{"cached_at":"2026-10-25T10:43:15.992218+00:00","cl_docket_id":"68433458","docket":{"resource_uri":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","id":68433458,"court":"https://www.courtlistener.com/api/rest/v4/courts/nysd/","court_id":"nysd","original_court_info":null,"idb_data":null,"clusters":["https://www.courtlistener.com/api/rest/v4/clusters/10295561/","https://www.courtlistener.com/api/rest/v4/clusters/11008753/"],"audio_files":[],"assigned_to":null,"referred_to":null,"bankruptcy_information":null,"absolute_url":"/docket/68433458/in-re-quidelortho-corporation-securities-litigation/","date_created":"2024-04-12T14:08:29.861717-07:00","date_modified":"2026-10-23T13:10:15.252207-07:00","source":1,"appeal_from_str":"","assigned_to_str":"Jeannette A. Vargas","referred_to_str":"","panel_str":"","date_last_index":"2024-11-13T11:20:00.731797-08:00","date_cert_granted":null,"date_cert_denied":null,"date_argued":null,"date_reargued":null,"date_reargument_denied":null,"date_filed":"2024-04-12","date_terminated":null,"date_last_filing":"2026-10-23","case_name_short":"","case_name":"In Re Quidelortho Corporation Securities Litigation","case_name_full":"","slug":"in-re-quidelortho-corporation-securities-litigation","docket_number":"1:24-cv-02804","docket_number_core":"2402804","docket_number_raw":"1:24-cv-02804","docket_number_source":0,"federal_dn_office_code":"1","federal_dn_case_type":"cv","federal_dn_judge_initials_assigned":"JAV","federal_dn_judge_initials_referred":"","federal_defendant_number":null,"pacer_case_id":"619466","cause":"15:78m(a) Securities Exchange Act","nature_of_suit":"850 Securities/Commodities","jury_demand":"Plaintiff","jurisdiction_type":"Federal Question","appellate_fee_status":"","appellate_case_type_information":"","mdl_status":"","filepath_ia":"","filepath_ia_json":"","ia_upload_failure_count":null,"ia_needs_upload":true,"ia_date_first_change":"2024-04-12T14:08:29.854821-07:00","date_blocked":null,"blocked":false,"appeal_from":null,"parent_docket":null,"tags":[],"panel":[]},"parties":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/15230709/","id":15230709,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Defendant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2025-03-25T23:48:34.768311-07:00","date_modified":"2025-03-25T23:48:34.768334-07:00","name":"Tamara Ranalli","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/15230708/","id":15230708,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Defendant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2025-03-25T23:48:34.707147-07:00","date_modified":"2025-03-25T23:48:34.707171-07:00","name":"Michael Iskra","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/15230707/","id":15230707,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Defendant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2025-03-25T23:48:34.635101-07:00","date_modified":"2025-03-25T23:48:34.635122-07:00","name":"Robert J. Bujarski","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/14774712/","id":14774712,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939078/","attorney_id":9939078,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939078/","attorney_id":9939078,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Movant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2024-11-13T11:19:45.782161-08:00","date_modified":"2024-11-13T11:19:45.782171-08:00","name":"Nova Scotia Health Employees' Pension Plan","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/14774711/","id":14774711,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042956/","attorney_id":10042956,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042956/","attorney_id":10042956,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042957/","attorney_id":10042957,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042957/","attorney_id":10042957,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9185236/","attorney_id":9185236,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9185236/","attorney_id":9185236,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042958/","attorney_id":10042958,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042958/","attorney_id":10042958,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042959/","attorney_id":10042959,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042959/","attorney_id":10042959,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/16175666/","attorney_id":16175666,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/16175667/","attorney_id":16175667,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Movant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]},{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Lead Plaintiff","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2024-11-13T11:19:45.760588-08:00","date_modified":"2024-11-13T11:19:45.760601-08:00","name":"Teamsters Local 710 Pension Fund","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/14774710/","id":14774710,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9185236/","attorney_id":9185236,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9185236/","attorney_id":9185236,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042958/","attorney_id":10042958,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042958/","attorney_id":10042958,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":2},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042956/","attorney_id":10042956,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042957/","attorney_id":10042957,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/16175666/","attorney_id":16175666,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/16175667/","attorney_id":16175667,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042959/","attorney_id":10042959,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Movant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2024-11-13T11:19:45.729277-08:00","date_modified":"2024-11-13T11:19:45.729291-08:00","name":"Central States, Southeast and Southwest Areas Health and Welfare Fund","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/13647856/","id":13647856,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939079/","attorney_id":9939079,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042960/","attorney_id":10042960,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Defendant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2024-04-17T22:44:24.794810-07:00","date_modified":"2024-04-17T22:44:24.794817-07:00","name":"Randall Steward","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/13647855/","id":13647855,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939079/","attorney_id":9939079,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042960/","attorney_id":10042960,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Defendant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2024-04-17T22:44:24.786498-07:00","date_modified":"2024-04-17T22:44:24.786506-07:00","name":"Joseph Busky","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/13647854/","id":13647854,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939079/","attorney_id":9939079,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042960/","attorney_id":10042960,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Defendant","date_terminated":null,"extra_info":"","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2024-04-17T22:44:24.778487-07:00","date_modified":"2024-04-17T22:44:24.778496-07:00","name":"Douglas Bryant","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/13647853/","id":13647853,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939079/","attorney_id":9939079,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9939081/","attorney_id":9939081,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1},{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/10042960/","attorney_id":10042960,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Defendant","date_terminated":null,"extra_info":"formerly known as\nQuidel Corporation","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2024-04-17T22:44:24.765385-07:00","date_modified":"2024-04-17T22:44:24.765392-07:00","name":"QuidelOrtho Corporation","extra_info":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/parties/13647852/","id":13647852,"attorneys":[{"attorney":"https://www.courtlistener.com/api/rest/v4/attorneys/9185236/","attorney_id":9185236,"date_action":null,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"role":1}],"party_types":[{"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","docket_id":68433458,"name":"Plaintiff","date_terminated":null,"extra_info":"Individually and on Behalf of All Others Similarly Situated","highest_offense_level_opening":"","highest_offense_level_terminated":"","criminal_counts":[],"criminal_complaints":[]}],"date_created":"2024-04-17T22:44:24.734045-07:00","date_modified":"2024-04-17T22:44:24.734055-07:00","name":"Bristol County Retirement System","extra_info":""}],"entries":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/482664668/","id":482664668,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/498448005/","id":498448005,"tags":[],"absolute_url":"","date_created":"2026-10-23T13:10:15.442234-07:00","date_modified":"2026-10-23T13:10:15.442247-07:00","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":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Remark","acms_document_guid":""}],"date_created":"2026-10-23T13:10:15.427036-07:00","date_modified":"2026-10-23T13:10:15.427052-07:00","date_filed":"2026-10-23","time_filed":"15:08:12","entry_number":null,"recap_sequence_number":"2026-10-23.001","pacer_sequence_number":null,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/482237485/","id":482237485,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/498006997/","id":498006997,"tags":[],"absolute_url":"/docket/68433458/82/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-10-20T17:09:57.818651-07:00","date_modified":"2026-10-20T17:09:57.831854-07:00","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":"82","attachment_number":null,"pacer_doc_id":"127040582434","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2026-10-20T17:09:57.783915-07:00","date_modified":"2026-10-20T17:09:57.792907-07:00","date_filed":"2026-10-20","time_filed":"19:12:04","entry_number":82,"recap_sequence_number":"2026-10-20.001","pacer_sequence_number":274,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/481814171/","id":481814171,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/497572040/","id":497572040,"tags":[],"absolute_url":"/docket/68433458/81/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-10-16T10:40:06.129414-07:00","date_modified":"2026-10-16T10:40:06.129433-07:00","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":"81","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2026-10-16T10:40:06.102200-07:00","date_modified":"2026-10-16T10:40:06.110517-07:00","date_filed":"2026-10-10","time_filed":null,"entry_number":81,"recap_sequence_number":"2026-10-10.001","pacer_sequence_number":null,"description":"ORDER granting 80 Letter Motion for Extension of Time to Answer. Defendants' answers shall be due November 16, 2026. (HEREBY ORDERED by Judge Jeannette A. Vargas)(Text Only Order) (Vargas, Jeannette) (Entered: 10/10/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/481187508/","id":481187508,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/496913684/","id":496913684,"tags":[],"absolute_url":"","date_created":"2026-10-10T18:10:01.129051-07:00","date_modified":"2026-10-10T18:10:01.129070-07:00","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":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order on Motion for Extension of Time to Answer","acms_document_guid":""}],"date_created":"2026-10-10T18:10:01.113175-07:00","date_modified":"2026-10-10T18:10:01.113193-07:00","date_filed":"2026-10-10","time_filed":"20:16:07","entry_number":null,"recap_sequence_number":"2026-10-10.001","pacer_sequence_number":null,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/481108046/","id":481108046,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/496831614/","id":496831614,"tags":[],"absolute_url":"/docket/68433458/80/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-10-09T10:09:30.904554-07:00","date_modified":"2026-10-09T10:09:30.918903-07:00","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":"80","attachment_number":null,"pacer_doc_id":"127040517358","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Extension of Time to File Answer","acms_document_guid":""}],"date_created":"2026-10-09T10:09:30.863730-07:00","date_modified":"2026-10-16T10:40:06.069898-07:00","date_filed":"2026-10-09","time_filed":"12:51:51","entry_number":80,"recap_sequence_number":"2026-10-09.001","pacer_sequence_number":269,"description":"CONSENT LETTER MOTION for Extension of Time to File Answer re: 42 Amended Complaint, addressed to Judge Jeannette A. Vargas from Colin B. Davis dated October 9, 2026. Document filed by QuidelOrtho Corporation, Douglas Bryant, Robert J. Bujarski, Joseph Busky, Michael Iskra, Tamara Ranalli, Randall Steward..(Davis, Colin) (Entered: 10/09/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/480778387/","id":480778387,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/496493860/","id":496493860,"tags":[],"absolute_url":"/docket/68433458/79/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-10-07T08:11:51.429089-07:00","date_modified":"2026-10-07T08:11:51.437476-07:00","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":"79","attachment_number":null,"pacer_doc_id":"127040494751","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order for Initial Pretrial Conference","acms_document_guid":""}],"date_created":"2026-10-07T08:11:51.383903-07:00","date_modified":"2026-10-08T17:55:38.132972-07:00","date_filed":"2026-10-06","time_filed":null,"entry_number":79,"recap_sequence_number":"2026-10-06.002","pacer_sequence_number":267,"description":"NOTICE OF INITIAL PRETRIAL CONFERENCE: It is further ORDERED that, unless and until the Court orders otherwise, counsel for all parties shall appear for an initial pretrial conference with the Court on October 27, 2026 at 3:30 p.m. The conference will be held in Courtroom 14C, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York 10007. (Initial Conference set for 10/27/2026 at 03:30 PM in Courtroom 14C, 500 Pearl Street, New York, NY 10007 before Judge Jeannette A. Vargas.) (Signed by Judge Jeannette A. Vargas on 10/6/2026) (sgz) (Entered: 10/07/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/480734532/","id":480734532,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/496448258/","id":496448258,"tags":[],"absolute_url":"/docket/68433458/78/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-10-06T17:47:10.555167-07:00","date_modified":"2026-10-06T17:47:10.569443-07:00","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":"78","attachment_number":null,"pacer_doc_id":"127040490212","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Notice of Appearance","acms_document_guid":""}],"date_created":"2026-10-06T17:47:10.526668-07:00","date_modified":"2026-10-08T17:55:38.115951-07:00","date_filed":"2026-10-06","time_filed":"15:18:21","entry_number":78,"recap_sequence_number":"2026-10-06.001","pacer_sequence_number":263,"description":"NOTICE OF APPEARANCE by Danielle Lazarus on behalf of Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund..(Lazarus, Danielle) (Entered: 10/06/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/480563112/","id":480563112,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/496272103/","id":496272103,"tags":[],"absolute_url":"/docket/68433458/77/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-10-05T14:09:21.237661-07:00","date_modified":"2026-10-05T14:09:21.245669-07:00","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":"77","attachment_number":null,"pacer_doc_id":"127040482935","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Notice of Appearance","acms_document_guid":""}],"date_created":"2026-10-05T14:09:21.210416-07:00","date_modified":"2026-10-08T17:55:38.100125-07:00","date_filed":"2026-10-05","time_filed":"16:49:11","entry_number":77,"recap_sequence_number":"2026-10-05.001","pacer_sequence_number":259,"description":"NOTICE OF APPEARANCE by Jesse Lee Jensen on behalf of Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund..(Jensen, Jesse) (Entered: 10/05/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/480066869/","id":480066869,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/495755873/","id":495755873,"tags":[],"absolute_url":"/docket/68433458/76/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-09-30T16:07:12.014594-07:00","date_modified":"2026-10-07T04:30:47.289019-07:00","sha1":"da91c5580aef5276194ddbb353d4bbd2e4e22cfc","page_count":100,"file_size":750536,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.76.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.76.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 1 of 100\n\n\n\n\nUNITED STATES DISTRICT COURT\nSOUTHERN DISTRICT OF NEW YORK\n---------------------------------------------------------------------- X\n :\n :\n :\n :\n : 24-CV-02804 (JAV)\nIN RE QUIDELORTHO CORPORATION :\nSECURITIES LITIGATION : OPINION AND ORDER\n :\n :\n :\n :\n :\n---------------------------------------------------------------------- X\n\nJEANNETTE A. VARGAS, United States District Judge:\n\n Court-appointed Lead Plaintiff Central States, Southeast and Southwest\n\nAreas Health and Welfare Fund (\u201cCentral States\u201d) and Teamsters Local 710\n\nPension Fund (\u201cLocal 710\u201d) (collectively, the \u201cTeamsters Funds\u201d or \u201cLead Plaintiff\u201d)\n\nbrings this federal securities class action on behalf of itself and a class consisting of\n\nall persons and entities damaged by their acquisition of the publicly traded common\n\nstock of Quidel Corporation (\u201cQuidel\u201d) and/or its successor QuidelOrtho Corporation\n\n(\u201cQuidelOrtho\u201d) (collectively, the \u201cCorporate Defendant\u201d or the \u201cCompany\u201d) during\n\nthe period from after market close on February 17, 2022, through April 1, 2024 (the\n\n\u201cClass Period\u201d). The Teamsters Funds allege material misrepresentations by\n\nQuidelOrtho\u2019s senior executives and bring claims for violation of Sections 10(b) and\n\n20(a) of the Securities Exchange Act of 1934 (\u201cthe Exchange Act\u201d) and Rule 10b-5\n\npromulgated thereunder, 17 C.F.R. \u00a7 240.10b-5, against the Corporate Defendant as\n\nwell as QuidelOrtho\u2019s former Chief Executive Officer (\u201cCEO\u201d) Douglas Bryant\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 2 of 100\n\n\n\n\n(\u201cBryant\u201d); the Company\u2019s Chief Financial Officer (\u201cCFO\u201d) Joseph Busky (\u201cBusky\u201d);\n\nthe Company\u2019s former CFO Randall Steward (\u201cSteward\u201d); the Company\u2019s former\n\nChief Operating Officer (\u201cCOO\u201d) Robert J. Bujarski (\u201cBujarski\u201d); the Company\u2019s\n\nformer Executive Vice President, Chief Commercial Officer, and Interim CEO\n\nMichael Iskra (\u201cIskra\u201d); and the Company\u2019s Senior Vice President, Molecular\n\nDiagnostics and Point of Care, Tamara Ranalli (\u201cRanalli\u201d) (collectively, \u201cIndividual\n\nDefendants\u201d). ECF No. 42 (\u201cAmended Complaint\u201d or \u201cAm. Compl.\u201d), \u00b6\u00b6 413-446.\n\nPresently before the Court are Defendants\u2019 Motion to Dismiss the Amended\n\nComplaint (\u201cMotion to Dismiss\u201d), Plaintiff\u2019s motion to strike, and Defendants\u2019\n\nmotion to strike. ECF No. 47, 51-52, 57-58.\n\n For the following reasons, the motions to strike are DENIED and\n\nDefendants\u2019 Motion to Dismiss is GRANTED IN PART AND DENIED IN PART.\n\n BACKGROUND\n\n The following allegations from the Amended Complaint are presumed true\n\nand construed in the light most favorable to Lead Plaintiff. Slayton v. Am. Express\n\nCo., 604 F.3d 758, 766 (2d Cir. 2010) (\u201cIn considering a motion to dismiss a 10(b)\n\naction, we must accept all factual allegations in the complaint as true and must\n\nconsider the complaint in its entirety.\u201d (citing Tellabs, Inc. v. Makor Issues &\n\nRights, Ltd., 551 U.S. 308, 322 (2007)).\n\nA. Quidel\u2019s Pre-Merger Business and the COVID-19 Pandemic\n\n QuidelOrtho is a Delaware corporation that emerged from the 2022 merger of\n\nQuidel and Ortho. Am. Compl., \u00b6 36. Quidel developed and marketed diagnostic\n\n\n\n\n 2\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 3 of 100\n\n\n\n\ntesting solutions, including rapid immunoassay tests (notably the Sofia platform),\n\ncardiometabolic immunoassays, molecular diagnostic solutions (Lyra and Solana\n\nplatforms), and specialized diagnostic solutions. Id., \u00b6 68. Prior to the COVID-19\n\npandemic, Quidel\u2019s annual revenues were steady, with $534.9 million reported in\n\n2019. Id., \u00b6 69. During this time period, Quidel did not typically provide the\n\nmarket with revenue projections on a yearly basis. Id.\n\n With the onset of the COVID-19 pandemic in early 2020, Quidel received\n\nEmergency Use Authorization (\u201cEUA\u201d) for several COVID-19 diagnostic tests,\n\nincluding the Lyra, Sofia, and Solana platforms. Id., \u00b6 70. COVID-19 test sales\n\ndrove a dramatic increase in revenues: $1.163 billion in 2020 (70% of total revenue)\n\nand $1.274 billion in 2021 (75% of total revenue). Id., \u00b6 74. The company\u2019s stock\n\nprice rose accordingly, peaking at $283.45 per share in November 2020. Id., \u00b6 3.\n\n By mid-2021, Quidel anticipated a transition from pandemic to endemic\n\nCOVID-19, with a reduction in testing demand akin to other, more common\n\nrespiratory illnesses. Id., \u00b6 4. The company sought to maintain its revenue and\n\nstock performance as pandemic-driven sales waned. Id.\n\nB. Quidel\u2019s Merger with Ortho and the Role of Savanna\n\n In May 2021, Quidel began exploring a merger with Ortho Clinical\n\nDiagnostics Holdings PLC (\u201cOrtho\u201d), a leading in-vitro diagnostics company. Id.,\n\n\u00b6\u00b6 5, 75. The merger was publicly announced on December 23, 2021, and completed\n\non May 27, 2022, with QuidelOrtho as the successor entity. Id., \u00b6 75. The merger\n\nwas justified in part by the anticipated synergies from Quidel\u2019s soon-to-launch\n\n\n\n\n 3\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 4 of 100\n\n\n\n\nSavanna molecular diagnostic platform, which was expected to drive $75 million of\n\nthe $100 million in projected revenue synergies. Id., \u00b6 78.\n\n First announced in 2011, the Savanna platform was marketed as a low-cost,\n\nrapid, multiplex PCR (Polymerase Chain Reaction) testing solution capable of\n\ndetecting multiple respiratory pathogens in approximately 30 minutes. Id., \u00b6 79.\n\nThe platform\u2019s flagship laboratory test, the Savanna Respiratory Viral Panel-4\n\n(\u201cRVP4\u201d), was designed to test for influenza A and B, COVID-19, and RSV from a\n\nsingle sample. Id., \u00b6 80. According to the Company\u2019s former Senior Director,\n\nRegulatory Affairs from January 2020 to April 2024 (\u201cFE-1\u201d), 1 the Company\u2019s\n\nability to be first to market with Savanna\u2019s new molecular diagnostic technologic\n\nwas critical to its success, as several competitors were similarly attempting to\n\ndevelop products that could provide quick test results with the same high level of\n\naccuracy as PCR tests. Id., \u00b6 129. FE-1, FE-2 (a former Senior Director, Systems\n\nEngineering from February 2020 through September 2023), and FE-4 (a scientist\n\nwho led Savanna RVP4\u2019s EU launch, among other roles from mid-2020 to fall 2023)\n\nadded that the Savanna launch faced additional pressure because QuidelOrtho\u2019s\n\ndominant point of care immunoassays\u2014the Sofia 1 and Sofia 2 analyzers\u2014were\n\nreaching their production \u201cend of life.\u201d Id., \u00b6\u00b6 138-146. Defendant Bryant\n\nrepeatedly characterized Savanna as \u201cthe most important product introduction\n\nin our history\u201d and attributed most of the $100 million in expected revenue\n\n\n\n\n1Former employees are hereinafter referred to, per the Amended Complaint, as\n\u201cFE-__.\u201d See Am. Compl. at 2 & \u00b6\u00b6 46-66.\n\n\n 4\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 5 of 100\n\n\n\n\nsynergies to Savanna\u2019s launch. Id., \u00b6 82.\n\n Quidel obtained limited European approval for Savanna and its RVP4 test in\n\nJuly 2021, allowing sales and marketing in certain European countries (the\n\n\u201cEuropean launch\u201d or \u201cEU launch\u201d). Id., \u00b6 83. In the lead-up to the merger,\n\nDefendants made several statements regarding the European launch, citing \u201cvery\n\npositive customer feedback\u201d and positioning Savanna as a major growth driver\n\nfor the merged company.2 Id., \u00b6\u00b6 7, 84.\n\nC. Public Statements and Disclosures Regarding Savanna RVP4,\n Manufacturing Capabilities, and COVID-19 Revenues\n\n Throughout the Class Period, QuidelOrtho and its executives made numerous\n\npublic statements asserting that the European launch of Savanna RVP4 was\n\nsuccessful, that customer feedback was positive, and that the platform was ready\n\nfor U.S. Food and Drug Administration (\u201cFDA\u201d) approval and to launch in the\n\nUnited States. For example, on February 17, 2022, CEO Bryant stated: \u201cBased on\n\ncustomer reviews in Europe, we believe Savanna will be a major growth\n\ndriver, both in the U.S. and globally, for years to come.\u201d Id., \u00b6\u00b6 7, 91. On\n\nMarch 9, 2022, during the Raymond James Annual Investors Conference, Bryant\n\nreported that Savanna is \u201cperforming very nicely in Europe right now. We\u2019re\n\nhearing really nice feedback. I think it\u2019s the right design for the market at\n\nthis time.\u201d Id., \u00b6 93. Similar statements were made in earnings calls, investor\n\nconferences, and analyst presentations throughout 2022 and 2023. Id., \u00b6\u00b6 321-322.\n\n\n\n2Certain reproduced statements are bolded and italicized, per the Amended\nComplaint, to distinguish alleged misrepresentations from unchallenged text\n\n\n 5\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 6 of 100\n\n\n\n\n Defendants appeared to assure investors that Savanna RVP4 was on track\n\nfor FDA approval and that the company would achieve $75 million in merger\n\nrevenue synergies and $300 million in annual Savanna revenues within three years\n\nof U.S. launch. Id., \u00b6\u00b6 95, 222, 327-328. These assurances were reiterated as the\n\nCompany struggled to meet the FDA\u2019s requirements. Id.\n\n Essential to achieving these synergies was the Company\u2019s ability to\n\nmanufacture the RVP4 test at scale. Id., \u00b6 222. Bryant represented that\n\nQuidelOrtho would be prepared to manufacture Savanna RVP4 at scale, with\n\nautomated production lines capable of producing over one million cartridges per\n\nmonth. Id., \u00b6\u00b6 222, 339-340. The Company invested $100 million in this\n\nmanufacturing capability. Id., \u00b6 222.\n\n In mid-2022, QuidelOrtho initially guided investors to expect $150-$200\n\nmillion in annual endemic COVID-19 revenues, a significant reduction from\n\npandemic levels. Id., \u00b6\u00b6 109-110. Following a negative market reaction to the\n\ncompany\u2019s December 13, 2022 Investor Day, however, CFO Busky doubled the\n\nguidance to $200-$400 million without providing supporting data. Id., \u00b6\u00b6 114-16,\n\n429. This higher guidance was repeated throughout 2023. Id., \u00b6 116. Despite\n\ninternal reports of declining COVID-19 test sales and mounting inventory,\n\nDefendants continued to publicly assert that demand remained strong and that the\n\ncompany was \u201cvery comfortable\u201d with the $200-$400 million range. Id., \u00b6\u00b6 20, 120.\n\nD. Internal Reports and Complaints Underlying Public Statements\n\n FE-10, Finance Director throughout the Class Period until Fall 2023, detailed\n\n\n\n\n 6\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 7 of 100\n\n\n\n\nthat prior to the Merger, employees at QuidelOrtho turned from optimistic about\n\nSavanna to perceiving that it was \u201cnot a real thing.\u201d Id., \u00b6 195. During pre-Merger\n\ndiscussions about Ortho\u2019s interest in a merger with Quidel because of Savanna, FE-\n\n10 and his colleagues remarked, \u201cwait until they see that it doesn\u2019t work.\u201d Id. In\n\n2022, FE-10 heard from a former Finance Manager and current Chief Operations\n\nOfficer\u2014who attended Savanna production meetings, weekly meetings with\n\nSavanna manufacturing, and regular meetings with Defendant Ranalli\u2014that\n\nSavanna was failing tests, that it was not doing what it was supposed to do, and\n\nthat the Company was spending money on a product that was not going to work.\n\nId. FE-11, a senior sales manager, affirmed that these issues were \u201cwidely known.\u201d\n\nId., \u00b6 197. FE-2 stated that the engineering issues with the RVP4 test were not\n\nfixed when it went on sale in Europe in late 2021, were not fixed when it was sent to\n\nthe FDA for approval in the second quarter of 2023, and were not fixed when he left\n\nthe Company in September 2023. Id., \u00b6 193. FE-10 recalled that Savanna RVP4\n\nhad issues throughout his entire tenure. Id. FE-10 stated that he never thought\n\nSavanna would be in production and that every test ran for Savanna was \u201cbad\n\nnews.\u201d Id., \u00b6 194. FE-6 understood that the Company would halt production of\n\nSavanna RVP4 in April 2024, the month he left the company. Id., \u00b6 189.\n\n 1. EU Launch Failures\n\n Twenty-one former employees involved in Savanna\u2019s development and\n\nlaunch\u2014several of whom held senior positions at the Company\u2014described\n\nsignificant, unresolved design and manufacturing flaws, including high rates of\n\n\n\n\n 7\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 8 of 100\n\n\n\n\ninvalid test results and device failures. Id., \u00b6\u00b6 21, 46-66, 160-209. FE-14, an\n\nengineer at the Company until the second half of 2023, described \u201cfundamental\n\nflaws\u201d in the manufacturing of the Savanna RVP4 assay cassette that the Company\n\n\u201cchose to ignore\u201d prior to the Class Period, instead choosing to transfer Savanna\n\nRVP4 to a smaller team that would stop providing cross-functional information\n\nwithin the Company and instead \u201cpush\u201d the product to production. Id., \u00b6\u00b6 132-34.\n\nFE-14 added that the Company skipped quality assurance measures like reliability\n\ntesting because the Savanna instrument and cartridge would break and fail if\n\nsubjected to them. Id., \u00b6 135. FE-6, a Cost Accounting Manager throughout the\n\nClass Period, described the process of bringing Savanna to market as \u201cflying a plane\n\nwhile building it.\u201d Id., \u00b6 165. FE-4 described the EU launch as a \u201cdefining\n\nmoment\u201d full of technical challenges from its \u201cbeginning.\u201d Id.\n\n FE-4 characterized himself as having the \u201cbest pulse\u201d on the EU launch\n\nperformance of all his United States-based colleagues because he worked directly\n\nwith colleagues in Italy and Germany and communicated with them weekly. Id.,\n\n\u00b6 171. Along with FE-4, FE-7 drafted promotional marketing materials used for\n\nSavanna sales in Europe, which FE-4 said included \u201cclaims about the Savanna\n\nRVP4 test performance and capabilities\u201d that were \u201cjust a wish or a dream.\u201d Id.,\n\n\u00b6\u00b6 166-67. After 20 years in \u201cthis line of work,\u201d FE-7 \u201cdidn\u2019t remember any market\n\nlaunch that was so full of issues.\u201d Id., \u00b6 190.\n\n Demand for Savanna in Europe was limited and restricted to late 2021 and\n\nthe first quarter of 2022. Id., \u00b6 170. FE-4 recalled, and FE-7 corroborated, that the\n\n\n\n\n 8\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 9 of 100\n\n\n\n\nCompany sold only about 40 to 55 Savanna devices from the July 2021 launch\n\nthrough mid-2023. Id. Customers throughout this period included about six\n\nhospitals across Austria and eastern Germany around December 2021 and 16\n\nhospitals in Italy in mid-2022. Id.\n\n In their positions, FE-4 and FE-7 were updated weekly on all of the\n\ncomplaints and issues with Savanna RVP4 in the European market. Id., \u00b6 171.\n\nFE-7 also noted \u201cissues with Savanna from the beginning.\u201d Id., \u00b6 172. FE-4\n\npersonally became aware of the device\u2019s \u201cwidespread failure\u201d between June 2022\n\nand November 2022. Id., \u00b6 173. The test\u2019s assay did not work \u201cfrom the very\n\nbeginning,\u201d and one in every four Savanna RVP4 instruments sold in Europe had to\n\nbe replaced at cost due to invalid results\u2014a \u201cdepressing\u201d outcome for the Company.\n\nId., \u00b6\u00b6 172-73. Indeed, there were times the replacement tests also failed. Id.,\n\n\u00b6 173. The Company\u2019s inventory and production costs increased as it began to send\n\nbackup tests with every instrument in case problems arose. Id., \u00b6 188. The\n\nindustry standard for invalid results is 1-2%, but the invalid rate for Savanna was\n\nbetween 10 and 30%. Id., \u00b6 176. J\u00fcrgen Becker, Scientific Marketing Manager,\n\nEurope, informed FE-4 that Savanna RVP4 customers were \u201cirate.\u201d Id. \u00b6 173.\n\nOther manufacturing errors also plagued the rollout, with one in four Savanna\n\nRVP4 test instruments failing due to overheating, frozen screens, and/or spring\n\nejection issues. Id., \u00b6 179.\n\n European customer complaints stayed steady, and even increased, as the\n\nClass Period progressed. Id., \u00b6 177. FE-8, a former member of the Quality\n\n\n\n\n 9\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 10 of 100\n\n\n\n\nAssurance team throughout the Class Period, recalled an \u201cuptick\u201d in complaints\n\nfrom European Savanna customers in approximately August 2023. Id., \u00b6 177.\n\nWhereas the Company had previously received between 11 and 13 Savanna RVP4\n\ncomplaints per month from European customers, it received over 30 such\n\ncomplaints in August 2023, all recorded in Salesforce. Id. On a scale measuring the\n\nseriousness of customer complaints from \u201cGreen\u201d to \u201cYellow\u201d to \u201cRed,\u201d the Company\n\nassigned the August 2023 Savanna RVP4 complaints a \u201cRed\u201d grade, significant\n\nenough to open a Corrective and Preventative Action (\u201cCAPA\u201d) investigation in\n\nsummer 2023 to address the complaints, identify their root cause, and prevent it\n\nfrom reoccurring. Id., \u00b6 178. Those notified of this CAPA included the research and\n\ndevelopment team for Savanna RVP4, the Company\u2019s Vice President of Clinical,\n\nRegulatory & Quality Assurance, and the Company\u2019s Director of Operations, who\n\nreported to the Company\u2019s Vice President, Operations Brad Smith. Id. Further,\n\ninformation about this CAPA was shared internally in monthly or quarterly\n\ninternal business unit reports to upper management. Id. FE-8 reported that the\n\nCompany was still investigating the root cause of the error codes behind the CAPA\n\nwhen he left in July 2024. Id. Likewise, FE-9, former Vice President, Sales and\n\nMarketing, Europe throughout the Class Period, confirmed that the steady stream\n\nof customer complaints about Savanna\u2019s invalid results, failing assays, and failing\n\ncontrols were still being addressed when he left the Company in June 2024. Id.,\n\n\u00b6\u00b6 178-79.\n\n Senior management was informed of European customer complaints, which\n\n\n\n\n 10\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 11 of 100\n\n\n\n\ncontinued from the start of the EU launch through the end of the Class Period. Id.,\n\n\u00b6\u00b6 182-188. In an effort to prevent reputational damage, the Company found itself\n\n\u201cfirefighting.\u201d Id., \u00b6 182. It enacted a formal complaint system to register customer\n\nissues in the EU, which were then sent to Defendant Ranalli, who reported to\n\nDefendant Bryant. Id., \u00b6\u00b6 183, 185. Generally, customers complained to sales\n\nrepresentatives, who then submitted complaint paperwork to the head of service in\n\nthe EU, who then reported on complaint statistics for Europe. Id., \u00b6 184. All\n\ncomplaints were also formally reported to the Company\u2019s office in Ireland, where\n\nleadership prepared quarterly reports on the complaints and sent them to the\n\nCompany\u2019s United States headquarters. Id., \u00b6 183. According to FE-7, there was\n\nno lack of visibility regarding Savanna\u2019s problems, and every single issue with\n\nSavanna was reported to Irish leadership. Id., \u00b6 184. Former Vice President, Sales\n\nand Marketing, Europe from October 2017 through June 2024, FE-9, confirmed\n\nIrish leadership was in \u201cconstant contact\u201d with the Company\u2019s U.S. Headquarters,\n\nparticularly Senior Vice President, Research and Development Werner Kroll, who\n\nthen\u2014according to FE-9\u2014relayed such discussions to Defendants Ranalli, Bryant,\n\nand Bujarski. Id., \u00b6\u00b6 54, 184.\n\n After Savanna launched in Europe in late 2021, the Director of Global\n\nProduct Management held \u201cmany, many . . . Zoom-style\u201d calls about Savanna at\n\nleast monthly with a regular group of fewer than ten people, including Defendant\n\nRanalli and FE-7. Id., \u00b6\u00b6 185-87. At these calls, Becker disclosed to Ranalli that\n\nthe Savanna RVP4 tests were failing in Europe and provided her with the negative\n\n\n\n\n 11\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 12 of 100\n\n\n\n\ncustomer feedback. Id., \u00b6 186. Between 60 and 80% of European customer\n\nfeedback on Savanna was negative. Id. FE-7 recalled, during one of these calls in\n\n2023, a PowerPoint presentation that included a quarterly report showing 80 units\n\nof Savanna in distribution and 85 complaints. Id., \u00b6 188.\n\n 2. FDA Approval\n\n FE-10 explained how, in early 2022, it became \u201ca reality\u201d for the Company\n\nthat the manufacturing yields for RVP4 test were too low to receive FDA clearance.\n\nId., \u00b6 194. As Finance Director, FE-10 added that longtime Financial Planning &\n\nAnalysis, Accounting and Operations Finance colleagues told him that the Company\n\nhad worked on the Savanna test for years and their \u201cconsistent sentiment\u201d was that\n\nthey did not think the test \u201cwould ever work.\u201d Id. QuidelOrtho nonetheless pushed\n\nfor FDA clearance even though employees who worked directly or indirectly with\n\nthe Savanna RVP4 test knew that the test had \u201cglaring issues.\u201d Id., \u00b6 206.\n\n Internal regulatory and validation teams reportedly informed management\n\nthat Savanna RVP4 could not consistently achieve the 95% sensitivity required for\n\nFDA approval, yet the company proceeded with its FDA required form 510(k)\n\napplication for clearance to sell Savanna. Id., \u00b6\u00b6 200-204, 359-360, 371. FE-11\n\nreported that the test \u201cnever came close\u201d to reaching the 95% sensitivity threshold.\n\nId., \u00b6 199.\n\n As Senior Director, Regulatory Affairs during the Class Period, FE-1\n\nexplained that the FDA submissions for Savanna RVP4 were under the purview of\n\nMichelle Bodien (also Senior Director, Regulatory Affairs) and Ron Lollar (Vice\n\n\n\n\n 12\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 13 of 100\n\n\n\n\nPresident, Clinical and Regulatory), who reported to Kroll. Id., \u00b6 198. FE-1\n\nreported that Kroll, Lollar, and Bodien\u2014and likely, in his estimation, Defendant\n\nBryant\u2014made the decision to make the FDA submission in the second quarter of\n\n2023. Id. Conversations FE-1 had in late 2023 confirmed that Company\n\nmanagement\u2014including Kroll and Defendants Bryant and Bujarski\u2014knew that\n\nSavanna RVP4 was not consistently meeting the FDA\u2019s detectability requirements.\n\nId., \u00b6\u00b6 198, 204.\n\n The Company kept written documentation of the feedback and discussions\n\nwith the FDA, including minutes of meetings with the FDA prior to submission.\n\nId., \u00b6 205. Status updates in the form of notes and PowerPoint slides regarding the\n\nSavanna FDA application were also reported regularly to the C-suite and the Board\n\nof Directors, at least monthly. Id. FE-1 recalled Defendant Bryant\u2019s practice of\n\n\u201copen dialogue\u201d with the FDA and that he was typically involved in discussions with\n\nthe FDA regarding the Company\u2019s COVID test-related products. Id.\n\n Associate Director of Assay Verification & Validation, Research &\n\nDevelopment Shawna Prange was responsible for validating Savanna for FDA\n\nsubmission. Id., \u00b6\u00b6 206-08. As part of the validation process prior to submission,\n\nRVP4\u2019s chemistry was subjected to a variety of viral loads to test its sensitivity\n\nunder varying conditions and extremes. Id., \u00b6 208. According to FE-2, Savanna\n\ncould not achieve the needed sensitivity readings or pick up enough results as part\n\nof that process. Id. In summer 2023, Prange\u2014whose studies were core to the\n\nCompany\u2019s FDA submission\u2014commented to FE-4 that the Savanna RVP4 test \u201cdoes\n\n\n\n\n 13\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 14 of 100\n\n\n\n\nnot work\u201d and that it \u201cisn\u2019t even a product.\u201d Id., \u00b6 206. Senior scientist FE-12, who\n\nworked on Savanna throughout 2023 and the first half of 2024, confirmed that\n\ndetectability issues like high rates of invalid test results and false positives\u2014in\n\naddition to issues with Savanna on a molecular level\u2014persisted \u201cacross the board\u201d\n\nthrough the end of the Class Period. Id., \u00b6\u00b6 209-10.\n\n According to FE-4, Prange knew the product could not achieve the required\n\n95% confidence interval and \u201cwill never get it\u201d but received \u201ca lot of pressure\u201d from\n\na \u201ctop-down mandate\u201d at the Company to approve Savanna \u201cno matter the cost.\u201d\n\nId., \u00b6 207. Several other employees expressed concern to management over the\n\n\u201cmany shortcuts\u201d it was taking to rush Savanna to market. Id., \u00b6 211. In FE-4\u2019s\n\nscientific opinion, Savanna would not receive FDA clearance, and if it managed to,\n\nit would get recalled. Id., \u00b6 212. In September 2023, he told a high-level senior\n\nexecutive who reported directly to Defendant Bryant that \u201cthis thing doesn\u2019t work\n\n. . . this ain\u2019t ever gonna fly. And if it does . . . we\u2019re gonna be facing the risk of a\n\nrecall.\u201d Id.\n\n 3. Scale\n\n QuidelOrtho\u2019s ability to automate Savanna RVP4 production was essential to\n\nits projected profits after achieving FDA approval. Id., \u00b6 222. Indeed, Defendant\n\nBryant identified the Company\u2019s ability to quickly manufacture and get to market\n\ninstruments and cartridges \u201cat very, very high volumes\u201d as the \u201conly constraint\u201d\n\non Savanna RVP4\u2019s U.S. launch. Id., \u00b6 339(d). He estimated the Company would\n\n\u201coutfit . . . over 1 million cartridges per month . . . within 3 years.\u201d Id.,\n\n\n\n\n 14\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 15 of 100\n\n\n\n\n\u00b6 339(e). Specifically, from the start of the Class Period, Defendants told investors\n\nthat the Company would realize $75 million of Merger revenue synergies by 2025 in\n\nconnection with the Savanna launch, another $30-$50 million in Savanna revenues\n\nby the end of 2024, and $300 million per year within three years of launch. Id.,\n\n\u00b6 222.\n\n The Company\u2019s efforts to build an automated manufacturing line for Savanna\n\nwere never close to successful. Id., \u00b6\u00b6 221-228. The Company\u2019s manual production\n\nof Savanna tests yielded usable tests far below the expected, normal threshold. Id.,\n\n\u00b6 223. These issues were reported to senior management. Id., \u00b6 229. Indeed, FE-4\n\nexplained that QuidelOrtho was forced to scrap a \u201cvery alarming\u201d 50-80%, and\n\nsometimes 90%, of the Savanna assays it manufactured due to defects. Id., \u00b6 223.\n\nFE-12 advised that the Savanna test suffered from both possible contamination\n\nissues and problems on a molecular level. Id., \u00b6 210. In the process of scaling up\n\nfrom pilot batches of assays of about 500 units to production scale, the tests\n\nproduced rates of invalid or false positives that were too high for even in-house use.\n\nId. By the time FE-10 left in fall 2023, RVP4 production efforts had only reached a\n\nmanufacturing yield of 50%, \u201cway below\u201d the Company\u2019s ideal yield rate of 90%. Id.,\n\n\u00b6 223. FE-6 confirmed that production yields for Savanna were 30-40% when they\n\nshould have been 70-80%. Id.\n\n After scrapping nearly half of its RVP4 manufacturing yield, the Company\n\nalso needed to scrap many RVP4 tests during final inspection due to a high level of\n\ninvalid test results\u2014\u201cthe worst result for a clinician.\u201d Id., \u00b6\u00b6 174, 224. FE-2\n\n\n\n\n 15\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 16 of 100\n\n\n\n\nconfirmed that, for example, in a production batch of 1000 units, maybe 500 needed\n\nto be scrapped immediately due to manufacturing errors, and of about 50 selected\n\nfor random quality testing from that pool, an additional 10% to 50% would fail. Id.,\n\n\u00b6 225. The Company was thus scrapping up to 50% of the entire production line,\n\ncompared to a 5% standard industry failure rate. Id., \u00b6 224. There were times the\n\nCompany had to shut the entire production line down because everything was\n\nfailing. Id. Meanwhile, the Company\u2019s manual production line increased costs and\n\nthe potential for human error and contamination. Id., \u00b6 226. The Company\n\nultimately spent upwards of $80-100 million on the incomplete automated\n\nproduction line, for which there was never a concrete location. Id., \u00b6 228. FE-6\n\nindicated that he raised \u201cred flags\u201d \u201cup the chain\u201d about rising costs associated with\n\nproduction issues multiple times. Id., \u00b6 229. Each month, FE-6 told Defendant\n\nBusky that the Company would charge costs to Research & Development because\n\nSavanna still needed adjustments and research to address its failures. Id.\n\n 4. Sales\n\n By late 2022 and throughout 2023, internal reports and sales data for\n\nproducts such as the Sofia analyzer showed that QuidelOrtho\u2019s COVID-19 test sales\n\nwere in decline, with the company losing market share to competitors offering more\n\nadvanced or cost-effective products. Id., \u00b6\u00b6 236-237, 240-41. Sales teams\n\nconsistently missed quotas, and inventory of unsold tests accumulated to concerning\n\nlevels. Id., \u00b6\u00b6 251-268, 270. These negative trends were communicated to senior\n\nmanagement, including Defendant Busky, through regular reports, meetings, and\n\n\n\n\n 16\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 17 of 100\n\n\n\n\ndirect conversations. Id., \u00b6\u00b6 276-277. Finance and sales personnel provided\n\ndetailed analyses of missed quotas and excess inventory and sought guidance from\n\nthe C-suite on how to address or \u201cspin\u201d these issues for investors. Id.\n\n FE-13, a Cost Accountant at the Company from February 2022 through\n\nMarch 2023, confirmed that Savanna was not passing the Company\u2019s internal\n\nqualifications or testing in 2022 and early 2023. Id., \u00b6 213. FE-13 explained that\n\nshe learned of the Company\u2019s goal to get Savanna on the market by the end of 2023\n\nand the product\u2019s testing problems during daily \u201cstandups\u201d for Triage and monthly\n\nleadership meetings. Id.\n\n FE-6, another Cost Account Manager, knew that problems with the Savanna\n\ntest instrument and chemical assay \u201calways\u201d amounted to a \u201chuge situation\u201d that\n\ndoubled the unit cost for the instrument due to quality control issues. Id., \u00b6 214.\n\nWhereas FE-6 cited a strong return-on-investment for production as yielding 70-\n\n80% usable tests, Savanna\u2019s yield was only 30-40%. Id., \u00b6 215. These poor yield\n\nrates and the amount of scrap material generated by the tests were recorded,\n\nincluding in emails and the Enterprise Resource Planning system used by the\n\ncompany, and reported every month to senior management. Id. He input\n\ninformation regarding cost accounting issues for Savanna into a system that\n\ngenerated reports for month-end financial close meetings with upper management,\n\nincluding the Company\u2019s Controller and Global Operations Finance Senior\n\nManager, who reported directly to Defendant Busky. Id.\n\n FE-13 corroborated that, because Savanna was supposed to be the Company\u2019s\n\n\n\n\n 17\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 18 of 100\n\n\n\n\nnext big \u201cmoney-maker,\u201d issues with Savanna were communicated to the C-Suite\n\n\u201call the time,\u201d and \u201ceveryone\u201d knew about its problems. Id., \u00b6 216. FE-2 elaborated\n\nthat \u201cevery test\u201d of Savanna\u2019s performance was documented, and any change to its\n\nengineering or assay was required to be documented in a design review. Id., \u00b6 217.\n\n\u201c[S]tandard practice\u201d was for engineers and scientists to report findings to their\n\nmanagers, who reported findings through PowerPoints to senior management such\n\nas Kroll and Defendant Ranalli, who then reported information to Defendants\n\nBujarski, Bryant, and Iskra. Id., \u00b6 217-18. Kroll personally reviewed all findings.\n\nId., \u00b6 219. FE-2 met weekly with Kroll before and during the Class Period until his\n\nSeptember 2023 departure. Id. Kroll met quarterly with the Board and senior\n\nmanagement to provide project updates on Savanna, such that senior\n\nmanagement\u2014specifically, Defendant Bryant\u2014was made aware of Savanna\u2019s\n\nfailure rate and assay problems when it was submitted to the FDA in mid-2023 and\n\nthereafter. Id. FE-5, a Territory Account Manager and Acute Account Manager at\n\nthe Company who pre-sold a high volume of RVP4 tests to customers in 2022,\n\nrecalled that the Company wanted salespeople to generate interest but could \u201cnever\n\nactually back it up with an actual product.\u201d Id., \u00b6 220.\n\nE. Corrective Disclosures and Market Reaction\n\n After close of market on February 13, 2024, QuidelOrtho reported\n\ndisappointing earnings for fourth quarter and fiscal year 2023 and cut guidance for\n\nendemic COVID-related revenue. Id., \u00b6 386. Previous guidance put this revenue\n\nbetween $200 and $400 million, while the February 13 disclosure moved the\n\n\n\n\n 18\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 19 of 100\n\n\n\n\nguidance to $200 million. Id. Defendants Bujarski, Bryant, and Iskra continued to\n\nmake positive statements about Savanna RVP4\u2019s FDA approval prospects. Id.,\n\n\u00b6 373. The next day, on February 14, 2024, QuidelOrtho\u2019s stock price fell 32% in a\n\nsingle trading session, moving from $66.77 per share on the 13th to $45.27 on the\n\n14th. Id., \u00b6 387. Two market analysis firms downgraded the stock, each citing\n\ncommunications by QuidelOrtho executives. Id., \u00b6\u00b6 291-292. The Company\n\nannounced the termination of CEO Bryant a week later, with analysts attributing\n\nthe move to the week\u2019s disappointing financial results. Id., \u00b6\u00b6 300-301.\n\n On March 4, 2024, UBS released an analyst report that downgraded\n\nQuidelOrtho stock to \u201csell.\u201d Id., \u00b6 296. The report suggested that the Company was\n\nlosing market share in COVID-related sales. Id. On April 2, 2024, QuidelOrtho\n\ndisclosed that it had withdrawn its FDA 510(k) submission for Savanna RVP4,\n\nciting failure to meet performance expectations. Id., \u00b6 303. The stock price dropped\n\nanother 10% after this announcement. Id., \u00b6 306. On July 31, 2024\u2014after the\n\nCompany lowered COVID-19 endemic guidance further, the Savanna RVP4 FDA\n\nresubmission was stalled again, and Savanna revenue projections were pushed out\n\nto 2026\u2014Defendants Bujarski and Iskra were fired. Id., \u00b6\u00b6 27, 380.\n\nF. Roles of Individual Defendants\n\n Douglas Bryant served as CEO throughout the Class Period and occupied a\n\npublic-facing role for the company\u2019s communications regarding Savanna and\n\nCOVID-19 revenues. Id., \u00b6\u00b6 4, 37, 344. He oversaw the Executive Steering\n\nCommittee for the Savanna project, signed SEC filings, and was directly involved in\n\n\n\n\n 19\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 20 of 100\n\n\n\n\ndecisions regarding product launch, regulatory submissions, and public guidance.\n\nId., \u00b6\u00b6 37, 43, 205, 357.\n\n As CFO, Joseph Busky was responsible for financial reporting and revenue\n\nguidance, including the abrupt doubling of endemic COVID-19 revenue projections.\n\nId., \u00b6\u00b6 38, 108. He received reports on sales, inventory, and financial risks and\n\nparticipated in public statements and earnings calls. Id., \u00b6\u00b6 43, 215, 376-378.\n\n Former CEO Randall Steward, COO Bujarski, CCO and Interim CEO Iskra,\n\nand SVP of Molecular Diagnostics Ranalli each played key roles in the development,\n\nmarketing, and oversight of Savanna and were recipients of internal reports\n\ndetailing product issues and sales trends. Id., \u00b6\u00b6 39-43, 360-362. For these and the\n\nother C-suite executives, compensation was allegedly tied to Savanna\u2019s launch. Id.,\n\n\u00b6\u00b6 136 (\u201cKroll, Defendant Steward, and Defendant Bujarski had large incentives in\n\ntheir employment contracts that were tied to Savanna RVP4 advances.\u201d), 381 (C-\n\nsuite bonuses were tied to achieving \u201ccertain Savanna launch targets,\u201d and former\n\nemployees confirm that compensation structure motivated the unrealistic and\n\nintense pressure surrounding Savanna.).\n\nG. Procedural History\n\n On April 12, 2024, Bristol County Retirement System filed a class action\n\ncomplaint against QuidelOrtho and three of its executives on behalf of all investors\n\nwho purchased or otherwise acquired QuidelOrtho common stock during the Class\n\nPeriod (\u201cthe Securities Action\u201d). ECF No. 1. About two weeks later, individual\n\nQuidelOrtho shareholder Matthew Whitfield separately filed a shareholder\n\n\n\n\n 20\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 21 of 100\n\n\n\n\nderivative action on behalf of QuidelOrtho against several members of the\n\nCompany\u2019s board of directors and the QuidelOrtho executives named as Defendants\n\nin the Securities Action. In Re Quidelortho Corporation Derivative Litigation, No.\n\n24-CV-03176 (S.D.N.Y.). The following day, Whitfield filed a Statement of\n\nRelatedness to the Securities Action. In Re Quidelortho Corporation Derivative\n\nLitigation, No. 24-CV-03176, ECF No. 3 (S.D.N.Y. April 26, 2024). Two months\n\nlater, individual QuidelOrtho shareholder Steven Pinkney also separately filed a\n\nshareholder derivative action and a Statement of Relatedness to the Securities\n\nAction. In Re Quidelortho Corporation Derivative Litigation, No. 24-CV-04753, ECF\n\nNos. 1, 4 (S.D.N.Y. June 21, 2024). The Court accepted the shareholder derivative\n\nactions filed by Whitfield and Pinkney (collectively, the \u201cDerivative Actions\u201d) as\n\ncases related to the Securities Action.\n\n On December 16, 2024, following oral argument on competing motions for\n\nappointment of Lead Plaintiff and Lead Counsel, the Court appointed the\n\nTeamsters Funds as Lead Plaintiff and Labaton Keller Sucharow LLP as Lead\n\nCounsel. See generally ECF No. 34. The Court also consolidated the two Derivative\n\nActions, declining to consolidate them with the Securities Action, and stayed the\n\nDerivative Actions for purposes of judicial economy. Id. at 10-11. The case was\n\nsubsequently reassigned to the undersigned. ECF No. 41. On February 7, 2025,\n\nthe Teamsters Funds filed the Amended Complaint. ECF No. 42. Defendants\n\nmoved to dismiss on April 4, 2025, ECF No. 47, and the parties filed their cross-\n\nmotions to strike in June and July 2025, ECF Nos. 51, 57.\n\n\n\n\n 21\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 22 of 100\n\n\n\n\n LEGAL STANDARDS\n\nA. Pleading Requirements\n\n On a Rule 12(b)(6) motion to dismiss, the Court must \u201caccept[] all factual\n\nallegations in the complaint [as true] and draw[] all reasonable inferences in the\n\nplaintiff\u2019s favor.\u201d ATSI Commc\u2019ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.\n\n2007). \u201cTo survive a motion to dismiss, a complaint must plead \u2018enough facts to\n\nstate a claim to relief that is plausible on its face.\u2019\u201d Ruotolo v. City of New York, 514\n\nF.3d 184, 188 (2d Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570\n\n(2007)); see ATSI Commc\u2019ns, 493 F.3d at 98 & n. 2 (applying the Twombly standard\n\nin the context of a securities fraud claim).\n\n Securities fraud claims brought under Section 10(b) and Rule 10b-5 are\n\nsubject to additional, heightened pleading requirements. Federal Rule of Civil\n\nProcedure 9(b) requires that \u201cthe circumstances constituting fraud . . . shall be\n\nstated with particularity.\u201d Novak v. Kasaks, 216 F.3d 300, 306 (2d Cir.\n\n2000) (citation omitted). Under Rule 9(b), a complaint must \u201c(1) specify the\n\nstatements that the plaintiff contends were fraudulent, (2) identify the speaker, (3)\n\nstate where and when the statements were made, and (4) explain why the\n\nstatements were fraudulent.\u201d Id. (internal quotation marks omitted). The Private\n\nSecurities Litigation Reform Act of 1995 (\u201cPSLRA\u201d) further requires a complaint to\n\n(i) \u201cspecify each statement alleged to have been misleading, the reason or reasons\n\nwhy the statement is misleading, and, if an allegation regarding the statement or\n\nomission is made on information and belief, . . . state with particularity all facts on\n\n\n\n\n 22\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 23 of 100\n\n\n\n\nwhich that belief is formed,\u201d ATSI Commc\u2019ns, 493 F.3d at 99 (quoting 15 U.S.C.\n\n\u00a7 78u 4(b)(1)), as well as (ii) \u201cstate with particularity facts giving rise to a strong\n\ninference that the defendant acted with the required state of mind,\u201d id. (quoting 15\n\nU.S.C. \u00a7 78u-4(b)(2)). In sum, the heightened pleading standards of Rule 9(b) and\n\nthe PSLRA require that plaintiffs \u201cdo more than say that the statements . . . were\n\nfalse and misleading; they must demonstrate with specificity why and how that is\n\nso.\u201d Rombach v. Chang, 355 F.3d 164, 174 (2d Cir. 2004).\n\nB. Section 10(b), Rule 10b-5, and Section 20(a) Liability\n\n Under Section 10(b) of the Exchange Act, it is unlawful to \u201cuse or employ, in\n\nconnection with the purchase or sale of any security . . . any manipulative or deceptive\n\ndevice or contrivance in contravention of such rules and regulations as the\n\nCommission may prescribe.\u201d 15 U.S.C. \u00a7 78j(b). SEC Rule 10b-5, promulgated under\n\nsection 10(b), further dictates:\n\n It shall be unlawful for any person . . . (a) [t]o employ any device,\n scheme, or artifice to defraud, (b) [t]o make any untrue statement of a\n material fact or to omit to state a material fact . . . or (c) to engage in\n any act, practice, or course of business which operates or would operate\n as a fraud or deceit upon any person, in connection with the purchase\n or sale of any security.\n\n17 C.F.R. \u00a7 240.10b-5.\n\n Under Section 20(a) of the Exchange Act, \u201c[e]very person who, directly or\n\nindirectly, controls any person liable under any provision of this chapter . . . shall\n\nalso be liable jointly and severally with and to the same extent as such controlled\n\nperson,\u201d unless the purported control person can demonstrate that he \u201cacted in good\n\nfaith and did not directly or indirectly induce the act or acts constituting the\n\n\n\n 23\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 24 of 100\n\n\n\n\nviolation or cause of action.\u201d 15 U.S.C. \u00a7 78t(a).\n\nC. Motion to Strike\n\n Federal Rule of Civil Procedure 12(f) states that \u201c[t]he court may strike from\n\na pleading an insufficient defense or any redundant, immaterial, impertinent, or\n\nscandalous matter.\u201d Fed. R. Civ. P. 12(f) (emphasis added). This rule \u201cexcludes\n\nmotions from the definition of pleadings, and courts in this district have held that\n\nRule 12(f) does not authorize this court to strike documents other than pleadings.\u201d\n\nIn re AppHarvest Sec. Litig., 684 F. Supp. 3d 201, 238 (S.D.N.Y. 2023) (cleaned up).\n\n DISCUSSION\n\n In the 191-page Amended Complaint, Lead Plaintiff imputes to Defendants\n\nfour types of misrepresentations, comprising 104 statements in total. Am. Compl.,\n\n\u00b6\u00b6 321(a)-(s), 327(a)-(w), 337(a)-(e), 339(a)-(bb), 344(a)-(v), 350, 351.3 Defendants\n\nrespond that many of the alleged misrepresentations are protected by the PSLRA\u2019s\n\nstatutory safe harbor, are inactionable puffery, or lack falsity. See, e.g., ECF No. 48\n\n(\u201cMTD Mem.\u201d) at 2.\n\n To succeed on a Section 10(b) claim in the Second Circuit, \u201ca plaintiff must\n\nprove (1) a material misrepresentation or omission by the defendant; (2) scienter;\n\n(3) a connection between the misrepresentation or omission and the purchase or\n\n\n\n3In appendices to their respective briefs, the parties have each indexed the\nstatements alleged in the Amended Complaint, see ECF Nos. 48-1, 50-1, which the\nCourt has reproduced in modified form as an appendix to this Opinion. The Court\nrefers to alleged misstatements with citations both to the Amended Complaint and\nby \u201cStatement number,\u201d as identified in its appendix. As noted supra, see note 2,\nreproduced statements are bolded and italicized, per the Amended Complaint, to\ndistinguish alleged misstatements from unchallenged text.\n\n\n 24\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 25 of 100\n\n\n\n\nsale of a security; (4) reliance upon the misrepresentation or omission; (5) economic\n\nloss; and (6) loss causation.\u201d Gimpel v. Hain Celestial Grp., Inc., 156 F.4th 121, 136\n\n(2d Cir. 2025). Defendants challenge only the first two of these prongs. See\n\ngenerally MTD Mem. The Court begins with the parties\u2019 cross-motions to strike, as\n\nthese motions address what materials the Court may properly consider in ruling on\n\nthe Motion to Dismiss.\n\nA. Motions to Strike\n\n Defendants move to strike Appendix A to Lead Plaintiff\u2019s memorandum of\n\nlaw in opposition to Defendants\u2019 motion to dismiss, ECF No. 50-1 (the \u201cAppendix\u201d),\n\nand to partially strike the Glossary of Defined Terms (\u201cGlossary\u201d) included in that\n\nsame memorandum, ECF No. 50 (\u201cOpp\u2019n\u201d). Lead Plaintiff moves to strike the\n\nDeclaration of Colin B. Davis and the forty-six exhibits attached thereto, ECF No.\n\n49 (\u201cDavis Declaration\u201d), as well as \u201cAppendix A\u201d attached to Defendants\u2019\n\nmemorandum in support of their motion to dismiss, ECF No. 48-1, pursuant to\n\nFederal Rules of Civil Procedure 12(d) and 12(f). ECF No. 52 (\u201cPl. Mem. Str.\u201d) at 1.\n\n 1. Lead Plaintiff\u2019s Motion to Strike\n\n The Teamsters Funds argue that (1) Defendants\u2019 request for the Court to\n\ntake judicial notice of the forty-six exhibits attached to the Davis Declaration and\n\nincorporate them by reference into the Amended Complaint is insufficient because it\n\nis argued in a footnote; (2) eight of Defendants\u2019 exhibits do not satisfy the standard\n\nfor judicial notice; (3) Defendants improperly attempt to cast doubt on the content of\n\ninvestor calls; (4) Defendants improperly attempt to utilize several exhibits as\n\n\n\n\n 25\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 26 of 100\n\n\n\n\n\u201cfactual rebuttal\u201d; and (5) Appendix A should be stricken because it relies on these\n\nexhibits. Id. at 1-2. Defendants respond that the Teamsters\u2019 Funds\u2019 motion is\n\nprocedurally improper, that Defendants\u2019 exhibits meet the legal standards for either\n\njudicial notice or incorporation by reference, and that Appendix A may be properly\n\nconsidered by the Court. ECF No. 62 at 1-2. Because Lead Plaintiff\u2019s motion seeks\n\nto strike materials other than pleadings, its motion is procedurally improper. The\n\nCourt thus turns to whether these materials may be considered in deciding\n\nDefendants\u2019 pending motion to dismiss.\n\n a. Documents Incorporated by Reference\n\n Federal Rule of Civil Procedure 12(d) provides, in relevant part, that courts\n\nmay not look to materials extrinsic to the complaint without converting the instant\n\nmotion to dismiss to a Rule 56 motion for summary judgment. Fed. R. Civ. P. 12(d).\n\nA court may, however, rely upon documents attached to the complaint as exhibits,\n\ndocuments which the complaint incorporates by reference, and documents \u201cupon\n\nwhich [a complaint] . . . relies and which [are] integral to the complaint.\u201d Cloister\n\nE., Inc. v. N.Y. State Liquor Auth., 563 F. Supp. 3d 90, 105 (S.D.N.Y. 2021)\n\n(citations omitted); accord Ark. Public Emps. Ret. Sys. v. Bristol-Myers Squibb, 28\n\nF.4th 343, 357 n.3 (2d Cir. 2022). A document cannot be incorporated by reference\n\nthrough the Defendants\u2019 motion papers, whether mentioned in a footnote or\n\notherwise. Rather, the Court must look to whether the Complaint \u201cmake[s] a clear,\n\ndefinite and substantial reference to the documents.\u201d Mosdos Chofetz Chaim, Inc. v.\n\nVill. of Wesley Hills, 815 F. Supp. 2d 679, 691 (S.D.N.Y. 2011) (cleaned up).\n\n\n\n\n 26\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 27 of 100\n\n\n\n\n Of the forty-six exhibits, it is undisputed that thirty-eight are incorporated by\n\nreference in the Complaint. Pl. Mem. Str. at 11-12. Of those exhibits, Lead\n\nPlaintiff contests the Courts\u2019 consideration of Defendants\u2019 Exhibits 3-4, 7, 9-29, 31-\n\n32, 34, 35, 38-42, and 44 on the basis that \u201cit is improper to assume the truth of an\n\nincorporated document if such assumptions only serve to dispute facts stated in a\n\nwell-pleaded complaint.\u201d Id. at 12 (quoting Khoja v. Orexigen Therapeutics, Inc.,\n\n899 F.3d 988, 1003 (9th Cir. 2018)). Certainly, \u201cdefendants may not use plaintiffs\u2019\n\nsources as an archive from which to build what amounts to a factual rebuttal.\u201d In re\n\nInt. Rate Swaps Antitrust Litig., 261 F. Supp. 3d 430, 481 (S.D.N.Y. 2017). Yet the\n\n\u201cprinciple\u201d permitting a Court to consider documents \u201cincorporated by reference\u201d on\n\na Rule 12(b)(6) motion \u201chas its greatest applicability in cases alleging fraud.\u201d Roth\n\nv. Jennings, 489 F.3d 499, 509 (2d Cir. 2007). Indeed, \u201cwhen the complaint alleges\n\nthat such a document made a particular representation, the court may properly look\n\nat the document to see whether that representation was made.\u201d Id. Accordingly,\n\nthe Court will consider these exhibits for this limited purpose.\n\n Lead Plaintiff similarly does not dispute that the transcripts of investor calls\n\nand conferences provided by Defendants in Exhibits 30, 33, 37, and 43 are\n\nincorporated by reference into the Amended Complaint. See Pl. Mem. Str. at 11-12.\n\nRather, the dispute is as to which version of the transcripts should be considered.\n\nLead Plaintiff accuses Defendants of submitting incomplete transcripts and submits\n\ncompeting versions to the Court. Id.; ECF No. 53, Exs. A-D. Defendants contend\n\nthat they obtained the transcripts from Bloomberg Law, a reputable source, and\n\n\n\n\n 27\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 28 of 100\n\n\n\n\nquestions the authenticity of Lead Plaintiff\u2019s exhibits. ECF No. 62 at 15-16. As the\n\nCourt must \u201caccept all factual claims in the complaint as true and draw all\n\nreasonable inferences in the plaintiff\u2019s favor,\u201d Emps.\u2019 Ret. Sys. of Gov\u2019t of the V.I. v.\n\nBlanford, 794 F.3d 297, 307 (2d Cir. 2015) (cleaned up), and \u201c[f]act specific\n\nquestions cannot be resolved on the pleadings,\u201d Anderson News, L.L.C. v. Am.\n\nMedia, Inc., 680 F.3d 162, 185 (2d Cir. 2012) (cleaned up), the Court looks to Lead\n\nPlaintiff\u2019s submissions for purposes of resolving this motion to dismiss.\n\n b. Judicial Notice\n\n With respect to the remaining eight exhibits, Defendants request that the\n\nCourt take judicial notice. ECF No. 61. Federal Rule of Evidence 201(b) provides\n\nthat a district court ruling on a motion to dismiss may judicially notice a fact that is\n\nnot subject to reasonable dispute because it is \u201cgenerally known within the trial\n\ncourt\u2019s territorial jurisdiction\u201d or \u201ccan be accurately and readily determined from\n\nsources whose accuracy cannot reasonably be questioned.\u201d Fed. R. Evid. 201(b).\n\nThe Court may take notice on its own and must take judicial notice if \u201ca party\n\nrequests it and the court is supplied with the necessary information.\u201d Id. These\n\ndocuments are \u201crelevant not to prove the truth of their contents but only to\n\ndetermine what the documents stated.\u201d Kramer v. Time Warner Inc., 937 F.2d 767,\n\n774 (2d Cir. 1991).\n\n \u201cUnder Federal Rule of Evidence 201, a court \u2018may take judicial notice on its\n\nown\u2019 of \u2018a fact that is not subject to reasonable dispute because it: (1) is generally\n\nknown within the trial court\u2019s territorial jurisdiction; or (2) can be accurately and\n\n\n\n\n 28\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 29 of 100\n\n\n\n\nreadily determined from sources whose accuracy cannot reasonably be questioned.\u2019\u201d\n\nJohnson v. McKay, No. 14-CV-00803 (BKS) (TWD), 2015 WL 1735102, at *4\n\n(N.D.N.Y Apr. 16, 2015) (quoting Fed. R. Evid. 201(b)-(c)). \u201cStill, as it always does,\n\nthe Court examines Defendants\u2019 exhibits to determine whether they are properly\n\nconsidered to resolve this motion to dismiss,\u201d Bazzelle v. Novocure Ltd., No. 23-CV-\n\n05146 (GHW), 2025 WL 843668, at *6 (S.D.N.Y. Mar. 18, 2025), keeping in mind\n\nthat \u201ca ruling on a motion for dismissal pursuant to Rule 12(b)(6) is not an occasion\n\nfor the court to make findings of fact.\u201d Roth, 489 F.3d at 509.\n\n The Court determines that Exhibits 1-2, 5-6, 8, 36, and 45-46 are suitable for\n\njudicial notice \u201conly to determine what the documents stated.\u201d Kramer, 937 F.2d at\n\n774. Exhibits 1 and 8 are excerpts of QuidelOrtho\u2019s Annual Reports on Form 10-K\n\nfiled with the U.S. Securities and Exchange Commission (the \u201cSEC\u201d); Exhibits 2\n\nand 36 are press coverage of the Savanna launch and QuidelOrtho earnings\n\nrespectively; Exhibits 5 and 6 are the transcript and accompanying presentation for\n\nQuidel\u2019s January 12, 2022 presentation at the Bloomberg J.P. Morgan 40th Annual\n\nHealthcare Conference; Exhibit 45 is a transcript of QuidelOrtho\u2019s July 31, 2024\n\nearnings call for the second quarter of 2024; and Exhibit 46 is a chart of the\n\nCompany\u2019s share prices over time. This public information \u201ccan be accurately and\n\nreadily determined from sources whose accuracy cannot reasonably be questioned,\u201d\n\nFed. R. Evid. 201(b)(2), and is especially important considering Lead Plaintiff\u2019s\n\ninvocation of Rule 10b-5 to allege that Defendants\u2019 misstatements or omissions have\n\naltered the \u201ctotal mix of information\u201d available to investors, Basic, Inc. v. Levinson,\n\n\n\n\n 29\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 30 of 100\n\n\n\n\n485 U.S. 224, 232 (1988) (cleaned up). \u201cWhen a complaint alleges, for example, that\n\na document filed with the SEC failed to disclose certain facts, it is appropriate for\n\nthe court, in considering a Rule 12(b)(6) motion, to examine the document to see\n\nwhether or not those facts were disclosed.\u201d Roth, 489 F.3d at 509.\n\n Accordingly, Lead Plaintiff\u2019s motion is denied.\n\n 2. Defendants\u2019 Motion to Strike\n\n In their motion to strike, Defendants argue that Lead Plaintiff attempts to\n\nimproperly amend the operative complaint and circumvent the Court-ordered page\n\nlimit through its Glossary, which provides definitions of various terms, and\n\nAppendix, which adds two columns of citations from the pleadings to the appendix\n\ncreated by Defendants. ECF No. 58 at 1. This argument both lacks merit and\n\nimproperly attempts to strike documents outside the pleadings.\n\n Accordingly, Defendants\u2019 motion to strike is denied.\n\nB. Section 10(b) Claims\n\n Section 10(b) and Rule 10b-5(b) protect investors from material\n\nmisrepresentations in connection with the sale or purchase of securities. \u201cUnder\n\nRule 10b-5(b), it is unlawful to[, in connection with the sale of any security,] (1)\n\nmake any untrue statement of a material fact, or (2) omit to state a material fact\n\nnecessary in order to make the statements made . . . not misleading.\u201d Gimpel, 156\n\nF.4th at 138 (citing 17 C.F.R. \u00a7 240.10b-5(b) (cleaned up)). \u201cThese prongs\n\ncorrespond to two actionable theories under Section 10(b) and Rule 10b-5: (1) a\n\nfalse statement, i.e., an actual statement that is untrue outright, and (2) a half-\n\n\n\n\n 30\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 31 of 100\n\n\n\n\ntruth, i.e., a representation that states the truth only so far as it goes, while\n\nomitting critical qualifying information.\u201d Id. (cleaned up). \u201cA false statement . . .\n\nmust . . . be false at the time it was made, and the plaintiff must demonstrate with\n\nspecificity why the statement is false.\u201d Id.\n\n A half-truth theory relies on a company\u2019s \u201cduty to be both accurate and\n\ncomplete.\u201d Caiola v. Citibank, N.A., N.Y., 295 F.3d 312, 331 (2d Cir. 2002). Rule\n\n10b-5 \u201cdoes not proscribe pure omissions,\u201d only omissions of \u201cmaterial facts\n\nnecessary to make the \u2018statements made . . . not misleading.\u2019\u201d Macquarie\n\nInfrastructure Corp. v. Moab Partners, L.P., 601 U.S. 257, 264 (2024) (quoting 17\n\nC.F.R. \u00a7 240.10b\u20135(b)). While Section \u201c10(b) and Rule 10b-5 do not create an\n\naffirmative duty to disclose any and all material information,\u201d Matrixx Initiatives,\n\nInc. v. Siracusano, 563 U.S. 27, 44 (2011), once \u201ca company speaks on an issue or\n\ntopic,\u201d it must \u201ctell the whole truth,\u201d Meyer v. Jinkosolar Holdings Co., 761 F.3d\n\n245, 250 (2d Cir. 2014). \u201cAdequate disclosure\u201d is required alongside such\n\nstatements to ensure that, \u201cin light of the circumstances under which they were\n\nmade, [they are] not misleading.\u201d Id. (cleaned up). Whether a statement is\n\nmisleading is an objective inquiry reliant upon its \u201cliteral truth\u201d and its \u201ccontext\n\nand manner of presentation.\u201d Singh v. Cigna Corp., 918 F.3d 57, 63 (2d Cir. 2019).\n\n A securities fraud plaintiff \u201cmust also adequately allege that the\n\nmisstatement or half-truth is \u2018material,\u2019 meaning that \u2018a reasonable investor would\n\nhave considered [it] significant in making investment decisions.\u2019\u201d Gimpel, 156 F.4th\n\nat 139 (quoting Caiola, 295 F.3d at 329); accord Matrixx, 563 U.S. at 38 (statement\n\n\n\n\n 31\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 32 of 100\n\n\n\n\nmaterially misleading if there was \u201csubstantial likelihood\u201d that it \u201cwould have been\n\nviewed by the reasonable investor as having significantly altered the total mix of\n\ninformation made available.\u201d (cleaned up)).\n\n At the pleading stage, allegations from confidential witnesses are taken as\n\ntrue if they \u201care described in the complaint with sufficient particularity to support\n\nthe probability that a person in the position occupied by the source would possess\n\nthe information alleged.\u201d Emps.\u2019 Ret. Sys. of Gov\u2019t of the V.I., 794 F.3d at 305\n\n(quoting Novak, 216 F.3d at 314); see also City of Warren Police & Fire Ret. Sys. v.\n\nWorld Wrestling Ent. Inc., 477 F. Supp. 3d 123, 132 (S.D.N.Y. 2020) (\u201cThis liberal\n\nstandard make[s] sense; the heightened demands of the PSLRA will often require\n\nplaintiffs to rely on the testimony of confidential sources, even where those sources\n\noffer indirect knowledge, that is, information and belief that is hearsay but\n\nplausible.\u201d).\n\n 1. Alleged Misrepresentations\n\n Lead Plaintiff alleges that Defendants Bryant, Busky, Bujarski, Iskra, and\n\nRanalli made materially false and misleading statements and omissions concerning:\n\n(i) the status of QuidelOrtho\u2019s European launch of Savanna RVP4; (ii) Savanna\n\nRVP4\u2019s readiness for a U.S. launch and FDA approval; (iii) the Company\u2019s ability to\n\nmanufacture Savanna RVP4 at the necessary scale to achieve over $75 million in\n\nrevenue synergies and $300 million in overall revenue; and (iv) QuidelOrtho\u2019s\n\nendemic COVID-19 revenue. The Court addresses each category of alleged\n\nmisrepresentations, and defenses raised against statements therein, in turn.\n\n\n\n\n 32\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 33 of 100\n\n\n\n\n a. Challenged Statements on Savanna RVP4\u2019s European\n Launch\n\n Lead Plaintiff contends that Defendants Bryant, Ranalli, Busky, and\n\nQuidelOrtho altogether made 19 misstatements regarding Savanna RVP4\u2019s\n\nEuropean launch during the Class Period. Am. Compl., \u00b6\u00b6 321(a)-(s).\n\n i. Falsity\n\n Defendants assert that statements concerning Savanna RVP4\u2019s European\n\nlaunch were not false or misleading because \u201cthe number of defective and invalid\n\nRVP4 tests, defective Savanna instruments[,] and related string of escalating\n\ncustomer complaints,\u201d id., \u00b6 322\u2014all omitted from the total mix of information\n\navailable to investors\u2014did not contradict Defendants\u2019 statements about positive\n\nfeedback and high customer demand in Europe, MTD Mem. at 17.\n\n \u201cThe test for whether a statement is materially misleading under Section\n\n10(b) . . . is whether the defendants\u2019 representations, taken together and in context,\n\nwould have misled a reasonable investor.\u201d City of Hialeah Emps.\u2019 Ret. Sys. v.\n\nPeloton Interactive, Inc., 153 F.4th 288, 295 (2d Cir. 2025) (quoting Rombach v.\n\nChang, 355 F.3d 164, 172 n.7 (2d Cir. 2004)) (internal quotation marks omitted). \u201cA\n\nstatement or omission is material if there is a substantial likelihood that a\n\nreasonable shareholder would consider it important in deciding how to act.\u201d IBEW\n\nLoc. Union No. 58 Pension Tr.t Fund & Annuity Fund v. Royal Bank of Scotland\n\nGrp., PLC, 783 F. 3d 383, 389 (2d Cir. 2015) (internal quotation marks omitted); see\n\nalso City of Hialeah, 153 F.4th at 295 (\u201cSimilarly, for an alleged statement to be\n\n\u2018material\u2019 under Section 10(b), it must be sufficiently specific for an investor to\n\n\n\n 33\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 34 of 100\n\n\n\n\nreasonably rely on that statement as a guarantee of some concrete fact or outcome.\u201d\n\n(cleaned up)).\n\n Applying those standards here, Lead Plaintiff has plausibly alleged material\n\nmisrepresentations associated with Savanna SVP4\u2019s European launch. Internal\n\nreports indicated that the launch was plagued by customer complaints and product\n\nreturns. Am. Compl., \u00b6\u00b6 179-82, 222. From the beginning of Savanna\u2019s EU launch\n\nin late 2021, the Company\u2019s Scientific Marketing Manager, Europe reported to\n\nCompany leadership that \u201cthe Savanna RVP4 tests were failing in Europe,\u201d and an\n\nemployee who felt he had the \u201cbest pulse\u201d on Savanna RVP4\u2019s performance in\n\nEurope reported that 60-80% of customer feedback was negative. Id., \u00b6\u00b6 171, 185-\n\n187. A quarterly report in 2023 showed even more complaints (85) than units in\n\ndistribution (80). Id., \u00b6 188. These figures stand in stark contrast to the picture\n\nDefendants paint through cited caselaw. See, e.g., Pearlstein v. BlackBerry Ltd.,\n\n93 F. Supp. 3d 233, 238 & 240-41 (S.D.N.Y. 2015) (statements that \u201cthe launch of\n\nBlackBerry . . . marked the beginning of the organization\u2019s transition to becoming a\n\nleading mobile computing organization\u201d and \u201c[c]ustomers love the device\u201d were not\n\nfalse or misleading \u201c[e]ven though . . . BlackBerry 10 devices were not selling well\u201d\n\nbecause that fact did not \u201ccontradict generally optimistic sentiments\u201d). A market\n\nlaunch so replete with errors and customer discontent, see, e.g., Am. Compl., \u00b6 362\n\n(\u201cFE-7 described how, in the 20 years he has been in this line of work, he \u201cdidn\u2019t\n\nremember any market launch that was so full of issues\u201d), can hardly be described as\n\nyielding \u201cgenerally optimistic sentiments.\u201d\n\n\n\n\n 34\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 35 of 100\n\n\n\n\n Accordingly, some, though not all, of the challenged statements would have\n\nmaterially misled investors about Savanna RVP4\u2019s promise vis \u00e0 vis its European\n\nlaunch. Statement 17 provides an illustrative example. In August 2023 during a\n\nQ2 2023 Earnings Call,4 Defendant Bryant remarked with respect to the decline of\n\nQuidelOrtho\u2019s molecular diagnostics business: \u201cNotably, this was partially\n\noffset by Savanna, which continued to perform well in the EU, with a modest\n\nimprovement in sales year-over-year. Given the product\u2019s ease-of-use and\n\nindustry-leading speed, we are seeing a lot of customer interest and have\n\nexpanded our reach to more customers across Europe.\u201d Am. Compl., \u00b6 321(q).\n\nThe use of the word \u201cnotably\u201d during the Earnings Call indicates Bryant\u2019s cue to\n\ninvestors that Savanna\u2019s \u201cmodest improvement\u201d in sales year-over-year in Europe\n\nwas material enough to \u201cpartially offset\u201d what the Company ultimately reported to\n\nbe a 67% decrease in year-over-year molecular diagnostics revenue\u2014approximately\n\n$65 million, or an average of about $16.25 million per quarter. Id., \u00b6 295.5 Yet the\n\nCompany generated only $2.56 million from Savanna RVP4 sales in Europe in all of\n\n\n\n\n4 ECF No. 50-1 corrects the Amended Complaint\u2019s attribution of this statement to a\nQ3 2023 Earnings Call.\n5 QuidelOrtho Corp., Annual Report (Form 10-K), at 55 (Feb. 28, 2024),\n\nhttps://perma.cc/6NFF-A7LW; Am. Compl., \u00b6 295. See Tang Cap. Partners, LP. v.\nBRC Inc., 661 F. Supp. 3d 48, 59 (S.D.N.Y. 2023) (\u201c[T]he Second Circuit has\nconsistently held that in the securities context, courts may consider public\ndisclosure documents required by law to be, and that have been, filed with the\nSEC.\u201d (internal quotation marks omitted) (citing cases)); ATSI Commc\u2019ns, 493 F.3d\nat 98 (\u201c[W]e may consider any written instrument attached to the complaint,\nstatements or documents incorporated into the complaint by reference, legally\nrequired public disclosure documents filed with the SEC, and documents possessed\nby or known to the plaintiff and upon which it relied in bringing the suit\u201d).\n\n\n 35\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 36 of 100\n\n\n\n\n2023, or an average of about $640,000 per quarter. Id., \u00b6 333. While the pleadings\n\ndo not provide an exact per-quarter distribution of these losses and gains, they\n\nprovide enough to suggest that Bryant\u2019s characterization of Savanna\u2019s EU revenues\n\nin August 2023 as a \u201cnotabl[e] . . . offset\u201d likely materially misled investors. Id.,\n\n\u00b6 321(q).\n\n Other alleged misstatements are not pleaded with this level of specificity.\n\nLead Plaintiff provides no basis of falsity for Statement 9, wherein Defendant\n\nBryant asserted during a Q3 2022 Earnings Call in November of that year, \u201c[W]e\n\nare shifting boxes that we had intended to ship early in the United States to\n\nEurope where, frankly, the folks there have been asking for more boxes than\n\nwe are shipping. So it\u2019s just that straightforward.\u201d Am. Compl., \u00b6 321(i).\n\nAlthough the Amended Complaint alleges facts sufficient to call the European\n\ndemand for RVP4 into question, id., \u00b6 170, the particulars of QuidelOrtho\u2019s shipping\n\npractices are not pleaded.\n\n Further, Lead Plaintiff does not allege facts sufficient to explain why\n\nDefendant Ranalli\u2019s Statement 12 is misleading. Lead Plaintiff challenges\n\nDefendant Ranalli\u2019s assertion during a 2022 Investor Day call in December 2022\n\nregarding the Company\u2019s \u201cinstalled base target,\u201d the \u201cpull-through in those\n\ninstalled bases,\u201d and a conclusion based on data from the EU launch that the\n\nCompany would achieve \u201cfewer boxes placed, but those boxes are running at a\n\nhigher rate than our original estimation.\u201d Id., \u00b6 321(l). Although Lead\n\nPlaintiff does plead with particularity why certain financial projections for Savanna\n\n\n\n\n 36\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 37 of 100\n\n\n\n\nRVP4 were misleading, infra Discussion \u00a7 B(1)(b)(iv)(1), the Amended Complaint\n\ndoes not allege facts sufficient to challenge the Company\u2019s amendments to its\n\noriginal run rate.\n\n ii. Puffery\n\n Defendants challenge 17 statements in this category as inactionable puffery\n\nor corporate optimism, \u201cvague[] and enthusiastic[]\u201d statements that are \u201ctoo general\n\nto cause a reasonable investor to rely upon them.\u201d 6 Okla. Firefighters Pension &\n\nRet. Sys. v. Xerox Corp., 300 F. Supp. 3d 551, 569-70 (S.D.N.Y. 2018).\n\n \u201cGeneric, indefinite statements of corporate optimism typically are not\n\nactionable\u201d because \u201creasonable investors [do not] place substantial reliance on\n\ngeneralizations regarding a company\u2019s health or the strength of a company\u2019s\n\nproduct.\u201d Abramson v. Newlink Genetics Corp., 965 F.3d 165, 173 (2d Cir. 2020);\n\nECA, Loc. 134 IBEW Joint Pension Tr. of Chicago v. JP Morgan Chase Co., 553 F.3d\n\n187, 206 (2d Cir. 2009) (statements \u201ctoo general to cause a reasonable investor to\n\nrely upon them\u201d are inactionable puffery). Such \u201cpuffery\u201d is thus \u201cactionable only\n\nwhen the speaker knew that the contrary was true.\u201d Abramson, 965 F.3d at 174\n\n(cleaned up).\n\n \u201cWhether a representation is \u2018mere puffery\u2019 depends, in part, on the context\n\nin which it is made.\u201d In re Petrobras Sec. Litig., 116 F. Supp. 3d 368, 381 (S.D.N.Y.\n\n2015). Moreover, where the context makes it such that \u201ca reasonable investor could\n\nrely on them as reflective of the true state of affairs at the Company,\u201d puffery\n\n\n6 These include Statements 2-11 and 13-19. Am. Compl., \u00b6 321(b)-(k), (m)-(s).\n\n\n\n 37\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 38 of 100\n\n\n\n\ndefenses fail. Id. at 381; accord In re Turquoise Hill Res. Ltd. Sec. Litig., 625 F.\n\nSupp. 3d 164, 222 (S.D.N.Y. 2022). \u201cThe key distinction between [mere puffery] and\n\npotentially actionable statements is that these [inactionable] statements were non-\n\nverifiable\u201d at the time they were made. Okla. Firefighters, 300 F. Supp. 3d at 570.\n\nCorporate statements that things are \u201cmoving forward well\u201d or \u201cgoing well,\u201d or that\n\na company is \u201cwell positioned, or that its operations are \u201csuccessful\u201d are \u201cclassically\n\nnon-actionable unless the statements addressed concrete and measurable areas of\n\nthe defendant company\u2019s performance.\u201d Id. (cleaned up).\n\n Half of Statement 6 and all of Statements 7, 13, and 15 fall within this\n\ncategory. On the 2022 Q2 Earnings Call, Defendant Bryant announced, \u201cOur\n\nlimited European launch of Savanna with RVP4 continues to go well with\n\nsome early wins. As manufacturing capacity ramps, we plan a full\n\nEuropean launch in Q4, followed by 2023 menu expansions.\u201d Am. Compl.,\n\n\u00b6 321(f). The latter half of this statement\u2014specifically linking a full European\n\nlaunch to increasing manufacturing capacity and projecting 2023 menu\n\nexpansions\u2014is neither \u201cgeneric\u201d nor \u201cindefinite.\u201d Abramson,, 965 F.3d at 173 (2d\n\nCir. 2020). The first half, however, touting the launch generally as \u201cgo[ing] well\u201d\n\nand having \u201cearly wins,\u201d is entirely \u201cnon-verifiable.\u201d Okla. Firefighters, 300 F.\n\nSupp. 3d at 570; Am. Compl., \u00b6 321(f). The same is true of Statement 7,\n\nattributable to Bryant at the Morgan Stanley Global Healthcare Conference in\n\nSeptember 2022: \u201cAnd we\u2019ve been pretty pleased with what we\u2019ve done in\n\nEurope with the Savanna launch early on and I would say it portends well\n\n\n\n\n 38\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 39 of 100\n\n\n\n\nfor the rest of the globe.\u201d Am. Compl., \u00b6 321(g). Phrases like \u201cpretty pleased\u201d\n\napplied in generic terms to what the Company had \u201cdone in Europe\u201d are \u201ctoo\n\ngeneral to cause a reasonable investor to rely upon them.\u201d ECA, 553 F.3d at 206.\n\nStatement 15 can be dismissed as inactionable puffery for the same reason.7\n\nStatement 13\u2014by Bryant at the 41st Annual J.P. Morgan Healthcare Conference in\n\nFebruary 2023\u2014is a bit more concrete, identifying \u201cdemand\u201d in Europe.8 Yet\n\nBryant in no way quantifies or even characterizes the demand he identifies here,\n\nnor does he attach his optimism to any particular deliverable. Accordingly, these\n\nstatements can be dismissed as inactionable puffery.\n\n Statement 5 offers a telling counterexample to those Defendants successfully\n\nchallenge on these grounds. At the June 2022 William Blair Annual Growth Stock\n\nConference, Defendant Bryant declared: \u201c[W]e just launched Savanna in\n\nEurope in a couple of different countries [sic] have done super well. We\n\ntook pretty significant share from [indiscernible] recently in Italy. And I\n\nthink right now the demand creation is not the issue.\u201d Not only does the\n\nphrase \u201csuper well\u201d (in contrast to Statement 7\u2019s \u201cpretty well\u201d) imply to reasonable\n\ninvestors that the EU launch was free of catastrophes, but this statement also\n\nexplicitly ties Savanna\u2019s success to European demand and denies the product\u2019s\n\n\n\n7 Am. Compl., \u00b6 321(o) (Defendant Bryant during the 2022 Q4 Earnings Call in\nFebruary 2023: \u201cAnd I think it would be fair to say that we\u2019ve been\nreasonably successful in a limited launch in Europe with Savanna too.\u201d)\n8 Am. Compl., \u00b6 321(m) (\u201cWe\u2019ve demonstrated in Europe and elsewhere that\n\nthere is demand. We see pretty strong demand expressed by US customers as\nwell for this product, and we have a wait list. So, I think this is going to go well .\n. . If I\u2019m wrong, you won\u2019t see me here next year. I\u2019ll be hiding.\u201d)\n\n\n 39\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 40 of 100\n\n\n\n\nweakness in that category (\u201cnot the issue\u201d), narrowing and concretizing the scope of\n\nBryant\u2019s commentary. Statements 1, 3, 14, and 16 likewise \u201caddress[] concrete and\n\nmeasurable areas of the defendant [C]ompany\u2019s performance\u201d and thus cannot be\n\ndismissed as inactionable puffery. 9 Okla. Firefighters, 300 F. Supp. 3d at 570.\n\n iii. Inactionable Opinion\n\n Defendants challenge seven statements in this category as inactionable\n\nopinions.10 \u201cA fact is \u2018a thing done or existing or an actual happening,\u2019 while an\n\nopinion is \u2018a belief, a view, or a sentiment which the mind forms of persons or\n\n\n\n9 Am. Compl., \u00b6 321(a) (\u201cBased on customer reviews in Europe, we believe\nSavanna will be a major growth driver, both in the U.S. and globally, for\nyears to come.\u201d); id., \u00b6 321(c) (\u201cThat\u2019s Savanna, that\u2019s beautiful, performing\nvery nicely in Europe right now. We\u2019re hearing really nice feedback. I think\nit\u2019s the right design for the market at this time.\u201d); id., \u00b6 321 (n) (\u201cSavanna\nsales in Europe are expected to drive strong growth within our Molecular\nDiagnostics business, which, along with the expected ramp in the US\nvolumes after receipt of regulatory clearance, are expected to drive\nmeaningful revenue in the back half of the year.\u201d); id., \u00b6 321(p) (\u201cSavanna\nsales in Europe are expected to ramp as we move through the year, which\nalong with expected U.S. volumes after anticipated receipt of regulatory\nclearance are expected to drive meaningful revenue in the back half of the\nyear.\u201d).\n10 These include Statements 1 (\u201cBased on customer reviews in Europe, we\n\nbelieve Savanna will be a major growth driver, both in the U.S. and\nglobally, for years to come.\u201d), 3 (\u201cThat\u2019s Savanna, that\u2019s beautiful, performing\nvery nicely in Europe right now. We\u2019re hearing really nice feedback. I think\nit\u2019s the right design for the market at this time.\u201d), 5 (\u201c[W]e just launched\nSavanna in Europe in a couple of different countries [sic] have done super\nwell. We took pretty significant share from [indiscernible] recently in Italy.\nAnd I think right now the demand creation is not the issue.\u201d), and 16\n(\u201cSavanna sales in Europe are expected to ramp as we move through the\nyear, which along with expected U.S. volumes after anticipated receipt of\nregulatory clearance are expected to drive meaningful revenue in the back\nhalf of the year.\u201d). MTD Mem. at 11, n. 3; Am. Compl., \u00b6\u00b6 321(a), (c), (e), (p). The\nCourt does not include in this subsection any otherwise applicable Statements that\nhave already been addressed on other grounds.\n\n\n 40\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 41 of 100\n\n\n\n\nthings.\u2019\u201d New England Carpenters Guaranteed Annuity & Pension Funds v.\n\nDeCarlo, 122 F.4th 28, 40 (2d Cir. 2024) (quoting Omnicare, Inc. v. Laborers Dist.\n\nCouncil Constr. Indus. Pension Fund, 575 U.S. 175, 183 (2015)), cert. denied sub\n\nnom. BDO USA, LLP v. New England Carpenters Guaranteed Annuity & Pension\n\nFunds, 146 S. Ct. 261 (2025). Statements 1, 3, 5, 7, 13, 15, and 16 all bear\n\nhallmarks of opinions, such as \u201cI think,\u201d \u201cI would say,\u201d \u201c[w]e believe,\u201d or convey a\n\nsubjective assessment through phrases such as \u201cexpected to.\u201d 11\n\n Defendants contend these opinion statements are protected from liability\n\nbecause they convey \u201cinherently subjective . . . assessment[s],\u201d ECF No. 59 (\u201cReply\u201d)\n\nat 4-5 (quoting In re Philip Morris Int\u2019l Inc. Sec. Litig., 89 F.4th 408, 418 (2d Cir.\n\n2023)), that are \u201cnot necessarily misleading when an issuer knows, but fails to\n\ndisclose, some fact cutting the other way,\u201d id. at 5 (quoting Omnicare, 575 U.S. at\n\n189). \u201c[A] sincere statement of pure opinion is not an untrue statement of material\n\nfact\u201d giving rise to liability under the securities laws, even if \u201can investor can\n\nultimately prove the belief wrong.\u201d Omnicare, 575 U.S. at 186 (cleaned up). This is\n\nbecause \u201c[r]easonable investors understand that opinions sometimes rest on a\n\nweighing of competing facts; indeed, the presence of such facts is one reason why an\n\nissuer may frame a statement as an opinion, thus conveying uncertainty.\u201d Id. at\n\n189-90.\n\n \u201cBut opinions lead double lives.\u201d New England Carpenters, 122 F.4th at 41.\n\n\n\n\n11Am. Compl., \u00b6\u00b6 321(a), (c), (e), (g), and (p). Statement 3 is mixed. Only the final\nsentence in that statement is an opinion.\n\n\n 41\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 42 of 100\n\n\n\n\nThis is because \u201can opinion may implicitly convey \u2018facts about how the speaker has\n\nformed the opinion.\u2019\u201d Id. (quoting Omnicare, 122 F.4th at 188). \u201c[I]f the real facts\n\nare otherwise, but not provided, the opinion statement will mislead\u201d a reasonable\n\ninvestor. Omnicare, 575 U.S. at 188. In other words, an \u201copinion may be false or\n\nmisleading if the embedded fact is not one as to which reasonable minds can differ.\u201d\n\nNew England Carpenters, 122 F.4th at 42. Accordingly, \u201cwhether an omission\n\nmakes an expression of opinion misleading always depends on context.\u201d Omnicare,\n\n575 U.S. at 190.\n\n All of the opinions at issue convey facts about which reasonable minds could\n\nnot differ. Take, for instance, Defendant Bryant\u2019s March 2022 statement at the\n\nRaymond James Annual Institutional Investors Conference that Savanna was\n\n\u201cperforming very nicely in Europe right now. We\u2019re hearing really nice\n\nfeedback. I think it\u2019s the right design for the market at this time.\u201d Am.\n\nCompl., \u00b6 321(c). Taking the Amended Complaint\u2019s allegations as true, the facts\n\nembedded in this opinion\u2014that Savanna was broadly well received in Europe and\n\nnot plagued with critical design flaws\u2014are not ones about which reasonable minds\n\ncould differ. Savanna RVP4\u2019s test assay was failing \u201cfrom the very beginning\u201d of the\n\nEU launch; customers were \u201cirate\u201d; and early complaints reflected the fact that one\n\nin four tests had to be replaced, devices overheated, and cartridges produced a high\n\nlevel of invalid test results. Id., \u00b6\u00b6 170-177. Demand for the product in this market\n\nwas also limited. Id., \u00b6 170. Accordingly, the challenged opinion statements are\n\nactionable.\n\n\n\n\n 42\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 43 of 100\n\n\n\n\n iv. PSLRA Safe Harbor\n\n The PSLRA exempts certain statements from liability if they are \u201cforward\n\nlooking\u201d and meet one of the two prongs of the PSLRA\u2019s safe harbor analysis. 15\n\nU.S.C. \u00a7 78u-4; see also Slayton, 604 F.3d at 762 (discussing the \u201cprongs\u201d of\n\nanalysis under the PSLRA). The first prong is satisfied, and the speaker is thereby\n\nexempt from liability for the statement, if the statement is \u201caccompanied by\n\nmeaningful cautionary statements.\u201d 15 U.S.C. \u00a7 78u\u20135(c)(1). The second prong is\n\nsatisfied if \u201cthe plaintiff fails to prove that the forward-looking statement . . . was\n\nmade with actual knowledge by that person that the statement was false or\n\nmisleading.\u201d Id.\n\n As a threshold matter, courts determine whether a statement is \u201cforward\n\nlooking\u201d before inquiring into the PSLRA\u2019s protections. See Slayton, 604 F.3d at\n\n766-67. A \u201cforward-looking statement\u201d is one that contains \u201ca projection of\n\nrevenues, income . . . , [or] earnings,\u201d \u201ca statement of the plans and objectives of\n\nmanagement for future operations,\u201d or \u201ca statement of future economic\n\nperformance.\u201d 15 U.S.C. \u00a7 78u-5(i)(1). \u201cA statement may contain some elements\n\nthat look forward and others that do not,\u201d and \u201cforward-looking elements\u201d may be\n\n\u201cseverable\u201d from \u201cnon-forward-looking\u201d elements.\u201d In re Vivendi Universal, S.A.\n\nSec. Litig., 765 F. Supp. 2d 512, 569 (S.D.N.Y. 2016) (cleaned up) aff\u2019d, 838 F.3d 223\n\n(2d. Cir, 2016); see also Makor Issues & Rights, Ltd. v. Tellabs Inc., 513 F.3d 702,\n\n705 (7th Cir. 2008) (\u201c[A] mixed present/future statement is not entitled to the safe\n\nharbor with respect to the part of the statement that refers to the present.\u201d).\n\n\n\n\n 43\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 44 of 100\n\n\n\n\n For a statement to qualify for the protections of the PSLRA under this first\n\nprong, \u201ccourts must first \u2018identify the allegedly undisclosed risk\u2019 and then \u2018read the\n\nallegedly fraudulent materials\u2014including the cautionary language\u2014to determine if\n\na reasonable investor could have been misled into thinking that the risk that\n\nmaterialized and resulted in his loss did not actually exist.\u2019\u201d zCap Equity Fund\n\nLLC v. LuxUrban Hotels Inc., 792 F. Supp. 3d 407, 432 (S.D.N.Y. 2025) (quoting\n\nHalperin v. eBanker USA.com, Inc., 295 F.3d 352, 359 (2d Cir. 2002)). A plaintiff\n\nmay establish that statements are not cautionary if language \u201cdid not expressly\n\nwarn of or did not directly relate to the risk that brought about plaintiffs\u2019\n\nloss.\u201d Halperin, 295 F.3d at 359. \u201cVague\u201d or \u201cmere boilerplate\u201d language does not\n\nsuffice. Slayton, 604 F.3d at 772.