MEMORANDUM AND ORDER

CATHERINE D. PERRY, District Judge.

This lawsuit brings class-wide securities claims against Monsanto and several of its senior managers on behalf of persons who purchased or acquired the common stock and debt securities of Monsanto Company between January 7, 2009 and May 27, 2010. Lead plaintiff Arkansas Teacher Retirement System1 claims that defendants violated §§ 10(b) and 20(a) of the Securities Exchange Act of 19342 and Rule 10b-53 by knowingly or recklessly making false and misleading statements about Monsanto's glyphosate/Roundup business, its newest seeds and traits products, and its earning projections for fiscal years 2009 through 2012. Defendants move to dismiss the second amended complaint4 on the ground that the challenged statements are either not actionable or are protected by the safe harbor provision of the Private Securities Litigation Reform Act,5 which governs this case. Defendants also contend that plaintiff has failed to meet the heightened pleading standard required by the PSLRA. After thorough review of the massive record in this case, which includes plaintiff's pleadings (the operative complaint alone stands at 89 pages and 315 paragraphs), the parties' briefs (the current versions total 162 pages), and more than 65 supporting exhibits, I find that dismissal is required as plaintiff cannot state a claim for securities fraud against defendants.

Background

Monsanto makes agricultural products for farmers.6 The individual defendants named in this case are present and former officers of Monsanto.7 This case involves Monsanto's Roundup herbicide and other glyphosate-based products (called Agricultural Productivity), as well as seeds and traits for corn, soybeans, and other plants (called Seeds and Genomics).

From 2003 to 2007, the Seeds and Genomics business grew faster than Agricultural Productivity. For the fiscal year ended August 31, 2007, Monsanto had $3 billion gross profit from Seeds and Genomics and $1.2 billion from Agricultural Productivity, $854 million of which was from the sale of Roundup/glyphosate.

In November 2007, Monsanto announced a five-year plan to double gross profit by fiscal year 2012. It predicted this growth would come principally from Seeds and Genomics, which it forecasted to grow between $6.5 and $7 billion in 2012. Gross profit from Roundup/glyphosate was predicted to grow to $1.2 billion. Monsanto ultimately did not meet this goal, primarily because of competition from Chinese and other generic glyphosate competitors. Monsanto repeatedly lowered its Roundup/glyphosate gross-profit forecasts, and by May of 2010, Monsanto expected the Roundup/glyphosate business to generate $250-300 million per year on an ongoing basis.

In fiscal year 2008, however, Monsanto reported gross profits of $6.177 billion, which represented a 46% increase over 2007. Roundup/glyphosate had a 131% increase ($1.976 billion gross profit), while Seeds and Genomics grew 28% to $3.857 billion, the fifth year of 20%-plus growth for this area.

In October 2008, Monsanto predicted gross profits for fiscal year 2009 of $4.5 to $4.6 billion for Seeds and Genomics and $2.3 to $2.4 billion of Roundup/glyphosate. Defendant Terry Crews, then Monsanto's Chief Financial Officer, stated on an October 8, 2008 earnings call that Monsanto anticipated a "tough competitive environment" for Roundup/glyphosate as Chinese manufacturers, the principal competitors in this market, would supply increased amounts of generic product at a lower price. But Monsanto believed demand for Roundup would "remain strong" and that the business's profitability would increase in fiscal year 2009 because the Chinese cost of production was roughly one-third higher than Monsanto's.

Plaintiff claims that by the fiscal year ended August 31, 2008, defendants already knew or should have known that market conditions for Roundup/glyphosate had dramatically changed and the business would generate lower profit. Plaintiff alleges that Monsanto knew that its higher prices for Roundup were causing Monsanto's customers to purchase cheaper generic glyphosate, which was being sold by Monsanto's competitors below cost to gain market share from Monsanto's seeds and traits business. Plaintiff alleges that the decline in Roundup/glyphosate sales was also evidenced by a buildup of excess inventory as early as November of 2008. In further support of its pledge to double gross profits, Monsanto also announced the introduction of a new premium soybean seed, Roundup Ready 2 Yield, for the 2009 growing season, and a new Smart-Stax corn seed for 2010. Plaintiff alleges that, contrary to defendants' representations, there was little demand for these new seeds because they were too expensive and failed to produce improved crop yields. Plaintiff asserts that these material facts were known (or severely recklessly disregarded) at the beginning of the class period and not disclosed to investors, causing the price of Monsanto stock to decline from a high of over $93 per share to close at $50.27 per share at the end of the class period.

Legal Standards

Before discussing the standards that govern defendants' motion to dismiss, I will briefly set out what plaintiff must plead and prove to prevail on its claims. Plaintiff brings claims under § 10(b) of the Securities Exchange Act, Rule 10b-5 implementing that section of the Act, and § 20(a) of the Act. Section 10(b) and Rule 10b-5 prohibit fraudulent conduct in the sale and purchase of securities. Section 10(b) makes it unlawful "[t]o use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe as necessary or appropriate in the public interest or for the protection of investors." 15 U.S.C. § 78j(b). "Rule 10b-5 implements [§ 10(b)] by making it unlawful to, among other things, `make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.'" Minneapolis Firefighters' Relief Ass'n v. MEMC Electronic Materials, Inc., 641 F.3d 1023, 1028 (8th Cir.2011) (quoting Matrixx Initiatives, Inc. v. Siracusano, ___ U.S. ___, 131 S.Ct. 1309, 1317, 179 L.Ed.2d 398 (2011)). As the Eighth Circuit Court of Appeals explained:

MEMC Electronic Materials, Inc., 641 F.3d at 1028 (citing Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 157, 128 S.Ct. 761, 169 L.Ed.2d 627 (2008)).

"In order to satisfy the [PSLRA]'s falsity pleading standard, a complaint may not rest on mere allegations that fraud has occurred." In re Cerner Corp. Securities Litig., 425 F.3d 1079, 1083 (8th Cir.2005). "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." Id. (internal citations and quotation marks omitted). "[T]o fulfill the materiality requirement there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available." Detroit General Retirement System v. Medtronic, Inc., 621 F.3d 800, 805 (8th Cir.2010) (internal citation and quotation marks omitted).

Scienter "can be established in three ways: (1) from facts demonstrating a mental state embracing an intent to deceive, manipulate, or defraud; (2) from conduct which rises to the level of severe recklessness; or (3) from allegations of motive and opportunity." Id. at 808 (internal citation and quotation marks omitted). "The inquiry ... is whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322-23, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). "[I]n determining whether the pleaded facts give rise to a strong inference of scienter, the court must take into account plausible opposing inferences." Id. at 323, 127 S.Ct. 2499. The Supreme Court explained:

Id. at 323-24, 127 S.Ct. 2499.

Section 20(a) of the Securities Exchange Act provides for a companion claim, establishing "liability of those who, subject to certain defenses, `directly or indirectly' control a primary violator of the federal securities laws." Lustgraaf v. Behrens, 619 F.3d 867, 873 (8th Cir.2010) (quoting 15 U.S.C. § 78t(a)). Section 20(a) has been interpreted "as requiring only some indirect means of discipline or influence short of actual direction to hold a `controlling person' liable." Id. at 873 (internal citation and quotation marks omitted).8 "The plain language of the control-person statute dictates that, absent a primary violation, a claim for control-person liability must fail." Id. at 874.

Safe-Harbor Provision

The Exchange Act provides a safe harbor for a forward-looking statement that is "identified as a forward-looking statement, and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement," and also for a forward-looking statement that is "immaterial." 15 U.S.C. § 78u-5(c)(1)(A). 15 U.S.C. § 78u-5(i)(1) defines six exclusive categories of forward-looking statements:

"Courts applying this safe harbor have made clear that it only protects purely forward-looking statements — i.e., not those that also contain representations as to present or historical facts." Western Washington Laborers-Employers Pension Trust v. Panera Bread Co., 697 F.Supp.2d 1081, 1092-93 (E.D.Mo.2010); In re Stone & Webster, Inc., Securities Litig., 414 F.3d 187, 213 (1st Cir.2005) ("The safe harbor... is intended to apply only to allegations of falsehood as to the forward-looking aspects of the statement."). To decide whether a statement is truly forward-looking, "the determinative factor is not the tense of the statement; instead, the key is whether its `truth or falsity is discernible only after it is made.'" Panera Bread, 697 F.Supp.2d at 1093 (quoting Harris v. Ivax Corp., 182 F.3d 799, 805 (11th Cir. 1999)). The applicability of this safe harbor is a question of law. See 15 U.S.C. § 78u-5(e) ("On any motion to dismiss based upon [the safe harbor], the court shall consider any statement cited in the complaint and any cautionary statement accompanying the forward-looking statement, which are not subject to material dispute...."); Panera Bread, 697 F.Supp.2d at 1093. "[A] forward-looking statement is protected if it is immaterial or identified as forward-looking and accompanied by meaningful cautionary language, regardless of whether the speaker knows the statement is false." Id. at 1089.

The safe harbor provision of the Exchange Act requires courts to assess whether cautionary language accompanying a forward-looking statement is sufficiently meaningful. See 15 U.S.C. § 78u-5(c)(1)(A)(i) (safe harbor requires "meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement"). The cautionary language need not be a part of the forward-looking statement so long as the statement specifies where it can be located. See 15 U.S.C. § 78u-5(c)(2) (oral statements); Panera Bread, 697 F.Supp.2d at 1089-1090 (courts uniformly conclude that incorporation by reference for written forward-looking statements is permissible); Yellen v. Hake, 437 F.Supp.2d 941, 963-64 (S.D.Iowa 2006) (same and collecting cases).

Although courts have articulated the standard underlying the meaningfulness requirement differently, it requires more than mere boilerplate but less than disclosure of every potential risk. See, e.g., Panera Bread, 697 F.Supp.2d at 1090; Asher v. Baxter International Inc., 377 F.3d 727, 732-33 (7th Cir.2004) (applying § 78u-5(c)(1)(A) and identically-worded § 77z-2(c)(1)(A) safe harbors, and concluding that the cautionary language requirement cannot require disclosure of all potential risks); Southland Sec. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 372 (5th Cir. 2004) ("The requirement for `meaningful' cautions calls for `substantive' company-specific warnings based on a realistic description of the risks applicable to the particular circumstances, not merely a boilerplate litany of generally applicable risk factors."); Harris, 182 F.3d at 807 (to be meaningful, cautionary statements must warn of "risks of a significance similar to that actually realized...."). "[T]o determine whether cautionary language is adequate, courts should evaluate it in light of the allegedly undisclosed risk and determine if a reasonable investor would have concluded that the risk that eventually materialized never existed." Panera Bread, 697 F.Supp.2d at 1090 (citing In re Sierra Wireless, Inc. Securities Litig., 482 F.Supp.2d 365, 380 (S.D.N.Y.2007)).

Standards Governing Motion to Dismiss

Defendants move to dismiss these claims under Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure and the PSLRA. To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a complaint must contain factual allegations sufficient "`to raise a right to relief above the speculative level.'" Parkhurst v. Tabor, 569 F.3d 861, 865 (8th Cir.2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Stated another way, "the complaint must allege only enough facts to state a claim to relief that is plausible on its face." B & B Hardware, Inc. v. Hargis Industries, Inc., 569 F.3d 383, 387 (8th Cir.2009) (internal quotation marks and citation omitted). "The plausibility of a complaint turns on whether the facts alleged allow us to draw the reasonable inference that the defendant is liable for the misconduct alleged." Lustgraaf, 619 F.3d at 873 (internal citation and quotation marks omitted). The court must still "accept as true the plaintiff's well pleaded allegations," Parkhurst, 569 F.3d at 865, and "construe the complaint liberally in the light most favorable to the plaintiff." Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir.2008).

