Case 6:21-cv-06418-EAW Document 202 Filed 09/27/22 Page 1 of 34
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF NEW YORK
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`In re EASTMAN KODAK COMPANY
`SECURITIES LITIGATION.
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`DECISION AND ORDER
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` 6:21-CV-6418 EAW
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`INTRODUCTION
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`This action arises out of the events surrounding a Letter of Interest (“LOI”) entered
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`into between defendant Eastman Kodak Company (“Kodak”) and the United States
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`International Development Finance Corporation (“DFC”) in July of 2020, discussing a
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`contemplated loan of $765 million from DFC to Kodak to support the conversion of
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`Kodak’s manufacturing facilities to produce pharmaceutical products. It consists of two
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`matters transferred to this District and consolidated for all purposes into a single action
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`denominated “In re Eastman Kodak Company Securities Litigation.” (Dkt. 89).
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`In the consolidated class action complaint, Lead Plaintiffs Les Investissements Kiz
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`Inc. (“Kiz, Inc.”) and UAT Trading Service, Inc. (“UAT”) (collectively “Plaintiffs”) allege
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`violations of federal securities laws by defendants Kodak, Kodak’s Executive Chairman
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`and CEO James V. Continenza (“Continenza”), CFO David Bullwinkle (“Bullwinkle”),
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`General Counsel Roger W. Byrd (“Byrd”), director Philippe D. Katz (“Katz”), director
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`Richard “Todd” Bradley (“Bradley”), director Jason New (“New”), director Jeffrey
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`Engelberg (“Engelberg”), director William G. Parrett (“Parrett”), and director George
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`Karfunkel (“Karfunkel”) (collectively “Defendants”). (Dkt. 116).
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`Case 6:21-cv-06418-EAW Document 202 Filed 09/27/22 Page 2 of 34
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`Presently before the Court is a joint motion filed by Defendants seeking dismissal
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`of the consolidated class action complaint for failure to state a claim upon which relief may
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`be granted. (Dkt. 159). For the reasons that follow, Defendants’ motion is granted in its
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`entirety.
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`I.
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`Factual Background
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`BACKGROUND
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`The following facts are taken from the consolidated class action complaint. (Dkt.
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`116). As is required at this stage of the proceedings, the Court treats Plaintiffs’ factual
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`allegations as true.
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`Plaintiffs commenced this putative federal securities class action against Kodak, an
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`internationally recognized company known primarily for its photography and film
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`manufacturing business, on behalf of certain purchasers of Kodak securities. (Id. at ¶ 43).
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`Following bankruptcy proceedings in 2012, Kodak began expanding its business by
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`focusing on commercial products and digital printing. (Id.).
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`In the spring of 2020, during the emergence of the COVID-19 pandemic, the United
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`States government began exploring the possibility of obtaining assistance from domestic
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`companies qualified to provide products and services to help fight COVID-19. (Id. at ¶ 45).
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`Specifically, on May 14, 2020, then-President Donald Trump issued an executive order
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`which permitted the DFC to issue loans to domestic companies capable of providing
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`strategic resources responsive to the COVID-19 outbreak. (Id. at 46).
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`In response to the White House announcement, Kodak dedicated resources to
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`explore its ability to produce chemical ingredients used in the manufacture of drugs
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`designed to combat COVID-19, including hydroxychloroquine. (Id. at ¶ 47). The prospect
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`of a lucrative government loan caused Kodak’s stock price to rise from the $2 range, where
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`it sat in the spring of 2020. (Id.).
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`Kodak designated the new project with the code name “Project Tiger” to maintain
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`its confidentiality. (Id. at ¶ 49). Individuals on the Project Tiger clearance list included
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`Continenza, Byrd, and three dozen Kodak employees. (Id.). On June 18, 2020, Kodak
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`emailed all Project Tiger team members informing them of their status on the clearance list
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`and warning them that knowledge of the project could be considered material non-public
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`information (“MNPI”). (Id. at ¶¶ 52, 53). The internal memo warned members against
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`trading in Kodak stock while in possession of MNPI and directed them to pre-clear any
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`trade transaction with Byrd. (Id. at ¶ 53).