\n\n While several of Defendants\u2019 misrepresentations regarding the European\n\nlaunch include forward-looking elements,12 these statements were not accompanied\n\nby meaningful cautionary language. Defendants attempt to invoke safe harbor\n\nprotection by pointing the Court to warnings \u201c[d]uring earnings calls and at\n\ninvestor conferences . . . that [the Company\u2019s] forward-looking statements were\n\nsubject to the risk factors identified in the Company\u2019s SEC filings,\u201d which in turn\n\noutlined that \u201cthere is no assurance . . . our efforts to develop new technologies,\n\nproducts or markets will be successful . . . [or] commercially viable.\u201d MTD Mem. at\n\n13-14. Yet such cautionary language does nothing to mitigate Defendant Bryant\u2019s\n\n\n\n\n12 These include Statements 1, 6, 10, 13, 14, 16, and 19. Am. Compl., \u00b6 321(a), (f),\n(j), (m)-(n), (p), (s). The Court does not address statements already dismissed.\n\n\n 44\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 45 of 100\n\n\n\n\nrepresentation, for instance, that \u201c[b]ased on customer reviews in Europe, we\n\nbelieve Savanna will be a major growth driver, both in the U.S. and\n\nglobally, for years to come.\u201d Am. Compl., \u00b6 321(a). This statement, like the other\n\nforward-looking statements about the European launch, was premised not upon\n\npredictions concerning disclosed risk factors but upon false summaries of already-\n\ncollected customer feedback on Savanna RVP4\u2019s performance in Europe. These\n\nstatements thus do not fall within the scope of the first prong of the safe harbor\n\nprovision. See Facebook, 986 F. Supp. 2d at 515 (cautionary language does not\n\n\u201cinsulate from liability the failure to disclose that the risk ha[d] transpired\u201d); accord\n\nRombach v. Chang, 355 F.3d 164, 173 (2d Cir. 2004).\n\n Lead Plaintiff has also plausibly alleged that Defendants had actual\n\nknowledge of the product\u2019s lackluster reception among the European market, thus\n\ndefeating Defendants\u2019 attempt to rely on the second prong of the safe harbor.\n\nAccording to the Amended Complaint, senior executives were regularly informed\n\nabout the negative feedback and technical problems. The rampant issues with the\n\nSavanna European launch were documented and reported up to the C-suite and\n\nBoard of Directors through regular meetings, PowerPoint presentations, and\n\ninternal complaint systems. Id., \u00b6\u00b6 184-185. In this sense, Lead Plaintiff has\n\n\u201cple[ade]d far more than fraud by hindsight.\u201d In re Glob. Crossing, Ltd. Sec. Litig.,\n\n322 F. Supp. 2d 319, 338 (S.D.N.Y. 2004). Accordingly, these statements do not\n\nreceive safe harbor protection.\n\n\n\n\n 45\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 46 of 100\n\n\n\n\n b. Challenged Statements on Savanna RVP4\u2019s Readiness for a\n U.S. Launch and FDA Approval\n\n Lead Plaintiff contends that Defendants QuidelOrtho, Bryant, Busky, Iskra,\n\nBujarski, and Ranalli altogether made 29 misstatements regarding Savanna\n\nRVP4\u2019s development progress toward FDA approval, satisfaction of FDA threshold\n\nrequirements, and readiness for a U.S. launch during the Class Period. Am.\n\nCompl., \u00b6\u00b6 327(a)-(w), 337(a)-(e).\n\n i. Falsity\n\n Lead Plaintiff has plausibly alleged material misrepresentations associated\n\nwith Savanna RVP\u2019s readiness for a U.S. launch and FDA approval. Id., \u00b6\u00b6 191-\n\n229, 328-36. For instance, several accounts from former employees regarding\n\nSavanna RVP4\u2019s manufacturing yields and sensitivity levels throughout the Class\n\nPeriod squarely contradict Defendant Bryant\u2019s statement on the Q1 2023 Earnings\n\nCall in May 2023 that \u201cSavanna meets the criteria that the FDA are looking\n\nfor. . . I have no reason to believe that the products that we have submitted\n\nwill not be.\u201d 13 Id., \u00b6 327(k) (Statement 30); see, e.g., id., \u00b6\u00b6 193 (\u201cFE-2 stated that\n\n. . . engineering issues with the RVP4 test were not fixed when it went on sale in\n\n\n\n13\n Defendants dispute the attribution of this statement to Defendant Bryant, instead\nattributing it to Defendant Busky. ECF No. 48-1 at 10 n.2. Lead Plaintiff\nmaintains that Bryant made the statement, see ECF No. 50-1 at 15 n.4, providing a\ntranscript in support of this assertion, ECF No. 53-1. The Court credits Lead\nPlaintiff\u2019s allegation at this stage. See, e.g., Emps\u2019 Ret. Sys. of Gov\u2019t of the V.I. v.\nBlanford, 794 F.3d 297, 307 (2d Cir. 2015) (on motion to dismiss, Court must\n\u201caccept all factual claims in the complaint as true and draw all reasonable\ninferences in the plaintiff\u2019s favor\u201d) (citation omitted); Anderson News, L.L.C.,680\nF.3d at 185 (\u201cFact specific questions cannot be resolved on the pleadings.\u201d (cleaned\nup)).\n\n\n 46\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 47 of 100\n\n\n\n\nEurope in late 2021, . . . not fixed when it was sent to the FDA for approval in the\n\nsecond quarter of 2023, and . . . not fixed when he left the Company in September\n\n2023.\u201d), 194 (\u201cFE-10 explained how, in early 2022, it became \u2018a reality\u2019 for the\n\nCompany that the manufacturing yields for RVP4 test were too low to receive FDA\n\nclearance.\u201d); 199 (\u201cthe FDA laid out a test plan for the approval of Savanna, which\n\nrequired that the RVP4 needed to meet a certain functional level of approximately\n\n95% or higher for detectability and accuracy,\u201d but \u201cFE-1 advised that Savanna could\n\nnot meet that level of accuracy either directly or through pooled samples\u201d), 200\n\n(\u201cFE-1\u2019s understanding was that the Company knew that it was not meeting the\n\nFDA\u2019s requirements when it submitted its 510(k) application for clearance to sell\n\nSavanna RVP4 in the United States.\u201d), 206 (\u201cFE-4 noted that QuidelOrtho \u2018pushed\u2019\n\nfor FDA clearance even though employees who worked directly or indirectly with\n\nthe Savanna RVP4 test knew that the test had \u2018glaring issues.\u2019\u201d). The Second\n\nCircuit has expressly found analogous statements misleading to investors.\n\nAbramson, 965 F.3d at 178 (\u201cBoth because of its posture as a response to a specific\n\nquestion and its categorical nature, . . . a jury could find that, by saying that [the\n\ncorporate defendant] did not have \u2018any reason\u2019 to believe\u201d the negative outcome at\n\nissue, the speaker, who was company president and chief medical officer, \u201cimplied\n\nthat there were no competing facts\u201d on this topic.).\n\n Statement 35 is also illustrative on this point. At the Evercore ISI Health\n\nCONX Conference in November 2023, Defendant Bryant was asked, \u201cwhat\u2019s\n\nhappening with Savanna? It looks like there was some timing pushout.\u201d Am.\n\n\n\n\n 47\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 48 of 100\n\n\n\n\nCompl., \u00b6 327(p). Beginning his statement, \u201cLet\u2019s be completely open,\u201d Defendant\n\nBryant elaborated that \u201cthe FDA\u2019s concern wasn\u2019t the performance of the\n\nproduct. It was they want to see how the instrument and cartridge performs\n\nwith respiratory season samples.\u201d Id. 14 This statement is a classic \u201chalf-truth\u201d\n\nunder Rule 10b-5(b). See Gimpel, 156 F.4th at 138-39. Once \u201ca company speaks on\n\nan issue or topic,\u201d it must \u201ctell the whole truth.\u201d Meyer, 761 F.3d at 250.\n\nParticularly given his representation of \u201ccomplete[] open[ness],\u201d Defendant Bryant\u2019s\n\nomissions here are striking and material. By specifying that the FDA\u2019s concern\n\nwith Savanna RVP4 wasn\u2019t the \u201cperformance of the product\u201d but rather the\n\n\u201cperform[ance]\u201d of the \u201cinstrument and cartridge\u201d (which some might indeed classify\n\nas the \u201cproduct\u201d) with \u201crespiratory season samples,\u201d this statement implied that the\n\nproduct\u2019s FDA clearance hurdle was a routine regulatory check for seasonal\n\nincongruency rather than the reality: that RVP4 \u201cnever worked properly.\u201d Am.\n\nCompl., \u00b6 192. Certainly, disclosure of the fact that the \u201cSavanna RVP4 test \u2018never\n\ncame close\u2019\u201d to the 95% sensitivity level required for FDA approval, id., \u00b6 199, would\n\nhave been \u201csubstantial[ly] likel[y] . . . [to] have been viewed by the reasonable\n\ninvestor as having significantly altered the \u2018total mix\u2019 of information made\n\navailable\u201d about the Company\u2019s FDA submission timeline, Matrixx, 563 U.S. at 38\n\n(citation omitted).\n\n The Court dismisses the first half of Statement 23 (\u201cWe continue to focus\n\n\n\n14Lead Plaintiff and Defendant again submit warring transcripts with respect to\nthis statement. See ECF Nos. 48-1 at 12 n.4, 53-3 at 4. Again, the Court credits\nPlaintiff\u2019s representations at this stage.\n\n\n 48\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 49 of 100\n\n\n\n\non overcoming manufacturing and supply chain challenges as we ramp up\n\nproduction of both instruments and cartridges\u201d), however, because the\n\nCompany\u2019s \u201cfocus\u201d on overcoming its manufacturing and supply chain challenges in\n\nservice of its efforts to ramp up production in November 2022 is not materially\n\nimpacted by its failure to ultimately do so. Statement 40 can be dismissed for the\n\nsame reason. Am. Compl., \u00b6 327(t) (regarding Defendants \u201cfocus\u201d on \u201cdoing all we\n\ncan do to get not just RVP4 out, but the other menu items.\u201d). In contrast, the\n\nsecond half of Statement 23 (\u201cAdditionally, we completed development\n\nactivities for all Savanna panels planned for launch in 2023.\u201d) survives, as it\n\ndirectly contradicts former employee accounts. See, e.g., id., \u00b6 212 (\u201cFE-2 explained\n\nthat the Company\u2019s plan was to fix issues as they went along, working in parallel\n\nwith QuidelOrtho\u2019s FDA application to prepare it for launch. This was a high-risk\n\nplan, according to FE-2, because the Company was manufacturing units that it\n\nwould have to ultimately pull off the shelves.\u201d).\n\n ii. Puffery\n\n Statements 20, 21, 29, 33, 34, 38, 45, 46, and 48 are too general to have been\n\nmaterial to a reasonable investor\u2019s analysis. Id., \u00b6 327(a)-(b), (j), (n)-(o), (r); id.,\n\n\u00b6 337(b)-(c), (e). These statements recount the Company\u2019s initial RVP4 Respiratory\n\nViral Panel menu and its anticipated RVP11 menu with no concrete timeline for\n\nrelease, see, e.g., id., \u00b6 337(b), (c), (e), or constitute \u201cvague descriptions offer[ing]\n\nonly generally optimistic opinions,\u201d see, e.g., id., \u00b6 327(a)-(b), (j), (n)-(o), (r), and can\n\nthus be classified as \u201cinactionable corporate puffery,\u201d In re Synchrony Fin. Sec.\n\n\n\n\n 49\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 50 of 100\n\n\n\n\nLitig., 988 F.3d 157, 170 (2d Cir. 2021). \u201cTo be actionably misleading, there must be\n\na sufficiently close nexus between the statement and the allegedly omitted\n\ninformation.\u201d Buhrke Fam. Revocable Tr. v. U.S. Bancorp, 726 F. Supp. 3d 315, 340\n\n(S.D.N.Y. 2024) (cleaned up). Such a nexus cannot exist where \u201cexaggerations or\n\noverstatements . . . mention nothing specific, but rather amount to general claims of\n\nsuperiority expressed in broad, vague, and commendatory language.\u201d\n\nMacNaughton v. Young Living Essential Oils, LC, 67 F.4th 89, 96 (2d Cir. 2023)\n\n(cleaned up). Accordingly, these statements are dismissed.\n\n iii. Inactionable Opinion\n\n Statement 43, Defendant Bujarski\u2019s challenged statement at the Raymond\n\nJames Institutional Investors Conference in March 2024, constitutes an\n\ninactionable opinion. 15 Like many \u201cstatements of opinion,\u201d Statement 43 includes\n\n\u201cqualifying language (like \u2018I believe\u2019 or \u2018I think\u2019) that conveys a lack of certainty\n\nabout the thing being expressed, marks the statement as reflecting the speaker\u2019s\n\nimpression or point of view rather than an objective truth, and makes it easier to\n\nidentify the statement as one of opinion rather than fact.\u201d New England\n\nCarpenters, 122 F.4th at 40-41. Further, \u201c[c]ertain statements address issues so\n\n\n\n\n15Am. Compl., \u00b6 327(w) (\u201cI think the ones that the field, I would say, is most\ninterested [in], RVP4 with CLIA Waiver, right? Without the CLIA Waiver, you\njust don\u2019t get to the breadth\u2014you don\u2019t get to the breadth of the placement.\nSo, that\u2019s going to be a key catalyst . . . those are the ones right out of the\ngate. So, when you\u2019re thinking about 2024, you\u2019re thinking about our focus,\nmore so than a revenue number for 2024, any of that. You got to have the\nmenu to really make this platform a success, and those are the ones that\nwe\u2019re focused on straight away\u201d).\n\n\n 50\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 51 of 100\n\n\n\n\nplainly subjective . . . that the statement is one of opinion not just by virtue of the\n\nwords used but also because of the nature of the information conveyed.\u201d New\n\nEngland Carpenters, 122 F.4th at 41. Defendant Bujarski\u2019s focus, and his opinion\n\nwith respect to what makes a product successful, \u201clacks any objective standard,\u201d id.\n\n(cleaned up), because it does not implicitly convey facts as to RVP4\u2019s capabilities at\n\nthat time. Accordingly, this statement is dismissed.\n\n The other statements that Defendants challenge as inactionable opinions are\n\nactionable because they \u201cimplicitly convey \u2018facts about how the speaker has formed\n\nthe opinion . . . or . . . about the speaker\u2019s basis for holding that view,\u2019\u201d and the\n\npleadings plausibly allege such facts to be both false and material. Id. (quoting\n\nOmnicare, 575 U.S. at 188). See, e.g., Am. Compl., \u00b6\u00b6 327(c) (\u201cit\u2019s just about\u2014it\u2019s\n\na matter of timing in terms of FDA clearance.\u201d) (conveying that nature of\n\nproduct errors were not so significant as to render FDA approval an \u201cif\u201d rather than\n\na \u201cwhen\u201d), 327(g) (\u201cWe\u2019re still expecting RVP for EUA in April and the 510(k)\n\nwill be just shortly after that. So, we\u2019re very much on track for the launch.\n\nAs I said, the instrument build issues have largely been resolved. We think\n\nwe are already at the capacity to have a meaningful launch. And we\u2019re at\n\nthe point where we\u2019re most\u2014most of the effort right now is around cartridge\n\nramp up . . . we expect to have the ability to make millions of cartridges very\n\nshortly\u201d) (conveying, inter alia, that \u201cinstrument build issues ha[d] largely\n\nbeen resolved,\u201d that \u201ccartridge ramp up\u201d concerns had supplanted more\n\nfundamental concerns regarding widespread detectability failures, that RVP4\n\n\n\n\n 51\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 52 of 100\n\n\n\n\nperformance as of February 2023 did not render FDA 510(k) approval three months\n\nlater an impossibility, and that the promised automated production line was close\n\nenough to producing \u201cmillions of cartridges very shortly\u201d that it had, for\n\ninstance, a physical location\u2014which Lead Plaintiff alleges it still did not as of April\n\n2024, see id., \u00b6 228).\n\n iv. PSLRA Safe Harbor\n\n Defendants argue that several of the challenged statements in this category\n\nare eligible for PSLRA safe harbor protection because they are forward looking,\n\nbecause they were accompanied by adequate cautionary language, and because\n\nLead Plaintiff has not proven that the Defendants who made the statements had\n\nactual knowledge that the statement was false or misleading. MTD Mem. at 11-15.\n\nThese include statements \u201ccontaining a projection of revenues\u201d or about \u201cfuture\n\neconomic performance,\u201d 16 15 U.S.C. \u00a7 78u-5(i)(1)(A), (C), projecting regulatory\n\napproval for RVP4 and its subsequent U.S. commercial launch,17 and anticipated\n\nmanufacturing capabilities and timeline for development of additional Savanna test\n\npanels.18 Many of the statements already dismissed on other grounds\u2014Statements\n\n20, 21, 34, 38, 43, 46, and 48, for instance\u2014would alternatively qualify for dismissal\n\nas immaterial under this doctrine. All of the statements not already dismissed on\n\nother grounds, however, remain actionable.\n\n\n\n16 These include Statements 25, 27, 32. See Am. Compl., \u00b6\u00b6 327(f), (h), (m).\n17 These include Statements 20, 21, 24, 25, 26, 27, 28, 29, 31, 32, 34, 36, 37, 38, 39,\n42, and 43. See Am. Compl., \u00b6\u00b6 327(a), (b), (e), (g)-(j), (l)-(m), (q)-(s), (v), (w).\n18 These include Statements 26, 39, 44, 45, 46, 47, 48. See Am. Compl., \u00b6\u00b6 327(g),\n\n(s), 337(a)-(e).\n\n\n 52\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 53 of 100\n\n\n\n\n Defendants point to oral warnings by Defendants that their \u201cforward-looking\n\nstatements were subject to risk factors identified in the Company\u2019s SEC filings,\u201d\n\nwhich in turn provided cautionary language regarding the Company\u2019s estimated\n\n\u201cregulatory clearance for RVP4 and other assays, as well as underlying assumptions\n\nabout development and manufacturability.\u201d MTD Mem. at 13-14 (emphasis added)\n\n(citing ECF Nos. 49-6 at 2, 49-7 at 1-2, 49-12 at 1-2, 49-14 at 2, 49-15 at 1, 49-19 at\n\n1, 49-21 at 3, 49-25 at 2, 49-27 at 2, 49-30 at 2, 49-33 at 1-2). Accepting Lead\n\nPlaintiff\u2019s well-pleaded allegations as true, however, these \u201cunderlying\n\nassumptions\u201d were knowingly false. While the Company cautioned that \u201c[f]ailure to\n\nobtain FDA clearance or approval would preclude commercialization in the U.S.,\n\nwhich could materially and adversely affect our future results of operations,\u201d ECF\n\nNos. 49-28 at 40-41, 49-8 at 33, it did not disclose material facts about the product\u2019s\n\nunaddressed incompatibility with those FDA clearance standards that would have\n\nmeaningfully altered a reasonable investor\u2019s assessment of Savanna RVP4\u2019s\n\ncommercial viability. \u201c[C]autionary words about future risk cannot insulate from\n\nliability an issuer\u2019s failure to disclose that the risk has, in fact, materialized in the\n\npast and is virtually certain to materialize again.\u201d Set Cap. LLC v. Credit Suisse\n\nGrp. AG, 996 F.3d 64, 85 (2d Cir. 2021). As Judge Pollack of this District once\n\nnoted, \u201cThe doctrine of bespeaks caution provides no protection to someone who\n\nwarns his hiking companion to walk slowly because there might be a ditch ahead\n\nwhen he knows with near certainty that the Grand Canyon lies one foot away.\u201d In\n\nre Prudential Sec. Inc. Ltd. P\u2019ships Litig., 930 F. Supp. 68, 72 (S.D.N.Y. 1996).\n\n\n\n\n 53\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 54 of 100\n\n\n\n\n 1. Revenue Projection Statements\n\n Contrary to Lead Plaintiff\u2019s assertions, Opp\u2019n at 15, Statements 25, 27, and\n\n32 are forward-looking revenue-projection statements. A statement that references\n\ndefendant\u2019s \u201ccurrent expectation of cash flows,\u201d for instance, is forward-looking\n\nbecause it does \u201cnot justify the financial projections in terms of any particular\n\naspect of the company\u2019s current situation\u201d but instead asserts \u201conly that, whatever\n\nthat situation is, it makes the future projection attainable.\u201d Gissin v. Endres, 739\n\nF. Supp. 2d 488, 505-06 (S.D.N.Y. 2010) (cleaned up).\n\n Yet the projections made in these statements were not attainable. Moreover,\n\nthey were not adequately \u201caccompanied by meaningful cautionary language\n\nidentifying important factors that could cause actual results to differ materially\n\nfrom those in the forward[-]looking statements.\u201d In re Nokia Oyj (Nokia\n\nCorporation) Sec. Litig., 423 F. Supp. 2d 364, 400 (S.D.N.Y. 2006) (citing 15 U.S.C.\n\n\u00a7 78u-5(c)).\n\n Further, as noted supra, see Discussion \u00a7 B(1)(a)(i), Defendants had actual\n\nknowledge that\u2014unlike Statements 25 and 27 implied\u2014their European revenue\n\ncould not offset revenue declines attributable to the delay of Savanna RVP4\u2019s U.S.\n\nlaunch. Lead Plaintiff adequately alleges, as to the first half of Statement 32, that\n\nDefendant Busky would have known by June of 2023 that \u201cplacing . . . boxes\u201d (after\n\nFDA approval) by the fourth quarter of that year was not possible. See Am. Compl.,\n\n\u00b6\u00b6 327(m), 332 (\u201cFE-2 further explained that Kroll met with the Board and senior\n\nmanagement quarterly to provide project updates on Savanna, and senior\n\n\n\n\n 54\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 55 of 100\n\n\n\n\nmanagement . . . was made aware of Savanna\u2019s issues with its failure rate and\n\nassay problems at the time it was submitted to the FDA in mid-2023 and\n\nthereafter.\u201d). Lead Plaintiff has also shown that Defendant Busky possessed actual\n\nknowledge that the second half of Statement 32 was false: \u201cWe haven\u2019t really\n\ntalked too much about the slope of that revenue ramp in 2024 and 2025. But we\n\nhave said that we expect three years post-launch that will be greater than\n\n$250 million of revenue on that Savanna product.\u201d Id., \u00b6 327(m). Savanna\n\nrevenue projections could not be realized without FDA approval, U.S. launch, and\n\nan automated production line. Id., \u00b6\u00b6 95, 222, 343; see also id., \u00b6 380 (On July 31,\n\n2024, QuidelOrtho bumps Savanna revenue projections to 2026 after RVP4 FDA\n\nresubmission stalls). Given Defendant Busky\u2019s alleged knowledge that these\n\nmilestones would not be possible in the near future, see, e.g., id., \u00b6\u00b6 214-220, this\n\nstatement does not qualify for safe harbor protection at the pleading stage.\n\n 2. Regulatory Approval Statements\n\n The remaining challenged statements projecting regulatory approval for\n\nRVP4 and its subsequent U.S. commercial launch are ineligible for safe harbor\n\nprotection for the same reasons as many of the prior statements. 19 See, e.g.,\n\nStatement 24 (\u201cThere\u2019s nothing really different in terms of the timelines that\n\nwe\u2019ve communicated before.\u201d); Statement 28 (\u201c[F]rom a timing perspective, I\n\nthink we\u2019re in reasonably good shape to be ahead of the upcoming\n\n\n\n\n19These include Statements 24, 26, 28, 29, 31, 36-37, 39, and 42. See Am. Compl.,\n\u00b6\u00b6 327 (e)-(j), (l)-(m), (q)-(s), (v).\n\n\n 55\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 56 of 100\n\n\n\n\nrespiratory season. In addition, I think our confidence comes from having\n\nsolved supply chain issues and now more reliably making and stocking\n\ninstruments. So that\u2019s not going to be a challenge for us. . . .\u201d); Statement 36\n\n(\u201c[W]e\u2019re in good shape. And I would commit to being in market before the\n\nend of the quarter.\u201d).\n\n Statement 26, made by Bryant in February 2023 during the Q4 2022\n\nEarnings call, is particularly glaring: \u201cWe\u2019re still expecting RVP for EUA in\n\nApril [2023] and the 510(k) will be just shortly after that. So, we\u2019re very\n\nmuch on track for the launch. As I said, the instrument build issues have\n\nbeen largely resolved. We think we are already at the capacity to have a\n\nmeaningful launch. . . . [We] expect to have the ability to make millions of\n\ncartridges very shortly.\u201d Id., \u00b6 327(g). As alleged, QuidelOrtho\u2019s outlook for FDA\n\nclearance was undeniably bleak in February 2023; some of its instrument build\n\nissues were never resolved; and the Company was lightyears away from the\n\ncapacity to make \u201cmillions of cartridges.\u201d See, e.g., id., \u00b6\u00b6 178 (CAPA investigation\n\nongoing in 2024), 221-229 (automated manufacturing line never built), 325-26\n\n(continuing instrument build failures), 330 (Company \u201cnever met\u201d FDA standards).\n\n The Amended Complaint sets forth a wide range of troubling allegations as to\n\nDefendants Busky, Bryant, Iskra, and Ranalli\u2019s knowledge that Savanna RVP4\n\nwould not receive FDA clearance anywhere near the projected timeframes within\n\nthe Class Period. See, e.g., id., \u00b6\u00b6 16, 194 (Finance Director FE-10, who was one\n\nreporting level away from Busky from May 2022 through Fall 2023, id., \u00b6 55,\n\n\n\n\n 56\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 57 of 100\n\n\n\n\n\u201crecounted internal discussions about Savanna where employees joked that the\n\nproduct was a fraud\u2014QuidelOrtho\u2019s \u2018Theranos\u2019\u2019\u2019 and \u201cexplained how, in early 2022,\n\nit became \u2018a reality\u2019 for the Company that the manufacturing yields for RVP4 test\n\nwere too low to receive FDA clearance,\u201d affirmed by \u201cconsistent sentiment[s]\u201d of\n\n\u201clongtime FP&A, Accounting and Operations Finance colleagues\u201d), 198-208, 211-12,\n\n216 (\u201cFE-13 corroborated . . . that [because] Savanna was supposed to be the\n\nCompany\u2019s next big \u2018money-maker,\u2019 . . . issues with Savanna were communicated to\n\nthe C-suite \u2018all the time.\u2019\u201d), 218 (\u201cAccording to FE-2, the practice at QuidelOrtho\n\nwas for the engineers and scientists to report findings to their managers, who in\n\nturn presented the findings to senior management . . ., specifically . . . Kroll and\n\nDefendant Bujarski, and that information was also forwarded on to Defendants\n\nBryant and Ranalli[, and] . . . [to] his understanding[,] . . . Defendant Iskra.\u201d), 359-\n\n360, 371; see also id., \u00b6 204 (\u201cFE-1 asserted that he had discussions with Bodien and\n\nNovis in late 2023, where it was discussed that QuidelOrtho management\u2014\n\nspecifically, according to FE-1\u2019s understanding, Defendant Bryant, Defendant\n\nBujarski, and Kroll\u2014knew that Savanna RVP4 was not consistently meeting the\n\nFDA\u2019s detectability requirements\u201d).\n\n Statement 42 falls outside the PSLRA safe harbor for the same reason as the\n\nsecond half of Statement 32. See supra Discussion B(1)(b)(iv)(1); Am. Compl.,\n\n\u00b6 327(v) (\u201c$250 million is the goal, and it\u2019s out there . . . whether it\u2019s $250\n\nmillion, $275 million, or $245 million, it\u2019s a big number; it\u2019s a big\n\nopportunity, and we still believe in it.\u201d).\n\n\n\n\n 57\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 58 of 100\n\n\n\n\n 3. Statements Regarding Manufacturing Capacity\n and Additional Panels\n\n Having already addressed the challenged statements regarding\n\nQuidelOrtho\u2019s anticipated manufacturing capabilities, the Court concludes that the\n\nchallenged statements regarding the Company\u2019s development of additional Savanna\n\ntest panels are likewise ineligible for safe harbor protection. 20 The Company\u2019s\n\nRVP11 and additional panels, touted to include sexually transmitted infections,\n\nparasites, and gastrointestinal panels, were described by FE-4 as \u201cnearly\n\nimpossible\u201d and nothing more than a \u201cpipe dream.\u201d See id. \u00b6\u00b6 168-69 (\u201cthere was no\n\nevidence at the time that Savanna RVP11 was going to launch in the near future[,]\n\nand . . . the Company knew this at the time the product overview was published\u201d).\n\nLead Plaintiff has sufficiently pleaded that Defendant Ranalli, as then-Senior Vice\n\nPresident of the Molecular Business Unit, and Defendant Bryant, as then-CEO,\n\nwere briefed on these topics. For instance,\n\n FE-2 explained in greater detail that everything done\n with developing the Savanna product, including every test\n of its performance, was documented. He noted that any\n change to the engineering or assay was required to be\n documented in a design review. He added that standard\n practice was for the engineers and scientists to report\n findings to their managers, who in turn presented the\n findings to senior management in Power Point\n presentations. Senior management included Kroll and\n Ranalli, who then reported information up to Defendants\n Bujarski and Bryant.\u201d).\n\nId., \u00b6 217; see also id., \u00b6\u00b6 42, 183, 185, 195, 369. These statements survive.\n\n\n\n20Excluding statements already dismissed or deemed ineligible for safe harbor\nprotection, these include only Statements 44 and 47. See Am. Compl., \u00b6 337(a), (d).\n\n\n 58\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 59 of 100\n\n\n\n\n c. Challenged Statements on Savanna RVP4\u2019s Scalability\n\n Lead Plaintiff contends that the Corporate Defendant and Individual\n\nDefendants Bryant, Busky, Iskra, and Bujarski altogether made 28\n\nmisrepresentations during the Class Period about the Company\u2019s ability to\n\nmanufacture Savanna RVP4 at the necessary scale to achieve over $75 million in\n\nrevenue synergies and $300 million in overall revenue in the near term. Id.,\n\n\u00b6\u00b6 339-343.\n\n Defendants\u2019 falsity challenge to these statements largely echo their\n\narguments regarding RVP4\u2019s European launch and readiness for the U.S. market.\n\nMTD Mem. at 21-22. The Court has already held that Lead Plaintiff plausibly\n\nalleges material misrepresentations associated with the Company\u2019s ability to\n\nmanufacture thousands of devices and millions of RVP4 tests once FDA approval\n\nmaterialized. See supra Discussion \u00a7 B(1)(b)(i), (iv)(2)-(3); see also Am. Compl.,\n\n\u00b6\u00b6 174, 194, 221-28. The Court turns to Defendants\u2019 remaining arguments.\n\n i. Inactionable Opinion\n\n All of the statements in this category that Defendants identify as opinions,\n\nMTD Mem. at 11 n.3, are actionable.21 Though several include phrases akin to \u201c[I]\n\nbelieve\u201d or \u201c[I] think,\u201d \u201cthose magic words can preface nearly any conclusion, and\n\nthe resulting statements, as [the Supreme Court] ha[s] shown, remain perfectly\n\ncapable of misleading investors.\u201d Omnicare, 575 U.S. at 193. Defendant Bryant\u2019s\n\n\n\n\n These include Statements 52, 57, 63, 64, 69, 71, 73, and 75. See Am. Compl.,\n21\n\n\u00b6\u00b6 339(d), (i), (o), (p), (u), (w), (y), (aa).\n\n\n 59\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 60 of 100\n\n\n\n\nstatement in May 2023 on the Company\u2019s Q1 2023 Earnings Call is illustrative:\n\n I think our confidence comes from having solved\n supply chain issues and now more reliably making\n and stocking instruments. So that\u2019s not going to be\n a challenge for us. And we now have the second line\n nearly validated on the cartridge manufacturing,\n which puts us in really good shape in terms of the\n volumes that we require in 2023 and 2024. So we\u2019re\n pretty confident.\n\nAm. Compl., \u00b6 339(p) (Statement 64); see also id., \u00b6 339(i) (Statement 57) (\u201cOur two\n\nautomated high-volume lines are expected to be up and running by mid-\n\n2023, ahead of our U.S. commercial launch.\u201d). Underlying Bryant\u2019s subjective\n\nassessment of the origins of QuidelOrtho\u2019s \u201cconfidence\u201d are his factual assurances\n\nthat QuidelOrtho had \u201csolved [its] supply chain issues,\u201d that it was \u201cmore reliably\n\nmaking and stocking instruments,\u201d that doing so was \u201cnot going to be a\n\nchallenge for\u201d the Company, and that the validation of the Company\u2019s second\n\ncartridge manufacturing line had put it in \u201creally good shape in terms of the\n\nvolumes [the Company would] require in 2023 and 2024.\u201d Id., \u00b6 339(p). As\n\ndiscussed, the pleadings amply allege otherwise. See, e.g., id., \u00b6\u00b6 212, 224-228, 340-\n\n43. \u201c[O]ne of the more straightforward ways a statement of opinion may be\n\nactionable is if it contains an embedded statement of fact that is not true.\u201d New\n\nEngland Carpenters, 122 F.4th at 42. As these statements contain several false\n\nassertions that do not \u201cturn[] on the exercise of subjective judgment,\u201d id. at 41, they\n\nare not inactionable opinions.\n\n ii. Puffery\n\n None of the statements in this category that Defendants contend are\n\n\n\n 60\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 61 of 100\n\n\n\n\ninactionable puffery qualify as such.22 In a representative example, Defendant\n\nBryant reported on the Q1 2022 Earnings Call in May 2022 that \u201cthe only\n\nconstraint with the launch, honestly, [is] our ability to get enough\n\ninstruments into the market as quickly as possible as well as our ability to\n\nmanufacture cartridges at very, very high volumes.\u201d Am. Compl., \u00b6 339(d)\n\n(Statement 52). Like the other statements at issue, and unlike inactionable\n\nstatements of corporate optimism, this statement is verifiably false. See Oklahoma\n\nFirefighters, 300 F. Supp. 3d at 570; see also Abramson, 965 F.3d at 178. Taking\n\nLead Plaintiff\u2019s allegations as true, there were clearly other constraints on the\n\nlaunch besides the speed and volume at which QuidelOrtho could bring Savanna\n\nRVP4 to market: namely, that the product didn\u2019t work. See, e.g., Am. Compl., \u00b6\u00b6 16\n\n(\u201cperson responsible for validating the RVP4 test results for its FDA submissions\n\n. . . , at the time when FDA submissions were being filed, [shared] that Savanna\n\nRVP4 \u2018does not work\u2019 and that it \u2018isn\u2019t even a product.\u2019\u201d), 173 (\u201cwidespread failure\u201d\n\nwith Savanna device and test assay \u201cnot working \u2018from the very beginning\u2019\u201d), 175\n\n(one in four test instruments in Europe did not work), 179 (European customers\n\nreported nonworking Savanna devices and invalid results, which persisted through\n\nJune 2024), 180 (RVP4 \u201ctest wasn\u2019t stable enough to launch to market\u201d in May\n\n2024), 192 (FDA submissions had \u201cglaring issues\u201d and RVP4 tests \u201cnever worked\n\nproperly\u201d), 194 (since early 2022, longtime employees\u2019 \u201c\u2018consistent sentiment\u2019 was\n\n\n\n\n22These include Statements 52, 55, 56, 61, 64, 69, 70, and 75. See MTD Mem. at 16\nn.10 (citing Am. Compl., \u00b6 339(d), (g), (h), (m), (p), (u), (v), (aa)).\n\n\n 61\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 62 of 100\n\n\n\n\nthat they did not think the test \u2018would ever work\u2019\u201d), 195 (at time of Quidel and\n\nOrtho merger, colleagues remarked, \u201cwait until they see [Savanna] doesn\u2019t work\u201d\n\nand is \u201cnot a real thing\u201d), 372 (\u201cat least half of the tests produced were defective and\n\nscrapped right after manufacturing\u201d).\n\n Because all challenged statements in this category are sufficiently specific to\n\ncause a reasonable investor to rely upon them, they cannot be dismissed as mere\n\npuffery. See Oklahoma Firefighters, 300 F. Supp. 3d at 570 (\u201cstatements\n\naddress[ing] concrete and measurable areas of the defendant company\u2019s\n\nperformance\u201d are not inactionable puffery (citation omitted)).\n\n iii. PSLRA Safe Harbor\n\n Nearly all of the challenged statements about Defendants\u2019 manufacturing\n\ncapacity, ability to hit the ground running with U.S. production and distribution\n\nafter FDA approval, and related near-term revenue projections are forward-\n\nlooking. 23 Again, however, \u201c[c]autionary words about future risk cannot insulate\n\nfrom liability the failure to disclose that the risk has transpired.\u201d Rombach, 355\n\nF.3d at 173. As established, Defendants\u2019 cautionary language was insufficient to\n\nprotect their statements about QuidelOrtho\u2019s manufacturing capacity and resultant\n\nrevenue projections from liability because those warnings did not disclose that the\n\nCompany had already failed to achieve necessary predicates to their predictions.24\n\n\n\n23 These include Statements 49-64, 66-67, 69-76. See MTD Mem. at 16 & nn.3-7\n(citing Am. Compl., \u00b6 339(a)-(p), (r), (s), (u)-(z), (aa)-(bb)).\n24 See, e.g., Am. Compl., \u00b6 339(e) (Defendant Bryant on the Q1 2022 Earnings Call in\n\nMay 2022: \u201cOnce online in the fall, our Savanna cartridge automated\nmanufacturing line is expected to begin its ramp-up and outfit to over 1\n\n\n 62\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 63 of 100\n\n\n\n\nThe Court has also already determined that investors were not adequately warned\n\nof risks associated with Defendants\u2019 statements about Savanna RVP4\u2019s FDA\n\napproval timeline,25 see supra Discussion \u00a7 B(1)(b)(iv)(1)-(2), and that Defendants\n\nBryant, Busky, Iskra, Bujarski, and senior executives more broadly had actual\n\nknowledge that their statements about the Company\u2019s ability to manufacture at\n\nscale were misleading, see supra Discussion \u00a7 B(1)(b)(iv)(2). Accordingly, none are\n\nprotected.\n\n d. Challenged Statements regarding QuidelOrtho\u2019s endemic\n COVID-19 Revenue\n\n Lead Plaintiff contends that the Corporate Defendant and Individual\n\nDefendants Bryant and Busky altogether made 28 misrepresentations regarding\n\nthe Company\u2019s endemic COVID-19 revenue during the Class Period. Am. Compl.,\n\n\u00b6\u00b6 344(a)-(v), 350, 351. Many of the statements in this category specifically address\n\nQuidelOrtho\u2019s multi-year endemic COVID-19 guidance of $200-400 million annually\n\n(\u201cendemic range statements\u201d), 26 some address the Company\u2019s future endemic\n\n\n\n\nmillion cartridges per month with $300 million annual revenues and\nanticipated within 3 years of U.S. launch.\u201d).\n25 See, e.g., Am. Compl., \u00b6 339(v) (Defendant Bryant on the Q3 2023 Earnings Call\n\nin November 2023: \u201cI am confident we will receive Savanna instrument\nclearance by the end of this year and launch commercially in the U.S. very\nquickly thereafter.\u201d); id., \u00b6 339(k) (Defendant Bryant on the 2022 Investor Day\nCall in December 2022: \u201c. . . That\u2019s three years post the US launch. So it\u2019s\nsometime[,] call it mid-to-late-2023; three years beyond that is where you\u2019ll\nsee that number. I would argue it\u2019s largely the same number, Patrick. I\nmean, it\u2019s greater than 250 [million].\u201d\n26 These include Statements 78, 82-86, 90-92, 97-98, and 101-02. Am. Compl.,\n\n\u00b6 344(b), (e)-(j), (l)-(n), (r), (u)-(v). Statements 82 and 84, id., \u00b6 344(e), (g), project an\nadditional $100 million to account for a secured government contract in 2023.\n\n\n 63\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 64 of 100\n\n\n\n\nCOVID-19 trends more broadly (\u201cgeneral prospects statements\u201d), 27 others\n\ncharacterize the Company\u2019s past or present performance within the respiratory\n\nmarket (\u201cmarket position statements\u201d), 28 and a few discuss respiratory market\n\ntrends at large (\u201cmarket trend statements\u201d). 29 Two encompass regulatory\n\ndisclosures and certifications.30\n\n i. Falsity and Puffery 31\n\n The endemic range statements can be divided into two groups: those that\n\nexplicitly tie the $200-$400 million projection to fiscal years beyond 202332 and\n\nthose that may be construed as applying to fiscal year 2023 only.33 Although Lead\n\nPlaintiff does not differentiate between these two statement types, the distinction is\n\nconsequential. As alleged, the statements that reassure investors the $200-$400\n\nmillion projection would hold for years to come are material misrepresentations,\n\nwhereas those that do not are less likely to have misled investors. This is because\n\nLead Plaintiff has sufficiently alleged that\u2014between missed sales quotas,\n\nimpending end-of-life concerns for the Sofia line of products, Savanna RVP4\u2019s\n\nunviability, QuidelOrtho\u2019s loss of market share, and skyrocketing excess and\n\n\n\n\n27 These include Statements 81 and 87. Am. Compl., \u00b6 344(e), (j).\n28 These include Statements 77, 79, 93-94, 96, and 99-100. Am. Compl., \u00b6 344(a), (c),\n(o), (q), (s)-(t).\n29 These include Statements 80, 88-89, and 95. Am. Compl., \u00b6 344(d), (k), (p).\n\n30 These include Statements 103 and 104. Am. Compl., \u00b6\u00b6 350-51.\n\n31 None of the challenged statements in this category are inactionable opinions.\n\n32 These include Statements include 83, 90, 92, 97, and 102. Am. Compl., \u00b6 344(f),\n\n(l), (n), (r), (v).\n33 These include Statements 78, 82, 84-86, 98, and 101. Am. Compl., \u00b6 344(b), (e),\n\n(g)-(i), (r), (u).\n\n\n 64\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 65 of 100\n\n\n\n\nobsolete (\u201cE&O\u201d) inventory\u2014there was no path to achieving revenue within the\n\n$200-400 million range after 2023. See, e.g., Am. Compl., \u00b6\u00b6 139-45 (end-of-life\n\nforecast for Sofia 1 and 2), 213 (Savanna not passing QuidelOrtho\u2019s internal\n\nqualifications or testing in 2022 and early 2023), 236-76 (sales quotas missed\u2014and\n\nprogressively tanked\u2014in every quarter of 2023; commission only paid if\n\nsalespeople\u2019s percent to forecast hit 93%, but average percent to forecast was 65-\n\n68%; E&O hit unprecedented levels), 354 (loss of market share), 378 (\u201cDefendant\n\nBusky received reports detailing how COVID-19 sales quotas were missed \u2018by a\n\nmile\u2019 throughout 2023\u201d).\n\n Throughout fiscal year 2023, however, these realities were still taking shape.\n\nSee, e.g., id., \u00b6\u00b6 237 (sales representatives attempted unsuccessfully to \u201cstop the\n\nbleeding\u201d of declining business and revenue loss in 2023), 240 (\u201cCOVID test sales at\n\nQuidelOrtho began declining in late 2022\u201d), 241 (\u201cFE-15 recalled that he saw\n\n\u2018significant\u2019 change in the behavior of customers between late Fall 2022 and early\n\nSpring 2023,\u201d by which time 30-40% of customers had stopped purchasing from\n\nQuidelOrtho because they were \u201cnot testing for COVID as frequently\u201d and\n\n\u201cpurchasing newer tests from competitors\u201d); 244 (\u201cCOVID tests sales in hospitals\n\nwere \u2018completely gone\u2019 in 2023 and . . . Quidel\u2019s acute business \u2018disappeared\n\novernight\u2019\u201d). Clocking out at $260 million in endemic COVID revenue, discounting\n\ngovernment contracts, id., \u00b6 296 n.13, the Company\u2019s final revenue numbers for\n\n2023 were within the projected range\u2014though shocking and disappointing to\n\ninvestors, see id., \u00b6\u00b6 291 (2023 \u201cQ4 came in as one of the most surprising results we\n\n\n\n\n 65\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 66 of 100\n\n\n\n\nhave seen in diagnostics in some time\u2014and not in a pleasant way for\n\nshareholders.\u201d), 292 (William Blair analysts decry \u201cdisconnect\u201d between the\n\nexpectations set by QuidelOrtho management and the Company\u2019s fourth quarter\n\nand fiscal year 2023 results\u201d and characterize QuidelOrtho shares as \u201cin the penalty\n\nbox\u201d until management can \u201crebuild some credibility\u201d). Accordingly, Statements 78,\n\n82, 84-86, 98, and 101 cannot be considered false and are dismissed.\n\n In contrast, the general prospects statements constitute material\n\nmisrepresentations because they project a picture of the Company\u2019s respiratory\n\nmarket outlook made impossible by documented realities at the time the statements\n\nwere made. For instance, during the Q4 2022 Earnings Call in February 2023,\n\nDefendant Busky made Statement 81: \u201cWe expect to continue to capture and\n\ngrow our share of the respiratory market, underpinned by our large and\n\ngrowing Sofia placements.\u201d Id., \u00b6 344(e). By February 2023, Sofia had no\n\nchance of \u201cunderpinn[ing]\u201d QuidelOrtho\u2019s capture of, or growth in, the respiratory\n\nmarket because Sofia placements were not \u201clarge and growing\u201d but rather careening\n\ntoward obsolescence. See e.g., id., \u00b6\u00b6 138 (\u201cQuidelOrtho\u2019s dominant point of care\n\nimmunoassay\u2014the Sofia 1 and Sofia 2 analyzers\u2014faced end-of-life threats early on\n\nin the Class Period.\u201d), 139 (\u201caccording to . . . several former employees, by no later\n\nthan mid-2023, the Sofia platform faced critical \u2018end-of-life\u2019 concerns that posed a\n\nthreat to its continued revenue contributions.\u201d), 147 (\u201cSofia analyzers\u2019 sales\n\npotential also suffered because customers were choosing more modern technology\n\nover what the Sofia platform could offer. . . . [B]y the time of the Merger,\u201d FE-3, a\n\n\n\n\n 66\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 67 of 100\n\n\n\n\nformer salesman and business developer for the Company, \u201creceived feedback from\n\nsome of his current and prospective QuidelOrtho customers that the Company\u2019s\n\nanalyzers\u2014including specifically the Sofia analyzers\u2014\u2018did not hold up\u2019 and\n\ntherefore customers purchased tests from competitors because they had more state-\n\nof-the-art products.\u201d), 148 (\u201cthere was less demand for the Sofia analyzer and other\n\nimmunoassay tests because competitors\u2019 molecular tests had substantially higher\n\nreimbursement rates.\u201d). Further, Defendant Bryant\u2019s statement at the Raymond\n\nJames Annual Institutional Investors Conference in March 2023 that the\n\nCompany\u2019s EBITDA expectations in \u201c2024 should be better than 2023 and [in]\n\n2025 better than 2024,\u201d id., \u00b6 344 (j), was materially misleading given the\n\nCompany\u2019s sales drop-offs and end-of-life concerns for its major COVID-19 products.\n\nSee e.g., id., \u00b6\u00b6 236-76.\n\n Most, but not all, of Defendants\u2019 market position statements were material\n\nmisrepresentations. For instance, Lead Plaintiff alleges with damning specificity\n\n\n\n\n 67\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 68 of 100\n\n\n\n\nthat Statements 77, 34 94, 35 and 10036 materially misled investors. In contrast,\n\nStatement 79 is certainly misleading, but it fails on puffery grounds along with\n\nStatement 99. 37 Because these statements \u201clack the sort of definite positive\n\n\n\n34 Compare Am. Compl., \u00b6 344(a) (\u201c[W]e don\u2019t have so much of a demand\nproblem right now. We have a supply problem. We got to get more\nproducts.\u201d), with id., \u00b6\u00b6 233 (\u201chuge decline\u201d in COVID test sales beginning in\nAugust 2021, such that distributors couldn\u2019t resell to end-users and \u201ctests kits . . .\nwere never moved from distribution warehouses\u201d), 245 (\u201cQuidel provided the\n[hospital] conglomerates and other acute customers free COVID demo kits and\nheavily discounted COVID tests to its customers because there was an \u2018urgency\u2019 to\nsell them in Q4 2022 [and] Q1 2023\u201d); 246 (FE-16 and his sales colleagues\nthroughout the U.S. \u201call talked about how no one was buying QuidelOrtho\u2019s acute\nproducts\u201d and \u201casked each other what they were doing with all the Quidel products\nthat they were unable to sell.\u201d), 247 (FE-17, \u201c[a]nother Account Executive\nresponsible for selling all of Quidel\u2019s respiratory products, including the Lyra, Sofia\nand Solana, to distributors, hospitals, reference labs, and private practices . . .\nrecalled that in 2022 and 2023, \u2018no one\u2019 was buying COVID tests.\u201d).\n35 Compare Am. Compl., \u00b6 344(o) (Defendant Bryant, discussing the \u201coverall\n\nmarket for respiratory testing and our respiratory business\u201d in November\n2023 during the Q3 2023 Earnings Call, describes \u201csignificant share gains from\ncompetitors for us specifically.\u201d), with id., \u00b6 347 (QuidelOrtho was \u201closing\nmarket share to competitors whose tests offered more flexibility or better\ntechnology\u201d).\n36 Compare Am. Compl., \u00b6 344(t) (\u201c[W]e historically have preannounced when\n\nwe have something that\u2019s materially different than you think. . .[s]o, we\ndidn\u2019t actually see a need to do that and we\u2019ll have plenty to talk about at\nthe earnings call here in a few weeks.\u201d), with id., \u00b6 281 (\u201cWilliam Blair analysts\ncommented that QuidelOrtho\u2019s decision not to pre-release its fourth quarter and full\nyear 2023 financial results \u2018surprised investors,\u2019 but that this was not a cause for\nalarm because: \u2018Mgmt. was clear: if nothing materially different from range,\nno need to prerelease\u2019 [so] \u201823 guidance (rev and profits) appears intact\u2019. . .\nand that \u2018Q1 [2024] looks like a normal respiratory season.\u2019\u201d), and id., \u00b6 283\n(Defendant Bryant \u201cwill not sugarcoat the fact that our fourth quarter numbers fell\nshort of our expectations\u201d), and id., \u00b6 286 (\u201cDefendants . . . in January . . . [were]\nfully aware [that] . . . total revenue . . . was about 6% or 7% of what we had\nprojected.\u201d).\n37 Am. Compl., \u00b6 344(c) (\u201cBut part of beating expectations is to set the\n\nexpectations correctly. And so we\u2019re pretty humble with the street. We don\u2019t\nget ahead of our skis, as they say. We don\u2019t try to . . . say things that would\nhype the share price. We just, you know, we call it like we see it.\u201d); id.,\n\n\n 68\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 69 of 100\n\n\n\n\nprojections that might require later correction,\u201d In re Vivendi, 838 F.3d at 245\n\n(citation omitted), they are inactionable statements of corporate optimism. See\n\nAbramson, 965 F.3d at 173 (securities laws do not \u201crequire[] corporate officials to\n\npresent an overly gloomy or cautious picture of current performance and future\n\nprospects.\u201d (cleaned up)). Statement 93 fails because Lead Plaintiff does not allege\n\nfacts with specificity to conclude that the third quarter of 2023 did not have \u201cstrong\n\nand early respiratory demand\u201d as Defendant Bryant represented on the Q3 2023\n\nEarnings Call. Am. Compl., \u00b6 344(o). Statement 96 similarly fails because Lead\n\nPlaintiff does not allege that QuidelOrtho\u2019s 2023 Q2 \u201cfinancial performance\u201d did\n\nnot \u201cexceed[] [its] plan significantly.\u201d Id., \u00b6 344(q). While Lead Plaintiff does\n\nallege that the Company\u2019s salespeople did not hit their quotas that quarter, id.,\n\n\u00b6 346, the Teamsters Funds do not advance overall Q3 projections against which to\n\nmeasure QuidelOrtho\u2019s ultimate Q3 performance.\n\n Defendants\u2019 market trend statements would not have materially misled\n\nreasonable investors because they were not concretely tied to QuidelOrtho\u2019s\n\nperformance. 38 Accordingly, these statements are dismissed.\n\n\n\n\u00b6 344(s) (\u201cSo, we continue to do well in this space [with respect to Sofia]. I\ndon\u2019t want to sound arrogant, but I do want to point out that we do pretty\nwell in this space, so, and it\u2019s our highest market share category.\u201d).\n38 See Am. Compl., \u00b6 344(d) (COVID-19 is \u201cdefinitely not declining though. And\n\nso it\u2019s become somewhat steady state.\u201d), (k) (\u201cDemand for diagnostics across\nthe health care continuum remained strong.\u201d), (k) (\u201csignificant increase in\nglobal demand for global testing.\u201d), (p) (\u201cThe key difference is that the\noverall respiratory market, including COVID-19 now in its current endemic\nstate is significantly larger than it was pre-pandemic. And QuidelOrtho\u2019s\nposition in the overall diagnostics market, including respiratory, is much\nstronger as a combined company than either company was on a standalone\n\n\n 69\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 70 of 100\n\n\n\n\n Finally, Statements 103 and 104 are QuidelOrtho\u2019s regulatory disclosures\n\nand certifications. Am. Compl., \u00b6\u00b6 350-51. While these 10-Ks, 10-Qs, and\n\nSarbanes-Oxley Act of 2022 (\u201cSOX\u201d) certifications are insufficient to shield many of\n\nthe other statements from liability, see infra Discussion \u00a7 B(1)(d)(ii), they are not in\n\nand of themselves false. Accordingly, they are dismissed.\n\n ii. PSLRA Safe Harbor\n\n The remaining forward-looking statements not already dismissed address\n\nDefendants\u2019 market share and endemic COVID-19 revenue projections for fiscal\n\nyear 2023 and beyond.39 Defendants point to their SEC filings as providing\n\n\u201c[m]eaningful cautionary language\u201d with \u201cdetailed warnings about risks to\n\nQuidelOrtho\u2019s future financial performance and business.\u201d MTD Mem. at 13-14.\n\nQuidelOrtho\u2019s 2022 Form 10-K filed on February 23, 2023 (\u201c2022 10-K\u201d) is\n\nillustrative, as the Company\u2019s quarterly 10-Qs for 2023 incorporate it by reference\n\nthrough November 2023.40 The 2022 10-K provides, in relevant part:\n\n\n\nbasis. Contrary to some recent opinions, we believe as evidenced by our\nresults, the market, the diagnostics market is positioned for continued\ndurable growth for many years to come.\u201d).\n39 These include Statements 81, 83, 87, 90, 92, 97, and 102. Am. Compl., \u00b6 344(e)-(f),\n\n(j), (l), (n), (r), (v).\n40 QuidelOrtho Corp., Quarterly Report (Form 10-Q), at 36 (filed May 4, 2023),\n\nhttps://www.sec.gov/Archives/edgar/data/1906324/000190632423000033/qdel-\n20230402.htm (\u201cThere has been no material change in our risk factors as previously\ndisclosed in our Annual Report on Form 10-K for the fiscal year ended January 1,\n2023.\u201d); QuidelOrtho Corp., Quarterly Report (Form 10-Q), at 35 (filed Aug. 9,\n2023), https://www.sec.gov/Archives/edgar/data/1906324/000190632423000046/qdel-\n20230702.htm (same); QuidelOrtho Corp., Quarterly Report (Form 10-Q), at 36\n(filed Nov. 2, 2023),\nhttps://www.sec.gov/Archives/edgar/data/1906324/000190632423000058/qdel-\n20231001.htm (same).\n\n\n 70\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 71 of 100\n\n\n\n\n . . . The gross margins derived from sales of our COVID-\n 19 and influenza tests are generally significantly higher\n than the gross margins from many of our other core\n products. As a result, if sales or revenues of our COVID-\n 19 or influenza tests fluctuate or decline for any reason,\n whether as a result of a waning of the COVID-19\n pandemic, a mild flu season, market share loss or price\n pressure, obsolescence, regulatory matters, such as loss of\n EUAs from the FDA for our COVID-19 products, or any\n other reason, our operating results would be materially\n and adversely affected on a disproportionate basis.\n\nAm. Compl., \u00b6 350. Because several of the hypothetical risks listed in this\n\ndisclosure (e.g., market share loss and obsolescence) had already manifested by the\n\ntime many of these SEC filings were released, such cautionary language does not\n\noffer safe harbor protection.\n\n The Amended Complaint is also replete with allegations that Defendants\n\nBusky and Bryant were aware that QuidelOrtho\u2019s sales and E&O metrics rendered\n\ntheir revenue and market share projections fantastical. See, e.g., id., \u00b6\u00b6 144 (\u201cFE-4\n\nconfirmed that current Director, Global Product Management Sean Redmond,\n\nformer Senior Vice President POCT Business Unit Bill Ferenczy and current Vice\n\nPresident, Strategy and Portfolio Management Rhys de Callier, each of\n\nwhom were \u2018close\u2019 to Defendant Bryant, were aware of the \u2018major concerns\u2019 about\n\nSofia\u201d), 232 (\u201cthis projection of $200 to $400 million in COVID-19 endemic revenue\n\nwas in direct conflict with the Company\u2019s actual COVID-19 test sales and revenue\n\ntrends, all of which were directly reported to senior management, including the\n\nIndividual Defendants.\u201d), 236-238 (\u201cFE-3 noted that he logged feedback from [his]\n\nconversations\u201d with customers who \u201cpurchased tests from competitors because they\n\n\n\n\n 71\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 72 of 100\n\n\n\n\nhad more state-of-the-art products . . . in CRM Salesforce and shared the feedback\n\nin weekly meetings\u201d with his team and supervisor who reported to VP of Sales John\n\nMeckles. \u201cAccording to FE-3, [his supervisor] thereafter attended business manager\n\nmeetings where sales were discussed with senior management\u201d), 251 (\u201cthe inflated\n\nsales quotas were identified at the start of 2023 and brought to the attention of\n\nsenior management, including the Individual Defendants\u201d), 257 (\u201cupper\n\nmanagement utilized Microsoft Power BI to analyze data and \u2018see the bigger\n\npicture,\u2019 i.e., all of the Company\u2019s territories,\u201d where the \u201chuge decline in the Quidel\n\nside of the business . . . was seen \u2018easily and obviously.\u2019\u201d), 264 (\u201cThese missed sales\n\nquotas and lower customer demand for COVID-19 products were communicated\n\ndirectly to the highest levels of senior management, including Defendant Busky.\u201d),\n\n265 (Defendant Busky attended meetings about the Company\u2019s sales analysis\n\nthroughout 2023), 276 (\u201cFE-10 maintained and updated a report called the\n\nMcKellar Report, which included sales data for raw materials and finished goods,\n\nhow much product was selling each week, and how much of each product the\n\nCompany had in inventory. FE-10 stated that the McKellar Report reflected that\n\n\u2018nothing is selling\u2019 and that inventory levels were going \u2018up, up, up\u2019 beginning in\n\nearly 2021 and consistently increased throughout FE-10\u2019s tenure. FE-10 stated\n\nthat Jenkins provided E&O numbers to CFO Defendant Busky.\u201d), 278 (FE-10\n\ndiscussed inventory analysis and data directly with Defendant Busky); see also id.,\n\n\u00b6 265. Accordingly, the PSLRA\u2019s safe harbor does not shelter these statements.\n\n\n\n\n 72\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 73 of 100\n\n\n\n\n 2. Scienter\n\n The Supreme Court has instructed that a \u201cstrong inference\u201d of scienter \u201cmust\n\nbe more than merely plausible or reasonable\u2014it must be cogent and at least as\n\ncompelling as any opposing inference of nonfraudulent intent.\u201d Tellabs, 551 U.S. at\n\n314 . This inference need not be \u201cirrefutable,\u201d of the \u201csmoking-gun genre,\u201d or the\n\n\u201cmost plausible of competing inferences,\u201d rather, courts consider \u201cwhether all of the\n\nfacts alleged, taken collectively, give rise to a strong inference of scienter, not\n\nwhether any individual allegation, scrutinized in isolation, meets that standard.\u201d\n\nId. at 323-24. \u201cCourts in this district generally conclude that the scienter of\n\n\u2018management level\u2019 employees can be attributed to the corporation.\u201d In re ASML\n\nHolding N.V. Sec. Litig., 825 F. Supp. 3d 208, 239 (S.D.N.Y. 2026) (citation\n\nomitted); Thomas v. Shiloh Indus., Inc., No. 15-CV-07449 (KMW), 2017 WL\n\n2937620, at *3 (S.D.N.Y. July 7, 2017) (same) (collecting cases).\n\n In this Circuit, \u201c[a] plaintiff may establish scienter by alleging facts showing\n\nthat (1) the defendants had the motive and opportunity to commit fraud, or (2)\n\nstrong circumstantial evidence of conscious misbehavior or recklessness.\u201d Gimpel\n\n156 F.4th at 144 (cleaned up). If plaintiffs cannot make a showing of motive, \u201cthe\n\nstrength of the circumstantial allegations must be correspondingly greater.\u201d ECA,\n\n553 F.3d at 198-99 (cleaned up). Further, \u201cpersonal financial gain may weigh\n\nheavily in favor of a scienter inference.\u201d Slayton, 604 F.3d at 776 (quoting Tellabs,\n\n551 U.S. at 325).\n\n\n\n\n 73\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 74 of 100\n\n\n\n\n a. Motive and Opportunity\n\n To raise an inference of scienter under motive and opportunity, a plaintiff\n\nmust show that the corporation or its officers \u201cbenefitted in some concrete and\n\npersonal way from the purported fraud.\u201d zCap Equity Fund LLC, 792 F. Supp. 3d\n\nat 440 (quoting Novak, 216 F.3d at 307-08). The Amended Complaint imputes such\n\na motive to the Individual Defendants, alleging that \u201cC-suite bonuses were tied to\n\nachieving \u2018certain Savanna launch targets,\u2019\u201d and \u201cformer employees confirm that\n\ncompensation structure motivated the unrealistic and intense pressure surrounding\n\nSavanna.\u201d Am. Compl., \u00b6 381 (internal quotation marks omitted); see also id., \u00b6 136\n\n(\u201c[T]he Executive Steering Committee[, which included Defendants Steward and\n\nBujarski,] pushed the Savanna RVP4 project through even though they knew it was\n\nflawed because they were under pressure to release the product, and because they\n\nwanted to get paid their bonuses, . . . [and] Kroll, Defendant Steward, and\n\nDefendant Bujarski had large incentives in their employment contracts that were\n\ntied to Savanna RVP4 advances. . . . Defendant Bryant oversaw Quidel\u2019s Executive\n\nSteering Committee for the Savanna project.\u201d).\n\n b. Circumstantial Evidence of Conscious Misbehavior or\n Recklessness\n\n For 10b-5 actions in this Circuit, recklessness is defined as \u201cat the least, . . .\n\nan extreme departure from the standards of ordinary care . . . to the extent that the\n\ndanger was either known to the defendant or so obvious that the defendant must\n\nhave been aware of it.\u201d zCap, 792 F. Supp. 3d at 440 (cleaned up). As relevant\n\nhere, pleadings must that show Defendants \u201cknew facts or had access to\n\n\n\n 74\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 75 of 100\n\n\n\n\ninformation suggesting that their public statements were not accurate\u201d or \u201cfailed to\n\ncheck information they had a duty to monitor\u201d give rise to an inference of scienter.\n\nId. (cleaned up). The Court has discussed at length the extent to which\n\nDefendants Bryant, Busky, Iskra, and Ranalli \u201cknew facts or had access to\n\ninformation suggesting that their public statements were not accurate.\u201d See supra\n\nDiscussion \u00a7 B(1)(a)(iv), (b)(iv), (c)(iii), (d)(ii).\n\n Further, \u201c[t]he timing of terminations and resignations, in relation to the\n\nmagnitude of corrections in a restatement, also can be a strong inference of scienter,\n\napproaching recklessness or even conscious malfeasance as to the targeted\n\nindividuals.\u201d In re Pareteum Sec. Litig., No. 19-CV-09767 (AKH), 2021 WL\n\n3540779, at *17 (S.D.N.Y. Aug. 11, 2021) (cleaned up). Taken alongside the rest of\n\nthe Amended Complaint, CEO Bryant\u2019s termination a week after the corrective\n\nmarket reaction to QuidelOrtho\u2019s 2023 Form 10-K, Am. Compl., \u00b6 300-01, and\n\nDefendants Bujarski and Iskra\u2019s firings that July after the Company continued to\n\nperform below touted expectations, id., \u00b6\u00b6 27, 380, are probative of these Individual\n\nDefendants\u2019 recklessness.\n\n Accordingly, the Court finds that Lead Plaintiff has adequately alleged\n\nscienter as to both the Individual Defendant and QuidelOrtho. 41 See Teamsters\n\nLocal 445 Freight Div. Pension Fund v. Dynex Capital, Inc., 531 F.3d 190, 195 (2d\n\nCir. 2008) (\u201cIn most cases, the most straightforward way to raise such an inference\n\n\n Finding Lead Plaintiff\u2019s alternate arguments sufficient to plead scienter, the\n41\n\nCourt does not address the parties\u2019 core operations doctrine arguments. See MTD\nMem. at 31; Opp\u2019n at 28.\n\n\n\n 75\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 76 of 100\n\n\n\n\nfor a corporate defendant will be to plead it for an individual defendant.\u201d).\n\nC. Scheme Liability under Rule 10b-5(a) and (c)\n\n To state a scheme liability claim, a plaintiff must allege \u201c(1) manipulative\n\nacts; (2) damage (3) caused by reliance on an assumption of an efficient market free\n\nof manipulation; (4) scienter; (5) in connection with the purchase or sale of\n\nsecurities; (6) furthered by the defendant\u2019s use of the mails or any facility of a\n\nnational securities exchange.\u201d ATSI, 493 F.3d at 101. \u201cUnlike a misrepresentation\n\nor omission claim under Rule 10b-5(b), [a] scheme liability claim is aimed at\n\ninherently deceptive conduct and does not require a misleading statement or\n\nomission.\u201d In re AT&T/DirecTV Now Sec. Litig., 480 F. Supp. 3d 507, 534 (S.D.N.Y.\n\n2020) (cleaned up), aff\u2019d sub nom., Steamfitters Loc. 449 Pension Plan v. AT&T Inc.,\n\nNo. 21-2698-CV, 2022 WL 17587853 (2d Cir. Dec. 13, 2022) (summary order).\n\nInstead, \u201cscheme liability is triggered where the defendant performed an inherently\n\ndeceptive act that was distinct from an alleged misstatement: i.e., sham\n\nagreements, sham transactions, sham companies.\u201d SEC v. Farnsworth, 692 F.\n\nSupp. 3d 157, 189 (S.D.N.Y. 2023) (cleaned up). Accordingly, while \u201cmisstatements\n\nand omissions can form part of a scheme liability claim, . . . an actionable scheme\n\nliability claim also requires something beyond misstatements and omissions.\u201d SEC\n\nv. Rio Tinto PLC, 41 F.4th 47, 49 (2d Cir. 2022).\n\n While the misrepresentations set forth in the Amended Complaint certainly\n\naugment Lead Plaintiff\u2019s scheme liability claim, see Am. Compl., \u00b6 429(a)-(g), they\n\nare not its only support. Lead Plaintiff\u2019s other allegations in support of scheme\n\n\n\n\n 76\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 77 of 100\n\n\n\n\nliability include, inter alia, inflated sales goals, concealing the CAPA investigation\n\nand negative customer feedback in Europe, dismantling and downsizing the\n\nSavanna RVP4 team in favor of a more insular team, advertising additional\n\nSavanna panels that did not exist, doubling endemic COVID revenue projections\n\nwithout substantiation, and submitting Savanna RVP4 to the FDA despite known\n\ninsufficiencies. Id., \u00b6\u00b6 115, 168-69, 178-79, 183-84, 198, 200-04, 207, 359-60, 429;\n\nsee also, id., \u00b6\u00b6 134-35 (to \u201cpush\u201d Savanna \u201cover the goal line,\u201d \u201cDefendant Steward\n\nand Defendant Bujarski . . . \u2018championed\u2019 cutting corners on the RVP4 project . . .\n\nthrough the second half of 2023,\u201d including by \u201cskipp[ing] quality steps like\n\nreliability testing . . . because there were flaws with the Savanna RVP4\n\ninstrumentation, [such that] the RVP4 instrument and cartridge would break and\n\nfail and therefore the Company could not run a reliability test.\u201d), 201 (employees\n\nbelieved the Company made its Savanna RVP4 FDA submission in 2023 to boost\n\nthe Company\u2019s stock price), 370 (After team developing Savanna RVP4 told Kroll\n\nthe test had manufacturability concerns that would prevent it from being reliably\n\nmanufactured, QuidelOrtho did not \u201cproceed with a \u2018design review,\u2019 the next step on\n\na normal trajectory at a medical device company.\u201d Instead, \u201cKroll and Defendants\n\nSteward and Bujarski held a meeting in 2020 where they \u2018dismantled\u2019 the large\n\nteam working on Savanna to assemble a small, \u2018insular\u2019 team to handle it going\n\nforward,\u201d allegedly to \u201cinsulate information from the rest of the Company about\n\nissues with Savanna RVP4 and \u2018push it\u2019 to production and R&D.\u201d). Accordingly,\n\nthis claim survives.\n\n\n\n\n 77\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 78 of 100\n\n\n\n\nD. Control Person Liability Under Section 20(a)\n\n Section 20(a) of the Exchange Act assigns joint and several liability to every\n\nperson who controls any person liable under any provision of the Exchange Act. 15\n\nU.S.C. \u00a7 78t(a). To state a claim under section 20(a), \u201ca plaintiff must show (1) a\n\nprimary violation by the controlled person, (2) control of the primary violator by the\n\ndefendant, and (3) that the defendant was, in some meaningful sense, a culpable\n\nparticipant in the controlled person\u2019s fraud.\u201d Okla. Firefighters, 300 F. Supp. 3d at\n\n569-70 (cleaned up).\n\n Defendants\u2019 sole argument for dismissal of this claim is that Lead Plaintiff\n\nfails to plead a \u201cprimary violation\u201d under Section 10(b) that would allow for a claim\n\nunder Section 20(a). MTD Mem. at 35. As discussed at length, Lead Plaintiff\u2019s\n\nSection 10(b) claims survive Defendants\u2019 motion, so its claims arising under Section\n\n20(a) may proceed as well. See, e.g., Ark. Pub. Emps. Ret. Sys., 28 F.4th at 356-57\n\n(2d Cir. 2022).\n\n CONCLUSION\n\n Accordingly, Defendants\u2019 Motion to Dismiss is GRANTED IN PART AND\n\nDENIED IN PART. Both motions to strike are DENIED. The Clerk of Court is\n\nrespectfully directed to terminate ECF Nos. 47, 51, and 57.\n\n SO ORDERED.\n\nDated: September 30, 2026 ______________________________\n New York, New York JEANNETTE A. VARGAS\n United States District Judge\n\n\n\n\n 78\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 79 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n European Launch of Savanna RVP4\n\n\n 2/17/2022 \u201cBased on customer reviews in Europe, we believe Savanna will be a major growth driver, both\n 1 321(a) Bryant\n Q4 2021 Earnings Release in the U.S. and globally, for years to come.\u201d\n\n\n \u201cWe\u2019re in market in a limited launch with our Respiratory Viral Panel 4 respiratory panel and\n 2/17/2022\n 2 321(b) Bryant have received very positive customer feedback to date, including requests for additional\n Q4 2021 Earnings Call\n instruments .\u201d\n\n 3/9/2022\n Raymond James Annual \u201cThat\u2019s Savanna, that\u2019s beautiful, performing very nicely in Europe right now. We\u2019re hearing\n 3 321(c) Bryant\n Institutional Investors really nice feedback. I think it\u2019s the right design for the market at this time. \u201d\n Conference\n\n An analyst asked about Savanna and whether any of its panels were \u201cmore applicable\u201d to different\n 3/9/2022 locations. In response, Defendant Bryant stated: \u201cWe launched in Europe, it was the safest, easiest.\n Raymond James Annual We have a direct sales force there. And so we\u2019ve placed units with a small number of customers.\n 4 321(d) Bryant\n Institutional Investors Each one of those [European customers] -- well, one in particular, dramatically increased the\n Conference number of units they wanted after they had experience with it. So that was encouraging. We\u2019re\n receiving some really nice feedback. But that\u2019s just RVP4 at the moment.\u201d\n\n\n 6/8/2022 \u201c[W]e just launched Savanna in Europe in a couple of different countries [sic] have done super\n 5 321(e) William Blair Annual Bryant well. We took pretty significant share from [indiscernible] recently in Italy. And I think right\n Growth Stock Conference now the demand creation is not the issue. \u201d\n\n\n \u201cOur limited European launch of Savanna with RVP4 continues to go well with some early wins.\n 8/4/2022\n 6 321(f) Bryant As manufacturing capacity ramps, we plan a full European launch in Q4, followed by 2023\n Q2 2022 Earnings Call\n menu expansions .\u201d\n\n 9/12/2022\n \u201cAnd we\u2019ve been pretty pleased with what we\u2019ve done in Europe with the Savanna launch early\n 7 321(g) Morgan Stanley Global Bryant\n on and I would say it portends well for the rest of the globe. \u201d\n Healthcare Conference\n\n \u201cWe actually obtained CE marking and we\u2019ve done a launch in Europe around Christmas time last\n 9/13/2022\n 8 321(h) Ranalli year. So we\u2019ve been available in the market and we have been [sic] great feedback from our initial\n Repertoire Podcast\n customers. \u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 80 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n \u201c[W]e are shifting boxes that we had intended to ship early in the United States to Europe where,\n 11/2/2022\n 9 321(i) Bryant frankly, the folks there have been asking for more boxes than we are shipping. So it\u2019s just that\n Q3 2022 Earnings Call\n straightforward .\u201d\n\n\n 11/2/2022 \u201c[W]e are seeing demand in Europe and are increasingly confident that Savanna placements\n 10 321(j) Bryant\n Q3 2022 Earnings Call and revenue will accelerate throughout 2023 .\u201d\n\n\n 12/13/2022 QuidelOrtho, in a slide dedicated to Savanna, stated: \u201cOur Differentiator Personalized, Prompt &\n 11 321(k) 2022 Investor Day QO Precise ,\u201d also writing \u201cLess than 25 minutes from sample to result without sacrificing quality &\n Presentation performance .\u201d\n\n\n\n \u201cOn the second part of the slide, you\u2019ll see our three-year Savanna installed base target of 6,000\n boxes and our three-year Savanna run rate target, which is greater than $250 million in revenue.\n 12/13/2022 This is a slight adjustment to what you may have seen previously. The number of installed base\n 12 321(l) Ranalli\n 2022 Investor Day Call target is a little bit lower. However, the pull-through in those installed bases is a little bit higher,\n right. And this is based on the data that we\u2019re seeing with our current launch in Europe. So,\n fewer boxes placed, but those boxes are running at a higher rate than our original estimation .\u201d\n\n\n 1/9/2023 \u201cWe\u2019ve demonstrated in Europe and elsewhere that there is demand. We see pretty strong\n 13 321(m) 41st Annual J.P. Morgan Bryant demand expressed by US customers as well for this product, and we have a wait list. So, I think\n Healthcare Conference this is going to go well . . . If I\u2019m wrong, you won\u2019t see me here next year. I\u2019ll be hiding. \u201d\n\n\n \u201cSavanna sales in Europe are expected to drive strong growth within our Molecular Diagnostics\n 2/15/2023\n 14 321(n) Busky business, which, along with the expected ramp in the US volumes after receipt of regulatory\n Q4 2022 Earnings Call\n clearance, are expected to drive meaningful revenue in the back half of the year .\u201d\n\n\n An analyst asked Defendant Bryant a question regarding the \u201ccross-selling excitement\u201d that he\n 2/15/2023\n 15 321(o) Bryant referred to earlier. In response, Bryant stated: \u201cAnd I think it would be fair to say that we\u2019ve been\n Q4 2022 Earnings Call\n reasonably successful in a limited launch in Europe with Savanna too .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 81 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n \u201cSavanna sales in Europe are expected to ramp as we move through the year, which along with\n 5/3/2023\n 16 321(p) Busky expected U.S. volumes after anticipated receipt of regulatory clearance are expected to drive\n Q1 2023 Earnings Call\n meaningful revenue in the back half of the year. \u201d\n\n\n Defendant Bryant described how, while the molecular diagnostics business had declined because of\n declining Lyra assay sales, \u201cNotably, this was partially offset by Savanna, which continued to\n 8/8/2023\n 17 321(q) Bryant perform well in the EU , with a modest improvement in sales year-over-year. Given the product\u2019s\n Q2 2023 Earnings Call\n ease-of-use and industry-leading speed, we are seeing a lot of customer interest and have\n expanded our reach to more customers across Europe. \u201d\n\n\n Defendant Bryant was asked about \u201clonger term, what is the Savanna thesis, what should we expect\n from Savanna?\u201d Bryant responded: \u201cWell, we like the idea of the small syndromic panel and when\n you think about you\u2019ve got competitors that have very large panels and you have competitors that\n 11/30/2023\n have just one or two assays. And I think that the smaller syndromic panel of 4 to 5 analytes, I think\n 18 321(r) Evercore ISI HealthCONx Bryant\n the largest panel we have has 11, but those needs that exist out there we think can be addressed with\n Conference\n something that\u2019s faster and simpler, easier to run and frankly just more modern will be super\n competitive. And that\u2019s what our marketing data says. And we do have customers in Europe, we\n do have IUO customers in the US and the feedback at this point has been encouraging .\u201d\n\n\n 1/8/2024 \u201cI think we can talk more during Q&A, if you like, about the attributes of Savanna. But we\n 19 321(s) J.P. Morgan Healthcare Bryant already have evidence both in Europe and ex-US and now in the United States that we\u2019re going\n Conference to be extremely competitive .\u201d\n\n\n Savanna\u2019s Readiness for a U.S. Launch and FDA Approval Throughout the Class Period\n\n\n \u201cOur key near-term opportunity is the anticipated U.S. launch of our revolutionary Savanna\n 2/17/2022\n 20 327(a) Bryant, QO multiplex molecular platform , which allows for testing of up to 12 pathogens from a single sample\n Q4 2021 Earnings Release\n in less than 25 minutes.\u201d\n\n\n\n \u201cAnd as long as we\u2019re on the subject of future cash flow strength, I\u2019d also like to address\n 2/17/2022 progress we\u2019ve made with our revolutionary Savanna platform and what lies in store for us as\n 21 327(b) Bryant\n Q4 2021 Earnings Call we prepare for its U.S. launch later this year. The Savanna platform will be our next flagship\n product, and we are incredibly proud of the progress made to date .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 82 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n Defendant Bryant was asked about RVP4 and other panels represented to be in development\n 3/9/2022 (\u201cRVP11, HSV/VZV, GI, pharyngitis\u201d), and specifically, his thoughts \u201cabout the rollout in\n Raymond James Annual international versus U.S. and maybe closer to the point-of-care versus more in the hospital setting.\u201d\n 22 327(c) Bryant\n Institutional Investors In response, he stated: \u201cWe see demand right now in Europe. We think we will see demand in\n Conference South Africa pretty quickly. And then here, it\u2019s just about -- it\u2019s a matter of timing in terms of\n FDA clearance .\u201d\n\n\n \u201cWe continue to focus on overcoming manufacturing and supply chain challenges as we ramp\n 11/2/2022\n 23 327(d) Bryant up production of both instruments and cartridges. Additionally, we completed development\n Q3 2022 Earnings Call\n activities for all Savanna panels planned for launch in 2023 .\u201d\n\n\n \u201cThere\u2019s nothing really that\u2019s changed in terms of when the panels will be launched. The only\n 11/2/2022 addition is that we\u2019re pulling up some of our thoughts with respect to 510(k) submission . . . . So\n 24 327(e) Bryant\n Q3 2022 Earnings Call again, there\u2019s nothing really different in terms of the timelines that we\u2019ve communicated\n before .\u201d\n\n\n Defendant Bryant was asked directly on the Q3 2022 Earnings Call to confirm that with respect to\n \u201cthe $300 million guide out there for a three-year period. No change to that if US gets pushed out,\n it\u2019s just kind of coming from different places. Is that right? And then I guess with that $300 million,\n that guide you do have out there, I know it\u2019s not going to be linear, right, so how do we think about\n 11/2/2022\n 25 327(f) Bryant that as we work our way through 2023, assuming, let\u2019s say, US gets pushed out a little bit?\u201d Bryant\n Q3 2022 Earnings Call\n responded that: \u201cwe\u2019re not making any change to the $300 million plus target that we had over\n the three-year period. We\u2019re just shifting where we\u2019re sending the product based on the\n availability. So we\u2019re not going to need to allocate so much as we might have before between the\n two major continents. \u201d\n\n\n\n An analyst asked Defendant Bryant for an update on the Savanna timeline. In response, Defendant\n Bryant stated: \u201cWe\u2019re still expecting RVP for EUA in April and the 510(k) will be just shortly\n 2/15/2023 after that. So, we\u2019re very much on track for the launch. As I said, the instrument build issues\n 26 327(g) Bryant\n Q4 2022 Earnings Call have been largely resolved. We think we are already at the capacity to have a meaningful\n launch. And we\u2019re at the point where we\u2019re most \u2013 most of the effort right now is around\n cartridge ramp up. . . . we expect to have the ability to make millions of cartridges very shortly. \u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 83 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n Defendant Bryant responded to questions about the Savanna FDA approval process during the\n Raymond James Institutional Investors Conference, where the analyst asked, \u201c[i]s there anything\n 3/7/2023\n incremental since you last spoke about the conversations with FDA, your expectations on EUA\n Raymond James\n 27 327(h) Bryant versus 510(k) or anything in that front?\u201d In response, Bryant stated: \u201cWe expect EUA either in\n Institutional Investors\n April or worst case early May. . . . But for the moment, we\u2019re still sticking to this idea that we\n Conference\n should be able to generate $30 million to $40 million in Savanna revenue, which obviously\n includes what we\u2019re doing in Europe now too. \u201d\n\n\n\n An analyst asked Defendants for an update on the Savanna U.S. launch. In response, Defendant\n Bryant stated: \u201cFirst point is that we\u2019re in process of submitting the EUA for RVP and\n simultaneously, we\u2019re working on the submission of the 510(k) package. So from a timing\n perspective, I think we\u2019re in reasonably good shape to be ahead of the upcoming respiratory\n 5/3/2023\n 28 327(i) Bryant season. In addition, I think our confidence comes from having solved supply chain issues and\n Q1 2023 Earnings Call\n now more reliably making and stocking instruments. So that\u2019s not going to be a challenge for\n us. And we now have the second line nearly validated on the cartridge manufacturing , which\n puts us in really good shape in terms of the volumes that we require in 2023 and 2024. So we\u2019re\n pretty confident.\u201d\n\n\n \u201cWe\u2019re anticipating an expanded global launch ahead of the next respiratory season . . . So,\n 5/3/2023\n 29 327(j) Bryant Savanna is coming, the platform is robust and the total addressable market is huge. The outlook\n Q1 2023 Earnings Call\n is exciting .\u201d\n\n\n 5/3/2023 \u201cSavanna meets the criteria that the FDA are looking for . . . . I have no reason to believe that\n 30 327(k) Bryant\n Q1 2023 Earnings Call the products that we have submitted will not be .\u201d\n\n\n\n \u201cAnd then finally, the one that we talk about, in fact, have talked about in every single meeting\n today is the launch of Savanna, which we\u2019re very close to in the United States. We did launch in\n 6/6/2023\n Europe in a limited fashion. Learned a lot there. We\u2019re in a position where we\u2019re building\n 31 327(l) William Blair Growth Bryant\n inventories of instruments and cartridges in order to support Europe. This year, the US\n Stock Conference\n beginning in the fourth quarter, and then also supplying of cartridges for all of our clinical trial\n sites for a number of syndromic panels. So those are the three near-term drivers .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 84 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n In response to an analyst question regarding \u201cHow important is Savanna\u201d to achieving \u201c6% to 9%\u201d\n growth, Defendant Busky stated: \u201cAnd then finally, Molecular, coming back to Savanna, we do\n 6/6/2023\n expect to get regulatory clearance in the US on the Savanna product and start placing those\n 32 327(m) William Blair Growth Busky\n boxes as we move into the fourth quarter of this year. We haven\u2019t really talked too much about the\n Stock Conference\n slope of that revenue ramp in 2024 and 2025. But we have said that we expect three years post-\n launch that will be greater than $250 million of revenue on that Savanna product .\u201d\n\n\n\n An analyst asked, \u201chow the initial launch of Savanna in Europe went\u201d and whether the Company\n was seeing \u201cshare gains take place and how that has changed the initial US game plan once we get\n the approval?\u201d In response, Defendant Bryant stated: \u201cWell, I think it\u2019s a bit of foreshadowing of\n 8/8/2023\n 33 327(n) Bryant what we might expect. The competitors that we thought based on European feedback might be\n Q2 2023 Earnings Call\n vulnerable were indeed those same 2 competitors and we\u2019ve done there quite well. The issues that\n are reported in Europe we see as being applicable here in the United States, too. So particularly\n with respect to the respiratory launch, I think we\u2019re in really good shape here in the US .\u201d\n\n\n\n An analyst asked Defendants \u201cwhat is the path to a broader presence in Europe for Savanna look\n 9/12/2023 like?\u201d In response, Defendant Bryant stated: \u201cWell, first, realize, we did a limited launch. . . . And\n 34 327(o) Morgan Stanley Global Bryant so, as we\u2019re about to enter our largest opportunity, our largest market, we will have resolved\n Healthcare Conference some of the things that would have needed to be resolved had we not launched somewhere else\n first .\u201d\n\n\n An analyst asked Defendant Bryant \u201cwhat\u2019s happened with Savanna? It looks like there was some\n timing pushout.\u201d In response, Bryant stated: \u201cLet\u2019s be completely open. We submitted to the FDA\n 11/30/2023 in July and we completed the clinical trial during the summer. There was a lot of to-and-fro and\n 35 327(p) Evercore ISI Bryant we\u2019ve been in communication constantly with the FDA. The one issue which we\u2019ve agreed was\n HealthCONX Conference that we needed to run some samples during respiratory season. And the FDA\u2019s concern wasn\u2019t the\n performance of the product. It was they want to see how the instrument and cartridge performs\n with respiratory season samples\u2026 \u201d\n\n\n Defendant Bryant was asked: \u201cCan you give us a sense of when we should expect the RVP4 panel,\n 1/8/2024\n should that be approved during the respiratory season here? And just kind of yet any update on\n 36 327(q) J.P. Morgan Healthcare Bryant\n what you\u2019ve heard from the Agency or anything?\u201d Defendant Bryant responded: \u201cWell, we\u2019re in\n Conference\n good shape. And I would commit to being in market before the end of the quarter .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 85 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n Defendant Bryant was asked: \u201cAnd then on Savanna, I just want to understand, I guess like the\n gating factors to getting RVP4 approved, is there any \u2013 do you feel like you have all the trial activity\n you need done at this point? That\u2019s number one. And number two, when do you expect to be CLIA\n 2/13/2024\n 37 327(r) Bryant Waiver for Savanna? Does that come in conjunction with RVP4 or do you think that\u2019s later in the\n Q4 2023 Earnings Call\n year?\u201d In response, Bryant stated: \u201cThe status of the submission of the 510(k) is on track from\n my previous comments. Recall that I had said that we expect to get clearance before the end of\n the first quarter. I think we\u2019re still on track for all that .\u201d\n\n\n \u201cWe are advancing both with FDA review of our RVP4 panel and others in the queue. Our US\n 2/13/2024\n 38 327(r) Bryant sales team is meeting this week, and I can assure you a successful Savanna commercial launch\n Q4 2023 Earnings Call\n is on their menu as well .\u201d\n\n\n 2/13/2024 \u201cWe continue to expect Savanna instrument placements of approximately 1,000 in 2024, which\n 39 327(s) Busky\n Q4 2023 Earnings Call will pave the way for 2025 Savanna revenue growth .\u201d\n\n\n\n Defendant Iskra was asked: \u201cAnd maybe we\u2019ll just go to Savanna now. Any updates to share today\n in terms of RVP4 and kind of how you think about the timeline for getting that to market and really\n kind of being able to go pedal to the metal in that portfolio?\u201d In response, Iskra stated:\n \u201cSo, the folks [sic focus] around Savanna is building out the menu and delivering that. RVP4+\n 3/5/2024 for us, our focus right now is primarily in the back end of the year. That\u2019s the flu season and the\n Raymond James respiratory season. We\u2019re pretty much coming out of the opportunities to be in place for that by the\n 40 327(t) Iskra\n Institutional Investors end of the year. Somebody asked me if I was comfortable with where we are on that, and I\u2019ll tell\n Conference them same thing. I\u2019m totally like, I won\u2019t be comfortable until I see it, right? So, let\u2019s just be honest\n about it. We are dealing with some things we don\u2019t fully control. But for the things we do control,\n I would tell you it\u2019s getting a lot of attention, right? All three of us [Iskra, Busky and Bujarski]\n and others are heavily focused on it and doing all we can do to get not just RVP4 out, but the\n other menu items. And that\u2019s what we need .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 86 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n An analyst asked Defendant Iskra about the \u201carrows in the quiver\u201d at QuidelOrtho, based on\n previous opportunities touted for Point of Care and Molecular, and \u201cwhere are we in terms of kind\n 3/5/2024\n of really driving that traction today?\u201d In response, Iskra stated: \u201cwe still firmly believe that the\n Raymond James\n 41 327(u) Iskra market opportunity in Molecular where we are today provides a great opportunity,\u201d and\n Institutional Investors\n \u201cSavanna is made for this market, which we\u2019re well across ease of use, on performance, and on\n Conference\n cost. . . . I\u2019ll make it absolutely clear: our first priority is execute on Savanna, get a foothold\n there, and then expand .\u201d\n\n\n\n An analyst asked Defendants Iskra, Bujarski and Busky about the \u201c$250 million run rate goal\u201d for\n 3/5/2024 Savanna, quizzing them about whether that \u201cis still the goal\u201d and \u201cis it still kind of what we should\n Raymond James be thinking about and expecting?\u201d In response, Defendant Iskra stated: \u201c$250 million is the goal,\n 42 327(v) Iskra\n Institutional Investors and it\u2019s out there \u201d and \u201cnet-net, we are driving to that number, but we\u2019re watching a lot of things\n Conference that will factor into it. But nonetheless, whether it\u2019s $250 million, $275 million or $245 million,\n it\u2019s a big number, it\u2019s a big opportunity, and we still believe in it .\u201d\n\n\n\n The same analyst followed up and asked, \u201cas you think about the bridge to get there, and you\n mentioned the menu, what\u2019s your vision of what that menu looks like at that point? Is it, hey, we\u2019ve\n gotten RVP4, RVP11, syphilis added. Is it five assays? Is it 7, 10? Like what does it take to get\n there?\u201d Defendant Bujarski responded: \u201cI think the ones that the field, I would say, is most\n 3/5/2024\n interested, RVP4 with CLIA Waiver, right? Without the CLIA Waiver, you just don\u2019t get to the\n Raymond James\n 43 327(w) Bujarski breadth \u2013 you don\u2019t get to the breadth of the placement. So, that\u2019s going to be a key catalyst as\n Institutional Investors\n well as STI. And those are the first two. Now, that might not get you to the $250 million, but when\n Conference\n you start to say, when do we start to get traction, what gets the field very excited, those are the ones\n right out of the gate. So, when you\u2019re thinking about 2024, you\u2019re thinking about our focus,\n more so than a revenue number for 2024, any of that. You got to have the menu to really make\n this platform a success, and those are the ones that we\u2019re focused on straight away .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 87 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n\n\n \u201cIn addition to RVP4, which we are going through the EUA process with that panel, we will have\n a larger respiratory panel, which is the full RVP11 . And that includes a whole host of the most\n common different respiratory viruses. Again, those things like adenovirus and parainfluenza and\n human metapneumovirus. But outside the respiratory world, which we obviously do love, we\u2019re\n going into some GI panels. So we\u2019ll have a parasite panel and a combo bacterial viral panel. And\n so a lot of these are foodborne pathogens or viruses or parasites that you would get endemic in\n different areas. And then we\u2019ll have a sexually transmitted infection panel. And so that will\n 9/13/2022 include mycoplasma genitalium, trichomonas, chlamydia, and gonorrhea. So the four most\n 44 337(a) Ranalli\n Repertoire Podcast common STIs all in the same panel. We\u2019ll have a broader pharyngitis panel. Most of you guys\n are probably aware that in addition to Group A strep, you know, we were the first company to\n come out with a strep C and G. And we\u2019re also adding a couple of different bacterial pharyngitis\n causes onto a comprehensive pharyngitis panel. We have a HSV-VZV panel, which we\u2019re adding\n syphilis to as well. So that\u2019s kind of an all-encompassing lesion panel. And then finally, a\n vaginitis panel. And those are the ones that are actually currently in development. That\u2019s not,\n you know, we\u2019re actually adding more and more new products that I can\u2019t talk about yet. But\n those are the next six that are coming out that we\u2019re super excited about .\u201d\n\n\n\n\n \u201cBeyond [HSV and RVP4], we expect to begin clinical trials for RVP11, STI, two GI panels,\n 2/15/2023 bacterial, viral and a parasite panel, pharyngitis and vaginitis. We have purposely focused our\n 45 337(b) Bryant\n Q4 2022 Earnings Call initial menu on these areas to take advantage of Savanna\u2019s unique features, faster turnaround\n time, test flexibility, and lower total cost of ownership .\u201d\n\n\n\n \u201cOur initial menu includes our RVP4 Respiratory Viral Panel, followed by an HSV/VCZ lesion\n 5/3/2023 panel, RVP11, a panel for sexually transmitted infections including chlamydia, gonorrhea,\n 46 337(c) Bryant\n Q1 2023 Earnings Call mycoplasma genitalia and trichomonas vaginalis, plus two gastrointestinal panel, one bacterial\n and/or viral and the second parasitic, a pharyngitis panel, and a vaginitis panel .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 88 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n An analyst asked Defendants to \u201cgo back to Savanna commentary\u201d and \u201ctalk about the steps for\n menu development\u201d and how they should be \u201cthinking about additional assays rolling off over the\n next handful of years?\u201d In response, Defendant Bryant stated: \u201cWe are well on our way on assay\n development and almost everything that we had teed up for what I would call wave one. And I\n 5/3/2023\n 47 337(d) Bryant would say our clin and rec teams are already teed up with respect to the clinical trials. So the assays\n Q1 2023 Earnings Call\n that I mentioned in the script are very much on track. Is there further work to do here and there?\n Yes. But for the most part, technical issues are not obviously insurmountable. I don\u2019t see\n anything that would preclude us from launching any of those things that we had listed earlier on\n the call. \u201d\n\n\n\n\n \u201cOur initial menu includes our RVP4 respiratory viral panel and HSV/VZV lesion panel to be\n followed throughout 2024 by RVP11 and HSV/VZV syphilis panel, a panel for sexually\n transmitted infections including chlamydia, gonorrhea, Mycoplasma genitalia and Trichomonas\n 8/8/2023 vaginalis, plus two gastrointestinal panels; one bacterial and/or viral and a second parasitic\n 48 337(e) Bryant\n Q2 2023 Earnings Call panel. A pharyngitis panel that test for four bacterial pathogens, and, finally, a vaginitis panel . .\n . . On behalf of our customers and shareholders, I\u2019m thrilled that the US Savanna launch is\n progressing as the platform is robust, the total addressable market is huge and the outlook is\n very exciting. \u201d\n\n\n\n Company\u2019s Ability To Manufacture Savanna at a Scale Necessary To Achieve Over $75 Million in Revenue Synergies and $300 Million in Overall Revenue\n\n\n\n \u201c[W]e\u2019ve identified $100 million in expected revenue synergies by 2025 with approximately 80%\n 2/17/2022\n 49 339(a) Bryant to come from cross-selling opportunities and our expanded geographical footprint to sell\n Q4 2021 Earnings Call\n Savanna and other products in ex-U.S. markets .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 89 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n In Quidel\u2019s prospectus on Form 424(b)(3) (the \u201cApril 11, 2022 Prospectus\u201d), Defendants\n represented that they would achieve revenue synergies in the following amounts (a) $5 million by\n 4/11/2022 the end of 2022; (b) $28 million in 2023; (c) $61 million by end of 2024; (d) $105 million by end of\n 50 339(b) QO\n April 11, 2022 Prospectus 2025; and (e) $149 million by end of 2026. Of these totals, Defendants communicated that \u201c75% of\n revenue synergies attributable to Savanna , with the remainder from Triage and QuickVue\n products.\u201d\n\n\n \u201cThis resulted in Ortho\u2019s assumption, from a product perspective, of approximately 75% of\n 4/11/2022\n 51 339(c) Bryant revenue synergies attributable to Savanna , with the remainder from Triage and QuickVue\n 2022 Proxy Statement\n products.\u201d\n\n\n\n An analyst asked Defendant Bryant whether the Company was \u201cable to build some inventory as we\n head into this U.S. launch?\u201d In response, Bryant stated: \u201cthe only constraint with the launch,\n 52 339(d) QO\n honestly, being our ability to get enough instruments into the market as quickly as possible as\n 5/4/2022 well as our ability to manufacture cartridges at very, very high volumes .\u201d\n Q1 2022 Earnings Call\n\n\n \u201cOnce online in the fall, our Savanna cartridge automated manufacturing line is expected to\n 5/4/2022\n 53 339(e) Bryant begin its ramp-up and outfit to over 1 million cartridges per month with $300 million annual\n Q1 2022 Earnings Call\n revenues and anticipated within 3 years of U.S. launch .\u201d\n\n\n\n \u201cWith regard to integration, we\u2019ve already generated considerable momentum and have a clear\n 8/4/2022\n 54 339(f) Bryant path forward to reaching our targeted cost and revenue synergies, and positioning the combined\n Q2 2022 Earnings Release\n business for long-term growth and enhanced shareholder value .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 90 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n\n \u201cAs discussed on prior calls, we expect to realize cost synergies from the transaction of $90 million\n and cross-selling revenue synergies of over $100 million by the end of year 3, following\n 8/4/2022\n 55 339(g) Bryant transaction close though we do expect the commercial momentum to continue beyond that\n Q2 2022 Earnings Call\n timeframe. While our integration is still in the early days, the pieces are aligning and the\n chemistry is even better than expected, which is remarkable given our high expectations .\u201d\n\n\n\n An analyst asked about the prior guidance provided for 2022 and what Defendants were \u201cthinking\n about next year.\u201d In response, Defendant Bryant stated: \u201cwe feel very comfortable both on the\n 8/4/2022\n 56 339(h) Bryant clinical chemistry and immunoassay systems as well as on the Savanna. And what I would point\n Q2 2022 Earnings Call\n to, I think, generally, is to be S-4 in those forecasts and suggest to you that those are solidly\n intact .\u201d\n\n\n\n \u201cLastly, over the past couple of months, we\u2019ve overcome Savanna instrument supply chain\n challenges, begun ramping our instrument manufacturing capacity and completed the setup and\n validation of the first of two low-volume cartridge manufacturing lines. This allows us to expand\n 11/2/2022 our Europe, Middle East and Africa commercialization for the current respiratory season. Our\n 57 339(i) Bryant\n Q3 2022 Earnings Call second low volume line is expected to be run online during the fourth quarter. We believe these two\n lines should be more than sufficient to meet pull-through demand given the number of\n instruments we expect to ship. Our two automated high-volume lines are expected to be up and\n running by mid-2023, ahead of our US commercial launch .\u201d\n\n\n\n Defendant Bryant responded to an analyst question about whether the Company needed to revise\n \u201cthe $300 million guide out there for a three-year period\u201d for Savanna revenues assuming that the\n 11/2/2022\n 58 339(j) Bryant US launch \u201cgets pushed out,\u201d to which Bryant responded:\n Q3 2022 Earnings Call\n \u201c[W]e\u2019re not making any change to the $300 million plus target that we had over the 3-year\n period. We\u2019re just shifting where we\u2019re sending the product based on the availability. \u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 91 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n\n An analyst asked why Defendants \u201ctalked about pretty confidently kind of a $300 million number in\n that three-year timeframe\u201d and \u201c[i]t\u2019s now $250 million . . . can you just talk about what changed in\n the last few months? Is it slower adoption in Europe? Is it the fact that US got push out again on the\n 12/13/2022 quarter?