Weston Family Partnership Lllp v. Twitter, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

WESTON FAMILY PARTNERSHIP No. 20-17465

LLLP; THE TWITTER INVESTOR

GROUP, D.C. No.

Plaintiffs-Appellants, 4:19-cv-07149-

YGR

and

KHAN M. HASAN; KHAFRE OPINION

BARCLIFT,

Plaintiffs,

v.

TWITTER, INC.; JACK DORSEY; NED

SEGAL,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of California

Yvonne Gonzalez Rogers, District Judge, Presiding

Argued and Submitted November 10, 2021

Pasadena, California

Filed March 23, 2022

2 WESTON FAMILY PARTNERSHIP V. TWITTER

Before: Daniel P. Collins and Kenneth K. Lee, Circuit

Judges, and Jill A. Otake, * District Judge.

Opinion by Judge Lee

SUMMARY **

Securities Fraud

The panel affirmed the district court’s dismissal of a

securities fraud lawsuit under §§ 10(b) and 20(a) of the

Securities Exchange Act and Rule 10b-5, alleging that

Twitter, Inc., misled investors by hiding the scope of

software bugs that hampered its advertisement

customization.

Twitter shares users’ cell phone location data with

companies that pay more for ads tailored to certain users, but

it permits users to opt out of such data-sharing. In May 2019,

Twitter announced that it had discovered software bugs that

caused sharing of cell phone location data of its users, but it

told its users that it had fixed the problems. In August 2019,

Twitter announced that it had again accidentally shared user

data with advertisers, even for those who had opted out, but

it had “fixed these issues.” Twitter had not resolved the

software bugs, but instead had stopped sharing user data

altogether for its Mobile App Promotion advertising

*

The Honorable Jill A. Otake, United States District Judge for the

District of Hawaii, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

WESTON FAMILY PARTNERSHIP V. TWITTER 3

program, resulting in a drop in revenue. In October 2019,

Twitter disclosed the software bugs and reported a revenue

shortfall, and its share price dropped.

The panel held that it had jurisdiction because plaintiffs

appealed a non-final order dismissing with leave to amend,

but the district court ultimately issued a final order and thus

cured the premature notice of appeal under Federal Rule of

Appellate Procedure 4(a)(2).

The panel held that plaintiffs’ complaint failed to state a

claim under § 10(b) because Twitter’s statements were not

false or materially misleading. The panel held that the

securities laws do not require real-time business updates or

complete disclosure of all material information whenever a

company speaks on a particular topic. To the contrary, a

company can speak selectively about its business so long as

its statements do not paint a misleading picture. The panel

held that Twitter’s statements about its advertising program

were not false or misleading because they were qualified and

factually true, and the company had no duty to disclose more

than it did under federal securities law. Specifically,

securities laws did not require Twitter to provide real-time

updates about the progress of its Mobile App Promotion

program. Further, plaintiffs did not plausibly or with

particularity allege that the software bugs disclosed in

August had materialized and affected revenue in July. In

addition, Twitter’s July 2019 statements fell within the

Exchange Act’s safe harbor provision for forward-looking

statements.

4 WESTON FAMILY PARTNERSHIP V. TWITTER

COUNSEL

Tamar Weinrib (argued) and Jeremy A. Lieberman,

Pomerantz LLP, New York, New York; Jeffrey P. Campisi,

Robert N. Kaplan, and Jason A. Uris, Kaplan Fox &

Kilsheimer LLP, New York, New York; Laurence D. King

and Mario M. Choi, Kaplan Fox & Kilsheimer LLP,

Oakland, California; Shannon L. Hopkins and Andrew E.

Lencyk, Levi & Korinsky LLP, Stamford, Connecticut; for

Plaintiffs-Appellants.

Susan E. Engel (argued), Andrew B. Clubok, and Matthew

Peters, Latham & Watkins LLP, Washington, D.C.;

Michele D. Johnson, Latham & Watkins LLP, Costa Mesa,

California; Elizabeth L. Deeley and Nicholas Rosellini,

Latham & Watkins LLP, San Francisco, California; for

Defendants-Appellees.

