Hill v. Gozani
2011 U.S. App. LEXIS 13303
1st Cir.2011Background
- This is an appeal from a district court decision affirming dismissal; Hill, Anima S.G.R.P.A. v. Gozani et al. (No. 10-1048) First Circuit case caption; the court issued an opinion on March 18, 2011 affirming dismissal.
- Four days after that opinion, the Supreme Court issued Matrixx Initiatives, Inc. v. Siracusano, which prompted Anima to file a petition for rehearing en banc claiming inconsistency with Matrixx.
- Matrixx refined materiality under Rule 10b-5 as a fact-specific inquiry and rejected a bright-line rule that only statistically significant adverse events are material.
- Anima argued three points: (1) our decision was inconsistent with Matrixx, (2) differences in the statements at issue affect the duty to disclose, and (3) internal dissenting opinions should have been disclosed.
- The First Circuit denied the petition for rehearing en banc, holding that Matrixx did not require a broader disclosure duty or alter the court’s analysis, and that the statements here were not misleading despite the omitted opinions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Matrixx consistency with prior ruling | Anima argues inconsistency with Matrixx | Hill/NeuroMetrix argue Matrixx not controlling here | Rehearing denied |
| Materiality and disclosure duty under Matrixx | Matrixx requires disclosure of material undisclosed facts | No automatic duty to disclose; facts here do not trigger duty | No change to duty to disclose in this case |
| Disclosure of internal dissenting opinions | Dissenting director opinions should have been disclosed | Statements acknowledged risks; no requirement to disclose dissenting internal opinions | No duty to disclose internal dissenting opinions; Matrixx not violated |
Key Cases Cited
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (2011) (materiality is fact-specific; no automatic duty to disclose; duty arises to avoid misleading statements)
- Basic Inc. v. Levinson, 485 U.S. 224 (1988) (silence absent a duty to disclose is not misleading; materiality framework)
- Lormand v. U.S. Unwired, Inc., 565 F.3d 228 (5th Cir. 2009) (predictions by employees; exceptional facts required to compel disclosure)
- In re Cabletron Systems, Inc., 311 F.3d 11 (1st Cir. 2002) (duty to disclose dependent on factual circumstances and statements made)