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[Entered: 02/11/2025 04:05 PM] [Edited: 02/14/2025 12:08 PM]","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/421603301/","id":421603301,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69854027/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/435607924/","id":435607924,"tags":[],"absolute_url":"/docket/69854027/33/city-of-hialeah-employees-retirement-system-v-peloton-interactive-inc/","date_created":"2025-04-07T11:11:00.464135-07:00","date_modified":"2026-07-21T12:06:43.743784-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"33","attachment_number":null,"pacer_doc_id":"7a29e0d0-8ce8-ef11-be20-001dd808b3ce","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2025-04-07T11:11:00.451263-07:00","date_modified":"2026-07-21T12:06:43.693292-07:00","date_filed":"2025-02-11","time_filed":"00:00:00","entry_number":33,"recap_sequence_number":"2025-02-11.001","pacer_sequence_number":null,"description":"ORAL ARGUMENT STATEMENT LR 34.1 (a), on behalf of Appellee Peloton Interactive, Inc., Thomas Cortese, John Foley, William Lynch, Jill Woodworth, Mariana Garavaglia, Hisao Kushi, FILED.\u00a0Service date 02/11/2025 by ACMS. [Entered: 02/11/2025 10:28 AM] [Edited: 02/11/2025 01:07 PM]","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/421603300/","id":421603300,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69854027/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/435607923/","id":435607923,"tags":[],"absolute_url":"/docket/69854027/35/city-of-hialeah-employees-retirement-system-v-peloton-interactive-inc/","date_created":"2025-04-07T11:11:00.437752-07:00","date_modified":"2026-07-21T12:06:43.982944-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"35","attachment_number":null,"pacer_doc_id":"4280f7af-c3e8-ef11-be20-001dd8004571","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2025-04-07T11:11:00.423889-07:00","date_modified":"2026-07-21T12:06:43.952476-07:00","date_filed":"2025-02-11","time_filed":"00:00:00","entry_number":35,"recap_sequence_number":"2025-02-11.003","pacer_sequence_number":null,"description":"REPLY BRIEF, on behalf of\u00a0Appellant City of Hialeah Employees Retirement System, Appellant Robeco Capital Growth Funds SICAV Robeco Global Consumer Trends,, FILED.\u00a0Service date 02/11/2025 by ACMS. [Entered: 02/11/2025 05:01 PM] [Edited: 02/14/2025 12:14 PM]","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/421603299/","id":421603299,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69854027/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/435607922/","id":435607922,"tags":[],"absolute_url":"/docket/69854027/32/city-of-hialeah-employees-retirement-system-v-peloton-interactive-inc/","date_created":"2025-04-07T11:11:00.408773-07:00","date_modified":"2026-07-21T12:06:43.632010-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"32","attachment_number":null,"pacer_doc_id":"33e3b67d-85e5-ef11-9342-001dd806da91","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2025-04-07T11:11:00.395165-07:00","date_modified":"2026-07-21T12:06:43.604630-07:00","date_filed":"2025-02-07","time_filed":"00:00:00","entry_number":32,"recap_sequence_number":"2025-02-07.001","pacer_sequence_number":null,"description":"CASE CALENDARING, for the week of 04/07/2025, Panel B, PROPOSED. [Entered: 02/07/2025 01:58 PM]","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/421603298/","id":421603298,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69854027/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/435607921/","id":435607921,"tags":[],"absolute_url":"/docket/69854027/31/city-of-hialeah-employees-retirement-system-v-peloton-interactive-inc/","date_created":"2025-04-07T11:11:00.378881-07:00","date_modified":"2026-07-21T12:06:43.549587-07:00","sha1":"232ec1a48371c1e7163f36df25d283668d1eb258","page_count":72,"file_size":720896,"filepath_local":"recap/gov.uscourts.ca2.5ac3df89-b20a-4755-9f93-26cc78a93aa7/gov.uscourts.ca2.5ac3df89-b20a-4755-9f93-26cc78a93aa7.31.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.ca2.5ac3df89-b20a-4755-9f93-26cc78a93aa7/gov.uscourts.ca2.5ac3df89-b20a-4755-9f93-26cc78a93aa7.31.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 1 of 72\n\n\n\n\n 24-2803\n United States Court of Appeals\n for the Second Circuit\n \u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\n CITY OF HIALEAH EMPLOYEES\u2019 RETIREMENT SYSTEM, INDIVIDUALLY AND ON\nBEHALF OF ALL OTHERS SIMILARLY SITUATED, ROBECO CAPITAL GROWTH FUNDS\n SICAV\u2014ROBECO GLOBAL CONSUMER TRENDS,\n Plaintiffs-Appellants,\n v.\nPELOTON INTERACTIVE, INC., THOMAS CORTESE, JOHN FOLEY, WILLIAM LYNCH,\n JILL WOODWORTH, MARIANA GARAVAGLIA, HISAO KUSHI,\n Defendants-Appellees.\n \u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\nOn Appeal from the United States District Court for the Southern District of New York\n No. 1:21-cv-9582 (Hon. Andrew L. Carter)\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\n BRIEF OF DEFENDANTS-APPELLEES\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\n Melissa Arbus Sherry\n Andrew B. Clubok\n LATHAM & WATKINS LLP\n 555 Eleventh Street, NW\n Suite 1000\n Washington, DC 20004\n (202) 637-2200\n melissa.sherry@lw.com\n\n Michele D. Johnson\n LATHAM & WATKINS LLP\n 650 Town Center Drive\n 20th Floor\n Costa Mesa, CA 92626\n\nJanuary 28, 2025 Counsel for Defendants-Appellees\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 2 of 72\n\n\n\n\n CORPORATE DISCLOSURE STATEMENT\n\n Pursuant to Federal Rule of Appellate Procedure 26.1, Defendant Peloton\n\nInteractive, Inc. (\u201cPeloton\u201d), by and through its undersigned counsel, certifies that it\n\nis a publicly traded company that has no parent corporation and that, upon\n\ninformation and belief, Morgan Stanley, a publicly-held corporation, owns more\n\nthan 10% of Peloton\u2019s Class A common stock.\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 3 of 72\n\n\n\n\n TABLE OF CONTENTS\n Page\nINTRODUCTION ..................................................................................................... 1\nSTATEMENT OF THE CASE .................................................................................. 3\n A. Factual Background............................................................................... 3\n 1. March-September 2020: COVID Causes Demand Surge .......... 4\n 2. February 2021: Peloton Exceeds Q2 Guidance and\n Provides Q3 Forecast .................................................................. 4\n 3. May 2021: Peloton Exceeds Q3 Guidance and Provides\n Q4 Forecast ................................................................................. 7\n 4. August 2021: Peloton Exceeds Q4 and FY21 Guidance\n and Provides Q1 and FY22 Forecast .......................................... 9\n 5. November 2021: Peloton Exceeds Q1 Guidance and\n Provides Q2 Forecast ................................................................ 11\n 6. January-February 2022: Peloton Meets Q2 Guidance .............. 12\n B. Procedural Background ....................................................................... 13\n 1. The District Court Dismisses the First Amended\n Complaint .................................................................................. 13\n 2. The District Court Dismisses the Second Amended\n Complaint .................................................................................. 14\nSUMMARY OF ARGUMENT ............................................................................... 15\nARGUMENT ........................................................................................................... 17\nI. THE DISTRICT COURT CORRECTLY HELD PLAINTIFFS\n FAILED TO PLEAD ANY MATERIAL MISSTATEMENT OR\n OMISSION .................................................................................................... 17\n A. The District Court Correctly Held that None of the Eight\n Challenged Statements Were False ..................................................... 18\n 1. Peloton\u2019s Revenue Guidance Reinforces Each Statement........ 19\n\n\n\n ii\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 4 of 72\n\n\n\n\n Page\n 2. None of the Statements Were False or Misleading .................. 23\n 3. The CW Allegations Do Not Contradict the Challenged\n Statements ................................................................................. 32\n B. Six Statements Are Nonactionable \u201cPuffery\u201d ..................................... 41\n C. The Same Six Statements Are Nonactionable Forward-Looking\n Statements ........................................................................................... 43\n 1. The Statements Are Forward-Looking ..................................... 43\n 2. The Forward-Looking Statements Fall Under the PSLRA\n Safe Harbor ............................................................................... 45\n D. Three Statements Are Also Nonactionable Opinions ......................... 48\nII. IN THE ALTERNATIVE, PLAINTIFFS HAVE FAILED TO PLEAD\n A STRONG INFERENCE OF SCIENTER .................................................. 49\n A. Plaintiffs Fail to Allege Motive and Opportunity ............................... 50\n B. Plaintiffs Fail to Plead Strong Circumstantial Evidence of Fraud ...... 52\nIII. THE DISTRICT COURT CORRECTLY DISMISSED PLAINTIFFS\u2019\n OTHER CLAIMS .......................................................................................... 57\nCONCLUSION ........................................................................................................ 58\n\n\n\n\n iii\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 5 of 72\n\n\n\n\n TABLE OF AUTHORITIES\n Page(s)\n CASES\n\nArkansas Public Employees Retirement System v. Bristol-Myers\n Squibb Co.,\n 28 F.4th 343 (2d Cir. 2022) ........................................................22, 50, 51, 52, 57\n\nAvon Pension Fund v. GlaxoSmithKline PLC,\n 343 F. App\u2019x 671 (2d Cir. 2009) ........................................................................ 52\n\nBay Harbour Management LLC v. Carothers,\n 282 F. App\u2019x 71 (2d Cir. 2008) .......................................................................... 22\n\nCBF Ind\u00fastria de Gusa S/A v. AMCI Holdings, Inc.,\n 850 F.3d 58 (2d Cir. 2017) ................................................................................. 49\n\nCity of Monroe Employees Retirement System v. Bridgestone Corp.,\n 399 F.3d 651 (6th Cir. 2005) .............................................................................. 42\n\nCox v. Blackberry Ltd.,\n 660 F. App\u2019x 23 (2d Cir. 2016) .......................................................................... 56\n\nECA, Local 134 IBEW Joint Pension Trust of Chicago v. JP Morgan\n Chase Co.,\n 553 F.3d 187 (2d Cir. 2009) .........................................................................41, 50\n\nEmployees\u2019 Retirement System of the Virgin Islands v. Blanford,\n 794 F.3d 297 (2d Cir. 2015) .........................................................................37, 38\n\nIn re Finisar Corp. Securities Litigation,\n 646 F. App\u2019x 506 (9th Cir. 2016) .................................................................39, 42\n\nFreedman v. Value Health, Inc.,\n 34 F. App\u2019x 408 (2d Cir. 2002) .......................................................................... 43\n\nFurher v. Ericsson LM Telephone Co.,\n 363 F. App\u2019x 763 (2d Cir. 2009) ........................................................................ 22\n\nGamm v. Sanderson Farms, Inc.,\n 944 F.3d 455 (2d Cir. 2019) .........................................................................17, 18\n\n\n\n iv\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 6 of 72\n\n\n\n\n Page(s)\nHalperin v. eBanker USA.com, Inc.,\n 295 F.3d 352 (2d Cir. 2002) ............................................................................... 47\n\nHassan v. Boston Beer Co.,\n No. 23-8, 2023 WL 8110940 (2d Cir. Nov. 22, 2023) ...............23, 40, 41, 44, 54\n\nIBEW Local Union No. 58 Pension Trust Fund & Annuity Fund v.\n Royal Bank of Scotland Group, PLC,\n 783 F.3d 383 (2d Cir. 2015) ............................................................................... 43\n\nIWA Forest Industry Pension Plan v. Textron Inc.,\n 14 F.4th 141 (2d Cir. 2001) ................................................................................ 38\n\nJackson v. Abernathy,\n 960 F.3d 94 (2d Cir. 2020) ................................................................................. 57\n\nJones v. Perez,\n 550 F. App\u2019x 24 (2d Cir. 2013) .......................................................................... 53\n\nJP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de C.V.,\n 412 F.3d 418 (2d Cir. 2005) .........................................................................18, 58\n\nKalnit v. Eichler,\n 264 F.3d 131 (2d Cir. 2001) ............................................................................... 50\n\nKleinman v. Elan Corp.,\n 706 F.3d 145 (2d Cir. 2013) .........................................................................29, 40\n\nLeadersel Innotech ESG v. Teladoc Health, Inc.,\n No. 23-cv-1112, 2024 WL 4274362 (2d Cir. Sept. 24, 2024) ................31, 34, 43\n\nIn re Liberty Tax, Inc. Securities Litigation,\n 828 F. App\u2019x 747 (2d Cir. 2020) ........................................................................ 22\n\nLocal No. 38 International Brotherhood of Electrical Workers\n Pension Fund v. American Express Co.,\n 430 F. App\u2019x 63 (2d Cir. 2011) .......................................................................... 54\n\nLucas v. Icahn,\n 616 F. App\u2019x 448 (2d Cir. 2015) ........................................................................ 19\n\n\n\n v\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 7 of 72\n\n\n\n\n Page(s)\nIn re Lululemon Securities Litigation,\n 14 F. Supp. 3d 553 (S.D.N.Y. 2014), aff\u2019d, 604 F. App\u2019x 62 (2d\n Cir. 2015) ......................................................................................................40, 51\n\nNew Jersey Carpenters Health Fund v. Royal Bank of Scotland\n Group, PLC,\n 709 F.3d 109 (2d Cir. 2013) ............................................................................... 36\n\nNew Orleans Employees Retirement System v. Celestica, Inc.,\n 455 F. App\u2019x 10 (2d Cir. 2011) .......................................................................... 38\n\nNguyen v. New Link Genetics Corp.,\n 297 F. Supp. 3d 472 (S.D.N.Y. 2018) ................................................................ 51\n\nNovak v. Kasaks,\n 216 F.3d 300 (2d Cir. 2000) ............................................................................... 39\n\nNursing Home Pension Fund, Local 144 v. Oracle Corp.,\n 380 F.3d 1226 (9th Cir. 2004) ............................................................................ 39\n\nOklahoma Firefighters Pension & Retirement System v. Xerox Corp.,\n 300 F. Supp. 3d 551 (S.D.N.Y. 2018), aff\u2019d sub nom. Arkansas\n Public Employees Retirement System v. Xerox Corp., 771 F. App\u2019x\n 51 (2d Cir. 2019) ...........................................................................................23, 42\n\nOmnicare, Inc. v. Laborers District Council Construction Industry\n Pension Fund,\n 575 U.S. 175 (2015) ......................................................................................48, 49\n\nIn re Philip Morris International Inc. Securities Litigation,\n 89 F.4th 408 (2d Cir. 2023) ....................................................................42, 44, 45\n\nIn re Renewable Energy Group Securities Litigation,\n No. 22-335, 2022 WL 14206678 (2d Cir. Oct. 25, 2022) ............................55, 57\n\nRombach v. Chang,\n 355 F.3d 164 (2d Cir. 2004) .......................................................17, 18, 32, 41, 48\n\nSan Leandro Emergency Medical Group Profit Sharing Plan v. Philip\n Morris Cos.,\n 75 F.3d 801 (2d Cir. 1996) .....................................................................43, 51, 52\n\n\n vi\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 8 of 72\n\n\n\n\n Page(s)\nSheet Metal Workers Loc. 32 Pension Fund v. Terex Corp.,\n No. 9-cv-2083, 2018 WL 1587457 (D. Conn. Mar. 31, 2018) ........................... 39\n\nShemian v. Research in Motion Ltd.,\n 570 F. App\u2019x 32 (2d Cir. 2014) .......................................................................... 53\n\nSimon v. American Power Conversion Corp.,\n 945 F. Supp. 416 (D.R.I. 1996) .......................................................................... 