[00:00:12] Speaker 00:
May it please the court?

[00:00:14] Speaker 00:
I would like to reserve three minutes.

[00:00:17] Speaker 02:
Counsel, please be advised that the time shown on the clock is your total time remaining.

[00:00:24] Speaker 00:
Yes, your honor.

[00:00:25] Speaker 00:
Leading up to the class period.

[00:00:26] Speaker 02:
Could you introduce yourself for the record?

[00:00:29] Speaker 00:
Brian Alexander for the appellate.

[00:00:33] Speaker 00:
Leading up to the class period, federal and California employment regulators in quick succession

[00:00:40] Speaker 00:
employed rarely used mechanisms reserved for serious systemic misconduct to open sexual harassment and discrimination investigations into Activision.

[00:00:55] Speaker 00:
Activision did not disclose these investigations.

[00:00:58] Speaker 00:
Instead, for more than two years they reassured investors by stating in all of their public filings that

[00:01:11] Speaker 00:
all investigations that they were a party to were routine.

[00:01:18] Speaker 00:
Now, one incident of sexual harassment may be arguably routine.

[00:01:28] Speaker 00:
For a large company, maybe multiple incidents.

[00:01:30] Speaker 00:
But two government investigations into systemic misconduct

[00:01:41] Speaker 00:
are not routine, particularly given what was going on at Activision.

[00:01:47] Speaker 00:
As the district court found, the complaint pleads a toxic work environment where reprehensible conduct was tolerated.

[00:01:57] Speaker 00:
Accordingly, there is no way these investigations could be accurately described as routine.

[00:02:02] Speaker 00:
Further, there were other reasons, in addition to the mechanisms and the underlying misconduct at Activision, that they were not routine.

[00:02:11] Speaker 01:
Well, just stopping on the mechanisms for a minute, can you point me to where in the complaint you make an allegation that Activision would have known that or knew that director's complaints or commissioner's charges were rarely used?

[00:02:30] Speaker 01:
Where is that alleged?

[00:02:32] Speaker 00:
Well, it does say there's no specific allegation in the complaint that they

[00:02:39] Speaker 00:
that they knew they were rarely used.

[00:02:41] Speaker 00:
But Activision is a very sophisticated company.

[00:02:44] Speaker 00:
And with high-powered lawyers, in fact, they hired Paul Hastings to start a parallel investigation that used to obstruct the DFU.

[00:02:57] Speaker 04:
But what you call obstruct is defend yourself, isn't it?

[00:03:04] Speaker 00:
Well, even if it could be conceived of that way, it really still goes to the question of whether these investigations were routine or not.

[00:03:15] Speaker 00:
So the DFEH in its complaint called it obstruction.

[00:03:18] Speaker 04:
But even if you refer to it as- Do you have any allegation as to how many investigations of what sort Activision was subject to?

[00:03:30] Speaker 04:
That is, yes.

[00:03:32] Speaker 04:
in their face this might seem, but when their alleged misstatement says, you know, we're subject to investigations, it mentions employment law, it mentions several other things.

[00:03:48] Speaker 04:
For example, if you alleged, well, this is the only thing they'd ever been investigated for.

[00:03:54] Speaker 04:
That might make it seem less routine.

[00:03:57] Speaker 04:
But I would think a company of this sort has everything from OSHA to regular compensation, wage and hour, whatever.

[00:04:07] Speaker 04:
Is there any knowledge about that in the complaint?

[00:04:11] Speaker 00:
there's no way for us to know how many undisclosed investigations that Activision is subject to.

[00:04:17] Speaker 04:
Well, you had a lot of confidential witnesses.

[00:04:22] Speaker 00:
Right.

[00:04:22] Speaker 00:
But the question here is, would a reasonable investor consider these investigations routine?