OPINION

LEE, Circuit Judge:

Every day, millions of people use Twitter to share and

read news, offer (often horrendous) hot takes, and fire off

mean tweets. Twitter, in turn, mines the personal data of its

users to better target advertisements. In August 2019,

Twitter revealed that it had inadvertently shared with

advertisers the personal data of users who had opted out of

data-sharing, but it reassured its users that it had “fixed these

issues.” A few months later during its quarterly earnings

announcement, Twitter disclosed that software bugs had

hampered its advertisement customization and that it had

suffered a $25 million revenue shortfall. The plaintiffs then

filed this securities fraud lawsuit, alleging that Twitter had

WESTON FAMILY PARTNERSHIP V. TWITTER 5

misled investors by hiding the scope of its software bugs

when it touted its latest advertisement initiative.

Securities laws, however, do not require real-time

business updates or complete disclosure of all material

information whenever a company speaks on a particular

topic. To the contrary, a company can speak selectively

about its business so long as its statements do not paint a

misleading picture. Twitter’s statements about its

advertising program were not false or misleading because

they were qualified and factually true. The company had no

duty to disclose any more than it did under federal securities

law. We thus affirm the district court’s dismissal of the

lawsuit.

BACKGROUND 1

Twitter operates a social media platform that allows

people to share short 280-character messages to the public.

Like most social media outlets, Twitter does not charge its

users but rather earns money through advertising. Twitter

shares certain user data—e.g., cell phone location data—

with companies that pay more for ads tailored to certain

users. But because of privacy concerns, Twitter has

permitted users to opt out of such data-sharing since 2017.

At issue is Twitter’s Mobile App Promotion (“MAP”)

product, which allows advertisers to prompt users to

download their apps onto their phones or tablets. MAP is

most effective when an advertiser knows information about

the user’s device settings, such as its operating system or

1

These facts come from the Consolidated Class Action Complaint

and are accepted as true for this appeal. See Nguyen v. Endologix, Inc.,

962 F.3d 405, 408 (9th Cir. 2020).

6 WESTON FAMILY PARTNERSHIP V. TWITTER

which apps the user has already downloaded. Twitter has

highlighted MAP as an important driver of Twitter’s future

revenue growth, and has invested in an improved, next

generation MAP product.

Despite its earlier pledge to allow user opt-outs, Twitter

announced in a May 13, 2019 blog post that it had discovered

software bugs that caused sharing of cell phone location data

of its users. Twitter, however, told its users that it had fixed

the problems. Then about three months later on August 6,

Twitter announced in a tweet that it had again accidentally

shared user data with advertisers, even for those who had

opted out. The accompanying web post stated:

At Twitter, we want to give you control over

your data, including when we share that

data. . . . [W]e recently found issues where

our setting choices may not have worked as

intended. . . .

We fixed these issues on August 5, 2019.

We know you will want to know if you were

personally affected, and how many people in

total were involved. . . .

What is there for you to do? Aside from

checking your settings, we don’t believe

there is anything for you to do.

When Twitter said that it had “fixed these issues,” it did

not mean resolving the software bugs, which proved to be

difficult. Rather, Twitter had stopped sharing user data for

its MAP advertising program altogether. This meant no data-

sharing for all users and thus also less revenue from MAP.

Twitter did not disclose these facts at that time. And

WESTON FAMILY PARTNERSHIP V. TWITTER 7

according to the complaint, Jack Dorsey, Twitter’s Chief

Executive Officer, and Ned Segal, its Chief Financial

Officer, had access to the company’s key performance

metrics, including Cost Per Ad Engagement, which

allegedly would have flagged this brewing problem with

MAP.

Finally, about 11 weeks later on October 24, Twitter in

its quarterly earnings report disclosed the software bugs

hampering MAP and reported a $25 million revenue

shortfall. In response to this news, some analysts

downgraded the stock and the share price dropped over 20%.