Although Rule 8(a) of the Federal Rules of Civil Procedure ordinarily requires only a "short and plain statement" of the claims, Rule 9(b) and the PSLRA apply to plaintiff's securities fraud claims. "Under Rule 9(b)'s heightened pleading standard, allegations of fraud, including fraudulent concealment for tolling purposes, [must] be pleaded with particularity." Summerhill v. Terminix, Inc., 637 F.3d 877, 880 (8th Cir.2011) (internal citation and quotation marks omitted). "In other words, Rule 9(b) requires plaintiffs to plead the who, what, when, where, and how: the first paragraph of any newspaper story." Id. As the Eighth Circuit Court of Appeals has explained, "The PSLRA goes beyond the ordinary pleading requirements described in Rules 8(a)(2) and 9(b) of the Federal Rules of Civil Procedure...." In re 2007 Novastar Financial Inc., Securities Litig., 579 F.3d 878, 882 (8th Cir.2009). "Claims governed by the PSLRA must specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading (the falsity requirement), and state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind (the scienter requirement)." Lustgraaf, 619 F.3d at 873 (internal citations and quotation marks omitted); see also Medtronic, 621 F.3d at 805. "Where, as here, the "primary violation" is a § 10(b)/Rule 10b-5 securities fraud claim, the plaintiff's § 20(a) "control person" claims against the individual defendants, as well as the § 10(b)/Rule 10b-5 claim, must satisfy the PSLRA's heightened pleading requirements. Lustgraaf, 619 F.3d at 874.

Discussion-Allegations of Falsity9

A. First Quarter Fiscal Year 2009

Defendants' Statements

On January 7, 2009, Monsanto announced its first-quarter 2009 results and raised its ongoing earnings-per-share (EPS) guidance for the year from a range of $4.20 to $4.40 to a range of $4.40 to $4.50.10 Monsanto also projected gross profit in the Roundup/glyphosate business of $2.4 to $2.5 billion for the year, but predicted it would fall to $1.9 billion in 2012. Defendant Hugh Grant, Monsanto's Chairman, President and Chief Executive Officer, is quoted in the earnings press release as stating, "Our Latin American business once again displayed its strength and set the pace for a great fiscal 2009, giving us confidence to raise our earnings projections and helping us take another solid step toward fulfilling our 2012 gross profit commitments." Monsanto also reported that sales in the first quarter for its Agricultural Productivity segment grew 28 % ($337 million), largely from "higher net selling prices and higher sales volumes of the company's Roundup and other glyphosate-based herbicides in Brazil along with higher net selling prices in all major world areas." The January 7, 2009, earnings release includes the following language:

Monsanto's Form 10-K Report contains the following warnings of "some of the important reasons that actual results may be materially different from those that we anticipate":

On a January 7, 2009 conference call, defendant Terry Crews stated that Monsanto expected the "U.S. Roundup business to still be strong" and to see "solid growth in the U.S. seeds and traits business." He said, "I think we're up about $300 million of GP in the first quarter, largely driven by Brazil, ... We're talking about another 2 to $300 million in the rest of the year and that's largely going to be driven by our U.S. business...." In response to a participant's question about "what incentivizes the farmer to prepay [seed]," Crews responded that "one [reason] is orders improving and the pace of orders picking up in December and January and that's — that is largely driven by people wanting to lock in particular seed at that point. The prepay program is really more of financial management program for the growers...." In the same call, another Monsanto executive reminded participants that "this call will include statements concerning future events" and as such, "the Company's actual performance and results may vary in a material way from those expressed or implied in any forward-looking statements." Participants were directed to Monsanto's 10-K and press release for a "description of the factors that may cause such a variance."

The next day, Monsanto filed its 10-Q for first quarter fiscal 2009, which made similar statements, including for example, that Monsanto "expect[ed] to see increased gross profit as [its] higher-margin seeds and traits business grows and [it] realize[s] the full-year impact of improved average net selling prices in [its] Roundup business." Page 1 of the Form 10-Q contains the following cautionary language regarding forward-looking statements:

The Outlook section of the Form 10-Q states in relevant part as follows:

At a February 10, 2009 investor conference, Crews reaffirmed that Monsanto "still expect[ed]" to "more than doubl[e] the gross profit between 2007 and 2012" and was "comfortable that [it was] still staying on that trajectory."11 After reminding the participants that he would be making some "forward-looking statements," Crews stated:

A week later defendant Carl Casale, Executive Vice President of Strategy and Operations, appeared at a separate investor conference and said that Monsanto was clearly "on track" to meet that projection and "expected that [its] Roundup franchise will be from approximately $2.4 billion, $2.5 billion of gross profit this year."12 Monsanto made similar statements at the Credit Suisse 14th Annual Global Ag Productivity Conference on March 10, 2009.13

Plaintiff's Allegations That Defendants' Statements Were False or Misleading

Plaintiff's second amended complaint alleges that Monsanto enjoyed increased profits when it materially increased the price of Roundup in 2008 due to a glyphosate supply shortage. Plaintiff alleges the shortage resulted, in part, "from a reduction in Chinese manufacturing due to higher fuel costs, stricter environmental guidelines imposed by the Chinese government in anticipation of the 2008 Olympic Games, and an earthquake in China that disrupted production of glyphosate." However, plaintiff alleges that Chinese manufacturers returned to the market in the fall of 2008, raising questions about whether Roundup would continue to generate the same high level of profits enjoyed in fiscal 2008.

Plaintiff alleges that the statements made by Monsanto in the first and second quarters of fiscal year 2009 were false and misleading because defendants had failed to disclose that: demand for Roundup had materially declined and the inventory was materially increasing due to Monsanto's "high prices;" competitive prices of glyphosate, "which defendants used to establish Monsanto's gross profitability targets, had dramatically declined;"14 and, Monsanto's competitors, Dow and Syngenta, were selling glyphosate at a material discount to gain market share, which "materially, negatively affected" the sales of Monsanto's seeds.15

Plaintiff cites Confidential Informant 3, a former inventory manager for Monsanto during the relevant time period, as the source for information about Monsanto's inventory. The second amended complaint alleges:

Plaintiff's second amended complaint further alleges that Monsanto's inventory build-up was accompanied by a decline in sales in late 2008. "According to CI 3, Amy Halleran, Senior Customer Operations Specialist, presented reports at the TSOP meetings that reflected a material and continuous decline in sales volume and, accordingly, forecasts for glyphosate sales were materially lowered." Plaintiff alleges that "CI 3 personally informed Defendant Begemann about the increase in glyphosate inventory." The second amended complaint cites another confidential informant, CI 4 (a former Monsanto employee that sold Roundup), as the source of its information that "throughout 2009[ ] there `was a lot of excess Roundup which sat in tanks ... due to lower demand.'"

According to Confidential Informant 5 (a marketing manager at a Monsanto subsidiary), "material damage was done to Monsanto's image and customer demand for Monsanto's soybean and corn seed products" because Monsanto "materially overpriced glyphosate." The amended complaint alleges that CI 5 heard "a lot of turbulent messages" from farmers about Roundup performance, relayed his frustration at Monsanto's sales expectations and "blatant disregard of the widespread negative sentiments" to Monsanto, and was told "that the sales problems were national and that Monsanto's corporate office was aware of the trend." CI 1 also allegedly observed farmers switching to generic glyphosate because the price of Roundup was too high.

The second amended complaint alleges that "alarm bells went off inside Monsanto" in March of 2009 because glyphosate inventory was so high (18 million REGs). Plaintiff cites Confidential Informant 6 (a former member of Monsanto's finance department) and Confidential Informant 7 (a former financial analyst who "supported" Monsanto) as the sources of its allegation that "starting in February and March 2009, the decline in glyphosate was so steep that Monsanto's finance department began to plan material cuts to certain expenses. CIs 6 and 7 understood that the material reduction in expenditures was needed for Monsanto to meet its projected earnings per share for fiscal 2009."

Analysis

Almost all of the statements being challenged by plaintiff in this case are forward-looking statements as defined by the Exchange Act because they include projections of revenues, income, earnings, statements of future economic performance, statements of plans and objectives of management for future operations, and the assumptions "underlying or relating to" such statements. The tense of the statement is not determinative; rather, "the key is whether its truth or falsity is discernible only after it is made." Panera Bread, 697 F.Supp.2d at 1093. Like the plaintiffs in Panera Bread, plaintiff here challenges as fraudulent all of defendants' projections about quarterly earnings per share and sales growth, and its projections about doubling gross profit by 2012. Plaintiff argues that defendants knew they could not meet these projections because they were aware that their growth strategy (through Roundup and the newest seeds and traits business) was failing. But defendants' forecasts of future sales and earnings and doubling gross profit are the "sorts of projections [that] are quintessential forward-looking statements." Id. This remains true regardless of the tense of some of these statements because they do not make any "specific, verifiable representation about the present state of affairs." Id. at 1094. Statements that Monsanto "was still staying on [the] trajectory" of doubling gross profit and was "on track" "while in the present tense, are inherently forward-looking." In re Federal-Mogul Corp. Securities Litig., 166 F.Supp.2d 559, 565 (E.D.Mich.2001). They are not, as plaintiff argues, factual statements of Monsanto's current performance. It is also clear that statements about Monsanto expecting to see increased gross profit as its seeds and traits business grows, when read in context, are also forward-looking as an assumption underlying defendants' projections about Monsanto's performance going forward, as well as statements of the plans and objectives for future operations. As such, these forward-looking statements are protected by the safe harbor provision of the Exchange Act if they are accompanied by meaningful cautionary statements.

The cautionary language accompanying the forward-looking statements is meaningful as a matter of law because it is substantive and addresses risks specific to Monsanto's business. Indeed, defendants repeatedly warned of the very risks that plaintiff alleges they failed to disclose, including: "competition in seeds and traits and agricultural chemicals has significantly affected, and will continue to affect, our sales;" "increasing competition from agricultural biotechnology firms and from major agrichemical, seed and food companies," specifically "continued competition for our Roundup herbicides;" and, "our ability to match our production to the level of product demanded by farmers or our licensed customers has a significant effect on our sales, costs, and growth potential." These are not generic, boilerplate risks that could apply to any business — they are specific warnings about the volatility in the glyphosate business, the competition faced by Roundup, and issues with respect to levels of production and demand affecting sales. These warnings were repeated by Crews in February, when he told investors that Roundup was "reaching its peak" in annual gross profit growth and that it would begin to decline in price and gross profit. Similarly detailed cautionary language accompanied each of defendants' statements at issue.

I am also not persuaded by plaintiff's argument that defendants' cautionary language is not meaningful simply because it "remained virtually unchanged" during the relevant time period. While some of the language used in Monsanto's public filings was similar, the warnings were specific to Monsanto's business and were indeed the very risks that, according to plaintiff, caused Monsanto to miss its targeted projections. Moreover, Monsanto's cautionary language included more than just those risk factors disclosed in public filings. During conference calls and other public statements, defendants continually warned investors of these specific risks, including competition in the glyphosate market and the challenges and setbacks associated with the launch of new products. The language is simply not the type of rote, boilerplate language found insufficient under the Act by other courts. While defendants may have underestimated the effect of these risks to its glyphosate business, they did not mislead investors or falsely deny that these risks existed.