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`On June 23, 2020, Continenza purchased 46,737 shares of Kodak stock at an
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`average price of $2.22 a share and Katz purchased 5,000 shares at the same average price.
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`(Id. at ¶ 54). The purchases by Continenza and Katz occurred on the last day of an open
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`window trading period which permitted Kodak insiders to transact in Kodak stock so long
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`as they were not in possession of MNPI or in violation of Kodak’s insider trading policy.
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`(Id. at ¶ 54). Three days later on June 26, 2020, Kodak submitted its loan package to the
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`DFC. (Id. at ¶ 55).
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`On July 8, 2020, Kodak was informed that DFC representatives wanted to conduct
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`a site visit at Kodak headquarters. (Id. at ¶ 56). On July 22, 2020, DFC officials toured
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`the Kodak facility and met with Kodak executives, including Continenza and Bullwinkle.
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`(Id. at ¶ 57). During the visit, Kodak learned that DFC would enter into an LOI with Kodak
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`regarding the potential loan and that the LOI would be announced in a press release on July
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`28, 2020. (Id.). Before the announcement, DFC sent Kodak a draft term sheet identifying
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`the terms of the $765 million loan but making clear it was for discussion purposes only.
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`(Id. at ¶ 58). Correspondence between Kodak and DFC explicitly noted that the LOI was
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`subject to a comprehensive review and approval process requiring due diligence. (Id. at ¶
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`59). The LOI also expressly stated that DFC would not enter into any commitments until
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`the process was completed satisfactorily and that the letter was not and could not be deemed
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`an agreement or commitment by DFC to provide support for the project. (Id. at ¶ 60).
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`The day before the LOI was scheduled to be announced, Continenza and Byrd
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`convened a meeting of Kodak’s Board of Directors and its Compensation, Nominating and
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`Governance Committee1 (“CNG Committee”) to notify them of the LOI prior to the DFC
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`announcement and to seek approval for granting “spring-loaded” stock options to certain
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`members of Kodak’s senior management, including Continenza, Bullwinkle, and Byrd.
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`(Id. at ¶ 62). The options granted these Defendants the right to purchase Kodak shares at
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`a pre-arranged strike price that would be worth millions if the stock price surged. (Id. at
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`¶ 63).
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`On the same day, July 27, 2020, Kodak leaked information to the press concerning
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`the July 28th announcement. (Id. at ¶ 67). Just after noon on that day, local news reporters
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`in Rochester, New York, began tweeting information about a Kodak initiative to
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`manufacture products to help create medicines used to fight COVID-19. (Id. at ¶ 68). One
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`The CNG Committee was composed of Bradley, Katz, and New.
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`local television news reporter tweeted, “Kodak tells @13WHAM we should expect an
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`announcement soon with senior U.S. govt officials regarding a new manufacturing
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`initiative that ‘could change the course of history for Rochester and the American people.’
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`No more details released but wow, that’s quite a promise.” (Id. (citation omitted)).
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`Following the leak, the price of Kodak’s shares increased and closed at $2.62 a
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`share, but opened the following morning at $9.63 a share, representing a nearly 370%
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`overnight increase. (Id. at ¶ 70). On July 28, 2020, at 6:00 a.m. and before the market
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`opened, the Wall Street Journal published an article which stated that Kodak was awarded
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`a $765 million government loan to expedite domestic production of drugs needed to combat
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`the COVID-19 pandemic. (Id. at ¶ 71). Continenza was quoted in the article as indicating
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`that Kodak would produce key starter materials and active pharmaceutical ingredients and
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`“expects the loan to create around 300 jobs in Rochester, and 30 to 50 in Minnesota.” (Id.).