Within five days of this announcement, Khan Hasan, an

individual investor, filed a putative class action on behalf of

all persons who bought Twitter’s stock between July 26,

2019 and October 23, 2019 against Twitter and its two top

executives, Dorsey and Segal. Under the Private Securities

Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-

4, the district court consolidated it with another similar

action, and named the Weston Family Partnership, LLP and

the Twitter Investor Group as co-lead plaintiffs and counsel

for the class. Plaintiffs then filed a consolidated class action

complaint. The complaint alleged violations of Section 10(b)

of the Securities and Exchange Act of 1934, 15 U.S.C.

§ 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5. It also

included a claim against Dorsey and Segal for control person

liability under Section 20(a) of the Exchange Act, 15 U.S.C.

§ 78t.

Plaintiffs allege that these statements were false or

materially misleading:

(1) Twitter’s July 26, 2019 shareholder letter and July

31, 2019 Form 10-Q stated the company is

“continuing [its] work to increase the stability,

8 WESTON FAMILY PARTNERSHIP V. TWITTER

performance, and flexibility of [its] ads platform and

[MAP],” but that it is “not there yet” and that this

work will “take place over multiple quarters, with a

gradual impact on revenue.” Segal added that the

company is “still in the middle of that work” [relating

to MAP improvements], and that it is “still at the

state where [he] believe[s] that you would see its

impact be gradual in nature.” Plaintiffs allege that

these statements are false because the defendants did

not disclose the software bugs allegedly plaguing

MAP then and suggested that MAP was on track.

(2) The Form 10-Q also contained warnings that the

company’s products and services “may contain

undetected software errors, which could harm [its]

business and operating results.” Plaintiffs claim that

this statement is misleading because Twitter

supposedly knew by this time that “software errors”

would—not just “may”—harm the bottom line.

(3) Because of the allegedly false or misleading

statements in the 10-Q filing, Twitter’s Sarbanes-

Oxley (SOX) certifications signed by Dorsey and

Segal were also false or misleading.

(4) On August 6, 2019, the company issued a tweet that

stated: “We recently discovered and fixed issues

related to your settings choices for the way we

deliver personalized ads, and when we share certain

data with trusted management and advertising

partners,” and Twitter’s Help Center claimed that it

“fixed these issues on August 5, 2019.” Plaintiffs

assert that this statement misleadingly suggested

Twitter had solved the software bugs, not just the

privacy leak.

WESTON FAMILY PARTNERSHIP V. TWITTER 9

(5) On September 4, 2019 at an investor conference,

Segal stated that the company’s “MAP work is

ongoing” and that Twitter “continued to sell the

existing MAP product.” Plaintiffs again claim that

Twitter failed to disclose the scope of the software

bugs hindering MAP.

(6) At the same conference, Segal stated that “Asia . . .

has tended to be more MAP-focused historically.”

This statement, according to Plaintiffs, glossed over

MAP’s software bugs.

The defendants filed a Rule 12(b)(6) motion to dismiss,

arguing that Plaintiffs failed to (1) allege statements that are

materially false or misleading, or are otherwise actionable;

(2) establish a strong inference of scienter; and (3) establish

loss causation. The district court granted the motion on the

first two grounds, but it did not address loss causation. And

because the Section 20(a) control liability claim relies on the

same allegations as the Section 10(b) claim, the district court

also dismissed it. The district court granted leave to amend,

but Plaintiffs did not file an amended complaint and instead

filed the notice of appeal. Then several days later, the district

court sua sponte considered the claims dismissed and closed

the case.

STANDARD OF REVIEW

We review de novo a district court’s dismissal of a

complaint under Federal Rule of Civil Procedure 12(b)(6).

See Reese v. Malone, 747 F.3d 557, 567 (9th Cir. 2014). The

court may consider all materials incorporated into the

complaint by reference, as well as evidence properly subject

to judicial notice. See Metzler Inv. GMBH v. Corinthian

Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008) (citation

omitted). When assessing the adequacy of a complaint, we

10 WESTON FAMILY PARTNERSHIP V. TWITTER

accept all factual allegations as true and view them in the

light most favorable to the plaintiff. Id. (citation omitted).