[00:04:29] Speaker 00:
And the complaint alleges that given particularly what was going on in the MeToo movement, given

[00:04:43] Speaker 00:
Given the statements that Activision made about the importance of diversity and inclusion, they touted that they were a top 100 company to work for and how they relied on their people, a reasonable investor in Activision would think that these particular investigations weren't routine because of the potential damage, weren't routine because of the explosive nature of the allegations.

[00:05:09] Speaker 04:
The allegations that ultimately came out when the complaints were filed, your lawsuit, I take it, says that these were lies from day one.

[00:05:23] Speaker 04:
Reading it with a two-year investigation, which at the beginning certainly seemed to me routine.

[00:05:31] Speaker 04:
Do you have an argument based on, you know, this is the time when they really should have known, when investors should have been warned?

[00:05:41] Speaker 04:
Or are you saying two years earlier, just because an investigation had begun, they were lying from the beginning?

[00:05:50] Speaker 00:
Well, we think they were lying from the beginning because, Your Honor, because of the fact that, because of the mechanisms, because of what was going on in terms of the Me Too movement, because they immediately also made pretty significant changes to human resources, and they started the investigation very quickly.

[00:06:10] Speaker 00:
And they informed the board of directors about this, and for a large company,

[00:06:14] Speaker 04:
I'd also argue that's- The informing the board of directors, does that only come from the Wall Street Journal article and statement like six months after the corrective?

[00:06:26] Speaker 04:
And it doesn't say, as I read it, correct me if I'm wrong, it says they were informed of all investigations.

[00:06:33] Speaker 04:
It didn't say we were informed on this day of this investigation.

[00:06:37] Speaker 04:
I read it as a CYA, oh, we're informed of everything.

[00:06:41] Speaker 04:
We're the board.

[00:06:43] Speaker 04:
Oh, the art, it's definitely in context of, it's definitely- Is that the only basis for your statement that the board was informed?

[00:06:53] Speaker 00:
That's the basis, but that is the- That's fine.

[00:06:56] Speaker 00:
Okay, I'm done.

[00:06:59] Speaker 00:
And just to continue on Judge Boggs' question, there are some significant things that happened also further into the class period that made the investigation even

[00:07:12] Speaker 00:
even uh... even less routine such as the restructuring of uh... human resources so that it it reported to corporate and they're also there is also a uh... a lawsuit a public an intervention by the d f e h into a private lawsuit uh... class action for harassment against uh... riot games which

[00:07:42] Speaker 00:
which the suit was going to settle for $10 million.

[00:07:46] Speaker 00:
And the DFVH came in and stopped the suit from settling and said that the women could be owed up to $400 million.

[00:07:53] Speaker 00:
So at minimum, that should have put Activision on alert that this was not a routine matter.

[00:08:00] Speaker 04:
That's not their company, though, is it?

[00:08:02] Speaker 04:
It's a different company.

[00:08:03] Speaker 00:
It isn't their company, but it's a direct competitor in the video game market.

[00:08:08] Speaker 00:
in Southern California, and there's a confidential witness statement in the complaint saying that an earlier article about sexism at Riot Games that came out was huge news at Activism, and everybody was talking about it.

[00:08:25] Speaker 00:
So it's a reasonable inference that people at Activism would be concerned about this.

[00:08:30] Speaker 00:
This isn't just a random allegation about a different company.

[00:08:48] Speaker 00:
Sienter here is also straightforward.

[00:08:53] Speaker 00:
There's no dispute that Kodak was aware of the investigations.

[00:08:56] Speaker 00:
The defendants do not dispute this.

[00:08:59] Speaker 00:
And the Wall Street Journal reported that he was.

[00:09:03] Speaker 00:
In addition, he knew about many sexual harassment incidents.

[00:09:10] Speaker 00:
And he was a hands-on manager.

[00:09:12] Speaker 00:
He was heavily involved in employment issues at the company.

[00:09:15] Speaker 00:
And confidential witnesses say he was aware of the change of human resources.

[00:09:21] Speaker 00:
Further, an internal response like Activision mounted towards this while reassuring investors strongly supports Cianta under this court's ruling in Shuliman versus Arena Pharmaceutical.

