United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 04-2662
                                 ___________

In re: Cerner Corp. Securities Litigation *
________________________                  *
                                          *
John A. Campagnuola, Individually         *
and on Behalf of All Other Similarly      *
Situated,                                 *
                                          *
              Plaintiff,                  *
                                          *
Phil Crabtree,                            * Appeal from the United States
                                          * District Court for the
              Plaintiff/Appellant,        * Western District of Missouri.
                                          *
        v.                                *
                                          *
Cerner Corporation; Neal Patterson;       *
Mark Naulten; Paul Black; Clifford W. *
Illig; Earl H. Devanny, III; Glenn P.     *
Tobin,                                    *
                                          *
              Defendants/Appellees.       *
                                    ___________

                           Submitted: January 13, 2005
                              Filed: October 6, 2005
                               ___________

Before WOLLMAN, MURPHY, and BYE, Circuit Judges.
                         ___________

WOLLMAN, Circuit Judge.
      Phil Crabtree, the lead plaintiff in a securities fraud class action against Cerner
Corporation (Cerner) and several individual defendants, appeals from the district
court’s1 dismissal of the consolidated class complaint, as well as the district court’s
denial of leave to amend the complaint. We affirm.

                                             I.
       Because Crabtree’s appeal arises from the district court’s grant of a motion to
dismiss, we draw the relevant facts from the class complaint. See Fla. State Bd. of
Admin. v. Green Tree Fin’l Corp., 

, 648 (8th Cir. 2001). Cerner sells
clinical and management information systems to healthcare providers. Cerner also
provides services and personnel to install, support, and implement its products. On
April 3, 2003, after enjoying a span of thirteen consecutive quarters in which its
reported earnings either met or exceeded estimates, Cerner announced that it would
not meet its revenue and earnings projections for the first quarter of 2003 because of
“a lower level of new business bookings in the quarter.” Cerner attributed the
shortfall to a variety of factors, including “a change in the competitive environment,”
“more challenging economics for health care provider organizations,” and the
company’s “move to a more client-centric organizational structure,” all of which
affected Cerner’s ability to replace deals that it had lost or “pushed with new
business.” In response to this announcement, Cerner’s stock quickly lost
approximately 45% of its value.

      Shortly after the April 3 announcement, several securities fraud class actions
were filed against Cerner and some of its officers and directors (collectively, the
Individual Defendants). The district court consolidated those actions and appointed
Crabtree to act as lead plaintiff on behalf of a class consisting of all persons who
purchased or otherwise acquired Cerner securities between July 17, 2002, and April


      1
        The Honorable H. Dean Whipple, Chief Judge, United States District Court
for the Western District of Missouri.

                                          -2-
2, 2003, inclusive (the class period). Crabtree subsequently filed a consolidated class
action complaint, and he now alleges that Cerner and the Individual Defendants
issued a series of statements during the class period that were materially false or
misleading in violation of SEC Rule 10b-5. 17 C.F.R. § 240.10b-5. Crabtree also
asserts that the Individual Defendants are jointly and severally liable for the alleged
misstatements by virtue of their status as “controlling persons” of Cerner. See 15
U.S.C. § 78t(a).

       Crabtree’s claims encompass two groups of alleged misstatements. The first
group concerns Cerner’s future earnings projections. Crabtree argues that the
Individual Defendants made favorable statements throughout the class period about
Cerner’s growth, the demand for its products, and Cerner’s opinions on future
earnings forecasts—specifically, that the demand for Cerner’s products was “strong,”
that the company saw “substantial opportunities” in the future, and that the company
was “comfortable” with certain earnings and performance estimates—while at the
same time failing to disclose that: (1) Cerner was experiencing an increased level of
competition and losing a material amount of sales as competitors slashed prices in
order to take business from Cerner; (2) Cerner was offering substantial product and
service discounts in order to close deals before the end of a given quarter; (3) to a
material extent, clients were delaying or deferring purchases of Cerner’s products, or
deciding not to proceed with those purchases at all, due to general economic factors
and to dissatisfaction with Cerner’s performance; (4) Cerner had engaged in an
aggressive revenue recognition policy, allowing the company to “pull in” revenue
projected to be recognized in future quarters; (5) Cerner had reorganized its sales
force, which negatively impacted the ability of the company to close certain deals;
and (6) Cerner was increasingly focused on closing a small number of large deals
under circumstances in which Cerner’s bottom line was unusually sensitive to losing
such deals. J.A. at 0052-0061. Crabtree claims that the omission of these facts
rendered the favorable statements materially false and misleading.