\u201d In response, Defendant Bryant stated:\n 59 339(k) Bryant\n 2022 Investor Day Call \u201cI would say that the number that Tammi showed was 250 or better. And remember, that\u2019s \u2013 I\n have too many mics now. Sorry. That\u2019s three years post the US launch. So it\u2019s sometime call it\n mid-to-late-2023; three years beyond that is where you\u2019ll see that number. I would argue it\u2019s\n largely the same number, Patrick. I mean, it\u2019s greater than 250 .\u201d\n\n\n\n\n \u201cFor cartridge manufacturing, we are in the process of increasing manual manufacturing lines,\n 2/15/2023 hiring additional staff and installing high volume automated lines that will produce the millions\n 60 339(l) Bryant\n Q4 2022 Earnings Call of cartridges that will be required. The first two panels that we\u2019ll launch are RVP4 and the\n HSV/VZV lesion panel.\u201d\n\n\n\n\n \u201cI\u2019m pleased to say that we are nearly there, nearly ready for an expanded global launch ahead\n 2/15/2023 of the next respiratory season. Supply chain and instrument manufacturing issues that were a\n 61 339(m) QO\n Q4 2022 Earnings Call challenge for us are largely resolved, and we now have the capacity to begin to ship the\n analyzers that we had anticipated all along .\u201d\n\n\n\n 2/13/2024 The investor presentation accompanying the Q4 2023 Earnings Call stated that the Company\n 62 339(n) Q4 2023 Earnings Call Bryant \u201c[e]xpect[s] Savanna instrument placements of ~1,000 and $30 to $50 million of Savanna\n Investor Presentation respiratory revenue, primarily in the fourth quarter of 2024 .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 92 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n\n Analyst Andrew Cooper asked about Savanna since \u201c[w]e\u2019re almost two years out from CE mark\u201d\n and the \u201clatest and greatest\u201d feedback now that the product has been through a full respiratory\n season. In response, Defendant Bryant stated: \u201c[A] lot of the issues, Andrew, that we were\n 3/7/2023\n working through early on have now largely been resolved. And I think we have the ability to\n Raymond James Annual\n 63 339(o) Bryant have an effective global launch of Savanna, assuming we can get the cartridge manufacturing\n Institutional Investors\n to where we want. We\u2019ve started with a low volume line. We\u2019re doubling that now with another\n Conference\n low volume line. And we expect to have our higher volume line that will produce the millions of\n cartridges that we\u2019re going to need to support the market. That should be validated sometime in\n the first quarter of 2024 .\u201d\n\n\n\n\n \u201cIn addition, I think our confidence comes from having solved supply chain issues and now\n more reliably making and stocking instruments. So that\u2019s not going to be a challenge for us.\n 5/3/2023\n 64 339(p) Bryant And we now have the second line nearly validated on the cartridge manufacturing, which puts\n Q1 2023 Earnings Call\n us in really good shape in terms of the volumes that we require in 2023 and 2024. So we\u2019re\n pretty confident .\u201d\n\n\n\n \u201cWe are currently in a stocking position for both the Savanna Instrument and the RVP4\n 5/3/2023 cartridge, and our second cartridge manufacturing line is in the final stages of validation, as we\n 65 339(q) Bryant\n Q1 2023 Earnings Call work to build inventory in anticipation of Savanna\u2019s launch in the US, following regulatory\n clearance .\u201d\n\n\n\n In response to an analyst question regarding \u201cwhat\u2019s included in the guide for the year for\n Savanna[,]\u201d Defendant Busky stated: \u201cthere\u2019s really no change with what we said on the Q4 call\n 5/3/2023 related to Savanna guidance. We are going to be -- we\u2019re going to continue to ramp in Europe,\n 66 339(r) Busky\n Q1 2023 Earnings Call and we are expecting regulatory clearance in the U.S. So we\u2019re expecting to have products\n available for the Q4 respiratory season. So there -- I wouldn\u2019t say there\u2019s no change really to the\n guidance that we gave in Q4 related to Savanna .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 93 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n 6/6/2023 In response to an analyst question regarding \u201cHow important is Savanna\u201d and what will drive the\n 67 339(s) William Blair Growth Busky \u201c6% to 9%\u201d growth at QuidelOrtho, Defendant Busky stated: \u201cwe expect three years post-launch\n Stock Conference that will be greater than $250 million of revenue on that Savanna product .\u201d\n\n\n \u201cWe completed validation of our second low volume Savanna cartridge manufacturing line\n 8/8/2023\n 68 339(t) Bryant during Q2 and are currently building inventory in anticipation of Savanna\u2019s launch in the US,\n Q2 2023 Earnings Call\n following regulatory clearance .\u201d\n\n\n\n \u201c[W]e\u2019re just finished standing up our second low volume manufacturing line for the cartridges\n 8/8/2023\n 69 339(u) Bryant for both clinical trials and launches. And that\u2019s going well, too. So I think we\u2019re in really good\n Q2 2023 Earnings Call\n shape from an office supply chain and launch perspective .\u201d\n\n\n\n \u201cI am confident we will receive Savanna instrument clearance by the end of this year, and\n 11/1/2023\n 70 339(v) Bryant launch commercially in the U.S. very quickly thereafter. We have instrument inventory, and I\n Q3 2023 Earnings Call\n expect that we will launch at pace .\u201d\n\n\n An analyst asked Defendants to talk about their \u201cconfidence in rapid menu expansion and then\n placement install expectations?\u201d In response, Defendant Bryant stated that the Company \u201cha[s]\n 11/1/2023\n 71 339(w) Bryant instruments in inventory. We\u2019ve recently completed the software update. We are fully\n Q3 2023 Earnings Call\n manufacturing cartridges and so I don\u2019t see any other constraint other than US FDA\n clearance .\u201d\n\n\n\n 11/1/2023 An analyst asked for \u201can update on the high volume cartridge manufacturing line.\u201d In response,\n 72 339(x) Bryant\n Q3 2023 Earnings Call Defendant Bryant stated: \u201cWe\u2019re still targeting everything on track for midyear next year .\u201d\n\n\n An analyst asked Defendants, \u201cwhat is the Savanna thesis, what should we expect from Savanna?\u201d\n 11/30/2023 In response, Defendant Bryant stated: \u201c[W]e think we\u2019ll do about 1,000 instruments. That\u2019s the\n 73 339(y) Evercore ISI Bryant forecast. I always say to the marketing people that models are rarely right, but it\u2019s at least useful to\n HealthCONX Conference have something that you think you are aiming at. And I think that\u2019s about an appropriate target\n for us in 2024 .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 94 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n\n \u201cOur [2024] guidance also assumes a minimal contribution of between $30 million to $50\n million in respiratory revenues from Savanna RVP4. And we expect that the revenue to be\n 2/13/2024\n 74 339(z) Busky primarily in the fourth quarter of 2024, given the timing of approvals for the respiratory\n Q4 2023 Earnings Call\n indication, which we expect in Q1. We continue to expect Savanna instrument placements of\n approximately 1,000 in 2024, which will pave the way for 2025 Savanna revenue growth .\u201d\n\n\n\n An analyst asked whether the $250 million run rate goal for Savanna by 2026 was \u201cstill the goal?\u201d\n 3/5/2024\n In response, Defendant Iskra stated: \u201cSo, yeah, look, $250 million is the goal, and it\u2019s out there . .\n Raymond James\n 75 339(aa) Iskra . . And clearly, we are on the timeline that we expected. But, again, I would say the market\n Institutional Investors\n opportunity is still there . . . . But nonetheless, whether it\u2019s $250 million, $275 million or $245\n Conference\n million, it\u2019s a big number, it\u2019s a big opportunity, and we still believe in it .\u201d\n\n\n An analyst asked Defendants for their \u201cvision\u201d of what the Savanna menu will look like and\n 3/5/2024\n whether it will include RVP4, RVP11, and other panels. In response, Defendant Bujarski stated:\n Raymond James\n 76 339(bb) Bujarski \u201cSo, when you\u2019re thinking about 2024, you\u2019re thinking about our focus, more so than a revenue\n Institutional Investors\n number for 2024, any of that. You got to have the menu to really make this platform a success,\n Conference\n and those are the ones that we\u2019re focused on straight away .\u201d\n\n\n Endemic COVID-19 Revenue During the Class Period\n\n 12/13/2022 \u201cI think Doug [Bryant] said this earlier, too, we don\u2019t have so much of a demand problem right\n 77 344(a) Busky\n 2022 Investor Day Call now. We have a supply problem. We got to get more products .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 95 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n\n\n Analysts at William Blair published an analyst report titled: \u201cVirtual NDR Takeaways and\n 12/20/2022 Additional Thoughts Following Last Week\u2019s Investor Day,\u201d which was written after the analysts\n William Blair analyst \u201chosted and attended virtual meetings with management from QuidelOrtho and investors across the\n report relaying U.S. and Europe,\u201d specifying that the participating members of QuidelOrtho management were\n QuidelOrtho management Defendant Busky and Bryan Brokmeier, Vice President of Investor Relations. The analyst report\n 78 344(b) Busky\n statements \u201cVirtual NDR \u201cdiscuss[ed] in more detail the key takeaways from the meetings\u201d with Defendant Busky and\n Takeaways and Additional Brokmeier. Specifically, William Blair wrote: \u201cManagement provided some thoughts on endemic\n Thoughts Following Last COVID-19 testing levels, noting that its prior estimate for between $150 million and $200\n Week\u2019s Investor Day\u201d million of endemic COVID-19 testing revenue was likely conservative and that something\n between $200 million and $400 million is more realistic .\u201d\n\n\n\n\n But part of beating expectations is to set the expectations correctly. And so we\u2019re pretty humble\n with the street. We don\u2019t get ahead of our skis, as they say. We don\u2019t try to... say things that\n 1/26/2023\n 79 344(c) Bryant would hype the share price. We just, you know, we call it like we see it. And you can either say\n Repertoire Podcast\n that\u2019s not too clever, Doug, or you can say, you know, I would imagine that you have pretty good\n credibility with the street as a result. And I kind of like to think it\u2019s the latter.\n\n\n\n\n \u201cWe also were the beneficiary, to be fair, Scott, of additional COVID shipments in two areas. One,\n we did receive additional orders from the federal government for a quick few COVID tests. And\n 1/26/2023\n 80 344(d) Bryant then, you know, we have seen a little bit of uptick in prevalence, but really it\u2019s been somewhat flat.\n Repertoire Podcast\n It\u2019s definitely not declining though. And so it\u2019s become somewhat steady state . And I think some\n people are probably forecasting that that was going to continue to fall.\u201d\n\n\n 2/15/2023 \u201cWe expect to continue to capture and grow our share of the respiratory market, underpinned by\n 81 344(e) Busky\n Q4 2022 Earnings Call our large and growing Sofia placements .\u201d\n\n On the Q4 2022 Earnings Call to discuss these results, Defendant Busky told investors to expect\n 2/15/2023\n 82 344(e) Busky \u201c[r]espiratory revenue of $610 million to $875 million, which includes COVID revenue with $300\n Q4 2022 Earnings Call\n million to $500 million .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 96 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n An analyst asked Defendants whether \u201cthere\u2019s the fear that, as COVID comes out, 2024 then takes a\n step down,\u201d which Defendant Busky responded: \u201c[T]here\u2019s really no change there with that\n 2/15/2023\n 83 344(f) Busky endemic level of annual revenue being it\u2019s $200 million to $400 million , and you\u2019re right, it\u2019s up\n Q4 2022 Earnings Call\n another $100 million in 2023 guide because of those government orders, which again, like as you\n said, doesn\u2019t carry super significant amount of margin.\u201d\n\n\n\n In response to an analyst question about \u201cwhere you\u2019re sort of settling out of what normal might be\n for COVID and how that\u2019s going to play out through the course of the year kind of in context of . . .\n 2/15/2023 what you just said about some of the seasonality in flu and respiratory in general,\u201d Defendant\n 84 344(g) Bryant & Busky\n Q4 2022 Earnings Call Bryant responded that \u201c$300 million to $500 million \u201d was the range, and Busky stated that: \u201cWe\n were saying 200 to 400 for endemic state and it\u2019s up $300 million to $500 million because you\u2019ve\n got this level of government contracts that we know we have in hand.\u201d\n\n\n\n In response to an analyst question regarding \u201chow should we think about the total respiratory\n 2/15/2023\n 85 344(h) Busky business size wise,\u201d Defendant Busky stated: \u201cI think we would, again, go back to the COVID $200\n Q4 2022 Earnings Call\n million to $400 million. . . . \u201d\n\n\n\n\n An analyst noted that \u201cYou\u2019re pointing folks to $200 million to $400 million of endemic COVID\u201d\n and asked: \u201ccan you talk to us a little bit about how you arrived at that $200 million to $400 million\n number in context of sort of where flu was for you, and where are some of the drivers of that being\n the right range really come from?\u201d\u2018 Defendant Bryant responded by explaining how the $200-$400\n million range was based on a \u201ctop down\u201d approach \u201clooking at historical data and the professional\n 3/7/2023\n segment\u201d and a \u201cbottoms up approach\u201d based on \u201cmarketers\u201d that is \u201calmost [] an account by\n Raymond James Annual\n 86 344(i) Bryant account analysis,\u201d concluding: Now it\u2019s a little difficult because when you look at the total number\n Institutional Investors\n of customers that we have, respiratory customers, it\u2019s about -- in the United States, it\u2019s about 93,000\n Conference\n and it is a little bit of an overlap. So we\u2019re double counting customers that actually run QuickVue\n and Sofia. But Sofia customers, it\u2019s approximately 21,400. QuickVue customers, it\u2019s about 72,000.\n So it\u2019s kind of hard to do a complete bottoms-up by name, but I think, they do a pretty good job of\n coming at it from a couple of different ways. And it\u2019s a pretty big range to $200 million to $400\n million .\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 97 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n 3/7/2023 An analyst asked Defendant Bryant about \u201cthe progression\u201d of the Company\u2019s EBITDA\n Raymond James Annual expectations \u201cin terms of COVID rolling off\u201d and whether EBITDA for 2024 should \u201cbe higher\n 87 344(j) Bryant\n Institutional Investors than 2023, 2025 higher than 2024?\u201d In response, Bryant stated: \u201cyour comment about 2024 should\n Conference be better than 2023 and 2025 better than 2024 I think is a reasonable expectation .\u201d\n\n\n 5/3/2023\n 88 344(k) Bryant \u201cDemand for diagnostics across the health care continuum remained strong .\u201d\n Q1 2023 Earnings Call\n 5/3/2023\n 89 344(k) Bryant The \u201csignificant increase in global demand for global testing .\u201d\n Q1 2023 Earnings Call\n\n\n In response to Citi analyst question about the Company\u2019s decision to \u201cmaintain the guide for the full\n year\u201d and whether there was a need to \u201cde-risk\u201d the guidance, Defendant Bryant stated: \u201cBut\n remember, in the endemic state, we had, assuming that we are now in that endemic state, we had\n 5/3/2023\n 90 344(l) Bryant forecasted that we would be doing $200 million to $400 million per year over the next few years,\n Q1 2023 Earnings Call\n this year, next year and perhaps beyond. That was how we derisked the number . . . . So I think\n we\u2019re still very comfortable that moving forward will be in that 200 to 400 range for COVID.\n And this year, obviously, we\u2019re forecasting to be slightly higher .\u201d\n\n\n\n\n 5/3/2023 \u201c[J]ust to put a bow on that . . . [w]e do think that we\u2019ve de-risked the balance off your forecast\n 91 344(m) Busky\n Q1 2023 Earnings Call for Respiratory and COVID because we\u2019re not changing it and we didn\u2019t overachieve in Q1.\u201d\n\n\n An analyst asked about \u201cthe guide here on the COVID side of things\u201d with \u201cthe public health\n emergency coming to an end in May.\u201d In response, Defendant Bryant stated:\n \u201cWhat I would say for the back half total guide though, that this certainly de-risks what we said we\n 9/12/2023\n would do for the back half in terms of respiratory disease testing for both COVID and influenza.\n 92 344(n) Morgan Stanley Global Bryant\n And then, further, I would say it supports the notion what\u2019s happening right now, supports our\n Healthcare Conference\n assertion that COVID is just another respiratory virus and it is now endemic. And we should\n expect, therefore, moving forward, 2024 and beyond, to see $200 million to $400 million in\n COVID-specific \u2013 or COVID-only sales. \u201d\n\n 11/1/2023 \u201c[T]he strong and early respiratory demand in Q3 was mainly driven by high COVID-19\n 93 344(o) Bryant\n Q3 2023 Earnings Call prevalence throughout the United States .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 98 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n \u201cBoth the overall market for respiratory testing and our respiratory business became\n significantly larger due to more testing in general, and significant share gains from competitors\n 11/1/2023 for us specifically . We have a strong position in this market and our respiratory diagnostic\n 94 344(o) Bryant\n Q3 2023 Earnings Call capabilities play an important role in combating both early and seasonal upticks of COVID-19, RSV\n and influenza, among others. We\u2019re also well positioned to manage any seasonal fluctuations, given\n our operations team\u2019s agility to respond to meet customer demand.\u201d\n\n\n\n Now, I\u2019d like to leave you with one key takeaway , and that\u2019s we are the same successful respiratory\n company than we were prior to the global pandemic and the acquisition of Ortho Clinical\n Diagnostics. The key difference is that the overall respiratory market, including COVID-19 now\n 11/1/2023 in its current endemic state is significantly larger than it was pre-pandemic. And QuidelOrtho\u2019s\n 95 344(p) Bryant\n Q3 2023 Earnings Call position in the overall diagnostics market, including respiratory, is much stronger as a combined\n company than either company was on a standalone basis. Contrary to some recent opinions, we\n believe as evidenced by our results, the market, the diagnostics market is positioned for\n continued durable growth for many years to come .\n\n\n\n\n \u201cOur Q3 financial performance, which exceeded our plan significantly derisk Q4 and while we\n can\u2019t precisely predict the timing of the respiratory season in advance, we believe it\u2019s prudent to\n 11/1/2023\n 96 344(q) Busky plan for a normal or typical season . In addition, we have excellent visibility into our non-\n Q3 2023 Earnings Call\n respiratory business and again we expect our lab business to grow high single digits in Q4. All in\n all, we are very confident that we can end the year strong .\u201d\n\n\n An analyst asked Defendants about the Company\u2019s \u201cnew baseline\u201d for COVID assumptions and\n whether there were any \u201csensitivities[.]\u201d In response, Defendant Bryant affirmed QuidelOrtho\u2019s\n 11/30/2023\n target of $200-$400 million in COVID-related revenue for fiscal year 2024, but added that \u201cwe\n 97 344(r) Evercore ISI HealthCONx Bryant\n probably will be higher than the midpoint [,]\u201d stating: \u201cWell, I don\u2019t know about sensitivities. I\n Conference\n would say, our $200 million to $400 million, we still think is the right number. I think, for 2024,\n we probably will be higher than the midpoint for COVID still .\u201d\n\n 11/30/2023 Defendant Busky was asked about the endemic COVID guidance, where he stated: \u201cthere\u2019s no\n 98 344(r) Evercore ISI HealthCONx Busky change in the guidance\u201d and reaffirmed \u201cyou\u2019ve got the level of endemic COVID and where you\n Conference end up in that range of $200 million to $400 million .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 99 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n \u201cSome other facts about Point of Care. We have 88,000 Sofias on the ground. I\u2019ve been asked, are\n you still growing placements? Yes, we are. Through the first nine months, we placed an additional\n 1/8/2024\n 3,900 analyzers in the United States. And of those, 48% were brand new customers, right? So, we\n 99 344(s) J.P. Morgan Healthcare Bryant\n continue to do well in this space. I don\u2019t want to sound arrogant, but I do want to point out that\n Conference\n we do pretty well in this space, so, and it\u2019s our highest market share category . It\u2019s our highest\n margin category as well.\u201d\n\n\n\n\n Defendant Bryant responded to an analyst question about the Company\u2019s decision not to pre-\n announce financial results for 4Q 2023, stating:\n\n \u201cYes, that\u2019s quite a question. Let me start by saying we historically have preannounced when we\n 1/8/2024\n have something that\u2019s materially different than you think . So, both positive and negative. One of\n 100 344(t) J.P. Morgan Healthcare Bryant\n my first things that I did in 2010 was announce \u2013 preannounce that we had missed the quarter\n Conference\n dramatically. So, we will always endeavor to preannounce when we think it makes sense. And\n obviously, Savanna was an important enough thing to preannounce, but we had already announced\n that a few or week or so ago. So, we didn\u2019t actually see a need to do that and we\u2019ll have plenty to\n talk about at the earnings call here in a few weeks .\u201d\n\n\n\n Defendant Bryant was asked about QuidelOrtho\u2019s endemic COVID guidance, with an analyst\n asking: \u201cSo you\u2019re guiding to 6% to 9% top line growth ex COVID over the longer term. Just want\n to clarify, since you\u2019ve been splitting out kind of ex respiratory the last couple of quarters, is that\n 6% to 9% now ex respiratory? And then will you kind of continue to split out respiratory?\u201d\n 1/8/2024 Defendant Bryant responded:\n 101 344(u) J.P. Morgan Healthcare Bryant\n Conference No, that\u2019s total and those same ranges that we had described, both at our -- excuse me, our Analyst\n Day, Investor Day, the last 1, they still haven\u2019t changed and we\u2019ve been pretty much been -- we\n have been in those ranges. A couple of things have caused that to be different. For example, we\n said $200 million to $400 million on COVID. And -- but we didn\u2019t anticipate we were going to\n get that big government order in the first quarter. So we\u2019ll be higher than the range there .\n\n\n 1/8/2024 In response to an analyst question regarding whether QuidelOrtho\u2019s target of $200-$400 million in\n 102 344(v) J.P. Morgan Healthcare Bryant COVID-related revenue was \u201capplicable to 2024,\u201d Defendant Bryant stated: \u201cI think we\u2019re very\n Conference much on track for 2024 .\u201d\n\f Case 1:24-cv-02804-JAV Document 76 Filed 09/30/26 Page 100 of 100\n\n\n\nStatement # Complaint \u00b6 Date and Source Speaker Alleged Misrepresentation\n\n\n Fluctuations or a decline in sales of our COVID-19 and influenza diagnostic tests can have a\n significant impact on our operating results and if sales or revenues of our COVID-19 or\n influenza tests fluctuate or decline for any reason, our operating results could be materially and\n adversely affected .\n\n A significant percentage of our total revenues is generated from a limited number of our product\n families. In particular, revenues from the sales of our COVID-19 tests have represented a significant\n portion of our total revenues. Sales of our COVID-19 products accounted for approximately 44% of\n our total revenues for the year ended January 1, 2023, which includes the impact of Ortho\u2019s\n operations from the date of the Combinations. Demand for our COVID-19 testing products has and\n 2/23/2023 may continue to fluctuate or decline as a result of a number of factors, including but not limited to\n 103 350 QO, Bryant, Busky\n Form 10-K the emergence and impact of new variants or resurgences, the effectiveness of global containment\n efforts, and the increased market supply of COVID-19 tests by our competitors. Sales of our\n influenza tests accounted for approximately 11% of our total revenues for the year ended January 1,\n 2023, which includes the impact of Ortho\u2019s operations from the date of the Combinations. Demand\n for our influenza tests can fluctuate or decline based on the severity of the flu season. The gross\n margins derived from sales of our COVID-19 and influenza tests are generally significantly higher\n than the gross margins from many of our other core products. As a result, if sales or revenues of our\n COVID-19 or influenza tests fluctuate or decline for any reason, whether as a result of a waning of\n the COVID-19 pandemic, a mild flu season, market share loss or price pressure, obsolescence,\n regulatory matters, such as loss of EUAs from the FDA for our COVID-19 products, or any other\n reason, our operating results would be materially and adversely affected on a disproportionate basis.\n\n\n\n 2/23/2023\n Form 10-K\n\n 5/2/2023\n Form 10-Q\n Attestations by Defendants Bryant and Busky that information in the 2022 10-K \u201cfairly presents, in\n 104 351 8/9/2023 Bryant, Busky\n all material respects, the financial condition and results of operations of the Company .\u201d\n Form 10-Q\n\n 11/2/2023\n Form 10-Q\n\n SOX Certifications\n\f","ocr_status":2,"date_upload":"2026-10-01T17:56:15.485529-07:00","document_number":"76","attachment_number":null,"pacer_doc_id":"127040453869","is_available":true,"is_free_on_pacer":true,"is_sealed":null,"document_type":1,"description":"Memorandum & Opinion","acms_document_guid":""}],"date_created":"2026-09-30T16:07:11.991671-07:00","date_modified":"2026-10-08T17:55:38.057807-07:00","date_filed":"2026-09-30","time_filed":"18:02:44","entry_number":76,"recap_sequence_number":"2026-09-30.001","pacer_sequence_number":254,"description":"OPINION AND ORDER: Accordingly, Defendants Motion to Dismiss is GRANTED IN PART AND DENIED IN PART. Both motions to strike are DENIED. The Clerk of Court is respectfully directed to terminate ECF Nos. 47, 51, and 57. So Ordered. (Signed by Judge Jeannette A. Vargas on 9/30/2026) (nmo) (Entered: 09/30/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/453055494/","id":453055494,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/467937309/","id":467937309,"tags":[],"absolute_url":"/docket/68433458/75/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-02-06T15:09:04.688959-08:00","date_modified":"2026-05-22T12:34:47.426831-07:00","sha1":"5ed7c1171a28d191b616e16a8b6971ae9d6835ad","page_count":3,"file_size":403576,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.75.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.75.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 75 Filed 02/06/26 Page 1 of 3\n\n C oli n B. D a vi s\n P art n er\n T: + 1 9 4 9. 4 5 1. 3 9 9 3\n M: + 1 9 4 9. 4 3 1. 3 9 1 6\n c d a vi s @ gi b s o n d u n n. c o m\n\n\n F e br u ar y 6, 2 0 2 6\n\n T h e H o n or a bl e J e a n n ett e A. V ar g a s\n U nit e d St at e s Di stri ct C o urt f or t h e S o ut h er n Di stri ct of N e w Y or k\n D a ni el P atri c k M o y ni h a n U nit e d St at e s C o urt h o u s e\n 5 0 0 P e arl Str e et, R o o m 7 0 3\n N e w Y or k , N e w Y or k 10 0 0 7\n\n R e: I n r e Q ui d el Ort h o C or p. S e c uriti e s Liti g ati o n, N o. 2 4- c v- 0 2 8 0 4 ( S. D. N. Y.)\n\n D e ar J u d g e V ar g a s:\n\n D ef e n d a nt s i n t h e a b o v e -r ef er e n c e d m att er r e s p e ctf ull y s u b mit t hi s l ett er i n\n r e s p o n s e t o L e a d Pl ai ntiff\u2019s J a n u ar y 3 0, 2 0 2 6 n oti c e of \u201cs u p pl e m e nt al a ut h orit y \u201d\n c o n c er ni n g D ef e n d a nt s \u2019 p e n di n g m oti o n t o di s mi s s. S e e E C F N o. 7 4 (t h e \u201cL ett er \u201d).\n\n I n it s f o urt h n oti c e of s u p pl e m e nt al a ut h orit y si n c e t h e m oti o n t o di s mi s s bri efi n g\n c o n cl u d e d i n J ul y, L e a d Pl ai ntiff a s k s t h e C o urt t o c o n si d er t hr e e c a s e s t h at ar e\n f a ct u all y a n d pr o c e d ur all y i n a p p o sit e\u2014 or , at m o st, pr o vi d e a d diti o n al s u p p ort f or\n D ef e n d a nt s \u2019 ar g u m e nt s. 1\n\n Fir st, L e a d Pl ai ntiff dir e ct s t h e C o urt t o S h er m a n v. A b e n g o a, S. A. , 1 5 6 F. 4t h\n 1 5 2, 1 6 9 ( 2 d Cir. 2 0 2 5) , b ut t h at d e ci si o n o nl y u n d er s c or e s t h e d efi ci e n ci e s i n L e a d\n Pl ai ntiff \u2019s C o m pl ai nt . A c c or di n g t o L e a d Pl ai ntiff , A b e n g o a s u p p ort s t h e C o m pl ai nt\u2019s\n r eli a n c e o n s e c o n d -h a n d s p e c ul ati o n a b o ut D ef e n d a nt s \u2019 all e g e d k n o wl e d g e , dr a w n\n l ar g el y fr o m l o w-l e v el c o nfi d e nti al wit n e s s es . L ett er at 1. A b e n g o a , h o w e v er,\n u n d er s c or e s \u2014 n ot r el a x e s \u2014 t h e n e e d f or all e g ati o n s fr o m c o nfi d e nti al wit n e s s e s t o b e\n pl e a d e d wit h p arti c ul ari t y a n d i n d e p e n d e ntl y c orr o b or at e d, a n d f or t h e s o ur c e s t o b e\n e v al u at e d f or w h et h er t h e y w er e p o siti o n e d t o k n o w t h e i nf or m ati o n attri b ut e d t o t h e m .\n A b e n g o a , 1 5 6 F. 4t h at 1 6 0, 1 6 4 \u2013 6 6, 1 6 9 \u2013 7 0 ; s e e al s o E C F N o. 4 8 (t h e \u201cM oti o n \u201d or\n \u201cM ot. \u201d) at 2 5 ( q u oti n g I n r e Dr aft Ki n g s I n c. S e c. Liti g., 6 5 0 F. S u p p. 3 d 1 2 0, 1 5 4\n ( S. D. N. Y. 2 0 2 3) ( e n u m er ati n g f a ct or s c o urt s m u st c o n si d er w h e n d et er mi ni n g t h e\n w ei g ht t o aff or d f a ct s attri b ut e d t o u ni d e ntifi e d c o nfi d e nti al wit n e s s e s)).\n\n I n A b e n g o a , t h e S e c o n d Cir c uit h el d t h at t h e di stri ct c o urt err e d i n di sr e g ar di n g\n c o nfi d e nti al wit n e s s all e g ati o n s d e s cri bi n g a wi d e s pr e a d, s y st e mi c a c c o u nti n g\n s c h e m e , w h er e t h o s e all e g ati o n s w er e c orr o b or at e d b y ot h er wit n e s s a c c o u nt s, a n\n i n d e p e n d e nt i n v e sti g ati o n i nt o t h e all e g e dl y fr a u d ul e nt a cti vit y, a n d fili n g s i n r el at e d\n pr o c e e di n g s. 1 5 6 F. 4t h at 1 6 1, 1 7 0. T h e s o ur c e s t h er e i n cl u d e d a Dir e ct or of H u m a n\n R e s o ur c e s w h o r e c ei v e d c o m pl ai nt s d uri n g e xit i nt er vi e w s fr o m e m pl o y e e s or d er e d\n t o p arti ci p at e i n t h e all e g e d fr a u d , as w ell a s ot h er e m pl o y e e s dir e ctl y i n v ol v e d i n\n\n 1 Lead Pl ai ntiff al s o a g ai n di sr e g ar d s t h e p a g e li mit i n R ul e 3. A of t h e C o urt \u2019s I n di vi d u al\n R ul e s a n d Pr a cti c e s i n Ci vil C a s e s.\n\n\nGi b s o n, D u n n & Cr ut c h er L L P\n3 1 6 1 Mi c h el s o n Dri v e S uit e 1 2 0 0 | Ir vi n e, C A 9 2 6 1 2 -4 4 1 2 | T: 9 4 9. 4 5 1. 3 8 0 0 | F: 9 4 9. 4 5 1. 4 2 2 0 | gi b s o n d u n n. c o m\n\f Case 1:24-cv-02804-JAV Document 75 Filed 02/06/26 Page 2 of 3\n\n\n F e br u ar y 6 , 2 0 2 6\n Page 2\n\n\nfi n a n ci al r e p orti n g a n d a c c o u nti n g w h o c o nfir m e d t h e e xi st e n c e of p ar all el\nr e c or d k e e pi n g f or e xt er n al a u dit ors . Fr a n ci s c o v. A b e n g o a, S. A ., 5 5 9 F. S u p p. 3 d\n2 8 6, 3 0 3 \u2013 0 6 ( S. D. N. Y. 2 0 2 1), aff \u2019d i n p art s u b n o m. S h er m a n v. A b e n g o a, S. A ., 1 5 6\nF. 4t h 1 5 2 ( 2 d Cir. 2 0 2 5) . H er e, b y c o ntr a st , t h e v a st m aj orit y of c o nfi d e nti al wit n e s s e s\nh a d n o dir e ct c o nt a ct wit h D ef e n d a nt s or Q ui d el Ort h o \u2019s s e ni or l e a d er s hi p or w er e\nl o wer -l e v el s al e s p er s o n n el u nli k el y t o p o s s e s s t h e i nf or m ati o n t h e y cl ai m t o k n o w,\na n d t h e C o m pl ai nt \u2019s all e g ati o n s a b o ut t h e m ar e n ot t et h er e d t o a n y s p e cifi c ti m e .\nM ot. at 2 4 \u2013 2 8.\n\n S e c o n d, L e a d Pl ai ntiff o v er st at e s t h e si g nifi c a n c e of I n r e D e nt s pl y Sir o n a, I n c.\nS e c. Liti g . (D e nt s pl y II ), N o. 2 4 CI V. 9 0 8 3 ( N R B), 2 0 2 6 W L 1 2 4 5 8 1 ( S. D. N. Y. J a n. 1 6,\n2 0 2 6) . L e a d Pl ai ntiff fir st a s k s t h at t hi s C o urt di sr e g ar d D ef e n d a nt s \u2019 ar g u m e nt s\nb e c a u s e , i n D e nt s pl y II , J u d g e B u c h w al d li mit e d h er a n al y si s t o st at e m e nt s s p e cifi c all y\na d dr e s s e d in t h e bri efi n g , r at h er t h a n t h o s e r ef er e n c e d o nl y i n t h e d ef e n d a nt s \u2019 c h art s .\nS e e D ef e n d a nt s \u2019 C h all e n g e d St at e m e nt s C h art s i n S u p p ort of M oti o n t o Di s mi s s,\nD e nt s pl y II , N o. 2 4 CI V. 9 0 8 3 ( N R B), E C F N o s. 7 0-1 9, 7 7 -1 ( S. D. N. Y. J ul y 8, 2 0 2 5)\n(att a c hi n g c h art s di s c u s si n g 1 0 \u2013 2 1 of t h e 5 6 t ot al c h all e n g e d st at e m e nt s ). B ut h er e,\nD ef e n d a nt s di d n ot r el y o n c h art s i n li e u of ar g u m e nt; D ef e n d a nt s pr o vi d e d a c h art\nt h at or g a ni z e d 1 0 4 st at e m e nt s a cr o s s a n e arl y 2 0 0 -p a g e c o m pl ai nt, a n d D ef e n d a nt s\nf ull y bri ef e d t h e c at e g ori e s of st at e m e nt s at i s s u e , wit h r ef er e n c es t o e a c h c h all e n g e d\nst at e m e nt . S e e M ot. 1 1 \u2013 2 4 . I n d e e d, L e a d Pl ai ntiff a c k n o wl e d g e s t h at D ef e n d a nt s\nf ull y a d dr e s s e d t h e c h all e n g e d st at e m e nt s i n t h eir bri efi n g. L ett er at 2\u2013 3. D e nt s pl y II\nd o e s n ot s u g g e st c o urt s s h o ul d di sr e g ar d m erit s ar g u m e nt s t h at ar e a ct u all y bri ef e d.\nD ef e n d a nt s \u2019 a p pr o a c h al s o i s p arti c ul arl y a p pr o pri at e b e c a u s e L e a d Pl ai ntiff\nc h all e n g e s n e arl y t wi c e a s m a n y st at e m e nt s \u2014 a n d fil e d a c o m pl ai nt n e arl y fift y p a g e s\nl o n g er\u2014 t h a n t h e pl ai ntiff s i n D e nt s pl y II. Se e M ot. 1 7 n. 1 1.\n\n L e a d Pl ai ntiff al s o i n si st s t h at D e nt s pl y II s h o ul d i nf or m t h e C o urt\u2019s m at eri alit y\na n al y si s , b ut t h e d e ci si o n m er el y r eit er at e s s ettl e d pri n ci pl e s: c o nt e xt m att er s ,\no pi ni o n s ar e a cti o n a bl e o nl y if n ot g e n ui n el y h el d , a n d g e n eri c \u201cp uff er y \u201d m a y b e\na cti o n a bl e o nl y w h er e it \u201cc o nt ai n[ s] [ a n] e m b e d d e d st at e m e nt[] of f a ct\u201d t h at do e s n ot\n\u201cali g n[] wit h i nf or m ati o n a v ail a bl e \u201d t o d ef e n d a nt s at t h e ti m e. D e nt s pl y II , 2 0 2 6 W L\n1 2 4 5 8 1, at * 1 2. T h o s e pri n ci pl e s ar e irr el e v a nt h er e . A s e x pl ai n e d i n t h e M oti o n, t h e\nc h all e n g e d st at e m e nt s eit h er w er e n ot f al s e w h e n m a d e or c o n stit ut e d cl a s si c ,\nn o n a cti o n a bl e p uff er y \u2014 st at e m e nt s \u201ct o o g e n er al t o c a u s e a r e a s o n a bl e i n v e st or t o r el y\nu p o n t h e m .\u201d I d. at * 1 5 ; s e e , e. g ., M ot. at 1 5\u2013 2 3 ( di s c u s si n g st at e m e nt s r e g ar di n g\n\u201cv er y p o siti v e c u st o m er f e e d b a c k \u201d a n d \u201cr e c ei vi n g s o m e r e all y ni c e f e e d b a c k\u201d).\n\n N or d o e s D e nt s pl y II s u g g e st t h at e x e c uti v e d e p art ur e s, st a n di n g al o n e,\ns u p p ort s ci e nt er . R at h er, i n t h at c a s e, t h e c o urt f o u n d s ci e nt er a d e q u at el y pl e a d e d\nb a s e d o n a c o m bi n ati o n of all e g ati o n s r e g ar di n g t h e d ef e n d a nt s \u2019 a c c e s s t o i nf or m ati o n\ns h o wi n g t h o u s a n d s of u nr e p ort e d p ati e nt i nj uri e s , t h eir p er s o n al r e vi e w of i nj ur y\nr e p ort s, t h eir p u bli c r e pr e s e nt ati o n s of o p er ati o n al e x p erti s e, a n d t h eir fi n a n ci al\ni n c e nti v e s t o c o n c e al t h e all e g e d fr a u d . D e nt s pl y II , 2 0 2 6 W L 1 2 4 5 8 1, at * 1 9 \u2013 2 0.\n\f Case 1:24-cv-02804-JAV Document 75 Filed 02/06/26 Page 3 of 3\n\n\n F e br u ar y 6 , 2 0 2 6\n Page 3\n\n\nD e nt s pl y II al s o r e affir m e d f a mili ar pl e a di n g st a n d ar d s u n d er R ul e 9( b) a n d t h e P S L R A\nr e q uiri n g pl ai ntiff s t o ti e all e g e d f al sit y t o s p e cifi c s p e a k er s, ti mi n g, a n d c o nt e xt . L e a d\nPl ai ntiff h a s f ail e d t o s ati sf y t h o s e r e q uir e m e nt s h er e, i n st e a d c h o o si n g t o r el y o n\ng e n er ali z e d \u201cn e g ati v e f e e d b a c k \u201d u nt et h er e d fr o m a n y s p e cifi c s p e a k er or c h all e n g e d\nst at e m e nt.\n\n D e nt s pl y II al s o c o nfir m s t h at s c h e m e li a bilit y r e q uir e s pl ai ntiff s t o all e g e a\ndi sti n ct c o ur s e of d e c e pti v e c o n d u ct t h at o p er at es s e p ar at el y fr o m a n y all e g e d\nmi sl e a di n g st at e m e nt s or o mi s si o n s. I d. at * 2 0 . L e a d Pl ai ntiff all e g e s a \u201cs c h e m e \u201d\nh er e t h at si m pl y r e p a c k a g e s t h e s a m e all e g e d mi s st at e m e nt s a n d o mi s si o n s wit h o ut\ni d e ntif yi n g s e p ar at e m a ni p ul ati v e a ct s, a s D ef e n d a nt s\u2019 M oti o n e x pl ai n s. S e e M ot. at\n3 4 \u2013 3 5; E C F N o. 5 9 ( D ef e n d a nt s \u2019 R e pl y) at 1 5 ( pr e s si n g t hi s di sti n cti o n).\n\n Fi n all y, L e a d Pl ai ntiff \u2019s r eli a n c e o n St a di u m C a pit al v. C o- Di a g n o sti c s , N o . 2 2-\nC V -6 9 7 8 ( A S), 2 0 2 6 W L 1 0 0 5 7 6 ( S. D. N. Y. J a n. 1 4, 2 0 2 6) , i s mi s pl a c e d. Criti c all y,\nSt a di u m C a pit al i n v ol v e d cr o s s-m oti o n s f or s u m m ar y j u d g m e nt f oll o wi n g di s c o v er y.\nI d. at * 4 . T h er e , t h e c o urt r eli e d o n r e c or d e vi d e n c e s h o wi n g t h e d ef e n d a nt s tr a c k e d\nr e al-ti m e s al e s d at a dir e ctl y c o ntr a di cti n g t h eir p u bli c st at e m e nt s. I d. at * 3 \u2013 4. T h e\nc o urt al s o e x pr e s sl y r e s er v e d s ci e nt er f or t h e j ur y. I d. at * 6. St a di u m C a pit al d o e s\nn ot s a y a n yt hi n g a b o ut t h e s uffi ci e n c y of t h e pl e a di n g s, m u c h l e s s s u g g e st t h at\ng e n er ali z e d all e g ati o n s of i nt er n al a w ar e n e s s or b u si n e s s h e a d wi n d s s uffi c e t o pl e a d\nf al sit y or s ci e nt er u n d er t h e P S L R A.\n\n At b ott o m, t h e L ett er c o nti n u e s L e a d Pl ai ntiff \u2019s pr a cti c e of i n v o ki n g i n a p p o sit e\na ut h orit i e s a n d o v er st ati n g t h eir h ol di n g s. A s wit h L e a d Pl ai ntiff \u2019s pri or l ett er s, n o n e\nof t h e cit e d c a s e s r e m e dy t h e C o m pl ai nt\u2019s f ail ur e t o all e g e t h at a n y D ef e n d a nt\np o s s e s s e d c o ntr a di ct or y i nf or m ati o n at t h e ti m e of a n y s p e cifi c st at e m e nt or c o n v ert\no pti mi sti c or o ut -of - c o nt e xt st at e m e nt s i nt o a cti o n a bl e fr a u d. F urt h er, t h e cit e d c a s e s\nr el y o n all e g ati o n s of p er v a si v e s c h e m e s c orr o b or at e d b y i n d e p e n d e nt i n v e sti g ati v e\nfi n di n g s or d et ail e d a c c o u nt s of s p e cifi c e x e c uti v e s e x pr e s sl y dir e cti n g mi s c o n d u ct ,\nn o n e of w hi c h ar e pr e s e nt h er e. L e a d Pl ai ntiff still h a s n ot i d e ntifi e d wit h p arti c ul arit y\nw h at a n y s p e a k er k n e w, w h e n t h e y k n e w it, a n d h o w t h at c o nt e m p or a n e o u s\nk n o wl e d g e r e n d er e d s p e cifi c st at e m e nt s f al s e w h e n m a d e.\n\n F or t h e s e r e a s o n s, L e a d Pl ai ntiff \u2019s s u p pl e m e nt al a ut h oriti e s pr o vi d e n o b a si s\nt o d e n y D ef e n d a nt s\u2019 m oti o n t o di s mi s s. T h e C o urt s h o ul d gr a nt D ef e n d a nt s \u2019 m oti o n\nt o di s mi s s f or t h e r e a s o n s st at e d i n t h eir bri efi n g a n d pri or l ett er s.\n\n R e s p e ctf ull y s u b mitt e d,\n\n\n\n C oli n B. D a vi s\n\nc c: All C o u n s el of R e c or d (vi a E C F )\n\f","ocr_status":1,"date_upload":"2026-05-20T15:30:00.960421-07:00","document_number":"75","attachment_number":null,"pacer_doc_id":"127039030321","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Response (non-motion)","acms_document_guid":""}],"date_created":"2026-02-06T15:09:04.655591-08:00","date_modified":"2026-04-26T22:50:00.905239-07:00","date_filed":"2026-02-06","time_filed":"18:02:38","entry_number":75,"recap_sequence_number":"2026-02-06.001","pacer_sequence_number":251,"description":"RESPONSE re: 74 Letter,, . Document filed by QuidelOrtho Corporation, Douglas Bryant, Robert J. Bujarski, Joseph Busky, Michael Iskra, Tamara Ranalli, Randall Steward..(Davis, Colin) (Entered: 02/06/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/452240452/","id":452240452,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/467102583/","id":467102583,"tags":[],"absolute_url":"/docket/68433458/74/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-01-30T15:11:03.332604-08:00","date_modified":"2026-05-22T12:29:24.606361-07:00","sha1":"621b35c50aa7529a1b06e502dc161d02248d2849","page_count":5,"file_size":272227,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.74.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.74.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 74 Filed 01/30/26 Page 1 of 5\n Lauren A. Ormsbee\n Partner\n Labaton Keller Sucharow LLP\n 140 Broadway\n New York, New York 10005\n 212.907.0864\n LOrmsbee@labaton.com\n\n\n\n\nJanuary 30, 2026\n\nVIA ECF\n\nThe Honorable Jeannette A. Vargas\nUnited States District Court\nDaniel Patrick Moynihan U.S. Courthouse\n500 Pearl Street, Room 703\nNew York, NY 10007\n\nRe: In re QuidelOrtho Corp. Sec. Litig., No. 24-cv-02804-JAV (S.D.N.Y.)\n\nDear Judge Vargas:\n\n Lead Plaintiff Central States, Southeast and Southwest Areas Health and Welfare Fund and\nTeamsters Local 710 Pension Fund (\u201cLead Plaintiff\u201d) respectfully submits as supplemental\nauthorities three decisions pertinent to the Court\u2019s consideration of Defendants\u2019 pending motion\nto dismiss (ECF Nos. 47-48). Copies of these decisions are attached as Exhibits A-C. Each of the\nsubmitted authorities were issued after Defendants\u2019 motion was fully briefed, including the\nmemorandum in opposition submitted by Lead Plaintiff (ECF No. 50, \u201cOpposition Brief\u201d), and\nafter the submission of the supplemental authorities later submitted by Lead Plaintiff (ECF No.\n56, as modified by ECF Nos. 66, 69, 71). These decisions further establish the inadequacy of\nDefendants\u2019 motion to dismiss arguments and confirm that Defendants\u2019 motion to dismiss should\nbe denied.\n\n A. Sherman v. Abengoa, S.A., 156 F.4th 152, 157 (2d Cir. 2025)\n\n In Abengoa, the Second Circuit reversed dismissal of a securities fraud class action\ncomplaint that cited accounts provided by former employees (\u201cFEs\u201d). The Abengoa district court\nhad dismissed the complaint for failure to sufficiently plead falsity and scienter, and in so doing,\nrejected the allegations based on the accounts of six FEs for varying reasons, including that (i) the\nFEs were not alleged to have interacted with Abengoa management; (ii) the FEs made allegations\nconcerning \u201csenior management\u201d without defining \u201cwho constitutes senior management;\u201d (iii) the\nFEs made allegations against \u201csuperiors\u201d without \u201cproviding the names or roles of those\n\u2018superiors\u2019;\u201d and (iv) one of the FEs had \u201cstopped working at an Abengoa subsidiary seven months\nbefore the class period.\u201d Francisco v. Abengoa, S.A., 624 F. Supp. 3d 365, 392-94 (S.D.N.Y.\n2022).\n\n On appeal, the Second Circuit vacated the dismissal, in part, as to both falsity and scienter,\nand rejected the district court\u2019s rulings as to the FEs, holding instead that \u201ceach\u201d FE \u201creadily met\u201d\nthe standard of \u201csufficient particularity to support the probability ... [they] would possess the\n\n\n New York | Delaware | London | Washington, D.C.\n\f Case 1:24-cv-02804-JAV Document 74 Filed 01/30/26 Page 2 of 5\n\n\n\n\nJanuary 30, 2026\nPage 2\n\ninformation alleged.\u201d Abengoa, 156 F.4th at 164-65. The Court of Appeals credited the FE\nallegations as showing \u201cwidespread and systemic\u201d fraud in support of the federal securities claims.\nId. at 168-69 (emphasis added in part).\n\n As in Abengoa, Defendants in their motion to dismiss here lodge slapdash arguments\naround the 21 FEs, each of whom provide detailed accounts in support of the elements of falsity\nand scienter. The Complaint alleges\u2014and Lead Plaintiff describes in great detail in the Opposition\nBrief\u2014specific facts and bases sufficient to establish at this pleading stage that each FE readily\nestablishes \u201csufficient particularity to support the probability . . . [they] would possess the\ninformation alleged.\u201d Id. at 164. See Opposition Brief at ix-xi (describing each FE and the location\nof their referenced allegations in the Complaint); see also id. at 8-9, 12-13, 15 n.6, 18-19, 20-21,\n25-34. Indeed, Defendants concede, as they must, that several of the FEs, who provided\ninformation included in the Complaint, had direct contact with the Defendants, while many others\nreported up to the Individual Defendants in their reporting lines. Id. at 33. The Court of Appeals\u2019\nruling in Abengoa makes clear that these pleadings are more than sufficient, and the same sorts of\nscattershot arguments as to the reliability of the FEs made by Defendants here likewise fail for the\nsame reasons as in Abengoa.\n\n B. In re Dentsply Sirona, Inc. Sec. Litig., 2026 WL 124581\n (S.D.N.Y. Jan. 16, 2026) (\u201cDentsply II\u201d1)\n\n In Dentsply II, Judge Naomi Reice Buchwald denied, in nearly all parts, defendants\u2019\nmotions to dismiss plaintiff\u2019s Exchange Act claims, holding that the complaint adequately alleged:\n(i) defendants made materially false and misleading statements regarding Dentsply\u2019s Byte dental\naligner product and business under Rule 10b-5(b); (ii) defendants could be held liable for an\nindependent \u201cscheme liability\u201d claim under Rules 10b-5(a) and (c); and (iii) all but one of the\ndefendants acted with scienter. 2026 WL 124581, at *21. Judge Buchwald\u2019s analysis of the\nExchange Act elements, as they applied to the claims in Dentsply II, is relevant here.\n\n Falsity: At the outset, the defendants in Dentsply II\u2014same as Defendants here\u2014included\na summary chart for the alleged misstatements along with their motions to dismiss. There, the\nDentsply II court declined to address any legal challenges to falsity (including puffery, opinion,\nand safe harbor) to the extent the defendants did not affirmatively raise the challenged statement\nin their brief and instead relied on the challenges cited in passing in their chart. See id. at *9 (citing\nDentsply I, 732 F. Supp. 3d at 315). Here, Defendants make similar passing and unsubstantiated\nlegal challenges to multiple Misstatements by listing the paragraph numbers in a footnote without\nany discussion, and the Court should follow the Dentsply II lead in simply rejecting these improper\n\n\n1\n Lead Plaintiff cites to an opinion addressing separate Exchange Act claims against the same\ncorporate defendant in its Opposition Brief (defined above) (San Antonio Fire & Police Pension\nFund v. Dentsply Sirona Inc., 732 F. Supp. 3d 300, 316 (S.D.N.Y. 2024)) (\u201cDentsply I,\u201d herein),\nwhich is why the submitted supplemental authority is referred to herein as \u201cDentsply II\u201d.\n\f Case 1:24-cv-02804-JAV Document 74 Filed 01/30/26 Page 3 of 5\n\n\n\n\nJanuary 30, 2026\nPage 3\n\nchallenges. See Opposition Brief at 9, 11, 17, 19, 24; ECF 50-1, n.2 (noting with an asterisk each\nchallenge made by reference to a paragraph number only, without discussion of the text of the\nMisstatement).\n\n Next, the Dentsply II court\u2019s analysis of the defendants\u2019 materiality challenges applies\nequally here. See Dentsply II, 2026 WL 124581, at *9-13. For example, the Dentsply II court\nrejected several puffery/materiality challenges on the basis that, while in certain circumstances the\nstatement could be immaterial, examining those statements in the context in which they were\nmade, i.e., in response to a direct analyst question, established materiality. See id. at *12. Likewise\nhere, Defendants\u2019 arguments challenging numerous statements as immaterial improperly ignores\nthe specific context in which those statements were made\u2014such as in direct response to analyst\ninquiries\u2014and which, when read in their full context, establishes their materiality to investors. See\nOpposition Brief at 11, 16-17, 19-20, 23-24.\n\n Finally, the Dentsply II court rejected the defendants\u2019 arguments that several of their\nstatements should be considered to be inactionable \u201copinion\u201d statements. Specifically, the court\nruled that even statements including certain words, such as \u201c\u2018I think\u2019. . . or a similar phrase, does\nnot transform the statements into opinions,\u201d in part because each \u201copinion\u201d contained \u201cembedded\nstatements of fact\u201d that did not \u201calign[] with information available\u201d to defendants. Dentsply II,\n2026 WL 124581, at *12-13. Defendants\u2019 challenges that statements here are nonactionable\n\u201copinions\u201d fail for the same reasons: while many are not fashioned as opinions at all, even as to\nDefendants\u2019 statements couched in language such as \u201cwe believe,\u201d the statements alleged by\nPlaintiff are nonetheless actionable with respect to the embedded statements of fact within those\nstatements, which were contrary to the alleged information available to Defendants. See\nOpposition Brief at 11-12, 17-18, 19-20, 23-24.\n\n Scheme Liability. Judge Buchwald held that plaintiffs adequately alleged scheme liability,\nfinding that such liability could \u201carise out of the same set of facts\u201d alleging both misrepresentations\nas well as \u201ca deceptive scheme or course of conduct that went beyond the misrepresentations.\u201d\nDentsply II, 2026 WL 124581, at *20. In Dentsply II, the scheme included the concealment of\ninjuries from the FDA, as well as the use of non-disclosure agreements to silence employees,\nlobbying the government, and providing inaccurate information to customers. Id. This is relevant\nto this action where Lead Plaintiff alleges in a similar fashion that Defendants\u2019 deceptive scheme\nincluded, among other things, (i) \u201cmisrepresenting and concealing negative feedback, customer\ncomplaints and device failures;\u201d (ii) dismantling the Savanna team to hide their concerns and\nproduct issues; and (iii) submitting Savanna to the FDA without remediating existential issues with\nthe product. See Complaint, \u00b6429.\n\n Scienter. Finally, after holistically evaluating plaintiffs\u2019 scienter allegations, the Dentsply\nII court ruled that scienter was sufficiently pled as to all but one defendant. 2026 WL 124581, at\n*14-20. For example, the Dentsply II court found that the complaint sufficiently pled \u201cmotive and\nopportunity\u201d to commit fraud because: (i) the \u201cIndividual Defendants\u2019 bonuses were tied to\nDentsply\u2019s EPS\u201d and other similar metrics; and (ii) management had an \u201cincentive to conceal\u201d\n\f Case 1:24-cv-02804-JAV Document 74 Filed 01/30/26 Page 4 of 5\n\n\n\n\nJanuary 30, 2026\nPage 4\n\ntheir customers\u2019 injuries associated with the Byte product to \u201cdelay the day of reckoning.\u201d Id. at\n*15. The Dentsply II court also rejected the defendants\u2019 challenges to the reliability of the accounts\nof eight former employee allegations based on quibbles as to the length of the FEs\u2019 tenures and/or\nthe FEs\u2019 seniority at the company (id. at *15-17). To the contrary, the court specifically rejected\nthese challenges, credited the information from the FEs, and held that the FE accounts sufficiently\ndemonstrated that the defendants had \u201caccess to contrary facts,\u201d even where the \u201cspecific\u201d contents\nof those reports were not alleged or where plaintiffs\u2019 failed to allege that the defendants \u201cactually\nviewed [the] specific document[.]\u201d Id. at *16-17. Finally, the Dentsply II court found that the\ndeparture of multiple executives around the time of the alleged corrective disclosures\n\u201csignificantly bolsters the inference of scienter.\u201d Id. at *20.\n\n In each regard, Dentsply II aligns directly with Lead Plaintiff\u2019s particularized scienter\nallegations here. As explained in Lead Plaintiff\u2019s Opposition Brief, the Complaint: (i) alleges that\nbonuses were tied to achieving \u201ccertain Savanna launch targets,\u201d which motivated the unrealistic\nsales pressure and \u201ctop-down mandate\u201d regarding Savanna\u2019s premature launch (Opposition Brief\nat 29, n.17); (ii) alleges that Defendants doubled QuidelOrtho\u2019s endemic COVID revenue estimate\nto \u201cstaunch a rapidly falling stock price\u201d despite negative sales figures, inventory levels, and\nknown trends (id. at 30-34); (iii) contains the accounts of 21 former employees with direct\nknowledge sufficient to demonstrate Defendants\u2019 knowledge of, or access to, information that\ncontradicted their public statements (id. at 25-34); and (iv) alleges that the \u201ctiming and\ncircumstances\u201d of Defendants Bryant, Bujarski, and Iskra\u2019s terminations strongly support an\ninference of scienter (id. at 31-32). Here, as in Dentsply II, these allegations readily suffice.\n\n C. Stadium Cap. LLC v. Co-Diagnostics, Inc., 2026 WL 100576 (S.D.N.Y. Jan.\n 14, 2026) (\u201cStadium Cap. II\u201d2)\n\n In Stadium Cap. II, Judge Arun Subramanian granted in relevant part the plaintiff\u2019s motion\nfor summary judgment on the element of falsity in a case involving misstatements through which\n\u201cdefendants misled investors by reassuring them that demand for the [defendant\u2019s COVID-19 test]\nremained strong and by suspending their quarterly revenue guidance, citing an inability to\naccurately forecast sales when in reality defendants tracked demand daily and were already aware\nsales had plummeted.\u201d 2026 WL 100576, at *2. The Stadium Cap. II court rejected the defendants\u2019\nfalsity challenges that blamed their misstatements on \u201cthe volatility of the COVID-19 testing\nmarket and the difficulty in providing precise revenue projections\u201d because such arguments\n\u201csidestep the key point: CoDx experienced a steep decline in demand for its flagship product but\nwithheld that information from investors.\u201d Id. at *3-4.\n\n Similarly, Defendants argue erroneously that their statements were not false and\nmisleading because they purportedly warned investors of the challenges in estimating COVID-19-\n\n\n2\n Lead Plaintiff cites to the motion to dismiss opinion in the same action in its Opposition Brief at\n25 & 26, which is why the supplemental authority is referred to herein as \u201cStadium Cap. II\u201d.\n\f Case 1:24-cv-02804-JAV Document 74 Filed 01/30/26 Page 5 of 5\n\n\n\n\nJanuary 30, 2026\nPage 5\n\nrelated trends. See Opposition Brief at 22. For the reasons explained in the Opposition Brief and\nat center in both Stadium Cap. opinions, these arguments also \u201csidestep the key point\u201d because\nDefendants doubled their assessment of annual COVID-19 revenue overnight (from $150-$200\nmillion to $200-$400 million), despite internal reports of materially declining sales. Id. at 20.\nThese allegations, together with the Complaint\u2019s FE allegations regarding Defendants\u2019 awareness\nof negative sales figures, inventory levels, and known trends, more than suffice to allege falsity at\nthis motion to dismiss stage. See id. at 20-24.\n\n We thank the Court for its attention to this matter.\n\n\n\nRespectfully submitted,\n\n\n\n\nLauren A. Ormsbee\n\f","ocr_status":1,"date_upload":"2026-05-20T15:30:01.666435-07:00","document_number":"74","attachment_number":null,"pacer_doc_id":"127038985720","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/479925121/","id":479925121,"tags":[],"absolute_url":"/docket/68433458/74/1/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-05-20T15:30:00.641505-07:00","date_modified":"2026-05-22T08:57:53.142377-07:00","sha1":"560706166d7652e5df3f66c154d6fb3a36372a65","page_count":17,"file_size":503999,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.74.1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.74.1.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":"2026-05-20T15:30:06.792220-07:00","document_number":"74","attachment_number":1,"pacer_doc_id":"127038985721","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit A - Sherman v. Abengoa, S.A., 156 F.4th 152, 157 (2d Cir. 2025)","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/479925122/","id":479925122,"tags":[],"absolute_url":"/docket/68433458/74/2/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-05-20T15:30:00.663861-07:00","date_modified":"2026-05-22T10:41:54.701978-07:00","sha1":"da1de237ff5592e722514fd4ebeb8dc8a49c3861","page_count":22,"file_size":513111,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.74.2.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.74.2.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":"2026-05-20T15:30:21.248491-07:00","document_number":"74","attachment_number":2,"pacer_doc_id":"127038985723","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit B - In re Dentsply Sirona, Inc. Sec. Litig., 2026 WL 124581 (S.D.N.Y. Ja","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/479925123/","id":479925123,"tags":[],"absolute_url":"/docket/68433458/74/3/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-05-20T15:30:00.677266-07:00","date_modified":"2026-05-22T08:58:17.863679-07:00","sha1":"8a533c7b8c37da027aee83f26604ba55c5ec57f6","page_count":12,"file_size":527645,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.74.3.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.74.3.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 1:24-cv-02804-JAV Document 74-3 Filed 01/30/26 Page 1 of 12\n\n\n\n\n EXHIBIT C\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 2 of 12\n\n\n v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113\n 2026 WL 100576 S.Ct. 2786, 125 L.Ed.2d 469 (1993). And Stadium has moved\n Only the Westlaw citation is currently available. to exclude portions of the testimony of defendants\u2019 expert\n United States District Court, S.D. New York. witnesses, Thomas Tsai and Vinita Juneja. For the following\n reasons, Stadium's motion for partial summary judgment is\n STADIUM CAPITAL LLC et al., Plaintiffs, GRANTED in part and DENIED in part, its Daubert motion\n v. is DENIED without prejudice, and defendants\u2019 summary\n CO-DIAGNOSTICS, INC. et al., Defendants. judgment and Daubert motions are DENIED.\n\n 22-cv-6978 (AS), 22-cv-7988 (AS)\n |\n BACKGROUND\n Signed January 14, 2026\n CoDx develops, manufactures, and sells tests to diagnose\nAttorneys and Law Firms\n diseases. Dkt. 120 \u00b6\u00b6 1\u20132. When the COVID-19 pandemic\nFrederic Scott Fox, Sr., Jason Aron Uris, Kaplan Fox & began, CoDx quickly developed its Logix Test to detect the\nKilsheimer LLP, New York, NY, Chang Hahn, Ainsworth virus. Id. \u00b6 3. Soon after it began selling Logix Tests in late\nGorkin PLLC, New York, NY, for Plaintiff Stadium Capital February and March 2020, the product became CoDx's \u201csole\nLLC in No. 22-cv-6978. material source of revenue.\u201d Dkt. 121 \u00b6 1. During this period,\n CoDx's business skyrocketed. Dkt. 120 \u00b6\u00b6 18\u201326. CoDx's\nJames Michael LoPiano, Jeremy Alan Lieberman, Joseph quarterly revenues closely tracked its quarterly Logix Test\nAlexander Hood, II, Pomerantz LLP, New York, NY, for sales, a metric that a CoDx executive said the company had\nPlaintiff Drew Lee in Nos. 22-cv-6978, 22-cv-7988. the ability to track in real-time. Id. \u00b6 118; Dkt. 121 \u00b6\u00b6 7\u201310.\n Shortly after the start of the pandemic, defendants began to\nDouglas W. Greene, Genevieve Graeme York-Erwin, Baker offer revenue guidance for the upcoming quarter when they\n& Hostetler LLP, Seattle, WA, Erica Adina Barrow, Zachary announced CoDx's financial results for the previous quarter.\nRowen Taylor, Baker & Hostetler LLP, New York, NY, Dkt. 120 \u00b6 169; Dkt. 121 \u00b6\u00b6 3, 26. After reporting $1.5 million\nMarissa Peirsol, Baker & Hostetler LLP, Columbus, OH, for in revenue for the first quarter of 2020, CoDx earned $24\nDefendants in No. 22-cv-6978. million in revenue for the second quarter\u2014and at least $20\n million in revenue for each of the seven quarters after. Dkt.\n 120 \u00b6\u00b6 18\u201326; Dkt. 121 \u00b6 2.\n OPINION AND ORDER\n Then sales plummeted in the middle of 2022. Dkt. 121 \u00b6 16.\nARUN SUBRAMANIAN, United States District Judge: By mid-May, CoDx received orders of just $2.5 million for\n the quarter-to-date\u2014far less than what was typical for mid-\n*1 Stadium Capital (\u201cStadium\u201d), the lead plaintiff in this\n quarter sales, which had been over $5.1 million at that point\nclass action lawsuit, 1 has sued Co-Diagnostics (\u201cCoDx\u201d), since CoDx started selling the Logix Test. Dkt. 121 \u00b6\u00b6 11,\nits CEO Dwight Egan, and its CFO Brian Brown, for 14. Around the same time, CoDx and its executives made the\nallegedly making false or misleading statements in violation decision not to offer mid-quarter revenue guidance. Dkt. 120\nof \u00a7\u00a7 10(b) and 20(a) of the Securities Exchange Act \u00b6\u00b6 230, 233; Dkt. 121 \u00b6\u00b6 56\u201357. Egan and Brown justified this\nof 1934 and SEC Rule 10b-5(b). Both sides have moved decision in a press release and on an earnings call on May 12,\nfor summary judgment. Defendants have also moved to 2022 with three statements that Stadium now challenges:\nexclude the testimony of Stadium's expert witness, Chad\nCoffman, under Federal Rule of Evidence 702 and Daubert\n Setting Statement\n\n CoDx Press Release Egan: \u201cWhile we remain very confident about\n the long-term potential of our business,\n our ability to accurately forecast Logix\n Smart\u2122 COVID-19 Test sales through the\n balance of the year has diminished due to\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 1\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 3 of 12\n\n\n decreased mask mandates in the United\n States, continued emergence and spread of\n new variants, and persistently low vaccination\n rates in many parts of the world. As a result, it\n has become difficult to predict with any level of\n precision the cumulative impact of these and\n other factors on our future financial results. For\n these reasons, we are not providing quarterly\n guidance at this time and will reassess this\n position in the future[.]\u201d Dkt. 120 \u00b6 230; Dkt.\n 121 \u00b6 56.\n\n Earnings Call Brown: \u201cThe dedication from our team to\n deliver solid performance remains on full\n display. Our record performance during the\n first quarter would not have been possible\n without their many contributions. As we look\n to the balance of fiscal 2022, we remain\n encouraged by the demand for our products\n and the operational and scientific teams we\n have established to support our future growth.\n Turning now to our visibility around the\n outlook for the balance of the year. While\n we experienced strong demand for our\n products during the first quarter of 2022,\n changes in our operating environment and\n markets have restricted our near-term visibility.\n We will continue to navigate the near-term\n environment with caution, but as a result, we'll\n not be providing quarterly guidance at this\n time.\n To be clear, we remain very confident about\n the long-term potential of our business and\n the demand for our products. Our ability to\n accurately forecast Logix Smart COVID-19\n test sales through the balance of the year has\n diminished due to decreased mask mandates\n in the United States, continued emergence and\n spread of new variants and persistently low\n vaccination rates in many parts of the world.\n Furthermore, we are experiencing sizable\n fluctuations in order patterns from our\n customers that are not cleanly captured in\n a particular quarter as testing requirements\n continue to vary across the many geographic\n regions we serve. As a result, it has become\n difficult to predict with an expected level of\n precision the cumulative impact of these and\n other factors on our future financial results.\u201d\n Dkt. 121 \u00b6 57.\n\n Earnings Call Analyst: \u201cSo with the Logix Smart detection\n test, are you already seeing a decline in\n customer orders? Or are you refraining from\n providing a guidance mainly because it's\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 2\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 4 of 12\n\n\n tough to like predict the environment moving\n forward?\u201d\n Brown: \u201cIt's more about the timing and being\n able to forecast the timing of orders is the\n bigger issue. It's not necessarily a demand\n issue that we're seeing. It's more of just timing\n of being able to accurately forecast what's\n coming in. And the last thing we want to do\n is provide guidance that we're not confident\n in. And so that's one thing you'll know going\n forward is if we're not confident in providing\n guidance, then we won't provide guidance.\u201d\n Dkt. 120 \u00b6 234; Dkt. 121 \u00b6 58.\n\n bears the burden of proof, as Stadium does here on its motion,\nThree months later, on August 11, CoDx disclosed a steep\n then the movant's evidence \u201cmust be substantial\u201d and \u201cmust\ndecline in revenue. Dkt. 120 \u00b6\u00b6 266, 270. For the second\n be sufficient for the court to hold that no reasonable trier of\nquarter of 2022, CoDx reported revenue of just $5 million\u2014\nan almost 82% decline compared to the prior year period. Dkt. fact could find other than for the moving party.\u201d Donoghue\n120 \u00b6 270; Dkt. 121 \u00b6 59. The next day, CoDx's common stock v. Oaktree Specialty Lending Corp., 2024 WL 3455292, at *8\nprice fell by 30.65% to $4.48 per share. Dkt 120 \u00b6 281; Dkt. (S.D.N.Y. June 20, 2024) (quoting Leone v. Owsley, 810 F.3d\n121 \u00b6 61. 1149, 1153 (10th Cir. 2015)). When deciding cross-motions,\n the Court \u201cevaluate[s] each party's motion on its own merits,\n *2 Stadium sued defendants shortly after those reduced taking care in each instance to draw all reasonable inferences\nearnings were reported, focusing its securities-fraud claims against the party whose motion is under consideration.\u201d\non the three allegedly false or misleading statements Williams, 44 F.4th at 125 (alteration in original) (quoting\nabove. Stadium alleges that defendants misled investors by Byrne v. Rutledge, 623 F.3d 46, 53 (2d Cir. 2010)).\nreassuring them that demand for the Logix Test remained\nstrong and by suspending their quarterly revenue guidance, Under Federal Rule of Evidence 702 and Daubert, the\nciting an inability to accurately forecast sales when in reality proponent of expert testimony must show that the \u201cwitness ...\ndefendants tracked demand daily and were already aware is qualified as an expert by knowledge, skill, experience,\nsales had plummeted. Dkt. 31 For their part, defendants argue training, or education.\u201d Fed. R. Evid. 702. The proponent\nthat because the COVID-19 testing market was so volatile, must also demonstrate that it is more likely than not that the\n\u201cthere was not a cognizable downward trend in demand for expert's testimony \u201cwill help the trier of fact to understand\nthe Logix test,\u201d meaning defendants did not make any false the evidence or to determine a fact in issue,\u201d \u201cis based on\nor misleading statements or omissions. Dkt. 107 at 1. Both sufficient facts or data,\u201d \u201cis the product of reliable principles\nStadium and defendants now move for summary judgment. and methods,\u201d and \u201creflects a reliable application of the\n principles and methods to the facts of the case.\u201d Id.; see\n also In re Rezulin Prods. Liab. Litig., 309 F. Supp. 2d 531,\n 539 (S.D.N.Y. 2004) (\u201c[Rule 702] incorporates principles\n LEGAL STANDARDS established in Daubert v. Merrell Dow Pharmaceuticals,\n Inc., in which the Supreme Court charged trial courts with\n\u201cThe court shall grant summary judgment if the movant\n a gatekeeping role to \u2018ensure that any and all scientific\nshows that there is no genuine dispute as to any material fact\n testimony or evidence admitted is not only relevant, but\nand the movant is entitled to judgment as a matter of law.\u201d\n reliable.\u2019 \u201d (footnote omitted) (quoting Daubert, 509 U.S. at\nFed. R. Civ. P. 56(a). A dispute is \u201cgenuine\u201d if a reasonable\n 589, 113 S.Ct. 2786)).\njury could find for the non-moving party, Anderson v. Liberty\nLobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d\n202 (1986), and a fact is \u201cmaterial\u201d if it could \u201caffect the\noutcome.\u201d Id. The Court views the record \u201cin the light most DISCUSSION\nfavorable to the non-movant.\u201d Williams v. MTA Bus Co., 44\nF.4th 115, 126 (2d Cir. 2022) (cleaned up). If the movant\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 3\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 5 of 12\n\n\n guidance completely, citing uncertainty in the market causing\n I. The Court grants summary judgment to Stadium on the company to not accurately predict results ... could\n falsity and materiality but otherwise denies both sides\u2019 be viewed as more positive than guiding to a figure and\n motions. coming up very short.\u201d Id. Defendants eventually gave this\nSEC Rule 10b-5(b) prohibits the \u201cmak[ing of] any untrue rationale to investors for suspending quarterly projections.\nstatement of a material fact\u201d in connection with the purchase Dkt. 114-21 at 7. Stadium also points to testimony from\nor sale of a security. 17 C.F.R. \u00a7 240.10b-5(b). To prevail on CoDx executives that the \u201ctheme\u201d they were emphasizing\na Rule 10b-5(b) private action, \u201ca plaintiff must prove (1) a was that \u201cCOVID was not going away.\u201d Dkt. 121 \u00b6 51.\nmaterial misrepresentation or omission by the defendant; (2) Stadium argues that saying all this \u201cbut omitting the negative\nscienter; (3) a connection between the misrepresentation or elephant in the room\u201d\u2014the steep quarter-to-date decline in\nomission and the purchase or sale of a security; (4) reliance Logix Test sales\u2014rendered the three challenged statements\nupon the misrepresentation or omission; (5) economic loss; false or misleading. Dkt. 133 at 16 (quoting Dkt. 42 at 6).\nand (6) loss causation.\u201d Stoneridge Inv. Partners, LLC v.\nScientific-Atlanta, Inc., 552 U.S. 148, 157, 128 S.Ct. 761, Defendants disagree for two reasons. First, they argue that\n169 L.Ed.2d 627 (2008). Here, Stadium moves for summary \u201cthe undisputed, material facts establish the statements were\njudgment on falsity, materiality, and scienter. Meanwhile, true\u201d because of the volatility of the COVID-19 testing\ndefendants move for summary judgment on those same market and the difficulty in providing precise revenue\nelements, together with reliance and loss causation. projections. Dkt. 107 at 9\u201310. Defendants rely on the expert\n testimony of Dr. Thomas Tsai, who reported significant\n uncertainty at the time regarding near-term demand for\n A. The Court grants summary COVID-19 testing. Dkt. 106-1 \u00b6 14. Defendants then refer\n judgment to Stadium on falsity. to testimony and emails from CoDx executives stating that\n these uncertain market conditions made it impossible to\n *3 Under \u00a7 10(b) and Rule 10b-5(b), \u201cit is unlawful to (1) accurately predict sales at the time and led them to suspend\nmake any untrue statement of a material fact, or (2) omit to quarterly revenue projections. Dkt. 108 \u00b6\u00b6 155\u201356, 194,\nstate a material fact necessary in order to make the statements 221, 236\u201340. Defendants further point to testimony from\nmade not misleading.\u201d In re Vivendi, S.A. Sec. Litig., 838 F.3d CoDx executives stating that, despite this uncertainty, they\n223, 239 (2d Cir. 2016) (cleaned up); 15 U.S.C. \u00a7 78j(b). remained confident about long-term demand and earning\nIn gauging whether a statement is untrue, the central issue potential. Dkt. 108 \u00b6\u00b6 30, 192, 252. Second, defendants argue\nis not whether \u201cparticular statements, taken separately, were that omitting quarter-to-date sales data did not render any\nliterally true, but whether defendants\u2019 representations, taken statements misleading and that they had no regular practice of\ntogether and in context, would have mislead a reasonable disclosing it. Dkt. 107 at 13\u201315. They rely on the testimony\ninvestor.\u201d McMahan & Co. v. Wherehouse Ent., Inc., 900 F.2d of company executives that intra-quarter sales numbers were\n576, 579 (2d Cir. 1990). often volatile (especially during this period) as well as some\n of the underlying sales numbers to help prove it. Dkt. 108\nStadium argues that \u201c[t]he undisputed evidence shows that the \u00b6\u00b6 123\u201328, 130\u201332, 136, 138\u201339. They also rely on the\nalleged misrepresentations were false and misleading when testimony of their executives that no one saw the early 2022\nmade.\u201d Dkt. 113 at 15. It argues that CoDx and its executives decline in Logix Test sales as concerning, and that it didn't\n\u201cgave investors a pretextual excuse for their decision to stop factor into the press-release and earnings-call preparation. Id.\nproviding [quarterly projected revenue] guidance, when in \u00b6\u00b6 144\u201345, 177, 179, 182, 185, 188.\nreality, they were simply trying to delay delivering the bad\nnews.\u201d Id. Stadium cites to quarterly sales data to claim CoDx *4 The Court is unconvinced by defendants\u2019 arguments,\nand its executives knew that second-quarter-of-2022 demand because they sidestep the key point: CoDx experienced a\nfor the Logix Test was \u201cmeagre.\u201d Id.; see also Dkt. 121 steep decline in demand for its flagship product but withheld\n\u00b6\u00b6 11\u201312, 14\u201316. It then points to an email between CoDx that information from investors. When asked on the earnings\nexecutives and their investor relations consultant, in which call about whether CoDx was \u201calready seeing a decline in\nthe consultant advised that \u201ckeep[ing] quarterly guidance but customer orders,\u201d Brown responded \u201c[i]t's not necessarily a\nlower[ing] your estimates\u201d would \u201chave a negative impact on demand issue that we're seeing.\u201d Dkt. 108 \u00b6 234; Dkt. 115\nthe share price.\u201d Dkt. 114-12 at 2. He predicted that \u201cpull[ing] \u00b6 58. But of course, CoDx was already seeing a decline in\n\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 4\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 6 of 12\n\n\ncustomer orders relative to historical trends. Dkt. 115 \u00b6\u00b6 11, for the Logix Test, among other factors. Id. \u00b6 59. It also\n14. This omission of negative information about declining highlights the over 30% single-day decline in CoDx's stock\nLogix Test demand renders CoDx, Egan, and Brown's price following the disclosure of the decline in sales. Id. \u00b6\u00b6\nstatements about uncertain demand misleading. See In re 59, 61\u201362. Thus, Stadium argues that \u201c[g]iven the extent to\nBankAtlantic Bancorp, Inc. Sec. Litig., 2010 WL 6397500, which sales of the Logix Test had declined, there is no genuine\nat *6, 29 (S.D. Fla. Aug. 18, 2010) (defendant's positive dispute as to materiality.\u201d Dkt. 113 at 17.\nstatements to investors misleading when there were internal\nemails stating that \u201cthe music has stopped\u201d and expressing Defendants claim that any omission was immaterial because\n\u201csignificant concern\u201d about the investments). Egan and \u201cthe market was already aware of the volatile, cyclical nature\nBrown painted a rosy picture of long-term fiscal health, while of COVID-test sales\u201d and \u201cthe market understood from\nattributing the decision to halt future quarter guidance to these statements, in context, the same thing that disclosing\nanything but CoDx's undisputed decline in quarter-to-date lower quarter-to-date sales would have communicated.\u201d Dkt.\nsales. These are textbook misleading statements. See Meyer 107 at 15\u201316. To support these claims, defendants rely on\nv. Jinkosolar Holdings Co., 761 F.3d 245, 250 (2d Cir. 2014) Tsai's expert report on volatility in the COVID-19 testing\n(\u201conce a company speaks on an issue or topic, there is a duty market. Dkt. 108 \u00b6\u00b6 43\u2013103. Also, they argue that analyst\nto tell the whole truth\u201d). Any rational juror would find that and news commentary described defendants\u2019 statements (and\n\u201ctaken together and in context, [the challenged statements] suspension of revenue guidance) as an \u201cindication of a likely\nwould have misled a reasonable investor[.]\u201d McMahan, 900 decline in future revenue and earnings related to COVID-19\nF.2d at 579. products.\u201d Id. \u00b6\u00b6 256\u201357, 263\u201364. Thus, defendants claim\n that even if they disclosed quarter-to-date sales on May\n 12, that would not have changed an investor's total mix of\n information. Dkt. 107 at 16.\n B. The Court grants summary\n judgment to Stadium on materiality.\n The court again is unconvinced. First, the magnitude of\n\u201cFor an undisclosed fact to be material, there must be CoDx's decline in quarter-to-date sales makes clear that the\na substantial likelihood that the disclosure of the omitted information was plainly material to any reasonable investor.\nfact would have been viewed by the reasonable investor Of course, \u201cbright-line numerical tests for materiality are\nas having significantly altered the total mix of information inappropriate,\u201d ECA, Loc. 134 v. JP Morgan Chase Co.,\nmade available.\u201d In re Synchrony Fin. Sec. Litig., 988 F.3d 553 F.3d 187, 204 (2d Cir. 2009), but as a general matter\n157, 170 (2d Cir. 2021) (citations omitted). \u201c[M]aterial a deviation of greater than 5% of a financial figure is \u201ca\nfacts include ... facts which affect the probable future of good starting place\u201d for assessing materiality. Id. (citing SAB\nthe company and those which may affect the desire of No. 99, 64 Fed. Reg. at 45,151). Here, sales to date were\ninvestors to buy, sell, or hold the company's securities.\u201d about 50% lower than the lowest number defendants had\nSEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 849 (2d Cir. previously reported as guidance. Dkt. 121 \u00b6\u00b6 11, 14. As\n1968). \u201cOnly if the established omissions are so obviously defendants note, these numbers could be noisy\u2014but that is far\nimportant to an investor, that reasonable minds cannot differ more signal than noise. After all, defendants previously relied\non the question of materiality[,] is the ultimate issue of on these numbers to give forward-looking guidance. And to\nmateriality appropriately resolved as a matter of law by that end, this lower number signaled what was to come: an\nsummary judgment.\u201d TSC Indus., Inc. v. Northway, Inc., 426 82% decrease in sales for the company's marquee product\nU.S. 438, 450, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976) (internal by the end of the quarter. Id. \u00b6 59. Qualitative inquiry backs\nquotations omitted). that up. \u201cAmong useful qualitative factors [are] ... whether\n the misstatement concerns a segment or other portion of the\nStadium claims the omission of CoDx's quarter-to-date registrant's business that has been identified as playing a\ndecline in sales was material to investors. Dkt. 113 at 17\u2013 significant role in the registrant's operations or profitability,\n18. Stadium points out that before, during, and after the class and whether management expects that the misstatement will\nperiod, the Logix Test was CoDx's sole material source of result in a significant market reaction.\u201d Hutchison v. Deutsche\nrevenue. Dkt. 121 \u00b6 1. Relying on CoDx's financials, it then Bank Sec. Inc., 647 F.3d 479, 485 (2d Cir. 2011) (citations\npoints to the 82% decline in CoDx's revenues in the second and quotation marks omitted). The Logix Test was the sole\nquarter of 2022, which Egan attributed to lower demand material source of revenue for CoDx\u2014it's hard to play a more\n\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 5\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 7 of 12\n\n\nsignificant role than that. Dkt. 121 \u00b6 1. And management Recklessness in the securities fraud context is \u201cconscious\ncertainly was in on discussions indicating the importance recklessness\u2014i.e., a state of mind approximating actual\nof the guidance: the consultant they had hired sent Brown intent, and not merely a heightened form of negligence.\u201d\n(the CFO of CoDx) an email in early May as he \u201cprepare[d] S. Cherry St., LLC v. Hennessee Grp. LLC, 573 F.3d 98,\nto discuss guidance with the Board,\u201d sharing the view that 109 (2d Cir. 2009) (emphasis omitted). Recklessness can\n\u201ckeep[ing] quarterly guidance but lower[ing] your estimates\u201d be shown based on \u201cdefendants\u2019 knowledge of facts or\nwould \u201chave a negative impact on the share price.\u201d Dkt. 114-2 access to information contradicting their public statements.\u201d\nat 2. Novak v. Kasaks, 216 F.3d 300, 308 (2d Cir. 2000). And\n the scienter of a company's officers and directors may be\n *5 Relatedly, the Court views investor reactions to imputed to the company. In re Axsome Therapeutics, Inc.\ndefendants\u2019 eventual disclosure of the declining sales as clear Sec. Litig., 2025 WL 965265, at *9 (S.D.N.Y. Mar. 31, 2025)\nindicia of the information's materiality. See, e.g., Fresno Cnty. (holding that scienter of CEO and COO are \u201cimputed to the\nEmps.\u2019 Ret. Ass'n v. comScore, Inc., 268 F. Supp. 3d 526, 550 Company\u201d (citing Jackson v. Abernathy, 960 F.3d 94, 98\u2013\n(S.D.N.Y. 2017) (\u201ccomScore's significant stock drop further 99 (2d Cir. 2020))). Given the complex inquiry on intent\nsupports an inference of materiality\u201d); In re Petrobras Sec. required for scienter determinations, \u201cthe Second Circuit has\nLitig., 116 F. Supp. 3d 368, 380 (S.D.N.Y. 2015) (holding that left no doubt that scienter issues are seldom appropriate for\nthe dramatic decline in Petrobras\u2019 share price following the resolution at the summary judgment stage.\u201d SEC v. Cole, 2015\ndisclosure of a corruption scheme was indicia the information WL 5737275, at *5 (S.D.N.Y. Sept. 19, 2015).\nwas material). On August 12, 2022, the first day of trading\nafter CoDx reported its steep decline in Logix Test sales and Stadium says defendants were reckless. It points to evidence\noverall revenue, CoDx's stock price declined by over 30%, that Egan and Brown had access to real-time daily Logix Test\nwhich indicates the information was \u201cobviously important,\u201d sales data, Dkt. 115 \u00b6\u00b6 7\u20138, 21, 24, and that Brown used\nand thus material. TSC, 426 U.S. at 450, 96 S.Ct. 2126. Any this data to calculate quarterly revenue guidance, which he\nrational juror would view the steep decline in demand for the would generally discuss with Egan, id. \u00b6\u00b6 24\u201330. Stadium\nproduct that was CoDx's sole material source of revenue as says these facts indicate that Egan and Brown knew\u2014or at the\na fact that would have \u201csignificantly altered the total mix of very least were reckless in failing to know\u2014about the steep\ninformation made available\u201d to an investor. In re Synchrony, decline in Logix Test demand by May 12. Stadium then argues\n988 F.3d at 170. that defendants\u2019 rationale for suspending revenue guidance\n was a pretext to avoid disclosing this rapid decline. It points\n to correspondence between Brown, Egan, and their investor-\n relations consultant workshopping their press release and\n C. The Court denies Stadium\n earnings script and the decision to suspend revenue guidance.\n summary judgment on scienter.\n Id. \u00b6\u00b6 39\u201346.\nScienter is defined as \u201ca mental state embracing intent to\ndeceive, manipulate, or defraud.\u201d Tellabs, Inc. v. Makor Issues Defendants disagree. They deny that Egan regularly looked\n& Rts., Ltd., 551 U.S. 308, 318, 127 S.Ct. 2499, 168 L.Ed.2d at the real-time numbers, Dkt. 121 \u00b6 21, deny that Brown\n179 (2007) (quoting Ernst & Ernst v. Hochfelder, 425 U.S. often looked at this measure either, id. \u00b6 24, and argue that\n185, 193 n.12, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976)). Egan and Brown acted in good faith and did not intend to\nPlaintiffs have two options to prove scienter. In re Mylan mislead investors. Dkt. 107 at 17. They point to the testimony\nN.V. Sec. Litig., 666 F. Supp. 3d 266, 294 (S.D.N.Y. 2023) of Egan and Brown expressing their good-faith belief in long-\n(citing Kalnit v. Eichler, 264 F.3d 131, 137\u201338 (2d Cir. 2001)). term demand for the Logix Test and the difficulty they had\n\u201cFirst, the plaintiff may choose to adduce specific facts parsing volatile sales data. Dkt. 108 \u00b6\u00b6 139\u201340, 165, 189\u2013\ndemonstrating that the \u2018defendants had both a motive and 92, 215, 221, 234, 252, 278. They then point to corroborating\nopportunity to commit fraud.\u2019 Alternatively, the plaintiff can testimony from CoDx executive Andrew Benson. Dkt. 108 \u00b6\u00b6\nproduce \u2018facts that constitute strong circumstantial evidence 141, 194\u201396, 220, 239\u201342. On defendants\u2019 view, the decision\nof conscious misbehavior or recklessness.\u2019 \u201d Id. (quoting not to share mid-quarter guidance had nothing to do with\nKalnit, 264 F.3d at 138). an intent to mislead investors and instead has a simpler\n explanation: They didn't feel confident making a prediction\n in a volatile situation.\n\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 6\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 8 of 12\n\n\n rebuttable presumption of classwide reliance on public,\n *6 A rational jury may very well agree with Stadium material misrepresentations when shares are traded in an\nthat given Egan and Brown's actual knowledge of\u2014or, at efficient market.\u201d Amgen Inc. v. Conn. Ret. Plans & Tr.\nthe very least, access to the data showing\u2014the decline in Funds, 568 U.S. 455, 463, 133 S.Ct. 1184, 185 L.Ed.2d 308\nLogix Test sales, they intended to deceive investors by (2013). \u201cAny showing that severs the link between the alleged\nomitting that information. But while it's a close call, the facts misrepresentation and either the price received (or paid) by\ndon't compel a ruling in Stadium's favor at this juncture. the plaintiff, or his decision to trade at a fair market price,\nSee S. Cherry St., LLC, 573 F.3d at 109 (defining scienter will be sufficient to rebut the presumption of reliance.\u201d Basic,\nproved by recklessness as \u201cnot merely a heightened form of 485 U.S. at 248, 108 S.Ct. 978. \u201cThe district court's task is\nnegligence\u201d (emphasis omitted)); In re Mylan, 666 F. Supp. simply to assess all the evidence of price impact\u2014direct and\n3d at 295 (holding that scienter requires \u201c[n]ot just any failure indirect\u2014and determine whether it is more likely than not that\nto see the obvious ... [but rather] an egregious refusal to see the alleged misrepresentations had a price impact.\u201d Goldman\nthe obvious\u201d (quotations omitted)). Sachs Grp., Inc. v. Ark. Tchr. Ret. Sys. (ATRS), 594 U.S. 113,\n 126\u201327, 141 S.Ct. 1951, 210 L.Ed.2d 347 (2021).\nIn many of the cases Stadium references where scienter\nwas established on summary judgment, the facts showed Defendants aim to rebut the presumption of classwide\nthat the defendants admitted to or were clearly aware of reliance, making two arguments. First, they claim that the\ntheir reckless behavior. SEC v. Honig, 2023 WL 6386918, at \u201cfront-end\u201d price increase on May 13 that kept CoDx's\n*30 (S.D.N.Y. Sept. 29, 2023) (defendant admitted statement stock high was because of the positive first-quarter results\nwas inaccurate); SEC v. Gallison, 588 F. Supp. 3d 509, 524 announced with the challenged statements, not any omissions\n(S.D.N.Y. 2022) (defendant's actions directly contradicted in the challenged statements concerning second quarter sales.\nstatement at issue); SEC v. Frohling, 851 F.3d 132, 137 (2d Dkt. 107 at 20. They rely on the expert report of Dr. Vinita\nCir. 2016) (defendant admitted he knew facts that made his Juneja and on the fact that financial analysts covering CoDx\nstatements false). Those kinds of admissions are absent here, didn't raise their price targets after the May 13 releases\nand defendants offer some explanation for Egan and Brown concerning sales in the second quarter, but instead lowered\nnot mentioning the decline in quarter-to-date sales\u2014that they them (suggesting that the market priced in that this was bad\nthought the decline they were seeing wasn't indicative of news simply from the lack of guidance). Dkt. 108 \u00b6\u00b6 256\u2013\nanything other than volatility in the market, which they did 65. Second, defendants argue that the \u201cback-end\u201d price drop\nmention. While that explanation doesn't hold water for either following the disclosure of declining Logix Test sales on\nfalsity or materiality, if the jury finds that CoDx, Egan, and August 11 can't be used as indirect evidence of a \u201cfront-\nBrown genuinely thought it was true, it could find they lacked end\u201d price impact, given the mismatch between the generic\nscienter. statements made on May 12 and the specific disclosure on\n August 11. Dkt. 107 at 21. Again, defendants rely on Juneja's\nFor these reasons, neither side is entitled to summary expert report. Dkt. 108 \u00b6\u00b6 269, 289. Putting all that together,\njudgment on this element. defendants argue that CoDx's stock rose after the earnings\n call for reasons unrelated to the lack of sales guidance for\n the second quarter, that the lack of guidance was priced in,\n and then that the final revelation of the sales numbers was\n D. The Court denies summary\n just too mismatched with the alleged omission to support any\n judgment to defendants on reliance.\n inference that the alleged omissions inflated the stock's price.\nAn essential element of a plaintiff's \u00a7 10(b) and Rule Dkt. 107 at 22.\n10b-5(b) claim is \u201creliance upon the misrepresentation or\nomission\u201d made by the defendant. Stoneridge, 552 U.S. *7 While defendants\u2019 argument might hold sway with the\nat 157, 128 S.Ct. 761. However, proving direct reliance jury, it's not enough for summary judgment. Defendants\n\u201cplace[s] an unnecessarily unrealistic evidentiary burden on \u201cbear[ ] the burden of persuasion to prove a lack of price\n[a] plaintiff who has traded on an impersonal market.\u201d Basic impact by a preponderance of the evidence.\u201d Goldman, 594\nInc. v. Levinson, 485 U.S. 224, 245, 108 S.Ct. 978, 99 U.S. at 121, 126, 141 S.Ct. 1951. They haven't established\nL.Ed.2d 194 (1988). Thus, the Supreme Court has endorsed that as a matter of law, viewing the evidence in the light most\nthe \u201cfraud-on-the-market\u201d theory, which \u201crecogniz[es] a favorable to Stadium. First, it isn't relevant that CoDx's stock\n\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 7\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 9 of 12\n\n\nprice may have risen because of other positive news on the At trial, defendants may well persuade a jury that Stadium's\nearnings call. Stadium is arguing that there was a material claim of market reliance is bogus. But at this stage, they\nomission\u2014in other words, the statements on the earnings call haven't met their burden of showing that as a matter of law\nmaintained the inflation that was already in the stock price. Stadium's story of reliance is wrong. That story goes: (1) the\nSee In re Vivendi, 838 F.3d at 257\u201358. And \u201cstatements that stock price was propped up when defendants downplayed a\nmerely maintain inflation already extant in a company's stock lack of demand they were seeing for CoDx's product, then (2)\nprice, but do not add to that inflation, nonetheless affect a the stock price later dropped when sales turned out to be low\ncompany's stock price.\u201d Waggoner v. Barclays PLC, 875 F.3d for the quarter.\n79, 104 (2d Cir. 2017). Next, defendants fail to show as a\nmatter of law that the market properly priced in the bad news\nafter the earnings call. As support, they cite analyst reports\n E. The Court denies summary judgment\nthat mentioned the lack of guidance and didn't raise their price\n to defendants on loss causation.\ntargets. Dkt. 108 \u00b6\u00b6 256\u201357. But, again, Stadium's theory of\nthe case (consistent with the caselaw) is that the price would \u201cLoss causation is the causal link between the alleged\nhave dropped (or at least not risen as much) if defendants had misconduct and the economic harm ultimately suffered by\nmade a full disclosure. the plaintiff.\u201d Lentell v. Merrill Lynch & Co., 396 F.3d 161,\n 172 (2d Cir. 2005) (internal quotations omitted); see also\nThat leaves defendants\u2019 argument that the back-end 15 U.S.C. \u00a7 78u-4(b)(4). A plaintiff can demonstrate loss\ndisclosure is mismatched with the omission, confounding any causation by producing evidence supporting a \u201ccorrective\ninference from the price drop. This argument relies on the disclosure.\u201d In re Omnicom Grp., Inc. Sec. Litig., 597 F.3d\nSupreme Court's decision in Goldman. 594 U.S. 113, 141 501, 511, 513 (2d Cir. 2010) (\u201cOmnicom II\u201d); In re Mylan,\nS.Ct. 1951. There, the Court examined generic statements 666 F. Supp. 3d. at 288. A disclosure is corrective if it reveals\n(risk factors in SEC filings) paired with a specific disclosure new information to the market that indicates the falsity of a\nthat came afterward and allegedly rendered those statements challenged statement. In re Omnicom Grp., Inc. Sec. Litig.,\nfalse or misleading. Id. at 116, 141 S.Ct. 1951. The Court 541 F. Supp. 2d 546, 551\u201352 (S.D.N.Y. 2008) (\u201cOmnicom\ncautioned that \u201cwhen the earlier misrepresentation is generic I\u201d). Nevertheless, a plaintiff \u201cmust disaggregate at least some\n(e.g., \u2018we have faith in our business model\u2019) and the later portion of the declines in share prices from losses resulting\ncorrective disclosure is specific (e.g., \u2018our fourth quarter from other, non-fraud-related events.\u201d In re Moody's Corp.\nearnings did not meet expectations\u2019),\u201d then \u201cit is less likely Sec. Litig., 2013 WL 4516788, at *12 (S.D.N.Y. Aug. 23,\nthat the specific disclosure actually corrected the generic 2013). \u201cIn their attempt to disaggregate competing causal\nmisrepresentation, which means that there is less reason to events from economic loss, plaintiffs may utilize event studies\ninfer front-end price inflation\u2014that is, price impact\u2014from conducted by experts.\u201d Id. (citing In re Vivendi, 634 F. Supp.\nthe back-end price drop.\u201d Id. at 123, 141 S.Ct. 1951. This 2d 352, 364 (S.D.N.Y. 2009) (\u201cIt is an expert that produces\nCourt embraces that principle, but it has nothing to do with the almost obligatory \u2018event study\u2019 that begins by isolating\nthis case. Here, the statements downplaying the bad mid- stock declines associated with market-wide and industry-\nquarter demand for the test were narrow (not broad); and the wide downturns from those specific to the company.\u201d)).\ndisclosure of the poor sales of that very same product was \u201c[S]ummary judgment is appropriate if [a plaintiff] cannot\ndirectly related to them. Defendants\u2019 argument to the contrary show that at least some of the price drop was due to the fraud.\u201d\n(that all that was said on the call was a generic negative signal Omnicom II, 597 F.3d at 510 n.3 (citing Celotex Corp. v.\nabout future earnings) is wishful thinking. On May 12 Egan Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265\nsaid: \u201cIt's not necessarily a demand issue we're seeing.\u201d Dkt. (1986)).\n120 \u00b6 234. Then on August 11 he said: \u201clower volumes for\nour ... test drove a year-over-year decline in revenue.\u201d Dkt. *8 Defendants claim that CoDx's August 11 second-quarter\n103-17 at 4. In short, this looks nothing like the generic risk earnings release didn't \u201ccorrect\u201d any prior omissions or\nfactors described in Goldman. 594 U.S. at 120, 141 S.Ct. 1951 misstatements because it announced new developments:\n(including \u201c[o]ur clients\u2019 interests always come first,\u201d and disappointing full-quarter results and continued uncertainties\n\u201c[i]ntegrity and honesty are at the heart of our business\u201d). and delays. Dkt. 107 at 24\u201325. They then argue that\n even if the August 11 earnings release was a corrective\n disclosure, Stadium still didn't properly disaggregate losses.\n\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 8\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 10 of 12\n\n\nId. Defendants aim to exclude Coffman's expert testimony on Defendants move to exclude Coffman's testimony because\nthis basis (addressed further below), but they argue that even he allegedly fails to analyze and account for confounding\nif such testimony were admitted, it does not give rise to a factors essential to determining loss causation. Dkt. 110 at 1.\ngenuine issue of material fact. Id. Generally, a court must determine if a proponent for an expert\n witness shows: (1) that the \u201cwitness ... is qualified as an expert\nThe Court disagrees. First, defendants fail to show that by knowledge, skill, experience, training, or education,\u201d (2)\nthere's no genuine dispute of material fact about whether that the expert's \u201ctestimony is based on sufficient facts or\nthe August 11 statements were corrective. Stadium's case data,\u201d (3) that the expert's \u201ctestimony is the product of reliable\ncenters on allegedly false or misleading statements on May 12 principles and methods,\u201d and (4) that \u201cthe expert's opinion\ndownplaying a decline in demand for the Logix Test. Stadium reflects a reliable application of the principles and methods to\npoints to statements made by Egan during the August 11 the facts of the case.\u201d Fed. R. Evid. 702; see also In re Rezulin,\nearnings call attributing CoDx's steep decline in revenue to a 309 F. Supp. 2d at 539. In this case, defendants challenge the\ndecline in demand for the Logix Test, in his words a \u201cfalloff.\u201d reliability of Coffman's opinion as it relates to loss causation,\nDkt. 121 \u00b6\u00b6 59\u201360. This was new, relevant information to inflation, and damages.\ninvestors on the same subject matter of the alleged fraud\nthat negatively impacted CoDx's stock price. A jury could *9 For experts on loss causation \u201c[t]o establish a causal\nreasonably rely on that information to conclude that the link between stock price movement and misrepresentations\nalleged fraud caused the loss. or corrective disclosures, an economist must control for\n confounding factors, i.e., other industry- or company-specific\nSecond, there's a genuine dispute of material fact about information released to the market unrelated to the alleged\nwhether part of the stock drop was caused by the correction of fraud.\u201d Bricklayers & Trowel Trades Int'l Pension Fund v.\nthe misstatement. The Court disagrees that the record is clear Credit Suisse First Bos., 853 F. Supp. 2d 181, 190 (D. Mass.\nthat Stadium inadequately \u201cdisaggregate[d] at least some 2012), aff'd sub nom. 752 F.3d 82 (1st Cir. 2014) (citing\nportion of the declines in share prices from losses resulting Omnicom I, 541 F. Supp. 2d at 554). \u201cBefore a conclusion on\nfrom other, non-fraud-related events.