NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS SEP 17 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
WAHID TADROS, individually and on No. 16-56904
behalf of all others similarly situated,
D.C. No.
Plaintiff-Appellant, 3:15-cv-01458-AJB-DHB
v.
MEMORANDUM*
CELLADON CORPORATION; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of California
Anthony J. Battaglia, District Judge, Presiding
Argued and Submitted August 28, 2018
Pasadena, California
Before: BYBEE and WATFORD, Circuit Judges, and HERNANDEZ,** District
Judge.
Wahid Tadros appeals the district court’s order dismissing his class action
securities fraud complaint for failure to adequately plead material
misrepresentation or omission and scienter. We have jurisdiction under 28 U.S.C.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Marco A. Hernandez, United States District Judge for
the District of Oregon, sitting by designation.
§ 1291. We review the district court’s decision de novo. WPP Luxembourg
Gamma Three Sarl v. Spot Runner, Inc., 655 F.3d 1039, 1047 (9th Cir. 2011). We
affirm.
1. Material Misrepresentation or Omission. Plaintiff alleges that
defendants’ statements touting the success of Mydicar were misleading because of
flaws underlying both the study and sensitivity analysis. “[A] statement is
misleading if it would give a reasonable investor the impression of a state of affairs
that differs in a material way from the one that actually exists.” In re Cutera Sec.
Litig., 610 F.3d 1103, 1109 (9th Cir. 2010); see In re Rigel Pharm., Inc. Sec. Litig.,
697 F.3d 869, 877–78 (9th Cir. 2012). In this case, the alleged flaws underlying the
study and the sensitivity analysis were disclosed by defendants in a publicly
accessible journal article published years before Celladon went public. As this
information was already part of the total mix of information available to investors,
defendants’ statements were not misleading. Cf. Heliotrope Gen., Inc. v. Ford
Motor Co., 189 F.3d 971, 976 (9th Cir. 1999) (“Because Ford’s tax strategy was
part of the total mix of information reflected in the price of FHI Preferred Stock at
the time Heliotrope purchased its shares, Heliotrope cannot prove that Ford’s
failure to disclose its tax strategy caused Heliotrope any loss.”).
2. Scienter. Plaintiff alleges that—because of Zsebo’s education and
experience and Celladon’s small size and reliance on Mydicar as its sole product
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candidate—defendants knew about the alleged flaws underlying the clinical trial
and had motive to misrepresent the results. To state a claim for securities fraud,
plaintiff must “state with particularity facts giving rise to a strong inference that the
defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2)(A).
“Scienter can be established by intent, knowledge, or certain levels of
recklessness.” In re VeriFone Holdings, Inc. Sec. Litig., 704 F.3d 694, 702 (9th
Cir. 2012). “[T]he ultimate question is whether the defendant knew his or her
statements were false, or was consciously reckless as to their truth or falsity.” Id.
As the district court found, plaintiff has failed to allege specific facts
demonstrating that defendants acted with the intent to manipulate the clinical trial
or deceive the public. In addition, the purported weaknesses with the trial were
disclosed by defendants, and there is nothing to suggest that Zsebo or her co-
authors, who were prominent physicians, did not believe in the results of the study.
Even viewing plaintiff’s allegations holistically, the inference of scienter in this
case is not as compelling as opposing inferences from the facts alleged. See Tellabs
Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322–24 (2007).
AFFIRMED.
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