[00:09:39] Speaker 00:
Also on loss causation, which the district court did not rule on, but the defendants challenged in their brief.

[00:09:51] Speaker 00:
At the pleading stage, plaintiffs need to just allege a causal connection between the fraud and the loss.

[00:09:58] Speaker 00:
And here are the upheaval at Activision and the game cancellations that preceded the stock drop.

[00:10:05] Speaker 02:
Council, what was the stop drop, and when did the stop drop occur?

[00:10:12] Speaker 00:
Well, the first stop drop was on July 27.

[00:10:15] Speaker 00:
And that happened after the DFEH complaint came out.

[00:10:27] Speaker 02:
How long after the complaint came out?

[00:10:29] Speaker 00:
It was a week.

[00:10:30] Speaker 02:
And what was the amount of the, what was the,

[00:10:33] Speaker 02:
value of the stock before, and what was the value of the stock a week later?

[00:10:38] Speaker 00:
It went from 91 to 84.

[00:10:47] Speaker 00:
And it occurred after Activision denied the allegations.

[00:10:55] Speaker 00:
But then there was a huge amount of employee unrest.

[00:10:58] Speaker 00:
There was a walkout.

[00:10:59] Speaker 00:
2,000 people signed a letter.

[00:11:02] Speaker 00:
acute uh... about harassment at act at activision and have to do with

[00:11:11] Speaker 00:
Well, it happened that those events proceeded directly before the stock drop and that showed that that Activision's denial of the complaint of the complaints allegations were not going to quell unrest among employees and it was going to damage Activision.

[00:11:27] Speaker 04:
Doesn't that mean that the employee unrest caused the stock drop, not the

[00:11:33] Speaker 04:
not the quote corrective disclosure, usually corrective disclosures in these kind of suits, you know, they reveal that something's happened in the stock drops the next day.

[00:11:44] Speaker 04:
This says they revealed what everybody already knew that you got a bunch of bombs running this company and it was just that the employees just showed how bad it was and that's what caused the stock drop.

[00:11:56] Speaker 04:
Wouldn't that be a more plausible?

[00:11:58] Speaker 00:
Well, the analyst reports connect the

[00:12:01] Speaker 00:
the complaints direct the revelation of the DFEH investigation directly to the drop.

[00:12:09] Speaker 00:
And there's precedent in this circuit, the Gilead case, where even if an event happens earlier, where in that case there was a warning letter that didn't cause an immediate drop, but then when the sales impact of the warning letter came out,

[00:12:30] Speaker 00:
That caused the drop, and that was considered a sufficient causal connection for law civilization.

[00:12:39] Speaker 00:
If there's no more questions, I'd like to reserve the rest of my time.

[00:12:42] Speaker 02:
All right.

[00:12:42] Speaker 02:
Thank you, counsel.

[00:12:53] Speaker 03:
Good morning.

[00:12:53] Speaker 03:
May it please the court?

[00:12:54] Speaker 03:
I'm Kevin Muck, counsel for the defendants and the appellees in this case.

[00:13:00] Speaker 03:
I want to start with what this case is about and what it isn't about.

[00:13:08] Speaker 03:
Unlike many 10b cases that come before this court, the issues here are fairly discrete.

[00:13:14] Speaker 03:
They're a very narrow set of issues.

[00:13:18] Speaker 03:
Plaintiffs are challenging just two statements in Activision's legal proceeding statements from November of 2018 through May of 2021.

[00:13:30] Speaker 03:
And plaintiffs are asserting an omission's claim.

[00:13:34] Speaker 03:
And I think it's important to go back and look at the complaint and see exactly what it is that the plaintiffs are alleging was omitted and why it's actionable.

[00:13:44] Speaker 03:
And I would refer the court to paragraphs 288 and 289 of the plaintiff's complaint, pages 97 and 98 of the excerpts of records.