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`At approximately 9:00 a.m. on July 28, 2020, just before the market opened, the
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`DFC issued a statement confirming the contemplated deal for the $765 million loan to
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`Kodak. (Id. at ¶ 73). The statement quoted Continenza as stating, “[b]y leveraging our
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`vast infrastructure, deep expertise in chemicals manufacturing, and heritage of innovation
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`and quality, Kodak will play a critical role in the return of a reliable American
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`pharmaceutical supply chain.” (Id. ). Kodak’s shares rose to an intra-day high of $11.80
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`per share and closed at $7.94 per share. (Id. at ¶ 74).
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`The following day, Continenza appeared on several interviews with financial news
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`media. (Id. at ¶ 78). In an interview with CNBC, Continenza was asked if this was a “done
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`deal,” and Continenza replied, “[w]ell, we feel very comfortable that we can bank on it,”
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`and “we feel very comfortable we’re gonna get to the end game or we wouldn’t be probably
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`sitting here.” (Id.). Later that morning, he appeared on Fox Business and stated, “we will
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`supply about 25% of the small molecule KSMs and APIs—which is key starter materials,
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`or active pharmaceutical ingredients, you know, for the US supply chain, with other
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`partners.” (Id. at ¶ 79). Finally, he appeared on Yahoo News and was asked about Kodak’s
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`plans, responding in part that: “we will create 300 jobs, about 1200 indirect jobs in upstate
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`New York area. It will take about 3 ½ years roughly to build it, but there will be phases
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`right. It will come out and we will produce more, and it will come out and we will produce
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`more. It will come out and it will go to continuous. And that’s what will happen. So it
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`will be phased in for the next 3 ½ years but for sure in the first year and a half will just be
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`very small batches.” (Id. at ¶ 80). On July 29, 2020, Kodak’s shares rose to an intra-day
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`high of $60 per share and closed at $33.20 per share, or more than 318% higher than the
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`closing price the previous day. (Id. at ¶ 81).
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`Also on July 29, 2020, Defendants disclosed in Form 4 SEC filings that Continenza,
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`Bullwinkle, and other executives had been granted options on July 27th. (Id. at ¶ 84). After
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`the market closed that day, the Wall Street Journal published an article entitled, “Tweets
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`and Articles Sent Kodak Shares Surging Before Official Announcement.” (Id. at ¶ 85).
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`On July 30, 2020, Kodak’s shares fell by $3.37 a share to close at $29.83 per share. (Id. at
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`¶ 86).
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`In a communication between Kodak and DFC on July 30, 2020, that discussed
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`questions from the media about the loan, DFC’s Chief Communications Office stated,
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`“[t]his could be a good opportunity to remind [the inquiring reporter] that the loan is not
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`finalized/approved. We signed a letter of interest and the loan is still going through the
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`DFC’s approval process.” (Id. at ¶ 87 (alterations in original)). A July 31, 2020 New York
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`Times article was entitled, “Kodak C.E.O. Got Stock Options Day Before News of Loan
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`Sent Stock Soaring.” (Id. at ¶ 88). The same day, the Wall Street Journal published a story
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`entitled, “Kodak’s Stock Surge Turned Insiders’ Options into Potential Windfall.” (Id. at
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`¶ 89). A Kodak spokesperson responded that the loan was not guaranteed and no deal had
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`been finalized. (Id.). Kodak shares declined an additional $7.98 per share to close at
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`$21.85 per share. (Id. at ¶ 90).
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`Over the next several days, additional news sources reported on the options. (Id. at
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`¶ 91). Kodak’s shares continued to fall and closed at $14.91 per share on August 3, 2020.
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`(Id. at ¶ 92). On August 4, 2020, media outlets reported that United States Senator
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`Elizabeth Warren had asked U.S. regulators to examine possible insider trading occurring
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`prior to the July 28, 2020 announcement of the DFC loan. (Id. at ¶ 93). It was also reported
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`on the morning of August 4, 2020, that Kodak’s disclosure of the loan and stock surge were
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`being examined by the SEC. (Id.).
