 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued February 10, 2015               Decided June 23, 2015

                         No. 14-7017

IN RE: HARMAN INTERNATIONAL INDUSTRIES, INC. SECURITIES
                     LITIGATION,

   ARKANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM,
 INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
                      SITUATED,
                     APPELLANT

   CHEOLAN KIM AND CITY OF BOCA RATON GENERAL
 EMPLOYEES PENSION PLAN, ON BEHALF OF ITSELF AND ALL
      OTHERS SIMILARLY SITUATED - (CA-07-2175),
                     APPELLEES

                              v.

     HARMAN INTERNATIONAL INDUSTRIES INC., ET AL.,
                    APPELLEES


        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:07-cv-01757)


     Steven J. Toll argued the cause for appellant. With him on
the briefs was Daniel S. Sommers.
                                2

     Traci L. Lovitt argued the cause for appellees. With her on
the brief were Thomas F. Cullen Jr., Robert C. Micheletto, Kelly
A. Carrero, and Ian J. Samuel.

    Before: HENDERSON, ROGERS and PILLARD, Circuit Judges.

    Opinion for the Court by Circuit Judge ROGERS.

     ROGERS, Circuit Judge: Between April 2007 and February
2008, Harman International Industries, Inc., and three of its
officers are alleged to have knowingly and recklessly propped
up the Company’s stock price by making materially false and
misleading statements about the Company’s financial condition
and by failing to disclose related material adverse facts, in
violation of Section 10(b) of the Securities Exchange Act of
1934 (“the Act”), 15 U.S.C. § 78j(b); Rule 10b-5, 17 C.F.R.
§ 240.10b-5; and Section 20(a) of the Act, 15 U.S.C. § 78t(a).
This is alleged to have occurred during a period when the
Company was being considered for acquisition. Only after the
acquisition did not go forward, it is alleged, did the Company
disclose information that would have been important to a
reasonable investor. The district court dismissed the complaint
for failure to state a claim.

     On appeal, the only question is whether the complaint stated
a plausible claim of securities fraud with respect to three alleged
statements that focus primarily on the status of the Company’s
personal navigational device (“PND”) products. Consistent with
the standard to be applied in considering a motion to dismiss for
failure to state a claim, we necessarily offer no view on the
merits of the allegations. The district court concluded two of the
alleged statements fell within the statutory safe harbor for
forward-looking statements accompanied by meaningful
cautionary language and the third statement was “puffery” and
thus inactionable. Upon de novo review, we hold that although
                                3

the challenge to the forward-looking nature of two statements
was forfeited, the complaint plausibly alleges that those
statements were not entitled to safe harbor protection because
the accompanying cautionary statements were misleading
insofar as they failed to account for historical facts about PNDs
that would have been important to a reasonable investor. We
also hold that the third statement, in the Company’s annual
report, is plausibly understood, in the alleged circumstances, as
a specific statement about its recent financial performance and
not mere “puffery.” Because loss causation was adequately
pleaded and the Section 20(a) claims alleged against the
individual defendants are plausible, we reverse the dismissal of
the complaint as to these three statements and remand the case
to the district court for further proceedings.

                                I.

     Section 10(b) of the Securities Exchange Act of 1934, as
amended, provides that it shall be unlawful “[t]o use or employ,
in connection with the purchase or sale of any security registered
on a national securities exchange . . . any manipulative or
deceptive device or contrivance in contravention of such rules
and regulations as the [Securities and Exchange] Commission
may prescribe as necessary or appropriate in the public interest
or for the protection of investors.” 15 U.S.C. § 78j(b). SEC
Rule 10b-5 closely tracks Section 10(b), providing that, “in
connection with the purchase or sale of any security,” it is
unlawful:

         (a) To employ any device, scheme, or artifice to
         defraud,
         (b) To make any untrue statement of a 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
                                4

         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[.]

17 C.F.R. § 240.10b-5. The Act, as amended, provides a safe
harbor from liability for forward-looking statements that are
“identified as . . . forward-looking” and “accompanied by
meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those in
the forward-looking statement.” 15 U.S.C. § 78u-5(c)(1)(A)(i)
(emphases added); see Private Securities Litigation Reform Act
of 1995, Pub. L. 104-67, 109 Stat. 737 (1995). Section 20(a)
subjects to liability “[e]very person who, directly or indirectly,
controls any person liable under” another provision of the Act
or implementing rules. 15 U.S.C. § 78t(a).

     In 2008, when the consolidated class action complaint was
filed, Harman International Industries, Inc., was “a leading
manufacturer of high-quality, high fidelity audio products and
electronic systems for the automotive, consumer, and
professional markets in the Americas, Europe, and Asia.”
Compl. ¶ 2. Its products included information and entertainment
systems for automobiles. According to the complaint, on April
26, 2007, the Company announced its potential acquisition by an
entity formed by Kohlberg Kravis Roberts and an affiliate of
Goldman Sachs, two prominent private equity firms. The same
day, and on two subsequent occasions at issue, the Company,
through its chief executive officers and chief financial officer
and in its FY 2007 Annual Report, made statements regarding
past and forecasted sales of its products, including PNDs. The
price of the Company’s stock rose markedly following the April
2007 merger announcement and held steady through September
2007. When the Company announced in September 2007 that
the acquisition plans had been abandoned, the Company’s share
                                5

price fell by more than 24 percent. It fell again in January 2008
when the Company lowered projected earnings per share, noting
among other things “a major shift” in its PND business. Id.
¶ 109. It continued to fall in February 2008, when the Company
announced the financial results for the second quarter of FY
2008, noting PND sales had fallen by $29 million compared to
the same period in the previous year, in part due to sale of older
products at substantial discounts. Id. ¶ 113.

     The lead plaintiff, Arkansas Public Employees’ Retirement
System (“Appellant”), a purchaser of common stock between
April 26, 2007, and February 5, 2008, sued the Company and
three of its officers for securities fraud. Count one of the
complaint alleges that the Company violated Section 10(b) of
the Act and Rule 10b-5 when its chief executive officers and
chief financial officer “knowingly or recklessly propped up [the
Company’s] stock price by issuing materially false and
misleading disclosures regarding the Company’s financial
condition in fiscal 2007 (ending June 30, 2007) and in fiscal
2008 (beginning July 1, 2007).” Id. ¶ 3. They, additionally,
“knowingly or recklessly failed to disclose material adverse
facts about the [c]ompany’s financial condition.” Id. Count two
alleges that three officers were individually liable under Section
20(a) of the Act for the Company’s Section 10(b) and Rule 10b-
5 violations “[b]y virtue of their positions as controlling
persons.” Id. ¶ 186. The complaint identified a number of
allegedly actionable false and misleading statements. Only three
statements are at issue on appeal, and they relate primarily to the
Company’s automotive PND line of business. We quote
relevant portions of the alleged statements.