39\n\nSingh v. Cigna Corp.,\n 918 F.3d 57 (2d Cir. 2019) ................................................................................. 22\n\nSlayton v. American Express Co.,\n 604 F.3d 758 (2d Cir. 2010) ...................................................................45, 47, 56\n\nIn re Smith & Wesson Holding Corp. Securities Litigation,\n 836 F. Supp. 2d 1 (D. Mass. 2011), aff\u2019d, 669 F.3d 68 (1st Cir.\n 2012) ................................................................................................................... 35\n\nIn re SolarEdge Technologies, Inc. Securities Litigation,\n No. 23-cv-9748, 2024 WL 4979296 (S.D.N.Y. Dec. 4, 2024)........................... 36\n\nSouth Cherry Street, LLC v. Hennessee Group LLC,\n 573 F.3d 98 (2d Cir. 2009) ................................................................................. 52\n\nSteamfitters Local 449 Pension Plan v. AT&T Inc.,\n No. 21-2698, 2022 WL 17587853 (2d Cir. Dec. 13, 2022) .........................41, 42\n\nSwanson v. Danimer Scientific, Inc.,\n No. 23-7674, 2024 WL 4315109 (2d Cir. Sept. 27, 2024) ................................. 57\n\nTellabs, Inc. v. Makor Issues & Rights, Ltd.,\n 551 U.S. 308 (2007) ............................................................................................ 49\n\nTongue v. Sanofi,\n 816 F.3d 199 (2d Cir. 2016) .........................................................................48, 49\n\nIn re UiPath, Inc. Securities Litigation,\n -- F. Supp. 3d --, 2024 WL 4667269 (S.D.N.Y. Nov. 4, 2024) .......................... 32\n\nWeston v. DocuSign, Inc.,\n 669 F. Supp. 3d 849 (N.D. Cal. 2023) ................................................................ 39\n\n vii\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 9 of 72\n\n\n\n\n Page(s)\nWochos v. Tesla, Inc.,\n 985 F.3d 1180 (9th Cir. 2021) ...................................................................... 45, 54\n\n STATUTES AND REGULATIONS\n\n15 U.S.C. \u00a7 78j(b) ...................................................................................................... 3\n\n15 U.S.C. \u00a7 78t(a) ...................................................................................................... 3\n\n15 U.S.C. \u00a7 78t-1 ....................................................................................................... 3\n\n15 U.S.C. \u00a7 78u-4(b)(1) ........................................................................................... 17\n\n15 U.S.C. \u00a7 78u-4(b)(2)(a) ....................................................................................... 49\n\n15 U.S.C. \u00a7 78u-5(c) ................................................................................................ 43\n\n15 U.S.C. \u00a7 78u-5(c)(1)(A)-(B) ............................................................................... 43\n\n15 U.S.C. \u00a7 78u-5(i)(1)(A)-(D)................................................................................ 43\n\n17 C.F.R. \u00a7 240.10b-5 ................................................................................................ 3\n\n17 C.F.R. \u00a7 240.10b5-1(c)(1)................................................................................... 50\n\n OTHER AUTHORITIES\n\nJason Fernando, Compound Annual Growth Rate (CAGR) Formula\n and Calculation, Investopedia,\n https://www.investopedia.com/terms/c/cagr.asp (updated Nov. 12,\n 2024) ..................................................................................................................... 8\n\n\n\n\n viii\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 10 of 72\n\n\n\n\n INTRODUCTION\n\n This case is about a company\u2019s good faith efforts to navigate the COVID-19\n\npandemic (\u201cCOVID\u201d), not securities fraud. COVID left businesses around the globe\n\nnavigating an unprecedented situation and vulnerable to the whims of broken supply\n\nchains, disrupted manufacturing, closed physical stores, and uncertain consumer\n\nspending. For Peloton Interactive, Inc. (\u201cPeloton\u201d), COVID triggered unexpected,\n\nrecord-breaking demand. Before COVID, Peloton\u2019s business followed the\n\nseasons\u2014with higher demand in the winter than the summer. But the first year of\n\nCOVID departed from this usual pattern. And Peloton\u2019s inventory could not keep\n\nup, with customer order-to-delivery times ballooning from 1-3 weeks to 8-10 weeks.\n\nPeloton invested significant resources in developing manufacturing capacity and\n\nincreasing inventory\u2014a plan it disclosed to the market in real-time.\n\n At the same time, Peloton repeatedly warned that the impacts of COVID on\n\nits business were difficult to predict, and that COVID-level demand was not\n\nexpected to last. By the start of 2021, Peloton predicted a return to pre-COVID\n\nseasonal trends and that demand in some quarters would be less than prior quarters.\n\nBut Peloton also predicted demand would still remain strong relative to the prior\n\nyear and especially two years prior. These predictions were reflected and quantified\n\nin Peloton\u2019s quarterly revenue guidance. And they proved correct: Peloton met or\n\n\n\n\n 1\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 11 of 72\n\n\n\n\nexceeded its guidance, which Plaintiffs do not challenge, and achieved year-over-\n\nyear (\u201cYoY\u201d) growth during the entire Class Period.\n\n Plaintiffs seek to transform Peloton\u2019s transparency into a story of deliberate\n\ndeception. They allege Defendants continued to promise COVID-level demand and\n\nfailed to disclose that inventory was allegedly \u201cexcess\u201d relative to demand. But\n\nPlaintiffs plead no particularized facts to support their narrative and no reasonable\n\ninvestor would be misled into thinking that the COVID peaks would continue\n\nindefinitely. Nor could they: Defendants told the market in real-time that\n\nunprecedented COVID levels would not continue and quantified its growing\n\ninventory, in dollar amount, in SEC forms. The documents incorporated by\n\nreference into the Second Amended Complaint (\u201cSAC\u201d) confirm exactly that. And\n\nthe allegations of confidential witnesses (\u201cCW\u201d)\u2014mostly low-level employees who\n\nhad no direct contact with Defendants and no visibility into company-wide\n\nmetrics\u2014do not conflict with those disclosures.\n\n Understanding all this, the district court correctly dismissed the SAC for\n\nseveral, independent reasons. Most fundamentally, each statement was true when\n\nmade\u2014that alone is reason to affirm. Most also fail as puffery, forward-looking\n\nstatements, opinion, or all three. And although the district court did not\u2014and this\n\nCourt need not\u2014address scienter, Plaintiffs\u2019 allegations do not give rise to a strong\n\ninference that Defendants intentionally misled investors. This Court should affirm.\n\n\n\n 2\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 12 of 72\n\n\n\n\n STATEMENT OF THE CASE\n\n This is a putative class action asserting claims under Sections 10(b), 20(a),\n\nand 20A of the Securities Exchange Act of 1934, 15 U.S.C. \u00a7\u00a7 78j(b), 78t(a), and\n\n78t-1, and Rule 10b-5, 17 C.F.R. \u00a7 240.10b-5, against Defendants Peloton\n\nInteractive, Inc.; John Foley, William Lynch, and Jill Woodworth (collectively,\n\n\u201cSpeaker Defendants\u201d); and Thomas Cortese, Mariana Garavaglia, and Hisao Kushi\n\n(collectively, \u201cNon-Speaker Defendants\u201d), on behalf of an investor class that\n\nacquired Peloton common stock between February 5, 2021 and January 19, 2022\n\n(the \u201cClass Period\u201d). JA179 \u00b6\u00b6 9-10; JA277 \u00b6 316. On September 30, 2024, the\n\ndistrict court dismissed the SAC with prejudice. SPA1-26. This appeal followed.\n\n A. Factual Background\n\n Founded in 2012, Peloton sells, among other things, stationary bikes with\n\ntouch screens that provide access to live and on-demand fitness content. JA405-06.\n\nDuring the Class Period, customers could purchase these products three ways: online\n\n(comprising a majority of sales), via an \u201cinside sales\u201d team member, or at a Peloton\n\nshowroom. JA408, 424. Peloton\u2019s revenue was generated primarily from these\n\nsales. JA405.\n\n Peloton\u2019s \u201cbusiness is affected by seasonality,\u201d meaning demand is typically\n\nhigher during the winter season\u2014due to the holidays, New Year\u2019s resolutions, and\n\ncold weather\u2014than the warmer months. JA375. Because Peloton\u2019s fiscal year runs\n\n\n\n 3\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 13 of 72\n\n\n\n\nfrom July 1 to June 30, the lower-demand months generally fall during Q1 (July 1-\n\nSeptember 30) and Q4 (April 1-June 30), and the higher-demand months fall during\n\nQ2 (October 1-December 31) and Q3 (January 1-March 31). Id.\n\n 1. March-September 2020: COVID Causes Demand Surge\n\n In March 2020, COVID was declared a pandemic. Despite the uncertainties\n\ncaused by COVID, JA415-16, Peloton demand surged, JA206 \u00b6 110, and departed\n\nfrom \u201ctraditional seasonal patterns,\u201d JA410, having benefited from lockdown orders\n\nand gym closures. Peloton\u2019s revenue for April-June 2020 (4Q20), which ordinarily\n\nwould have been lower than January-March 2020 (3Q20), was higher. JA593. At\n\nthe same time, COVID severely disrupted global supply chains, hindering the import\n\nof products. For Peloton, this resulted in low inventory and heightened order-to-\n\ndelivery times, see JA673, which risked hurting customer satisfaction in a highly\n\ncompetitive market and increasing \u201crates of post-purchase order cancellation,\u201d\n\nJA415-16. In November 2020, Peloton told investors it would be \u201coperating under\n\nsupply constraints for the foreseeable future.\u201d JA631.\n\n 2. February 2021: Peloton Exceeds Q2 Guidance and Provides\n Q3 Forecast\n\n On February 4, 2021, Peloton announced its October-December 2020 (2Q21)\n\nresults. Peloton\u2019s $1.065 billion in quarterly revenue \u201cexceed[ed] expectations\n\nacross all geographies,\u201d and represented 128% YoY growth. JA676.\n\n\n\n\n 4\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 14 of 72\n\n\n\n\n During an earnings call the same day, then-CEO Foley explained this \u201cstrong\n\ndemand,\u201d paired with \u201cCOVID-related delivery challenges,\u201d resulted in \u201celevated\u201d\n\n\u201cdelivery wait times.\u201d JA673. To combat this \u201csupply and demand imbalance,\u201d\n\nPeloton was \u201cfocused on significantly growing [its] manufacturing capabilities.\u201d\n\nJA672, 677. These efforts, then-CFO Woodworth shared, were starting to pay off:\n\n\u201ccurrent manufacturing capacity exceeds demand[,] a trend that will accelerate as\n\nwe move through the back half of the fiscal year.\u201d JA677. But more near-term work\n\nwas needed, so Peloton announced plans to spend over $100 million in \u201cexpedited\n\nshipping\u201d to ensure \u201ccertainty for customers on the delivery dates we offer.\u201d JA673.\n\n An analyst asked whether Woodworth\u2019s prediction about manufacturing\n\ncapacity exceeding demand was \u201cbecause [Peloton] ramped capacity,\u201d or whether it\n\nwas \u201cseeing any change to demand due to extended [order-to-delivery] times.\u201d\n\nJA680. Foley responded: \u201cWe are not seeing a softening of demand. That is\n\nabsolutely not what\u2019s happening here. We are seeing incredibly strong organic\n\ndemand, even in the face of light marketing.\u201d Id. (Statement 1); see Addendum (table\n\nof statements).1 He added: \u201c[I]t\u2019s absolutely not a softening of demand. That\u2019s no[t]\n\n\n\n\n 1\n The italics used for the statements here and in the addendum reflect the\nemphasis added in the SAC and Plaintiffs\u2019 brief. This brief refers to the statements\nby the number used in the district court\u2019s order dismissing the SAC. SPA5-9.\nBecause Plaintiffs have dropped challenges to various statements, the numbering\nincludes gaps. Only eight statements remain at issue: 1-2, 9-11, 14, 19-20.\n\n\n 5\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 15 of 72\n\n\n\n\nwhat we\u2019re seeing. We\u2019re seeing robust demand.\u201d JA680. Woodworth\n\n\u201chighlight[ed], obviously,\u201d that Foley\u2019s assertions of \u201cstrong\u201d demand were\n\n\u201creflected in the revised revenue guidance that we\u2019ve given for Q3 and Q4.\u201d Id.\n\n\u201c[I]n Q3, . . . we\u2019re still seeing very strong organic demand across all geographies\n\nacross all products.\u201d Id. (Statement 2).\n\n Consistent with these statements, Peloton\u2019s January-March 2021 (3Q21)\n\nguidance predicted $1.1 billion in quarterly revenue\u2014more than double its revenue\n\nfrom the prior year. JA658, 677. But Peloton warned \u201c[a]ctual results may differ\n\nmaterially\u201d and instructed investors to review the \u201cSEC filings\u201d and \u201cshareholder\n\nletter\u201d \u201c[f]or a discussion of the material risks and other important factors that could\n\nimpact our actual results.\u201d JA672; see JA659 (directing investors to Forms 10-K\n\nand 10-Q \u201cRisk Factors\u201d). The referenced SEC filings included specific and\n\nextensive disclosures. See JA369-94. They warned that the fitness market is highly\n\ncompetitive; Peloton\u2019s revenue growth rate was likely to slow as the business\n\nmatured; and Peloton derived a significant majority of revenue from bike sales,\n\nmeaning a decrease would have a large impact on revenue. JA369.\n\n Peloton also emphasized the unique risks and uncertainties caused by COVID.\n\nJA369 (COVID was \u201cmaterial risk[]\u201d). It acknowledged that COVID-driven\n\ndemand was \u201cunexpected[ly]\u201d high, resulting in deviations from usual seasonal\n\ntrends. JA379; see JA371, 375, 658. Peloton repeatedly warned that COVID\u2019s\n\n\n\n 6\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 16 of 72\n\n\n\n\n\u201cimpact [on] consumer demand for our products and services\u201d \u201cremains uncertain,\u201d\n\nJA370, and \u201cis changing rapidly,\u201d JA372; see JA333, 370-71, 374, 380, 659. And\n\nPeloton made clear it did not believe the unprecedented COVID demand would\n\ncontinue indefinitely: \u201c[o]ver time, we expect the seasonality of our business to\n\nreturn, with pronounced increases in demand during our second and third quarters,\u201d\n\nas compared to the first and fourth quarters. JA375.\n\n 3. May 2021: Peloton Exceeds Q3 Guidance and Provides Q4\n Forecast\n\n On May 6, 2021, Peloton reported January-March 2021 (3Q21) results,\n\nbeating its forecast with actual sales of $1.262 billion and achieving 141% YoY\n\ngrowth. JA703. During an earnings call that same day, Woodworth announced that\n\nPeloton\u2019s efforts \u201cto reduce wait times for [Peloton] products\u201d were paying off. Id.\n\nWait times for one bike model, which had been as high as \u201c8-10 weeks\u201d in April\n\n2021, JA193 \u00b6 64, were \u201cback to pre-pandemic levels of one to three weeks,\u201d JA703.\n\nIn its 10-Q, Peloton quantified the precise inventory increase, explaining it had \u201ca\n\n$363.7 million increase in inventory levels\u201d compared to the prior year \u201cas [it]\n\nramped up supply to meet the current increased demand.\u201d JA549 (Statement 9).\n\n Woodworth then offered \u201coverall commentary\u201d on Peloton\u2019s sales outlook.\n\nJA706. She explained that, \u201c[a]s anticipated,\u201d bike sales had been \u201ctapering from\n\nCOVID highs,\u201d and Peloton was \u201cexpecting a gradual return to historical seasonal\n\nsales trends.\u201d Id. Reflecting this anticipated return to seasonality, Peloton\n\n\n 7\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 17 of 72\n\n\n\n\nannounced April-June 2021 (4Q21) revenue guidance of $915 million\u2014\n\napproximately $300 million lower than its Q3 results. Id.\n\n Woodworth contextualized this guidance by comparing it to Peloton\u2019s pre-\n\nCOVID results: \u201c[O]ur unit sales remain significantly higher than pre-COVID\n\nlevels. We expect [bike] sales in Q4 fiscal \u201921 to be over 3x higher than they were\n\nin Q4 of fiscal \u201919, two years prior.\u201d Id.; see JA710, 716. When asked, two weeks\n\nlater, about this guidance and how to \u201cget people comfortable with where bike\n\ndemand is heading into warmer weather and into strong reopening,\u201d Woodworth\n\nrepeated: \u201c[w]e\u2019ve lapped COVID now. But bike sales or bike demand is still over\n\n3x where it was a couple of years ago, which when you look at that [compound\n\nannual growth rate (\u201cCAGR\u201d)] over a 2-year period, we still see a ton of demand.