\u201d In re Moody's, 2013 causation can be reliably drawn, the expert must make some\nWL 4516788, at *12. Stadium's expert conducted an event reasonable attempt to eliminate some of the most obvious\nstudy that purports to isolate how much of the price decline causes.\u201d U.S. Info. Sys., Inc. v. Int'l Bhd. of Elec. Workers\nwas attributable to news about sales and demand for the Loc. Union No. 3, AFL-CIO, 313 F. Supp. 2d 213, 238\nLogix Test. Dkt. 103-34. The event study included controls (S.D.N.Y. 2004). \u201cIt is not required, however, that an expert\n\u201cfor market and industry effects\u201d and reached the statistically categorically exclude each and every possible alternative\nsignificant result of a 32.21% decline in the value of the cause in order to render the proffered testimony admissible.\u201d\ncommon stock attributable to the news about declining Astra Aktiebolag v. Andrx Pharms., Inc., 222 F. Supp. 2d 423,\ndemand. Id. \u00b6 75. Defendants\u2019 expert, Juneja, claims there 488 (S.D.N.Y. 2002), aff'd sub nom. In re Omeprazole Pat.\nwas confounding news warranting further disaggregation of Litig., 84 F. App'x 76 (Fed. Cir. 2003).\nlosses\u2014for example, that demand would continue to stay\nlow. Dkt. 106-3 \u00b6\u00b6 24\u201327. And Coffman replies that Juneja Defendants argue that Coffman's expert opinion is\ndidn't conduct any of her own analysis to prove that this other inadmissible because it fails to account for the \u201caxiomatic\u201d\ninformation drove the drop instead and that he sees it as part requirement of \u201cadequately accounting for obvious\nand parcel with the same corrective disclosure. Dkts. 103-35 alternative explanations.\u201d Fed R. Evid. 702 advisory\n\u00b6 7; 103-34 \u00b6 76. The conflicting opinions of these experts committee's note to 2000 amendments; Dkt. 110 at 1. They\nillustrates the presence of a genuine dispute as to a material then argue that expert testimony on loss causation requires\nfact. It is \u201cup to the jury to determine how much, if any, of the an accounting of confounding factors that Coffman did not\nartificial inflation identified by [plaintiff's expert] was caused provide. Dkt. 110 at 7\u201316. They point to three confounding\nby [defendants\u2019] alleged fraud[.]\u201d In re Vivendi, 838 F.3d at issues that Coffman allegedly failed to disaggregate in his\n255\u201356. testimony on loss causation: (1) the financial results for the\n second half of the second quarter of 2022, (2) forward-looking\n statements about uncertain future sales and demand, and (3)\n II. The Court denies defendants\u2019 motion to exclude the announcement of delays for the initial clinical trial of an\n Coffman's expert testimony. at-home, point-of-care PCR test. Dkt. 110 at 7\u201316.\n\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 9\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 11 of 12\n\n\n at his deposition that the \u201cconfounding\u201d information was\n either already baked into the market (or would have been if\nStadium responds that none of that information is\n defendants had told the truth on their May call), or it was\n\u201cconfounding\u201d because, as Coffman said at his deposition,\n immaterial. So there wouldn't be any material \u201cconfounding\u201d\nit isn't \u201cnegative value relevant information that would have\n information to consider. Coffman's theory and methods are\nsubstantially contributed to the stock price decline.\u201d Dkt.\n111-3 at 73:23\u201325; Dkt. 119 at 1. First, Stadium says the plainly reliable enough to reach a jury. See Ambrosini v.\nfinancial results for the second half of the second quarter of Labarraque, 101 F.3d 129, 141 (D.C. Cir. 1996) (possibility\n2022 are \u201cpart of the corrective information,\u201d so they aren't of some un-eliminated causes presents question of weight,\n\u201cconfounding.\u201d Dkt. 119 at 1. In other words, those continued so long as most obvious causes have been considered and\npoor results are what the market would've priced in, had reasonably ruled out by expert).\ndefendants not misled investors in the May 12 statements.\nNext, Stadium says the statements about demand uncertainty *10 To be sure, defendants can try to rebut Coffman's\n\u201ccould not possibly cause a stock price reaction\u201d because they testimony or otherwise mitigate potential damages by\n\u201cso closely mirror the alleged misrepresentations,\u201d id. at 2, showing that their \u201cconfounding\u201d information contributed\nand so the market had \u201calready digested that information and materially to the price drop. But the Court determines that\n Coffman's testimony \u201ccan be helpful to the jury\u201d as it\nincorporated it into the price,\u201d In re Pfizer Inc. Sec. Litig., 819\nF.3d 642, 659 (2d Cir. 2016). And it asserts that an analyst's evaluates those arguments. In re Pfizer Inc. Sec. Litig., 819\nresponse shows that the market didn't view the announcement F.3d at 660\u201361. Because Coffman's opinion was \u201cthe product\nregarding the continued delay of the PCR test clinical trial as of reliable principles and methods\u201d and \u201creliably applied\nmaterial negative news. Dkt. 119 at 2. the principles and methods to the facts of the case,\u201d it is\n admissible. Fed. R. Evid. 702; see also In re Rezulin, 309 F.\nZooming out, Coffman's testimony is reliable and thus Supp. 2d at 539.\nadmissible. First, he used the common and accepted method\nof an event study, which determined that the corrective\ndisclosure caused a \u201cstatistically significant negative price CONCLUSION\nmovement in [CoDx's] Common Stock beyond the 95%\nconfidence level (as well as beyond the 99% confidence For the reasons stated above, Stadium's motion for partial\nlevel).\u201d Dkt. 103-34 \u00b6 56. That was after \u201ccontrolling summary judgment, Dkt. 112, is GRANTED in part and\nfor market and industry factors,\u201d as required. Id. Second, DENIED in part, its motion to exclude portions of Tsai and\nCoffman stated in his report that he \u201calso considered and Juneja's testimony, Dkt. 104, is DENIED without prejudice, 2\nanalyzed the degree to which information arguably unrelated and defendants\u2019 motions for summary judgment, Dkt. 101,\nto the corrective information (i.e., confounding information) and to preclude Coffman's testimony, Dkt. 109, are DENIED.\npotentially impacted the stock price over the two-day trading\nperiod.\u201d Dkt. 103-34 \u00b6 76. He noted that he \u201cdid not The Clerk is directed to terminate the motions at Dkts. 101,\nidentify any confounding information.\u201d Id. Indeed, the most 104, 109, and 112.\nobvious cause of the over-30% price drop was the news\nabout substantially decreased Logix Test sales and what SO ORDERED.\nthat fact implied about future sales, not information about\nthose low sales remaining stable for the second half of the\nquarter, another announcement about continued uncertainty All Citations\nsurrounding future demand, or another announcement that the\n --- F.Supp.3d ----, 2026 WL 100576\nat-home PCR test wasn't quite ready yet. Coffman testified\n\n\n\n\n Footnotes\n\n\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 10\n\f Case 1:24-cv-02804-JAV Document 74-3\nStadium Capital LLC v. Co-Diagnostics, Inc., --- F.Supp.3d ---- (2026)\n Filed 01/30/26 Page 12 of 12\n\n\n1 The certified class includes \u201c[a]ll persons and entities who purchased the publicly traded securities of CoDx\n during the period May 12, 2022, through the close of the market on August 11, 2022 (4:00 p.m. ET), inclusive\n (the \u201cClass Period\u201d), and were damaged thereby.\u201d Dkt. 59 \u00b6 2 (footnote omitted). It excludes defendants, their\n immediate family members, and certain affiliates. Id.\n\n2 The Court has ruled in Stadium's favor on every issue here besides scienter, and the Court does not rely on\n Tsai or Juneja's testimony on that element. So Tsai and Juneja's testimony doesn't adversely impact Stadium\n in any way on the cross-motions for summary judgment. In its motions in limine, Stadium may reassert any\n portion of its Daubert motion that it thinks remains live.\n\n\n\nEnd of Document \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works.\n\n\n\n\n \u00a9 2026 Thomson Reuters. No claim to original U.S. Government Works. 11\n\f","ocr_status":1,"date_upload":"2026-05-20T15:30:43.563650-07:00","document_number":"74","attachment_number":3,"pacer_doc_id":"127038985724","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit C - Stadium Cap. LLC v. Co-Diagnostics, Inc., 2026 WL 100576 (S.D.N.Y. J","acms_document_guid":""}],"date_created":"2026-01-30T15:11:03.265978-08:00","date_modified":"2026-04-26T22:50:00.835138-07:00","date_filed":"2026-01-30","time_filed":"16:06:01","entry_number":74,"recap_sequence_number":"2026-01-30.001","pacer_sequence_number":249,"description":"LETTER addressed to Judge Jeannette A. Vargas from Lauren A. Ormsbee dated 1/30/2026 re: Supplemental Authority in Opposition to Defendants' Motion to Dismiss. Document filed by Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund. (Attachments: # 1 Exhibit A - Sherman v. Abengoa, S.A., 156 F.4th 152, 157 (2d Cir. 2025), # 2 Exhibit B - In re Dentsply Sirona, Inc. Sec. Litig., 2026 WL 124581 (S.D.N.Y. Jan. 16, 2026), # 3 Exhibit C - Stadium Cap. LLC v. Co-Diagnostics, Inc., 2026 WL 100576 (S.D.N.Y. Jan. 14, 2026)).(Ormsbee, Lauren) (Entered: 01/30/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/446958304/","id":446958304,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/461695850/","id":461695850,"tags":[],"absolute_url":"/docket/68433458/73/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-12-11T15:12:03.427399-08:00","date_modified":"2026-04-26T22:50:00.802252-07:00","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":"73","attachment_number":null,"pacer_doc_id":"127038716856","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2025-12-11T15:12:03.362896-08:00","date_modified":"2026-04-26T22:50:00.776084-07:00","date_filed":"2025-12-11","time_filed":"16:46:26","entry_number":73,"recap_sequence_number":"2025-12-11.001","pacer_sequence_number":247,"description":"LETTER addressed to Judge Jeannette A. Vargas from Lauren A. Ormsbee dated December 11, 2025 re: Section 5.F of Individual Rules and Practices in Civil Cases. Document filed by Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund..(Ormsbee, Lauren) (Entered: 12/11/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/440589353/","id":440589353,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/455149364/","id":455149364,"tags":[],"absolute_url":"/docket/68433458/72/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-10-10T10:10:43.562616-07:00","date_modified":"2026-05-22T12:31:45.978446-07:00","sha1":"c5d291b78c84f156a3193bbee4f109f5bbbfd532","page_count":3,"file_size":217720,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.72.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.72.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 72 Filed 10/10/25 Page 1 of 3\n\n Colin B. Davis\n Partner\n T: +1 949.451.3993\n M: +1 949.431.3916\n cdavis@gibsondunn.com\n\n\n VIA ECF\n\n October 10, 2025\n\n The Honorable Jeannette A. Vargas\n United States District Court for the Southern District of New York\n Daniel Patrick Moynihan United States Courthouse\n 500 Pearl Street, Room 703\n New York, New York 10007\n\n Re: In re QuidelOrtho Corp. Securities Litigation, No. 24-cv-02804 (S.D.N.Y.)\n\n Dear Judge Vargas:\n\n Defendants in the above-referenced matter respectfully submit this letter in\n response to Lead Plaintiff\u2019s October 3, 2025 notice of \u201csupplemental authority\u201d\n concerning Defendants\u2019 pending motion to dismiss. See ECF No. 71 (the \u201cLetter\u201d).\n\n In their third notice of supplemental authority in as many months, Lead Plaintiff\n purports to draw the Court\u2019s attention to a factually inapposite decision arising from\n alleged channel-stuffing practices that merely reaffirms well-established legal\n principles. Defendants do not dispute that Second Circuit law requires that \u201conce a\n company speaks on an issue or topic,\u201d it must \u201ctell the whole truth\u201d to avoid making\n those statements \u201cmaterially misleading.\u201d Gimpel v. The Hain Celestial Grp. Inc., No.\n 23-7612, -- F.4th --, 2025 WL 2749562, at *10 (2d Cir. Sept. 29, 2025). What\n Defendants do dispute, and what Hain Celestial sheds no light on, is that Defendants\n failed to disclose any truth that rendered their statements misleading. ECF No. 48 at\n 10\u201317.\n\n Lead Plaintiff also emphasizes the Hain Celestial court\u2019s finding that\n \u201callegations of compensation \u2018move the needle\u2019\u201d towards inferring scienter. Letter at\n 2. But Lead Plaintiff elides the specific allegations in Hain Celestial that two individual\n defendants received millions of dollars in bonuses and stock awards directly \u201ctied to\n the metrics Hain overstated\u201d through the alleged channel stuffing. 2025 WL 2749562\n at *14. These specific allegations of a direct link between a defendant\u2019s compensation\n and the alleged fraudulent statements are absent here. ECF No. 48 at 34 n.31. Lead\n Plaintiff\u2019s reliance on the Hain Celestial court\u2019s finding that confidential witness\n allegations supported an inference of scienter similarly is misplaced. Letter at 2.\n Unlike here, the Hain Celestial complaint included particularized allegations from\n confidential witnesses that the individual defendants participated in channel-stuffing\n activities, which supported an inference of fraud. See 2025 WL 2749562 at *15\n (alleging individual defendants \u201cnegotiated the concessions and directed Hain\n employees to push product on distributors\u201d). No similar allegations exist here.\n\n\n\nGibson, Dunn & Crutcher LLP\n3161 Michelson Drive Suite 1200 | Irvine, CA 92612-4412 | T: 949.451.3800 | F: 949.451.4220 | gibsondunn.com\n\f Case 1:24-cv-02804-JAV Document 72 Filed 10/10/25 Page 2 of 3\n\n\n\n\n October 10, 2025\n Page 2\n\n Lead Plaintiff also purports to draw the Court\u2019s attention to the Hain Celestial\ncourt\u2019s finding that the departure of the individual defendants \u201cunder suspicious\ncircumstances\u201d supported a strong inference of scienter. Letter at 2. There, the\nplaintiffs alleged \u201ca litany of suspicious personnel changes \u2026 some of which the CWs\u2019\nallegations link[ed] to the alleged fraud.\u201d 2025 WL 2749562 at *16. By contrast, Lead\nPlaintiff here cannot\u2014and does not\u2014link any executive departures to any alleged\nfraud. ECF No. 48 at 32. Finally, Lead Plaintiff emphasizes the Hain Celestial court\u2019s\n\u201cconfirm[ation]\u201d in a footnote that the \u201ccore-operations\u201d and \u201cmagnitude of the fraud\u201d\ndoctrines support a finding of scienter. Letter at 2. Tellingly, Lead Plaintiff omits the\nportion of the footnote explaining that the Second Circuit has not \u201cclearly affirmed the\nvalidity of [the core-operations] doctrine following the passage of the PSLRA.\u201d 2025\nWL 2749562 at *16 n.19. And, in any event, the core operations doctrine does not\nallow an inference of scienter based on a single product that was projected to\ncontribute less than 2% of the Company\u2019s revenue. ECF No. 48 at 31\u201332.\n\n Lead Plaintiff\u2019s citation of an out-of-circuit district court decision only highlights\nthe deficiency of Lead Plaintiff\u2019s allegations here. In Alghazwi v. Beauty Health Co.,\nthe court found that \u201calleged statements about customer feedback were misleading\nbecause they highlighted only positive feedback,\u201d despite allegations of high return\nrates for the defendant company\u2019s skincare treatment device, more than 5,000\ndocumented customer complaints, and executive acknowledgement of issues with the\ndevice. 2025 WL 2751076, at *5, *17 (C.D. Cal. Sept. 23, 2025) (\u201dBHC\u201d). The BHC\ncourt found that the complaint not only \u201cprovide[d] specific allegations that belie[d]\nDefendants\u2019 representations that customers were thrilled with\u201d the device, but also\n\u201cexhaustively identifie[d] the timing and means through which Defendants allegedly\nacquired knowledge about\u201d these issues. Id. at *12\u2013*13. Indeed, the BHC complaint\nalleged that the defendants (i) \u201cpersonally directed employees to follow a policy of \u2018no\nquestions asked\u2019\u201d; (ii) \u201chad access to internal databases that tracked customer\ncomplaints\u201d that were reported to the defendants in detail; (iii) \u201crented warehouse\nspace to store the returned [devices] immediately before an external audit\u201d; and\n(iv) \u201cpersonally reached out\u201d to the founder of a Facebook group highlighting issues\nwith the device to ask her to take down the group. Id. BHC\u2019s particularized allegations\ndiffer significantly from Lead Plaintiff\u2019s allegations here, which generally allege that\nthe Company received negative feedback about its RVP4 test that are consistent with\nthe Company\u2019s disclosure of manufacturing challenges. ECF No. 48 at 17.\n\n Like the complaint, Lead Plaintiff\u2019s third notice of supplemental authority\naggregates allegations of general awareness of wrongdoing while overlooking the\nPSLRA\u2019s requirement that a plaintiff particularize the information a speaker knew and\nwhen, such that the speaker should have known his or her statement was false or\nmisleading when made. This Court should grant Defendants\u2019 motion to dismiss for\nthe reasons set forth in Defendants\u2019 motion to dismiss and reply.\n\f Case 1:24-cv-02804-JAV Document 72 Filed 10/10/25 Page 3 of 3\n\n\n\n\n October 10, 2025\n Page 3\n\n Respectfully submitted,\n\n\n\n Colin B. Davis\n Partner\n\n\ncc: All Counsel of Record (via ECF)\n\f","ocr_status":1,"date_upload":"2026-05-20T15:30:36.310052-07:00","document_number":"72","attachment_number":null,"pacer_doc_id":"127038362140","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2025-10-10T10:10:43.526924-07:00","date_modified":"2026-04-26T22:50:00.654763-07:00","date_filed":"2025-10-10","time_filed":"13:01:02","entry_number":72,"recap_sequence_number":"2025-10-10.001","pacer_sequence_number":245,"description":"LETTER addressed to Judge Jeannette A. Vargas from Colin B. Davis dated October 10, 2025 re: response to Lead Plaintiff's Notice of Supplemental Authority (ECF 71). Document filed by QuidelOrtho Corporation, Douglas Bryant, Robert J. Bujarski, Joseph Busky, Michael Iskra, Tamara Ranalli, Randall Steward..(Davis, Colin) (Entered: 10/10/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/439892452/","id":439892452,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/454433475/","id":454433475,"tags":[],"absolute_url":"/docket/68433458/71/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-10-03T14:10:16.369205-07:00","date_modified":"2026-05-22T12:30:36.278708-07:00","sha1":"02d6ede2deae2743adbd9a4263e69b624d0e96a8","page_count":3,"file_size":199097,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.71.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.71.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 71 Filed 10/03/25 Page 1 of 3\n Lauren A. Ormsbee\n Partner\n Labaton Keller Sucharow LLP\n 140 Broadway\n New York, New York 10005\n 212.907.0864\n LOrmsbee@labaton.com\n\n\n\n\nOctober 3, 2025\n\n\nVIA ECF\n\nThe Honorable Jeannette A. Vargas\nUnited States District Court\nDaniel Patrick Moynihan U.S. Courthouse\n500 Pearl Street, Room 703\nNew York, NY 10007\n\nRe: In re QuidelOrtho Corporation Securities Litigation, No. 24-cv-02804 (S.D.N.Y.)\n\nDear Judge Vargas:\n\n Lead Plaintiff respectfully submits the recent decisions in Gimpel v. The Hain Celestial\nGrp., Inc., No. 23-7612, -- F.4th --, 2025 WL 2749562 (2d Cir. Sept. 29, 2025) and Alghazwi v.\nBeauty Health Co., No. 2:23-CV-09733-SPG-MAA, 2025 WL 2751076 (C.D. Cal. Sept. 23, 2025)\n(\u201cBHC\u201d), as supplemental authority in opposition to Defendants\u2019 motion to dismiss (ECF No. 47-\n48), which Lead Plaintiff opposed on June 4, 2025 (ECF No. 50, \u201cOpposition Brief\u201d), and\nsubmitted additional supplemental authority in support thereof on July 8, 2025 (ECF No. 56, as\nmodified by ECF No. 66) and on August 22, 2025 (ECF No. 69). A copy of the Hain Celestial and\nBHC opinions are submitted herewith as Exs. A and B, respectively.\n\n Hain Celestial: In Hain Celestial, a unanimous panel of the Second Circuit reaffirmed the\nfundamental principle that once \u201ca company speaks on an issue or topic,\u201d it must \u201ctell the whole\ntruth\u201d and assumes \u201ca duty to be both accurate and complete\u201d such that adequate disclosure is\nrequired to make other statements, \u201cin light of the circumstances under which they were made, not\nmisleading.\u201d 2025 WL 2749562 at *10 (citation modified). Moreover, the Second Circuit\nconfirmed that the court\u2019s inquiry into whether a statement is misleading should be \u201cobjective,\nfrom the perspective of a reasonable investor, considering not only a statement\u2019s literal truth but\nalso its context and manner of presentation.\u201d Id. (citation modified). Accordingly, the Second\nCircuit reversed the lower court and held that the Hain Celestial defendants\u2019 failure to disclose\ntheir reliance on channel stuffing to meet investor benchmarks triggered this \u201chalf-truth\u201d doctrine\nbecause defendants repeatedly \u201cput the reasons for the company\u2019s success at issue\u201d but \u201cfail[ed]\nto disclose a material source of its success.\u201d Id. at *11-12 (citation modified).\n\n Hain Celestial directly supports the falsity of Defendants\u2019 Misstatements. For example,\nDefendants chose to speak about Savanna RVP4\u2019s \u201cvery positive customer feedback\u201d from the\nEU launch, QuidelOrtho\u2019s readiness for a US launch, and its manufacturing capabilities, while\n\n\n\n New York | Delaware | London | Washington, D.C.\n\f Case 1:24-cv-02804-JAV Document 71 Filed 10/03/25 Page 2 of 3\n\n\n\n\nOctober 3, 2025\nPage 2\n\nfailing to disclose that nearly all of the feedback that QuidelOrtho obtained from its EU customers\nwas negative and the RVP4 panel was riddled with issues that prevented the test from ever\nsatisfying the known FDA criteria or being manufactured to scale. See Opposition Brief at 6-20.\nMoreover, Defendants chose to speak about demand for QuidelOrtho\u2019s COVID-19 testing\nproducts, but failed to disclose that market share was materially decreasing as the Company lost\ncustomers to competitors with cheaper or newer tests. See id. at 20-24.\n\n Similarly, the Second Circuit in Hain Celestial holistically evaluated plaintiff\u2019s scienter\nallegations and found that the complaint\u2019s confidential witnesses allegations supported an\ninference of scienter where they supported allegations that defendants \u201cknew facts or had access\nto information suggesting that their public statements were not accurate.\u201d 2025 WL 2749562 at\n*15. Further, the Second Circuit found that a strong inference of scienter was supported by the\ndeparture of \u201cthe Individual Defendants and other key personnel under suspicious circumstances.\u201d\nId. at *17. Hain Celestial also confirmed that \u201ccore-operations\u201d and \u201cmagnitude of the fraud\u201d\ndoctrines, which demonstrate that \u201cthe size of the alleged fraud, coupled with its importance to [a\ncompany\u2019s] operations, provides supplemental support\u201d for scienter. Id. at *16, n.19. Finally, the\nSecond Circuit recognized that allegations of compensation motive \u201cmove the needle [inferring\nscienter] because the significant bonuses and stock awards\u201d that defendants received \u201cwere tied to\nthe metrics that Hain overstated.\u201d Id. at *14.\n\n In each regard, Hain Celestial is in direct alignment with the allegations here. First, the\nComplaint contains the accounts of 21 former employees with direct knowledge sufficient to\ndemonstrate Defendants\u2019 knowledge of, or access to, information that contradicted their public\nstatements regarding Savanna RVP4 and demand and revenue from its COVID-19 tests. See\nOpposition Brief at 25-34. Second, the Complaint alleges that the \u201ctiming and circumstances\u201d of\nDefendants Bryant, Bujarski, and Iskra\u2019s terminations strongly support an inference of scienter.\nId. at 31-32. Third, the Complaint alleges that the Individual Defendants\u2019 scienter is bolstered by\nthe core operations doctrine as they repeatedly touted Savanna as \u201cthe most important product\u201d in\nthe history of the Company (e.g. \u00b682), and a \u201cmajor growth driver\u201d for the Company. See\nOpposition Brief at 28-29. Finally, the Complaint alleges that bonuses were tied to achieving\n\u201ccertain Savanna launch targets,\u201d which motivated the unrealistic sales pressure and \u201ctop-down\nmandate\u201d regarding Savanna\u2019s premature launch. See id. at 29, n. 17.\n\n BHC: In BHC, the court found that defendants made material misstatements regarding\nBHC\u2019s next generation HydraFacial system known as Syndeo\u2014a product that the company\ndesigned specifically to increase margins for is consumable sales. 2025 WL 2751076 at *1. As\nalleged, defendants rushed the launch of Syndeo after conducting limited product testing because\nof pressures caused by declining consumable sales, while being aware that Syndeo was \u201cplagued\nwith flaws from the time of its launch.\u201d Id. at *2. Specifically, plaintiffs\u2019 complaint alleged that\ndefendants touted the \u201creally good feedback\u201d that the company received from its customers\nregarding the Syndeo launch while omitting, inter alia, that 74% of Syndeo customers reported\nexperiencing issues with their machines. Id. at *12. Accordingly, the BHC court held that \u201cat a\nminimum, Defendants\u2019 alleged statements about customer feedback were misleading because they\n\f Case 1:24-cv-02804-JAV Document 71 Filed 10/03/25 Page 3 of 3\n\n\n\n\nOctober 3, 2025\nPage 3\n\nhighlighted only positive feedback while omitting any reference to the numerous issues and\ncomplaints with the Syndeo machines.\u201d Id. at *17. The BHC decision is directly applicable here,\nwhere Defendants stated that QuidelOrtho had \u201creceived very positive customer feedback to date,\u201d\nbut omitted, inter alia, that (i) 60%-80% of all Savanna RVP4 customer feedback was negative;\nand (ii) 25% of the RVP4 tests and instruments that made it to Europe (and weren\u2019t scrapped on\nthe production line) were invalid (\u00b6\u00b6173-76, 179). See Opposition Brief at Argument, \u00a71.A;\nMisstatements 1-19; Complaint \u00a7\u00a7IV.D, IV.F, V.A-C.\n\n Similarly, the BHC court found that plaintiffs adequately pled scienter through FE\nallegations that detailed meetings in which Syndeo issues were discussed, databases in which\nproduct issues were logged, and reports that were generated and received by defendants that\ndetailed these issues. See BHC, 2025 WL 2751076, at *12-13. Moreover, the BHC court found\nthat \u201c[b]y making repeated statements about customer feedback, Defendants held themselves out\nto investors as having personal knowledge about customer satisfaction.\u201d Id. at *12 (\u201cOnce\nDefendants chose to tout positive information about customer feedback, they were bound to do so\nin a manner that wouldn\u2019t mislead investors, including disclosing adverse information that cuts\nagainst positive information.\u201d). Once again, this case is in direct alignment.\n\n Here, the Complaint contains particularized allegations regarding Defendants\u2019 scienter: (a)\nmonthly calls regarding RVP4 and its \u201csignificant failures\u201d (\u00b6185); (b) key executives provided\nproduct updates on Savanna to senior management, including Defendants (\u00b6\u00b6219, 363); (c) a\nformal complaint system for logging complaints from the EU launch sent directly to Defendant\nRanalli and quarterly reports sent to US headquarters (\u00b6183); (d) a formal investigation into RVP4\nerror codes that confirmed issues with Savanna shared in monthly or quarterly internal business\nunit reports to upper management (\u00b6178); (e) monthly discussions with Defendant Busky reporting\nincreased R&D costs to address Savanna\u2019s continued failures (\u00b6229); and (f) routine reports from\nengineers and scientists to senior management (\u00b6217). See Opposition Brief at Argument, \u00a7III.A.\nFurther, the Complaint alleges that Defendants made repeated statements about the \u201cvery positive\ncustomer feedback to date,\u201d RVP4 performance, and market demand for QuidelOrtho\u2019s products.\nMoreover, Defendants spoke about Savanna on every earnings call and often responded to analyst\nquestions regarding Savanna. This, paired with Defendants\u2019 statements that they were \u201cintimately\ninvolved\u201d and \u201cprivy to important details\u201d regarding Savanna, supports the same conclusion as the\nBHC court\u2014that the most compelling inference is that Defendants\u2019 statements were made with\nintent to mislead. See id. at \u00a7III.A.\n\nVery truly yours,\n\n\n\nLauren A. Ormsbee\n\f","ocr_status":1,"date_upload":"2026-05-20T15:30:43.967779-07:00","document_number":"71","attachment_number":null,"pacer_doc_id":"127038325087","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/479925161/","id":479925161,"tags":[],"absolute_url":"/docket/68433458/71/1/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-05-20T15:30:45.807488-07:00","date_modified":"2026-05-22T10:37:25.267077-07:00","sha1":"18533c6597f829bc2802c5e2b96d176010ba3c1f","page_count":28,"file_size":649036,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.71.1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.71.1.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 1:24-cv-02804-JAV Document 71-1 Filed 10/03/25 Page 1 of 28\n\n\n\n\n EXHIBIT A\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 2 of 28\n\n\n\n 2025 WL 2749562\n Only the Westlaw citation is currently available.\n United States Court of Appeals, Second Circuit.\n\n Salamon GIMPEL, Rosewood Funeral Home, Lead Plaintiffs\u2013Appellants,\n James Spadola, Rodney Lynn, Consolidated Plaintiffs,\n Bradley D. Flora, Individually and on behalf of all others similarly situated, Plaintiff,\n v.\n THE HAIN CELESTIAL GROUP, INC., Irwin D. Simon, Pasquale\n Conte, John Carroll, Stephen J. Smith, Defendants\u2013Appellees.\n\n Docket No. 23-7612\n |\n August Term, 2024\n |\n Argued: December 5, 2024\n |\n Decided: September 29, 2025\n\nSynopsis\nBackground: Stockholders filed second amended complaint on behalf of putative class of investors in corporation against\ncorporation and four of its officers for securities fraud and control-person liability under the Securities Exchange Act, alleging\ndefendants made false statements about corporation's financial results and accounting and internal controls practices, and failed\nto disclose corporation's \u201cchannel stuffing\u201d practices. The United States District Court for the Eastern District of New York,\nArthur D. Spatt, J., 2020 WL 1676762, granted defendants' motion to dismiss for failure to state a claim. On appeal, the Court of\nAppeals, 20 F.4th 131, vacated and remanded. On remand, the District Court, Joanna Seybert, Senior District Judge, 2023 WL\n6360345, largely adopted report and recommendation of the District Court, Lee G. Dunst, United States Magistrate Judge, 2022\nWL 18859055, recommending that defendants' motion to dismiss for failure to state a claim be granted, and granted defendants'\nmotion, finding stockholders failed to plead actionable misstatement or omission and scienter. Stockholders appealed.\n\n\n\nHoldings: The Court of Appeals, Sack, Senior Circuit Judge, held that:\n\n[1] stockholders plausibly alleged that defendants' statements regarding its accounting practices were material misstatements,\nas required to state claim for securities fraud;\n\n[2] stockholders plausibly alleged that corporation relied on various \u201cchannel-stuffing\u201d practices to boost its revenues;\n\n[3] stockholders plausibly alleged that defendants' statements regarding corporation's financial results were misleading\nstatements, as required to state claim for securities fraud;\n\n[4] stockholders plausibly alleged that defendants' statements about distributors\u2019 inventory levels were misleading, as required\nto state claim for securities fraud;\n\n[5] stockholders' allegations of motive to defraud based on stock sales and compensation incentives for corporation's executives\nweighed in favor of scienter;\n\n[6] stockholders' allegations of officers' conscious misbehavior or recklessness supported strong inference of scienter; and\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 1\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 3 of 28\n\n\n\n[7] stockholders adequately pleaded loss causation, as required to state claim for securities fraud.\n\n\nVacated and remanded.\n\nProcedural Posture(s): On Appeal; Motion to Dismiss for Failure to State a Claim.\n\n\n West Headnotes (31)\n\n\n [1] Federal Civil Procedure\n Courts generally consider and take as true allegations by confidential witnesses at the pleadings stage so long as the\n confidential witnesses are described in the complaint with sufficient particularity to support the probability that a\n person in the position occupied by the source would possess the information alleged.\n\n\n\n [2] Federal Courts\n The Court of Appeals reviews the district court's dismissal of a complaint for failure to state a claim de novo. Fed.\n R. Civ. P. 12(b)(6).\n\n\n\n [3] Federal Civil Procedure\n To survive a motion to dismiss for failure to state a claim, a complaint must contain sufficient factual matter, accepted\n as true, to state a claim to relief that is plausible on its face. Fed. R. Civ. P. 12(b)(6).\n\n\n\n [4] Securities Regulation\n Any complaint alleging securities fraud must satisfy the heightened pleading requirements of the Private Securities\n Litigation Reform Act (PSLRA) and the rule for pleading fraud claims by stating with particularity the circumstances\n constituting fraud. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b); Fed. R. Civ. P. 9(b).\n\n\n\n [5] Securities Regulation\n To succeed on a \u00a7 10(b) claim, a plaintiff must prove (1) a material misrepresentation or omission by the defendant,\n (2) scienter, (3) a connection between the misrepresentation or omission and the purchase or sale of a security, (4)\n reliance upon the misrepresentation or omission, (5) economic loss, and (6) loss causation. Securities Exchange Act\n of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [6] Securities Regulation\n In the context of a securities fraud claim, \u201cchannel stuffing\u201d is not necessarily fraudulent; offering distributors\n concessions is a common practice, and there may be legitimate reason for a company pressing for sales to be made\n earlier than in the normal course, such as to incite its distributors to more vigorous efforts to sell the stuff lest it pile\n up in inventory. Securities Exchange Act of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 2\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 4 of 28\n\n\n\n [7] Securities Regulation\n In the context of a securities fraud claim, \u201cchannel stuffing\u201d may become fraudulent when it is done to mislead\n investors. Securities Exchange Act of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [8] Securities Regulation\n Theories of actionable misstatements under \u00a7 10(b) and Rule 10b-5 include: (1) a \u201cfalse statement,\u201d i.e., an actual\n statement that is untrue outright, and (2) a \u201chalf-truth,\u201d i.e., a representation that states the truth only so far as it goes,\n while omitting critical qualifying information. Securities Exchange Act of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R.\n \u00a7 240.10b-5(b).\n\n\n\n [9] Securities Regulation\n For purposes of a securities fraud claim under \u00a7 10(b) and Rule 10b-5, a false statement must be false at the time it\n was made, and the plaintiff must demonstrate with specificity why the statement is false. Securities Exchange Act of\n 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [10] Securities Regulation\n For securities fraud claims, although \u00a7 10(b) and Rule 10b-5 do not create an affirmative duty to disclose any and all\n material information, once a company speaks on an issue or topic, it must tell the whole truth; that is, when a company\n does speak, it assumes a duty to be both accurate and complete, and adequate disclosure is required to make other\n statements, in light of the circumstances under which they were made, not misleading. Securities Exchange Act of\n 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [11] Securities Regulation\n The plaintiff in a securities fraud action must adequately allege that the misstatement or half-truth is \u201cmaterial,\u201d\n meaning that a reasonable investor would have considered it significant in making investment decisions; in other\n words, there must be a substantial likelihood that the statement or omission would have been viewed by the reasonable\n investor as having significantly altered the total mix of information made available. Securities Exchange Act of 1934\n \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [12] Securities Regulation\n Sarbanes-Oxley (SOX) certifications are statements of opinion, which may be actionable under \u00a7 10(b) and Rule\n 10b-5 if, among other things, that statement does not rest on the issuer's meaningful inquiry or fairly align with the\n information in the issuer's possession at the time. Securities Exchange Act of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17\n C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [13] Securities Regulation\n A subsequent restatement of financial results or disclosure of material weaknesses in internal controls, standing alone,\n does not mean that the original opinions in Sarbanes-Oxley (SOX) certifications were disingenuous, nor is a genuinely\n held opinion that turned out to be wrong necessarily actionable under \u00a7 10(b) and Rule 10b-5. Securities Exchange\n Act of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 3\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 5 of 28\n\n\n\n\n [14] Securities Regulation\n Stockholders plausibly alleged that statements by corporation and its officers regarding its accounting practices\n were material misstatements, as required to state a claim for securities fraud; complaint alleged that defendants\n made positive statements regarding its financial results, its compliance with generally-accepted accounting principals,\n the existence of effective internal controls, its description of its revenue-recognition policies, and its filings with\n the Securities and Exchange Commission (SEC), but subsequently issued a restatement of its financial results and\n disclosed material weaknesses in its internal controls and financial-reporting and accounting practices, suggesting that\n the statements were false at the time they were made. Securities Exchange Act of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b);\n 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [15] Securities Regulation\n Stockholders plausibly alleged that corporation relied on various \u201cchannel-stuffing\u201d practices to boost its revenues,\n supporting stockholders' securities fraud claim, alleging corporation and its officers made \u201chalf-truths\u201d in failing to\n disclose the practices; complaint alleged that a first confidential witness, who served as corporation's senior manager\n of customer support, reported that they alone processed a $700,000 product return from a customer in just one quarter,\n that a second confidential witness, who served as corporation's senior director of supply chain finance, reported that\n corporation's CEO negotiated a right of return that customer, and that an order from the Securities and Exchange\n Commission (SEC) revealed corporation relied on a host of similar tactics. Securities Exchange Act of 1934 \u00a7 10, 15\n U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [16] Securities Regulation\n Stockholders plausibly alleged that statements by corporation and its officers regarding corporation's financial results\n were misleading statements, as required to state a claim for securities fraud, in action alleging that the statements were\n \u201chalf-truths\u201d that failed to disclose the use of various \u201cchannel-stuffing\u201d practices to boost corporation's revenues;\n complaint alleged that defendants repeatedly attributed its financial results to factors such as expanded distribution and\n brand contribution, strong demand for corporation's organic and natural brands, momentum for organic and natural\n products, and its diverse portfolio of products, but did not disclose that it achieved its results by granting distributors\n credits, incentives, spoils coverage, or a right to return product. Securities Exchange Act of 1934 \u00a7 10, 15 U.S.C.A.\n \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [17] Securities Regulation\n Stockholders plausibly alleged that statements by corporation and its officers about distributors\u2019 inventory levels were\n misleading, as required to state a claim for securities fraud, in action alleging that the statements were \u201chalf-truths\u201d\n that failed to disclose the use of \u201cchannel-stuffing\u201d practices to boost corporation's revenues; complaint alleged that\n after corporation cut its quarterly and annual guidance for anticipated sales and earnings, corporation's vice president\n acknowledged to investors that the guidance cut was \u201cin the area of inventory\u201d but stated that the problems were \u201cone-\n offs,\u201d which was misleading, since inventory saturation would persist because demand for corporation's products had\n waned, and its distributors had already reached their inventory capacity. Securities Exchange Act of 1934 \u00a7 10, 15\n U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [18] Securities Regulation\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 4\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 6 of 28\n\n\n In the context of a securities fraud action under \u00a7 10(b) and Rule 10b-5, the \u201ctruth-on-the-market\u201d defense provides\n that a misrepresentation is immaterial if the information is already known to the market because the misrepresentation\n cannot then defraud the market. Securities Exchange Act of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [19] Securities Regulation\n \u201cScienter,\u201d for purposes of a securities fraud claim, is a mental state embracing intent to deceive, manipulate,\n or defraud. Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7\n 240.10b-5(b).\n\n\n\n [20] Securities Regulation\n Under the Private Securities Litigation Reform Act (PSLRA), a plaintiff in a securities fraud action must allege facts\n giving rise to a strong inference that the defendant acted with scienter, where a \u201cstrong inference\u201d means that the\n inference must be more than merely plausible or reasonable; it must be cogent and at least as compelling as any\n opposing inference of nonfraudulent intent. Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b),\n 78u-4(b)(2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [21] Securities Regulation\n The inference that the defendant acted with scienter, for purposes of a securities fraud claim, need not be irrefutable\n or even the most plausible of competing inferences; instead, the court must consider whether all of the facts alleged,\n taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in\n isolation, meets that standard, and it must take into account inferences favoring both the plaintiff and the defendant.\n Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [22] Securities Regulation\n A securities fraud plaintiff may establish scienter by alleging facts showing that (1) the defendants had the motive\n and opportunity to commit fraud, or (2) strong circumstantial evidence of conscious misbehavior or recklessness; a\n plaintiff can also meet his scienter burden with both motive-and-opportunity and circumstantial allegations, considered\n collectively. Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7\n 240.10b-5(b).\n\n\n\n [23] Securities Regulation\n Courts generally presume that high-level corporate insiders, such as C-suite executives, have the opportunity to\n commit fraud, for purposes of the scienter element of a securities fraud claim. Securities Exchange Act of 1934 \u00a7\u00a7\n 10, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [24] Securities Regulation\n To establish motive to engage in securities fraud, for purposes of the scienter element of a securities fraud claim,\n plaintiffs must assert a concrete and personal benefit to the individuals who allegedly carried out the fraud. Securities\n Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 5\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 7 of 28\n\n\n\n [25] Securities Regulation\n Stockholders' allegations of motive to defraud based on stock sales and compensation incentives for corporation's\n officers weighed in favor of scienter required to support stockholders' securities fraud claims, in action alleging officers\n made false statements about corporation's financial results and made statements that were \u201chalf-truths\u201d that failed to\n disclose the use of \u201cchannel-stuffing\u201d practices to boost corporation's revenues; complaint alleged that vice president\n disposed of approximately 74% of his total shares for more than $24.3 million, and CEO sold 66% of his total for\n more than $80 million, and that they, respectively, received stock award bonuses of $5,565,725 and $8,787,355 that\n were tied to the very financial metrics that corporation admittedly overstated. Securities Exchange Act of 1934 \u00a7\u00a7 10,\n 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [26] Securities Regulation\n \u201cRecklessness\u201d for purposes of the scienter element of a securities fraud claim, is highly unreasonable conduct\n representing an extreme departure from the standards of ordinary care and approximating actual intent, rather than\n merely a heightened form of negligence. Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)\n (2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [27] Securities Regulation\n Stockholders' allegations of conscious misbehavior or recklessness by corporations' officers based on corporations'\n \u201cchannel-stuffing\u201d practices supported a strong inference of scienter, as required to state a claim for securities fraud;\n complaint alleged that confidential witnesses reported that corporation's vice president requested mid-quarter sales\n numbers to calculate sales shortfalls and negotiated concessions to make up for sales shortfalls, that corporation's CEO\n told a customer that corporation needed \u201cto make [the forecasted sales numbers] this quarter,\u201d that corporation pushed\n out inventory, and used credits and accruals to offset sales deficits on its balance sheet, and that officers prepared\n financial reports for the public and signed off on their accuracy. Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15\n U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [28] Securities Regulation\n In the context of a securities fraud claim, the \u201ccore-operations\u201d doctrine posits that scienter may be imputed to key\n officers who should have known facts relating to the \u201ccore operations\u201d of their company, while the \u201cmagnitude\n of the fraud\u201d doctrine suggests recklessness if the alleged falsity impacted a large portion of the company's sales\n or operations. Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7\n 240.10b-5(b).\n\n\n\n [29] Securities Regulation\n Stockholders' allegations of conscious misbehavior or recklessness by corporations' officers based on changes to\n corporation's executives offered supplemental, circumstantial support for a strong inference of scienter required to\n support stockholders' claim for securities fraud, in action alleging corporation and its officers made false statements\n regarding corporation's financial results, and failed to disclose corporation's \u201cchannel-stuffing\u201d practices; complaint\n alleged that over a period of approximately four years, seven executives were terminated and two more were demoted,\n and alleged that a confidential witness reported that corporation's chief financial officer was replaced and several other\n executives left because they took issue with corporation's practices. Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15\n U.S.C.A. \u00a7\u00a7 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 6\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 8 of 28\n\n\n\n\n [30] Securities Regulation\n Order of the Securities and Exchange Commission (SEC), which found that corporation engaged in \u201cend of quarter\n sales\u201d that could have had financial reporting implications, but which declined to impose a civil penalty, did not weigh\n against scienter required to support stockholders' securities fraud claims, in action alleging corporation and its officers\n made false statements regarding corporation's financial results and accounting and internal controls practices, and\n failed to disclose corporation's \u201cchannel-stuffing\u201d practices; SEC's decision not to pursue charges was irrelevant as to\n whether stockholders plausibly alleged claims, as it was not the result of an actual adjudication of any of the issues,\n and the order was consistent with stockholders' theory. Securities Exchange Act of 1934 \u00a7\u00a7 10, 21D, 15 U.S.C.A. \u00a7\u00a7\n 78j(b), 78u-4(b)(2)(A); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n [31] Securities Regulation\n Stockholders adequately pleaded loss causation, as required to state a claim for securities fraud against corporation\n and its officers, in action alleging defendants made false statements regarding corporation's financial results and\n accounting and internal controls practices, and failed to disclose corporation's \u201cchannel-stuffing\u201d practices; complaint\n alleged that corporation's stock price declined after corporation disclosed that it was reevaluating whether it should\n have recognized revenue associated with concessions to distributors when its products sold through the distributors\n to end customers, rather than at the time of shipment to distributors, as it had been doing, and that the Securities and\n Exchange Commission (SEC) had launched a formal investigation of corporation. Securities Exchange Act of 1934\n \u00a7 10, 15 U.S.C.A. \u00a7 78j(b); 17 C.F.R. \u00a7 240.10b-5(b).\n\n\n\n\nAppeal from the United States District Court for the Eastern District of New York (Joanna Seybert, Judge)\n\nAttorneys and Law Firms\n\nChristine M. Fox (Carol C. Villegas, James M. Fee, Matthew J. Grier, Labaton Keller Sucharow LLP, New York, NY, on the\nbrief); (Robert V. Prongay, Leanne Heine Solish, Jonathan M. Rotter, Glancy Prongay & Murray LLP, Los Angeles, CA, on the\nbrief); (Brian Schall, The Schall Law Firm, Los Angeles, CA, on the brief), for Lead Plaintiffs-Appellants Rosewood Funeral\nHome and Salamon Gimpel;\n\nJohn M. Hillebrecht (Marc A. Silverman, on the brief), DLA Piper LLP (US), New York, NY, for Defendants-Appellees.\n\nBefore: Sack, Nardini, and Lee, Circuit Judges.\n\nOpinion\n\nSack, Circuit Judge:\n\n *1 Lead Plaintiffs-Appellants Salamon Gimpel and Rosewood Funeral Home 1 (collectively, the \u201cPlaintiffs\u201d) appeal from the\ndismissal of their securities-fraud class action brought against Defendants-Appellees The Hain Celestial Group, Inc. (\u201cHain\u201d)\nand four of its present or former officers, Irwin Simon, Pasquale Conte, John Carroll, and Stephen Smith (the \u201cIndividual\nDefendants,\u201d and together with Hain, the \u201cDefendants\u201d). 2 On behalf of a putative class of investors who purchased or otherwise\nacquired Hain's publicly traded common stock from November 5, 2013, through February 10, 2017 (the \u201cClass Period\u201d), the\nPlaintiffs asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the \u201cExchange Act\u201d), 15 U.S.C.\n\u00a7\u00a7 78j(b), 78t(a), and Rule 10b-5, 17 C.F.R. \u00a7 240.10b\u20135, in their operative, Second Amended Complaint (the \u201cComplaint\u201d).\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 7\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 9 of 28\n\n\n\nThe gravamen of the Complaint is that Hain, a leading marketer, manufacturer, and seller of organic and natural food and\npersonal care products, engaged in a so-called \u201cchannel-stuffing\u201d scheme: Faced with flagging demand for its products and\npressure to meet Wall Street analysts\u2019 financial forecasts for the company, Hain offered its distributors significant concessions\nto accept more product than they needed at the end of each fiscal quarter. However, by stuffing its distributors to the gills, Hain\nallegedly robbed Peter to pay Paul, cannibalizing future revenues to make present sales look more impressive. After distributors\nwould no longer accept inventory and Hain's practices precipitated internal strife and an independent audit, the Securities and\nExchange Commission (the \u201cSEC\u201d) launched an investigation. Eventually, Hain restated its financial numbers, conceded that\nit lacked adequate internal controls to account for its practices and improperly recognized revenue, and settled with the SEC,\nwhich declined to bring charges. Hain's reported sales figures plummeted. The Plaintiffs brought suit in the Eastern District\nof New York.\n\n *2 Channel stuffing is not necessarily illegal, but it may give rise to liability under the Exchange Act when a company engages\nin the practice to deceive investors. Here, the Plaintiffs allege that the Defendants made false statements to investors about,\namong other things, their financial results, the existence of adequate internal controls, and their compliance with Generally\nAccepted Accounting Principles (\u201cGAAP\u201d); they allege further that the Defendants made misleading statements by attributing\nHain's financial success to consumer demand and by downplaying concerns about inventory levels without disclosing their\nreliance on channel stuffing. And, according to the Plaintiffs, the Defendants made these false and misleading statements with\na wrongful state of mind, i.e., scienter, defined here as the \u201cdefendant's intention to deceive, manipulate, or defraud.\u201d 3 Tellabs,\nInc. v. Makor Issues & Rts., Ltd., 551 U.S. 308, 313, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007); see 15 U.S.C. \u00a7 78u\u20134(b)(1), (2).\n\nAfter the district court first dismissed the Plaintiffs\u2019 Complaint, In re Hain Celestial Grp. Inc. Sec. Litig. (Hain II), No. 16-\nCV-4581, 2020 WL 1676762, at *17 (E.D.N.Y. Apr. 6, 2020), and we reversed, In re Hain Celestial Grp., Inc. Sec. Litig., 20\nF.4th 131, 137-38 (2d Cir. 2021), the Defendants again moved to dismiss. 4 Largely adopting the conclusions of Magistrate\nJudge Lee G. Dunst's Report and Recommendation (\u201cR&R\u201d), In re Hain Celestial Grp. Inc. Sec. Litig. (Hain III), No. 16-\nCV-4581, 2022 WL 18859055 (E.D.N.Y. Nov. 4, 2022), the district court (Joanna Seybert, Judge) granted the Defendants\u2019\nmotion to dismiss under Federal Rule of Civil Procedure 12(b)(6), concluding that the Plaintiffs had failed to adequately allege\nthat the Defendants acted with scienter, In re Hain Celestial Grp. Inc. Sec. Litig. (Hain IV), No. 16-CV-4581, 2023 WL 6360345,\nat *14-18 (E.D.N.Y. Sep. 29, 2023).\n\nOn appeal, we conclude that the Plaintiffs have adequately alleged that the Defendants made actionable misstatements in\nconnection with Hain's channel-stuffing practices and did so with scienter under Rule 10b-5(b); they also sufficiently alleged\nloss causation. We further determine that the Plaintiffs\u2019 claims for control-person liability against the Individual Defendants\nunder Section 20(a) of the Exchange Act may proceed. For the reasons set forth in further detail below, we VACATE the district\ncourt's order dismissing the Plaintiffs\u2019 Complaint and REMAND the matter for further proceedings consistent with this opinion.\n\n\n\n BACKGROUND\n\n I. Factual History\n [1] The following facts are drawn primarily from the factual allegations of the Plaintiffs\u2019 Complaint, which we treat as true for\npresent purposes, \u201cdrawing all reasonable inferences in favor of [the] Plaintiffs to the extent that the inferences are plausibly\nsupported by allegations of fact.\u201d Hain, 20 F.4th at 133. The Complaint relies on allegations from eight unnamed confidential\nwitnesses (\u201cCWs\u201d), seven of whom are former Hain employees, and one of whom worked for a company that provided\nwarehousing services for Hain. We generally consider and take as true allegations by CWs at the pleadings stage so long as\nthe CWs \u201care described in the complaint with sufficient particularity to support the probability that a person in the position\noccupied by the source would possess the information alleged.\u201d Emps.\u2019 Ret. Sys. of Gov't of the Virgin Islands v. Blanford, 794\nF.3d 297, 305 (2d Cir. 2015). The Complaint also incorporates by reference various publicly available documents, such as SEC\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 8\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 10 of 28\n\n\nfilings, an SEC order, and earning calls transcripts, of which we take judicial notice. See San Leandro Emergency Med. Grp.\nProfit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 808\u201309 (2d Cir. 1996).\n\n\n\n A. Hain's Alleged Channel-Stuffing Scheme\n\n *3 Hain is a leading marketer, manufacturer, and seller of organic, natural, and personal care products, which it sells primarily\nto specialty and natural food distributors, supermarkets, and select e-commerce retailers. In the early 2010s, Hain faced stiffening\ncompetition from other brands and retailers offering a similar selection of natural and organic foods, which weakened demand\nfor Hain's products. Hain feared that it could meet neither its own financial projections nor the predictions made by Wall Street\nfinancial analysts about Hain's financial performance\u2014shortcomings that could send Hain's stock prices tumbling. Hain resorted\nto \u201cchannel stuffing,\u201d offering its distributors significant concessions to purchase substantial quantities of product in advance\nof the distributors\u2019 typical purchasing patterns. See Greebel v. FTP Software, Inc., 194 F.3d 185, 202 (1st Cir. 1999); Steckman\nv. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir. 1998). But channel stuffing may exact a heavy toll: By pulling sales\nforward, the company artificially inflates its present sales at the expense of its future performance\u2014it robs Peter to pay Paul.\nSee Steckman, 143 F.3d at 1298. Among the concessions Hain allegedly offered its distributors to front-load their purchases\nwere (1) cash incentives as high as $500,000 for a single distributor in a single quarter; (2) product discounts of up to 20%; (3)\nextended payment terms; (4) spoils coverage, or reimbursements for excess product that spoiled or expired; and (5) an absolute\nright to return unsold product.\n\nHain's channel stuffing worked roughly as follows. Each quarter, Hain publicly reported its financial results and provided\ninvestors with guidance on its projected net sales and earnings per share. Independent Wall Street financial analysts then\nestablished consensus prospective quarterly estimates, i.e., financial benchmarks for the company, that were generally consistent\nwith Hain's guidance and predicted continued sales growth for the company. Investors used these forecasts to gauge a company's\nfinancial performance and health, but a company's failure to meet these \u201cStreet expectations\u201d could trigger a decline in the\ncompany's stock price.\n\nThat all is standard practice\u2014but here's the rub: As sales weakened during the Class Period, Hain faced a \u201csales shortfall\u201d\nbetween its actual, mid-quarter results and its projected figures. Joint App'x 208 \u00b6 63. To bridge that gap, Carroll, the CEO of\nHain North America, obtained the mid-quarter numbers, estimated the sales shortfall, and, along with Hain President and CEO\nSimon, enticed Hain's distributors to take on additional inventory by offering the various concessions. Carroll and Simon then\ndirected Hain brand managers to ship the excess inventory to distributors. By pulling forward these sales, Hain could report to\ninvestors that it had met its performance benchmarks without disclosing its declining financial prospects.\n\nFor one key Hain distributor, United Natural Foods, Inc. (\u201cUNFI\u201d), end-of-quarter sales were especially prominent. Hain and\nUNFI agreed to quarterly inventory purchasing targets of around $90 million per quarter; however, UNFI communicated to\nHain that it might miss these targets by as little as $10 million and as much as $30 million. To ensure that UNFI would meet\nits targets, Hain negotiated \u201coff-contract\u201d incentives and concessions. UNFI bought between 52-64% of its inventory based on\nthese off-contract incentives, constituting more than 15% of Hain's entire U.S. quarterly sales. 5 Hain relied on similar tactics\nwith another key distributor, Walmart Stores, Inc., which accounted for around 8% of Hain's net U.S. sales.\n\nBut these channel stuffing practices raised serious accounting issues. For one, as Hain later disclosed, although Hain negotiated\nthese concessions \u201coff-contract\u201d or in \u201cside agreements\u201d\u2014rather than in, for instance, its annual sales contracts\u2014it did not have\neffective internal controls to \u201cidentify, accumulate[,] and assess the accounting impact\u201d of these arrangements. Joint App'x 231\u2013\n32 \u00b6 147. Indeed, Hain's agreements with UNFI were, according to a subsequent SEC investigation, \u201ctypically memorialized\nonly in email correspondence with the distributor,\u201d and some incentives agreed to only \u201corally.\u201d Id. at 361 \u00b6 9. Moreover, Hain\nallegedly resorted to using millions of dollars\u2019 worth of credits and accruals 6 to offset sales deficits on its balance sheet. But\nHain accounted for the \u201ccredits and off-invoice concessions as revenue as soon as the shipments left the warehouse.\u201d Id. at\n209 \u00b6 64; see id. at 215 \u00b6 82. And because of the size of the credits and accruals and the ensuing \u201cdrop off\u201d in sales following\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 9\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 11 of 28\n\n\nHain's end-of-quarter product push, id. at 212 \u00b6 76, Hain's Chief Operating Officer (\u201cCOO\u201d) and non-defendant James Meiers\n\u201csmoothed out\u201d and \u201cchang[ed]\u201d the credits, concessions, and sales and revenue numbers to make the numbers \u201clook pretty,\u201d\nid. at 209, \u00b6 64, 220\u201321 \u00b6 104.\n\n *4 Booking Hain's shipments as revenue as soon as they went out the door also proved especially troublesome because,\naccording to the CWs, Hain offered its distributors an \u201cabsolute right to return\u201d product with no obligation to pay. Joint App'x\n207 \u00b6 59. One CW reported having routinely processed hundreds of thousands of dollars in quarterly product returns, including\n$700,000 in one quarter of 2015 alone. Nonetheless, Meiers sent the sales and revenue numbers for inclusion in Hain's SEC\nfilings to Hain's CFO (either Smith or Conte), who signed off on Hain's accounting statements and certified their accuracy.\n\nIn addition to presenting accounting problems, the channel-stuffing practices were also unsustainable. The following fiscal\nquarter, distributors often returned the excess inventory from the previous quarter, \u201cand the process would begin again, although\nwith an increasingly larger deficit due to the prior quarter's credits [for returns] and off-invoice concessions.\u201d Id. at 209 \u00b6 65.\nFaced with declining end-customer demand for Hain's products, distributors also began to hit an inventory wall, reaching their\ncapacity. All the while, the Defendants made repeated public statements attributing Hain's strong growth in sales numbers to\n\u201cstrong consistent consumer demand\u201d and other \u201corganic\u201d factors, while failing to disclose how the channel-stuffing practices\nartificially inflated sales figures. See, e.g., id. at 259 \u00b6 257, id. at 260 \u00b6 260, id. at 262 \u00b6 266.\n\n\n\n B. The Channel-Stuffing Scheme Unravels\n\nAround late 2015, things fell apart. As sales ebbed, accruals and credits flowed. Filled to the brim with inventory, Hain's\ndistributors informed Hain that they would no longer accept more inventory than necessary. Hain's newly arrived Treasurer\nJames Langrock, brought onboard in late 2015 and \u201csurprised\u201d by what he found in Hain's books, questioned \u201chow [Hain was]\naccounting for\u201d its various practices. Id. at 224\u201325 \u00b6\u00b6 115, 117. He subsequently brought in external auditors, including Ernst\n& Young (\u201cEY\u201d).\n\nOn January 11, 2016, as EY began to dig into Hain's books, Hain cut its quarterly and annual guidance, announcing that it\nanticipated its full-year sales to be $70 million less than expected and its earnings per share in the range of $1.95-$2.10, below\nits previous issued guidance of $2.11-$2.26. On January 21, 2016, Hain revealed in an SEC filing that Ross Weiner resigned\nfrom his positions as Vice President of Finance and Chief Accounting Officer, allegedly because \u201che did not like what he was\nseeing regarding the off-invoice concessions offered to distributors.\u201d Id. at 226 \u00b6 122. Despite Simon's assurances to investors\non January 22, 2016, that there is \u201cnothing wrong with Hain's accounting at all,\u201d Hain's share price declined 7% between January\n21 and January 25, 2016, from $36.10 a share to $33.46. Id. at 226 \u00b6\u00b6 123\u201324.\n\nOn August 15, 2016, Hain also announced that it would delay its release of its 2016 financial results because \u201cthe Company\nidentified concessions that were granted to certain distributors in the United States [and] ... is currently evaluating whether\nrevenue associated with those concessions was accounted for in the correct period and is also currently evaluating its internal\ncontrol over financial reporting.\u201d Id. at 226\u201327 \u00b6 125. Hain disclosed that it was reevaluating whether it should have recognized\nrevenue associated with concessions when its products sold through the distributors to end customers, rather than at the time\nof shipment to distributors, as it had been doing. From August 15 to 16, 2016, Hain's share price fell by 26%, from $53.40 to\n$39.35 per share, shaving $1.6 billion off of Hain's market capitalization. On August 30, 2016, Hain informed the SEC that it\nwould not be able to file its annual Form 10-K report for Fiscal Year 2016 by the filing deadline because of its reevaluation\nof its revenue-recognition policies.\n\n *5 Although Hain announced in a November 16, 2016, press release that it had completed its internal audit without finding any\n\u201cevidence of intentional wrongdoing,\u201d it disclosed that it had \u201cbegun to implement a remediation plan to strengthen its internal\ncontrols and organization\u201d and was still unable to release financial results. Id. at 228 \u00b6 132. Despite the purported conclusion\nof its internal investigation, on the final day of the Class Period, February 10, 2017, Hain announced it had expanded the scope\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 10\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 12 of 28\n\n\nof its internal investigation to encompass its historical financial results and that the SEC had launched a formal investigation of\nHain and issued subpoenas seeking relevant documents. Hain's stock price fell a further 8%, from $38.53 to $35.10 per share.\nOver the next months, Hain removed Carroll from his role as CEO for North America, received notice that its stock was subject\nto delisting from the National Association of Securities Dealers Automated Quotations (\u201cNASDAQ\u201d), and obtained several\nadditional extensions for the deadline to file its financial results.\n\n\n\n C. Hain Restates its Financial Results\n\nOn June 22, 2017, having failed to publicly file any financial reports for almost a year, Hain issued its belated Report on\nForm 10-K for Fiscal Year (\u201cFY\u201d) 2016, as well as its Reports on Form 10-Q for the first, second, and third quarters of FY\n2017. Hain admitted that it identified \u201cdeficiencies that constituted individually, or in the aggregate, material weaknesses in\n[its] internal control over financial reporting as of June 30, 2016,\u201d including an ineffective control environment and inadequate\nrevenue-recognition mechanisms. Id. at 231\u201332 \u00b6 147. Specifically, it acknowledged, \u201cboth [its] fiscal 2016 and fiscal 2015 net\nsales benefited from certain concessions provided to [its] largest distributors, including payment terms beyond the customer's\nstandard terms, rights of return of product[,] and post-sale concessions, most of which were associated with sales that occurred\nat the end of each respective quarter.\u201d Id. at 231 \u00b6 146.\n\nIn conjunction with these disclosures, Hain restated its historic financials, disclosing that it overstated its net sales by $167\nmillion\u20142.1%, 2.9% and 1.9% in FY 2014, FY 2015 and for the nine months ending March 31, 2016, respectively\u2014and\nits GAAP earnings per share by $0.13 for Fiscal Years 2014, 2015 and the first three quarters of FY 2016. Despite having\npreviously reported financial results that met Wall Street's consensus estimates for three of the six quarters from FY 2015\nthrough the second quarter of FY 2016, Hain's restatement revealed that it would have missed those estimates in every quarter\nhad it engaged in proper accounting practices. Hain also announced that CFO Conte was being replaced by James Langrock,\neffective immediately; according to a CW, Hain also terminated several senior members of its financial team, including its\nController Marla Hyndman.\n\nHain's business subsequently nosedived. In the first nine months of FY 2017, U.S. net sales fell 14% year-over-year, and net\nincome and earnings per share each plummeted 51.1%. These numbers, the CEO of Hain North America acknowledged, were\n\u201cobviously a significant hit for [Hain] to take.\u201d Id. at 235 \u00b6 154.\n\n\n\n D. SEC Investigation and Settlement\n\nOn December 11, 2018, the SEC concluded its almost two-year-long investigation and announced it had entered a consent\ndecree with Hain (the \u201cSEC Order\u201d). See id. at 358\u201365. Hain admitted that it violated Section 13(b)(2)(A) of the Exchange Act,\nwhich requires Hain to make and keep records that accurately and fairly reflect Hain's transactions, and Section 13(b)(2)(B),\nwhich requires Hain to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurance\nthat transactions are executed in accordance with management's authorization and in conformity with GAAP.\n\nThe SEC Order recounted its findings. It stated that Hain had engaged in \u201cend of quarter sales\u201d in which Hain asked its two\nleading distributors\u2014which together accounted for 30% of Hain's U.S. net sales\u2014to purchase specific dollar values of inventory\nby quarter-end, in exchange for the following incentives:\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 11\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 13 of 28\n\n\n\n\n *6 (1) cash incentives (up to $500,000), (2) extended payment terms (up to 90 days), (3) discounts off\n list price (up to 20% off), and (4) spoils coverage, whereby Hain agreed to reimburse the distributor for\n products that spoiled or expired before the distributor could sell through to retailers.\n\n\n\nId. at 360. While the SEC Order stated that the \u201cvast majority of the products purchased in connection with [end-of-quarter]\nsales ... ultimately sold through to retailers,\u201d and \u201c[n]one of these types of incentives are improper,\u201d it noted that these incentives\n\u201ccould have financial reporting implications.\u201d Id. at 360\u201361. Moreover, it concluded that \u201cHain lacked sufficient policies and\nprocedures to provide reasonable assurances that [end-of-quarter] sales were accounted for properly.\u201d Id. at 361. Ultimately,\nin part because Hain engaged in remedial acts, self-reported to the SEC, and assisted with its investigation, the SEC declined\nto impose a civil penalty. It did, however, order Hain to cease and desist from committing violations of Section 13(b)(2)(A)\nand 13(b)(2)(B) of the Exchange Act.\n\n\n II. Procedural History\nThe case before us already has a lengthy procedural history. On August 17, 2016, three plaintiffs filed separate securities fraud\nactions against Hain, which the district court consolidated, appointing Lead Plaintiffs. On September 7, 2017, Plaintiffs filed\na second complaint, adding additional individual defendants.\n\n\n\n A. Prior Proceedings\n\nOn March 29, 2019, the district court 7 dismissed the Plaintiffs\u2019 allegations under Sections 10(b) and 20(a) of the Exchange\nAct and Rule 10(b)-5 without prejudice and granted the Plaintiffs leave to amend. See Hain I, 2019 WL 1429560, at *22. The\nPlaintiffs filed their operative Complaint on May 6, 2019, and, responding to the district court, added additional allegations,\nincluding those based on additional CWs.\n\nOn April 6, 2020, the district court again dismissed the Plaintiffs\u2019 Complaint, this time with prejudice. See Hain II, 2020 WL\n1676762, at *17. The court dismissed the Plaintiffs\u2019 claims under Rule 10b-5(a) and (c), 8 which prohibits the \u201cemploy[ment\nof] any device, scheme, or artifice to defraud,\u201d 17 C.F.R. \u00a7 240.10b\u20135(a), and \u201cengage[ment] in any act, practice, or course of\nbusiness which operates or would operate as a fraud or deceit upon any person,\u201d id. \u00a7 240.10b\u20135(c). Hain II, 2020 WL 1676762\nat *9\u201312. The court determined that the Plaintiffs had not sufficiently alleged an \u201cabsolute right to return\u201d purchased product,\nHain II, 2020 WL 1676762, at *11; this absolute right to return was dispositive to these \u201cscheme liability\u201d claims, the court\nheld, because \u201c[c]hannel stuffing becomes a form of fraud only when it is used to book revenues on the basis of goods shipped\nbut not really sold because the buyer can return them,\u201d id. at *10\u201311 (quoting Makor Issues & Rts., Ltd. v. Tellabs Inc., 513 F.3d\n702, 709 (7th Cir. 2008)). The court then dismissed the Plaintiffs\u2019 Section 10(b) and Rule 10b-5(b) claims because the court\nhad already determined that the channel-stuffing scheme was legitimate. Id. at *12 (\u201cThis theory fails because its predicate is\nthe illegitimacy of the channel stuffing practices the Court already found to be legitimate.\u201d). The court also reached the issue of\nscienter, concluding that although the Plaintiffs\u2019 allegations were \u201cquite close\u201d to meeting their burden, they nonetheless failed\nto do so. Id. at *14\u201317. The Plaintiffs timely appealed from the district court's dismissal of their allegations of a violation of\nRule 10b-5(b), but not clauses (a) and (c).\n\n *7 On appeal, we vacated the district court's judgment and remanded the case for the district court to reconsider the Defendants\u2019\nmotion to dismiss. See Hain, 20 F.4th at 138. We concluded that the district court had erred in dismissing the Plaintiffs\u2019 Rule\n10b-5(b) claim because whether the channel-stuffing scheme is itself fraudulent under 10b-5(a) or (c) is not dispositive to\na Rule 10b-5(b) claim, which focuses \u201cnot on schemes, devices, or practices, but on statements made.\u201d Id. at 136\u201337. Rule\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 12\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 14 of 28\n\n\n10b-5(b), we elaborated, \u201cdoes not require that conduct underlying a purportedly misleading statement or omission amount to a\nfraudulent scheme or practice.\u201d Id. at 137. We clarified that the success of the Plaintiffs\u2019 theory\u2014\u201cthat [the] Defendants made\nstatements attributing Hain's high sales volume to strong consumer demand, while omitting to state that increased competition\nhad weakened consumer demand and that Hain's high sales volume was achieved in significant part by the offer of unsustainable\nchannel stuffing incentives,\u201d id. at 137\u2014depends on whether \u201csomething said was materially misleading, either because it\nincluded a false statement of a material fact or because it omitted to state a material fact which omission rendered the things said\nmisleading,\u201d id. at 136. We therefore vacated the district court's decision that the Complaint failed to satisfy Rule 10b-5(b)\u2019s\nrequirements. Id. at 137.\n\nAs to scienter, we concluded that the district court erred twice. First, the district court's mistaken understanding of the Plaintiffs\u2019\ntheory \u201cinevitably affected\u201d its scienter analysis, requiring reconsideration. Id. Second, we determined that the court erred in\nfailing to \u201cassess the total weight of the circumstantial allegations together with the allegations of motive and opportunity.\u201d\nId. at 137\u201338. We directed the district court to consider anew whether the Complaint sufficiently stated a Rule 10b-5(b) claim.\nId. at 138.\n\n\n\n B. The District Court's Opinion on Remand\n\nOn remand, the Defendants\u2019 motion to dismiss was referred to Magistrate Judge Lee G. Dunst. Judge Dunst issued a report\nand recommendation (\u201cR&R\u201d) recommending that the district court grant the Defendants\u2019 motion to dismiss with prejudice,\nconcluding that the Plaintiffs had failed to adequately plead (1) any actionable misstatement or omission under Rule 10b-5(b)\nand (2) scienter. See Hain III, 2022 WL 18859055, at *34.\n\nOn September 29, 2023, Judge Seybert issued a memorandum and order adopting much of the R&R. See Hain IV, 2023 WL\n6360345, at *18. While the court \u201cconcur[red]\u201d with \u201cMagistrate Judge Dunst's threshold recommendation finding that [the]\nPlaintiffs have failed to plead an actionable misstatement or omission,\u201d id. at *14, it explicitly adopted only the R&R's \u201cscienter-\nrelated recommendations,\u201d id. at *18. Because the court concluded that the Plaintiffs had failed to make the requisite scienter\nallegations, it dismissed the Plaintiffs\u2019 Rule 10(b) and Rule 20(a) claims and denied the Plaintiffs leave to amend their Complaint.\nId. at *18. The Plaintiffs appeal for a second time.\n\n\n\n DISCUSSION\n\n I. Applicable Law\n\n\n A. Standard of Review\n\n [2] [3] We review the district court's dismissal of a complaint for failure to state a claim de novo. Johnson v. Nextel Commc'ns,\nInc., 660 F.3d 131, 138 (2d Cir. 2011). \u201cTo survive a motion to dismiss, a complaint must contain sufficient factual matter,\naccepted as true, to state a claim to relief that is plausible on its face.\u201d Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937,\n173 L.Ed.2d 868 (2009).\n\n [4] \u201cAny complaint alleging securities fraud must satisfy the heightened pleading requirements of the [Private Securities\nLitigation Reform Act of 1995 (the \u201cPSLRA\u201d)] and Fed. R. Civ. P. 9(b) by stating with particularity the circumstances\nconstituting fraud.\u201d ECA, Loc. 134 IBEW Joint Pension Tr. of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 196 (2d Cir.\n2009). Under the PSLRA's heightened pleading requirement, the plaintiff must \u201c(1) \u2018specify each statement alleged to have\nbeen misleading [and] the reason or reasons why the statement is misleading,\u2019 and (2) \u2018state with particularity facts giving rise\nto a strong inference that the defendant acted with the required state of mind,\u2019 \u201d i.e., scienter. Tellabs, 551 U.S. at 321, 127 S.Ct.\n2499 (quoting 15 U.S.C. \u00a7\u00a7 78u\u20134(b)(1), 78u\u20134(b)(2)). While we \u201cnormally\u201d draw all reasonable inferences in favor of the\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 13\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 15 of 28\n\n\nplaintiff, \u201cthe PSLRA establishes a more stringent rule for inferences involving scienter because the PSLRA requires particular\nallegations giving rise to a strong inference of scienter.\u201d ECA, 553 F.3d at 196.\n\n\n\n B. Securities Law\n\n *8 The Plaintiffs\u2019 primary claims are brought pursuant to Section 10(b) of the Exchange Act, 15 U.S.C. \u00a7 78j(b), and the\nrelevant provision of its implementing regulation, Rule 10b-5(b), 17 C.F.R. \u00a7 240.10b\u20135(b). Section 10(b) makes it unlawful\nfor \u201cany person, directly, or indirectly ... [t]o use or employ, in connection with the purchase or sale of any security ... any\nmanipulative or deceptive device or contrivance in contravention of\u201d rules and regulations promulgated by the SEC for the\nprotection of investors. 15 U.S.C. \u00a7 78j(b). Rule 10b-5(b), in turn, makes it unlawful to \u201cmake any untrue statement of a material\nfact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under\nwhich they were made, not misleading.\u201d 9 17 C.F.R. \u00a7 240.10b\u20135(b). As we explained when this case was last on appeal,\nviolations of Rule 10b-5(b) \u201cdo[ ] not require that the defendant have used a fraudulent or otherwise illegal device, scheme,\nartifice, act, practice, or course of business\u201d but rather turn on \u201cwhether something said was materially misleading, either\nbecause it included a false statement of a material fact or because it omitted to state a material fact which omission rendered\nthe things said misleading.\u201d Hain, 20 F.4th at 136.\n\n [5] To succeed on a Section 10(b) claim, \u201ca plaintiff must prove (1) a material misrepresentation or omission by the defendant;\n(2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon\nthe misrepresentation or omission; (5) economic loss; and (6) loss causation.\u201d Stoneridge Inv. Partners, LLC v. Sci.-Atlanta,\n552 U.S. 148, 157, 128 S.Ct. 761, 169 L.Ed.2d 627 (2008). The Plaintiffs also bring Section 20(a) control-person liability\nclaims against the Individual Defendants, which require an adequately pleaded Rule 10b-5(b) claim as a predicate. ECA, 553\nF.3d at 207.\n\n\n\n C. Channel Stuffing\n\n [6] [7] Channel stuffing is not necessarily fraudulent: Offering distributors concessions is a common practice, see Tellabs,\n551 U.S. at 325, 127 S.Ct. 2499, and there may be legitimate reason for a company \u201cpressing for sales to be made earlier than\nin the normal course,\u201d Greebel, 194 F.3d at 202, such as to \u201cincite [its] distributors to more vigorous efforts to sell the stuff lest\nit pile up in inventory,\u201d Makor, 513 F.3d at 709. However, channel stuffing may become fraudulent when it is \u201cdone to mislead\ninvestors.\u201d Garfield v. NDC Health Corp., 466 F.3d 1255, 1262 (11th Cir. 2006). Parsing between \u201c[a] certain amount of channel\nstuffing [that] could be innocent,\u201d Makor, 513 F.3d at 709, and illegitimate channel stuffing done to mislead investors has been\nno easy task for courts. In Tellabs, the Supreme Court suggested that a company \u201cwriting orders for products customers had\nnot requested\u201d is the \u201cillegitimate kind\u201d of channel stuffing, 551 U.S. at 325, 127 S.Ct. 2499; on remand, the Seventh Circuit\nopined that channel stuffing becomes fraudulent \u201conly when it is used ... to book revenues on the basis of goods shipped but\nnot really sold because the buyer can return them\u201d because the conditions of revenue recognition\u2014the transfer of \u201cownership\nand its attendant risks\u201d\u2014have not actually occurred. Makor, 513 F.3d at 709.\n\n\nAs we previously explained in this case, a plaintiff proceeding under Rule 10b-5(b) 10 may successfully plead securities fraud\neven when the alleged channel-stuffing practices are not themselves \u201cfraudulent or otherwise illegal\u201d because Rule 10b-5(b)\nfocuses \u201con whether something said was materially misleading, either because it included a false statement of a material fact\nor because it omitted to state a material fact which omission rendered the things said misleading,\u201d rather than on whether \u201cthat\nconduct underlying a purportedly misleading statement or omission amount to a fraudulent scheme or practice.\u201d Id. at 136\u201337.\nIn our Circuit, courts have recognized two relevant scenarios in which a company may incur liability under Rule 10b-5(b) in\nconnection with channel-stuffing practices.\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 14\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 16 of 28\n\n\n *9 First, district courts have recognized that channel stuffing may give rise to liability if it results in improper revenue\nrecognition and, therefore, false financial statements and violations of GAAP. See, e.g., Plumbers & Pipefitters Nat. Pension\nFund v. Orthofix Int'l N.V., 89 F. Supp. 3d 602, 608\u201309, 616 (S.D.N.Y. 2015) (concluding, where the plaintiff alleged that the\ndefendant engaged in \u201clarge bulk sales to distributors designed to inflate revenue before the end of a quarter\u201d and the defendant\nrestated its financial results and admitted violations of GAAP, that the plaintiff adequately alleged a securities-fraud claim).\nImproper revenue recognition could occur, for example, if the company offers its distributors the \u201cright to return\u201d product and\nfails to account for those returns, or if it does not properly recognize the costs associated with the incentives used to induce\nchannel stuffing. Of course, even if channel stuffing requires financial corrections or results in false affirmations of GAAP\ncompliance, those misstatements must be material, and a plaintiff must adequately plead scienter for a cognizable securities-\nfraud claim to obtain. See Novak v. Kasaks, 216 F.3d 300, 309 (2d Cir. 2000) (\u201cOnly where such allegations [of GAAP violations\nor accounting irregularities] are coupled with evidence of corresponding fraudulent intent might they be sufficient.\u201d).\n\nA second possibility\u2014regardless of whether the company restated its financial results\u2014is that the company made misleading\nstatements about, for example, the company's financial success or channel inventory levels without disclosing its reliance on\nchannel stuffing. See Hain, 20 F.4th at 136\u201337 (holding that a company may incur liability based \u201con whether something said\nwas materially misleading\u201d in connection with channel stuffing on Rule 10b-5(b) claim); see, e.g., Okla. Firefighters Pension\n& Ret. Sys. v. Lexmark Int'l, Inc., 367 F. Supp. 3d 16, 31\u201334 (S.D.N.Y. 2019) (concluding that the defendants\u2019 statements\nabout inventory levels, revenue growth, and price harmonization were actionable in light of channel-stuffing allegations); San\nAntonio Fire & Police Pension Fund v. Dentsply Sirona Inc., 732 F. Supp. 3d 300, 316 (S.D.N.Y. 2024) (statements about \u201cthe\nstrength and sustainability of the company's earnings in general and demand for [the] products in particular\u201d are misleading if\n\u201cmuch of [the company's] sales were due to channel stuffing\u201d); In re SolarEdge Techs., Inc. Sec. Litig., No. 23-CV-9748, 2024\nWL 4979296, at *7 (S.D.N.Y. Dec. 4, 2024) (\u201cPlaintiffs have adequately pleaded that it was misleading for [the defendant] to\nattribute increased revenues in late 2022 to a variety of factors meanwhile omitting that part of the increase in revenues was\ncaused by a practice of channel stuffing.\u201d). Failing to disclose the existence of channel stuffing, under this theory, is misleading\nbecause investors would want to know that revenue is not being driven by increased demand but by sales tactics that will likely\nprove unsustainable once distributors reach maximum inventory and the company can no longer flood them with product.\n\nMindful of these principles, we turn to the Plaintiffs\u2019 allegations.\n\n\n II. Actionable Misstatements\nWe first examine whether the Plaintiffs have plausibly alleged actionable misstatements. The district court noted only that it\nconcurred with the portions of the R&R that concluded that the Plaintiffs had failed to allege such actionable misstatements and\nomissions, Hain IV, 2023 WL 6360345, at *14, but did not specifically adopt those portions of the R&R into its findings, see\nid. at *18 (\u201cThe Court adopts Magistrate Judge Dunst's scienter-related recommendations.\u201d). So, although the district court did\nnot reach the misstatement issue, we first consider the alleged actionable misstatements because our conclusions as to which\nstatements are actionable are, of course, relevant in determining whether the Defendants acted with scienter in making them.\n\n\n\n A. Legal Principles\n\n [8] Under Rule 10b\u20135(b), it is unlawful to (1) \u201cmake any untrue statement of a material fact,\u201d or (2) \u201comit to state a material\nfact necessary in order to make the statements made ... not misleading.\u201d 17 C.F.R. \u00a7 240.10b\u20135(b). These prongs correspond\nto two actionable theories under Section 10(b) and Rule 10b\u20135: (1) a false statement, i.e., \u201can actual statement ... that is ...\n\u2018untrue\u2019 outright,\u201d and (2) a half-truth, i.e., a \u201crepresentation[ ] that state[s] the truth only so far as it goes, while omitting critical\nqualifying information.\u201d 11 In re Vivendi, S.A. Sec. Litig., 838 F.3d 223, 239\u201340 (2d Cir. 2016).\n\n *10 [9] A false statement is the most intuitive: it must, of course, be false at the time it was made, and the plaintiff must\ndemonstrate with specificity why the statement is false. Rombach v. Chang, 355 F.3d 164, 172 (2d Cir. 2004).\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 15\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 17 of 28\n\n\n\n [10] A half-truth theory involves more nuance. A classic contract-law example of a half-truth is \u201cthe seller who reveals that\nthere may be two new roads near a property he is selling, but fails to disclose that a third potential road might bisect the property.\u201d\nUniversal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 188\u201389, 136 S.Ct. 1989, 195 L.Ed.2d 348 (2016).\nFor securities-fraud claims, although \u201c\u00a7 10(b) and Rule 10b\u20135 do not create an affirmative duty to disclose any and all material\ninformation,\u201d Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 44, 131 S.Ct. 1309, 179 L.Ed.2d 398 (2011), once \u201ca company\nspeaks on an issue or topic,\u201d it must \u201ctell the whole truth,\u201d Meyer v. Jinkosolar Holdings Co., 761 F.3d 245, 250 (2d Cir. 2014).\nThat is, when a company does speak, it assumes \u201ca duty to be both accurate and complete,\u201d Caiola v. Citibank, N.A., N.Y., 295\nF.3d 312, 331 (2d Cir. 2002), and adequate disclosure is required to make other statements, \u201cin light of the circumstances under\nwhich they were made, not misleading,\u201d Meyer, 761 F.3d at 250. To determine whether a statement is misleading, our inquiry is\nobjective, from the perspective of a \u201creasonable investor,\u201d considering not only a statement's \u201cliteral truth\u201d but also its \u201ccontext\nand manner of presentation.\u201d Singh v. Cigna Corp., 918 F.3d 57, 63 (2d Cir. 2019).\n\n [11] The plaintiff must also adequately allege that the misstatement or half-truth is \u201cmaterial,\u201d meaning that \u201ca reasonable\ninvestor would have considered [it] significant in making investment decisions.\u201d Caiola, 295 F.3d at 329. In other words, there\nmust be a \u201csubstantial likelihood\u201d that the statement or omission \u201cwould have been viewed by the reasonable investor as having\nsignificantly altered the total mix of information made available.\u201d Matrixx, 563 U.S. at 38, 131 S.Ct. 1309.\n\nHere, the Plaintiffs allege that Defendants made both actionable false statements to investors related to Hain's financial results\nand accounting practices and misleading \u201chalf-truths\u201d in failing to disclose their reliance on channel stuffing when attributing\ntheir financial success and discussing inventory levels.\n\n\n\n B. Misstatements under Accounting Fraud Theory\n\n [12] [13] [14] We first conclude that the Plaintiffs have plausibly alleged that the Defendants made a series of material\nmisstatements about, among other things, Hain's financial results, its compliance with GAAP, the existence of effective internal\ncontrols, its description of its revenue-recognition policies, and its certifications in its SEC filings that, among other things,\nthose filings did not contain any untrue or misleading statements of material fact and rested on adequate internal controls (the\n\u201cSOX certifications\u201d). 12 See, e.g., Joint App'x 238\u201357 \u00b6\u00b6 163\u2013250 (detailing false statements in Hain's financial results); id. at\n271\u201372 \u00b6\u00b6 294\u201396 (Hain's compliance with GAAP); id. at 272\u201373 \u00b6\u00b6 297\u201399 (Hain's revenue-recognition policies); id. at 273\n\u00b6\u00b6 300\u201302 (Hain's statement that \u201cincentives are deducted from our gross sales to determine reported net sales\u201d); id. at 273\u2013\n74 \u00b6\u00b6 303\u201305 (Hain's statement that \u201c[a]ccruals for trade promotions are recorded primarily at the time a product is sold to the\ncustomer based on expected levels of performance\u201d); id. at 274\u201377 \u00b6\u00b6 306\u201312 (SOX certifications); id. at 277\u201381 \u00b6\u00b6 313\u201319\n(Hain's statements about the existence of adequate internal controls). Hain's subsequent restatement of its financial results and\ndisclosure of material weaknesses in its internal controls and financial-reporting and accounting practices, see id. at 231\u201333 \u00b6\u00b6\n147\u201349, suffice to establish that these statements were in fact false at the time they were made, 13 see, e.g., Fresno Cnty. Emps.\u2019\nRet. Ass'n v. comScore, Inc., 268 F. Supp. 3d 526, 544 (S.D.N.Y. 2017) (\u201cIn light of [the defendant's] admission that it must\nrestate its financial statements, there can be no dispute that the [complaint] pleads numerous false and misleading misstatements\nwith respect to revenue, revenue related metrics, and [the defendant's] compliance with GAAP.\u201d); In re Atlas Air Worldwide\nHoldings, Inc. Sec. Litig., 324 F. Supp. 2d 474, 486 (S.D.N.Y. 2004) (\u201cAlthough a restatement is not an admission of wrongdoing,\nthe mere fact that financial results were restated is sufficient basis for pleading that those statements were false when made.\u201d).\n\n\n\n C. Actionable \u201cHalf-Truths\u201d in Failing to Disclose Channel-Stuffing Practices\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 16\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 18 of 28\n\n\n *11 We also conclude that the Defendants made a series of actionable misleading, \u201chalf-true\u201d statements by failing to disclose\nto investors their reliance on the channel-stuffing practices when discussing Hain's financial success and inventory levels at\nits distributors.\n\n [15] As an initial matter, the Plaintiffs have adequately alleged that Hain relied on various channel-stuffing practices to boost\nits revenues. According to the CW allegations, Hain offered distributors an absolute right to return purchased product. The\nDefendants counter that the CW allegations are too vague and conclusory to support this conclusion, but this argument founders.\nWe may credit the allegations of the CWs so long as they \u201care described in the complaint with sufficient particularity to support\nthe probability that a person in the position occupied by the source would possess the information alleged.\u201d Novak, 216 F.3d\nat 314. The Plaintiffs\u2019 Complaint does just that: CW 6, who served as Senior Manager of Customer Support at Hain, alleged\nthat they alone processed a $700,000 product return from UNFI in just one quarter of 2015, while CW 7, who served as Senior\nDirector of Supply Chain Finance, also reported that Simon negotiated a right of return with UNFI. Hain's disclosure in its\nFY 2016 SEC filing that its net sales benefited from \u201crights of return of product\u201d fortifies these allegations. Joint App'x 231\n\u00b6 146. That disclosure and the subsequent SEC Order together reveal that Hain relied on a host of other practices that may\nhave been of interest to investors, such as quarterly cash incentives of up to $500,000 to distributors, extended payment terms,\nprice discounts of up to 20% off, and spoils coverage, including up to $1.6 million for one distributor in one quarter alone. The\nPlaintiffs have therefore plausibly alleged that Hain used undisclosed, material sales tactics to meet benchmarks that may have\nmade a difference in the mind of a \u201creasonable investor.\u201d Caiola, 295 F.3d at 329.\n\n [16] Having determined that the Complaint sufficiently alleges that Hain employed various channel-stuffing tactics, we further\nconclude that the Defendants made a series of actionable misleading statements by failing to disclose their reliance on channel\nstuffing to meet investor benchmarks. In making these statements, Hain triggered the \u201chalf-truth\u201d doctrine\u2014that \u201conce a\ncompany speaks on an issue or topic, there is a duty to tell the whole truth,\u201d Meyer, 761 F.3d at 250\u2014by repeatedly attributing\nits financial results during the Class Period to factors such as \u201cexpanded distribution and brand contribution,\u201d Joint App'x 241 \u00b6\n174, \u201cstrong demand for [its] organic and natural brands as demonstrated by the increasing consumption of [its] products,\u201d id. at\n242 \u00b6 181, \u201cmomentum for organic and natural products,\u201d id. at 244 \u00b6 190, its \u201cdiverse portfolio of brands and products,\u201d id. at\n246 \u00b6 198, and \u201cstrong worldwide demand for [its products],\u201d id. at 250 \u00b6 219. But it did not disclose that it allegedly achieved\nits financial results in no small part by granting distributors credits, incentives, spoils coverage, or a right to return product. By\n\u201cput[ting] the reasons for the company's success at issue, but fail[ing] to disclose a material source of its success, specifically the\npractice of channel stuffing, the[se] statement[s] [were] materially misleading.\u201d SolarEdge, 2024 WL 4979296, at *8; see also\nSan Antonio Fire, 732 F. Supp. 3d at 316 (concluding that statements discussing strength and sustainability of the company's\nearnings and demand for its products \u201cwould be misleading if (as alleged) the company was having trouble getting the materials\nto make the products, many of the products it did make didn't work, and much of its sales were due to channel stuffing\u201d); Okla.\nFirefighters, 367 F. Supp. 3d at 33 (\u201c[A] reasonable investor would likely have found it significant that ... revenues were driven\nby inflated channel inventory and not increased end-user demand because those forces fundamentally differ in sustainability.\u201d).\n\n *12 [17] We similarly conclude that several of the Defendants\u2019 statements about distributors\u2019 inventory levels were also\nmisleading. For example, on January 12, 2016, the day after Hain cut its quarterly and annual guidance for anticipated sales\nand earnings, Carroll acknowledged to investors that the guidance cut was \u201cin the area of inventory\u201d but stated that these\nproblems were \u201cone-offs.\u201d Joint App'x 267 \u00b6 281. If, as the Complaint alleges, demand for Hain's products had waned, and\nHain's distributors had already reached their inventory capacity, the characterization of these problems as \u201cone-offs\u201d would be\nmisleading since inventory saturation would persist. See Novak, 216 F.3d at 311\u201312 (holding that the defendants\u2019 \u201creassurances\nthat inventory was under control or giving false explanations for its growth\u201d constituted \u201cconscious misstatements\u201d); Okla.