    First, on April 26, 2007, CEO Sidney Harman stated during
a conference call with analysts:
                               6

         I had indicated in earlier conference calls that the PND
         environment in Europe was not as margin challenged
         as it is in the United States, but that we could surely
         anticipate it. There was reasonable foresight in that
         observation. In the recent quarter, the European PND
         market has become extremely competitive. We are
         working extraordinarily hard to increase sales and to
         maintain adequate margins in that environment. In our
         earnings call three months ago, it was noted that
         Harman/Becker PND inventories in Europe had
         grown substantially. We said then that the inventory
         had been developed to support a vigorous sales effort
         and that we planned to reduce it to normal levels at
         year-end. The plan forecasts total unit sales of
         618,000 units for the fiscal ‘07 year, and that plan is
         proceeding. Where March 31 inventory was $75
         million, we expect April 30 inventory to be
         approximately $50 million, May 31 inventory to be
         approximately $30 million, and June 30 inventory to be
         approximately $15 million, that a very normal level.

Id. ¶ 57 (bold emphases added). Thereafter, in response to a
question by an analyst, the Company CFO, Kevin Brown, stated
that the Company had sold 84,000 PNDs during the prior quarter
and 300,000 units for the preceding nine months. When asked
whether, in light of those numbers, he still expected total PND
sales to eclipse 600,000 for the fiscal year, CEO Harman stated:
“We do, and we said so.” Id. ¶ 58 (emphasis omitted).
Following the April 26 acquisition announcement and
conference call, the Company’s stock price rose from $102.56
to $122.50, closing the next day at $122.59. At the beginning of
the conference call the moderator had stated that “certain
statements by the [C]ompany during this call are forward-
looking statements” that “include the [C]ompany’s beliefs and
expectations as to future events and trends affecting the
                               7

[C]ompany’s business and are subject to risks and
uncertainties.” Harman Int’l Indus. Earnings Release Conf. Call
Tr. at 1 (Apr. 26, 2007). Persons on the call were “advised to
review the reports filed by Harman International with the [SEC]
regarding these risks and uncertainties.” Id.

     The complaint alleges that the CEO’s forecast for PND
sales, particularly his statement that “that plan is proceeding,”
was materially false and misleading because the defendants
“knew or recklessly disregarded that the Company’s foray into
PND sales in Europe would cause material declines in its
operating income as a percentage of net sales.” Compl. ¶ 64(a).
At the time of the April conference call, the complaint alleges,
there was “a large inventory of older generation, obsolete PNDs
which [the Company] could not sell or was forced to sell at a
substantial loss,” and the “prospects for future sales of PNDs
were being adversely affected by increasing competition and
pressures from competitive pricing.” Id. ¶ 64(b). The
Company’s former sales engineer advised that the Company had
not sold PNDs up to expectations in either FY 2006 or FY 2007,
with the result that the Company “had a stockpile of the devices
in inventory,” id. ¶ 64(c), and that in early 2007, the Company
modified its PND design, rendering all of the earlier generation
units in inventory obsolete. The Company’s former accounting
manager advised that the Company had released five different
versions of the same PND between March 2006 and July 2007
but did not sell a significant number of the devices until July
2007.

    Second, on August 29, 2007, the Company filed its FY 2007
year-end Annual Report with the SEC, on Form 10-K, which
was signed by the individual defendants. The Report stated:
“Sales of aftermarket products, particularly PNDs, were
very strong during fiscal 2007.” Compl. ¶ 82 (emphasis
added). Once the Annual Report was publicly released, the
Company’s stock rose, from $112.93 to $113.39. Early on the
                                 8

Report stated that it “contains forward-looking statements within
the meaning of the [Act]” and that readers should “not place
undue reliance on these statements.” Harman Int’l Indus. SEC
Form 10-K at i (Aug. 29, 2007). The Report listed various
factors that “may cause fluctuations in [the Company’s]
operating results and/or the price of [its] common stock,” id. at
ii, and included a detailed account of the “risk factors,” id. at 9.

    The complaint alleges the statement that the Company’s
PND sales were “very strong” was “false and misleading when
made and/or omitted to disclose material facts necessary to
make the statement[] made not misleading.” Compl. ¶ 86.
Specifically, the Company failed to disclose: (1) the growing
inventory of obsolete PNDs, (2) the fact that the Company had
missed PND sales targets for the previous fiscal year by more
than $85 million, and (3) that the Company had recently sold
100,000 obsolete PND units at a substantial discount.

     Third, on September 27, 2007, CFO Brown stated during a
conference call with analysts that the Company had forecast first
quarter FY 2008 sales to be $950 million, up 15 percent
compared to the first quarter of FY 2007. When an analyst
observed that “the $950 million of revenue expectation is the
highest number [the Company had] ever achieved” and asked
whether “that observation [is] correct” and “to what degree did
the spillover of [Mercedes Benz] C Class revenues influence
that number,” id. ¶ 101, CFO Brown responded:

         Yes, Peter, you are correct that that is a very strong
         first quarter on the top line for us, reflecting getting
         fully up the ramp curve on Mercedes C Class but also
         reflecting the fact that we are bringing additional
         business on stream at Chrysler as we ramp up our
         Missouri plant and in the PND business, where we
         continue the growth and expansion of that business
         primarily in Europe.
                                9

Id. (bold emphases added). The conference call was convened
to discuss the Company’s almost-completed first quarter FY
2008 financial results and expectations for the remainder of the
fiscal year. The conference call’s moderator again began the
call by stating that “certain statements made by the Company
during this call are forward-looking statements” that “include
the Company’s beliefs and expectations as to future events and
trends affecting the Company’s business and are subject to risks
and uncertainties.”         Harman Int’l Indus. Guidance
Announcement Tr. at 1 (Sept. 27, 2007). Those on the call were
“advised to review the reports filed by Harman International
with the [SEC] regarding these risks and uncertainties.” Id.

     The complaint alleges that the statement “growth and
expansion” would “continue” in the PND business was
materially false and misleading, primarily because of the
historical evidence of growing inventory, widespread
obsolescence, and stagnant sales. Compl. ¶ 102.

     Proceeding on a corrective disclosure theory of loss
causation, the complaint points to the Company’s statements in
January and February 2008, allegedly “when [the Company]
disclosed [its] deteriorating financial condition and the truth
became apparent to the market, [and the Company’s] stock fell
sharply,” eliminating “the prior artificial inflation.” Id. ¶ 125.

         • On January 14, 2008, prior to the opening of the
market, a Company press release disclosed revised FY 2008
earnings guidance, “significantly lowering estimates of earnings
per share.” Id. ¶ 109. The release explained that “[t]he change
in guidance was prompted primarily by a major shift in the
market for Portable Navigation Devices (PNDs). In recent
months this sector has experienced significant pricing pressure
which is affecting the entire industry.” Id. The release quoted
the statement of the Company’s then-CEO, Dinesh Paliwal, that
“[w]hile the growth fundamentals of our core business remain
                               10

sound, the difficult PND environment presents a challenge.” Id.
The share price of the Company’s stock dropped by nearly 40
percent on the day the press release issued. Id. ¶ 110.