In a last-ditch effort to avoid the safe harbor provision, plaintiff argues that it does not apply because the statements were false at the time they were made. I agree with Judge Webber's conclusion in Panera Bread that "a forward-looking statement is protected if it is immaterial or identified as forward-looking and accompanied by meaningful cautionary language, regardless of whether the speaker knows the statement is false." 697 F.Supp.2d at 1089; see also, W. Washington Laborers-Employers Pension Trust v. Panera Bread Co., 2009 WL 3756619, at *2-*3 (E.D.Mo. Nov. 6, 2009). Defendants' forward-looking statements were accompanied by meaningful cautionary language and are not actionable under the safe harbor provision of the Act.

To the extent plaintiff argues that Crews' January 7, 2009 statement about "orders improving and the pace of orders picking up in December and January" constitutes a present statement of verifiable fact, it completely misreads the context of this statement. Crews was responding to a question about what drives a hypothetical farmer to prepay for seed, and he responded that a farmer may want to lock in a particular seed in December or January. It is clear that Crews was speculating on the motives of a hypothetical farmer and not making any factual statements about Monsanto's seed business. For plaintiff to suggest otherwise grossly misstates the record in this case.

Statements about how a product is performing relative to expectations are, as a general matter, inactionable puffery under the Exchange Act. Panera Bread, 697 F.Supp.2d at 1094 n. 5; see Johnson v. Tellabs. Inc., 262 F.Supp.2d 937, 951 (N.D.Ill.2003) (statements such as "demand for that product is exceeding out expectations" and "we feel very, very good about the robust growth we're experiencing" are "nothing more than puffery and cannot be the basis of a cause of action."). Defendants' comments that Monsanto expected "solid growth" and the Roundup business to be "strong" do not contain any specific, concrete factual representations as to present facts. Instead, they are inactionable puffery about performance relative to expectations. See Parnes v. Gateway 2000, Inc., 122 F.3d 539, 547 (8th Cir.1997) ("[S]ome statements are so vague and such obvious hyperbole that no reasonable investor would rely upon them... soft, puffing statements generally lack materiality because the market price of a share is not inflated by vague statements predicting growth. No reasonable investor would rely on these statements ....") (internal quotation marks and citations omitted).

Plaintiff argues that defendants had a duty to disclose additional facts — such as the amount that Roundup inventory was increasing and that Dow and Syngenta were selling glyphosate at a material discount — so that their statements would not be rendered materially false or misleading. The Supreme Court in Matrixx wrote:

Matrixx, 131 S.Ct at 1321-22 (internal quotation marks and citations omitted); see also Basic Inc. v. Levinson, 485 U.S. 224, 239 n. 17, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988) ("Silence, absent a duty to disclose, is not misleading under Rule 10b-5."). "A fact is material if it is substantially likely that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available." In re K-tel International, Inc. Securities Litig., 300 F.3d 881, 897 (8th Cir.2002) (quoting Levinson, 485 U.S. at 231-32, 108 S.Ct. 978). "Materiality alone is not sufficient to place a company under a duty of disclosure ... the law requires an actor to provide complete and non-misleading information with respect to the subjects on which he undertakes to speak." K-tel, 300 F.3d at 898 (internal quotation marks and citations omitted). Here, plaintiff falls far short of demonstrating that disclosure of these additional facts was somehow required. As discussed above, defendants repeatedly disclosed continued competition in the glyphosate market, as well as expected lower sales volumes of Roundup, in the challenged statements. Plaintiff's position in this case seems to be that, by making any statements about the expected performance of Roundup, defendants were then obligated to disclose every bit of pricing, inventory, and marketing information underlying these predictions, right down to every comment allegedly made by "unidentified customers" to "confidential informants." But the securities laws impose no such duty, for such a requirement would undoubtedly drown the reasonable investor in a never-ending — and ultimately, meaningless — deluge of information. When defendants' statements are viewed as a whole, it is clear that no disclosure of additional facts is necessary to render them not misleading under Matrixx.16

Of course, even if these statements were not forward-looking or were otherwise actionable, plaintiff would still have to demonstrate their falsity to avoid dismissal. "In order to satisfy the Reform Act's falsity pleading standard, a complaint may not rest on mere allegations that fraud has occurred ... The complaint's facts must necessarily show that the defendants' statements were misleading." In re Hutchinson Technology, Inc. Securities Litig., 536 F.3d 952, 958-59 (8th Cir.2008) (internal quotation marks and citation omitted). With projections about future sales and earnings, this is very difficult because "corporate officials need not be clairvoyant." In re Navarre Corp. Securities Litig., 299 F.3d 735, 743 (8th Cir.2002) (internal quotation marks and citation omitted). Merely using hindsight to demonstrate a statement is false is insufficient to meet the heightened pleading standard of the PSLRA; "[i]nstead, 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 re Cerner Corp. Securities Litig., 425 F.3d 1079, 1083 (8th Cir.2005).

I agree with defendants that the Eighth Circuit's decision in Cerner is instructive on this issue. The complaint in Cerner alleged that the defendants' favorable statements regarding future earnings were materially false and misleading because the company was losing deals due to increased competition, dissatisfied customers, a general economic downturn, an inexperienced sales force, and a neglect of smaller deals. Affirming the district court's dismissal of the complaint, the Eighth Circuit held:

Id. at 1084. Like the challenged statements in Cerner, Monsanto's future projections and statements that Roundup would continue to generate "a sustainable source of cash and gross profit" are not necessarily inconsistent with alleged decreasing sales. Indeed, a reasonable investor (and the Court) could easily conclude that Roundup could continue to provide a "sustainable source of cash and gross profit" even with softening demand. Furthermore, there is no indication on the face of the complaint that even a material decline in sales necessarily rendered Monsanto unable to achieve its projected earnings.17 As defendants point out, the glyphosate market was extremely volatile so the price of generic glyphosate at any given point in January of 2009 would not necessarily render the forecasts for the entire fiscal year false, let alone the predictions for 2012. This is particularly true because the price of generic glyphosate was only one of the factors used to forecast the profitability of Roundup. Under these circumstances, these allegations cannot survive the PSLRA's falsity standard. In sum, I find no actionable statements for the first quarter of fiscal year 2009.

B. Second Quarter Fiscal Year 2009

Defendants' Statements

On April 2, 2009, Monsanto issued a press release announcing its second quarter-2009 results and reaffirming its EPS guidance in the range of $4.40 to $4.50. At the same time, Monsanto also announced that Roundup sales had decreased 21% compared with the prior year's second quarter, but it expected orders to shift back to previous selling patterns in the "third and fourth quarters."18 The press release states that the decrease was "largely a timing effect, as our customer's shipments were ahead of a pre-announced price increase ... additionally, results in the quarter were also affected by lower branded volumes of glyphosate due to the drought conditions in Latin America." Monsanto repeated these statements on a conference call held the same day.19 In this call, Crews also predicted that "Roundup gross profit for the full fiscal year will be approximately $2.4 billion. This is supported by the fact that we have reached the half-way mark of $1.2 billion in gross profit already." Crews warned that the "Roundup business is likely to become more competitive" as the Chinese "bring more volume online." Chief Executive Officer, defendant Grant, then spoke and reiterated the prediction that Roundup gross profit would peak in 2009 and decline to approximately $1.9 billion by fiscal 2012. He stated that he did not know whether Roundup gross profit would reach "steady state in 2010 or 2012, or if the path between them will be steep or rolling. They are all possible." Grant also reported strong sales in Seeds and Genomics and predicted "gross profit ... to top $7 billion."

Monsanto's Form 10-Q issued on April 3, 2009, contains the same cautionary language regarding forward-looking statements as the previous Form 10-Q. The form states Monsanto's belief that is "positioned to sustain earnings growth and strong cash flow" and that it "expects to see increased gross profit as [its] higher-margin seeds and traits business grows and [it] realizes the full-year impact of improved average net selling prices in our Roundup business." It also predicts that Roundup sales would "peak in 2009 and continue to generate a significant source of cash and gross profit thereafter." In the Outlook section, Monsanto reported in relevant part as follows:

At a May 13, 2009 conference, Monsanto reaffirmed that it was "on track" to double gross profits from 2007 to 2012. On May 27, 2009, Monsanto issued a press release and held an investor conference. The press release states that Monsanto "is on track to meet the lower end of its previous ongoing earnings guidance for fiscal year 2009" of $4.40 per share. Monsanto also announced that its Roundup business would likely generate about $2 billion gross profit in fiscal year 2009, "down from its previous forecast of $2.4 billion." The release states that "application of [Roundup] is half that compared with product use at the end of May 2008" and notes that the "supply of glyphosate is now exceeding demand globally." The release cites weather and increased competition from generic glyphosate suppliers20 as among the reasons for the gross profit decline in Roundup, but predicts it will be offset by the "continued outstanding performance from [Monsanto's] seeds and traits business." The press release contains substantially the same cautionary language as appears in the Form 10-Q. During the conference, Grant acknowledged that the "cold, wet spring" and "large volume of Chinese generic material" in the marketplace contributed to the revised Roundup forecast. He then stated that Monsanto would "reassess the path forward with Roundup. There was an inevitability in this. It was always coming. We always said it was going to get smaller...." However, Grant predicted that "despite the decline of Roundup to that $2 billion dollar level in gross profit, we still see the overall opportunity in growing the business by about 20% even with that Roundup softness."21

Plaintiff's Allegations That Defendants' Statements Were False or Misleading

Plaintiff relies on the same facts discussed in connection with the first quarter fiscal year 2009 as evidence that defendants' statements in the second quarter were false and misleading. Plaintiff also alleges that these statements were false and misleading because "the launch of Monsanto's new Roundup Ready 2 Yield soybeans for the 2009 growing season was a failure because defendants could not sell the new seeds at premium prices. In fact, sales were so poor that Monsanto's retailers materially discounted the price of Roundup Ready 2 Yield to prices near those for Roundup Ready I seeds."

Analysis

I have already concluded that defendants' projections of revenues, income, and earnings, statements of plans and objectives for future operations, statements of future economic performance, and the assumptions "underlying or relating to" these statements are forward-looking statements subject to the safe harbor provision. This includes predictions of gross profit (including the prediction of an "overall opportunity in growing the business by about 20%"), Roundup gross profit, gross profit for Seeds and Genomics "topping $7 billion," increased profit for the seeds and traits business (and the underlying assumption that it would be caused by improved breeding and continued growth of stacked and second-generation biotech traits), as well as the predicted guidance numbers.

I also find that these forward-looking statements are accompanied by meaningful cautionary language for the reasons previously discussed. In addition to the specific, detailed risks set out in the press releases and the Form 10-Q, defendants' statements made during the April and May conferences also included appropriate cautionary language regarding forward-looking statements. Defendants also expanded on these risks in the statements themselves. For example, in the April conference call Grant warned participants that he did not know whether Roundup gross profit would reach "steady state in 2010 or 2012, or if the path between them will be steep or rolling. They are all possible." Crews echoed the warning, stating that the Roundup business "is likely to become more competitive" as the Chinese "bring more volume online." The May press release cites weather and increased competition from generic glyphosate suppliers as among the reasons for declining gross profit of Roundup and warns of excess supply and decreasing demand. Grant reiterated these same concerns during the May investor conference. He told them that "it [decreased Roundup profits] was always coming. We always said it was going to get smaller...." These identified risks were detailed and specific to Monsanto's business and the changing conditions of the marketplace. Under these facts, I find that defendants' forward-looking statements were accompanied by meaningful cautionary language and are not actionable under the safe harbor provision of the Exchange Act.

