Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 1 of 30
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`IN RE CLOUDERA, INC.
`SECURITIES LITIGATION
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`This Document Relates To:
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`ALL ACTIONS
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`Case No. 19-cv-03221-MMC
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`ORDER DISMISSING SECOND
`AMENDED COMPLAINT
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`Re: Dkt. No. 234
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`Before the Court is defendants Cloudera, Inc. (“Cloudera” or “the Company”), Intel
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`Corporation (“Intel”), Thomas J. Reilly (“Reilly”), Jim Frankola (“Frankola”), Michael A.
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`Olson (“Olson”), Ping Li (“Li”), Martin I. Cole (“Cole”), Kimberly L. Hammonds
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`(“Hammonds”),1 Rosemary Schooler (“Schooler”), Steve J. Sordello (“Sordello”), Michael
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`A. Stankey (“Stankey”), Priya Jain (“Jain”), Robert Bearden (“Bearden”), Paul Cormier
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`(“Cormier”), Peter Fenton (“Fenton”), and Kevin Klausmeyer’s (“Klausmeyer”) Motion,
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`filed August 5, 2021, to “Dismiss Consolidated Second Amended Class Action Complaint
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`(‘SAC’).” Plaintiffs Mariusz J. Klin and the Mariusz J. Klin MD PA 401K Profit Sharing
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`Plan, Robert Boguslawski, and Arthur P. Hoffman have filed opposition, to which
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`defendants have replied. In addition, plaintiffs have filed, on four occasions, statements
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`of recent decision, the last on September 9, 2022. The Court, having read and
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`considered the papers filed in support of and in opposition to the motion, rules as
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`follows.2
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`1 On August 16, 2022, defendants’ counsel filed a statement of death, giving notice
`that Hammonds had passed away.
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`2 By clerk’s notice issued December 3, 2021, the Honorable Lucy H. Koh, to whom
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`Northern District of California
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`Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 2 of 30
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`BACKGROUND3
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`In 2005, Cloudera co-founder Doug Cutting created a “data storage and
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`processing platform” called Hadoop, which “was considered revolutionary” and “quickly
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`became an important technological tool for analyzing enormous amounts of unstructured
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`data.” (See SAC ¶¶ 21-22.) In 2008, Cutting, Olson, and others founded Cloudera, and
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`in 2009, the Company released its own version of Hadoop, which peaked in popularity by
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`2015 as “user demand shifted to cloud.” (See SAC ¶¶ 21, 23.) According to plaintiffs,
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`“[u]nlike on-premise Hadoop platforms, cloud services provide on-demand, elastic,
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`scalable and adaptable service models where processing and storage resources can be
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`accessed from any location via the internet.” (See SAC ¶ 25.)
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`In April 2017, Cloudera announced an initial public offering (“IPO”), and the
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`Company’s share price closed on April 28, 2017, the first day of trading, at $18.10. (See
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`SAC ¶ 34.) Plaintiffs allege that between April 28, 2017, and June 5, 2019 (the “Class
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`Period”), “the Company repeatedly and misleadingly assured investors that it possessed
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`an ‘original cloud native architecture’ and ‘cloud-native platform.’” (See SAC ¶ 36.)
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`Specifically, in 2018, Cloudera released Altus, which, according to plaintiffs, it
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`“misleadingly touted . . . as a cloud offering,” even though “it lacked any of the key
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`features of effective cloud computing.” (See SAC ¶ 42.)
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`On September 27, 2017, Cloudera announced a secondary public offering
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`(“SPO”), which closed on October 2, 2017, and in which Li, “Cloudera’s earliest venture
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`capital backer,” Accel, Li’s venture capital firm, and Olson, Cloudera’s co-founder and
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`Chief Strategy Officer, “together sold over $112 million of Cloudera stock” at $15.79 per
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`share. (See SAC ¶¶ 44, 45, 109.)
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`Over a year later, on October 3, 2018, Cloudera announced it was merging with
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`Hortonworks, Inc. (the “Merger”) (see SAC ¶ 55), and, that same day, Reilly, at that time
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`the above-titled action previously was assigned, took the matter under submission.
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`3 The following facts are taken from the SAC, the operative complaint.
