[00:00:00] Speaker 00:
Good morning, Your Honours.

[00:00:01] Speaker 00:
Christopher Moriarty on behalf of the Plaintiff Appellants.

[00:00:04] Speaker 00:
May I reserve two minutes for rebuttal?

[00:00:07] Speaker 00:
Your Honours, this case primarily concerns Intel's misstatements during late 2019 and through 2020 regarding the status of the timeline for the release of its seven nanometre microchip products.

[00:00:22] Speaker 00:
A graphics processing unit known as Ponte Vecchio, which Intel represented, will be slated for release in late 2021.

[00:00:31] Speaker 00:
and as part of a contract for the development of the Department of Energy's supercomputer known as Aurora.

[00:00:38] Speaker 00:
And secondly, CPU server chips, which Intel represented would follow in 2022, along with a full suite of seven nanometer products that same year.

[00:00:51] Speaker 00:
Those statements were false when they were made, because by no later than December 2019,

[00:00:57] Speaker 00:
Intel's internal roadmap showed that it was at least a year or two behind what it was telling the market.

[00:01:05] Speaker 00:
This inconsistency showed that the public statements did not fairly align with the information that was in Intel's possession at the time of each statement.

[00:01:16] Speaker 00:
Now you might ask why didn't Intel tell the truth?

[00:01:20] Speaker 00:
Because by not doing so, they avoided customer flight.

[00:01:24] Speaker 00:
They avoided risks associated with the contract with the Department of Energy.

[00:01:30] Speaker 00:
And they just suffered significant reputational harm associated with a botched rollout of the 10 nanometer products.

[00:01:39] Speaker 02:
So help me with the Safe Harbor issue in this case.

[00:01:43] Speaker 02:
All of these statements are about when they plan in the future to roll something out.

[00:01:50] Speaker 00:
No, Your Honor, that is not correct.

[00:01:52] Speaker 00:
These statements are about what the status was of the timeline.

[00:01:56] Speaker 02:
Well, you keep talking about the status of the timeline.

[00:02:00] Speaker 02:
But when I look at the statements, they just keep saying, we plan to roll this out in 2021, and our plan is unchanged.

[00:02:10] Speaker 02:
They don't say, here's a timeline.

[00:02:14] Speaker 02:
Here's what occurs here and there.

[00:02:17] Speaker 02:
So I'm trying to figure out why this isn't just

[00:02:21] Speaker 02:
somebody saying, here are our future plans.

[00:02:23] Speaker 02:
We plan to roll it out in 2021.

[00:02:25] Speaker 02:
It turns out they couldn't, but they're only talking about their future plans.

[00:02:30] Speaker 02:
Why isn't this inside the safe harbor?

[00:02:33] Speaker 00:
Respectfully, Judge Hurwitz, may I direct you to the June 11th, 2020 statement?

[00:02:37] Speaker 00:
And I'll read that verbatim.

[00:02:39] Speaker 00:
The, quote, timeline remains unchanged with the late 2021 launch.

[00:02:43] Speaker 02:
Sure.

[00:02:43] Speaker 02:
But the timeline is a prediction of when they are going to... It's not as if they said, we have these little checkpoints on the timeline and we've reached them, and that's a false statement.

[00:02:53] Speaker 02:
They're saying, we still plan to roll this out in 2021.

[00:02:58] Speaker 00:
They did say they plan to roll it out in 2021, but if you look at the if you look at the facts underlying that it shows why they're not forward looking statements and if you if you turn, for example, first to that December 12 article from.

[00:03:11] Speaker 00:
semi-accurate.

[00:03:13] Speaker 00:
That's semi-accurate saw the roadmaps and said that the Granite Rapids, the CPUs, wouldn't be available until late 2023.

[00:03:20] Speaker 04:
But I guess the problem there, Mr. Moriarty, is that the statements themselves don't speak to roadmaps, they speak to destinations.

[00:03:29] Speaker 04:
We're going to get here

[00:03:31] Speaker 04:
They don't talk about all these intermediate steps that perhaps the company is quite worried about and the interior But the forward-looking safe harbor applies to the statement and the statement is the end date not these intermediate dates We want to direct you to the fifth circuits recent opinion in six flags, which I think provides and if you'll pardon the pun

[00:03:53] Speaker 00:
a perfect roadmap for how you should look at this case.

[00:03:56] Speaker 00:
And in that case, the defendants largely ignore this case for good reason, because in Six Flags, the executives were privy to certain information that contradicted their representations that the company's parks in China were, and I quote, progressing nicely towards opening dates.

[00:04:11] Speaker 00:
There were, quote, no delays, and the, quote, and parks were, quote, still progressing towards the announced opening dates.

[00:04:18] Speaker 00:
So the Fifth Circuit held that those statements were not protected by the safe harbour and while, as Your Honours are suggesting, a deadline is a future projection, the statements regarding the progress towards it are not.

