Full opinion text
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT PREJUDICE JENKINS, District Judge. Pending before the Court are: (1) Defendants Golden State Vintners, Inc. (“GSV” or “the Company”), Jeffrey J. Brown, Jeffrey B. O’Neill, John G. Kelle-her and O’Neill Acquisition Co., LLC’s (“the O’Neill Group” or “OAC”) Motion to Dismiss (Doc. # 40); and (2) Defendant Frank Uberoi’s Motion to Dismiss (Doc. # 39) Plaintiffs Amended Class Action Complaint for Violation of the Federal Securities Laws. Plaintiff Israel Shurkin has filed Oppositions to both Motions, to which Defendants filed Replies. For the following reasons, the Court GRANTS Defendants’ Motions and dismisses Plaintiffs Amended Complaint WITHOUT PREJUDICE. I. BACKGROUND A. The Parties Plaintiff brings this lawsuit on behalf of himself and as class representative for a purported class of all purchasers of GSV stock between December 23, 2003 and April 23, 2004, asserting claims against Defendants for violations of sections 10(b), 20A, and 20(a) of the Securities and Exchange Act of 1934 (“the Act”), and Rule 10-5 promulgated thereunder. Simply-stated, Plaintiff alleges that Defendants employed a scheme to take GSV private at an artificially deflated price by misleading investors about the Company, and when that scheme was derailed by The Wine Group’s (“TWG”) competing acquisition offer, concealed the ensuing bidding war for control of GSV. (Amend.ComplA 2.) Defendant Jeffrey Brown was chairman of GSV’s Board of Directors from April 1995, until TWG purchased GSV in July 2005. Defendant Jeffrey O’Neill was President, CEO, and a director of GSV prior to its sale to TWG. Defendant John Kelleher was GSV’s CFO and Secretary prior to its sale to TWG. Defendant O’Neill Group is a California limited liability company that Defendant O’Neill organized. The associates/members of the O’Neill Group include Mr. O’Neill, Paul Violich, Peter Sterling, Peter Mullin, Scott Selig-man, Doug Bratton, William Hallman, and Defendant Hank Uberoi. B. The Amended Complaint Plaintiffs Amended Complaint alleges as follows: 1. Factual Background Prior to July 2004, Golden State Vinters, Inc. (“GSV”) was a California-based vintner and supplier of bulk wines, wine processing and storage services, and case goods, doing business through out the country. (Id. ¶2.) Particularly, GSV sold alcoholic beverages and related products in five operating segments: bulk wines, case goods, wine grapes, brandy, and ready-to-drink (“RTD”) beverages. (Id. ¶ 26.) Based on its quarterly and annual SEC filings, GSV traditionally earned most of its income in the first half of its fiscal year, with 40 percent or more of its sales typically coming in the second quarter, which ended on December 31st. (Id. ¶ 28.) According to Plaintiff, since GSV went public in 1998, GSV “appeared to be mired in a consistent downward sales trend, as exemplified by the decline in its second quarter revenues from $53.6 million in 2Q00, to just $31.1 million by 2Q03.” (Id. ¶ 30.) Correspondingly, the price of GSV’s stock declined from its 1998 initial public offering price of $17 per share, to $2 per share by FY03. (Id. ¶ 31.) In 1999, GSV hired an investment bank, AH & H, to evaluate a potential merger or sale of the Company. (Id. ¶ 32.) But it did not identify any credible interest in GSV and failed to generate any firm proposals. (Id.) Although GSV received additional inquiries from prospective merger partners, GSV indicated that none of the inquiries resulted in any viable merger or acquisition proposals. (Id.) Thereafter, in late 2002, GSV began investigating the “full range of strategic alternatives available to the Company.” (Id. ¶ 33.) Toward this end, in January and February 2003, GSV received and evaluated memoranda from outside counsel detailing the available alternatives. (Id.) Later, on March 3 and 4, 2003, GSV’s Board, including Mr. O’Neill and Mr. Brown, met to discuss GSV’s strategic options. (Id.) According to the December 23 Proxy, in light of the financial burdens of maintaining GSV’s public company status, coupled with the continued challenges that GSV faced in the marketplace, the Board “generally concurred that a going private transaction might be a desirable strategic alternative to consider further, provided one could be proposed and effected at a price and on terms fair to all of [GSV’s] stockholders.” (Id.) The Board therefore instructed management to explore the feasibility and fairness of a going-private transaction. (Id.) GSV’s Board met again on June 9 and 10, 2003, and discussed the financial burdens and competitive disadvantage of being a public company. Based on such factors, including “the lack of interest in any third party in a merger or acquisition,” the Board requested that GSV’s management propose a going-private transaction. (Id. ¶ 34.) On July 15, 2003, GSV prepared a confidential term sheet outlining plans to take the Company private in a reverse 5,900 to 1 stock split, coupled with a $3.25 per share payment to holders of fractional interests. (Id. ¶ 35.) The following month, a special committee of outside directors hired AH & H to render a fairness opinion for the proposed going-private transaction. (Id. ¶ 39.) At this time, GSV’s management provided AH & H with certain nonpublic financial projections on which to base their analysis of the fairness of the $3.25 per share price, including projected FY04 earnings of $2.7 million, based on $1.7 million in second quarter earnings and $1.1 million in combined third and fourth quarter loss. (Id.) According to Plaintiff, “Defendants deliberately caused AH & H’s opinions to be prepared before [GSV]’s second quarter began, because they knew that any increased revenues earned during that quarter would require them to raise the acquisition price in the reverse split transaction above the $3.25 per share the Company could afford.” (Id.) Further, Plaintiff alleges that “Defendants did not thereafter ask AH & H to update its opinion, even after second quarter revenues began coming in at increased levels that rendered the financial projections on which AH & H had based its opinion inaccurate and unreliable.” (Id.) On September 9, 2003, AH & H delivered its fairness opinion to GSV, wherein it opined that the $3.25 per share going private transaction was fair to GSV’s shareholders. (Id. ¶ 40). In response, and upon the Special Committee’s recommendation, GSV’s Board approved the transaction. (Id.) The following day, on September 12, 2003, GSV issued a press release announcing the going-private transaction. (Id.) On that date, the $3.25 per share cash consideration represented a 56.3 percent premium over the $2.08 closing price of GSV’s common stock on September 11, 2003 — the last day of trading prior to the announcement. (Id. ¶ 41.) On September 15, 2003 — the first day of trading following the announcement — GSV’s stock price spiked, rising from $2.08 to $3.00 per share on greatly-increased trading volume. (Id. ¶ 42.) On November 15, 2003, GSV published its initial proxy statement for the reverse stock split transaction, wherein GSV explained the mechanics of the transaction, the reasons prompting the transaction, and why it was fair to the stockholders. (Id. ¶ 43.) In particular, the initial proxy stated that one of the reasons for the transaction was the lack of any viable alternatives, including the lack of any potential merger or acquisition partner with an interest in acquiring GSV, and the Company’s Class A shareholder’s lack of interest in increasing their investment in GSV. (Id.) GSV subsequently amended the proxy on December 2, 9, and 16, 2003, before it became effective on December 23, 2003. (Id. ¶ 44.) 