Plaintiff argues that the April 2, 2009 press release includes a present statement of verifiable fact that decreased Roundup sales were due to a pre-announced price increase. Again, plaintiff takes the statement out of context, which states that decreased sales were "largely" the result of that effect, but also of drought conditions in Latin America. Plaintiff presents no evidence that this statement, when read in its entirety, is false or misleading as is required to state a claim under the Act, particularly when considered as a whole with all of the available information about Roundup's declining sales. Plaintiff also fails to demonstrate that defendants' statements about its soybean and seeds and traits business are false and misleading. First, the statement about growers "buying our higher performing, higher value soybean products" does not even specifically address the Roundup Ready 2 Yield soybeans, much less the price or volume of Roundup Ready 2 Yield soybean purchases. I also agree with defendants that the statement about "growers steadily buying" products constitutes inactionable puffery. Second, as explained by Crews in the April 2 conference call, the launch of Roundup Ready 2 Yield in 2009 was a "pre-commercial introduction" limited to just 1.5 million acres. There is no evidence that this limited pre-launch was a "failure"22 or that its results somehow rendered defendants' statements regarding its seeds and traits business false or misleading.

Plaintiff also argues that Monsanto's statement in its Form 10-Q that the Company had "experienced increased [glyphosate] demand in recent years" is a misleading statement of verifiable fact. Although not a forward-looking statement, there is no evidence that it is either false or misleading. In fact, plaintiff's second amended complaint alleges that Monsanto had experienced increased glyphosate demand in the years preceding April of 2009. Because this statement accurately reported past historical fact and contains no representations of present or future demand, it is not actionable. My review of the record reveals no actionable statements for the second quarter of fiscal year 2009.

C. Third Quarter Fiscal Year 2009

Defendants' Statements

On June 24, 2009, Monsanto issued a press release announcing its third quarter results. In it, Grant stated that "[o]ur 2009 fiscal year represents a milestone for our business as our seeds and traits business alone will deliver more gross profit than all of Monsanto did in 2007, a remarkable achievement in just two short years." Grant also reiterated that Monsanto "remain[s] committed to doubling gross profit for the entire company from the 2007 base of $4.2 billion to roughly $8.6-to-8.8 billion in 2012."23 However, the press release acknowledges declining sales in the Agricultural Productivity segment, which it attributes to "increased pressure from generic glyphosate and other branded competitors who continue to aggressively move larger-than-expected volumes or lower-priced material into the marketplace and to a lesser extent by cold, wet weather in parts of the U.S. corn belt." Monsanto also reported "increased revenues from seed and traits products," "estimat[ing] that some 16,000-plus farmers [in the United States] are using the Genuity brand Roundup Ready 2 Yield trait on approximately 1.4 million to 1.5 million acres this season." The press release states that "Monsanto believes that customer demand for its branded corn seed products has contributed to an eighth consecutive year of share gains in the U.S. corn seed sales." Finally, the press release announces the creation of a separate division for Roundup, "to deliver optimal gross profit and a sustainable level of operating cash in the upcoming seasons."

In an earnings conference call held later that day,24 Grant repeated Monsanto's projection that, "[i]n 2009, Roundup should be flat at $2 billion in gross profit, and we now believe it will deliver something in the neighborhood of $1 billion longer-term." He also stated that "by 2012, the Seeds and Traits segment is forecast to deliver $7.3 billion to $7.5 billion in gross profit," although he acknowledged that "even [Monsanto's] amazing Seeds and Traits business cannot in one year offset a $1 billion decline in Roundup gross profit." Grant stated:

Grant also called the Roundup Ready 2 Yield soybeans one of the "four big drivers of our success in 2010," with "some 16,000 plus farmers [ ] experiencing the Roundup Ready 2 Yield trait on an estimated 1.4 million to 1.5 million acres. That penetration, we expect, accelerates the 7 million to 8 million acres in 2010, with a total market opportunity of 45 million to 55 million acres."

In the same call, Casale explained that the revised Roundup outlook could be explained by a more rapid "rate of decline in the pricing from the competition, ... and the sheer volume of competitive products sitting in the distribution channel," which he described as "unprecedented." Although "believ[ing] the demand for glyphosate globally will continue in the low single digits, with additional Roundup Ready acres and continued conversion to conservation tillage practices," Casale explained that Monsanto "[is] facing a changing supply environment, and what we need to determine is the price, volume, [and] share dynamic that will deliver the optimal gross profit and ultimately the optimal level of operating cash. This may entail stretched premiums and lower volumes, or at the other end of the spectrum, sub-historic premiums and a recapture of share and volume." Casale then announced that Monsanto would be creating a separate division for Roundup "to remove the distraction from the rest of the organization." Acknowledging that "today marks a clear reset in expected contribution from Roundup," Casale stated:

When asked to elaborate on the 2012 plan for Roundup, Casale responded as follows:

Crews summarized the conference call by stating that Monsanto "expect[s] 2009 to be another year with a 20% growth rate for ongoing EPS, to have a path to reduce the volatility associated with Roundup and still [have] a clear line of sight on exceptional growth from an unparalleled Seed and Trait franchise...." However, Crews warned that 2010 could see gross profit "below flat" if "Roundup falls" to the predicted levels. He stated:

In its third-quarter Form 10-Q, filed on June 26, 2009, Monsanto reported that "net sales of Roundup and other glyphosate-based herbicides decreased 47 percent, or $554 million, in the three-month comparison. In third quarter 2009, net sales of Roundup and other glyphosate-based herbicides decreased in all regions... sales volumes in the U.S. decreased primarily due to a softening of customer demand compared to third quarter 2008, driven by increased pressure from generic competition." Monsanto also stated its belief that "Roundup herbicide gross profit will peak in 2009 at levels similar to 2008, and going forward, will decline." However, it predicted that "our seeds and traits businesses will have significant near-term growth opportunities through a combination of improved breeding and continued growth of stacked and second-generation biotech traits." Monsanto stated:

Finally, Monsanto announced its plans to reduce costs and concentrate its resources on its seeds and traits business by creating a separate division for Roundup. Like the others, Monsanto's third-quarter Form 10-Q contains the following section entitled, "Caution Regarding Forward-Looking Statements":

Monsanto's Form 10-Q also warns that "our forward-looking statements represent our estimates and expectations that are based on currently available information at the time that we make those statements, However, circumstances change constantly, often unpredictably, and many events beyond our control will determine whether the expectations encompassed in our forward-looking statements will be realized."

At an investor event held August 13-14, 2009, Grant reiterated that "Monsanto remains on track to more than double 2007 gross profit in 2012." Page one of the "Complete Logistics and Reference Guide" manual from the event contains a section entitled "Forward-Looking Statements," which states in relevant part as follows:

In September's press release, Monsanto reaffirmed "full-year 2009 ongoing earnings per share (EPS) at the low end of its previously-announced range of $4.40 to $4.50." The press release states that "[g]ross profit from Roundup and other glyphosate-based herbicides is expected to be lower than anticipated, offset by an expected slightly higher seeds and genomics gross profit, incremental selling, general and administrative savings, and a lower tax rate." For these reasons, "Monsanto expects ongoing EPS in the range of $3.10 to $3.30 for fiscal year 2010...." The press release also announces Casale's intention to "re-emphasize the company's commitment to more than doubling gross profit in fiscal year 2012 over its fiscal year 2007, with seeds and genomics making up 85 percent of the total gross profit mix by that time." However, gross profit from Roundup/glyphosate in 2010 was predicted only in the range of $650 million to $750 million. Monsanto projected net branded average selling price for Roundup/glyphosate of $10-$12 per gallon, down from over $20 in fiscal 2009. The press release contains the following statement from Casale:

The release concludes with a warning regarding forward-looking statements that is substantially similar to those found in previous Monsanto press releases.

During the investor call held the same day, Casale26 explained how Monsanto intended to "optimize the gross profit from Roundup":

Casale concluded his presentation by stating that Monsanto was "very well poised as we sit here today to see a doubling of this business from a GP standpoint in 2012, which was our target off of our 2007 base." With respect to Monsanto's Roundup Ready 2 Yield soybeans, Casale stated:

In response to a participant's question about the price of glyphosate, Casale responded that Monsanto was "resetting prices as we speak. And on a global basis, as my slide showed, the long term being that $11 to $13 range, and that would correlate to a generic price right now on the order of, say, $10. So we've tested it aggressively, and basically at these price premiums, these modest price premiums, the brand is positioned very well."

At an investor conference held September 15, 2009, Grant reiterated that, "despite the correction or the reset in our guidance for 2010, ... [Monsanto] ha[s] the capacity to double gross profit in our overall business from 2007 to 2012." Grant made the following comments about Roundup:

Grant concluded his presentation by stating that, "by 2012, we will have $7.33 billion to $7.5 billion of gross profit in our seeds franchise, and we get there by serving the grower worldwide ... and that's what makes us unique and that's what makes us confident in the future for this business."27

Plaintiff's Allegations That These Statements Were False and/or Misleading

Plaintiff alleges that by the third quarter of 2009, when Monsanto announced the creation of a separate division for the herbicide business, Monsanto was already "well aware of the negative trend in Monsanto's herbicide business, a fact [it] never disclosed." As evidence of this, plaintiff alleges that in June defendant Crews told CI 3 "that Monsanto's leadership had known about the Roundup inventory build-up and declining sales `for awhile.'" According to CI 3, Crews said that "we know and are doing everything we can to get things going again" and "Monsanto's leadership has been looking into it for a while." Plaintiff alleges that demand was so weak for glyphosate that defendants "began offering millions of dollars in incentives to Monsanto's customers to buy its glyphosate-based products during fiscal 2009." CI 3 allegedly attended a national sales meeting headed by several Monsanto executives of Monsanto where glyphosate sales representatives were told of "new sales incentives through which ... customers could purchase glyphosate and would not have to pay for it until as late as June 2010." According to CI 3, "Monsanto glyphosate sales representatives were told to capture customer tanks for fiscal 2010 business now so that Monsanto could book the sales in fiscal 2009."28 Plaintiff alleges that defendants falsely reported that the glyphosate sales incentives would only apply to fiscal year 2010, and that "out of the $100-150 million allocated for the incentive program for the full fiscal year 2010, up to 45% had already been used in the fourth quarter of 2009."29

Plaintiff also alleges that defendants knew that the 2010 targets for Roundup were "false and materially inflated" because Confidential Informant 8, an operations manager at Monsanto, claims that Monsanto executives were being "bombarded" with concerns from glyphosate sales representatives that its sales projections for glyphosate were "totally unrealistic."

