Glen Barnes v. Edison International
21-55589
| 9th Cir. | Mar 18, 2022Background
- Appellants Irving Lichtman and Iron Workers Local 580 Joint Funds appealed the dismissal of securities claims against Edison International under Section 10(b)/Rule 10b‑5 and Section 11 of the Securities Act.
- Plaintiffs alleged Edison made misleading statements about safety and reliability and omitted material information about safety practices, prior safety violations, Edison’s role in the Thomas Fire, the Long Beach fire, its CPUC interactions, and related risk disclosures.
- The district court dismissed the Exchange Act claims for failure to plead particularized facts meeting the PSLRA and Rule 9(b) standards, finding the challenged statements were puffery or not objectively verifiable.
- The district court dismissed the Section 11 claims as time‑barred under the one‑year statute of limitations; plaintiffs alleged the market understood Edison caused the Thomas Fire on December 5, 2017, but filed the Section 11 claims on April 29, 2019.
- On appeal, the Ninth Circuit affirmed: Exchange Act claims failed for lack of particularized allegations of false or misleading statements/omissions, and Section 11 claims were barred by the statute of limitations (and would fail for the same pleading defects).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs pleaded actionable misstatements or omissions under §10(b)/Rule 10b‑5 | Edison made false/misleading statements about safety/reliability and omitted material adverse facts | Statements were non‑actionable corporate puffery or not objectively verifiable; omissions of publicly available info are not actionable | Plaintiffs failed to plead particularized facts; dismissal affirmed |
| Whether challenged statements were literally false or objectively verifiable | Statements conveyed specific safety/reliability assurances inconsistent with Edison’s conduct | Statements were not literally false and amounted to puffery | Statements not actionable |
| Whether failure to disclose publicly available safety information made statements misleading | Omitted safety practices/prior violations rendered disclosures incomplete and misleading | No duty to disclose publicly available information; no ‘‘rule of completeness’’ requiring disclosure of all public information | Omissions not actionable; no material affirmative misimpression shown |
| Whether Section 11 claim was timely and subject to heightened pleading | Section 11 claim arises from same filings and should proceed | Claim is time‑barred (one‑year rule); also sounds in fraud and must meet Rule 9(b) | Section 11 claim barred by statute of limitations; alternatively fails for pleading defects |
Key Cases Cited
- Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049 (9th Cir. 2008) (statements not literally false must be pleaded with particularity)
- Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988 (9th Cir. 2018) (distinguishing actionable statements from non‑verifiable puffery)
- In re Alphabet, Inc. Sec. Litig., 1 F.4th 687 (9th Cir. 2021) (corporate puffery not actionable)
- Police Ret. Sys. of St. Louis v. Intuitive Surgical, Inc., 759 F.3d 1051 (9th Cir. 2014) (no rule of completeness requires disclosure of all publicly available information)
- Merck & Co. v. Reynolds, 559 U.S. 633 (2010) (statute‑of‑limitations accrual when plaintiff, exercising reasonable diligence, could have discovered the facts constituting the violation)
- Rubke v. Capitol Bancorp Ltd., 551 F.3d 1156 (9th Cir. 2009) (Securities Act claims that ‘‘sound in fraud’’ are subject to Rule 9(b) heightened pleading)