\nFirefighters, 367 F. Supp. 3d at 31 (concluding that statements that channel inventory levels were \u201cflat,\u201d \u201cneutral,\u201d or had\nincreased only a \u201cbit\u201d were misleading because they failed to mention \u201cthe true nature of [the defendant's] channel inventory\nlevels\u201d). For the same reason\u2014that a buildup of inventory based on channel stuffing \u201cwould inevitably require a drawdown\nin future quarters,\u201d Okla. Firefighters, 367 F. Supp. 3d at 35\u2014several of the Individual Defendants\u2019 other statements about\ninventory levels and declining sales are similarly actionable, see, e.g., Joint App'x 258\u201359 \u00b6\u00b6 253\u201356 (Carroll downplaying\ninventory concerns on a February 4, 2014, earnings conference call); id. at 266 \u00b6 278, 269 \u00b6 288, 270 \u00b6 291 (Carroll and Conte\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 17\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 19 of 28\n\n\nattributing declining sales to distributor and account shifts, rather than inventory saturation from channel stuffing); id. at 269\u2013\n70 \u00b6\u00b6 290\u201391 (Carroll telling investors that \u201c[w]e're resolving some of the issues we had with retailers, for example, with ...\ndistributors as we had accounts shift\u201d in response to question about declining sales growth in U.S. segment on a May 4, 2016,\nearnings call).\n\n [18] The Defendants contend that Hain adequately disclosed these practices to investors, but we are unpersuaded. The \u201ctruth-\non-the-market\u201d defense invoked by the Defendants provides that \u201ca misrepresentation is immaterial if the information is already\nknown to the market because the misrepresentation cannot then defraud the market.\u201d Ganino v. Citizens Utils. Co., 228 F.3d\n154, 167 (2d Cir. 2000). Here, Hain urges that it disclosed its channel-stuffing practices to investors by stating in SEC filings\nthat it undertook \u201c[s]ales incentives and promotions\u201d such as \u201cprice discounts, slotting fees and coupons\u201d in an effort to \u201csupport\nsales of the Company's products.\u201d See, e.g., Hain Celestial Group, Inc., Annual Report at 42 (Form 10-K) (Aug. 21, 2015).\n\nThe Defendants\u2019 argument fails at the pleading stage. We have emphasized that the \u201ccorrective information must be conveyed to\nthe public with a degree of intensity and credibility sufficient to counter-balance effectively any misleading information created\nby the alleged misstatements\u201d and cautioned that \u201c[t]he truth-on-the-market defense is intensely fact-specific and is rarely an\nappropriate basis for dismissing a \u00a7 10(b) complaint for failure to plead materiality.\u201d Ganino, 228 F.3d at 167. For one, Hain's\nstatement that it used various incentives and promotions did not disclose that it offered distributors a right to return product.\nAnd because the \u201ctruth-on-the-market defense\u201d is a fact-intensive inquiry, whether Hain's generic language about offering sales\nincentives and promotions sufficiently counterbalanced the statements that attributed sales growth to growing demand should\nnot be resolved at the pleadings stage. See, e.g., In re Fannie Mae 2008 Sec. Litig., 891 F. Supp. 2d 458, 476 & n.12 (S.D.N.Y.\n2012), aff'd, 525 F. App'x 16 (2d Cir. 2013) (rejecting the defendants\u2019 contention that it disclosed sufficient information to\n\u201ccorrect, clarify, or render immaterial the purported misstatements\u201d on motion to dismiss). We cannot conclude, for example,\nthat Hain's boilerplate statement that \u201c[s]ales are reported net of sales and promotion incentives\u201d in its revenue-recognition\npolicies, 14 Joint App'x 272 \u00b6 297, would inform a reasonable investor that Hain's increasing reliance on credits, discounts,\nand incentives propelled those sales numbers, see, e.g., Solomon v. Sprint Corp., No. 19-CV-5272, 2022 WL 889897, at *6\n(S.D.N.Y. Mar. 25, 2022) (company's general disclosures of its use of promotions \u201cdo not defeat the clear impression generated\nby the company's other statements about the strength of the business overall\u201d). Indeed, the Defendants can hardly be said to\nhave disclosed their channel stuffing when, despite their alleged increasing reliance on the practice, they failed to update these\nstatements year over year, \u201crender[ing] [the statements] meaningless in light of the changing circumstances and risks.\u201d In re\nSalix Pharms., Ltd., No. 14-cv-8925, 2016 WL 1629341, at *12 (S.D.N.Y. Apr. 22, 2016) (concluding that the defendant's\ncautionary language was inadequate to invoke the PSLRA's safe-harbor provision for forward-looking statements 15 ). Compare\nHain, Annual Report at 42, 61 (Form 10-K) (Aug. 21, 2015) with Hain, Annual Report at 37, 54 (Form 10-K) (Aug. 27, 2014).\n\n *13 Nor do the cases cited by the Defendants salvage their argument. For instance, in Dalberth v. Xerox Corp., 766 F.3d\n172 (2d Cir. 2014), we concluded on summary judgment that one of the individual defendants adequately disclosed that the\ncompany's reorganization of U.S. operations had negative effects on the company's revenue growth where, for example, the\nindividual defendant stated that cash generation was \u201cclearly unsatisfactory\u201d and attributed this problem in part to the company's\n\u201creorganization and restructuring,\u201d id. at 186. This specific disclosure about a discrete problem is miles apart from Hain's\ngeneric statement that it generally employed promotions and incentives\u2014just as a child telling his parents that he ate dessert\nis misleading if he ate the entire cake. See Macquarie Infrastructure Corp. v. Moab Partners, L. P., 601 U.S. 257, 264, 144\nS.Ct. 885, 218 L.Ed.2d 214 (2024).\n\nIn sum, we conclude that Hain made actionable misstatements when it stated, among other things, its financial results,\nthe existence of adequate internal controls, and its compliance with GAAP. That Hain restated its financials and admitted\ndeficiencies in its practices suffices to establish that they were false at the time they were made. We further conclude that Hain\nmade a series of misleading \u201chalf-truths\u201d in discussing the causes of its financial success without disclosing its reliance on\nchannel stuffing.\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 18\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 20 of 28\n\n\n\n III. Scienter\n[19] [20] [21] We next turn to whether the Plaintiffs have adequately alleged scienter, \u201ca mental state embracing intent\nto deceive, manipulate, or defraud.\u201d 16 Tellabs, 551 U.S. at 319, 127 S.Ct. 2499. Under the PSLRA, a plaintiff must allege\nfacts giving rise to a \u201cstrong inference that the defendant acted with [scienter],\u201d 15 U.S.C. \u00a7 78u-4(b)(2)(A), where a \u201cstrong\ninference\u201d means that the inference \u201cmust be more than merely plausible or reasonable\u2014it must be cogent and at least as\ncompelling as any opposing inference of nonfraudulent intent,\u201d Tellabs, 551 U.S. at 314, 127 S.Ct. 2499. That inference,\nhowever, need not be \u201cirrefutable,\u201d of the \u201csmoking-gun genre,\u201d or even the \u201cmost plausible of competing inferences.\u201d Id.\nat 324, 127 S.Ct. 2499. Instead, we must consider \u201cwhether all of the facts alleged, taken collectively, give rise to a strong\ninference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard,\u201d id. at 323, 127 S.Ct.\n2499, and we must take into account inferences favoring both the plaintiff and the defendant, Blanford, 794 F.3d at 305.\n\n [22] A plaintiff may establish scienter by alleging facts showing that (1) the defendants had the motive and opportunity to\ncommit fraud, or (2) strong circumstantial evidence of conscious misbehavior or recklessness. ECA, 553 F.3d at 198. A plaintiff\ncan also meet his scienter burden with both motive-and-opportunity and circumstantial allegations, considered collectively.\nSee Hain, 20 F.4th at 137\u201338. The Plaintiffs here advance both motive-and-opportunity and recklessness arguments; because a\nplaintiff who fails to show motive must provide correspondingly stronger circumstantial allegations, Ark. Pub. Emps. Ret. Sys.\nv. Bristol-Myers Squibb Co., 28 F.4th 343, 355 (2d Cir. 2022), we consider the strength of the Plaintiffs\u2019 motive allegations first.\n\n\nA. Motive and Opportunity\n [23] [24] The Plaintiffs first argue that the Individual Defendants had the motive and opportunity to make the false and\nmisleading statements. We generally presume that high-level corporate insiders, such as C-suite executives, have the opportunity\nto commit fraud. See In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 74 (2d Cir. 2001). To establish a motive to engage in\nfraud, \u201cplaintiffs must assert a concrete and personal benefit\u201d to the individuals who allegedly carried out the fraud. Kalnit v.\nEichler, 264 F.3d 131, 139 (2d Cir. 2001). We have cautioned against inferring motive from a \u201cgeneralized\u201d desire of individual\ndefendants to see strong corporate performance or higher stock prices, \u201ccommon to all corporate executives and, thus, too\ngeneralized to demonstrate scienter,\u201d id.\u2014otherwise, \u201cvirtually every company in the United States that experiences a downturn\nin stock price could be forced to defend securities fraud actions.\u201d ECA, 553 F.3d at 201. The Plaintiffs allege that we may\ninfer motive from the Individual Defendants\u2019 suspicious stock sales and compensation incentives that were tied to erroneous\nfinancial statements. We agree.\n\n *14 [25] First, the Plaintiffs have adequately alleged that two of the Individual Defendants, Carroll and Simon, engaged in\nsuspicious stock sales during the Class Period; as a point of comparison to the Class Period sales, the Plaintiffs provide a Control\nPeriod from July 30, 2010, to November 4, 2013, a period equal in length to and before the Class Period. During the Class\nPeriod, Carroll disposed of approximately 74% of his total shares for more than $24.3 million, and Simon sold 66% of his total\nfor more than $80 million, both of which represent significantly higher volumes and totals than during the Control Period.\n\nWe find the timing and volume of stock sales unusual, even if the allegations lack several attributes that might make the\ninferences drawn in the Plaintiffs\u2019 favor even stronger. Although the Plaintiffs did not plead net profits that Carroll and Simon\nreceived from the sales, our caselaw instructs that the amount of profits is merely one of several \u201c[f]actors considered in\ndetermining whether insider trading activity is unusual,\u201d including \u201cthe portion of stockholdings sold, the change in volume of\ninsider sales, and the number of insiders selling,\u201d Scholastic, 252 F.3d at 74\u201375, and therefore imposes no net-profit pleading\nrequirement. We decline to impose one here. That the Plaintiffs do not allege that the sales occurred in the final 100 days of the\nnearly four-year-long class period or that two of the other Individual Defendants, Smith and Conte, engaged in suspicious sales\nmight weaken the strength of the inferences we draw in the Plaintiffs\u2019 favor. Cf. San Leandro, 75 F.3d at 814 (concluding that the\nfailure of some individual defendants to sell stock during class period undermined the plaintiffs\u2019 allegations that any defendant\nintended to inflate stock for personal profit); Chapman v. Mueller Water Prods., Inc., 466 F. Supp. 3d 382, 412 (S.D.N.Y. 2020)\n(stating that district courts in our Circuit are \u201cfrequently skeptical that stock sales are indicative of scienter where no trades\noccur in the months immediately prior to a negative disclosure\u201d). But that does not mean we discount the Plaintiffs\u2019 allegations\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 19\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 21 of 28\n\n\naltogether. Rather, consistent with the teachings of Tellabs, we simply consider at the pleading stage whether \u201call of the facts\nalleged, taken collectively,\u201d support an inference of scienter, even if that inference is \u201cnot [ ] irrefutable.\u201d 551 U.S. at 323\u201324,\n127 S.Ct. 2499. We therefore abstain from imposing a brightline rule that securities-fraud plaintiffs must allege that sales took\nplace in the final 100 days of a class period or that all Individual Defendants engaged in such sales. See Scholastic, 252 F.3d\nat 75 (explaining that San Leandro and similar cases did not \u201cestablish[ ] a per se rule that the sale by one officer of corporate\nstock for a relatively small sum can never amount to unusual trading[;] [r]ather, each case was decided on its own facts\u201d). The\nPlaintiffs\u2019 allegations of motive, taken collectively, tip the scale in their favor.\n\nSecond, we give weight to the Plaintiffs\u2019 allegations that Simon and Carroll had the motive to commit fraud because bonuses they\nreceived were tied to the very metrics that Hain admittedly overstated. To be sure, \u201c[m]otives that are common to most corporate\nofficers, such as the desire for the corporation to appear profitable and the desire to keep stock prices high to increase officer\ncompensation, do not constitute \u2018motive\u2019 for purposes of this inquiry.\u201d ECA, 553 F.3d at 198. But we may infer the defendants\u2019\n\u201cmotive to sweep problems under the rug\u201d if the allegations support a \u201cdirect link between the compensation package and the\nfraudulent statements.\u201d Id. at 201. Here, the Plaintiffs\u2019 allegations move the needle because the significant bonuses and stock\nawards that Simon and Carroll received in FY 2015\u2014a bonus of $5,565,725 and $8,787,355 in stock awards for Simon and a\nbonus of $711,711 and $1,119,854 in stock awards for Carroll\u2014were tied to the metrics that Hain overstated, including Hain's\nnet sales, net income, and earnings per share. 17 That Simon met his bonus target for net sales in FY 2015 by only 0.1%\u2014\nand would not have hit that metric had Hain properly accounted for its channel-stuffing practices\u2014suffices to show that the\n\u201cdefendants benefitted in some concrete and personal way from the purported fraud.\u201d Novak, 216 F.3d at 307\u201308; see also San\nAntonio Fire, 732 F. Supp. 3d at 318 (motive allegations weigh in favor of scienter where the alleged fraud of several million\ndollars was \u201ccritical\u201d because \u201cthe company just barely hit the thresholds necessary for bonuses\u201d).\n\n *15 Because we conclude that the Plaintiffs\u2019 motive allegations weigh in favor of scienter, the circumstantial evidence need\nnot be as great, although it must still be strong. See Ark. Pub. Emps., 28 F.4th at 355.\n\n\nB. Circumstantial Evidence of Conscious Misbehavior or Recklessness\n [26] We next consider the Plaintiffs\u2019 allegations of circumstantial evidence of conscious misbehavior or recklessness. Here,\nrecklessness is \u201chighly unreasonable\u201d conduct representing \u201can extreme departure from the standards of ordinary care\u201d and\n\u201capproximating actual intent,\u201d rather than \u201cmerely a heightened form of negligence.\u201d Setzer v. Omega Healthcare Invs., Inc.,\n968 F.3d 204, 214\u201315 (2d Cir. 2020). \u201c[S]ecurities fraud claims typically have sufficed to state a claim based on recklessness\nwhen they have specifically alleged [the] defendants\u2019 knowledge of facts or access to information contradicting their public\nstatements.\u201d Id. at 215. \u201cUnder such circumstances, [the] defendants knew or, more importantly, should have known that they\nwere misrepresenting material facts related to the corporation.\u201d Novak, 216 F.3d at 308.\n\nAs discussed above, the Plaintiffs here advance two broad sets of actionable misstatements: (1) false statements about, among\nother things, Hain's financial results and accounting and internal controls practices, and (2) misleading, half-true statements\nabout Hain's financial success and inventory. While both scienter inquiries turn on the same principle\u2014whether the Defendants\n\u201cknew or, more importantly, should have known that they were misrepresenting material facts related to the corporation,\u201d Novak,\n216 F.3d at 308\u2014our precise inquiry in applying that principle varies with the type of actionable misstatement. For the false\nstatement theory, the question is whether the Defendants knew or should have known that their revenue-treatment policies and\nhence their contemporaneous financial statements were incorrect. See In re Bristol-Myers Squibb Sec. Litig., 312 F. Supp. 2d\n549, 566 (S.D.N.Y. 2004); Plumbers & Pipefitters, 89 F. Supp. 3d at 616\u201317. For the half-truth theory, we ask whether the\nDefendants knew or should have known that the channel-stuffing practices and its implications contradicted their statements\nabout Hain's financial success and inventory levels. See San Antonio Fire, 732 F. Supp. 3d at 319\u201320; Okla. Firefighters, 367\nF. Supp. 3d at 37. Because of the substantial overlap between these inquiries, we consider them together.\n\n\n i. Confidential Witnesses\u2019 Allegations About Individual Defendants\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 20\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 22 of 28\n\n\n [27] The Plaintiffs first argue that the Individual Defendants\u2019 actual knowledge of and active participation in the channel-\nstuffing practices support an inference of scienter. Again, we have recognized that such circumstantial evidence can support\nscienter where the defendants \u201cknew facts or had access to information suggesting that their public statements were not\naccurate.\u201d ECA, 553 F.3d at 199. We conclude that the Plaintiffs\u2019 allegations support a strong inference that the Individual\nDefendants had actual knowledge of the channel-stuffing practices that made their statements about financial success and\ninventory misleading.\n\nStart with the Plaintiffs\u2019 allegations that Individual Defendants negotiated the concessions and directed Hain employees to\npush product on distributors. According to the CWs, Carroll requested mid-quarter sales numbers from CW 6 to calculate sales\nshortfalls, negotiated the credits and off-invoice concessions to make up for sales shortfalls, and informed sales-calls attendees\nabout the concessions. At the end of the fourth quarter of FY 2016, Simon called the general manager of a customer, BluePrint,\ntold him that BluePrint \u201cneeds to make [the forecasted sales numbers] this quarter,\u201d and directed CW 2 18 to \u201cpush[ ] inventory\u201d\nto BluePrint's distributor. Joint App'x 213 \u00b6 78. And, according to CW 7, Simon dealt directly with UNFI's owner on the\nconcessions and revenue and could \u201calways make [UNFI] buy more [product] if needed.\u201d Id. at 218 \u00b6 94. These allegations,\nwhich we treat as true for present purposes, contradict Hain's public statements attributing its financial success to factors such\nas strong demand and downplaying inventory issues. See Scholastic, 252 F.3d at 73 (concluding that the company's \u201caggressive\nsales practices ... would furnish additional support for the proposition that company officials were aware of declining sales\nand increasing returns\u201d). They also support scienter as to the false financial and accounting statements because the Individual\nDefendants knew or had access to information about sales on \u201cloosened terms.\u201d Plumbers & Pipefitters, 89 F. Supp. 3d at 617.\n\n *16 The CWs\u2019 allegations about Hain's accounting practices further support a strong inference of scienter. For example,\naccording to CW 7, Hain pushed out inventory, used credits and accruals to offset sales deficits on its balance sheet, and engaged\nin creative accounting tactics to smooth out sales, which would plummet in the first month of a subsequent quarter after Hain\nhad pushed its inventory on distributors. Several CWs confirmed that Hain offered its distributors a right to return product:\nCW 6 reported a $700,000 product return in 2015 and stated that $500,000 in quarterly returns were on the \u201clow-end\u201d of such\nreturns. Joint App'x 211 \u00b6 72. CW 3\u2014who prepared budget materials as an Executive Assistant to COO Meiers\u2014stated that\nat the end of 2015 and early in 2016, they witnessed a significant increase in returns and credits. CW 7 reported that accruals\nbegan to climb into the millions of dollars from a starting point of around $200,000. CW 1 eventually left Hain in June 2016\nbecause he believed \u201csomething screwy\u201d was going on with Hain's financial numbers after he saw sales declining but credits\nincreasing to millions of dollars each quarter. Joint App'x 217 \u00b6 89.\n\nBurnishing the scienter allegations, the Individual Defendants\u2019 involvement continued through concession negotiations and top-\ndown directives to accounting and reporting. After Carroll and Simon directed Hain's managers to ship off-invoice product to\ndistributors, Smith and Conte prepared Hain's financial reports for the public, and they, with Simon, signed off on their accuracy.\nNotably, Smith and Carroll received weekly reports on sales, inventory, and guidance targets. Such allegations suggest actual\nknowledge of the alleged unsustainable practices and improper revenue-recognition practices. See, e.g., Okla. Firefighters,\n367 F. Supp. 3d at 37 (the plaintiffs sufficiently alleged knowledge where the defendants tracked inventory levels and saw\ndata at monthly meetings); Freudenberg v. E*Trade Fin. Corp., 712 F. Supp. 2d 171, 198 (S.D.N.Y. 2010) (conversations and\nattendance at meetings show \u201caccess to and actual knowledge of facts\u201d). That Hain never had an internal audit or compliance\ndepartment and subsequently disclosed in its Form 10-K for FY 2016 that its \u201cinternal controls to identify, accumulate and\nassess the accounting impact of certain concessions or side agreements on whether the Company's revenue recognition criteria\nhad been met were not adequately designed or operating effectively,\u201d Joint App'x 231\u201332 \u00b6 147; see also id. at 362 \u00b6 16 (SEC\nOrder finding that Hain maintained insufficient policies), further suggests recklessness on the part of the Defendants, see San\nAntonio Fire, 732 F. Supp. 3d at 321 (collecting district court cases in this Circuit holding that \u201cpoor internal controls support\nan inference of scienter\u201d).\n\nConsider next the Plaintiffs\u2019 allegations that the Defendants maintained an inappropriate \u201ctone at the top,\u201d i.e., a company\nculture of secrecy and fear, and poor internal controls. See San Antonio Fire, 732 F. Supp. 3d at 320\u201321 (collecting district court\ncases that have \u201crepeatedly held that improper tone at the top ... support[s] an inference of scienter\u201d). For example, according to\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 21\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 23 of 28\n\n\nCW1, after Hain's August 15, 2016, announcement that it would delay releasing its FY 2016 financial results, Carroll demanded\nthat \u201cemployees refrain from using the term \u2018loading\u2019 \u201d and rephrase it as \u201c \u2018inventory reduction.\u2019 \u201d Joint App'x 217\u201318 \u00b6 92.\nCW7 alleged overhearing Carroll and Simon stating that they were \u201cnot supposed\u201d to be discussing their arrangements with\nUNFI in front of others. Id. at 218\u201319 \u00b6 95. And, according to CW 7, Hain executives told one employee\u2014who was eventually\nfired during the class period\u2014to stop asking questions about the end-of-quarter tactics. Id. at 223 \u00b6 113. Such secrecy insinuates\nknowledge of wrongdoing.\n\n[28] Bolstering the scienter inference is that the alleged fraud touched on large swaths of Hain's U.S. business and areas of\ncritical import to Hain and its executives, who we may infer \u201care likely to know more about things central to their business.\u201d 19\nStadium Cap. LLC v. Co-Diagnostics, Inc., No. 22-cv-6978, 2024 WL 456745, at *5 (S.D.N.Y. Feb. 5, 2024). Hain ultimately\nadjusted its net sales by 2.1%, 2.9%, and 1.9% in FY 2014, FY 2015 and for the nine months ending March 31, 2016, respectively,\nwhich, taken together, accounted for about $167 million of $7 billion (around 2.4%) in net sales over a three-year period. The\ntotal size of this alleged fraud is comparable to other cases in which we have credited scienter allegations, see Scholastic, 252\nF.3d at 77 (holding that a total of $24 million in charges for book returns \u201cundermines, at the pleading stage, the argument that\nthe defendants were unaware\u201d of any increase in returns), although the figures are not eye-popping as a percentage of net sales,\ncf. Salix, 2016 WL 1629341, at *3, 16 (considering a \u201cstartling\u201d magnitude of alleged fraud, around 12.5% of sales).\n\n *17 Further tilting the balance in the Plaintiffs\u2019 favor, moreover, is the importance of this alleged fraud to Hain. See, e.g.,\nScholastic, 252 F.3d at 76\u201377 (stating that pleaded facts establishing significance of inventory levels to company's financial\nperformance supported allegation that defendants acted recklessly when they failed to acknowledge publicly the company's\ndecreased sales and increased returns); New Orleans Emps. Ret. Sys. v. Celestica, Inc., 455 Fed. App'x 10, 14 & n.3 (2d Cir. 2011)\n(summary order) (the plaintiffs properly pleaded scienter where \u201cinventory levels\u201d were \u201ckey to measuring [the defendant's]\nfinancial performance and [were] a subject about which investors and analysts often inquired\u201d). As already recounted, pushing\nproduct at the end of quarters through various channel-stuffing tactics was a top-down priority, deemed critical to meet Wall\nStreet financial benchmarks, and involving top Hain executives and the company's most important distributors. Because of the\nsize of the restatement, the importance of the end-of-quarter practices to meet financial targets, and the distributors affected,\nwe infer that the Individual Defendants would have \u201cmonitored [these operations] closely,\u201d San Antonio Fire, 732 F. Supp. 3d\nat 319, and knew or should have known information contradicting their public statements, see Okla. Firefighters, 367 F. Supp.\n3d at 37\u201338 (inferring scienter from allegations of fraud in the defendant's \u201cprimary profit engine\u201d). Put simply, it would strain\ncredulity to conclude that the Individual Defendants were unaware of channel stuffing and its potentially insidious implications\nfor investors.\n\n\n ii. Personnel Changes During and After the Class Period\n [29] District courts in our Circuit have concluded that key personnel changes\u2014while not sufficient to establish scienter\u2014may\nadd to the total mix of circumstantial evidence of fraud when those changes are \u201chighly unusual and suspicious,\u201d especially\n\u201cwhen independent facts indicate that the resignation was somehow tied to the fraud alleged.\u201d In re AppHarvest Sec. Litig., 684\nF. Supp. 3d 201, 245 (S.D.N.Y. 2023). Here, the Plaintiffs provide a litany of suspicious personnel changes\u2014the terminations\nof seven executives and demotions of two more\u2014some of which the CWs\u2019 allegations link to the alleged fraud. See Joint App'x\n288\u201390 \u00b6\u00b6 339\u201347.\n\nOf particular note, each of the Individual Defendants and other key personnel departed under suspicious circumstances. On\nSeptember 8, 2015, Hain announced that Conte would be replacing Smith as CFO after only two years in the role, allegedly\nbecause Smith clashed with Simon over the company's practices. On December 7, 2016, Hain transferred Meiers, who oversaw\nthe accounting issues, from his position as COO to a role as CEO for the Hain Pure Protein division, in a move that one\nCW characterized as a demotion. On March 6, 2017\u2014less than a month after the revelation that the SEC had launched an\ninvestigation\u2014Hain announced that Carroll would be removed from his role as CEO for Hain North America. Then, on June\n22, 2017, the same day that Hain restated its financial results and announced its remedial measures, Conte resigned as CFO.\nOn that day, Hain also announced that it would be creating an expanded \u201cteam with new hires including a new controller for\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 22\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 24 of 28\n\n\nthe U.S. segment, a global revenue Controller, a Head of Internal Audit, and a Chief Compliance Officer.\u201d Id. at 290 \u00b6\u00b6 346\u2013\n47. In 2018, Simon and Senior Vice President and Controller Marla Hyndman also departed.\n\nFortifying these allegations, several other Hain executives left the company, allegedly because they took issue with Hain's\nchannel-stuffing practices and its financial reporting. See, e.g., id. at 223 \u00b6 112, 289 \u00b6 341 (Hain firing Senior Vice President of\nFinance/Business Planning, Rose Ng, in September 2015, allegedly because she was \u201cbutting heads with Meiers\u201d over Hain's\nfinancial-reporting practices); id. at 226 \u00b6 122 (Hain announcing Ross Weiner's resignation from his position of Vice President\n\u2013 Finance, Chief Accounting Officer on January 21, 2016, and CW 6 alleging that Weiner left because \u201che did not like what he\nwas seeing regarding the off-invoice concessions offered to distributors\u201d). We view these allegations as offering supplemental,\ncircumstantial support for the Plaintiffs\u2019 scienter pleadings.\n\n\n iii. The SEC Order\n [30] Finally, we reject the Defendants\u2019 insistence that the SEC Order exonerates them of potential liability. The Defendants\nassert that the SEC Order \u201cundermines any inference of wrongful intent\u201d because of the Order's statement that the incentives\nwere not necessarily improper and the SEC's decision not to charge Hain or any individual with fraud. Appellee's Br. at 29\n(citing Hain IV, 2023 WL 6360345, at *15). As a preliminary matter, the SEC's decision not to pursue charges is \u201cirrelevant\nas to whether Plaintiffs have plausibly alleged claims in this case,\u201d Vanleeuwen v. Keyuan Petrochems., Inc., No. 13-cv-6057,\n2014 WL 3891351, at *4 n.5 (S.D.N.Y. Aug. 8, 2014), because the SEC Order was the result of negotiated, \u201cprivate bargaining\u201d\nbetween the SEC and Hain, rather than \u201cthe result of an actual adjudication of any of the issues,\u201d Lipsky v. Commonwealth\nUnited Corp., 551 F.2d 887, 893\u201394 (2d Cir. 1976). Indeed, by its own terms, the SEC Order states that Hain consented to\nthe entry of the Order \u201c[s]olely for the purpose of these proceedings and any other proceedings brought by or on behalf of the\nCommission, or to which the Commission is a party.\u201d Joint App'x 358. It does not doom the Plaintiffs here.\n\n *18 But even taking the Defendants\u2019 argument on its own terms, the SEC Order is consistent with the Plaintiffs\u2019 theory. As we\npointed out above, the inquiry under Rule 10b-5(b) is not on the legality of \u201cschemes, devices, or practices, but on statements\nmade.\u201d Hain, 20 F.4th at 136. Again, that principle establishes that the Defendants\u2019 exposure to Rule 10b-5(b) liability does not\nturn on the propriety of the incentives described in the SEC Order, 20 but on whether the Defendants made misleading statements\nin connection with those practices. What is more, while noting the legality of these incentives in a vacuum, the SEC Order\nexplicitly recognized that those incentives \u201ccould have financial reporting implications,\u201d Joint App'x 360 \u00b6 5\u2014consistent with\nthe Plaintiffs\u2019 theory as to Hain's allegedly fraudulent accounting practices. Nor does the SEC Order's determination that the\n\u201cvast majority of the products purchased [by distributors] in connection with [end-of-quarter] sales ... ultimately sold through\nto retailers,\u201d id. at 361\u201362, absolve the Defendants. That finding is consistent with the Plaintiffs\u2019 theory that distributors would\nbe stuffed to the gills with inventory and eventually either return Hain's product or stop buying it, causing sales to fall off a cliff.\nSee id. at 206 \u00b6 57. And Hain's numbers eventually did precisely that, with year-over-year U.S. net sales falling by 14% and net\nincome plummeting by 51.1% for the first nine months of FY 2017 after Hain imposed remedial measures. That much of the\nproduct may have eventually sold through to end customers negates neither Hain's admission that it failed to account properly\nfor those sales in its SEC filings nor its allegedly misleading statements about its financial and operational status during the\nClass Period.\n\n\n C. Holistic Evaluation of the Plaintiffs\u2019 Allegations\nHaving analyzed the Plaintiffs\u2019 allegations, we now consider \u201cwhether all of the facts alleged, taken collectively, give rise to a\nstrong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.\u201d Tellabs, 551\nU.S. at 323, 127 S.Ct. 2499. We conclude that they do.\n\nTo summarize, based on the unusual stock sales and executive compensation tied to Hain's overstated financial results, the\nPlaintiffs have adequately alleged that the Individual Defendants had the motive and opportunity to mislead investors about the\nchannel-stuffing practices. Holistically, the CWs\u2019 allegations also limn a portrait of the Individual Defendants acting recklessly\n\u2014at the very least\u2014in orchestrating those practices and failing to ensure a proper accounting thereof. In light of the allegations\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 23\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 25 of 28\n\n\nof the Individual Defendants\u2019 personal involvement, we would be hard-pressed to conclude at this stage that the Defendants did\nnot know, or should not have known, that those practices would endanger the propriety of their financial results, or that it would\nbe inaccurate to attribute Hain's financial success solely to organic demand. And providing the final gloss for the Plaintiffs are\nthe size and significance of the alleged fraud to Hain's operations, the improper \u201ctone at the top\u201d and admittedly inadequate\ninternal controls, and a sustained pattern of suspicious executive personnel changes. Notwithstanding their heightened pleading\nburden, the Plaintiffs have adequately alleged scienter.\n\n\nIV. Loss Causation\n [31] We also conclude that the Plaintiffs have adequately pleaded loss causation, for which there is no heightened pleading\nstandard. See Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 346\u201347, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005); see also Lentell v.\nMerrill Lynch & Co., 396 F.3d 161, 174 (2d Cir. 2005) (stating that loss causation is generally a fact-specific question appropriate\nfor trial). As the Plaintiffs have alleged declines in Hain's stock price following Hain's negative disclosures, the Plaintiffs have\nmet the pleading standard. See, e.g., AppHarvest, 684 F. Supp. 3d at 273.\n\n\nV. Section 20(a) Control Liability Claims\nFinally, we reinstate the Plaintiffs\u2019 claims under Section 20(a), under which a plaintiff may \u201callege a primary \u00a7 10(b) violation\nby a person controlled by the defendant, and culpable participation by the defendant in the perpetration of the fraud.\u201d Scholastic,\n252 F.3d at 77; see 15 U.S.C. \u00a7 78t(a). Because the district court dismissed the Plaintiffs\u2019 Section 20(a) claims for failure to\nplead a primary Section 10(b) violation, see Hain IV, 2023 WL 6360345, at *14, and \u201con appeal [the] defendants offer no\nbasis for dismissing the secondary liability claim if we reverse the dismissal of the securities fraud causes of action, we hereby\nreinstate it,\u201d Scholastic, 252 F.3d at 78.\n\n\n\n CONCLUSION\n\n*19 We have considered the Defendants\u2019 other arguments and conclude that they are without merit. Based on the foregoing,\nwe conclude that the Plaintiffs have adequately alleged that the Defendants made actionable misstatements and omissions in\nconnection with the channel-stuffing scheme and acted with scienter. 21 Accordingly, this long-pending case should proceed\nto discovery. The judgment of the district court is therefore VACATED, and this case is REMANDED to the district court for\nfurther proceedings consistent with this opinion.\n\n\nAll Citations\n\n--- F.4th ----, 2025 WL 2749562\n\n\n\n\n Footnotes\n\n\n1 Co-Lead Plaintiff Rosewood Funeral Home is a funeral home in the Houston, Texas area that purchased Hain Celestial\n Group, Inc. (\u201cHain\u201d) call options during the Class Period and suffered approximately $1,548,333 in losses. Co-Lead\n Plaintiff Salamon Gimpel purchased Hain common stock and suffered approximately $822,519 in losses during the\n Class Period.\n\n2 Defendant Simon founded Hain and served as its President, Chief Executive Officer (\u201cCEO\u201d), and Chairman of the\n Board until June 2018. Defendant Conte served as Treasurer and Vice President from July 2009 to October 2014, Senior\n Vice President of Finance from October 2014 to September 2015, and Chief Financial Officer (\u201cCFO\u201d) and Executive\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 24\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 26 of 28\n\n\n Vice President of Finance from September 2015 to June 2017 (as successor to Smith). Defendant Carroll was Hain's\n Executive Vice President and CEO for Hain Celestial North America from February 2015 to March 6, 2017, and has been\n the Executive Vice President for Global Brands, Categories, and New Business Ventures since March 6, 2017. Defendant\n Smith preceded Conte as Hain's CFO and Executive Vice President from September 3, 2013, to September 30, 2015.\n\n3 Unless otherwise indicated, when quoting cases, all internal quotation marks, alteration marks, emphases, footnotes,\n and citations are omitted.\n\n4 To date, this case has seen four substantive district-court opinions and one opinion from this Court. See In re The Hain\n Celestial Grp. Inc. Sec. Litig. (Hain I), No. 16-CV-4581, 2019 WL 1429560, at *22 (E.D.N.Y. Mar. 29, 2019) (dismissing\n then-operative complaint without prejudice); In re Hain Celestial Grp. Inc. Sec. Litig. (Hain II), No. 16-CV-4581, 2020\n WL 1676762, at *17 (E.D.N.Y. Apr. 6, 2020) (dismissing Complaint with prejudice), vacated and remanded 20 F.4th 131\n (2d Cir. 2021); In re Hain Celestial Grp. Inc. Sec. Litig. (Hain III), No. 16-CV-4581, 2022 WL 18859055 (E.D.N.Y. Nov.\n 4, 2022), report and recommendation adopted (Hain IV), No. 16-CV-4581, 2023 WL 6360345, at *17\u2013*18 (E.D.N.Y.\n Sep. 29, 2023) (dismissing Complaint with prejudice again).\n\n5 The U.S. business segment, in turn, represented around half of Hain's global net sales during the Class Period.\n\n6 In \u201caccrual basis\u201d accounting, an accrual is revenue that is actually earned but not yet paid, whereas in \u201ccash basis\u201d\n accounting, \u201crevenues are recognized when cash is received (as opposed to earned).\u201d Setzer v. Omega Healthcare Invs.,\n Inc., 968 F.3d 204, 209 n.8 (2d Cir. 2020). One CW reported becoming wary about the size and legitimacy of the accruals\n used to offset sales deficits. Joint App'x 215\u201316 \u00b6 85.\n\n7 At this time, Judge Arthur B. Spatt presided over the case; the case was transferred to Judge Seybert after Judge Spatt's\n passing.\n\n8 As discussed below, these claims are not before us on this appeal.\n\n9 The Supreme Court has found an implied private right of action in Section 10(b) and Rule 10b\u20135. See Macquarie\n Infrastructure Corp. v. Moab Partners, L. P., 601 U.S. 257, 260, 144 S.Ct. 885, 218 L.Ed.2d 214 (2024).\n\n10 Two other provisions of Rule 10b-5, clauses (a) and (c), impose liability on public companies for \u201cuse of a fraudulent\n or deceptive device, scheme, artifice, act, or practice.\u201d Hain, 20 F.4th at 136. Because these provisions are not before\n us, we do not consider the circumstances in which channel stuffing might become a fraudulent scheme in and of itself.\n\n11 We use the term \u201chalf-truth,\u201d rather than \u201comission,\u201d to avoid confusion with non-actionable, \u201cpure omissions.\u201d See\n Vivendi, 838 F.3d at 240 n.9. \u201c[T]he difference between a pure omission and a half-truth is the difference between a\n child not telling his parents he ate a whole cake and telling them he had dessert.\u201d Macquarie, 601 U.S. at 264, 144 S.Ct.\n 885. Although we had previously held that liability may arise under a \u201cpure omission\u201d theory\u2014omissions when the\n \u201ccorporation is subject to a duty to disclose the omitted facts,\u201d such as where a different statutory or regulatory provision\n obligates the company to speak affirmatively, Vivendi, 838 F.3d at 239\u201340 & n.8\u2014the Supreme Court has since clarified\n that they are not actionable under Rule 10b\u20135(b), see Macquarie, 601 U.S. at 264, 144 S.Ct. 885; Maso Cap. Invs.\n Ltd. v. E-House (China) Holdings Ltd., No. 22-355, 2024 WL 2890968, at *4 (2d Cir. June 10, 2024) (summary order)\n (\u201cRule 10b\u20135(b) does not proscribe pure omissions, but instead covers half-truths by requiring disclosure of information\n necessary to ensure that statements already made are clear and complete.\u201d).\n\n12 The Defendants\u2019 principal argument on this score is that the Plaintiffs abandoned these claims, a conclusion with which\n the R&R agreed. See Hain III, 2022 WL 18859055, at *16\u201317. However, our review of the record reveals that the\n Plaintiffs maintained that these statements were false and material before both the magistrate judge and the district court.\n See, e.g., Joint App'x 947 (the Plaintiffs\u2019 opposition to Defendants\u2019 motion to dismiss before the magistrate judge stating\n that \u201cHain's quarterly and annual reported financial results during the Class Period, including net sales, net income, and\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 25\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 27 of 28\n\n\n EPS, were materially overstated in violation of GAAP because the Company failed to account for the off-invoice sales\n concessions and incentives granted to distributors, including with respect to revenue recognition\u201d).\n\n13 The SOX certifications are statements of opinion, which may be actionable if, among other things, that statement does\n not rest on the issuer's \u201cmeaningful inquiry\u201d or \u201cfairly align with the information in the issuer's possession at the time.\u201d\n New Eng. Carpenters Guaranteed Annuity & Pension Funds v. DeCarlo, 122 F.4th 28, 46\u201347 (2d Cir. 2023). As the\n Defendants press, a subsequent restatement of financial results or disclosure of material weaknesses in internal controls,\n \u201cstanding alone, does not mean that the original certified opinions were disingenuous[,] [n]or is a genuinely held opinion\n that turned out to be wrong necessarily actionable.\u201d Id. at 47. However, as we explain further below, the Plaintiffs\n allege that the Defendants never had an internal audit or compliance department and documented the concessions they\n personally negotiated in potentially deceptive ways. Such allegations, coupled with the later disclosure, suggest that\n \u201cthe speaker kn[ew] or reasonably should [have] know[n] of different material facts\u201d about Hain's internal controls and\n accounting practices. Abramson v. Newlink Genetics Corp., 965 F.3d 165, 175 (2d Cir. 2020).\n\n14 In any event, it appears that this statement was false in light of Hain's subsequent disclosures.\n\n15 Because the PSLRA's safe-harbor provision applies to forward-looking statements, it is not applicable to the Defendants\u2019\n representations of present fact. See Okla. Firefighters, 367 F. Supp. 3d at 33. However, the doctrine's treatment of\n unchanging, boilerplate language is illustrative here. See Slayton v. Am. Exp. Co., 604 F.3d 758, 772\u201373 (2d Cir. 2010)\n (holding that the doctrine requires the defendants to \u201cdemonstrate that their cautionary language was not boilerplate and\n conveyed substantive information\u201d and concluding that cautionary language was mere boilerplate in part because \u201cthe\n defendants\u2019 cautionary language remained the same even while the problem changed\u201d).\n\n16 The Individual Defendants\u2019 scienter can be imputed to Hain. See Teamsters Loc. 445 Freight Div. Pension Fund v. Dynex\n Cap. Inc., 531 F.3d 190, 195 (2d Cir. 2008) (\u201cWhen the defendant is a corporate entity, ... the pleaded facts must create\n a strong inference that someone whose intent could be imputed to the corporation acted with the requisite scienter.\u201d).\n\n17 Executive compensation packages may, of course, depend on a host of metrics, but we may infer motive where there is\n a \u201cdirect link\u201d between at least some of the metrics and the alleged fraudulent statements. ECA, 553 F.3d at 201.\n\n18 CW 2 served as a Senior Sales Analyst, \u201cresponsible for forecasting, trade planning, and profit and loss analysis at the\n BluePrint brand business at Hain.\u201d Joint App'x 199 \u00b6 33.\n\n19 In making this argument, the Plaintiffs invoke two related doctrines, the \u201ccore-operations\u201d and \u201cmagnitude of the fraud\u201d\n doctrines. The core-operations doctrine posits that \u201cscienter may be imputed to key officers who should have known\n facts relating to the \u2018core operations\u2019 of their company,\u201d In re Wachovia Equity Sec. Litig., 753 F. Supp. 2d 326, 352\n (S.D.N.Y. 2011), while the magnitude of the fraud doctrine suggests recklessness if the alleged falsity impacted a large\n portion of the company's sales or operations, see Rothman v. Gregor, 220 F.3d 81, 92 (2d Cir. 2000). We have not,\n however, \u201cclearly affirmed the validity of [the core-operations] doctrine following the passage of the PSLRA,\u201d In Re\n Renewable Energy Grp. Sec. Litig., No. 22-335, 2022 WL 14206678, at *3 n.4 (2d Cir. Oct. 25, 2022) (summary order),\n although we have suggested that the doctrine \u201ccan provide supplemental support for allegations of scienter, even if they\n cannot establish scienter independently,\u201d New Orleans Emps. Ret. Sys. v. Celestica, Inc., 455 F. App'x 10, 14 n.3 (2d\n Cir. 2011) (summary order). Here, we assume that the size of the alleged fraud, coupled with its importance to Hain's\n operations, provides supplemental support for the Plaintiffs\u2019 other sufficiently pleaded allegations of scienter.\n\n20 Note, too, that the SEC Order did not speak about a right to return, but we have credited the Plaintiffs\u2019 allegations on\n this point.\n\n21 Because we reverse the district court's judgment, we do not decide whether the court abused its discretion in denying\n the Plaintiffs leave to amend the Complaint. See Joint App'x 1064 (the Plaintiffs requesting leave to amend if the district\n court granted the Defendants\u2019 motion to dismiss).\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 26\n\f Case 1:24-cv-02804-JAV Document 71-1\nGimpel v. The Hain Celestial Group, Inc., --- F.4th ---- (2025)\n Filed 10/03/25 Page 28 of 28\n\n\n\nEnd of Document \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works.\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 27\n\f","ocr_status":1,"date_upload":"2026-05-20T15:31:04.791549-07:00","document_number":"71","attachment_number":1,"pacer_doc_id":"127038325088","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit A","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/479925162/","id":479925162,"tags":[],"absolute_url":"/docket/68433458/71/2/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-05-20T15:30:45.839827-07:00","date_modified":"2026-05-22T10:37:24.976127-07:00","sha1":"5ec3223afb1faa4e87f5db8ba99f743dcb37cc7d","page_count":27,"file_size":573416,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.71.2.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.71.2.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 1:24-cv-02804-JAV Document 71-2 Filed 10/03/25 Page 1 of 27\n\n\n\n\n EXHIBIT B\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 2 of 27\n2025 WL 2751076\n\n\n\n 2025 WL 2751076\n Only the Westlaw citation is currently available.\n United States District Court, C.D. California.\n\n Abduladhim A. ALGHAZWI, individually and on behalf of all others similarly situated, Plaintiff,\n v.\n The BEAUTY HEALTH COMPANY; Andrew Stanleick; and Liyuan Woo, Defendants.\n\n Case No. 2:23-cv-09733-SPG-MAA\n |\n Signed September 23, 2025\n\nSynopsis\nBackground: Purchasers of high-end facial machine provider securities brought putative class action against provider and\ntwo of its former executives for violations of Securities Exchange Act, alleging defendants misled investors about success of\nprovider's next generation facial machine by failing to disclose critical design flaws while touting product's success. Defendants\nmoved to dismiss for failure to state a claim.\n\n\n\nHoldings: The District Court, Sherilyn Peace Garnett, J., held that:\n\n[1] Court would incorporate by reference transcript of investor day meeting and press releases announcing quarterly financial\nresults;\n\n[2] Court would take judicial notice of Securities and Exchange Commission (SEC) forms;\n\n[3] purchasers adequately alleged scienter;\n\n[4] confidential witnesses upon which purchasers relied were sufficiently reliable;\n\n[5] defendants statements were not protected by \u201cbespeaks caution\u201d doctrine;\n\n[6] purchasers adequately alleged that defendants' statements were materially misleading, rather than non-actionable puffery;\nand\n\n[7] purchasers adequately alleged loss causation.\n\n\nMotion denied.\n\nProcedural Posture(s): Motion to Dismiss for Failure to State a Claim.\n\n\n West Headnotes (60)\n\n\n [1] Federal Civil Procedure\n A court may assume an incorporated document's contents are true for purposes of a motion to dismiss for failure to\n state a claim. Fed. R. Civ. P. 12(b)(6).\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 1\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 3 of 27\n2025 WL 2751076\n\n\n\n\n [2] Securities Regulation\n To make out a private claim for securities fraud, a plaintiff must adequately plead a plausible claim, meet heightened\n pleading standard applicable to claims of fraud, and plead falsity and scienter required by Private Securities Litigation\n Reform Act (PSLRA). Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(1) - (2); Fed. R. Civ. P. 8(a)\n (2), 9(b).\n\n\n\n [3] Fraud\n To satisfy the heightened pleading standard for fraud claims, a plaintiff must identify the time, place, and content\n of the alleged misrepresentations, as well as the circumstances indicating falseness or the manner in which the\n representations at issue were false and misleading. Fed. R. Civ. P. 9(b).\n\n\n\n [4] Fraud\n Allegations of fraud must be specific enough to give defendants notice of the particular misconduct which is alleged to\n constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything\n wrong. Fed. R. Civ. P. 9(b).\n\n\n\n [5] Fraud\n Private Securities Litigation Reform Act (PSLRA) requires that a complaint for securities fraud plead with particularity\n both falsity and scienter. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(1) - (2).\n\n\n\n [6] Federal Civil Procedure\n At the motion to dismiss stage, courts may not consider any material beyond the pleadings when assessing the\n sufficiency of a complaint. Fed. R. Civ. P. 12(b)(6).\n\n\n\n [7] Federal Civil Procedure\n Under doctrines of \u201cincorporation-by-reference\u201d and \u201cjudicial notice,\u201d courts may consider the contents of certain\n extrinsic documents without converting a motion to dismiss into a motion for summary judgment.\n\n\n\n [8] Federal Civil Procedure\n Pursuant to the judicially created \u201cincorporation-by-reference doctrine,\u201d courts may consider an external document\n to be part of the complaint itself if the plaintiff refers extensively to the document or the document forms the basis\n of the plaintiff's claim.\n\n\n\n [9] Federal Civil Procedure\n The incorporation-by-reference doctrine seeks to prevent plaintiffs from selecting only portions of documents that\n support their claims, while omitting portions of those very documents that weaken, or doom, their claims.\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 2\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 4 of 27\n2025 WL 2751076\n\n\n [10] Federal Civil Procedure\n It is improper to assume the truth of an incorporated document on a motion to dismiss for failure to state a claim if\n such assumptions only serve to dispute facts stated in a well-pleaded complaint. Fed. R. Civ. P. 12(b)(6).\n\n\n\n [11] Federal Civil Procedure\n District Court would incorporate by reference transcript of investor day meeting of high-end facial machine provider\n with analysts in assessing provider's motion to dismiss putative class action brought by purchasers of provider's\n securities for Securities Exchange Act violations, where purchasers referenced substance of investor day call\n extensively throughout complaint, and statements made during call formed basis of purchasers' claims of misleading\n statements or omissions. Securities Exchange Act of 1934 \u00a7\u00a7 10, 20, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78t(a).\n\n\n\n [12] Federal Civil Procedure\n District Court would incorporate by reference press release announcing first quarter financial results of high-end facial\n machine provider in assessing provider's motion to dismiss putative class action brought by purchasers of provider's\n securities for Securities Exchange Act violations, where purchasers referenced press release at multiple places in\n complaint and statements in press release formed basis of purchasers' claims of misleading statements. Securities\n Exchange Act of 1934 \u00a7\u00a7 10, 20, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78t(a).\n\n\n\n [13] Federal Civil Procedure\n District Court would incorporate by reference press release announcing third quarter financial results of high-end facial\n machine provider in assessing provider's motion to dismiss putative class action brought by purchasers of provider's\n securities for Securities Exchange Act violations, where press release was repeatedly referenced in purchasers'\n complaint and served as basis for their allegations of a stock price drop. Securities Exchange Act of 1934 \u00a7\u00a7 10, 20,\n 15 U.S.C.A. \u00a7\u00a7 78j(b), 78t(a).\n\n\n\n [14] Federal Civil Procedure\n District Court would decline to incorporate by reference press release announcing fourth quarter financial results of\n high-end facial machine provider in assessing provider's motion to dismiss putative class action brought by purchasers\n of provider's securities for Securities Exchange Act violations, where press release was referenced only a single time\n in the complaint and did not form the basis of any of purchasers' claims. Securities Exchange Act of 1934 \u00a7\u00a7 10, 20,\n 15 U.S.C.A. \u00a7\u00a7 78j(b), 78t(a).\n\n\n\n [15] Federal Civil Procedure\n Overuse and improper application of judicial notice and the incorporation-by-reference doctrine essentially amounts\n to unscrupulous use of extrinsic documents to resolve competing theories against the complaint.\n\n\n\n [16] Federal Civil Procedure\n Incorporating documents that are extensively referenced in the complaint to prevent plaintiffs from selecting only\n portions of documents that support their claims is the purpose of the incorporation-by-reference doctrine.\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 3\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 5 of 27\n2025 WL 2751076\n\n\n\n\n [17] Federal Civil Procedure\n Incorporation by reference of transcript of investor day meeting of high-end facial machine provider with analysts and\n press releases announcing quarterly financial results in assessing provider's motion to dismiss putative class action\n brought by purchasers of provider's securities for Securities Exchange Act violations was not an improper application\n of incorporation-by-reference doctrine amounting to unscrupulous use of extrinsic documents in resolving competing\n theories against the complaint, where incorporated documents were extensively referenced in complaint, incorporation\n of them prevented purchasers from selecting only portions of documents that supported their claims, which was very\n purpose of doctrine, and documents were being used to contextualize purchasers' statements. Securities Exchange Act\n of 1934 \u00a7\u00a7 10, 20, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78t(a).\n\n\n\n [18] Federal Civil Procedure\n A court may take judicial notice of matters of public record without converting a motion to dismiss into a motion for\n summary judgment. Fed. R. Evid. 201.\n\n\n\n [19] Federal Civil Procedure\n A court may not take judicial notice of disputed facts contained in public records. Fed. R. Evid. 201.\n\n\n\n [20] Securities Regulation\n Documents publicly filed with the Securities and Exchange Commission (SEC) are subject to judicial notice. Fed.\n R. Evid. 201.\n\n\n\n [21] Securities Regulation\n Documents showing historical stock prices are subject to judicial notice. Fed. R. Evid. 201.\n\n\n\n [22] Securities Regulation\n Analyst reports are subject to judicial notice. Fed. R. Evid. 201.\n\n\n\n [23] Federal Civil Procedure\n Accuracy is only part of the judicial notice inquiry, and courts must also consider and identify which fact or facts are\n being noticed. Fed. R. Evid. 201.\n\n\n\n [24] Federal Civil Procedure\n It is improper to judicially notice a document when the substance of the document is subject to varying interpretations,\n and there is a reasonable dispute as to what the document establishes. Fed. R. Evid. 201.\n\n\n\n [25] Federal Civil Procedure\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 4\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 6 of 27\n2025 WL 2751076\n\n While court may take judicial notice of undisputed matters of public record, it may not take notice of disputed facts\n stated in public records. Fed. R. Evid. 201.\n\n\n\n [26] Federal Civil Procedure\n Securities and Exchange Commission (SEC) filings should be considered in judicial notice context only for the\n purpose of determining what statements the documents contain, not to prove the truth of the documents' contents.\n Fed. R. Evid. 201.\n\n\n\n [27] Federal Civil Procedure\n While it is appropriate for a court to take judicial notice of the content of the Securities and Exchange Commission\n forms and the fact that they were filed with the agency, it is not appropriate to take judicial notice of the truth of the\n content. Fed. R. Evid. 201.\n\n\n\n [28] Securities Regulation\n District Court would take judicial notice of Securities and Exchange Commission (SEC) forms for purposes of\n assessing existence of those filings and their contents, as requested by high-end facial machine provider and its former\n executives at motion to dismiss stage of putative class action brought by purchasers of provider's securities alleging\n Securities Exchange Act violations. Securities Exchange Act of 1934 \u00a7\u00a7 10, 20, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78t(a); Fed.\n R. Evid. 201.\n\n\n\n [29] Securities Regulation\n District Court would decline to take judicial notice of Securities and Exchange Commission (SEC) forms for purposes\n of noticing truth of stock sales disclosed in forms so as to negate scienter requirement of Private Securities Litigation\n Reform Act (PSLRA), as requested by high-end facial machine provider and its former executives at motion to\n dismiss stage of putative class action brought by purchasers of provider's securities alleging Securities Exchange Act\n violations. Securities Exchange Act of 1934 \u00a7\u00a7 10, 20, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78t(a), 78u-4(b)(1) - (2); Fed.\n R. Evid. 201.\n\n\n\n [30] Securities Regulation\n To adequately allege a misrepresentation claim under the Securities Exchange Act, a plaintiff must allege: (1) a\n material misrepresentation or omission, or falsity; (2) made with scienter; (3) in connection with the purchase or sale\n of a security; (4) reliance on the misrepresentation or omission; (5) economic loss; and (6) loss causation. Securities\n Exchange Act of 1934 \u00a7 10, 15 U.S.C.A. \u00a7 78j(b).\n\n\n\n [31] Securities Regulation\n To establish scienter under the Private Securities Litigation Reform Act (SLRA), complaint must allege that the\n defendant made false or misleading statements with an intent to deceive, manipulate, or defraud, or with deliberate\n recklessness. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 5\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 7 of 27\n2025 WL 2751076\n\n\n [32] Securities Regulation\n \u201cDeliberate recklessness,\u201d upon which a plaintiff may rely in establishing scienter under the Private Securities\n Litigation Reform Act (SLRA), is an extreme departure from the standards of ordinary care which presents a danger\n of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been\n aware of it. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n [33] Securities Regulation\n In assessing whether securities fraud complaint gives rise to strong inference of scienter, as required by the Private\n Securities Litigation Reform Act (SLRA), courts must consider plausible, nonculpable explanations for defendant's\n conduct. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n [34] Securities Regulation\n In assessing whether securities fraud complaint gives rise to strong inference of scienter, as required by Private\n Securities Litigation Reform Act (SLRA), courts conduct dual inquiry, asking first whether any of plaintiff's\n allegations, standing alone, are sufficient to create strong inference of scienter, and if not, whether insufficient\n allegations combine to create strong inference of scienter. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7\n 78u-4(b)(2)(A).\n\n\n\n [35] Securities Regulation\n A securities fraud complaint will meet scienter requirement of Private Securities Litigation Reform Act (SLRA) only if\n a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference\n one could draw from the facts alleged. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n [36] Securities Regulation\n In assessing whether securities fraud complaint gives rise to strong inference of scienter, as required by Private\n Securities Litigation Reform Act (SLRA), courts must consider complaint in its entirety rather than looking to whether\n any individual allegation, scrutinized in isolation, meets that standard. Securities Exchange Act of 1934 \u00a7 21D, 15\n U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n [37] Securities Regulation\n Purchasers of high-end facial machine provider securities adequately alleged facts raising inference of deliberate\n recklessness of provider that was at least as compelling as any nonculpable explanation, and thus met requirement\n of pleading scienter under Private Securities Litigation Reform Act (PSLRA) at motion to dismiss stage of their\n putative class action against provider and its former executives alleging violations of Securities Exchange Act;\n complaint exhaustively identified timing and means through which defendants allegedly acquired knowledge about\n specific defects with provider's next generation facial machine, alleged that defendants nonetheless made repeated,\n specific, and unqualified representations of machine's success, including functionality, design, and customer feedback.\n Securities Exchange Act of 1934 \u00a7\u00a7 10, 20, 21D, 15 U.S.C.A. \u00a7\u00a7 78j(b), 78t(a), 78u-4(b)(2)(A).\n\n\n\n [38] Securities Regulation\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 6\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 8 of 27\n2025 WL 2751076\n\n Unusual or suspicious stock sales by corporate insiders may constitute circumstantial evidence of scienter, as\n requirement of Private Securities Litigation Reform Act (PSLRA) to adequately alleged securities fraud claim.\n Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n [39] Securities Regulation\n Scienter, as requirement of Private Securities Litigation Reform Act (PSLRA) to state claim for securities fraud, can\n be established even if the officers who made the misleading statements did not sell stock during the class period.\n\n\n\n [40] Securities Regulation\n A securities fraud complaint relying on statements from confidential witnesses must pass two hurdles to satisfy the\n requirement to plead scienter under the Private Securities Litigation Reform Act (PSLRA): (1) the confidential witness\n whose statements are introduced to establish scienter must be described with sufficient particularity to establish\n reliability and personal knowledge; and (2) statements which are reported by confidential witnesses with sufficient\n reliability and personal knowledge must themselves by indicative of scienter. Securities Exchange Act of 1934 \u00a7 21D,\n 15 U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n [41] Securities Regulation\n Confidential witnesses upon which purchasers of high-end facial machine provider securities relied in alleging scienter\n of provider and its former executives, as requirement of Private Securities Litigation Reform Act (PSLRA) for\n purchasers to state securities fraud complaint, were sufficiently reliable, where purchasers identified witnesses' job\n titles, duties, reporting structure, and dates of employment such that inferences could be made about the type of\n information that they would reasonably have been exposed to, and allegations from witnesses generally aligned with\n times that they were employed by provider and with types of information that individuals in those roles would be\n expected to learn. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n [42] Securities Regulation\n That some of the statements of confidential witnesses consist of inadmissible hearsay does not automatically disqualify\n those statements from consideration in determining scienter, as required by Private Securities Litigation Reform Act\n (PSLRA) for securities fraud claims. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)(2)(A).\n\n\n\n [43] Securities Regulation\n In assessing scienter, as requirement of Private Securities Litigation Reform Act (PSLRA) for securities fraud claims,\n District Court would not rely on confidential witness's assertion that real reason for moving returned products to\n warehouse was to hide those machines from auditor responsible for International Organization for Standardization\n (ISO) certification, in putative class action brought by purchasers of high-end facial machine provider securities\n alleging violations of Securities Exchange Act; complaint provided no basis for Court to infer that witness's personal\n knowledge of reason for moving returned products. Securities Exchange Act of 1934 \u00a7 21D, 15 U.S.C.A. \u00a7 78u-4(b)\n (2)(A).\n\n\n\n [44] Securities Regulation\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 7\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 9 of 27\n2025 WL 2751076\n\n Omission is materially misleading, for purposes of securities fraud claim, only if information has not already entered\n market.\n\n\n\n [45] Securities Regulation\n Under the \u201ctruth-on-the-market doctrine,\u201d where information has been made credibly available to the market by other\n sources, the failure to disclose material information may be excused from liability for securities fraud.\n\n\n\n [46] Securities Regulation\n Before truth-on-the-market doctrine can be applied in securities fraud action, defendants must prove that information\n that was withheld or misrepresented was transmitted to public with degree of intensity and credibility sufficient to\n effectively counterbalance any misleading impression created by insider's one-sided representations.\n\n\n\n [47] Securities Regulation\n Truth-on-the-market defense is available in principle but not at pleading stage of securities fraud action.\n\n\n\n [48] Securities Regulation\n Relevant inquiry in determining falsity of statements as basis of securities fraud claim is whether the statements were\n misleading in light of the circumstances under which they were made.\n\n\n\n [49] Securities Regulation\n Alleged statements of high-end facial machine provider and its executives were, at a minimum, misleading, as required\n for purchasers of provider's securities to state securities fraud claim, where alleged statements about customer feedback\n regarding provider's next-generation facial machine highlighted only positive feedback while omitting any reference\n to numerous issues and complaints with the machines. Securities Exchange Act of 1934 \u00a7 20, 15 U.S.C.A. \u00a7 78t(a).\n\n\n\n [50] Securities Regulation\n Many, if not most, of alleged claims of high-end facial machine provider and its officers regarding success of next-\n generation facial machine were not forward-looking, as required for \u201cbespeaks caution\u201d doctrine to foreclose securities\n fraud claims brought by purchasers of provider's securities, where purchasers alleged that provider issued numerous\n misleading statements about customer feedback, all of which referred to feedback that provider had already received,\n as well as statements about provider's flawless rollout of products, which referred to company's efforts since product\n launch, and provider's disclosure of general possibility of recall did not provide safe haven for subsequent allegedly\n misleading statements. Securities Exchange Act of 1934 \u00a7 20, 15 U.S.C.A. \u00a7 78t(a).\n\n\n\n [51] Securities Regulation\n Having chosen to speak on success of its next-generation facial machine, high-end facial machine provider and\n its officers were under an obligation to ensure that their statements were not misleading, contrary to provider\n and executives' assertions at motion to dismiss stage of securities fraud claim brought by purchasers of provider's\n securities; defendants contended that they had no affirmative obligation to disclose each and every glitch with next-\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 8\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 10 of 27\n2025 WL 2751076\n\n generation machine as it arose, but purchasers alleged that defendants made repeated and unqualified statements\n of product's success, creating misleading impression that its launch was flawless and that customer feedback was\n overwhelmingly positive. Securities Exchange Act of 1934 \u00a7 20, 15 U.S.C.A. \u00a7 78t(a).\n\n\n\n [52] Securities Regulation\n Purchasers of high-end facial machine provider securities adequately alleged that statements of provider and its\n executives were materially misleading, rather than non-actionable \u201cpuffery,\u201d at motion to dismiss stage of securities\n fraud action, where alleged statements were regarding next-generation facial machine of central importance to\n provider's profits, and purchasers alleged that defendants knew of thousands of customer complaints and returned\n machines. Securities Exchange Act of 1934 \u00a7 20, 15 U.S.C.A. \u00a7 78t(a).\n\n\n\n [53] Securities Regulation\n When valuing corporations, investors do not rely on vague statements of optimism, such as \u201cgood,\u201d \u201cwell-regarded,\u201d\n or other feel good monikers amounting to non-actionable \u201cpuffery.\u201d\n\n\n\n [54] Securities Regulation\n Professional investors, and most amateur investors as well, know how to devalue the optimism of corporate executives\n as non-actionable \u201cpuffery.\u201d\n\n\n\n [55] Securities Regulation\n Even general statements of optimism, when taken in context, may form a basis for a securities fraud claim when those\n statements address specific aspects of a company's operation that the speaker knows to be performing poorly.\n\n\n\n [56] Securities Regulation\n To show loss causation, securities fraud plaintiff must demonstrate causal connection between deceptive acts that form\n basis for claim of securities fraud and injury suffered by plaintiff.\n\n\n\n [57] Securities Regulation\n As long as the misrepresentation is one substantial cause of the investment's decline in value, other contributing\n forces will not bar recovery under the loss causation requirement for securities fraud claims but will play a role \u2018in\n determining recoverable damages.\n\n\n\n [58] Securities Regulation\n Loss causation in the securities fraud context is a matter of proof at trial and not to be decided on a motion to dismiss\n for failure to state a claim. Fed. R. Civ. P. 12(b)(6).\n\n\n\n [59] Securities Regulation\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 9\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 11 of 27\n2025 WL 2751076\n\n As long as securities fraud complaint alleges facts that, if taken as true, plausibly establish loss causation, dismissal\n for failure to state claim is inappropriate. Fed. R. Civ. P. 12(b)(6).\n\n\n\n [60] Securities Regulation\n Purchasers of high-end facial machine provider securities adequately alleged loss causation at motion to dismiss stage\n of securities fraud action against provider and its former executives, where purchasers contended that provider's stock\n price was artificially inflated by defendants' misleading statements about experiences with provider's next-generation\n facial machine, and that defendants' disclosure of product's issues were at least a substantial cause of subsequent drop\n in stock price. Securities Exchange Act of 1934 \u00a7 20, 15 U.S.C.A. \u00a7 78t(a).\n\n\n\n\nAttorneys and Law Firms\n\nPavithra Rajesh, Charles Henry Linehan, Robert Vincent Prongay, Glancy Prongay and Murray LLP, Los Angeles, CA, for\nPlaintiff.\n\nBrian M. Rostocki, Pro Hac Vice, Reed Smith LLP, Wilimington, DE, Charles P. Hyun, James L. Sanders, Katherine Goetz,\nReed Smith LLP, Los Angeles, CA, John C. Scalzo, Pro Hac Vice, Zachary B. Kaye, Pro Hac Vice, Reed Smith LLP, New\nYork, NY, for Defendants.\n\n\n\n ORDER DENYING DEFENDANTS\u2019 MOTION TO DISMISS\n PLAINTIFF'S SECOND AMENDED COMPLAINT [ECF NO. 67]\n\nSHERILYN PEACE GARNETT, UNITED STATES DISTRICT JUDGE\n\n *1 [1] Before the Court is the Motion to Dismiss the Consolidated Second Amended Class Action Complaint (ECF No.\n67 (\u201cMotion\u201d)) filed by Defendants Andrew Stanleick (\u201cStanleick\u201d), Liyuan Woo (\u201cWoo,\u201d or together with Stanleick, the\n\u201cIndividual Defendants\u201d), and the Beauty Health Company (\u201cBHC\u201d or the \u201cCompany\u201d; together with Stanleick and Woo,\n\u201cDefendants\u201d). The Court has read and considered the Motion and concluded that it is suitable for decision without oral\nargument. See Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15. Having considered the parties\u2019 submissions, the relevant law, and the\nrecord in this case, the Court DENIES the Motion.\n\n\nI. BACKGROUND\n\n A. Factual Background\nBHC is a business-to-business provider of high-end facial machines, known primarily for its \u201cHydraFacial\u201d brand machines\nused by spas and beauty parlors. (ECF No. 57 (\u201cSAC\u201d) \u00b6 2). BHC operates under a \u201crazor and blade\u201d business model, with\napproximately half of the Company's revenue coming from the sale of facial machines and half coming from the sale of\nconsumables used to operate the machines. (Id.). In March 2022, BHC launched \u201cSyndeo\u201d as its next generation HydraFacial\nmachine. (Id. \u00b6 5). BHC promised that Syndeo would provide more personalized skincare treatment through software that\ntracked client history and preferences. (Id.).\n\nLead Plaintiffs Priscilla Dijkgraaf and Martijn Dijkgraaf (\u201cPlaintiffs\u201d) are purchasers of BHC securities, who seek to lead a\npurported class of BHC investors. (Id. \u00b6 30). Plaintiffs allege that, during the period of May 10, 2022, to November 13, 2023,\n(the \u201cClass Period\u201d), BHC misled investors about the success of Syndeo by failing to disclose critical design flaws even while\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 10\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 12 of 27\n2025 WL 2751076\n\ntouting the product's success. (Id. at 8). Plaintiffs bring suit for compensatory damages under the Securities and Exchange Act\nSections 10(b) and 20(a), 15 U.S.C. \u00a7\u00a7 78j(b) and 78t(a). In addition to BHC, Plaintiffs name Woo and Stanleick\u2014the former\nCFO and CEO of the Company\u2014as Defendants.\n\nIn the SAC, Plaintiffs rely on information from six Former Employees (\u201cFE\u201d) of the Company. FE-1 was an employee of the\nCompany from early 2020 to May 2023, serving first in a managerial position reporting to the VP of Quality and Regulatory\nAffairs and, beginning in April 2022, serving as BHC's Director of Quality. (Id. \u00b6 36). FE-2 worked as a Capital Sales Manager\nfor BHC beginning in April 2023, selling Syndeo and other HydraFacial machines directly to customers in the field. (Id. \u00b6\u00b6\n38-39). FE-3 worked as the Director of Sales at BHC from June 2023 to November 2023. (Id. \u00b6 40). FE-4 worked as a Capital\nSales Manager from late 2020 until summer 2022. (Id. \u00b6 41). FE-5 was a Business Development Manager for HydraFacial for\nseveral years, including 2022 and 2023. (Id. \u00b6 42). FE-6 was a Senior Quality Assurance Manager from June 2023 to April\n2024, overseeing the management of HydraFacial's quality management system and coordinating internal audits. (Id. \u00b6 43).\nPlaintiffs also rely on information from a single Customer Witness (\u201cCW-1\u201d), who purchased a Syndeo in April 2022 and later\nstarted a Facebook group for Syndeo users to exchange troubleshooting techniques. (Id. \u00b6 45).\n\n*2 In the SAC, Plaintiffs allege the following:\n\n\n\n 1. Launch of Syndeo (May 2021 \u2013 March 2022)\n\nOn May 13, 2021, shortly after going public, BHC announced that it intended to bring its next generation HydraFacial system,\nknown as Syndeo, to market in the first half of 2022. (Id. \u00b6 56). The average retail price of Syndeo would be approximately\n$43,000, compared to a mid-$30,000 price range for previous systems. (Id. \u00b6 59). On January 20, 2022, BHC announced the\nappointment of Stanleick to serve as its President and CEO. (Id. \u00b6 60).\n\nBy the end of 2021, BHC's sales of consumables were contributing less to its overall revenues, dropping from 55.2% of net\nsales in fiscal year (\u201cFY\u201d) 2020 to 46.4% in FY 2021. (Id. \u00b6 62). This did not match BHC's business plan, which relied on the\nsale of high-margin consumables to be paired with the low-margin HydraFacial machines. (Id. \u00b6 64). One cause of the declining\nconsumables sales was that customers increasingly relied on lower-priced, generic serums, rather than Hydrafacial-branded\nserums and other consumables. (Id. \u00b6 66).\n\nSyndeo was designed to address this problem, accepting only specially shaped bottles and using RFID technology to reject\ngeneric consumables. (Id. \u00b6 67). Plaintiff alleges that, because of the pressures caused by declining consumables sales,\nDefendants rushed the launch of Syndeo, conducting only limited testing on employees, friends, family, and select customers\nin 2021 and early 2022. (Id. \u00b6 68). For example, during a sales meeting just before launch in early March 2022, FE-4 observed\nscreen glitching, which the Company acknowledged and said would be addressed. (Id. \u00b6 69). BHC announced the launch of\nSyndeo on March 7, 2022, touting Syndeo as \u201ca revolutionary new digitally connected device co-created with our HydraFacialist\ncommunity to meaningfully enhance the consumer and provider experience.\u201d (Id. \u00b6 71).\n\n\n\n 2. Syndeo 1.0 (March 2022 \u2013 July 2022)\n\nPlaintiffs allege that Syndeo was plagued with flaws from the time of its launch. First, Syndeo suffered from cosmetic problems,\nincluding fitment issues and blemishes. (Id. \u00b6 85). FE-1 estimates that these cosmetic problems were present in 30% of the early\nSyndeo systems. (Id. \u00b6 86). FE-1 indicates that customers were unhappy with these cosmetic issues both because of the high\nprice of Syndeo and because the machines were intended to be used in an area visible to clients. (Id. \u00b6 87). Plaintiffs allege\nthat the cosmetic issues resulted from Woo's decision to utilize China-based suppliers for parts as a \u201ccost play,\u201d and the SAC\nstates that Woo was repeatedly informed that the new design and suppliers were causing cosmetic issues. (Id. \u00b6\u00b6 85, 88). Rather\nthan addressing the design or supply issues, Woo told employees to simply replace any complained-of Syndeo machines with\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 11\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 13 of 27\n2025 WL 2751076\n\nnew machines. (Id. \u00b6 89). FE-1 states that the Company received \u201ca lot of complaints\u201d and that it \u201creplaced every machine, no\nquestions asked.\u201d (Id. \u00b6 90). In some cases, the new machines had the same cosmetic problems, resulting in multiple rounds of\nreplacements, including one customer who went through five machines due to cosmetic issues. (Id. \u00b6 91).\n\n *3 Second, BHC began receiving various complaints about functionality issues with the machines. CW-1 indicates that she\nreached out to BHC on April 26, 2022, about the Syndeo not drawing serum through the tube and the screen going blank or\nturning off on its own. (Id. \u00b6 92). FE-4 states that she probably became aware of a problem with the machines pulling too\nmuch solution by the end of March 2022, (id. \u00b6 70), and she states that she began receiving complaints in early April 2022 of\nvarious other issues, including screen issues and pieces falling off the machines, (Id. \u00b6 94). FE-4 estimates that she received\ncomplaints from approximately 85-90% of her customers and states that she reported these complaints to customer service,\nwhich tracked the complaints in an internal database. (Id.). FE-5 states that, as early as March or April 2022, FE-5 experienced\nproblems with the machine's software, including issues with suction and the machine not turning on. (Id. \u00b6 93). In response\nto these complaints, the Company would send out replacement devices, without conducting any quality control measures to\ninspect the replacements. (Id. \u00b6 96).\n\nThird, BHC learned in late April or early May 2022 that Syndeo systems suffered from a design flaw that caused the machines\nto routinely clog up, completely preventing use. (Id. \u00b6 97). Specifically, due to a change in the design contractor from prior\nHydraFacial machines, a channel in the manifold was designed to be too thin and had a membrane covering it. (Id. \u00b6\u00b6 97-98).\nFE-1 indicates that this issue came to light in April or May 2022 and that complaints increased significantly by May or June\n2022. (Id. \u00b6\u00b6 99-100). FE-1 estimated that by late June 2022, more than 20% and as many as 50% of machines were suffering\nfrom this issue. (Id. \u00b6 101). As with other issues, BHC's response was to immediately send out new machines to customers. (Id.\n\u00b6 102). FE-1 indicates that BHC had no mechanism for fixing the broken machines and that the Company preferred sending\nnew machines in order to maintain the revenue stream from consumables sales. (Id. \u00b6\u00b6 103-04).\n\nPlaintiffs allege that the Individual Defendants were aware of these issues. FE-1 indicates that information about the clogging\nissue was discussed during \u201cTiger Team\u201d meetings with Woo and in follow-up emails sent to BHC's executive officers. (Id. \u00b6\n107). Woo was also included on weekly \u201cSyndeo issues\u201d emails, consisting of weekly action-items. (Id.). FE-4 indicates that\nStanleick became personally involved as of June 2022. (Id. \u00b6 109). On June 14, 2022, Stanleick joined a meeting with FE-4's\nteam in which they discussed issues with Syndeo. (Id. \u00b6 111). After the meeting, FE-4 received an email from the Executive Vice\nPresident of Sales, indicating that he had \u201ctalked about [the meeting] at length\u201d with Stanleick and that Stanleick said that \u201cour\n#1 priority is to focus on Syndeo and getting it back on track; there is nothing that is more important for the organization.\u201d (Id.\n\u00b6 112). The VP also stated that Stanleick had scheduled a weekly meeting to \u201cunderstand issues, set dates and hold people\naccountable.\u201d (Id. \u00b6 113).\n\nBetween April and July 2022, BHC's operations and quality teams began working on potential design fixes for the clogging\nissue. (Id. \u00b6 120). FE-1, who worked on the quality team, stated that the operations team, led by Woo, steamrolled the quality\nteam and settled on a proposed fix that involved widening the manifold in the machines. (Id. \u00b6\u00b6 118-19). The quality team\nultimately approved the fix despite internal discomfort with the lack of testing. (Id. \u00b6 121). Woo and Stanleick attended at least\none meeting related to the new design tests prior to July 2022. (Id. \u00b6 123).\n\nDespite their awareness of cosmetic, functionality, and design issues with the Syndeo machines, Defendants made public\nstatements proclaiming the unqualified success of the launch. In a press release on May 10, 2022, Defendants touted the \u201chighly\nsuccessful launch of Syndeo\u201d and raised the Company's full-year guidance for net sales. (Id. \u00b6 282). In an earnings call the\nsame day, Stanleick referred to Syndeo as \u201ca revolutionary system that offers significant improvements,\u201d stated that he was\n\u201cthrilled by the strong early feedback we are receiving from the field,\u201d and emphasized that the sales team \u201cdid an amazing job\nexecuting on the first phase of the planned rollout.\u201d (Id. \u00b6\u00b6 286, 288). At a conference on June 19, 2022, Stanleick answered an\nanalyst's inquiry about Syndeo by describing it as a \u201cleap forward in technology\u201d and highlighting its \u201creally handy functional\nbenefits.\u201d (Id. \u00b6 292). Later, in response to a question about what he was most proud of, Stanleick stated that it was \u201cthe flawless\nglobal launch of Syndeo.\u201d (Id. \u00b6 293).\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 12\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 14 of 27\n2025 WL 2751076\n\n\n\n\n 3. Rollout of Syndeo 2.0 (July 2022 \u2013 January 2023)\n\n *4 In July 2022, BHC implemented its plan to begin producing \u201cSyndeo 2.0\u201d machines\u2014an internal designation used to refer\nto machines with the new manifold design and a software fix intended to correct the flow rate issue. (Id. \u00b6 125). Because of a\nlag time with manufacturers, the updated production did not occur until approximately September 2022. (Id. \u00b6 126). In addition\nto the new machines, the Syndeo 2.0 designation referred to a fix for existing machines in the field, which the Company began\nto implement in October 2022. (Id.).\n\nOn August 9, 2022, BHC issued its Q2 financial results, accompanied by a press release highlighting the Company's\n\u201c[e]xceptional results driven by acceleration of HydraFacial delivery system placements globally\u201d and the \u201cstrong demand for\nSyndeo.\u201d (Id. \u00b6 297). At an earnings call with investors, Stanleick again stated that the Syndeo rollout had been \u201ca tremendous\nsuccess\u201d and that, \u201c[h]aving visited with hundreds of providers and consumers across the US, there is an incredible enthusiasm\nfor our new Syndeo delivery system.\u201d (Id. \u00b6 299). Stanleick also indicated that \u201ccustomers are raving about the connected system\nand user experience,\u201d and he emphasized the \u201cpositive feedback we have with US customers.\u201d (Id. \u00b6 301). Later, during a Q&A\nwith analysts, Stanleick stated that the Company was \u201creally thrilled with the launch of Syndeo,\u201d that customer feedback \u201chas\nbeen very consistent,\u201d and that the Company had received \u201clearnings\u201d that Syndeo was \u201cbeautiful, it's connected[,] and it gives\na great user experience.\u201d (Id. \u00b6\u00b6 302-03).\n\nOn September 15, 2022, at an Investor Day conference with analysts, BHC published a presentation, in which it stated\nthat \u201cSyndeo's launch has been next level\u201d and highlighted Syndeo's \u201celevated design,\u201d \u201cenhanced ease-of use and intuitive\noperation,\u201d and \u201cconnected experience.\u201d (Id. \u00b6\u00b6 308-09). During the call, Stanleick emphasized the \u201cincredible enthusiasm\u201d\nfor Syndeo, highlighted the feedback from \u201csome of our delighted aestheticians,\u201d and stated that \u201cSyndeo represents a game\nchanger in ease of operation, design, and use for our aestheticians.\u201d (Id. \u00b6 311). Another BHC executive noted that the Company\nwas \u201chard at work enhancing, improving, and optimizing Syndeo in collaboration with our early adopter providers,\u201d but he\nindicated that \u201ccustomers love the new look\u201d and that Syndeo \u201cmakes their life so much easier.\u201d (Id. \u00b6\u00b6 312, 314).\n\nBy this time, BHC's liberal return policy meant that Syndeo machines had started to pile up in the Company's warehouse. (Id.\n\u00b6 147). FE-1 indicates that, by September or October 2022, the Company was storing approximately 2,000 \u2013 3,000 returned\nSyndeo machines. (Id. \u00b6 147). Woo toured the warehouse several times and saw the disorganized state of the returned Syndeos.\n(Id. \u00b6 151). Around this time, BHC's warehouse was inspected as part of an audit by BSI, a private company responsible for\nInternational Organization for Standardization (\u201cISO\u201d) certification. (Id. \u00b6 147). In advance of the audit, BHC rented an adjacent\nbuilding and stored the returned Syndeos there, which FE-1 asserts was done \u201cto hide the machines from BSI.\u201d (Id. \u00b6\u00b6 148-49).\n\nIn September or October 2022, Stanleick and Woo attended the Company's annual management review meetings, at which issues\nwith Syndeo were discussed. (Id. \u00b6\u00b6 141-42). Stanleick and Woo also received copies of the management review report, which\ndetailed the number and type of complaints that the Company had received. (Id. \u00b6\u00b6 143-44). FE-1 indicates that the report would\nhave mentioned that approximately 30% of complaints related to cosmetic issues and 20% related to flow issues. (Id. \u00b6 144).\n\n *5 While Syndeo 2.0 was initially viewed as a success, the problems soon returned. (Id. \u00b6 165). By late October or November\n2022, complaints about clogging began to reach a critical mass. (Id. \u00b6 166). In addition, the Company began receiving new\ncomplaints that the larger channel manifold caused some machines to use too much serum; rather than getting the advertised\nfifteen treatments per bottle of serum, some customers reported getting only five to six treatments per bottle, significantly cutting\ntheir profit margin. (Id. \u00b6\u00b6 167, 215). Additionally, cosmetic issues continued, including reports of front panels falling off. (Id.\n\u00b6 172). According to FE-1, around 20% of customers continued to experience issues with the Syndeo 2.0 machines. (Id. \u00b6 169).\nDespite the issues, BHC continued selling the machines and offering replacements upon receiving complaints. (Id. \u00b6\u00b6 170-71).\nWoo was apprised of these issues through the Tiger Team process and related emails. (Id. \u00b6\u00b6 172-73). Stanleick and other BHC\nexecutives also acknowledged Syndeo 2.0 issues at sales meetings and quarterly calls. (Id. \u00b6 174).\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 13\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 15 of 27\n2025 WL 2751076\n\n\nOn November 8, 2022, BHC issued a press release indicating strong sales \u201cdriven by solid demand for Syndeo.\u201d (Id. \u00b6 318).\nDuring an earnings call the same day, Stanleick indicated that the Company was \u201cseeing absolutely no slowdown,\u201d and Woo\nstated that consumer \u201csentiment seems to be strong.\u201d (Id. \u00b6\u00b6 320-21). Stanleick summed up the positive indications, stating,\n\u201csix months since the launch of Syndeo, and we couldn't be happier with the rollout.\u201d (Id. \u00b6 322).\n\nIn late 2022 or early 2023, BHC learned that one of its subcontractors was using an unauthorized computer chip for Syndeo\nthat caused some machines to be inoperable. (Id. \u00b6 187). While the problem impacted only a select number of machines, BHC\nincurred significant costs in hiring technicians to individually fix the machines. (Id. \u00b6 189).\n\n\n\n 4. Continued Issues with Syndeo 2.0 and Disclosure of Syndeo 1.0 Issues (February 2023 \u2013 July 2023)\n\nBy February 2023, CW-1 had received four or five replacement Syndeo machines. (Id. \u00b6 190). Due to her frustrations with the\nmalfunctions, she created a Facebook group for other Syndeo users. (Id.). The Facebook group was active from approximately\nFebruary to April 2023 and grew to approximately 900 members. (Id. \u00b6 191). BHC customers posted numerous complaints in\nthe Facebook group about Syndeo machines. (Id. \u00b6\u00b6 192-95). Stanleick became aware of the group and reached out to CW-1 to\nspeak with her. (Id. \u00b6 196). Stanleick and CW-1 spoke over the phone on February 10, 2023, and March 16, 2023, with CW-1\ndescribing the conversations as \u201cheated.\u201d (Id. \u00b6\u00b6 196-97). Stanleick also communicated with CW-1 over text. (Id. \u00b6\u00b6 199-200).\nIn April 2023, the group was removed by Facebook for trademark infringement, and CW-1 was banned from HydraFacial's\nofficial Facebook page. (Id. \u00b6 201).\n\nIn a February 27, 2023, press release, BHC made its first disclosure about issues with Syndeo 1.0, stating that the Company had\nincurred \u201c$2.4 million in non-recurring Syndeo initial program logistics and services costs.\u201d (Id. \u00b6 203). On an earnings call that\nday, Woo acknowledged the $2.4 million charge but characterized the expense as a \u201cone time program.\u201d (Id. \u00b6 208). Stanleick\nagain referred to Syndeo's \u201chighly successful US launch\u201d but acknowledged that the Company was \u201clearning how to improve\nthe system and the software ... based on provider feedback.\u201d (Id. \u00b6\u00b6 205, 209). When asked about what the Company had learned,\nStanleick declined to provide specific information, stating, \u201cI think in the coming quarters, we'll share more insights with you\non what we're learning.\u201d (Id. \u00b6 209). BHC followed this up with a March 30, 2023, press release announcing the international\nlaunch of Syndeo, which stated that \u201cSyndeo has been embraced by HydraFacial's consumer and provider community in the\nUS\u201d and highlighted Syndeo's \u201cupgraded connected functionality and elegant design.\u201d (Id. \u00b6 211).\n\nSyndeo continued to face issues with performance and high levels of returns throughout the first half of 2023. FE-2 indicated\nthat even before starting at the Company in April 2023, they learned of systematic performance issues. (Id. \u00b6 213). Upon starting\nat the Company, FE-2 heard from clients that Syndeo overconsumed serums. (Id. \u00b6 214). FE-1 indicates that, by May 2023, the\nCompany had received more than 5,000 returned Syndeo machines out of approximately 10,000 total sales. (Id. \u00b6 222). FE-6\nstates that, upon joining the Company in June 2023, they saw thousands of returned Syndeos in storage and viewed more than\n5,000 documented customer complaints. (Id. \u00b6\u00b6 223-24).\n\n *6 Even so, in a May 10, 2023, press release, BHC announced net sales increases and raised its sales projections based on\n\u201cstrong Syndeo traction globally.\u201d (Id. \u00b6 341). During an earnings call the same day, Stanleick indicated that the Company\n\u201cexpect[ed] growth to continue\u201d and touted \u201cstrong Syndeo traction.\u201d (Id. \u00b6\u00b6 342-43). During a May 2023 podcast interview,\nStanleick proclaimed that Syndeo's launch had \u201cbeen a tremendous success\u201d and stated that the launch of Syndeo was \u201cat the\nheart of\u201d the Company's success over the previous years. (Id. \u00b6 347). At a June 6, 2023, conference, Stanleick again referred\nto the launch of Syndeo as \u201ca great success\u201d and emphasized that the Company was \u201ctesting and learning, improving the\ndevice.\u201d (Id. \u00b6\u00b6 351-52).\n\nWithin the Company, issues with Syndeo were spoken about frequently. FE-3 indicates that, while being interviewed, FE-3\nlearned about numerous issues with Syndeo. (Id. \u00b6 227). The Company brought on a new Chief Operating Officer to assess the\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 14\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 16 of 27\n2025 WL 2751076\n\nclogging issue and devise a solution. (Id.). In July 2023, the Company held a mid-year global sales meeting, which Stanleick\nattended, at which Syndeo clogging issues were discussed and the Company presented a plan for converting new and existing\nunits. (Id. \u00b6\u00b6 228-29). FE-2 reports that Stanleick spoke openly about problems with Syndeo during the meeting. (Id. \u00b6 230). In\nAugust 2023, BHC held a company conference call, led by Stanleick, in which it was announced that the Company would hire\ntwo outside engineering firms to deploy upgrades to the Syndeo machines. (Id. \u00b6 231). FE-3 states that the engineering firms\nwere unable to solve the issues and ended up being fired by November 2023. (Id. \u00b6 236).\n\n\n\n 5. The Disclosures (August 2023 \u2013 November 2023)\n\nOn August 9, 2023, BHC issued a press release reporting a sharp decrease in gross margin, which it attributed to \u201can increase in\nsales of lower margin refurbished systems ... and the sell-through of higher cost inventory.\u201d (Id. \u00b6 239). The Company pointed to\n\u201ca tightening credit environment\u201d and \u201cU.S. providers await[ing] Syndeo enhancements in the third quarter of 2023 to improve\nthe user experience.\u201d (Id.). In its quarterly report, BHC disclosed that it \u201claunched a voluntary initiative to replac[e] certain\ncomponentry in previously manufactured Syndeo delivery systems to increase resistance to inadvertent clogging,\u201d which was\n\u201cexpected to result in approximately $5 million in expense during the third quarter.\u201d (Id. \u00b6 248). On the same day, the Company\nannounced that Woo had been let go in an \u201cinvoluntary separation without cause\u201d and would be replaced by a new CFO the\nfollowing day. (Id. \u00b6 241).\n\nIn an earnings call the same day, the Company gave a presentation in which it identified Syndeo as the driver for the reduced\ngross margin and referred to \u201cteething issues\u201d with the product. (Id. \u00b6 242). Stanleick described the same \u201cteething issues\u201d but\nstated that the Company had \u201cidentified simple component upgrades to enhance the system's durability.\u201d (Id. \u00b6 243). Stanleick\nindicated that other projects intended to expand gross margin had been delayed as the Company \u201cdedicated resources to manage\nSyndeo's teething issues.\u201d (Id. \u00b6 245). During the subsequent Q&A, Stanleick divulged that \u201cpart of the teething issues were\nsoftware-related\u201d and part were \u201cuser experience and hardware.\u201d (Id. \u00b6 246). Specifically, Stanleick stated that the software\nissues were \u201crelated to forcing rinse cycle ... because we're finding that some of the first generations had some residue build-\nup and blockage and other ones were simply simple component upgrades.\u201d (Id.). Stanleick described the gross margin issues\nas \u201ctemporary\u201d and stated that the Company had a \u201cfix in place.\u201d (Id. \u00b6 247).\n\n *7 Following these disclosures, the Company's stock price fell modestly by $0.41, or 5.4%, per share. (Id. \u00b6 250). On September\n12, 2023, BHC reaffirmed its sales projections for the following year and disclosed a plan to reduce $35 million in costs and\nbuy back up to $100 million of its common stock. (Id. \u00b6 252). This news caused the stock price to shoot up by more than\n24%. (Id. \u00b6 198).\n\nOn November 13, 2023, BHC issued a press release announcing \u201c$63.1 million in restructuring charges related to device\nupgrades of early generation Syndeo devices.