UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

RETAIL WHOLESALE & No. 14-16433 DEPARTMENT STORE UNION LOCAL 338 RETIREMENT D.C. No. FUND, 3:12–cv–04115–JST Plaintiff-Appellant,

v. OPINION

HEWLETT-PACKARD CO. and MARK A. HURD, Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California Jon S. Tigar, District Judge, Presiding

Argued and Submitted July 7, 2016 San Francisco, California

Filed January 19, 2017

Before: Marsha S. Berzon and N. Randy Smith, Circuit Judges and Dana L. Christensen,* Chief District Judge.

Opinion by Chief Judge Christensen

* The Honorable Dana L. Christensen, Chief District Judge for the U.S. District Court for the District of Montana, sitting by designation. 2 RETAIL WHOLESALE V. HEWLETT-PACKARD

SUMMARY**

Securities Fraud

The panel affirmed the district court’s dismissal of a securities fraud action alleging violations of the Securities Exchange Act of 1934.

Shareholders of Hewlett-Packard Company alleged that the company CEO and chairman violated the corporate code of ethics after publicly touting the business’s high standards for ethics and compliance. The panel held that the shareholders failed to state a claim for securities fraud because they failed to sufficiently allege that the defendants made a material misrepresentation or misleadingly omitted a material fact.

COUNSEL Ira M. Press (argued), Mark A. Strauss, and Thomas W. Elrod, Kirby McInerney LLP, New York, New York; for Plaintiff-Appellant. Marc J. Sonnenfeld (argued), Karen Pieslak Pohlmann, and Laura Hughes McNally, Morgan Lewis & Bockius LLP, Philadelphia, Pennsylvania; Thomas M. Peterson and Joseph E. Floren, Morgan Lewis & Bockius LLP, San Francisco, California; Robert E. Gooding, Morgan Lewis & Bockius

** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. RETAIL WHOLESALE V. HEWLETT-PACKARD 3 LLP, Irvine, California; for Defendant-Appellee Hewlett-Packard Company. Lawrence D. Lewis (argued), Dwight L. Armstrong, and Keith Paul Bishop, Allen Matkins Leck Gamble Mallory & Natsis LLP, Irvine, California; Amy Wintersheimer Findley, Allen Matkins Leck Gamble Mallory & Natsis LLP, San Diego, California; for Defendant-Appellee Mark V. Hurd.

OPINION CHRISTENSEN, Chief District Judge:

In 2010, Defendant-Appellee Mark Hurd resigned from his position as CEO and Chairman of Defendant-Appellee Hewlett-Packard Company (“HP”). During the course of an investigation prompted by allegations of sexual harassment, HP discovered that Hurd had misrepresented his relationship with a former independent contractor, Jodie Fisher. Hurd had not been forthcoming about the personal nature of his relationship with Fisher; in fact, he had doctored expense reports to prevent its discovery and lied to investigators. Immediately following Hurd’s resignation, the price of HP stock dropped, resulting in an alleged loss of $10 billion. In this putative class action lawsuit, HP shareholders allege violations of the Securities Exchange Act of 1934. The shareholders purchased HP stock between November 13, 2007, and August 6, 2010 (“the Class Period”) and held shares as of August 6, 2010.

This Court has not decided when a high-ranking employee’s violation of a business’s ethical code may give rise to a cause of action under § 10 and Rule 10–b of the 4 RETAIL WHOLESALE V. HEWLETT-PACKARD Securities Exchange Act of 1934. Here, the issue is relatively narrow—whether shareholders ma