          • On February 5, 2008, the Company announced its FY
2008 second quarter results, stating that “its Automotive
division’s earnings were ‘under pressure’ due to PNDs and that
it had suffered a gross margin decline from lower margins on
PND products; product mix change . . . ; and higher than
expected material costs.” Id. ¶ 112. Operating income for the
second quarter of FY 2008 (ending December 31, 2007) was $61
million, or 5.7 percent of sales, as compared to $116 million and
12.4 percent, respectively, for the same quarter of the previous
year. The Company’s “PND sales had fallen by $29 million
compared to the same period in 2006” and “PND sales and
margins decreased due to aggressive price reduction by
competitors, the delay of new products, and the sale of older
products at substantial discounts.” Id. ¶ 113 (emphases
added) (internal quotation marks omitted). The Company’s
stock price fell more than 15 percent the next day. According to
the complaint, the second quarter report, which was filed on
SEC Form 10-Q on February 11, 2008, “disclosed more
specifically the reasons why operating income and margins had
declined in the first six months of fiscal 2008.” Id. ¶ 115. That
is, “the [recent] gross margin decline was the result of lower
margins on PND products” attributable to “a significant
decline in average market prices, delayed introductions and
lower volumes of new generation products and the inventory
clearance of prior generation models at a loss.” Id.
(emphases added).

     The district court granted the defendants’ motion to dismiss
the complaint on the grounds that the statements during the
conference calls fell within the safe harbor for forward-looking
statements accompanied by meaningful cautionary statements,
and the statement in the FY 2007 Annual Report was “mere
                                 11

puffery” and inactionable. In re Harman Int’l Indus., Inc. Sec.
Litig., 27 F. Supp. 3d 26, 46, 50, 51 (D.D.C. 2014). The court
did not reach the question whether loss causation had been
adequately pleaded. On appeal, Appellant contends that the
district court erred because the Company’s statements during the
two conference calls were neither forward looking, nor
accompanied by meaningful cautionary language, and its
statement in the FY 2007 Annual Report was not puffery, and
further that loss causation and its Section 20(a) claim were
adequately pleaded. Our review of the dismissal of the
complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6)
for failure to state a claim, is de novo. See English v. District of
Columbia, 717 F.3d 968, 971 (D.C. Cir. 2013).

                                 II.

      The elements of a claim under Rule 10b-5 are “(1) a
material misrepresentation or omission by the defendant; (2)
scienter; (3) a connection between the misrepresentation or
omission and the purchase or sale of a security; (4) reliance
upon the misrepresentation or omission; (5) economic loss; and
(6) loss causation.” Janus Capital Grp., Inc. v. First Derivative
Traders, 131 S. Ct. 2296, 2301 n.3 (2011) (internal quotation
marks omitted). “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). Although the court need not accept
the plaintiff’s legal conclusions, the court must assume the truth
of all well-pleaded factual allegations in the complaint and draw
all reasonable inferences from those allegations in the plaintiff’s
favor. See, e.g., de Csepel v. Republic of Hungary, 714 F.3d
591, 597 (D.C. Cir. 2013); Doe v. Rumsfeld, 683 F.3d 390, 391
(D.C. Cir. 2012). Fraud must be pled with particularity, see
FED. R. CIV. P. 9(b), and the Act, as amended in 1995, requires
a plaintiff to “specify each statement alleged to have been
                               12

misleading[ and] the reason or reasons why the statement is
misleading,” 15 U.S.C. § 78u-4(b)(1)(B), and to “state with
particularity facts giving rise to a strong inference that the
defendant acted with the required state of mind,” id.
§ 78u-4(b)(2)(A).

                                A.
     The complaint alleges that none of the Company’s
statements were entitled to safe-harbor protection because many
were not “identified” as forward looking and that, “[t]o the
extent there were any forward-looking statements, there were no
meaningful cautionary statements . . . .” Compl. ¶ 171
(emphasis added). The district court concluded that the parties
were “not in dispute as to whether any particular statement is
‘forward-looking,’” explaining that although Appellant had
alleged that many of the statements “were not identified as
forward-looking when made,” Appellant did not move forward
with this theory in briefing on the motion to dismiss. Harman,
27 F. Supp. 3d at 40 & n.4. In opposing the Company’s motion
to dismiss the complaint, Appellant discussed the two statements
made during the conference calls under the heading:
“Defendants’ Forward-Looking Statements Are Not Protected
by the PSLRA’s Safe Harbor.” See Lead Pl.’s Mem. in Opp. to
Defs’ Mot. to Dismiss at 13–15. Characterizing some
statements as pertaining to current or historical facts, i.e., not
forward looking, Appellant did not characterize the two
statements at issue as pertaining to current or historical facts.

     Appellant has at least forfeited the argument that the two
conference call statements were not forward looking. See
United States v. Volvo Powertrain Corp., 758 F.3d 330, 338
(D.C. Cir 2014). It is true that the court has recognized that
“‘[o]nce a federal claim is properly presented, a party can make
any argument in support of that claim; parties are not limited to
the precise arguments they made below.’” Woodruff v. Peters,
482 F.3d 521, 525 (D.C. Cir. 2007) (quoting Yee v. City of
                                 13

Escondido, 503 U.S. 519, 534 (1992)). Neither this court’s
precedent nor the Supreme Court in Yee sweeps as broadly as
Appellant suggests. In Yee, 503 U.S. at 534–35, the Supreme
Court distinguished between a claim (that a city ordinance
effected an unconstitutional taking) that had to be raised in the
district court and an argument in support of that claim that did
not need to be raised in the district court. Thus, on appeal a
party may “refine and clarify its analysis in light of the district
court’s ruling,” Teva Pharm., USA, Inc. v. Leavitt, 548 F.3d 103,
105 (D.C. Cir. 2008), including citing “additional support for his
side of an issue upon which the district court did rule, much like
citing a case for the first time on appeal,” Koch v. Cox, 489 F.3d
384, 391 (D.C. Cir. 2007). But that is not what Appellant seeks
to do.

      Although this court has acknowledged it has discretion to
consider issues raised for the first time on appeal, Roosevelt v.
E.I. Du Pont de Nemours & Co., 958 F.2d 416, 419 n.5 (D.C.
Cir. 1992); see Singleton v. Wulff, 428 U.S. 106, 121 (1976), it
has done so where there are exceptional or otherwise particular
circumstances, see, e.g., Lesesne v. Doe, 712 F.3d 584, 588 (D.C.
Cir. 2013); Meier, Inc. v. Biovail Corp., 533 F.3d 857, 867 (D.C.
Cir. 2008). Declining to address Appellant’s new issue would
not involve a miscarriage of justice in view of its counseled
decision in the district court declining to move forward with the
argument that the two statements were not forwarding looking.
It is true, as Appellant suggests, that the issue is purely legal and
has been fully briefed, but the parties’ briefs demonstrate that
resolution of the issue is not “beyond any doubt,” Singleton, 428
U.S. at 121; see also Lesesne, 712 F.3d at 588, and to treat the
issue as “antecedent to the secondary question of whether
cautionary language is meaningful,” Reply Br. 4, would extend
the concept of “antecedent to and ultimately dispositive of the
dispute,” U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of Am.,
Inc., 508 U.S. 439, 447 (1993) (internal quotation marks and
alteration omitted), in a manner that would recast Appellant’s
                                14

position in the district court. Nor are we persuaded that the
passage of time alone, during which Appellant asserts without
substantive elaboration that the law interpreting the safe harbor
provision has “evolve[d],” Reply Br. 5, is the type of intervening
change in the law that warrants exercising our discretion to
consider Appellant’s new argument rather than adhering to “our
ordinary practice of refusing to entertain an argument made for
the first time on appeal,” Volvo Powertrain, 758 F.3d at 338
(internal quotation marks omitted).