Plaintiff also alleges that Monsanto's statements about its seeds and traits business during this quarter were false and misleading because "defendants failed to disclose that the launch of Monsanto's new Roundup Ready 2 Yield soybeans on the 1.4 to 1.5 million acres was a failure because defendants could not sell the new seeds at premium prices." According to the amended complaint, "[i]n fact, sales were so poor that Monsanto's retailers materially discounted the price Roundup Ready 2 Yield to prices near those for Roundup Ready 1 seeds." Plaintiff alleges that Monsanto's seeds and traits business was experiencing "serious hardships of its own" because Roundup Ready 2 Yield was offered only in limited varieties and its ability to improve yield was "unproven to farmers."30 Plaintiff alleges that Monsanto began to force customers to switch from Roundup Ready 1 seeds to Roundup Ready 2 Yield by refusing to renew licensing agreements for Roundup Ready 1 and bundling Roundup Ready 2 Yield with other seed treatments. According to the second amended complaint, bundling the seed treatments drove up the cost of Roundup Ready 2 Yield seeds, which were initially priced at $20 more than Roundup Ready 1 in 2009.31 Monsanto allegedly justified a price increase of more than 40 percent "due to purported added value with technological improvements to the seeds, higher yields and greater efficiencies." Yet plaintiff contends that "Roundup Ready 2 Yield was expensive, unproven and was limited to varieties that could only successfully be grown in certain limited parts of the country, materially limiting demand for the new seeds."32 Plaintiff alleges that "farmers were not willing to purchase a higher priced, untested seed and, as of late 2009, farmers continued to be hesitant about purchasing Roundup Ready 2 Yield." Plaintiff claims that it was for this reason that farmers bought only enough Roundup Ready 2 Yield soybeans to plant six million acres, instead of the eight to 10 million acres expected by Monsanto.

Plaintiff also alleges that the lack of demand in Roundup negatively affected sales of Monsanto's seeds. The second amended complaint alleges that "[a]ccording to CI 1 and CI 2 starting in early 2009, as Monsanto lost material market share in glyphosate to competitors like Dow and Syngenta, it also lost market share in the seeds and traits business." CI 5 claims that "customer demand for Monsanto's soybean and corn seed products `dramatically declined,' which, based on conversations with customers, CI 5 attributed to price increases for glyphosate that occurred in mid-2008." CI 5 allegedly relayed the farmers' concerns about "being burned" by Monsanto "to a Roundup Marketing Manager and a Marketing Lead" and was told that "the sales problems were national and that Monsanto's corporate office was aware of the trend." CI 5 claims that he heard "a lot of turbulent messages" from farmers about Roundup, "which made them now second-guess who they would be buying their seeds from." The second amended complaint also alleges that Monsanto lost seeds and traits business to Dow and Syngenta because those companies sold more products and varieties.33

Analysis

Once again, most of the statements plaintiff claims are false and misleading are actually forward-looking and protected by the safe harbor provision of the Exchange Act for the reasons discussed above. These statements include: predictions of gross profit (including predictions of doubling gross profit and being "on track" to do so),34 as well as gross profit for Roundup (including predictions that it "will continue to generate a strong source of cash and gross profit") and the seeds and traits business, along with the underlying assumption that seeds and traits would deliver higher-than-expected gross profit; predicted selling prices for Roundup, including the statement that "at these price premiums, the brand is positioned well;" predicted sales volume and market penetration for Roundup Ready 2 Yield soybeans, along with the underlying assumptions that these predictions would be reached because of expected yield increases and price premiums; predicted guidance numbers; and statements of plans and objectives for future operations, including the plans to introduce new pricing and incentives for the future growing seasons, along with the assumption that these pricing changes and incentives would generate increase sales.

As with the forward-looking statements in earlier quarters, these forward-looking statements were also accompanied by meaningful cautionary language. In addition to the specific, detailed risks set out in the press releases, the written materials accompanying investor conferences, and the Form 10-Q, the defendants warned of these same risks repeatedly. For example, the June 24 press release disclosed "increased pressure from generic glyphosate," which Casale explained meant that Monsanto "[is] facing a changing supply environment, and what we need to determine is the price, volume, [and] share dynamic that will deliver the optimal gross profit and ultimately the optimal level of operating cash. This may entail stretched premiums and lower volumes, or at the other end of the spectrum, sub-historic premiums and a recapture of share and volume." At the September 10 investor conference, Casale acknowledged that due to a "tremendous amount of Chinese production," there was "probably about four times as much in the inventory of generic glyphosate" in the U.S. market as compared to a year ago and that glyphosate prices had "dropped dramatically." He added that, in response to these market conditions, Monsanto announced new pricing and incentives to compete with generic glyphosate. Similarly, at a September 15 conference Grant cautioned that Roundup still faced "large headwinds," including "enormous levels of competitive inventory... mainly Chinese generics, that has to be worked through." As for Monsanto's prediction that the use of glyphosate sales incentives would generate additional revenue, Monsanto previously disclosed its practice of using incentive programs to drive sales and specifically and repeatedly warned investors that its ability to realize cash and gross profits would "depend on [its] ability to control ... marketing costs without adversely affecting sales ... and provide marketing programs meeting the needs of [its] customers." Because the identified risks were detailed and specific to Monsanto's business and the changing conditions of the marketplace, defendants' forward-looking statements were accompanied by meaningful cautionary language and protected by the safe harbor provision of the Act.

Moreover, there is no evidence of falsity with respect to the statements concerning glyphosate sales incentives because there are no allegations to suggest that at the time the statements were made, Monsanto was actually using those sales incentives to bolster 2009 sales or that defendants thought that the incentives might not work.35 The same is true with respect to the statements about Monsanto's seeds and traits business. Plaintiff has pleaded no specific facts to suggest that Monsanto would have been unable to achieve its forecasts for seeds and traits even if, as plaintiff alleges, Monsanto was experiencing setbacks with the launch of Roundup Ready 2 Yield. Indeed, gross profit for seeds and traits in the third quarter of 2009 was 17% higher than the third quarter 2008 gross profit, and soybean gross profit for the quarter was up 26% over the prior year's quarter on a 21% increase in sales.

Plaintiff also challenges the statement in the June 24 press release reporting "increased revenues from seeds and traits products," "estimat[ing] that some 16,000-plus farmers are using the Genuity brand Roundup Ready 2 Yield trait on approximately 1.4 million to 1.5 million acres this season." Yet plaintiff does not allege that these estimates were false or that customer demand did not contribute to share gains. Although plaintiff complains that the Roundup Ready 2 Yield was "a failure because defendants could not sell the new seeds at premium prices," there is no evidence of falsity because the challenged statements make no representations about price.36

Casale's statement that Roundup Ready 2 Yield is "literally a game changing technology" is not, as plaintiff argues, a present statement of verifiable fact. It is inactionable puffery, as are his statements about Roundup being "positioned very well." See In re NVE Corp. Securities Litig., 551 F.Supp.2d 871, 895-96 (D.Minn.2007) (statements calling technology "the Holy Grail of memory" and "the type of technology that occurs once in a lifetime are puffery"), aff'd, 527 F.3d 749 (8th Cir.2008); Hutchinson, 536 F.3d at 960 ("[w]e believe we are well-positioned on a number of new disk drive programs" is puffery). My review of the record reveals no actionable statements for the third quarter of fiscal year 2009.

D. Fourth Quarter Fiscal Year 2009

Defendants' Statements

On October 7, 2009, Monsanto reported ongoing EPS for fiscal 2009 of $4.41 and "affirmed its full-year ongoing 2010 EPS is in the range of $3.10 to $3.30." It also "reported net sales of $1.9 billion for the fourth quarter of fiscal year 2009, a slight decrease over the same period of fiscal year 2008 due in large part to a sales decrease for Monsanto's Roundup and other glyphosate-based herbicides as a result of pricing competition and a global glyphosate supply and demand imbalance." However, Monsanto also announced that "positive drivers for the quarter included higher sales of corn seeds and traits as well as sales of vegetable seeds," and "seeds and traits, which is targeted to account for 85 percent of Monsanto's business in 2012, is expected to cross the $5 billion gross profit mark for the first time in 2010 by creating new value for growers and increasing their profitability on farm." The press release reports quarterly net sales of Roundup at $778 million and states that "Monsanto delivered on its commitment to grow ongoing earnings per share (EPS), reporting at year-over-year increase of 21 percent to $4.41 per share (5 percent or $3.80 on an as-reported basis), driven by strong seeds and traits performance, the optimization of gross profit for Roundup and other glyphosate-based herbicides at $1.8 billion, and extraordinary cost reduction actions."37

During a conference call held the same day,38 Casale (who by this time had replaced Crews as CFO) announced that Monsanto intended to increase grower profitability by launching Roundup Ready 2 Yield and SmartStax "at levels unprecedented in our history and thus in our industry." Casale warned that these new launches came "with a cost" and "don't immediately translate into share shifts," so he anticipated a "break even or even [ ] a modest loss in the first quarter and a small loss in the fourth" as the Seeds and Genomics growth rate would drop in 2010 to 13 to 15 percent. During the same call, Grant said that "if [Monsanto] provide[s] the compelling returns that we believe these two technologies promise, we can see a path to servicing some 65% to 75% of the market opportunity with these traits in our brands, and our brands through our licensees in 2012." Grant concluded his presentation by stating that "we remain on track to deliver on our commitment to more than double the gross profit that we delivered in 2007." However, he acknowledged that this "was an aggressive commitment," especially "given the volatility on Roundup that's being managed across the life of this five-year plan." When asked how farmers have reacted to the price cut of Roundup, Casale responded that "it's being received well, but the season's just getting going." On the same call, another executive reaffirmed Monsanto's "clear path to optimizing Roundup gross profit at the $1 billion target by 2012...."

Monsanto filed its 10-K on October 27, 2009. The section entitled "Outlook" states in relevant part as follows:

The Form 10-K also contains the following section entitled "Caution Regarding Forward-Looking Statements":

Item 1A. contains the following Risk Factors and accompanying explanations:

After this case was filed, Monsanto disclosed that "the staff of the [SEC] is conducting an investigation regarding Monsanto's customer incentive programs relating to its glyphosate products in fiscal years 2009 and 2010, and Monsanto has received a subpoena for documents in connection therewith." On October 5, 2011, Monsanto filed a report with the SEC on Form 8-K that provided an update on the SEC's investigation and disclosed that it had undertaken its own internal review and audit of the situation. On November 14, 2011, Monsanto filed an amended Form 10-K, which the parties refer to as "the Restatement."39 The Restatement restates Monsanto's financial statements and disclosures for the fiscal year ended August 31, 2009. Monsanto determined that a restatement was necessary because its internal investigation revealed "communications with customers ... and other facts ... that impacted our determination of which revenue transactions resulted in progress by the customer toward earning the program incentive." Monsanto explained the need for the Restatement as follows:

Plaintiff alleges that, according to the Restatement, "defendants caused Monsanto to fail to record $44 million in costs relating to glyphosate sales incentives to its customers during the quarter ended August 31, 2009," which overstated Monsanto's actual ongoing EPS by $0.03 for the quarter and year ended August 31, 2009.40

In a press release dated November 10, 2009, Monsanto stated that it "expects total-company gross profit in 2012 in the range of $8.6 billion to $8.8 billion, with gross-profit contribution from its Seeds and Genomics platform representing $7.3 billion to $7.5 billion of the 2012 target." During a November 10 investor event,41 Monsanto again stated that it remained "on track" to double gross profits from 2007 to 2012. Grant acknowledged that the key to meeting this forecast was the seeds and traits business. He then stated that "the elephant in the room is can Monsanto deliver on 2010? Can Monsanto deliver on 2011? Can they really double by '12?" He answered these questions with a "yes." Grant also told investors that the key to doubling gross profits by 2012 "is [the] mix [of new technologies available to farmers]," which included making Roundup Ready 2 Yield soybean and SmartStax corn seeds readily available for sale a year earlier than expected. However, Grant also noted that Monsanto was still "in an early introductory year" with these traits, "so relative to the overall business it's still quite small...."

