Tamer Salameh v. Tarsadia Hotel

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

TAMER SALAMEH; REAL ESTATE 4 No. 11-55479
HOSPITALITY, LLC, a California
limited liability company; ALEKSEY D.C. No.
KATS; DIANA KATS; MITCHELL J. 3:09-cv-02739-
PEREIRA; GARY A. TORRETTA; DMS-CAB
ROBERT ALVARENGA; ALEXIS
COSIO; CESAR MOTA; DENIS B.
ROTHE, JR.; CHARLENE SCHRUFER; OPINION
DAVID R. BUSHY; DALE CURTIS;
ZONDRA SCHMIDT; DOLORES
GREEN; CHRISTY JESKE; TAZIA
REYNA; MARY L. WEE SONG;
KERRY L. STEIGERWALT; BETH
STEIGERWALT; STUART M.
WOLMAN; JEFFREY E. LUBIN;
BARBARA L. LUBIN, individually and
as co-trustees of the Lubin Family
Trust dated 26 March 2002; MIKAEL
HAVLUCIYAN; THERESE
HAVLUCIYAN, individually and as
co-trustees of the Havluciyan Family
Trust; SADOUX KIM, individually
and on behalf of a class of all others
similarly situated, VIRGINIA
GALLANOSA; JOSE GALLANOSA;
JOEY CLEMENT; KEVIN HENRY;
ANDREW PAUL; STEVEN PAUL; VITO
MICALE; PHILIP GUTIRREZ;
BARBARA BEHRLE; THOMAS
2 SALAMEH V. TARSADIA HOTEL

BEHRLE; DANON SLINKARD; KIM
HENRY; SYLVIA HOERR; MATTHEW
HOERR,
Plaintiffs-Appellants,

v.

TARSADIA HOTEL, a California
corporation; TUSHAR PATEL, an
individual; B. U. PATEL, an
individual; GREGORY CASSERLY, an
individual; 5TH ROCK LLC, a
Delaware limited liability company;
MPK ONE, LLC, a California limited
liability company; PLAYGROUND
DESTINATION PROPERTIES, a
corporation; GASLAMP HOLDINGS,
LLC, a California limited liability
company; PROFESSIONAL
MORTGAGE PARTNERS, INC.,
Defendants-Appellees.

Appeal from the United States District Court
for the Southern District of California
Dana M. Sabraw, District Judge, Presiding

Argued and Submitted
June 4, 2013—Pasadena, California

Filed August 13, 2013
 SALAMEH V. TARSADIA HOTEL 3

Before: Ronald M. Gould and N. Randy Smith, Circuit
Judges, and Sharon L. Gleason, District Judge.*

Opinion by Judge Gould

SUMMARY**

Securities

Affirming the dismissal on the pleadings of a putative
class action under the Securities Act of 1933, the Securities
Exchange Act of 1934, and California state law, the panel
held that the plaintiffs failed to allege the sale of a security
based on their purchase of condominiums in the Hard Rock
Hotel in San Diego.

The panel held that the plaintiffs did not adequately allege
facts showing that they were offered real-estate and rental-
management contracts as a package. In addition, they did not
allege facts showing that they were induced to buy the
condominiums by the rental-management agreement.
Accordingly, these transactions did not constitute the sale of
a security, and the plaintiffs failed to state a claim for relief
under federal or state securities law. The panel also affirmed
the dismissal of common-law fraud claims.

*
The Honorable Sharon L. Gleason, District Judge for the U.S. District
Court for the District of Alaska, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4 SALAMEH V. TARSADIA HOTEL

COUNSEL

Michael J. Aguirre (argued), Christopher S. Morris, and
Maria C. Severson, Aguirre, Morris & Severson LLP, San
Diego, California, for Plaintiffs-Appellants.

Frederick H. Kranz (argued) and Lynn T. Galuppo, Cox,
Castle & Nicholson LLP, Irvine, California; Jonathan S.
Kitchen and Ali P. Hamidi, Cox, Castle & Nicholson LLP,
San Francisco, California, for Defendants-Appellees Tarsadia
Hotels, Tushar Patel, B.U. Patel, Gregory Casserly, 5th Rock,
LLC, MKP One, LLC, and Gaslamp Holdings, LLC.