\u201d (Id. \u00b6 256). The press release stated that the continued challenges with the Syndeo\nsystem had led the Company to declare all 1.0 and 2.0 Syndeo systems to be obsolete. (Id. \u00b6 206). From then on, the Company\nannounced, it would only be selling the new 3.0 system and would offer existing customers the opportunity to upgrade their\nolder models. (Id.). The Company also stated that Stanleick would be departing from the Company effective November 19,\n2023. (Id. \u00b6 259).\n\nIn the subsequent earnings call, BHC admitted that \u201cmany mistakes were made with regard to Syndeo,\u201d leading the company\nto take \u201ctough actions.\u201d (Id. \u00b6 260). The Company described the decline in performance as being \u201clargely a result of provider\nexperience issues with Syndeo in the U.S.\u201d (Id. \u00b6 261). The Company disclosed that Syndeo 1.0 had \u201can issue with low flow\nand clogs\u201d and that, despite efforts to fix these issues in Syndeo 2.0, \u201cmany of the issues continued to persist.\u201d (Id. \u00b6 262).\nHowever, the Company stated that it was \u201cvery pleased\u201d with the performance of Syndeo 3.0 devices and that these devices\nhad \u201ca return rate in line with HydraFacial's low historical benchmark.\u201d (Id.).\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 15\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 17 of 27\n2025 WL 2751076\n\nFollowing the news, BHC's share price fell by 64.3%. (Id. \u00b6 269). In a survey of the Company's customers conducted afterwards\nby an outside analyst, 74% indicated that they had experienced issues with Syndeo. (Id. \u00b6 271). In subsequent earnings calls,\nthe Company revealed that, while the core issues with earlier versions were resolved with Syndeo 3.0, the newest version still\nhas certain functionality issues. (Id. \u00b6 277). The Company's share price continues to trade at levels far below the pre-disclosure\nbaseline. (Id.). In April 2024, BHC disclosed that it was the subject of an SEC investigation. (Id. \u00b6 279).\n\n\n B. Procedural History\nOn November 16, 2023, the named plaintiff filed a class action suit alleging that the Company's disclosures were materially false\nor misleading. (ECF No. 1 \u00b6 7). On January 16, 2024, three individuals filed motions seeking appointment as lead plaintiff for\nthe putative class. See (ECF Nos. 14, 16, 19). On May 2, 2024, the Court granted the motion of Priscilla and Martijn Dijkgraaf\nand designated them as lead plaintiffs. (ECF No. 31). Plaintiffs then filed the consolidated and amended complaint on July 1,\n2024. (ECF No. 39). Defendants filed a motion to dismiss the consolidated complaint on September 30, 2024. (ECF No. 45).\nOn January 8, 2025, just before the hearing on Defendants\u2019 motion, the parties stipulated to vacate the hearing, withdraw the\nmotion, and briefly stay the case to complete private mediation. (ECF Nos. 51, 53). On April 14, 2025, the parties filed a status\nupdate, indicating that mediation had been unsuccessful. (ECF No. 55). The Court set a schedule for the filing of an amended\ncomplaint and for briefing on a renewed motion to dismiss. (ECF No. 56).\n\n *8 Plaintiffs filed the SAC on May 5, 2025. (SAC). Defendants filed the instant Motion on July 11, 2025, (Mot.), along with\na request for judicial notice of certain documents, (ECF No. 68 (\u201cRJN\u201d)). On August 11, 2025, Plaintiffs filed oppositions to\nthe Motion, (ECF No. 69 (\u201cOpposition\u201d)), and the request for judicial notice, (ECF No. 70 (\u201cOpp. to RJN\u201d)). On September 2,\n2025, Defendants replied in support of the Motion, (ECF No. 74 (\u201cReply\u201d)), and the request for judicial notice, (ECF No. 75).\n\n\nII. LEGAL STANDARD\n [2] To make out a private claim for securities fraud, a Plaintiff must satisfy three requirements. Reese v. BP Expl. (Alaska) Inc.,\n643 F.3d 681, 690-91 (9th Cir. 2011). First, consistent with Rule 8(a)(2), a plaintiff must provide \u201ca short and plain statement of\nthe claim showing that the pleader is entitled to relief,\u201d Fed. R. Civ. P. 8(a)(2), alleging \u201cenough facts to state a claim to relief\nthat is plausible on its face,\u201d Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). \u201cA claim\nhas facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the\ndefendant is liable for the misconduct alleged.\u201d Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).\nIn ruling on such a motion, the Court must \u201caccept all factual allegations in the complaint as true.\u201d Tellabs, Inc. v. Makor Issues\n& Rts., Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). However, the Court is \u201cnot required to accept as true\nallegations that contradict exhibits attached to the Complaint,\u201d allegations that contradict \u201cmatters properly subject to judicial\nnotice, or allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.\u201d Seven Arts Filmed\nEnt., Ltd. v. Content Media Corp. PLC, 733 F.3d 1251, 1254 (9th Cir. 2013) (internal quotation marks and citation omitted).\n\n [3] [4] Second, a plaintiff must satisfy the heightened pleading standard of Federal Rule of Civil Procedure 9(b), requiring\nthat fraud claims \u201cstate with particularity the circumstances constituting fraud or mistake.\u201d Fed. R. Civ. P. 9(b). To meet\nthis standard, a plaintiff must identify \u201cthe time, place, and content of [the] alleged misrepresentation[s],\u201d as well as the\n\u201ccircumstances indicating falseness\u201d or \u201cthe manner in which the representations at issue were false and misleading.\u201d In re\nGlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547-48 (9th Cir. 1994) (internal quotation marks, citation, and alterations omitted);\nsee also Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (\u201cRule 9(b) requires a party to state with\nparticularity the circumstances constituting fraud or mistake, including the who, what, when, where, and how of the misconduct\ncharged.\u201d (internal quotation marks and citation omitted)). Those allegations \u201cmust be specific enough to give defendants notice\nof the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not\njust deny that they have done anything wrong.\u201d Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (citation omitted).\nAlthough the circumstances of the alleged fraud must be alleged with specificity, knowledge \u201cmay be alleged generally.\u201d Fed.\nR. Civ. P. 9(b).\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 16\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 18 of 27\n2025 WL 2751076\n\n [5] Finally, a plaintiff must satisfy the additional requirements of the Private Securities Litigation Reform Act of 1995 (PSLRA),\nwhich \u201crequire[s] that a complaint plead with particularity both falsity and scienter.\u201d Zucco Partners, LLC v. Digimarc Corp.,\n552 F.3d 981, 990 (9th Cir. 2009) (citation omitted). Under the PSLRA, a complaint must (1) \u201cspecify each statement alleged to\nhave been misleading [and] the reason or reasons why the statement is misleading,\u201d and (2) \u201cstate with particularity facts giving\nrise to a strong inference that the defendant acted with the required state of mind.\u201d 15 U.S.C. \u00a7 78u-4(b)(1) \u2013 (2) (emphasis\nadded).\n\n\nIII. REQUEST FOR JUDICIAL NOTICE\n *9 [6] [7] Generally, at the motion to dismiss stage, courts may not consider any material beyond the pleadings when\nassessing the sufficiency of a complaint under Federal Rule of Civil Procedure 12(b)(6). See Lee v. City of Los Angeles, 250\nF.3d 668, 688 (9th Cir. 2001) (\u201c[R]eview is limited to the complaint.\u201d (citation omitted)). If a court considers such extrinsic\nevidence, \u201cthe motion must be treated as one for summary judgment under Rule 56\u201d and \u201c[a]ll parties must be given a reasonable\nopportunity to present all the material that is pertinent to the motion.\u201d Fed. R. Civ. P. 12(d). However, under the doctrines\nof incorporation-by-reference and judicial notice, courts may consider the contents of certain extrinsic documents \u201cwithout\nconverting the motion to dismiss into a motion for summary judgment.\u201d Lee, 250 F.3d at 688.\n\n\n A. Incorporation by Reference\n [8] [9] [10] First, pursuant to the \u201cjudicially created\u201d incorporation-by-reference doctrine, courts may consider an external\ndocument to be \u201cpart of the complaint itself\u201d if \u201cthe plaintiff refers extensively to the document or the document forms the basis\nof the plaintiff's claim.\u201d Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1002 (9th Cir. 2018) (citation omitted). The doctrine\nseeks to prevent \u201cplaintiffs from selecting only portions of documents that support their claims, while omitting portions of those\nvery documents that weaken\u2014or doom\u2014their claims.\u201d Id. A court may also \u201cassume an incorporated document's contents are\ntrue for purposes of a motion to dismiss under Rule 12(b)(6).\u201d Id. at 1003 (alterations and citation omitted). However, \u201cit is\nimproper to assume the truth of an incorporated document if such assumptions only serve to dispute facts stated in a well-\npleaded complaint.\u201d Id.\n\nDefendants request that the Court incorporate four documents referenced in the Complaint: (1) Exhibit 5, a transcript of the\nCompany's Investor Day meeting with analysts on September 15, 2022; (2) Exhibit 6, a press release announcing the Company's\nQ4 2022 financial results; (3) Exhibit 10, a press release announcing the Company's Q1 2023 financial results; and (4) Exhibit\n13, a press release announcing the Company's Q3 2023 financial results. (RJN at 2-3). Plaintiffs oppose the incorporation of\nthese documents and argue that Defendants seek to use the documents for the improper purpose of undermining well-pleaded\nfactual allegations in the Complaint. (Opp. to RJN at 2-5).\n\n [11] [12] [13] [14] The Court concludes that Exhibits 5, 10, and 13 may be incorporated by reference. Plaintiffs reference\nthe substance of the Investor Day call extensively throughout the SAC, and statements made during the Investor Day call form\nthe basis of Plaintiffs\u2019 claims of misleading statements or omissions from September 15, 2022. See (SAC \u00b6\u00b6 307-14). Similarly,\nPlaintiffs reference Exhibit 10 at multiple places in the SAC, and statements in the Exhibit form the basis of Plaintiffs\u2019 claims of\nmisleading statements on May 10, 2023. See (id. \u00b6\u00b6 217, 341). Exhibit 13 is also repeatedly referenced in the SAC and serves as\nthe basis for Plaintiffs\u2019 allegations of a stock price drop. See (id. \u00b6\u00b6 256-58). Exhibit 6, however, is referenced only a single time\nin the SAC, (id. \u00b6 203), and does not form the basis of any of Plaintiffs\u2019 claims, so the Court will not incorporate it by reference.\nSee Khoja, 899 F.3d at 1003 (\u201cFor \u2018extensively\u2019 to mean anything ..., it should, ordinarily at least, mean more than once.\u201d).\n\n [15] [16] [17] In incorporating these documents, the Court is cognizant of the Ninth Circuit's warning in Khoja against\n\u201c[t]he overuse and improper application of judicial notice and the incorporation-by-reference doctrine\u201d that essentially amounts\nto \u201cunscrupulous use of extrinsic documents to resolve competing theories against the complaint.\u201d Id. at 998. But incorporating\ndocuments that are extensively referenced in the Complaint to prevent \u201cplaintiffs from selecting only portions of documents\nthat support their claims\u201d is the very purpose of the incorporation-by-reference doctrine. Id. at 1002. Because these documents\nwere extensively referenced in the SAC, they are being used to contextualize Plaintiffs\u2019 statements rather than merely to create\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 17\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 19 of 27\n2025 WL 2751076\n\na defense to the allegations in the SAC. See In re Sentinelone, Inc. Sec. Litig., No. 23-cv-02786-HSG, 2024 WL 3297150, at *2\n(N.D. Cal. July 2, 2024) (\u201cAlthough the truth of an incorporated document may not be considered solely to dispute well-pled\nfacts, the Court need not accept as true conclusory allegations that are contradicted by documents referenced in the complaint.\u201d).\n\n\n B. Judicial Notice\n *10 [18] [19] Second, judicial notice under Federal Rule of Evidence 201 authorizes courts to notice an adjudicative fact\nif it is \u201cnot subject to reasonable dispute.\u201d Fed. R. Evid. 201(b). A fact is \u201cnot subject to reasonable dispute\u201d if it is \u201cgenerally\nknown,\u201d or \u201ccan be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.\u201d Fed. R.\nEvid. 201(b)(1), (2). Accordingly, \u201c[a] court may take judicial notice of matters of public record without converting a motion\nto dismiss into a motion for summary judgment.\u201d Lee, 250 F.3d at 689 (internal quotation marks and citation omitted). A court,\nhowever, may not \u201ctake judicial notice of disputed facts contained in such public records.\u201d Khoja, 899 F.3d at 999.\n\nDefendants request that the Court take judicial notice of Exhibits 1-4 and 6-13, which are all documents filed by the Company\nwith the SEC between the dates of May 21, 2021, and November 12, 2023. (RJN at 7). Defendants also request judicial notice\nof Exhibit 14\u2014an excerpt of a chart from Yahoo! Finance showing data related to the Company's common stock\u2014and Exhibits\n15 and 16\u2014analyst reports published on September 15, 2022, and August 9, 2023. (Id. at 8). Plaintiffs argue that judicial notice\nof these documents is inappropriate because they were not cited in the SAC and are being used to support competing theories\nagainst the SAC. (Opp. to RJN at 6).\n\n [20] [21] [22] As an initial matter, it is clear that all of the Exhibits \u201ccan be accurately and readily determined from sources\nwhose accuracy cannot reasonably be questioned.\u201d Fed. R. Evid. 201(b). Documents publicly filed with the SEC are subject to\njudicial notice. See, e.g., Waterford Twp. Police v. Mattel, Inc., 321 F. Supp. 3d 1133, 1143 (C.D. Cal. 2018); In re Aqua Metals,\nInc. Sec. Litig., No. 17-cv-07142-HSG, 2019 WL 3817849, at *5 (N.D. Cal. Aug. 14, 2019). The same is true for documents\nshowing historical stock prices, see, e.g., Sentinelone, Inc. Sec. Litig., 2024 WL 3297150, at *3; Kampe v. Volta Inc., No. 4:22-\ncv-2055-JST, 2024 WL 308262, at *7 (N.D. Cal. Jan. 26, 2024), and analyst reports, see, e.g., In re Amgen Inc. Sec. Litig., 544\nF. Supp. 2d 1009, 1023-24 (C.D. Cal. 2008); Waterford Twp. Police, 321 F. Supp. 3d at 1144.\n\n [23] [24] [25] However, \u201caccuracy is only part of the inquiry under Rule 201(b)\u201d and courts \u201cmust also consider\u2014and\nidentify\u2014which fact or facts\u201d are being noticed. Khoja, 899 F.3d at 999. \u201cIt is improper to judicially notice a [document] when\nthe substance of the [document] is subject to varying interpretations, and there is a reasonable dispute as to what the [document]\nestablishes.\u201d Id. at 1000 (internal quotation marks and citation omitted). While a court may \u201ctake judicial notice of undisputed\nmatters of public record,\u201d it may not take notice of \u201cdisputed facts stated in public records.\u201d Lee, 250 F.3d at 690.\n\n [26] [27] [28] [29] For Exhibits 1-4 and 6-13, Defendants ask that the Court take notice of \u201cwhat statements the documents\ncontain\u201d and of the existence of stock sales disclosed in SEC Forms 4. (RJN at 7). SEC filings \u201cshould be considered only for\nthe purpose of determining what statements the documents contain, not to prove the truth of the documents\u2019 contents.\u201d Troy\nGrp., Inc. v. Tilson, 364 F. Supp. 2d 1149, 1152 (C.D. Cal. 2005) (citation omitted). Thus, while it \u201cis appropriate for the court\nto take judicial notice of the content of the SEC Forms 4 and the fact that they were filed with the agency,\u201d it is not appropriate\nto take judicial notice of \u201c[t]he truth of the content.\u201d Patel v. Parnes, 253 F.R.D. 531, 546 (C.D. Cal. 2008); see also Maiman\nv. Talbott, No. SACV 09-0012 AG (ANx), 2010 WL 11421950, at *7 (C.D. Cal. Aug. 9, 2010) (\u201c[W]hile it may be appropriate\nto judicially notice the existence of SEC filings and their contents, judicial notice should not be taken of the truth of their\ncontents.\u201d). To the extent Defendants request judicial notice of the existence of these SEC filings and their contents, the request\nis granted. However, to the extent they ask the Court to notice the truth of the stock sales disclosed in the SEC Forms 4 for\npurposes of negating scienter, the request is denied.\n\n *11 For Exhibit 14, Defendants ask that the Court take judicial notice of the Company's historical stock price. While it is\nnot clear what purpose Defendants seek to use this information for since Exhibit 14 is not cited in the Motion, the Court will\nnevertheless take judicial notice purely of the fact of the stock price. See Okla. Firefighters Pension & Ret. Sys. v. Ixia, 50 F.\nSupp. 3d 1328, 1349 (C.D. Cal. 2014) (\u201cBecause [publicly] traded companies historical stock prices can be readily ascertained\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 18\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 20 of 27\n2025 WL 2751076\n\nand those prices are not subject to reasonable dispute, courts routinely take judicial notice of them.\u201d). Finally, as to Exhibits\n15 and 16, Defendants seek to use these analyst reports to argue that the market was aware of certain issues with Syndeo. See\n(Mot. at 35). Defendants assert that they intend to use the documents solely to determine what information was disclosed, not\nfor the truth of the matter asserted. (RJN at 8). As other courts have done, the Court will notice the analyst reports for this\nlimited purpose. See, e.g., In re Regulus Therapeutics Inc. Sec. Litig., 406 F. Supp. 3d 845, 855 (S.D. Cal. 2019) (taking notice\nof analyst reports \u201cnot in order to take notice of the truth of the matters asserted therein, but in order to determine what may\nor may not have been disclosed to the public\u201d).\n\n\nIV. DISCUSSION\n [30] To state a claim for a violation of Section 10(b) of the Exchange Act, 15 U.S.C. \u00a7 78j(b), a plaintiff must allege \u201c(1)\na material misrepresentation or omission (\u2018falsity\u2019), (2) made with scienter, (3) in connection with the purchase or sale of a\nsecurity, (4) reliance on the misrepresentation or omission, (5) economic loss, and (6) loss causation.\u201d In re Genius Brands Int'l,\nInc. Sec. Litig., 97 F.4th 1171, 1180 (9th Cir. 2024). In the Motion, Defendants contest the adequacy of the allegations as to\nscienter, falsity, and loss causation. The Court will consider each of these arguments in turn.\n\n\n A. Scienter\n [31] [32] To establish scienter under the PSLRA, a plaintiff must \u201cstate with particularity facts giving rise to a strong inference\nthat the defendant acted with the required state of mind.\u201d 15 U.S.C. \u00a7 78u-4(b)(2)(A). To meet this standard, \u201ca complaint\nmust allege that the defendant made false or misleading statements with an intent to deceive, manipulate, or defraud, or with\ndeliberate recklessness.\u201d Prodanova v. H.C. Wainwright & Co., LLC, 993 F.3d 1097, 1106 (9th Cir. 2021) (internal quotation\nmarks and citation omitted). Deliberate recklessness is \u201can extreme departure from the standards of ordinary care ... which\npresents a danger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have\nbeen aware of it.\u201d Id. (citation omitted).\n\n [33] [34] [35] [36] In assessing whether a complaint gives rise to a \u201cstrong inference\u201d of scienter, courts \u201cmust consider\nplausible, nonculpable explanations for the defendant's conduct.\u201d Tellabs, 551 U.S. at 324, 127 S.Ct. 2499. \u201cA complaint\nwill survive ... only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any\nopposing inference one could draw from the facts alleged.\u201d Id. In assessing this question, courts \u201cmust consider the complaint\nin its entirety\u201d rather than looking to \u201cwhether any individual allegation, scrutinized in isolation, meets that standard.\u201d Id. at\n322-33, 127 S.Ct. 2499. Under Ninth Circuit precedent, courts conduct a dual inquiry, asking first \u201cwhether any of the plaintiff's\nallegations, standing alone, are sufficient to create a strong inference of scienter,\u201d and if not, \u201cwhether the insufficient allegations\ncombine to create a strong inference\u201d of scienter. Zucco Partners, 552 F.3d at 992.\n\n [37] The Court concludes that the SAC contains sufficient factual allegations such that an inference of deliberate recklessness is\nat least as compelling as any nonculpable explanation. As detailed above, the SAC exhaustively identifies the timing and means\nthrough which Defendants allegedly acquired knowledge about specific defects with Syndeo. The SAC alleges that, despite their\nknowledge about the many issues plaguing Syndeo, Defendants made repeated, specific, and unqualified representations about\nSyndeo's success, including its functionality, design, and customer feedback. Based on their alleged knowledge of the state of\nSyndeo and the content of their statements, the facts alleged in the SAC give rise to a compelling inference that Defendants\neither intended to mislead investors or were deliberately reckless about the likelihood of misleading investors.\n\n *12 Defendants\u2019 statements about customer feedback are particularly illustrative. For example, on May 10, 2022, Stanleick\nstated that he was \u201cthrilled by the strong early feedback we are receiving from the field\u201d and emphasized that the sales team\n\u201cdid an amazing job executing on the first phase of the planned rollout.\u201d (Id. \u00b6\u00b6 286, 288). On August 9, 2022, Stanleick stated\nthat customer feedback had \u201cbeen very consistent [with what] we're hearing,\u201d including \u201creally good feedback on\u201d Syndeo's\n\u201cdata connectivity, the improvements in user interface, the touch screen technology, the LightStim LED, et cetera.\u201d (Id. \u00b6 135).\nOn September 15, 2022, Stanleick described the \u201cincredible enthusiasm\u201d for Syndeo and highlighted the feedback from \u201csome\nof our delighted aestheticians.\u201d (Id. \u00b6 311). On November 8, 2022, Woo stated, \u201cwe're very encouraged as we continue to visit\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 19\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 21 of 27\n2025 WL 2751076\n\nour providers and the sentiment seems to be strong.\u201d (Id. \u00b6 182). On February 28, 2023, Stanleick discussed learnings that\nthe Company was gaining from provider feedback, but he declined to share any specific information when asked by analysts.\n(Id. \u00b6 209).\n\nThe SAC provides specific allegations that belie Defendants\u2019 representations that customers were thrilled with Syndeo. For\nexample, the SAC alleges that 30% of Syndeo 1.0 systems suffered from cosmetic issues, (id. \u00b6 86); that 20-50% of Syndeo 1.0\nsystems suffered from clogging issues, (id. \u00b6 101); that 85-90% of FE-4's customers complained about their devices, (id. \u00b6 94);\nthat the replacement machines suffered from the same issues and that some customers went through multiple machines with the\nsame defects, (id. \u00b6 91); that, by September 2022, the Company had received 3,000 returned units\u2014so many that the Company\nhad to rent additional warehouse space to store them, (id. \u00b6 153); that Syndeo 2.0 machines did not resolve these issues, (id. \u00b6\n166); that customers started a Facebook group with over 900 members discussing complaints with Syndeo, (id. \u00b6 191); that the\nCompany received more than 5,000 customer complaints and more than 5,000 returned Syndeo machines by May 2023, (id. \u00b6\u00b6\n222, 224); and that 74% of Syndeo customers ultimately reported experiencing issues with their machines, (id. \u00b6 271).\n\nThe SAC also provides specific allegations establishing when and how Defendants learned about these issues. See City of\nDearborn Heights Act 345 Police & Ret. Sys. v. Align Tech., Inc., 856 F.3d 605, 620 (9th Cir. 2017) (\u201c[P]articularized allegations\nthat defendants had actual access to the disputed information may raise a strong inference of scienter.\u201d (internal quotation marks\nand citation omitted)). The SAC alleges that Woo received reports on Syndeo's cosmetic issues in March 2022 and that she\nlearned of the clogging issues through Tiger Team meetings in April/May 2022. (Id. \u00b6\u00b6 8, 11, 107). Woo also knew of the\nhigh rate of returns, having toured the Company's warehouse half a dozen times and having personally directed employees\nto follow a policy of \u201cno questions asked\u201d exchanges. (Id. \u00b6\u00b6 88, 90, 151). Meanwhile, the SAC alleges facts to demonstrate\nthat Stanleick knew by at least June 2022 that Syndeo had serious issues, as he attended a sales meeting discussing the issues,\norganized weekly \u201cSyndeo Powerhouse\u201d meetings to discuss issues with Syndeo, and declared internally that the Company's\n#1 priority would be \u201cgetting [Syndeo] back on track.\u201d (Id. \u00b6\u00b6 109-13). Both Woo and Stanleick also attended a meeting related\nto the redesign of Syndeo in July 2022. (Id. \u00b6 123). According to the SAC, Woo and Stanleick also both had access to internal\ndatabases that tracked customer complaints, and these complaints were reported in detail to Defendants through the annual\nmanagement review process in September/October 2022. (Id. \u00b6\u00b6 95, 141, 143, 146).\n\nBy making repeated statements about customer feedback, Defendants held themselves out to investors as having personal\nknowledge about customer satisfaction. In re Quality Sys., Inc. Sec. Litig., 865 F.3d 1130, 1145 (9th Cir. 2017) (finding scienter\nto be adequately pleaded where executives \u201ctold investors they had real-time access to, and knowledge of, sales information\u201d);\nsee, e.g., (SAC \u00b6 299 (\u201cHaving visited with hundreds of providers and consumers across the US, there is an incredible enthusiasm\nfor our new Syndeo delivery system.\u201d)). Once Defendants chose to tout positive information about customer feedback, \u201cthey\n[were] bound to do so in a manner that wouldn't mislead investors, including disclosing adverse information that cuts against\nthe positive information.\u201d Schueneman v. Arena Pharm., Inc., 840 F.3d 698, 706 (9th Cir. 2016) (internal quotation marks\nand citation omitted). Given the SAC's allegations that Defendants knew about widespread issues and customer complaints\nregarding Syndeo, the most compelling inference is that their unqualified statements highlighting positive customer feedback\nwere made with intent to mislead, or at least deliberate recklessness of the likelihood of misleading investors. See In re Splunk\nInc. Sec. Litig., 592 F. Supp. 3d 919, 947 (N.D. Cal. 2022) (finding that allegations raised strong inference of scienter \u201cbecause\nthey strongly suggest that individual Defendants had actual knowledge that the challenged statements ... would be misleading\nto investors\u201d).\n\n *13 Various other aspects of the SAC contribute to this strong inference of scienter. Even as they touted Syndeo's \u201cflawless\u201d\nlaunch, the SAC alleges Defendants secretly convened meetings to redesign the Syndeo machines, and Stanleick stated that\ngetting Syndeo \u201cback on track\u201d was the Company's \u201c#1 priority.\u201d (SAC \u00b6\u00b6 109, 123). Defendants also rented warehouse space to\nstore the returned Syndeos immediately before an external audit of the warehouse was to take place. (Id. \u00b6 147). In response to a\ncustomer Facebook group highlighting issues with Syndeo, the SAC alleges Stanleick personally reached out to the founder and\nasked her to take down the group. (Id. \u00b6 198). After she refused to do so, the group was later taken down by Facebook because\nof a trademark infringement complaint, and the founder was banned from the Company's official Facebook page. (Id. \u00b6 201).\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 20\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 22 of 27\n2025 WL 2751076\n\nTaken together, all of these alleged facts add to the inference that Defendants sought to hide public disclosure of problems with\nSyndeo. See Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 49, 131 S.Ct. 1309, 179 L.Ed.2d 398 (2011) (finding strong\ninference of recklessness where defendant \u201chired a consultant to review the product,\u201d prevented use of the company's name in a\nnegative presentation about the product, and issued a press release suggesting that the product did not have certain side effects).\n\nDefendants\u2019 narrow disclosures in SEC filings further contribute to an inference of intentional or deliberately reckless conduct.\nThe Company first disclosed that it had incurred costs in replacing Syndeo 1.0 machines in February 2023. In making this\ndisclosure, the Company described the costs as \u201c$2.4 million in non-recurring Syndeo initial program logistics and services\ncosts,\u201d (SAC \u00b6 203), and Woo referred to the expense as a \u201cone time program,\u201d (id. \u00b6 208). Given that Syndeo 2.0 was rolled\nout in July 2022, this disclosure appears to be significantly delayed from when these costs would have been incurred. The\n$2.4 million cost is also suspiciously small, given the $40,000 price tag for a single Syndeo machine, the fact that sales of\nthe machines are alleged to be \u201clow-margin,\u201d and the fact that the Company allegedly had already received 3,000 returned\nmachines by September 2022. Additionally, the reference to this cost as being \u201cnon-recurring\u201d and part of a \u201cone time program\u201d\nis difficult to square with the Company's alleged policy of replacing all defective Syndeo machines, (id. \u00b6\u00b6 88, 91), and with the\nCompany's alleged knowledge as of October/November 2022 that the Syndeo 2.0 did not fix the clogging issues, (id. \u00b6\u00b6 166,\n169). Similarly, the Company downplayed the significance of the August 2023 disclosures by referring to them as \u201cteething\nissues\u201d that were \u201ctemporary\u201d and could be addressed through \u201csimple component upgrades.\u201d (Id. \u00b6\u00b6 242-43, 247). The SAC\nsufficiently alleges facts to show that, in making these disclosures, the Company did not come close to fully disclosing the\nscope of the issues or the Company's unsuccessful efforts to address them. As such, these alleged inadequate disclosures further\nbolster the inference of scienter.\n\nDefendants raise several contrary arguments. First, Defendants argue that Plaintiffs\u2019 theory is one of \u201cfraud-by-hindsight\u201d in that\nthe SAC alleges Defendants only became aware of issues gradually as they emerged. (Mot. at 24). However, as discussed above,\nPlaintiffs have alleged numerous statements by Defendants that were misleading in light of the information that Defendants\nknew at the time. While it is true that Defendants only learned information gradually, this does not excuse statements\u2014such as\nthose discussed above about positive customer feedback\u2014that the SAC alleges Defendants knew or should have known were\nmisleading when made. Defendants also argue that the SAC does not allege that BHC \u201chad even considered the possibility of\ndeclaring Syndeo 1.0 and 2.0 obsolete in advance of the decision in November[ ] 2023[ ] to do so.\u201d (Id. at 25). However, the\nstrong inference of scienter does not rest on an assumption that Defendants knew all along that Syndeo would end in catastrophic\nfailure. Instead, this inference comes from Defendants\u2019 alleged repeated and unqualified positive statements regarding the\nappearance, functionality, and customer reception of Syndeo, coupled with their alleged knowledge of issues with Syndeo and\nits reception that rendered these statements untrue or misleading. See Splunk Inc. Sec. Litig., 592 F. Supp. 3d at 948 (\u201cPlaintiff\nneed only allege facts that raise the strong inference that individual Defendants were aware of the adverse facts that cut against\npositive information conveyed in the challenged statements and knew that the challenged statements would be misleading to\ninvestors if they failed to disclose such adverse facts.\u201d).\n\n *14 Defendants also point to In re NVIDIA Corp. Securities Litigation, 768 F.3d 1046 (9th Cir. 2014), for the proposition that\nfailure to disclose internal efforts to remedy a product defect, absent advance knowledge of the eventual financial impact of the\ngradually discovered issues, cannot support an inference of scienter. (Mot. at 27). However, NVIDIA Corp. is distinguishable\nfor several reasons. First, the NVIDIA court discounted as \u201cimplausible\u201d allegations in the complaint that NVIDIA had first\ndetermined the root cause of its product defect a year before making the disclosure. NVIDIA Corp., 768 F.3d at 1057. Here, as\ndiscussed in greater detail below, the confidential witness allegations plausibly establish Defendants\u2019 knowledge of Syndeo's\ndefects, such that the Court cannot merely discount them. Second, the NVIDIA court emphasized that, in the computer chip\nindustry, \u201cproduct defects are so common\u201d that NVIDIA maintains \u201ca reduction to revenue as a cash reserve to cover costs.\u201d Id.\nThe court found that scienter was not adequately alleged in part because the plaintiffs had not alleged that anyone at NVIDIA\nknew \u201cthat NVIDIA's liability would exceed its normal reserve set aside for costs associated with product failures.\u201d Id. at 1058.\nHere, no such reserve exists, so Plaintiffs are not required to plead specific knowledge of the costs associated with Syndeo's\nfailures. Third, the product failure in NVIDIA involved a computer chip inserted into a computer manufactured by a third-party,\nsuch that it was necessary for NVIDIA to \u201cinvestigat[e] the extent of the problem\u201d and determine \u201cwhether it [or the third-\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 21\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 23 of 27\n2025 WL 2751076\n\nparty] was responsible for it.\u201d Id. at 1065. Finally and most importantly, the plaintiffs in NVIDIA alleged only that NVIDIA's\nfinancial statements were misleading because they omitted any reference to the product defect. Id. at 1050. Here, by contrast,\nPlaintiffs allege that Defendants\u2019 statements were misleading because they affirmatively highlighted positive aspects of Syndeo\nwhile neglecting to mention known issues, thus rendering the omissions misleading \u201cin light of the circumstances under which\nthey were made.\u201d 17 C.F.R. \u00a7 240.10b-5(b); see Schueneman, 840 F.3d at 706 (\u201c[O]nce defendants choose to tout positive\ninformation to the market, they are bound to do so in a manner that wouldn't mislead investors.\u201d (internal quotation marks,\ncitation, and alterations omitted)).\n\n [38] [39] Next, Defendants argue that the lack of any allegations of insider stock sales undermines an inference of scienter.\n(Mot. at 28). It is true that \u201c \u2018unusual\u2019 or \u2018suspicious\u2019 stock sales by corporate insiders may constitute circumstantial evidence of\nscienter.\u201d In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999) (citation omitted). However, \u201c[s]cienter can\nbe established even if the officers who made the misleading statements did not sell stock during the class period.\u201d No. 84 Emp.-\nTeamster Joint Council Pension Tr. Fund v. Am. W. Holding Corp., 320 F.3d 920, 944 (9th Cir. 2003). Here, notwithstanding\nthe lack of any allegations of insider trading, the SAC adequately alleges scienter for the reasons discussed above.\n\nDefendants also contend that the SAC's theory of scienter is \u201cnonsensical\u201d because it \u201cwould require the Court to draw the\nunreasonable inference that BHC knowingly shipped defective Syndeo units to the customers it needed to keep happy to drive\nhigh-margin Consumables sales.\u201d (Mot. at 29). The Court disagrees that any such inference is unreasonable. The SAC alleges\nthat BHC's revenue model is based on a \u201crazor-and-blade\u201d system, in which approximately half of revenue is derived from\nlow-margin sales of HydraFacial machines and half is derived from high-margin sales of consumables used in those machines.\n(SAC \u00b6 51). The SAC alleges that Defendants were motivated to push Syndeo to market quickly and without adequate testing\nbecause the Company's consumables sales were dropping, due to the use of generic consumables. (Id. \u00b6 66). Syndeo addressed\nthis problem by introducing compatibility issues with generic consumables. (Id. \u00b6 67). It is not unreasonable to infer based\non this that Defendants had an incentive to downplay issues with Syndeo\u2014including by shipping new Syndeo machines to\ncustomers free of charge\u2014in order to maintain sales of high-margin consumables. Contrary to Defendants\u2019 arguments, such a\npolicy could be understood to keep customers happy by enabling them to continue to offer Syndeo facials to their end-users.\n\n *15 [40] Finally, Defendants argue that the SAC's reports from former employee and customer witnesses do not support\nscienter because these witnesses are not sufficiently reliable. (Mot. at 30-32). \u201c[A] complaint relying on statements from\nconfidential witnesses must pass two hurdles to satisfy the PSLRA pleading requirements.\u201d Zucco Partners, 552 F.3d at\n995. \u201cFirst, the confidential witness whose statements are introduced to establish scienter must be described with sufficient\nparticularity to establish their reliability and personal knowledge.\u201d Id. \u201cSecond, those statements which are reported by\nconfidential witnesses with sufficient reliability and personal knowledge must themselves be indicative of scienter.\u201d Id.\n\n [41] [42] [43] The Court finds that the confidential witnesses satisfy these requirements. First, the SAC adequately identifies\nthe confidential witnesses such that their personal knowledge can be inferred. While the SAC does not identify the former\nemployee witnesses by name, it identifies their job titles, duties, reporting structure, and dates of employment, such that the\nCourt can make inferences about the type of information that they would reasonably have been exposed to. See (SAC \u00b6\u00b6 36-44);\nsee also Weston v. DocuSign, Inc., 669 F. Supp. 3d 849, 882 (N.D. Cal. 2023) (finding employee witnesses to be reliable\nwhere the complaint \u201cdescrib[es] their roles within [the company], how long they were employed there, the nature of their\nresponsibilities, and, in some circumstances, their exact titles and who they reported to\u201d). The Court finds that the allegations\nfrom the former employee witnesses generally align with the times that they were employed at the Company and with the types\nof information that individuals in those roles would be expected to learn. 1 While it is true that none of the former employee\nwitnesses directly reported to the Individual Defendants, the information that they relate does not rely on direct, personal contact\nwith the Individual Defendants. For example, at various points, the SAC includes copies of the written communications through\nwhich the former employees learned the information. See, e.g., (SAC \u00b6\u00b6 111-14 (emails that FE-4 received from a manager,\ndetailing conversations between the manager and Stanleick); id. \u00b6 200 (text messages between Stanleick and CW-1)). Other\nreports come from meetings attended by the former employees and the Individual Defendants. See, e.g., (id. \u00b6 173 (\u201cFE-1\nsaid Woo was still involved with the Tiger Team and continued to receive meeting minutes and action plans.... FE-1 was on\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 22\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 24 of 27\n2025 WL 2751076\n\nmost of the emails of meeting minutes discussing the problems, which recipient list included Defendant Woo.\u201d); id. \u00b6 174\n(\u201cAccording to FE-5, Stanleick and other BeautyHealth executives would acknowledge Syndeo 2.0 issues at sales meetings\nand quarterly calls.\u201d); id. \u00b6 230 (\u201cFE-2 remembered Stanleick speaking about the Syndeo problems at the company's national\nsales meeting.\u201d)). Second, for the reasons detailed above, the Court also finds that the statements, in combination with the other\nallegations in the SAC, support a compelling inference of scienter. The fact that some of the statements consist of inadmissible\nhearsay \u201cdoes not automatically disqualify [these] statement[s] from consideration in the scienter calculus.\u201d Zucco Partners,\n552 F.3d at 997 n.4. Given the explanations for how the witnesses learned the information, the Court finds that the statements\nare \u201csufficiently, reliable, plausible, or coherent,\u201d id., such that they support a finding of scienter.\n\n*16 Accordingly, the Court finds that the SAC contains sufficient allegations to support an inference of scienter that is at least\nas compelling as any nonculpable inference. 2\n\n\n B. Falsity\nNext, Defendants raise a series of arguments that the challenged statements do not contain actionable misrepresentations or\nomissions. First, Defendants argue that the challenged statements were already known by the market, such that Defendants\ncannot be held liable for any omissions. Defendants point out that the SAC contains several allegations that suggest Syndeo\nissues were widely known, including that FE-2 learned of issues before joining Syndeo, that FE-3 learned of the issues during\nhis interview, and that a public Facebook group with 900 members addressed issues with Syndeo. (Mot. at 34). Defendants also\nargue that the two disclosures in February and August 2023 provided information to the market about Syndeo's issues. Finally,\nDefendants cite the two analyst reports, Exhibits 15 and 16, to argue that the market was aware of issues with Syndeo.\n\n [44] [45] [46] As Defendants argue, \u201can omission is materially misleading only if the information has not already entered\nthe market.\u201d In re Convergent Techs. Sec. Litig., 948 F.2d 507, 513 (9th Cir. 1991). Thus, where \u201cinformation has been made\ncredibly available to the market by other sources,\u201d the failure to disclose material information \u201cmay be excused.\u201d In re Apple\nComputer Sec. Litig., 886 F.2d 1109, 1115 (9th Cir. 1989). However, \u201c[b]efore the \u2018truth-on-the-market\u2019 doctrine can be applied,\nthe defendants must prove that the information that was withheld or misrepresented was transmitted to the public with a degree\nof intensity and credibility sufficient to effectively counterbalance any misleading impression created by [an] insider's one-sided\nrepresentations.\u201d Provenz v. Miller, 102 F.3d 1478, 1492-93 (9th Cir. 1996) (internal quotation marks and citation omitted).\n\n [47] The Court declines to resolve this factual determination at the motion to dismiss stage. \u201c[A] \u2018truth-on-the-market\u2019 defense\nis available in principle ... but not at the pleading stage.\u201d In re Thoratec Corp. Sec. Litig., No. C-04-03168 RMW, 2006 WL\n1305226, at *4 (N.D. Cal. May 11, 2006) (quoting Asher v. Baxter Int'l Inc., 377 F.3d 727, 734 (7th Cir. 2004)); see Ganino\nv. Citizens Utils. Co., 228 F.3d 154, 167 (2d Cir. 2000) (\u201cThe truth-on-the-market defense is intensely fact-specific and is\nrarely an appropriate basis for dismissing a \u00a7 10(b) complaint for failure to plead materiality.\u201d); In re Lockheed Martin Corp.\nSec. Litig., 272 F. Supp. 2d 928, 938 n.11 (C.D. Cal. 2002) (\u201cThe truth on the market defense presented by the defendants\nnecessarily involves a fact-intensive inquiry which is ill-suited to a motion to dismiss.\u201d (citation omitted)); Sneed v. AcelRx\nPharm., Inc., No. 21-cv-04353-BLF, 2024 WL 2059121, at *7 (N.D. Cal. May 7, 2024) (\u201cAlthough Defendants argue that\ninformation about DSUVIA's administration, use, and limitations were transmitted to the public with a sufficient degree of\nintensity and credibility, determining the truth of this assertion would require the Court to engage in an intensely fact-specific\nanalysis that is inappropriate on a motion to dismiss.\u201d).\n\n *17 [48] [49] Defendants also argue that the challenged statements were accurate and therefore not misleading. (Mot. at\n36). However, the relevant inquiry is whether the statements were misleading \u201cin light of the circumstances under which they\nwere made.\u201d Matrixx Initiatives, Inc., 563 U.S. at 44, 131 S.Ct. 1309. As discussed above with respect to the scienter inquiry, at\na minimum, Defendants\u2019 alleged statements about customer feedback were misleading because they highlighted only positive\nfeedback while omitting any reference to the numerous issues and complaints with the Syndeo machines. See Schueneman, 840\nF.3d at 706 (\u201c[O]nce defendants [chose] to tout positive information to the market, they [were] bound to do so in a manner that\nwouldn't mislead investors.\u201d (internal quotation marks and citation omitted)).\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 23\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 25 of 27\n2025 WL 2751076\n\n\n [50] Next, Defendants argue that the \u201cbespeaks caution\u201d doctrine forecloses Plaintiffs\u2019 claims because their statements were\nforward-looking representations containing \u201cenough cautionary language or risk disclosure to protect ... against claims of\nsecurities fraud.\u201d (Mot. at 36 (quoting In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1408 (9th Cir. 1996) (citation omitted))).\nDefendants argue that the Company disclosed the risk that Syndeo would be declared obsolete on its March 1, 2022, Form 10-\nK, which stated, \u201c[i]f our products are found to be, or perceived to be, defective or unsafe, or if they otherwise fail to meet our\nconsumers\u2019 expectations ... we may need to recall some products.\u201d (Id.). The bespeaks caution doctrine cannot shield Defendants\nhere, however, because many, if not most of their alleged misleading statements were not forward-looking. As identified above,\nthe SAC alleges Defendants issued numerous misleading statements about customer feedback, all of which referred to feedback\nthat the Company had already received. Statements about the Company's flawless rollout were also backwards-looking, referring\nto the Company's efforts since launch. That the Company disclosed the general possibility of a recall does not provide a safe\nhaven for Defendants\u2019 subsequent allegedly misleading statements. See In re Apple Comput., Inc. Sec. Litig., 243 F. Supp. 2d\n1012, 1025 (N.D. Cal. 2002) (\u201cThe making of a cautionary statement on one occasion does not provide a shield to liability for\nall statements subsequently made.\u201d).\n\n [51] Defendants also argue that any omissions were not misleading because Defendants had no affirmative obligation to\ndisclose each and every glitch with Syndeo as it arose. (Mot. at 37). While it true that, in a vacuum, Defendants had no affirmative\nobligation to disclose every issue with Syndeo, the SAC's allegations of falsity do not rest on any such obligation. Instead, the\nSAC relies on Defendants\u2019 alleged repeated and unqualified statements of Syndeo's success, which Plaintiffs assert created the\nmisleading impression that Syndeo's launch was flawless and that customer feedback was overwhelmingly positive. Having\nchosen to speak on these issues, Defendants were under an obligation to ensure that their statements were not misleading. See\nSchueneman, 840 F.3d at 706.\n\n [52] [53] [54] [55] Finally, Defendants argue that many of the challenged statements are simply non-actionable puffery.\n(Mot. at 40-41). \u201cWhen valuing corporations, ... investors do not rely on vague statements of optimism like \u2018good,\u2019 \u2018well-\nregarded,\u2019 or other feel good monikers.... [P]rofessional investors, and most amateur investors as well, know how to devalue\nthe optimism of corporate executives.\u201d In re Cutera Sec. Litig., 610 F.3d 1103, 1111 (9th Cir. 2010) (citation omitted). However,\n\u201ceven general statements of optimism, when taken in context, may form a basis for a securities fraud claim when those statements\naddress specific aspects of a company's operation that the speaker knows to be performing poorly.\u201d Quality Sys., Inc. Sec. Litig.,\n865 F.3d at 1143 (internal quotation marks and citation omitted). Here, given the context\u2014including the central importance\nof Syndeo to BHC's profits, analysts\u2019 specific questions about customer feedback, and Defendants\u2019 alleged knowledge of the\nthousands of customer complaints and returned machines\u2014the SAC sufficiently alleges Defendants\u2019 statements about positive\ncustomer feedback were materially misleading. While Defendants may be correct that some of the other challenged statements\nare mere puffery, at the motion to dismiss stage, the Court declines to resolve this issue as to each challenged statement. See, e.g.,\nPolice & Fire Ret. Sys. of the City of Detroit v. Crane, 87 F. Supp. 3d 1075, 1083 n.1 (N.D. Cal. 2015) (\u201cBut it's not necessary at\nthis stage to decide which of the defendants\u2019 many statements were false or misleading, because at a minimum their statements\nabout year-over-year revenue growth were misleading.\u201d); In re DDi Corp. Sec. Litig., No. CV 03-7063 NM, 2005 WL 3090882,\nat *13 (C.D. Cal. July 21, 2005) (finding that court need not, on motion to dismiss, determine if all statements were actionable\nas long as enough were actionable to state a cause of action (citing Cooper v. Pickett, 137 F.3d 616, 623 (9th Cir. 1997)).\n\n *18 Accordingly, the Court finds that at least some of the challenged statements are sufficient to meet the requirements to\nshow a material misrepresentation or omission.\n\n\n C. Loss Causation\nDefendants next argue that Plaintiffs have failed to adequately allege loss causation. Defendants contend that Plaintiffs\u2019 theory\nis solely premised on the November 13, 2023, disclosure, and they argue that the far more plausible reason for the subsequent\ndrop in stock price is BHC's reporting of its poor financial performance. (Mot. at 42). As evidence of this, Defendants point\nto the August 9, 2023, disclosure, which they argue \u201cfully revealed Syndeo's systemic problems\u201d but did not cause a similar\ndrop in stock price. (Id. (internal quotation marks omitted)).\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 24\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 26 of 27\n2025 WL 2751076\n\n\n [56] [57] [58] [59] To show loss causation, \u201cthe plaintiff must demonstrate a causal connection between the deceptive\nacts that form the basis for the claim of securities fraud and the injury suffered by the plaintiff.\u201d In re Daou Sys., Inc., 411\nF.3d 1006, 1025 (9th Cir. 2005). \u201c \u2018As long as the misrepresentation is one substantial cause of the investment's decline in\nvalue, other contributing forces will not bar recovery under the loss causation requirement\u2019 but will play a role \u2018in determining\nrecoverable damages.\u2019 \u201d Id. (quoting Robbins v. Koger Props., Inc., 116 F.3d 1441, 1447 n.5 (11th Cir. 1997)). The Ninth Circuit\nhas explained that \u201closs causation \u2018is a matter of proof at trial and not to be decided on a Rule 12(b)(6) motion to dismiss.\u2019 \u201d\nIn re Gilead Sciences Sec. Litig., 536 F.3d 1049, 1057 (9th Cir. 2008) (quoting Emergent Cap. Inv. Mgmt., LLC v. Stonepath\nGrp., Inc., 343 F.3d 189, 197 (2d Cir. 2003)). Instead, \u201c[s]o long as the complaint alleges facts that, if taken as true, plausibly\nestablish loss causation, a Rule 12(b)(6) dismissal is inappropriate.\u201d Id.\n\n [60] The Court finds that the SAC has plausibly alleged that Defendants\u2019 disclosure of Syndeo's issues was at least a \u201csubstantial\ncause\u201d of the drop in stock price. Plaintiffs have pleaded sufficient facts \u201cto give defendants ample notice of [their] loss causation\ntheory, and to give [the Court] some assurance that the theory has a basis in fact.\u201d Berson v. Applied Signal Tech., Inc., 527 F.3d\n982, 989\u201390 (9th Cir. 2008). At the motion to dismiss stage, the Court cannot disentangle the effects of the Syndeo disclosures\nfrom the effects of the financial disclosures. Indeed, it is not clear that these effects should be disentangled, since the Company\ndisclosed on November 13, 2023, that its poor financial performance was \u201clargely a result of provider experience issues with\nSyndeo in the US.\u201d (SAC \u00b6 261). Since Plaintiffs\u2019 theory is that the stock price was artificially inflated by Defendants\u2019 earlier\nmisleading statements about \u201cprovider experiences with Syndeo,\u201d it is not clear that there is any meaningful distinction between\nthe Syndeo disclosures and the financial disclosures.\n\nDefendants\u2019 cited cases are easily distinguishable in that the fraud disclosures and financial performance disclosures in those\ncases were not alleged to be directly causally related. See Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1063\n(9th Cir. 2008) (\u201cThe TAC does not allege that the June 24 and August 2 announcements disclosed\u2014or even suggested\u2014to the\nmarket that [defendant] was manipulating student enrollment figures company-wide in order to procure excess federal funding,\nwhich is the fraudulent activity that [plaintiff] contends forced down the stock that caused its losses.\u201d); In re Oracle Corp. Sec.\nLitig., 627 F.3d 376, 392 (9th Cir. 2010) (concluding, on summary judgment, that plaintiffs could not show a triable dispute\nthat the \u201cshare price dropped as a result of the market learning of and reacting to Defendants\u2019 purported fraud, as opposed to\n[defendant's] poor financial health generally\u201d (emphasis added)); Brodsky v. Yahoo! Inc., 592 F. Supp. 2d 1192, 1207 (N.D.\nCal. 2008) (finding no plausible allegation of loss causation where disclosure \u201cdid not comment on any click fraud issues\u201d on\nwhich the complaint was premised).\n\n*19 Accordingly, the Court concludes that Plaintiffs have plausibly alleged loss causation for purpose of a motion to dismiss.\n\n\n D. Section 20(a) Claim\nLastly, Defendants argue that Plaintiffs\u2019 \u00a7 20(a) claim should fail because it is derivative of the \u00a7 10(b) claim. Defendants raise\nno specific argument as to this claim aside from those already addressed. Because the Court finds that Plaintiffs have stated a\nclaim under \u00a7 10(b), the Court concludes the same as the \u00a7 20(a) claim.\n\n\nV. CONCLUSION\nFor the foregoing reasons, the Court DENIES the Motion.\n\nIT IS SO ORDERED.\n\n\nAll Citations\n\n--- F.Supp.3d ----, 2025 WL 2751076\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 25\n\f Case 1:24-cv-02804-JAV Document 71-2\nAlghazwi v. Beauty Health Company, --- F.Supp.3d ---- (2025)\n Filed 10/03/25 Page 27 of 27\n2025 WL 2751076\n\n\n\n\n Footnotes\n\n\n1 The Court does not necessarily credit every allegation of the former employee witnesses where those allegations amount\n only to speculation that exceeds any personal knowledge. For example, because the SAC provides no basis for the Court\n to infer personal knowledge, the Court does not rely on FE-1's assertion that \u201cthe real reason\u201d for moving the returned\n units into a warehouse was \u201cto hide the machines from BSI.\u201d (SAC \u00b6 149).\n\n2 In so concluding, the Court does not reach the parties\u2019 arguments as to the core operations theory.\n\n\nEnd of Document \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works.\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 26\n\f","ocr_status":1,"date_upload":"2026-05-20T15:31:03.318435-07:00","document_number":"71","attachment_number":2,"pacer_doc_id":"127038325089","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit B","acms_document_guid":""}],"date_created":"2025-10-03T14:10:16.347973-07:00","date_modified":"2026-04-26T22:50:00.599823-07:00","date_filed":"2025-10-03","time_filed":"15:45:18","entry_number":71,"recap_sequence_number":"2025-10-03.001","pacer_sequence_number":243,"description":"LETTER addressed to Judge Jeannette A. Vargas from Lauren A. Ormsbee dated 10/3/2025 re: Supplemental Authority in Opposition to Defendants' Motion to Dismiss. Document filed by Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund. (Attachments: # 1 Exhibit A, # 2 Exhibit B).(Ormsbee, Lauren) (Entered: 10/03/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/436299613/","id":436299613,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/450742036/","id":450742036,"tags":[],"absolute_url":"/docket/68433458/70/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-08-29T10:07:33.869352-07:00","date_modified":"2026-05-22T11:00:37.675660-07:00","sha1":"af94c0e7de92bd5a1755df35d0e9e8fc6728444d","page_count":2,"file_size":232442,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.70.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.70.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 70 Filed 08/29/25 Page 1 of 2\n\n Colin B. Davis\n Partner\n T: +1 949.451.3993\n M: +1 949.431.3916\n cdavis@gibsondunn.com\n\n\n August 29, 2025\n\n The Honorable Jeannette A. Vargas\n United States District Court for the Southern District of New York\n Daniel Patrick Moynihan United States Courthouse\n 500 Pearl Street, Room 703\n New York, New York 10007\n\n Re: In re QuidelOrtho Corp. Securities Litigation, No. 24-cv-02804 (S.D.N.Y.)\n\n Dear Judge Vargas:\n\n Defendants in the above-referenced matter respectfully submit this letter in\n response to Lead Plaintiff\u2019s August 22, 2025 notice of \u201csupplemental authority\u201d\n concerning Defendants\u2019 pending motion to dismiss. See ECF No. 69 (the \u201cLetter\u201d).\n\n For many of the same reasons set forth in Defendants\u2019 July 11, 2025 letter,\n Levon v. CorMedix Inc., No. CV 21-14020 (JXN) (CLW), 2025 WL 2400346 (D.N.J.\n Aug. 19, 2025), is distinguishable and has no persuasive value because the CorMedix\n complaint included specific and particularized allegations demonstrating (i) why the\n challenged statements were false or misleading and (ii) the detailed information the\n defendants allegedly knew that contradicted their public statements. See ECF No. 63\n at 1\u20132. As set forth in Defendants\u2019 motion to dismiss, ECF No. 48 at 17\u201324, 29\u201331,\n Lead Plaintiff pleads no similar facts here.\n\n In CorMedix, the plaintiff alleged that the defendants had conducted an internal\n audit that concluded that the company\u2019s commercial manufacturing organization\n \u201cwould never be able to pass FDA inspection,\u201d CorMedix, 2025 WL 2400346, at *2,\n and that the FDA had issued a complete response letter identifying \u201cnumerous\n manufacturing deficiencies\u201d at the manufacturer, id. at *9. Given these specific\n allegations, the court found defendants had a duty to disclose (i) \u201cthat it could not\n quickly resolve the identified manufacturing deficiencies,\u201d id., and (ii) \u201cthe issues at\n [the manufacturing] facility impeding the proscribed timeline,\u201d id. at *10.\n\n Lead Plaintiff emphasizes the CorMedix court\u2019s finding that the PSLRA safe\n harbor did not immunize any forward-looking statements because \u201c[c]autionary\n statements are not truly cautionary when the defendant knows that an identified risk\n has or will occur.\u201d Letter at 2 (quoting CorMedix, 2025 WL 2400346, at *15). But\n Lead Plaintiff ignores that it has not alleged with specificity that any defendant here\n knew an identified risk \u201cha[d] or w[ould] occur\u201d\u2014let alone facts contrary to any\n challenged statement. See ECF No. 48 at 29\u201331, ECF No. 59 at 3. Lead Plaintiff\n\n\n\n\nGibson, Dunn & Crutcher LLP\n3161 Michelson Drive Suite 1200 | Irvine, CA 92612-4412 | T: 949.451.3800 | F: 949.451.4220 | gibsondunn.com\n\f Case 1:24-cv-02804-JAV Document 70 Filed 08/29/25 Page 2 of 2\n\n\n\n\n August 29, 2025\n Page 2\n\nalso highlights the CorMedix court\u2019s rejection of the defendants\u2019 \u201cpuffery defense\u201d\nbecause \u201cinvestors had a basis to and did rely on\u201d defendants\u2019 optimistic statements.\nLetter at 2 (quoting CorMedix, 2025 WL 2400346, at *17). But again, Lead Plaintiff\noverlooks the fact that no reasonable investor would have relied on the optimistic\nstatements at issue here. See ECF No. 48 at 15\u201316. The court\u2019s finding that the\ndefendants\u2019 opinion statements\u2014including that the defendants believed the company\nhad adequately addressed the FDA\u2019s concerns\u2014were actionable similarly does\nnothing to bolster Lead Plaintiff\u2019s argument. Letter at 2. The CorMedix plaintiff\nspecifically alleged defendants proffered the purported opinions \u201cwithout evidence\u201d\nthat the company had resolved the \u201cobjectionable conditions that the FDA had already\ntold Defendants was required \u2026 before [its] application may be approved.\u201d CorMedix,\n2025 WL 2400346, at *18. No similar allegations exist here.\n\n The CorMedix court also declined to discount allegations from confidential\nwitnesses because the plaintiff had alleged \u201cwith the requisite particularity \u2018the who,\nwhat, where, when and how\u2019 about [the] confidential witnesses and the basis of their\nknowledge about the alleged securities fraud.\u201d Id. at *21. Although Lead Plaintiff\nargues that Defendants \u201cdo not challenge the credibility of a single FE,\u201d see Letter at\n3, this is simply not true. Indeed, Defendants\u2019 Opening Brief dedicates nearly four\npages, ECF No. 48 at 25\u201329, to explaining why Lead Plaintiff has failed to allege \u201cthe\nreliability of [its] confidential witness\u2019s statements.\u201d CorMedix, 2025 WL 2400346, at\n*21. As to the CorMedix court\u2019s application of the \u201ccore operations\u201d doctrine, Lead\nPlaintiff ignores that the defendants did not dispute that \u201cDefenCath\u2019s approval was\ncritical to CorMedix\u2019s viability and the issues at the [manufacturer] effected [sic] the\ncore of CorMedix\u2019s business.\u201d Id. at *23.\n\n This Court should grant Defendants\u2019 motion to dismiss for the reasons set forth\nin Defendants\u2019 motion to dismiss and reply.\n\n Respectfully submitted,\n\n\n\n Colin B. Davis\n Partner\n\n\ncc: All Counsel of Record (via ECF)\n\f","ocr_status":1,"date_upload":"2026-05-20T15:31:11.430536-07:00","document_number":"70","attachment_number":null,"pacer_doc_id":"127038125396","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2025-08-29T10:07:33.843559-07:00","date_modified":"2026-04-26T22:50:00.538588-07:00","date_filed":"2025-08-29","time_filed":"12:43:36","entry_number":70,"recap_sequence_number":"2025-08-29.001","pacer_sequence_number":241,"description":"LETTER addressed to Judge Jeannette A. Vargas from Colin B. Davis dated August 29, 2025 re: Response to Lead Plaintiff's Letter dated August 22, 2025. Document filed by QuidelOrtho Corporation, Douglas Bryant, Robert J. Bujarski, Joseph Busky, Michael Iskra, Tamara Ranalli, Randall Steward..(Davis, Colin) (Entered: 08/29/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/435640280/","id":435640280,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/450059555/","id":450059555,"tags":[],"absolute_url":"/docket/68433458/69/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-08-22T18:08:31.818213-07:00","date_modified":"2026-05-22T10:33:28.797102-07:00","sha1":"e13499a4a08922fc2649d30c09f2b5d66fef4753","page_count":3,"file_size":303558,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.69.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.69.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 69 Filed 08/22/25 Page 1 of 3\n Lauren A. Ormsbee\n Partner\n Labaton Keller Sucharow LLP\n 140 Broadway\n New York, New York 10005\n 212.907.0864\n LOrmsbee@labaton.com\n\n\n\n\nAugust 22, 2025\n\n\nVIA ECF\n\nThe Honorable Jeannette A. Vargas\nUnited States District Court\nDaniel Patrick Moynihan U.S. Courthouse\n500 Pearl Street, Room 703\nNew York, NY 10007\n\nRe: In re QuidelOrtho Corp. Securities Litigation, No. 24-cv-02804 (S.D.N.Y.)\n\nDear Judge Vargas:\n\n We represent Lead Plaintiff in the above-captioned securities class action, which brings\nclaims against Defendant QuidelOrtho Corporation and several of QuidelOrtho\u2019s officers under\nthe Securities Exchange Act of 1934 (the \u201cExchange Act\u201d). We write to bring to the Court\u2019s\nattention the recent decision issued in Levon v. CorMedix Inc., No. 21-14020 (JXN) (CLW), 2025\nWL 2400346, at *1 (D.N.J. Aug. 19, 2025), which bears upon Defendants\u2019 pending motion to\ndismiss (ECF No. 48) and supports the positions Lead Plaintiff submitted in its opposition (ECF\nNo. 50, \u201cOpposition Brief\u201d) and in its July 8, 2025 letter submitting supplemental authority (ECF\nNo. 56). 1 A copy of the CorMedix opinion is submitted herewith as Ex. A.\n\n In CorMedix, defendants sought FDA approval for DefenCath, an antimicrobial catheter\nlock solution. 2025 WL 2400346, at *1. Throughout the class period, the CorMedix defendants\nassured investors that DefenCath was \u201con track\u201d for FDA approval and that the company had\n\u201cadequately addressed\u201d any manufacturing concerns even as delays in approval occurred. Id. at\n*2-5, 10. However, as the CorMedix plaintiffs alleged, CorMedix and its officers knew or should\n\n1\n Lead Plaintiff\u2019s July 8, 2025 supplemental authority letter submitted three opinions, all supportive of Lead\nPlaintiff\u2019s position. Among those three opinions was one issued in the CorMedix case on June 30, 2025,\nwhich was subsequently withdrawn by that court (and quickly withdrawn as supplemental authority by\nLead Plaintiff (see ECF No. 66)). The attached CorMedix opinion replaces the initial CorMedix opinion,\nreaching the same result. Defendants previously hypothesized that Lead Plaintiff \u201ctactically\u201d filed its\nsupplemental authority prior to the deadline for their reply brief, and questioned the ability for a party to\nfile argumentative supplemental authority. ECF No. 63 at 1. To be clear, each of the three opinions\nsubmitted on July 8 were all issued within two weeks of the filing, including the prior CorMedix opinion,\nwhich had been issued just prior to the start of the July 4 holiday week. Moreover, there is no bar to\ndescriptive supplemental authority within this district or within Your Honor\u2019s rules and, unlike with sur-\nreplies, Defendants have every opportunity to respond to this letter, as they previously did.\n\n\n\n New York | Delaware | London | Washington, D.C.\n\f Case 1:24-cv-02804-JAV Document 69 Filed 08/22/25 Page 2 of 3\n\n\n\n\nAugust 22, 2025\nPage 2\n\nhave known from internal accounts and document that the DefenCath manufacturing facility\n\u201cwould never be able to pass an FDA inspection.\u201d Id. at *2. Indeed, by the end of the Class Period,\nit was disclosed that DefenCath faced manufacturing challenges and had not received FDA\napproval, leading to significant investor losses. Id. at *2-5.\n\n The CorMedix court found the complaint\u2019s allegations sufficient to establish both material\nmisrepresentations, scienter, and loss causation, denying defendants\u2019 motion to dismiss and\nrejecting similar falsity and scienter challenges as those made by Defendants in this action. The\nCorMedix decision is directly relevant to at least four key issues before this Court.\n\n First, the CorMedix court held that statements about \u201cmanufacturing readiness\u201d and being\n\u201con track\u201d for FDA approval were actionable when the allegations demonstrated that defendants\nknew or should have known of manufacturing deficiencies and impediments to FDA approval,\ncreating a duty to speak truthfully when discussing those topics with investors. Id. at *9-18. The\ncourt found that once a company speaks about manufacturing capabilities and FDA approval\nprospects, it must disclose obstacles that contradict those statements. Id. at *9-12. This directly\nsupports Plaintiff\u2019s challenges to each of the QuidelOrtho Defendants\u2019 challenged statements,\nmost directly those related to similar representations that Savanna was \u201con track\u201d and \u201cmeets the\ncriteria that the FDA are looking for.\u201d See \u00b6\u00b6327(a)-(w), 337(a)-(e), 339(a)-(bb) (Misstatements\n20-76); see also Complaint \u00a7\u00a7IV.D, IV.F; Opposition Brief at 12-20.\n\n Second, the court rejected the CorMedix defendants\u2019 safe harbor, opinion, and puffery\narguments, all also raised by Defendants here in response to similar Misstatements. The court first\nrejected the argument that cautionary language protected defendants\u2019 statements under the \u201csafe\nharbor\u201d doctrine, concluding that \u201c[c]autionary statements are not truly cautionary when the\ndefendant knows that an identified risk has or will occur.\u201d CorMedix, 2025 WL 2400346, at *15.\nThe court then rejected defendants\u2019 puffery defense, noting that \u201c[c]ontext . . . informs the puffery\nanalysis\u201d and \u201chighly material information cannot be mere puffery,\u201d concluding that certain\nstatements (similar to those alleged here) \u201cwere not puffery because investors had a basis to and\ndid rely on them.\u201d Id. at *17. The court also easily disposed of defendants\u2019 arguments that the\nchallenged statements were inactionable opinions, finding that the challenged statements \u201ccontain\n\u2018embedded\u2019 falsities and concern a central part of CorMedix\u2019s business.\u201d Id. The Court specifically\ndiscussed how statements espousing a \u201cbelief\u201d that the company had addressed and satisfied FDA\nconcerns was not an inactionable opinion under the Supreme Court\u2019s Omnicare opinion, because\n\u201c[s]uch a statement falls within the third Omnicare scenario: it \u2018reasonably implies untrue facts,\u2019\u201d\nsuch as internal reports cautioning of issues that would prevent FDA approval, \u201cand omits\nappropriate qualifying language.\u201d Id. at *18. That reasoning and analysis can easily be applied to\narguments raised by Defendants. See Opposition Brief at 9-12, 15-18, 19-20, 22-24.\n\n Third, CorMedix supports the sufficiency of Lead Plaintiff\u2019s falsity and scienter allegations\nto the extent they rely on the accounts of former employees with relevant knowledge. In CorMedix,\nthe court accepted the information provided by two former employees \u201cas true\u201d because the two\n\u201caccounts are described with sufficient particularity to support the probability that the confidential\n\f Case 1:24-cv-02804-JAV Document 69 Filed 08/22/25 Page 3 of 3\n\n\n\n\nAugust 22, 2025\nPage 3\n\nwitnesses possessed the information alleged.\u201d 2025 WL 2400346, at *21. Here, the Complaint\ndescribes accounts from 21 former employees, who collectively provide detailed, corroborative\naccounts of Savanna RVP4\u2019s failed European launch, inability to meet FDA criteria, and\nmanufacturing deficiencies, as well as similarly corroborative accounts of the knowing falsity of\nthe COVID revenue statements based on declining sales, the increasing inventory crisis detailed\nin documents such as the \u201cMcKellar Report,\u201d and unreachable sales quotas given the market for\nQuidelOrtho\u2019s tests. See, e.g., Complaint (ECF No. 42) at Section IV; see also Opposition Brief at\nix-xi (listing Complaint paragraphs attributable to each respective FE). Notably, Defendants here\ndo not challenge the credibility of a single FE. See Opposition Brief at 32.\n\n Fourth, CorMedix applied the \u201ccore operations\u201d doctrine to a pre-revenue product\n(DefenCath) whose approval by the FDA was deemed \u201ccritical\u201d to the company\u2019s financial health.\nCorMedix, 2025 WL 2400346, at *23-24. The court held that the core operations doctrine strongly\nsupported a finding of scienter when viewed together with the \u201centirety\u201d of the complaint\u2019s\nallegations, where executives with significant industry experience made misrepresentations about\nthe company\u2019s important \u201clead product candidate.\u201d Id. at *1, 23-24. This case is in direct\nalignment. Here, Defendants described Savanna as \u201cthe most important flagship product in the\nhistory of the Company\u201d and repeatedly highlighted their pharmaceutical expertise while\nconcealing known deficiencies. See Opposition Brief at 28-29; Complaint at \u00b6\u00b678-88, 357-58.\n\n Both CorMedix and this action involve the concealment of manufacturing problems,\nmisrepresentations about FDA readiness, and continued assurances to investors despite knowledge\nof disqualifying deficiencies in a product vitally important to the company\u2019s financial health. The\nCorMedix court\u2019s analysis strongly supports the sufficiency of Lead Plaintiff's allegations.\n\nVery truly yours,\n\n\n\nLauren A. Ormsbee\n\f","ocr_status":1,"date_upload":"2026-05-20T15:31:10.007925-07:00","document_number":"69","attachment_number":null,"pacer_doc_id":"127038091199","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/479925276/","id":479925276,"tags":[],"absolute_url":"/docket/68433458/69/1/in-re-quidelortho-corporation-securities-litigation/","date_created":"2026-05-20T15:31:11.450953-07:00","date_modified":"2026-05-22T10:21:01.102868-07:00","sha1":"924946a468f18abe74653dc205ff4960ab08668c","page_count":28,"file_size":834648,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.69.1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.69.1.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25 Page 1 of 28\n\n\n\n\n EXHIBIT A\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 2 of 28\n\n\n of CorMedix between October 16, 2019, and August 8,\n 2025 WL 2400346 2022 (the \u201cClass Period\u201d). (TAC \u00b6 1). This class action\n Only the Westlaw citation is currently available. arises from CorMedix's efforts to obtain U.S. Food and\n United States District Court, D. New Jersey. Drug Administration (\u201cFDA\u201d) approval of its New Drug\n Application (\u201cNDA\u201d) for DefenCath. (Id. at \u00b6\u00b6 1, 12, 144). 2\n Lead Plaintiff John C. LEVON, individually and\n on behalf of all others similarly situated, Plaintiffs, CorMedix is a publicly traded biopharmaceutical company\n v. headquartered in New Jersey, focused on the development\n CORMEDIX INC., KHOSO BALUCH, and commercialization of products for the prevention and\n ROBERT COOK, MATTHEW DAVID, treatment of infectious diseases. (Id. at \u00b6 47). Its lead\n PHOEBE MOUNTS, JOHN L. ARMSTRONG, product candidate, DefenCath (formerly known as Neutrolin)\n (\u201cDefenCath\u201d), is an antimicrobial catheter lock solution that\n and JOSEPH TODISCO, Defendants.\n is placed into catheters when not in use, designed to reduce\n Civil Action No. 21-14020 (JXN) (CLW) catheter related infections. (Id. at \u00b6\u00b6 2, 47).\n |\n Filed 08/19/2025 Baluch, Cook, David, Mounts, Armstrong, and Todisco were\n executive officers of CorMedix during part or all of the Class\n Period. (Id. at \u00b6\u00b6 48-54). Baluch served as CorMedix's Chief\n Executive Officer (\u201cCEO\u201d) and on its Board from October\n OPINION\n 2016 to October 4, 2021. (Id. at \u00b6 48). Cook served as\nJULIEN XAVIER NEALS United States District Judge CorMedix's Chief Financial Officer (\u201cCFO\u201d) from February\n 1, 2017, through January 31, 2020. (Id. at \u00b6 49). David has\n *1 This matter comes before the Court on Defendants served as CorMedix's CFO and Executive Vice President\nCorMedix Inc. (\u201cCorMedix\u201d), Khoso Baluch (\u201cBaluch\u201d), (\u201cEVP\u201d) since May 2020. (Id. at \u00b6 50). Mounts serves \u201cas\nRobert Cook (\u201cCook\u201d), Matthew David (\u201cDavid\u201d), Phoebe EVP, General Counsel, and Secretary of CorMedix as well\nMounts (\u201cMounts\u201d), John L. Armstrong (\u201cArmstrong\u201d), and as its Head of Regulatory, Compliance & Legal.\u201d (Id. at\nJoseph Todisco's (\u201cTodisco\u201d) (collectively, \u201cDefendants\u201d) \u00b6 51). Armstrong served as CorMedix's EVP for Technical\nmotion to dismiss the Third Amended Consolidated Operations from March 2017, through October 4, 2021. (Id.\nClass Action Complaint (ECF No. 97) (\u201cThird Amended at \u00b6 52). Todisco has served as CorMedix's CEO and on its\nComplaint\u201d or \u201cTAC\u201d), pursuant to Federal Rules of Civil Board since May 10, 2022. (Id. at \u00b6 54).\nProcedure 12(b)(6) and 9(b), and the Private Securities\nLitigation Reform Act of 1995 (\u201cPSLRA\u201d), 15 U.S.C. \u00a7\n78u-4, et. seq. (ECF No. 104). Jurisdiction is proper under 28 B. The Alleged Fraud and Ultimate Disclosure\nU.S.C. \u00a7 1331 and 15 U.S.C. \u00a7 78aa. Venue is proper under\n 1. The Audit\n28 U.S.C. \u00a7 1391(b) and \u00a7 27 of the Securities Exchange\n *2 In 2017, CorMedix selected ROVI Contract\nAct of 1934 (\u201cExchange Act\u201d). The Court has carefully\n Manufacturing, S.L. (\u201cROVI\u201d), a third-party commercial\nconsidered the parties\u2019 written submissions and decides this\n manufacturing organization (\u201cCMO\u201d) located in Spain, to\nmatter without oral argument pursuant to Federal Rule of\n assist with the manufacturing process of DefenCath. (Id. at\nCivil Procedure 78(b) and Local Civil Rule 78.1(b). For the\n \u00b6\u00b6 3-4, 79). Thereafter, in 2018, CorMedix hired Former\nreasons stated below, Defendants\u2019 motion to dismiss (ECF\n Employee 1 (\u201cFE1\u201d) to conduct an audit (\u201cthe Audit\u201d) of\nNo. 104) is DENIED.\n ROVI. (Id. at \u00b6\u00b6 80-81). FE1 and a support team conducted\n the Audit over a span of weeks and included an on-site visit\nI. BACKGROUND 1 to ROVI's facilities, (Id. at \u00b6 81). The formal Audit report,\n which was prepared in 2019, recommended that CorMedix\n A. Plaintiff. CorMedix. and DefenCath not use ROVI \u201cand directly stated that ROVI would never\nPlaintiff John C. Levon brings this putative securities be able to pass an FDA inspection.\u201d (Id. at \u00b6 83; see\nclass action on behalf of himself, and all others similarly also id. at \u00b6 5). According to Plaintiff, \u201cCorMedix did not\nsituated who purchased or otherwise acquired common stock disclose the existence of this audit or its conclusions[ ] and\n inexplicably pushed ahead with ROVI as CMO.\u201d (Id. at \u00b6\u00b6 5,\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 1\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 3 of 28\n\n\n81-85). 3 Defendants allegedly concealed these findings from\nthe public, despite commenting on their ability to manage the *3 On August 31, 2020, CorMedix issued a press release\nmanufacture of DefenCath through ROVI. (Id. at \u00b6\u00b6 40, 88). announcing the FDA's acceptance for filing and priority\n review 6 of the DefenCath NDA. (Id. at \u00b6 206; see also id. at\nFormer Employee 2 (\u201cFE2\u201d) \u201cwas the Senior Director of \u00b6 15). CorMedix also set a Prescription Drug User Fee Act\nQuality Assurance at CorMedix from February 2020 until (\u201cPDUFA\u201d) \u201cdate of February 28, 2021, for the completion\nthey resigned in May 2023.\u201d (Id. at \u00b6 82). FE2 averred that of its review.\u201d (Id. at \u00b6 206; see also id. at \u00b6 15). CorMedix\ndespite FE1's recommendation that ROVI not be utilized, \u201cnoted that [the FDA] ... had not identified any potential\nROVI was selected due to \u201cthe close personal friendship review issues at this time.\u201d (Id. at \u00b6 100). CorMedix reiterated\nbetween ROVI's head and [ ] Baluch.\u201d (Id. at \u00b6 83). The this message on November 5, 2020, when reporting its 3Q20\nAudit \u201cwas placed on an internal [ ] shared drive, where FE2 financial results, stating it \u201cha[d] not been informed of any\nwas able to access it.\u201d (Id. at \u00b6 85). Additionally, according delays by the FDA in the review of the NDA, but ... pre-\nto FE2, \u201cBaluch was closely involved in the production and approval inspections are required for manufacturing sites.\ndistribution of FE1's report[ ]\u201d and believes Mounts received (Id.)\na copy of it. (Id. at \u00b6 86).\n On February 26, 2021, the FDA issued DefenCath's first\n CRL (\u201cFirst CRL\u201d), which explained \u201c(1) the drug product\n 2. Defendants\u2019 Actions and Impact on CorMedix's manufacturing facility (ROVI Pharma Industrial Services\n Stock Value S.A.) was found inadequate following a 704(a)(4) based\nOn October 16, 2019, CorMedix issued a press release review; and (2) inadequate in-process controls were proposed\nclaiming that \u201c[t]he FDA was supportive of [DefenCath]\u2019s for ... the drug product manufacturing process.\u201d (Id. at \u00b6\nproposed manufacturing program, including the active\n 20, 105, 218). 7 On March 1, 2021, Defendants publicly\npharmaceutical ingredients (\u201cAPI\u201d), the container closure and\n disclosed the First CRL. (Id. at \u00b6\u00b6 21, 106, 219). On that same\ntesting\u201d and that \u201c[DefenCath] can be approved in the second\n date, CorMedix's stock price decreased approximately 54.4\nhalf of 2020.\u201d (Id. at \u00b6\u00b6 7, 89-90, 178-79). Following the press\n percent. (Id. at \u00b6\u00b6 22, 106, 220).\nrelease, CorMedix's stock increased over 9 percent. (Id.)\n\n On March 9, 2021, during CorMedix's first call after the\nSubsequently, in February 2020, the FDA accepted the\n First CRL, \u201cDefendants downplayed the issues underlying\nDefenCath NDA for rolling review, (Id. at \u00b6 12). In May\n the [First] CRL,\u201d by stating that one of the deficiencies cited\n2020, the FDA conditionally approved DefenCath. (Id. at\n in the First CRL was because it was unclear to the FDA\n\u00b6 13). Thereafter, in July 2020, CorMedix completed its\n that the future installation of new equipment at the facility\nsubmission. 4 (Id. at \u00b6 98). was unrelated to DefenCath and that the FDA's requested\n manual extraction and airflow visualization studies would be\nIn July 2020, after CorMedix completed the DefenCath \u201ccompleted in the next several weeks.\u201d (Id. at \u00b6 24; see also\nNDA, CorMedix advised investors that CorMedix and its id. at \u00b6\u00b6 113-119, 223). Further, FE2 stated that after the\nCMO were \u201csuccessfully collecting the information [ ] and first CRL, \u201cthere were near constant remediation meetings ...\ndata required to meet FDA standards: ail that was left was (sometimes up to four meetings per day)\u201d and that Mounts,\napproval\u201d and assured investors that \u201cit had not been informed Ortiz, Berrios, FE1, and Baluch attended these meetings. (Id.\nof any delays by the FDA in the review of the NDA\u201d (Id. at \u00b6\u00b6 at \u00b6 112).\n14, 98, 100). CorMedix's stock increased 7 percent. (Id. at \u00b6\n14). On July 29, 2020, CorMedix conducted a public offering, *4 However, on April 14, 2021, CorMedix issued a\n 5\nwhich was originally issued on November 27, 2020. (Id. press release advising that representatives from ROVI and\nat \u00b6\u00b6 16, 99). CorMedix sold 832,676 shares of common CorMedix met with the FDA \u201cto discuss proposed resolutions\nstock at a weighted average price of $8.69 per share, realizing for the deficiencies identified in the First CRL and the\nnet proceeds of approximately $7.0 million during 2020, corresponding Post-Application Action Letter (\u201cPAAL\u201d)\nand during the first six months of 2021, CorMedix sold an received by [ROVI].\u201d (Id. at \u00b6 125). That same day, investors\naggregate 3,737,862 shares of common stock at an average learned CorMedix could not resubmit the NDA until the\nprice of $11.10 per share, with net proceeds of $41.5 million. third quarter of 2021 because more remedial steps were\n(Id. at \u00b6 102). necessary than previously identified. (Id. at \u00b6\u00b6 25, 125).\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 2\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 4 of 28\n\n\nNotwithstanding, \u201cDefendants stressed that CorMedix and adequately addressed the concerns\u201d noted in the First CRL.\n[ROVI will] continue to work closely to ensure that the (Id. at \u00b6\u00b6 32, 144, 266).\nidentified deficiencies are resolved prior to resubmission of\nthe DefenCath NDA[,]\u201d within the \u201cnext several weeks.\u201d (Id. On March 28, 2022, \u201cCorMedix announced that the\nat \u00b6 127). Subsequently, CorMedix's stock price fell 18.36 DefenCath NDA resubmission had been accepted for filing as\npercent. (Id. at \u00b6\u00b6 25, 126, 236). a Class 2 response, warranting a 6-month review cycle.\u201d (Id.\n at \u00b6\u00b6 32, 147). In a press release issued that day, Mounts\nDespite Defendants\u2019 assurances, on May 13, 2021, CorMedix stated, \u201cCorMedix and [ROVI] have adequately addressed\nannounced it could not resubmit the NDA until the fourth the concerns the [FDA] identified during the review of the\nquarter of 2021. (Id. at \u00b6\u00b6 27, 129). CorMedix's stock fell original NDA, and we are committed to working jointly to\napproximately 20 percent. (Id. at \u00b6 237). Notwithstanding, ensure a successful inspection.\u201d (Id. at \u00b6\u00b6 147-48, 267).\nDefendants \u201ctouted\u201d CorMedix and ROVI's ability to resolve\nthe manufacturing deficiencies and assured investors that \u201cwe In May 2022, Todisco provided his opening remarks as CEO,\nhave the right team and appropriate resources in place to however, he did not disclose the manufacturing deficiencies\nresolve the third-party manufacturing deficiency[ ]\u201d and that identified at CorMedix's API for heparin, and one month later,\nthey were on schedule to resubmit the NDA in the fourth while presenting at a conference, he reiterated the CMO's\nquarter. (Id. at \u00b6\u00b6 at 28, 130). ability to maintain Current Good Manufacturing Practice\n (\u201ccGMP\u201d) 9 standards, which prompted the question \u201chas the\nYet, in September 2021, investors learned CorMedix \u201cha[d] company addressed all the [FDA's] questions appropriately?\u201d\nencountered delays\u201d at ROVI and that the timeline to address to which he answered \u201cyes, yes.\u201d (Id. at \u00b6\u00b6 152-54, 279).\ndeficiencies at ROVI's facility was \u201cuncertain.\u201d (Id. at \u00b6\u00b6 29,\n135, 261). CorMedix's stock fell over 27 percent. (Id. at \u00b6 *5 However, on August 4, 2022, the FDA issued a second\n262). CRL (\u201cSecond CRL\u201d), citing unresolved deficiencies at both\n ROVI and the API supplier for heparin. (Id. at \u00b6\u00b6 33,\nIn October 2021, CorMedix \u201cannounced that, effective 34, 156, 281). On August 8, 2022, CorMedix disclosed\nimmediately, [ ] Baluch was retiring from his role as CEO this Second CRL and stated ROVI needed \u201can independent\nand resigning from CorMedix's Board and [ ] Armstrong CGMP consultant\u201d prompting another drop in its stock price\nwas retiring[,]\u201d and [ ] Mounts would be taking over by approximately 57 percent. (Id. at \u00b6\u00b6 35-36, 157, 159,\nCorMedix's \u201ctechnical operations group, including a group of\n 281-82). 10\nconsultants that are working on addressing the situation with\n[ROVI].\u201d (Id. at \u00b6 137).\n Ultimately, in the Third Amended Complaint, Plaintiff alleges\n that throughout the Class Period Defendants consistently\nThe following month, despite CorMedix's repeated\n made materially false and misleading statements and\nassurances they had \u201cthe right team,\u201d Mounts announced,\n omissions concerning CorMedix's ability to secure FDA\n\u201cwe have engaged [a] team of external consultants to provide\nadditional expertise on FDA's expectations for addressing approval. 11 (Id. at \u00b6 40). Specifically, Plaintiff contends\nthe specific deficiencies at the manufacturing facility, and to that Defendants\u2014despite their awareness of the Audit\u2014\nassist in preparations for a pre-approval inspection.\u201d (Id. at \u00b6\u00b6 misrepresented or omitted material facts related to: (1)\n deficiencies that existed at ROVI and CorMedix's API\n31, 138). 8\n supplier for heparin; (2) ROVI's regulatory readiness (or\n lack thereof) and compliance with FDA guidance and cGMP\nOn February 4, 2022, unbeknownst to investors, the FDA\n standards; (3) the deficiencies in the DefenCath NDA, which\nissued a Form 483 to CorMedix's API manufacturer for\n would likely lead to the DefenCath NDA being rejected; (4)\nheparin for the United States market. (Id. at \u00b6 149). Plaintiff\n the true scope of the deficiencies after the first CRL; and (5)\nalleges the Form 483 \u201cwarranted requests for corrective\n ROVI's manufacture of contaminated products. (Id. at \u00b6 40).\nactions, yet, Defendants said nothing.\u201d (Id.)\n\nOn February 28, 2022, Defendants resubmitted the NDA C. Procedural History\nand announced that \u201c[CorMedix] and the manufacturer [had] On July 22, 2021, Plaintiff filed the initial class action\n complaint. (ECF No. 1). Thereafter, on October 13, 2021, an\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 3\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 5 of 28\n\n\norder was entered to consolidate Civil Action Nos. 21-16855 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation\nand 21-14020 into the present action. (ECF No. 39). modified). On a Rule 12(b)(6) motion, the \u201cfacts alleged\n must be taken as true\u201d and dismissal is not appropriate where\nOn December 14, 2021, Plaintiff filed the First Amended \u201cit appears unlikely that the plaintiff can prove those facts\nComplaint (\u201cFAC\u201d), asserting claims under both the or will ultimately prevail on the merits.\u201d Phillips v. Cnty.\nSecurities Act of 1933 and the Exchange Act. (ECF No. 43). of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (citation\nOn March 28, 2022, Defendants moved to dismiss the FAC. modified). A complaint will survive a motion to dismiss if it\n(ECF No. 57). 12 provides a sufficient factual basis to state a facially plausible\n claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).\nOn August 30, 2022, the parties entered a stipulation allowing\nthe filing of a Second Amended Complaint and permitting To determine whether a complaint is sufficient, the Third\nDefendants to file a motion to dismiss in response thereto. Circuit requires a three-part inquiry: (1) the court must first\n(ECF No. 75). On December 9, 2022, the Court granted in part recite the elements that must be pled in order to state a claim;\nand denied in part the motion, dismissing Plaintiff's Securities (2) the court must then determine which allegations in the\nAct claims with prejudice while allowing Plaintiff to amend complaint are merely conclusory and therefore need not be\nthe Exchange Act claims. (ECF Nos. 65-66). given an assumption of truth; and (3) the court must \u201cassume\n the[ ] veracity\u201d of well-pleaded factual allegations and\nOn October 10, 2022, Plaintiff filed the Second Amended ascertain whether they plausibly \u201cgive rise to an entitlement\nComplaint alleging claims under Sections 10(b) and 20(a) for relief.\u201d Santiago v. Warminster Twp., 629 F.3d 121, 130\nof the Exchange Act and Rule 10b-5. (ECF No. 79). On (3d Cir. 2010) (citation modified).\nNovember 23, 2022, Defendants moved to dismiss the Second\nAmended Complaint. (ECF No. 86). On March 21, 2024,\n B. Rule 9(b)\nthe Court denied Defendants\u2019 motion without prejudice and\n Under Rule 9(b) and in conjunction with Rule 12(b)(6),\ngranted Plaintiff leave to amend. (ECF No. 91).\n fraud-based claims are subject to a heightened pleading\n standard, requiring a plaintiff to \u201cstate with particularity\n *6 On April 22, 2024, Plaintiff filed the Third Amended\n the circumstances constituting fraud or mistake.\u201d Fed. R.\nComplaint. (ECF No. 97). The Third Amended Complaint\n Civ. P. 9(b). A court may dismiss a fraud-based claim if\nraises two causes of action against Defendants: (i) violation\n the plaintiff fails to plead with the required particularity,\nof Section 10(b) of the Exchange Act and Rule 10b-5\n i.e., sufficient details to put the defendant \u201con notice of\npromulgated thereunder (codified at 17 C.F.R. \u00a7 240.10b-5),\n the precise misconduct with which [it is] charged.\u201d See\nagainst all Defendants (Count I); and (ii) violation of Section\n Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir, 2007).\n20(a) of the Exchange Act, against the Individual Defendants\n At a minimum, Rule 9(b) requires a plaintiff to allege the\n(Count II). (TAC \u00b6\u00b6 309-25).\n \u201cessential factual background that would accompany \u2018the first\n paragraph of any newspaper story\u2019\u2014that is, the \u2018who, what,\nOn June 6, 2024, Defendants moved to dismiss the Third\n when, where and how\u2019 of the events at issue,\u201dIn re Suprema\nAmended Complaint. (\u201cDefs.\u2019 Br.\u201d) (ECF No. 104). On July\n Specialties, Inc. Sec. Litig., 438 F.3d 256, 276 (3d Cir. 2006)\n22, 2024, Plaintiff opposed. (\u201cPl.\u2019s Br.\u201d) (ECF No. 106). On\n (quoting In re Rockefeller Cir. Prop. Sec. Litig., 311 F.3d 198,\nAugust 21, 2024, Defendants replied. (\u201cDefs.\u2019 Rep. Br.\u201d)\n 217 (3d Cir. 2002)); see also U.S. ex rel. Moore & Co., P.A.\n(ECF No. 107). Defendants\u2019 motion to dismiss is now ripe for\n v. Majestic Blue Fisheries, LLC, 812 F.3d 294, 307 (3d Cir.\nadjudication. 13 2016). Accordingly, \u201c[t]o satisfy the particularity standard,\n \u2018the plaintiff must plead or allege the date, time and place\n of the alleged fraud or otherwise inject precision or some\nII. LEGAL STANDARD\n measure of substantiation into a fraud allegation.\u2019 \u201d Feingold\n A. Rule 12(b)(6) v. Graff, 516 F. App'x 223, 226 (3d Cir. 2013) (quoting\nRule 8 requires that a pleading include \u201ca short and plain Frederico, 507 F.3d at 200). This heightened standard is\nstatement of the claim showing that the pleader is entitled to designed to \u201censure that defendants are placed on notice of\nrelief\u201d and provide the defendant with \u201cfair notice of what the precise misconduct with which they are charged, and\nthe claim is and the grounds upon which it rests[.]\u201d Bell to safeguard defendants against spurious charges of fraud.\u201d\n Craftmatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 645 (3d Cir.\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 4\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 6 of 28\n\n\n1989) (citation modified). The heightened pleading standard Id. (citing Avaya, 564 F.3d at 253); seeFed. R. Civ. P. 9(b)\nset forth in Rule 9(b) applies to fraud claims brought under (\u201c[A] party must state with particularity the circumstances\nthe Exchange Act. See, e.g., In re Suprema, 438 F.3d at 276. constituting fraud or mistake.\u201d); see also Rahman, 736 F.3d\n at 241 n.3. \u201cIndeed, although the PSLRA replaces Rule 9(b)\n as the pleading standard governing private securities class\n C. The PSLRA 14 actions, Rule 9(b)\u2019s particularity requirement \u201cis comparable\n *7 \u201cIn addition to Rule 9(b)\u2019s heightened pleading to and effectively subsumed by\u201d PSLRA \u00a7 78u\u20134(b)(1).\u201d Id.\nrequirements, Congress enacted the Private Securities (citing Avaya, 564 F.3d at 253).\nLitigation Reform Act (\u201cPSLRA\u201d), 15 U.S.C. \u00a7 78u, et seq.,\nto require an even higher pleading standard for plaintiffs\nbringing private securities fraud actions.\u201d City of Warwick III. DISCUSSION\nRet. Sys. v. Catalent, No. 23-1108, 2024 WL 3219616,\n A. Violation of Exchange Act Section 10(b)\nat *3 (D.N.J. June 28, 2024) (citing In re Suprema, 438\n The private right of action under Section 10(b) and Rule\nF.3d at 276); see also Rahman v. Kid Brands, Inc., 736\n 10b-5 \u201ccreates liability for false or misleading statements or\nF.3d 237, 241 (3d Cir. 2013) (\u201cThe PSLRA establishe[s]\n omissions of material fact that affect trading on the secondary\nheightened pleading requirements for a plaintiff to meet\n market.\u201d In re Burlington, 114 F.3d at 1417. To state a claim\nin order to plead a cause of action successfully in class\n under Section 10(b) of the Exchange Act and Rule 10b-5,\nactions alleging securities fraud.\u201d). This heightened pleading\n a plaintiff must allege: \u201c(1) a material misrepresentation or\nstandard is targeted at preventing abusive securities litigation.\n omission, (2) scienter, (3) a connection with the purchase or\nSee Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.\n sale of a security, (4) reliance, (5) economic loss, and (6)\n308, 313 (2007) (\u201cPrivate securities fraud actions, ... if\n loss causation.\u201d Gold v. Ford Motor Co., 577 F. App'x 120,\nnot adequately contained, can be employed abusively to\n 122 (3d Cir. 2014) (citing Dura Pharms., Inc. v. Broudo, 544\nimpose substantial costs on companies and individuals whose\n U.S. 336, 341-42 (2005)); see also Matrixx Initiatives, Inc.\nconduct conforms to the law.\u201d).\n v. Siracusano, 563 U.S. 27, 37-38 (2011); City of Warren,\n 70 F.4th at 679; Fan v. StoneMor Partners LP, 927 F.3d\n\u201cThe PSLRA provides two distinct pleading requirements,\n 710, 714 (3d Cir. 2019); City of Edinburgh Council v. Pfizer,\nboth of which must be met in order for a complaint to survive\n Inc., 754 F.3d 159, 167 (3d Cir. 2014). Principally at issue\na motion to dismiss.\u201d City of Warwick, 2024 WL 3219616, at\n is whether the Third Amended Complaint sufficiently pleads\n*3 (citing Institutional Invs. Grp. v. Avaya, Inc., 564 F.3d 242,\n three elements of securities fraud for their Section 10(b)\n252 (3d Cir. 2009)); see also Tellabs, 551 U.S. at 313 (stating\n claim\u2014misrepresentations or omission, scienter, and loss\nthe PSLRA requires a complaint to \u201cstate with particularity\n causation. The Court addresses each of these elements in turn.\nboth the facts constituting the alleged violation, and the\nfacts evidencing scienter, i.e., the defendant's intention \u2018to\ndeceive, manipulate, or defraud.\u2019 \u201d (quoting Ernst & Ernst (1) Plaintiff Adequately Alleges Material\nv. Hochfelder, 425 U.S. 185, 194, and n.12 (1976))). \u201cFirst, Misrepresentation\nunder 15 U.S.C. \u00a7 78u\u20134(b)(1), the complaint must \u2018specify *8 Under Section 10(b) and Rule 10b-5, a misrepresentation\neach allegedly misleading statement, why the statement was or omission of fact is material \u201cif there is a substantial\nmisleading, and, if an allegation is made on information and likelihood that a reasonable shareholder would consider it\nbelief, all facts supporting that belief with particularity.\u2019 \u201d City important\u201d in making an investment decision, and there is\nof Warwick, 2024 WL 3219616, at *3 (quoting Avaya, 564 a \u201csubstantial likelihood that the disclosure of the omitted\nF.3d at 252). \u201cSecond, the complaint must, \u2018with respect to fact would have been viewed by the reasonable investor as\neach act or omission alleged to violate this chapter, state with having significantly altered the \u2018total mix\u2019 of information\nparticularity facts giving rise to a strong inference that the made available.\u201d Basic Inc. v. Levinson, 485 U.S. 224, 231-32\ndefendant acted with the required state of mind.\u2019 \u201d Id. (quoting (1988) (quoting TSC Indus. v. Northway, 426 U.S. 438, 440\nAvaya, 564 F.3d at 252). (1976)); see also In re Celgene Corp. Sec. Litig., No. 18-4772,\n 2019 WL 6909463, at *11 (D.N.J. May 19, 2017); Shapiro\n\u201cBoth provisions of the PSLRA require facts to be pled with v. UJB Fin. Corp., 964 F.2d 272, 280 n.11 (3d Cir. 1992).\n\u2018particularity.\u2019 \u201d Id. (quoting Avaya, 564 F.3d at 253). \u201cThis Importantly, to be actionable, a statement or omission must\nparticularity language echoes the requirements of Rule 9. have been materially misleading at the time it was made;\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 5\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 7 of 28\n\n\nliability cannot be imposed based on subsequent events, City 21-2071, 2022 WL 2128560, at *3 (3d Cir. June 14, 2022)\nof Warren, 70 F.4th at 693; In re NAHC, Inc. Sec. Litig., 306 (quoting City of Edinburgh Council, 754 F.3d at 174); see\nF.3d 1314, 1330 (3d Cir. 2002). also Williams v. Globus Med., Inc., 869 F.3d 235, 241 (3d Cir.\n 2017) (\u201cOnce a company has chosen to speak on an issue\u2014\nNotably, because materiality is a mixed question of law and even an issue it had no independent obligation to address\u2014it\nfact, \u201c[o]nly if the alleged misrepresentations or omissions cannot omit material facts related to that issue so as to make\nare so obviously unimportant to an investor that reasonable its disclosure misleading.