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`On August 5, 2020, the Wall Street Journal published an article that indicated that
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`several congressional committees were seeking records from Kodak and the DFC. (Id. at
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`¶ 94). On August 7, 2020, Kodak announced that it would conduct an “internal review” of
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`the facts surrounding the disclosure of the loan and the granting of the options. (Id. at ¶
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`95). Kodak appointed a special committee of independent directors, including New and
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`Parrett, to oversee the review, which was conducted by Kodak’s outside counsel. (Id.).
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`Later the same day, the DFC issued a tweet concerning the loan and indicating that
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`“[r]ecent allegations of wrongdoing raise serious concerns,” and that it would not “proceed
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`any further unless these allegations are cleared.” (Id. at ¶ 96). On August 10, 2020,
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`Kodak’s shares fell by $4.15 per share to close at $10.73 per share. (Id. at ¶ 98).
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`On August 11, 2020, the Wall Street Journal published an article that indicated that
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`an SEC filing from the previous week documented that Karfunkel had made a gift of three
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`million shares to a congregation in Brooklyn, New York. (Id. at ¶ 99). It was later reported
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`that Karfunkel served as one of three officers of the charitable foundation that was the
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`recipient of the donation and Karfunkel never obtained pre-approval, as required by Kodak
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`company policy, to make a gift of Kodak shares. (Id. at ¶ 100). Kodak’s share price closed
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`on August 11 at $10.01, down 6.7% from the previous day. (Id.). After the market closed
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`that day, Kodak held a conference call during which Continenza referred to the loan as a
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`“potential loan” and indicated support for the DFC decision to await clarification before
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`moving forward. (Id. at ¶ 101). Kodak’s May 17, 2021 filing with the SEC indicates that
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`the LOI has never been formally terminated, but given the time elapsed, Kodak is operating
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`on the basis that the loan will not proceed. (Id. at ¶ 101 n. 16).
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`The consolidated class action complaint alleges three causes of action: first, against
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`Kodak and Continenza for violation of § 10(b) of the Securities Exchange Act of 1934 (the
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`“Exchange Act”) and Rule 10b-5(b) promulgated thereunder (id. at ¶¶ 189-193); second,
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`against all defendants for violations of § 10(b) of the Exchange Act and Rule 10b-5(a) and
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`(c) promulgated thereunder (id. at ¶¶ 194-202); and third, against the individual defendants
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`for violation of § 20(a) of the Exchange Act (id. at ¶¶ 203-211). The consolidated class
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`action complaint alleges a class period of July 27, 2020, through August 11, 2020, and the
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`claims are asserted on behalf of all persons or entities that purchased or sold publicly traded
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`securities of Kodak during that period. (Id. at ¶ 184).
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`II.
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`Procedural Background
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`Tang v. Eastman Kodak Co., Civil Action No. 6:21-cv-6418, was filed in the United
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`States District Court for the District of New Jersey on August 13, 2020. (Dkt. 1). On
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`August 26, 2020, McAdams v. Eastman Kodak Co., Civil Action No. 6:21-cv-6449, was
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`filed in the United States District Court for the Southern District of New York. Both
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`matters were transferred to this District on May 28, 2021, and June 15, 2021, respectively.
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`(Dkt. 63). By Stipulation and Order entered June 22, 2021, the matters were consolidated
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`for all purposes into one action and McAdams was administratively terminated. (Dkt. 89).
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`On August 2, 2021, the Court granted a motion by Kiz Inc. and UAT to be appointed
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`as lead plaintiffs and denied several other parties’ motions for the same relief. (Dkt. 92).
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`The Court directed that deadlines for subsequent pleadings and motions would be governed
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`by the Stipulation and Order entered on September 14, 2020. (Dkt. 7). On October 1,
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`2021, Plaintiffs filed their consolidated class action complaint. (Dkt. 116). The parties
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`thereafter agreed to and the Court approved an extension of time for Defendants to respond
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`to the consolidated class action complaint. (Dkt. 125).