[00:04:32] Speaker 00:
That's because as the Fifth Circuit held, they are rooted in the present and imply that present construction progress was adequate to meet those deadlines.

[00:04:42] Speaker 04:
Well, how do you deal with, one reason they may not look at it is that we're not the Fifth Circuit.

[00:04:47] Speaker 04:
So with respect to the Ninth Circuit, so how would you distinguish, for example, the Tesla case?

[00:04:53] Speaker 00:
So I think the key thing about Tesla is Tesla did not change the law with respect to the safe harbor in this circuit.

[00:05:00] Speaker 00:
There was no sea change in the law with Tesla.

[00:05:02] Speaker 00:
And the Ninth Circuit in Tesla made clear that statements about the current or the past are not protected by the safe harbor.

[00:05:09] Speaker 00:
I don't think there's any dispute about that in this case.

[00:05:12] Speaker 00:
And to understand Tesla fully, you have to appreciate what the district court held.

[00:05:18] Speaker 00:
And Judge Breyer stated that,

[00:05:20] Speaker 00:
The plaintiff said, quote, didn't plead any actual timeline or plan.

[00:05:25] Speaker 00:
And in fact, he went further and stated that the allegations regarding any timeline were, quote, entirely specious.

[00:05:32] Speaker 00:
That is not the case here.

[00:05:33] Speaker 00:
We have the semi-accurate article I told you about.

[00:05:36] Speaker 00:
We have a former employee, one, who tells us that Intel was a year to two years behind.

[00:05:41] Speaker 04:
I guess just on the safe harbor still, and I think we'll get to these behind-the-scenes questions.

[00:05:50] Speaker 04:
When would the Safe Harbor ever apply if it doesn't apply to on-track type statements saying that this is our goal and we still plan to meet it?

[00:06:03] Speaker 04:
I mean, how is that not a quintessentially forward-looking statement?

[00:06:06] Speaker 04:
Or what would a forward-looking statement be in this case to qualify under your rule?

[00:06:12] Speaker 00:
Tesla gives you a perfect example because there was no timeline that there was no plan that that's complete opposite from here, where we are discussing where they were along the along the path.

[00:06:21] Speaker 04:
But where's the I guess I'm trying to you pointed us to disclosures and again the the statements that you've highlighted to us are statements about end of 2021 they're not statements about

[00:06:34] Speaker 04:
Internally, there isn't a statement here.

[00:06:37] Speaker 04:
Internally, we're hoping to be right here, and we know that we're not, but we're gonna tell people that we're on track.

[00:06:46] Speaker 04:
I can see your point with respect to that, but where is it in these statements where there's a claim of a timeline as opposed to, yeah, this is still forward-looking, our goal?

[00:06:57] Speaker 00:
The defendants even state that we monitor the progress.

[00:07:00] Speaker 00:
In other words, they monitor the timeline.

[00:07:03] Speaker 00:
And let me give you an example.

[00:07:04] Speaker 00:
We've pleaded several timelines in the complaint.

[00:07:06] Speaker 00:
You'll see several of the later figures in the complaint show timelines.

[00:07:09] Speaker 00:
Intel's Russian subsidiary released a graphics which showed that Granite Rapids was in 2023.

[00:07:17] Speaker 00:
So to suggest there's no timeline is contradicted by the complaint.

[00:07:20] Speaker 02:
But I'm looking at the statements in Tesla.

[00:07:23] Speaker 02:
We're on track to achieve a 5,000 per unit week by the end of this year.

[00:07:30] Speaker 02:
Is that a timeline?

[00:07:33] Speaker 00:
No, Your Honor, it is not a timeline, because as Judge Breyer made clear, there was no timeline in that case.

[00:07:38] Speaker 02:
Well, I know Judge Breyer said there was no timeline, but he said that in a case in which the statement was, we will be able to do this

[00:07:47] Speaker 02:
by the end of the year, and then another statement by the end of 2017.

[00:07:51] Speaker 02:
So why is that different than our plan is to deal with your product by the end of the year, isn't it?

[00:08:02] Speaker 02:
Those statements seem quite similar, and I think what Judge Breyer was saying is that those are not timelines that will give rise to a claim under the act.

[00:08:12] Speaker 02:
They're just predictions about when we'll do something in the future.

[00:08:15] Speaker 00:
I appreciate that there's some similarity in those statements, but I think to understand Tesla in this case, you really have to drill down into the fundamental aspects of whether there was a timeline or a roadmap or whether there wasn't.

[00:08:30] Speaker 00:
In this case, there was, and in Tesla, there wasn't.

[00:08:32] Speaker 00:
But I see there's a lot of focus on the cautionary, on the forward-looking aspects of the statements.

[00:08:37] Speaker 00:
But even if you're on as accept... Yes, that's where we're gonna go next.

