FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: CUTERA SECURITIES
LITIGATION,
DOUG HAMILTON,
Plaintiff,
No. 08-17627
and
D.C. No.
GUNAWAN ONIE; ZAHED SIDDIQUE; 3:07-cv-02128-
JAMIE W. COLLINS; KENNETH J. VRW
CHIN; GARY T. HORNYAK,
OPINION
Plaintiffs-Appellants,
v.
KEVIN CONNERS; ROBERT J.
SANTILLI; CUTERA, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Vaughn R. Walker, Chief District Judge, Presiding
Argued and Submitted
February 11, 2010—San Francisco, California
Filed June 30, 2010
Before: David R. Thompson and M. Margaret McKeown,
Circuit Judges, and Thomas S. Zilly,
Senior District Judge.*
*The Honorable Thomas S. Zilly, Senior United States District Judge
for the Western District of Washington, sitting by designation.
9451
9452 IN RE CUTERA SECURITIES LITIGATION
Opinion by Judge McKeown
9454 IN RE CUTERA SECURITIES LITIGATION
COUNSEL
Frederick W. Gerkins, III, Glancy Binkow & Goldberg LLP,
Los Angeles, California, for the appellant.
Paul D. Clement and Zachary D. Tripp, King & Spaulding
LLP, Washington, D.C., for the appellee.
OPINION
McKEOWN, Circuit Judge:
Gunawan Onie and other plaintiffs (the “investors”) appeal
the dismissal of their securities fraud class action against
Cutera, Inc., its chief executive officer, Kevin Connors, and
its chief financial officer, Robert J. Santilli (collectively “Cu-
tera”), under §§ 10(b) and 20(a) of the Securities Exchange
Act of 1934. In this fraud-on-the-market suit, the investors
claim that Cutera provided false and misleading revenue pro-
jections and failed to disclose material information about the
shortcomings of Cutera’s sales staff.
We conclude that Cutera’s alleged incomplete disclosures
about its sales force are not material omissions made in viola-
tion of the securities laws, and that Cutera’s earnings projec-
tions fall within the statutory safe harbor for forward-looking
projections under the Private Securities Litigation Reform Act
of 1995 (“PSLRA”), 15 U.S.C. § 78u-5. We therefore affirm
the district court’s dismissal of the suit under Federal Rule of
Civil Procedure 12(b)(6).
IN RE CUTERA SECURITIES LITIGATION 9455
BACKGROUND
Cutera sells lasers and other light-based aesthetic systems
to medical professionals for use in cosmetic procedures, pri-
marily through its direct sales force. In 2005, Cutera
expanded its senior sales force and by 2006 met with consid-
erable success, increasing its revenue 44%, “primarily [due]
to increased sales and marketing efforts and [its] higher con-
centration of direct sales employees in the United States.” In
late 2005, Cutera also embarked on an aggressive sales force
expansion plan to market a lower-priced laser (the “Solera
Opus”) through junior sales representatives. The expansion
was complete by May 2006 and Cutera projected it would
take two quarters for the junior sales representatives to reach
target productivity. In a January 31, 2007 conference call with
analysts reporting results from the third quarter of 2006, Con-
nors attributed growth to the success of the senior sales force
but stated that Cutera was “looking to improve upon the sales
productivity” of the junior sales team.
The junior sales force failed to move the Solera Opus, and
Cutera abandoned the program. By the end of March 2007,
only two junior representatives remained in their original
roles, while the rest had transferred to other positions within
Cutera or left the company.
The investors purchased Cutera stock between January 31,
2007 and May 7, 2007 (the “class period”). In a January 31,
2007 press release and conference call, Cutera disclosed that
it “didn’t get the productivity [it was] looking for” from the
junior sales staff, and that it had “since made modifications to
the [alignment] of the sales organization.” Cutera nonetheless
projected first quarter and year end revenues in 2007 of $26
million and $126 million respectively, a growth of 25% over
the previous year. Cutera’s stock value jumped from $28.62
to $33.38 the next day.
