
USCA1 Opinion

	




                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 96-1088                                     DAVID GROSS,                                Plaintiff, Appellant,                                          v.                 SUMMA FOUR, INC., BARRY R. GORSUN, JAMES J. FIEDLER,               JOHN A. SHANE, WILLIAM M. SCRANTON, AND ROBERT A. DEGAN,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF NEW HAMPSHIRE                    [Hon. Paul J. Barbadoro, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                                 Stahl, Circuit Judge,                                        _____________                           Campbell, Senior Circuit Judge,                                     ____________________                              and Lynch, Circuit Judge.                                         _____________                                 ____________________            Arthur R. Miller, with  whom Lee S. Shalov, Milberg Weiss  Bershad            ________________             _____________  ______________________        Hynes & Lerach LLP, Jules Brody, Mark  A. Levine, Stull Stull & Brody,        __________________  ___________  _______________  ___________________        Edward L. Hann, McLane, Graf,  Raulerson & Middleton, Joseph H. Weiss,        ______________  ____________________________________  _______________        and Weiss & Yourman, were on brief for appellant.            _______________            Peter J.  Macdonald, with whom Donald  J. Williamson and Hale  and            ___________________            _____________________     _________        Dorr, were on brief for appellees.        ____                                 ____________________                                   August 12, 1996                                 ____________________                      STAHL, Circuit Judge.  Investor David Gross appeals                      STAHL, Circuit Judge.                             _____________            from the district  court's dismissal of his  securities fraud            claim  against Summa  Four, Inc.,  its  president, and  other            Summa Four officers and directors.1   Gross claims that Summa            Four committed  "fraud on the  market" by making a  series of            public statements from  January to July 1994 that were either            materially misleading in and of themselves, or incomplete and            misleading  due to the omission of materially relevant facts.            Gross further complains that Summa Four improperly overstated            its revenue  during  the same  time  period.   After  careful            review, we affirm  the district court's dismissal  of Gross's            claims.                                          I.                                          I.                                          __                                      Background                                      Background                                      __________                      Summa  Four  is  a Delaware  corporation  with  its            principal place of business in Manchester, New Hampshire.  It            develops and  manufactures advanced-technology  switching and            signaling  systems  for use  in  telecommunications networks,            which it markets and distributes to clients worldwide.                      On September  23,  1993,  Summa  Four  successfully            completed  an initial public  offering ("IPO") of  its common                                            ____________________            1.  The  individual  defendants  are  Barry  Gorsun,  current            president, CEO and Chairman  of the Board; James  J. Fiedler,            president and director from July 1993 through July 1994; John            A.  Shane, director since 1976; William M. Scranton, director            since 1976; and Robert A. Degan, director since 1984.  Unless            otherwise   indicated  we  will   refer  to   all  defendants            collectively as "Summa Four" or "the company."                                         -2-                                          2            stock.   The individual  defendants sold a  portion of  their            shares  into  the IPO  (at a  price  of $17  per  share), but            remained significant shareholders following the offering.  As            provided in a  "lock-up" agreement with the  underwriter, the            individual  defendants  were  prohibited  from  selling   any            retained shares  in the  company for  180 days following  the            date of  the offering.   In late February 1994,  however, the            individual defendants  obtained special  permission from  the            underwriter to sell,  and did  sell, over  130,000 shares  of            Summa Four stock  at an average market price in excess of $38            per share.                          Gross, who purports to sue on behalf of himself and            all other  investors similarly situated, purchased 200 shares            of  Summa  Four  stock  in  late  May  1994  at  a  price  of            approximately $27.50 per share.  On July 5, 1994 (the closing            date  of the class  period),2 Summa  Four's stock  price fell            from  $22.25  to  $11.75 per  share  following  the company's            announcement  that its expected results for the first quarter            of fiscal year  1995 (ending June 30, 1994)  would fall short            of  earlier projections.    Shortly  thereafter,  Summa  Four            terminated  defendant James  Fiedler who  had  served as  its            president throughout the class period.            A.  Summa Four's Public Statements            __________________________________                                            ____________________            2.  The  purported "class  period" extends  from  January 18,            1994, to  July 5, 1994.   The district court  never certified            the class.                                         -3-                                          3                      From  January  to  July  1994,  Summa  Four  issued                                  several public  statements touting the  company's performance            and  profitability.    In  the  complaint,  Gross  relies  on            excerpts from three  such statements to establish  his claims            of securities fraud.   The first two excerpts  are taken from            press  releases  dated January  18  and  May  3,  1994,  that            accompanied the release of Summa Four's results for the third            and  fourth quarters  of its  1994  fiscal year.   