Cement Masons & Plasterers Joint Pension Trust
Filing
81
Order by Hon. Samuel Conti granting 67 Motion to Dismiss.(sclc1S, COURT STAFF) (Filed on 6/12/2013)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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United States District Court
For the Northern District of California
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CEMENT MASONS & PLASTERERS
JOINT PENSION TRUST,
individually and on behalf of
all others similarly situated,
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Plaintiffs,
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v.
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EQUINIX, INC., STEPHEN M.
SMITH, and KEITH TAYLOR,
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Defendants.
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) Case No. 11-01016 SC
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) ORDER GRANTING MOTION TO
) DISMISS
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I.
INTRODUCTION
Plaintiffs Cement Masons & Plasterers Joint Pension Trust
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("Cement Masons") and the International Brotherhood of Electrical
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Workers Local 697 Pension Fund ("IBEW") (collectively,
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"Plaintiffs") bring this putative securities class action against
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Equinix, Inc. ("Equinix"), and Equinix's CEO, Stephen M. Smith
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("Smith"), and CFO, Keith D. Taylor ("Taylor") (collectively,
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"Defendants").
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was artificially inflated between July 29, 2010 and October 5, 2010
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(the "Class Period") due to allegedly false and misleading
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statements made by Defendants, and that Equinix's stock price
Plaintiffs assert that the price of Equinix stock
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plummeted over 33 percent when the falsity of these statements was
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revealed.
Plaintiffs' previous attempts to state a claim against
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Defendants have been unsuccessful.
The Court dismissed Plaintiffs'
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First Amended Complaint ("FAC") and Second Amended Complaint
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("SAC") with leave to amend.
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Order").1
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No. 66 ("TAC"), which Defendants now move to dismiss pursuant to
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Federal Rule of Civil Procedure 12(b)(6), ECF No. 67 ("MTD").
ECF Nos. 40 ("FAC Order"), 63 ("SAC
Plaintiffs recently filed a Third Amended Complaint, ECF
The
United States District Court
For the Northern District of California
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motion is fully briefed, ECF Nos. 70 ("Opp'n"), 74 ("Reply"), and
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appropriate for determination without oral argument pursuant to
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Civil Local Rule 7-1(b).
The Court finds that the TAC does not assert any new facts
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that could remedy the pleading deficiencies previously identified
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by the Court.
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are virtually identical to those set forth in the FAC and SAC and
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rejected in the Court's prior orders.
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motion to dismiss is GRANTED and Plaintiffs' case is DISMISSED WITH
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PREJUDICE.
Indeed, the facts and legal theories pled in the TAC
Accordingly, Defendants'
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II.
BACKGROUND
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A.
Factual Background
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Equinix is a public corporation that provides carrier-neutral
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data centers and internet exchanges.
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businesses with partners and customers around the world through a
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TAC ¶ 5.
Equinix connects
Cement Masons & Plasterers Joint Pension Trust v. Equinix Inc.,
2012 WL 685344, 2012 U.S. Dist. LEXIS 28094 (N.D. Cal. Mar. 2,
2012); Cement Masons & Plasterers Joint Pension Trust v. Equinix,
Inc., 11-01016 SC, 2012 WL 6044787, 2012 U.S. Dist. LEXIS 172711
(N.D. Cal. Dec. 5, 2012).
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global platform of high-performance data centers called
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International Business Exchanges ("IBX(s)").
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customers to safeguard their infrastructure, house their assets and
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applications closer to users, and collaborate with partners and
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customers.
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through three offerings available to customers at its ninety-two
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IBXs: collocation services, interconnection services, and managed
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IT services.
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shared, equipped facilities for their computer and data systems.
United States District Court
For the Northern District of California
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Id.
Id.
IBXs enable
Equinix generates substantially all of its revenue
Id. ¶¶ 7-10.
These services provide customers with
See id.
Equinix acquired Switch and Data, one of its competitors,
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during the second quarter of 2010.
Id. ¶ 13.
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financial results for that quarter were positive.
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2010, the day before the commencement of the Class Period, the
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Company issued a press release announcing that it had posted its
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thirtieth consecutive quarter of sequential growth, reporting
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revenues of $296.1 million.