\u201d\n\nJA836 (Statement 10).2\n\n As usual, Peloton warned that \u201c[a]ctual results may differ materially,\u201d JA699,\n\nand provided specific and extensive risk disclosures, e.g., JA515-16, 553-81, 771.\n\nPeloton warned, for example, that \u201c[o]ur operating results could be adversely\n\naffected if we are unable to accurately forecast consumer demand for our products\n\nand services and adequately manage our inventory.\u201d JA563. \u201cIf we fail to accurately\n\n\n\n 2\n The CAGR is the rate of return assuming that the growth of an investment\nfrom its beginning to end balance is smoothed. Jason Fernando, Compound Annual\nGrowth Rate (CAGR) Formula and Calculation, Investopedia,\nhttps://www.investopedia.com/terms/c/cagr.asp (updated Nov. 12, 2024).\n\n\n 8\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 18 of 72\n\n\n\n\nforecast consumer demand we may experience excess inventory levels or a shortage\n\nof products available for sale. Inventory levels in excess of consumer demand may\n\nresult in inventory write-downs or write-offs and the sale of excess inventory at\n\ndiscounted prices, which would cause our gross margins to suffer . . . .\u201d JA564\n\n(Statement 20).3\n\n 4. August 2021: Peloton Exceeds Q4 and FY21 Guidance and\n Provides Q1 and FY22 Forecast\n\n On August 26, 2021, Peloton announced its April-June 2021 (4Q21) and full\n\nFY21 results. Peloton beat its Q4 guidance with $937 million in revenue, reflecting\n\n54% YoY growth. JA730. For FY21, Peloton announced $4.02 billion in revenue,\n\n\u201cup 120% year-on-year and up 340% versus fiscal year 2019.\u201d JA727. At the same\n\ntime, Woodworth reminded investors that FY21 was a \u201cvery unusual year,\u201d with\n\n\u201cboth supply and demand shocks [that] impacted our performance.\u201d JA733. She\n\nwarned that demand was expected to \u201cstep back in fiscal year 2022,\u201d JA736, and\n\n\u201creturn to normal seasonal patterns,\u201d JA733; see JA735, 745, 747. And she noted\n\nthat Peloton was now \u201clapping [COVID] comparisons,\u201d \u201cwhich makes predicting\n\nour year-over-year performance more challenging than normal.\u201d JA733.\n\nWoodworth then shared Peloton\u2019s \u201cbest current estimate\u201d for July-September 2021\n\n\n\n\n 3\n Plaintiffs challenge this same risk warning in Peloton\u2019s Form 10-K, filed\nAugust 26, 2021, and Form 10-Q, filed November 4, 2021. JA250-51 \u00b6\u00b6 214-16.\n\n\n 9\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 19 of 72\n\n\n\n\n(1Q22) and the full FY22, predicting $800 million in Q1 revenue\u2014a $100 million\n\ndecrease from the previous quarter\u2014and $5.4 billion for FY22. JA733-34.\n\n Woodworth further noted that, in the past year, Peloton had \u201cmade significant\n\nprogress on product wait times,\u201d with order-to-delivery windows for both bike\n\nmodels \u201cat pre-pandemic levels for the past several weeks.\u201d JA731. And she\n\nannounced that \u201cwe are entering fiscal 2022 with a normalized backlog for our Bike\n\nportfolio and guidance reflects our expectations of continued strong demand.\u201d\n\nJA734 (Statement 11).\n\n Foley also announced that Peloton was reducing its bike price\u2014the \u201clatest\n\nstep on [Peloton\u2019s] journey to broaden the accessibility of [its] products.\u201d JA729.\n\nThis journey began years before COVID and included offering a 0% financing\n\noption in 2017 and a no-risk 30-day home trial in 2019, and reducing the bike price\n\nin mid-2020, when demand was at its COVID-peak. JA728. As Foley explained,\n\n\u201c[d]emocratizing access to our platform has always been our goal.\u201d JA729. An\n\nanalyst asked how Peloton was \u201cthink[ing] about demand for Bike+ currently\u201d and,\n\n\u201cgiven the light [Q1] guide,\u201d whether the decrease in bike price was \u201coffensive or\n\ndefensive.\u201d JA737. Foley responded: \u201cwe feel like the demand for Bike+ and Bike\n\nis robust, and we feel good about the entire year\u2019s forecast. The price drop with\n\n[bike] was absolutely offensive. As we think about the competitive landscape, we\n\n\n\n\n 10\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 20 of 72\n\n\n\n\nthink about democratizing access to great fitness, which is, as you know, always\n\nbeen in our playbook.\u201d JA738 (Statement 14).\n\n As always, Peloton emphasized the \u201cgreat debate about the growth prospects\n\nof [the connected fitness] industry post-COVID,\u201d JA727; warned that \u201c[a]ctual\n\nresults may differ materially,\u201d JA726; and pointed to specific and extensive risk\n\ndisclosures, e.g., JA402-03, 414-42, 771. And Peloton further confirmed that, \u201c[a]s\n\nthe pandemic receded in recent months, we experienced a return to pre-pandemic\n\nseasonal trends.\u201d JA410.\n\n 5. November 2021: Peloton Exceeds Q1 Guidance and Provides\n Q2 Forecast\n\n On November 4, 2021, Peloton shared its July-September 2021 (1Q22)\n\nresults. Peloton\u2019s $805 million in revenue beat its guidance and reflected YoY (6%)\n\nand two-year (88% CAGR) growth. JA787.\n\n Peloton reminded investors that it \u201calways expected the engagement to come\n\ndown slightly coming out of COVID\u201d and that \u201cthose crazy elevated COVID\n\nengagement numbers\u201d would not last \u201cforever.\u201d JA799. And Peloton disclosed that\n\n\u201c[m]igrating from quarterly sequential growth during COVID back to our pre-\n\nCOVID seasonality has proven challenging.\u201d JA791. During fall 2021, Peloton\u2019s\n\nwebsite and showroom traffic did not increase as much as expected, \u201cadd[ing]\n\nincreased near-term uncertainty into our forecast.\u201d JA784. Peloton accordingly\n\n\n\n\n 11\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 21 of 72\n\n\n\n\nreduced its FY22 forecast, from $5.4 billion to $4.4-4.8 billion\u2014which still\n\nrepresented growth (14% YoY, 59% CAGR). JA790.\n\n For October-December 2021 (2Q22), Peloton predicted $1.1-1.2 billion in\n\nrevenue, reflecting its expectations of a strong holiday quarter. Id. Foley explained\n\nthat while the Q1 \u201csummer months have traditionally seen lower engagement\n\nlevels,\u201d \u201c[l]ooking ahead [to Q2], we\u2019re about to enter our busiest time of the year.\n\nOur inventories are healthy and our logistics teams are well equipped for the\n\nseasonally strong sales period.\u201d JA786-87 (Statement 19). He added: \u201c[w]e have\n\nlow expected [order-to-delivery times] across our portfolio as we know delivery is\n\ngreatly appreciated during the holiday and New Year\u2019s resolution periods.\u201d JA787.\n\n Again, Peloton warned that \u201c[a]ctual results may differ materially,\u201d JA783,\n\nand issued specific and extensive risk disclosures, e.g., JA784, 789-93. But the next\n\nday, Peloton\u2019s stock dropped 35%. JA253 \u00b6 225.\n\n 6. January-February 2022: Peloton Meets Q2 Guidance\n\n Peloton announced its October-December 2021 (2Q22) preliminary results on\n\nJanuary 20, 2022, JA808, and its final results on February 8, 2022, JA817. With\n\nrevenue of $1.13 billion, Peloton\u2019s results fell squarely within its guidance range,\n\nand represented YoY (6%) and two-year (56% CAGR) growth. JA817. But because\n\n\u201cassessing demand coming out of COVID\u201d continued to be a \u201csignificant challenge,\u201d\n\nJA825, Peloton further lowered its future guidance, JA818.\n\n\n\n 12\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 22 of 72\n\n\n\n\n B. Procedural Background\n\n 1. The District Court Dismisses the First Amended Complaint\n\n On November 18, 2021, Plaintiff Hialeah Employees\u2019 Retirement System\n\nfiled a putative class action complaint. JA7. On June 25, 2022, Plaintiff Robeco\n\nCapital Growth Funds-SICAV Robeco Global Consumer Trends filed an amended\n\nconsolidated complaint (\u201cFAC\u201d), alleging Defendants made eighteen statements\n\nabout Peloton\u2019s demand and inventory that were knowingly false and misleading\n\nbecause Defendants knew COVID-level demand had declined. JA21-144.\n\n The district court dismissed for failure to plead a material misstatement or\n\nomission\u2014but granted leave to amend. SPA44-52. The court concluded that every\n\nchallenged statement was true. Specifically, Peloton\u2019s characterization of its sales\n\nwas consistent with its financial results because Peloton \u201cexceeded\u201d its revenue\n\nguidance throughout the Class Period. SPA48-51. So \u201cPlaintiff\u2019s allegations that\n\nDefendants were concealing an actual decrease in overall demand\u201d were \u201cnot borne\n\nout by the totality of the facts alleged.\u201d SPA50. \u201c[M]ost importantly,\u201d the court\n\nexplained, Peloton \u201cexplicitly told the public that demand for Peloton\u2019s products\n\nwould be returning to pre-COVID levels after the surge in demand it had seen during\n\nCOVID.\u201d Id. Because the FAC was \u201cpremised on the nondisclosure of information\n\nthat was actually disclosed,\u201d Plaintiff had failed to state a claim. SPA51 (citation\n\nomitted).\n\n\n\n 13\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 23 of 72\n\n\n\n\n The district court also found many of the statements nonactionable for\n\nadditional reasons. Eight were forward-looking statements protected under the\n\nPrivate Securities Litigation Reform Act (\u201cPSLRA\u201d) safe harbor because they were\n\naccompanied by \u201cextensive\u201d and \u201cmeaningful cautionary language.\u201d SPA44-47.\n\nFive were nonactionable puffery, lacking \u201cspecific metric[s] on which the investing\n\npublic would reasonably rely.\u201d SPA47-48.\n\n Because Plaintiff failed to plead any actionable misstatement or omission, the\n\ndistrict court did not address scienter. SPA51-52. Finding no violation of Section\n\n10(b), the district court dismissed Plaintiff\u2019s remaining claims. SPA52.\n\n 2. The District Court Dismisses the Second Amended Complaint\n\n Plaintiffs then filed a consolidated SAC, JA171-307, dropping their challenge\n\nto ten statements and bringing challenges to two new statements, JA987-91 (listing\n\nstatements). Because Plaintiffs had \u201cfailed to cure the [FAC\u2019s] deficiencies,\u201d the\n\ndistrict court dismissed Plaintiffs\u2019 claims with prejudice. SPA15.\n\n The district court again held that every statement was true, SPA18-22, and\n\nthat each was nonactionable on alternative grounds: nine were protected by the\n\nPSLRA safe harbor, SPA15-18; five were puffery, SPA23-24; and one was an\n\nopinion, SPA24. The court did not address whether Plaintiffs adequately pleaded\n\nscienter. SPA24-25. And having found no Section 10(b) violation, it dismissed the\n\nremaining claims. SPA25.\n\n\n\n 14\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 24 of 72\n\n\n\n\n SUMMARY OF ARGUMENT\n\n The SAC challenged ten statements. The district court held that none were\n\nmaterially false or misleading for multiple, independent reasons. On appeal,\n\nPlaintiffs expressly abandon Statement 13\u2014the only statement made by Lynch.\n\nPls.\u2019 Opening Br. (\u201cOB\u201d) 8 n.4. They also implicitly abandon Statement 3 by failing\n\nto address it in the falsity section of their opening brief. And they do not challenge\n\nthe dismissal of claims against any Non-Speaker Defendant. Plaintiffs\u2019 arguments\n\nabout the remaining eight statements and two Speaker Defendants are without merit.\n\nSee Addendum (table of statements). This Court should affirm.\n\n First, the district court correctly held that none of the challenged statements\n\nwere false or misleading when made. Plaintiffs\u2019 claims are premised on Peloton\u2019s\n\npurported failure to disclose that demand would decrease from \u201cCOVID-level[s],\u201d\n\nOB23, and that inventory accumulated as a result of this allegedly undisclosed\n\ndemand decrease, OB27. But Plaintiffs ignore what Defendants actually said and\n\nthe relevant context, which contradict their claims of falsity. Peloton expressly and\n\nrepeatedly acknowledged COVID-level demand was anomalous, disclosed its\n\nexpectations of a return to seasonality, and said it was deliberately building\n\ninventory. Peloton provided revenue guidance reinforcing these disclosures and\n\nquantifying its expectations of a return to pre-COVID seasonality. And Peloton met\n\n\n\n\n 15\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 25 of 72\n\n\n\n\nor exceeded that guidance throughout the Class Period, with both YoY and two-year\n\ngrowth. Plaintiffs\u2019 failure to allege any false statement is reason alone to affirm.\n\n Second, most of the statements are nonactionable for additional reasons. Six\n\nare puffery (Statements 1-2, 10-11, 14, 19). Statements about \u201cstrong\u201d or \u201crobust\u201d\n\ndemand and \u201chealthy\u201d inventory, without more, are too vague for a reasonable\n\ninvestor to rely upon. The same six statements also reflect future expectations,\n\nperformance, or plans and are protected by the PSLRA safe harbor. Plaintiffs\n\ncontend the accompanying cautionary language is insufficient, but the safe harbor is\n\nwritten in the disjunctive and Plaintiffs do not argue the statements were made with\n\nactual knowledge of falsity. Regardless, each statement was accompanied by\n\nextensive cautions about COVID\u2019s impact on Peloton\u2019s demand and inventory. And\n\nthree of the statements, reflecting Foley and Woodworth\u2019s \u201cexpect[ations]\u201d and\n\n\u201cfeel[ings],\u201d are also nonactionable opinion (Statements 10-11, 14).\n\n Third, Plaintiffs failed to plead facts establishing a strong inference of\n\nscienter. The district court did not address, and did not need to address, scienter\n\nbecause Plaintiffs failed to allege falsity. But if this Court considers scienter,\n\nPlaintiffs\u2019 claims fail on that ground too. Plaintiffs point to Foley and Woodworth\u2019s\n\nstock sales\u2014but those sales were made under pre-arranged trading plans entered\n\nbefore the Class Period. The CWs do not adequately allege Foley or Woodworth\n\n\n\n\n 16\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 26 of 72\n\n\n\n\nhad any information contradicting their public statements. And statements made\n\nafter the Class Period say nothing about what they knew during the Class Period.\n\n Finally, because Plaintiffs\u2019 Section 20(a) and 20A claims are derivative of\n\ntheir Section 10(b) claim, the district court properly dismissed those claims as well.\n\n ARGUMENT\n\nI. THE DISTRICT COURT CORRECTLY HELD PLAINTIFFS FAILED\n TO PLEAD ANY MATERIAL MISSTATEMENT OR OMISSION\n\n To \u201cprotect [a defendant] against strike suits,\u201d the PSLRA and Rule 9(b)\n\nimpose stringent pleading requirements on private securities fraud actions. Gamm\n\nv. Sanderson Farms, Inc., 944 F.3d 455, 462-63 (2d Cir. 2019) (citation omitted).\n\nUnder Rule 9(b), plaintiffs must state \u201cthe circumstances of a fraud\u201d with\n\nparticularity. Id. The PSLRA imposes the additional requirement to \u201cspecify each\n\nstatement alleged to have been misleading, the reason or reasons why the statement\n\nis misleading, and, if an allegation regarding the statement or omission is made on\n\ninformation and belief,\u201d to \u201cstate with particularity all facts on which that belief is\n\nformed,\u201d 15 U.S.C. \u00a7 78u-4(b)(1). Under these heightened standards, plaintiffs\n\n\u201cmust do more than say that the statements . . . were false and misleading; they must\n\ndemonstrate with specificity why and how that is so.\u201d Rombach v. Chang, 355 F.3d\n\n164, 174 (2d Cir. 2004).\n\n To determine \u201cwhether a statement is materially misleading under Section\n\n10(b),\u201d a court asks \u201c\u2018whether the defendants\u2019 representations, taken together and in\n\n\n 17\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 27 of 72\n\n\n\n\ncontext, would have misled a reasonable investor.\u2019\u201d Id. at 172 n.7 (citation omitted).\n\nWhen evaluating these claims, a court \u201cconsiders, in addition to the complaint, and\n\nwritten instruments attached, statements incorporated by reference, and public\n\ndisclosure documents filed with the SEC.\u201d Gamm, 944 F.3d at 462.\n\n The district court correctly held Plaintiffs failed to plead any material\n\nmisstatement or omission for many, independent reasons. This Court should affirm.