The  third            excerpt  is  taken  from  a  June 29,  1994,  letter  to  the            shareholders from Summa Four's then president  James Fiedler.            The  June 29  letter was sent  in advance  of the end  of the            first quarter of Summa Four's 1995 fiscal year.  The relevant            portions of the three statements are quoted below.                      1.  January 18, 1994, press release:                       Competition at all levels and alternative                      technologies caused by divestiture in the                      U.S. and  privatization in  other markets                      are  fueling  growth for  new  customized                      services.   We are also  seeing increased                                                      _________                      demand for our  SDS distributed switch in                      ______ ___ ___  ___ ___________ ______                      a   number   of   international   markets                      including China, Chile and Columbia where                      there    is    rapid    development    in                      infrastructure.   .   .   .     The   SDS                      distributed   switch   is   becoming  the                      platform of choice for rapidly developing                      and   deploying   network-based  enhanced                      services worldwide.                      2.  May 3, 1994, press release:                      In the  fourth quarter [ending  March 31,                      1994], the  Company received  significant                                          ________  ___________                      orders  from  AT&T, McCaw,  Sprint,  GTE,                      ______                      Unisys, and IBM to address a broad  range                      of applications . . . .  These new orders                                         -4-                                          4                      were   for   both    new   and   existing                      applications,       domestically      and                      internationally.                                         -5-                                          5                      3.  June 29, 1994, letter to shareholders:                      We  are  pleased to  report  to  you that                      fiscal year  1994, ended March  31, 1994,                      was  a  watershed  year  in Summa  Four's                      history.    It  was a  year  in  which we                      strengthened  our  competitive  position,                      recorded our eighth  consecutive increase                      in  quarterly  revenues,   and  generated                      record net income.                        Our  strong   financial  performance   is                      ___  ______   _________  ___________                      primarily the  result of  our initiatives                      in the  highly competitive  long distance                      market . . .  .  Summa Four is  committed                      to maintaining  its worldwide  leadership                      position  in  the   public  network-based                      distributed  switch  market.     We  have                      preeminent  customers  worldwide,  broad-                      based  strategic  distribution  channels,                      public   network-certified  products,   a                                                              _                      strong   financial   position,   and   an                      ______   _________   ________                      experienced management team.                       Gross alleges  that, during the class period, Summa            Four possessed internal reports, documents, and board meeting            minutes revealing that the company was experiencing declining            growth in revenue  and earnings, delayed orders,  significant            increases in expenses, and difficulties in  its international            operations.   Specifically, in  order to  support his  claims            that the  three public  statements were  materially false  or            misleading, Gross  relies on certain internal "Flash Reports"            and "Monthly  Operating Reports"  for the  months of  January            through  April  1994,  and recorded  minutes  from  board and            internal operation meetings held in May and June 1994.  As we            progress with our  analysis, we will  discuss in more  detail            the content of these internal documents.                                          -6-                                          6            B.  The Present Lawsuit            _______________________                      On  July  12,  1994,  shortly  after  Summa  Four's            announcement of its expected results for the first quarter of            fiscal  year 1995  and the  ensuing sudden  decline in  Summa            Four's  stock price, Gross filed this securities fraud action            in the New Hampshire federal district court.  Gross purported            to  bring  the  complaint  on  behalf  of all  investors  who            purchased  Summa   Four  stock   during  the   class  period.            Following  Summa  Four's  initial  motion   to  dismiss,  the            district  court  granted  Gross  limited  discovery.     Upon            completion of that discovery, Gross amended his complaint.                        Subsequently,  Summa  Four  moved  to  dismiss  the            amended complaint.   After  briefing and  oral argument,  the            district court granted  the motion, rejecting all  of Gross's            claims.  The  court disagreed with  Gross that the  excerpted            portions of  the statements  could be  viewed as  affirmative            misrepresentations, stating that:                      A reasonable person could  not infer from                      the pleaded  acts that demand  for [Summa                      Four's products]  was no  longer growing,                      that  significant  orders  had  not  been                      received from major corporations, or that                      the   company  was   not  in   a  "strong                      financial position" simply because it did                      not    meet    its    short-term   budget                      projections,  its  orders for  one  month                      were   lower  than   expected,  and   its                      international operations were  in a state                      of disarray.                      