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Equinix offered financial projections for the third quarter 2010
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("3Q10") and fiscal year 2010 ("FY10").
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revenue of $335 to $338 million and FY10 revenue of $1.225 to
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$1.235 billion (the "July 28 guidance").
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EBITDA2 for FY10 was expected to be between $535 and $540 million.
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TAC Ex. C.
Id. ¶¶ 102-03.
Equinix's overall
On July 28,
In the same release,
Equinix forecasted 3Q10
Id. ¶ 102.
Adjusted
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The guidance was accompanied by cautionary language.
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28 press release stated: "This press release contains forward-
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2
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The July
Adjusted EBITDA is defined as income or loss from operations plus
depreciation, amortization, accretion, stock-based compensation
expense, restructuring charges, acquisition costs, and gains on
asset sales.
3
1
looking statements that involve risks and uncertainties.
Actual
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results may differ materially from expectations discussed in such
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forward-looking statements."
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the release included "unanticipated costs or difficulties relating
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to the integration of companies we have acquired"; "competition
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from existing and new competitors"; and "the loss or decline in
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business from our key customers."
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directed investors to further discussions of risk factors contained
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in its recent quarterly and annual reports filed with the SEC.
The risk factors identified in
Id.
Id.
The press release also
Id.
United States District Court
For the Northern District of California
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The cited 10-Q contains a sixteen-page "Risk Factor" section, which
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discusses, among other things: the risk of increased churn; the
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possibility of increased pricing pressure from competitors; and
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dependence on key "magnet customers."
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FAC Order at 11-12.
Also on July 28, 2010, Defendants made a number of statements
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concerning Equinix's pricing strategy.
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responding to investor questions about whether Equinix could
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maintain its firm pricing in the face of an increasingly
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competitive environment, Smith commented: "We're not going to go
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below a threshold," and "[w]e're maintaining the discipline on the
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floors and ceilings we have on our pricing and the sales force is
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staying very, very disciplined on price."
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On a conference call,
TAC ¶¶ 14, 66.
Smith conceded that there would be certain exceptions to this
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stable pricing strategy: "If it's a strategic deal and it's a
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magnetic deal for us, we'll get more aggressive."
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Smith also stated: "So, yes there's pricing pressure there and yes
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we lots of times walk away with it if it's a strategic customer we
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might get a little more aggressive."
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reiterated Equinix's pricing strategy in a talk with investors on
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Id. ¶ 107.
Id. ¶ 106.
Taylor later
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September 15, 2010, stating: "[W]e're not going to trade price for
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volume," and "this is sort of a consistent message you've heard
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from us previously, that pricing is stable, it's firm."
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135.
Id. ¶¶ 21,
On October 5, 2010, the last day of the Class Period, Equinix
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announced in a press release that it now expected 3Q10 revenue of
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$328 to $330 million, a 2.2 percent reduction from the July 28
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guidance, and FY10 revenue of $1.215 billion, a 1.2 percent
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reduction from the July 28 guidance.
Id. ¶ 142.
However, Equinix
United States District Court
For the Northern District of California
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also increased its adjusted EBITDA outlook to $540 million for
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FY10.
TAC Ex. G.
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In a conference call with investors on the same day, Smith
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stated that the downward revision in revenue was due to understated
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churn (i.e., customer attrition) assumptions, lower than expected
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revenues related to the company's Switch and Data assets, and
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customer discounts that were not fully contemplated when Equinix
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offered the July 28 guidance.
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TAC ¶ 142.
Smith explained:
[W]e just had an assumption that was missed in the
guidance. . . .
So it was an error on our part.
Should've seen it in Q2.
We caught it part way
through. We wanted to see the September flash so we'd
make darn sure we knew what the heck we were looking
at. And that's why we decided to get that behind us,
looking at the September flash and getting it out to
you guys today.
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Id. ¶ 146.
In responding to question about falling prices, Taylor
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stated:
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"[W]hen we went in and, if you will, provided those
credits to the customers, we made some adjustments in
debit and credit memos. And those weren't fully
contemplated when we offered guidance. And so what we
had is basically a June exit rate that didn't fully
represent that adjustment . . . . [T]he impact of the
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credits and debits going through our systems and how
people forecast those assumptions caused us . . . to
provide a guidance range that didn't fully contemplate
that credit or debit note."
