Fink v. Sunrun Inc. et al

Filing 90

ORDER GRANTING MOTION TO DISMISS 73 . Signed by Judge Vince Chhabria on 7/19/2018. (vclc1S, COURT STAFF) (Filed on 7/19/2018)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

IN RE SUNRUN INC. SECURITIES
LITIGATION

Case No. 17-cv-02537-VC
ORDER GRANTING MOTION TO
DISMISS
Re: Dkt. Nos. 73, 74

The motion to dismiss is granted.
1. The latest iteration of the complaint does not adequately explain with specificity the
importance of the "megawatts booked" metric, the impact of the alleged decision to delay
reporting contract cancellations on the numbers reported for megawatts booked, or the
importance of that decision on the company's overall numbers. If the complaint is to have even a
chance of making it past the pleading stage, it must address these issues, because, given the
weakness of the allegations in the complaint regarding the defendants' actual knowledge of or
exposure to the alleged decision to delay reporting cancellations,1 it appears the only way the
plaintiff could overcome the PSLRA's heightened pleading standard is to adequately allege that
the decision was so important to the company or so prominent that the defendants could not

1

To give just one example of the complaint's lack of specificity about the defendants' knowledge
of the alleged decision, paragraph 33 of the operative complaint describes a spring 2015
conference call in which regional sales managers were allegedly told by unnamed "executives" to
delay reporting cancellations. The complaint does not attribute this information to anyone.
Although the complaint identifies five "confidential witnesses," and paragraph 33 is sandwiched
between several paragraphs describing statements by those witnesses, the complaint does not
attribute the allegations in paragraph 33 to any of those witnesses.

possibly have been unaware of it. See Curry v. Yelp Inc., 875 F.3d 1219, 1227-28 (9th Cir.
2017); In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1063-64 (9th Cir. 2014); S. Ferry LP, No.
2 v. Killinger, 542 F.3d 776, 784 (9th Cir. 2008); Berson v. Applied Signal Technology, Inc., 527
F.3d 982, 987-89 (9th Cir. 2008); cf. Cutler v. Kirchner, 696 F. App'x 809, 815 (9th Cir. 2017).
2. Nor does the complaint adequately state a claim based on the new theory of fraud it
articulates. Viewed in context, the company's statement about the potential effect of increased
cancellations on its performance appears to have been forward-looking. To the extent it is not
forward-looking, the statement did not clearly imply (as the plaintiff argues) that increased
cancellations had not yet affected the company's performance. Instead, this sentence simply
stated the obvious – if customer cancellations were to increase, the company's business would
suffer.
Moreover, the statement from the Wall Street Journal reporter (whom the complaint
identifies as "CW5") about the effect cancellations had already had on the company's
performance is not helpful to the plaintiff for at least two reasons: (i) the witness does not appear
to have had the personal knowledge of the company's internal operations to make this
information sufficiently reliable; and (ii) the witness was unable to identify the source whose
personal knowledge she was allegedly reporting to the plaintiff. See In re NVIDIA Corp. Sec.
Litig., No. 08-CV-04260-RS, 2010 WL 4117561, at *6 (N.D. Cal. Oct. 19, 2010) (citing Zucco
Partners, LLC v. Digimarc Corp., 552 F.3d 981, 996 (9th Cir. 2009)).
3. Dismissal is with leave to amend. This will almost certainly be the plaintiff's final
opportunity to amend the complaint. Any amended complaint must be filed within 28 days of
this order. In addition, because the latest iteration of the complaint includes so many incomplete
quotations (from documents, analysts, and other sources), the next iteration of the complaint
must attach as an exhibit the full text of any document quoted. The initial case management
conference is vacated and will be rescheduled if the next iteration of the complaint survives a
motion to dismiss. The defendants' request for judicial notice is granted.

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IT IS SO ORDERED.
Dated: July 19, 2018
______________________________________
VINCE CHHABRIA
United States District Judge

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