The  court also  rejected  Gross's  claim that  the            statements  were misleading  by omission.    The court  noted                                         -7-                                          7            that, while many  of the facts Gross alleged  to support that            allegation  "might  have  been  important to  the  reasonable            investor,"  they were  not sufficient  to  indicate that  the            challenged statements were so incomplete as to be misleading.            The court  further rejected  Gross's final  claim that  Summa            Four  had   overstated  its   revenue,  reasoning  that   the            allegations  on which Gross relied did not reasonably support            the claim.  Gross now appeals.3                                         II.                                         II.                                         ___                                      Discussion                                      Discussion                                      __________                      Gross  contends that  the  district court  erred in            dismissing his claims.  He argues that the amended  complaint            adequately  alleged that  Summa  Four had  a  duty, which  it            breached, to  disclose material nonpublic information  in its            possession  necessary  to  make  its  public  statements  not            materially misleading.   Gross also contends that  Summa Four            improperly overstated  its  revenue and  earnings during  the            class period  by not following  generally accepted accounting            principles ("GAAP").  After discussing the standard of review            and the  relevant securities  law, we  address each  issue in            turn.                                              ____________________            3.  The  amended  complaint  also included  claims  regarding            alleged  misstatements  of  future  performance  and  alleged            misstatements  by third-party analysts.   Gross has expressly            abandoned those claims on appeal.                                          -8-                                          8            A.  Standard of Review            ______________________                      We review the district court's dismissal of Gross's            amended   complaint   de   novo,   taking  all   well-pleaded                                  __   ____            allegations  as true  and  giving Gross  the  benefit of  all            reasonable inferences.  See Roeder v. Alpha Indus., Inc., 814                                    ___ ______    __________________            F.2d  22, 25  (1st Cir.  1987).   Nonetheless,  because Gross            alleges  fraud,  he  is subject  to  the  heightened pleading            requirements  of Fed.  R. Civ.  P. 9(b), which  provides that            "[i]n  all averments of  fraud or mistake,  the circumstances            constituting  the fraud  or  mistake  shall  be  stated  with            particularity."                        Rule 9(b) sets  a demanding standard in  order to            "minimize   the  chance  that  a  plaintiff  with  a  largely            groundless  claim will  bring a  suit  and conduct  extensive            discovery  in the hopes of obtaining an increased settlement,            rather  than  in  the  hopes  that  the process  will  reveal            relevant  evidence."  Romani  v. Shearson Lehman  Hutton, 929                                  ______     _______________________            F.2d  875, 878  (1st  Cir.  1991)  (internal  quotations  and            citations  omitted).   We  have  been  especially  strict  in            demanding adherence to  Rule 9(b) in the  securities context,            id., expressly stating that             ___                      "general    averments   of    defendants'                      knowledge  of material  falsity will  not                      suffice.  Consistent with Fed. R. Civ. P.                      9(b),  the   complaint  must   set  forth                      specific facts that make it reasonable to                      believe that the defendant[s] knew that a                      statement   was   materially   false   or                      misleading.  The  rule requires that  the                                         -9-                                          9                      particular times, dates, places, or other                      details   of   the   alleged   fraudulent                      involvement of the actors be alleged."            Lucia v. Prospect St. High Income Fund, 36 F.3d 170, 174 (1st            ______   _____________________________            Cir. 1994) (quoting  Serabian v. Amoskeag Bank  Shares, Inc.,                                 ________    ___________________________            24 F.3d 357, 361 (1st Cir. 1994)).                      Furthermore,  we  have  consistently  held  that  a            securities  plaintiff does  not satisfy  the requirements  of            Rule  9(b)   merely  by  pleading  "`fraud   by  hindsight.'"            Greenstone v. Cambex  Corp., 975 F.2d 22, 25  (1st Cir. 1992)            __________    _____________            (quoting Denny v. Barber, 576  F.2d 465, 470 (2d Cir. 1978)).                     _____    ______            In  other words, "a  general averment that  defendants `knew'            earlier what  later turned  out  badly" does  not convey  the            necessary particularity  that Rule  9(b) requires.   Id.   In                                                                 ___            addition, the  heightened pleading  requirement of  Rule 9(b)            applies even  when the  fraud relates  to matters  peculiarly            within  the defendant's knowledge.   Lucia,  36 F.3d  at 174;                                                 _____            Romani, 929 F.2d at 878.                ______            B.  Requirements of a 10b-5 Claim            _________________________________                      Gross  bases his fraud claims on alleged violations            of   10(b) of the Securities  Exchange Act and the Securities            and Exchange Commission's Rule  10b-5 promulgated thereunder.            15 U.S.C.    78j(b); 17 C.F.R.    240.10b.5.   Together these            provisions prohibit any person, directly  or indirectly, from            committing  fraud in connection with  the purchase or sale of            securities.  Id.; Shaw v. Digital Equip. Corp., 82 F.3d 1194,                         ___  ____    ____________________                                         -10-                                          10            1217  (1st Cir. 1996).   