                                B.
     To come within the statutory safe harbor, a statement must
not only be forward looking (and identified as such), but also
“accompanied by meaningful cautionary statements.” 15 U.S.C.
§ 78u-5(c)(1)(A)(i). The safe harbor defines “meaningful
cautionary statements” as those that “identify[] important factors
that could cause actual results to differ materially from those in
the forward-looking statement.” Id. We first address the legal
standard, then its application.

     1. Although the statutory text is somewhat ambiguous, see
Slayton v. Am. Express Co., 604 F.3d 758, 770 (2d Cir. 2010);
Asher v. Baxter Int’l Inc., 377 F.3d 727, 729 (7th Cir. 2004), as
amended (Sept. 3, 2004), given the variety of possible factual
circumstances that could arise, the words Congress chose are not
without instructive meaning, even if their application may be
unclear in specific circumstances.

     Dictionary definitions may not, in and of themselves, be
dispositive of whether a particular statement falls within the safe
harbor, but they indicate the general nature of the information
that Congress concluded must be part of a cautionary statement
for safe harbor protection. The word “meaningful” means
“significant,” 9 OXFORD ENGLISH DICTIONARY 522 (2d ed.
1989), or “having a serious, important, or useful quality or
purpose,” NEW OXFORD AMERICAN DICTIONARY 1052 (2d ed.
                               15

2005). The word “important” means “[h]aving much import or
significance; carrying with it great or serious consequences;
weighty, momentous, grave, significant,” 7 OXFORD ENGLISH
DICTIONARY 728, or “of great significance or value; likely to
have a profound effect on success, survival, or well-being,” NEW
OXFORD AMERICAN DICTIONARY 849. The words imply
information that is tailored to a particular company’s status at a
particular time, because cautionary statements that are too
temporally general, or advise of a company’s performance in the
distant past, would not be “significant,” 9 OXFORD ENGLISH
DICTIONARY 522, to an investor, nor would they have any
“useful quality or purpose,” NEW OXFORD AMERICAN
DICTIONARY 1052. Furthermore, to the extent application of
these terms is ambiguous, the legislative history is helpful.
Congress’s purpose in enacting the safe harbor was to lessen the
“muzzling effect” of potential liability for forward-looking
statements, which often kept investors in the dark as to what was
foreseen for the company by managers “[f]ear[ful] that
inaccurate projections w[ould] trigger the filing of securities
class action lawsuit[s].” H.R. REP. NO. 104-369, at 42–43 (1995)
(“CONF. REP.”).

     Applying the text and hewing to Congress’s purpose, our
sister circuits have resolved the definitional ambiguity as
follows:

     “The requirement for ‘meaningful’ cautions calls for
substantive company-specific warnings based on a realistic
description of the risks applicable to the particular
circumstances.” Southland Sec. Corp. v. INSpire Ins. Solutions,
Inc., 365 F.3d 353, 372 (5th Cir. 2004) (some internal quotation
marks omitted). Thus, “cautionary statements must be
substantive and tailored to the specific future projections,
estimates or opinions in the [statements] which the plaintiffs
challenge.” Institutional Inv’rs Grp. v. Avaya, Inc., 564 F.3d
242, 256 (3d Cir. 2009) (internal quotation marks omitted). That
                                16

cautionary language must be tailored to the forward-looking
statement that it accompanies follows from the statutory
requirement that cautionary language must warn of what “could
cause actual results to differ materially from those in the
forward-looking statement.” 15 U.S.C. § 78u-5(c)(1)(A)(i)
(emphasis added).

     By contrast, mere boilerplate — “This is a forward-looking
statement: caveat emptor,” Asher, 377 F.3d at 729 (internal
quotation marks omitted) — does not meet the statutory standard
because by its nature it is general and ubiquitous, not tailored to
the specific circumstances of a business operation, and not of
“useful quality,” NEW OXFORD AMERICAN DICTIONARY 1052.
See Slayton, 604 F.3d at 772; Institutional Inv’rs Grp., 564 F.3d
at 256; Asher, 377 F.3d at 732; Southland, 365 F.3d at 372. So
too, generalized warnings that forward-looking statements are
“not guarantees of future performance . . . and involve known
and unknown risks and other factors that could cause actual
results to be materially different from any future results
expressed or implied by them,” Lormand v. US Unwired, Inc.,
565 F.3d 228, 244 (5th Cir. 2009) (internal quotation marks
omitted), because such a statement is not specific regarding the
business at issue. The Conference Report, in keeping with
Congress’s intent to “enhance market efficiency by encouraging
companies to disclose forward-looking information,” states that
“boilerplate warnings will not suffice as meaningful cautionary
statements identifying important factors that could cause actual
results to differ materially from those projected in the
statement.” CONF. REP. at 43.

     At the same time, cautionary language cannot be
“meaningful” if it is “misleading in light of historical fact[s],”
Slayton, 604 F.3d at 770, “that were established at the time the
statement was made,” id. at 769. Such statements are neither
“significant” nor of “useful quality or purpose.” 9 OXFORD
ENGLISH DICTIONARY 522; NEW OXFORD AMERICAN
                                 17

DICTIONARY 1052. Indeed, the Conference Report states that
“[a] cautionary statement that misstates historical facts is not
covered by the safe harbor.” CONF. REP. at 44. A warning that
identifies a potential risk, but “impl[ies] that no such problems
were on the horizon even if a precipice was in sight,” would not
meet the statutory standard for safe harbor protection. Asher,
377 F.3d at 733. If a company were to warn of the potential
deterioration of one line of its business, when in fact it was
established that that line of business had already deteriorated,
then, as the Second Circuit explained, its cautionary language
would be inadequate to meet the safe harbor standard. See
Slayton, 604 F.3d at 769–70. By analogy, the safe harbor would
not protect from liability a person “‘who warns his hiking
companion to walk slowly because there might be a ditch ahead
when he knows with near certainty that the Grand Canyon lies
one foot away.’” Rombach v. Chang, 355 F.3d 164, 173 (2d Cir.
2004) (quoting In re Prudential Secs. Inc. P’ships Litig., 930 F.
Supp. 68, 72 (S.D.N.Y. 1996)). As this court noted in Dolphin
& Bradbury, Inc. v. SEC, 512 F.3d 634, 640 (D.C. Cir. 2008),
there is an important difference between warning that something
“might” occur and that something “actually had” occurred.

     Because Congress required that cautionary statements warn
of “important factors that could cause actual results to differ,”
the cautionary language need not necessarily “mention the factor
that ultimately belies a forward-looking statement.” Harris v.
Ivax Corp., 182 F.3d 799, 807 (11th Cir. 1999). That is,
Congress did not require the cautionary statement warn of “all”
important factors, so long as “an investor has been warned of
risks of a significance similar to that actually realized,” such that
the investor “is sufficiently on notice of the danger of the
investment to make an intelligent decision about it according to
her own preferences for risk and reward.” Id. (citing CONF. REP.
at 44). Perfect clairvoyance may be impossible because of
events beyond a company’s control of which it was unaware.
See Asher, 377 F.3d at 730, 732. Congress required that a
                               18

company must warn of factors that “[h]av[e] much import or
significance” and “carry[] with [them] great or serious
consequences,” 7 OXFORD ENGLISH DICTIONARY 728, and which
are “likely to have a profound effect on success,” NEW OXFORD
AMERICAN DICTIONARY 849.