Daniel M. Benjamin (argued) and Thomas W. McNamara,
Ballard Spahr LLP, San Diego, California, for Defendant-
Appellee Playground Destination Properties, Inc.

Mark D. Cahn, Jacob H. Stillman, Randall W. Quinn,
William K. Shirey, Securities and Exchange Commission,
Washington, D.C., for Amicus Curiae Securities and
Exchange Commission.

Benjamin G. Shatz, Timi A. Hallem, and Jason T. Taketa,
Manatt, Phelps & Phillips, LLP, Los Angeles, California, for
Amici Curiae The Real Estate Roundtable and The National
Association of Realtors.
 SALAMEH V. TARSADIA HOTEL 5

OPINION

GOULD, Circuit Judge:

A transaction that looks nothing like a sale of stock and
involving such diverse items as citrus groves and vacation
homes may qualify as a sale of a security under federal law.
See SEC v. W.J. Howey Co., 328 U.S. 293 (1946); Hocking v.
Dubois, 885 F.2d 1449 (9th Cir. 1989) (en banc). Here, we
must decide whether Plaintiffs-Appellants have alleged the
sale of a security based on their purchase of condominiums in
the Hard Rock Hotel San Diego. We hold that Plaintiffs have
not adequately alleged facts showing that they were offered
the real-estate and rental-management contracts as a package.
And they have not alleged facts showing that they were
induced to buy the condominiums by the rental-management
agreement. For these reasons, Plaintiffs have not alleged the
sale of a security, and so all of Plaintiffs’ claims were
properly dismissed.

I

Plaintiffs-Appellants, purchasers of condominiums in the
Hard Rock Hotel San Diego, brought a putative class action
against the Hotel’s developer, operator, broker, and related
entities. Because the district court dismissed the complaint
on the pleadings, the facts come from the second amended
complaint, except where otherwise noted.

The Hotel is a twelve-story, mixed-use development with
commercial space and 420 condominium units. Through
television and print advertising, the public was offered the
opportunity to buy condominiums in the Hotel. Plaintiffs
each did so and later signed a rental-management agreement.
6 SALAMEH V. TARSADIA HOTEL

Plaintiffs complain that the Purchase Contract they executed
with 5th Rock, LLC not only sold them their condominiums
but also obligated them to enter into the Rental Management
Agreement with Tarsadia Hotels. Even though these
contracts were executed with distinct entities eight to fifteen
months apart,1 Plaintiffs allege that these contracts together
form an investment contract because Plaintiffs have no
control over their units and expect a profit only through the
efforts of the Hotel developer and operator. For example,
Plaintiffs were not issued keys to their units but had to obtain
keys from the Hotel operator when staying in their units. The
units had to be operated as part of the Hotel, and certain
Defendants were responsible for daily management,
operation, and marketing of the units. Plaintiffs also note that
a local zoning ordinance prohibited them from occupying
their units for more than 28 days per year.

Plaintiffs contend that this alleged investment contract did
not comply with federal and state securities laws. Plaintiffs’
second amended complaint alleges eight claims for relief: (1)
misrepresentation and omission in violation of § 12(a)(2) of
the Securities Act of 1933; (2) misrepresentation and
omission in violation of § 10(b) of the Securities Exchange
Act of 1934; (3) sale of an unqualified security in violation of
California Corporations Code §§ 25110, 25503, and 25504.1;
(4) misrepresentation and omission in violation of California
Corporations Code §§ 25401, 25501, and 25504.1; (5)
rescission against an unlicensed broker-dealer under
California Corporations Code § 25501.5; (6) control-person

1
Plaintiffs’ complaint does not allege when they signed the Purchase
Contracts or Rental Management Agreements. Defendants’ motion to
dismiss, however, stated the date on which each contract was executed.
Plaintiffs do not dispute these assertions.
 SALAMEH V. TARSADIA HOTEL 7

liability under California Corporations Code § 25504; (7)
common-law fraudulent misrepresentation; and (8) common-
law fraudulent concealment.

Defendants are Tarsadia Hotels, the Hotel operator; 5th
Rock, LLC, the developer; Gaslamp Holdings, LLC, the
owner of the land on which the Hotel sits; MPK One, LLC,
the controlling entity that manages 5th Rock; Tushar Patel,
Chairman of Tarsadia Hotels; B.U. Patel, Vice Chairman and
founder of Tarsadia Hotels; Greg Casserly, President of
Tarsadia Hotels; and Playground Destination Properties, Inc.,
a real-estate brokerage.2 Plaintiffs allege that Defendants,
although separate legal entities, were “agents” or “co-
conspirators” in perpetrating the fraud. But Plaintiffs allege
no other facts describing Defendants’ relationships with each
other.