To state  a cause of  action under              10(b)  and  Rule  10(b)(5),  a  plaintiff  must  plead,  with            sufficient particularity,  that  the defendant  made a  false            statement  or omitted  a material  fact,  with the  requisite            scienter, and that the plaintiff's reliance on this statement            or omission caused the plaintiff's  injury.  Shaw, 82 F.3d at                                                         ____            1217; see  also San  Leandro Emergency  Medical Group  Profit                  ___  ____ _____________________________________________            Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 808 (2d Cir.            ____________    __________________            1996).  A misrepresented  or omitted fact will  be considered            material  only if a reasonable investor would have viewed the            misrepresentation  or   omission  as   "having  significantly            altered the total mix of information made available."  Basic,                                                                   ______            Inc. v. Levinson, 485 U.S. 224, 231-32 (1988).            ____    ________                      By  itself, however, Rule 10b-5, does not create an            affirmative duty of  disclosure.  Indeed, a  corporation does            not commit securities fraud merely by failing to disclose all            nonpublic  material information in  its possession.   Roeder,                                                                  ______            814 F.2d at  26 (citing Chiarella v. United  States, 445 U.S.                                    _________    ______________            222,  235 (1980));  see  also Shaw,  82 F.3d  at  1202.   The                                ___  ____ ____            corporation must first have a  duty to disclose the nonpublic            material information  before the potential for  any liability            under the securities  laws emerges.  Roeder, 814  F.2d at 26.                                                 ______            Such  a duty  may arise  if,  inter alia,  a corporation  has                                          _____ ____            previously  made a statement of  material fact that is either                                         -11-                                          11            false,  inaccurate, incomplete, or misleading in light of the            undisclosed information.  See id. at 27.4                                         ___ ___                      Thus, "[w]hen a corporation does make a disclosure-            -whether it be voluntary or required--there is a duty to make            it complete and accurate."  Id.  at 26.  "This, however, does                                        ___            not mean that by revealing one fact about a product, one must            reveal  all others that,  too, would be  interesting, market-            wise, but means only such others,  if any, that are needed so            that  what was  revealed would  not be  `so incomplete  as to            mislead.'"  Backman  v. Polaroid Corp., 910 F.2d  10, 16 (1st                        _______     ______________            Cir. 1990) (en banc) (quoting  SEC v. Texas Gulf Sulphur Co.,                        __ ____            ___    ______________________            401 F.2d 833, 862 (2d Cir. 1968) (en banc), cert. denied, 394                                              __ ____   _____ ______            U.S. 976 (1969)).   Furthermore, the fact that  a company has            reported accurately about  past successes does not  by itself            burden  the company  with a  duty to  inform the  market that            present  circumstances are less  positive.  Shaw,  82 F.3d at                                                        ____            1202; Serabian  v. Amoskeag Bank  Shares, Inc., 24  F.3d 357,                  ________     ___________________________            361 (1st Cir. 1994).            C.  Analysis            ____________                      We turn first  to Gross's claims that  Summa Four's            various public statements during the class period were either                                            ____________________            4.  In Roeder, we also  alluded to two other  situations that                   ______            could  give rise to  a duty to disclose  material facts:  (1)            when an  insider trades  in the company's  securities on  the            basis of nonpublic  material information; (2) when  a statute            or regulation mandates disclosure.  See Shaw, 82 F.3d at 1202                                                ___ ____            n.3 (discussing Roeder).                            ______                                         -12-                                          12            false  and  misleading in  and  of  themselves  or false  and            misleading by omission.  We  take the claims arising from the            June  29 letter  first, and then  address the  claims arising            from  the  earlier  January  18 and  May  3  press  releases.            Finally, we turn to Gross's claim that, by employing improper            accounting  procedures,  Summa  Four  overstated its  revenue            during the class period.                       1.  June 29 Letter                      __________________                      Gross complains that, given the letter's failure to            disclose Summa Four's  impending poorer-than-expected results            for the  first quarter  of fiscal  year 1995,  its statements            that  the  company   had  experienced  a   "strong  financial            performance" and  was in  "a strong  financial position"  are            either  patently false  or  clearly  misleading by  omission.            Summa  Four  disputes  this  contention,  arguing  that  both            statements are completely borne out  by the facts alleged  in            the amended  complaint.  Summa  Four argues that  the "strong            financial  performance"   statement  is   a  backward-looking            statement  referring to  its record  results  in fiscal  year            1994.   Summa Four further  adds that nothing in  the amended            complaint,  viz.,  allegations concerning  its  disappointing                        ____            first quarter 1995  results, supports the inference  that the            company was not in a "strong financial position."                        