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`Cloudera’s Chief Executive Officer and Chairman of its Board of Directors, along with
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`Frankola, Cloudera’s Chief Financial Officer, hosted an investor conference call, in which
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`they promoted the Merger as one that would “unlock powerful synergies” (see SAC ¶ 50).
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`According to plaintiffs, however, “the Merger was consummated not to create ‘synergies,’
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`but because the Company’s highest-ranking insiders knew that Cloudera was then facing
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`competitive industry forces so severe that they were simply incapable of achieving
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`organic growth,” (see SAC ¶ 49), specifically, “the Company’s customers were then
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`already moving their workloads to actual cloud providers like Amazon, Google and
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`Microsoft” (see ¶ SAC 51).
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`In addition, plaintiffs allege, Reilly, Frankola, Olson, and Li (collectively, “Insider
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`Defendants”), along with Cole, Hammonds, Schooler, Sordello, Stankey, Jain, Bearden,
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`Cormier, Fenton, and Klausmeyer (collectively, “Director Defendants”), “planned and
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`participated in the preparation of the statements contained in the Merger Registration
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`Statement” (see SAC ¶¶ 116, 137), effective November 20, 2018 (see SAC ¶ 10 n.7),
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`which contained material misrepresentations and omissions. Plaintiffs further allege that
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`Intel, “a semiconductor technology company[,] . . . held approximately 17.6% of
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`Cloudera’s outstanding common stock as of March 31, 2018,” (see SAC ¶ 90), and is
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`“thus strictly liable . . . for the materially inaccurate statements contained in the Merger
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`Registration Statement and the failure of the Merger Registration Statement to be
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`complete and accurate” (see SAC ¶ 92).
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`On January 3, 2019, the Merger closed. (See SAC ¶ 51.) Thereafter, in March
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`2019, Cloudera announced it was developing a product called Cloudera Data Platform
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`(“CDP”) (see SAC ¶¶ 9, 59), which it later released “for the public cloud in September
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`2019 and for the private cloud in August 2020” (see SAC ¶ 24).4 According to plaintiffs,
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`4 Plaintiffs explain that “[a] company seeking to use cloud computing services can
`elect between a private cloud (where cloud services are exclusive to the company) and/or
`a public cloud (where cloud services are owned and managed by a provider who also
`hosts other tenants), or a combination of the two.” (See SAC ¶ 16.)
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`“CDP was the Company’s first ever cloud-native product.” (See SAC ¶ 20.)
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`On June 5, 2019, the last day of the Class Period, Cloudera disclosed what
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`plaintiffs describe as “profoundly negative first quarter results for the period ended April
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`30, 2019, and drastically reduced fiscal year 2020 guidance,” and further announced the
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`departures of Reilly and Olson from the Company. (See SAC ¶ 61.) Also on June 5,
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`2019, during the Company’s earnings call, Reilly stated that “the announcement of [the]
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`[M]erger in October 2018 created uncertainty,” and that “[d]uring this period of
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`uncertainty, [Cloudera] saw increased competition from the public cloud vendors.” (See
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`SAC ¶ 65.) “The following day, on June 6, 2019, the Company’s share price closed at
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`$5.21 per share, a single day drop of approximately 40.8% on unusually massive volume
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`of 57.9 million shares traded.” (See SAC ¶ 61.)
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`Based on the above allegations, plaintiffs assert the following five Claims for
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`Relief: (1) a claim alleging, as against Cloudera, Intel, the Director Defendants, and the
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`Insider Defendants, violations of § 11 of the Securities Act of 1933 (“Securities Act”)
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`(Count I), (2) a claim alleging, as against Cloudera, violations of § 12(a)(2) of the
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`Securities Act (Count II), (3) a claim alleging, as against Intel, the Director Defendants,
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`and the Insider Defendants, violations of § 15 of the Securities Act (Count III), (4) a claim
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`alleging, as against Cloudera and the Insider Defendants, violations of § 10(b) of the
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`Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated
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`thereunder (Count IV), and (5) a claim alleging, as against the Insider Defendants,
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`violations of § 20(a) of the Exchange Act (Count V).