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Id.
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Smith also addressed Equinix's pricing strategy, stating that
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Equinix had provided discounts to a number of strategic customers:
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During the second and third quarters, there were
certain discounts and credit memos issued to a number
of strategic customers in exchange for longer-term
contracts.
As we've discussed in the past, we have
been incenting our salesforce to extend the contract
terms of magnet customers, though this can result in a
price concession for some.
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United States District Court
For the Northern District of California
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TAC Ex. H at 3.
Smith made similar statements in response to
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analysts' questions on the call: "We historically have said we will
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not trade volume for price.
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There are magnets that will go after, and we will adjust.
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case, it's just over 10 percent is the effect of the adjustment on
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their existing pricing."
But these are strategic magnets.
In this
Id. at 12.
Plaintiffs claim that the discounts Equinix offered were even
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larger than those disclosed on October 5, pointing to allegations
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from a confidential witness ("CW") who was formerly the "Regional
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Director, Inside Sales East" at Switch and Data and Equinix.
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46.
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brought potential deals unless they would definitely close, so
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discounts were widely offered with little oversight" and that the
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CW "regularly approved discounts between 10-30%."
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CW also states that, "prior to and during the Class Period, Equinix
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sales reps themselves were empowered to offer a customer up to a
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10% discount without any supervisory or managerial approval," and
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"it was not uncommon for discounts to rise above 30% with the
TAC ¶
The CW states that "Equinix executives did not want to be
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Id. ¶ 128.
The
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approval of the Finance Director . . ."
Id. ¶ 130.
There is no
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indication that this practice was ever disclosed to the market
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during the Class Period.
Investors reacted negatively to the October 5, 2010
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announcements.
The following day, Equinix's stock price fell from
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$106.09 on October 5 to $70.34, a one-day loss of over 33 percent
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of shareholder equity.
Id. ¶ 177.
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B.
Procedural History
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Cement Masons, which had purchased Equinix stock during the
United States District Court
For the Northern District of California
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Class Period, filed the instant action in federal court on March 4,
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2011.
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that is represented by the same counsel as Cement Masons, was
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appointed as lead plaintiff on August 8, 2011.
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8, 2011 Order").
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asserting causes of action for (1) violations of Section 10(b) of
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the Securities Exchange Act of 1934 ("the Exchange Act") and of
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United States Securities and Exchange Commission ("SEC") Rule 10b-
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5; and (2) violations of Section 20(a) of the Exchange Act.
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Order at 6.
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of false and misleading statements concerning: (1) Equinix's
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financial forecasts for 3Q10 and FY10; (2) Equinix's pricing
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strategy; (3) the integration of Switch and Data's sales force; and
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(4) Equinix's ability to provide accurate financial forecasts.
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On March 4, 2012, the Court granted Defendants' motion to
ECF No. 1 ("Compl.").
IBEW, another Equinix stockholder
ECF No. 23 ("Aug.
The FAC was filed about six weeks later,
Mar. 2
The crux of the FAC was that Defendants made a number
Id.
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dismiss the FAC, but granted Plaintiffs leave to amend their
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complaint.
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not actionable because they fell under the safe harbor for forward-
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looking statements set out in the Private Securities Litigation
The Court found that Equinix's financial forecasts were
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1
Reform Act ("PSLRA").
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Plaintiffs failed to adequately plead the falsity of Defendants'
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statements concerning Equinix's pricing strategy and the
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integration of the Switch and Data sales force.
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Specifically, the Court held that "Defendants maintained a
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consistent position on pricing throughout the class period."
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at 14.
The Court also found that
Plaintiffs filed their SAC on May 2, 2012.
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FAC Order at 13.
Id. at 15.
Id.
Like the FAC, the
SAC alleged that Defendants made false and misleading statements
United States District Court
For the Northern District of California
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concerning Equinix's pricing strategy and the integration of Switch
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and Data.
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2010 financial forecasts for 3Q10 and FY10 were actionably false.
