                                                                                 FILED
                            NOT FOR PUBLICATION                                   JUN 05 2015

                                                                             MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                            U.S. COURT OF APPEALS



                             FOR THE NINTH CIRCUIT


FRESNO COUNTY EMPLOYEES’                           No. 13-55661
RETIREMENT ASSOCIATION, on
behalf of itself, and all others similarly         D.C. No. 3:10-cv-01673-BEN-
situated,                                          KSC

              Plaintiff - Appellant,
                                                   MEMORANDUM*
 v.

ALPHATEC HOLDINGS, INC.; et al.,

              Defendants - Appellees.


                    Appeal from the United States District Court
                      for the Southern District of California
                    Roger T. Benitez, District Judge, Presiding

                         Argued and Submitted May 5, 2015
                               Pasadena, California

Before: PREGERSON, TALLMAN, and NGUYEN, Circuit Judges.

      Fresno County Employees’ Retirement Association (“Fresno”) appeals the

district court’s dismissal of its action alleging violations of federal securities laws

by various entities and related individuals. We have jurisdiction pursuant to 28


        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
U.S.C. § 1291. Reviewing de novo, In re NVIDIA Corp. Sec. Litig., 768 F.3d

1046, 1051 (9th Cir. 2014), we affirm.

      First, we agree with the district court that the operative second amended

complaint does not allege a false or misleading statement. The statement that

Alphatec had “already begun to realize synergies from the Scient’x acquisition” is

not false or misleading because it refers to specific synergies unrelated to the

quality of Scient’x’s inventory. See In re Rigel Pharm., Inc. Sec. Litig., 697 F.3d

869, 880–81 (9th Cir. 2012); cf. Berson v. Applied Signal Tech., Inc., 527 F.3d

982, 985–87 (9th Cir. 2008) (noting that there is no general duty to disclose, but

once a company chooses to discuss a topic, it must do so in a way that is not

misleading). Similarly, the prospectus’s statement that Alphatec’s “revenues

throughout the balance of 2010 will continue to grow” is not false or misleading

because the complaint fails to sufficiently allege facts demonstrating a relationship

between the alleged difficulties with Scient’x’s inventory and the accuracy of

Alphatec’s revenue projections. See Ronconi v. Larkin, 253 F.3d 423, 433–34 (9th

Cir. 2001). Rather, the allegations demonstrate only that, in March and April 2010,

Alphatec encountered difficulties with the quality and documentation of an

unspecified percentage of Scient’x’s domestic inventory. Finally, the statement of

Alphatec’s CEO that “Scient’x’s U.S. operations have been consolidated into


                                          2
Alphatec Spine” is not false or misleading because it does not say or imply

anything about Scient’x’s inventory; the consolidation of Scient’x’s operations

with those of Alphatec Spine is conceptually distinct from the question of whether

Scient’x’s inventory was in salable condition. See Brody v. Transitional Hosps.

Corp., 280 F.3d 997, 1005–07 (9th Cir. 2002).

      Next, even assuming, without deciding, that Item 303 of SEC Regulation S-

K, 17 C.F.R. § 229.303(a)(3)(ii), applies to registration statements filed on SEC

Form S-3, the alleged inventory problems do not rise to the level of a “known trend

or uncertaint[y]” reasonably expected to “have a material . . . unfavorable impact

on net sales or revenues or income from continuing operations.” See id. This is so

because the complaint does not specify what portion of Scient’x’s overall

inventory was found to be defective or lacking proper documentation, nor does it

explain how the quality of Scient’x’s inventory factored into Alphatec’s revenue

projections.

      Accordingly, due to the lack of a false or misleading statement or an

undisclosed “known trend or uncertaint[y],” the district court correctly found that

Fresno fails to state a claim under Sections 11 and 12(a)(2) of the Securities Act of

1933, 15 U.S.C. §§ 77k(a), 77l(a)(2), Section 10(b) of the Securities Exchange Act

of 1934, 15 U.S.C. § 78j, or SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. See Rigel,


                                          3
697 F.3d at 885–86; cf. In re Daou Sys., Inc., 411 F.3d 1006, 1027–29 (9th Cir.

2005).

      Even if one or more of these three statements was misleading, we agree with

the district court that Fresno’s claim under Section 10(b) of the Securities

Exchange Act and SEC Rule 10b-5 fails for the additional reason that the

complaint’s allegations do not give rise to a “strong inference” of scienter. See

NVIDIA, 768 F.3d at 1052 (quoting 15 U.S.C. § 78u-4(b)(2)(A)). In this regard,

the problems with Scient’x’s inventory, as alleged, were not sufficiently definite or

severe at the time that the three statements were made in order to support a

compelling inference that any of defendants intended to “deceive, manipulate, or

defraud” investors. See id. at 1053 (quoting Ernst & Ernst v. Hochfelder, 425 U.S.

185, 193 n.12 (1976)).

      Finally, the district court correctly dismissed the claims under Section 20(a)

of the Securities Exchange Act, 15 U.S.C. § 78t(a), and Section 15 of the Securities

Act, 15 U.S.C. § 77o, due to Fresno’s failure to state a claim for a primary

violation of the securities laws. See, e.g., Paracor Fin. v. Gen. Elec. Capital Corp.,

96 F.3d 1151, 1161–62 (9th Cir. 1996).

      AFFIRMED.




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