\n\n A. The District Court Correctly Held that None of the Eight\n Challenged Statements Were False\n\n Plaintiffs failed to allege particularized facts showing that any of the eight\n\nchallenged statements were false or misleading when made.4 According to\n\nPlaintiffs, Defendants assured investors that COVID-level demand \u201cwas not\n\nimpacted by the relaxation of COVID restrictions.\u201d OB7-8. But as the district court\n\nconcluded, Defendants never made any such promise. SPA20, 50. To the contrary,\n\nDefendants repeatedly said COVID-level demand was anomalous; expressly warned\n\ndemand would return to pre-COVID seasonal trends; and released revenue guidance\n\nreflecting that assumption. As to inventory, Plaintiffs concede Peloton disclosed its\n\n\n 4\n Plaintiffs forfeit any challenge to Statement 3 by failing to make any argument\nthat the statement was false or misleading. OB21-35; see also OB8, 11 (not\nidentifying Statement 3); JP Morgan Chase Bank v. Altos Hornos de Mex., S.A. de\nC.V., 412 F.3d 418, 428 (2d Cir. 2005) (\u201c[A]rguments not made in an appellant\u2019s\nopening brief are waived even if the appellant pursued those arguments in the district\ncourt or raised them in a reply brief.\u201d). Plaintiffs briefly say Statement 3 is not\nforward-looking (OB36), but that does not matter if it is not false or misleading.\nRegardless, the arguments for Statement 1 apply equally to Statement 3.\n\n\n 18\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 28 of 72\n\n\n\n\naccumulating inventory to investors. OB14, 27. They nonetheless argue Peloton\n\nmisled investors by hiding why there was \u201cexcess inventory,\u201d i.e., that \u201cinventory\n\naccumulated because demand had declined.\u201d OB11, 13, 27, 29. But Plaintiffs fail\n\nto explain what it means for inventory to have been in \u201cexcess\u201d or to identify with\n\nparticularity when such \u201cexcess\u201d accumulated. And Peloton told the market it was\n\nbuilding inventory to ensure short order-to-delivery times for expected future\n\ndemand\u2014expectations reflected in Peloton\u2019s revenue guidance, which it met or\n\nexceeded every Class Period quarter. Peloton\u2019s disclosures are \u201cflatly inconsistent\n\nwith an intent to mislead.\u201d Lucas v. Icahn, 616 F. App\u2019x 448, 450 (2d Cir. 2015).\n\n 1. Peloton\u2019s Revenue Guidance Reinforces Each Statement\n\n One point is critical to understand at the outset: demand for Peloton\u2019s products\n\nis reflected in its sales, and Peloton\u2019s revenue guidance is a proxy for expected\n\ndemand. Plaintiffs do not dispute that Peloton\u2019s guidance was true when issued.\n\nOB6. So understood, the challenged statements cannot be false or misleading.\n\nPlaintiffs cannot claim to have been misled about demand, when the guidance\n\ndisclosed that demand would not increase indefinitely quarter-over-quarter but\n\nwould, instead, return to pre-COVID seasonal trends\u2014predictions that proved true.\n\n During earnings calls, Peloton made clear that its revenue guidance reflects\n\nits demand expectations. For instance, when announcing Q3 guidance, Woodworth\n\nexpressly stated that Peloton\u2019s expectations of strong demand were \u201creflected in the\n\n\n\n 19\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 29 of 72\n\n\n\n\nrevised revenue guidance that we\u2019ve given for Q3.\u201d JA680. Then when announcing\n\nPeloton\u2019s FY22 guidance, Woodworth explained that this \u201cguidance reflects our\n\nexpectation of continued strong demand.\u201d JA734 (Statement 11). She further\n\nexplained that the guidance\u2019s prediction of YoY growth was based on Peloton\u2019s\n\nexpectations of \u201cstrong demand\u201d and higher \u201csales\u201d \u201cthan in fiscal 2021.\u201d JA733.\n\nThen, when later reducing this guidance, Peloton explained the revision was\n\nnecessary because of \u201creduction[s]\u201d to Peloton\u2019s \u201cdemand outlook\u201d and \u201cdemand\n\nforecast.\u201d JA790-91. And Peloton\u2019s investors understood all this. For example,\n\nwhen Peloton issued July-September 2021 guidance that was lower than the previous\n\nquarter\u2019s revenue, an analyst commented that this guidance \u201cobviously . . . implies\n\nsequential decline\u201d in the \u201ctrend in demand.\u201d JA745 (emphasis added).\n\n\n\n\n 20\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 30 of 72\n\n\n\n\n While Peloton never promised to meet the revenue guidance, it did for every\n\nquarter during the Class Period\u2014each time representing YoY growth:\n\n Period Revenue Actual Revenue Guidance YoY\n Guidance Met? Growth?\n Jan-Mar 2021 $1.1 billion $1.262 billion \u2714 \u2714\n 3Q21\n\n Apr-June 2021 $915 million $937 million \u2714 \u2714\n 4Q21\n\n July-Sept 2021 $800 million $805 million \u2714 \u2714\n 1Q22\n\n Oct-Dec 2021 $1.1-1.2 billion $1.13 billion \u2714 \u2714\n 2Q22\n\nJA677, 703, 706, 730, 734, 787, 790, 817.\n\n Faced with a quantification of expected and actual demand that directly\n\ncontravenes their preferred narrative, Plaintiffs ask the Court to ignore these metrics.\n\nPlaintiffs claim the guidance cannot be considered because it comes from\n\n\u201cdocuments Defendants provided which were not referenced in the SAC.\u201d OB25.\n\nThat is specious. Five of the eight challenged statements were made during earnings\n\ncalls, where the guidance was provided. JA677 (Statements 1-2); JA734 (Statements\n\n11, 14); JA789-90 (Statement 19).5 The district court correctly concluded that the\n\n\n 5\n Of the three remaining statements, two were in SEC forms filed the same day\nand incorporated by reference in the earnings calls, JA549 (Statement 9); JA379,\n424, 563-64 (Statement 20), and one was made at a conference in reference to a\ncomment Woodworth had made during an earnings call, JA836 (Statement 10).\n\n\n 21\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 31 of 72\n\n\n\n\nfull earnings calls\u2014including the portions discussing revenue guidance\u2014were\n\nincorporated by reference. SPA13, 28 n.1, 49; see Ark. Pub. Emps. Ret. Sys. v.\n\nBristol-Myers Squibb Co., 28 F.4th 343, 352 n.3 (2d Cir. 2022) (\u201cA document that\n\nis integral to the complaint and partially quoted therein may be incorporated by\n\nreference in full\u201d and may be considered for \u201cthe truth of their contents.\u201d); In re\n\nLiberty Tax, Inc. Sec. Litig., 828 F. App\u2019x 747, 750 & n.2 (2d Cir. 2020) (considering\n\nfull earnings call and Form 10-Ks when evaluating whether specific statement made\n\nduring call was actionable).\n\n Plaintiffs also say that because they are \u201cnot challeng[ing]\u201d the guidance as\n\n\u201cfalse,\u201d OB25, 33, the district court erred by looking beyond the cherrypicked words\n\nthey do challenge, OB26, 36. Plaintiffs are wrong. It is well-settled that, to state a\n\nSection 10(b) claim, a statement must \u201cbe \u2018mislead[ing],\u2019 evaluated not only by\n\n\u2018literal truth,\u2019 but by \u2018context and manner of presentation.\u2019\u201d Singh v. Cigna Corp.,\n\n918 F.3d 57, 63 (2d Cir. 2019) (alteration in original) (citation omitted). And this\n\nCourt routinely rejects invitations to read statements in isolation and out of context.\n\nE.g., Furher v. Ericsson LM Tel. Co., 363 F. App\u2019x 763, 765 (2d Cir. 2009); Bay\n\nHarbour Mgmt. LLC v. Carothers, 282 F. App\u2019x 71, 75-76 (2d Cir. 2008).\n\n\n\n\nPlaintiffs do not dispute that the SEC forms and conference transcript were properly\nincorporated by reference.\n\n\n 22\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 32 of 72\n\n\n\n\n Read in context, Peloton explained how it expected demand to translate into\n\nrevenue. And with the truth of that revenue guidance unchallenged, Peloton\u2019s\n\nstatements could not have misled investors. See Hassan v. Boston Beer Co., No. 23-\n\n8, 2023 WL 8110940, at *3 (2d Cir. Nov. 22, 2023) (statement that product was\n\n\u201c\u2018growing in the high double digits\u2019\u201d not actionable when \u201ctrue and grounded in\n\npublicly available data\u201d (citation omitted)); Okla. Firefighters Pension & Ret. Sys.\n\nv. Xerox Corp., 300 F. Supp. 3d 551, 580 (S.D.N.Y. 2018) (statement that\n\n\u201cprofitability is improving\u201d not misleading when defendant \u201cgave a detailed\n\nsummary\u201d of company\u2019s results and \u201cdata\u201d showed revenue increase (citation\n\nomitted)), aff\u2019d sub nom. Ark. Pub. Emps. Ret. Sys. v. Xerox Corp., 771 F. App\u2019x 51\n\n(2d Cir. 2019) (\u201csubstantially for the [same] reasons\u201d).\n\n 2. None of the Statements Were False or Misleading\n\n Reading each statement in context and time (something Plaintiffs fail to do),\n\nnone were false or misleading when made.\n\n Statements 1-2: Foley and Woodworth\u2019s February 4, 2021 Statements.\n\nWoodworth and Foley\u2019s statements about \u201cstrong,\u201d \u201crobust,\u201d and not \u201csoftening\u201d\n\ndemand were not false or misleading because there are no particularized allegations\n\nthat, by February 2021, demand had slowed. To the contrary, demand remained\n\nstrong as evidenced by Q2 results and Q3 guidance.\n\n\n\n\n 23\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 33 of 72\n\n\n\n\n During the February 4, 2021 earnings call, Woodworth announced Peloton\u2019s\n\nOctober-December 2020 (2Q21) results of $1.065 billion, exceeding expectations\n\nand eclipsing the previous quarter ($757.9 million). JA648, 676. She then\n\nannounced that Peloton\u2019s \u201ccurrent manufacturing capacity exceeds demand.\u201d\n\nJA677. An analyst sought \u201cto clarify\u201d whether this was \u201cbecause [Peloton] ramped\n\ncapacity\u201d or whether it was \u201cseeing any change to demand due to extended [order-\n\nto-delivery] times.\u201d JA680. Foley responded: \u201cWe are not seeing a softening of\n\ndemand. That is absolutely not what\u2019s happening here. We are seeing incredibly\n\nstrong organic demand, even in the face of light marketing.\u201d Id. (Statement 1). He\n\ncontinued: \u201c[I]t\u2019s absolutely not a softening of demand. That\u2019s no[t] what we\u2019re\n\nseeing. We\u2019re seeing robust demand.\u201d Id. And Woodworth \u201chighlight[ed],\n\nobviously,\u201d that Foley\u2019s comment was \u201creflected in the revised revenue guidance\n\nthat we\u2019ve given for Q3.\u201d Id. \u201c[I]n Q3 . . . we\u2019re still seeing very strong organic\n\ndemand across all geographies across all products.\u201d Id. (Statement 2).\n\n As Woodworth expressly stated, these demand statements were \u201creflected\u201d in\n\nPeloton\u2019s Q3 guidance. And that guidance predicted $1.1 billion in quarterly\n\nrevenue, reflecting Peloton\u2019s expectations of further growth, both quarter-over-\n\nquarter and year-over-year.6 JA676.\n\n\n 6\n Peloton\u2019s statements about \u201cstrong\u201d and \u201crobust\u201d demand are best understood\nin context as reflected in the unchallenged revenue guidance. If viewed instead as\n\n\n 24\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 34 of 72\n\n\n\n\n Plaintiffs claim the CWs collectively allege demand \u201chad dropped by the start\n\nof the Class Period\u201d (i.e., February 5, 2021). OB4. That is false. The CWs do not\n\neven agree on when demand allegedly began to decline. E.g., JA186 \u00b6 37 (CW3,\n\n\u201cdownturn in sales\u201d started \u201cby April 2021\u201d); JA195 \u00b6 70 (CW12, sales \u201cslowed\n\ndown by June 2021\u201d); JA198-99 \u00b6 84 (CW19, \u201cdeliveries slowed\u201d \u201cin July 2021\u201d);\n\nJA202 \u00b6 94 (CW24, \u201corders were slowing\u201d \u201cin August or September 2021\u201d). Only\n\none CW (CW2), a low-level employee who is not alleged to have insight into\n\ncompanywide demand, consistently and definitively alleged demand decreased\n\nbefore February 2021. JA185 \u00b6 34. But the other allegations in the SAC contradict\n\nthat assertion, pointing to February 2021 as the earliest demand declined. JA211\n\n\u00b6 130 (summarizing CW accounts as allegedly \u201creveal[ing]\u201d demand declines \u201cas\n\nearly as February 2021\u201d); JA212-13 \u00b6 132 (cataloguing CWs stating demand\n\ndecreased in February or March 2021); JA213 \u00b6 132 (CW28, \u201cin December 2020,\n\nPeloton was still pretty busy\u201d); JA203 \u00b6 100 (CW27, describing consistent sales\n\nfrom January-June 2021). And timing matters: the absence of particularized\n\nallegations that demand dropped substantially before February 2021 (and actual\n\nfinancial results to the contrary) is fatal to any argument that Statements 1-2 were\n\nfalse or misleading when made.\n\n\n\nstatements about demand in the abstract, they are unquantified and too vague to be\nactionable. See infra Section I.B (puffery).\n\n\n 25\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 35 of 72\n\n\n\n\n Statement 9: Peloton\u2019s May 7, 2021 Statement. Peloton\u2019s statement about\n\nan \u201cincrease in inventory levels\u201d to meet \u201ccurrent increased demand\u201d was not false\n\nor misleading because both demand and inventory undisputedly increased during the\n\nreferenced time period and were disclosed in real-time.\n\n In Peloton\u2019s Form 10-Q, Peloton explained that, in July 2020-March 2021 (the\n\nfirst three quarters of FY21), as compared to July 2019-March 2020 (the first three\n\nquarters of FY20), Peloton had \u201ca $363.7 million increase in inventory levels as we\n\nramped up supply to meet the current increased demand.\u201d JA549. Except for a few\n\nweeks, the first three quarters of FY20 occurred prior to COVID shutdowns.\n\nPlaintiffs do not (and cannot) dispute that, from July 2020-March 2021 as compared\n\nto pre-COVID, Peloton experienced \u201cincreased demand\u201d and had to \u201cramp[] up\n\nsupply to meet\u201d this demand. This \u201cincreased demand\u201d is reflected in Peloton\u2019s\n\nactual revenue for the first three quarters of FY21: $757.9 million in Q1, $1.065\n\nbillion in Q2, and $1.26 billion in Q3. And it is further reinforced by Peloton\u2019s Q3\n\nresults, which reflected 141% YoY growth. Statement 9 was indisputably true for\n\nthe period to which the statement refers.\n\n Statement 10: Woodworth\u2019s May 25, 2021 Statement. Woodworth\u2019s\n\nstatement about \u201ca ton of demand\u201d was not false or misleading because it compared\n\ndemand to two years prior.\n\n\n\n\n 26\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 36 of 72\n\n\n\n\n In reference to Woodworth\u2019s comment during the May 6 earnings call \u201cthat\n\ndemand is up 3x from where it was 2 years ago,\u201d an analyst asked, \u201cwhere bike\n\ndemand is heading into warmer weather and into strong reopening.\u201d JA836.\n\nWoodworth emphasized, \u201cwe all know that COVID was a little bit of an anomaly\n\nlast year in terms of sales.\u201d Id. She explained that April-June 2020 (4Q20) is thus\n\nnot the \u201crelevant\u201d comparator; what matters is \u201cQ4 of [FY]19.\u201d Id. Comparing\n\n\u201cwhere we were in Q4 of [FY]19 [to] where we expect to be in terms of bike in Q4\n\nof this year,\u201d \u201cbike sales or bike demand is still over 3x where it was a couple years\n\nago, which when you look at that CAGR over a 2-year period, we still see a ton of\n\ndemand.\u201d Id. It is undisputed that in May 2021, as compared to May 2019, there\n\nwas \u201ca ton of demand.\u201d See JA706.\n\n Peloton\u2019s revenue guidance further confirms that Woodworth\u2019s demand\n\nstatement used a pre-COVID comparator. During the earnings call sparking the\n\nanalyst\u2019s question, Woodworth disclosed that \u201csales have been tapering from\n\nCOVID level highs, and we\u2019re expecting a gradual return to historical seasonal sales\n\ntrends.\u201d JA706. Woodworth reiterated the business is \u201cgoing to be seasonal\u201d now,\n\nJA836, and Peloton announced a Q4 forecast less than its actual Q3 revenue\u2014\n\nacknowledging demand would not increase quarterly and would instead reflect\n\nseasonality, with lower sales in warmer months. With this context, it is clear\n\nWoodworth did not promise COVID-level demand would continue in perpetuity.\n\n\n\n 27\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 37 of 72\n\n\n\n\n Statements 11 and 14: Woodworth and Foley\u2019s August 26, 2021\n\nStatements. Woodworth and Foley\u2019s statements about \u201cstrong\u201d and \u201crobust\u201d\n\ndemand, a \u201cnormalized backlog,\u201d and a decrease in bike price were not false or\n\nmisleading because demand expectations were explicitly tied to guidance accurately\n\nquantifying demand, and none speak to levels of inventory buildup at all.