In re OmniVision Technologies, Inc. Securities Litigation
937 F. Supp. 2d 1090
N.D. Cal.2013Background
- Lead plaintiffs allege OmniVision and senior officers misled investors about Apple iPhone sensor supply and competitive position during Aug 2010–Nov 2011.
- OmniVision’s CMOS sensors powered iPhone cameras; Sony emerged as rival for the iPhone 4S sensor slot.
- Defendants Hong (CEO), Chan (CFO), and Cisneros (VP of Worldwide Sales) allegedly publicized OmniVision’s lead and ties to Tier 1 customers.
- Allegations focus on statements about OmniVision’s design wins, BSI technology, and relationships with key customers.
- Plaintiffs contend Apple would become or remained OmniVision’s primary customer, which allegedly was false as Apple shifted to Sony for the iPhone 4S.
- Court denied the motion to dismiss after evaluating misstatements, omissions, and scienter, focusing on Chan’s September 2011 statements and related evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether alleged misstatements/omissions are actionable under Rule 10b-5 | Lead alleges statements implied Apple exclusivity; omissions misled about Apple as customer. | Defendants contend statements were not false or directed at Apple; many were puffery or non-actionable. | Two Chan statements deemed potentially actionable; majority dismissed as non-actionable. |
| Puffery vs. material facts | Plaintiffs argue some statements were concrete and misleading in context. | Court finds most statements are puffery or incapable of objective falsity. | Most statements not actionable; puffery and non-actionable disclosures prevail. |
| Conduit theory and attribution of statements to Chan via analysts | Statements attributed to Chan in analyst reports were communicated to market; sufficient attribution. | Need clear attribution; many statements were analyst interpretations. | Two Chan statements properly attributed and potentially actionable under conduit theory. |
| Falsity and scienter with Expert A and insider trading | Expert-based falsity and insider trading corroborate knowledge of adverse information. | Expert reliance insufficient under PSLRA; insider trading not clearly suspicious for all statements. | Falsity supported for two statements; scienter found based on holistic analysis, including insider activity. |
Key Cases Cited
- Brody v. Transitional Hospitals Corp., 280 F.3d 997 (9th Cir. 2002) (omission must be misleading; not every omission is actionable)
- Daou Sys., Inc. v. Faroui, 411 F.3d 1006 (9th Cir. 2005) (confidential witnesses must be described with sufficient particulars)
- McCormick v. Fund Am. Cos., Inc., 26 F.3d 869 (9th Cir. 1994) (knew what investor didn’t know; no liability for undisclosed unknowns)
- Nursing Home Pension Fund v. Oracle Corp., 380 F.3d 1226 (9th Cir. 2004) (analyst reports can be tied to defendants when clearly originated from them)
- In re Copper Mountain Sec. Litig., 311 F. Supp. 2d 857 (N.D. Cal. 2004) (puffery limits liability for vague optimistic statements)