     We join our sister circuits’ reasoned analysis of the safe
harbor requirement that forward-looking statements be
accompanied by “meaningful cautionary statements.” The words
Congress chose provide instructive guidance and the remaining
ambiguity in application is informed by and resolved in view of
Congress’s purpose to protect companies from “[a]busive
litigation,” CONF. REP. at 42, while still providing investors the
information they require to make reasoned decisions, id. at
43–44.

     2. The question, then, is whether the Company’s statements
during the two conference calls were accompanied by warnings
specific to the Company and tailored to the specific forward-
looking statements, not mere boilerplate, and consistent with the
historical facts when the statements were made, thereby carrying
out Congress’s purpose to ensure that investors have the
information they need to make an informed decision on whether
or not to invest, or remain invested, in the Company.

     The Company does not dispute that PND obsolescence was
an “important factor[] that could cause actual results to differ
materially from those in the forward-looking statement,” 15
U.S.C. § 78u-5(c)(1)(A)(i), and thus that it was required to alert
investors to the risk of obsolescence in order to gain safe harbor
protection. See Appellees’ Br. 32–37. Rather, the Company
states that it did warn of obsolescence “many times.” Id. at 35.
The moderator began both conference calls by warning generally
of risk and referring listeners to the Company’s recent Annual
Report. The 2006 Annual Report, referred to in the April
conference call, stated sales could suffer if the Company failed
                                19

to “develop, introduce and achieve market acceptance of new
and enhanced products,” that it had to “maintain and improve
existing products, while successfully developing and introducing
new products,” and could “experience difficulties that delay or
prevent the development, introduction or market acceptance of
new or enhanced products,” as well as that competitors could
“introduce superior designs or business strategies, impairing [the
Company’s] distinctive image and [its] products’ desirability.”
2006 Annual Report at 9–10. More specifically, the Company
stated that PND “inventories . . . had grown substantially,”
increasing to approximately $50 million. Compl. ¶ 57 (emphasis
omitted). Consequently, the Company concludes that when
“[c]onsidered against Dr. Harman’s particular warnings about the
competitive European PND market, the obsolescence risk was
adequately identified.” Appellees’ Br. 36.

     Several of the cautionary statements relied on by the
Company consist of boilerplate, such as the generalities in the
moderators’ comments and the Annual Reports. To the extent
other statements were tailored to the Company’s PND business
operations, the purportedly cautionary statements were not
meaningful because they were misleading in light of historical
fact. References to amassed inventory did not convey that
inventory was obsolete, as opposed to stocked with the latest,
cutting-edge models. Even if viewed as implicitly raising the
specter of obsolescence, the statements were insufficient for at
least the reason that they did not warn of actual obsolescence that
had already manifested itself. The court, thus, need not reach the
parties’ arguments regarding the role of actual knowledge under
the safe harbor, 15 U.S.C. § 78u-5(c)(1). See Appellant’s Br. 24
n.12; Appellees’ Br. 37.

     The allegations in the complaint plausibly show that by
failing to disclose that PND obsolescence that had already
materialized and to tailor its cautionary statements to its PND
business, the purported cautionary statements were inadequate to
                                20

qualify the April conference call statement for safe harbor
protection. According to the complaint, when the April
conference call was made, the threat of serious obsolescence was
materializing, because, according to a former sales engineer, the
Company itself had made a modification in early 2007, “which
rendered all of the older-generation units in inventory obsolete.”
Compl. ¶ 64(d); see also id. ¶ 53. In addition, the Company’s
2006 PND sales had been lower than anticipated and this resulted
in the Company storing PNDs in a warehouse. Id. ¶ 64(c).
Furthermore, the Company released five different versions of its
PND between March 2006 and July 2007, but at the time of the
first conference call had not sold “a significant number.” Id.
¶ 64(e). By early 2007, the sales engineer had initiated
conversations with Company sales representatives regarding the
need to lower PND prices in order to remain competitive. Id.
¶ 52. Nonetheless, there was no indication during the April
conference call that the Company’s PND business was
compromised by obsolescence, as distinct from inventory, let
alone due to the Company’s own actions, see id. ¶ 64(d).

     “[A]s a general matter, investors know of the risk of
obsolescence posed by older products forced to compete with
more advanced rivals. Technical obsolescence of computer
equipment in a field marked by rapid technological advances is
information within the public domain.’” Parnes v. Gateway
2000, Inc., 122 F.3d 539, 546–47 (8th Cir. 1997) (quoting In re
Convergent Techs. Sec. Litig., 948 F.2d 507, 513 (9th Cir. 1991))
(internal quotation marks and alterations omitted). But the
general information provided by the Company about its plan to
reduce its substantial inventory did not disclose historical facts
that could have affected the success of the plan being discussed.
The omission left a misleading picture with regard to the impact
of “a large inventory of older generation, obsolete PNDs which
[the Company] could not sell or was forced to sell at a substantial
loss.” Compl. ¶ 64(b). For instance, the Company did not warn
as to the problem it faced — here, PND obsolescence — that it
                               21

“has experienced, and may continue to experience,” certain
“problems,” Parnes, 122 F.3d at 549, or state “in detail what
kind of misfortunes could befall the company and what the effect
could be,” Harris, 182 F.3d at 807.

      CEO Harman’s April statement referred to the Company’s
plan to draw down its PND inventory to “normal levels,”
commenting “that plan [wa]s proceeding.” Compl. ¶ 57. Yet the
purportedly cautionary statements did nothing to distinguish any
risk faced by PNDs in particular. The 2006 Annual Report that
was referenced by the conference call moderator spoke generally
of “products,” both “existing” and “new.” See 2006 Annual
Report at 9–10. Even viewing CEO Harman’s explanation “that
the PND market in Europe was ‘extremely competitive’ and that
the [C]ompany had to work ‘extraordinarily hard’ to increase
sales and maintain margins” as “not merely statements about
general market risks, but . . . specific to the European PND
market of which Plaintiffs complain,” Harman, 27 F. Supp. 3d
at 46, nothing said during the conference call or in the Annual
Report warned of PND obsolescence. Likewise, the Company’s
statement that it had amassed a sizeable PND inventory does not
render the cautionary language “meaningful.” CEO Harman’s
statements that “[i]n our earnings call three months ago, it was
noted that Harman Becker PND inventories in Europe had grown
substantially” and that a plan had been developed to reduce
inventory and “[wa]s proceeding,” Harman Int’l Indus. Earnings
Release Conf. Call Tr. at 7, is not a warning at all, much less of
obsolescence.

      The Company’s cautionary language is not rendered
adequate by the Company’s statement during the April
conference call that, although it had projected annual sales of
618,000 units, the Company had sold only 300,000 through the
first nine months of FY 2007. In isolation, the statement could
be viewed as “allowing investors to evaluate for themselves
whether [the Company’s] projection of 318,000 unit sales in the
                                22

fourth quarter was realistic.” Harman, 27 F. Supp. 3d at 47. But
not when viewed in context. When asked whether, even having
only sold less than half of its projected year-end total through
three quarters of the fiscal year, the Company could still hit its
target, CEO Harman responded unequivocally that it could.
Stating that the Company was capable of nearly doubling its
three-quarter sales totals in the last quarter does not warn
investors that the Company was facing serious obsolescence in
its PND products, see Compl. ¶ 64(b).

