JOHN E. GOLUB, On Behalf of Himself and All Others Similarly Situated v. Gigamon Inc.

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN E. GOLUB, On Behalf of Himself
and All Others Similarly Situated,
Plaintiff-Appellant,
and
BRIAN CARPENTER,
Plaintiff,
v.
GIGAMON INC.; COREY M. MULLOY;
PAUL A. HOOPER; ARTHUR W.
COVIELLO, Jr.; JOAN A. DEMPSEY;
TED C. HO; JOHN H. KISPERT; PAUL E.
MILBURY; MICHAEL C. RUETTGERS;
ROBERT E. SWITZ; DARIO ZAMARIAN;
ELLIOTT MANAGEMENT
CORPORATION; ELLIOTT
ASSOCIATES, L.P.; ELLIOTT
INTERNATIONAL, L.P.; EVERGREEN
COAST CAPITAL CORPORATION;
GINSBERG HOLDCO, INC.; GINSBERG
MERGER SUB, INC.,
Defendants-Appellees.
No. 19-16975
D.C. No. 3:17-cv-06653-WHO
MEMORANDUM*
Appeal from the United States District Court
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
FILED
APR 20 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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for the Northern District of California
William Horsley Orrick, District Judge, Presiding
Argued and Submitted October 14, 2020
Submission Vacated December 15, 2020
Resubmitted April 13, 2021
San Francisco, California
Before: FERNANDEZ, WARDLAW, and COLLINS, Circuit Judges.
Lead Plaintiff John Golub (Golub) appeals from the district court’s dismissal
of his putative securities class-action lawsuit alleging a violation of § 14(a) of the
Securities Exchange Act of 1934 and Securities and Exchange Commission Rule
14a-9. We have jurisdiction, 28 U.S.C. § 1291, and we affirm.
The Private Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u-
5, required Golub’s amended complaint to “specify each statement alleged to have
been misleading,” in Gigamon’s proxy statement and “the reason or reasons why
the statement is misleading.” 15 U.S.C. § 78u-4(b)(1). To that end, we read
Golub’s amended complaint to allege: (1) five misrepresentations in connection
with statements of opinion (AC ¶ 97(a)-(e)) and (2) two omissions in connection
with statements of opinion (AC ¶¶ 90–96). We “examine [these] individual
allegations in order to benchmark whether they are actionable,” but “consider the
allegations collectively and examine the complaint as a whole.” Police Ret. Sys. of
St. Louis v. Intuitive Surgical, Inc., 759 F.3d 1051, 1058 (9th Cir. 2014).
We, like the district court, focus chiefly on whether Golub sufficiently

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pleaded facts demonstrating falsity and surmounting the PSLRA’s safe-harbor
provision. “We review the district court’s dismissal” on these grounds “de novo.”
Wochos v. Tesla, Inc., 985 F.3d 1180, 1188 (9th Cir. 2021). Our accompanying
opinion lays out the relevant standards for determining actionable falsity. As to the
PSLRA’s safe harbor, that provision insulates a defendant from liability “for a
false or misleading statement if it is forward-looking and either is accompanied by
cautionary language or is made without actual knowledge that it is false or
misleading.” Id. at 1190 (internal quotation marks and citation omitted). We
analyze each of the various categories of alleged misrepresentations and omissions
in Golub’s complaint with these standards in mind.
1. We begin with the five alleged misrepresentations of the opinion of the
Board of Directors (“the Board”) that Golub identified in his complaint. “[A]
statement of opinion may . . . involve a representation of material fact that, if that
representation is false or misleading, could be actionable.” Id. at 1189; see also
Va. Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1095 (1991). Such a statement
affirms at least that “the speaker actually holds the stated belief.” Wochos, 985
F.3d at 1189 (internal quotation marks and citation omitted). Moreover, “some
sentences that begin with opinion words like ‘I believe’ contain embedded
statements of fact.” Id. (emphasis removed) (internal quotation marks and citation
omitted). We assume that Golub intended to plead an actionable misrepresentation

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under either theory.
With regard to the first theory, the complaint fails to allege plausible
“misstatement[s] of the psychological fact of the speaker’s belief.” Va.
Bankshares, 501 U.S. at 1095. The allegations in Golub’s complaint admit of “two
possible explanations” for the proxy’s statements regarding the Board’s opinions—
“only one of which can be true and only one of which results in liability.” In re
Century Aluminum Co. Secs. Litig., 729 F.3d 1104, 1108 (9th Cir. 2013). On the
one hand, these allegations are consistent with the possibility that Gigamon’s
Board held very positive views of the company’s long-term future, but conveyed
the opposite impression in the proxy statement to effect the sale of the company by
whatever means necessary. On the other hand, these allegations are also consistent
with Gigamon having received two consecutive quarters of disappointing and
unexpected results, which affected the directors’ views of the company’s present
value and long-term success. Golub accordingly was required to plead
“[s]omething more . . ., such as facts tending to exclude the possibility that the
alternative explanation is true.” Id.
Like the district court, we conclude he has not done so. His allegations that
Gigamon and its directors suspiciously strayed from their previous “long-term”
view of Gigamon’s prospects—suddenly adopting a “quarter-on-quarter”
perspective—is betrayed by his own allegations that the Gigamon directors revised