We can affirm the dismissal of a complaint on any grounds

supported by the record. See Salameh v. Tarsadia Hotel,

726 F.3d 1124, 1129 (9th Cir. 2013).

Under Rule 12(b)(6), a complaint should be dismissed if

it fails to include “enough facts to state a claim to relief that

is plausible on its face.” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007). A complaint’s claims are

plausible when the pleaded facts “allow[] the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009). Actions for securities fraud brought under the

Exchange Act face “more demanding pleading

requirements” set out in Rule 9(b) and the PSLRA, which

are detailed below. In re Rigel Pharms., Inc. Sec. Litig.,

697 F.3d 869, 876 (9th Cir. 2012).

ANALYSIS

I. We Have Appellate Jurisdiction Because the District

Court Ultimately Issued a Final Order.

To start, the defendants argue that this court lacks

jurisdiction to hear this appeal because Plaintiffs appealed a

non-final order.

28 U.S.C. § 1291 provides that the “courts of appeals . . .

shall have jurisdiction of appeals from all final decisions of

the district courts of the United States.” A decision is “final”

under § 1291 if it “(1) is a full adjudication of the issues, and

(2) clearly evidences the judge’s intention that it be the

court’s final act in the matter.” Disabled Rts. Action Comm.

v. Las Vegas Events, Inc., 375 F.3d 861, 870 (9th Cir. 2004)

(citation omitted). So typically, orders dismissing claims

WESTON FAMILY PARTNERSHIP V. TWITTER 11

with leave to amend are considered not final and thus not

appealable as of right. See WMX Techs., Inc. v. Miller,

104 F.3d 1133, 1136 (9th Cir. 1997).

But that does not end our analysis. Citing Rule 4(a)(2) of

the Federal Rules of Appellate Procedure, 2 we have

recognized that “[w]hether Plaintiffs’ notice of appeal was

premature or not, the final disposition of the case by the

district court cures any timeliness defects of their appeal.”

Floyd v. Am. Honda Motor Co., 966 F.3d 1027, 1032 (9th

Cir. 2020). In Floyd, the district court filed its final order of

dismissal two weeks after the plaintiff’s notice of appeal and

six weeks after the order dismissing the claims. Id. at 1031.

Stating that there is “no penalty for filing a premature notice

of appeal,” the court held that it had jurisdiction to review

the appeal because the district court effectively cured the

premature notice of appeal when it later issued a final order.

Id. at 1032 (quoting Orr v. Plumb, 884 F.3d 923, 931 (9th

Cir. 2018)); accord Hall v. N. Am. Van Lines, Inc., 476 F.3d

683, 686 (9th Cir. 2007) (considering a premature appeal to

have been taken from the judgment entered subsequent to a

notice to appeal). See also Fed. R. App. P. 4(a)(2) advisory

committee’s note to 1979 amendments (explaining that it

was “designed to avoid the loss of the right to appeal by

filing the notice of appeal prematurely”).

This case is analogous to Floyd and Hall. Plaintiffs filed

a premature notice of appeal because the district court had

given leave to amend when it dismissed the complaint. If we

heard the case just after the notice of appeal had been filed,

we would not have had appellate jurisdiction because the

2

“A notice of appeal filed after the court announces a decision or

order—but before the entry of the judgment or order—is treated as filed

on the date of and after the entry.” Fed. R. App. P. 4(a)(2).

12 WESTON FAMILY PARTNERSHIP V. TWITTER

order was not final. But the district court within a few days

issued a final order, thus vesting this court with appellate

jurisdiction.

The defendants rest their argument on WMX Techs. v.

Miller, 104 F.3d 1133 (9th Cir. 1997). In that case, WMX

sought appellate review of an order in which the district

court dismissed some of its claims with leave to amend. Id.

at 1134. We dismissed for lack of appellate jurisdiction

because “a plaintiff, who has been given leave to amend,

may not file a notice of appeal simply because he does not

choose to file an amended complaint. A further district court

determination must be obtained.” Id. at 1136. That last

sentence is key: unlike here, the district court in that case had

not received a “further district court determination”—a final

order dismissing the case—by the time we heard the appeal.