The district court dismissed the second amended
complaint. The court’s analysis turned primarily on its
holding that Plaintiffs had not alleged that the condominium
units constituted a security. Alternatively, the district court
held that the securities claims were time-barred and that the
fraud claims were not pleaded with the particularity required
by Federal Rule of Civil Procedure 9(b). The district court
denied leave to amend because “Plaintiffs have had ample
opportunity to properly plead a case and have failed to do so.”

This timely appeal followed.

2
All other defendants were voluntarily dismissed with prejudice.
8 SALAMEH V. TARSADIA HOTEL

II

We review de novo the district court’s dismissal of a
complaint under Federal Rule of Civil Procedure 12(b)(6).
N. Cnty. Cmty. Alliance, Inc. v. Salazar, 573 F.3d 738, 741
(9th Cir. 2009). “If support exists in the record, [a] dismissal
[for failure to state a claim] may be affirmed on any proper
ground, even if the district court did not reach the issue or
relied on different grounds or reasoning.” Steckman v. Hart
Brewing, Inc., 143 F.3d 1293, 1295 (9th Cir. 1998).

“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.” Zixiang Li v. Kerry,
710 F.3d 995, 999 (9th Cir. 2013) (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)) (internal quotation marks omitted).
A claim is facially plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. The plausibility standard requires
more than the sheer possibility or conceivability that a
defendant has acted unlawfully. See id. at 678–79. “Where
a complaint pleads facts that are merely consistent with a
defendant’s liability, it stops short of the line between
possibility and plausibility of entitlement to relief.” Iqbal,
556 U.S. at 678 (citation and internal quotation marks
omitted). “[B]are assertions” are insufficient. Id. at 681; see
also Coto Settlement v. Eisenberg, 593 F.3d 1031, 1034 (9th
Cir. 2010). We “discount[] conclusory statements, which are
not entitled to the presumption of truth, before determining
whether a claim is plausible.” Chavez v. United States,
683 F.3d 1102, 1108 (9th Cir. 2012).
 SALAMEH V. TARSADIA HOTEL 9

We review a district court’s decision to dismiss a
complaint with prejudice for abuse of discretion. Okwu v.
McKim, 682 F.3d 841, 844 (9th Cir. 2012). A district court
abuses its discretion if it applies the wrong legal rule or if its
“application of the [correct] rule was illogical, implausible, or
without support in the record.” In re Korean Air Lines Co.,
Ltd., 642 F.3d 685, 698 & n.11 (9th Cir. 2011) (citing United
States v. Hinkson, 585 F.3d 1247, 1251 (9th Cir. 2009) (en
banc)).

III

The crux of Plaintiffs’ claims is that the sale of the hotel
condominiums and the later Rental Management Agreement
together constituted the sale of a security. We disagree and
hold that the transactions did not constitute the sale of a
security.

We review de novo whether a transaction is the sale of a
security. Hocking, 885 F.2d at 1454. “Both section 2 of the
Securities Act of 1933, 15 U.S.C. § 77b(1) (1982), and
section 3 of the Securities Exchange Act of 1934, 15 U.S.C.
§ 78c(1)(10) (1982), define the term ‘security’ to include any
‘investment contract.’” Id. at 1455. “The term ‘investment
contract’ has been interpreted to reach ‘[n]ovel, uncommon,
or irregular devices, whatever they appear to be.’” Id.
(alteration in original) (quoting SEC v. C.M. Joiner Leasing
Corp., 320 U.S. 344, 351 (1943)). “It embodies a flexible
rather than a static principle, one that is capable of adaptation
to meet the countless and variable schemes devised by those
who seek the use of the money of others on the promise of
profits.” Id. (quoting Howey, 328 U.S. at 299). Stated
simply, we have held that an investment contract is “(1) an
investment of money, (2) in a common enterprise, (3) with an
10 SALAMEH V. TARSADIA HOTEL

expectation of profits produced by the efforts of others.”3
Hocking, 885 F.2d at 1455; see also Howey, 328 U.S. at
298–99.