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SAC ¶ 10 n.2.
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including the former regional director discussed above.
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dismissed the SAC with leave to amend, once again finding that
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Plaintiffs had failed to allege falsity of the statements
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concerning the Switch and Data integration and Defendants' pricing
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strategy.
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allege loss causation as to the CW allegations, reasoning: "The
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only public disclosures alleged by Plaintiffs occurred on October
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5, and those disclosures merely revealed that Equinix had offered
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10 percent discounts to certain 'magnet customers.'"
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18.
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revealed to the market during the Class Period, it could not have
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caused Equinix's stock price to drop on October 6.
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However, Plaintiffs no longer alleged that the July 28,
The SAC included allegations from five CWs,
The Court
The Court also found that Plaintiffs had failed to
SAC Order at
Because the widespread discounting described by the CW was not
Id. at 18-19.
The TAC attempts to revive Plaintiffs' allegations and legal
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theories concerning Defendants' financial forecasts and their
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statements regarding pricing and discounts.
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The factual
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allegations in the TAC are more or less the same as those asserted
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in the FAC and the SAC.
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that the Court has already rejected the legal theories asserted in
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the TAC.
Defendants now move to dismiss, arguing
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III. LEGAL STANDARD
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A.
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A motion to dismiss under Federal Rule of Civil Procedure
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Motion to Dismiss
12(b)(6) "tests the legal sufficiency of a claim."
Navarro v.
United States District Court
For the Northern District of California
10
Block, 250 F.3d 729, 732 (9th Cir. 2001).
"Dismissal can be based
11
on the lack of a cognizable legal theory or the absence of
12
sufficient facts alleged under a cognizable legal theory."
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Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.
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1988).
15
should assume their veracity and then determine whether they
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plausibly give rise to an entitlement to relief."
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Iqbal, 129 S. Ct. 1937, 1950 (2009).
18
court must accept as true all of the allegations contained in a
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complaint is inapplicable to legal conclusions.
20
recitals of the elements of a cause of action, supported by mere
21
conclusory statements, do not suffice."
22
Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
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generally "limited to the complaint, materials incorporated into
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the complaint by reference, and matters of which the court may take
25
judicial notice."
26
540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor
27
Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).
28
///
"When there are well-pleaded factual allegations, a court
Ashcroft v.
However, "the tenet that a
Threadbare
Id. (citing Bell Atl.
The court's review is
Metzler Inv. GMBH v. Corinthian Colls., Inc.,
9
1
B.
Section 10(b)
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Section 10(b) of the Exchange Act makes it unlawful "[t]o use
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or employ, in connection with the purchase or sale of any security
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registered on a national securities exchange . . . any manipulative
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or deceptive device or contrivance in contravention of such rules
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and regulations as the [SEC] may prescribe . . . ."
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78j(b).
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states that "[i]t shall be unlawful for any person . . . [t]o
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engage in any act, practice, or course of business which operates
15 U.S.C. §
One such rule prescribed by the SEC is Rule 10b–5, which
United States District Court
For the Northern District of California
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or would operate as a fraud or deceit upon any person, in
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connection with the purchase or sale of any security."
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240.10b–5(c).
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violation of Rule 10b–5.
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"(1) a material misrepresentation or omission of fact, (2)
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scienter, (3) a connection with the purchase or sale of a security,
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(4) transaction and loss causation, and (5) economic loss."
17
Daou Sys., 411 F.3d 1006, 1014 (9th Cir. 2005).
18
17 C.F.R. §
Plaintiffs must plead five elements to establish a
Specifically, Plaintiffs must demonstrate
In re
Plaintiffs must also meet the heightened pleading standards of
19
Federal Rule of Civil Procedure 9(b) and the PSLRA, 15 U.S.C. §
20
78u-4.
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alleged to have been misleading [and] the reason or reasons why the
22
statement is misleading."
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the complaint must "state with particularity facts giving rise to a
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strong inference that the defendant acted with the required state
25
of mind."
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establishing securities fraud is the knowing, intentional, or
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deliberately reckless disclosure of false or misleading statements.
28
See Daou, 411 F.3d at 1014–15.