While  the  issues  raised by  the  June  29 letter            represent,  perhaps, Gross's  strongest  claims, we  need not                                         -13-                                          13            choose between  the parties' contrary positions.   Regardless            of the merits,  because Gross purchased his stock  on May 27,            1994, well  before Summa Four  issued the June 29  letter, he            has no standing to complain  about the statements included in            the letter.  See Shaw, 82  F.3d at 1222 (only individuals who                         ___ ____            purchased shares after  allegedly misleading statement  could                             _____            have  suffered a  cognizable  injury);  Roots Partnership  v.                                                    _________________            Lands'  End, Inc.,  965  F.2d  1411,  1420  (7th  Cir.  1992)            _________________            (similar).  In  other words,  because Summa  Four issued  the            letter after Gross had purchased his stock, the statements in            the letter could not possibly  have inflated the market price            that he paid  for those shares.  Roots  Partnership, 965 F.2d                                             __________________            at 1420.  Moreover, although  Gross purports to bring a class            action on behalf of all individuals who purchased  Summa Four            shares during the  class period, he cannot maintain an action            on behalf of class members to  redress an injury for which he            has no standing in his own right.  Id. at 1420 n.6; see Britt                                               ___              ___ _____            v. McKenny, 529 F.2d 44, 45 (1st Cir.) ("If none of the named               _______            plaintiffs  may maintain action on their own behalf, they may            not seek such  relief on behalf of a  class."), cert. denied,                                                            _____ ______            429 U.S.  854 (1976);  see also Lewis  v. Casey,  64 U.S.L.W.                                                                               ___ ____ _____     _____            4587, 4590 (U.S. June 25, 1996).                       2.    January 18  Press  Release:   False                      _________________________________________                      Statement of Current Facts                      __________________________                                         -14-                                          14                      Apart  from the  claims arising  from  the June  29                                  letter,  Gross points  to one  statement  excerpted from  the            January  18,  1994,  press release  as  constituting  a false            statement of current facts.   Gross contends that the amended            complaint sufficiently  alleged that  Summa Four's  statement            that "We are  seeing increased demand for our SDS distributed                                 _________ ______            switch  in a number of international markets including China,            Chile and Colombia" is patently false and a violation of Rule            10b-5.  We disagree.                      Though Gross adamantly  contends that the statement            is false, the amended complaint provides little in the way of            specific facts to  support this contention.   See Greenstone,                                                          ___ __________            975 F.2d at 25 ("complaint must set forth specific facts that            make it reasonable to believe  that the defendant knew that a            statement  was materially  false  or  misleading"); see  also                                                                ___  ____            Glassman  v. Computervision Corp.,  No. 95-2240, slip  op. at            ________     ____________________            31-34 (1st  Cir. July 31,  1996) (complaint failed  to allege            sufficient   factual   basis   for   claim  that   up-to-date            information was ignored in setting offering prices).  Indeed,            when  pressed  by  the  district court  on  this  very  issue            following  the  limited discovery,  Gross's  counsel conceded            that the amended complaint failed  to point to any "documents            that  expressly say that on January  18th or thereabouts that            the [SDS] switch  [was] experiencing declining orders."   The            only document contemporaneous to the January 18 press release                                         -15-                                          15            that Gross  cites to support  his claim, a January  20 "Flash            Report," made no comment on any product, or on any particular            international market.  At best, the January 20 "Flash Report"            revealed that Summa Four had experienced some slight negative            variances  from its overall  budgeted revenues and  costs for            the reporting period ending December 31, 1993.  Such evidence            hardly  supports the inference  that the  demand for  the SDS            switch was not increasing in the named international markets.                      Moreover, the additional  statement in the  January            20  "Flash Report" that  Summa Four's  "overall International            sales  and marketing efforts  are currently under  review and            will be revised"  provides little further support for Gross's            claim.     That  Summa   Four  was   reviewing  its   overall            international  marketing  efforts  does  not  contradict  the            assertion in the January 18 press release that demand for the            SDS switch was  increasing in certain areas.   Neither do the            later reports  and meeting minutes adverted to in the amended            complaint adequately  support the inference  that the excerpt            from the  January  18 press  release  was false  when  made.5                                            ____________________            5.  Summa  Four's January  Monthly  Operating Report,  issued            February 25, 1994, states, inter alia, that                                       _____ ____                      [a]   major   reorganization   of   sales                      responsibilities   in    [the   company's                      international operations]  is planned  to                      take  place during March.  