2. Defendants’ Alleged Scheme To Defraud According to Plaintiff, “[fjrom mid-2002 through 2003, as efforts to privatize the Company escalated, [Djefendants repeatedly tried to deflate the value of its ready to drink (‘RTD’) business, including a $10 million high speed bottling line that had been purchased and installed at [GSV’s] Reedley facility in the fourth quarter of 2001.” (Id. ¶ 45.) Particularly, Plaintiff alleges that, based on statements from former GSV employees who worked in the RTD line, “O’Neill and other members of senior management deliberately ignored numerous opportunities to expand that business, and then intentionally overstated a write-down taken in 3Q03 based on the loss of two customers and the purported lack of new customers for the high-speed bottling line.” (Id. ¶ 46.) Plaintiff alleges that “Defendants used the loss of business from these two customers to write off $8 million of [GSVl’s investment in the bottling line in the third quarter of fiscal year 2003,” which, in turn, caused GSV to report a FY03 net loss of $4.3 million. (Id. ¶¶ 46-47.) Plaintiff alleges that, according to Confidential Witness 1 (“CW1”), the write-down was overstated, and did not accurately reflect the loss GSV incurred when it lost the business from its two largest customers because there were many additional customers eager to use the bottling line at the time the write-down was taken. (Id. ¶ 47.) Plaintiff also alleges that based on statements from Confidential Witness 2 (“CW2”), GSV failed to pursue leads for new customers and failed to pursue other profitable business opportunities. (Id. ¶¶ 48-51.) Additionally, Plaintiff alleges that Confidential Witness 5 (“CW5”) stated that, “based on the information s/he learned from working in the accounting department for more than five years, s/he came to believe that O’Neill and Kelleher ‘did things to deflate [GSV’s] stock price’ to support their buyout attempt, including by writing off the value of the RTD bottling line.” (Id. ¶ 52.) Particularly, Plaintiff alleges that CW5 said that despite the availability of other customers ready to provide business for the RTD line, GSV declined to pursue these business prospects. (Id.) Plaintiff also alleges that according to the confidential witnesses, GSV deliberately reduced the amount of business from its existing customers by slowing down production and lowering production numbers, even in the face of a high product demand. (Id. ¶ 53.) Plaintiff alleges that GSV also understated these production numbers in its report to the federal Bureau of Alcohol Tobacco and Firearms (“ATF”). He claims “[t]hrough these and similar manipulations spanning a period of 18 months or more, [Defendants succeeded in driving down the value of [GSV] and keeping it artificially low by the time they first sought to take [GSV] private, at a price of just $3.25 per share.” (Id. at ¶ 57.) a. Defendants’ Alleged Hiding of GSV’s 2Q04 Financial Turnaround and Subsequent Bidding War According to Plaintiff, just before Defendants were to implement their plan to privatize GSV at the artificially-deflated value, GSV’s “core” business, namely its bulk wine and case goods sales, suddenly increased. (Id. ¶ 58.) Further, Plaintiff alleges that because this increase in sales had occurred immediately after the crush season in September, and before the holiday season, it was apparent at the time the December 23 Proxy became effective that the financial projections on which AH & H had based its fairness opinion were outdated and unreliable. (Id.) Particularly, Plaintiff claims that “[j]ust by comparing the actual results for the first half of FY04 with the projected results for the second half of the year, it was abundantly clear that [GSV] was going to far exceed the projections for its financial performance on which the fairness of the $3.25 reverse split price was premised[.]” (Id. ¶ 61.) However, Plaintiff alleges that because Defendants knew that disclosing GSV’s improved performance would undermine their plan to take the Company private at $3.25 per share, Defendants deliberately failed to update their projections or the fairness opinion in the December Proxy. (Id. ¶ 64.) In this way, Plaintiff alleges that Defendants sought to conceal GSV’s financial turn-around from shareholders, and to further their scheme to take control of GSV at an artificially-reduced price. (Id.) However, according to Plaintiff, Defendants’ scheme was frustrated when TWG offered to buy GSV for $5 per share on January 7, 2004 — two weeks after the December 23 Proxy was issued. (Id. ¶ 65.) Plaintiff alleges that, in response, Defendants attempted to out-bid TWG. (Id.) 3. False and Misleading Statements During the Class Period Plaintiff alleges the following statements and/or omissions by Defendants were false and misleading. a. The December 23, 2003 Proxy Statement Plaintiff alleges that the December 23 Proxy was prepared by or under the direction of Mr. O’Neill and Mr. Kelleher, was signed by Mr. Brown on behalf of GSV, and became effective on December 23, 2003 — the first day of the Class Period. (Id. ¶ 66.) The December 23 Proxy described Defendants’ plans to privatize GSV through the reverse-split transaction, summarized the mechanics of the transaction, and advised investors that GSV recommended approval of the transaction. (Id.) According to Plaintiff, the December 23 Proxy was materially false and misleading at the time it was issued because: “(1) the value of [GSV]’s assets, as reflected therein, was deliberately understated as the result of the improper write-down of the Reedley [RTD] bottling line; (2) the December Proxy included 2Q04 financial projections that they knew were no longer valid; and (3) there was no basis for the opinion that the $3.25 per share price to be paid in the reverse split transaction was fair to unaffiliated shareholders, because that conclusion was based on the financial data and projections that [Defendants knew were outdated and invalid.” (Id. ¶ 67.) Plaintiff alleges that shareholders who sold shares following issuance of the December 23 Proxy based on the above information, were misled, and incurred damages as a result. b. January 20, 2004 Press Release On January 20, 2004, GSV issued a press release, wherein it indicated that it had indefinitely suspended the going-private proposal described in the December 30, 2003 Proxy Statement. (Id at ¶ 94.) The Press Release further stated that, “[t]he Company’s Board of Directors has determined that in light of recently improved business and market conditions it is in the best interest of stockholders to suspend the proposal in order to provide more time to fully evaluate current conditions and the potential implications for stockholder value.” (Id.) The Press Release caused a significant increase in the volume of trading activity of GSV’s common stock, with over 220,000 shares sold during the two trading days following the Press Release. Plaintiff alleges that the Press