depending upon particular facts and circumstances,” misleading statements can include “[m]aterial which directly or indirectly impugns character, integrity or personal reputation, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation.” 17 CFR 240.14a-9(c) The Supreme Court has held that statements of belief or opinion run afoul of the Act only if the statement is both a “misstatement of the psychological fact of the speaker’s belief in what he says” and “mislead about the stated subject matter.”

The SAC Does Not Allege That Any of the Omissions Made Any Statement in the Proxy False or Misleading Section 14(a) and Rule 14a-9 prohibit “the solicitation of a proxy by a statement that contains either (1) a false or misleading declaration of material fact, or (2) an omission of material fact that makes any portion of the statement misleading.” Desaigoudar, 223 F.3d at 1022 (citing 15 U.S.C. § 78j(b); 17 C.F.R. § 240.14a-9). Where a claim is based on information allegedly omitted from a proxy statement, the complaint must plead facts showing either that disclosure of that particular information was specifically required by SEC regulations or that the omission “makes other statements in the proxy statement materially false or misleading.”

Plaintiffs allege violations of Section 14(a) of the Exchange Act and SEC Rule 14a-9. 15 U.S.C. § 78n(a); 17 C.F.R. § 240.14a-9(a). “To state a claim under section 14(a), a plaintiff must allege that: “(1) a proxy statement contained a material misrepresentation or omission, which (2) caused plaintiffs injury, and (3) that the proxy solicitation itself, rather than the particular defect in the solicitation materials, was an essential link in the accomplishment of the transaction.”

DCML’S CLAIM UNDER SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SEC RULE 14a-9 IS FRIVOLOUS. DCML’s first claim is that the Proxy Statement issued on May 30, 2008, and the Proxy Statement Supplement issued on June 18, 2008, violate Section 14(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(a),4 and SEC Rule 14a-9(a), 17 C.F.R. § 240.14a-9(a).5 (FAC ¶¶ 48–60.) This claim is frivolous because it fails to comply with three well-established principles governing Section 14(a) claims.

A-5 15 U.S.C. § 80a-20............................................................................................. A-8 Securities and Exchange Commission Rules Rule 14a-9 under the Securities Exchange Act of 1934, as amended, 17 C.F.R. § 240.14a-9.................................................................................. A-9 Rule 20a-1 under the Investment Company Act of 1940, as amended, 17 C.F.R. § 270.20a-1 ................................................................................

at 606; Henneberry v. Sumitomo Corp. of America, 415 F. Supp. 2d 423, 464-65 (S.D.N.Y. 2006). Similarly, Rule 9(b) also applies to a claim brought under Section 14(a) of the Securities Exchange Act and Rule 14a-9, 17 C.F.R § 240.14a-9, promulgated thereunder. See In re Marsh & McLennan Companies, Inc.

Rule 14a-9, promulgated pursuant to §14(a) of the Securities Exchange Act of 1934, provides that no proxy statement shall contain “any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading.” 17 C.F.R. §240.14a-9. Specifically, the Company’s proxy statements filed May 4, 2012, April 30, 2013, and April 29, 2014 violated §14(a) and Rule 14a-9 because they omitted material information regarding the wrongdoing of defendants and included by reference materially false and misleading financial statements.

Rule 14a-9 prohibits any “solicitation” that is “made by means of any proxy statement, form of proxy, notice of meeting or other communication,” and which contains false or materially misleading statements. See 17 C.F.R. § 240.14a-9 (emphasis added). Because “Section 14(a) prohibits the solicitation of shareholder proxies in violation of the Case 1:16-cv-01073-LY Document 42 Filed 02/27/17 Page 15 of 28 10 rules of the SEC,” “[i]n order to state a claim under Section 14(a) and Rule 14a-9, [a plaintiff] must at least allege that the defendants actually solicited proxies.”

Defendants also argue that Plaintiffs cannot prevail on their Section 14(a) and Rule 14a-9 disclosure claim. Opp. 37-38; 15 U.S.C. § 78n(a); 17 C.F.R. § 240.14a-9. Notably, Defendants do not even mention the Ninth Circuit’s alternative “serious questions” test—and cannot credibly dispute that serious questions plainly exist.

47 “[G]eneralized pleas for uniformity” are never a 47 In addition to Section 17(a)(3), several other provisions of the Securities Act do not require a plaintiff to prove scienter: Section 11, 15 U.S.C. § 77k (materially false or misleading registration statement); Herman & MacLean v. Huddleston, 459 U.S. 375, 381-82 (1983), Section 12(a)(2), 15 U.S.C. § 77l(a)(2) (materially false or misleading prospectus or oral communication); In re Morgan Stanley Information Fund Secs. Litig., 592 F.3d 347, 359-60 (2d Cir. 2010), and Section 17(a)(2), 15 U.S.C. § 77q(a)(2) (material misstatement or omission to obtain money or property); Aaron, 446 U.S. at 696. SEC Rule 14a-9, promulgated under Section 14 of the Securities Exchange Act, likewise does not require a plaintiff to prove scienter. 17 C.F.R. § 240.14a-9 (materially false or misleading proxy statement); Gerstle v. Gamble-Skogmo, Inc., 478 F.2d 1281, 1298-1301 (2d Cir. 1973) (Friendly, J.). Defendants suggest (Br. at 36) that Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976), and Sanders v. John Nuveen & Co., 554 F.2d 790 (7th Cir. 1977), support the supposedly settled proposition that federal law requires scienter, but they are (continued on next page) 97 sufficient basis to displace state law, Atherton v. FDIC, 519 U.S. 213, 220 (1997) (quotation marks omitted), and such pleas are only more unavailing when, as in this area, federal law itself does not follow any single uniform rule.