                                         -3-
       The second group of disputed statements primarily addresses the underlying
reasons for Cerner’s repeated earnings successes. The Individual Defendants
represented that such earnings successes were attributable to Cerner’s “leadership
position,” “consistent execution,” and “experience” in the industry. 

that these statements were materially misleading because the Individual
Defendants failed to mention that Cerner had only attained its earnings numbers by
pulling in sales revenues that were projected to be recognized in future quarters.
Crabtree contends that this alleged failure to disclose the true reasons for Cerner’s
historical earnings successes made the company’s statements about its historical
results materially false and misleading.

       After the consolidated class complaint was filed, Cerner and the Individual
Defendants filed a motion to dismiss. The district court granted the motion to
dismiss, holding that the complaint did not meet the heightened pleading standards
for falsity and scienter required by the Private Securities Litigation Reform Act of
1995 (Reform Act). See 15 U.S.C. § 78u-4(b). The district court further found that
amending the complaint would be futile, and thus denied Crabtree leave to amend.

                                             II.
       We review de novo the district court’s grant of a motion to dismiss a securities
fraud complaint. Fields v. AMDOCS Ltd. (In re AMDOCS Ltd. Sec. Litig.), 

, 547 (8th Cir. 2004). The district court’s decision may only be affirmed if the
plaintiffs can prove no set of facts which would entitle them to the relief requested.
Migliaccio v. K-tel Int’l, Inc. (In re K-tel Int’l, Inc. Sec. Litig.), 

, 888-89
(8th Cir. 2002) We construe the complaint liberally and accept all facts pleaded
therein as true, but reject conclusory or catch-all assertions of law and unwarranted
inferences. 

       The Reform Act provides that, to survive a motion to dismiss, a securities
plaintiff must satisfy two heightened pleading standards. 15 U.S.C. § 78u-4(b)(3).

                                           -4-
First, the plaintiff must plead falsity by specifying each allegedly misleading
statement and the reasons why each statement is misleading. 15 U.S.C. § 78u-4(b)(1).
If falsity is alleged based upon information and belief, the complaint must state with
particularity all facts on which the belief is formed. 

the plaintiff must
plead scienter by “stat[ing] with particularity facts giving rise to a strong inference
that the defendants acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2).
Crabtree’s complaint meets neither standard.

                                          A.
       In order to satisfy the Reform Act’s falsity pleading standard, a complaint may
not rest on mere allegations that fraud has occurred. Chen v. Navarre Corp. (In re
Navarre Corp. Sec. Litig.), 

, 742 (8th Cir. 2002). Instead, the complaint
must indicate why the alleged misstatements “would have been false or misleading
at the several points in time in which it is alleged they were made.” 

In
other words, the complaint’s facts must necessarily show that the defendants’
statements were misleading. 

(Wollman, J., concurring).

       Crabtree’s complaint alleges that Cerner’s statements regarding future earnings
were materially false and misleading because Cerner was losing deals due to
increased competition, dissatisfied customers, a general economic downturn, an
inexperienced sales force, and a neglect of smaller deals. The complaint is devoid,
however, of any indication that this alleged loss of deals, even if “material,” is
necessarily inconsistent with Cerner’s statements that its demand was “strong.” A
company could conceivably lose a material number of deals it had pursued, and yet
continue to see a strong demand for its products and substantial future opportunities.
Furthermore, there is no indication on the face of the complaint that even a material
loss of deals necessarily rendered Cerner unable to achieve its projected earnings.
Finally, and perhaps most importantly, the complaint does not identify a single
specific deal that was lost due to alleged changes in Cerner’s corporate structure and
strategies. Without any indication that an undefined loss of sales necessarily would