The PSLRA requires plaintiffs to "specify each statement
15 U.S.C. § 78u-4(b)(1).
Id. § 78u-4(b)(2).
Additionally,
The "required state of mind" for
"The stricter standard for pleading
10
1
scienter naturally results in a stricter standard for pleading
2
falsity, because falsity and scienter in private securities fraud
3
cases are generally strongly inferred from the same set of facts,
4
and the two requirements may be combined into a unitary inquiry
5
under the PSLRA."
Id. at 1015 (internal quotation marks omitted).
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IV.
DISCUSSION
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A.
Financial Forecast
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Plaintiffs' Section 10(b) claim is predicated in part on their
United States District Court
For the Northern District of California
10
allegation that Defendants' July 28, 2010 financial forecast was
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false.
12
$335 to $338 million and $1.225 and $1.235 billion, respectively.
13
Later, on October 5, 2010, Defendants announced that they expected
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3Q10 revenue of $328 to $330 million, a 2.2 percent reduction from
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the July 28 forecast, and FY10 revenue of $1.215 billion, a 1.2
16
percent reduction.
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failed to account for certain customer discounts.
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On July 28, Defendants forecast 3Q10 and FY10 revenue of
Defendants admitted that the July 28 guidance
Defendants argue that their July 28 forecasts are insulated by
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the PSLRA safe harbor for forward looking statements.
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The PSLRA defines a forward-looking statement as "a statement
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containing a projection of revenues, income (including income
22
loss), earnings (including earnings loss) per share, capital
23
expenditures, dividends, capital structure, or other financial
24
items."
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the safe harbor if: (A) they are "identified as forward-looking"
26
and "accompanied by meaningful cautionary statements identifying
27
important factors that could cause actual results to differ
28
materially from those in the forward-looking statement"; or (B) the
15 U.S.C. § 78u-5(i)(1).
11
MTD at 10.
Such statements may fall within
1
plaintiff fails to prove the projections were made with "actual
2
knowledge" that they were false and misleading. Id. § 78u-
3
5(c)(1)(A)-(B).
4
if the challenged statements are identified as forward-looking and
5
accompanied by meaningful cautionary language."
6
(citing In re Cutera Sec. Litig., 610 F.3d 1103, 1113 (9th Cir.
7
2010)).
"Thus, a defendant's state of mind is irrelevant
FAC Order at 10
Plaintiffs do not dispute that the July 28 forecasts
8
United States District Court
constitute forward-looking statements, but they argue that the
10
For the Northern District of California
9
PSLRA safe harbor does not apply because the forecasts were not
11
accompanied by meaningful cautionary language.
12
Specifically, they argue that Defendants' cautionary language did
13
not warn that the July 28 forecasts may fail to account for known
14
discounts and credit memos.
15
addressed and rejected in the FAC Order:
16
Id. at 12-13.
Opp'n at 12.
This same argument was
First, Equinix need not have warned of the exact risk
that caused the company to miss its forecast.
Second, the cautionary language in Equinix's SEC
filings did warn of the possibility of pricing
pressure and the dependence on magnet customers,
factors which purportedly caused Equinix to offer
discounts and settlements to its customers.
The SEC
filings also directly identified other risks that
purportedly contributed to the revision of the revenue
forecasts, including understatement of churn and lower
than expected revenues from Switch and Data.
Thus,
taken together, Equinix's cautionary language warned
of risks of a significance similar to those actually
realized.
Third, contrary to Plaintiffs' suggestion,
it does not appear that Equinix's failure to account
for customer discounts severely impacted its revenue
forecasts, since Equinix's July 28 forecasts were only
off by a few percentage points.
17
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21
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24
25
26
FAC Order at 12 (citations and quotations omitted).
27
declines to reach a different conclusion now.
28
///
12
The Court
1
Citing Cutera, Plaintiffs argue that they need not show that
2
Defendants had "actual knowledge" that their forecasts were false
3
because the actual knowledge requirement is triggered only where a
4
forward-looking statement is accompanied by meaningful cautionary
5
statements.
6
expressly states that a forward-looking statement falls under the
7
safe harbor if (1) the statement is identified as such and
8
accompanied by meaningful cautionary language, "or" (2) the
9
plaintiff fails to prove that the person making the statement had
Opp'n at 13 n.6.