\n\n During Peloton\u2019s earnings call for FY21 Q4, Woodworth announced that\n\norder-to-delivery times, which had been heightened due to supply chain issues, were\n\nback \u201cat pre-pandemic levels.\u201d JA731. As a result, Peloton \u201center[s] fiscal 2022\n\nwith a normalized backlog for our Bike portfolio and guidance reflects our\n\nexpectations of continued strong demand.\u201d JA734 (Statement 11). An analyst asked\n\nhow Peloton is \u201cthink[ing] about demand for Bike+ currently\u201d and, \u201cgiven the light\n\n[Q1] guide,\u201d whether the decrease in Bike price was \u201coffensive or defensive.\u201d\n\nJA737. Foley responded: \u201cwe feel like the demand for Bike+ and Bike is robust, and\n\nwe feel good about the entire year\u2019s forecast. The price drop with [bike] was\n\nabsolutely offensive. As we think about the competitive landscape, we think about\n\ndemocratizing access to great fitness, which is, as you know, always been in our\n\nplaybook.\u201d JA738 (Statement 14).\n\n Starting with demand, both Woodworth and Foley tethered their assertions to\n\nthe \u201cguidance\u201d or \u201cguide.\u201d JA734, 737-38. That Q1 guidance ($800 million) was\n\nlower than the previous quarter\u2019s results ($937 million), while reflecting YoY (6%)\n\n\n\n 28\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 38 of 72\n\n\n\n\nand two-year (87%) growth. JA734. Woodworth and Foley could not have been\n\ntrying \u201cto assuage the market\u2019s fears that COVID-level demand would not continue\u201d\n\n(OB23) when they disclosed an expected sequential decrease in demand.\n\nWoodworth further reminded investors that \u201cfiscal 2021 was a very unusual year,\u201d\n\nJA733, and warned that \u201cprofitability will step back in fiscal 2022,\u201d JA736.\n\nStatements 11 and 14 could not have misled inventors into believing that quarter-\n\nover-quarter demand increases would continue.\n\n As for inventory, Woodworth\u2019s statement about Peloton\u2019s \u201cnormalized\n\nbacklog\u201d referred to her announcement that the delays plaguing delivery had been\n\naddressed, and order-to-delivery times were back at \u201cpre-pandemic levels.\u201d JA731,\n\n734; see OB26 (not challenging this portion of statement). Statement 11 thus has\n\nnothing to do with inventory buildup. Statement 14 similarly says nothing about\n\ninventory buildup, much less attribute any buildup to increased demand. See\n\nKleinman v. Elan Corp., 706 F.3d 145, 155 (2d Cir. 2013) (defendant \u201cnot obligated\n\nto disclose\u201d fact when a statement, read in context, did not suggest \u201cthe contrary\u201d).\n\n Statement 19: Foley\u2019s November 4, 2021 Statement. Foley\u2019s statement\n\nabout \u201chealthy\u201d inventory was not false or misleading because it indicated only that\n\nthere was enough inventory heading into the holiday season to avoid delivery issues\n\nexperienced in prior periods.\n\n\n\n\n 29\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 39 of 72\n\n\n\n\n During an earnings call, Peloton announced its July-September 2021 results\n\n($805 million), which reflected the \u201clower engagement levels\u201d expected during the\n\nQ1 \u201csummer months,\u201d like in \u201cevery non-COVID year in [Peloton\u2019s] history.\u201d\n\nJA786-87. \u201cLooking ahead\u201d to Q2, Foley announced: \u201cwe\u2019re about to enter our\n\nbusiest time of the year. Our inventories are healthy and our logistics teams are\n\nwell equipped for the seasonally strong sales period.\u201d JA787. Foley explained that\n\nhaving \u201chealthy\u201d inventory and being \u201cwell equipped\u201d meant having \u201clow expected\n\n[order-to-delivery times] across our portfolio\u201d because \u201cdelivery is greatly\n\nappreciated during the holiday and New Year\u2019s resolution periods.\u201d Id. Reinforcing\n\nFoley\u2019s prediction of a \u201cseasonally strong sales period,\u201d Peloton issued guidance\n\npredicting $1.1-1.2 billion in Q2 revenue. JA790. In describing inventory as\n\n\u201chealthy,\u201d Foley was responding to a concern that Peloton might not have enough\n\ninventory to meet this \u201cseasonally strong\u201d demand\u2014the precise issue Peloton faced\n\nthe prior holiday season. See JA673 (supply chain issues in December 2020 \u201cforced\n\n[Peloton] to reschedule many deliveries\u201d). Foley\u2019s statement does not imply\n\nanything about Peloton having too much inventory.\n\n Statement 20: Peloton\u2019s Risk Disclosure. The risk disclosure was not false\n\nor misleading because Plaintiffs do not allege with any particularity that the warned-\n\nof risk materialized.\n\n\n\n\n 30\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 40 of 72\n\n\n\n\n In its 2021 Forms 10-Q and 10-K, Peloton warned: \u201cOur operating results\n\ncould be adversely affected if we are unable to accurately forecast consumer demand\n\nfor our products and services and adequately manage our inventory.\u201d JA379, 424,\n\n563. Specifically, it cautioned: \u201cIf we fail to accurately forecast consumer demand,\n\nwe may experience excess inventory levels or a shortage of products available for\n\nsale. Inventory levels in excess of consumer demand may result in inventory write-\n\ndowns or write-offs and the sale of excess inventory at discounted prices, which\n\nwould cause our gross margins to suffer . . . .\u201d JA564. The warned-of risk was two-\n\nfold: (i) Peloton could fail to accurately forecast demand; and (ii) if so, Peloton\n\nmight have \u201cexcess inventory\u201d leading to write-downs and other consequences. Id.\n\nPlaintiffs cannot allege that Peloton failed to accurately forecast demand, having\n\nconceded they do not challenge the revenue guidance. OB6. They argue only that\n\nPeloton characterized \u201cexcess inventory\u201d as a purely hypothetical risk when, in fact,\n\nthat risk had allegedly already materialized. OB42.\n\n But Peloton did not warn of \u201cexcess\u201d inventory in the abstract\u2014it warned of\n\nthe specific potential financial consequences of \u201cexcess\u201d inventory: write-downs,\n\nwrite-offs, sale at discounted prices, and a decrease in gross margins. And Plaintiffs\n\ndo not allege (much less with particularity) that any of those consequences\n\nmaterialized during the Class Period. See, e.g., Leadersel Innotech ESG v. Teladoc\n\nHealth, Inc., No. 23-cv-1112, 2024 WL 4274362, at *3 (2d Cir. Sept. 24, 2024)\n\n\n\n 31\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 41 of 72\n\n\n\n\n(dismissing fraud claims based on risk disclosures where complaint failed to\n\nadequately allege that risk materialized); Rombach, 355 F.3d at 173-74 (same).\n\n At the outset, Plaintiffs do not explain what it means for inventory to be in\n\n\u201cexcess.\u201d In any event, Peloton disclosed its precise inventory in dollar amounts, as\n\nwell as Peloton\u2019s precise financial condition. E.g., JA335 ($244.5 million in net\n\ninventory in June 2020; $552.8 million in December 2020); JA517 ($614.2 million\n\nin net inventory in March 2021). These \u201cfulsome disclosures\u201d permitted investors\n\n\u201cto track, quarter by quarter, whether revenue was adversely impacted\u201d by the\n\nwarned-of risk. In re UiPath, Inc. Sec. Litig., -- F. Supp. 3d --, 2024 WL 4667269,\n\nat *11 (S.D.N.Y. Nov. 4, 2024) (warnings about adverse conditions that could affect\n\nbusiness\u2019s results not misleading where defendant made \u201crobust disclosures\u201d about\n\nfinancial condition). Statement 20 was not misleading.\n\n 3. The CW Allegations Do Not Contradict the Challenged\n Statements\n\n Plaintiffs do not take the required statement-by-statement approach and\n\nentirely ignore the district court\u2019s \u201cmost important[]\u201d holding: that \u201cDefendants\n\nexplicitly told the public that demand for Peloton\u2019s products would be returning to\n\npre-COVID levels after the surge in demand it had seen during COVID.\u201d SPA50;\n\nsee SPA20. They do not dispute that Peloton\u2019s demand during the Class Period was\n\nstrong compared to pre-COVID and cannot dispute that Peloton disclosed that\n\ndemand would return to pre-COVID seasonal trends, as further reinforced by\n\n\n 32\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 42 of 72\n\n\n\n\nPeloton\u2019s revenue guidance. E.g., JA704, 706, 733, 736, 745, 747, 801, 836. And\n\nthey concede Peloton disclosed its inventory growth. Plaintiffs\u2019 limited\n\ncounterarguments focus on the CWs, which they say the district court\n\n\u201cdiscount[ed].\u201d OB6. But the CWs do not contradict the challenged statements.\n\n Allegations of Sale and Delivery Slowdowns. According to Plaintiffs, the\n\nCWs alleged \u201ca drastic slowdown in sales beginning in early 2021,\u201d as well as\n\n\u201cfewer deliveries.\u201d OB9. By using \u201csales\u201d as a proxy for demand, Plaintiffs concede\n\ndemand is inextricably linked with revenue and thus the unchallenged revenue\n\nguidance. In any case, the CWs (1-3, 7-8, 10-12, 14-24, 27-30) describe sales or\n\ndeliveries decreasing from COVID highs; none compare demand during the Class\n\nPeriod to pre-COVID seasonal demand, the focus of the challenged statements. See\n\nJA183-84 \u00b6 29; JA185 \u00b6 35; JA186 \u00b6 37; JA189 \u00b6 49; JA190 \u00b6 52; JA192 \u00b6 60;\n\nJA194 \u00b6 67; JA195 \u00b6 70; JA196 \u00b6 75; JA197 \u00b6\u00b6 78; JA198-99 \u00b6\u00b6 82-84, 86; JA200\n\n\u00b6\u00b6 87-88; JA201 \u00b6 90; JA202 \u00b6\u00b6 94, 96; JA203-04 \u00b6\u00b6 100, 102; JA205 \u00b6\u00b6 104-05.7\n\n\n\n\n 7\n Contrary to Plaintiffs\u2019 assertion that CW3 compared demand to \u201cp[re]-\nCOVID levels,\u201d OB14, CW3 alleged a \u201cdownturn in sales,\u201d as compared to\n\u201cthroughout 2020,\u201d beginning April 2021, JA186 \u00b6 37. Defendants disclosed this\nexpected decreased demand in April 2021, issuing revenue guidance for April-June\n2021 that was $300 million less than its previous quarter\u2019s results. CW3\u2019s limited\nvisibility into demand is evident by CW3\u2019s allegation that, \u201cbased on the number of\ndeliveries going out from [a small sampling of] warehouses,\u201d \u201cit was obvious that\nPeloton was not going to surpass its 2020 sales.\u201d Id. This allegation is contradicted\nby Peloton\u2019s actual FY21 results, reflecting 120% YoY growth.\n\n\n 33\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 43 of 72\n\n\n\n\nSuch allegations are entirely consistent with Peloton\u2019s disclosures and guidance,\n\nwhich predicted quarter-over-quarter decreases in demand heading into the summer,\n\ndue to a return to seasonality, from January-March 2021 ($1.1 million), to April-\n\nJune 2021 ($915 million), to July-September 2021 ($800 million). See supra at 21.\n\n Relying on Teladoc, Plaintiffs argue that the \u201cnumber\u201d of CWs is sufficient.\n\nOB32-35. That is not what Teladoc says: the CWs must allege particularized facts\n\nthat contradict the challenged statements. There, contrary to defendants\u2019\n\nrepresentations that the organization was \u201c\u2018fully integrated,\u2019\u201d CWs \u201cprovided\n\ndetails\u201d and \u201cspecific examples\u201d that those statements were not true, and their\n\nallegations were consistent with each other, \u201cemails[,] and other documentation.\u201d\n\n2024 WL 4274362, at *4 (citation omitted). Here, none of the CWs contradicted the\n\nchallenged statements. That should be the end of the matter. Moreover, unlike in\n\nTeladoc, where the CWs were responsible for overseeing the very conduct\n\ndefendants allegedly misrepresented (integration), none of the CWs here had any\n\ninvolvement in assessing Peloton\u2019s overall demand. And they offer inconsistent\n\nallegations about demand during the Class Period. Supra at 25 (CW allegations\n\ninconsistent regarding when slowdowns began).\n\n Allegations of Missed Sales Quotas. Plaintiffs rely heavily on \u201cmissed sales\n\nquotas\u201d (OB9-10, 30-31), but again, the CW allegations are inconsistent\u2014and none\n\ncontradict the challenged statements. The CWs do not even agree that sales quotas\n\n\n\n 34\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 44 of 72\n\n\n\n\nwere missed. E.g., JA205 \u00b6 105 (CW30, salespeople were \u201cmaking their goals,\u201d\n\nalbeit \u201cbarely\u201d). They also disagree on the timing of any missed quotas and whether\n\nthe quotas had to accordingly be adjusted. Compare JA185 \u00b6 34 (CW2, employees\n\nstarted \u201cmissing sales goals\u201d in \u201cDecember 2020\u201d), with JA192 \u00b6 60 (CW10, sales\n\n\u201cdropped off\u201d \u201cby the summer of 2021\u201d); compare JA200 \u00b6 87 (CW21, \u201csales quotas\n\ndid not decrease\u201d from COVID highs), with JA200 \u00b6 88 (CW22, quotas did\n\ndecrease). These inconsistencies highlight the CWs\u2019 limited visibility into the\n\ndemand of the entire company. As CW20 explained, sales managers (who reported\n\nto location managers, then regional managers, then management) received monthly\n\nreports used to \u201cset goals for the upcoming months\u201d for \u201ctheir location\u201d\u2014not the\n\ncompany as a whole. JA199 \u00b6 86; see also JA185 \u00b6 35 (CW2, each account\n\nexecutive received reports about own sales).\n\n And regardless, sales quotas are not metrics on demand performance but are\n\ninternal, aspirational \u201ctargets\u201d typically \u201cset high\u201d to \u201cencourage growth.\u201d In re\n\nSmith & Wesson Holding Corp. Sec. Litig., 836 F. Supp. 2d 1, 10 (D. Mass. 2011),\n\naff\u2019d, 669 F.3d 68 (1st Cir. 2012). Even around the 2020 holiday season, when\n\nPlaintiffs claim the \u201cpandemic was a boon for Peloton,\u201d JA206 \u00b6 110, employees\n\nwere achieving only 80-85% of their sales goal, according to CW10, JA192 \u00b6 60.\n\nPlus, the CWs are all from the inside sales or showroom teams, JA408; none are\n\nalleged to have visibility into online sales, which, during the Class Period, was\n\n\n\n 35\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 45 of 72\n\n\n\n\nresponsible for \u201ca majority of [Peloton\u2019s] units sold,\u201d JA424.8 That some individual\n\nemployees were missing different sales goals at different times\u2014in certain of\n\nPeloton\u2019s sales channels and in certain locations\u2014does not give rise to an inference\n\nthat the statements about company-wide demand were false or misleading.\n\n Plaintiffs argue that CWs can, in certain circumstances, establish company-\n\nwide practices (OB31-32), but their cases are readily distinguishable. In New Jersey\n\nCarpenters Health Fund v. Royal Bank of Scotland Group, PLC, a Securities Act\n\ncase subject to the lower Rule 8 standard, CWs directly involved in applying\n\ndefendant\u2019s underwriting guidelines uniformly and consistently described\n\n\u201ccompany-wide\u201d pressure to ignore the published guidelines that were alleged to be\n\nmisleading. 709 F.3d 109, 121 n.5, 124 (2d Cir. 2013). In In re SolarEdge\n\nTechnologies, Inc. Securities Litigation, the CW allegations \u201call corroborate[d] one\n\nanother[]\u201d and were \u201csufficient to infer a company-wide practice of channel\n\nstaffing\u201d because the high-level CWs, such as the Senior Director of National Sales\n\nand Director of Customer Support, \u201cinteracted directly\u201d with defendants and had\n\n\u201c\u2018broader knowledge\u2019 of the company\u2019s practices.\u201d No. 23-cv-9748, 2024 WL\n\n4979296, at *8-9 (S.D.N.Y. Dec. 4, 2024) (citation omitted). The low-level CWs\u2019\n\n\n\n 8\n Plaintiffs allege that \u201cInside Sales and Outside Sales were [Peloton\u2019s] primary\nsales channels,\u201d OB10 n.5, but this assertion is contradicted by Peloton\u2019s SEC\nForms, reporting that online sales were the \u201cmajority of [Peloton\u2019s] units sold,\u201d\nJA424, which Plaintiffs do not allege were false.\n\n\n 36\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 46 of 72\n\n\n\n\ninconsistent allegations here undermine any suggestion their experiences were\n\ncompany-wide rather than unique to their individual location or sales channel.