Cutera’s stock price stayed above $32 throughout February
and March 2007, peaking on April 4, 2007 at $38.39 a share.
9456 IN RE CUTERA SECURITIES LITIGATION
On April 5, 2007, Cutera revised revenue projections for the
first quarter of 2007 down from $26 million to $23 million,
stating the shortfall “was due primarily to lower than expected
productivity levels of [the] recent sales expansion.” That same
day, Cutera’s stock price dropped more than 30% to $26.67.
The stock price hovered between $24.83 and $30.06 between
April 5 and May 7, 2007, when Cutera reported final first
quarter revenues of $23.3 million, laying the shortfall at the
feet of “the unsuccessful implementation of [the] junior sales
program, unusually high sales employee turnover, and disap-
pointing results” from certain national accounts. By the close
of business May 8, 2007, Cutera shares closed at $23.40, a
loss of $5.33 per share or more than 18% off the previous
day’s price.
The investors allege that on January 31, 2007, Cutera did
not adequately disclose the poor performance of the junior
sales force, leading to artificially inflated stock prices, and
thus failing to provide investors with information material to
whether they should purchase Cutera stock. This claim rests
on the charge that Cutera knew about the significant short-
comings of the junior sales program before the beginning of
the class period. As a result, the investors claim that in April
and May 2007, when Cutera more fully disclosed the prob-
lems with its sales staff and associated shortfalls in earning
projections, the stock price fell, causing a loss to investors.
The district court granted Cutera’s motion to dismiss the
complaint, finding no material difference between Cutera’s
January 31, 2007 disclosures and later disclosures in spring
2007 and concluding that the alleged failure to fully disclose
information about the junior sales staff did not sufficiently
allege a violation of securities laws. The district court further
held that allegations about Cutera’s misleading earnings pro-
jections fell within the PSLRA’s safe harbor for forward-
looking statements. The district court dismissed the complaint
without prejudice to allow the investors to amend the com-
plaint to “allege—with the particularity contemplated by the
IN RE CUTERA SECURITIES LITIGATION 9457
[PSLRA]—that the factors which accounted for Cutera’s
deviation from the January earnings projection were not
warned against in the cautionary statements that accompanied
the January protections.” The investors eschewed the amend-
ment option and instead filed an appeal.
We review de novo the district court’s dismissal of the
complaint for failure to state a claim under Rule 12(b)(6). In
re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir.
2008). While a well-pleaded complaint may proceed even if
we conclude that “actual proof of those facts [alleged] is
improbable, and that a recovery is very remote and unlikely,”
Gilead, 536 F.3d at 1057 (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 556 (2007)), a complaint “is properly dismissed
if it fails to plead enough facts to state a claim to relief that
is plausible on its face.” Id. at 1055 (quoting Twombly, 550
U.S. at 570) (internal citations and quotation marks omitted).
The PSLRA imposes a heightened pleading standard in
securities litigation and requires that “the complaint shall
specify each statement alleged to have been misleading, the
reason or reasons why the statement is misleading, and, if an
allegation regarding the statement or omission is made on
information and belief, the complaint shall state with particu-
larity all facts on which that belief is formed.” 15 U.S.C.
§ 78u-4(b)(1)(B). Plaintiffs must allege with particularity both
“the facts constituting the alleged violation, and the facts evi-
dencing scienter, i.e., the defendant’s intention ‘to deceive,
manipulate, or defraud.’ ” Tellabs, Inc. v Makor Issues &
Rights, Ltd, 551 U.S. 308, 313 (2007) (quoting Ernst & Ernst
v. Hochfelder, 425 U.S. 185, 194 (1976)); see also 15 U.S.C.
§ 78u-4(b)(2). To surmount a motion to dismiss, the investors
must thus plead facts sufficient to plausibly articulate “with
particularity the circumstances constituting fraud.” Fed. R.
Civ. P. 9(b).
