Gammel v. Hewlett-Packard Co.
905 F. Supp. 2d 1052
C.D. Cal.2012Background
- HP sought to build a webOS-based ecosystem across devices (PCs, printers, smartphones, tablets) after acquiring Palm in 2010; class plaintiffs bought HP stock during 11/22/2010–8/18/2011 and alleged securities-law violations; defendants included HP executives Apotheker, Lesjak, and Bradley; allegations centered on misstatements about webOS timelines and ecosystem commitments; alleged misstatements spanned multiple public disclosures and interviews; PSLRA safe harbor, puffery, and falsity/ scienter issues were central to the motion to dismiss; court took judicial notice and incorporated certain documents but did not rely on them for truth of assertions; court dismissed all §10(b)/Rule 10b-5 claims and derivative §20(a) claims; plaintiffs were allowed to amend within 30 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the PSLRA safe harbor applies to certain forward-looking statements | Plaintiffs argue March 14 and May 17 statements were not properly protected | Defendants contend those statements had meaningful cautionary language and are forward-looking | Safe harbor applies to March 14 and May 17 statements |
| Whether alleged misstatements concerning webOS PCs/printers constitute puffery | Plaintiffs say some statements were not mere puffery due to context and specificity | Defendants classify many statements as general puffery | Some statements are actionable; others are puffery or protected by safe harbor |
| Whether Bradley’s February 9, 2011 statements about extending webOS to PCs were false when made | Bradley allegedly spoke without internal plans to put webOS on PCs/printers | Internal plans could have existed; roadmap insufficient to prove falsity | Allegations insufficient to plead falsity for Bradley’s Feb 9, 2011 statements |
| Whether plaintiffs adequately plead scienter | Holistic, strong inference of scienter from timing, write-downs, core operations | Allegations fail to rise to strong inference of scienter | Holistic pleading fails to raise strong inference of scienter |
Key Cases Cited
- In re Daou Sys., Inc., 411 F.3d 1006 (9th Cir. 2005) (requirement of particularity and scienter linkage in PSLRA pleading)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (U.S. 2007) (strong inference standard for scienter under PSLRA)
- In re Cutera Sec. Litig., 610 F.3d 1103 (9th Cir. 2010) (PSLRA safe harbor with meaningful cautionary language)
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (U.S. 2011) (holistic review for scienter; strong inference standard)
- South Ferry LP No. 2 v. Killinger, 542 F.3d 776 (9th Cir. 2008) (core operations inference caution for scienter)