[00:08:40] Speaker 00:
Speak to the cautionary language.

[00:08:42] Speaker 04:
So I think 29 and 30 might be a good place to focus.

[00:08:47] Speaker 04:
No cautionary language with respect to those, so you have to establish actual knowledge of falsities.

[00:08:51] Speaker 00:
So, just to be clear, our position is that these statements aren't forward-looking, but let's assume that they are, okay?

[00:08:58] Speaker 00:
Now, to be protected under PSLRA safe harbor, they have to be forward-looking, and they either have to be made with meaningful cautionary language, and the keyword there, Your Honors, is meaningful, or made with actual knowledge of the falsity.

[00:09:10] Speaker 00:
And I'm gonna address why we meet, why those statements are not protected by the safe harbor under either.

[00:09:16] Speaker 00:
But let me just point out one thing, and I would ask, Your Honors, to keep this statement front and center,

[00:09:21] Speaker 00:
That June 11th statement, the timeline remains unchanged for the late 2021 launch.

[00:09:27] Speaker 00:
Defendants acknowledge that wasn't made with cautionary language.

[00:09:30] Speaker 02:
But put aside for a moment the Safe Harbor issue.

[00:09:33] Speaker 02:
The second half of the Safe Harbor test really is the same as the test for Sienta in general, which is that you have to make a statement with knowledge that it's false.

[00:09:43] Speaker 00:
Isn't it?

[00:09:43] Speaker 00:
That's not correct, Your Honor.

[00:09:44] Speaker 00:
There are two CNTA standards, depending on whether the statements are forward-looking or not.

[00:09:49] Speaker 02:
Right, but let's assume, right, so let's assume a statement is forward-looking and you know it's not true when you make it.

[00:09:55] Speaker 02:
You're not within the safe harbor.

[00:09:58] Speaker 02:
In general, when you make a statement and you know it's not true when you make it, that's a misleading or false statement.

[00:10:06] Speaker 02:
So I'm still looking on both of them.

[00:10:08] Speaker 02:
I'm not sure my factual inquiry is going to be very different under whether or not this qualifies for the safe harbor or not.

[00:10:15] Speaker 02:
I'd like to know what the evidence is that they didn't have a plan.

[00:10:20] Speaker 02:
to be operational by that date.

[00:10:23] Speaker 02:
At the time, people said we do have a plan to be operational by that date.

[00:10:28] Speaker 00:
I don't mean to nitpick.

[00:10:29] Speaker 00:
But you do.

[00:10:32] Speaker 00:
That's a polite way of saying it.

[00:10:34] Speaker 02:
You mean to nitpick, so nitpick.

[00:10:36] Speaker 00:
The polite way of saying we don't have to plead evidence, Your Honor.

[00:10:38] Speaker 00:
We have to plead allegations.

[00:10:39] Speaker 00:
It's heightened.

[00:10:40] Speaker 02:
But you have to plead evidence that gives rise to

[00:10:43] Speaker 02:
a strong inference of scienter.

[00:10:46] Speaker 02:
And so I'm trying to figure out what facts you have pleaded that would lead me to believe that when people made these statements, we're on track, we intend to do this by then, even if they don't qualify for the safe harbor, that they knew those statements were false, that they didn't intend to bring it to market by then.

[00:11:05] Speaker 00:
So the first point to remember is that the Cienta analysis is holistic.

[00:11:09] Speaker 00:
So we don't need to give you one allegation to prove it.

[00:11:13] Speaker 00:
Sorry, to plead it.

[00:11:14] Speaker 00:
And it's also to be determined with common sense.

[00:11:15] Speaker 00:
This circuit's made that clear.

[00:11:17] Speaker 00:
And there are several factors that go into showing why there's Cienta here.

[00:11:21] Speaker 00:
And let me just start with the strongest one, because this also satisfies the actual knowledge standard for Cienta.

[00:11:27] Speaker 00:
In May, June, 2020, Keller,

[00:11:31] Speaker 00:
who is a quote unquote rock star brought in to handle these chips, meets with Swann, the CEO, and tells him of all these problems, tells him that the chief chip engineer defendant, Rendhu Shintala, was not doing his job.

[00:11:46] Speaker 00:
This meeting doesn't go well at all.

[00:11:48] Speaker 00:
So Swann, so Keller then goes to Intel's board and essentially goes over Swann's head.

[00:11:54] Speaker 00:
and tells the board of all these problems.

[00:11:58] Speaker 02:
There's plenty of evidence that there were problems and that Keller knew about them.

[00:12:02] Speaker 02:
I'm trying to figure out why I should think that Keller also knew that those problems rendered it impossible for them to meet their target.

[00:12:14] Speaker 00:
Respectfully, Your Honor, impossibility is not the standard.

[00:12:16] Speaker 00:
Six Flags makes that clear.