Forward-looking statements like the earnings projections
are further insulated from liability. Earnings projections iden-
9458 IN RE CUTERA SECURITIES LITIGATION
tified as forward-looking statements and accompanied by ade-
quate cautionary language fall within the PSLRA safe harbor,
15 U.S.C. § 78u-5(c)(1)(A)(i), as do other forward-looking
statements not identified and not accompanied by cautionary
language, unless they were “made with actual knowledge . . .
that [they were] false or misleading.” Id. §§ 78u-
5(c)(1)(B)(i)&(ii)(II).
ANALYSIS
[1] Section 10(b) of the Securities Exchange Act of 1934
makes it unlawful “[t]o use or employ, in connection with the
purchase or sale of any security . . . any manipulative or
deceptive device or contrivance in contravention of such rules
and regulations as the Commission may prescribe.” 15 U.S.C.
§ 78j(b). Pursuant to this section, the Securities and Exchange
Commission promulgated Rule 10b-5, which makes it unlaw-
ful, among other things, “[t]o make any untrue statement of
a material fact or to omit to state a material fact necessary in
order to make the statements made, in light of the circum-
stances under which they were made, not misleading.” 17
C.F.R. § 240.10b-5(b). Central to a 10b-5 claim is the require-
ment that a misrepresentation or omission of fact must be
material. Because the allegations do not meet this standard,
we need not consider the other elements of a 10b-5 claim.1
We also agree with the district court that the alleged misstate-
ments regarding Cutera’s projected earnings fall within the
PSLRA safe harbor.
1
In addition to materiality, a successful Rule 10b-5 claim must allege
“(2) scienter, (3) a connection with the purchase or sale of a security, (4)
transaction and loss causation, and (5) economic loss.” Sparling v. Daou
(In re Daou Sys.), 411 F.3d 1006, 1014 (9th Cir. 2005) (citing Dura
Pharms., Inc. v. Broudo, 544 U.S. 336, 341-42 (2005)). “If one of these
elements is missing, [the investors’] claim fails.” Paracor Fin., Inc. v. GE
Capital Corp., 96 F.3d 1151, 1157 (9th Cir. 1996).
IN RE CUTERA SECURITIES LITIGATION 9459
I. MATERIALITY
The central question is whether the claimed misstatements
or omissions were material. Although “determining material-
ity in securities fraud cases should ordinarily be left to the
trier of fact,” SEC v. Phan, 500 F.3d 895, 908 (9th Cir. 2007)
(internal citation and quotation marks omitted), “conclusory
allegations of law and unwarranted inferences are insufficient
to defeat a motion to dismiss for failure to state a claim.”
Halkin v. VeriFone Inc. (In re VeriFone Sec. Litig.), 11 F.3d
865, 868 (9th Cir. 1993) (internal citations omitted). The
PSLRA reinforces this longstanding general principle of
securities law and imposes a heightened pleading standard.
Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552
U.S. 148, 165 (2008) (“[T]he PSLRA . . . imposed heightened
pleading requirements . . . upon ‘any private action’ arising
from the Securities Exchange Act.”). To plead materiality, the
investors must (1) specify each allegedly misleading state-
ment or omission, (2) explain why the statement is mislead-
ing, and (3) if the allegation “regarding the statement or
omission is made on information and belief, the complaint
shall state with particularity all facts on which that belief is
formed.” 15 U.S.C. § 78u-4(b)(1)(B).2
[2] It is not enough for the investors to plead that Cutera
failed to make a full disclosure about its sales force. “Rule
10b-5 [prohibits] only misleading and untrue statements, not
statements that are incomplete. . . . Often, a statement will not
mislead even if it is incomplete or does not include all rele-
vant facts.” Brody v. Transitional Hosps. Corp., 280 F.3d 997,
1006 (9th Cir. 2002). Instead, “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.” Berson v. Applied Signal Tech., Inc., 527 F.3d 982,
2
All of the allegations made against Cutera were made on information
and belief, so the investors must meet this third materiality requirement.
9460 IN RE CUTERA SECURITIES LITIGATION
985 (9th Cir. 2008) (internal citation and quotation marks
omitted).