It is intended                      to refocus that  organization on European                      opportunities   and   to   emphasize  the                      development of  distribution channels  in                      major  marketplaces  such as  France  and                                         -16-                                          16            See,  e.g.,  Shaw,  82  F.3d  at 1223  (under  Rule  9(b),  a            ___   ____   ____            plaintiff may not  contrast a defendant's past  optimism with            less  favorable actual results,  and then simply  contend the            difference is fraud).  None of these later reports or minutes            specifically  reflect on  demand  for the  SDS switch  in the            China,  Chile,   or  Colombia  markets.    More  importantly,            although   they  arguably   suggest  that   Summa  Four   was            experiencing growing  difficulties in  the management  of its            international  operations  at  the  time those  documents  or            minutes were issued (in late February, April, and June), they            do not adequately support the inference that the company knew            of  these difficulties  (or that they  even existed)  when it            issued the January 18 press release.                      3.   May 3 Press Release:   Misleading Omissions of                      ___________________________________________________                      Current Facts                        _____________                      Gross also contends  that Summa  Four made  several            technically  accurate statements about  its receipt of orders            without  disclosing  facts  known to  the  company  that were                                            ____________________                      Germany.            The report further states that a "corporate reorganization of            Austrel's     domestic     and     international    marketing            responsibilities  has  slowed  completion  of the  Australian            opportunities."                      Summa Four's March Monthly Operating Report, issued            in April 1994,  indicated that the  company had replaced  the            Managing Director of  Summa Four's European  operations along            with  two other members of the international management team.            In  addition, an excerpt from the minutes of a June 20, 1994,            meeting  indicated that Summa  Four was  experiencing further            difficulties in its international operations.                                         -17-                                          17            necessary to  make the  disclosed statements  not misleading.            Gross points principally  to an excerpt from the  May 3 press            release,  stating that "[i]n the fourth quarter [ending March            31, 1994], the Company [had] received significant orders from                                         ________ ___________ ______            AT&T, McCaw, Sprint, GTE, Unisys,  and IBM to address a broad            range  of applications."6  Gross contends that this statement            was materially  misleading because  Summa Four  did not  also            tell investors that, at that time, it was experiencing delays            in consummating contracts for  at least one of  these orders,            in receiving other orders, and in shipping products.  We find            Gross's arguments unavailing.7                      First,  assuming  arguendo that  Gross  has alleged                                        ________            sufficiently particular facts to  support the inference  that            the company  knew about the  purported delays at the  time it            issued  the May 3 press release, we do not believe that those            alleged  delays make  Summa  Four's  statement  that  it  had            received "significant orders" in the prior quarter materially                                            ____________________            6.  In  the amended complaint, Gross never quotes the portion            of  the challenged statement that expressly indicates that it            refers  to  orders   received  "[i]n  the   fourth  quarter."            Nevertheless,  in reviewing  a  motion  to  dismiss,  we  may            consider  in its  entirety  a  relevant  document  explicitly            relied on by the  plaintiff in the  complaint.  See Shaw,  82                                                            ___ ____            F.3d at 1220; Philip Morris, 75 F.3d at 809.                           _____________            7.  Gross also points to an excerpt from the January 18 press            release, which noted that Summa Four had received orders from            Unisys, Sprint, IBM, DEC, Pacific  Bell, USWest and AT&T.  We            reject  Gross's  claims  with regard  to  this  statement for            essentially the  same reasons that  we reject his  claim that            the May 3 statement was materially misleading.                                          -18-                                          18            misleading.  As  Gross acknowledges, the statement  about the            orders is not false:   Gross does not contend that Summa Four            did   not  receive  the  orders.    Moreover,  the  statement            specifically concerns past events -- the receipt of orders in            the prior quarter.   We have consistently held  that the fact            that a company makes an affirmative true statement about past            results does  not give  rise  to a  duty  to comment  on  its            current  status.   Serabian,  24 F.3d  at  361; Capri  Optics                               ________                     _____________            Profit Sharing  v. Digital Equip.  Corp., 950 F.2d 5,  8 (1st            ______________     _____________________            Cir. 1991).                  Moreover,  the cases  on  which  Gross  relies  for  the            proposition  that the failure to disclose information similar            to  that alleged  here was  a material  omission are  clearly            distinguishable.  For  example, Gross cites Alfus  v. Pyramid                                                        _____     _______            Technology Corp., 764  F. Supp. 598, 603-04 (N.D. Cal. 1991),            ________________            as holding that a company's failure to  disclose, inter alia,                                                              __________            "manufacturing delays" and "flattening sales" was an omission            sufficient to survive  the company's motion  to dismiss.   