Court Opinion

ID: 6929118
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:47:48.532491+00
Date Added: 2024-06-11T09:10:57.853525
License: Public Domain

REINHARDT, Circuit Judge,
dissenting:
The majority holds at pages 868-69 of its opinion that the shareholders’ amended complaint does not allege a failure to disclose adverse information regarding past or present performance, but rather only a failure to disclose predictions of future revenue. I disagree. I believe that many of the statements in the complaint upon which the majority relies pertain to past or present occurrences. That they also form the basis for predicting future performance is irrelevant. It is the past or present events that the shareholders have a right to complain of in a case involving the statutory provisions at issue here— and complain of them they surely did:
Sales growth to VeriFone’s core market segment of retail merchant automation (which accounted for more than 76% of the Company’s revenues in 1989) had slowed substantially....
Unit sales to VeriFone’s core market segment of retail merchant automation had materially declined....
VeriFone’s historical sales channels ... were showing little growth in potential revenue based wpon order rates or unit sales.
VeriFone was forced to directly market its products to new markets as a result of the slow down in growth in its core business, and VeriFone’s inability to find resellers for these markets.
VeriFone’s direct marketing sales force had little or no experience in marketing VeriFone’s products to these new market segments, was meeting substantial resistance and long lead times between sales proposals and customer response, and had no reasonable basis to predict VeriFone’s ability to sell its product in these markets.
VeriFone’s Petroleum/Convenience market was saturated....
Amended Complaint at ¶ 21(a-e, g) (emphasis added).
The majority holds that these allegations concern only future events. It is true that the facts complained of, if true, are relevant to predicting VeriFone’s future performance. However, that is not surprising. The purpose of a public offering is to persuade investors to bet on a company’s future perfor-*873manee. Future revenue is the ultimate interest of every potential investor. What the majority overlooks is that it is only after evaluating past and present performance that investors bet — or decline to bet — on future performance. By focusing solely upon the portion of each allegation that may inform the reader as to future performance, the majority ignores the fact that the allegations are founded in the past and the present.
I think it clear that the shareholders’ complaint is not limited to allegations of a failure to forecast future events, as the majority states. Rather, the complaint expressly alleges a failure to disclose facts concerning VeriFone’s past and present performance. Because the shareholders properly alleged that the defendants concealed adverse facts in their public offering, I would reverse the judgment of the district court. Accordingly, I dissent.