While the investors’ fifty-five page complaint is lengthy
and packed with allegations, the bulk of it is comprised of
background facts that can be distilled into two allegedly “un-
true statement[s] of a material fact or omission[s] of a mate-
rial fact” that distorted the price of the security. 15 U.S.C.
§ 78-5u(c)(1). The investors allege first that Cutera omitted
material information about the weakness of its junior sales
force in its statements of January 31, 2007, and second, that
Cutera made faulty earnings projections. We begin with a
close examination of the basis of the allegations regarding the
January disclosure about the junior sales force juxtaposed
with later clarifications in April and May.
As the investors concede, their complaint is not based on
the shortcomings or failure of the junior sales force but what
they characterize as a lack of disclosure about its failure. In
Cutera’s January 31, 2007 conference call reporting results
for the fourth quarter of 2006 and projections for 2007, chief
executive officer Connors stated:
[W]e wanted to have a more junior sales force focus
on a certain segment of the market. We didn’t get the
productivity we were looking for with that.
However, the portion of our sales force — the senior
portion of the sales force showed modest improve-
ment in sales productivity. So we have since made
modifications to the [alignment] of the sales organi-
zation, and we anticipate having improved produc-
tivity from the sales force as a whole.
Responding to analysts’ questions about turnover in the fourth
quarter of 2006, Connors and Santilli, the chief financial offi-
cer, stated that turnover was “nothing appreciable,” “normal,”
and “nothing unusual.” The investors claim that these
IN RE CUTERA SECURITIES LITIGATION 9461
responses were materially misleading because by mid-
January, officers at Cutera had already informed the junior
sales force that they were going to be phased out and they
could seek senior sales positions with Cutera, positions with
Cutera’s distributor, or find employment elsewhere.3
When Cutera adjusted its revenue projection down on April
5, 2007, in a press release, Connors attributed the shortfall
“primarily to lower than expected productivity levels of our
recent sales expansion.” Connors also stated that Cutera was
“implementing specific initiatives to address [the shortfall]
and remain confident in our ability to increase our revenue
growth.” By May 7, Connors referred to the first quarter of
2007 as marked by “aberrantly high turnover.” The May 7
press release summarized the disappointing results from the
first quarter of 2007, with Connors attributing “the poor per-
formance of our North American sales team [to] the unsuc-
cessful implementation of our junior sales program, unusually
high sales employee turnover, and disappointing results from
. . . national accounts.”
Among the strategic initiatives identified to improve per-
formance was a continuing endeavor “to restructure [the]
sales-force with senior, experienced sales people, [having]
discontinued the junior sales program . . . .” At the press con-
ference that day, Connors acknowledged that the junior sales
force program “was a deviation from [Cutera’s] previously
successful sales force expansion practice of hiring senior sales
people . . . .” In describing the failure of the junior sales force,
Connors explained that “[Cutera] believed that [it] hired many
dedicated enthusiastic people, but the model did not prove
3
The investors support this allegation with the testimony of two confi-
dential witnesses, one recounting a mid-January meeting where the North
American sales manager informed junior sales representatives of their
planned phase-out, and one testifying based on personal knowledge about
a single junior sales representative who left the company in the fourth
quarter of 2006.
9462 IN RE CUTERA SECURITIES LITIGATION
successful . . . and instead resulted in low productivity and
consumed a considerable amount of sales management atten-
tion.” Id.
[3] The investors sufficiently state a factual basis for the
claim that Cutera knew about the weakness of its junior sales
force by January 31, 2007, as one confidential witness testi-
fied that senior management had already effectively given the
group its walking papers.4 As the district court correctly con-
cluded, however, there is no material difference between what
Cutera disclosed in January and what it disclosed in later
reports and conference calls.
[4] The January disclosures about necessary “modifica-
tions to the [alignment] of the sales organization,” are not
materially different from later disclosures that Cutera was
“implementing specific initiatives to address” the shortfall,
and restructuring its sales force with “senior, experienced
sales people,” having “discontinued the junior sales program.”