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`LEGAL STANDARD
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`Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure “can be
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`based on the lack of a cognizable legal theory or the absence of sufficient facts alleged
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`under a cognizable legal theory.” See Balistreri v. Pacifica Police Dep't, 901 F.2d 696,
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`699 (9th Cir. 1990). In analyzing a motion to dismiss, a district court must accept as true
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`all material allegations in the complaint and construe them in the light most favorable to
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`the nonmoving party. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
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`“To survive a motion to dismiss, a complaint must contain sufficient factual material,
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`accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
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`556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
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`“Factual allegations must be enough to raise a right to relief above the speculative
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`level[.]” Twombly, 550 U.S. at 555. Courts “are not bound to accept as true a legal
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`conclusion couched as a factual allegation.” See Iqbal, 556 U.S. at 678 (internal
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`quotation and citation omitted).
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`Generally, a district court, in ruling on a Rule 12(b)(6) motion, may not consider
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`any material beyond the complaint. See Hal Roach Studios, Inc. v. Richard Feiner & Co.,
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`Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). Documents whose contents are alleged
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`in the complaint, and whose authenticity no party questions, but which are not physically
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`attached to the pleading, however, may be considered. See Branch v. Tunnell, 14 F.3d
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`449, 454 (9th Cir. 1994). In addition, a district court may consider matters that are
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`subject to judicial notice, i.e., facts “not subject to reasonable dispute,” and the court
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`“must take judicial notice” of such facts “if a party requests it and the court is supplied
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`with the necessary information.” See Fed. R. Evid. 201(b)-(c).
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`DISCUSSION
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`At the outset, defendants request the Court “consider documents incorporated by
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`reference in the SAC and take judicial notice of certain documents,” altogether, thirty-
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`seven exhibits submitted in connection with their motion to dismiss. (See Decl. of Ryan
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`M. Keats, Dkt. No. 234-3; Defs.’ Req. for Consideration of Documents Incorporated into
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`Compl. and for Judicial Notice (“RJN”), Dkt. No. 235.) Plaintiffs oppose defendants’
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`request as to Exhibits 2, 10, 19, 24, 26, 28, 31, and 36, and further oppose the request to
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`the extent any exhibit is offered for the truth of the matters stated therein. (See Pls.’
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`Resp. to Defs.’ Req. for Consideration of Documents Incorporated into Compl. and for
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`Judicial Notice (“Pls.’ Resp.”) at 8:19-22, Dkt. No. 242.)
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`As to the opposed exhibits, although defendants request the Court take judicial
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`notice of Exhibit 10, a “Form 4 filed on behalf of Ping Li with the SEC on December 14,
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`Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 6 of 30
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`2017,” and Exhibit 24, a “Form 8-K as filed with the SEC on December 6, 2018,” (see
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`RJN at 6:25-26), neither is mentioned in their motion to dismiss, and defendants fail to
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`otherwise identify the facts therein on which they seek to rely. Accordingly, the Court
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`denies defendants’ request with respect to Exhibits 10 and 24. See Synopsys, Inc. v.
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`InnoGrit, Corp., 2019 WL 4848387, at *6 (N.D. Cal. Oct. 1, 2019) (noting court “may deny
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`a request to take judicial notice of facts that are irrelevant to the . . . motion”) (collecting
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`cases).
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`Next, although defendants request judicial notice of Exhibit 36, “a chart listing
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`Cloudera’s stock prices from April 28, 2017[,] through January 31, 2020, which was
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`obtained from the Yahoo! Finance website” (see RJN at 7:8-9), to establish “Cloudera’s
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`stock price rose in the months following [a] sale” of stock by Olson (see Defs.’ Mot. to
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`Dismiss SAC (“Defs.’ Mot.”) at 15:1-2, Dkt. No. 234), the Court agrees with plaintiffs’
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`argument that “such characterization is subject to reasonable dispute when viewed in
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`context” (see Pls.’ Resp. at 8:5). Accordingly, the Court takes judicial notice of Exhibit 36
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`only to the extent it establishes Cloudera’s historical stock prices. See Lee v. City of Los
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`Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (holding “a court may not take judicial notice
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`of a fact that is ‘subject to reasonable dispute’” (citing Fed. R. Evid. 201(b))); see also
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`ScripsAmerica, Inc. v. Ironridge Glob. LLC, 119 F. Supp. 3d 1213, 1232 (C.D. Cal. 2015)
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`(noting “[b]ecause publically traded companies[’] historical stock prices can be readily
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`ascertained and those prices are not subject to reasonable dispute, courts routinely take
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`judicial notice of them”).5
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`As to the unopposed exhibits, many are documents that are referenced and
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`quoted in the SAC, namely, SEC filings or transcripts of investor conference calls, and
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`plaintiffs do not dispute their authenticity. Accordingly, the Court grants defendants’
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`request as to those exhibits, specifically, Exhibits 1, 3-9, 12-18, 20-23, 25, 27, 29, and 30.