So the district court never cured the premature appeal under

Rule 4(a)(2). In our case, the district court issued a final

order dismissing the case, giving us jurisdiction to hear the

appeal. Id. at 1136–37 (“[W]hen a district court expressly

grants leave to amend, it is plain that the order is not

final. . . . [and] [a] final judgment must be obtained before

the case becomes appealable.”).

II. The Complaint Fails to State a Claim Under Section

10(b) Because Twitter’s Statements Are Not False or

Materially Misleading.

Section 10(b) of the Exchange Act makes it unlawful:

To use or employ, in connection with the

purchase or sale of any security registered on

a national securities exchange . . . any

manipulative or deceptive device or

contrivance in contravention of such rules

and regulations as the [SEC] may prescribe

WESTON FAMILY PARTNERSHIP V. TWITTER 13

as necessary or appropriate in the public

interest or for the protection of investors.

15 U.S.C. § 78j(b). The SEC, in turn, issued Rule 10b-5,

which declares it unlawful:

(a) To employ any device, scheme, or artifice

to defraud,

(b) To make any untrue statement of a

material fact or to omit to state a material fact

necessary in order to make the statements

made, in the light of the circumstances under

which they were made, not misleading, or

(c) To engage in any act, practice, or course

of business which operates or would operate

as a fraud or deceit upon any person,

in connection with the purchase or sale of any

security.

17 C.F.R. § 240.10b-5.

To state a claim under Section 10(b) of the Exchange Act

and Rule 10b-5, the complaint must plausibly allege: “(1) a

material misrepresentation or omission by the defendant;

(2) scienter; (3) a connection between the misrepresentation

or omission and the purchase or sale of a security;

(4) reliance upon the misrepresentation or omission;

(5) economic loss; and (6) loss causation. Halliburton Co. v.

Erica P. John Fund, Inc., 573 U.S. 258, 267 (2014) (citations

omitted).

For a statement to be false or misleading, it must

“directly contradict what the defendant knew at that time” or

14 WESTON FAMILY PARTNERSHIP V. TWITTER

“omit[] material information.” Khoja v. Orexigen

Therapeutics, Inc., 899 F.3d 988, 1008–09 (9th Cir. 2018);

see also 15 U.S.C. § 78u-4(b)(1)(A)–(B).

Plaintiffs must also overcome several hurdles to

successfully plead a claim under Section 10(b). First, under

the PSLRA’s particularity requirements and Federal Rule of

Civil Procedure 9(b), allegations of “fraud must be

accompanied by the who, what, when, where, and how of the

misconduct charged.” Kearns v. Ford Motor Co., 567 F.3d

1120, 1124 (9th Cir. 2009) (cleaned up); see also 15 U.S.C.

§ 78u-4(b)(1). Second, an allegedly misleading statement

must be “capable of objective verification.” Or. Pub. Emps.

Ret. Fund v. Apollo Grp. Inc., 774 F.3d 598, 606 (9th Cir.

2014). For example, “puffing”—expressing an opinion

rather than a knowingly false statement of fact—is not

misleading. Id.; see also Lloyd v. CVB Fin. Corp., 811 F.3d

1200, 1206–07 (9th Cir. 2016). Third, a statement is not

actionable just because it is incomplete. In re Vantive Corp.

Sec. Litig., 283 F.3d 1079, 1085 (9th Cir. 2002). Section

10(b) and Rule 10b-5(b) “do not create an affirmative duty

to disclose any and all material information. Disclosure is

required . . . only when necessary ‘to make . . . statements

made, in the light of the circumstances under which they

were made, not misleading.’” Matrixx Initiatives, Inc. v.

Siracusano, 563 U.S. 27, 44 (2011) (quoting 17 C.F.R.

§ 240.10b-5(b)). Finally, even if a statement is objectively

false or misleading, the PSLRA provides a “safe harbor” for

forward-looking statements if such statements are either

identified as forward-looking and accompanied by a

meaningful cautionary statement, or if the plaintiff fails to

show that the statement was made with actual knowledge

that it was false or misleading. See 15 U.S.C. § 78u-5(c)(1);

see also In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th

Cir. 2010).