To the extent the investors allege that an earlier disclosure of
the details of the sales force reorganization would have made
a material difference in their investment choices, we agree
with the district court that the investors have not raised a plau-
sible claim that stock prices fluctuated with disclosures about
the sales staff, or that a reasonable investor would have
received a materially different impression of Cutera’s state of
4
Other allegations lack a sufficient factual basis. For example, the facts
alleged do not support the investors’ claim that nine sales representatives
left Cutera in the fourth quarter of 2006. While one confidential witness
identified a junior sales representative that left Cutera in the fourth quarter
of 2006, that departure is consistent with statements that turnover in the
fourth quarter of 2006 was “nothing appreciable,” “normal,” and “nothing
unusual.”
The investors also allege that Cutera reported total U.S. sales represen-
tatives in its 2006 10-K Report, instead of total North American sales rep-
resentatives (U.S. & Canadian) as it reported in its 2005 10-K report, to
hide employee turnover in the fourth quarter of 2006. This variation in
reporting raises no material inconsistency.
IN RE CUTERA SECURITIES LITIGATION 9463
affairs had the company used the language from the April 5
or May 7 press releases to describe the sales shortfalls in its
January 31 statements.
[5] The investors also take issue with Cutera’s assertion in
its 2006 10-K report that “[n]one of our employees is repre-
sented by a labor union, and we believe our employee rela-
tions are good,” noting that many employees were already on
their way out the door. When valuing corporations, however,
investors do not rely on vague statements of optimism like
“good,” “well-regarded,” or other feel good monikers. This
mildly optimistic, subjective assessment hardly amounts to a
securities violation. Indeed, “professional investors, and most
amateur investors as well, know how to devalue the optimism
of corporate executives.” See VeriFone Sec. Litig., 784 F.
Supp. 1471, 1481 (N.D. Cal. 1992), aff’d, 11 F.3d 865 (9th
Cir. 1993). Similar statements have been held to be non-
actionable puffing. See In re Syntex Corp. Sec. Litig, 855 F.
Supp. 1086, 1095 (N.D. Cal. 1994), aff’d, 95 F.3d 922 (9th
Cir. 1996) (holding as non-actionable puffing the phrases
“ ‘we’re doing well and I think we have a great future,’ ‘busi-
ness will be good this year . . . we expect the second half of
fiscal 1992 to be stronger than the first half, and the latter part
of the second half to be stronger than the first . . .,’ ‘every-
thing is clicking [for the 1990s] . . . new products are coming
in a wave, not in a trickle . . . old products are doing very
well’ and that ‘I am optimistic about Syntex’s performance
during this decade’ ”). In the end, Cutera’s speculative infer-
ence approach fails both the particularity and materiality
requirements.
II. SAFE HARBOR
[6] The PSLRA also provides an additional barrier at the
pleading stage in the form of a safe harbor for “forward-
looking statements.” A forward-looking statement is “a state-
ment containing a projection of revenues, income (including
income loss), earnings (including earnings loss) per share,
9464 IN RE CUTERA SECURITIES LITIGATION
capital expenditures, dividends, capital structure, or other
financial items.” 15 U.S.C. § 78u-5(i)(A). The safe harbor
provision states in relevant part that:
a person . . . shall not be liable with respect to any
forward-looking statement, whether written or oral,
if and to the extent that—
(A) the forward-looking statement is—
(i) identified as a forward-looking state-
ment, and is accompanied by meaningful
cautionary statements identifying impor-
tant factors that could cause actual results
to differ materially from those in the
forward-looking statement; or
(ii) immaterial; or
(B) the plaintiff fails to prove that the
forward-looking statement—
(i) if made by a natural person, was made
with actual knowledge by that person
that the statement was false or mislead-
ing; or
(ii) if made by a business entity;[,] was—
(I) made by or with the approval of an
executive officer of that entity; and
(II) made or approved by such officer
with actual knowledge by that officer
that the statement was false or mis-
leading.
