Police Retirement Sys. V. Intuitive Surgical

Forward-looking statements that include sufficient warning fall within the safe harbor provision when there is a heightened Federal Rule of Civil Procedure 9(b) pleading requirement.

Intuitive Surgical, Inc. (“Intuitive”) designs, manufactures, and distributes robotics used in surgical procedures. The Police Retirement System of St. Louis (“PRS”) purchased shares of Intuitive stock for investment purposes. PRS alleges Intuitive executives issued misstatements about the company causing an over-inflation of the share price which lead to losses by shareholders, including PRS members. A complaint raised under the Securities Exchange Act of 1934 and Securities and Exchange Commission rules is subject to a heightened Federal Rule of Civil Procedure 9(b) pleading requirement. A claim for securities fraud must 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.” The Ninth Circuit held that because Intuitive’s forward-looking statements included sufficient warning, they fell within the safe harbor provision. The panel also held that a statement a reasonable investor would recognize as merely optimistic, absent a material misstatement or omission, is puffery and therefore inactionable. AFFIRMED.