[00:12:18] Speaker 00:
The standard.

[00:12:19] Speaker 02:
Okay, so rephrase the standard.

[00:12:21] Speaker 02:
See, all I see from your complaint is that Keller knew there were a bunch of problems.

[00:12:26] Speaker 02:
And people were still making the statements that we're on track to do this by the target date.

[00:12:32] Speaker 02:
So tell me how I can infer from the fact that there are problems, which there always are, that they couldn't meet the target date.

[00:12:41] Speaker 00:
Well, let me give you a good example for Ponte Vecchio.

[00:12:44] Speaker 00:
In March 2020, semi-accurate, which the district court previously held was reliable, reported that they missed the hard tape out date.

[00:12:52] Speaker 00:
Now, the hard tape out date is the deadline by which they have to send the chips for manufacturing.

[00:12:57] Speaker 00:
It can be seen as the point of no return.

[00:13:00] Speaker 02:
And what statement is made after that?

[00:13:01] Speaker 00:
There were several statements, Your Honor.

[00:13:03] Speaker 00:
And again, I keep going back to this June 11, 2020 statement that the timeline remains unchanged.

[00:13:10] Speaker 00:
And just remember, this statement was made by Swan after he had met with Keller, where Keller had told him that the... So for us to find Santa in one way or another, we have to find that at the time that statement was made, they knew the timeline had changed, yes?

[00:13:29] Speaker 00:
If it's forward-looking, you have to apply the actual knowledge standard.

[00:13:33] Speaker 00:
I agree with that.

[00:13:34] Speaker 02:
Let's assume it's not forward-looking.

[00:13:36] Speaker 00:
Absolutely not.

[00:13:37] Speaker 00:
Deliberate recklessness suffices when it's not

[00:13:40] Speaker 02:
I don't care whether the timeline has changed or not.

[00:13:42] Speaker 02:
I'm just going to say this.

[00:13:45] Speaker 00:
That's deliberate recklessness.

[00:13:47] Speaker 00:
In layman's terms, that's correct, your honor.

[00:13:50] Speaker 00:
So the scientim analysis, you really have to focus on are the statements of current past fact, then it's deliberate recklessness.

[00:13:58] Speaker 00:
If they're statements of forward-looking under the safe harbor, then it's actual knowledge.

[00:14:01] Speaker 00:
But as I say, we plead both.

[00:14:04] Speaker 00:
And let's also consider what these chips were for.

[00:14:07] Speaker 00:
These were part of a half a billion dollar contract with the Department of Energy.

[00:14:12] Speaker 00:
Rendhushan Chala, who we allege made false statements, it was his job to manage this, to oversee this.

[00:14:21] Speaker 00:
He was the chief chip engineer.

[00:14:23] Speaker 00:
So it would be absurd to suggest that he wasn't aware of what was going on at the time they were made.

[00:14:28] Speaker 00:
And my time's running out, so let me just give you a couple more points.

[00:14:31] Speaker 00:
Look at a temporal proximity.

[00:14:33] Speaker 00:
On June 25th, 2020, Intel goes and tells the market we're on track to meet the deadlines.

[00:14:40] Speaker 00:
Again, this is after Keller has met with Swann.

[00:14:43] Speaker 00:
What happens four weeks later?

[00:14:45] Speaker 00:
Intel announces delays of at least six months to Ponte Vecchio and at least 12 months to Granite Rapids.

[00:14:50] Speaker 00:
It's just not credible to believe that a process that is as designed and lengthy as this would just do a complete 180 within the space of four weeks.

[00:15:04] Speaker 04:
Okay, we'll spot you two minutes on your rebuttal.

[00:15:08] Speaker 04:
Thank you, Mr. Moriarty.

[00:15:17] Speaker 04:
Thank you.

[00:15:17] Speaker 04:
Mr. Gildersleeve.

[00:15:21] Speaker 03:
May it please the court, John Gildersleeve for the appellees.

[00:15:24] Speaker 03:
There's no question the seven nanometer delay was bad news, but the point of the PSLRA is to stop the abusive practice of pleading fraud by hindsight

[00:15:34] Speaker 03:
Every time there's bad news and a stock drop, the statute creates heightened pleading requirements that dispose of this case as to falsity, as to seander, as well as loss causation.

[00:15:45] Speaker 03:
It also creates a safe harbor for forward-looking statements that protect companies when they make predictions about what might happen in the future.

[00:15:52] Speaker 01:
Counsel, how would you distinguish the Six Flags case in on the forward-looking statements?

[00:15:57] Speaker 03:
Your Honour, in Six Flags, the Fifth Circuit did find a number of statements to be forward-looking.

[00:16:03] Speaker 03:
The statement that my friend referred to, it did not find forward-looking.

[00:16:06] Speaker 03:
That's the progressing nicely statement.