Defendant Brett Begemann, Executive Vice-President of Seeds and Traits, made the following comments about Monsanto's Roundup Ready 2 Yield soybeans:

Begemann attributed the "rough year" to weather conditions — the "wettest fall in 120 years" and "the coldest July on record" — which delayed seed purchases for the next growing season. Begemann also echoed Grant's statements "that the total volumes of SmartStax and Roundup Ready 2 Yield are not huge," but he still believed Monsanto was "on pace" with "both of those new game-changing technologies."

Casale spoke to investors about Roundup. He stated:

The second amended complaint alleges that on December 7, 2009, Monsanto filed its 2009 Proxy with the Securities & Exchange Commission on Form 14/A, which states that "we continue to focus on growing our seeds and traits business and our commitment to double our company's gross profit by fiscal 2012, from our fiscal 2007 base. We believe the successful launch of next generation products by our seeds and traits segment will be essential to meeting our growth commitment for 2012."

Begemann spoke again about Monsanto's goal of doubling gross profit at another investor conference held in December:42

At an investor conference on December 8, 2009, Grant reiterated44 that there was "no change" to Monsanto's commitment to doubling gross profit by 2012 except that they now had "more data yield that provides an additional level of granularity against those milestones." He also reported that farmers were experiencing a "7% yield improvement on our Roundup Ready 2 Yield platform." In response to a question about "what risk factors are out there that wouldn't allow you to get to [the 2012] targets," Grant responded:

Plaintiff's second amended complaint also alleges that Robb Fraley, Monsanto's Chief Technology Officer, made the following statements at a December 8, 2009, Yield Update Luncheon:45

Monsanto reiterated its confidence in its ability to reach its 2012 financial targets in a December 8, 2009 press release.

Plaintiff's Allegations That These Statements Were False and/or Misleading

In addition to the facts previously discussed, plaintiff again alleges that defendants' statements about Roundup and gross profit were false and misleading because Monsanto was forced by poor sales to initiate an incentive program to sell glyphosate-based products and that Monsanto used the incentive program to "pull additional glyphosate sales into fiscal 2009... When defendants belatedly mentioned an incentive program on September 10, 2009, they represented that the program would only apply to fiscal year 2010 and failed to inform investors that out of $100-150 million allocated for the incentive program for the full fiscal year 2010, up to 45% had already been used in the fourth quarter of 2009." In other words, plaintiff claims that "defendants offered incentives to its distributors for fiscal 2010 to cause them to purchase glyphosate in fiscal 2009" and did not tell investors that Monsanto "used glyphosate sales incentives to pull additional glyphosate sales into fiscal 2009." Plaintiff alleges that as later revealed in the Restatement, "defendants caused Monsanto to fail to record $44 million in costs relating to glyphosate sales incentives to its customers during the quarter ended August 31, 2009, thereby materially overstating Monsanto's Roundup/glyphosate gross profit by 16% for the quarter ended August 31, 2009 and overstating Monsanto's actual ongoing EPS by $0.03 for the quarter ended August 31, 2009." According to plaintiff, this allowed "defendants to continue to hide the true condition of the company's glyphosate business."

Plaintiff alleges that defendants' statements about Roundup Ready 2 Yield soybeans continued to be false and misleading for the reasons discussed above, namely, that sales were materially below expectations because the new seeds were too expensive, sold in limited varieties, and did produce the predicted yields.

In the fourth quarter of 2009, Monsanto announced the launch of its SmartStax corn product. Yet plaintiff alleges that Monsanto experienced problems with its launch as well, and that demand for these seeds, like that for Roundup Ready 2 Yield, was far below expectations. The second amended complaint alleges that "on October 8, 2009, it was disclosed that the United States Justice Department was investigating whether Monsanto violated antitrust rules in trying to expand its dominance of the market for genetically engineered crops." Monsanto allegedly then "began retreating from its seeds and traits pricing strategy" in late October, and on October 26, 2009 it announced that it would be reducing pricing for its new corn seed product. Plaintiff claims that "there was further evidence that farmers were reluctant to pay the premium prices for Monsanto's new soybeans and corn seeds" by November of 2009.46 As further evidence that Roundup Ready 2 Yield soybeans were "materially below expectations," plaintiff also points to a research report published by OTR Global in late October that reportedly revealed that yields were lower than predicted.47

Plaintiff claims that "by late 2009, Monsanto abandoned its efforts to force farmers to buy Roundup Ready 2 Yield and seed treatments." CI 9 and CI 10 were allegedly told by Monsanto during this time period that it had decided to abandon the bundling of seed treatments to force the adoption of Roundup Ready 2 Yield and to allow farmers to continue to grow and sell Roundup Ready 1 soybeans (allegedly even after the technology patent expired and by permitting them to save seeds).

Analysis

As with prior quarters, most of the statements plaintiff claims are false and misleading are actually forward-looking and protected by the safe harbor provision of the Act for the same reasons discussed above. These statements include: predictions of gross profit (including predictions of doubling gross profit, having a "clear path" to optimizing gross profits, having "no change" to this commitment, and being "on track" to do so), as well as gross profit for Roundup and the seeds and traits business, along with the underlying assumption that seeds and traits would deliver higher-than-expected gross profit; predicted selling prices for Roundup; predicted sales volume and market penetration for Roundup Ready 2 Yield soybeans and SmartStax corn, along with the underlying assumptions that these predictions would be reached because of expected yield increases and price premiums; predicted guidance numbers; and statements of plans and objectives for future operations, including the plans to introduce new pricing and incentives for the future growing seasons, along with the assumption that these pricing changes and incentives would generate increase sales. As I have explained, this remains true "regardless of whether the speaker knows the statement is false." Panera Bread Co., 697 F.Supp.2d at 1089.

These forward-looking statements were also accompanied by meaningful cautionary language for the reasons previously discussed. In addition to the specific, detailed risks set out in the public filings, press releases, and the written materials accompanying investor conferences, defendants warned of these same risks repeatedly. For example, on October 7 Casale warned that the new launches of Roundup Ready 2 Yield and SmartStax would come "with a cost" and might not "immediately translate into share shifts," even predicting a drop in the seeds and genomics growth rate. At the November investor event, Grant further cautioned that Monsanto was still "in an early introductory year" with these new seed traits, "so relative to the overall business it's still quite small...." Begemann also discussed the problems that some farmers were experiencing with the early launch of Roundup Ready 2 Yield soybeans, including lower than expected yield results and lack of seed volume and variety, acknowledging that these setbacks were not "what we're hoping our farmers will experience." Begemann attributed the "rough year" experienced by farmers to weather conditions, which delayed seed purchases and echoed Grant's statements that "the total volumes of SmartStax and Roundup Ready 2 Yield are not huge." Casale then told investors that "Roundup's not going to contribute to the gross profit increase in the business as we progress towards 2012." Because the identified risks were detailed and specific to Monsanto's business and the changing conditions of the marketplace, defendants' forward-looking statements were accompanied by meaningful cautionary language and are not actionable under the safe harbor provision of the Act.

In addition, plaintiff cannot demonstrate the falsity of these statements. Plaintiff challenges defendants' predictions about Roundup as false and misleading because they did not disclose the glyphosate sales incentives or that the announced September price cut had not increased demand. As for the price cut, Casale specifically warned investors during the October 7 conference call that the growing season was "just getting going," so it was too early to determine the price cut's effect on sales. Moreover, there is no evidence that these statements were false or misleading as Monsanto was not necessarily unable to reach its predicted gross profit guidance for 2012 based upon Roundup sales in the fourth quarter of 2009. The same analysis applies to Monsanto's Form 10-K prediction that Roundup would "continue to generate a strong source of cash and gross profit." As I have previously explained, this statement (and others regarding future projections and statements about Roundup) is not necessarily inconsistent with alleged decreasing sales, and there is no indication that even a material decline in sales necessarily rendered Monsanto unable to achieve its projected earnings. See Cerner, 425 F.3d at 1084. The allegations regarding the glyphosate sales incentives are the same as those discussed in the last quarter, and they fail for the same reasons discussed above. Under these circumstances, these allegations cannot survive the Act's falsity standard.

Plaintiff also challenges defendants' predictions relating to seeds and traits as false because Monsanto failed to disclose problems with the launch of Roundup Ready 2 Yield and SmartStax. These allegations of falsity are not sufficient because plaintiff has not specifically alleged what the "expectations" were for the launch of these new products, so it is impossible to determine whether, as plaintiff alleges, sales were "materially below expectations." The opinions of CI 9 and CI 10 (two independent seed distributors who did not even work for Monsanto) are insufficient to demonstrate that Monsanto's predictions about its seeds and traits business were false and misleading. Just because these two distributors may have believed that farmers were hesitant to purchase the new seeds is not necessarily inconsistent with Monsanto's predictions about its seeds and traits business, and there is no indication that these alleged difficulties with Roundup Ready 2 Yield and SmartStax necessarily rendered Monsanto unable to achieve its projected earnings. Plaintiff's reliance on the OTR Global report is equally misplaced. This single study (which Monsanto disputed as flawed) does not demonstrate that Monsanto's predictions about its seeds and traits business, including the underlying assumptions of expected yield results, were false and misleading. This is especially true given defendants' repeated statements that the launch of these products was limited, included only limited varieties and volume, and did not provide expected yield results for some farmers.

Monsanto's December 8 statement that SmartStax and Roundup Ready 2 Yield products delivered "great" or "exceptional" performance and "me[t] our requirements" is not, as plaintiff claims, an actionable statement of present, verifiable fact. Instead, this vague statement of corporate optimism constitutes inactionable puffery "that no reasonable investor would rely upon." See Hutchinson, 536 F.3d at 960 (internal quotation marks and citation omitted). The same is true of defendants' statements about seeds and traits being "positive drivers" and "game-changing technologies," having "unprecedented levels" of grower profitability, "compelling returns," and a "strong level of support from our customers," as well as the previously discussed statements about "being on track" or "committed" to reaching the predicted goals of gross profitability and such similar "soft, puffing statements." Id. My review of the record reveals no actionable statements for the fourth quarter of fiscal year 2009.

E. First Quarter Fiscal Year 2010

Defendants' Statements

In a January 6, 2010 press release,48 Monsanto announced first-quarter fiscal 2010 results and confirmed ongoing EPS guidance of $3.10-$3.30. The press release affirms that Monsanto is "on track to meet its 2010 financial commitments" and includes the following statement from Grant:

In the section entitled "Results of Operations," the press release states that net sales decreased $952 million, or 36 percent, in the three-month comparison "primarily as a result of decreased sales of glyphosate-based herbicide, primarily in Brazil and Europe." Monsanto also reported that "gross profit percentage for the total company decreased 15 percentage points to 44 percent in the first quarter, largely driven by pricing adjustments for Roundup and other glyphosate-based herbicides."

In Agricultural Productivity, Monsanto's sales in the first quarter declined 57 percent or $884 million compared with the same period in 2009, due to "the global supply-demand imbalance." The press release states that to address this problem Monsanto "continues to execute on its plan by resetting branded prices to bring premiums more in line with historical norms, increasing overall volumes and optimizing its low-cost production advantage." Finally, Monsanto reported that the Seeds and Genomics segment decreased six percent or $68 million compared to the first quarter of 2009. The press release announces the "launch of Genuity SmartStax corn, which is expected to be on more than 4 million acres. Given the early orders, the early-adopter uptake for Genuity SmartStax has been good and the company is on pace to meet the more than 4 million-acre target." However, Monsanto reported that soybean gross profit was down four percent "due to a timing effect." The release states that "[d]elays in harvesting last year's soybean crop have put the company's seed shipments slightly behind," but Monsanto still believed that its "sales to date" were "on pace" to meet the increased acres target of eight to million acres.