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`On December 14, 2021, Defendants filed the instant joint motion to dismiss the
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`consolidated class action complaint for failure to state a claim. (Dkt. 159). A joint
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`memorandum of law was filed on behalf of all defendants (Dkt. 159-1) and separate
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`supplemental memoranda on behalf of certain outside directors were also filed (Dkt. 160;
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`Dkt. 161). On February 28, 2022, Plaintiffs filed their opposition (Dkt. 173), and on April
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`6, 2022, Defendants filed their replies (Dkt. 177; Dkt. 178; Dkt. 179). The Court heard
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`oral argument on August 3, 2022, and reserved decision. (Dkt. 196).
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`DISCUSSION
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`Legal Standard
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`“In considering a motion to dismiss for failure to state a claim pursuant to Rule
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`I.
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`12(b)(6), a district court may consider the facts alleged in the complaint, documents
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`attached to the complaint as exhibits, and documents incorporated by reference in the
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`complaint.” DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010); Hawaii
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`Structural Ironworkers Pension Tr. Fund v. AMC Entm’t Holdings, Inc., 422 F. Supp. 3d
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`821, 831 (S.D.N.Y. 2019) (noting that on a motion to dismiss, the court can consider “(1)
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`documents attached to or incorporated by reference in the complaint, (2) documents
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`integral to and relied upon in the complaint, even if not attached or incorporated by
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`reference, (3) public disclosure documents required by law to be, and that have been, filed
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`with the SEC, and (4) facts of which judicial notice properly may be taken.”). A court
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`should consider the motion by “accepting all factual allegations as true and drawing all
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`reasonable inferences in favor of the plaintiff.” Trs. of Upstate N.Y. Eng’rs Pension Fund
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`v. Ivy Asset Mgmt., 843 F.3d 561, 566 (2d Cir. 2016). Generally, to withstand dismissal, a
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`claimant must set forth “enough facts to state a claim to relief that is plausible on its face.”
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`Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility
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`when the plaintiff pleads factual content that allows the court to draw the reasonable
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`inference that the defendant is liable for the misconduct alleged.” Turkmen v. Ashcroft,
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`589 F.3d 542, 546 (2d Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
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`“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
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`detailed factual allegations, a plaintiff’s obligation to provide the grounds of his
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`entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation
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`of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal
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`quotations and citations omitted). “To state a plausible claim, the complaint’s ‘[f]actual
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`allegations must be enough to raise a right to relief above the speculative level.’” Nielsen
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`v. AECOM Tech. Corp., 762 F.3d 214, 218 (2d Cir. 2014) (quoting Twombly, 550 U.S. at
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`555).
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`II.
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`Private Securities Litigation Reform Act of 1995 (“PSLRA”) and Rule 9(b)
`Heightened Pleading Standard
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`The PSLRA, codified in part at 15 U.S.C. § 78u-4(b), was passed “to provide
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`uniform standards for class actions and other suits alleging fraud in the securities market.”
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`Lander v. Hartford Life & Annuity Ins. Co., 251 F.3d 101, 107 (2d Cir. 2001). Securities
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`fraud allegations are also subject to the heightened pleading requirements of Rule 9(b) of
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`the Federal Rules of Civil Procedure. In re Ideanomics, Inc., Sec. Litig., No. 20 CIV. 4944
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`(GBD), 2022 WL 784812, at *6 (S.D.N.Y. Mar. 15, 2022) (“Allegations of fraud, including
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`securities fraud, must satisfy the heightened pleading requirements of Federal Rule of Civil
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`Procedure 9(b) and the Private Securities Litigation Reform Act[.]”). To satisfy the
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`pleading requirements of Rule 9(b), a plaintiff “must state with particularity the
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`circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). In the securities
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`context, “[a] plaintiff relying on false or misleading public statements must identify the
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`statements in question, identify the speaker, state when they were issued, and explain why
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`the statements were fraudulent.” Sec. & Exch. Comm’n v. MiMedx Grp., Inc., No. 19 CIV.