[00:16:10] Speaker 03:
I think, one, I'm not sure that that treatment of the progressing nicely statement is consistent with what this Court did in

[00:16:18] Speaker 03:
in Tesla, but regardless, progressing nicely does communicate that there is some progress occurring.

[00:16:27] Speaker 03:
It communicates that much.

[00:16:28] Speaker 02:
But your statements remain on track, if you will.

[00:16:32] Speaker 02:
We remain on track to roll this out at the time we said.

[00:16:36] Speaker 01:
How does that differ meaningfully from progressing nicely?

[00:16:39] Speaker 04:
I guess it could be on track and not moving, but I think the implication there is that progress.

[00:16:47] Speaker 03:
Yes, your honor.

[00:16:48] Speaker 03:
I think in in six flags.

[00:16:49] Speaker 03:
Of course, the allegations are very different.

[00:16:52] Speaker 03:
These are construction of theme parks in China as to which virtually no activity had occurred.

[00:16:58] Speaker 03:
And there was a confidential witness who said

[00:17:00] Speaker 03:
There's not even holes in the ground.

[00:17:02] Speaker 03:
Blueprints had not even been commissioned for these parks.

[00:17:06] Speaker 03:
There's no comparable allegation here, for example, that Intel was not actually developing the technology for the 7nm.

[00:17:12] Speaker 02:
Well, but what if, just, I don't know that the record supports this, but just assume this for a second.

[00:17:19] Speaker 02:
What if everybody at Intel knew that it would be absolutely impossible to roll this out?

[00:17:25] Speaker 02:
You don't have to fight the impossible because it's better for your side.

[00:17:32] Speaker 02:
Absolutely impossible to roll this out by a certain date, yet they nonetheless made statements that were on track.

[00:17:39] Speaker 02:
Would you agree that those would be actionable?

[00:17:42] Speaker 03:
So Your Honor, that wouldn't change the nature of the statement itself.

[00:17:46] Speaker 03:
The statement is either forward-looking or not.

[00:17:48] Speaker 02:
Right, so you can make a statement that we're on track to be done by a certain date when you know that you're off track and you can't possibly be done by that date, and that's still protected by the safe harbor.

[00:18:02] Speaker 03:
Well, for safe harbor protection, the court would look to the two prongs.

[00:18:05] Speaker 02:
Yes.

[00:18:05] Speaker 02:
There's no automatic protection for a forward-looking state.

[00:18:08] Speaker 02:
And we all agree that the first prong is

[00:18:11] Speaker 02:
probably not expressly covered here.

[00:18:13] Speaker 02:
Nobody said, caution, caution, this is a forward-looking statement, don't rely on it.

[00:18:20] Speaker 02:
So I'm looking at the Siento prom.

[00:18:22] Speaker 02:
And so you're saying that even if the speaker knew that the predicted date was absolutely impossible to achieve, then it's protected by the safe harbor.

[00:18:35] Speaker 03:
In that scenario, the scienter prong, the actual knowledge prong, I don't think would be satisfied.

[00:18:41] Speaker 03:
Now, those aren't the allegations here.

[00:18:43] Speaker 02:
Well, I understand.

[00:18:44] Speaker 02:
Well, I'm trying to figure out whether they allege close enough to that here, which is a separate point.

[00:18:48] Speaker 02:
But your legal point is that as long as we're talking about the future, Yogi Berra, who said it's difficult to predict things, particularly the future.

[00:18:58] Speaker 02:
But as long as you're talking about the future, that's enough.

[00:19:02] Speaker 02:
We're done.

[00:19:03] Speaker 02:
No more analysis needed.

[00:19:06] Speaker 03:
So, Your Honor, the safe harbor does operate independently of the elements of a securities fraud claim, except for the overlap on the second problem.

[00:19:16] Speaker 02:
So your answer to my question is yes.

[00:19:18] Speaker 03:
The answer is yes, Your Honor, because even if every element of a securities fraud claim is adequately pleaded,

[00:19:25] Speaker 03:
the safe harbor still might apply to render a statement not actionable.

[00:19:29] Speaker 03:
This court explained that in Quality Systems.

[00:19:31] Speaker 02:
Sure.

[00:19:32] Speaker 02:
But I'm posing now one where they know when they make the statement that it's false.

[00:19:38] Speaker 02:
We're on track to do something by X date.

[00:19:42] Speaker 02:
They know that it's false.

[00:19:44] Speaker 02:
They just don't want anybody in the rest of the world to know that they're not on track.

[00:19:47] Speaker 02:
And you're saying that still fits within the safe harbor.

[00:19:51] Speaker 03:
If the statement's forward looking, which in your honor is hypothetical.

[00:19:54] Speaker 03:
Yes, yes.

[00:19:56] Speaker 03:
It seems that the second prong would not be satisfied because there is actual knowledge of falsity in that hypothetical.