[00:13:56] Speaker 03:
And in 289, after having recited the two sentences that the planners purport to challenge,

[00:14:03] Speaker 03:
Plaintiffs allege that the statements were misleading because they failed to disclose that the DFEH and EEOC investigations were not routine, that they hadn't arisen in the ordinary course of business, that they weren't significant, and were not expected to have a material adverse effect on Activision's business.

[00:14:26] Speaker 03:
That's plaintiff's allegation.

[00:14:29] Speaker 03:
Plaintiff's Council talked about the routine aspect of that statement.

[00:14:34] Speaker 03:
That's not sufficient.

[00:14:36] Speaker 03:
And I know why plaintiffs want to focus on routine.

[00:14:39] Speaker 03:
They believe that that's their best argument as to why this statement was allegedly misleading.

[00:14:46] Speaker 03:
I don't believe that they have alleged for the reasons that I believe Judge Boggs noted in his questions.

[00:14:51] Speaker 03:
I don't believe they've adequately alleged that these investigations were non-routine.

[00:14:56] Speaker 03:
But putting that aside,

[00:14:58] Speaker 03:
Simply alleging that an investigation wasn't routine doesn't give rise to a cause of action under Section 10B.

[00:15:06] Speaker 03:
It's horn book law that under Section 10B, an omission must be material.

[00:15:13] Speaker 03:
And the problem that the plaintiffs have is that they don't plead that at any point during the relevant period of time, from November of 2018 when the first challenge statement was made until May of 2021,

[00:15:26] Speaker 03:
when the last challenge statement was made, they don't plead any facts to show that those investigations were understood to be, or actually were, material.

[00:15:39] Speaker 02:
Well, a pulse in council states that the fact that the mechanisms by which they were initiated were unusual to the point that we can draw an inference that the

[00:15:55] Speaker 02:
defendants knew or should have known that these were not routine.

[00:16:00] Speaker 02:
What's your response to that?

[00:16:02] Speaker 02:
Is that inference appropriate from what's been played?

[00:16:06] Speaker 03:
Absolutely not, Your Honor.

[00:16:07] Speaker 03:
It's not appropriate to draw that inference.

[00:16:09] Speaker 03:
The plaintiffs certainly do make that allegation, but they don't support it with any facts to suggest, A, that that's the case.

[00:16:17] Speaker 03:
There's not one instance, not one,

[00:16:20] Speaker 03:
in which the plaintiffs have cited an example where a company faced with one of these rarely used mechanisms actually ended up with a material adverse effect on its business.

[00:16:36] Speaker 03:
There's no facts at all.

[00:16:37] Speaker 03:
The plaintiffs say nothing about it.

[00:16:38] Speaker 02:
Well, that's a different issue, whether or not there was a material adverse effect on the business and whether or not we can draw an inference.

[00:16:46] Speaker 02:
that they were aware that this wasn't routine because of the mechanism with which the investigation was initiated.

[00:16:54] Speaker 02:
Those are two different issues.

[00:16:55] Speaker 03:
Well, I think that they are related issues, though, Your Honor.

[00:16:58] Speaker 03:
Because again, even if something isn't routine, if it's not material, it's not actionable under Section 10B.

[00:17:04] Speaker 02:
But getting back- What they're saying is material because it was so out of the ordinary.

[00:17:10] Speaker 02:
And that in and of itself, whether or not it had an effect on the business or not,

[00:17:14] Speaker 02:
The fact that these two different agencies initiated investigations in a way that's very rare supports an inference that the defendant knew or should have known that this was not routine, setting aside what the effect was on the business.

[00:17:33] Speaker 03:
Well, Your Honor, I agree that they used that argument to show routine.

[00:17:37] Speaker 03:
I don't believe that they've made that argument that that shows it was material.

[00:17:41] Speaker 03:
And that's the ultimate issue.

[00:17:43] Speaker 03:
That's what they need to ultimately prove.

[00:17:46] Speaker 03:
Moreover, they need to come forward with facts.

