Desai Vikramkumar v. Nimble Storage, Inc., 4:15-cv-05803

Background

Arkansas Teacher Retirement System (lead plaintiff) sued Nimble Storage and four executives under Section 10(b)/Rule 10b-5 and Section 20(a), alleging misleading statements about Nimble’s commercial and enterprise segments and its prospect of reaching non‑GAAP breakeven during the Class Period (Nov. 24, 2014–Nov. 19, 2015).
The Court had previously dismissed earlier complaints twice, permitting limited amendment only as to alleged fraudulent reclassifications of commercial accounts as enterprise accounts and statements in 3Q16.
TAC relied largely on confidential witness (CW) allegations that Nimble reclassified commercial accounts as enterprise wins and that internal predictive tools and bookings/backlog indicated defendants knew by 3Q16 they would miss guidance.
Defendants moved to dismiss arguing plaintiff failed to plead particularized false statements, many statements were forward‑looking (PSLRA safe harbor), and scienter was unsupported; the Court focused on falsity/particularity and did not reach safe harbor or scienter.
The Court found plaintiff never alleged any disclosed numerical metrics (e.g., Global 5000 customer counts) were false, and CW testimony lacked the required specificity (timing, content of reports, or that reclassifications were improper) to show statements were false or misleading when made.
Given repeated failed amendments and lack of particularized facts, the Court granted the motion and dismissed the TAC with prejudice, and dismissed the derivative Section 20(a) claim as dependent on Section 10(b) claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiff pleaded particularized false or misleading statements about enterprise growth prior to 3Q16	Nimble overstated enterprise momentum and counted reclassified commercial accounts as enterprise wins, misleading investors	Disclosed numeric metrics (Global 5000 counts) were accurate; general optimism is nonactionable and plaintiff did not allege disclosed numbers were false	Dismissed — plaintiff failed to allege any disclosed numbers were false; further amendment futile
Whether statements in 3Q16 (Aug–Sept 2015) about enterprise/commercial strength and win rates were false when made	CWs and internal predictive tools show defendants knew months in advance they would miss 3Q16 guidance and that pipelines were weak	CW allegations lack specificity on timing, scope, content of internal reports; no particularized facts showing statements false on the specific dates	Dismissed — CWs insufficiently particular; cannot infer falsity without timing/content details
Whether statements about being "on track" to achieve breakeven were misleading	Breakeven assertions were premised on false representations about segment strength	Even if guidance later missed, plaintiff must plead falsity at statement time; no facts showing breakeven statements were false when made	Dismissed — plaintiff failed to plead falsity for breakeven statements
Whether Section 20(a) control‑person claims survive	Control claims based on underlying Section 10(b) violations by executives Vasudevan and Singh	If Section 10(b) claims fail, Section 20(a) claims fail too	Dismissed — Section 20(a) dependent on dismissed Section 10(b) claims

Key Cases Cited

In re Verifone Sec. Litig., 784 F. Supp. 1471 (N.D. Cal. 1992) (sales and profit data, when accurately reported, are rarely misleading despite optimistic statements)
In re OmniVision Techs., Inc. Sec. Litig., 937 F. Supp. 2d 1090 (N.D. Cal. 2013) (defendants may be liable for statements communicated to analysts intended for the market)
Nursing Home Pension Fund, Local 144 v. Oracle Corp., 380 F.3d 1226 (9th Cir. 2004) (statements in analyst reports attributable to defendants can be actionable)
Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049 (9th Cir. 2008) (plaintiffs must raise a strong inference of scienter in securities fraud complaints)
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007) (court must compare inferences of scienter; complaint survives only if inference of intent is at least as compelling as opposing inferences)
Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976) (scienter requirement for private securities fraud actions)