[00:20:04] Speaker 02:
You would not be in the safe harbor then?

[00:20:06] Speaker 03:
Well, the analysis would turn to the first prong, which is the statement accompanied by meaningful cautionary statements.

[00:20:13] Speaker 03:
And the answer is that if it is, then the state property.

[00:20:15] Speaker 04:
What was it with respect to the ones that we've been focusing on?

[00:20:19] Speaker 04:
Timeline remains unchanged, process remains on track.

[00:20:23] Speaker 04:
Do you contend that there's meaningful cautionary language for either of those?

[00:20:27] Speaker 04:
These are statements 29 and 30.

[00:20:30] Speaker 03:
Those statements were not accompanied by meaningful cautionary language because one was made to analysts from Deutsche Bank.

[00:20:37] Speaker 03:
And I would point out, my friend said the statement was made by Swan, the CEO.

[00:20:42] Speaker 03:
It's not actually made by any of the defendants.

[00:20:44] Speaker 03:
This is the analyst's paraphrasing of statements that the defendants made to them.

[00:20:51] Speaker 03:
Those statements were not accompanied by cautionary language, Judge Johnstone.

[00:20:55] Speaker 03:
So for the safe harbor to apply, there has to be no actual knowledge of falsity.

[00:21:00] Speaker 03:
And we very much contend that that's not true.

[00:21:03] Speaker 04:
Exactly.

[00:21:04] Speaker 04:
Squaring up now to Judge Hurwitz's point, why is it not enough?

[00:21:12] Speaker 04:
So there's no allegation in here.

[00:21:14] Speaker 04:
that there was a timeline that on Monday we're going to be this far along and on Tuesday and Wednesday, they don't allege that.

[00:21:23] Speaker 04:
Do they have to?

[00:21:23] Speaker 04:
Do they have to allege a timeline of intermediate steps before disclosing that they are on track to some final destination?

[00:21:32] Speaker 03:
For the statements to be actionable, notwithstanding the safe harbor, the answer is yes.

[00:21:38] Speaker 03:
That's the distinction that this court drew in Tesla, right?

[00:21:43] Speaker 03:
If you are disclosing those interim underlying dates, the embedded timeline, the intermediate benchmarks, these are all phrases for the same thing.

[00:21:54] Speaker 03:
It's the checkpoints along the way, like Judge Hurwitz said.

[00:21:59] Speaker 03:
A company says we're on track to the goal.

[00:22:01] Speaker 03:
Having disclosed those checkpoints, the prior disclosure of the checkpoints imbues the phrase on track with more meaning.

[00:22:08] Speaker 03:
It turns it into a statement of present fact.

[00:22:12] Speaker 03:
It communicates that yes, we have met that checkpoint.

[00:22:14] Speaker 03:
We've passed it.

[00:22:16] Speaker 03:
There are no disclosures to the market, no references to checkpoints, way stations along the way, a timeline along the way, nothing.

[00:22:25] Speaker 03:
And I noted even at argument, my friend is unable to point to any allegation of statements to the market like that.

[00:22:33] Speaker 03:
Instead, the statements here are the unadorned statements, to use the court's phrase from Tesla.

[00:22:40] Speaker 03:
Those statements are forward-looking and protected by the safe harbor.

[00:22:45] Speaker 03:
I do want to turn to CNTER.

[00:22:47] Speaker 03:
It's an independent basis for dismissal, and it's also the ticket to the safe harbor for certain of the statements, as the Court has noted.

[00:22:55] Speaker 03:
There are no particularized facts connecting the individual defendants to knowledge of falsity with respect to any of these statements.

[00:23:04] Speaker 03:
there is no stock sales pleaded.

[00:23:08] Speaker 03:
Now those aren't required to plead a strong inference of C-Enter, but the absence of those allegations does weigh against.

[00:23:15] Speaker 04:
So we have the anonymous sources, and I guess I'd like your elaboration on the question of whether the Zuko test for reliability and personal knowledge should or shouldn't apply to that for purposes of the safe harbor.

[00:23:29] Speaker 03:
So the reliability and personal knowledge test that this court announced in Zucco Partners, our view is that it does apply to consideration of any anonymous sourced allegations, but the court doesn't really need to reach whether it applies to sources in news reports because even what the anonymous sources in the semi-accurate article said here isn't enough to show falsity, isn't enough to show

[00:23:56] Speaker 03:
But to answer Your Honor's question directly, I do think the Zucco test applies.

[00:24:01] Speaker 03:
It's even more important when the anonymous source appears in a third-party blog post than when it's a confidential witness.

[00:24:09] Speaker 03:
And the reason is that in the confidential witness typical scenario, at least plaintiff's counsel knows who the confidential witness is.

[00:24:19] Speaker 03:
And counsel has obligations to the court under Rule 11 and things like that.

[00:24:24] Speaker 03:
to, you know, not distort these allegations too much.