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`5 As to the remaining opposed exhibits, the Court has not relied on them in
`reaching its decision, and, consequently, does not further address them herein.
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`Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 7 of 30
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`Further, as to Exhibit 34, a “Voting and Standstill Agreement dated March 28, 2017[,]
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`between Intel Corporation and Cloudera, Inc.” (see RJN at 6:27-28), the Court grants
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`defendants’ unopposed request for judicial notice of the fact that said agreement
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`“prohibited Intel from increasing its holding above 20%” (see Defs.’ Mot. at 21 n.14), and,
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`as to Exhibit 37, “a copy of [the New York Stock Exchange’s (“NYSE”)] Listed Company
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`Manual sections 303A.01 and 303A.02, as accessed from the NYSE’s website on August
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`3, 2021,” (see RJN at 7:25-8:1), the Court grants defendants’ unopposed request for
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`judicial notice that said manual establishes what “[t]hose rules provide” (see Defs.’ Mot.
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`at 23:10). None of the above-noticed facts in Exhibits 34 and 37 is subject to reasonable
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`dispute. See Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 999 (9th Cir. 2018)
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`(noting “[a] fact is ‘not subject to reasonable dispute’ if it is ‘generally known,’ or ‘can be
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`accurately and readily determined from sources whose accuracy cannot reasonably be
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`questioned’” (citing Fed. R. Evid. 201(b)(1)–(2))).
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`The Court next turns to plaintiffs’ claims. In the SAC, plaintiffs challenge forty-two
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`statements, comprising thirty-two under the Exchange Act (see SAC Ex. A) and ten under
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`the Securities Act (see SAC Ex. B).6 The Court considers first plaintiffs’ Exchange Act
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`claims, then proceeds to their Securities Act claims.
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`A. Count IV – § 10(b) of the Exchange Act and Rule 10b-5
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`Section 10(b) of the Exchange Act makes it unlawful “[t]o use or employ, in
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`connection with the purchase or sale of any security . . . any manipulative or deceptive
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`device or contrivance in contravention of such rules and regulations as the Commission
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`may prescribe.” See 15 U.S.C. § 78j(b). Additionally, Rule 10b–5, promulgated pursuant
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`to § 10(b), makes it unlawful, inter alia, “[t]o make any untrue statement of a material fact
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`or to omit to state a material fact necessary in order to make the statements made, in the
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`light of the circumstances under which they were made, not misleading.” See 17 C.F.R.
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`6 As noted later herein, seven of these statements are challenged under both Acts.
`See infra Section C.1.
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`§ 240.10b–5(b).
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`To plead a claim under § 10(b) and Rule 10b-5, a plaintiff must allege “(1) a
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`material misrepresentation or omission; (2) scienter; (3) a connection between the
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`misrepresentation or omission and the purchase or sale of a security; (4) reliance; (5)
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`economic loss; and (6) loss causation.” See Oregon Pub. Emps. Ret. Fund v. Apollo
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`Grp. Inc., 774 F.3d 598, 603 (9th Cir. 2014). Claims brought under § 10(b) and Rule 10b-
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`5 must also meet the particularity requirements of Rule 9(b) of the Federal Rules of Civil
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`Procedure, see Fed. R. Civ. P. 9(b) (providing, “[i]n alleging fraud . . . , a party must state
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`with particularity the circumstances constituting fraud . . .”); Semegen v. Weidner, 780
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`F.2d 727, 731 (9th Cir. 1985) (applying Rule 9(b) to claim made under § 10(b) and Rule
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`10b-5) and, in addition to alleging Rule 9(b)’s requirements as to the “time, place and
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`nature of the alleged fraudulent activities,” a plaintiff must “plead evidentiary facts”
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`sufficient to establish any allegedly false statement “was untrue or misleading when
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`made,” see Fecht v. Price Co., 70 F.3d 1078, 1082 (9th Cir. 1995) (emphasis omitted)
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`(internal quotations and citations omitted).