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`10927 (NRB), 2022 WL 902784, at *5 (S.D.N.Y. Mar. 28, 2022) (citing Shields v. Citytrust
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`Bancorp., Inc., 25 F.3d 1124, 1128 (2d Cir. 1994)). “Additionally, the PSLRA expands
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`upon Rule 9(b) by requiring the plaintiff to ‘(1) specify each statement alleged to have been
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`misleading [and] the reason or reasons why the statement is misleading; and (2) state with
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`particularity facts giving rise to a strong inference that the defendant acted with the required
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`state of mind.’” In re Ideanomics, Inc., Sec. Litig., 2022 WL 784812, at *6 (quoting 15
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`U.S.C. § 78u-4(b)(2)).
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`III. Defendants’ Motion to Dismiss
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`A.
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`Count 1—Section 10(b) and Rule 10b-5(b) Claim
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`Plaintiffs’ first claim is asserted against Kodak and Continenza pursuant to Section
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`10(b) of the Exchange Act and Rule 10b-5(b).
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`Under Rule 10b-5(b), it is “unlawful for any person, directly or indirectly,
`. . . [t]o 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 light of the
`circumstances under which they were made, not misleading” in connection
`with the purchase or sale of securities. To support a claim for material
`misrepresentation under that rule, a plaintiff must plead: (1) a material
`misrepresentation or omission, (2) scienter, (3) a connection between the
`misrepresentation or omission and the purchase or sale of a security, (4)
`reliance on the misrepresentation or omission, (5) economic loss, and (6) loss
`causation. The first two elements must be pled with heightened specificity
`pursuant to [the PSLRA and Rule 9(b)].
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`Noto v. 22nd Century Grp., Inc., 35 F.4th 95, 102-03 (2d Cir. 2022) (alteration in original
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`and quoting 17 C.F.R. § 240.10b-5); see In re Garrett Motion Inc. Sec. Litig., No. 20 CIV.
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`7992 (JPC), 2022 WL 976269, at *11 (S.D.N.Y. Mar. 31, 2022) (“To state a claim under
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`section 10(b) and Rule 10b-5, a plaintiff must allege (1) a material misrepresentation or
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`omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or
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`omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or
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`omission; (5) economic loss; and (6) loss causation. Because this type of claim alleges
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`securities fraud, it must meet the heightened pleading standards under Rule 9(b) and the
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`PSLRA.” (quotation and citation omitted)); Rice as Tr. of Richard E. & Melinda Rice
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`Revocable Fam. Tr. 5/9/90 v. Intercept Pharms., Inc., No. 21-CV-0036 (LJL), 2022 WL
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`837114, at *6 (S.D.N.Y. Mar. 21, 2022) (“To succeed on their Section 10(b) and Rule 10b-
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`5 claim, Plaintiffs must plead—and ultimately prove—(1) a material misrepresentation or
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`omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or
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`omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or
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`omission; (5) economic loss; and (6) loss causation.” (quotation and citation omitted)).
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`Defendants argue that Plaintiffs have failed to adequately allege that Defendants
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`made misstatements or omissions of material fact in connection with the DFC loan. The
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`Court agrees, for the reasons that follow.
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`“Rule 10b-5 expressly requires an actual statement, one that is either ‘untrue’
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`outright or ‘misleading’ by virtue of what it omits to state.” Bos. Ret. Sys. v. Alexion
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`Pharms., Inc., 556 F. Supp. 3d 100, 119 (D. Conn. 2021) (quoting In re Vivendi, S.A. Sec.
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`Litig., 838 F.3d 223, 239 (2d Cir. 2016)); see also In re Weight Watchers Int’l Inc. Sec.
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`Litig., 504 F. Supp. 3d 224, 247 (S.D.N.Y. 2020) (“A violation of securities laws premised
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`on misstatements cannot occur unless an alleged material misstatement was false at the
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`Case 6:21-cv-06418-EAW Document 202 Filed 09/27/22 Page 14 of 34
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`time it was made.”); Hart v. Tri-State Consumer, Inc., No. 21-CV-1738 (VEC), 2021 WL
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`5180923, at *9 (S.D.N.Y. Nov. 6, 2021) (“To plausibly allege a misstatement or omission
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`of material fact, the plaintiff must plead that a statement of fact by defendants was false or
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`misleading at the time the statement was made.”).