     The circumstances recounted in the complaint are not unlike
those in Lormand, 565 F.3d 228. The issue there was whether
US Unwired had provided meaningful cautionary language with
statements about its affiliation with Sprint. Id. at 231–33. To
simplify, US Unwired was forced over a period of several years
to change its working relationship with Sprint in a manner that
destroyed US Unwired’s business model. Id. at 232–38. US
Unwired nevertheless made a series of statements touting its
relationship with Sprint and the growth and vitality of its
business. Id. at 240–41. Accompanying its forward-looking
statements were warnings, such as “Sprint PCS may make
decisions that adversely affect our business like setting the prices
for its national plans at levels that may not be economically
sufficient for our business,” id. at 245 (emphasis added). The
Fifth Circuit, drawing inferences in US Unwired’s favor,
concluded that references to US Unwired’s “business” were
“very vague and general.” Id. at 246. With respect to risks
related to a no-deposit program offering service to low-income
and risky credit subscribers, id. at 237, 242, US Unwired warned:
US Unwired’s “PCS business may suffer because more
subscribers generally disconnect their service in the PCS industry
than in the cellular industry . . . . We plan to keep our subscriber
churn [i.e., turnover] down by expanding network coverage,
improving network reliability, marketing affordable plans and
enhancing customer care. We cannot assure that these strategies
will be successful. A high rate of PCS subscriber churn could
                                23

harm our competitive position and the results of operations of
our PCS services.” Id. at 246. The court held this warning was
also insufficient to provide safe harbor protection because, in
part, US Unwired only warned of “a future risk of limited
magnitude that would be averted” while failing to disclose
“certain dangers that had already begun to materialize.” Id. at
247. So too here. The cautionary language included in the
Company’s April conference call is too general and fails to
account for the materialization, rather than abstract possibility,
of the important risk posed by PND obsolescence.

      The allegations in the complaint also plausibly show that the
cautionary language provided during the September conference
call was inadequate for safe harbor protection for the same
reasons. CFO Brown referred to a favorable projection of
revenue, stating “we are bringing additional business on-stream
. . . in the PND business, where we continue the growth and
expansion of that business primarily in Europe.” Compl. ¶ 101
(emphasis omitted). For an investor, “[e]qually important was
‘inventory clearance of prior generation models at a loss,’ i.e.,
inventory obsolescence . . . [that the Company allegedly] did not
disclose for more than six months.” Reply Br. 15. In September,
no mention was made of the Company’s inventoried products
that would not be saleable due partly to obsolescence, or to the
stalling of the plan to reduce inventory to normal levels, or to
anything else that could warn of the serious obsolescence
problem. See id. ¶¶ 86(c)-(e). Instead, the cautionary statements
are essentially the same as those made during the April
conference call: a boilerplate statement about risk generally and
reference to the Company’s FY 2007 Annual Report, which
repeated the general warnings in the FY 2006 Annual Report.
(The Company acknowledges that the two annual reports are
more or less indistinguishable. See Appellees’ Br. 35–36.)

    The warnings accompanying the September statement, like
those that accompanied the April statement, were misleading in
                               24

light of historical facts and were not tailored to the specific
forward-looking statement the Company made. According to the
complaint, by June 2007, the Company had agreed to sell
100,000 PNDs for $110 less than the ordinary $350 price tag.
Compl. ¶¶ 56, 86(e). In all, the Company missed its PND sales
projected by more than 200,000 units in FY 2007, id. ¶ 55, which
meant PND sales fell short of projections by at least $85 million,
id. ¶¶ 56, 86(d). The information provided by the Company’s
former accounting manager indicated that “the Company had on
hand hundreds of millions of dollars worth of obsolete
Generation 2 PNDs which were being superseded by newer
Generation 3 PNDs in August 2007.” Id. ¶ 86(c). By the end of
FY 2007, there was no longer a mere risk and some evidence of
obsolescence, but rather an intractable problem of obsolescence
was a reality that the Company failed to disclose. “[T]he risk of
which [the Company] warned . . . had already transpired,”
Slayton, 604 F.3d at 770; see also Lormand, 565 F.3d at 247, by
the time of the September conference call, and consequently the
Company’s cautionary language was not “meaningful.” See id.
at 246–47. Even were it clear that the Company warned of
obsolescence, the warnings were misleading because they
provided, at most, information about a generalized risk of
obsolescence and the general effect that obsolescence could have
on sales. The district court did not address whether the
cautionary language accompanying the September statement was
misleading in light of historical facts. See Harman, 27 F. Supp.
3d at 50.

     Reinforcing our conclusion that safe harbor protection is
unavailable for the September statement is the fact that the
Company’s cautionary statements remained unchanged despite
a significant change in circumstances of material importance to
an investor. See Slayton, 604 F.3d at 772–73; see also Asher,
377 F.3d at 734; Helwig v. Vencor, Inc., 251 F.3d 540, 559 (6th
Cir. 2001), abrogated on other grounds by Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308 (2007). Despite what had
                               25

happened regarding PNDs between April and September, the
Company did not update or tailor its cautionary language to
make it meaningful, instead relying on the same general
prefatory language and reference to the Company’s general
statements regarding risk in its most recent annual report.
Compare 2007 Annual Report at 10–11, with 2006 Annual
Report at 9–10. “The consistency of the defendants’ language
over time despite” changing circumstances “belies any
contention that the cautionary language was ‘tailored to the
specific future projection.’” Slayton, 604 F.3d at 773 (quoting
Institutional Inv’rs Grp., 564 F.3d at 256).

     The complaint points, moreover, in support of the theory of
corrective disclosure, to the Company’s January and February
2008 releases that disclosed, allegedly for the first time, the
obsolescence problems facing its PND line of business. See
Compl. ¶¶ 133, 135. CEO Harman had assured investors in
April that there was a plan to reduce inventory to normal levels,
from $75 million to $15 million by June 30, 2007, id. ¶ 57, and
CFO Brown had reassured investors in September that the PND
business was growing and expanding, id. ¶ 101. Thus, over this
period the Company failed to disclose what was an historical fact
of importance to a reasonable investor: by April, inventory
obsolescence was becoming a problem, see id. ¶¶ 64 (b), (d), (e);
by September it had fully materialized into a serious problem
effecting Company revenues, see id. ¶¶ 86(c)-(e). Prior to the
January and February statements, according to the complaint, the
Company had not “even mentioned that rapid obsolescence
might pose a material risk to the Company’s PND business, let
alone that such obsolescence might be caused by the Company’s
own product changes.” Appellant’s Br. 21; see Compl. ¶ 64(d).
Given the rosy picture that the Company painted during the
April-September period, investors were unaware of the
obsolescence problem until January-February 2008, when the
Company, in announcing disappointing financial results in
                                26

February 2008, first disclosed PND obsolescence that had
resulted in “the sale of older products at substantial discounts.”
Id. ¶ 113 (internal quotation marks omitted).