                                           -5-
affect the company’s overall demand or its ability to meet its future earnings
projections, these allegations cannot survive the Reform Act’s falsity standard.2 

       The complaint’s allegations regarding the alleged pulling in are similarly
deficient. Although Crabtree is not required to describe in detail the circumstances
of Cerner’s pulling in activities, he is required to plead with particularity the “who,
what, when, where, and how” of the pulling in.3 

. Here,
Crabtree’s complaint alleges that the pulling in took place and caused an
overstatement in Cerner’s earnings during each quarter in the class period and an
impairment in Cerner’s ability to meet future earnings guidance. The complaint fails,
however, to allege the amount of any overstatements, the extent of any pulling in that
took place, or the amount of any revenue that was pulled in from future quarters.
Thus, the complaint’s general description of the pulling in, without more, cannot
satisfy the heightened falsity pleading standard. 

of alleged

      2
        Crabtree also alleges that the Individual Defendants were aware that their
projections for the first quarter of 2003 were “going to be a bust” at the time they
publicly disclosed the projections on January 23, 2003. If the Individual Defendants
in fact possessed knowledge that they could not achieve their first quarter targets, it
is conceivable that their favorable outlooks may have been false. Because we
conclude that, even as to this challenged statement, Crabtree cannot satisfy the
Reform Act’s heightened pleading standard for scienter, we need not address the
issue of the statement’s falsity.
      3
       We reject Crabtree’s argument that he need not meet this standard because his
complaint alleges that the failure to disclose the pulling in practice, rather than the
existence of the practice itself, rendered the statements materially false and
misleading. In Navarre, we held a revenue overstatement claim subject to the “who,
what, when, where, and how” 

. The plaintiffs’ claim in
that case, like Crabtree’s claim, alleged that the defendant corporation had used a
revenue recognition scheme in order to inflate its revenue, net income, and earnings
per share. 

The fact that the scheme in Navarre allegedly was illegal, while
the practice here allegedly was not, does not affect the standard’s applicability.

                                         -6-
wrongdoing by defendants, unaccompanied by more specific information, does not
reach the level of particularity required by the Reform Act).

                                            B.
       Crabtree’s complaint also fails to satisfy the Reform Act’s scienter pleading
standard. Although the Reform Act does not prescribe any particular method of
meeting the scienter standard, inferences of scienter will survive a motion to dismiss
only if they are “both reasonable and strong.” Kushner v. Beverly Enters., Inc., 

, 827 (8th Cir. 2003) (citation and internal quotations omitted). Scienter is
normally a factual question to be decided by a jury, but the complaint must at least
provide a factual basis for its scienter allegations. 

.

       Crabtree’s complaint seeks to prove scienter by showing that the Individual
Defendants received a “concrete and personal benefit,” see 

misstatements and omissions through well-timed insider trading and executive
compensation. J.A. at 0034-0041, 0070-0074. Insider trading activity may create an
inference of scienter when the trading activity during the class period is unusual. K-

. Here, the complaint’s allegations of insider trading pertain
to only one Individual Defendant (Clifford Illig), and allege that he sold
approximately 4% of his stock (113,383 shares out of approximately 3 million). This
amount is certainly not unusual on its face, and the complaint lacks any additional
allegations—such as prior trading history—that would tend to show that Illig’s
trading activity was otherwise unusual. See 

(Wollman, J.,
concurring). This deficiency, along with the fact that none of the other Individual
Defendants are alleged to have traded any stock during the class period, “decreases
any inference of scienter.” K-

.

      Similarly, Crabtree’s allegations that the Individual Defendants were motivated
to make the alleged misstatements by their desire to increase their bonus and
executive compensation packages and to make the company seem more profitable in

                                         -7-
preparation for a private debt placement fail to raise the requisite strong inference of
scienter. The desire to make a company seem more profitable is a desire “universally
held among corporations and their executives,” Green 

, and thus
is insufficient to prove scienter as a matter of law. 