Release was false and misleading because “[t]he reverse slit was suspended as a result of The Wine Group’s offer and O’Neill’s competing bid, and not because business conditions had recently improved.” (Id. at ¶ 96.) Additionally, Plaintiff claims that the Press Release was false and misleading because it characterized the action as merely a “suspension” of the reverse split, and did not disclose Defendants’ true reason for the action, which was to allow the Company to analyze the undisclosed third-party offer, and to provide time for O’Neill to put together his competing bid and buy the undervalued shares from the unaffiliated investors. (Id at ¶ 97.) Plaintiff alleges that “[t]he statement in the [P]ress [R]elease that Citigroup Global Markets [ ] had ‘been retained to advise’ the Company in connection with its alternatives” was similarly misleading, because it failed to disclose that, in reality, Citigroup had been retained specifically to evaluate the third party offer for the Company, and weeks before the [Defendants seized on improved business conditions as the purported reason for suspending the reverse split transaction.” (Id.) c. The 2004 10-Q Report On February 18, 2004, GSV filed its Form 10-Q with the SEC. (Id. at ¶ 108.) The Form 10-Q reported that the value of GSV’s property, plant, and equipment had declined to $56,236 million by the end of the second quarter. (Id at ¶ 109.) The only statement in the Form 10-Q regarding the reverse split transaction or any pending merger or acquisition activities was: On September 12, 2003, we announced that our Board of Directors had approved a 1 for 5,900 reverse split of each of out shares of Class A and Class B common stock with the intention to take us private. On January 20, 2004, we announced that we had indefinitely suspended, until further notice, the going private proposal described in out definitive proxy statement dated December 30, 2003. As more fully described in the proxy, the proposal called for a 1 for 5,900 reverse split of the Company’s Class A and Class B common stock at a price of $3.25 per share. The Company’s Board of Directors determined that in light of recently improved business and market conditions it was in the best interest of stockholders to suspend the proposal in order to provide more time to fully evaluate current conditions and the potential implications for stockholder value. Citigroup Global Markets Inc. has been retained to advise the Company in connection with its alternatives. The Annual Meeting of the Stockholders was held on February 5, 2004 as planned. The stockholders approved the election of directors and the ratification of Deloitte & Touche LLP as the Company’s independent auditors. The vote on the reverse stock split was indefinitely suspended until further notice as described above. (Id. at ¶ 110.) Plaintiff alleges that “[t]he proposals made by and bidding war between The Wine Group and the O’Neill Group were not revealed in the 2Q04 Form 10-Q or any other prior or contemporaneous public disclosure of information.” (Id. at ¶ 111.) He claims that the February Form 10-Q was materially false and misleading at the time it was issued because it continued to under-report the value of GSV’s assets by reflecting the improper write-down of its high-speed bottling facility, it misled investors as to the true reasons for the suspension of the reverse split transaction, and because it misleadingly characterized it as a “suspension” rather than a “cancellation” of that transaction. (Id. at ¶ 112.) Additionally, Plaintiff alleges that the Form 10-Q misled investors because it failed to disclose the existence of the competing proposals by the O’Neill Group and TWG to acquire the Company, or that the bidding war had continued to escalate, inflating the value of the Company. (Id. at ¶ 113.) d. The February 24, 2004 and March 8, 2004 Press Releases On February 24, 2004, GSV issued a press release indicating that it had received two proposals to acquire the Company, including one from the O’Neill Group. (Id. at ¶ 116.) The February 24 Press Release also explained that GSV’s Board of Directors had been in discussions with the potential acquirers regarding the proposals, and was going to continue to evaluate the proposals, as well as other alternatives available to GSV. (Id.) Following the February 24 Press Release trading volumes in GSV stock rose, and the stock price increased from $4.75 per share to $5.27 per share, before closing at $4.90 per share. (Id. at ¶ 117.) Subsequently, on March 8, 2004, GSV issued a press release announcing that it had entered into a merger agreement with the O’Neill Group. (Id. at ¶ 118.) The Press Release stated that, under the terms of the agreement, each outstanding share of GSV’s Class A and Class B Common Stock was entitled to receive merger consideration of $6.85 per share. (Id.) Following the issuance of the March 8 Press Release, the price of GSV’s stock rose from $6.42 per share, to $6.76 per share. (Id. at ¶ 119.) Plaintiff alleges that both press releases are false and misleading because “[n]either the February 24, 2004 or March 8, 2004[P]ress [Rjeleases, nor any other contemporaneous public statements, fully disclosed the extent of the bidding war then being waged over control of the Company.” (Id. at ¶ 120.) Specifically, Plaintiff charges that “[t]he [R]eleases did not identify The Wine Group as the competitive bidder, did not disclose the dates or amounts of the prior bids, and did not otherwise reveal the potential for further price increases as a result of the hotly contested bidding war that had erupted between the Company’s management and one of its well-capitalized competitors.” (Id.) Instead, Plaintiff alleges that “based on the public statements through March 8, 2004, investors had been told only that: (i) plans to take the Company private for $3.25 per share had been put on hold on January 20, 2004 due to recently improved business conditions; (ii) two proposals to acquire the Company, including one from O’Neill, had been made around February 24, 2004; and (iii) the Company had agreed to O’Neill’s proposal, at a price of $6.85 per share.” (Id.) 4. The Bidding War Between TWG and OAC According to Plaintiff, on January 7, 2004, TWG — GSV’s competitor — offered to buy the Company for $5 per share. (Id. at ¶ 65). Plaintiff alleges that immediately after TWG’s made its offer, O’Neill formed OAC to outbid TWG for GSV. (Id. at ¶ 103) According to Plaintiff, two members of OAC — Uberoi and Bratton — began buying GSV shares on the open market that they had agreed to contribute to OAC to further OAC’s efforts to outbid TWG. (Id. at ¶ 104). On January 25, 2004 OAC offered to buy GSV for $6 per share, which it raised to $6.10 per share by February 24, 2004. (Id. at ¶ 118-115.) At the time it raised its offer to $6.10, OAC held 52.7% of the outstanding shares of GSV Class B common stock. (Id. at ¶ 115.) On March 8, 2004, GSV announced it entered into a merger agreement with OAC that would be completed in June 2004. (Id. at ¶ 118.) TWG responded with another offer of $7.25 per share. (Id. at ¶ 124.) Two days later, GSV formally notified OAC of the offer and on March 17, 2004, TWG disclosed in a press release that TWG was also attempting to acquire GSV. (Id.) At this time GSV notified OAC that the Company was prepared