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`In order to be considered material, “there must be a substantial likelihood that the
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`disclosure of the omitted fact would have been viewed by the reasonable investor as having
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`significantly altered the ‘total mix’ of information made available.” Bos. Ret. Sys., 556 F.
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`Supp. 3d at 119 (quoting Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988)); ECA, Loc.
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`134 IBEW Joint Pension Tr. of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 197 (2d
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`Cir. 2009) (“The materiality of a misstatement depends on whether ‘there is a substantial
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`likelihood that a reasonable shareholder would consider it important in deciding how to
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`[act].’” (alteration in original and quoting Basic Inc., 485 U.S. at 231-32)).
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`In contrast to a statement of existing fact, an expression of an opinion, expectation,
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`or intention may not be actionable under Rule 10b-5 unless certain conditions are met. See
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`In re Dynagas LNG Partners LP Sec. Litig., 504 F. Supp. 3d 289, 315 (S.D.N.Y. 2020).
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`Specifically, “[a]n opinion statement is not actionable unless the speaker disbelieved the
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`statement at the time it was made, the opinion contained ‘one or more embedded factual
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`statements that can be proven false,’ or the opinion ‘implied facts that can be proven
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`false.’” In re Mindbody, Inc. Sec. Litig., 489 F. Supp. 3d 188, 202 (S.D.N.Y. 2020)
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`(quoting Abramson v. Newlink Genetics Corp., 965 F.3d 165, 173, 175 (2d Cir. 2020)); see
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`also In re Wells Fargo & Co. Sec. Litig., No. 1:20-CV-04494-GHW, 2021 WL 4482102,
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`at *10 (S.D.N.Y. Sept. 30, 2021) (“[O]pinions, although sincerely held and otherwise true
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`Case 6:21-cv-06418-EAW Document 202 Filed 09/27/22 Page 15 of 34
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`as a matter of fact, may nonetheless be actionable if the speaker omits information whose
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`omission makes the statement misleading to a reasonable investor.” (citation omitted)); In
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`re AT&T/DirecTV Now Sec. Litig., 480 F. Supp. 3d 507, 524-25 (S.D.N.Y. 2020) (“The
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`Second Circuit has observed that opinion statements can be actionable if they contain one
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`or more embedded factual statements that can be proven false,” or “impl[y] facts or the
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`absence of contrary facts that are capable of verification.” (original alteration, quotations
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`and citations omitted)). “Statements of opinion must be examined in the context in which
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`they arise.” In re Wells Fargo & Co. Sec. Litig., 2021 WL 4482102, at *9.
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`Similarly, mere statements of puffery are not actionable. Rombach v. Chang, 355
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`F.3d 164, 174 (2d Cir. 2004) (“[E]xpressions of puffery and corporate optimism do not
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`give rise to securities violations.”). “Puffery encompasses ‘statements [that] are too
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`general to cause a reasonable investor to rely upon them’ . . . and thus ‘cannot have misled
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`a reasonable investor.’” Oak Hill Mgmt., Inc. v. Edmund & Wheeler, Inc., No. 2:20-CV-
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`124, 2021 WL 3855669, at *11 (D. Vt. Aug. 27, 2021) (alterations in original and quoting
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`In re Vivendi, S.A. Sec. Litig., 838 F.3d at 245). “[M]ere[] generalizations regarding
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`[Defendants’] business practices . . . are ‘precisely the type of “puffery” that [the Second
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`Circuit] and other circuits have consistently held to be inactionable.’” City of Brockton
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`Ret. Sys. v. Avon Prods., Inc., No. 11 CIV. 4665 PGG, 2014 WL 4832321, at *15 (S.D.N.Y.
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`Sept. 29, 2014) (alterations in original and quoting ECA & Local 134 IBEW Joint Pension
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`Tr. of Chi., 553 F.3d at 206).