\n\n Allegations of Increasing Inventory. Plaintiffs cite CWs to say that Peloton\n\nwas building inventory at a rate that \u201cfar outpaced demand,\u201d OB12-13, but as\n\nPlaintiffs concede, Peloton disclosed its plans to build inventory, OB14, 17; JA29\n\n\u00b6 9; JA64 \u00b6 129 (admitting Defendants disclosed that purpose was to decrease order-\n\nto-delivery times). The CW allegations are thus not inconsistent with the challenged\n\nstatements. Compare OB12-13 (CWs 13, 11, 8, 1 alleging that inventory\n\naccumulated in \u201cChristmastime in 2020,\u201d \u201cApril or May of 2021,\u201d \u201cJune of 2021,\u201d\n\nand \u201cAugust 2021,\u201d respectively), with JA677 (announcing, in February 2021, that\n\n\u201ccurrent manufacturing capacity exceeds demand, a trend that will accelerate\u201d);\n\nJA517 (disclosing inventory increase in May 2021); JA734-35 (similar in August\n\n2021). And, again, the CWs do not agree on when inventory allegedly became\n\n\u201cexcessive\u201d\u2014offering testimony ranging from \u201cChristmastime in 2020,\u201d JA195\n\n\u00b6 71, to \u201csummer of 2021,\u201d JA202 \u00b6 94.\n\n Plaintiffs\u2019 reliance on Employees\u2019 Retirement System of the Virgin Islands v.\n\nBlanford, 794 F.3d 297 (2d Cir. 2015), is thus inapposite. There, statements that\n\ndefendants were \u201c\u2018not building any excess inventory\u2019\u201d were directly contradicted by\n\nthe consistent allegations of CWs, including several who reported directly to\n\ndefendants, that inventory was frequently \u201cthrow[n] away,\u201d \u201cstored in [employees\u2019]\n\n\n\n 37\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 47 of 72\n\n\n\n\nwork spaces,\u201d and smuggled \u201conto trucks or hidden behind black plastic in roped off\n\nareas during the quarterly auditor visits.\u201d Id. at 306-07. Peloton disclosed its\n\nexpectations that demand would return to seasonal trends, reinforced by revenue\n\nguidance that was met every quarter. And it disclosed its plans to build inventory to\n\nreduce order-to-delivery times from the beginning of the Class Period through\n\nAugust 2021 and to prepare for a busy 2021 holiday season from August 2021\n\nthrough the end of the Class Period. It also quantified its precise inventory increase,\n\nin dollar amount, in its SEC forms. Such disclosures are the antithesis of fraud.\n\n ***\n\n In sum, none of the challenged statements were false or misleading because\n\nthey are not contradicted by concrete and particularized allegations, as required by\n\nthe PSLRA. In a series of string cites, Plaintiffs invoke cases where demand or\n\ninventory statements were deemed actionable. See OB5, 24, 27-28, 31-33. But, in\n\neach, defendants\u2019 statements were contradicted by concrete and particularized\n\nallegations and so stand in marked contrast to the challenged statements here. E.g.,\n\nIWA Forest Indus. Pension Plan v. Textron Inc., 14 F.4th 141, 146-47 (2d Cir. 2001)\n\n(statements that defendants had \u201c\u2018clear[ed] older inventory\u2019\u201d actionable in reference\n\nto non-disclosed 2017 inventory buildup, but not actionable in reference to 2016\n\ninventory, which defendants had disclosed (emphasis and citation omitted)); New\n\nOrleans Emps. Ret. Sys. v. Celestica, Inc., 455 F. App\u2019x 10, 13-15 (2d Cir. 2011)\n\n\n\n 38\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 48 of 72\n\n\n\n\n(defendants stated \u201cany inventory problems were aberrations\u201d and omitted inventory\n\nas a contributor to company cost, when they were \u201cdirectly\u201d and \u201cspecifically\n\ninformed\u201d that \u201copposite was true\u201d); Novak v. Kasaks, 216 F.3d 300, 304 (2d Cir.\n\n2000) (defendants stated \u201cno major or unusual markdowns were anticipated\u201d when\n\nthey deliberately ignored own policy of marking down obsolete and worthless\n\ninventory, resulting in overstated financials); In re Finisar Corp. Sec. Litig., 646 F.\n\nApp\u2019x 506, 507 (9th Cir. 2016) (\u201cCEO denied having knowledge of inventory build-\n\nup\u201d disclosed to him during annual contract negotiations).9\n\n This Court (and others) routinely affirm dismissals when, as here, challenged\n\nstatements are not contradicted by concrete and particularized factual allegations.\n\nFor example, in Hassan v. Boston Beer Co., a case concerning post-COVID demand\n\nfor hard seltzer, this Court concluded that defendants\u2019 April 2021 statement that the\n\n\n\n\n 9\n The plethora of nonbinding district court cases cited are unpersuasive for the\nsame reason. See Weston v. DocuSign, Inc., 669 F. Supp. 3d 849, 866-67, 879 (N.D.\nCal. 2023) (statements guaranteeing that demand \u201cwill persist\u201d misleading when\ndemand \u201cwaned,\u201d as illustrated by missed sales guidance); Sheet Metal Workers Loc.\n32 Pension Fund v. Terex Corp., No. 9-cv-2083, 2018 WL 1587457, at *7 (D. Conn.\nMar. 31, 2018) (financial statements misleading, having been \u201cinflated by the use of\nimproper accounting methods\u201d); Simon v. Am. Power Conversion Corp., 945 F.\nSupp. 416, 429 (D.R.I. 1996) (failure to report product malfunction misleading,\nresulting in product returns, suspension, and buildup). And Plaintiffs\nmischaracterize Nursing Home Pension Fund, Local 144 v. Oracle Corp., where the\nquestion was not whether a statement about \u201crobust demand\u201d was actionable, OB24,\nbut whether an analyst\u2019s characterization of defendant\u2019s demand was fairly\nattributable to defendant, 380 F.3d 1226, 1234 (9th Cir. 2004).\n\n\n 39\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 49 of 72\n\n\n\n\nhard seltzer industry will \u201cnow start to reaccelerate\u201d was not misleading. 2023 WL\n\n8110940, at *3. The Court rejected plaintiff\u2019s argument that the use of \u201cnow\u201d meant\n\n\u201cimmediate reacceleration\u201d because the statement was in response to a question\n\nabout \u201cfull year growth.\u201d Id. at *2 (citation omitted). And it dismissed plaintiff\u2019s\n\nreliance on defendants\u2019 alleged \u201c\u2018expect[ation] [of] a slowdown in May and June,\u2019\u201d\n\nincluding a CW alleging the same, explaining that any such expectation \u201cd[id] not\n\ncontradict\u201d the assertion that \u201cthe category would reaccelerate over the course of\n\n2021.\u201d Id. (citation omitted).\n\n Similarly, in In re Lululemon Securities Litigation, this Court affirmed the\n\nconclusion that statements about defendants\u2019 garment \u201cquality\u201d being the \u201c\u2018highest\n\nin the industry\u2019\u201d were nonactionable, despite several product recalls, where\n\ndefendants disclosed that \u201c\u2018sometimes products don\u2019t quite turn out the way we\n\nimagined.\u2019\u201d 14 F. Supp. 3d 553, 577-79 (S.D.N.Y. 2014) (citations omitted), aff\u2019d,\n\n604 F. App\u2019x 62 (2d Cir. 2015) (for \u201csubstantially\u201d same reasons). Because \u201cthe\n\ncontext\u201d of defendants\u2019 statements about quality \u201creveal[ed] their intended\n\nlimitations,\u201d the court rejected plaintiffs\u2019 reliance on eleven CWs, who failed to\n\nprovide allegations contradicting defendants\u2019 statements. Id. at 579-81, 563 n.2.\n\n And finally, in Kleinman v. Elan Corp., this Court found nonactionable a press\n\nrelease stating, \u201cEncouraging Top-line Results,\u201d where the full document disclosed\n\nthat defendants had achieved \u201cstatistically significant results\u201d in a subgroup of the\n\n\n\n 40\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 50 of 72\n\n\n\n\nstudy population, but that \u201cthe \u2018overall study population\u2019 did not attain statistically\n\nsignificant results.\u201d 706 F.3d at 153. \u201c[G]iven the context of the statements,\u201d the\n\nCourt explained, \u201cno reasonable investor could have understood the headline to\n\nmean anything other than the positive subgroup.\u201d Id.\n\n So too here. When read in context, each statement was true and grounded in\n\nPeloton\u2019s revenue guidance. This Court has never found an actionable misstatement\n\non similar facts.\n\n B. Six Statements Are Nonactionable \u201cPuffery\u201d\n\n Expressions of \u201cpuffery\u201d do not give rise to securities violations because they\n\nare \u201ctoo general to cause a reasonable investor to rely upon.\u201d ECA, Local 134 IBEW\n\nJoint Pension Tr. of Chi. v. JP Morgan Chase Co., 553 F.3d 187, 206 (2d Cir. 2009).\n\n\u201c\u2018People in charge of an enterprise are not required to take a gloomy, fearful or\n\ndefeatist view of the future\u2019\u201d and \u201cmust be permitted to operate with a hopeful\n\noutlook.\u201d Rombach, 355 F.3d at 174 (citation omitted).\n\n Statements 11 and 14 describe, respectively, Woodworth\u2019s \u201cexpectation\u201d and\n\nFoley\u2019s \u201cfeel[ing]\u201d about future strong demand. Such \u201cpositive forward-looking\n\nstatements\u201d are not actionable. Steamfitters Loc. 449 Pension Plan v. AT&T Inc.,\n\nNo. 21-2698, 2022 WL 17587853, at *2 (2d Cir. Dec. 13, 2022) (\u201cexpect[ations]\u201d\n\nabout \u201cmargin levels\u201d are puffery); Hassan, 2023 WL 8110940, at *2-3 (defendant\n\n\u201cfeel[ing] very optimistic\u201d and \u201cconfident\u201d about growth are puffery). Statement\n\n\n\n 41\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 51 of 72\n\n\n\n\n19, about inventory being \u201chealthy,\u201d is also puffery. It is not specific, measurable,\n\nor capable of objective verification; that is, Plaintiffs \u201ccannot point to any objective,\n\nblack-and-white standards by which to verify\u201d it. In re Philip Morris Int\u2019l Inc. Sec.\n\nLitig., 89 F.4th 408, 418 (2d Cir. 2023).\n\n As for Statements 1, 2, and 10 about demand being \u201cstrong\u201d and \u201crobust,\u201d\n\n\u201c[n]o reasonable investor would place \u2018substantial reliance\u2019\u201d on these\n\n\u201c\u2018generalizations regarding a company\u2019s health or the strength of a company\u2019s\n\nproducts.\u2019\u201d Steamfitters, 2022 WL 17587853, at *2 (citation omitted). Demand, of\n\ncourse, can be quantifiable. The challenged statements here, for example, were\n\naccompanied by concrete data about demand\u2014including, most notably, the revenue\n\nguidance. Because Plaintiffs do not challenge the revenue guidance as false, demand\n\nstatements consistent with the revenue guidance cannot be false. See supra Section\n\nI.A.1-2. But if Plaintiffs insist that their chosen words should be viewed in isolation,\n\nthey are textbook puffery.\n\n Statements 1-2, 10-11, 14, and 19 are similar to the types of statements that\n\ncourts routinely deem nonactionable puffery. See, e.g., Finisar Corp., 646 F. App\u2019x\n\nat 507 n.1 (\u201cstatements about the strength of demand\u201d are puffery); Xerox Corp.,\n\n300 F. Supp. 3d at 569 (statements that \u201cvaguely and enthusiastically described\n\n[defendant\u2019s] performance [and] expectations of business success\u201d are puffery); City\n\nof Monroe Emps. Ret. Sys. v. Bridgestone Corp., 399 F.3d 651, 671 (6th Cir. 2005)\n\n\n\n 42\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 52 of 72\n\n\n\n\n(\u201cunprecedented market demand\u201d); San Leandro Emergency Med. Grp. Profit\n\nSharing Plan v. Philip Morris Cos., 75 F.3d 801, 811 (2d Cir. 1996) (\u201cincome\n\ngrowth consistent with its historically superior performance\u201d); Freedman v. Value\n\nHealth, Inc., 34 F. App\u2019x 408, 411 (2d Cir. 2002) (\u201cthriving\u201d business); IBEW Loc.\n\nUnion No. 58 Pension Tr. Fund & Annuity Fund v. Royal Bank of Scotland Grp.,\n\nPLC, 783 F.3d 383, 392 (2d Cir. 2015) (integration \u201coff to a promising start\u201d);\n\nTeladoc, 2024 WL 4274362, at *4 (integration \u201con track\u201d).\n\n C. The Same Six Statements Are Nonactionable Forward-Looking\n Statements\n\n Statements 1-2, 10-11, 14, 19 are also protected under the PSLRA \u201csafe\n\nharbor,\u201d which exempts from liability certain \u201cforward-looking statements.\u201d 15\n\nU.S.C. \u00a7 78u-5(c). A \u201cforward-looking statement\u201d is broadly defined to include\n\nstatements about \u201cprojection of revenues,\u201d \u201cfuture economic performance,\u201d \u201cplans\n\nand objectives of management for future operations,\u201d as well as any \u201cassumptions\n\nunderlying or relating to any\u201d such statements. Id. \u00a7 78u-5(i)(1)(A)-(D). Forward-\n\nlooking statements are not actionable when they are either (1) \u201caccompanied by\n\nmeaningful cautionary statements,\u201d or (2) not made \u201cwith actual knowledge\u201d of\n\nfalsity. Id. \u00a7 78u-5(c)(1)(A)-(B).\n\n 1. The Statements Are Forward-Looking\n\n Each of Statements 1-2, 10-11, 14, and 19 is a forward-looking statement\n\nabout future expectations, performance, or plans. Plaintiffs say the use of \u201cpresent\n\n\n 43\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 53 of 72\n\n\n\n\ntense\u201d is determinative, OB23, 36, but once again, ignore context, see Hassan, 2023\n\nWL 8110940, at *2 (rejecting argument that \u201cuse of \u2018now\u2019 meant that [defendant]\n\nprojected immediate [action] [a]s belied by the broader context of [the] statement\u201d).\n\n Statements 1 and 2 should be read together, as collective answers to the same\n\nquestion about the effect heightened order-to-delivery times might have on Peloton\u2019s\n\ndemand. Foley responded: \u201c[w]e are not seeing a softening of demand.\u201d JA680\n\n(Statement 1). Woodworth \u201chighlight[ed]\u201d that Foley\u2019s statement was \u201creflected in\n\nthe revised [Q3 and Q4] revenue guidance,\u201d and added that \u201cin Q3,\u201d \u201cwe\u2019re still\n\nseeing very strong organic demand,\u201d id. (Statement 2), reinforcing that these\n\nstatements about \u201cstrong\u201d and \u201crobust\u201d demand were tied to and reflected in their\n\nprojections about future Q3 and Q4 demand.\n\n Statement 10, Woodworth\u2019s response to a question in May 2021 about\n\ndemand \u201cheading into warmer weather and into strong reopening,\u201d is also forward-\n\nlooking. JA836 (emphasis added). She answers \u201cwe still see a ton of demand,\u201d then\n\ndescribes \u201cwhere we expect to be in terms of bike in Q4 of this year.\u201d Id. Whether\n\nthis statement about Q4 demand was correct could not \u201cbe ascertained until\u201d later,\n\nmaking it forward-looking. Philip Morris, 89 F.4th at 428 (citation omitted).10\n\n\n\n 10\n Plaintiffs\u2019 sole reference to Statement 3 occurs in their discussion of forward-\nlooking statements. OB36. To the extent preserved, that statement about demand,\nin response to a question about \u201cnext year,\u201d is forward-looking for the same reason\nas Statement 10.\n\n\n 44\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 54 of 72\n\n\n\n\n Statements 11, 14, and 19 are also forward-looking future predictions.\n\nStatements 11 and 14\u2014made in August 2021, the beginning of Peloton\u2019s fiscal\n\nyear\u2014reflect, respectively, Woodworth\u2019s \u201cexpectation of continued strong demand\u201d\n\nin the upcoming \u201cfiscal [year] 2022,\u201d JA734, and Foley\u2019s optimism \u201cabout the entire\n\nyear\u2019s forecast,\u201d JA738. Both refer to predictions about future FY22 demand. See\n\nPhilip Morris, 89 F.4th at 428 (\u201cexpected\u201d typically forward-looking). And\n\nStatement 19 \u201c[l]ook[s] ahead,\u201d on November 4, 2021, to Peloton\u2019s peak sales\n\nperiod\u2014\u201cthe holiday and New Year\u2019s resolution periods\u201d\u2014and confirms that\n\nPeloton is \u201cwell equipped\u201d for this upcoming \u201cseasonally strong sales period\u201d\n\nbecause its \u201cinventories are healthy.\u201d JA787. Each of these statements uses\n\n\u201cquintessentially forward-looking language.\u201d Philip Morris, 89 F.4th at 428; see\n\nalso Wochos v. Tesla, Inc., 985 F.3d 1180, 1191 (9th Cir. 2021) (\u201cassumption[]\u201d\n\nunderlying future projection protected).\n\n 2. The Forward-Looking Statements Fall Under the PSLRA Safe\n Harbor\n\n Forward-looking statements are nonactionable if they are either accompanied\n\nby meaningful cautionary language or not made with actual knowledge of falsity.\n\nSlayton v. Am. Express Co., 604 F.3d 758, 766 (2d Cir. 2010). Plaintiffs do not argue\n\nPeloton had \u201cactual knowledge\u201d of falsity, a higher standard than scienter. Id. at\n\n773. Because the PSLRA safe harbor is framed in the \u201cdisjunctive,\u201d id. at 766, that\n\n\n\n\n 45\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 55 of 72\n\n\n\n\nfailure is dispositive: each forward-looking statement is protected by the safe harbor\n\nregardless whether there are sufficient cautionary statements.\n\n Even so, the forward-looking statements were accompanied by extensive\n\nwarnings specifically tailored to the risks present in Peloton\u2019s business. Each\n\nearnings call began with the reminder: \u201c[a]ctual results may differ materially from\n\nthose contained in or implied by these forward-looking statements due to the risks\n\nand uncertainties associated with our business.