[00:17:49] Speaker 04:
It's not enough to— From your point of view, as you're putting the law, let's say, if even a lawyer, let alone someone on the board, said, good heavens,

[00:18:01] Speaker 04:
The last six times somebody brought a director's complaint, it blew up the company, or they fired the CEO, or you better watch out, that would

[00:18:15] Speaker 04:
come a lot closer to making a case from your point of view.

[00:18:18] Speaker 03:
Absolutely right, Your Honor.

[00:18:20] Speaker 03:
And none of those facts are alleged in the complaint.

[00:18:23] Speaker 03:
There's not one fact alleged about any of these directors' complaints or commissioners' charges.

[00:18:30] Speaker 03:
And under the Reform Act, the plaintiffs can't simply make that conclusion without supporting facts and ask the court

[00:18:38] Speaker 03:
to accept it is true.

[00:18:39] Speaker 03:
The plaintiffs spent a lot of time talking about this court's recent decision in the Forescout case.

[00:18:45] Speaker 03:
Forescout is actually instructive on this point because what Forescout said was that there's a difference between a Reform Act case where the plaintiffs need to plead detailed facts to support their allegations

[00:18:58] Speaker 03:
And the ordinary case under Iqbal and Twombly, where all the plaintiffs need to do is raise a plausible inference that what they're saying is accurate.

[00:19:10] Speaker 03:
And in Forescout, the court actually rejected claims where the plaintiffs didn't go beyond that plausible standard.

[00:19:17] Speaker 03:
and support their allegations with facts.

[00:19:20] Speaker 03:
I clearly think that that's the case here with respect to the rarity of the investigations.

[00:19:26] Speaker 03:
But to Judge Boggs's question, there's no allegation at all that anybody at Activision knew or understood that there was any significance whatsoever associated with respect to the mechanisms that were used

[00:19:43] Speaker 03:
to commence these investigations.

[00:19:46] Speaker 04:
So that goes to Cienture, though, more than falsity.

[00:19:48] Speaker 03:
It does, Your Honor, although I think that it also is arguably relevant to the question of materiality and whether the investigations were expected to have a material adverse effect on the company.

[00:20:02] Speaker 03:
But it does go to Cienture, and I want to focus on Cienture.

[00:20:05] Speaker 03:
because I think that there are a number of instances in which, again, this case is very narrow in a way that is probably different from most certainly.

[00:20:16] Speaker 04:
Let me just break in and say narrow.

[00:20:18] Speaker 04:
Am I right that the question of whether this company was being run by a bunch of bums

[00:20:24] Speaker 04:
is completely different than the question of what they said in the 10b-5, because certainly a great deal of their briefing makes a very good case that a lot of bad things are going on at this company.

[00:20:36] Speaker 03:
That's correct, Your Honor.

[00:20:37] Speaker 03:
And let me be clear.

[00:20:41] Speaker 03:
Activision and Mr. Kodick, CEO of Activision,

[00:20:47] Speaker 03:
made, you know, consistently conveyed that they viewed the allegations of misconduct as serious, unacceptable, and that even one instance of misconduct is not acceptable, was inconsistent.

[00:21:02] Speaker 03:
But you're absolutely right, Your Honor.

[00:21:04] Speaker 03:
This is not a labor or employment case.

[00:21:07] Speaker 03:
This is a securities fraud case.

[00:21:09] Speaker 03:
And to plead securities fraud under the Reform Act, what the plaintiffs need to do is to provide particularized facts, contemporaneous facts, to show, and let's focus on Sienta for a moment, to show why the defendants knew or deliberately disregarded that the statements that they made were materially false at the time they were made.

[00:21:34] Speaker 03:
And one of the ways in which this case is narrow

[00:21:37] Speaker 03:
is that the plaintiffs have now conceded that three of the four individual defendants aren't liable under Section 10B, that the plaintiffs didn't plead C-enter as to the chairman of the board or the two individuals who served as chief financial officer during the relevant time period.