to terminate the OAC merger agreement in favor or TWG’s bid. (Id.) On March 22, 2004, OAC matched TWG’s $7.25 offer, and the next day GSV authorized the execution of a revised merger agreement with OAC. (Id. at ¶ 126.) On March 24, 2004, GSV issued a press release announcing that the Company would continue with the OAC merger and TWG issued a press release announcing it was withdrawing its bid. (Id. at ¶ 127-28.) On March 25, 2004, the price of GSV’s stock dropped from $7.40 per share to $7.17 per share, on an increased volume of 100,900 shares. (Id. at ¶ 129.) On April 4, 2004, TWG reemerged in the bidding process and offered GSV $7.75 per share. (Id. at ¶ 130.) On April 9, 2004, GSV issued a press release announcing that it had received an offer from TWG to acquire GSV for $7.75 per share. (Id. at ¶ 130.) Following the Release, the price of GSV stock rose from $7.21 per share, to $7.76 per share. (Id. at ¶ 131.) On April 13, 2004, OAC increased its offer to $7.80 per share. (Id. at ¶ 132.) GSV issued a Release indicating that it had amended the Merger Agreement with OAC to reflect the new offer. (Id. at ¶ 132.) On April 16, 2004, TWG increased its bid to $8.25 per share. (Id. at ¶ 133.) GSV issued a Press Release announcing that it had received a new buyout offer from TWG to acquire the Company at $8.25 per share, which the Board determined was superior to the Merger Agreement with OAC. (Id.) Plaintiff claims that on April 22, 2004, O’Neill gained control of the Reedley facilities, including the high-speed bottling fine “through a series of transaction and agreement involving [TWG], SBIC, Brown and others.” (Id. at ¶ 134.) According to Plaintiff, “[^Immediately after that agreement was reached, O’Neill caused the O’Neill group to drop out of the bidding war for [GSV], and [GSV] signed a merger agreement with [TWG].” (Id.) Following announcement of the agreement, the price of GSV stock fell from $8.45 per share — the Class Period high— on April 22, 2004, to close at $8.19 per share on April 23, 2004. (Id. at ¶ 135.) Thereafter, GSV’s stock continued to trade at between $8.15 and $8.25 per share until the merger with TWG was completed on July 14, 2004. (Id.) The merger closed on July 14, 2005, with the payment of $8.25 per share to GSV’s non-affiliated stockholders. (Id at ¶ 138.) C. Procedural History — Defendants’ First Motion to Dismiss Plaintiff filed his original Complaint on August 19, 2004. On August 10, 2005, the Court granted Defendants’ Motion to Dismiss the Complaint. Specifically, as to Plaintiffs First Cause of Action for violation of section 10(b) and Rule 10b-5, the Court found that Plaintiff failed to plead falsity with sufficient particularity or facts supporting a strong inference of scienter. With respect to the December 2003 Proxy, the Court found that Plaintiff had not sufficiently pled that the $3.25 per share opinion was objectively false or misleading. Particularly, the Court rejected Plaintiffs argument that certain later-revealed facts supported Plaintiffs falsity allegation. The Court further agreed with Defendants that Plaintiff had failed to plead facts raising a strong inference that any defendant acted with scienter in issuing the December Proxy. Accordingly, the Court held that Plaintiffs allegation that the fairness opinion was false and misleading was subject to dismissal under the Private Securities Litigation Reform Act. With respect to Plaintiffs allegation that Defendants’ stated reasons for the reverse stock split proposal (that the company would save more than $900,000 a year in reporting-related expenses) were misleading, the Court found Plaintiffs allegations as to falsity and scienter insufficient. Reviewing Plaintiffs Complaint, the Court found that he had failed to allege facts to support the allegation that, in December 2003, Defendants’ plan was to artificially deflate the value of GSV so that they could purchase the Company at a reduced price and benefit from the Company’s increased earnings. Next, the Court analyzed Plaintiffs allegation that Defendants’ failure to disclose the January 7, 2004 third-party offer from the TWG to buy GSV for a minimum $5 per share was false and misleading. Plaintiff alleged that the third-party offer thwarted Defendants’ attempts to take the Company private and that Defendants concealed the offer from the public so they could modify their plan to acquire the Company in a management-led buyout. Defendants argued that Plaintiff had not pled the falsity of this omission with sufficient detail. Particularly, they asserted that, absent allegations that Defendants owed Plaintiff a duty to disclose the offer, Defendants’ silence was not misleading. The Court agreed, finding that because Plaintiff did not allege that Defendants ever represented to the public that no merger or acquisition was imminent, Defendants had no duty to disclose the offer. Accordingly, the Court dismissed the claim to the extent it was premised on Defendants’ purported . failure to disclose the January 7, 2004 offer. Next, the Court evaluated the sufficiency of Plaintiff’s allegations regarding GSV’s January 20 Press Release. Plaintiff alleged that Defendants misled shareholders when they explained in the January 20 Press Release that the Company was suspending the going-private scheme due to “recently improved business and market conditions.” According to Plaintiff, Defendants actually suspended the reverse stock split scheme because their plans to take the Company private for $3.25 per share were being foiled by the third-party offer from the TWG and they wanted to delay the selling process long enough to ensure that OAC could come up with the premium offer. The Court found that Plaintiff failed to plead any facts that Defendants suggested in their January 20 Press Release that no merger or acquisition was imminent, or that any reason provided for the suspension of the going-private scheme was untrue. Accordingly, the Court held that Plaintiff failed to satisfy the pleading requirements of the PSLRA with respect to his allegation that the January 20 Press Release was designed to mislead. As to Plaintiffs Second Cause of Action for violation of § 20(a) of the Securities and Exchange Act, the Court held that because Plaintiff failed to plead an underlying 10(b) violation, his section 20(a) claim failed as a matter of law. Finally, the Court granted Defendants’ Motion with respect to Plaintiffs Third Cause of Action for insider trading in violation of section 20A against Defendant OAC. Plaintiff had alleged that OAC engaged in illegal insider trading during the class period because members of the OAC — Uberoi and Bratton — bought 176,-580 shares of GSV stock on the open market after TWG made its $5.00 per share offer, but before the public knew about the offer. The Court dismissed the claim on the ground that Plaintiff failed to adequately plead a predicate section 10(b) violation, and because Plaintiff had failed to plead the link between Defendant O’Neill and purchasers Uberoi and Bratton. The Court granted Plaintiffs request for leave to amend to cure these deficiencies. On September 23, 2005, Plaintiff filed the Amended Complaint. D. Claims in the Amended Complaint In his Amended Complaint, Plaintiff alleges that because GSV falsely reported information with respect to the Company’s financial condition, performance, growth, operations, and current and future business prospects, the price of GSV common stock was deflated during the class period. Consequently, Plaintiff asserts a Section 10(b) violation against Defendants GSV, Brown, O’Neill, and Kelleher; Sections 20A and 10(b) violations against Defendants O’Neill, Uberoi, and OAC; and Section 20(a) violation against Defendants Golden State, Brown, O’Neill, Kelleher, and the O’Neill Group. Defendants now move to dismiss the Amended Complaint on the ground that Plaintiff has failed to plead fraud with the required particularity or to state a claim upon which this Court may grant relief. II. LEGAL STANDARD A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of a claim. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Because the focus of a 12(b)(6) motion is on the legal sufficiency, rather than the substantive merits of a claim, the Court ordinarily limits its review to the face of the complaint. See Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir.2002). Generally, dismissal is proper only when the plaintiff has failed to assert a cognizable legal theory or failed to allege sufficient facts under a cognizable legal theory. See SmileCare Dental Group v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 782 (9th Cir.1996); Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.1988); Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984). Further, dismissal is appropriate only if it appears beyond a doubt that the plaintiff can prove no set of facts in support of a claim. See Abramson v. Brownstein, 897 F.2d 389, 391 (9th Cir.1990). In considering a 12(b)(6) motion, the Court accepts the plaintiffs material allegations in the complaint as true and construes them in the light most favorable to the plaintiff. See Shwarz v. United States, 234 F.3d 428, 435 (9th Cir.2000). III. DISCUSSION A. Requests for Judicial Notice As a threshold matter, the Court considers Defendants’ request for judicial notice. Federal Rule of Evidence 201 allows a court to take judicial notice of a fact “not subject to reasonable dispute in that it is ... capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Even where judicial notice is not appropriate, courts may also properly consider documents “whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiffs] pleadings.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994). Defendants request that the Court take judicial notice of various documents GSV filed with the SEC, including a Form 10-K/A for Fiscal Year Ended June 30, 2003; a Form 10-K/A for Fiscal Year Ended June 30, 200; a Form 10-K for Fiscal Year Ended June 30, 1999; and a Form 10-Q for quarterly period September 30, 2003. Defendants assert the documents are matters of public record whose contents are explicitly relied on in the Amended Complaint. Defendant Uberoi also requests the Court take judicial notice of several documents filed with the SEC, including Schedule 13D of O’Neill, Paul Violech, Uberoi, Sterling Management Trust, Peter Mullin, Scott Seligman, Doug Bratton and William Hallman, filed with the SEC on February 26, 2004; Amended Schedule 13D of O’Neill, Violich, Uberoid, Sterling Management Trust, Mullin, Seligman, Bratton and Hallman, filed with the SEC on March 17, 2004; and Schedule 13G of Uberoi, filed with the SEC on January 23, 2004. Plaintiff opposes both requests. Plaintiff objects insofar as Defendants seek to have the Court take judicial notice of the truth or accuracy of the documents. Plaintiff acknowledges that the Court may take judicial notice of documents upon which the complaint necessarily relies and the authenticity of which is not disputed and of documents generally known within the community whose accuracy cannot reasonably be questioned. Fed.R.Evid. 201(b); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir.2001). Nonetheless, Plaintiff argues the Court should not take judicial notice of some of the documents. “In a securities action, a court may take judicial notice of public filings when adjudicating a motion to dismiss.... ” In re Calpine Corp. Sec. Litig., 288 F.Supp.2d 1054, 1076 (N.D.Cal.2003). Accordingly, the Court takes judicial notice of these documents, not for the truth of the statements contained therein, but for the fact that these documents that were publicly-filed and for the fact that the statements made therein were made to the public on the dates specified. B. Plaintiffs First Cause of Action Against GSV, Brown, O’Neil, and Kelleher for Violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5 Section 10(b) of the Securities Exchange Act provides, in part, that it is unlawful “to use or employ in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” 15 U.S.C. § 78j(b). Relatedly, Rule 10b-5 makes it unlawful for any person to use interstate commerce (a) to employ any device, scheme, or artifice to defraud; (b) to make any untrue statement of material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R. § 240.10b-5. For a claim under § 10(b) and Rule 10b-5 to be actionable, a plaintiff must allege: (1) a misrepresentation or omission; (2) of material fact; (3) made with scienter; (4) on which the plaintiff justifiably relied; (5) that proximately caused the alleged loss. See Binder v. Gillespie, 184 F.3d 1059, 1063 (9th Cir.1999). Concomitantly, as indicated above, pursuant to Federal Rule 9(b), to survive dismissal, Plaintiff must plead both the falsity and scienter elements with particularity. Ronconi v. Larkin, 253 F.3d 423, 429 (9th Cir.2001). As the Ninth Circuit explained: Because falsity and scienter in private securities fraud cases are generally strongly inferred from the same set of facts, we have incorporated the dual pleading requirements of 15 U.S.C. §§ 78u-4(b)(1) and (b)(2) into a single inquiry. In considering whether a private securities fraud complaint can survive dismissal under Rule 12(b)(6), [the court] must determine whether ‘particular facts in the complaint, taken as a whole, raise a strong inference that defendants intentionally or [with] ‘deliberate recklessness’ made false or misleading statements to investors.’ Where pleadings are not sufficiently particularized or where, taken as a whole, they do not raise a ‘strong inference’ that misleading statements were knowingly or [with] deliberate recklessness made to investors, a private securities fraud complaint is properly dismissed under Rule 12(b)(6). Id. (citations and internal quotation marks omitted). Furthermore, in 1995, Congress enacted the PSLRA to provide “protections to discourage frivolous [securities] litigation.” H.R. Conf. Rep. No. 104-469, 104th Conf., 1st Sess. at 32 (1995) (Nov. 28, 1995). The PSLRA strengthened the pleading requirements of Rules 8(a) and 9(b). Actions based on allegations of material misstatements or omissions under the PSLRA must “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(l). The PSLRA also heightened the pleading threshold for causes of action brought under Section 10(b) and Rule 10b-5. Specifically, the PSLRA imposed strict requirements for pleading scienter. A complaint under the PSLRA must “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). The Ninth Circuit, in interpreting the PSLRA, has held that “a private securities plaintiff proceeding under the [PSLRA] must