[00:24:29] Speaker 03:
But the sources who are referred to in, say, Mr. Demirjian, the blogger's blog post, are completely unknown.

[00:24:37] Speaker 03:
The plaintiff's counsel, I assume, doesn't know who they are.

[00:24:40] Speaker 03:
We don't know who they are.

[00:24:40] Speaker 03:
The court doesn't know who they are.

[00:24:43] Speaker 03:
We don't know how many there are, whether they work at Intel.

[00:24:47] Speaker 03:
We don't know whether they were involved in 7-nanometer development at all.

[00:24:52] Speaker 04:
Okay, and I guess to now go back to your substantive point about why do the disclosures in there not give rise to inferences of sanitary or actual knowledge as the case may be.

[00:25:09] Speaker 03:
So let me take the posts in turn.

[00:25:12] Speaker 03:
The first is the December 2019 post, and the substance of it that is in the complaint is granite rapids is slated for second half of 2023.

[00:25:25] Speaker 03:
Granite rapids is only one seven nanometer product, and even the blogger, Mr. Demurgian, did not infer from that

[00:25:37] Speaker 03:
kind of purported delay of granite rapids, that all seven nanometer products were delayed.

[00:25:42] Speaker 03:
The complaint doesn't allege that the market, or any other actor, interpreted the blog post that way.

[00:25:50] Speaker 03:
In fact, the complaint cites an analyst report commenting on the blog post, and the analyst report doesn't even mention seven nanometer.

[00:25:59] Speaker 03:
The next post is the July 2020 semi-accurate post, so that's after the delay's announced.

[00:26:06] Speaker 02:
I'm struck by calling posts semi-accurate.

[00:26:11] Speaker 02:
I know they come from semi-accurate, but they've got to be better than semi-accurate for us to rely on them.

[00:26:16] Speaker 02:
But go ahead.

[00:26:18] Speaker 03:
Yes, and to your point, Judge Hurwitz, I mean, this is not The New York Times, right?

[00:26:22] Speaker 03:
It's a blogger who describes himself as a roving engine of chaos and snide remarks.

[00:26:29] Speaker 03:
This court has discussed Mr. Demirjian's allegations before in a prior securities case.

[00:26:36] Speaker 03:
It's the NVIDIA case from 2014.

[00:26:39] Speaker 03:
The court said the allegations are second-hand, even though Mr. Demirjian purportedly spoke to dozens of people.

[00:26:45] Speaker 03:
But to return to the allegations here, the second post about the missed tape-out date, that one's not even attributed to

[00:26:54] Speaker 03:
sources.

[00:26:55] Speaker 03:
It's just a statement by Mr. Demirjan, who I think it's undisputed, does not work at Intel, never did.

[00:27:03] Speaker 03:
The third post is from a different source, WCCF Tech.

[00:27:09] Speaker 03:
That's the purportedly leaked slides.

[00:27:12] Speaker 03:
That one on the merits, it's consistent with the company's statements.

[00:27:16] Speaker 03:
It says Granite Rapids 2022 or 2023.

[00:27:20] Speaker 03:
That's in the record at 550.

[00:27:23] Speaker 03:
of the supplemental excerpts, and that's consistent with the company's statements.

[00:27:27] Speaker 03:
I'll turn now to the confidential witnesses.

[00:27:30] Speaker 02:
Could you deal with Mr. Keller in particular?

[00:27:34] Speaker 03:
Yes.

[00:27:34] Speaker 03:
So Mr. Keller is not one of the named defendants.

[00:27:38] Speaker 02:
Right.

[00:27:38] Speaker 02:
And that's what I'm trying to figure out.

[00:27:40] Speaker 02:
Let's assume that Mr. Keller knew at some point in time that the timeline was unachievable.

[00:27:47] Speaker 02:
Just assume that for purposes of discussion.

[00:27:50] Speaker 02:
What evidence is there in the record that that

[00:27:53] Speaker 02:
now his knowledge was either transferred or can be imputed to the other named defendants there is no such evidence well he does have a meeting with someone and then he does go and talk to the board can we infer from that that he

[00:28:10] Speaker 02:
Said what he knew?

[00:28:11] Speaker 03:
No, Your Honor, for two reasons.

[00:28:14] Speaker 03:
One, the evidence in the complaint about the purported meeting is highly unreliable.

[00:28:19] Speaker 03:
It's all sourced to FE1, who was not in the room.

[00:28:23] Speaker 03:
He or she is relaying, I want to say triple hearsay, but it's not even that, because the link is broken.

[00:28:30] Speaker 03:
He's essentially relaying a rumor that he heard from

[00:28:34] Speaker 03:
someone else, Mr. Carville, Mr. Carville says he does not say, excuse me, that he heard that rumor from Mr. Keller.

[00:28:41] Speaker 03:
So there's a break in the chain.

