Gompper v. Visx, Inc.

Summary

The Ninth Circuit affirmed dismissal of a securities fraud class action against VISX, Inc. and its individual officers and directors. The court held that the complaint failed to plead falsity and scienter with the particularity required by the Private Securities Litigation Reform Act. It further held that courts must consider all reasonable inferences, including those unfavorable to plaintiffs, when determining whether a strong inference of scienter exists, and that leave to amend was properly denied as futile.

Holdings

1. The complaint did not allege particularized facts giving rise to a strong inference that the defendants knew, or acted with deliberate recklessness as to, the falsity of their optimistic statements concerning VISX's business and patent portfolio.
2. When deciding whether a complaint establishes a strong inference of scienter under the PSLRA, the court must consider all reasonable inferences arising from the allegations, including inferences unfavorable to the plaintiffs, and evaluate the complaint as a whole.
3. The district court properly dismissed the complaint without leave to amend because the proposed additional facts did not meaningfully strengthen the scienter allegations and amendment would have been futile.

Questions Presented

1. Whether the complaint adequately pleaded falsity and scienter under the heightened pleading requirements of the Private Securities Litigation Reform Act.
2. Whether, in determining whether the complaint gives rise to a strong inference of scienter, the court must consider reasonable inferences unfavorable to the plaintiffs as well as favorable inferences.
3. Whether the district court erred by dismissing the complaint without leave to amend.

Disposition

affirmed