plead, in great detail, facts that constitute strong circumstantial evidence of deliberately reckless or conscious misconduct.” In re Silicon Graphics, Inc. Sec. Litig., 183 F.3d 970, 974 (9th Cir.1999). If the complaint does not satisfy the pleading requirements of the PSLRA, upon motion by the defendant, the court must dismiss the complaint. See 15 U.S.C. § 78u — 4(b)(1). In the Amended Complaint Plaintiff alleges four statements attributable to Defendants were false and misleading and that Defendants knew the statements were false or misleading at the time they were made. Plaintiff alleges: (1) in the December 23, 2003 Proxy Statement, Defendants materially understated the value of the RTD business based on false claims that it had no customers, Defendants materially understated financial projections, Defendants misstated that the $3.25 per share price for the reverse split price was fair to shareholders, and Defendants failed to update the proxy information; (2) in the January 20, 2004 Press Release, Defendants mislead investors about reasons for the suspension of the reverse stock split; (3) in the Second Quarter 2004 Form 10-Q Report, Defendants continued to mislead investors about GSV’s value by delaying disclosure of the bidding war between TWG and OAC; and (4) in the February 24, 2004 and March 8, 2004 Press Releases, Defendants continued to mislead investors about GSV’s value by failing to disclose material facts relating to TWG and OAC’s competing bids. The Court will examine each of these in turn. 1. December 23, 2003 Proxy Statement As in Plaintiffs initial Complaint, in the Amended Complaint Plaintiff alleges that GSV’s December 23 Proxy Statement undervalued GSV’s financial outlook by falsely assuring shareholders that $3.25 per share was a fair price in the going-private transaction. Plaintiff alleges that when the proxy was disseminated, Defendants knew the GSV was on track to earn revenues that exceeded its annual projected earnings. Plaintiff also alleges Defendants engaged in a write-down scheme of the RTD bottling line which caused AH & H to underestimate GSV’s potential revenues and value. Consequently, Plaintiffs assert that Defendants misrepresented to shareholders that $3.25 per share was a fair buy-out price with respect to the going private transaction. In their Motion, Defendants argue that Plaintiffs allegations with respect to the December Proxy are insufficient to meet the pleading requirement of the PLSRA. Defendants also assert Plaintiffs allegations do not raise a strong inference of scienter. The Court agrees on both grounds. a. Falsity of the Fairness Opinion A representation in a proxy statement that a proposed plan of action is “fair, from a financial point of view, to the shareholders” is a statement of opinion. In re McKesson HBOC Sec. Litig., 126 F.Supp.2d 1248, 1265 (N.D.Cal.2000). To plead the falsity of a statement of opinion, a plaintiff must “plead with particularity why the statement of opinion was objectively and subjectively false.” Id. A fairness opinion is “objectively false” if the subject matter of the opinion is not, in fact, fair, and is “subjectively false” if the speaker does not, in fact, believe the subject matter of the opinion to be fair. Id. As detailed above, Plaintiff alleges that the December 23, 2003 Proxy undervalued GSV’s existing and prospective financial condition by falsely assuring investors that $3.25 per share was a fair price in the going-private scheme based on financial projections and a fairness opinion that Defendants purportedly knew were outdated and unreliable (AC at ¶¶ 58-89.) According to Plaintiff, by the time the Proxy became effective, Defendants were aware that GSV was on track to report revenue and earnings for the second quarter and fiscal year that substantially exceeded the revenue and earnings projected in the Proxy. (AC ¶¶ 59-64, 74-80.) Thus, Plaintiff argues that “[bjecause [Defendants knew the $3.25/share fairness opinion and the financial projections on which it was based both lacked a reasonable basis at the time the Proxy was issued, the Proxy was both objectively and subjectively false.” (Opp. at 9.) In support of its claim, Plaintiff proffers the following allegations. Plaintiff alleges that the majority of GSV’s revenues came from bulk wine and case goods sales, the majority of which took place in the second quarter. Based in part on statements from CW3 — an inventory controller and distribution coordinator in GSV’s RTD division — Plaintiff alleges that GSV typically increased its second quarter case goods production so it could ship products by the end of October in anticipation of increased holiday sales. (AC ¶ 29.) Because GSV’s second quarter production was font-loaded, Plaintiff alleges that “it is reasonable to infer that most of [GSV’s] 2Q04 sales had already taken place and product had been shipped well before December 23, 2003, when the December Proxy became effective.” (AC ¶ 77.) Plaintiff thus advances that “it is plain that the dramatic increase in second quarter sales occurred long before the Proxy was issued on December 23.” (Opp. at 7.) In the same vein, Plaintiff alleges that, in light of the dramatic increase in second quarter revenues, the financial projections in the Proxy were unreliable. According to Plaintiff, by the end of 2Q04, GSV had earned $6.1 million, which was more than double the $2.7 million that the December Proxy stated would be earned in the entire fiscal year. (AC ¶ 78.) Plaintiff alleges that, although GSV had experiences losses in 3Q03 and 4Q02, those losses were the result of one-time events, not recurring seasonal losses. (AC ¶ 79.) Thus, Plaintiff claims that these losses did not provide an accurate prediction of GSV’s anticipated results from operations in the second half of 2004. (Id.) Relying on the foregoing allegations, Plaintiff asserts that “it was misleading for [GSV’s] Proxy to publish the out-of-date financial projections, or rely on AH & H’s fairness opinion that $3.25/share was a fair price that was in the best interest of [GSV’s] unaffiliated shareholders, knowing it was based on out-of-date financial projections.” Further, Plaintiff argues that because the fairness opinion and the Proxy indicated that AH & H based its assessment on currently available estimates and judgments of future financial projections, “the logical conclusion of a reader of the Proxy would be that the fairness opinion was not updated after September 11 because nothing had changed and no update was necessary.” (Opp. at 8.) Plaintiff charges that, in failing to update the financial projections or the fairness opinion, or otherwise alert investors that the information was outdated and incorrect, Defendants acted fraudulently. (Id.) As in their prior Motion to Dismiss, Defendants again attack the sufficiency of Plaintiffs allegations, arguing that Plaintiff has failed to plead facts to support his allegations that the statement in the Proxy that the $3.25 per share was a fair price for shareholders was false. For the reasons that follow, the Court agrees with Defendants. To a large extent, Plaintiffs allegations in his Amended Complaint with respect to the falsity of the fairness statement in the Proxy suffer from the same deficiencies as those in his initial Complaint. First, the fact that GSV “ramped up” production