In a company earnings conference call held the same day,49 Casale stressed that Monsanto's "guidance is a commitment, not an aspiration ... I feel confident confirming our full year EPS and cash flow targets today." Casale discussed the progress Monsanto was making in the "plan to generate $650 million to $750 million in Roundup gross profit this year, on the way to a sustainable $1 billion in gross profit by 2012." He stated: "We're executing on our 2010 objectives to reduce Roundup prices to bring premiums more in line with historical norms, increase overall volumes and optimize our low cost production advantage." Casale reported that the U.S. growing season "is shaping up as we expected" with a good response to price reduction. Although he noted that "the clearing of generic inventory is still under way, keeping farm gate generic prices depressed," Casale believed that "our price moving incentives put us where we need to be at this point in the season." With respect to seeds and traits, Casale stated:

In response to a question from a participant, Grant stated that the 4 million acre projected target for SmartStax is "being realized. It's a pretty small base this year, but it's being realized." Casale also affirmed that "the demand is strong and bear in mind, at 4 million acres, we're targeting the early adopters of the technology, so the price of orders that we see on SmartStax is very consistent ... with what our expectations are, so we feel very good about the 4 million acres for the year." When asked by another participant about expected selling prices for soy and corn, Grant responded that "[i]t's early" but "so far, so good," although he stressed that "competitive pricing pressure" is usually seen later in the planting season.

Two days later, Monsanto filed its 10-Q for the first quarter ended November 30, 2009. The Outlook Section states as follows:

The first section of the Form 10-Q contains the following section entitled "Caution Regarding Forward-Looking Statements:"

The Risk Factors section of the 10-Q refers to the risk factors disclosed in the Form 10-K for the fiscal year ended August 31, 2009 and states that "there have been no material changes from the risk factors previously disclosed...."

On January 13, 2010, Monsanto hosted an R & D Pipeline Review telephone conference. Casale began his presentation with a reminder that "we will be making some forward-looking statements today."50 He then stated:

On February 10, 2010, Begemann told the participants at the Goldman Sachs Agricultural Biotech Forum that Monsanto "was on path for our 2012, with 2010 being that year of execution, albeit 2010 is the challenging year that we said 2010 was going to be...."51

On February 25, 2010, Monsanto made a presentation at the Morgan Stanley Global Basic Materials conference. During the conference Casale stated:

However, Casale warned that Monsanto's guidance for 2010 "includes some headwinds," such as "launch costs associated with the establishment of both Roundup Ready 2 Yield and SmartStax" and "about $100 million to $150 million of incremental price concessions or trade incentives that we have in our Roundup business to reestablish the Roundup brand within our distribution channels." Casale explained that the launch of the two products was "more about getting the product positioned to have the better trajectory to grow [in 2012] than it was the incremental gross profit contribution in 2010." As always, the materials provided by Monsanto during this conference included the standard safe harbor language.

Plaintiff's Allegations That These Statements Were False and/or Misleading

Plaintiff claims that Monsanto's statements during this time period about Roundup Ready 2 Yield and SmartStax were false and misleading because "demand for Monsanto's products was in free-fall and the Company's customers were in full-blown rebellion over high seed prices." Plaintiff claims it was knowledge about problems with Roundup Ready 2 Yield and SmartStax that prompted Grant and "his team" to "personally embark[ ] on a `listening tour' in which he visited with 1,200 farmers and heard complaints about Monsanto's prices" in the first quarter of 2010. Plaintiff alleges that Monsanto continued to experience material problems with its SmartStax product during this time period as well. Plaintiff alleges that Monsanto's statements during this time period were false and misleading because "[a]ccording to CI 5, there were material defects with certain of Monsanto's new corn seeds." As evidence of this allegation, plaintiff claims that "CI 5 sold, among other products, two SmartStax hybrids which had been tentatively approved by Monsanto Research & Development (R & D)." However, plaintiff alleges that CI 5 was told by R & D that these two hybrids did not "make it through the last (testing) hoop" about midway through the growing season, and that Monsanto ceased its sales of these two seeds. "According to CI 5, another seed replaced the defective seeds. Further, farmers who had already paid for these two respective hybrids experienced poor yields in 2010 and Monsanto had to provide financial incentives to farmers who experienced poor yields." Plaintiff also repeats its allegations that defendants' statements about Roundup Ready 2 Yield were false and misleading because defendants failed to disclose that, for the 2010 growing season, sales of Monsanto's Roundup Ready 2 Yield soybeans were "materially below expectations" because the seeds were too expensive, did not "materially improve crop yields," and were sold in limited varieties.

Plaintiff also alleges that defendants' statements were false and misleading because Monsanto failed to disclose that the price decrease of Roundup had not increased demand, which "severely, negatively" impacted Monsanto's gross profit, and that Monsanto's new Roundup Ready 2 Yield soybeans were "materially below expectations" because the new seeds were too expensive, offered in limited varieties, and did not materially improve crop yields, which negatively impacted the sales of new Roundup Ready 2 Yield seeds. Plaintiff claims that, "for these reasons, defendants knew that Monsanto could not double 2007 gross profits by 2012 or it was at least severely reckless for defendants to make this representation."

Analysis

Once again, most of defendants' statements are forward-looking and protected by the safe harbor provision of the Act for the same reasons discussed above. These statements include: predictions of gross profit (including predictions of doubling gross profit and being "confident," "committed," and "on track" to do so), as well as gross profit for Roundup and the seeds and traits business; predicted selling prices for Roundup; predicted sales volume and market penetration for Roundup Ready 2 Yield soybeans and SmartStax corn, along with the underlying assumptions that these predictions would be reached because of expected yield increases and price premiums; predicted guidance numbers; and statements of plans and objectives for future operations, including the plans to introduce new pricing and incentives for the future growing seasons, along with the assumption that these pricing changes and incentives would generate increase sales. As I have explained, the safe harbor provision protections exist "regardless of whether the speaker knows the statement is false." Panera Bread Co., 697 F.Supp.2d at 1089.

These forward-looking statements were accompanied by meaningful cautionary language for the reasons previously discussed. In addition to the specific, detailed risks set out in detail above and contained in public filings, press releases, and written materials accompanying investor conferences,52 defendants again warned of these same risks repeatedly. During the January 6, 2010 conference call, Casale reported that "the clearing of generic inventory [of glyphosate] is still under way, keeping farm gate generic prices depressed" so it was still too early to determine the effect of price reductions and incentives. As for the predictions about Roundup Ready 2 Yield and SmartStax, defendants made clear that they were talking about "introductory volumes," a "small base" for the projected volume targets, and that they were relying on "early adapters of the technology" to meet these goals. Casale warned investors on February 25 that Monsanto's 2010 guidance "includes some headwinds," such as launch costs associated with Roundup Ready 2 Yield and SmartStax and Roundup incentives. He also stated that previously announced acreage targets for Roundup Ready 2 Yield and SmartStax would be at the "top end of the range" (and likely 20% lower) because the launch of these products was really "more about getting the product positioned" to grow than about "gross profit contribution in 2010." Because the identified risks were detailed and specific to Monsanto's business and the changing conditions of the marketplace, defendants' forward-looking statements were accompanied by meaningful cautionary language and are not actionable under the safe harbor provision of the Act.

Plaintiff also cannot demonstrate the falsity of these statements. Plaintiff challenges defendants' predictions about Roundup as false and misleading because they did not disclose that the announced September price cut had not increased demand. This argument fails because Casale acknowledged on the January 6 conference call that the "clearing of generic inventory" was keeping prices depressed, and the Form 10-Q disclosed decreasing Roundup net sales and gross profit, despite price cuts, due to competitive pricing and supply issues. Moreover, there is no evidence that these statements were false or misleading as Monsanto was not necessarily unable to reach its predicted gross profit guidance for 2012 based upon Roundup sales in the first quarter of 2010. The same analysis applies to Monsanto's continued Form 10-Q prediction that Roundup would "continue to generate a strong source of cash and gross profit." As I have previously explained, this statement (and others regarding future projections and statements about Roundup) is not necessarily inconsistent with alleged decreasing sales, and there is no indication that even a material decline in sales necessarily rendered Monsanto unable to achieve its projected earnings. The allegations regarding the glyphosate sales incentives are the same as those discussed in the last two quarters, and they fail for the same reasons discussed above. Under these circumstances, these allegations cannot survive the PSLRA's falsity standard.

Plaintiff also alleges that defendants' predictions relating to the expected size of the launches of Roundup Ready 2 Yield and SmartStax were misleading. Yet there is no evidence that defendants made false or misleading predictions about these two products. On February 25, Casale stated that the predicted forecasts of 8 to 10 million acres of Roundup Ready 2 Yield and 4 million acres of SmartStax represented the "top end" of the range and that both launches would probably be about 20 % smaller. Defendants made clear that they were talking about "introductory volumes," a "small base" for the projected volume targets, and that they were relying on "early adapters of the technology" to meet these goals. Casale said "[i]t's early" but "so far, so good," although he stressed that "competitive pricing pressure" is usually seen later in the planting season.

Plaintiff continues to challenge defendants' predictions relating to seeds and traits as false because Monsanto failed to disclose problems with the launch of Roundup Ready 2 Yield and SmartStax. As with the similar allegations made in connection with the prior quarter, these allegations of falsity do not survive the Act. Again, plaintiff has not specifically alleged what the "expectations" were for the launch of these new products, so it is impossible to determine whether, as plaintiff alleges, sales were "materially below expectations." To support its allegation, plaintiff relies on a confidential informant who claims that he was advised that two hybrid varieties of SmartStax had "failed final testing," which required Monsanto to replace the defective seeds and "provide financial incentives to farmers who experienced poor yields." This allegation falls short of demonstrating falsity because it fails to explain the portion of Monsanto's overall SmartStax sales affected by the alleged defect, or the effect, if any, the alleged defect had on Monsanto's ability to meet its SmartStax acreage forecast. The alleged failure of two hybrid varieties of corn seeds is not necessarily inconsistent with Monsanto's predictions about its seeds and traits business, and there is no indication that these alleged difficulties with Roundup Ready 2 Yield and SmartStax necessarily rendered Monsanto unable to achieve its projected earnings or otherwise made defendants' statements false or misleading. This is especially true given defendants' repeated statements that the launch of these products was limited, still in the early stages, and included only limited varieties and volume.

Plaintiff challenges the statement in Monsanto's January 6, 2010 press release that "delays in harvesting last year's soybean crop have put the company's seed shipments slightly behind, with this volume expected to shift into the second quarter" as one of verifiable fact, not forward-looking. Yet plaintiff fails to allege facts that showing that this statement was false or misleading. Plaintiff has not alleged that there was no delay in harvesting soybeans in late 2009 after the "wettest fall in 120 years," or that this delay did not affect soybean sales, so it is not actionable under the Act. Plaintiff also makes much of Casale's statement that "Hugh [Grant] and I personally reviewed the order book at calendar end," but again has not alleged that Casale or Grant did not actually do so. Without any allegation or evidence of falsity, this statement is not actionable under the Act.

Statements that SmartStax and Roundup Ready 2 Yield are "winning products" are not actionable statements of present, verifiable fact. Instead, they are inactionable puffery. The same is true of the previously discussed statements about "being on track" or "committed" to reaching the predicted goals of sales and gross profitability and such similar "soft, puffing statements." Id. My review of the record reveals no actionable statements for the first quarter of fiscal year 2010.