[00:21:55] Speaker 03:
That means that there is one individual defendant and one individual defendant only, Mr. Kodick, the CEO,

[00:22:03] Speaker 03:
So the entire case hinges on whether the plaintiffs can identify specific facts showing that at the time these challenge statements were made, Mr. Kodak personally either knew or deliberately disregarded that the investigations were non-routine, significant, and expected to have a material adverse effect on the company.

[00:22:30] Speaker 03:
And let me just pause for a moment there.

[00:22:32] Speaker 03:
The reason why the entire case comes down to Mr. Kodick is because the plaintiffs don't dispute that to show activitions, Sienta, the plaintiffs need to show that one of the individual defendants acted with Sienta.

[00:22:46] Speaker 03:
So because they've now conceded that three of the four individual defendants

[00:22:50] Speaker 03:
didn't have Cienter, the only way of showing that Activision is liable is to show that Mr. Kotick acted with Cienter.

[00:22:59] Speaker 03:
And as I said, they don't do that.

[00:23:02] Speaker 03:
And I think the clearest example of that is that

[00:23:09] Speaker 03:
When you look at what the third amended complaint alleges with respect to what Mr. Kodick was told about the investigations at various times, there's virtually nothing.

[00:23:22] Speaker 03:
The closest that the plaintiffs come, and we heard it here this morning, was that as a member of the board, Mr. Kodick would have been aware of these rarely used mechanisms.

[00:23:36] Speaker 03:
But they admit that they haven't pled knowledge.

[00:23:39] Speaker 03:
Mr. Plaintiff's Council just admitted in his comments a few moments ago that he doesn't plead specifically that Mr. Kodak was aware of these rarely used mechanisms.

[00:23:53] Speaker 03:
So even if one were to assume that the existence of these rarely used mechanisms was somehow in and of itself materially incompatible with the legal proceedings statements,

[00:24:07] Speaker 03:
The fact that the plaintiffs alleged that they haven't, or that they admit they haven't alleged that Mr. Kodak was aware of that is fatal to their claims.

[00:24:16] Speaker 03:
It means Scientor is lacking as to him, and Scientor is also lacking as to the company as a result.

[00:24:23] Speaker 03:
I would suggest that, as we cited in our papers, this court's decision in the Lending Club case

[00:24:35] Speaker 03:
is instructive, specifically on this issue.

[00:24:38] Speaker 03:
In that case, that was a case in which the plaintiffs alleged that Lending Club had failed to disclose information about an FTC investigation, and specifically that the FTC was investigating allegedly deceptive lending practices by the company.

[00:24:59] Speaker 03:
The district court

[00:25:02] Speaker 03:
held that the plaintiffs had not adequately alleged that the CEO and other officers were familiar with the details of the investigation or that they knew that information about the investigation was materially inconsistent with what the company said this court affirmed on that basis and I think that the out well

[00:25:28] Speaker 03:
The statements in Lending Club are slightly different from the statements in this case.

[00:25:36] Speaker 03:
The Cienter analysis is right on point and confirms why, as to Mr. Kodick and Activision plaintiffs, haven't adequately alleged a strong inference of Cienter.

[00:25:48] Speaker 03:
And that's the other point that I would like to stress, is we're talking about

[00:25:54] Speaker 03:
a uniquely challenging pleading standard when it comes to CNTER.

[00:26:01] Speaker 03:
The PSLRA, the Reform Act, generally imposes heightened requirements, but the requirements as to CNTER are especially stringent.

[00:26:12] Speaker 03:
They need to plead facts supporting a strong inference of CNTER and

[00:26:17] Speaker 03:
I would submit that they haven't pled facts that would even suggest negligence in this case, much less either knowledge of falsity or deliberate recklessness, which is tantamount to intent by turning a blind eye to the truth.

[00:26:34] Speaker 03:
I want to just turn briefly to the other issue that came up, and that is loss causation.

