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City of Dearborn Heights v. Align Technology, Inc., 5/5/17
November 5, 2017

A qualitative assessment of fair value was an opinion statement for purposes of a securities fraud claim under Securities Exchange Act § 10(b) (15 U.S.C.S. § 78j(b)) and S.E.C. Rule 10b-5 (17 C.F.R. § 240.10b-5), while an assertion that no facts and circumstances indicated impairment of goodwill was an opinion statement with an embedded statement of fact. The court overruled Reese v. Malone, 747 F.3d 557 (9th Cir. 2014), as inconsistent with Supreme Court case law to the extent it had allowed pleading falsity by alleging no reasonable basis for the belief under a material misrepresentation theory. The complaint inadequately pleaded under Fed. R. Civ. P. 9(b) and 15 U.S.C.S. § 78u-4(b) subjective falsity, omitted material facts, and scienter. Absent a primary violation, a control person claim under Securities Exchange Act § 20(a) (15 U.S.C.S. § 78t(a)) failed. The lower court’s dismissal was affirmed.