     The Company responds that it needed only to warn of
“risks,” Harris, 182 F.3d at 807 (emphasis added), not “actual
inventory obsolescence,” Appellees’ Br. 37 (emphasis in
original). Nothing in Harris purports to afford safe harbor
protection based on a statement that risk could come to fruition
where that risk has already begun to materialize. To conclude
otherwise, that even where a risk has materialized a company
need only warn that it is a “risk,” would render misleading
cautionary language sufficient, a result neither the statutory text,
nor legislative history, nor precedent supports.

     Finally, the Company maintains that the internal reports on
which the complaint relies are irrelevant and unreliable, and
therefore inadmissible as a matter of law. This is because, the
Company continues, the complaint “fails to identify any
information about the internal reports, i.e., who prepared them,
who received them, how firm the numbers were within them,
how they were distributed, or to whom they were distributed, and
does not allege that any of the individual defendants received and
reviewed the internal reports.” Appellees’ Br. 49–50. The
precedent on which the Company relies for its categorical rule is
inapposite. San Leandro Emergency Medical Group Profit
Sharing Plan v. Philip Morris Companies, Inc., 75 F.3d 801, 812
(2d Cir. 1996), held that an “unsupported general claim of the
existence of confidential Company sales reports that revealed”
information that would render a company’s statement misleading
was “insufficient to survive a motion to dismiss.” Here, the
allegation that operating reports exist is not general and the
operating reports are not the only support for the alleged claims.
Arazie v. Mullane, 2 F.3d 1456, 1467 (7th Cir. 1993), held that
the particularity requirement was not met by references to an
                                27

internal report that did “not indicate who prepared the projected
figures, when they were prepared, how firm the numbers were,
or which [company] officers reviewed them.” Here, the
complaint identifies the internal reports as monthly and annual
reports of the Company’s Automotive Division, which were
“authored by executives of Harman Automotive in Germany and
distributed to Harman International executives,” including CEO
Harman and CFO Brown, and after July 1, 2007, then-CEO
Paliwal, as well as to several other executives and lower-level
accounting or financial personnel. Compl. ¶ 55.

    For these reasons, we hold the allegations in the complaint
plausibly show that the April and September statements were not
accompanied by meaningful cautionary language and,
consequently, were not entitled to safe harbor protection.

                                 C.
     The third statement appeared in the Company’s FY 2007
Annual Report. For a statement to be actionable under Section
10(b) and Rule 10b-5, it must be “material” in the sense that it
would have “been viewed by the reasonable investor as having
significantly altered the ‘total mix’ of information made
available,” Halliburton Co. v. Erica P. John Fund, Inc., 134 S.
Ct. 2398, 2413 (2014) (quoting Basic Inc. v. Levinson, 485 U.S.
224, 231–32 (1988)). The Supreme Court has recognized that
“statements of reasons, opinions, or beliefs” can be actionable,
Va. Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1091 (1991),
even when conclusory terms are used, id. at 1093. This is
because “conclusory terms [like ‘high’ value and ‘fair’] in a
commercial context are reasonably understood to rest on a
factual basis that justifies them as accurate, the absence of which
renders them misleading.” Id. But, “statements [that] are too
general to cause a reasonable investor to rely upon them” are
immaterial and inactionable. ECA & Local 134 IBEW Joint
Pension Trust of Chi. v. JP Morgan Chase Co., 553 F.3d 187,
                               28

206 (2d Cir. 2009). “Puffery” refers to one type of immaterial
statement: the sort of “generalized statements of optimism that
are not capable of objective verification.” Grossman v. Novell,
Inc., 120 F.3d 1112, 1119 (10th Cir. 1997). Statements that
constitute puffery employ terms that are “too squishy, too
untethered to anything measurable, to communicate anything that
a reasonable person would deem important to a securities
investment decision.” City of Monroe Employees Ret. Sys. v.
Bridgestone Corp., 399 F.3d 651, 671 (6th Cir. 2005).

     In the FY 2007 Annual Report, the Company stated that
“[s]ales of aftermarket products, particularly PNDs, were very
strong during fiscal 2007.” Compl. ¶ 82. The district court
concluded that statement was immaterial puffery because
“strong” is “subjective and provides no standard against which
a comparison can be drawn.” Harman, 27 F. Supp. 3d at 51. But
the critical inquiry is whether the statement could “have misled
a reasonable investor,” San Leandro, 75 F.3d at 811, and given
the context in which it was made, according to the allegations in
the complaint, we conclude that the “very strong” statement in
the FY 2007 Annual Report is plausibly understood as a
description of historical fact rather than unbridled corporate
optimism, i.e., immaterial puffery.

     PNDs, although only a “rather small component of [the
Company’s] total portfolio,” Harman Int’l Indus. Earnings Call
Tr. at 6 (Feb. 5, 2008), were part of the Company’s automotive
division, which “comprised approximately 70% of [the
Company’s] business and generated the bulk of the Company’s
revenue and earnings.” Compl. ¶ 141. CEO Harman explained
during the April conference call that the Company would
undertake a “vigorous sales effort” to reduce PND inventory to
“normal levels at year-end,” and, when asked whether the
Company thought FY 2007 sales totals could double in the final
quarter, he responded “[w]e do, and we said so.” Id. ¶¶ 57–58.
                               29

The “very strong” statement was specific about product and time
period, and comparable to the statement in In re Lucent
Technologies, Inc. Sec. Litig., 217 F. Supp. 2d 529, 559 (D.N.J.
2002), that one of the defendant’s products was generating
“strong customer acceptance,” id. (internal quotation marks
omitted). The statement in Lucent Technologies was held not to
be puffery because, given recent fiscal results, “a reasonable
investor likely would consider material any information relating
to customer acceptance of key products for purposes of making
investment decisions.” Id. The context alleged here is similar.
PNDs were part of the Company’s largest division and had been
the focus of recent public statements. The “very strong”
statement could have had the same effect on an investor in the
Company’s stock and is therefore actionable. Unlike the
statements in cases on which the Company relies, the statement
was tied to a product and a time period and it was not too vague
to be material. In re Copper Mountain Securities Litigation, 311
F. Supp. 2d 857, 868 (N.D. Cal. 2004), involved a bare statement
that “business remained strong,” id. (internal quotation marks
omitted). So too, the statement in In re Splash Technology
Holdings, Inc. Securities Litigation, 160 F. Supp. 2d 1059,
1076–77 (N.D. Cal. 2001), that demand was “strong.”
Statements such as “Food Lion is one of the best-managed high
growth operators in the food retailing industry,” Longman v.
Food Lion, Inc., 197 F.3d 675, 684 & n.2 (4th Cir. 1999), a
company had achieved “substantial success” in integrating the
sales force of two merged entities, Grossman, 120 F.3d at 1121,
and a company was “optimistic” and “should deliver income
growth consistent with its historically superior performance,”
San Leandro, 75 F.3d at 811, are equally lacking in specifics that
an investor could use to evaluate the statement’s veracity.