Although “ordinary real estate investments . . . usually are
not securities under either Federal or State law, the facts of
each case determine whether or not particular instruments
are securities.” Teague v. Bakker, 35 F.3d 978, 987 n.9
(4th Cir. 1994) (quoting Kosnoski v. Bruce, 669 F.2d 944, 947
n.3 (4th Cir. 1982)); Bender v. Cont’l Towers Ltd. P’ship,
632 F. Supp. 497, 500–01 (S.D.N.Y. 1986); see also Thomas
Lee Hazen, 1 Law Sec. Reg. § 1.6 (2013). As Shakespeare
wrote, “[T]hat which we call a rose, [b]y any other name
would smell as sweet.” William Shakespeare, Romeo and
Juliet, act 2, sc. 2. The same principle applies here when
determining whether a real-estate transaction is a security:
substance governs, not name or label or form. United Hous.
Found., Inc. v. Forman, 421 U.S. 837, 848 (1975). What
matters is the economic reality of the transaction. Id. So
long as money is invested in a common enterprise with profits
anticipated by virtue of others’ work, there may be an
investment contract.

In Hocking v. Dubois, sitting en banc, we held that there
was a genuine issue of material fact whether the sale of a
condominium along with a rent-pooling arrangement
constituted a security. Hocking worked with real-estate agent

3
Under California law, a security exists if the federal Howey standard
is met or if the “risk capital test” is met. Consol. Mgmt. Grp., LLC v.
Dep’t of Corps., 75 Cal. Rptr. 3d 795, 805 (Cal. Ct. App. 2008) (citing
Silver Hills Country Club v. Sobieski, 361 P.2d 906, 907–08 (Cal. 1961)).
But Plaintiffs did not argue the risk-capital theory in the district court or
on appeal. We decline to analyze this case under a theory that Plaintiffs
did not advance in the complaint or argue on appeal.
 SALAMEH V. TARSADIA HOTEL 11

Dubois to find a condominium that he could use as an
investment. Hocking, 885 F.2d at 1452. Dubois found a
condominium in a resort complex and told Hocking that if he
would buy the condominium, a rent-pooling arrangement
would be available. Id. Under the rent-pooling arrangement,
a management company

is responsible for renting as many of the
participating units in the complex as possible;
the rental income from the units is pooled, and
after each owner is assessed a pro rata share
of [the management’s] costs, each owner
receives a pro rata share of the rental income,
whether or not his individual unit has actually
been rented.

Id. at 1453 n.4. The record showed and we emphasized “that
but for the availability of the rental pool arrangement
[Hocking] would not have purchased the condominium.” Id.
at 1453, 1455, 1458; see also id. at 1466 (Norris, J.,
dissenting).

We held that there was a genuine issue of material fact as
to whether Dubois had offered Hocking the sale of a security.

In attempting to determine whether a scheme
involves a security, the inquiry is not limited
to the contract or other written instrument.
“Characterization of the inducement cannot be
accomplished without a thorough examination
of the representations made by the defendants
as the basis of the sale. Promotional
materials, merchandising approaches, oral
assurances and contractual agreements were
12 SALAMEH V. TARSADIA HOTEL

considered in testing the nature of the product
in virtually every relevant investment contract
case.”

Id. at 1457 (quoting Aldrich v. McCulloch Props., Inc.,
627 F.2d 1036, 1039–40 (10th Cir. 1980)). Closely
examining what had induced the sale, we held that there was
a fact issue where Hocking had “put forward numerous facts
concerning whether the condominium sale and rental
agreements were presented to him as parts of one
transaction.” Id. at 1458. “We also cannot ignore the fact
that . . . these agreements were entered into immediately
following the purchase of the condominium.” Id. We
stressed that these facts “distinguish this case from a situation
where, after a purchase and separate from any inducement to
purchase, a [broker] arranges for a rental pool.” Id. We then
applied the Howey factors to the package of contracts and
held that there was a genuine issue of material fact as to
whether Dubois offered Hocking a security.