\u201d JA672 (Statements 1-3); JA726-27\n\n(Statements 11, 14); JA783 (Statement 19). And listeners were directed to Peloton\u2019s\n\n\u201cSEC filings\u201d for \u201ca discussion of the material risks and other important factors that\n\ncould impact [its] actual results.\u201d Id.\n\n Peloton\u2019s SEC filings, in turn, discussed in detail the principal risks to\n\nPeloton\u2019s business. See supra at 6-12. Most notably, they provided extensive\n\ndiscussion of COVID-specific risks, including the risks Plaintiffs allege\n\nmaterialized. Peloton warned, for example, that \u201cit remains uncertain how the\n\nCOVID-19 pandemic will impact consumer demand for our products and services.\u201d\n\nJA415. It recognized that demand \u201cfluctuated based on developments surrounding\n\nCOVID-19,\u201d such as \u201cthe duration of the spread of the outbreak (including the\n\npotential impact of variants of the virus) and related stay-at-home orders\u201d and\n\n\u201ccompanies\u2019 remote work policies.\u201d JA416. It further acknowledged that demand\n\nhad been unusually \u201chigh due to government shelter-in-place orders and other stay\n\n\n\n 46\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 56 of 72\n\n\n\n\nat home trends,\u201d JA425, and expressly cautioned \u201cthe removal of lockdowns may\n\ncause consumers to go back to their pre-COVID routines,\u201d JA416.\n\n Peloton also regularly updated its disclosures as it gained more information,\n\nfurther reinforcing the tailored nature of the cautionary language. Slayton, 604 F.3d\n\nat 773. For example, in its Forms 10-Q for FY21 Q2 and Q3, Peloton stated that\n\n\u201c[o]ver time, we expect the seasonality of our business to return.\u201d JA375; JA560.\n\nIn its Form 10-K for FY21 Q4, Peloton altered this disclosure to state: \u201c[a]s the\n\npandemic receded in recent months, we experienced a return to pre-pandemic\n\nseasonal trends.\u201d JA410.\n\n And during each earnings call, as well as the May 2021 conference,\n\nDefendants repeatedly emphasized that the COVID situation was changing rapidly,\n\nwas highly uncertain, and could not be predicted. E.g., JA691 (Statements 1-2);\n\nJA731 (Statements 11, 14); JA784 (Statement 19); JA836 (Statement 10).\n\nDefendants also expressly acknowledged that COVID-level demand was \u201cunusual\u201d\n\nand would \u201cstep back in fiscal year 2022,\u201d JA736, and \u201creturn to normal seasonal\n\npatterns,\u201d JA733 (August 2021 earnings call); see JA706 (May 2021 earnings call);\n\nJA801 (November 2021 earnings call); JA836 (May 2021 analyst call). Such\n\nwarnings are more than sufficient, especially since any \u201creasonable investor\u201d during\n\nthe Class Period would have understood, and experienced, the unpredictability\n\nassociated with COVID. Halperin v. eBanker USA.com, Inc., 295 F.3d 352, 360 (2d\n\n\n\n 47\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 57 of 72\n\n\n\n\nCir. 2002) (\u201ccautionary language [that] addresse[d] the relevant risk directly\u201d was\n\nsufficient); Rombach, 355 F.3d at 176 (cautionary statements sufficient, even when\n\nsome were \u201cformulaic\u201d).\n\n Plaintiffs respond that Peloton offered only \u201cboilerplate\u201d disclosures.\n\nOB38-40. But the detailed disclosures listed above are anything but boilerplate.\n\nAnd Plaintiffs\u2019 conclusory assertion that the disclosures are insufficient because they\n\n\u201cdid not specifically address\u201d the undisclosed risk or that warned-of events\n\n\u201calready materialized\u201d (OB38-39) lacks merit for reasons discussed. See supra at\n\n30-32.\n\n D. Three Statements Are Also Nonactionable Opinions\n\n Statements 10, 11, and 14 are each opinions and not \u201cuntrue statement[s] of\n\nmaterial fact.\u201d Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension\n\nFund, 575 U.S. 175, 186 (2015) (citation omitted). An opinion can be actionable\n\nonly if \u201c\u2018the speaker did not hold the belief she professed,\u2019\u201d \u201cthe supporting facts\n\nshe supplied were untrue,\u201d or \u201cthe speaker omits information whose omission makes\n\nthe statement misleading to a reasonable investor.\u201d Tongue v. Sanofi, 816 F.3d 199,\n\n210 (2d Cir. 2016) (citation omitted).\n\n Statements 10 and 11 reflect Woodworth\u2019s \u201cexpect[ations],\u201d or beliefs, about\n\nfuture bike demand; and Statement 14 offers Foley\u2019s \u201cfeel[ings]\u201d about future bike\n\ndemand and the FY22 forecast. These statements do not \u201cexpress[] certainty\u201d and,\n\n\n\n 48\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 58 of 72\n\n\n\n\nas such, are statements of opinion. Omnicare, 575 U.S. at 183; see Tongue, 816 F.3d\n\nat 210-11 (\u201cexpectation[s]\u201d or feeling \u201cpleased with the results\u201d are opinions).\n\n Plaintiffs do not argue otherwise. They instead assert\u2014in a single conclusory\n\nsentence and without reference to any specific statement\u2014that any opinion\n\nstatement is actionable because Defendants \u201comitted conflicting material facts about\n\nPeloton\u2019s demand and inventory levels.\u201d OB47. But for an opinion to be actionable,\n\n\u201cthe omitted facts must \u2018conflict with what a reasonable investor would take from\n\nthe statement itself.\u2019\u201d Tongue, 816 F.3d at 211 (citation omitted). Plaintiffs identify\n\nno such conflict. See supra Section I.A.2.\n\nII. IN THE ALTERNATIVE, PLAINTIFFS HAVE FAILED TO PLEAD A\n STRONG INFERENCE OF SCIENTER\n\n Because Plaintiffs have failed to allege an actionable misstatement or\n\nomission, the question of scienter need not be decided. But Plaintiffs\u2019 failure to\n\nplead the requisite strong inference offers an alternative ground to affirm. See CBF\n\nInd\u00fastria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58, 78-79 (2d Cir. 2017).\n\n The PSLRA requires plaintiffs to \u201cstate with particularity facts giving rise to\n\na strong inference that the defendant acted with,\u201d 15 U.S.C. \u00a7 78u-4(b)(2)(a), an\n\n\u201cintent to deceive, manipulate or defraud,\u201d Tellabs, Inc. v. Makor Issues & Rts., Ltd.,\n\n551 U.S. 308, 319 (2007) (citation omitted). A \u201cstrong\u201d inference is one that is\n\n\u201cmore than merely plausible or reasonable\u2014it must be cogent and at least as\n\ncompelling as any opposing inference of nonfraudulent intent.\u201d Id. at 314. Plaintiffs\n\n\n 49\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 59 of 72\n\n\n\n\nbear the burden of alleging facts (a) \u201cto show that defendants had both motive and\n\nopportunity to commit fraud,\u201d or (b) \u201cthat constitute strong circumstantial evidence\n\nof conscious misbehavior or recklessness.\u201d Kalnit v. Eichler, 264 F.3d 131, 138 (2d\n\nCir. 2001) (citation omitted). Plaintiffs fail to sufficiently allege either.\n\n A. Plaintiffs Fail to Allege Motive and Opportunity\n\n \u201c[T]o raise a strong inference of scienter through \u2018motive and opportunity\u2019 to\n\ndefraud, Plaintiffs must allege that [Defendants] \u2018benefitted in some concrete and\n\npersonal way from the purported fraud.\u2019\u201d ECA, 553 F.3d at 198 (citation omitted).\n\nPlaintiffs\u2019 motive theory is based solely on an allegation that Foley and Woodworth\n\n\u201crealized tremendous profits on sales of their Peloton stock during the Class Period.\u201d\n\nOB53 (citation omitted). But insider stock sales cannot suggest motive unless they\n\nare \u201cunusual.\u201d Ark. Pub. Emps., 28 F.4th at 355 (citation omitted). Plaintiffs allege\n\nnothing unusual here.\n\n As Plaintiffs admit, Foley and Woodworth\u2019s stock sales were made pursuant\n\nto 10b5-1 trading plans. JA260 \u00b6 247; JA272 \u00b6 295; JA273 \u00b6 297. Such trades\n\n\u201c[can]not be timed suspiciously,\u201d and do not give rise to scienter, unless the plan\n\nwas entered into \u201cduring the putative class period\u201d and the complaint \u201c\u2018allege[s] that\n\nthe purpose of the plan was to take advantage of an inflated stock price.\u2019\u201d Ark. Pub.\n\nEmps., 28 F.4th at 355-56 & n.4 (citation omitted); cf. 17 C.F.R. \u00a7 240.10b5-1(c)(1).\n\nPlaintiffs admit that Foley\u2019s trading plan was established in September 2020 (OB56),\n\n\n\n 50\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 60 of 72\n\n\n\n\nand do not dispute that Woodworth\u2019s trading plan was likewise entered before the\n\nClass Period. Nor do Plaintiffs allege the trading plans were \u201cto take advantage of\n\nan inflated stock price.\u201d The stock sales thus cannot give rise to the requisite strong\n\ninference of scienter.11 See Ark. Pub. Emps., 28 F.4th at 356 n.4 (failed to allege\n\n\u201cplan was not \u2018given or entered into in good faith\u2019 or was \u2018part of a plan or scheme\n\nto evade the prohibitions\u2019 of the regulations\u201d (citation omitted)); Lululemon, 14 F.\n\nSupp. 3d at 585 (no facts alleging trading plan entered \u201c\u2018strategically\u2019 so as to\n\ncapitalize on insider knowledge\u201d).\n\n Plaintiffs\u2019 arguments to the contrary lack merit. Plaintiffs repeatedly\n\nemphasize that the trades were for substantial amounts. OB53-54. But the mere fact\n\nthat stock sales are \u201clarge,\u201d without more, is insufficient. San Leandro, 75 F.3d at\n\n814.12 And while Plaintiffs say the \u201ctiming\u201d was suspicious, the only sales it\n\nidentifies were in February 2021 (OB54-55)\u2014at the start of the Class Period and\n\npursuant to pre-arranged Rule 10b5-1 plans.\n\n\n\n\n 11\n Plaintiffs\u2019 reliance on Nguyen v. New Link Genetics Corp., 297 F. Supp. 3d\n472 (S.D.N.Y. 2018), is misplaced. OB56-57. There, the defendants adopted\ntrading plans during the class period and traded in irregular amounts at irregular\nintervals, allegations not present here.\n 12\n Plaintiffs refer to $383 million in profit from the stock sales (OB3, 16), but\nthe vast majority of those profits come from sales by the Non-Speaker Defendants\nand Lynch (OB53; JA259 \u00b6 244)\u2014none of whom made any of the statements\nchallenged on appeal.\n\n\n 51\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 61 of 72\n\n\n\n\n Plaintiffs also argue that Foley later terminated his 10b-5 plan and later\n\npledged Peloton shares as collateral for loans, and that Woodworth later \u201chalted\u201d\n\nsales, to \u201cavoid[] selling [her] Peloton stock.\u201d OB56-57. But this Court\u2019s\n\ndecisions\u2014and common sense\u2014make clear that \u201cretain[ing] a large holding in the\n\ncompany\u201d is inconsistent with a motive to defraud. San Leandro, 75 F.3d at 814;\n\nsee Ark. Pub. Emps., 28 F.4th at 356 n.4. Maintaining existing or accumulating\n\nshares of stock \u201csignals only confidence in the future of the[] company\u201d\u2014\n\nconfidence incompatible with fraudulent intent. Avon Pension Fund v.\n\nGlaxoSmithKline PLC, 343 F. App\u2019x 671, 673 (2d Cir. 2009). In arguing otherwise,\n\nPlaintiffs seek to benefit from opposite inferences: that both selling and not selling\n\nstock during the Class Period are indicative of fraud. Plaintiffs cannot have it both\n\nways.\n\n B. Plaintiffs Fail to Plead Strong Circumstantial Evidence of Fraud\n\n To establish scienter by demonstrating \u201cconscious misbehavior or\n\nrecklessness,\u201d Plaintiffs must show\u2014as to each defendant\u2014that their conduct\n\nrepresents such an \u201cextreme departure from the standards of ordinary care\u201d as to\n\n\u201capproximat[e] actual intent.\u201d S. Cherry Street, LLC v. Hennessee Grp. LLC, 573\n\nF.3d 98, 109 (2d Cir. 2009) (citations omitted). Where, as here, Plaintiffs fail to\n\nestablish motive, \u201cthe circumstantial evidence of conscious misbehavior \u2018must be\n\ncorrespondingly greater.\u2019\u201d Ark. Pub. Emps., 28 F.4th at 355 (citation omitted).\n\n\n\n 52\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 62 of 72\n\n\n\n\n Plaintiffs rely on the CWs, post-Class Period statements, and the \u201ccore\n\noperations\u201d theory. Viewed individually and collectively, these allegations are\n\ninsufficient.\n\n The CWs. Plaintiffs repeatedly invoke the \u201cnumber\u201d of CWs. OB32; e.g.,\n\nOB4, 8, 35, 49 (bolding \u201cthirty-one\u201d). But alleging a strong inference of scienter is\n\nnot a counting exercise; the actual substance of the allegations matters. As\n\nexplained, the CW allegations are entirely consistent with the challenged statements,\n\nand inconsistent with one another. See supra Section I.A.3. For scienter purposes,\n\nthere is an additional flaw: no CW had any meaningful direct contact with Foley,\n\nand only CW1 had direct contact with Woodworth. Since the relevant inquiry is\n\nwhether \u201cDefendants knew, when speaking, that their statements . . . were false,\u201d the\n\nother CWs have little bearing. Shemian v. Rsch. in Motion Ltd., 570 F. App\u2019x 32,\n\n35 (2d Cir. 2014); see Jones v. Perez, 550 F. App\u2019x 24, 28 (2d Cir. 2013) (no scienter\n\nwhere CWs did not \u201cassert direct knowledge that this view was held by\n\ndefendants\u201d).13\n\n\n 13\n CW5 alleges Peloton hosted company-wide meetings, during which Foley\n\u201cdiscuss[ed] sales figures\u201d and \u201cinventory management.\u201d JA187 \u00b6 42; JA213 \u00b6 133.\nBut CW5 provides no details and no time frame for these meetings, and never alleges\nFoley shared data showing decreased sales or \u201cexcess\u201d inventory. Similarly, CW27\nreported attending \u201cweekly Zoom calls\u201d with a number of people, including Foley,\nJA203 \u00b6 99, but says nothing about what was discussed during those calls. CW26\nasserts \u201cWoodworth was \u2018aware\u2019 of inventory reporting discrepancies,\u201d JA203 \u00b6 98,\nbut fails to explain what these \u201cdiscrepancies\u201d were, when they occurred, or how\n\n\n 53\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 63 of 72\n\n\n\n\n As to CW1, Plaintiffs assert, at most, that CW1 met with Woodworth once a\n\nmonth \u201cto discuss capacity and demand\u201d and that data presented during these\n\nmeetings suggested \u201cdemand for Peloton\u2019s bikes was expected to decline as early as\n\nFebruary 2021,\u201d and that \u201cdemand had declined by \u201c7-20%\u201d \u201cby March 2021.\u201d\n\nJA183 \u00b6\u00b6 27-28. But CW1 does not contend Woodworth \u201cever accepted\u201d his\n\n\u201cviews.\u201d Wochos, 985 F.3d at 1194. Nor should she have: demand was not predicted\n\nto\u2014and did not\u2014decrease in February or March 2021. Peloton\u2019s $1.262 billion in\n\nQ3 revenue (January-March 2021) beat its guidance ($1.1 billion) and exceeded\n\nresults from the previous quarter ($1.065 billion) and year (141% YoY). JA703.\n\n The timing of CW1\u2019s allegations further reinforce they are irrelevant to\n\nDefendants\u2019 knowledge of falsity. Based on CW1\u2019s own allegations, any meeting\n\nto discuss slowed demand occurred after the February 4, 2021 statements\n\n(Statements 1-2). And to state the obvious, CW1\u2019s allegations about demand in\n\nFebruary and March have no relevance to demand in May, August, and November\n\n2021 (Statements 9-11, 14, 19-20). See Hassan, 2023 WL 8110940, at *3\n\n(statements \u201crefer[ring] to growth within the second quarter\u201d do not render\n\nmisleading statements about \u201cYTD growth\u201d).\n\n\n\nthey relate to Plaintiffs\u2019 allegations. This is demonstrably insufficient for scienter.\nSee Loc. No. 38 Int\u2019l Bhd. of Elec. Workers Pension Fund v. Am. Express Co., 430\nF. App\u2019x 63, 65 (2d Cir. 2011) (no scienter despite twelve CWs because \u201cnot one\u201d\ncould \u201cidentify a single specific report\u201d contradicting challenged statements).\n\n\n 54\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 64 of 72\n\n\n\n\n To the extent Plaintiffs contend that Defendants should have disclosed\n\ndecreased demand after February or March, that is precisely what Defendants did,\n\nby issuing Q4 revenue guidance lower than Q3 revenue. JA449. That decrease in\n\ndemand heading into the warmer weather mirrored traditional seasonal sales trends,\n\nwhich Peloton also disclosed. JA375, 704, 706. Like all of Plaintiffs\u2019 allegations,\n\nCW1 fails to recognize the seasonal calendar, lacks any comparator, and ignores\n\nactual results.