.
Furthermore, unless the complaint shows that the benefit to an individual defendant
is unusual, a desire to increase executive compensation is also insufficient to prove
scienter. 

.

      We have previously held that an individual defendant’s benefit is unusual
based upon the overwhelming magnitude of the benefit and other suspicious
circumstances, such as a timing coincidence. See Green 

($102
million benefit to individual defendant, and alleged overstatement of earnings took
place just as individual defendant’s contract was to expire). In Cerner’s case,
however, the largest bonus (allegedly based upon company-wide performance) paid
to any one Individual Defendant during the Class Period was approximately
$355,000, the aggregate bonus paid was approximately $1 million, and no suspicious
circumstances similar to those in Green Tree are present. The complaint thus fails to
show the unusual benefit required to plead scienter. See also 

(finding allegations of personal benefit insufficient where largest single bonus
was $630,000, aggregate bonus was over $1.7 million, and no other suspicious
circumstances were present).

       Crabtree’s complaint further alleges that scienter is established as a result of
the Individual Defendants’ knowledge or reckless disregard of the falsity of each
challenged statement. Because we hold that the complaint has not established the
falsity or misleading nature of any of the challenged statements (with the possible
exception of the January 23, 2003, earnings forecast), this allegation necessarily fails.
In addition, even if the January 23 statement was false, Crabtree’s complaint does not
show that it was knowingly false when made.



                                          -8-
       As support for its allegation that the January 23 earnings forecast was
knowingly false when made, the complaint cites the statement of a former Cerner
regional sales manager that he and some of his personnel discussed among
themselves the unattainable nature of the earnings forecasts. At best, this allegation
establishes that such an opinion was held by the regional sales manager and his peers.
It sheds no light on the relevant issue of whether the Individual Defendants shared
this view, or indeed of whether the forecasts were necessarily unattainable.
Accordingly, it is not sufficient to establish a strong inference that the January 23
statement, even if false, was issued with the requisite scienter.

                                           III.
        Finally, Crabtree argues that the district court abused its discretion in denying
him leave to amend his complaint to comply with the Reform Act’s pleading
requirements. “[L]eave to amend should be granted freely ‘when justice so
requires.’” 

(quoting Fed. R. Civ. P. 15(a)). Nevertheless,
futility is a valid reason for denial of a motion to amend. 

district court’s holding that amendment would be futile is based
upon its finding that no actual amendments to the complaint are possible, we review
the denial of leave to amend for abuse of discretion. 

Where the
district court’s denial of leave to amend based upon futility is in turn based upon a
finding that a specific allegation, even if amended, would fail to state a claim as a
matter of law, we review the denial de novo. 

       We need not attempt to ascertain the basis of the district court’s ruling,
however, because we would affirm the district court’s decision under either standard.
Like the plaintiff in K-tel, Crabtree was afforded ample opportunity to explain to the
district court how he would amend his complaint in order to comply with the Reform
Act’s pleading standards. For instance, he could have filed a motion for
reconsideration of the district court’s denial of leave to amend under Fed. R. Civ. P.

                                          -9-
59(e). In such a motion, which Crabtree could have filed after the district court had
informed him of the complaint’s deficiencies, he could have detailed any potential
amendment to the district court. In addition, Crabtree could have provided the
substance of his proposed amendments in his principal or reply briefs before this
court. Instead, he simply asserted that he is able to amend, but does not believe that
he should have to.4 Under either an abuse of discretion or a de novo standard of
review, we agree with the district court that Crabtree has not shown that any potential
amendment would save his complaint. See also Wisdom v. First Midwest Bank, of
Poplar Bluff, 

, 409 (8th Cir. 1999) (“[P]arties should not be allowed to
amend their complaint without showing how the complaint could be amended to save
the meritless claim.”).

      Accordingly, we affirm the district court’s dismissal of Crabtree’s complaint,
as well as its denial of leave to amend the complaint.
                         ______________________________




      4
       Although Crabtree’s counsel did contend at oral argument that he could
identify specific deals and dollar amounts in an amended complaint, he failed to
explain whether those potential amendments would satisfy the Reform Act’s pleading
standards.

                                         -10-