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their opinions regarding the company’s prospects only after two consecutive
quarters of disappointing results.
Meanwhile, the May and July 2018 press statements that his complaint
identifies lend no support on this front. The positive figures listed in these press
statements are not inconsistent with the Board’s professed determination in the
proxy statement that Gigamon remained on a growth trajectory, albeit a more
gradual one than the Board had expected before FY 2017’s Q2 and Q3 results.
Thus, they do not support the inference that the Board believed one thing, yet said
another. See In re Read-Rite Corp., 335 F.3d 843, 846 (9th Cir. 2003), abrogated
on other grounds by S. Ferry LP, No. 2 v. Killinger, 542 F.3d 776 (9th Cir. 2008).
2. Alternatively, interpreting Golub’s complaint as challenging certain
misrepresentations of embedded facts within these five statements of opinion, we
conclude that such a challenge cannot succeed. At most, three of these alleged
misrepresentations contain embedded statements of fact. See AC ¶¶ 97(b), (d), (e).
And most of those embedded statements cannot evade the PSLRA’s safe-harbor
provision, as they are in and of themselves forward-looking statements regarding
the company’s future financial performance, see 15 U.S.C. § 78u-5(i)(1)(A), (C);
In re Quality Sys., Inc. Secs. Litig., 865 F.3d 1130, 1146 (9th Cir. 2017),
accompanied by adequate cautionary language, see Intuitive Surgical, Inc., 759
F.3d at 1059–60.

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Indeed, the only embedded fact that surmounts the PSLRA safe harbor is the
statement that “the Company was currently performing at levels even below the
Case C projections” when the directors decided to rely on the Case C projections
on October 24, 2017. AC ¶ 97(e). But Golub has made no other allegations
relating to the company’s performance at that specific moment in time. He thus
“pleaded no facts that would establish falsity in [this] sense.” Wochos, 985 F.3d at
1196.
3. As for the alleged omissions in connection with statements of opinion, we
conclude that Golub has again failed to allege falsity or to overcome the PSLRA’s
safe harbor. Such a claim required Golub to “identify particular (and material)
facts going to the basis for [Gigamon’s and the Board’s] opinion—facts about the
inquiry the issuer did or did not conduct or the knowledge it did or did not have—
whose omission makes the opinion statement at issue misleading to a reasonable
person reading the statement fairly and in context.” Omnicare, Inc. v. Laborers
Dist. Council Constr. Indus. Pension Fund, 575 U.S. 175, 194 (2015). “That is no
small task.” Id. And “whether an omission makes an expression of opinion
misleading always depends on context,” because “investor[s] take[] into account
the customs and practices of the relevant industry.” Id. at 190; see also
Desaigoudar v. Meyercord, 223 F.3d 1020, 1023–24 (9th Cir. 2000) (“The SEC
has historically disfavored forecasts and value estimates in proxy statements.”).

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Accordingly, Gigamon’s alleged non-disclosure of partial FY 2017 Q4
earnings in advance of the December 22, 2017 shareholder vote did not render
false or misleading the Board’s opinion that Gigamon would face “continued
challenges . . . to grow top-line revenue and accurately predict its quarterly
results.” Public companies generally release quarterly earnings only after a given
quarter has ended. Moreover, one quarter of positive results—following two
quarters of unexpectedly poor numbers—does not render misleading the Board’s
opinion (as of December 22, 2017) that these particular challenges would continue.
See City of Dearborn Heights Act 345 Police & Fire Ret. Sys. v. Align Tech., Inc.,
856 F.3d 605, 615 (9th Cir. 2017) (“[L]iability is not necessarily established by
demonstrating that ‘an issuer knows, but fails to disclose, some fact cutting the
other way,’ because ‘[r]easonable investors understand that opinions sometimes
rest on a weighing of competing facts.’” (alteration in original) (quoting Omnicare,
575 U.S. at 189–90)).
Golub failed to plead facts sufficient to show that the omission of the
Updated Case B Projections rendered materially false or misleading the Board’s
opinion that those projections were “overstated.” Moreover, the Board stated that
it endorsed the proposed sale based on the Updated Case C Projections and
disclosed those projections to its shareholders. Given this context, Golub failed to
plead facts showing that the omission of details about the Updated Case B

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Projections made the Board’s “expression of opinion misleading.” Omnicare, 575
U.S. at 190.
In addition, both statements allegedly rendered misleading by this omission,
see AC ¶¶ 90, 96, are entirely forward-looking and accompanied, as discussed
above, by adequate cautionary language in the proxy statement. The PSLRA thus
bars any claim based on these omissions. See 15 U.S.C. § 78u-5(c)(1) (noting the
safe harbor’s application to an “omission of a material fact necessary to make the
statement not misleading”); In re Cutera Secs. Litig., 610 F.3d 1103, 1112–13 (9th
Cir. 2010) (finding claim based on omission relating to revenue projections barred
by safe-harbor provision).
4. Because Golub has failed to state an actionable claim under § 14(a), we
also affirm the dismissal of his § 20(a) claims against all Defendants. Wochos, 985
F.3d at 1197.
AFFIRMED.

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