in the initial half of the second quarter so that the bulk of its earnings occurred during this time does not give rise to a strong inference that the statement in the Proxy that $3.25 was a fair price was false. Particularly, as Defendants note, Plaintiffs allegation that, during his employment CW3 witnessed GSV ramp up production, does not support the inference that GSV also increased production during the second quarter of FY04. In fact, Plaintiff concedes that CW3’s employment ended before the Class Period and thus, CW3 lacks any personal knowledge as to the GSV’s production activity during the 2Q04 that is at issue here. Second, although GSV’s second quarter earnings exceeded the initial projections, as Defendants point out, GSV’s first half FY04 did not conclude until December 31, 2003, and GSV’s actual second quarter results were not published until GSV filed its February 18, 2004 10-Q. Thus, at the time AH & H issued its fairness opinion and at the time GSV issued its proxy, GSV’s second quarter performance had not concluded nor had its precise earnings been finalized. Moreover, as Plaintiff recognizes, GSV’s 1Q04 earnings were lower than GSV anticipated. Given the unavailability of finalized second quarter figures, and the lower than expected earnings in the preceding first quarter, the Court finds that Plaintiffs allegations that the initial indications of higher than expected profits in the second quarter are insufficient to support Plaintiffs claim that the fairness statement in the Proxy was false or misleading. b. Improper Write-Down of the RTD Bottling Line In his Amended Complaint, Plaintiff alleges that the December Proxy materially understated the value of GSV’s property, plant, and equipment because it was based on an inflated $8 million write-down of the Reedley bottling line in 3Q03. Plaintiff alleges that “the write-down was not caused by [GSV’s] claimed ‘inability to locate new customers,’ but was instead part of [Defendants’ overall scheme to defraud the Company’s unaffiliated shareholders by artificially devaluing [GSV] and its assets and diminishing its actual and anticipated financial projections.” (AC ¶71.) According to Plaintiff, former GSV insiders have stated that Defendants “deliberately ignored or sabotaged efforts to enter into new contracts with new customers who expressed strong interest in using the RTD bottling line, even in the face of repeated inquiries from [GSV’s] own sales personnel.” (Id.) Additionally, Plaintiff alleges that “Defendants misled investors by undervaluing the value of its assets in violation of generally accepted accounting principles,” and “materially understated its 3Q03 and FY03 financial performance, as well as its value under the comparable company, liquidation, and discounted cash flow analyses performed by AH & H.” (Id.) Further, the Amended Complaint alleges that “[t]he December Proxy, and the FY03 Form 10-K incorporated therein by reference, also misrepresented the business prospects for the Reedley bottling line by falsely claiming that there was insufficient business to support the investment the Company had made in the line when, in fact, [Defendants had deliberately ignored and refused to follow up on numerous inquiries from potential customers that would have allowed them to expand operations on the line[.]” (AC ¶ 72.) Plaintiff claims the CW statements support these allegations, in that they indicate that “O’Neill and other members of the senior management deliberately ignored numerous opportunities to expand [the RTD business], and then intentionally overstated a write-down taken in 3Q03 based on the loss of two customers and the purported lack of new customers for the high-speed bottling line.” (AC ¶ 46.) The Court has reviewed the allegations based on Plaintiffs CW accounts and agrees with Defendants that the allegations lack particularized detail to support each witness’s basis of knowledge. At most CW1, 2, 3, 5, and 6 offer their own assessment of the business decisions that GSV’s directors made with respect to the RTD line. As Defendants correctly point out, none of the CWs indicate that he/she had first-hand knowledge about Defendants’ decisions regarding pursuing potential business ventures and customers. Further, while the Confidential Witnesses may speculate that Defendants’ underlying objective was to decrease the value GSV’s shares by inhibiting the performance of the RTD line, none of the witnesses indicates that they were instructed by any Defendant to take such action or that any Defendant revealed such a motive. The fact that the CWs may be critical of Defendants’ business decisions with respect to the RTD line based on their appraisal of the write-down and GSV’s attempt to expand its customer base do not provide the level of particularity that would support an inference that Defendants deliberately understated the value of GSV’ assets by fraudulently writing-down the value of the RTD line. The Court therefore finds that Plaintiff has failed to meet the heightened pleading requirement with respect to this statement. c. Scienter Defendants contend that the Plaintiff has not raised a strong inference of scienter on behalf of any defendant. Defendants also assert that none of the CWs, whose accounts Plaintiff relies onto to establish the strong inference, have ever spoken directly to O’Neill or Kelleher. Plaintiffs counter that the aforementioned facts demonstrate a strong inference of scienter because they indicate GSV had undergone a substantial financial turnaround prior to the issuance of the December 23 Proxy Statement, which Defendants purposefully ignored. The PSLRA requires securities fraud plaintiffs to plead “in great detail” that each defendant participated in making false or misleading statements of present or historical fact with either (1) actual knowledge that a statement being made is false, or (2) intentional recklessness to the truth of a statement at the time it is made. In re Silicon Graphics, 183 F.3d at 977. Such plaintiffs must allege facts that give rise to a “strong inference” of at least deliberate recklessness. Id. at 974. To satisfy the “strong inference” requirement, the Complaint must contain particularized “ ‘allegations of specific “contemporaneous statements or conditions” that demonstrate the intentional or the deliberately reckless false or misleading nature of the statements when made.’ ” In re Read-Rite Corp. Sec. Litig., 335 F.3d 843, 846 (9th Cir.2003) (citing Ronconi, 253 F.3d at 432). Even assuming, arguendo, Plaintiffs pled falsity with sufficient particularity, Plaintiff has not pled facts that give rise to a strong inference of scienter. Although Plaintiff asserts in conclusory fashion that Defendants knew the $3.25 per share price in the December 23 Proxy was incorrect because of GSV’s alleged financial turnaround, Plaintiff has not pled specific statements or conditions that demonstrate Defendants knew the information provided in the December 23 Proxy was false or that Defendants deliberately disregarded the truth about GSV’s financial status when the December Proxy was released. Furthermore, as for the CW accounts, at best Plaintiff makes allegations that several GSV employees disagreed with the business decisions and financial reports of GSV upper management. The AC does not establish that the three CWs who were still working at GSV when Defendants decided on a reverse stock split and later released the December 23 Proxy Statement had any direct contact whatsoever with Defendants. Thus, not only do these allegations fail to establish that GSV was undergoing a substantial turn-around prior to or at the time the December Proxy Statement was released, they also fail to establish that statements in the December 23 Proxy Statement were false or that the officers who provided AH & H with information pertaining to the RTD write-down or the December Proxy Statement knew it to be false or were deliberately reckless in providing the information. See, e.g., In re Cornerstone Propane Partners, L.P. Sec. Litig., 355 F.Supp.2d at 1084 (N.D.Cal.2005). 