WESTON FAMILY PARTNERSHIP V. TWITTER 15

A. Securities laws do not require Twitter to provide

real-time updates about the progress of its MAP

program.

Plaintiffs suggest that Twitter—when faced with a

setback in dealing with software bugs plaguing its MAP

program—had a legal duty to disclose it to the investing

public. Not so. While society may have become accustomed

to being instantly in the loop about the latest news (thanks in

part to Twitter), our securities laws do not impose a similar

requirement. Section 10(b) and Rule 10b-5 “do not create an

affirmative duty to disclose any and all material

information.” Matrixx, 563 U.S. at 44.

Put another way, companies do not have an obligation to

offer an instantaneous update of every internal development,

especially when it involves the oft-tortuous path of product

development. See Vantive, 283 F.3d at 1085 (“If the

challenged statement is not false or misleading, it does not

become actionable merely because it is incomplete.”).

Indeed, to do so would inject instability into the securities

market, as stocks may wildly gyrate based on even fleeting

developments. A company must disclose a negative internal

development only if its omission would make other

statements materially misleading. Matrixx, 563 U.S. at 45

(“Even with respect to information that a reasonable investor

might consider material, companies can control what they

have to disclose under these provisions by controlling what

they say to the market.”).

Plaintiffs argue that Twitter’s failure to disclose the

software bugs’ impact on MAP in July 2019 was materially

misleading because its prior statements had allegedly left a

“misimpression” that the work to improve MAP was “on

track.” But a closer examination of the statements reveals a

much more qualified and less definitive characterization of

16 WESTON FAMILY PARTNERSHIP V. TWITTER

the MAP program. For example, the July 2019 shareholder

letter and 10-Q stated that Twitter is “continuing [its] work

to increase the stability, performance, and flexibility of [its]

ads platform and [MAP] . . . but we’re not there yet.”

Similarly, the CFO explained that the company is “still in the

middle of that work” relating to MAP. And later in

September of that same year, the CFO again reiterated that

the “MAP work is ongoing.”

None of these statements suggests that Twitter’s MAP

program was “on track.” Rather, they suggest a vaguely

optimistic assessment that MAP, like almost all product

developments, has had its ups and downs, even as the

company continues to make progress. 3 Perhaps if Twitter

had set a specific deadline or revenue impact for MAP, its

somewhat optimistic statements could seem like an implied

affirmation of that target. 4 But Twitter never made such

specific or unqualified guidance. And with no such

guidance, Twitter’s statements are so imprecise and

noncommittal that they are incapable of objective

verification. See Apollo, 774 F.3d at 606 (distinguishing

non-actionable vague puffery from statements capable of

objective verification); In re Cutera Sec. Litig., 610 F.3d

3

Even in everyday conversation, such phrases do not reflect that

everything is on track without a hitch. Suppose someone is building an

item of IKEA furniture and a spouse asks about its status. A response

such as “I’m in the middle of it but I’m not there yet,” “I’m continuing

it,” or “It’s ongoing” does not misleadingly suggest that the person has

not suffered setbacks (e.g., finding a mysterious extra screw) in building

that piece of furniture.

Even then, an express statement of the company being “on track”

4

to meet a target would likely be protected as a forward-looking statement

under the safe harbor provision of the PSLRA. Wochos v. Tesla, Inc.,

985 F.3d 1180, 1192 (9th Cir. 2021).

WESTON FAMILY PARTNERSHIP V. TWITTER 17

at 1111 (“[M]ildly optimistic, subjective assessment hardly

amounts to a securities violation.”). Nor can it be said that

the company “tout[ed] positive information to the market”

such that it “[became] bound to do so in a manner that

wouldn’t mislead investors, including disclosing adverse

information that cuts against the positive information.”

Khoja, 899 F.3d at 1009.

In short, Twitter had no legal duty to disclose

immediately the software bugs in its MAP program,

especially given that its earlier statements about MAP’s

progress were qualified and vague.