[00:28:43] Speaker 03:
So point one is it's not reliable.

[00:28:46] Speaker 03:
Point two, your honor, is that even what FE1 relays about that Keller to management board meeting is not about the projected release dates for the products.

[00:29:00] Speaker 03:
There are vague references in that paragraph of the complaint

[00:29:05] Speaker 03:
it's paragraphs 93 and 94, to delays and problems.

[00:29:11] Speaker 03:
It's just those words.

[00:29:12] Speaker 03:
It does not say that Mr. Keller told the board or told the CEO that the public projected release date schedule is irretrievably off track, impossible.

[00:29:24] Speaker 03:
It doesn't say that.

[00:29:26] Speaker 03:
It just says delays and problems, which could be anything.

[00:29:28] Speaker 03:
So it's fundamentally unreliable under Zucco partners, but even the substance doesn't get the plaintiffs where they need to be.

[00:29:45] Speaker 03:
I do want to just very briefly address FE2 and FE3.

[00:29:50] Speaker 03:
FE2 also doesn't address the projections or the schedule at all.

[00:29:54] Speaker 03:
It's just a vague reference to problems with yield.

[00:29:57] Speaker 03:
And as Your Honor notes, there are inherently problems when you're developing new technology.

[00:30:05] Speaker 03:
And FE3 also says nothing about the schedule.

[00:30:10] Speaker 03:
at issue.

[00:30:11] Speaker 03:
One last note, I believe my friend said with respect to the December 29 post that Semi Accurate saw the roadmaps.

[00:30:20] Speaker 03:
I don't think that's what the record bears out.

[00:30:22] Speaker 03:
The blogger doesn't say that he saw any roadmaps.

[00:30:25] Speaker 03:
It's just the vague reference to sources, which I think is not reliable, no personal knowledge under Zucco Partners.

[00:30:32] Speaker 03:
Unless the court has further questions, I'm happy to stop there.

[00:30:36] Speaker 04:
Thank you, Mr. Goldersleeve.

[00:30:37] Speaker 03:
Thank you.

[00:30:43] Speaker 04:
Mr. Moriarty, two minutes.

[00:30:45] Speaker 00:
Your Honour, I'd like, Your Honours, I'd like to take Judge Hurwitz on a trip down memory lane to CVB, Lloyd VCB VB, in which you wrote that confidential witnesses can report hearsay.

[00:30:57] Speaker 00:
That addresses Mr. Gilder Sleave's concern about FE1's reliability.

[00:31:03] Speaker 00:
I'd also like to say that this is not a case of fraud by hindsight.

[00:31:06] Speaker 00:
is a case where we've pleaded numerous contemporaneous facts that show that the statements in question were false when made.

[00:31:13] Speaker 00:
And when we look at the cautionary language, we've shown the actual knowledge, but I also want to point out that this cautionary language was not meaningful because the, and I believe Your Honor, Judge Myers, you addressed this briefly in the previous case where you said that

[00:31:30] Speaker 00:
When a risk is already materialized, you can't present that risk as this could happen, or that can happen, or this may happen.

[00:31:36] Speaker 00:
Because those risks have materialized, the cautionary language can't be meaningful.

[00:31:40] Speaker 00:
And I think if you look at pages seven to eight of Defendants Brief, you'll see that the risks they list as hypothetical had already materialized.

[00:31:51] Speaker 00:
Mr. Gilderslieve also mentioned that the June 11th statement was basically repeated by Deutsche Bank, but we plead

[00:32:00] Speaker 00:
that defendant Swan and Davis met with Deutsche Bank and that they then repeated what they were told by Swan and Davis.

[00:32:09] Speaker 00:
And again, this was after Swan had met with Keller.

[00:32:13] Speaker 00:
Then there was also some criticism of Demirjian.

[00:32:17] Speaker 00:
But he does identify his sources.

[00:32:19] Speaker 00:
He says his sources were employees at Intel.

[00:32:21] Speaker 00:
And the citation to the NVIDIA case for his reliability is misplaced.

[00:32:26] Speaker 00:
The court there didn't find him unreliable.

[00:32:28] Speaker 00:
They found that he wasn't helpful because the allegations attributed to him weren't really related to the underlying theory of fraud.

[00:32:39] Speaker 00:
So.

[00:32:42] Speaker 00:
Oh, the other point on the December the 10 point was, Randush and Tala said the entire portfolio for seven nanometers would be delayed until 2020.

[00:32:52] Speaker 00:
Sorry, in December 2010, Randush and Tala informed the market that all the seven nanometer products will be available in 2022.

[00:33:01] Speaker 00:
I see my time is up, Your Honours.

[00:33:05] Speaker 04:
Thank you very much, Mr. Moriarty.

[00:33:06] Speaker 04:
Thank you to counsel on both sides and the case is submitted and we will recess until tomorrow morning.