In            Alfus, however, the public statements allegedly undermined by            _____            the nondisclosed  information were  more specific  statements            about  the company's  revenue  and  earnings potentials  than            those Gross  alleges here.   Where Gross  only points  to two            public statements concerning  past orders  received by  Summa            Four, the statements in Alfus dealt with definite projections                                    _____            (e.g., "[W]e forecast total revenue growth of  40 percent, to             ____                                         -19-                                          19            $110-120  million.     We   view  this   as  a   conservative            estimate.").  Id. at 602; see also In re Sunrise Technologies                          ___         ___ ____ __________________________            Sec. Litig., [1992 Transfer Binder] Fed. Sec. L. Rep. (CCH)              ___________            97,042 (N.D. Cal. Sept. 22, 1992) (similar).  In short, we do            not believe that  Gross's allegations that the  company knew,            but failed to  disclose, that it was suffering various delays            in closing contracts, receiving orders, and shipping products            are sufficient to  support a claim that its  statement in the            May 3 press release about past orders received was materially            misleading.   Furthermore, to  the extent that  the statement            that Summa Four  had received "significant orders"  carries a            positive implication about the its future success (viz., that                                                               ____            Summa Four received significant  orders last quarter  implies            that  it  would  fill  and  profit  from  those  orders  this            quarter), an so might,  arguably, be the basis for  a duty to            update claim, we think this  statement falls in the  category            of  vague and loosely  optimistic statements that  this court            has held  nonactionable as  a matter of  law.   See Glassman,                                                            ___ ________            slip op. at 49-50; Shaw, 82 F.3d at 1217-19.                               ____                      In  any event, the  amended complaint does  not set            forth  sufficiently particular  facts  from  which one  could            reasonably  infer  that  Summa Four  knew  about  the alleged            delays at the  time it issued the May 3 press release.  Gross            first points to a March 17 report that stated both that Summa            Four had  experienced "delays in  resolving several  customer                                         -20-                                          20            issues  and gaining closure  on contracts [that]  caused some            [revenue] slippage out of [February]" and that, due to delays            of several  major orders in February, Summa  Four had reduced                                        ________            its internal bookings  and revenue forecasts for  the quarter            ending  March 31,  1994.   Both  of these  excerpts, however,            speak to  events that  occurred in February  1994 and  do not            support  the  inference  that Summa  Four  was  continuing to            experience  delays  in  May substantial  enough  to  make the            statements in the May 3 press release materially misleading.                       Moreover, neither do we believe that the references            in the minutes  of the  June 14  board meeting  to delays  in            orders  that  the  company  was  experiencing  at  that  time            sufficiently support the  inference that Summa Four  was (and            knew  that it was) experiencing the  alleged delays and other            difficulties at  the time of  the May 3  press release.   The            June 14 board  meeting was held five weeks  after the company            issued the  May 3 press  release.  Compare Philip  Morris, 75                                               _______ ______________            F.3d at 812  (cannot infer  that company  knew statements  in            prospectus  concerning retail sales  were false when  made on            the basis  that decline  in sales  was announced  three weeks            later) with Shaw,  82 F.3d at  1224-25 (where prospectus  was                   ____ ____            issued just eleven days prior to the  end of the quarter with            disappointing results -- and three weeks prior to  the actual            disclosure of the  disappointing results -- the  proximity in                                         -21-                                          21            time, although not sufficient by itself to survive Rule 9(b),            provided some support for the fraud claims).                      4.  Overstatement of Revenue                      ____________________________                      Gross  also  claims  that Summa  Four's  statements            regarding  its revenue and  earnings during the  class period            were materially misleading because,  contrary to GAAP,  Summa            Four recognized revenue upon receipt of orders rather than on            shipment  of  products.   Gross  claims  that  this premature            recognition  of  income  allowed  Summa   Four  to  overstate            significantly its  revenues  and earnings  during  the  class            period.                       To support this claim, Gross alleges that, although            Summa Four typically requires twelve  to twenty weeks to ship            its switches  following the  placement of  an order,  Fiedler            stated  at a  June 14  board meeting  that the  company could            generate up  to  $4.7 million  in  new revenues  through  the            receipt of new  orders in the two weeks  remaining before the            end of the quarter.   Gross contends that, given the  time it            takes  Summa   Four  to   fill  orders,   the  statement   is            inexplicable unless  the company was recognizing revenue upon            receipt of  orders instead  of  upon shipment.   Gross  finds            further corroboration for this claim in Summa Four's May 1994            board meeting minutes where it is recorded that the company's            chief  financial  officer  was  working  on  a  new  "revenue                                         -22-                                          22            recognition  policy"  that  was to  be  "more  formalized and            somewhat more restrictive" than its previous policy.                      