2. January 20, 2004 Press Release Next, Defendants urge the Court to dismiss any claim based on the January 20 Press Release. In the Amended Complaint, Plaintiff alleges that the January 20 Press Release was false and misleading because: (1) “it characterized the action as a mere ‘suspension’ of the reverse split”; (2) “failed to disclose [Defendants’ true reasons for the action: to provide time for the Company to analyze the undisclosed third party offer and to provide time for O’Neill to put together his competing bid and snap up the undervalued shares in the Company from unsuspecting unaffiliated investors”; and (3) “[t]he statement in the press release that Citigroup Global Markets Inc. [] had ‘been retained to advise the Company in connection with its alternatives’ was similarly misleading because it failed to disclose that, in reality, Citigroup had been retained specifically to evaluate the third party offer for the Company, and weeks before [Defendants seized on improved business conditions as the purported reason for suspending the reverse split transaction.” In their Motion, Defendants assert that Plaintiff had failed to adequately allege the falsity of these statements or scienter. a. Falsity Defendants attack Plaintiff’s allegations on two bases. First, they argue that the January 20 Press Release “did not merely advise investors that business conditions had improved; it expressly told investors it was considering strategic alternatives other than the going private transaction that had been suspended.” Morever, the Press Release expressly indicated that GSV had hired an investment banker “to advise the Company in connection with its alternatives.” Thus, Defendants argue that the Press Release adequately apprised the public of the status of the going-private transaction and the reasons for its suspension. Defendants therefore assert that Plaintiff has no basis to argue that a more complete disclosure was needed to prevent the December Proxy from being misleading. They further argue that “the statement in the December 23 proxy — that one reason for the reverse split transaction was that there had been no expression of interest in acquiring the [C]ompany — became irrelevant when GSV announced in the January 20 Press Release that the reverse split transaction was not going forward and that other alternatives, which might be more favorable to stockholders in light of recently improved business and market conditions, were being considered with the assistance of an investment banker.” Second, Defendants argue that, as the Court held in its prior Order, GSV did not have any duty to disclose the third party offers. Specifically, they argue that the January 20 Press Release did not state or intimate that no merger was imminent or that GSV had received no expressions of interest as of January 20. Nor did the Release state that conditions were the same as those discussed in the December 23 Proxy. Defendants also argue that Press Release put the public on notice that GSV was considering other alternatives to the reverse stock split transaction. Plaintiff responds that “[b]y affirmatively setting forth purported reasons for the indefinite suspension of the reverse split, [Defendants had a duty to make their disclosure complete — they could not mislead investors into believing that the reverse split was tabled merely as a result of changing business conditions when, in fact, the transaction had been cancelled so that [GSV] could evaluate the two competing offers to take control of the Company, including one led by management.” (Opposition. at 18.) With respect to the Court’s prior holding, Plaintiff argues that he has cured the defects that formed the basis of the Court’s dismissal. Particularly, Plaintiff states that he has alleged that Defendants repeatedly suggested to the public that no merger or acquisition was in the works because there was no interest in GSV from any potential merger or acquisition partner or any existing members of management or Class A shareholders, and cites ¶¶ 32-34, 43-44, and 98 of the Amended Complaint in support. “To be actionable under the securities laws, an omission must be misleading.” Brody v. Transitional Hospitals Corp., 280 F.3d 997, 1006 (9th Cir.2002). “Silence, absent a duty to disclose, is not misleading under Rule 10b-5.” Basic, Inc. v. Levinson, 485 U.S. 224, 239 n. 17, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). As the Court noted in its prior Order, “[a]n omission is not misleading unless it ‘affirmatively creates an impression of a state of affairs that differs in a material way from the one that actually exists.’ ” (Order, at 18:7-9) (quoting Brody, 280 F.3d at 1006). In Brody, the defendant THC’s board announced its plan to buy back $25 million worth of shares from stockholders in August 1996. Id., at 998-99. In February 1997, a third party, Vencor, subsequently made a written offer to the THC board to purchase THC at a greater price per share. Id. at 999. In March 1997, THC issued a press release describing the progress and extent of its stock repurchase program, but the press release did not mention Vencor’s purchase offer or any other company’s interest in purchasing THC. Id. While the plaintiffs argued that the THC misled investors by not disclosing Vencor’s purchase offer, the Ninth Circuit found that the public was not misled because THC never conveyed to the public that a merger or acquisition would not occur. Id. at 1006-07. Similarly, in the instant case, although Defendants did not disclose that GSV had received competing merger bids in the January 20 Press Release, Defendants’ statements regarding the status of the going private transaction did not mislead investors because Defendants never indicated that a merger or acquisition would not occur. Thus, Defendants did not have a duty to disclose the expressions of interest, and their failure to do so was not misleading. Plaintiff, however, argues that this case is distinguishable from Brody because the Amended Complaint alleges that “[Defendants repeatedly ‘suggested to the public that no merger or acquisition was in the works’ because there was absolutely no interest in the Company from any potential merger or acquisition partner or any existing members of management or Class A shareholders” in the December Proxy. (Opp. at 19, citing AC ¶¶ 32-34, 43-44, 98). Because Defendants did not cancel the December Proxy in light of the new possible merger developments, the December Proxy Statement remained effective, and, as such, Defendants had a duty to correct or make comple