John Ingram, on behalf of himself and all others similarly situated v. VIVUS, INC., LELAND F. WILSON, and WESLEY W. DAY, Ph. D.

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN INGRAM, on behalf of himself and
all others similarly situated,
Plaintiff-Appellant,
v.
VIVUS, INC., LELAND F. WILSON, and
WESLEY W. DAY, Ph. D.,
Defendants-Appellees.
No. 12-17398
D.C. No. 4:10-cv-04957-PJH
MEMORANDUM*
Appeal from the United States District Court
for the Northern District of California
Phyllis J. Hamilton, District Judge, Presiding
Argued and Submitted January 16, 2015
San Francisco, California
Before: NOONAN and CLIFTON, Circuit Judges, and ADELMAN, District
Judge.**
The plaintiff appeals from a judgment of the district court granting the
defendants’ motion to dismiss his class action complaint, which asserts claims under
FILED
JAN 29 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The Honorable Lynn S. Adelman, District Judge for the United States
District Court for the Eastern District of Wisconsin, sitting by designation.

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the Securities Exchange Act of 1934. A complaint alleging securities fraud must
comply with Federal Rules of Civil Procedure 8 and 9 and the pleading requirements
of the Private Securities Litigation Reform Act, 15 U.S.C. § 78u-4(b). In the present
case, the district court concluded that the complaint did not satisfy these requirements
because it did not adequately allege that the defendants made materially misleading
statements or omissions and did not adequately state facts giving rise to a strong
inference of scienter.
We agree with the district court that the complaint did not adequately allege that
the defendants made materially misleading statements or omissions. The plaintiff
does not allege that any of the defendants’ statements were literally false. Instead, he
alleges that when the defendants made positive statements about the safety of Qnexa,
VIVUS’s then-developmental weight-loss drug, they misled investors by failing to
disclose information about certain side effects observed during the Qnexa clinical
trials. However, the complaint does not give rise to a plausible inference that it is
substantially likely that a reasonable investor wold have viewed that information as
significantly altering the total mix of information the defendants made available about
Qnexa’s safety. See Matrixx Initiatives, Inc. v. Siracusano, __ U.S. __, 131 S.Ct.
1309, 1318 (2011).
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We also agree with the district court that the allegations of the complaint do not
give rise to an inference of scienter that is “cogent and at least as compelling as any
opposing inference one could draw from the facts alleged.” Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 324 (2007). Even if we were to assume that the
defendants materially misled investors when they made positive statements about the
safety of Qnexa without also disclosing the side-effect data, the most compelling
inference one can draw from the facts alleged is that the defendants were, at worst,
negligent in failing to appreciate that a reasonable investor would deem the omitted
data material. See In re VeriFone Holdings, Inc. Sec. Litig., 704 F.3d 694, 702 (9th
Cir. 2012) (stating that negligence is insufficient to establish scienter).
Because we conclude that the plaintiff has failed to plead primary violations of
Section 10(b) and Rule 10b-5, we also conclude that the Section 20 claims were
properly dismissed. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 990
(9th Cir. 2009) (control-person claims may be dismissed summarily when plaintiff
fails to plead primary claim of securities fraud).
Finally, we conclude that the district court did not abuse its discretion in
dismissing the complaint without granting leave to amend. Id. at 989, 1007.
AFFIRMED.
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