\u201d); In re Bristol-Meyers Squibb Sec.\nminds cannot differ on the question of materiality is it Litig., No. 00-1990, 2005 WL 2007004, at *23 (D.N.J. Aug.\nappropriate for the district court to rule that the allegations 17, 2005) (\u201c[A] defendant may choose silence or speech\nare inactionable as a matter of law.\u201d Shapiro, 964 F.2d at 280 based on the then-known factual basis, but cannot choose\nn.11 (citation modified). \u201cThe Third Circuit has warned that half-truths.\u201d (citation modified). \u201cImportantly, Section 10(b)\nthe task of determining materiality can be especially difficult and Rule 10b-5 only prohibit omissions that engender \u2018half-\nwhen the statement at issue contains \u2018soft\u2019 information, truths.\u2019 \u201d Zhou v. Desktop Metal, Inc., 120 F.4th 278, 292\ni.e., statements of subjective analysis or extrapolation, such (5th Cir. 2024) (quoting Macquarie Infrastructure v. Moab\nas opinions, motives, and intentions, or forward[-]looking Partners, L. P., 601 U.S. 257, 263 (2024))); see also id. at\nstatements, such as projections, estimates, and forecasts.\u201d 265 (explaining \u201c[a]n omission, even if material, is actionable\nRoofer's Pension Fund v. Papa, No. 16-2805, 2018 WL only if it \u2018renders affirmative statements made misleading.\u2019\n3601229, at *8 (July 28, 2018) (citing Craftmatic, 890 F.2d at \u201d (quoting Macquarie Infrastructure, 601 U.S. at 265)).\n642). \u201cThe ultimate issue of materiality should not be decided Accord Matrixx, 563 U.S. at 44 (\u201cDisclosure is required ...\nas a matter of law unless \u2018the disclosures or omissions are so only when necessary \u2018to make ... statements made, in the\nclearly unimportant that reasonable minds could not differ.\u2019 \u201d light of the circumstances under which they were made,\nCarmignac Gestion, S.A. v. Perrigo Co. PLC, No. 17-10467, not misleading.\u2019 \u201d (quoting 17 C.F.R. \u00a7 240.10b-5(b)); In\n2019 WL 3451523, at *9 (D.N.J. July 31, 2019) (quoting re Burlington, 114 F.3d at 1432 (\u201c[P]ossession of material\nIn re Galena Biopharma, Inc. Sec. Litig., 336 F. Supp. 3d nonpublic information alone does not create a duty to disclose\n378, 390 (D.N.J. 2018)); see also In re Enzymotec Sec. Litig., it.\u201d). In sum, \u201cthere is no affirmative duty to disclose all\nNo. 14-5556, 2015 WL 8784065, at *15 (D.N.J. Dec. 15, material information, but such a duty may arise when a\n2015) (\u201c[T]he question of whether disclosure was required is company chooses \u2018to speak about a material subject to\nbest left to the trier of fact, since whether a prior disclosure investors.\u2019 \u201d In re Amarin Corp., 2022 WL 2128560, at *3\nis inaccurate, incomplete, or misleading in light of all of (quoting City of Edinburgh Council, 754 F.3d at 174); Kline\nthe evidence is a mixed question of law and fact.\u201d (citing v. First W. Gov't Sec., Inc., 24 F.3d 480, 491 (3d Cir. 1994)\nWeiner v. Quaker Oats Co., 129 F.3d 310, 317 (3d Cir, (\u201c \u2018[E]ncompassed within that general obligation [to speak\n1997))); Ieradi v. Mylan Lab'ys, Inc., 230 F.3d 594, 599 (3d truthfully] is also an obligation or \u201cduty\u201d to communicate\nCir. 2000) (\u201c[W]here there is room for differing opinions on any additional or qualifying information, then known, the\nthe issue of materiality, the question should be left for jury absence of which would render misleading that which was\ndetermination.\u201d) (citation modified). communicated.\u2019 \u201d (quoting Rose v. Ark. Valley Env't & Util.\n Auth., 562 F. Supp. 1180, 1207 (W.D. Mo. 1983))).\nHowever, regardless of whether a piece of information is\nmaterial, Section 10(b) and Rule 10b\u20135 \u201cdo not create an\naffirmative duty to disclose any and all material information.\u201d i. Misstatements and Omissions Related to ROVI\nMatrixx, 563 U.S. at 44; In re Intelligroup Sec. Litig., 527 *9 The Court first considers the following statements\nF. Supp. 2d 262, 281 (D.N.J. 2007) (\u201c[W]hen an allegation Plaintiff alleges were made regarding ROVI:\nof fraud is based upon nondisclosure, there can be no fraud\n \u2022 \u201c[T]he drug product manufacturer ... is in place\nabsent a duty to speak.\u201d). Indeed, \u201c[s]ilence, absent a duty\n and processes have been established and appropriate\nto disclose, is not misleading under Rule 10b-5.\u201d City of\n validation testing completed to enable manufacture of\nEdinburgh Council, 754 F.3d at 174 (quoting Basic, 485 U.S.\n launch quantities.\u201d (TAC \u00b6 185).\nat 239 n.17). Although, \u201c[t]here is no affirmative duty to\ndisclose all material information, [ ] such a duty may arise \u2022 The First CRL disclosed on March 1, 2021 posed minimal\nwhen a company chooses \u2018to speak about a material subject hurdles, as one deficiency would be resolved within\nto investors.\u2019 \u201d In re Amarin Corp. PLC Sec. Litig., No.\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 6\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 8 of 28\n\n\n \u201cseveral weeks\u201d and the other was \u201cunrelated to the manufacturing deficiencies to comply with cGMP standards,\n manufacture[ ]\u201d of DefenCath. (Id. at \u00b6 223). especially in light of the Audit and the FDA's concerns. (TAC\n \u00b6\u00b6 149, 221, 228, 241, 269, 280). See Kline, 24 F.3d at 490-91\n \u2022 CorMedix, following receipt of the First CRL, (finding actionable omissions where, as here, executives\n \u201c[s]uccessfully concluded ... validation of the drug \u201celected to speak\u201d but \u201cfailed to include ... information that,\n product manufacturing process, which has enabled if included, would have undermined the conclusions\u201d in\n production at 2 different manufacturing locations[,]\u201d and the alleged misstatements). Cf. SLF Holdings, LLC v. Uniti\n \u201c[l]aunch quantities are already in production[.]\u201d (Id. at Fiber Holdings, Inc., 499 F. Supp. 3d 49, 64-65 (D. Del.\n \u00b6 240). 2020), aff'd, No. 20-3427, 2022 WL 3442353 (3d Cir. Aug.\n 17, 2022) (stating there is \u201cno duty to disclose a risk that\n \u2022 \u201c[W]e and the manufacturer have adequately addressed\n had not \u2018actually materialized\u2019 at the time of the allegedly\n the concerns the [FDA] identified in the CRL and\n misleading prior disclosure\u201d (quoting Williams, 869 F.3d at\n PAAL.\u201d (Id. at \u00b6 266).\n 243). Accordingly, Defendants\u2019 alleged failure to disclose the\n \u2022 \u201cCorMedix and [its CMO] have adequately addressed the Audit is sufficient to maintain a Section 10(b) claim at this\n concerns the [FDA] identified during the review of the stage. See, e.g., Williams, 869 F.3d at 241 (finding that \u201c[o]nce\n original NDA ....\u201d (Id. at \u00b6 147). a company has chosen to speak on an issue\u2014even an issue\n it had no independent obligation to address\u2014it cannot omit\n \u2022 CorMedix was \u201cgoing to work closely with [its] CMO material facts related to that issue so as to make its disclosure\n for any observations that are related to DefenCath\u201d so misleading\u201d); id. at 242 (\u201c[A] company may be liable under\n the only risk in the FDA inspection of the manufacturing Section 10[(b)] for misleading investors when it describes\n operations were \u201cobservations that didn't involve [its] as hypothetical a risk that has already come to fruition.\u201d);\n product.\u201d (Id. at \u00b6 279). But its \u201chighly reputable Curran v. Freshpet, Inc., No. 16-2263, 2018 WL 394878,\n European manufacturer\u201d would \u201cwork with the FDA on, at *4-5 (D.N.J. Jan. 12, 2018) (denying motion to dismiss\n if necessary, improving any compliance concerns FDA where the defendants\u2019 statements on earning calls were\n could raise.\u201d (Id.) materially misleading because the \u201c[d]efendants knew ... that\n [the company] was facing substantial obstacles that would\nThe Court finds each of these statements are actionable. impede [its] growth ... [including] alleged manufacturing\nBy discussing ROVI's manufacturing readiness, the first problems\u201d).\nCRL, and the FDA's concerns regarding the DefenCath\nNDA, Defendants put those specific issues \u201cin play.\u201d This,\nin turn, entitled investors to know that, in fact, the Audit ii. Misstatements and Omissions Related to Being \u201cOn\nconcluded ROVI would likely not pass FDA inspection Track\u201d\nand that numerous manufacturing deficiencies existed at *10 The TAC alleges that Defendants withheld known\nthe CMO. See City of Warwick, 2024 WL 3219616, at *8; risks about the NDA's sufficiency and ROVI's manufacturing\nRoofer's Pension Fund 2018 WL 3601229, at *13 (agreeing capabilities while assuring investors the DefenCath NDA was\nwith the plaintiffs that statements were actionable because on track for FDA approval. (TAC \u00b6\u00b6 107-38). Additionally,\nthe defendants \u201cdescribed the integration in entirely positive during the Class Period, Defendants represented, inter alia:\nterms ... while omitting known extensive problems that\n \u2022 \u201cWe have remained on schedule towards an anticipated\nbrought key integration processes to a halt\u201d); see also Shapiro,\n approval in the second half of 2020, subject of course\n964 F.2d at 280 n.11. \u201cAccordingly, the Court finds that\n to possible delays at FDA due to the coronavirus\nthe statements are actionable because disclosure of this\n pandemic.\u201d (TAC \u00b6 194).\nother material information which was omitted would have\n\u2018significantly altered the mix of information available to a \u2022 \u201c[W]e are maintaining our guidance for an anticipated\nreasonable investor.\u2019 \u201d City of Warwick, 2024 WL 3219616, at decision on approval of the NDA in the second half of\n*8 (first quoting Roofer's Pension Fund, 2018 WL 3601229, 2020.\u201d (Id. at \u00b6 196).\nat *14; then citing Shapiro, 964 F.2d at 280 n.11).\n \u2022 \u201c[W]e look forward to continuing to work together [with\nAdditionally, after the first CRL, CorMedix had a duty the FDA] expeditiously to complete the review of the\nto disclose that it could not quickly resolve the identified\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 7\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 9 of 28\n\n\n DefenCath NDA to address an unmet medical need.\u201d (Id. that the statements made by Defendants were contrary to the\n at \u00b6 207). then existing state of facts, for example, that Pleconaril was\n effective for all adults when it was not.\u201d)).\n \u2022 CorMedix \u201chas not been informed of any delays by the\n FDA in the review of the NDA ....\u201d (Id. at \u00b6 100). *11 Defendants\u2019 statements that DefenCath was \u201con\n \u201cCorMedix remains on schedule for a potential NDA track\u201d are similarly actionable because the statements\n approval during the second half of 2020.\u201d (Id. at \u00b6 187). misrepresented the status of the DefenCath NDA at the time\n the statements were made. See In re Cigna Corp. Sec. Litig.,\n \u2022 \u201c[I]n terms of activities that we are currently undertaking,\n No. 02-8088, 2005 WL 3536212, at * 11 (E.D. Pa. Dec.\n we are doing right now all the typical prelaunch\n 23, 2005) (finding statement that \u201cwe are on track with\n planning.\u201d (Id. at \u00b6\u00b6 153, 277).\n our own schedule\u201d actionable where company was not \u201con\n \u2022 \u201cSo from everything that we can see, I'm optimistic that track\u201d); see also Frater v. Hemispherx Biopharma, Inc., 996 F.\n everything is moving in the right direction.\u201d (Id. at \u00b6 Supp. 2d 335, 348-49 (E.D. Pa. 2014) (concluding defendants\n 279). \u201csystemically misled investors about the key components of\n the ... NDA and the nature of FDA feedback while presenting\nCorMedix's statements regarding the timeline for FDA predictions about FDA approval ... that [they] should have\napproval created a parallel duty to disclose the issues at known were unreasonable under the circumstances\u201d).\nROVI's facility impeding the proscribed timeline, In re\nAmarin Corp., 2022 WL 2128560, at *3 (\u201cThere is no Moreover, courts have consistently determined alleged\naffirmative duty to disclose all material information, but such misstatements that selectively disclosed to investors what\na duty may arise when a company chooses \u2018to speak about a information was provided to the FDA are actionable. In re\nmaterial subject to investors.\u2019 \u201d (quoting City of Edinburgh Celgene, 2019 WL 6909463, at *18 (finding \u201cthat Defendants\nCouncil, 754 F.3d at 174)); see also Williams, 869 F.3d at told investors about the positive clinical study results but\n241 (\u201cOnce a company has chosen to speak on an issue\u2014 failed to disclose the Metabolite discovery was misleading\u201d);\neven an issue it had no independent obligation to address Tomaszewski v. Trevena, Inc., 482 F. Supp. 3d 317, 331 (E.D.\n\u2014it cannot omit material facts related to that issue so as Pa. 2020) (determining omissions were actionable where the\nto make its disclosure misleading.\u201d); In re Bristol-Meyers defendant knew that the NDA would be deficient because\nSquibb, 2005 WL 2007004, at *23 (\u201c[A] defendant may he knew that Trevena's studies did not conform to FDA\nchoose silence or speech based on the then-known factual requirements); SEB Inv. Mgmt., 351 F. Supp. 3d at 898 (falsity\nbasis, but cannot choose half-truths.\u201d (citation modified)); alleged where defendants failed to disclose unfavorable data\nsee also In re Digital Island Sec. Litig., 357 F.3d 322, 329 that would inform the FDA's decision); id. at 902 (first citing\nn.10 (3d Cir. 2004) (duty to affirmatively disclose \u201cmay arise Schueneman v. Arena Pharm., Inc., 840 F.3d 698, 707-08\nwhen there is ... an inaccurate, incomplete or misleading (9th Cir. 2016) (finding that once the defendants affirmatively\nprior disclosure[ ]\u201d (citation modified)); Roofer's Pension represented that all its animal studies supported its case\nFund, 2018 WL 3601229, at *12 (\u201c[T]he Court agrees, for FDA approval, they had a duty to disclose the adverse\nthat once [d]efendants\u2019 chose to speak about generic drug study showing tumor growth related to their drug) then\npricing, they could not \u2018omit material facts related to that citing In re Viropharma, 21 F. Supp. 3d at 471 (determining\nissue so as to make the disclosure misleading.\u2019 \u201d (quoting defendants made material omissions by failing to reveal\nPTC Therapeutics, 2017 WL 3705801, at *14)); Industriens the FDA's conclusion that its Genzyme Study was deficient\nPensionsforsikring A/S v. Becton, Dickinson & Co., 620 F. because it bore directly on its discussions regarding market\nSupp. 3d 167, 186 (D.N.J. 2022) (\u201cDefendants may not exclusivity)).\ndescribe \u2018a favorable picture\u2019 of [a] material issue \u2018without\nincluding the details that would have presented a complete Defendants contend that because the FDA gave no indication\nand less favorable one.\u2019 \u201d (quoting SEB Inv. Mgmt. AB v. that the Moderna contamination would impact its NDA\nEndo Int'l PLC, 351 F. Supp. 3d 874, 897 (E.D. Pa. 2018))). approval, they had no duty to disclose that information.\nAccord In re Viropharma Inc., Litig., No. 02-1627, 2003 (Defs.\u2019 Br. at 22). To support their argument, Defendants\nWL 1824914, at *6 (E.D. Pa. April 7, 2003) (\u201cStatements cite In re Genzyme Corp. Sec. Litig., 754 F.3d 31, 43 (1st\nregarding the overall efficacy of the drug ... cannot be simply Cir. 2014), which held that the defendant had no obligation\ndismissed as immaterial .... [T]he Plaintiffs have pleaded to disclose bioreactor failures at one plant where failures\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 8\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 10 of 28\n\n\n\u201cbore no relation to FDA approval of [the NDA]\u201d at another by the FDA relating to the\nplant and where FDA bad not given \u201cany indication that qualification of the filling operation.\nthe bioreactor failures would hinder approval\u201d of the NDA.\n(Emphasis added).\n (Id. at \u00b6 118).\nHowever, the Court finds Genzyme distinguishable because\nthe failures at ROVI were relevant to the FDA's approval Consequently, Defendants knew or should have known\nof DefenCath and the FDA Indicated as much, and also based on FDA guidelines, FDA communications, and\ninvolved the same facility. The First CRL cited concerns cGMP standards, that the outstanding fill line concerns at\nabout \u201cthe proposed future installation of new equipment,\u201d 15 ROVI\u2014although unrelated to DefenCath\u2014would impact\n(TAC \u00b6 24) and \u201cregarding the qualification of the filling DefenCath's approval. Defendants continued to comment on\noperation.\u201d (Id. at \u00b6 25). Thus, Defendants were made the likelihood of DefenCath's approval, which created a duty\naware via the First CRL that ROVI's fill lines\u2014even those that Defendants address the Moderna contamination and its\nthat Defendants contend are unrelated to DefenCath\u2014were impact on DefenCath's approval. See In re Intelligroup, 527\nof concern to the FDA and could impact DefenCath's F. Supp. 2d at 281-82 (\u201c \u2018When an allegation of fraud is based\napproval. (Id. at \u00b6 24). Next, Plaintiff alleges Defendants were upon nondisclosure, there can be no fraud absent a duty to\nresponsible for providing the FDA with information about the speak[.]\u2019 ... \u2018[S]uch a duty to disclose may arise [only] when ...\nfill lines. (Id. at \u00b6 163) (\u201cBased on FDA guidelines and/or [there was] an inaccurate, incomplete or misleading prior\ncommunications with the FDA, CorMedix knew or should disclosure [requiring a corrective statement].\u2019 \u201d) (citation\nhave known that it needed to provide to the FDA, information modified), Defendants did not meet this duty.\nabout any new production line and/or equipment at the facility\nmanufacturing DefenCath\u2014even if it was unrelated to the\nmanufacturing of DefenCath.\u201d); (see also id. at \u00b6\u00b6 165-66). iii. Misstatements and Omissions Related to the FDA's\nYet Plaintiff alleges that Defendants did not provide the Support for the DefenCath NDA\nFDA with information concerning new production lines at The Court next considers alleged statements made regarding\nthe ROVI facility or testing for contaminants in the Moderna the FDA's support for the DefenCath NDA:\nvaccine being done at ROVI. (Id. at \u00b6\u00b6 163, 166). The new\n \u2022 \u201cThe FDA was supportive of Neutrolin's proposed\nfill lines were found to be the source of the contaminants in\n manufacturing program ....\u201d (TAC \u00b6\u00b6 178, 181).\nthe Moderna vaccines. (Id. at \u00b6 167). Additionally, Plaintiff\nalleges, based on cGMP and Defendants\u2019 dialogue with \u2022 \u201cAs our press release of 16 October indicated the outcome\nthe FDA, that Defendants were responsible for ensuring of our interaction with the FDA was very positive. FDA\nprocesses were in place to ensure control of outsourced was supportive of the core manufacturing processes\nactivities and quality of purchased substances. (Id. at \u00b6 17). for the drug product and the active pharmaceutical\nRelatedly, Plaintiff notes: ingredients for the inclusion as part of the NDA\n submission.\u201d (Id. at \u00b6\u00b6 93, 184).\n\n *12 [S]ince the CMO \u2022 The FDA \u201cnoted that ... it had not identified any potential\n manufactured multiple different review issues at this time.\u201d (Id. at \u00b6 211).\n drug products, Defendants also\n \u2022 Responding \u201cYes, yes\u201d to the question of \u201chas the\n knew or recklessly ignored that\n company addressed all the questions [from the FDA]\n they needed to ensure that its\n appropriately?\u201d (Id. at \u00b6 154).\n protocols relating to changeover\n of manufacturing lines ... met\n These alleged material misstatements and omissions\n cGMP standards and that deficient\n are actionable; they contradicted information known by\n protocols relating to changeover of\n Defendants and failed to disclose unfavorable information\n manufacturing lines ... could and\n that would have painted a fuller, more accurate picture for\n would cause contaminated vials,\n investors. See SEB Inv. Mgmt., 351 F. Supp. 3d at 898\n which would delay the CMO's\n (claims sustained where defendants, while \u201cinstilling hope\n ability to obtain the data requested\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 9\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 11 of 28\n\n\nin their investors ... failed to disclose the unfavorable data found this sufficient to satisfy the requirement for pleading\nthat would inform the FDA's decision\u201d); Frater, 996 F. materiality at the motion to dismiss stage. See, e.g., In re Able\nSupp. 2d at 348-49 (E.D. Pa. 2014) (claim adequately pled Labs. Sec. Litig., No. 05-2681, 2008 WL 1967509, at *15\nthat \u201cHemispherx systemically misled investors about the (D.N.J. Mar. 24, 2008) (\u201c[T]he significant decrease in stock\nkey components of the [ ] NDA and the nature of FDA price immediately following the disclosure of the adverse\nfeedback while presenting predictions about FDA approval ... information satisfies the Third Circuit's standard for pleading\nthat it should have known were unreasonable under the materiality.\u201d); Frater, 996 F. Supp. 2d at 347 (requisite\ncircumstances.\u201d); Gorlamari v. Verrica Pharm., Inc., 2024 materiality demonstrated where stock price \u201cplummeted\u201d\nWL 150341, at *12 (E.D. Pa. Jan. 11, 2024) (falsity alleged after \u201cmisleading statements were contradicted by the FDA\u201d).\nwhere \u201cWhite's partial response \u2018yes\u2019 could suggest that\nWhite had not received news inconsistent with approval\nin late May, which would contradict the FDA's findings v. Forward-Looking Statements 17\nin February 2022 that quality problems persisted.\u201d); see *14 Defendants assert that some of the alleged\nalso Skiadas v. Acer Therapeutics Inc., 2020 WL 4208442, misstatements are forward-looking and accompanied by\n*8 (S.D.N.Y. July 21, 2020) (complaint upheld where the adequate cautionary language, thus immunizing Defendants\n\u201cDefendants knew that the FDA had not agreed to approve under the PSLRA's safe harbor provision. (Defs.\u2019 Br. at\n[Edsivo] but ... chose to say the opposite.\u201d). 24). Plaintiff argues that Defendants lack immunity for\n Defendants\u2019 failure to disclose adverse events and risks that\n had already occurred or were occurring, making the purported\n iv. The Misstatements and Omissions Related to the forward-looking statements neither forward-looking, nor\n ROVI Manufacturer, Being \u201cOn Track,\u201d and the supported by cautionary language. (Pl.\u2019s Br. at 22-24).\n FDA's Support for the DefenCath NDA are Material Plaintiff specifically alleges in the Third Amended Complaint\n *13 The materiality of a misrepresentation or omission is that the forward-looking statements are misleading\u2014not\nmeasured by the effect of the disclosure of the facts on the because they fail to \u201ccorrectly predict that the FDA would not\nstock's price. In re Constar Int'l Inc. Sec. Litig., 585 F.3d approve DefenCath[,]\u201d but because \u201cDefendants concealed\n774, 783 (3d Cir. 2009) (citation modified); see also In re events that had occurred or were occurring.\u201d (Pl.\u2019s Br. at 22).\nMerck Derivative & \u201cERISA\u201d Litig., 543 F.3d 150, 168 (3d The Court finds that Plaintiff sufficiently alleges at this stage\nCir. 2008). 16 that the statements are not forward-looking.\n\nThe materiality of the misstated and omitted information Under the PSLRA's safe harbor provision, \u201cforward-looking\u201d\nwas evidenced by the allegations of subsequent disclosure statements are not actionable if they are \u201c(1) identified as\nof the information and its significant impact on the market. such, and accompanied by meaningful cautionary statements;\n(See TAC \u00b6\u00b6 21-22, 106, 219-20 (alleging CorMedix's stock or (2) immaterial; or (3) made without actual knowledge that\nprice decreased approximately 54.4 percent after Defendants the statement was false or misleading.\u201d In re Aetna, Inc.\npublicly disclosed the First CRL); id. at \u00b6\u00b6 25, 125-26, 236 Sec. Litig., 617 F.3d 272, 278-79 (3d Cir. 2010) (citing 15\n(alleging CorMedix's stock price fell 18.36 percent after U.S.C. \u00a7 78u-5(c)); see also Avaya, 564 F.3d at 254. The\ninvestors learned CorMedix could not resubmit the NDA PSLRA's definition of \u201cforward-looking statement\u201d includes\nuntil the third quarter of 2021 because more remedial steps \u201cprojections of future performance, plans and objectives for\nwere necessary than previously identified); id. at \u00b6\u00b6 27, future operations, and assumptions underlying statements\n129, 237 (alleging CorMedix's stock fell approximately 20 about future financial, economic or operational performance.\u201d\npercent after it announced it could not resubmit the NDA In re Aetna, 617 F.3d at 279 (citing 15 U.S.C. \u00a7 78u\u20135(i)(1)).\nuntil the fourth quarter of 2021); id. at \u00b6\u00b6 29, 135, 261, 262\n(alleging CorMedix's stock fell over 27 percent after investors Additionally, to be protected under the PSLRA safe harbor,\nlearned CorMedix \u201cha[d] encountered delays\u201d at ROVI and the forward-looking statements must be accompanied by\nthat the timeline to address deficiencies at ROVI's facility cautionary language that is \u201cextensive and, specific.\u201d (citing\nwas \u201cuncertain\u201d); id. at \u00b6\u00b6 35-36, 157, 159, 281-82 (alleging Avaya, 564 F.3d at 256 (quoting GSC Partners CDO Fund\nCorMedix's stock fell approximately 57 percent after it v. Washington, 368 F.3d 228, 243 n.3 (3d Cir. 2004)).\ndisclosed the existence of the Second CRL and stated ROVI \u201c[A] vague or blanket (boilerplate) disclaimer which merely\nneeded \u201can independent CGMP consultant\u201d)). Courts have warns the reader that the investment has risks will ordinarily\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 10\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 12 of 28\n\n\nbe inadequate to prevent misinformation. To suffice, the looking statements are misleading because their predictions\ncautionary statements must be substantive and tailored to are incorrect, rather that the forward-looking statements are\nthe specific future projections, estimates or opinions in misleading because adverse events and risks underlying their\nthe prospectus which the plaintiffs challenge.\u201d Id. (quoting predictions were not disclosed. (Pl.\u2019s Br. at 22). Cautionary\nSemerenko v. Cendant Corp., 223 F.3d 165, 182 (3d Cir. statements are not truly cautionary when the defendant knows\n2000)); see also OFI Asset Mgmt v. Cooper Tire & Rubber, that an identified risk has or will occur. See In re Bristol-Myers\n834 F.3d 481, 491 (3d Cir. 2016) (noting cautionary Squibb, 2005 WL 2007004, *51-52. The Bristol-Myers Court\nstatements are \u201cmeaningful\u201d when they are \u201csubstantive found that \u201ceven though these statements [we]re forward-\nand tailored to the specific future projections, estimates or looking ... and even if these statements were accompanied\nopinions in the [documents] which the plaintiffs challenge.\u201d); by adequate cautionary language, [the] [p]laintiff adequately\nNational Junior Baseball League v. Pharmanet, 720 F. Supp. alleges that [the] [d]efendants had enough information ... to\n2d 517, 530 (D.N.J. 2010) (explaining cautionary statements know that this status would not be attained.\u201d Id. Importantly,\nare tailored when they \u201c \u2018[identify] important factors that \u201csafe harbor ... provides no protection to someone who warns\ncould cause actual results to differ materially from those in his hiking companion to walk slowly because there might be a\nthe forward-looking statement.\u2019 \u201d (quoting EP MedSystems, ditch ahead when he knows with near certainty that the Grand\nInc. v. EchoCath, Inc., 235 F.3d 865, 872-73 (3d Cir. 2000))). Canyon is one foot away.\u201d Id. at 51.\n\nHowever, the safe harbor provision does not apply to a \u201c For the purported forward-looking statements made before\n\u2018mixed present/future statement ... with respect to the part of the First CRL, Plaintiff adequately alleges that Defendants\nthe statement that refers to the present.\u2019 \u201d Roofer's Pension failed to disclose that the FDA raised concerns and\nFund, 2018 WL 3601229, at *7 (quoting Avaya, 564 F.3d deficiencies at ROVI's facility, which make the statements\nat 255); see also In re Majesco Sec. Litig., No. 05-3557, misleading. (TAC \u00b6\u00b6 205, 208, 213). For the forward-looking\n2006 WL 2846281, at *4 (D.N.J. Sept. 29, 2006) (noting statements made after the First CRL, Plaintiff adequately\n\u201c \u2018allegations based upon omissions of existing facts or alleges in the Third Amended Complaint that Defendants\ncircumstances do not constitute forward[-]looking statements failed to disclose various events and risks that affected ROVI's\nprotected by the safe harbor\u2019 \u201d (quoting In re MobileMedia ability to address the deficiencies identified in the First CRL,\nSec. Litig., 28 F. Supp. 2d 901, 930 (D.N.J. 1998)). which make the statements misleading. (Id. at \u00b6 228).\n\nThe PSLRA's \u201csafe harbor [provision] for forward-looking Since the \u201calleged misstatements are assertions of current\nstatements overlaps with the Third Circuit's \u2018bespeaks fact, not predictions, they do not qualify for safe harbor\ncaution\u2019 doctrine, under which \u2018cautionary language, if protection.\u201d In re PTC Therapeutics, Inc. v. Sec. Litig., at *15\nsufficient, renders the alleged [forward-looking] omissions or (citing In re Viropharma, 21 F. Supp. 3d at 471 (\u201c[O]missions\nmisrepresentations immaterial as a matter of law.\u2019 \u201d Dang, of existing facts or circumstances are not forward-looking,\n750 F. Supp. 3d at 466 (citing EP MedSystems, 235 F.3d at and thus do not qualify for safe harbor protection.\u201d)).\n874 (quoting In re Donald J. Trump Casino Sec. Litig.-Taj\nMahal Litig., 7 F.3d 357, 371 (3d Cir. 1993))). \u201cUnder both Additionally, when viewed in isolation, the cautionary\nthe PSLRA and the bespeaks caution doctrine, cautionary language regarding the likelihood of FDA approval of\nlanguage must be extensive, specific, and directly related the DefenCath NDA facially appear to be forward-looking\nto the alleged misrepresentation ....\u201d Id. at 466 (quoting statements that are within the safe harbor provision,\nLewakowski v. Aquestive Therapeutics, Inc., No. 21-3751, However, these statements appear less so when considered\n2023 WL 2496504, at *5 (D.N.J. Mar. 14, 2023) (citing In re in context with Plaintiff's allegations, specifically, omitting\nAetna, 617 F.3d at 282; In re Donald J. Trump, 7 F.3d 357 at the manufacturing issues at ROVI, misstatements about being\n371-72). \u201con track,\u201d and the FDA's Support for the DefenCath NDA,\n as well as withholding the Audit. (See generally TAC). See,\n *15 The purported forward-looking statements are not e.g., SEB Inv. Mgmt., 351 F. Supp, 3d at 902 (finding that\nprotected by the PSLRA's safe harbor. Defendants analogize while qualified cautionary statements about prospect of FDA\ntheir statements to cases that found similar statements approval appear to be forward looking, when statements are\nregarding the FDA to be forward-looking. (Defs.\u2019 Br. at considered in context they are not protected because certain\n24-25), However, Plaintiff does not allege that the forward- defendants failed to identify data contradicting statements\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 11\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 13 of 28\n\n\nand expressed optimism regarding labeling approval); cf. In the SOX certifications. (Defs.\u2019 Br. at 26-28). The Court finds\nre Amarin Corp. PLC Sec. Litig., 689 F. App'x 124, 131 & categories 1 and 2 are actionable statements. 20\nn.10 (3d Cir. 2017) (finding no false or misleading statement\nin part because the defendants never stated that its special \u201c[T]he omission of a fact can make a statement of opinion ...,\nprotocol assessment would be accepted by the FDA and even if literally accurate, misleading to an ordinary investor.\u201d\nwarned approval was not guaranteed). 18 Omnicare, Inc. v. Laborers Dist. Council Constr. Indus.\n Pension Fund, 575 U.S. 175, 187 (2015); see also City\nContrary to Defendants\u2019 argument, statements regarding of Warren, 70 F. 4th at 685 (\u201cOmnicare's framework for\nthe timing of the FDA's decision on DefenCath's NDA evaluating opinion falsity applies to claims under [Section]\nsimilarly do not fall within the PSLRA's safe harbor because 10(b) for violations of [SEC] Rule 10b-5.\u201d). \u201c \u2018An opinion\nPlaintiff alleges Defendants concealed adverse events and is \u2018a belief[,] a view,\u2019 or a \u2018sentiment which the mind forms\nrisks that occurred or were in the process of occurring. See of persons or things,\u2019 whereas a fact is a \u2018thing done or\nFrater, 996 F. Supp. 2d at 348-49 (rejecting argument that existing\u2019 or \u2018[a]n actual happening.\u2019 \u201d City of Warren, 70\nplaintiff's claim turned on likelihood of approval \u201cirrelevant F. 4th 668 at 684 (quoting Omnicare, 575 U.S. at 183).\nto whether Hemisphere systemically misled investors about As such, a statement of opinion is not misleading simply\nthe key components of [ ] NDA and the nature of FDA because external facts show the opinion to be incorrect.\nfeedback ....\u201d); Shanawaz v. Intellipharmaceutics Int'l Inc., Omnicare, 575 U.S. at 188. However, opinion statements\n348 F. Supp. 3d 313, 324-25 (S.D.N.Y. 2018) (\u201cAt issue can still be false or misleading, City of Warren, 70 F. 4th at\nhere are not Defendants\u2019 opinions about the NDA's prospects 684. The \u201cmagic words[,] [\u201cwe think\u201d or \u201cwe believe,\u201d] can\nbefore the FDA, but [their] allegedly false descriptions of preface nearly any conclusion, and the resulting statements ...\nthe contents of the NDA itself.\u201d). Moreover, where alleged remain perfectly capable of misleading investors.\u201d Onmicare,\nmisstatements addressed already-known issues, \u201cit cannot 575 U.S. at 193. An opinion statement is misleading if it;\nbe that the mere inclusion of \u2018words of futurity or belief (1) \u201cwas not sincerely believed when made;\u201d (2) \u201ccontains\nbrings otherwise non-forward-looking statements within the an expressly embedded, untrue factual assertion;\u201d or (3)\nPSLRA safe harbor.\u201d Frater, 996 F. Supp. 2d at 348; see also \u201creasonably implies untrue facts and omits appropriate\nBristol-Myers, 2005 WL 2007004, *24 (holding statement qualifying language.\u201d City of Warren, 70 F. 4th at 686.\nthat trial results \u201care very impressive results\u201d not puffery This is not a conjunctive test but rather three separate\nbecause they \u201crefer[ ] specifically to the results from the scenarios by which an opinion may be actionable. Id. at\n[drug] trials\u2014a matter of historical fact\u201d). Indeed, Plaintiff 685. This standard does not \u201callow investors to second-guess\nalleges Defendants proffered unrealistic timeline statements inherently subjective and uncertain assessments\u201d nor is it\nbased on the manufacturing issues at ROVI. (See, e.g., TAC \u00b6\u00b6 \u201can invitation to Monday morning quarterback an issuer's\n28-29, 113, 118, 121-22, 187, 194, 196, 264, 269, 280). See In opinions.\u201d Omnicare, 575 U.S. at 186. In sum, opinions\nre MGM Mirage Sec. Litig., No. 09-1558, 2013 WL 5435832, may still be actionable \u201cif they do not reflect the speaker's\nat *7 (D. Nev. Sep. 26, 2013) (\u201c[E]ven though an estimate is subjective belief or if they omit known material information\na future projection, Defendants\u2019 statements were misleading undermining that belief.\u201d Roofer's Pension Fund, 2018 WL\nbecause, at the time the statement was made, Defendants 3601229, at *10.\nknew the estimate was not accurate and that actual costs were\nreasonably expected to exceed the stated budget.\u201d). 19 Moreover, \u201cthe Supreme Court has held that statements of\n opinion by top corporate officials may be actionable if they\n are made without a reasonable basis\u201d since \u201csuch statements\n vi. Opinion and Non-Action able Statements of can be materially significant to investors because investors\n Corporate Optimism know that these top officials have knowledge and expertise far\n *16 Defendants contend that Plaintiff wrongly characterizes exceeding that of the ordinary investor.\u201d In re Cambrex Corp.\nnon-actionable statements of corporate optimism and Sec. Litig., No. 03-4896, 2005 WL 2840336 (D.N.J. Oct. 27,\nopinion statements as material misstatements. (Defs.\u2019 Br. 2005) (citing In re Burlington, 114 F.3d at 1428).\nat 26). Defendants subcategorize the purported opinion/\nnon-actionable statements into three groups: (1) statements Additionally, while material misrepresentations may be\nabout having the right team, (2) opinion statements that actionable, such \u201crepresentations must be contrasted with\nCorMedix had adequately addressed FDA concerns, and (3) statements of subjective analysis or extrapolations, such as\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 12\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 14 of 28\n\n\nopinions, motives and intentions, or general statements of of its drug product were adequate to preserve DefenCath's\noptimism.\u201d EP MedSystems, 235 F.3d at 872. \u201c[V]ague and identity, strength, quality, and/or purity.\u201d (TAC \u00b6 186).\ngeneral statements of optimism \u2018constitute no more than Moreover, Defendants\u2019 statements regarding the DefenCath\n\u2018puffery\u2019 and are understood by reasonable investors as such.\u2019 NDA were not puffery because investors had a basis to\n\u201d In re Advanta Corp. Sec. Litig., 180 F.3d 525, 538 (3d and did rely on them. (Id. at \u00b6\u00b6 186, 205, 213, 228,\nCir. 1999) (quoting In re Burlington, 114 F.3d at 1428 n.14), 235, 255, 260). Cf. Fan, 927 F.3d at 716 (\u201c \u2018[V]ague and\nabrogated by, City of Warren, 70 F.4th at 668; see also In re general statements of optimism\u2019 are non-actionable precisely\nAetna, 617 F.3d at 283 (citation modified). because they are not material\u2014 a reasonable investor would\n not base decisions on such statements.\u201d); United States\n *17 \u201c \u2018Puffery\u2019 statements do not violate the securities laws S.E.C. v. Kearns, 691 F. Supp. 2d 601, 617 (D.N.J. 2010)\nbecause they lack an underlying factual basis and they fail (finding that medical transcriptions company's statements\nto meet Rule 10b-5's materiality requirement.\u201d Howard v. about \u201cdisciplined business practice\u201d and the experience and\nArconic Inc., 395 F. Supp. 3d 516, 548 (W.D. Pa. 2019). discipline of its management team, were merely puffery\n\u201cHowever,\u2018[i]f a statement is material, then it cannot be because no reasonable investor would have relied on them);\npuffing.\u2019 \u201d In re Aetna, 34 F. Supp. 2d at 945; see also In In re Hertz Glob. Holdings, Inc. Sec. Litig., No. 13-7050,\nre Enzymotec, 2015 WL 8784065, at *14 (\u201cA statement is 2017 WL 1536223, at *11 (D.N.J. Apr. 27, 2017), aff'd sub\nconsidered puffery only when it is immaterial.\u201d). \u201cContext nom, 905 F.3d 106 (3d Cir. 2018) (finding that statements\n[also] informs the puffery analysis.\u201d Howard, 395 F. Supp. 3d about \u201cstrong\u201d and \u201crecord\u201d financial results, as well as the\nat 548. generally optimistic statements, constituted puffery because\n they \u201care not determinate, verifiable statements.\u201d).\n\n a. \u201cRight Team\u201d Statements Further, to the extent Defendants argue that the subject\nDefendants argue that statements such as Defendants have statements related to DefenCath's NDA being \u201con track\u201d were\n\u201ca very experienced and competent team\u201d \u201cthe team\u201d, opinions, the Court finds that they are actionable as they\nand \u201cthe right team and appropriate resources\u201d constitute contain \u201cembedded\u201d falsities and concern a central part of\nstatements of non-actionable corporate optimism. (TAC CorMedix's business. City of Warren, 70 F. 4th at 686; see\n\u00b6\u00b6 185, 202, 210, 232). However, Defendants statements also West Palm Beach Police Pension Fund v. DFC Glob.\nabout having the \u201cright team\u201d were determinable, verifiable Corp., No. 13-6731, 2015 WL 3755218, at *13 (E.D. Pa. June\nstatements rather than mere vague, aspirational statements. 16, 2015) (\u201cFar from being a vague statement of intention or\nFor example, Defendants did not only assert that they optimism, fraudulent comments regarding ... a fundamental\nhave \u201ca very experienced and competent team,\u201d but also aspect of [the defendant]\u2019s business are of vital importance to\nArmstrong went further, stating \u201cI have working with me investors.\u201d).\na very experienced and competent team, they have the\nneeded breadth and depth in the requirements for sourcing,\nmanufacturing, distribution and quality assurance that is b. Statements Related to the FDA's Concerns\nnecessary for both the US and foreign markets.\u201d (Id. at \u00b6 185) *18 Next, Defendants posit that statements they made\n(emphasis added). This statement was made on November expressing their belief that CorMedix adequately addressed\n14, 2019, after the Audit report allegedly concluded that the deficiencies identified by the FDA in the First CRL were\nROVI would not pass FDA inspection and should not be opinion statements which Plaintiff has failed to allege were\nused. (Id. at \u00b6 181). The statement specifically comments not sincerely held or omitted material facts. (Defs.\u2019 Br. at 27).\non the qualifications of Armstrong's team and its ability The Court disagrees.\nto meet manufacturing requirements. This information is\nhighly material because this action revolves around CRLs Defendants contend the statement \u201cwe believe that we and the\nissued because of manufacturing issues at ROVI related to manufacturer have adequately addressed the concerns [the]\nthe DefenCath NDA\u2014CorMedix's principal business goal. [FDA] identified in the CRL and PAAL\u201d is not actionable.\nHighly material information cannot be mere puffery. In (Defs.\u2019 Br. at 27 (citing TAC \u00b6 266) (second alteration in the\nre Aetna, 34 F. Supp, 2d at 945. Plaintiff specifically original); see also TAC \u00b6 267-68)). However, this statement\nalleges that \u201cCorMedix's \u2018team,\u2019 including the Individual is indicative of an actionable opinion. Such a statement falls\nDefendants, failed to ensure that the methods used in within the third Omnicare scenario: it \u201creasonably implies\nmanufacturing and the controls used to maintain the quality untrue facts and omits appropriate qualifying language.\u201d City\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 13\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 15 of 28\n\n\nof Warren, 70 F. 4th at 686. Defendants proffered such 438 F.3d at 276. Accord McLean v. Alexander, 599 F.2d\nan opinion: (1) despite Defendants\u2019 failure to disclose the 1190, 1197 (3d Cir. 1979) (adopting definition for reckless\nAudit, which cautioned CorMedix of the very issues the conduct associated with either omissions or misstatements in\nFDA subsequently identified at ROVI; (2) without evidence the context of suits under Section 10(b) and Rule 10b-5).\nof \u201csatisfactory resolution of [the] objectionable conditions\nthat the FDA had already told Defendants was required ... Conscious behavior exists where a plaintiff \u201cspecifically\nbefore this application may be approved\u201d; and (3) despite allege[s] defendants\u2019 knowledge of facts or access to\nDefendants\u2019 failure to disclose that CorMedix \u201chad not information contradicting their public statements.\u201d In re\nensured [ROVI] complied ... with cGMP standards.\u201d (TAC Campbell Soup, 145 F. Supp. 2d at 599; see also Aviva\n\u00b6 269). As such, the Court finds Plaintiff has sufficiently Partners LLC v. Exide Techs., No. 05-3098, 2007 WL 789083,\npled that Defendants\u2019 statement regarding their handling of at *12 (D.N.J. Mar. 13, 2007), \u201c[T]he key inquiry is whether\nthe deficiencies identified by the FDA in the First CRL \u2018defendants knew or, more importantly, should have known\nis implying untrue factual assertions, making the opinion that they were misrepresenting material facts related to the\nstatement actionable under Omnicare. corporation.\u2019 \u201d National Junior Baseball League, 720 F. Supp.\n 2d at 553 (quoting In re Campbell Soup, 145 F. Supp. 2d at\n 599 (quotations omitted)).\n (2) Plaintiff Adequately Alleges Scienter 21\nUnlike Rule 9(b), which permits state of mind to be \u201cIn the Third Circuit, \u2018[s]cienter may be established by\nplead generally, PSLRA's \u201c[e]xacting pleading standard for setting forth facts that constitute circumstantial evidence of\nscienter\u201d requires that a securities fraud complaint, as to each either recklessness or conscious behavior and supported by\nact or omission, state \u201cwith particularity facts giving rise to evidence of motive and opportunity to commit fraud.\u2019 \u201d\na strong inference that the defendant acted with the required Roofer's Pension Fund, 2018 WL 3601229, at *15 (quoting\nstate of mind.\u201d 15 U.S.C. \u00a7 78u\u20134(b)(2); Tellabs, 551 U.S. In re Anadigics, Inc., Sec. Litig., No. 08-5572, 2011 WL\nat 313; City of Warren, 70 F.4th at 681 n.1; Avaya, 564 F.3d 4594845, at *32 (D.N.J. Sept 30, 2011), aff'd, 484 F. App'x\nat 267 (quoting 15 U.S.C. \u00a7 78u\u20134(b)(2)) (citation modified); 742 (3d Cir. 2012)). \u201cA plaintiff can rely on direct or\nsee also In re Elecs. for Imaging, Inc. Sec. Litig., No. 17-5992, circumstantial evidence to show the defendants had (1) both a\n2019 WL 397981, at *6 (D.N.J. Jan. 31, 2019) (same). motive and opportunity to commit the fraud; or (2) conscious\n misbehavior or recklessness.\u201d Allegheny Cnty. Emps.\u2019 Ret.\nScienter is \u201ca mental state embracing intent to deceive, Sys. v. Energy Transfer LP, 744 F. Supp. 3d 350, 390 (E.D.\nmanipulate, or defraud.\u201d Tellabs, 551 U.S. at 319 (quoting Pa. 2024) (citing Roofer's Pension Fund v. Papa, 687 F. Supp.\nErnst & Ernst, 425 U.S. at 193 n.12). A plaintiff alleging 3d 604, 617 (D.N.J. 2023).\nscienter must assert facts giving rise to a strong inference\nof reckless or conscious behavior. Avaya, 564 F.3d at 267 \u201cDemonstrating that a defendant had a motive, such as\n(quoting In re Advanta Corp., 180 F.3d at 534-35); see also personal financial gain, to commit a securities fraud violation\nFain v. USA Techs., Inc., 707 F. App'x 91, 95 (3d Cir. 2017). is a \u2018relevant consideration\u2019 that \u2018may weigh heavily in\n favor of a scienter inference[.]\u2019 \u201d Hertz Glob. Holdings, 905\n *19 \u201cA reckless statement is one involving not merely F.3d at 119 (quoting Tellabs, 551 U.S. at 325); see also\nsimple, or even inexcusable negligence, but an extreme Rahman, 736 F.3d 237, 245 (3d Cir. 2013) (\u201cThough it is\ndeparture from the standards of ordinary care, and which not necessary to plead motive to establish that a defendant\npresents a danger of misleading buyers or sellers that is either acted with scienter, its presence can be persuasive when\nknown to the defendant or is so obvious that the actor must conducting a holistic review of the evidence.\u201d). However,\nhave been aware of it.\u201d Avaya, 564 F.3d at 267 n.42 (quoting \u201cmotive and opportunity\u201d do not \u201cserve as an independent\nAdvanta, 180 F.3d at 535). 22 See also In re Campbell Soup route to [establishing] scienter.\u201d Avaya, 564 F.3d at 277;\nCo. Sec. Litig., 145 F. Supp. 2d 574, 599 (D.N.J. 2001) Roofer's Pension Fund, 2018 WL 3601229, at *17 (citation\n(The relevant inquiry for recklessness is whether defendants modified).\n\u201cshould have known that they were misrepresenting material\nfacts related to the corporation[,]\u201d i.e., when defendants had A plaintiff relying upon circumstantial evidence to support\n\u201cknowledge of facts or access to information contradicting a strong inference of scienter \u201cmust sufficiently plead\ntheir public statements.\u201d) (citation modified); In re Suprema, \u2018defendants\u2019 knowledge of facts or access to information\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 14\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 16 of 28\n\n\ncontradicting their public statements .... [i.e., that] defendants \u201crepresentations of confidential witnesses.\u201d Avaya, 564 F.3d\nknew or, more importantly, should have known that they were at 260. \u201cEven though all allegations relating to the falsity of\nmisrepresenting material facts related to the corporation.\u2019 \u201d a defendant's statement must be pled with particularity, see15\nRoofer's Pension Fund, 2018 WL 3601229, at *18 (quoting U.S.C. \u00a7 78u\u20134(b)([1]) and (2), a plaintiff in securities fraud\nIn re Campbell Soup, 145 F. Supp. 2d at 599). 23 actions can support a complaint by reliance on information\n attributed to confidential sources.\u201d In re Intelligroup, 527 F.\n *20 To determine if allegations in a complaint satisfy Supp. 2d at 290. Such reliance is not without limitation:\nthe scienter requirement the Court engages in a three-\npart analysis. Tellabs, 551 U.S. at 322-23. First, the Court\naccepts all factual allegations in the complaint as true. Id. [U]ndisclosed confidential sources\nat 322. Next, the Court determines \u201cwhether all of the facts can be used only in two situations:\nalleged, taken collectively, give rise to a strong inference of (1) if the complaint sets forth\nscienter, not whether any individual allegation, scrutinized other factual allegations, such\nin isolation, meets that standard.\u201d Id. at 322-23 (emphasis as documentary evidence, which\nadded). Finally, to determine whether the allegations give rise are sufficient alone to support\nto a \u201cstrong\u201d inference of scienter, the Court \u201ctake[s] into a fraud allegation, ... or (2)\naccount plausible opposing inferences.\u201d Id. at 323. That is, when the confidential sources are\nthe Court must consider \u201cplausible, nonculpable explanations described in the complaint with\nfor the defendant's conduct, as well as inferences favoring the sufficient particularity to support\nplaintiff.\u201d Id. at 324. \u201cAn inference that a defendant acted with the probability that a person in\nscienter need not be irrefutable.\u201d Martin, 757 F. App'x at 154 the position occupied by the\n(citing Tellabs, 551 U.S. at 324). \u201cHowever, it must be more [confidential] source would possess\nthan merely \u2018reasonable or permissible\u2014it must be cogent the information alleged.\nand compelling.\u2019 \u201d Id. (quoting Tellabs, 551 U.S. at 324). A\nsecurities fraud complaint will therefore only survive a 12(b)\n(6) motion to dismiss if \u201ca reasonable person would deem the In re Intelligroup, 527 F. Supp. 2d at 290 (citation\ninference of scienter cogent and at least as compelling as any modified); see also National Junior Baseball League, 720\nopposing inference one could draw from the facts alleged.\u201d Id. F. Supp. 2d at 538-39. \u201cWhere, as here, plaintiff[ ] lack[s]\n documentary evidence such as internal memoranda, \u2018reliance\nA plaintiff does not need to come forward with \u201csmoking- on confidential sources to supply the requisite particularity\ngun\u201d evidence to meet the PSLRA's pleading requirements. for their fraud claims ... assumes a heightened importance.\u2019 \u201d\nIn re Hertz, 905 F.3d at i 14 (citing Tellabs, 551 U.S. at Avaya, 564 F.3d at 261 (quoting California Pub. Emps.\u2019 Ret.\n324); see also Tellabs, 551 U.S. at 324 (\u201cThe inference that Sys. v. Chubb, 394 F.3d 126, 148 (3d Cir. 2004)).\nthe defendant acted with scienter need not be irrefutable,\ni.e., of the \u2018smoking-gun\u2019 genre, or even the most plausible In considering the reliability of a confidential witness's\nof competing inferences.\u201d); Fain, 707 F. App'x at 95, statements, courts should consider \u201cthe detail provided by\nAlthough courts \u201caggregate the allegations in the complaint the confidential sources, the sources\u2019 basis of knowledge, the\nto determine whether [they] create[ ] a strong inference of reliability of the sources, the corroborative nature of other\nscienter, plaintiffs must create this inference with respect to facts alleged, including from other sources, the coherence and\neach individual defendant in multiple defendant cases.\u201d Winer plausibility of the allegations, and similar indicia.\u201d Chubb,\nFamily Tr. v. Queen, 503 F.3d 319, 337 (3d Cir. 2007) (citation 394 F.3d at 147; see Urban Outfitters, 103 F. Supp. 3d\nmodified). at 648-49; see also National Junior Baseball League, 720\n F. Supp. 2d at 553 (\u201c[I]n order to rely on the statements\n of a confidential witness, even for the purpose of pleading\n i. The Statements of the Confidential Witnesses\n scienter, the plaintiff must allege: (1) the time period that the\n Supports a \u201cStrong Inference\u201d of Scienter\n confidential source worked at the defendant-company, (2) the\nA plaintiff may plead \u201cfalsity by alleging various sources\n dates on which the relevant information was acquired, and\nfor the \u2018true facts\u2019 known or recklessly disregarded\n (3) the facts detailing how the source obtained access to the\nby defendants[,]\u201d including documentary evidence and\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 15\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 17 of 28\n\n\ninformation.\u201d) (citing Intelligroup, 527 F. Supp. 2d at 290) report. (Id. at \u00b6 86). FE2 identified problems with ROVI's\n(citation modified). \u201cmanufacturing, validation, test methods, and[ ] critically\n the ROVI facility itself: ROVI had not maintained a sterile\n *21 In Chubb, the Third Circuit disregarded statements by manufacturing facility, and its plant was not compliant with\nconfidential witnesses for plaintiffs\u2019 failure to allege when International Sterilization Organization standards,\u201d (Id. at \u00b6\nthe witnesses were employed by the company, the dates they 87).\nacquired the information alleged, or how they had access to\nsuch information. Chubb, 394 F.3d at 148, The confidential The Court finds that FE1 and FE2's accounts are described\nwitnesses\u2019 statements left the court \u201cto speculate whether the with sufficient particularity to support the probability\nanonymous sources obtained the information they purport[ed] that the confidential witnesses possessed the information\nto possess by firsthand knowledge or rumor.\u201dId.; see also In alleged, Avaya, 564 F.3d at 263. As such, \u201cthe factors\nre PayPal, 2025 WL 325603, at *17 (declining to consider used to evaluate the overall reliability of information from\nconfidential witnesses statements where \u201c[n]one of the above confidential sources do not reveal a basis to steeply discount\nrepresentative allegations\u2014of any similar allegations in the the information,\u201d and the Court will therefore take the\nComplaint\u2014contain[ed] details about actual meetings or information from FE1 and FE2 as true. City of Warren, 70\ncommunications where Defendants learned information that F.4th at 693.\ncontradicted their public statements.\u201d). In contrast, in Avaya,\nthe plaintiff shareholders who relied on confidential witnesses\nfor information about alleged securities fraud violations ii. Defendants\u2019 Public Representations of Expertise\nadequately described \u201cthe who, what, when, where and how\u201d and Direct Oversight Support a \u201cStrong Interference\u201d\nabout the sources and their acquisition of information in of Scienter\nsatisfaction of the PSLRA's pleading requirements. Id. at 253, Courts have consistently found scienter where defendants\n263-64. represent knowledge about the misrepresented topics. See\n City of Warwick, 2024 WL 3219616, at *14 (finding scienter\nHere, the Third Amended Complaint alleges with the requisite where the defendants \u201cspoke frequently about how involved\nparticularity \u201cthe who, what, when, where and how\u201d about they were in all aspects of the company's business[ ]\u201d and\nPlaintiff's confidential witnesses and the basis of their where the CFO was presented with problematic findings of\nknowledge about the alleged securities fraud, See Avaya, 564 internal audit); see also Hall v. Johnson & Johnson, No.\nF.3d at 253, According to the Third Amended Complaint, FE1 18-1833, 2019 WL 7207491, *22 (D.N.J. Dec. 27, 2019)\nwas hired in 2018 by CorMedix to audit ROVI, its CMO, in (finding CEO who \u201crepeatedly professed to have knowledge\nSpain. (TAC \u00b6\u00b6 80-81). FE1 personally conducted the audit, regarding\u201d issues at the heart of alleged misstatements acted\nwhich \u201ctook a couple of weeks and included an on-site visit with scienter); SEB Inv. Mgmt., 351 F. Supp. 3d at 906\nto ROVI's facilities in Spain.\u201d (Id. at \u00b6 81). FE1 then prepared (finding scienter where the plaintiff alleged that company\nthe Audit in 2019 and \u201crecommended that ROVID not be executives made \u201cpublic comments regarding the clinical data\nused, and directly stated that ROVI would never be able to in press releases and earnings calls\u201d because the \u201cofficers\npass an FDA inspection.\u201d (Id. at \u00b6 83). were speaking as authoritative sources who possessed the\n information to support their statements. When they did so,\nFurther, the Third Amended Complaint identifies FE2 as they knew that withholding the negative data that contradicted\n\u201cthe Senior Director of Quality Assurance at CorMedix from their public statements was misleading to investors.\u201d); Frater,\nFebruary 2020 until they resigned in May 2023.\u201d (Id. at \u00b6 996 F. Supp. 2d at 349-50 (finding scienter where executives\u2019\n82). FE2 reported to John Ortiz, the Director of Quality, public statements about FDA compliance were contradicted\nwho reported to Mounts. (Id.) According to FE2, while the by internal findings); id. at 350 (citing In re MannKind Sec.\nreport from the Audit recommended ROVI not be used by Actions, 835 F. Supp. 2d 797, 811 (C.D. Cal. 2011) (\u201cWhen\nCorMedix, it was \u201cchosen anyway based on the close personal the FDA tells a company about problems with a product,\nfriendship between ROVI's head and ... Baluch.\u201d (Id. at and the company nonetheless continues to make confident\n\u00b6 84). FE2 accessed the report because it was placed on predictions about a product, courts have inferred scienter\nCorMedix's internal shared drive. (Id. at \u00b6 85) Baluch was and falsity.\u201d)); In re PTC Therapeutics, 2017 WL 3705801,\n\u201cclosely involved in the production and distribution of FE1's *17 (\u201c[S]tatements to investors during earnings calls and\nreport\u201d and FE2 believed Mounts received a copy of the healthcare conferences implied that they had first-hand\n knowledge of ACT DMD results and PTC's conversations\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 16\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 18 of 28\n\n\nwith the FDA.\u201d). Accord Utesch v. Lannett Co., Inc., 385 F. \u201cIn some cases, a plaintiff can establish scienter by showing\nSupp. 3d 408, 422 (E.D. Pa. 2019) (finding scienter when the defendants had \u2018knowledge of facts or access to\n\u201ca high-ranking officer \u2018evinc[es] certitude\u2019 as to a matter, information contradicting their public statements.\u2019 \u201d Roofer's\nparticularly where the underlying substance is being publicly Pension Fund, 687 F. Supp. at 622 (quoting Novak v. Kasaks,\nquestioned\u201d (quoting Avaya, 564 F.3d at 270)). 216 F. 3d 300, 308 (2d. Cir. 2000); Avaya Inc., 564 F.3d at\n 259-60; see also National Junior Baseball League, 720 F.\n *22 Defendants publicly and repeatedly represented, (i) Supp. 2d at 553 (\u201cA plaintiff alleging a strong inference of\ntheir knowledge of \u201csuccessfully submit[ing] multiple NDAs scienter from circumstantial evidence must sufficiently plead\nthat were ultimately approved;\u201d (ii) \u201cArmstrong's more than \u2018defendants\u2019 knowledge of facts or access to information\n45 years of experience in the pharmaceutical industry with contradicting their public statements .... [i.e., that] defendants\nbroad senior level cross functional experience, as well as knew or, more importantly, should have known that they were\nhis having held a number of general management positions;\u201d misrepresenting material facts related to the corporation.\u2019\nand (in) CorMedix and the team's \u201crequisite knowledge \u201d (quoting In re Campbell Soup, 145 F. Supp. 2d at 599\nand experience to oversee and manage the manufacture of (alteration in the original))); In re Great Atl. & Pac. Tea\n[DefenCath],\u201d which support a \u201cstrong inference\u201d of scienter. Co., Inc. Sec. Litig., 103 F. App'x 465, 469 (3d Cir. 2004)\n(TAC \u00b6\u00b6 6, 52, 88). Indeed, from the Class Period's inception, (\u201c[W]hen the alleged fraud is based on non-disclosure of\nArmstrong stated to investors that \u201cCorMedix has been facts, evidence that the defendants had actual knowledge of\nmanufacturing and selling Neutrolin outside the U.S. for the the facts is sufficient to show scienter.\u201d).\nlast five years. We have successfully carried out technical\ntransfer and validation of the manufacturing process, which Here, the Third Amended Complaint, through the averments\nhas enabled the successful production of product at three of FE1 and FE2, alleges that Defendants had access to the\ndifferent manufacturing sites\u201d and went on to assure \u201c[t]his Audit cautioning that ROVI would \u201cnever be able to pass an\nshould give you comfort that we understand Neutrolin's FDA inspection.\u201d (TAC \u00b6\u00b6 5, 40, 80-87). Despite Defendants\u2019\nmanufacturing, technical, analytical processes as well as the alleged knowledge of the Audit, Defendants assured investors\nquality controls and the systems that go with it ... [a]nd that manufacturing issues at ROVI had been and would be\nimportantly, the key members of my staff, including me, have rectified, and DefenCath's NDA was on track. 25 (Id. at\nin our past experience, successfully submitted multiple NDAs \u00b6\u00b6 180, 182, 188, 193, 195, 197, 208, 213, 217). These\nthat were ultimately approved.\u201d (Id. at \u00b6\u00b6 6, 88). 24 allegations \u201care sufficient to raise a strong inference of at least\n reckless disregard on the part of the individual Defendants\nAdditionally, Defendants provided responses to specific with respect to [DefenCath's NDA] ....\u201d City of Warwick, 2024\nquestions about DefenCath and the NDA process, which WL 3219616, at *15 (citing McCullough v. Advest, Inc., 754\nimplied firsthand knowledge to investors. See Roofer's F. App'x 109, 113 (3d Cir. 2018) (acknowledging access to\nPension Fund, 2018 WL 3601229, at *21 (finding that information in finding that scienter adequately alleged)); see\ndefendant repeatedly responded to questions from analysts also Aldridge v. A.T. Cross Corp., 284 F.3d 72, 83 (1st Cir.\nand investors with answers that indicated knowledge about 2002) (access to facts contradicting statements to investors\ndrug pricing and the repeated inquiries \u201cwould have made is \u201cclassic evidence of scienter\u201d); In re Campbell Soup, 145\nDefendants aware of the importance of generic drug pricing F. Supp. 2d at 599 (stating that a claim of recklessness can\nto the investing public\u201d thus defendants\u2019 failure to disclose be based on allegations that the defendants had access to\ncertain facts in its answers was indicative of scienter (citing information which contradicted their public statements); cf.\nNew Orleans Emps. Ret. Sys. v. Celestica, Inc., 455 F. App'x Spar v. Celsion Corp., No. 20-15228, 2023 WL 2069725, at\n10, 14 (2d Cir. 2011) (finding that executives had reason to *7 (D.N.J. Feb. 6, 2023) (\u201cDefendants reiterate that Plaintiff\nfocus on the subject of alleged misrepresentations because cannot and does not allege that Defendants had access to\nit was a \u201csubject about which investors and analysts often the data at the time such statements were made.\u201d); Roofer's\ninquired[ ]\u201d))); see also id. at *22. Pension Fund, 2018 WL 3601229, at *19 (finding that the\n defendants having access to publicly available reports is not\n as compelling as a competing inference that the defendants\n a. Defendants\u2019 Access to the Audit Results Further did not act with scienter)).\n Supports a \u201cStrong Interference\u201d of Scienter\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 17\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 19 of 28\n\n\n *23 Here, Plaintiff \u201cha[s] specifically alleged [D]efendants\u2019 conveyed to management and related to fraud.\u2019 \u201d Id. (quoting\nknowledge of facts or access to information contradicting Avaya, 564 F.3d at 270).\n[Defendants\u2019] public statements[ ]\u201d and accordingly, the\nCourt finds a sufficient \u201cstrong inference\u201d of scienter. In Notably, the core operations doctrine on its own is not\nre Campbell Soup, 145 F. Supp. 2d at 599; see also In re sufficient to establish scienter but should be taken \u201cin\nViropharma, 2003 WL 1824914, at *9 (finding \u201cDefendants consideration when viewing the entirety\u201d of the TAC's\nhad access to non-public annual reports which contained allegations. In re Enzymotec, 2015 WL 8784065, at *18.\nthe results of the clinical trials, the NDA for Pleconaril\nwhich contained data from the Phase II and III trials, and Here, Plaintiff alleges that DefenCath's approval was critical\nthe Case Report Forms prepared during the clinical trials.\u201d); to CorMedix's viability and the issues at the CMO effected\nIn re RAIT Fin. Tr. Sec. Litig., 2008 WL 5378164, at the core of CorMedix's business. (TAC \u00b6\u00b6 2, 5, 37, 40,\n*12-13 (E.D. Pa. Dec. 22, 2008) (finding scienter where 293). Defendants do not contend otherwise. Additionally,\nthe plaintiff alleged that the individual defendants were the Third Amended Complaint boasts the experience of the\nsenior executives, with access to information contradicting Individual Defendants. For instance, Plaintiff characterizes\ntheir public statements).Accord Frater, 996 F. Supp. 2d Armstrong, the EVP of Technical Operations, as an executive\nat 350 (\u201cWhen the FDA tells a company about problems officer with \u201cmore than 45 years of experience in the\nwith a product, and the company nonetheless continues to pharmaceutical industry with broader senior level cross\nmake confident predictions about a product, courts have functional experience, as well as his having held a number\ninferred scienter and falsity.\u201d). Further, considering the Third of general management positions.\u201d (Id. at \u00b6 52). Baluch\nAmended Complaint in its entirety, \u201cPlaintiff[ ] properly \u201cboasted\u201d about:\nallege[s] scienter based on Defendants\u2019 conscious decision\nto omit presently known facts,\u201d particularly when presented\nwith \u201cinformation about difficulties facing\u201d DefenCath The significant experience Phoebe\nNDA's FDA approval. See Curran, 2018 WL 394878, at *5. [Mounts] brings in regulatory, Jack\n [Armstrong] in manufacturing and\n supply chain, Paul in medical\n iii. The Core Operations Doctrine\n affairs and Liz in clinical operation,\nThe core operations doctrine also supports a finding of\n coupled with my Cialis and Byetta\nscienter. The core operations doctrine provides that when\n launch experience in the US just to\nmisrepresentations and omissions involve \u201ccore matters of\n name a few recent launches makes\ncentral importance\u201d to the corporate defendant, \u201ca \u2018core\n for a winning team. Together, we\noperations inference\u2019 supports scienter.\u201d Avaya, 564 F.3d at\n have a combined experience of over\n268; see also In re Urban Outfitters, Inc. Sec. Litig., 103 F.\n 170 years in the pharmaceutical\nSupp. 3d 635, 653-54 (E.D. Pa. 2015) (\u201c[U]nder the core\n business.\noperations doctrine, misstatements and omissions made on\n\u2018core matters of central importance\u2019 to the company and its\nhigh-level executives gives rise to an inference of scienter\n (Id. at \u00b6 95) (alterations in the original).\nwhen taken together with additional allegations connecting\nthe executives\u2019 positions to their knowledge.\u201d) (quoting\n At this juncture, these allegations are sufficient to support\nRahman, 736 F.3d at 246); see also Martin, 757 F. App'x\n scienter based upon the core operations doctrine. See,\nat 155; In re Amarin Corp. PLC., No. 13-6663, 2015 WL\n e.g., Urban Outfitters, 103 F. Supp. 3d at 654 (holding\n3954190, at *12 (D.N.J. June 29, 2015)).\n core operations doctrine was allowed to support scienter\n where business wherein fraud was alleged to have\nHowever, \u201c \u2018corporate management's general awareness of\n occurred accounted for 44 percent of all sales by Urban\nthe day-to-day workings of the company's business does not\n Outfitters during the year in question); Avaya, 564 F.3d\nestablish scienter[.]\u2019 \u201d Rahman, 736 F.3d at 247 (quoting\n at 271-72 (holding the core operations doctrine supported\nAvaya, 564 F.3d at 270). Rather, in order to support a finding\n scienter where CEO and CFO of a communications\nof scienter based upon the core operations doctrine, there\n company affirmatively denied the existence of intense\nmust be \u201c \u2018some additional allegations of specific information\n price competition at a time when the company actively\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 18\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 20 of 28\n\n\nwas granting steep price discounts even though no the defendants knew the information they disseminated was\nconfidential witness statement or particular document showed false); Stichting Pensionenfonds, 775 F. Supp. 3d at 850\na defendant's knowledge); Carmignac Gestion, S.A., 2019 (finding the core operations doctrine inapplicable where\nWL 3451523, at *16 (holding scienter met where senior the plaintiffs fail to allege that the defendants \u201cspecifically\nexecutives made statements concerning a product line that received information related to the alleged liability of the\naccounted for 22 percent of revenue\u2014and were specifically lead-sheathed copper cables and nonetheless omitted that\nalleged to have reviewed reports showing declining information in their statements concerning the cost benefits\nmarket share); Hall, 2019 WL 7207491, at *21 (finding of removing copper cables and implementing fiber cables.\u201d);\nscienter adequately pled where the defendants made public In re Heartland Payment Sys., Inc. Sec. Litig., No. 09-1043,\nmisstatements about a \u201cflagship product\u201d despite internal 2009 WL 4798148, at *7 (D.N.J. Dec. 7, 2009) (\u201c[I]t\nknowledge of adverse information); In re Allergan Generic is not automatically assumed that a corporate officer is\nDrug Pricing Sec. Litig., No. 16-9449, 2019 WL 3562134, familiar with certain facts just because these facts are\nat *12 (D.N.J. Aug. 6, 2019) (applying core operations important to the company's business; there must be other,\ndoctrine and finding scienter was supported where alleged individualized allegations that further suggest that the officer\nmisrepresentations addressed three drugs that made up a had knowledge of the fact in question.\u201d); In re Advanta Corp.,\n\u201csubstantial portion\u201d of the defendant company's revenues 180 F.3d at 539 (rejecting \u201callegations that a securities-fraud\nand operations during the class period); In re Toronto- defendant, because of his position within the company, \u2018must\nDominion Bank Sec. Litig., No. 17-1665, 2018 WL 6381882, have known\u2019 a statement was false or misleading\u201d); In re\nat *19 (D.N.J. Dec. 6, 2018) (holding core operations doctrine Amarin Corp., 2015 WL 3954190, at *12 (refusing to infer\nsupported scienter at pleading stage where the plaintiffs scienter from core operations doctrine \u201cabsent particularized\nalleged Canadian retail segment of business was \u201cflagship allegations showing that defendants had ample reason to\nbusiness\u201d and contributed over 60 [percent] of earnings); know of the falsity of their statements\u201d).\nSEB Inv. Mgmt., 351 F. Supp. 3d at 906-07 (holding that\na plaintiff sufficiently pled scienter where the the plaintiff *24 Moreover, the content and context of many of the\nalleged that the defendants recklessly disregarded facts they alleged misleading statements further enhances the finding of\nknew contradicted their public statements about a product scienter with respect to the individual defendants whom the\nthat was a critical part of defendants\u2019 business); Enzymotec, Court has found to have the requisite scienter. See Utesch,\n2015 WL 8784065, at *17 (finding scienter where the 385 F. Supp. 3d at 422 (\u201c \u2018[T]he most powerful evidence\nmisstatements \u201cabout which Defendants regularly spoke\u201d of scienter is the content and context\u2019 of the misleading\nconcerned their core business); In re Viropharma, 21 F. statements.\u201d) (quoting Avaya, 564 F.3d at 269)); see also In\nSupp. 3d at 473 (finding that \u201csales of Vancocin comprised re Urban Outfitters, 103 F. Supp. 3d at 653-54. In Avaya,\nViroPharma's \u2018core business,\u2019 also supports the inference that the company's CEO made statements \u201crepeatedly assur[ing]\nDefendants either knew or should have been aware of the analysts and investors that, although there was pressure in\nissues concerning the drug's approval\u201d and noting Vanocin the market, there were no significant changes to the pricing\naccounted for more than 50 percent of ViroPharma's revenue); environment.\u201d 564 F.3d at 260. The plaintiffs alleged that the\nIn re Cell Pathways, Inc., Sec. Litig., No. 99-725, 2000 WL CFO made these statements while \u201ckn[owing] of or recklessly\n805221, at *7 (E.D. Pa. June 20, 2000) (finding \u201cwhere the disregard[ing] the fact that competition was forcing unusually\nalleged fraud relates to the core business of the company, large 20 [percent] to 40 [percent] price discounts that were\nknowledge of the fraud may be imputed to the individual hurting profit margins,\u201d Id.\ndefendants\u201d (citation modified)); cf. Tibbs v. electroCore,\nInc., No. 23-2655, 2024 WL 4987243, at *7 (3d Cir. Dec. Here, for instance, in May 2022, Todisco provided his\n5, 2024) (affirming dismissal for lack of scienter on the opening remarks as CEO, but failed to disclose the\nbasis that \u201chigh-level allegations that individual defendants manufacturing deficiencies identified at CorMedix's API\nhad knowledge of [the company]\u2019s business, standing alone, for heparin, and one month later, while presenting at a\nwere not enough\u201d); Rahman, 736 F.3d at 246-47 (refusing to conference, he reiterated the CMO's ability to maintain\nallow the core operations doctrine to support scienter because cGMP standards, which prompted the question \u201chas the\nthe scheme involved only comprised a small percentage company addressed all the [FDA's] questions appropriately?\u201d\nof the defendants\u2019 annual business and declining to apply to which he answered \u201cyes, yes.\u201d (Id. at \u00b6\u00b6 152-54, 279).\ndoctrine in the absence of allegations demonstrating that Notwithstanding, on August 4, 2022, the FDA issued a\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 19\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 21 of 28\n\n\nSecond CRL, which cited unresolved deficiencies at both something more is needed.\u201d) (citation modified). Accord In\nROVI and the API supplier for heparin. (Id. at \u00b6\u00b6 33, 34, re Global Brokerage, Inc., No. 17-916, 2019 WL 1428395,\n156, 281). Further, on August 8, 2022, CorMedix disclosed at *14 (S.D.N.Y. Mar. 28, 2019) (holding that the defendants\nthis Second CRL and stated ROVI needed \u201can independent cannot be held liable for their SOX certifications with respect\nCGMP consultant.\u201d (Id. at \u00b6\u00b6 35, 157, 281). This further to statements where a plaintiff fails to adequately allege\nsupports a finding of scienter at this stage. See Roofer's actionable misstatements or omissions); Menaldi v. Och-Ziff\nPension Fund, 2018 WL 3601229, at *21 (finding content Cap. Mgmt. Grp. LLC, 277 F. Supp. 3d 500, 517 (S.D.N.Y.\nand context of \u201chigh-ranking executive\u201d defendants\u2019 repeated 2017) (\u201cSOX certifications ... do not constitute a standalone\nanswers to analysts questions regarding generic drug pricing basis for liability.\u201d).\nindicated personal knowledge of the subject and further\nsupported scienter); see also In re PTC Therapeutics, 2017 *25 The Court finds that Defendants\u2019 SOX certifications\nWL 3705801, at *17 (finding \u201cpersuasive\u201d the content and minimally support an inference of scienter. As addressed\ncontext of the statements of two executives \u201cimplied that they supra, the Court has already found the CWs\u2019 statements\nhad first-hand knowledge\u201d of the matter at issue, which, while may support a finding that Individual Defendants\u2014including\nnot conclusive, bolstered an inference of scienter). those who filed SOX certifications (Baluch and Armstrong)\n either knew (or were reckless in not knowing) about the\n Audit and the manufacturing deficiencies at ROVI that\n iv. SOX Certifications would materially impact the DefenCath NDA. See In re\n\u201cUnder the Sarbanes-Oxley Act, principal executive and Toronto Bank, 2018 WL 6381882, at *19 (considering\nfinancial officers of public companies must make a number of the SOX certifications to further scienter where court had\ncertifications about their financials.\u201d In re Elecs. for Imaging, already found CWs\u2019 statements \u201cmay support\u201d a finding\n2019 WL 397981, at *9 (citing 15 U.S.C. \u00a7\u00a7 78m, 78o(d), that defendants \u201ceither knew (or were reckless in not\n7241(a)(4)). \u201cSpecifically, officers must certify the general knowing) the alleged improprieties occurring at [the] Bank.\u201d).\ntruthfulness of the company's quarterly and annual reports Additionally, Plaintiff has alleged Defendants knew or\nand the establishment and adequacy of the company's internal recklessly disregarded the results of the Audit as well as the\ncontrols.\u201dId. (citing In re Intelligroup, 527 F. Supp. 2d at 287). manufacturing deficiencies at ROVI. (TAC \u00b6\u00b6 85-86, 149,\n 221). Accepting these allegations as true, as the Court must\nHere, the Third Amended Complaint references SOX at this stage, the Court considers the SOX certifications and\ncertifications during the Class Period signed by Baluch and allocates minimal weight to these certifications. See In re\nDavid. (TAC \u00b6\u00b6 192, 204, 212, 231, 254). These SOX Intelligroup, 527 F. Supp. 2d at 358. Cf. Roofer's Pension\ncertifications contained the following statement: \u201cto my Fund, 2018 WL 3601229, at *16; In re Campbell Soup Co.,\nknowledge ... the information contained in the [[ ] 10-K] 18-14385, 2020 WL 7022655, at *9 (D.N.J. Nov. 30, 2020)\nReport fairly presents, in all material respects, the financial (holding the \u201c[p]laintiffs have failed to allege facts to support\ncondition and results of operations of the Company.\u201d (Id.) the conclusion that Defendants knew the information in the\n SOX Certifications was false or recklessly disregarded any\n\u201cAn allegation that a defendant signed a SOX certification inaccuracies contained in an SEC filing.\u201d).\nattesting to the accuracy of an SEC filing that turned out\nto be materially false does not add to the scienter puzzle\nin the absence of any allegation that the defendant knew v. Whether Any Factors Weigh Against Scienter\nhe was signing a false SEC filing or recklessly disregarded In support of their motion, Defendants advance several\ninaccuracies contained in an SEC filing.\u201d In re Hertz, 905 F. factors which they contend undercut Plaintiff's scienter\n3d at 118; see also In re Intelligroup, 527 F. Supp. 2d at 288 allegations, including inter alia: (1) Defendants did not sell\n(holding that for Sarbanes-Oxley certifications to establish stock during the Class Period; (2) Baluch and Armstrong's\nscienter \u201cplaintiffs must allege facts indicating that certifying resignations were retirements; and (3) Defendants\u2019 filing of\ndefendants had clear reasons to doubt the validity of financials SOX Certifications. 26 (Defs.\u2019 Br. at 10, 17). 27\nbeing certified but kept turning their blind eye to all \u2018red\nflags\u2019 \u201d in order to \u201ccreate the requisite strong inference of\nscienter[ ]\u201d); Roofer's Pension Fund, 2018 WL 3601229, at a. Defendants Did Not Sell Stock During the Class\n*16 (\u201cCourts have found that SOX certifications themselves Period\nare not actionable and, that to support an inference of scienter,\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 20\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 22 of 28\n\n\nDefendants assert that the absence of insider stock sales 2018) (if \u201cthe resignation both takes place within a couple\nundermines scienter. (Defs.\u2019 Br. at 11; Defs.\u2019 Reply Br. at 3). of months of the announcement of the errors committed and\nPlaintiff does not allege that Defendants sold stock during is accompanied by an extraordinary corporate punishment\nthe Class Period. (See generally TAC). Rather, according measure, e.g., denial of severance payment\u201d it can support\nto Defendants, one of the Individual Defendants bought scienter) (quoting In re Intelligroup, 527 F. Supp. 2d at 347);\nCorMedix stock. (Defs.\u2019 Br. at 11 (citing Declaration of David see also Fain, 707 F. App'x at 97. \u201cFor a resignation to add to\nKotler (\u201cKotler Decl.\u201d), ECF No. 104-12, Ex. J)). \u201cAlthough an inference of scienter, a pleading must set forth allegations\nnot determinative, courts have consistently weighed this fact suggesting a compelling inference that the resignation was\nagainst an inference of scienter.\u201d See Lewakowski, 2023 WL the result of something other than \u2018the reasonable assumption\n2496504, at *12 (collecting cases); see also National Junior that the resignation occurred as a result of the release of bad\nBaseball League, 720 F. Supp. 2d at 558 (\u201c[T]he fact that news.\u201d Hertz, 905 F.3d at 118 (quoting Zucco Partners, LLC v.\n[the individual defendants] did not sell any [of the company's] Digimarc Corp., 552 F.3d 981, 1002 (9th Cir. 2009), amended\nstock during the Class Period tends to negate scienter.\u201d); on other grounds, (Feb. 10, 2009)). \u201c[E]ven the termination\nAvaya, 564 F.3d at 279 ([W]e will not infer fraudulent intent of an executive after the announcement of so-called bad news\nfrom the mere fact that some officers sold stock) (quoting (e.g. accounting irregularities) requires \u2018more than pleading a\nAdvanta, 180 F.3d at 540) (quoting In re Burlington, 114 F.3d link between bad news and an executive's resignation.\u2019 \u201d In re\nat 1424)); In re Valeant Pharms. Int'l, Inc. Sec. Litig., No. Toronto-Dominion Bank, 2018 WL 6381882, at *18 (quoting\n15-7658 2017 WL 1658822, at *11 (D.N.J. Apr. 28, 2017) In re Hertz, 905 F.3d at 119). \u201cThere must still be allegations\n(\u201cBecause it is plausible that the Exchange Act [d]efendants which cogently suggest that the resignations resulted from\nwere caught before they had a chance to sell their shares, the the relevant executives\u2019 knowing or reckless involvement in\nmere fact that the Exchange Act [d]efendants did not sell their a fraud.\u201d Id.\nshares is insufficient to render [the p]laintiffs\u2019 allegations\ndeficient.\u201d). Accord In re Urban Outfitters, 103 F. Supp. As the Third Circuit explained in Hertz, \u201c[c]hanges in\n3d at 655; In re Adolor Corp. Sec. Litig., 616 F. Supp. 2d leadership are only to be expected when leadership fails. That\n551, 572-73 (E.D. Pa. 2009), Cf. In re Suprema Specialties, is not, in itself, a symbol of fraud. Corporate resignations\n438 F.3d at 278 (finding complaint \u201cplausibly alleged that do not strengthen an inference of scienter, when, as here,\nthe sales were not normal or routine\u201d for defendant officers the allegations do not cogently suggest that the resignations\nwho each \u201cis alleged to have sold over 30 percent of his resulted from the relevant executives\u2019 knowing or reckless\nholdings\u201d); In re Enzymotec, 2015 WL 8784065, at *19 involvement in a fraud.\u201d Hertz, 905 F.3d at 118. Here,\n(finding complaint alleged stock sales \u201cunusual in scope\u201d the resignations of Armstrong and Baluch do not provide\nwhere one defendant sold 35 percent of his total holdings additional support of scienter. Both resignations\u2014which\nand another sold 42 percent). Accordingly, the lack of stock were characterized both in the TAC and by Defendants as\nsales during the Class Period neither bolsters nor defeats retirements\u2014occurred seven months after the first CRL,\nscienter, City of Warwick, 2024 WL 3219616, *13, 15 (finding which undercuts an inference of scienter. (TAC \u00b6 137).\nscienter adequately pled notwithstanding \u201cno allegations that Intelligroup, 527 F. Supp. 2d at 347. Plaintiff also fails\nDefendants engaged in irregular stock sales or profited from to adequately allege an extraordinary corporate punishment\nthe purported fraud.\u201d). against Armstrong or Baluch. Hoey, 2018 WL 902266, at\n *23 (inference of scienter not found even where executive\n resigned \u201cshortly after\u201d negative results announced). Indeed,\n b. Armstrong and Baluch's Resignations Do Not Defendants state Baluch remained as an advisor and note\n Further Bolster Scienter both Defendants received severance. (Defs.\u2019 Br. at 17 (citing\n *26 Generally, \u201c[t]he departure of corporate executive Kotler Decl., ECF No. 104-13, Ex. K at 1-2)). See In re\ndefendants is a factor that can strengthen the inference of Toronto-Dominion, 2018 WL 6381882, at *18 (declining\nscienter,\u201d In re Hertz, 905 F.3d at 118 (citation modified); to find resignations or reassignment of certain defendants\nbut see In re Par Pharm. Sec. Litig., No. 06-3226, 2008 supported scienter and noting if the defendants knew or\nWL 2559362, at *12 (D.N.J. June 24, 2008) (\u201cThe Third reckless in not knowing the alleged fraud, \u201cwhy would [the\nCircuit has generally found resignations of key officers to b]ank retain them in an advisory role[.]\u201d); Dang, 750 F.\nbe insufficient to show that they acted with the requisite Supp. 3d at 477-78 (finding two departures from company\nscienter to commit the alleged fraud.\u201d); see also Hoey v. that were neither contemporaneous with bad news nor\nInsmed Inc., No. 16-4323, 2018 WL 902266, at *23 (D.N.J.\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 21\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 23 of 28\n\n\naccompanied by punishment, which occurred seven months should be held responsible as a matter of public policy for\nafter negative decision by court of appeals insufficient to the losses suffered by the plaintiff.\u2019 \u201d Id. at 425 (quoting\ndemonstrate scienter); see also Roofer's Pension Fund, 2018 Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 222 (3d\nWL 3601229, at *20 (finding \u201csome probative value,\u201d in Cir. 2006)). It is not enough for a plaintiff to show that the\nemployee's resignation, which was announced the same price of a security was artificially inflated at the time of\nday as an investigation into company's revenue recognition purchase because of a defendant's misrepresentations. In re\npractices but noting that departure was not \u201cinvoluntary or DVI, Inc. Sec. Litig., No. 03-05336, 2010 WL 3522090, at\naccompanied by some form of corporate sanction.\u201d); In re *5 (E.D. Pa. Sept. 3, 2010). Rather, a plaintiff must show\nIntelligroup, 527 F. Supp. 2d at 347-49 (finding officers\u2019 that \u201cthe share price fell significantly after the truth became\nresignations insufficient evidence of scienter and declining to known,\u201d Id. at *5 (citing Dura Pharms., 544 U.S. at 347);\nfind sudden resignation of auditor contributed to inference of see also In re Bradley Pharms., Inc., 421 F. Supp. 2d 822,\nscienter where the plaintiffs failed to explain how resignation 828 (D.N.J. 2006) (holding that plaintiffs pled sufficient\nprovided insight into defendants\u2019 mental state). Accord In re facts to satisfy loss causation by alleging that the price of\nGreat Atl. & Pac. Tea Co., 103 F. App'x at 470 (finding that defendants\u2019 stocks dropped after the truth about defendants\u2019\nresignations of key officers are insufficient to show that they alleged misrepresentation became known.).\nacted with the requisite scienter). Cf. Van Dongen v. CNinsure\nInc., 951 F. Supp. 2d 457, 474 (S.D.N.Y. 2013) (inference of *28 \u201cCourts in this district have held loss causation is\nscienter supported by retirement of executive \u201con the same adequately pled when a company's stock price declines after\nday\u201d a research firm released a negative report about the media reports and disclosures presented new information\ncompany). Accordingly, Armstrong and Baluch's resignations about the alleged fraud to the public.\u201d City of Warwick, 2024\nwithout more do not further support scienter. WL 3219616, at *15 (first citing In re Aurora Cannabis\n Inc. Sec. Litig., No. 19-20588, 2023 WL 5508831, at *5-7\n *27 Notwithstanding, because \u201ca reasonable person would (D.N.J. Aug. 24, 2023); then citing Hall, 2019 WL 7207491,\ndeem the inference of scienter cogent and at least as at *27-28); but see Omanoff v. Patrizio & Zhao, LLC, No.\ncompelling as any opposing inference one could draw 14-723, 2015 WL 1472566, at *6 (D.N.J. Mar. 31, 2015)\nfrom the facts alleged[,]\u201d the Court concludes that Plaintiff (\u201cThe fact that a misrepresentation occurred and the share\nadequately alleges scienter. Tellabs, 551 U.S. at 324. price declined is not enough.\u201d).\nAccepting Plaintiff's allegations as true, and considering\ncompeting inferences, the inference that Defendants have Importantly, \u201c[t]he issue of loss causation is usually not\nacted with scienter is \u201cat least as likely as any plausible resolved on a motion to dismiss.\u201d Dudley v. Haub, No.\nopposing inference.\u201d Id. at 328 (emphasis in original). Thus, 11-05196, 2013 WL 1845519, at *18 (D.N.J. Apr. 30, 2013)\nthe Third Amended Complaint gives rise to a strong inference (citing EP MedSystems, 235 F.3d at 884 (\u201cWhether the\nof scienter that is \u201ccogent and compelling,\u201d satisfying the plaintiff has proven [loss] causation is usually reserved for\nheightened requirements of the PSLRA. Id. at 323. 28 the trier of fact.\u201d)); see also Gross v. GFI Grp., Inc., 162 F.\n Supp. 3d 263, 269 (S.D.N.Y. 2016) (\u201c[Plaintiff]\u2019s burden to\n plead loss causation is not a heavy one, and when it is unclear\n (3) Plaintiff Adequately Alleges Loss Causation 29 whether the plaintiff's losses were caused by the fraud or some\n\u201cIn the context of Rule 10b\u20135 claims, the Third Circuit applies other intervening event, the chain of causation is ... not to\nthe general causation principles of tort law to the element be decided on a Rule 12(b)(6) motion to dismiss.\u201d) (citation\nof loss causation.\u201d City of Warwick, 2024 WL 3219616, at modified).\n*15. In determining loss causation, the Court asks, \u201cwhether\nthe misrepresentation or omission proximately caused the Here, Plaintiff adequately pleads loss causation. 30 For\neconomic loss.\u201d McCabe v. Ernst & Young, LLP, 494 F.3d each alleged corrective disclosure, Plaintiff alleges: (1) the\n418, 426 (3d Cir. 2007). A plaintiff must show that \u201cthe information that was provided in each disclosure; (2) the ways\nrevelation of th[e alleged] misrepresentation or omission was in which each disclosure relates to the concealment (or that\na substantial factor in causing a decline in the security's price, the truth became known); and (3) that stock prices dropped\nthus creating an actual economic loss for the plaintiff.\u201d Id. following each disclosure. For example, Plaintiff alleges that\nat 425-26 (emphasis added) (citing Semerenko, 223 F.3d at in a press release on March 1, 2021, CorMedix disclosed that\n184-85). Loss causation focuses on \u201c \u2018whether the defendant it received its first CRL based on the FDA's review of records\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 22\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 24 of 28\n\n\nrequested from the CMO. (TAC \u00b6 219). Plaintiff alleges re Viropharma, 21 F. Supp. 3d at 468. To state a claim under\nthat the first corrective disclosure relates to CorMedix's Section 20(a), Plaintiff must demonstrate (1) the defendant\nmisrepresentations and omissions regarding the \u201ctrue scope\u201d controlled another person or entity; (2) the controlled person\n or entity committed a primary violation of the securities laws;\nof the CMO's deficiencies. (Id. at \u00b6 221). CorMedix stock\n and (3) the defendant was a culpable participant in the fraud.\u201d\nprice fell 54.4 percent, purportedly as a result of the first\n Carmack v. Amaya Inc., 258 F. Supp, 3d 454, 466 (D.N.J.\ncorrective disclosure. (Id. at \u00b6 220). Plaintiff also alleges that\neach corrective disclosure represents the market discovering 2017); see also In re Suprema, 438 F.3d at 284 n.16; In re\nthe truth (or partial truth) of the fraud. (Id. at \u00b6\u00b6 286-290) Intelligroup, 527 F. Supp. 2d at 280 (citation modified).\n(\u201cThe price of CorMedix securities declined significantly\nwhen the misrepresentations made to the market, and/or the Defendants argue that Plaintiff's Section 20(a) claim for\ninformation alleged herein to have been concealed from the control person liability must be dismissed because Plaintiff\nmarket, and/or the effects thereof, were disseminated and has failed to state an actionable Section 10(b) claim. Avaya,\npublicly revealed\u201d). Each corrective disclosure informed the 564 F.3d at 252. However, the Court has determined that\nmarket that Defendants did or must have previously misstated Plaintiff sufficiently pleads underlying violations of Section\nand/or omitted material facts that artificially inflated the stock 10(b) against Defendants in Count I of the TAC. Accordingly,\nprice. Thus, Plaintiff plausibly alleges a causal link between Plaintiff's Section 20(a) claim survives. In re Coinbase\nDefendants\u2019 statements regarding the DefenCath NDA and Global, Inc. Sec. Litig., No. 22-04915, 2024 WL 4053009,\nPlaintiff's losses through allegations connecting multiple at *18 (D.N.J. Sep. 5, 2024); In re Enzymotec, 2015 WL\nstock price drops to the misleading nature of such statements. 8784065, at *19-20; In re Viropharma, 21 F. Supp. 3d at 474.\nSee also Semerenko, 223 F.3d at 184 (\u201c[W]here the claimed Cf. Martin, 757 F. App'x at 155 n.26 (\u201cBecause the district\nloss involves the purchase of a security at a price that is court correctly dismissed the 10b-5 claim, the derivative \u00a7\ninflated due to an alleged [omission], there is a sufficient 20(a) claim necessarily fails.\u201d).\ncausal nexus between the loss and the alleged [omission] to\nsatisfy the loss causation requirement.\u201d). Accordingly, the\n IV. CONCLUSION\nCourt finds that Plaintiff adequately plead loss causation.\n For the reasons set forth above, Defendants\u2019 motion to\n dismiss (ECF No. 144) is DENIED. An appropriate Order\n B. Violation of Section 20(a) accompanies this Opinion.\n *29 Section 20(a) of the Exchange Act is a derivative\ncause of action against individuals who exercise control All Citations\nover a \u201ccontrolled person,\u201d including a corporation, that has\ncommitted a violation of Section 10(b). 15 U.S.C. \u00a7 78t(a); In Slip Copy, 2025 WL 2400346\nre Suprema, 438 F.3d at 284; Avaya, Inc., 564 F.3d at 252; In\n\n\n\n\n Footnotes\n\n\n1 The following factual allegations are taken from Plaintiff's Third Amended Complaint, which are accepted as\n true. Sheridan v. NGK Metals Corp., 609 F.3d 239, 262 n.27 (3d Cir. 2010).\n\n2 \u201cIf an NDA is accepted, the FDA performs a substantive review and either approves the NDA or issues a\n Complete Response Letter (\u201cCRL\u201d) rejecting the NDA.\u201d Paice v. Aldeyra Therapeutics, Inc., No. 23-11737,\n 2025 WL 815065, at *2 (D. Mass. Mar. 14, 2025). (See also TAC \u00b6 21 (\u201cHaving been kept in the dark by\n Defendants, investors were shocked when, on March 1, 2021, CorMedix issued a press release announcing\n the First CRL instead of FDA approval.\u201d)).\n\n3 The Court properly considers the following: (1) the Third Amended Complaint and documents referenced\n therein; (2) SEC filings; and (3) public information capable of judicial notice, such as stock prices or FDA\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 23\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 25 of 28\n\n\n guidance. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (court \u201cmust consider\u201d\n documents \u201cincorporated ... by reference\u201d and matters subject to judicial notice); In re NAHC, Inc. Sec. Litig.,\n 306 F.3d 1314, 1331 (3d Cir. 2002); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.\n 1997) (court may consider a document \u201cintegral to or explicitly relied upon in the complaint\u201d on motion to\n dismiss). Accord Pinkney v. Meadville, Pa., No. 21-1051, 2022 WL 1616972, at *2 (3d Cir. May 23, 2022)\n (A court may look beyond the pleadings and \u201cconsider \u2018document[s] integral to or explicitly relied upon in the\n complaint,\u2019 or any \u2018undisputedly authentic document that a defendant attaches as an exhibit to a motion to\n dismiss if the plaintiff's claims are based on the document.\u2019 \u201d (quoting In re Asbestos Prods. Liab. Litig. (No.\n VI), 822 F.3d 125, 133 (3d Cir. 2016))).\n\n4 The Court notes Plaintiff alternatively alleges, earlier in the Third Amended Complaint, that CorMedix\n completed its NDA submission in June 2020. (TAC \u00b6 12).\n\n5 According to the Third Amended Complaint, CorMedix supplemented its public offering on August 12, 2021.\n (TAC \u00b6 16).\n\n6 \u201cUnder Priority Review, the FDA reduces its review time from ten months to six.\u201d (TAC \u00b6 15 n.2 (citing\n U.S. FOOD 6 DRUG ADMIN., Priority Review (Jan. 4, 2018), https://www.fda.gov/patients/fast-track-\n breakthrough-therapy-acceierated-approvalpriority-review/priority-review).\n\n7 Notwithstanding, by July 9, 2020, Plaintiff alleges Defendants \u201cknew or recklessly ignored that ROVI had\n agreed to do large-scale, commercial fill-finish manufacturing of Moderna's COVID-19 vaccine candidate at\n ROVI's Madrid facility. (TAC \u00b6 163). In March 2021, CorMedix disclosed the \u201cproposed future installation\n of new equipment\u201d at its CMO's facility as well as \u201cdelays\u201d at its CMO relating to \u201cissues ... unrelated to\n DefenCath manufacturing activities[,]\u201d which Plaintiff avers related to its manufacturing of Moderna. (Id. at \u00b6\n 164). Additionally, according to the Third Amended Complaint, \u201cDefendants knew or recklessly ignored that\n ROVI would be investing in new production lines at its Madrid facility \u201cwhere it bottles, or \u2018fills and finishes\u2019\n Moderna vaccines for markets\u201d other than the US in order to \u201cdouble its capacity to bottle\u201d the vaccine,\u201d (Id.\n at \u00b6 165). Plaintiff alleges \u201cbased on FDA guidelines\u201d and communication with the FDA \u201cCorMedix knew or\n recklessly ignored that it needed to provide the FDA information about any new production lines at the facility\n manufacturing DefenCath\u2014even if they were unrelated to the manufacturing of DefenCath.\u201d (Id.) Plaintiff\n also alleges \u201cDefendants knew or recklessly ignored contaminants in vials manufactured by ROVI\u201d and that\n \u201cCorMedix knew or should have known that it needed to provide the FDA with information about testing being\n done at the facility manufacturing DefenCath\u201d even if it were unrelated to DefenCath. (Id. at \u00b6 166).\n\n8 The Third Amended Complaint references Sarbanes-Oxley (\u201cSOX\u201d) certifications during the Class Period\n signed by Baluch and David. (TAC \u00b6\u00b6 192, 204, 212, 231, 254). These SOX certifications consecutively\n contained the following statement: \u201cto my knowledge ... the information contained in the [[ ] 10-K] Report fairly\n presents, in all material respects, the financial condition and results of operations of the Company.