15 U.S.C. § 78u-5(c)(1).
IN RE CUTERA SECURITIES LITIGATION 9465
[7] The January 31 earnings projection is by definition a
forward-looking statement. 15 U.S.C. § 78u-5(i)(1)(A). We
agree with the district court that the revenue projections and
the eventual shortfall in actual revenue plausibly drove fluctu-
ations in Cutera’s stock price. Thus, the projections are not
immaterial under subsection (A)(ii).
The January 31 revenue projections may still fall within the
safe harbor in either of two circumstances: if they were identi-
fied as forward-looking statements and accompanied by
meaningful cautionary language, under subsection (A)(i); or
if the investors fail to prove the projections were made with
actual knowledge that they were materially false or mislead-
ing, under subsection (B).
Subsection (B) governs unidentified forward-looking state-
ments and forward-looking statements unaccompanied by
meaningful cautionary language. Those statements fall out-
side the safe harbor if the plaintiff can allege facts that would
create a strong inference that the defendants made the fore-
cast(s) at issue with “actual knowledge . . . that the statement
was false or misleading.” 15 U.S.C. § 78u-5(c)(1)(B)(i); see
also Employers Teamsters Local Nos 175 and 505 Pension
Trust Fund v. Clorox Co., 353 F.3d 1125, 1134 (9th Cir.
2004). Under subsection (A)(i), however, if a forward-looking
statement is identified as such and accompanied by meaning-
ful cautionary statements, then the state of mind of the indi-
vidual making the statement is irrelevant, and the statement is
not actionable regardless of the plaintiff’s showing of
scienter.
[8] The investors’ sole allegation referencing the safe har-
bor lacks specificity, providing only conclusory allegations in
the alternative that either (i) “there were no meaningful cau-
tionary statements identifying important factors that could
cause actual results to differ materially from those in the pur-
portedly forward-looking statements” or (ii) “at the time each
of the forward-looking statements was made, the particular
9466 IN RE CUTERA SECURITIES LITIGATION
speaker knew that the particular forward-looking statement
was false, and/or the forward-looking statement was autho-
rized and/or approved by an executive officer of Cutera, who
knew that those statements were false when made.”
In its motion to dismiss, Cutera invoked the safe harbor
under subsection (A)(i), citing to the language identifying the
revenue projections in its January 31 press release and confer-
ence call as forward-looking statements, and highlighting the
cautionary language that spoke directly to the purported mis-
statements alleged by the complaint. As to the first half of that
conclusory allegation, Cutera’s January 31 conference call
began with a notice that “these prepared remarks contain
forward-looking statements concerning future financial per-
formance and guidance,” that “management may make addi-
tional forward-looking statements in response to [ ]
questions,” and that factors like Cutera’s “ability to continue
increasing sales performance worldwide” could cause vari-
ance in the results. Cutera affirmatively warned that its ability
to compete and perform in the industry depended on the abil-
ity of its sales force to sell products to new customers and
upgraded products to current customers, and that failure to
attract and retain sales and marketing personnel would materi-
ally harm its ability to compete effectively and grow its busi-
ness.
[9] Perhaps recognizing that Cutera’s forward-looking
statements meet the requirements of subsection (A)(i), the
investors argue for a conjunctive reading of the safe harbor
provision, under which a sufficiently strong inference of
actual knowledge would overcome a claim of safe harbor pro-
tection even for statements identified as forward-looking and
accompanied by meaningful cautionary language. The diffi-
culty with this approach is that it ignores the plain language
of the statute, which is written in the disjunctive as to each
subpart. As written, the statute provides a safe harbor for:
(A)(i) identified forward-looking statements
with sufficient cautionary language;
IN RE CUTERA SECURITIES LITIGATION 9467
(A)(ii) immaterial statements; and
(B)(i)-(ii) unidentified forward-looking statements
or forward-looking statements lacking
sufficient cautionary language where the
plaintiff fails to prove actual knowledge
that the statement was false or mislead-
ing.