Though these  contentions  give us  some pause,  we            nonetheless agree with  the district court that  Gross failed            to   plead  this  claim  with  sufficient  particularity  for            purposes  of  Rule  9(b).    As we  have  noted,  "a  general            allegation  that the practices  at issue resulted  in a false            report of company  earnings is not a  sufficiently particular            claim   of   misrepresentation  [to   satisfy   Rule  9(b)]."            Serabian, 24 F.3d at 362 n.5.  In this case, Gross has failed            ________            to allege any  particulars to support his  general allegation            of inflated earnings  through the use of  improper accounting            methods.  Specifically, he has  not alleged the amount of the            putative overstatement  or  the  net  effect it  had  on  the            company's earnings.  See Shushany v. Allwaste, Inc., 992 F.2d                                 ___ ________    ______________            517,  522  (5th  Cir.  1993)  (allegation  that  company  had            adjusted  the accounting of its inventory to inflate revenues            and  earnings   does  not  sufficiently   plead  fraud  where            complaint does not  explain, inter alia, how  the adjustments                                         _____ ____            affected the  company's financial statements and whether they            were material  in light  of the  company's overall  financial            position); Roots  Partnership, 965  F.2d at  1419 (allegation                       __________________            that company "failed  to establish adequate reserves  for its            excessive  and outdated inventory" does not satisfy Rule 9(b)            where  investor does not  allege "what  the reserves  were or                                         -23-                                          23            suggest  how great the reserves should have been"); Decker v.                                                                ______            Massey-Ferguson,  Ltd.,  681  F.2d 111,  116  (2d  Cir. 1982)            ______________________            (allegation that  company's failure  to write  down value  of            obsolete equipment  does not sufficiently  plead fraud  where            plaintiff  did  not  allege amounts  at  which  equipment was            carried--or should  have been  carried--on company's  books);            Schick v.  Ernst & Young,  141 F.R.D. 23, 27  (S.D.N.Y. 1992)            ______     _____________            (allegations  that  accountants   "significantly  overstated"            assets   of   company  in   prospectus  did   not  adequately            particularize  the alleged  misrepresentations and  omissions            where plaintiff failed to allege  the amount of the purported            overstatement); cf.  Cohen v. Koenig, 25 F.3d  1168, 1173 (2d                            ___  _____    ______            Cir. 1994)  (fraud pleaded  with sufficient particularity  by            setting out representations made, what financial figures they            were given,  and what they  alleged to be the  true financial            figures).                        Moreover, the  single statement  by Fiedler  during            the minutes of the June 14 board meeting is far too tenuous a            foundation  (at  least  for Rule  9(b)  purposes)  to support            Gross's claim that Summa Four had fraudulently overstated its            revenue.    Arguably,  the statement  supports  a  reasonable            inference that  the company,  or at  least Fiedler,  may have            contemplated  booking  revenue  upon  the receipt  of  orders            rather than shipment for the quarter ending on June 30, 1994;            however, we  do not think  that the statement, by  itself, is                                         -24-                                          24            sufficient to indicate  that the company had  actually booked            as  revenue  sales  instead  of  shipments  in  any  previous            quarter.8     Moreover,  we   do  not  think   the  ambiguous            statements  taken from  the  minutes of  the  May 1994  board            meeting  concerning review of the company's accounting system            corroborate  Fiedler's  June  14  statement  sufficiently  to            overcome the deficiencies in Gross's pleadings.9                                         III.                                         III.                                         ____                                      Conclusion                                      Conclusion                                      __________                      For  the foregoing reasons,  we affirm the judgment                                                      affirm                                                      ______            of the district court.  Costs to appellee.                                    Costs to appellee.                                    _________________                                            ____________________            8.  As with the June 29  letter, Gross would have no standing            to assert a securities fraud claim that  Summa Four misstated            its revenue only for the quarter ending June 30, 1994.            9.  Gross  also contends  that the  district  court erred  in            refusing to  consider two  additional affidavits  Gross filed            with  the court to  accompany his motion  for reconsideration            pursuant to Fed R. Civ. P. 59(e).  The district court refused            to  consider the additional affidavits, noting that Gross had            "not  demonstrated that  he  could  not  have  produced  this            information in  response to  defendant's motion to  dismiss."            In  that the affidavits address whether the amended complaint            adequately alleged undisclosed facts to support the inference            that a reasonable investor would have considered Summa Four's            public  statements  to be  false and  misleading --  an issue            clearly before the court on Summa Four's motion to dismiss --            we find  no abuse of discretion by  the district court in its            refusal to consider them.   See, e.g., Williams v. Poulos, 11                                        ___  ____  ________    ______            F.3d  271,  289  (1st  Cir.  1993)  (reconsideration  rulings            reviewed only for abuse of discretion).                                          -25-                                          25