\n\n The other CWs do not speak to Defendants\u2019 knowledge of any specific\n\ncontradictory information. OB51-52. Several say nothing about any of the Speaker\n\nDefendants and speak (at most) about \u201cmanagement\u201d generally. E.g., JA189 \u00b6 48;\n\nJA217 \u00b6 143. The rest allege generally that the Speaker Defendants had \u201caccess\u201d to\n\nor had \u201cseen\u201d inventory reports, or that they \u201cshould,\u201d \u201cwould,\u201d or must have known\n\nsomething. E.g., JA188 \u00b6 46; JA192 \u00b6 61; JA195 \u00b6\u00b6 68, 70; JA225 \u00b6 158; JA242\n\n\u00b6 195; JA250 \u00b6 211. Such vague allegations of \u201caccess\u201d \u201camount to little more than\n\nspeculation that documentation or evidence of [contrary facts] must have existed.\u201d\n\nIn re Renewable Energy Grp. Sec. Litig., No. 22-335, 2022 WL 14206678, at *3 (2d\n\nCir. Oct. 25, 2022). And \u201cgeneralized allegations predicated on what the Defendants\n\nmust have known \u2018[b]y virtue of their responsibilities and activities as a senior\n\nofficer,\u2019 are precisely the kind of conclusory allegations that fail to satisfy the\n\nPSLRA\u2019s heightened pleading standard.\u201d Id. (alteration in original) (citation\n\n\n\n 55\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 65 of 72\n\n\n\n\nomitted); see Cox v. Blackberry Ltd., 660 F. App\u2019x 23, 25 (2d Cir. 2016) (allegations\n\nthat defendants \u201cmonitored the sales and returns\u201d insufficient to establish that\n\n\u201cdefendants actually possessed information contradicting their public statements\u201d).\n\n Post-Class Period Allegations. Ignoring this Court\u2019s repeated warnings that\n\n\u201cplaintiffs may not plead fraud by hindsight,\u201d Slayton, 604 F.3d at 776, Plaintiffs\n\ninvoke two post-Class Period events to show scienter: (i) a Business Insider article\n\ndiscussing a January 2022 internal presentation, allegedly showing Peloton had\n\n\u201cexcess inventory . . . since June 2021,\u201d JA219 \u00b6 146; OB53; and (ii) Peloton\u2019s then-\n\nnew CEO, Barry McCarthy\u2019s September 2022 statement about the status of\n\ninventory in February 2022, OB3, 17, 42. But the first of the five inventory\n\nstatements (Statement 9) was made on May 7, 2021, before the internal presentation\n\nalleged that \u201cexcess inventory\u201d had accrued. And the last (Statement 19) was made\n\non November 4, 2021, months before the internal presentation was made and before\n\nMcCarthy arrived at Peloton. These later statements cannot make any of the\n\ninventory statements knowingly false at the time they were made.14\n\n Core Operations. Plaintiffs also rely on the \u201ccore operations\u201d doctrine.\n\nOB52-53. Setting aside \u201cwhether, and in what form,\u201d the doctrine \u201csurvives [the\n\n\n\n\n 14\n The temporal disconnect also disposes of the January 2022 CNBC article,\nwhich reported that Peloton allegedly \u201cstopped producing the Bike+ in December\n2021\u201d\u2014after all the challenged statements were made. OB4.\n\n\n 56\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 66 of 72\n\n\n\n\nPSLRA] as a viable theory of scienter,\u201d Renewable Energy Grp., 2022 WL\n\n14206678, at *3 n.4 (citation omitted), Plaintiffs state only that \u201c[d]emand and\n\ninventory were part of Peloton\u2019s \u2018core operations.\u2019\u201d OB52. \u201cSuch a naked assertion,\n\nwithout more, is plainly insufficient.\u201d Jackson v. Abernathy, 960 F.3d 94, 99 (2d\n\nCir. 2020) (stating only that product was \u201ckey product\u201d insufficient); see Swanson\n\nv. Danimer Sci., Inc., No. 23-7674, 2024 WL 4315109, at *2 (2d Cir. Sept. 27, 2024)\n\n(stating only that \u201cthe challenged statements reflect[] \u2018core information\u2019 that was or\n\nshould have been known by executives\u201d insufficient). Regardless, and as Plaintiffs\n\nconcede, any \u201ccore operations\u201d theory can, at most, \u201csupplement[]\u201d allegations of\n\nscienter and \u201ccannot establish scienter independently.\u201d OB52 (citation omitted).\n\nFor the reasons discussed, there are no independent allegations of scienter for the\n\ncore operations theory to supplement.\n\nIII. THE DISTRICT COURT CORRECTLY DISMISSED PLAINTIFFS\u2019\n OTHER CLAIMS\n\n As Plaintiffs admit (OB58), their Section 20(a) and 20A claims rise and fall\n\nwith their Section 10(b) and Rule 10b-5 claims. See Ark. Pub. Emps., 28 F.4th at\n\n356. Because Plaintiffs failed to allege a predicate violation, the district court\n\ncorrectly dismissed Plaintiffs\u2019 Section 20(a) and 20A claims. And because Plaintiffs\n\ndo not raise any arguments challenging dismissal of their Section 10(b) insider\n\ntrading claims against the Non-Speaker Defendants in their opening brief, those\n\n\n\n\n 57\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 67 of 72\n\n\n\n\nclaims are not before the Court. JP Morgan Chase Bank v. Altos Hornos de Mex.,\n\nS.A. de C.V., 412 F.3d 418, 428 (2d Cir. 2005).\n\n CONCLUSION\n\n For the foregoing reasons, the judgment of the district court should be\n\naffirmed.\n\n\nDated: January 28, 2025 Respectfully submitted,\n\n /s/ Melissa Arbus Sherry\n Melissa Arbus Sherry\n Andrew B. Clubok\n LATHAM & WATKINS LLP\n 555 Eleventh Street, NW\n Suite 1000\n Washington, DC 20004\n (202) 637-2200\n melissa.sherry@lw.com\n\n Michele D. Johnson\n LATHAM & WATKINS LLP\n 650 Town Center Drive\n 20th Floor\n Costa Mesa, CA 92626\n\n Counsel for Defendants-Appellees\n Peloton Interactive, Inc., Thomas Cortese, John Foley, William Lynch,\n Jill Woodworth, Mariana Garavaglia, and Hisao Kushi\n\n\n\n\n 58\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 68 of 72\n\n\n\n\n CERTIFICATE OF COMPLIANCE\n\n This brief complies with the type-volume limitations of Second Circuit Rule\n\n32.1(a)(4) because this brief and addendum contain 13,938 words, excluding the\n\nparts exempted by Federal Rule of Appellate Procedure 32(f).\n\n This brief complies with the typeface requirements of Federal Rule of\n\nAppellate Procedure 32(a)(5) and the type-style requirements of Federal Rule of\n\nAppellate Procedure 32(a)(6) because it has been prepared in a proportionally spaced\n\ntypeface using Microsoft Word in 14-point Times New Roman font.\n\n\nDated: January 28, 2025 /s/ Melissa Arbus Sherry\n Melissa Arbus Sherry\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 69 of 72\n\n\n\n\n ADDENDUM\n\nNumber Source Statement Reasons Not\n Actionable\n 1 Feb. 4, 2021 Analyst: \u201c[Y]ou mentioned that manufacturing capacity exceeds Not false or\n Earnings Call demand. I just want to clarify, is that strictly because you ramped misleading\n capacity, or are you seeing any change to demand due to extended\n order delivery times?\u201d Puffery\n\n Foley (Statement 1): \u201cWe are not seeing a softening in demand. Forward-\n That is absolutely not what\u2019s happening here. We are seeing looking\n incredibly strong organic demand even in the face of light\n marketing, as you know. The successes that we\u2019re seeing in getting No scienter\n order delivery down and getting a backlog down are 100% based on\n incredible upgrades in our manufacturing capacity . . . . [B]ut it\u2019s\n absolutely not a softening of demand. That\u2019s now what we\u2019re\n seeing. We\u2019re seeing robust demand.\u201d\n\n 2 Woodworth (Statement 2): \u201cAnd I would just highlight, obviously, Not false or\n that\u2019s reflected in the revised revenue guidance that we\u2019ve given for misleading\n Q3 and Q4. Obviously, in Q3, we\u2019re working through a substantial\n backlog of orders, but we\u2019re still seeing very strong organic Puffery\n demand across all geographies across all products.\u201d\n Forward-\n JA680. looking\n\n No scienter\n\n\n\n ADD1\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 70 of 72\n\n\n\n\n 315 Analyst: \u201c[J]ust thinking about the opening next year, . . . how are Not false or\n you thinking about that.\u201d misleading\n\n Foley: \u201c[W]e\u2019ve remained very, very bullish on our opportunity. We Puffery\n haven\u2019t seen any softening of demand.\u201d\n Forward-\n JA683. looking\n\n No scienter\n\n 9 May 7, 2021 Peloton: \u201cThe increase in net operating assets and liabilities [for the Not false or\n Form 10-Q nine months ended March 31, 2021] was primarily due to a $444.2 misleading\n million increase in accounts payable and accrued expenses related to\n increased inventory and other expenditures to promote general No scienter\n business growth, as well as the timing of payments, partially offset by\n a $363.7 million increase in inventory levels as we ramped up\n supply to meet the current increased demand.\u201d\n\n JA549.\n 10 May 25, 2021 Analyst: \u201c[H]ow do you get people comfortable with where bike Not false or\n Conference demand is heading into warmer weather and into strong opening[?]\u201d misleading\n\n Woodworth: \u201c[W]e all know that COVID was a bit of an anomaly last Puffery\n year in terms of sales. And so when you look at Q4 of last year, . . .\n [it] was the most bikes or treads that we had ever sold in such a short Forward-\n period of time, it\u2019s a tough comparable for us, right? And at this looking\n\n15\n Statement 3, though forfeited (supra note 4), is included for the Court\u2019s convenience.\n\n\n ADD2\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 71 of 72\n\n\n\n\n juncture, it\u2019s not relevant. So . . . let\u2019s look back to where we were in\n Q4 of \u201919 and where we expect to be in terms of bike in Q4 of this Opinion\n year. And I was trying to make the point that, yes, we\u2019ve lapped\n COVID now. But bike sales or bike demand is still over 3x where No scienter\n it was a couple of years ago, which when you look at that CAGR\n over a 2-year period, we still see a ton of demand. . . . [A]nd then\n in terms of the warmer weather and getting back, we\u2019re always going\n to be seasonal, right? Now that COVID is behind us and people aren\u2019t\n locked indoors. There\u2019s always going to be some summer seasonality\n to the business.\u201d\n\n JA836.\n11 Aug. 26, 2021 Woodworth: \u201cFor fiscal 2022, we expect total revenue of $5.4 billion Not false or\n Earnings Call or 34% year-over-year growth and a 72% two-year CAGR. . . . [W]e misleading\n are entering fiscal 2022 with a normalized backlog for our Bike\n portfolio and guidance reflects our expectation of continued strong Puffery\n demand.\u201d\n Forward-\n JA734. looking\n\n Opinion\n\n No scienter\n\n14 Analyst: \u201c[W]e know there\u2019s seasonality, but just given the light 1Q Not false or\n guide, . . . is the bike price offensive or defensive? And how do you misleading\n think about demand for Bike+ currently?\u201d\n Puffery\n\n\n ADD3\n\f Case: 24-2803, 01/28/2025, DktEntry: 31.1, Page 72 of 72\n\n\n\n\n Foley: \u201cSo as Jill said in her opening remarks, we feel like the\n demand for Bike+ and Bike is robust, and we feel good about the Forward-\n entire year\u2019s forecast. The price drop with B1 was absolutely looking\n offensive. As we think about the competitive landscape, we think\n about democratizing access to great fitness, which is, as you Opinion\n know, always been in our playbook.\u201d\n No scienter\n JA737-38.\n19 Nov. 4, 2021 Foley: \u201cLooking ahead, we\u2019re about to enter our busiest time of the Not false or\n Earnings Call year. Our inventories are healthy, and our logistics teams are well misleading\n equipped for the seasonally strong sales period. We have low\n expected OTDs across our portfolio as we know delivery is greatly Puffery\n appreciated during the holiday and New Year\u2019s resolution periods.\u201d\n Forward-\n JA787. looking\n\n No scienter\n\n20 May 6, 2021 \u201cOur operating results could be adversely affected if we are unable to Not false or\n Form 10-Q; accurately forecast consumer demand for our products and services misleading\n August 26, and adequately manage our inventory. . . . If we fail to accurately\n 2021 forecast consumer demand, we may experience excess inventory No scienter\n Form 10-K; levels or a shortage of products available for sale. Inventory levels\n November 4, in excess of consumer demand may result in inventory write-downs\n 2021 Form or write-offs and the sale of excess inventory at discounted prices,\n 10-Q which would cause our gross margins to suffer . . . .\u201d\n\n JA379, 424, 563-64.\n\n\n ADD4\n\f","ocr_status":2,"date_upload":"2025-04-07T11:34:55.205692-07:00","document_number":"31","attachment_number":null,"pacer_doc_id":"fc46f4d8-e8dd-ef11-8eea-001dd806da91","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2025-04-07T11:11:00.363332-07:00","date_modified":"2026-07-21T12:06:43.478668-07:00","date_filed":"2025-01-28","time_filed":"00:00:00","entry_number":31,"recap_sequence_number":"2025-01-28.001","pacer_sequence_number":null,"description":"BRIEF, on behalf of Appellee Hisao Kushi, Appellee Jill Woodworth, Appellee John Foley, Appellee Mariana Garavaglia, Appellee Peloton Interactive, Inc., Appellee Thomas Cortese, Appellee William Lynch,\u00a0 FILED.\u00a0Service date 01/28/2025 by ACMS. [Entered: 01/28/2025 09:29 PM] [Edited: 01/31/2025 11:36 AM]","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/421603297/","id":421603297,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69854027/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/435607920/","id":435607920,"tags":[],"absolute_url":"/docket/69854027/30/city-of-hialeah-employees-retirement-system-v-peloton-interactive-inc/","date_created":"2025-04-07T11:11:00.344680-07:00","date_modified":"2026-07-21T12:06:43.430870-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"30","attachment_number":null,"pacer_doc_id":"63537b4a-21c9-ef11-b8e9-001dd806da91","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2025-04-07T11:11:00.331463-07:00","date_modified":"2026-07-21T12:06:43.382679-07:00","date_filed":"2025-01-02","time_filed":"00:00:00","entry_number":30,"recap_sequence_number":"2025-01-02.001","pacer_sequence_number":null,"description":"MOTION ORDER, granting motion\u00a0for extension of time to file Appellees brief on 01/28/2025, at docket entry 29, on behalf of Appellee Peloton Interactive, Inc., Appellee John Foley, Appellee William Lynch, Appellee Jill Woodworth, Appellee Thomas Cortese, Appellee Mariana Garavaglia, Appellee Hisao Kushi, by AJN, FILED. [Entered: 01/02/2025 10:54 AM]","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/421603296/","id":421603296,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69854027/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/435607919/","id":435607919,"tags":[],"absolute_url":"/docket/69854027/29/city-of-hialeah-employees-retirement-system-v-peloton-interactive-inc/","date_created":"2025-04-07T11:11:00.316531-07:00","date_modified":"2026-07-21T12:06:43.313448-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"29","attachment_number":null,"pacer_doc_id":"6a71cc7a-e6bc-ef11-b8e9-001dd80556ad","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2025-04-07T11:11:00.303010-07:00","date_modified":"2026-07-21T12:06:43.267645-07:00","date_filed":"2024-12-17","time_filed":"00:00:00","entry_number":29,"recap_sequence_number":"2024-12-17.001","pacer_sequence_number":null,"description":"MOTION, for extension of time, on behalf of Appellee Peloton Interactive, Inc., Appellee Thomas Cortese, Appellee John Foley, Appellee William Lynch, Appellee Jill Woodworth, Appellee Mariana Garavaglia, Appellee Hisao Kushi, FILED.\u00a0Service date 12/17/2024 by ACMS. [Entered: 12/17/2024 09:32 PM]","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/421603295/","id":421603295,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69854027/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/435607918/","id":435607918,"tags":[],"absolute_url":"/docket/69854027/22/city-of-hialeah-employees-retirement-system-v-peloton-interactive-inc/","date_created":"2025-04-07T11:11:00.287893-07:00","date_modified":"2026-07-21T12:06:42.445721-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"22","attachment_number":null,"pacer_doc_id":"5e26f9f6-08b7-ef11-b8e9-001dd809bcaf","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2025-04-07T11:11:00.272539-07:00","date_modified":"2026-07-21T12:06:42.401071-07:00","date_filed":"2024-12-10","time_filed":"00:00:00","entry_number":22,"recap_sequence_number":"2024-12-10.002","pacer_sequence_number":null,"description":"ATTORNEY,\u00a0Karin E Fisch for Appellant City of Hialeah Employees Retirement System, Appellant Robeco Capital Growth Funds SICAV Robeco Global Consumer Trends, ADDED. [Entered: 12/10/2024 10:12 AM]","tags":[]}],"entries_total":"https://www.courtlistener.com/api/rest/v4/docket-entries/?count=on&docket=69854027&page_size=40"}