Here, by contrast, Plaintiffs’ allegations are not sufficient
to show that a security was sold when the condominiums
were transferred. Plaintiffs allege no facts showing that the
Purchase Contracts and the Rental Management Agreements
were offered as a package. They do not allege that the Rental
Management Agreement was promoted at the time of the sale.
They do not allege that Defendants told them that the Rental
Management Agreement would be forthcoming. They do not
allege that they were told that the Rental Management
Agreement would result in investment-like profits. But in
Hocking our holding rested on facts supporting these types of
 SALAMEH V. TARSADIA HOTEL 13

allegations.4 Id. at 1457–58 (noting that inducement can be
shown through “a thorough examination of the
representations made by the defendants as the basis of the
sale”); see also SEC v. Rubera, 350 F.3d 1084, 1091 (9th Cir.
2003).

Plaintiffs allege that representations in the Hotel Guide
and the Rental Management Agreement FAQs show that the
Purchase Contract and Rental Management Agreement were
a package, but they plead no facts establishing when the
Guide and the FAQs were given to them. If Plaintiffs did not
have these documents before they signed the Purchase
Contracts, the representations in these documents are
irrelevant in assessing whether a security was “presented” to
the Plaintiffs at that time. See Hocking, 885 F.2d at 1458.
For that matter, Plaintiffs do not even allege when the
Purchase Contracts and Rental Management Agreements
were signed. In a motion to dismiss, it was Defendants who
told the district court that the Rental Management
Agreements were executed eight to fifteen months after the
Purchase Agreements. A large time gap between the real-
estate purchase and the execution of a rental-management
agreement may not be dispositive in every case. But see id.
(noting the significance of the rent-pooling agreement being

4
In Hocking, we analyzed whether the real-estate and rent-pooling
contracts were presented as a package before examining whether the
transaction was a security under Howey. Hocking, 885 F.2d at 1457–58.
But regardless of whether we treat Hocking as requiring a threshold
inquiry or as a component of the Howey test, the result is the same.
Because Plaintiffs do not allege facts that show that they were induced to
purchase the condominiums by the Rental Management Agreement, we
look at the transactions separately. And neither alone is an investment of
money in a common enterprise with the expectation of profits by the
efforts of others. See id. at 1459–62.
14 SALAMEH V. TARSADIA HOTEL

signed “immediately” after the purchase agreement). Yet
here, where Plaintiffs did not allege that the contracts were
presented at the same time, the large time gap underscores
our holding that Plaintiffs were not offered a security.5

Plaintiffs’ strongest argument that the two contracts,
signed about a year apart, form a single transaction is their
assertion that the “economic reality” shows that the two
transactions are part and parcel of one scheme. They contend
that the Purchase Contract, combined with external factors,
such as the zoning ordinance, gave them no choice but to sign
the Rental Management Agreement when it was later
presented. This argument has some force. See Hocking,
885 F.2d at 1461; see also Tcherepnin v. Knight, 389 U.S.
332, 336 (1967). But to accept this argument, we not only
would have to ignore the large time gap between the two
transactions that were executed with different entities, but
also the fact that Plaintiffs’ complaint is void of any
allegation that they were induced to buy the condominiums
by the Rental Management Agreement. The economic reality
as we see it is that these two transactions were distinct.
Moreover, Plaintiffs’ economic-reality argument rests on the
implicit assumption that the only viable use for the
condominiums was as an investment property, but there is no
plausible reason why there cannot be a viable market for
owner-occupied hotel-condominiums for use as short-term
vacation homes. See Brief of Amici Real Estate Roundtable
& National Association of Realtors 3–6. This conclusion

5
At oral argument, Plaintiffs’ counsel stated that he had evidence
showing that the Rental Management Agreement was promoted at the
time the Purchase Contracts were signed. But on appeal from the
dismissal of the complaint, we review the complaint, not the
representations of counsel at oral argument.
 SALAMEH V. TARSADIA HOTEL 15

undercuts Plaintiffs’ economic assumptions. See Forman,
421 U.S. at 858 (holding that a security does not exist “where
[a consumer] purchases a commodity for personal
consumption or living quarters for personal use”).

