In Re Oracle Corp. Securities Litigation
627 F.3d 376
| 9th Cir. | 2010Background
- Oracle missed 3Q01 EPS by two cents; stock fell after the miss.
- Suite 11i (ERP/CRM) was launched in May 2000 as a unified product; it faced rollout issues.
- Internal forecasting process: pipeline, regional forecasts, and Minton’s bottom-up 3Q01 forecast; late-quarter revisions occurred.
- December 14, 2000, Oracle guided 3Q01 at 12 cents; actual 3Q01 was 10 cents.
- March 1, 2001, Oracle announced the miss; Ellison and Henley had substantial pre-quarter stock sales.
- District court sanctioned spoliation (Ellison emails, Softwar book materials); plaintiffs obtained adverse inferences, then district court granted summary judgment in Oracle’s favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 3Q01 forecast had a reasonable basis | Nursing Home argues forecast lacked basis due to Suite 11i issues and economy. | Oracle contends forecast was based on a thorough bottom-up process with reasonable basis. | No genuine issue; forecast had a reasonable basis. |
| Whether intra-quarter statements were misleading | Plaintiffs claim certain statements misled about 3Q01 and economy. | Statements were not knowingly misleading; included reasonable bases. | Not material misrepresentations as a matter of law. |
| Loss causation linking misrepresentations to stock drop | Loss caused by fraud about Suite 11i and earnings. | Loss caused by broader economic health; not the fraud-specific acts. | Plaintiffs failed to show loss causation; no §10(b) violation proven. |
| Contemporaneous trading liability under §20A | Ellison/Henley traded while in possession of material nonpublic information. | Trades occurred before the first internal forecast; no transaction causation shown. | No §20A liability; no independent §10(b) violation established. |
| Admissibility and evidentiary rulings on summary judgment evidence | A substantial evidentiary record supports fraud claims. | District court properly excluded or limited evidence; volume did not establish triable facts. | No abuse of discretion; summary judgment proper. |
Key Cases Cited
- MetaL. Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049 (9th Cir. 2008) (loss causation requires market reaction to fraud, not general poor health)
- Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (U.S. 2005) (loss causation require that market learns of and reacts to fraud)
- Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049 (9th Cir. 2008) (loss causation not pled where market reaction to overall health)
- In re VeriFone Sec. Litig., 11 F.3d 865 (9th Cir. 1993) (prediction wrong in hindsight does not render statement untrue)
- Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151 (9th Cir. 1996) (need a reasonable basis for representations at time made)
- Stoneridge Inv. Partners v. Scientific-Atlanta, Inc., 552 U.S. 146 (U.S. 2008) (explains private §10(b) action framework)
- Gilead Scis. Sec. Litig., 536 F.3d 1049 (9th Cir. 2008) (loss causation and pleading standards)
- Daou Sys., Inc. Sec. Litig., 411 F.3d 1006 (9th Cir. 2005) (analyst reports and market reactions relevant to loss causation)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard; evidence must show genuine issue)
- In re Williams Secs. Litig.—WCG Subclass, 558 F.3d 1130 (10th Cir. 2009) (loss causation considerations in class actions)