\u201d (Id.)\n\n9 cGMP \u201cincludes the implementation of oversight and controls over the manufacture of drugs to ensure\n quality, including managing the risk of and establishing the safety of raw materials, materials used in the\n manufacturing of drugs, and finished drug products.\u201d 21 U.S.C. \u00a7 351; see also 21 C.F.R. Parts 210 and\n 211. The cGMP is the mandatory standard of compliance set by the FDA for pharmaceutical manufacturing.\n See21 U.S.C. \u00a7 351 (a)(2)(B) and 21 C.F.R. Parts 210 and 211. \u201cThe regulations help guarantee that the\n drug in the bottle matches what is on the label.\u201d In re Digitek Prods. Liab. Litig., 821 F. Supp. 2d 822, 826\n n.3 (S.D. W. Va. 2011).\n\n10 Plaintiff notes that if Defendants disagreed with either the First or Second CRL, they were entitled to appeal.\n (TAC \u00b6 160). Plaintiff alleges that \u201cFDA regulations 21 CFR 312.48 and 21 CFR 314.103 address dispute\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 24\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 26 of 28\n\n\n resolution as it relates specifically to ... new drug applications (NDA)\u201d but alleges Defendants did not appeal,\n indicating that Defendants knew the manufacturing deficiencies were material. (Id.)\n\n11 The Court does not re-print the entirety of the statements quoted in the Third Amended Complaint in the\n Background Section because such statements are alleged in voluminous paragraphs, totaling over one\n hundred (100) pages of the Third Amended Complaint. Rather Defendants\u2019 specific statements are quoted\n and discussed in the Discussion section. See, e.g., Dang v. Amarin Corp. PLC, 750 F. Supp. 3d 449 n.4\n (D.N.J. 2024).\n\n12 On February 21, 2022, Defendants moved to dismiss the First Amended Complaint. (ECF No. 50). The Court\n administratively terminated the motion at ECF No. 50 based on the parties\u2019 joint stipulation amending the\n briefing schedule. (See ECF No. 55). The motion to dismiss was refiled under ECF No. 57.\n\n13 On June 30, 2025, the Court inadvertently issued a preliminary draft opinion, which the Court withdrew from\n the docket. (ECF No. 126).\n\n14 \u201cTo plead falsity, Rule 9(b) and the PSLRA each demand specificity.\u201d City of Warren Police & Fire Ret. Sys.\n v. Prudential Fin, Inc., 70 F.4th 668, 680 (3d Cir. 2023). \u201cAlthough the pleading standards in Rule 9(b) and\n the PSLRA can be generally reconciled harmoniously for allegations of falsity, the PSLRA's requirements\n for allegations of scienter control over the more lenient standard in Rule 9(b) for mental-state allegations.\u201d\n Id. at 681 n.1 (emphasis omitted) (citing Avaya, 564 F.3d at 253 (\u201cThe PSLRA's requirement for pleading\n scienter ... marks a sharp break with Rule 9(b).\u201d)); Tellabs, 551 U.S. at 323-24); compareFed. R. Civ. P. 9(b)\n (permitting \u201c[m]alice, intent, knowledge, and other conditions of a person's mind [to] be alleged generally\u201d),\n with15 U.S.C. \u00a7 78u-4(b)(2)(A) (requiring a particularized statement of the \u201cfacts giving rise to a strong\n inference that the defendant acted with the required state of mind\u201d). Notably, \u201cRule 9(b) and the PSLRA do not\n insist upon irrefutable evidence of a statement's falsity at the pleading stage; rather, a complaint must contain\n particularized factual allegations that plausibly allege that a statement was misleading.\u201d City of Warren, 70\n F.4th at 681.\n\n15 The new equipment to be installed were fill lines for the manufacturer of Moderna.\n\n16 See In re Merck & Co., Inc. Sec. Litig., 432 F.3d 261, 269 (3d Cir. 2005) (stating that the Third Circuit,\n \u201cas compared to the other courts of appeals, has one of the \u2018clearest commitments\u2019 to the efficient market\n hypothesis\u201d). Additionally, the Court notes it takes judicial notice of CorMedix's stock price. Id. at 264 n.3 (a\n court may take judicial notice of stock prices at any stage of the proceeding because they are \u201cnot subject\n to reasonable dispute and are capable of accurate and ready determination by resort to a source whose\n accuracy cannot be reasonably questioned\u201d) (citation modified).\n\n17 The Court notes that its preliminary determination regarding Defendants\u2019 purported forward-looking\n statements is not dispositive. Such statements are given minimal weight and do not substantially alter the\n Court's finding of material misstatements and omissions discussed supra. At this juncture, the Court accepts\n Plaintiff's allegations as true. Tellabs, 551 U.S. at 322. Discovery will likely provide information to further\n elucidate whether these professed forward-looking statements were adequate.\n\n18 Plaintiff alleges that \u201cto the extent certain of the statements alleged to be false may be characterized\n as forward looking, they were not identified as \u2018forward-looking statements\u2019 when made and there were\n no meaningful cautionary statements identifying important factors that could cause actual results to differ\n materially from those in the purportedly forward-looking statements.\u201d (TAC \u00b6 291).\n\n19 Moreover, Plaintiff alleges Defendants had actual knowledge that the forward-looking statements were\n materially false or misleading. (TAC \u00b6 292). At this motion to dismiss stage, Plaintiff's allegations adequately\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 25\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 27 of 28\n\n\n plead with particularity that Defendants had actual knowledge their statements were false or misleading.\n Thus, the alternative basis for safe harbor provision is not applicable.\n\n20 Since the parties discuss the SOX certifications both in their discussions of actionable misstatements or\n omissions as well as scienter, the Court will address the SOX certifications in the scienter section infra. See,\n e.g., In re PayPal Holdings Inc. Sec. Litig., No. 22-5864, 2025 WL 325603, at *16 n.16 (D.N.J. Jan. 29, 2025)\n (citing In re Celgene, 2019 WL 6909463, at *18 n.24).\n\n21 The Third Circuit has \u201cexplicitly approved of scienter analyses that assess individual categories of scienter\n allegations individually when it is clear, as it is here, that a district court ultimately considered the allegations\n as a whole.\u201d Hertz, 905 F.3d at 115 (citing OFI Asset Mgmt., 834 F.3d at 493 (concluding that just because\n a court is \u201cthorough in explaining why it found scienter lacking as to each asserted misrepresentation does\n not suggest that it did not consider the allegations as a whole\u201d)); see also Avaya, 564 F.3d at 280 (\u201cAlthough\n we have discussed each of the alleged facts bearing on defendants\u2019 scienter one at a time, we have heeded\n Tellabs\u2019s command to evaluate [the plaintiffs\u2019] allegations collectively rather than individually.\u201d). Accordingly,\n the Court will, therefore, follow this approach and consider the alleged facts bearing on scienter individually,\n while at the same time considering whether, holistically, they give rise to a strong inference of scienter.\n\n22 \u201cAdvanta noted that applying the recklessness standard in the securities fraud context promotes the \u2018policy\n objectives of discouraging deliberate ignorance and preventing defendants from escaping liability solely\n because of the difficulty of proving conscious intent to commit fraud.\u2019 \u201d Martin v. GNC Holdings, Inc., 757 F.\n App'x 151, 154 n.10 (3d Cir. 2018) (quoting Advanta, 180 F.3d at 535).\n\n23 \u201cWhen plaintiffs attempt to establish scienter through circumstantial evidence of recklessness, the strength\n of the circumstantial allegations must be even greater.\u201d Stichting Pensionenfonds Metaal En Techniek v.\n Verizon Commc'ns, Inc., 775 F. Supp. 3d 826, 849 (D.N.J. 2025) (citing National Junior Baseball League,\n 720 F. Supp. 2d at 553).\n\n24 The Third Amended Complaint also alleges Armstrong stated:\n\n We have been diligently working and interacting with the FDA on this topic continually during the product\n development in the U.S.\n\n ...\n\n Our press release of July 9 was an update on our ongoing discussions with FDA to ensure that all the CMC\n information required for the NDA will be in place. It was intended to be a clear signal from CorMedix to life\n science investors that we understand the importance of manufacturing data and that we are on top of it.\n\n (TAC \u00b6 88).\n\n25 Defendants argue that the Audit should be discounted because it predates the NDA submission by two years\n and involves a third-party entity. (Defs.\u2019 Reply Br. at 2-3). However, the Audit addressed precisely the type\n of manufacturing deficiencies that later formed the basis of the FDA's CRLs. (TAC \u00b6\u00b6 7, 40).\n\n26 As discussed supra, Defendants\u2019 SOX certifications minimally support an inference of scienter.\n\n27 \u201cWhile \u2018motive and opportunity\u2019 do not offer an \u2018independent route to scienter following Tellabs, particularized\n allegations regarding motive and opportunity may, in combination with other allegations, support a strong\n inference of scienter.\u201d Dang, 750 F. Supp. 3d at 478 (quoting Avaya, 564 F.3d at 277); see also Avaya, 564\n F.3d at 277-78; Hoey, 2018 WL 902266, at *21-22. Plaintiff alleges that Defendants had significant financial\n motives to hide material risks regarding the DefenCath NDA because CorMedix's survival virtually depended\n on it. (TAC \u00b6 293). Additionally, Plaintiff alleges that Defendants\u2019 false and misleading statements allowed\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 26\n\f Case 1:24-cv-02804-JAV Document 69-1 Filed 08/22/25\nLead Plaintiff John C. LEVON, individually and on behalf of all..., Slip Copy (2025)\n Page 28 of 28\n\n\n CorMedix to raise tens of millions of dollars through secondary stock that it otherwise would not have been\n able to. (Id. at \u00b6\u00b6 102, 134). However, \u201cthe desire to raise funds is [a] motive shared by all corporate executives\n and officers, and \u2018a motivation of avoiding an event that would threaten the survival of a company is ... too\n generalized (and generalizable).\u2019 \u201d Paxton v. Provention Bio, Inc., No. 21-11613, 2022 WL 3098236, at *17\n (D.N.J. Aug. 4, 2022) (quoting In re Chembio Diagnostics, Inc. Sec. Litig., No. 20-02706, 2022 WL 541891, at\n *10 (E.D.N.Y. Feb. 23, 2022)); see also Rahman, 736 F.3d at 245-46 (\u201cMotives that are generally possessed\n by most corporate directors and officers do not suffice; instead, plaintiffs must assert a concrete and personal\n benefit to the individual defendants resulting from this fraud.\u201d). Notwithstanding, \u201cthe absence of a motive\n allegation is not fatal.\u201d Tellabs, 551 U.S. at 325.\n\n28 The Court notes Defendants argue: \u201cTaking the [Third Amended Complaint] as a whole, the much more\n compelling inference is that Defendants, while disclosing the risks, sincerely believed that DefenCath would\n be approved by [the] FDA, provided regular updates to investors on the status of the NDA, but experienced\n some significant setbacks at third-party suppliers and manufacturers during the pandemic.\u201d (Defs.\u2019 Br. at\n 17-18). The Court recognizes it must \u201ctake into account plausible opposing inferences.\u201d Martin, 757 F. App'x at\n 154 (quoting Tellabs, 551 U.S. at 323); see also Avaya, 564 F.3d at 267 (noting courts obligation to weigh the\n \u201cplausible nonculpable explanations for the defendant's conduct against \u201cinferences favoring the plaintiff.\u201d)\n (quoting Tellabs, 551 U.S. at 324). As discussed supra, the Court finds Plaintiff has adequately alleged an\n inference of scienter at the motion to dismiss stage. Moreover, the Court finds Defendants\u2019 cursory arguments\n regarding the nonculpable inferences are less plausible than Plaintiff's allegations.\n\n29 The Court applies Rule 8 rather than the heightened 9(b) pleading standard in determining loss causation.\n See, e.g., Dura, 544 U.S. at 347; Hall, 2019 WL 7207491, at *27 (collecting cases); National Junior Baseball\n League, 720 F. Supp. 2d at 558 (\u201cPlaintiff need not satisfy the PSLRA or Rule 9(b)\u2019s heightened pleading\n requirements to survive a motion to dismiss for loss causation; rather, a plaintiff need only satisfy the\n requirements of Rule 8(a)(2)\u201d) (citation modified); Hull v. Glob. Digital Sols., Inc., No. 16-5153, 2017 WL\n 6493148, at *11 (D.N.J. Dec. 19, 2017) (\u201cImportantly, alleging loss causation or economic loss does not\n require a plaintiff to satisfy the heightened pleading standard under Rule 9(b)[.]\u201d).\n\n30 Plaintiff relies on two theories to plead loss causation: corrective disclosure and materialization of concealed\n risk. (Pl.\u2019s Br. at 38). However, \u201cthe ultimate loss causation inquiry under either the corrective disclosure\n theory or the materialization of a concealed risk theory is the same: whether a \u2018misstatement or omission\n concealed something from the market that, when disclosed, negatively affected the value of the security.\u2019 \u201d\n De Vito v. Liquid Holdings Grp., Inc., No. 15-6969, 2018 WL 6891832, at *39 (D.N.J. Dec. 31, 2018). This\n Court will evaluate the alleged corrective disclosures by addressing \u201cthe ultimate loss causation inquiry\u201d as\n it relates to this matter. Id.\n\n\n\nEnd of Document \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works.\n\n\n\n\n \u00a9 2025 Thomson Reuters. No claim to original U.S. Government Works. 27\n\f","ocr_status":1,"date_upload":"2026-05-20T15:31:31.374781-07:00","document_number":"69","attachment_number":1,"pacer_doc_id":"127038091200","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit A - CorMedix Inc: Levon v. CorMedix Inc., No. 21-14020 (JXN)(CLW), 2025","acms_document_guid":""}],"date_created":"2025-08-22T18:08:31.747399-07:00","date_modified":"2026-04-26T22:50:00.480477-07:00","date_filed":"2025-08-22","time_filed":"19:09:03","entry_number":69,"recap_sequence_number":"2025-08-22.001","pacer_sequence_number":239,"description":"LETTER addressed to Judge Jeannette A. Vargas from Lauren A. Ormsbee dated 8/22/2025 re: Supplemental Authority in Opposition to Defendants' Motion to Dismiss. Document filed by Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund. (Attachments: # 1 Exhibit A - CorMedix Inc: Levon v. CorMedix Inc., No. 21-14020 (JXN)(CLW), 2025 WL 2400346 (D.N.J. Aug. 19, 2025)).(Ormsbee, Lauren) (Entered: 08/22/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/433228110/","id":433228110,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/447574541/","id":447574541,"tags":[],"absolute_url":"/docket/68433458/68/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-07-30T20:07:27.081635-07:00","date_modified":"2026-05-22T11:21:52.927968-07:00","sha1":"ce28e23db838d04a400cf139116184b91522177a","page_count":18,"file_size":337915,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.68.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.68.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 1 of 18\n\n\n\n\n UNITED STATES DISTRICT COURT\n SOUTHERN DISTRICT OF NEW YORK\n\n\nIN RE QUIDELORTHO CORPORATION\nSECURITIES LITIGATION\n No. 24-cv-02804-JAV\n\n ORAL ARGUMENT REQUESTED\n\n\n\n REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF LEAD\n PLAINTIFF\u2019S MOTION TO STRIKE THE DECLARATION OF COLIN B. DAVIS,\n EXHIBITS ATTACHED THERETO, AND DEFENDANTS\u2019 APPENDIX A PURSUANT\n TO RULES 12(D) AND 12(F)\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 2 of 18\n\n\n\n\n TABLE OF CONTENTS\n\n Page\n\nTABLE OF AUTHORITIES .......................................................................................................... ii\n\nI. INTRODUCTION .............................................................................................................. 1\n\nII. ARGUMENT ...................................................................................................................... 2\n\n A. Plaintiff\u2019s MTS Is Procedurally Proper .................................................................. 3\n\n B. Defendants\u2019 Footnote Request Was Deficient ........................................................ 4\n\n C. Exhibits 1-2, 5-6, 8, 36, 45-46 Should Not Be Judicially Noticed For The\n Reasons Requested By Defendants ......................................................................... 6\n\n D. Exhibits 3-4, 7, 9-29, 31-32, 34-35, 38-42, 44 Should Not Be Considered For\n The Reasons Requested By Defendants ................................................................. 9\n\n E. Exhibits 30, 33, 37, 43 Are Incomplete And Inaccurate And Should Not Be\n Considered ............................................................................................................ 10\n\n F. The Court Should Strike Or Exclude Defendants\u2019 Appendix A ........................... 11\n\nIII. CONCLUSION ................................................................................................................. 12\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 3 of 18\n\n\n\n\n TABLE OF AUTHORITIES\n\n Page(s)\n\nCases\n\nArk. Pub. Emps. Ret. Sys. v. Bristol-Myers Squibb Co.,\n 28 F.4th 343 (2d Cir. 2022) .......................................................................................................9\n\nBazzelle v. Novocure Ltd.,\n 2025 WL 843668 (S.D.N.Y. Mar. 18, 2025) .............................................................................5\n\nIn re Bristol-Myers Squibb Co. CVR Sec. Litig.,\n 658 F. Supp. 3d 220 (S.D.N.Y. 2023)........................................................................................4\n\nCity of Austin Police Ret. Sys. v. Kinross Gold Corp.,\n 957 F. Supp. 2d 277 (S.D.N.Y. 2013)....................................................................................3, 8\n\nDavid Rovinsky LLC v. Peter Marco, LLC,\n 2020 WL 5645792 (C.D. Cal. Sept. 21, 2020) ..........................................................................6\n\nIn re DraftKings Inc. Sec. Litig.,\n 650 F. Supp. 3d 120 (S.D.N.Y. 2023)........................................................................................4\n\nFogel v. Wal-Mart de M\u00e9xico SAB de CV,\n 2017 WL 751155 (S.D.N.Y. Feb. 27, 2017), aff\u2019d sub nom. Fogel v. Vega,\n 759 F. App\u2019x 18 (2d Cir. 2018) ...............................................................................................12\n\nFonte v. Bd. of Managers of Cont'l Towers Condo.,\n 848 F.2d 24 (2d Cir. 1988)...................................................................................................3, 10\n\nIn re Garrett Motion Inc. Sec. Litig.,\n 2023 WL 2744029 (S.D.N.Y. Mar. 31, 2023), aff\u2019d sub nom. Gabelli Asset\n Fund v. Garrett Motion Inc., 2024 WL 1653451 (2d Cir. Apr. 17, 2024) ..............................12\n\nGluck v. Hecla Mining Co.,\n 657 F. Supp. 3d 471 (S.D.N.Y. 2023)........................................................................................4\n\nHawes v. Argo Blockchain\n plc, 2024 WL 4451967 (S.D.N.Y. Oct. 9, 2024) .....................................................................12\n\nU.S. ex rel. K&R Ltd. P\u2019ship v. Mass. Hous. Fin. Agency,\n 456 F. Supp. 2d 46 (D.D.C. 2006), aff\u2019d, 590 F.3d 980 (D.C. Cir. 2008) ...............................12\n\nLong Miao v. Fanhua, Inc.,\n 442 F. Supp. 3d 774 (S.D.N.Y. 2020)........................................................................................4\n\nLuv n' care, Ltd. v. Jackel Int'l Ltd.,\n 502 F. Supp. 3d 1106 (W.D. La. 2020)......................................................................................5\n\n\n ii\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 4 of 18\n\n\n\n\nMascitti v. Quarterman,\n 2009 WL 4728003 (S.D. Tex. Dec. 3, 2009) .............................................................................5\n\nIn re MINISO Grp. Holding Ltd. Sec. Litig.,\n 2024 WL 759246 (S.D.N.Y. Feb. 23, 2024), reconsideration denied, 2025 WL\n 965688 (S.D.N.Y. Mar. 30, 2025) .......................................................................................4, 11\n\nMorales-Garcia v. Higuera Farms, Inc.,\n 2019 WL 4284512 (C.D. Cal. May 9, 2019) .............................................................................9\n\nRoth v. Jennings,\n 489 F.3d 499 (2d Cir. 2007)...............................................................................................6, 7, 8\n\nSaraf v. Ebix, Inc.,\n 2023 WL 4561655 (S.D.N.Y. July 17, 2023) ............................................................................4\n\nSchneidermesser v. NYU Grossman Sch. of Med.,\n 2024 WL 4054372 (S.D.N.Y. Sept. 5, 2024).............................................................................3\n\nNew York ex rel. TZAC, Inc. v. New Israel Fund,\n 520 F. Supp. 3d 362 (S.D.N.Y. 2021)........................................................................................4\n\nIn re UBS Auction Rate Sec. Litig.,\n 2010 WL 2541166 (S.D.N.Y. June 10, 2010) ...........................................................................3\n\nIn re Under Armour Sec. Litig.,\n 409 F. Supp. 3d 446 (D. Md. 2019) ...........................................................................................9\n\nWeston v. DocuSign, Inc.,\n 669 F. Supp. 3d 849 (N.D. Cal. 2023) .......................................................................................9\n\nIn re Yatsen Holding Ltd. Sec. Litig.,\n 2024 WL 3498049 (S.D.N.Y. July 22, 2024) ..........................................................................10\n\nOther Authorities\n\nFED. R. CIV. P. 12(d) ........................................................................................................................3\n\n\n\n\n iii\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 5 of 18\n\n\n\n\nI. INTRODUCTION\n\n Defendants filed an opposition to Plaintiff\u2019s MTS (ECF No. 62, \u201cDefendants\u2019 MTS\n\nOpp.\u201d), which continues to oppose the motion to strike in its entirety, while seemingly also\n\nconceding that their footnote request for the sweeping admission of 46 exhibits and Defendants\u2019\n\nAppendix A was deficient by simultaneously filing a belated, and also improper, Request for\n\nConsideration of Documents Incorporated By Reference and Eligible for Judicial Notice in\n\nSupport of Defendants\u2019 Motion to Dismiss (ECF No. 61, \u201cRequest for Consideration\u201d) in\n\nconnection with their reply in further support of their MTD. 1 Defendants cannot have it both\n\nways; their initial footnote request was insufficient and now they have created a procedural mess\n\nthat requires the Court to sift through four fully briefed motions (the MTD, Plaintiff\u2019s MTS,\n\nDefendants\u2019 MTS, and Defendants\u2019 Request for Consideration). For the reasons explained in\n\nPlaintiff\u2019s MTS and further detailed herein, the Court should strike the Declaration of Colin B.\n\nDavis (ECF No. 49, \u201cDavis Decl.\u201d), which attaches the Exhibits for review by the Court, and\n\n\u201cDefendants\u2019 Appendix A\u201d (ECF No. 48-1). Further, the Court need not consider Defendants\u2019\n\nRequest for Consideration because it inappropriately raises new arguments and evidence that\n\nshould have been raised in Defendants\u2019 initial moving papers. 2\n\n If the Court is nevertheless inclined to consider the documents attached to the Davis\n\nDeclaration (which it should not), it can consider the documents for the limited purpose of\n\ndetermining what the documents state, but not for the truth of the matter asserted as Defendants\n\n\n\n\n1\n Unless otherwise defined, capitalized terms have the meaning ascribed in Lead Plaintiff\u2019s\nAmended Class Action Complaint for Violations of the Federal Securities Laws (ECF No. 42) or\nin the Glossary contained in Plaintiff\u2019s MTD Opposition (ECF No. 50) (the \u201cGlossary\u201d).\nReferences to the Complaint herein appear as \u201c\u00b6___\u201d. Unless otherwise noted, emphasis has been\nadded, internal citations and quotation marks are omitted.\n2\n See Plaintiff\u2019s Opposition to Defendants\u2019 Request for Consideration (ECF No. 65) at 1-2.\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 6 of 18\n\n\n\n\nrequest. On the other hand, the Court should not consider Defendants\u2019 Appendix A for its analysis\n\nwhatsoever because that document improperly adds extraneous language to the Complaint\u2019s\n\nMisstatements and raises inaccurate factual arguments within the document based on the\n\nExhibits. 3 Instead, the Court may utilize Plaintiff\u2019s Appendix A (ECF No. 50-1), which lists each\n\nof the Misstatements as they were pled in the Complaint and adds additional reference columns\n\nto aid the Court in its analysis of the parties\u2019 briefing in connection with Defendants\u2019 MTD.\n\nII. ARGUMENT\n\n Defendants\u2019 MTS Opposition attempts to cast Plaintiff\u2019s MTS as a \u201cdiversion to avoid\n\nmeaningful scrutiny of the dispositive flaws\u201d in the Complaint. Defendants\u2019 MTS Opp. 1. Quite\n\nthe opposite, Plaintiff does not challenge Defendants\u2019 attempt to create a counternarrative because\n\nit purportedly provides the Court with the \u201cwhole truth\u201d of what was disclosed to investors. Id. at\n\n1-2. Rather, it is Plaintiff\u2019s contention that Defendants\u2019 use of the Exhibits, and request that the\n\nCourt interpret the documents in a way most favorable to Defendants and inconsistent with the\n\nwell-pled factual allegations of the Complaint, is inappropriate at this stage of the proceedings\n\nwithout affording Plaintiff\u2019s any access to discovery with which to challenge Defendants\u2019\n\ncounternarrative. The same is true for Defendants\u2019 Appendix A, which the Court should not use\n\nbecause language was liberally added to each Misstatement from Defendants\u2019 Exhibits, including\n\nlanguage from inaccurate and incomplete investor conference call transcripts.\n\n The remaining arguments in Defendants\u2019 MTS Opposition contend that: (i) Plaintiff\u2019s\n\nMTS is procedurally improper; (ii) Defendants\u2019 sweeping footnote request for the consideration\n\nof 46 documents was sufficient; (iii) Exhibits 1-2, 5-6, 8, 36, and 45-46 should be judicially\n\n\n\n\n3\n See Plaintiff\u2019s MTS 17; see also Plaintiff\u2019s Opposition to Defendants\u2019 Motion to Strike\nPlaintiff\u2019s Appendix A and Glossary (ECF No. 64, \u201cPls.\u2019 Opp. to Defs.\u2019 MTS\u201d) at 4-7.\n\n 2\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 7 of 18\n\n\n\n\nnoticed for the reasons requested by Defendants; (iv) Exhibits 3-4, 7, 9-29, 31-32, 34-35, 38-42\n\nand 44 should be considered for the reasons requested by Defendants; (v) Exhibits 30, 33, 37, and\n\n44 are accurate and should not be stricken; and (vi) the Court should not strike Defendants\u2019\n\nAppendix A. Each of these arguments fail for the reasons explained below.\n\n A. Plaintiff\u2019s MTS Is Procedurally Proper\n\n Seeking relief under both Rules 12(d) and 12(f) of the Federal Rules of Civil Procedure,\n\nPlaintiff asks the Court to strike or exclude certain documents and, at the very least, decline to\n\nuse the documents for the purposes requested by Defendants. In its opposition, Defendants first\n\nargue that the MTS pursuant to Rule 12(f) is \u201cprocedurally improper\u201d and should be denied on\n\nthose grounds. MTS Opp. 4-5 (without mentioning that relief is also sought under Rule 12(d)).\n\nWhile some courts have disfavored motions to strike, it is well within the Court\u2019s authority to\n\nstrike or exclude matters presented outside the pleadings on a Rule 12(b)(6) motion to dismiss.\n\nCity of Austin Police Ret. Sys. v. Kinross Gold Corp., 957 F. Supp. 2d 277, 288\u201389 (S.D.N.Y.\n\n2013) (granting plaintiff\u2019s motion to strike exhibits submitted in connection with defendants\u2019\n\nmotion to dismiss in an attempt to dispute allegations in complaint); In re UBS Auction Rate Sec.\n\nLitig., 2010 WL 2541166, at *16 (S.D.N.Y. June 10, 2010); Fonte v. Bd. of Managers of Cont'l\n\nTowers Condo., 848 F.2d 24, 25 (2d Cir. 1988) (\u201cthe court may exclude the additional material\n\nand decide the motion on the complaint alone....\u201d); FED. R. CIV. P. 12(d) (\u201cIf, on a motion under\n\nRule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the\n\ncourt, the motion must be treated as one for summary judgment under Rule 56.\u201d). Indeed,\n\n\u201c[w]hether to grant or deny a motion to strike is vested in the trial court\u2019s sound discretion.\u201d\n\nSchneidermesser v. NYU Grossman Sch. of Med., 2024 WL 4054372, at *1 (S.D.N.Y. Sept. 5,\n\n2024).\n\n\n\n\n 3\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 8 of 18\n\n\n\n\n In any event, the Court need not grant Plaintiff\u2019s MTS to deny Defendants\u2019 request for\n\nconsideration of these documents and refrain from: (i) considering the documents for the reasons\n\nrequested by Defendants; or (ii) utilizing Defendants\u2019 Appendix A when analyzing Defendants\u2019\n\nMTD.\n\n B. Defendants\u2019 Footnote Request Was Deficient\n\n Defendants\u2019 MTS Opposition dedicates two full pages to their argument that courts should\n\nconsider arguments made in footnotes, such as their two-sentence footnote that they claim was\n\npurportedly sufficient to request the Court\u2019s consideration of 46 separate documents. Defendants\u2019\n\nMTS Opp. 5-7. However, each of the cases that Defendants cite in support of this argument is\n\ndistinguishable. See, e.g., New York ex rel. TZAC, Inc. v. New Israel Fund, 520 F. Supp. 3d 362,\n\n376 n.4 (S.D.N.Y. 2021) (noting that defendants\u2019 \u201cblanket request for judicial notice\u201d was\n\nunopposed and \u201cthe Court does not analyze whether each individual exhibit is appropriate for\n\njudicial notice\u201d because it \u201cdid not rely upon many of [defendant\u2019s] submissions\u201d in denying the\n\nmotion to dismiss); see also In re MINISO Grp. Holding Ltd. Sec. Litig., 2024 WL 759246, at *9\n\nn.20 (S.D.N.Y. Feb. 23, 2024) (judicially noticing documents when plaintiff did not oppose such\n\nrequests, except for earnings call transcripts, for which the Court ruled that it will use plaintiff\u2019s\n\nversions). 4\n\n\n\n4\n See also In re Bristol-Myers Squibb Co. CVR Sec. Litig., 658 F. Supp. 3d 220, 227 (S.D.N.Y.\n2023) (granting unopposed request in connection with motion to dismiss second amended\ncomplaint after court already found consideration warranted in connection with defendants\u2019\nmotion to dismiss the first amended complaint); Gluck v. Hecla Mining Co., 657 F. Supp. 3d 471,\n481 (S.D.N.Y. 2023) (granting unopposed request to judicially notice that documents contained\ncertain information without regard to the truth of their contents); Saraf v. Ebix, Inc., 2023 WL\n4561655, at *1 (S.D.N.Y. July 17, 2023) (granting unopposed request for judicial notice of SEC\nfilings); In re DraftKings Inc. Sec. Litig., 650 F. Supp. 3d 120, 134 (S.D.N.Y. 2023) (granting\nunopposed request for consideration of SEC filings and SEC Investor Bulletin); Long Miao v.\nFanhua, Inc., 442 F. Supp. 3d 774, 781 n.2 (S.D.N.Y. 2020) (considering documents \u201cfor fact\n\n\n\n 4\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 9 of 18\n\n\n\n\n Moreover, unlike the unopposed footnote requests made by defendants in those cases,\n\nDefendants\u2019 footnote here fails to provide any explanation or discussion as to how the documents\n\nshould be considered, why the documents can be considered, and on what grounds. Compare\n\nMTD at 3 n.1 (simply stating that \u201cThe Court may consider documents incorporated by reference\n\nin the Complaint\u201d and \u201cpublic disclosure documents \u2026 filed with the SEC\u201d); with Bazzelle v.\n\nNovocure Ltd., 2025 WL 843668, at *6-7 (S.D.N.Y. Mar. 18, 2025) (granting request for judicial\n\nnotice and incorporation by reference for limited purpose of determining what statements the\n\ndocuments contained based on detailed requests) and Bazzelle v. Novocure Ltd., No. 1:23-CV-\n\n5146-GHW, ECF No. 72 at nn. 3, 8, 10, 12, 14 (footnotes explicitly reference certain exhibits by\n\ncategory and explain how the court should consider them and on what grounds).\n\n Further, Defendants apparently refuse to acknowledge that Plaintiff does contend that the\n\ntwo-sentence footnote request \u201cfailed to supply the Court with the necessary information here.\u201d\n\nSee Defendants\u2019 MTS Opp. 5, see also Plaintiff\u2019s MTS 4-6 (\u201cThis footnote omits the mention of\n\nany particular Exhibit, forcing the Court and Plaintiff to speculate as to why these documents\n\nshould be considered and on what grounds.\u201d). Defendants\u2019 two-sentence footnote does not\n\nadequately \u201cidentify the fact to be noticed, the purpose and relevance of that fact, and \u2018the source\n\nof indisputable accuracy\u2019\u201d for a fact that can be accurately and readily determined under Rule\n\n201(b)(2). See Luv n\u2019 care, Ltd. v. Jackel Int'l Ltd., 502 F. Supp. 3d 1106, 1108 (W.D. La. 2020)\n\n(quoting 21B Charles Alan Wright & Kenneth Graham, FEDERAL PRACTICE AND\n\nPROCEDURE \u00a7 5107.1 (2d ed. 2005)); see also Mascitti v. Quarterman, 2009 WL 4728003, at\n\n\n\n\nthat the statements were made\u201d based on descriptive footnotes explaining why court can consider\ncertain documents and on what grounds); Long Miao v. Fanhua, Inc., No. 1:18-cv-08183-PAE,\nECF No. 34 at nn. 4, 6-8, 10-12, 14 (explaining why and how documents should be considered).\n\n 5\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 10 of 18\n\n\n\n\n*1 (S.D. Tex. Dec. 3, 2009) (\u201cFailure to address any one of these factors would arguably undercut\n\na request for judicial notice\u201d).\n\n Separately, while the Court should not entertain Defendants\u2019 belated Request for\n\nConsideration because it contains new arguments and evidence that should have been raised in\n\nthe party\u2019s initial moving papers, none of the additional arguments and caselaw support the relief\n\nsought, as discussed below. See Plaintiff\u2019s Opposition to Defendants\u2019 Request for Consideration\n\n(ECF No. 65) at 1-2.\n\n C. Exhibits 1-2, 5-6, 8, 36, 45-46 Should Not Be Judicially Noticed For The\n Reasons Requested By Defendants\n\n Defendants concede that Exhibits 1-2, 5-6, 8, 36, and 45-46 were not incorporated by\n\nreference in the Complaint, 5 but still maintain that the Court should consider these documents for\n\nthe reasons requested because they \u201ccontain facts appropriate for judicial notice\u2026.\u201d Defendants\u2019\n\nMTS Opp. 7-8. While the Court should strike or exclude these exhibits for the reasons explained\n\nsupra, it may judicially notice these documents for the limited purpose of determining \u201cwhat\n\nstatements [they] contained.\u201d Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007). This, however,\n\nis not what Defendants are requesting or how their MTD uses these documents. Rather,\n\nDefendants\u2019 requests go too far by asking the Court to consider these documents for the truth of\n\nthe matter asserted in support of their inaccurate arguments. See id. (\u201cIf the court takes judicial\n\nnotice, it does so in order \u2018to determine what statements [they] contained\u2019\u2014but \u2018again not for the\n\n\n\n5\n Given the vague and incomplete request for consideration in the two-sentence footnote, it was\nunclear what exactly Defendants were requesting and on what grounds. See MTD 3 n.1; see also\nPlaintiff\u2019s MTS 4-6. While Defendants\u2019 MTS Opposition and Request for Consideration now\nclarify their requests, the Court should not reward their willingness to waste judicial resources\nwith supplemental briefing. See David Rovinsky LLC v. Peter Marco, LLC, 2020 WL 5645792,\nat *2 (C.D. Cal. Sept. 21, 2020) (\u201c[The parties] present new arguments in requests for judicial\nnotice and supplemental declarations\u2026. The Court did not permit supplemental briefing, so it\ndoes not consider these arguments in evaluating the pending motions.\u201d).\n\n 6\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 11 of 18\n\n\n\n\ntruth of the matters asserted.\u2019\u201d); see also Plaintiff\u2019s MTS 6-10. Even Defendants admit that such\n\na request is inappropriate for judicial notice. Defendants\u2019 MTS Opp. 8.\n\n For example, as explained in Plaintiff\u2019s MTS, Defendants ask the Court to judicially\n\nnotice Exhibit 36, a Bloomberg News Article dated November 1, 2023, for the proposition that\n\nQuidelOrtho disclosed the full extent of the Company\u2019s decline in COVID revenues. See MTD\n\n8, 23 (\u201cwhich QuidelOrtho disclosed (see supra Factual Background at \u00a7 IV)\u201d). While the Court\n\ncan consider the fact that the Bloomberg News Article contains the statement that \u201c[r]espiratory\n\nrevenue decreased by 21% \u2026 primarily due to the anticipated decline in COVID-19 revenue[,]\u201d\n\nit cannot judicially notice the incorrect factual assumption that the Company disclosed the full\n\nextent of its decline in COVID revenues, including the fact that the Company was losing market\n\nshare to competitors that worsened as the Company doubled its guidance. See Plaintiff\u2019s MTS 9-\n\n10. Any finding along these lines would run afoul of the well-set precedent that documents cannot\n\nbe judicially noticed for the truth of the matter asserted. See Roth, 489 F.3d at 510-11.\n\n The same is true for Exhibit 5, a January 12, 2022 (pre-Class Period) transcript of the\n\nBloomberg J.P. Morgan 40th Annual Healthcare Conference, which Defendants rely on to argue\n\nthat \u201cQuidelOrtho repeatedly disclosed that it faced constraints on its manufacturing capabilities.\u201d\n\nMTD 22. While the Court may judicially notice the fact that this document contains the statement\n\n\u201cI think the biggest challenge right now [to Savanna] \u2026 will be how quickly can we ramp\n\nmanufacture[,]\u201d the Court cannot consider the document for the purpose of determining that\n\nDefendants fully disclosed the Company\u2019s \u201cconstraints on its manufacturing capabilities.\u201d See\n\nid.; see also Roth, 489 F.3d at 510-11. As discussed in Plaintiff\u2019s MTS, a fair reading of the pre-\n\nClass Period statement that Defendants cite within Exhibit 5 shows that they did not disclose that\n\nthe Company was suffering from \u201cconstraints on its manufacturing capabilities\u201d (nor that\n\n\n\n\n 7\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 12 of 18\n\n\n\n\nDefendants \u201crepeatedly\u201d disclosed that) because that statement begins: \u201cwe\u2019re very encouraged\n\nby what we see so far \u2026\u201d See Exhibit 5 at 4; see also Roth, 489 F.3d at 511 (\u201cEven assuming that\n\nthose factual assertions were relevant, they raised issues of fact that should not have been\n\ndetermined at the pleadings stage.\u201d). Even so, this purported pre-Class Period disclosure is belied\n\nby Defendants\u2019 misrepresentations during the Class Period. See, e.g., \u00b6327(g) (\u201cAs I said, the\n\ninstrument build issues have been largely resolved. We think we are already at the capacity to\n\nhave a meaningful launch.\u201d); see also \u00b6339(i) (\u201cwe\u2019ve overcome Savanna instrument supply chain\n\nchallenges\u201d).\n\n Likewise, Defendants\u2019 attempt to judicially notice Exhibit 45, a post-Class Period July 31,\n\n2024 earnings call transcript, for the purpose of having the Court find that the Company\n\n\u201ccontinued to view Savanna as a competitive product and to invest in its next-generation\n\nrespiratory and other panels[,]\u201d is inappropriate. MTD 8. While the Court may take judicial notice\n\nof the fact that the document contains the statement that \u201cwe expect to enter clinical trials on our\n\nrespiratory panel later this year, and \u2026 our goal is to be in the market with both the respiratory\n\npanel and the [STD] panel in 2025[,]\u201d the Court cannot consider the document for the purpose of\n\nfinding that the Company \u201ccontinued\u201d to view Savanna as a competitive product that could enter\n\nthe market in the near future. See Roth, 489 F.3d at 510-11; see also Kinross, 957 F. Supp. 2d at\n\n288\u201389 (S.D.N.Y. 2013) (rejecting defendants\u2019 attempt to judicially notice documents for truth\n\nof the matter asserted to dispute the complaint\u2019s scienter allegations). Indeed, as explained in\n\nPlaintiff\u2019s MTS, Defendants\u2019 post-Class Period document is belied by the Company\u2019s recent\n\nannouncement that it \u201cplans to discontinue the Company\u2019s Savanna platform development,\u201d a\n\nfact that directly aligns with the Complaint\u2019s allegations. Plaintiff\u2019s MTS 10.\n\n\n\n\n 8\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 13 of 18\n\n\n\n\n D. Exhibits 3-4, 7, 9-29, 31-32, 34-35, 38-42, 44 Should Not Be Considered For\n The Reasons Requested By Defendants\n\n Plaintiff also asks that the Court refrain from considering the documents in Exhibits 3-4,\n\n7, 9-29, 31-32, 34-35, 38-42 and 44 for the reasons explained supra, in Section II.B. If the Court\n\nis still nonetheless inclined to consider these Exhibits, it cannot consider these documents for the\n\ntruth of the matters asserted as Defendants request. Defendants\u2019 MTS Opp. 11-14.\n\n Defendants\u2019 MTS Opposition misinforms the Court that it may consider documents\n\nincorporated by reference in a complaint for the truth of their contents even if such assumptions\n\nonly serve to dispute the facts stated in a well-pled complaint. See id. at 12 (\u201cPlaintiff is wrong\n\nthat documents incorporated by reference in the Complaint cannot be considered for their truth.\u201d).\n\nAs courts have carefully instructed, defendants should not be permitted to incorporate documents\n\nby reference with the intention of resolving factual disputes at the pleadings stage. See Morales-\n\nGarcia v. Higuera Farms, Inc., 2019 WL 4284512, at *2 (C.D. Cal. May 9, 2019); see also\n\nWeston v. DocuSign, Inc., 669 F. Supp. 3d 849, 871 (N.D. Cal. 2023) (\u201cAlthough a court may\n\nassume the contents of an incorporated document are true for the purposes of a motion to dismiss\n\n(unlike judicial notice), \u2018it is improper to assume the truth of an incorporated document if such\n\nassumptions only serve to dispute facts stated in a well-pleaded complaint.\u2019\u201d); In re Under\n\nArmour Sec. Litig., 409 F. Supp. 3d 446, 456 (D. Md. 2019) (\u201cOf course, any such facts noticed\n\nshall be construed in the light most favorable to the Plaintiffs.\u201d).\n\n The case law cited in Defendants\u2019 MTS Opposition does not hold differently. For\n\nexample, in Bristol-Myers, the Second Circuit relied on a document submitted by defendants on\n\nthe grounds that the document\u2019s contents were inconsistent with factual allegations in the\n\ncomplaint purportedly sourced from that document, a claim that Defendants do not make here.\n\nSee Ark. Pub. Emps. Ret. Sys. v. Bristol-Myers Squibb Co., 28 F.4th 343, 352 n.3 (2d Cir. 2022).\n\n\n\n 9\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 14 of 18\n\n\n\n\nSimilarly, the Court in Yatsen pointedly did not accept a submitted document for its truth, but did\n\ncite to a statement as being consistent with the court\u2019s determination that the complaint\u2019s\n\nallegations failed to allege with sufficient particularity the importance to revenues posed by sales\n\nfrom the two sales platforms at issue. In re Yatsen Holding Ltd. Sec. Litig., 2024 WL 3498049, at\n\n*5 n.6 (S.D.N.Y. July 22, 2024).\n\n Thus, as explained in Plaintiff\u2019s MTS, should the Court consider these challenged exhibits\n\nat all, its consideration should be limited to determining what the documents state, but not accept\n\nDefendants\u2019 characterization and use of the documents to contradict the well-pled facts and\n\nallegations in the Complaint. Plaintiff\u2019s MTS 12-16. To do so would require, in accordance with\n\nRule 12(d), a conversion of the MTD to a summary judgement motion that would require a full\n\nfactual record. See Fonte, 848 F.2d at 25 (\u201cwhen matters outside the pleadings are presented in\n\nresponse to a 12(b)(6) motion: the court may exclude the additional material and decide the\n\nmotion on the complaint alone or it may convert the motion to one for summary judgment....\u201d).\n\n E. Exhibits 30, 33, 37, 43 Are Incomplete And Inaccurate And Should Not Be\n Considered\n\n For the reasons explained in Plaintiff\u2019s MTS, the Court should strike or exclude Exhibits\n\n30, 33, 37, and 43. These incomplete transcripts are inaccurate, as Plaintiff\u2019s own transcripts of\n\nthe events demonstrate. See ECF Nos. 53-1\u20134; Plaintiff\u2019s MTS 11. Indeed, the incompleteness\n\nand inaccuracy of Defendants\u2019 exhibits is conclusively demonstrated by the audio recordings of\n\nthe events, which are publicly available and which Plaintiff is willing to provide to the Court if\n\nrequested. See Plaintiff\u2019s MTS 11, n.4; see also Pls.\u2019 Opp. to Defs.\u2019 MTS 6-7 (\u201c[T]he Individual\n\nDefendants\u2014the makers of the statements\u2014know that they made these statements. Their attempt\n\n\n\n\n 10\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 15 of 18\n\n\n\n\nto present incomplete conference call transcripts to escape liability is dishonest. Plaintiff \u2026 can\n\nprovide audio files of each conference call if requested.\u201d). 6\n\n The Court should not treat Exhibits 30, 33, 37, and 43 as accurate, or consider them when\n\nanalyzing the well-pled allegations in the Complaint, simply because Defendants contend that\n\nthey were obtained from \u201ca verifiable source routinely considered by courts\u201d such as Bloomberg.\n\nDefendants\u2019 MTS Opp. 15-16. The Individual Defendants said what they said at those conference\n\ncalls, and their attempts to submit incomplete transcripts as a way to avoid liability for those\n\nstatements is concerning.\n\n Regardless, as Defendants\u2019 own case law explains, the Court should \u201caccept[] all factual\n\nallegations in the complaint as true and draw[] all reasonable inferences in the plaintiff's favor.\u201d\n\nMiniso, 2024 WL 759246, at *9 n.20. In doing so, to the extent the Court goes outside the\n\nComplaint and relies on any source documents, the Court should consider the versions of the\n\ntranscripts that were actually used to draft the Complaint. Id. (\u201cthe Court will use the versions\n\ncited in the SAC.\u201d).\n\n F. The Court Should Strike Or Exclude Defendants\u2019 Appendix A\n\n As explained throughout the various motions briefed in connection with Defendants\u2019\n\nMTD, the Court should strike or exclude Defendants\u2019 Appendix A because it inappropriately: (i)\n\nrewrites the alleged false and misleading statements and omissions; and (ii) adds arguments that\n\n\n\n\n6\n Defendants purportedly contest that Plaintiff\u2019s exhibits are \u201cunofficial and unreliable artificial\nintelligence-generated transcripts\u201d and argue that the Court should refuse to consider these\ndocuments because \u201cquestions of authenticity exist.\u201d Defendants\u2019 MTS Opp. 15-16. Tellingly,\nDefendants do not explain what these purported \u201cquestions of authenticity\u201d are or offer to supply\nthe Court with audio recordings that support the notion that their transcripts are more accurate.\nId. Nor could they. The audio recordings from these earnings calls and investor conference calls\nclearly demonstrate the accuracy of the Complaint\u2019s allegations.\n\n 11\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 16 of 18\n\n\n\n\nerroneously contest the accuracy of misstatements and omissions pled in the Complaint. See\n\nPlaintiff\u2019s MTS 1, 17; see also Pls.\u2019 Opp. to Defs.\u2019 MTS 4-7, 10-11.\n\n The cases cited by Defendants do not support consideration of Defendants\u2019 Appendix A,\n\nalthough they do support the consideration of Plaintiff\u2019s Appendix A that lists the Misstatements,\n\nwithout additional improper language. See Pls.\u2019 Opp. to Defs.\u2019 MTS n.4. For example, while the\n\ncourts in some of Defendants\u2019 cited cases appreciated the utility of submitted appendices of false\n\nand misleading statements, those appendices (the use of which was unopposed, unlike here) did\n\nnot appear to provide any embellishment or arguments as presented in Defendants\u2019 Appendix A.\n\nSee Hawes v. Argo Blockchain plc, 2024 WL 4451967, at *1 (S.D.N.Y. Oct. 9, 2024); see also In\n\nre Garrett Motion Inc. Sec. Litig., 2023 WL 2744029, at *3 n.5 (S.D.N.Y. Mar. 31, 2023)\n\n(adopting and including in the opinion itself a version of defendants\u2019 unopposed appendix that\n\naccurately quotes the misstatements alleged in the complaint). Defendants\u2019 other cases are equally\n\ndistinguishable. See Fogel v. Wal-Mart de M\u00e9xico SAB de CV, 2017 WL 751155, at *18\n\n(S.D.N.Y. Feb. 27, 2017) (denying plaintiff\u2019s motion to strike as moot because the Court did not\n\n\u201cutilize Defendants\u2019 appendices in reaching its decision\u201d); U.S. ex rel. K&R Ltd. P\u2019ship v. Mass.\n\nHous. Fin. Agency, 456 F. Supp. 2d 46, 52\u201353 (D.D.C. 2006) (denying motion to strike exhibit\n\ncontaining factual contentions at summary judgment stage).\n\n Plaintiff does not oppose the use of an appendix that actually lists the Complaint\u2019s\n\nMisstatements, which is why the Court should use Plaintiff\u2019s Appendix A as an accurate\n\ncompendium of the Complaint\u2019s alleged Misstatements.\n\nIII. CONCLUSION\n\n For the foregoing reasons, Plaintiff respectfully requests that the Court strike or exclude\n\nthe Davis Declaration, the Exhibits attached thereto, and Defendants\u2019 Appendix A, in their\n\nentirety, and disregard statements or arguments made in Defendants\u2019 MTD in reliance on the\n\n\n 12\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 17 of 18\n\n\n\n\nExhibits. In the event that the Court is inclined to consider any of the Exhibits to the Davis\n\nDeclaration, Plaintiff respectfully requests that the Court decline to use the documents to\n\nchallenge the Complaint\u2019s allegations, which at this stage should be accepted.\n\nDATED: July 30, 2025 Respectfully submitted,\n\n /s/ Lauren A. Ormsbee\n LABATON KELLER SUCHAROW LLP\n Lauren A. Ormsbee\n Lisa M. Strejlau\n Charles J. Stiene\n 140 Broadway\n New York, New York 10005\n Telephone: (212) 907-0700\n Facsimile: (212) 818-0477\n lormsbee@labaton.com\n lstrejlau@labaton.com\n cstiene@labaton.com\n Counsel for Lead Plaintiff and Lead\n Counsel for the Proposed Class\n\n\n\n\n 13\n\f Case 1:24-cv-02804-JAV Document 68 Filed 07/30/25 Page 18 of 18\n\n\n\n\n CERTIFICATE OF COMPLIANCE\n\n I, Lauren A. Ormsbee, hereby certify that this memorandum of law complies with the\n\nlength restrictions in Local Civil Rule 7.1(c).\n\n I further certify that this memorandum of law contains 3,495 words, including any\n\nfootnotes or endnotes and excluding only those sections of the brief that are exempted under Local\n\nRule 7.1(c) and Your Honor\u2019s Individual Practices. In preparing this certificate of compliance, I\n\nhave relied on the word count of the word-processing system used to prepare this memorandum\n\nof law.\n\n\n\n /s/ Lauren A. Ormsbee\n Lauren A. Ormsbee\n\n\n\n\n 14\n\f","ocr_status":2,"date_upload":"2026-05-20T15:31:17.424758-07:00","document_number":"68","attachment_number":null,"pacer_doc_id":"127037958000","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Reply Memorandum of Law in Support of Motion","acms_document_guid":""}],"date_created":"2025-07-30T20:07:27.068127-07:00","date_modified":"2026-04-26T22:50:00.427625-07:00","date_filed":"2025-07-30","time_filed":"21:11:26","entry_number":68,"recap_sequence_number":"2025-07-30.001","pacer_sequence_number":236,"description":"REPLY MEMORANDUM OF LAW in Support re: 51 MOTION to Strike Document No. [49, 49-1 - 49-46, & 48-1], The Declaration of Colin B. Davis, Exhibits Attached Thereto, and Defendants' Appendix A. . Document filed by Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund..(Ormsbee, Lauren) (Entered: 07/30/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/433058796/","id":433058796,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/447401218/","id":447401218,"tags":[],"absolute_url":"/docket/68433458/67/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-07-29T16:08:45.468596-07:00","date_modified":"2026-05-22T10:58:33.722840-07:00","sha1":"ebbdd8b2daa62a13d4f4a7d5939e5823e4aabc43","page_count":7,"file_size":160642,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.67.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.67.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 67 Filed 07/29/25 Page 1 of 7\n\n\n\n\nUNITED STATES DISTRICT COURT\nSOUTHERN DISTRICT OF NEW YORK\n\n\n\n\n No. 1:24-cv-02804-JAV\nIN RE QUIDELORTHO CORPORATION\nSECURITIES LITIGATION\n ORAL ARGUMENT REQUESTED\n\n\n\n\n DEFENDANTS\u2019 REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF\n MOTION TO STRIKE PLAINTIFF\u2019S APPENDIX A AND GLOSSARY\n\n\n\n\n GIBSON, DUNN & CRUTCHER LLP\n 200 Park Avenue\n New York, New York 10166\n Telephone: 212.351.4000\n Facsimile: 212.351.4035\n\n Attorneys for Defendants\n\f Case 1:24-cv-02804-JAV Document 67 Filed 07/29/25 Page 2 of 7\n\n\n\n\n INTRODUCTION\n\n Plaintiff\u2019s Opposition to Defendants\u2019 Motion to Strike (ECF No. 64, \u201cOpposition to the\n\nMotion to Strike\u201d) confirms Plaintiff\u2019s Appendix and Glossary are improper.1 Plaintiff spends the\n\nmajority of its Opposition to the Motion to Strike attempting to explain why Defendants\u2019 Appendix\n\nA is improper, rather than providing any real response to Defendants\u2019 arguments that Plaintiff\u2019s\n\nAppendix and Glossary should be stricken. It is Plaintiff, not Defendants, who \u201cdoth protest[s]\n\ntoo much.\u201d Opp. to Mot. to Strike 2 n.2. That Plaintiff required a 57-page Appendix and five-\n\npage Glossary to make sense of its own Complaint is telling. The Court should strike Plaintiff\u2019s\n\nimproper Appendix and Glossary.\n\n ARGUMENT\n\nI. Plaintiff\u2019s Opposition to the Motion to Strike Confirms the Appendix and Glossary\n Add Argument Beyond the Agreed-Upon Page Limit\n\n Plaintiff characterizes the Appendix and Glossary as \u201creference tools\u201d to aid the Court,\n\nOpp. to Mot. to Strike 3, but even a cursory review of those documents reveals that Plaintiff is\n\nusing them to advance arguments in opposition to Defendants\u2019 Motion to Dismiss the Amended\n\nClass Action Complaint (ECF No. 48, the \u201cMotion to Dismiss\u201d), not to help the Court.\n\n Plaintiff asserts that its Appendix is proper because it \u201ccontained only the language from\n\nthe Complaint and a full citation to each Misstatement\u2019s location in the Complaint\u2014and added [to\n\nDefendants\u2019 Appendix A]2 two reference columns that identified [the basis and location of related\n\narguments in the parties\u2019 briefing] without any argument.\u201d Opp. to Mot. to Strike 1. Tellingly,\n\n\n1\n Defined terms have the meanings given in Defendants\u2019 Memorandum of Law in Support of\nDefendants\u2019 Motion to Strike (ECF No. 58, \u201cDefendants\u2019 Motion to Strike\u201d or \u201cDefs.\u2019 Mot. to\nStrike\u201d), unless noted otherwise. All emphasis in citations is added unless noted otherwise, and\nall internal citations and quotation marks are omitted.\n2\n For the reasons set forth in Defendants\u2019 Opposition to Plaintiff\u2019s Motion to Strike (ECF No. 62),\nDefendants\u2019 Appendix A is a proper reference guide to aid the Court in its review of the Motion\nto Dismiss.\n\n\n\n 1\n\f Case 1:24-cv-02804-JAV Document 67 Filed 07/29/25 Page 3 of 7\n\n\n\n\nPlaintiff fails to mention key differences between the parties\u2019 appendices, namely the arguments\n\nit attempts to sneak in through headings and footnotes, which clearly seek to advance Plaintiff\u2019s\n\narguments in opposition to the Motion to Dismiss. For example, the Appendix contains citations\n\nto the Complaint as \u201cDirect Support for Falsity,\u201d in an improper attempt to connect each challenged\n\nstatement to the reasons why that statement purportedly is false or misleading. See Defs.\u2019 Mot. to\n\nStrike 2. This is in stark contrast to the Complaint, which merely offers a list of alleged\n\nmisstatements followed by a general explanation as to why the enumerated statements are false or\n\nmisleading. Mot. to Dismiss 1\u20132, 21; Reply Mem. of Law in Further Support of Defs.\u2019 Mot. to\n\nDismiss the Am. Class Action Compl. (ECF No. 59, the \u201cReply\u201d) 1, 5\u20136. And rather than merely\n\n\u201cidentifying\u201d Defendants\u2019 arguments in the Motion to Dismiss, the columns in Plaintiff\u2019s\n\nAppendix labeled \u201cDefendants\u2019 Challenges\u201d and \u201cPlaintiff\u2019s Rebuttal\u201d circumvent the agreed-\n\nupon page limit for Plaintiff\u2019s Opposition to Defendants\u2019 Motion to Dismiss by responding directly\n\nto Defendants\u2019 arguments as to each of the 104 challenged statements\u2014which Plaintiff failed to\n\ndo within the body of its Opposition to the Motion to Dismiss. See Reply 1.\n\n Plaintiff further includes a series of footnotes and asterisks in the Appendix to editorialize\n\n\u201cDefendants\u2019 Challenges.\u201d See, e.g., App. 1. For example, Plaintiff criticizes (in a footnote to the\n\nAppendix, ironically) Defendants\u2019 use of footnotes in the Motion to Dismiss to identify to which\n\nof the 104 challenged statements any given argument applies. See id. at 1 nn.1\u20132 (assigning a \u201c*\u201d\n\nto identify which arguments Defendants raised for each specific alleged misstatement \u201cby\n\nreference to the paragraph number only, without any discussion of the text\u201d); see id. at 7 n.3, 35\n\nn.8. Plaintiff had 35 pages to present these arguments in its Opposition to the Motion to Dismiss,\n\nbut did not.\n\n As with the Appendix, Plaintiff attempts to convince the Court that its Glossary is merely\n\n\n\n\n 2\n\f Case 1:24-cv-02804-JAV Document 67 Filed 07/29/25 Page 4 of 7\n\n\n\n\nan aid to assist the Court with its review of the Complaint. Opp. to Mot. to Strike 8. But Plaintiff\n\nacknowledges that the FE definitions in the Glossary combine numerous purported \u201cfacts\u201d alleged\n\nthroughout the 187-page Complaint. See, e.g., id. at 8 n.7. Plaintiff does not meaningfully dispute\n\nits failure to connect the FE allegations with the relevant alleged misstatements in the Complaint.3\n\nSee generally id. at 9. Indeed, the sheer number of paragraphs cited in the FE definitions of the\n\nGlossary shows that the Complaint fails to connect each FE\u2019s allegations with any challenged\n\nstatement. Id. Plaintiff\u2019s need to provide a Glossary to \u201caid\u201d the Court confirms the Complaint\u2019s\n\nlack of particularized allegations.\n\n Contrary to Plaintiff\u2019s assertion, Plaintiff\u2019s Appendix and Glossary are not merely a\n\n\u201cbibliography,\u201d id. at 6, or a \u201creference tool,\u201d id. at 9. The Appendix and Glossary include\n\nunsanctioned advocacy beyond the agreed-upon page limit for Plaintiff\u2019s Opposition to the Motion\n\nto Dismiss, and the Court should strike the Appendix and FE definitions in the Glossary and refuse\n\nto consider any arguments based on them.\n\nII. Plaintiff\u2019s Opposition to the Motion to Strike Confirms the Appendix and Glossary\n Improperly Seek to Amend the Complaint\n\n Plaintiff\u2019s insistence that the Appendix and Glossary correctly quote the Complaint does\n\nnothing to address Defendants\u2019 argument that the Appendix and Glossary purport to connect the\n\nalleged misrepresentations to the reasons why those statements are false or misleading in a way\n\n\n3\n Plaintiff\u2019s patchwork of out-of-Circuit authority does not compel a different outcome. For\nexample, the court in In re Arqit Quantum Inc. Sec. Litig. declined to strike the appendix at issue\nbecause it \u201cd[id] not contain new or additional arguments.\u201d 774 F. Supp. 3d 505, 523 n.17\n(E.D.N.Y. 2025). As discussed supra, the Appendix and Glossary do contain new and additional\narguments. Davis v. Comm\u2019r of Soc. Sec. Admin. is similarly inapplicable. 2022 WL 2529057 (D.\nAriz. July 7, 2022). Davis involved a fee dispute in which the defendant argued that the plaintiff\n\u201cbilled excessive time to prepare a 10-page Glossary.\u201d Id. at *3. The court explained that\n\u201c[i]nclusion of a [medical] glossary can be helpful in Social Security cases,\u201d which include\ncomplicated and unfamiliar terms. Id. Here, Plaintiff does not seek to define complicated or\nunfamiliar terms\u2014it seeks to rewrite the Complaint and advance arguments in response to the\nMotion to Dismiss.\n\n\n\n 3\n\f Case 1:24-cv-02804-JAV Document 67 Filed 07/29/25 Page 5 of 7\n\n\n\n\nnot done in the Complaint itself. Indeed, Plaintiff concedes the Glossary connects allegations\n\nthroughout the Complaint to create summaries that do not otherwise appear in the Complaint. Id.\n\nat 8 (Glossary takes FE descriptions and \u201cfurther add[s] citation to each Complaint paragraph with\n\nallegations attributable to each witness\u201d). But Plaintiff ignores the fact that connecting allegations\n\nto the challenged statements in a way not done in the Complaint is itself an improper amendment\n\nof the Complaint. See 15 U.S.C. \u00a7 78u-4(b)(1)(B) (connection between allegedly false or\n\nmisleading statements and the facts purportedly supporting fraud, i.e., the basis for liability, must\n\nbe alleged in the complaint); Defs.\u2019 Mot. to Strike 4. Further, that Plaintiff needed to create a\n\nGlossary and Appendix to aid the Court in its review of Plaintiff\u2019s own Complaint only highlights\n\nthat Plaintiff failed to present its allegations in a clear and particularized manner initially. See\n\nTarapara v. K12 Inc., 2017 WL 3727112, at *27 (N.D. Cal. Aug. 30, 2017) (noting that submission\n\nof competing appendices \u201cin itself is a sure indication that the complaint is overly long and\n\nconvoluted\u201d).\n\n CONCLUSION\n\n For these reasons as well as the reasons stated in Defendants\u2019 Memorandum of Law in\n\nsupport of their Motion to Strike, the Court should strike the Appendix and the twenty-one FE\n\nentries from the Glossary.\n\n\n\n\n 4\n\f Case 1:24-cv-02804-JAV Document 67 Filed 07/29/25 Page 6 of 7\n\n\n\n\nDated: July 29, 2025 Respectfully submitted,\n\nNew York, New York GIBSON, DUNN & CRUTCHER LLP\n\n\n By: /s/ Colin B. Davis\n Colin B. Davis\n\n 3161 Michelson Drive\n Suite 1200\n Irvine, CA 92612\n Tel: (949) 451-3800\n cdavis@gibsondunn.com\n (admitted pro hac vice)\n\n Brian M. Lutz\n One Embarcadero Center\n Suite 2600\n San Francisco, CA 94111\n Tel: (415) 393-8200\n blutz@gibsondunn.com\n\n Dana E. Sherman\n 200 Park Avenue\n New York, NY 10166\n Tel: (212) 351-4000\n dsherman@gibsondunn.com\n\n Attorneys for Defendants\n\n\n\n\n 5\n\f Case 1:24-cv-02804-JAV Document 67 Filed 07/29/25 Page 7 of 7\n\n\n\n\n CERTIFICATE OF COMPLIANCE\n\n I, Colin B. Davis, hereby certify that this memorandum of law complies with the length\n\nrestrictions in Local Civil Rule 7.1(c).\n\n I further certify that this memorandum of law contains 1277 words, including any\n\nfootnotes or endnotes and excluding only those sections of the brief that are exempted under\n\nLocal Rule 7.1(c) and Your Honor\u2019s Individual Practices. In preparing this certificate of\n\ncompliance, I have relied on the word count of the word-processing system used to prepare this\n\nmemorandum of law.\n\n /s/ Colin B. Davis\n Colin B. Davis\n\n\n\n\n 6\n\f","ocr_status":2,"date_upload":"2026-05-20T15:31:24.207755-07:00","document_number":"67","attachment_number":null,"pacer_doc_id":"127037947904","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Reply Memorandum of Law in Support of Motion","acms_document_guid":""}],"date_created":"2025-07-29T16:08:45.456657-07:00","date_modified":"2026-04-26T22:50:00.368925-07:00","date_filed":"2025-07-29","time_filed":"18:00:20","entry_number":67,"recap_sequence_number":"2025-07-29.001","pacer_sequence_number":233,"description":"REPLY MEMORANDUM OF LAW in Support re: 57 MOTION to Strike Document No. [50-1 and 50 at viii-xii] // Defendants' Motion to Strike Plaintiff's Appendix A and Glossary. . Document filed by QuidelOrtho Corporation, Douglas Bryant, Robert J. Bujarski, Joseph Busky, Michael Iskra, Tamara Ranalli, Randall Steward..(Davis, Colin) (Entered: 07/29/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/432375864/","id":432375864,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/446704779/","id":446704779,"tags":[],"absolute_url":"/docket/68433458/66/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-07-23T19:57:34.671408-07:00","date_modified":"2026-05-22T10:58:19.484379-07:00","sha1":"b5fc907abf03f0b95b7215e322c20dc665264204","page_count":1,"file_size":229108,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.66.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.66.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 66 Filed 07/23/25 Page 1 of 1\n Lauren A. Ormsbee\n Partner\n Labaton Keller Sucharow LLP\n 140 Broadway\n New York, New York 10005\n 212.907.0864\n LOrmsbee@labaton.com\n\n\n\n\nJuly 23, 2025\n\n\nVIA ECF\n\nThe Honorable Jeannette A. Vargas\nUnited States District Court for the Southern\nDistrict of New York\nDaniel Patrick Moynihan\nUnited States Courthouse\n500 Pearl Street, Room 703\nNew York, NY 10007\n\nRe: In re QuidelOrtho Corp. Securities Litigation, No. 24-cv-02804 (S.D.N.Y.)\n\nDear Judge Vargas:\n\n On July 8, 2025, Lead Plaintiff filed a notice of supplemental authority attaching three\nrecent opinions that Lead Plaintiff believes further support denial of Defendants\u2019 Motion to\nDismiss the Amended Complaint. See ECF No. 56. Lead Plaintiff writes to inform the Court that\none of those three opinions was recently withdrawn and Lead Plaintiff accordingly asks the Court\nnot to consider that opinion as supplemental authority. Specifically, the opinion in Levon v.\nCorMedix Inc., No. CV 21-14020 (JXN) (CLW), 2025 WL 1810207 (D.N.J. June 30, 2025) was\nwithdrawn by the Court today, in a text order, as having been \u201centered in error.\u201d The CorMedix\nCourt noted that a subsequent opinion \u201cwill follow.\u201d To the extent the CorMedix Court issues a\nnew opinion denying the motion to dismiss that remains relevant to the allegations in this Action,\nLead Plaintiff will submit that opinion once issued.\n\nVery truly yours,\n\n\n\nLauren A. Ormsbee\n\n\n\n\n New York | Delaware | London | Washington, D.C.\n\f","ocr_status":2,"date_upload":"2026-05-20T15:31:32.938269-07:00","document_number":"66","attachment_number":null,"pacer_doc_id":"127037915284","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Letter","acms_document_guid":""}],"date_created":"2025-07-23T19:57:34.495877-07:00","date_modified":"2026-04-26T22:50:00.314906-07:00","date_filed":"2025-07-23","time_filed":"19:20:10","entry_number":66,"recap_sequence_number":"2025-07-23.001","pacer_sequence_number":231,"description":"LETTER addressed to Judge Jeannette A. Vargas from Lauren A. Ormsbee dated 7/23/2025 re: Lead Plaintiff's July 8, 2025 Notice of Supplemental Authority. Document filed by Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund..(Ormsbee, Lauren) (Entered: 07/23/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/432199489/","id":432199489,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68433458/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/446524438/","id":446524438,"tags":[],"absolute_url":"/docket/68433458/64/in-re-quidelortho-corporation-securities-litigation/","date_created":"2025-07-22T18:09:59.465615-07:00","date_modified":"2026-05-22T03:14:33.438504-07:00","sha1":"649bd4fa90c130b23e31c45041d4b7898cc9c292","page_count":17,"file_size":230728,"filepath_local":"recap/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.64.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.nysd.619466/gov.uscourts.nysd.619466.64.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 1 of 17\n\n\n\n\n UNITED STATES DISTRICT COURT\n SOUTHERN DISTRICT OF NEW YORK\n\n\nIN RE QUIDELORTHO CORPORATION\nSECURITIES LITIGATION\n No. 24-cv-02804-JAV\n\n ORAL ARGUMENT REQUESTED\n\n\n\n LEAD PLAINTIFF\u2019S MEMORANDUM OF LAW IN OPPOSITION TO\n DEFENDANTS\u2019 MOTION TO STRIKE PLAINTIFF\u2019S APPENDIX A AND\n GLOSSARY\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 2 of 17\n\n\n\n\n TABLE OF CONTENTS\n\n Page\n\nI. INTRODUCTION .............................................................................................................. 1\n\nII. ARGUMENT ...................................................................................................................... 3\n\n A. Plaintiff\u2019s Appendix A and the FE Defined Terms in the Glossary Do Not Add\n Additional Argument .............................................................................................. 4\n\n 1. Plaintiff\u2019s Appendix A Contains No Improper Argument .......................... 4\n\n 2. The FE Defined Terms in the Glossary Present No Improper Argument... 8\n\n 3. Defendants\u2019 MTS Lacks Any Legal Support.............................................. 9\n\n B. Plaintiff\u2019s Appendix A and the FE Defined Terms in the Glossary Do Not\n Attempt to Amend the Complaint ......................................................................... 10\n\nIII. CONCLUSION ................................................................................................................. 11\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 3 of 17\n\n\n\n\n TABLE OF AUTHORITIES\n\n Page(s)\n\nCases\n\nIn re Arqit Quantum Inc. Sec. Litig.,\n 774 F. Supp. 3d 505 (E.D.N.Y. 2025) .......................................................................................7\n\nCurran v. Aetna Life Ins. Co.,\n 2016 WL 3843085 (S.D.N.Y. July 11, 2016) ..........................................................................10\n\nD.P. v. N.Y.C. Dep\u2019t of Educ.,\n 2022 WL 103536 (S.D.N.Y. Jan. 10, 2022), aff'd sub nom. H.C. v. N.Y.C.\n Dep\u2019t of Educ., 71 F.4th 120 (2d Cir. 2023) ............................................................................10\n\nDavis v. Comm'r of Soc. Sec. Admin.,\n 2022 WL 2529057 (D. Ariz. July 7, 2022) ................................................................................9\n\nGhorbani v. Pac. Gas & Elec. Co. Grp. Life Ins.,\n 100 F. Supp. 2d 1165 (N.D. Cal. 2000) .....................................................................................2\n\nHawes v. Argo Blockchain\n plc, 2024 WL 4451967 (S.D.N.Y. Oct. 9, 2024) .......................................................................6\n\nKing v. Nat'l Gen. Ins. Co.,\n 2023 WL 8879261 (N.D. Cal. Dec. 22, 2023) ...........................................................................9\n\nLesser v. TD Bank, N.A.,\n 2020 WL 1943050 (S.D.N.Y. Apr. 23, 2020)..........................................................................11\n\nMcCray v. City of N.Y.,\n 2007 WL 4352748 (S.D.N.Y. Dec. 11, 2007) .........................................................................11\n\nPacenza v. IBM Corp.,\n 2007 WL 9817926 (S.D.N.Y. July 26, 2007), aff\u2019d, 363 F. App\u2019x 128 (2d Cir.\n 2010) ........................................................................................................................................10\n\nRosado-Acha v. Red Bull Gmbh,\n 2016 WL 3636672 (S.D.N.Y. June 29, 2016) .........................................................................10\n\nSnellink v. Gulf Res., Inc.,\n 870 F. Supp. 2d 930 (C.D. Cal. 2012) .......................................................................................7\n\nStrougo v. Tivity Health, Inc.,\n 551 F. Supp. 3d 839 (M.D. Tenn. 2021) ....................................................................................7\n\n\n\n\n ii\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 4 of 17\n\n\n\n\nOther Authorities\n\nFED. R. CIV. P. 12(f) ........................................................................................................................3\n\nWilliam Shakespeare, Hamlet ..........................................................................................................2\n\n\n\n\n iii\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 5 of 17\n\n\n\n\n Plaintiff submits this opposition to Defendants\u2019 Motion to Strike Plaintiff\u2019s Appendix A\n\nand Glossary (ECF No. 58, \u201cDefendants\u2019 MTS\u201d), both of which were submitted with Plaintiff\u2019s\n\nopposition (ECF No. 50, \u201cMTD Opposition\u201d) to Defendants\u2019 Motion to Dismiss the Complaint\n\n(ECF No. 48 \u201cMTD\u201d).1\n\nI. INTRODUCTION\n\n Defendants, in support of their 35-page MTD, improperly submitted 46 exhibits totaling\n\n722 pages, and a 36-page \u201cDefendants\u2019 Appendix A\u201d that attempts to recast the Complaint\u2019s 104\n\nMisstatements by adding cherry-picked language to the Misstatements and raising arguments\n\nincorrectly contesting the accuracy of certain Misstatements. Plaintiff moved to strike or,\n\nalternatively, limit the use of those documents (ECF No. 52, \u201cPlaintiff\u2019s MTS\u201d), and will respond\n\nto Defendants\u2019 opposition to Plaintiff\u2019s MTS (ECF No. 62) on July 30, 2025. Defendants\u2019 actions\n\nare an important comparative touchstone to the arguments raised in Defendants\u2019 MTS.\n\n In the MTD Opposition, Plaintiff employed two organizational aids to assist the Court in\n\nlocating allegations relevant to Defendants\u2019 legal challenges and to correct the improper additions\n\nto the Complaint language contained in Defendants\u2019 Appendix A. First, Plaintiff provided its own\n\nAppendix A (ECF No. 50-1) that contained the same columns as Defendants\u2019 improper Appendix\n\nA\u2014with an important difference being that Plaintiff\u2019s Appendix A contained only the language\n\nfrom the Complaint and a full citation to each Misstatement\u2019s location in the Complaint\u2014and\n\nadded two reference columns that identified without any argument: (i) the basis and location, by\n\npage number, of Defendants\u2019 MTD challenges to each Misstatement (i.e., forward-looking\n\n\n\n\n1\n Unless otherwise defined, capitalized terms have the meaning ascribed in Lead Plaintiff\u2019s\nAmended Class Action Complaint for Violations of the Federal Securities Laws (ECF No. 42) or\nin the Glossary contained in Plaintiff\u2019s MTD Opposition (the \u201cGlossary\u201d). References to the\nComplaint herein appear as \u201c\u00b6___\u201d.\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 6 of 17\n\n\n\n\nstatements, opinion statements, immaterial puffery statements, and not false statements); and (ii)\n\nthe location of Plaintiff\u2019s corresponding responses, by page number, in the MTD Opposition.\n\nSecond, Plaintiff included a Glossary of Certain Defined Terms in its MTD Opposition that\n\nidentified many abbreviated and capitalized terms used in the Complaint and the MTD\n\nOpposition, including a definition for each of the 21 FEs in the Complaint, who were described\n\nby title, tenure, and responsibilities\u2014exactly as they were defined in the Complaint, specifically\n\nin \u00b6\u00b646-66 of the Complaint. The Glossary also listed, without argument or description, the\n\nComplaint paragraphs where each FE\u2019s allegations are located. Such organizational aids are\n\nappreciated by courts and, indeed, are at times required to be submitted, as described below.\n\n Defendants\u2019 MTS is a striking example of projection because defense counsel incorrectly\n\nattributes to Plaintiff improper conduct that, in fact, mirrors Defendants\u2019 tactics. As Defendants\n\nmove to strike the entirety of Plaintiff\u2019s Appendix A and the FE descriptions in the Glossary, they\n\nare defending, in a corresponding brief, the incorporation of 722 pages of exhibits and their\n\nAppendix A, which relies liberally on those exhibits in creating an impermissible counter-\n\nnarrative to the Complaint. See ECF No. 62, Defendants\u2019 Opposition to Plaintiff\u2019s Motion to\n\nStrike the Declaration of Colin B. Davis, Exhibits Attached Thereto, and Defendants\u2019 Appendix\n\nA. Defendants \u201cdoth protest too much.\u201d2 Every argument raised by Defendants applies, if at all,\n\nto their own actions, while application of these arguments to Plaintiff\u2019s non-argumentative\n\nGlossary and Plaintiff\u2019s Appendix A is merely an attempt to fit a square peg into a round hole.\n\n\n\n\n2\n William Shakespeare, Hamlet, act III, sc. II. See, e.g., Ghorbani v. Pac. Gas & Elec. Co. Grp.\nLife Ins., 100 F. Supp. 2d 1165, 1168 (N.D. Cal. 2000) (\u201cTo the contrary, the strenuousness with\nwhich a defendant objects to a plaintiff's claim might legitimately be regarded as a sign that a case\nhas merit. As Gertrude\u2019s observation to Hamlet reveals, suspicions are rightly fueled by one who\n\u2018doth protest too much.\u2019\u201d).\n\n\n 2\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 7 of 17\n\n\n\n\n Specifically, Defendants raise two arguments in support of their MTS, neither of which\n\nbears the weight of even the lightest scrutiny. First, Defendants argue that Plaintiff\u2019s Appendix\n\nA and the FE definitions in the Glossary contain \u201cargument\u201d and therefore are an improper\n\ncircumvention of the agreed-upon page limitations. Defendants\u2019 MTS at 2-4. There is no\n\nargument, legal or factual, in the challenged documents. They are neutral and accurate, serving\n\nas a reference, not an argumentative tool. Defendants\u2019 citation to a remarkably inapposite string\n\nof cases in support only proves this point. Second, Defendants argue that the direct and\n\nunembellished citations to the Complaint\u2019s extensive allegations in the Glossary and Plaintiff\u2019s\n\nAppendix A somehow serve as an amendment to the Complaint\u2019s extensive allegations of\n\nsecurities fraud. Id. at 4-5. Since these documents merely reflect and cite to the Complaint, and\n\nseek to remove the extraneous arguments and language Defendants attempt to insert in their MTD,\n\nexhibits and Appendix A, Plaintiff amends nothing by providing these reference tools.\n\n It is clear why Defendants want to strike Plaintiff\u2019s Appendix A and Glossary. They each\n\nprovide a useful aid for the Court to use in reviewing the Misstatements and the location of the\n\narguments challenging and defending them, and the FE allegations that support them. A fair and\n\nunbiased review of the allegations will maximize judicial efficiency. None of Defendants\u2019 MTS\n\narguments provide any justification for the exclusion of these materials, and it should be denied\n\nin its entirety.\n\nII. ARGUMENT\n\n Under Federal Rule of Civil Procedure 12(f), a \u201ccourt may strike from a pleading an\n\ninsufficient defense or any redundant, immaterial, impertinent, or scandalous matter.\u201d FED. R.\n\nCIV. P. 12(f). As discussed below, submissions such as glossaries and appendices listing the\n\nalleged false and misleading statements from the Complaint are traditionally welcomed, if not\n\n\n\n\n 3\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 8 of 17\n\n\n\n\nrequired, by courts tasked with analyzing complex claims, such as those in securities class actions.\n\nTheir contents do not meet the Rule 12(f) standard for exclusion.\n\n A. Plaintiff\u2019s Appendix A and the FE Defined Terms in the Glossary Do Not\n Add Additional Argument\n\n Defendants\u2019 claim that Plaintiff\u2019s Appendix A and the definitions of FE-1 through FE-21\n\n\u201cattempt to supplement the Opposition with additional argument\u201d and should be stricken as being\n\nin excess of the page limits. MTS at 2-4. This argument fails because neither document contains\n\nany legal or factual argument.\n\n 1. Plaintiff\u2019s Appendix A Contains No Improper Argument\n\n Appendices containing each of the false and misleading statements alleged in a complaint\n\nare increasingly commonplace. Indeed, if Defendants had submitted an appendix that accurately\n\ncontained the alleged Misstatements, Plaintiff would not have moved to strike it. However, as\n\ndescribed in Plaintiff\u2019s MTS (and forthcoming reply brief in further support of Plaintiff\u2019s MTS,\n\ndue on July 30, 2025), Defendants\u2019 Appendix A \u201cclaims to set forth the 104 Misstatements\n\nalleged in the Complaint, but liberally adds extraneous language to the Misstatements throughout,\n\nwithout noting what language was added by Defendants and what was contained in the Complaint,\n\nand further raises improper and inaccurate factual arguments within the document based on the\n\nExhibits.\u201d Plaintiff\u2019s MTS at 1. Plaintiff\u2019s Appendix A provides exactly what it should\u2014the\n\nexact language of the Misstatements alleged in the Complaint\u2014a fact Defendants do not dispute.\n\n The truly ironic core of Defendants\u2019 MTS is that a plain comparison of Defendants\u2019\n\nAppendix A and Plaintiff\u2019s Appendix A shows that 5 of the 7 columns are in substance identical,\n\nwith key differences that support the inclusion of Plaintiff\u2019s Appendix A and the striking of\n\nDefendants\u2019 Appendix A.\n\n\n\n\n 4\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 9 of 17\n\n\n\n\n First, as discussed above and in Plaintiff\u2019s MTS, Defendants\u2019 Appendix A presents each\n\n\u201cAlleged Misstatement\u201d as if it were identical to the presentation in the Complaint, but in fact,\n\nadds language and raises wholly incorrect arguments about the content of those Misstatements,\n\nwithout even indicating to the Court what text was added by Defendants. Plaintiff\u2019s MTS at 11-\n\n12, 17. Plaintiff\u2019s parallel column titled \u201cFalse or Misleading Statements and Omissions\u201d\n\ncontains, in the same exact order as presented in the Complaint (and in Defendants\u2019 Appendix\n\nA), each Misstatement as alleged in the Complaint. Plaintiff notes that for ease of reference,\n\nPlaintiff referred to each Misstatement in its Opposition by its \u201cMisstatement #\u201d assigned to it in\n\nboth Defendants\u2019 Appendix A and Plaintiff\u2019s Appendix A.3\n\n Second, while in Defendants\u2019 Appendix A, the column indicating the Misstatement\u2019s\n\nlocation in the Complaint lists only a single paragraph citation, Plaintiff\u2019s Appendix A cites every\n\nlocation of the Misstatement, as well as every paragraph that explains why the Misstatement was\n\nmaterially false and misleading when made, in the body of the Complaint. That is not \u201cargument\u201d;\n\nit is merely completeness. Compare, e.g., Defendants\u2019 Appendix A, Misstatement 2 (citing only\n\n\u00b6321(b)) with Plaintiff\u2019s Appendix A, Misstatement 2 (citing \u00b6\u00b67, 91, 321(b), 322-26 & Section\n\nIV.F.2). The fact that one Appendix A provides the Court with all Complaint references to each\n\nMisstatement, while another Appendix A obfuscates the totality of the Complaint allegations by\n\nciting only one of several paragraphs, proves the propriety of Plaintiff\u2019s Appendix A and its utility\n\nto the Court as a reference aid (and the impropriety of Defendants\u2019 Appendix A).\n\n Third, Defendants\u2019 claim that the two additional columns in Plaintiff\u2019s Appendix A that\n\nprovide relevant page citations to the MTD and the Opposition somehow \u201cmakes conclusory legal\n\n\n\n3\n Should the Court for any reason strike or disregard both Plaintiff\u2019s and Defendants\u2019 Appendix\nA, Plaintiff asks that the Court accept the numbering of the Misstatements adopted by both parties\nfor purposes of its analysis of the MTD.\n\n 5\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 10 of 17\n\n\n\n\narguments in response to the [MTD], like claiming that certain statements are \u2018Not Protected\n\nForward-Looking\u2019 or \u2018Not Inactionable Puffery.\u2019\u201d Defendants\u2019 MTS at 2. While Plaintiff agrees\n\nthat Defendants\u2019 position\u2014that certain Misstatements are forward-looking or puffery (or\n\ninactionable opinions or not false and misleading)\u2014is conclusory and legally insufficient, those\n\narguments are made in Defendants\u2019 MTD, not by Plaintiff. Plaintiff\u2019s Appendix A does nothing\n\nmore than identify, by page number, where the Court may locate those arguments in the MTD\n\nand Opposition. Again, this should not even bear repeating, but this is not \u201cargument\u201d by any\n\ndefinition of that word; it is a reference tool, a bibliography.4\n\n Finally, Plaintiff\u2019s Appendix A responds to footnotes 2-10 in Defendants\u2019 Appendix A,\n\nwhere Defendants claim that the language contained in the Complaint for certain Misstatements\n\nis inaccurate or not contained in Defendants\u2019 version of a conference call statement. See Plaintiff\u2019s\n\nAppendix A, nn. 4-12. Defendants made the statements exactly as they were pled in the\n\nComplaint. Of course, the Individual Defendants\u2014the makers of the statements\u2014know that they\n\nmade these statements. Their attempt to present incomplete conference call transcripts to escape\n\nliability is dishonest. Plaintiff provided the accurate transcripts to the Court to counter this\n\ndishonest argument and can provide audio files of each conference call if requested. See Plaintiff\u2019s\n\n\n\n\n4\n Indeed, Defendants\u2019 own cited case backfires against them because it plainly supports Plaintiff\u2019s\nAppendix A and, specifically, the addition of these two columns. In Hawes v. Argo Blockchain\nplc, Judge Colleen McMahon expressed appreciation for the submission of an appendix that \u201clists\neach statement identified in the pleading as misleading\u201d (without any indication that the\nsubmitting party embellished or added to the statement\u2019s alleged language) and \u201cidentif[ied] the\nlegal principles on which [Defendants] rely to buttress their claim that the pleading is fatally\nflawed,\u201d including whether the statements were challenged as \u201cforward-looking statements,\n\u201cpuffery,\u201d and statements of opinion or belief rather than fact.\u201d 2024 WL 4451967, at *1\n(S.D.N.Y. Oct. 9, 2024). Judge McMahon went on to \u201ccommend [the submitting party] for doing\nwhat the court would otherwise have had to do \u2013 identify every statement that must be evaluated\nand the rules allegedly applicable to that evaluation. It is an ideal way to set up a motion to dismiss\nin a securities fraud case.\u201d Id.\n\n\n 6\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 11 of 17\n\n\n\n\nMTS at 11 n.4 (\u201cAudio recordings of the entire conference are also available online and accessible\n\nto the public, which corroborate the accuracy of the Complaint\u2019s allegations.\u201d). In any event, the\n\nproposed counternarrative argued in Defendants\u2019 Appendix A is plainly improper at this stage,\n\nand Plaintiff\u2019s response to it is warranted (although unnecessary). See, e.g., Snellink v. Gulf Res.,\n\nInc., 870 F. Supp. 2d 930, 938 (C.D. Cal. 2012) (\u201cThough the accuracy of Plaintiffs\u2019 financial\n\ndata may be disputed, it would be premature to dismiss the case in light of these factual disputes\n\nat the pleading stage.\u201d); see also Strougo v. Tivity Health, Inc., 551 F. Supp. 3d 839, 848 (M.D.\n\nTenn. 2021) (\u201cwhether Defendants actually disclosed certain other information is a fact issue that\n\nis premature to address at the motion to dismiss stage.\u201d).\n\n Plaintiff\u2019s Appendix A is a proper, and often preferred, tool to increase judicial efficiency.\n\nSee In re Arqit Quantum Inc. Sec. Litig., 774 F. Supp. 3d 505, 523 n. 17 (E.D.N.Y. 2025) (denying\n\ndefendants\u2019 motion to strike plaintiffs\u2019 Appendix A because it \u201cdoes not contain new or additional\n\narguments\u201d and \u201cserves as a convenient summary and reference with respect to the alleged\n\nmisstatements\u201d). Indeed, some judges in this district and others require that plaintiffs file a similar\n\nchart in connection with their opposition to a Rule 12(b)(6) motion to dismiss. For example, Rule\n\n8.G.i. of the Individual Practices in Civil Cases of Southern District of New York Judge Arun\n\nSubramanian mandates that, in the context of a motion to dismiss, \u201cthe non-moving party must\n\nattach a responsive, non-argumentative exhibit to its responsive papers identifying the paragraphs\n\nof the complaint that plausibly allege those elements.\u201d5\n\n\n\n5\n Judge Arun Subramanian\u2019s Individual Practices in Civil Cases, available at:\nhttps://www.nysd.uscourts.gov/sites/default/files/practice_documents/AS%20Subramanian%20\nCivil%20Individual%20Practices_0.pdf. See also Judge Yvonne Gonzalez Rogers\u2019 Standing\nOrder in Civil Cases, Rule 14 (available at: https://cand.uscourts.gov/wp-\ncontent/uploads/judges/gonzalez-rogers-ygr/YGR-Standing-Order-In-Civil-Cases-Updated-\n03.17.25.pdf) (requiring securities class action plaintiffs file with the Court a chart summarizing\n\n\n\n 7\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 12 of 17\n\n\n\n\n 2. The FE Defined Terms in the Glossary Present No Improper\n Argument\n\n Plaintiff\u2019s Complaint contains 446 paragraphs detailing Defendants\u2019 fraudulent scheme to\n\nmislead investors throughout the Class Period. Out of those 446 paragraphs, over 190 paragraphs\n\ninclude detailed allegations from the accounts of 21 FEs, or former employees, of QuidelOrtho.6\n\nDefendants\u2019 MTD mischaracterizes and disregards the substantive and well-pled FE allegations\n\ncontained in the Complaint, and Plaintiff, in turn, addressed the FE allegations in its MTD\n\nOpposition. As an aid, given the large number of cited former employees, Plaintiff added the\n\ndefinition of each FE to the Glossary of Defined Terms in a manner that is largely identical or\n\nderivative of the FE description paragraphs in \u00b6\u00b646-66 of the Complaint, and further added\n\ncitation to each Complaint paragraph with allegations attributable to each witness.\n\n In their MTS, Defendants contend that the Glossary is improperly argumentative.\n\nDefendants\u2019 MTS at 3-4. It is not. Indeed, the Glossary does not contain argument whatsoever,\n\nnor does it contain any new facts or allegations; all of the information contained in each FE\n\ndefinition is taken directly from the Complaint.7 While Defendants broadly argue without\n\nexplanation that all 21 FE definitions are \u201cargument,\u201d they address only one FE description,\n\n\n\nthe following information from the complaint: (a) each statement alleged to have been false or\nmisleading; (b) the speaker, date, and medium by which the statement was made; (c) the reason(s)\nthe statement was false or misleading when made with specific references to paragraphs in the\ncomplaint; and (d) the facts alleged to show that defendant(s) knew the statement was false and/or\nmisleading with specific references to paragraphs in the complaint).\n6\n See \u00b6\u00b69, 11, 16, 20, 46-66, 77, 129-30, 132-36, 138, 140-47, 149, 152-57, 163-90, 193-220, 223-\n29, 233-50, 252-80, 302, 322-26, 329-32, 334, 338, 340-42, 346-49, 353-54, 359-60, 362-64, 366-\n72, 377-79, 381.\n7\n For example, the Glossary defines FE-1 using the, nearly verbatim, description provided to him\nin the \u201cRelevant Third Parties\u201d section of the Complaint. Compare Opposition at ix (FE-1:\n\u201cFormer Senior Director, Regulatory Affairs from January 2020 through April 2024.\u201d) with \u00b646\n(\u201cFE-1 worked at Quidel and then QuidelOrtho from approximately January 2020 through April\n2024 in the Company\u2019s San Diego location. He served as Senior Director, Regulatory\nAffairs\u2026.\u201d).\n\n\n 8\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 13 of 17\n\n\n\n\nclaiming not that Plaintiff added anything outside of the Complaint, but that \u201cPlaintiff pieces\n\ntogether multiple allegations to describe FE-4\u201d and \u201cidentified no less than 31 allegations as\n\n\u2018attributable to FE-4.\u2019\u201d Defendants\u2019 MTS at 3. Nothing in Plaintiff\u2019s definition of FE-4 is\n\nargument or not plain language from the face of the Complaint. FE-4 is defined in the Glossary\n\nas a \u201cFormer employee who was a scientist who held senior level marketing roles from mid-2020\n\nuntil Fall 2023 and led the EU launch of Savanna RVP4 and drafted Savanna marketing\n\nmaterials.\u201d MTD Opposition at ix. The Complaint defines him identically. See \u00b649 (\u201cFE-4 held\n\nvarious senior level marketing roles from mid-2020 until Fall 2023\u2026. FE-4 led the launch of\n\nSavanna RVP4 in Europe and drafted a Savanna product overview and Savanna brochure, both\n\nof which were used to market Savanna\u2026.\u201d); \u00b6212 (\u201cFE-4 stated that as a scientist, he knew that\n\nSavanna would not get FDA clearance but that if it did, Savanna would eventually get recalled.\u201d).\n\n Defendants\u2019 stance that defining a former employee in a Glossary as he is defined in the\n\nComplaint, and listing where in the Complaint that former employee is mentioned, is disallowed\n\n\u201cargument\u201d does not hold up. This is even clearer when taking into account the fact that, as a\n\nmatter of practice, courts typically find that glossaries are \u201cnot generally regarded as an\n\ninfringement on page limitation rules\u201d because they are a helpful reference tool. See Davis v.\n\nComm\u2019r of Soc. Sec. Admin., 2022 WL 2529057, at *3 (D. Ariz. July 7, 2022) (\u201cInclusion of a\n\nglossary can be helpful \u2026 and is not generally regarded as an infringement on page limitation\n\nrules.\u201d); see also King v. Nat\u2019l Gen. Ins. Co., 2023 WL 8879261, at *6 (N.D. Cal. Dec. 22, 2023)\n\n(referencing glossary, filed by plaintiffs as an exhibit, containing a list of witnesses and a\n\nsummary of their respective backgrounds).\n\n 3. Defendants\u2019 MTS Lacks Any Legal Support\n\n The weakness of the MTS is obvious when comparing the circumstances presented here\n\nto the stricken argumentative information in the handful of cases Defendants chose to cite. In\n\n\n 9\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 14 of 17\n\n\n\n\nthose cases, courts struck (i) a separate 29-page \u201cDeposition Analysis\u201d memorandum arguing that\n\ndefendants\u2019 testimony was contradictory (Pacenza v. IBM Corp., 2007 WL 9817926, at *1\n\n(S.D.N.Y. July 26, 2007), aff\u2019d, 363 F. App\u2019x 128 (2d Cir. 2010)); and (ii) a party declaration that\n\ncontained \u201cbrand-new factual allegations not made or even referenced in either of his complaints\u201d\n\n(Rosado-Acha v. Red Bull Gmbh, 2016 WL 3636672, at *8 (S.D.N.Y. June 29, 2016)). In two\n\nother cases, courts did not strike anything, but did caution against the use of a declaration that\n\n\u201coffers extensive legal and factual arguments\u201d including several pages of citation to caselaw and\n\nargument, which is not applicable here. See D.P. v. N.Y.C. Dep\u2019t of Educ., 2022 WL 103536, at\n\n*1 n. 1 (S.D.N.Y. Jan. 10, 2022), aff'd sub nom. H.C. v. N.Y.C. Dep\u2019t of Educ., 71 F.4th 120 (2d\n\nCir. 2023); see also Curran v. Aetna Life Ins. Co., 2016 WL 3843085, at *8 (S.D.N.Y. July 11,\n\n2016) (admonishing plaintiff for failing to \u201cinclude any legal argument in support of her third\n\nclaim\u201d in her memorandum, and instead, trying to incorporate an attorney declaration to advance\n\nfactual and legal arguments).\n\n B. Plaintiff\u2019s Appendix A and the FE Defined Terms in the Glossary Do Not\n Attempt to Amend the Complaint\n\n Defendants next state, without explanation, that Plaintiff used Plaintiff\u2019s Appendix A and\n\nthe FE definitions in the Glossary \u201cto connect each challenged statement to the reasons why that\n\nstatement purportedly is false or misleading, and the FEs whose accounts purportedly support\n\nthose reasons, in a way not done in the Complaint.\u201d Defendants\u2019 MTS at 4-5. This is just not\n\ncorrect. The Misstatements and the FE definitions are presented identically as they are in the\n\nComplaint.\n\n As explained herein, the Complaint contains all of the facts and allegations cited in\n\nPlaintiff\u2019s Appendix A and Glossary. Plaintiffs\u2019 Appendix A lists the alleged Misstatements, in\n\nthe exact order in which they appear in the \u201cDefendants\u2019 False and Misleading Statements and\n\n\n\n 10\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 15 of 17\n\n\n\n\nOmissions\u201d section of the Complaint. Despite this, Defendants contend that Plaintiff\u2019s Appendix\n\nA and Glossary constitute an attempt to amend the Complaint. Id. This argument is ironic because,\n\nas explained supra, it is Defendants themselves that first presented an Appendix A, and it was\n\nDefendants\u2019 Appendix A that: (i) inappropriately rewrote the alleged false and misleading\n\nstatements and omissions; and (ii) added arguments that erroneously contest the accuracy of\n\nmisstatements and omissions pled in the Complaint.\n\n Tellingly, Defendants cannot point to a single piece of information that was not alleged in\n\nthe Complaint or explain how Plaintiff\u2019s Appendix A and Glossary purportedly altered those well-\n\npled allegations. Nor can they because both documents merely provide citations to facts and\n\nallegations in the Complaint or page citations to legal arguments within each party\u2019s respective\n\nbrief in connection with Defendants\u2019 Motion.8\n\nIII. CONCLUSION\n\n Plaintiff submitted its Appendix A and Glossary as a courtesy to the Court and to correct\n\nthe mischaracterizations of the Complaint\u2019s facts and allegations within Defendants\u2019 MTD and\n\nDefendants\u2019 Appendix A. For the reasons explained herein, the Court should deny Defendants\u2019\n\nMTS in its entirety.\n\n\n\n\n8\n Defendants\u2019 case law is readily distinguishable. See McCray v. City of N.Y., 2007 WL 4352748,\nat *30 (S.D.N.Y. Dec. 11, 2007) (finding that plaintiffs\u2019 memorandum attempted to be more\nspecific in response to defendants\u2019 motion to dismiss where the complaint failed to plead claims\n\u201cwith sufficient specificity to put each Defendant on notice of what he or she allegedly did or did\nnot do\u201d); see also Lesser v. TD Bank, N.A., 2020 WL 1943050, at *11 (S.D.N.Y. Apr. 23, 2020)\n(plaintiff attempted to make new factual allegations in memorandum of law that were not pled in\nthe complaint).\n\n\n 11\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 16 of 17\n\n\n\n\nDATED: July 22, 2025 Respectfully submitted,\n\n /s/ Lauren A. Ormsbee\n LABATON KELLER SUCHAROW LLP\n Lauren A. Ormsbee\n Lisa M. Strejlau\n Charles J. Stiene\n 140 Broadway\n New York, New York 10005\n Telephone: (212) 907-0700\n Facsimile: (212) 818-0477\n lormsbee@labaton.com\n lstrejlau@labaton.com\n cstiene@labaton.com\n Counsel for Lead Plaintiff and Lead\n Counsel for the Proposed Class\n\n\n\n\n 12\n\f Case 1:24-cv-02804-JAV Document 64 Filed 07/22/25 Page 17 of 17\n\n\n\n\n CERTIFICATE OF COMPLIANCE\n\n I, Lauren A. Ormsbee, hereby certify that this memorandum of law complies with the\n\nlength restrictions in Local Civil Rule 7.1(c).\n\n I further certify that this memorandum of law contains 3,428 words, including any\n\nfootnotes or endnotes and excluding only those sections of the brief that are exempted under Local\n\nRule 7.1(c) and Your Honor\u2019s Individual Practices. In preparing this certificate of compliance, I\n\nhave relied on the word count of the word-processing system used to prepare this memorandum\n\nof law.\n\n\n\n /s/ Lauren A. Ormsbee\n Lauren A. Ormsbee\n\n\n\n\n 13\n\f","ocr_status":2,"date_upload":"2026-05-20T15:31:40.919935-07:00","document_number":"64","attachment_number":null,"pacer_doc_id":"127037907407","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Memorandum of Law in Opposition to Motion","acms_document_guid":""}],"date_created":"2025-07-22T18:09:59.286510-07:00","date_modified":"2026-04-26T22:49:59.847032-07:00","date_filed":"2025-07-22","time_filed":"17:16:50","entry_number":64,"recap_sequence_number":"2025-07-22.001","pacer_sequence_number":225,"description":"MEMORANDUM OF LAW in Opposition re: 57 MOTION to Strike Document No. [50-1 and 50 at viii-xii] // Defendants' Motion to Strike Plaintiff's Appendix A and Glossary. . Document filed by Central States, Southeast and Southwest Areas Health and Welfare Fund, Teamsters Local 710 Pension Fund..(Ormsbee, Lauren) (Entered: 07/22/2025)","tags":[]}],"entries_total":"https://www.courtlistener.com/api/rest/v4/docket-entries/?count=on&docket=68433458&page_size=40"}