    The Company maintains that the “very strong” statement is
puffery because it “lacked a standard against which a reasonable
investor could expect [it] to be pegged,” quoting City of Monroe,
                               30

399 F.3d at 671. Nothing in City of Monroe purports to render
inactionable any statement that does not contain its own metric.
There the statements — that Bridgestone sold “the best tires in
the world,” that its products demonstrated “global consistent
quality,” and that it had experienced strong sales because of
“high regard among automakers for our strengths in product
quality,” id. at 670 — appear more in line with generalized
boasting, i.e., more “squishy,” id. at 671, than the Company’s
report of “very strong” PND sales in the FY 2007 Annual
Report. Alternatively, the Company maintains that “disclosure
of the actual sales results renders the ‘very strong’ statement
immaterial” because investors could review the relevant
information and undertake their own evaluation of the
Company’s statement. Appellees’ Br. 53. The Company points
to nothing in the current record showing that it had elsewhere
disclosed FY 2007 PND sales results.

                                 D.
     A claim under Section 10(b) and Rule 10b-5 requires proof
of “the traditional elements of causation and loss.” Dura
Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 346 (2005); see
15 U.S.C. § 78u-4(b)(4). A plaintiff may survive a motion to
dismiss the complaint for failure to state a claim “either by
alleging (a) the existence of cause-in-fact on the ground that the
market reacted negatively to a corrective disclosure of the fraud;
or (b) that . . . the loss was foreseeable and caused by the
materialization of the risk concealed by the fraudulent
statement.” Carpenters Pension Tr. Fund of St. Louis v.
Barclays PLC, 750 F.3d 227, 232–33 (2d Cir. 2014) (internal
quotation marks omitted). The 2008 consolidated class
complaint alleges the former. See Compl. ¶¶ 109–13, 125–38;
see also Reply Br. 23. At the pleadings stage, a plaintiff need
not “demonstrate . . . that the corrective disclosure was the only
possible cause for decline in the stock price.” Carpenters, 750
F.3d at 233. And “a corrective disclosure need not be a
                               31

‘mirror-image’ disclosure — a direct admission that a previous
statement is untrue,” although it “must relate to the same subject
matter as the alleged misrepresentation.” Mass. Ret. Sys. v. CVS
Caremark Corp., 716 F.3d 229, 240 (1st Cir. 2013). Thus, “[t]he
appropriate inquiry is whether” the Company’s statements, taken
“as a whole, plausibly revealed to the market that” the Company
was experiencing significant difficulties in its PND business. Id.

     The Company maintains, unpersuasively, that the complaint
failed adequately to plead that the alleged misrepresentations or
other fraudulent conduct proximately caused economic loss to
Appellant. According to the complaint, the Company’s January
14, 2008, press release on revised earnings guidance and its
February 5, 2008, press release announcing results for the second
quarter of FY 2008 disclosed that the Company’s PND business
was not as strong as previously indicated in the three statements
now at issue. Both releases were followed by marked declines
in the Company’s stock price, the first by a 37.65 percent decline
and the second by a drop of 15 percent, see Compl. ¶¶ 110, 114.
The alleged releases were not, as the Company suggests, simply
“announcement[s] of a failed projection.” Appellees’ Br. 56.
Rather, they provided specific information about the state of the
Company’s PND business, disclosing, allegedly for the first
time, that it was not flourishing as the Company had indicated
during the April and September conference calls and the FY
2007 Annual Report.

     The Company responds that “the Complaint, on its face,
identifies so many alternative reasons for [Appellant’s] share
price drop that [Appellant] cannot prove loss causation as a
matter of law.” Appellees’ Br. 58. But “[p]laintiffs need not
demonstrate on a motion to dismiss that the corrective disclosure
was the only possible cause for decline in the stock price.”
Carpenters, 750 F.3d at 233. The cases cited by the Company
are not to the contrary. In Dura, 544 U.S. at 343, the Supreme
                                 32

Court explained that a drop in a security’s price “may reflect, not
the earlier misrepresentation, but changed economic
circumstances, changed investor expectations, new
industry-specific or firm-specific facts, conditions, or other
events, which taken separately or together account for some or
all of that lower price,” concerned what “at the end of the day
plaintiffs need . . . establish, i.e., prove,” id. at 342 (internal
quotation marks omitted). In that case, the complaint failed for
absence of allegations on the loss suffered, id. at 347, a defect
that does not plague the complaint here, see Compl. ¶¶ 110, 114.
Other cases on which the Company relies either relate to the
plaintiff’s burden to obtain judgment, see Nuveen Mun. High
Income Opportunity Fund v. City of Alameda, Cal., 730 F.3d
1111, 1123 (9th Cir. 2013); In re Williams Sec. Litig.-WCG
Subclass, 558 F.3d 1130, 1132 (10th Cir. 2009), or do not
involve the corrective disclosure theory alleged here, see Schaaf
v. Residential Funding Corp., 517 F.3d 544, 550 (8th Cir. 2008).

                                 III.

     Appellant also sued under Section 20(a) of the Act, which
provides that “a plaintiff must show a primary violation by the
controlled person and control of the primary violator by the
targeted defendant.” SEC v. First Jersey Sec., Inc., 101 F.3d
1450, 1472 (2d Cir. 1996); see also Stevens v. InPhonic, Inc.,
662 F. Supp. 2d 105, 129 (D.D.C. 2009). A claim under Section
20(a) can exist only if there is a viable claim against the
corporation. See First Jersey, 101 F.3d at 1472. There is a split
in the circuits on whether the plaintiff must show that the alleged
control person “culpably participated” in the underlying fraud.1


        1
          Compare SEC v. J.W. Barclay & Co., 442 F.3d 834, 841 &
n.8 (3d Cir. 2006), and SEC v. First Jersey Secs., Inc., 101 F.3d 1450,
1472 (2d Cir. 1996), with Paracor Fin., Inc. v. Gen. Elec. Capital
Corp., 96 F.3d 1151, 1161 (9th Cir. 1996); Brown v. Enstar Group,
                                33

In those not requiring proof of culpable participation, the
plaintiff need only show the defendant is a “controlling person,”
and the burden shifts to the defendant to show the actions were
taken “‘in good faith and did not directly or indirectly induce the
act or acts constituting the violation or cause of action.’”
Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151,
1161 (9th Cir. 1996) (quoting 15 U.S.C. § 78t(a)).

      The court need not decide which approach to adopt because
the allegations in the complaint suffice to show culpable
participation by the individual defendants. See Compl.
¶¶ 142–167. According to the complaint, each personally made
actionable statements: CEO Harman during the April conference
call, CFO Brown during the September conference call, joined
by CEO Paliwal, and each individual defendant also signed in
August 2007 the SEC Form 10-K for the FY 2007 Annual Report
containing the “very strong” statement. Even if corporate job
titles may not alone suffice, see Appellees’ Br. 62, the complaint
plausibly alleges each defendant made false and misleading
statements about the Company.

     Accordingly, we reverse the dismissal of the complaint for
failure to state a claim with respect to the three statements at
issue, and we remand the case for further proceedings.




Inc., 84 F.3d 393, 396 (11th Cir. 1996); Harrison v. Dean Witter
Reynolds, Inc., 974 F.2d 873, 881 (7th Cir. 1992); Metge v. Baehler,
762 F.2d 621, 630–31 (8th Cir. 1985); G.A. Thompson & Co. v.
Partridge, 636 F.2d 945, 958 (5th Cir. 1981); and Carpenter v.
Harris, Upham & Co., Inc., 594 F.2d 388, 394 (4th Cir. 1979).