B. Plaintiffs have not plausibly or with particularity

alleged that the software bugs disclosed in August

had materialized and affected revenue in July.

Because Twitter disclosed “issues” about its legacy

MAP product on August 6, 2019, the defendants must have

known about those issues in July, according to Plaintiffs.

Plaintiffs thus argue that it is reasonable to infer that the

defendants must have taken steps to address those issues in

July (which decreased revenue in July), and that the

defendants’ challenged statements were therefore false and

misleading. But it is simply not enough to assume or

implausibly infer that the defendants must have known about

these issues in July based on later facts or developments. Yet

Plaintiffs repeatedly rely on future statements to leap to that

conclusion.

For example, the complaint alleges that the defendants

misled investors in their July 2019 shareholder letter and 10-

Q filing when they asserted that they are “continuing [their]

work to increase the stability, performance and scale of

[their] ads platform and [MAP] . . . . but we’re not there yet.”

According to Plaintiffs, these statements created the

18 WESTON FAMILY PARTNERSHIP V. TWITTER

“misimpression that [d]efendants’ work to improve MAP

was on track[] and would lead to increased revenue,” even

as the company struggled to fix the software bugs in the

MAP program. They similarly allege that Twitter’s risk

warning in its July 2019 10-Q filing that its “product and

services may contain undetected software errors, which

could harm our business and operating results,” was

misleading because the risk had materialized by then.

Plaintiffs’ falsity allegations thus presume that the

defendants knew (i) in July 2019 about the software bugs in

its legacy MAP product and (ii) that those bugs have caused

a delay the development of the next generation MAP. But

the complaint does not plausibly allege either.

First, Plaintiffs do not adequately allege that the

defendants knew of the software bugs as of July 2019 when

they discussed MAP’s progress. Plaintiffs hitch their wagon

on Twitter’s August 6, 2019 statement that it “recently

discovered” the issues to leap to the conclusion that it knew

about them in July 2019. But nothing in the complaint

suggests that the company knew of the bugs in July 2019.

And this court has held that, without more, temporal

proximity alone does not satisfy the particularity

requirements of Rule 9(b). See Yourish v. Cal. Amplifier,

191 F.3d 983, 997 (9th Cir. 1999). So Plaintiffs have not

adequately alleged that Twitter even knew about these

software bugs when it discussed MAP’s progress in July

2019.

Plaintiffs argue that “the only plausible inference” from

the timeline is that Twitter must have discovered the

software bugs in July 2019 because these types of bugs,

according to their confidential informant, take three to six

months to fix. Put differently, Plaintiffs assume that

Twitter’s August 6, 2019 tweet and blog post—which

WESTON FAMILY PARTNERSHIP V. TWITTER 19

announced the discovery and the fix of the data-sharing

privacy issues—was referring to the fix of the software bugs,

and not just a halt to the data-sharing.

But Twitter’s August 6 Help Center blog post said no

such thing. The context makes clear that Twitter had “fixed”

the inadvertent data-sharing; there is no mention of software

bugs, let alone ridding of them. See Retail Wholesale &

Dep’t Store Union Local 338 Ret. Fund v. Hewlett-Packard

Co., 845 F.3d 1268, 1278 (9th Cir. 2017) (“[A] duty to

provide information exists only where statements were made

which were misleading in light of the context surrounding

the statements.” (emphasis added)). The blog post starts off

by noting that Twitter wants “to give you control over your

data” but that it had “recently found issues” of inadvertent

data-sharing. The post then states: “We fixed these issues on

August 5, 2019. We know you will want to know if you were

personally affected . . . . What is there to do? Aside from

checking your settings, we don’t believe there is anything for

you to do.” These statements address Twitter users’

concerns about their privacy, and thus the “fix” related to

privacy leaks, not software bugs that are not even mentioned

in the blog post. In short, an ordinary investor would not read

Twitter’s Help Center blog post as saying that Twitter had

remediated the software issues.