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`Further, such plaintiff must meet the heightened pleading requirements of the
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`Private Securities Litigation Reform Act of 1995 (“PSLRA”), which requires the plaintiff to
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`“specify each statement alleged to have been misleading [and] the reason or reasons
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`why the statement is misleading,” see 15 U.S.C. § 78u-4(b)(1), and “state with
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`particularity facts giving rise to a strong inference that the defendant acted with the
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`required state of mind,” see § 78u-4(b)(2).
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`By order filed May 25, 2021, Judge Koh dismissed all forty-one statements alleged
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`in the Consolidated Amended Complaint (“CAC”) to have been made in violation of
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`§ 10(b) and Rule 10b-5, finding they were “either (1) forward-looking statements
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`accompanied by meaningful cautionary language, and therefore immunized under the
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`PSLRA’s Safe Harbor provision; (2) not actionable as statements of corporate optimism;
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`or (3) because [p]laintiffs ha[d] failed to adequately allege that the statements were false
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`when made.” (See Order Granting Mots. to Dismiss Consol. Am. Class Action Compl.
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`Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 9 of 30
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`(“May 25 Order”) at 18:14-17, Dkt. No. 220.)
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`In the SAC, plaintiffs, as noted, now allege Cloudera and the Insider Defendants
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`made thirty-two false and misleading statements in violation of § 10(b) and Rule 10b-5.
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`(See SAC Ex. A.) In the instant motion, defendants argue “none of the challenged
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`statements were false or misleading at the time they were made or [they] are inactionable
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`as a matter of law.” (See Defs.’ Mot. at 5:20-22.) As set forth below, the Court agrees.7
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`1. General Statements of Fact
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`“The PSLRA has exacting requirements for pleading falsity.” See Metzler Inv.
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`GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1070 (9th Cir. 2008) (internal
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`quotation and citation omitted). To satisfy those “exacting requirements,” a plaintiff must
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`plead “specific facts indicating why” the statements at issue were false. See id.
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`Consistent therewith, a plaintiff must allege “specific contemporaneous statements or
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`conditions that demonstrate the . . . false or misleading nature of the statements when
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`made.” See Ronconi v. Larkin, 253 F.3d 423, 432 (9th Cir. 2001) (internal quotation and
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`citation omitted); see also Norfolk Cnty. Ret. Sys. v. Solazyme, Inc., 2016 WL 7475555,
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`at *3 (N.D. Cal. Dec. 29, 2016) (dismissing claim brought under § 10(b) and Rule 10b-5;
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`finding complaint’s “allegations omit[ted] contemporaneous facts that would establish a
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`contradiction between the alleged materially misleading statements and reality”).
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`By the May 25 Order, Judge Koh found plaintiffs had “failed to adequately plead
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`falsity” as to thirty-two of the forty-one statements then alleged to be in violation of
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`§ 10(b) and Rule 10b-5, twenty-seven of which “concern[ed] Cloudera’s cloud product
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`offerings.” (See May 25 Order at 19:14-20.)
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`a. Statements Regarding Cloud Products
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`In the SAC, plaintiffs now allege thirty-two statements were false and misleading in
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`7 In light thereof, the Court does not address herein the question of whether
`plaintiffs have sufficiently alleged facts that raise a “strong inference” that defendants
`acted with scienter, i.e., were “deliberately reckless” or engaged in “conscious
`misconduct.” See DSAM Glob. Value Fund v. Altris Software, Inc., 288 F.3d 385, 388–89
`(9th Cir. 2002).
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`Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 10 of 30
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`violation of § 10(b) and Rule 10b-5, twenty-four of which concern Cloudera’s cloud
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`products. Of those twenty-four statements, twenty were previously dismissed by Judge
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`Koh and four, specifically, Statements 4, 12, 19, and 22, are new. The Court discusses
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`below the twenty-four statements in chronological order, setting forth their content, along
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`with the context, exactly as plaintiffs allege in the SAC, but omitting any emphases added
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`by plaintiffs.
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`April 28, 2017, IPO Prospectus
`Statement 1 (by Cloudera and the Insider Defendants)
`“Building on the approach of web-scale consumer internet companies, we
`have collaborated with the global open source community to innovate and
`deliver our cloud-native platform.”