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`Separately, the PSLRA provides a safe harbor for forward-looking statements.
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`“Under the PSLRA’s safe harbor, a defendant ‘shall not be liable with respect to any
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`Case 6:21-cv-06418-EAW Document 202 Filed 09/27/22 Page 16 of 34
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`forward-looking statement’ if (1) the forward-looking statement is ‘identified’ as such and
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`‘accompanied by meaningful cautionary statements,’ or (2) the forward-looking statement
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`is ‘immaterial,’ or (3) the plaintiff ‘fails to prove that the forward-looking statement . . . if
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`made by a natural person, was made with actual knowledge by that person that the
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`statement was false or misleading.’” In re Weight Watchers Int’l Inc. Sec. Litig., 504 F.
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`Supp. 3d at 253 (alteration in original and quoting 15 U.S.C. § 78u-5(c)(1)(A)–(B)). “For
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`a forward-looking statement to be actionable, the plaintiff must show that the statement
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`was made with actual knowledge of its falsity by the speaker.” Id. (alteration, quotation,
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`and citation omitted). “Generic, indefinite statements of corporate optimism typically are
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`not actionable because reasonable investors do not place substantial reliance on
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`generalizations regarding a company’s health or the strength of a company’s product.” In
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`re AT&T/DirecTV Now Sec. Litig., 480 F. Supp. 3d at 523 (quotation and citation omitted).
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`Applying these legal principles, the Court agrees with Defendants that none of the
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`specific statements allegedly made by Kodak and Continenza are actionable under § 10(b)
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`and Rule 10b-5(b). Plaintiffs have identified three sources of affirmative statements
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`forming the basis of their claim: the July 27, 2020 press release Kodak leaked to the media;
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`the July 28, 2020 Wall Street Journal article; and Continenza’s July 29, 2020 interviews
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`with CNBC, Fox News, and Yahoo Finance. Turning first to the leaked press release from
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`July 27, 2020, in which an unidentified Kodak spokesperson stated that a new
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`manufacturing initiative would soon be announced that “could change the course of history
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`for Rochester and the American people” (Dkt. 116 at ¶¶ 68-69), this statement is a classic
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`example of non-actionable puffery and/or corporate optimism. See, e.g., In re Bristol-
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`Myers Squibb Sec. Litig., 312 F. Supp. 2d 549, 559 (S.D.N.Y. 2004) (statement that new
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`drug “potentially represent[ed] one of the most important advances in cancer medicine”
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`was not actionable because it was “non-actionable opinion, personal or corporate optimism
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`and puffery”). Moreover, while “puffery may be actionable if the declarant knew the
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`contrary to be true,” In re Peabody Energy Corp. Sec. Litig., No. 20-CV-8024 (PKC), 2022
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`WL 671222, at *13 (S.D.N.Y. Mar. 7, 2022), there are no allegations in the consolidated
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`class action complaint suggesting that the unidentified Kodak spokesperson who made the
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`statement did not genuinely believe that the new manufacturing initiative contemplated by
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`the LOI would have a substantial impact in the fight against COVID-19.
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`Plaintiffs argue in a footnote that this statement “cannot be considered mere
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`puffery” in context “because, at the time, Kodak was foundering as a company and no
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`longer had a core set of products or services on which it could rely for revenue.” (Dkt. 173
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`at 52 n. 22). As an initial matter, Plaintiffs’ relegation of this argument to a footnote
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`relieves the Court of any burden to consider it. See Stensrud v. Rochester Genesee Reg’l
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`Transportation Auth., 507 F. Supp. 3d 444, 459 (W.D.N.Y. 2020) (collecting cases).
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`Moreover, the case on which Plaintiffs rely, Gross v. GFI Grp., Inc., 162 F. Supp. 3d 263
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`(S.D.N.Y. 2016), is inapposite. There, the corporation’s executive chairman stated that a
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`proposed merger was a “singular and unique opportunity” for shareholders to “optimize