Taking all non-conclusory facts alleged in the complaint
as true, we hold that Plaintiffs have not alleged the sale of a
security and thus have not stated claims for relief under
federal or state securities law. See 15 U.S.C. §§ 77l(a)(2),
78j(b) (requiring a security); Cal. Corp. Code §§ 25110,
25401, 25501, 25501.5, 25503, 25504, 25504.1 (same). We
affirm the district court’s dismissal of the federal and state
securities claims.6

Next we turn to Plaintiffs’ common-law fraud claims.
Unlike the securities-fraud claims, the common-law fraud
claims do not necessarily require the sale of a security as an
element of the claim. See Okun v. Morton, 250 Cal. Rptr.
220, 235 (Cal. Ct. App. 1988) (listing the elements of
common-law fraud: misrepresentation, knowledge of falsity,
intent to induce reliance, justifiable reliance, and resulting
damages). But here, Plaintiffs’ claims actually do depend on
the sale of a security because that fact is at the heart of
Plaintiffs’ theory of misrepresentation. Plaintiffs allege that
Defendants fraudulently offered a security disguised as a real-

6
The Securities and Exchange Commission as amicus urges the opposite
result based, in part, on an SEC Release. See Guidelines as to the
Applicability of the Federal Securities Laws to Offers and Sales of
Condominiums or Units in a Real Estate Development, Securities Act
Release No. 33-5347, 1973 WL 158443 (Jan. 4, 1973). But our
conclusion here rests squarely on Hocking, which was decided after the
Release was issued. And like Plaintiffs, the SEC overlooks the fact that
Plaintiffs’ complaint does not allege that the Plaintiffs were induced to
purchase the condominiums by the Rental Management Agreement.
16 SALAMEH V. TARSADIA HOTEL

estate transaction and that the fraud concealed that the rental
program was mandatory. But our holding that Plaintiffs have
not alleged the sale of a security necessarily leads to the
conclusion that Plaintiffs could not have been fraudulently
sold a security for purposes of their theory of common-law
fraud. And Plaintiffs have not plausibly pleaded that the
Purchase Contract obligated them to sign the Rental
Management Agreement because the transactions were not a
package. Without the sale of a security, Plaintiffs have not
pleaded facts showing that the common-law fraud claims
survive a motion to dismiss.

Additionally, Plaintiffs’ common-law fraud allegations do
not satisfy Federal Rule of Civil Procedure 9(b). See Vess v.
Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003)
(“It is established law . . . that Rule 9(b)’s particularity
requirement applies to state-law causes of action.”). To meet
this standard, Plaintiffs’ complaint must “identify the who,
what, when, where, and how of the misconduct charged, as
well as what is false or misleading about the purportedly
fraudulent statement, and why it is false.” Cafosso, U.S. ex
rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1054, 1055 (9th
Cir. 2011) (internal quotation marks omitted). Plaintiffs’
common-law fraud allegations fall short of Rule 9(b)’s
standard because they do not identify when Defendants made
the representations that Plaintiffs purport to be false. For this
reason as well, we affirm the district court’s dismissal of
these claims.

IV

We also hold that the district court did not abuse its
discretion in denying leave to amend. “Although a district
court should grant the plaintiff leave to amend if the
 SALAMEH V. TARSADIA HOTEL 17

complaint can possibly be cured by additional factual
allegations, ‘[d]ismissal without leave to amend is proper if
it is clear that the complaint could not be saved by
amendment.’” Zixiang Li, 710 F.3d at 998 (alteration in
original) (citation omitted) (quoting Kendall v. Visa U.S.A.,
Inc., 518 F.3d 1042, 1051 (9th Cir. 2008)). A district court’s
discretion to deny leave to amend is “particularly broad”
where the plaintiff has previously amended. Sisseton-
Wahpeton Sioux Tribe v. United States, 90 F.3d 351, 355 (9th
Cir. 1996) (quoting Ascon Props., Inc. v. Mobil Oil Co.,
866 F.2d 1149, 1160 (9th Cir. 1989)).

Here, the district court denied leave to amend because
“Plaintiffs have had ample opportunity to properly plead a
case and have failed to do so.” Indeed, the district court gave
Plaintiffs specific instructions on how to amend the
complaint, and Plaintiffs did not comply. Moreover,
Plaintiffs’ counsel represented to the district court that he
knew additional facts that could solve the deficiencies in the
complaint, but counsel never proffered these facts to the
court. A plaintiff may not in substance say “trust me,” and
thereby gain a license for further amendment when prior
opportunity to amend had been given. The district court did
not abuse its discretion by denying leave to amend. See In re
Korean Air Lines Co., Ltd., 642 F.3d at 698 & n.11 (citing
Hinkson, 585 F.3d at 1251).

AFFIRMED.