NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       NOV 29 2019
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

CITY OF FORT LAUDERDALE                         No.    18-55496
GENERAL EMPLOYEES’ RETIREMENT
SYSTEM, on behalf of itself and all others      D.C. No.
similarly situated,                             3:15-cv-01478-BEN-KSC

                Plaintiff-Appellant,
                                                MEMORANDUM*
 v.

EDISON INTERNATIONAL; THEODORE
F. CRAVER; W. JAMES SCILACCI;
RONALD L. LITZINGER,

                Defendants-Appellees.

                   Appeal from the United States District Court
                     for the Southern District of California
                   Roger T. Benitez, District Judge, Presiding

                    Argued and Submitted November 12, 2019
                              Pasadena, California

Before: GRABER, BERZON, and CHRISTEN, Circuit Judges.

      Plaintiff City of Fort Lauderdale General Employees’ Retirement System

appeals the district court’s judgment granting Defendants’ motion to dismiss its

Third Amended Complaint. We affirm.


      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      Plaintiff did not properly allege loss causation, as required for security-fraud

actions. See Halliburton Co. v. Erica P. John Fund, Inc., 

, 267 (2014).

The loss causation inquiry “requires no more than the familiar test for proximate

cause.” Mineworkers’ Pension Scheme v. First Solar Inc., 

, 753 (9th

Cir. 2018) (per curiam). “[T]he ultimate issue is whether the defendant’s

misstatement, as opposed to some other fact, foreseeably caused the plaintiff’s

loss.” 

Here, Plaintiff alleged that Defendants’ falsehoods

and omissions artificially inflated Edison’s share price and that the inflation

dissipated when the truth of Defendants’ fraud was revealed to the market through

four partial disclosures. Plaintiff did not properly allege that the four partial

disclosures revealed the fraud to the market, resulting in Plaintiff’s alleged loss.

      Three of the four disclosures were too opaque to constitute partial

disclosures of the true facts. The three announcements were either requests to undo

the settlement by other parties to the settlement or a request for an investigation

from a third party. These announcements, without more, are insufficient to

establish loss causation because, at most, they put investors on notice of a

“potential future disclosure of fraudulent conduct.” Loos v. Immersion Corp., 

, 890 (9th Cir. 2014).

      The fourth disclosure resembled an announcement of a governmental

investigation. An announcement of a governmental investigation can serve as a


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basis for loss causation if the plaintiff also alleges a subsequent corrective

disclosure. Lloyd v. CVB Fin. Corp., 

, 1210 (9th Cir. 2016). In

Lloyd, the plaintiff plausibly alleged loss causation because the defendant’s share

price dropped “precipitously” by twenty-two percent after the disclosure of the

governmental investigation. 

defendants made a corrective disclosure

that confirmed the fraudulent behavior, but that disclosure had a “minimal effect”

on the defendant’s stock price. 

The stark difference in share-price

drops between the announcement of the investigation and the corrective disclosure

plausibly suggested that the market perceived the original announcement as the

revelation of defendant’s fraud. 

      Here, Plaintiff failed to meet the Lloyd test. The share-price drop that

coincided with the announcement of the investigation was less than one percent,

which resembled the share-price drop corresponding to the later corrective

disclosure. Given that both drops were small and were similar in magnitude, there

was no indication, as there was in Lloyd, that the earlier drop plausibly reflected

the “market’s concerns” about the investigation announcement. See 

failed to tie Defendants’ alleged falsehoods and omissions to its loss and

did not satisfy the loss causation requirement.

      Because our holding on loss causation is sufficient to affirm the district

court’s judgment, we need not reach the issue of scienter.


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AFFIRMED.




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