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`Statement 2 (by Cloudera and the Insider Defendants)
`A key element of its strategy was “extending our original cloud-native
`architecture.”
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`June 8, 2017, Earnings Call
`Statement 3 (by Reilly)
`“Cloudera offers a leading cloud native software platform for machine
`learning and advanced analytics.”8
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`September 7, 2017, Earnings Call
`Statement 4 (by Reilly)
`“Having a cloud-native platform fits nicely with enterprises’ desire to shift
`data and workloads to the cloud . . .”
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`Statement 5 (by Reilly)
`“The second quarter also saw growth in the adoption of Cloudera Altus, our
`Platform-as-a-Service offering that enables data engineering and data
`science workloads to run natively and easily in the public cloud.”
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`September 28, 2017, SPO Prospectus
`Statement 6 (by Cloudera and the Insider Defendants)
`“Building on the approach of web-scale consumer internet companies, we
`have collaborated with the global open source community to innovate and
`deliver our cloud-native platform.”
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`8 Although plaintiffs allege Reilly stated “Cloudera offers the leading cloud native
`software platform for machine learning and advanced analytics” (see SAC ¶ 163
`(emphasis added)), the Court notes the earnings call transcript reflects he stated
`“Cloudera offers a leading cloud native software platform . . .” (see Defs.’ Mot. Ex. 3 at 5
`(emphasis added)), and, accordingly, considers the statement as actually made.
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`Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 11 of 30
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`Statement 7 (by Cloudera and the Insider Defendants)
`A key element of its strategy included “extending our original cloud-native
`architecture . . . .”
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`Statement 8a (by Cloudera and the Insider Defendants)
`“Cloudera Altus is our platform-as-a-service (PaaS) offering. Altus is a
`cloud service . . . .”
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`December 7, 2017, Earnings Call
`Statement 9 (by Reilly)
`Defendant Reilly touted the Company’s “cloud-native data platform[.]”9
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`Statement 10 (by Olson)
`“Cloudera Altus Analytic DB is the first data warehouse cloud service that
`brings the warehouse to the data through a unique cloud-scale architecture
`that eliminates complex and costly data movement.”
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`April 3, 2018, Earnings Call
`Statement 11 (by Olson)
`The Company’s Altus offering “delivers the speed, convenience, elasticity
`and ease-of-use expected in native public cloud services.”
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`Statement 12 (by Olson)
`“Altus is uniquely multicloud[.]”
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`April 4, 2018, Annual Report
`Statement 8b (by Cloudera and the Insider Defendants)
`“Altus is a cloud service that . . . enable[s] customers to address a new set
`of elastic and transient workloads that would otherwise be impractical to run
`in the datacenter[.]”
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`Statement 17a (by Cloudera and the Insider Defendants)
`The “Key elements” of Cloudera's strategy include that the Company's
`“original architecture was designed for the cloud. Our software platform
`runs natively on public cloud infrastructure . . .”
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`Statement 18a (by Cloudera and the Insider Defendants)
`Cloudera's offerings provided “[c]loud and on-premises deployment at scale
`and across hybrid cloud environments[.]”
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`June 6, 2018, Earnings Call
`Statement 19 (by Cloudera and Reilly)
`Defendant Reilly again boasted that a client was “taking advantage of our
`cloud-native architecture to improve agility to respond to ever-changing data
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`9 The Court notes plaintiffs omit the word “data” from Statement 9 (see Defs.’ Mot.
`Ex. 8 at 5), which the Court has included herein.
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`Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 12 of 30
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`volume and business needs.”
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`September 5, 2018, Press Release
`Statement 20 (by Reilly and Frankola)
`Cloudera had introduced Cloudera Data Warehouse which it represented as
`“a modern data warehouse for self-service analytics, built with a hybrid
`cloud-native architecture that handles 50 PB data workloads and enables
`hybrid compute, storage, and control for workload portability across public
`clouds and enterprise data centers.”
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`September 5, 2018, Earnings Call
`Statement 21 (by Cloudera and Olson)
`“Cloudera Data Warehouse is a modern data warehouse for self-service
`analytics. Let me define modern data warehouse and why it's important in
`this world of exploding data and the Internet of Things. It's a cloud-native
`architecture.”
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`Statement 22 (by Cloudera and Olson)
`“We operate natively on those stores.”
