GARY CHENG, Individually v. Activision Blizzard, Inc.; Robert A. Kotick; Dennis Durkin; Armin Zerza; Brian Kelly

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GARY CHENG, Individually and on behalf
of all others similarly situated; MICAH
ERNST; MICHAEL NOON; NICK
BALDWIN; CHRIS MARTIN;
ALEJANDRO TOIBER; JEFF ROSS,
Plaintiffs-Appellants,
v.
ACTIVISION BLIZZARD, INC.; ROBERT
A. KOTICK; DENNIS DURKIN; ARMIN
ZERZA; BRIAN KELLY,
Defendants-Appellees.
No. 23-55158
D.C. No.
2:21-cv-06240-PA-JEM
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Percy Anderson, District Judge, Presiding
Argued and Submitted January 11, 2024
Pasadena, California
Before: BOGGS,** RAWLINSON, and H.A. THOMAS, Circuit Judges.
Gary Cheng appeals the district court’s dismissal of his securities-fraud suit
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The Honorable Danny J. Boggs, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
FILED
JAN 19 2024
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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against Activision Blizzard, Inc. (Activision). We have jurisdiction under 28
U.S.C. § 1291. We review de novo a district court’s dismissal of a complaint for
failure to state a claim. Glazer Cap. Mgmt., L.P. v. Forescout Techs., Inc., 63 F.4th
747, 763 (9th Cir. 2023). We affirm.
As the district court held, Cheng’s Third Amended Complaint (TAC) failed
to meet the heightened pleading requirements imposed by the Private Securities
Litigation Reform Act and the Federal Rules of Civil Procedure in securities-fraud
class actions. 15 U.S.C. § 78u-4(b); Fed. R. Civ. P. 9(b). Cheng did not plead facts
leading to a strong inference that Kotick knew or deliberately disregarded the fact
that the California Department of Fair Employment and Housing1 and U.S. Equal
Employment Opportunity Commission investigations were nonroutine, significant,
and likely to have material adverse outcomes. 15 U.S.C. § 78u-4(b)(2)(A); Nguyen
v. Endologix, Inc., 962 F.3d 405, 414 (9th Cir. 2020); Tellabs, Inc. v. Makor Issues
& Rts., Ltd., 551 U.S. 308, 324 (2007). Because Activision could only have
scienter through Kotick, Cheng failed to adequately plead a strong inference of
scienter against Activision. Prodanova v. H. C. Wainwright & Co., 993 F.3d 1097,
1108 (9th Cir. 2021). Because Cheng’s failure to adequately plead scienter
constitutes an independent basis to affirm the district court’s dismissal of the TAC,
we do not reach the adequacy of the pleading of falsity or of loss causation in the
1 Now the California Civil Rights Department.

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TAC. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 986–87 (9th Cir.
2009). Cheng’s control person claim under Section 20(a) of the Exchange Act
necessarily also fails. Webb v. SolarCity Corp., 884 F.3d 844, 858 (9th Cir. 2018).
AFFIRMED.

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