That is not the law.
The PSLRA
United States District Court
For the Northern District of California
10
"actual knowledge" of its falsity.
15 U.S.C. § 78u-5(c)(1)(A)-(B).
11
The disjunctive shows that either condition may trigger the safe
12
harbor.
13
rejected Plaintiffs' conjunctive reading of the safe harbor
14
provision, reasoning that "it ignores the plain language of the
15
statute."
16
state of mind may be "irrelevant" where a forward-looking statement
17
is accompanied by cautionary language because "the statement is not
18
actionable regardless of the plaintiff's showing of scienter."
19
Contrary to Plaintiffs' suggestion, the Ninth Circuit did not hold
20
that a plaintiff need not show actual knowledge where meaningful
21
cautionary language is absent.
Cutera does not hold otherwise.
610 F.3d at 1112.
In fact, Cutera expressly
Cutera did hold that a defendant's
Id.
22
The Court previously held that Plaintiffs failed to plead
23
sufficient facts to show that Defendants had actual knowledge that
24
the July 28 forecasts were false.
25
offers no new facts on this issue.
26
theory remains the same: Defendants must have known that the July
27
28 forecasts failed to account for customer discounts because
28
Defendants approved some those discounts before they issued the
13
FAC Order at 12-13.
The TAC
Further, Plaintiffs' legal
1
forecasts.
2
even if Defendants were aware of the discounts, there is no
3
indication that they had actual knowledge that the forecast failed
4
to account for them.
5
that Defendants touted their "exceptional visibility" into
6
Equinix's financial model.
7
alleging that Defendants actually knew that they would not meet
8
their revenue targets by a few percentage points.
9
Opp'n at 17-18.
However, as the Court previously held,
FAC Order at 13.
TAC ¶ 103.
Plaintiffs have merely pled
This is a far cry from
For these reasons, the Court finds that Defendants' July 28
United States District Court
For the Northern District of California
10
financial forecasts are not actionable under the PSLRA safe harbor
11
for forward-looking statements.
12
B.
Pricing and Discounts
13
The pricing allegations in the TAC look much like the pricing
14
allegations in the FAC and SAC.
15
falsely represented that their pricing was firm when they were
16
actually providing their customers with steep discounts.
17
of the matter was allegedly revealed on October 5 when Defendants
18
admitted that they had been providing discounts of up to 10 percent
19
to certain "strategic" and "magnet" customers.
20
allege that the discounts were even steeper than 10 percent,
21
asserting that a former regional director of sales states that she
22
regularly approved discounts of between 10 and 30 percent.
23
Plaintiffs allege that Defendants
The truth
Plaintiffs again
The Court previously rejected these allegations, concluding
24
that Defendants statements about pricing remained consistent
25
throughout the class period.
26
conceded that they might offer discounts to strategic customers.
27
Plaintiffs now argue that these statements, including Smith's
28
statement that Equinix might face pricing pressure, "indicate an
As early as July 28, Defendants
14
1
expectation of the future, and do[] not intimate that the pricing
2
pressure had already resulted in discounts . . . ."
3
Defendants respond that, when viewed in context, it is clear that
4
Smith was not discussing the conditions under which Equinix was
5
offering discounts.
6
Opp'n at 10.
Reply at 8-9.
The Court agrees with Defendants.
The full text of Smith's
7
July 28 statement concerning pricing competition, which is attached
8
to the TAC, shows that Smith was referring to discounts that had
9
been offered in the past, as well as discounts that might be
United States District Court
For the Northern District of California
10
offered in the future:
11
12
13
14
15
16
17
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20
21
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24
25
26
27
28
On the competitive front it does vary by metro, by
market. I would tell you in the US the statement you
made is we're seeing a little bit of that in the LA
market. And I think because of the demand -- or the
competitive supply that we see in Phoenix and Vegas
and also in the LA market, so there are certain
markets where certain pressure -- pricing pressure and
pricing behaviors are going to change, but that's not
terribly different than what we've experienced over
several quarters.
And so in certain markets we're
going to get some pricing pressure on certain deals.