[00:26:41] Speaker 03:
The plaintiff's counsel has acknowledged that as a result of the disclosure of the investigations with the DFEH lawsuit on July 20th, 2021, the stock price did not move.

[00:26:59] Speaker 03:
The stock price moved a week later, but by plaintiff's admission, it moved in response to something else.

[00:27:05] Speaker 03:
It moved in response to employee unrest and concerns that were raised by employees.

[00:27:14] Speaker 03:
The law is clear that for loss causation, plaintiff needs to plead that disclosure of the specific fact that was allegedly misstated or omitted caused the stock price to drop.

[00:27:28] Speaker 03:
Plaintiffs here allege that there was one fact and one fact alone that rendered these statements misleading.

[00:27:35] Speaker 03:
That was the failure to disclose the investigations.

[00:27:38] Speaker 03:
That fact was disclosed by July 20 of 2021.

[00:27:43] Speaker 03:
The fact that the stock didn't move in response to that means that loss causation is a separate basis on which this court can affirm the judgment below.

[00:27:52] Speaker 03:
Unless the court has other questions, thank you very much for your time.

[00:27:57] Speaker 02:
It appears not.

[00:27:57] Speaker 02:
Thank you, counsel.

[00:28:26] Speaker 00:
Your honor, it's notable that the defense counsel would start by discussing materiality, given that the standard is so high to get a case dismissed on the pleadings for materiality.

[00:28:39] Speaker 00:
As this court held in alphabet, the inquiry into materiality is fact-specific, and resolving materiality as a matter of law is generally appropriate only if the adequacy of the disclosure or the materiality of the statement is so obvious.

[00:28:54] Speaker 00:
that reasonable minds could not differ.

[00:28:57] Speaker 00:
So this court should not affirm dismissal based on the idea these statements are not material.

[00:29:06] Speaker 00:
Further, well, there's a discussion about the mechanisms.

[00:29:11] Speaker 00:
And the mechanisms, I think, are a very powerful allegation.

[00:29:15] Speaker 00:
This case does not need to be decided on whether the mechanisms by themselves make it material because of the extensive allegations

[00:29:23] Speaker 00:
about the endemic harassment at Activision and the nature of Activision as a company that was reliant on its workers.

[00:29:31] Speaker 04:
Counsel, doesn't that go to my colloquial statement that goes much more to whether the company was acting badly about its employees than about whether they lied about this statement?

[00:29:45] Speaker 04:
Because despite your colleagues standing up for his client, to me, you make a great case about how bad many of their practices were.

[00:29:56] Speaker 00:
But that's not the issue, is it?

[00:29:57] Speaker 00:
It isn't.

[00:29:58] Speaker 00:
And I agree with you, Your Honor.

[00:29:59] Speaker 00:
This very easily could not have been a securities case, because Activision didn't have to make this disclosure.

[00:30:07] Speaker 00:
We don't argue that Activision had to just disclose these investigations.

[00:30:14] Speaker 00:
What we argue is that they specifically reassured investors over and over again that all investigations that they were a party to, that were not listed, the way that the allegation is structured, there's a list, and then it says in addition, for example, in the 2019-10K.

[00:30:34] Speaker 00:
And that's when they committed securities fraud.

[00:30:37] Speaker 00:
And based on a reasonable investor, a reasonable investor would be shocked that they were subject to these investigations.

[00:30:45] Speaker 00:
And just a final word on C-Enter.

[00:30:47] Speaker 00:
Well, the C-Enter standard, well, obviously the C-Enter standard is not a normal notion of a standard.

[00:30:52] Speaker 00:
It is still, if the inference is equal to the non-culpable inference, then the plaintiff still can move forward on C-Enter.

[00:31:02] Speaker 00:
So therefore, I think there's clearly enough

[00:31:07] Speaker 00:
Thank you, counsel.

[00:31:09] Speaker 02:
Thank you to both counsel for your helpful arguments.

[00:31:12] Speaker 02:
The case just argued is submitted for decision by the court.