15 U.S.C. § 78u-5(c)(1). It would be anomalous indeed if a
false but immaterial statement would fall outside the safe har-
bor, but that is the result of the investors’ proposed construc-
tion. The logical reading of the statute is simply to take it as
written — subsections (A) and (B) and their subpoints each
offer safe harbors for different categories of forward-looking
statements. The defendants’ state of mind is not relevant to
subsection (A). To read the provisions otherwise would make
no sense.
[10] The investors’ proposed conjunctive construction of
the safe harbor is not only inconsistent with the statutory lan-
guage, but has been rejected by all of our sister circuits to
consider the question. See Southland Secs. Corp. v. Inspire
Ins. Solutions, Inc., 365 F.3d 353, 371-72 (5th Cir. 2004)
(holding that subsection (A)(i) “focus[es] on the defendant’s
cautionary statements” while subsection (B)(i) focuses “on
the defendant’s state of mind”); Miller v. Champion Enters.,
Inc., 346 F.3d 660, 672 (6th Cir. 2003) (“[F]or ‘forward-
looking statements’ that are accompanied by meaningful cau-
tionary language, [subsection (A)(i)] makes the state of mind
irrelevant.”); Helwig v. Vencor, Inc., 251 F.3d 540, 554 (6th
Cir. 2001) (holding the disjunctive reading mandated by the
statutory text), overruled in part on other grounds as stated
in Konkol v. Diebold, Inc., 590 F.3d 390, 396 (6th Cir. 2009);
Harris v. Ivax Corp., 182 F.3d 799, 803 (11th Cir. 1999)
(holding that where all allegedly false statements were identi-
fied as forward-looking statements and accompanied by cau-
9468 IN RE CUTERA SECURITIES LITIGATION
tionary language, “the defendant’s state of mind is
irrelevant”). We join with their reasoned interpretation.
The investors’ citation to No. 84 Employer-Teamster Joint
Council Pension Trust Fund v. American West Holding Corp.,
320 F.3d 920, 937 n.15 (9th Cir. 2003), is not persuasive.
There, we held that the statements were neither forward-
looking nor accompanied by the requisite “meaningful cau-
tionary statement.” Id. at 937. In a footnote, we suggested that
“a strong inference of actual knowledge” could except
forward-looking statements from the safe harbor rule. This
passing reference offered no statutory analysis or discussion
of the safe harbor itself, and can only be characterized as obi-
ter dicta.5
CONCLUSION
[11] The investors’ claims fail because they do not allege
material facts regarding the nature of the sales program. They
also cannot overcome safe harbor protection for Cutera’s Jan-
uary 31, 2007 forward-looking revenue projections, which
were accompanied by cautionary language. The district
court’s order granting Cutera’s motion to dismiss is
AFFIRMED.6
5
Our clear statement today that the statute should be read in the disjunc-
tive should clear up the issue for the handful of district courts that have
embraced that passing reference as a holding from this court. See e.g., In
re LDK Solar Sec. Litig., 584 F. Supp. 2d 1230, 1250 (N.D. Cal. 2008);
In re Dura Pharmaceuticals, Inc. Secs. Litig., 548 F. Supp. 2d 1126, 1143
(S.D. Cal. 2008); Glenbrook Capital L.P. v. Kuo, 525 F. Supp. 2d 1130,
1136 (N.D. Cal. 2007). But see, e.g., In re SeeBeyond Techs. Corp. Secs.
Litig., 266 F. Supp. 2d 1150, 1165 (C.D. Cal. 2003)
6
The district court did not directly address the investors 20(a) claim.
However, “[t]o be liable under section 20(a), [Cutera] must be liable under
another section of the Exchange Act.” Heliotrope Gen., Inc. v. Ford Motor
Co., 189 F.3d 971, 978 (9th Cir. Cal. 1999) (citing 15 U.S.C. § 78t(a)).
Because the § 10(b) claims were properly dismissed, the § 20(a) claims
were also properly dismissed.