If it's a strategic deal and it's a magnetic deal for
us, we'll get more aggressive. If it's not, we're
going to let it go and whether it goes to a
competitive retail or a wholesale business, so be it.
We're maintaining the discipline on the floors and
ceilings we have on our pricing and the sales force is
staying very, very disciplined on price. So I wouldn't
tell you it's in very many markets, it's in a couple
of places and on a couple of deals where we're seeing
this as you called it pricing behavior get a little
goofy.
In terms of deal sizes, as we open up a new phase or a
new IBX in particular, we tend to follow the same
formula that we've done in the past. We'll put -- if
we have an anchor that's magnetic like or that's at -that's going to get it jump started for us in the
right vertical, we will tend to do a larger deal
that's anchor like to get the IBX jump started. But in
general, when a deal gets to a certain size, call it
250, 300, 400 KW of power, call it a quarter to a half
a megawatt of power, it tends to get more crowded in
terms of competition. And if it is a strategic deal,
15
we might hang in there for a while. If it's not, we're
going to let it go to the wholesale or to the
competitors.
1
2
3
TAC Ex. D at 10.
While Smith's statements might be cryptic, they
4
are not false or misleading.
In the SAC Order, the Court also held that Plaintiffs' CW
5
6
allegations, which assert that Defendants routinely offered
7
discounts of 10 to 30 percent during the class period, could not
8
support a claim for securities fraud.
9
Plaintiffs had failed to plead loss causation because these
The Court reasoned that
United States District Court
For the Northern District of California
10
discounts were never disclosed to the market during the class
11
period.
12
deficiency.
13
have reacted to widespread discounting of which it was not aware.
14
Plaintiffs concede the point in their opposition brief, arguing
15
that Equinix stock dropped on October 6 because Equinix revised its
16
revenue guidance.
SAC Order at 18-19.
The TAC does not cure this
Plaintiffs still do not allege how the market could
Opp'n at 24-25.
The Court finds that Plaintiffs' pricing allegations cannot
17
18
support a claim for securities fraud. For these reasons and the
19
reasons set forth in Section IV.A, Plaintiffs Section 10(b) claim
20
is DISMISSED.3
21
C.
Plaintiffs' Section 20(a) Claim
22
Absent an underlying violation of the Exchange Act, there can
23
be no control person liability under Section 20(a).
Paracor Fin.,
24
Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1161 (9th Cir.
25
1996).
Because Plaintiffs have not pled a violation of Section
26
27
28
3
Defendants also argue that Plaintiffs have failed to plead
scienter. As Plaintiffs have failed to plead other necessary
elements of a Section 10(b) claim, the Court need not and does not
address this issue.
16
1
10(b), their control person claim is also DISMISSED.
See Shurkin
2
v. Golden State Vinters, Inc., 471 F. Supp. 2d 998, 1027 (N.D. Cal.
3
2006), aff'd 303 Fed. Appx. 431 (9th Cir. 2008).
4
D.
Leave to Amend
5
Plaintiffs have requested leave to amend to satisfy the
freely given when justice so requires.
8
However, Plaintiffs have already had three opportunities to amend
9
their pleading, and the TAC merely reasserts factual allegations
10
United States District Court
pleading requirements of the PSLRA.
7
For the Northern District of California
6
Leave to amend should be
and legal theories that have already been rejected by the Court.
11
The result is that Plaintiffs and the Court are now repeating
12
themselves.
13
that they could allege in a fourth amended complaint.
14
this matter is DISMISSED WITH PREJUDICE.
Fed. R. Civ. P. 15(a)(2).
Further, Plaintiffs have not identified any new facts
Accordingly,
15
16
17
IV.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants
18
Equinix, Inc., Stephen M. Smith, and Keith Taylor's Motion to
19
Dismiss.
20
and the International Brotherhood of Electrical Workers Local 697
21
Pension Fund's action is DISMISSED WITH PREJUDICE.
Plaintiffs Cement Masons & Plasterers Joint Pension Trust
22
23
IT IS SO ORDERED.
24
25
Dated: June 12, 2013
26
UNITED STATES DISTRICT JUDGE
27
28
17
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