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`Statement 23 (by Cloudera and Reilly)
`“With a modern architecture for on-premises deployments and being cloud-
`native for public cloud infrastructure and Platform-as-a-Service
`implementations, we believe we have the right set of solutions for the next
`phase of the data warehouse industry.”
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`October 3, 2018, Merger Conference Call
`Statement 24 (by Cloudera and Reilly)
`“Our underlying platform, both what Hortonworks is delivering and ours is
`cloud-native technology, and it flourishes in cloud compute environments so
`we're very excited about accelerating our capabilities there.”
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`October 3, 2018, Merger Registration Statement (or incorporated
`therein)
`Statement 8c (by Cloudera and the Insider Defendants)
`Same as Statement 8b
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`Statement 17b (by Cloudera and the Insider Defendants)
`Same as Statement 17a
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`Statement 18b (by Cloudera and the Insider Defendants)
`Same as Statement 18a
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`Statement 25 (by Cloudera and the Insider Defendants)
`Cloudera could “leverage the latest advances in infrastructure including the
`public cloud for ‘big data’ applications.”
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`Statement 29 (by Cloudera and the Insider Defendants)
`The Company’s “underlying platform” consisting of “cloud-native technology
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`Case 3:19-cv-03221-MMC Document 262 Filed 10/25/22 Page 13 of 30
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`. . . flourishes in cloud compute environments so we’re very excited.”
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`December 5, 2018, Earnings Call
`Statement 30 (by Cloudera and Reilly)
`“Customers are coming to our platform, all of them are evaluating cloud, and
`it’s our hybrid cloud capabilities are winning . . . And so it is – we are
`uniquely positioned to run where our customers want to run and give them a
`lot of flexibility.”
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`December 6, 2018, Barclays Conference
`Statement 31 (by Cloudera and Reilly)
`“. . . We're called Cloudera because when we started, we started with the
`original Hadoop project, we offered it as a cloud service on Amazon Web
`Services in 2008 and software, okay? That's why we're called Cloudera . . .
`The market has now moved to us because we offer a hybrid capability, right,
`so we run on-prem, bare metal, we run increasingly on private cloud, which
`we think customers are really driving and we're hybrid and multi-cloud,
`okay? . . . . And we already have hybrid capabilities that they have to
`develop, they've never really innovated in their space. And then, we're
`going to have multi-cloud. So we're taking it to them, momentum has
`shifted in our favor and increasingly will go that way.”
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`(See SAC Ex. A at 1-28, 39-59, 76-83.)
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`Plaintiffs allege the above-referenced twenty-four statements were false and
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`misleading when made because, at the time, Cloudera’s “products were not ‘cloud-
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`native’” (see, e.g., SAC Ex. A at 1) and “were not ‘cloud-native architecture’” (see, e.g.,
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`SAC Ex. A at 15). Plaintiffs allege “Cloudera did not possess a ‘cloud-native’ offering
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`until the Company released CDP for the public cloud in September 2019 and for the
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`private cloud in August 2020.” (See SAC ¶ 18.)
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`By the May 25 Order, Judge Koh dismissed plaintiffs’ claims to the extent based
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`on the twenty-seven statements that concerned Cloudera’s cloud products as alleged in
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`the CAC, finding its “allegations . . . deficient because [p]laintiffs d[id] not explain what it
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`meant to have ‘cloud-native’ products or ‘cloud-native architecture’ at the time Cloudera
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`Defendants[10] made the challenged statements,” and “[w]ithout a contemporaneous
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`definition or explanation for what ‘cloud-native’ technology meant when Cloudera
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`10 In said order, Judge Koh refers to Cloudera, along with the Insider Defendants
`and Director Defendants, collectively, as “Cloudera Defendants.” (See May 25 Order at
`2:20-21.)
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`Defendants made the challenged statements, the Court ha[d] no basis to find that
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`[p]laintiffs ha[d] adequately pled that Cloudera Defendants’ statements were false.” (See
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`May 25 Order at 20:26-21:6.) In particular, Judge Koh found plaintiffs’ reliance on a
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`“post-Class Period definition of ‘cloud native’ or ‘cloud architecture’” taken from “an article
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`published by Cloudera’s Chief Product Officer Arun Murthy [(“Murthy”)] on February 6,
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`2020, seven months after the c