F. Second Quarter Fiscal Year 2010

Defendants' Statements

On April 7, 2010, Monsanto announced its second-quarter results in a press release.53 Monsanto confirmed full-year 2010 ongoing EPS guidance in the range of $3.10 to $3.30, with full-year 2010 EPS on an as-reported basis in the low end of the range of $2.85 to $3.11. For the first time, Monsanto announced that "its goal of doubling 2007 gross profit by 2012 is unlikely." Citing "key trends that deviated from the core planning assumptions for Roundup," including "the continued presence of generic inventory and competitive pricing strategies," Monsanto also lowered its Roundup/glyphosate gross profit forecast to "plus-or-minus $600 million for the year." Grant issued the following statement:

In an earnings conference call later that day, Casale told participants that U.S. Roundup prices remained "slightly below" the previously projected $10-$12 per gallon range "as competitive generic inventory has moved out of the system slower than we would have anticipated, depressing farm gate prices below what we [would] expect." He also warned that "we're starting to see early evidence of competitors using [generic glyphosate] as a los[s] leader to sell other chemical products in the[ir] portfolios creating margin compression in the channel that threatens to keep farm gate prices from fully rebounding with seasonal refills." Casale predicted 3 million acres of SmartStax to be planted and about 6 million acres of Roundup Ready 2 Yield.

Grant also spoke, telling participants that "we recognize it's unlikely we will reach our goal of doubling our 2007 gross profit by 2012," and "[w]hile there may be options to make an accelerated push for 2012, it's clear that achieving that objective could involve making sharp choices that to me are not in a long range interest of this business." He then stated:

While answering questions from participants, Casale and Grant cautioned that the "competitive dynamics" within generic glyphosate "remain acute resulting in systemic price competition," which had "the potential to strain our full year Roundup performance and put pressure on our ability to meet our projected gross profit expectations," and that, if it persisted, Monsanto "might be looking at a lower level of [Roundup gross profit] ... for the long term for the business." Grant also said that, in response to farmer feedback, Monsanto would be focusing more on volume, offering a "broader range of product[s]," and "faster, earlier trial by growers" because "when you get told the same thing often enough, it becomes pretty compelling."54 The materials accompanying the conference call included the standard safe-harbor language.

On April 8, 2010, Monsanto filed its Form 10-Q for the period ended February 28, 2010. The Outlook section states:

The first section of the Form 10-Q contains the following section entitled "Caution Regarding Forward-Looking Statements:"

The Risk Factors section of the 10-Q refers to the risk factors disclosed in the Form 10-K for the fiscal year ended August 31, 2009 and states that "there have been no material changes from the risk factors previously disclosed...."

On May 27, 2010, the last day of the class period, Monsanto issued a press release announcing that it was "repositioning its Roundup business in the face of fundamental structural changes that have caused upheaval in the glyphosate industry." These changes included "systemic margin compression in the distribution channel attributed to sustained oversupply of glyphosate," "the reality that Chinese glyphosate overcapacity is profoundly overbuilt," and "an abbreviated burn-down season in the United States that limited the opportunity for sales in the third quarter." Monsanto stated that to address these changes it was lowering prices on volume for the 2011 season, accelerating payment on certain distributor and retailer incentives, simplifying its product offerings, and moving to a "single-brand strategy" in key markets. Monsanto reported that it now expected fiscal-year 2010 earnings per share to be in the range of $2.40 to $2.60 on an ongoing basis and $2.15 to $2.41 on an as-reported basis, with the ongoing gross profit contribution of Roundup to be in the range of $50-$250 million for fiscal 2010 and $250 million to $300 million per year thereafter.55

In a conference call later that day, Grant justified the "dramatic reposition[ing] [of] our Roundup business" as follows:

Grant explained that Monsanto had been tracking "adverse developments" indicating that the glyphosate industry was on the verge of a structural change, but that those developments actually accelerated in the early U.S. season. The adverse developments included the fact that glyphosate margins were at all-time lows, the "chronically oversupplied" glyphosate market, the fact that "China is profoundly overbuilt," and the need for "someone to step in and lead the industry to a simple weed management approach, given the evolution of weed resistance." Grant predicted that Monsanto's new strategy would "free Monsanto to grow to its core fundamentals...." Plaintiff's second amended complaint alleges that in June of 2010, Grant told investors that Monsanto had "left the chemical space" and "removed the anticipation of additional growth in the Roundup business."56

Plaintiff's Allegations That These Statements Were False and/or Misleading

Plaintiff alleges that defendants' profit and sales predictions were false and misleading because they knew of the "materially deteriorating conditions" of Monsanto's Roundup business. Plaintiff also claims that defendants' statements about Roundup continuing to be a "strong" or "sustainable" source of cash and gross profit were false and misleading because previous price decreases had not increased demand for Roundup.

Analysis

As with the previous quarters, defendants' forward-looking statements are protected by the safe harbor provision of the Act. These include statements predicting gross profit and gross profit for Roundup and the seeds and traits business in 2010 and beyond, as well as predicted guidance numbers and statements of plans and objectives for future operations, including the plans to introduce new pricing and sales strategies for Roundup (including lowering prices on volume for the 2011 season, accelerating payment on certain distributor and retailer incentives, simplifying its product offerings, and moving to a "single-brand strategy" in key markets), along with the assumption that these changes would generate increase sales. As I have explained, this protection remains "regardless of whether the speaker knows the statement is false." Panera Bread Co., 697 F.Supp.2d at 1089.

These forward-looking statements were also accompanied by meaningful cautionary language for the reasons previously discussed. In addition to the specific, detailed risks set out in detail above, defendants cautioned investors of factors that might result in even the lowered Roundup forecasts not being met. For example, the April 7 press release reported the "continued presence of generic inventory" and Monsanto's need to adopt "competitive pricing strategies." Later that day, Casale told investors that U.S. Roundup prices remained "slightly below" the previously projected range as generic glyphosate depressed prices below what was expected. He also warned that competitors were using glyphosate "as a loss leader to sell other chemical products," while Grant reiterated that competition from generic glyphosate "put pressure on our ability to meet our projected gross profit expectation" and could result in a lower level of Roundup gross profit "long term." Because the identified risks were detailed and specific to Monsanto's business and the changing conditions of the marketplace, defendants' forward-looking statements were accompanied by meaningful cautionary language and are not actionable under the safe harbor provision of the Act.

Monsanto's future projections and statements that Roundup would continue to generate a "sustainable" or "strong" source of cash and gross profit are not false and misleading because, as explained above, they are not necessarily inconsistent with alleged decreasing sales. They also constitute inactionable puffery for the same reasons previously discussed. My review of the record reveals no actionable statements for second quarter of fiscal year 2010.57

Discussion-Scienter

Even if plaintiff had alleged an actionable statement under the Act, it still failed to adequately plead scienter under the PSLRA's special heightened pleading standard. "The inquiry is whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter...." Minneapolis Firefighters' Relief Assoc. v. MEMC Electronic Materials, Inc., 641 F.3d 1023, 1029 (8th Cir.2011) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322-23, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007)). As set out more fully in the beginning of this opinion, to meet the required "strong inference" of scienter "the inference must be more than merely plausible or reasonable — it must be cogent and compelling, thus strong in light of other explanations." Tellabs, 551 U.S. at 323-24, 127 S.Ct. 2499.

Here, plaintiff does not allege that defendants had any motive, such as insider trading, to make false or misleading statements. Instead, plaintiff alleges that defendants "knew or were severely reckless in disregarding that the public documents and statements issued or disseminated in the name of Monsanto were materially false and misleading." "Proof of severe reckless may establish the requisite scienter." Horizon Asset Management Inc. v. H & R Block, Inc., 580 F.3d 755, 766 (8th Cir.2009). "To demonstrate severe recklessness, a plaintiff must allege highly unreasonable omissions or misrepresentations amounting to an extreme departure from the standards of ordinary care, and that present a danger of misleading buyers or sellers which is either known to the defendant or is so obvious that the defendant must have been aware of it." Id. (internal quotation marks and citation omitted). "[W]ithout a showing of motive or opportunity other allegations tending to show scienter would have to be particularly strong in order to meet the Reform Act standard." In re K-tel Intern., Inc. Securities Litig., 300 F.3d 881, 894 (8th Cir. 2002).58

Here, plaintiff's generic allegations of "severe recklessness" are insufficient to allege scienter under the Reform Act. The second amended complaint does not plead any individual defendant's state of mind. Instead, it merely alleges "knowledge" as a group without any specific allegations about each defendant and each alleged misrepresentation, such as how and what each defendant allegedly knew that rendered the alleged misstatement actionable. This is plainly insufficient as plaintiff "must ... raise a strong inference of scienter for each defendant and with respect to each alleged misrepresentation." H & R Block, 580 F.3d at 761.

Statements from confidential informants claiming that Monsanto knew of excess glyphosate inventory and was worried about sales and production of glyphosate do not create the inference of scienter that is as compelling as the more innocent, simpler inference that the defendants thought that Monsanto was responding appropriately to deteriorating market conditions and were perhaps slow to appreciate the effect that these conditions would have on Monsanto's bottom line. Yet defendants warned investors repeatedly of these risks and continually revised their projections downward in an attempt to respond to these conditions. The same is true for the confidential informants' claims regarding Roundup Ready 2 Yield and SmartStax. The more compelling inference is that defendants were optimistic about the introduction of the new technologies, but as discussed above this optimism was continually tempered by warnings about the introductory nature of the products and the risks associated with bringing new products to market.59 "[M]isguided optimism is not a cause of action, and does not support an inference of fraud." In re Carter-Wallace, Inc. Securities Litig., 220 F.3d 36, 42 (2d Cir.2000) (internal quotation marks and citation omitted).60

Nor do plaintiff's newly added allegations regarding Monsanto's earnings restatement raise a strong inference of scienter. Plaintiff does not allege accounting fraud, and the Eighth Circuit has rejected the argument that accounting errors or restatements, in and of themselves, demonstrate scienter. "Allegations that accounting errors were discovered months and years later do not give rise to a strong inference that the certifications were knowingly false when made." In re Ceridian Corp. Securities Litig., 542 F.3d 240, 248 (8th Cir.2008). Plaintiff fails to plead any facts showing that defendants knew of or recklessly disregarded facts that established Monsanto's financial statements were false when issued. "[A] showing in hindsight that the statements were false does not demonstrate fraudulent intent." Id. (internal quotation marks and citation omitted). Here, as in Ceridian, "[w]ithout something more, the opposing inference of nonfraudulent intent — that there were mistakes by accounting personnel undetected because of faulty accounting controls — is simply more compelling." Id. at 246. When all the allegations are taken together, plaintiff has not met the "strong inference" requirement.

Conclusion

Because plaintiff does not sufficiently allege an actionable misrepresentation or omission or scienter, the second amended complaint must be dismissed. Having concluded that plaintiff's § 10(b) claims fail to meet the pleading requirements of the PSLRA and are barred by the safe harbor provision and the bespeaks caution doctrine, plaintiff's claims against the individual defendants under § 20(a) cannot proceed as a matter of law and must likewise be dismissed. See Navarre, 299 F.3d at 748 (finding that an actionable § 20(a) claim must be preceded by an actionable primary violation under § 10(b)).

Accordingly,

IT IS HEREBY ORDERED that defendants' motion to dismiss [# 81] is granted, and plaintiff's second amended complaint is dismissed with prejudice.

A separate Judgment in accordance with this Memorandum and Order is entered the same date.