Second, even if Twitter knew of the software bugs in

July 2019, Plaintiffs’ theory of deception makes sense only

if those software bugs in the legacy MAP program delayed

the new version of MAP. In support of that assumption,

Plaintiffs can marshal only Segal’s statement that “[t]he

biggest impact from a resourcing perspective when things

like [the software bugs] come up is that we—people, we end

shifting, or people are spending their time sometimes where

we work on remediation when we may have preferred to

20 WESTON FAMILY PARTNERSHIP V. TWITTER

work on other things.” But that statement says nothing about

the software bugs supposedly delaying the next generation

MAP. To the contrary, the complaint acknowledges that as

of February 2020—after Twitter disclosed the bugs in legacy

MAP and continued to work on them—the company made

progress on the next generation MAP. At one point in their

brief, Plaintiffs veer from their allegations in their complaint,

and make the new bold claim that Twitter’s efforts on the

next generation MAP “stopped cold” because of the privacy

bugs in legacy MAP. But the complaint contains no such

allegations, let alone provides sufficient particularity to

support them. 5

In sum, Plaintiffs have failed to plausibly allege falsity

based on their theory that the software issues had

materialized and impacted revenue in July.

C. Twitter’s July 2019 statements fall within the safe

harbor provision.

Plaintiffs’ challenge of Twitter’s July 2019 statements in

its shareholder letter and 10-Q fails for another reason: They

were identified as forward-looking statements and fall

5

For similar reasons, Segal’s September 4, 2019 statement that

Twitter “continued to sell the existing MAP product” is not actionable.

In context, Segal was explaining that the company continued to sell the

legacy product while working on the next generation product. Segal was

not touting the sales of the legacy MAP product or characterizing how

the legacy MAP was performing. Thus, omitting information about the

effect of the bug did not “affirmatively create an impression of a state of

affairs that differs in a material way from the one that actually exists.”

Brody v. Transitional Hosps. Corp., 280 F.3d 997, 1006 (9th Cir. 2002).

Plaintiffs also argue Segal misled investors when he said that “Asia . . .

has tended to be more MAP-focused historically,” even though MAP

was struggling in Asia. But this is a statement about historical patterns

that is uncontradicted by any of the plaintiffs’ allegations.

WESTON FAMILY PARTNERSHIP V. TWITTER 21

within the safe harbor of the Exchange Act. 15 U.S.C. § 78u-

5(c)(1); see also Police Ret. Sys. of St. Louis v. Intuitive

Surgical, Inc., 759 F.3d 1051, 1058 (9th Cir. 2014)

(“[C]lassic growth and revenue projections[] . . . are

forward-looking on their face.”). These forward-looking

statements in the shareholder letter and 10-Q were

accompanied by very detailed meaningful cautionary

language that “identif[ied] important factors that could cause

actual results to differ materially from those in the forward-

looking statement[s].” 15 U.S.C. § 78u-5(c)(1)(A)(i). 6

III. The District Court Properly Dismissed the

Section 20(a) Claims.

Under Section 20(a) of the Exchange Act, “certain

‘controlling’ individuals [are] also liable for violations of

section 10(b) and its underlying regulations.” Zucco

Partners, 552 F.3d at 990 (citing 15 U.S.C. § 78t(a)).

Because a Section 20(a) claim is derivative, “a defendant

employee of a corporation who has violated the securities

laws will be jointly and severally liable to the plaintiff, as

long as the plaintiff demonstrates ‘a primary violation of

federal securities law’ and that ‘the defendant exercised

actual power or control over the primary violator.’” Id.

(citation omitted). But, as shown above, Plaintiffs did not

adequately plead a primary violation of Section 10(b) or

Because Twitter’s statements made in the Form 10-Q and the risk

6

warnings were not misleading or were protected under the safe harbor

provision, the SOX certifications likewise cannot be actionable. Zucco

Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1004 (9th Cir. 2009).

22 WESTON FAMILY PARTNERSHIP V. TWITTER

Rule 10b-5 by any defendant. Thus, control person liability

under Section 20(a) cannot survive. 7

CONCLUSION

The district court’s order granting the defendants’

motion to dismiss is AFFIRMED.

7

Because we hold that the complaint did not adequately allege

falsity, we need not address scienter or loss causation.