Case: 21-10865 Document: 67-2 Page: 1 Date Filed: 02/09/2023
`
`United States Court of Appeals
`for the Fifth Circuit
`
`
`No. 21-10865
`
`
`Oklahoma Firefighters Pension and Retirement System,
`
`
`FILED
`January 18, 2023
`
`Lyle W. Cayce
`Clerk
`
`United States Court of Appeals
`Fifth Circuit
`
`Plaintiff—Appellant,
`
`
`
`versus
`
`
`Six Flags Entertainment Corporation; James Reid-
`Anderson; Marshall Barber,
`
`
`Defendants—Appellees.
`
`
`
`
`Appeal from the United States District Court
`for the Northern District of Texas
`USDC No. 4:20-CV-201
`
`
`
`Before Southwick, Haynes, and Higginson, Circuit Judges.
`Leslie H. Southwick, Circuit Judge:
`
`retirement-system purchaser of Six Flags
`labor-union
`A
`Entertainment Corporation common stock brought suit against the company
`and two of its executive officers. That Purchaser alleges that Six Flags
`executives made material misrepresentations and omissions regarding the
`development of several Six Flags theme parks in China, thereby violating
`federal securities laws. The district court dismissed the claims with prejudice
`for failure to state a claim. We REVERSE and REMAND for further
`proceedings consistent with this opinion.
`
`

`

`Case: 21-10865 Document: 67-2 Page: 2 Date Filed: 02/09/2023
`
`No. 21-10865
`
`FACTUAL AND PROCEDURAL BACKGROUND
`
`Six Flags Entertainment Corporation is the world’s largest regional
`theme park operator, with over 24 parks across North America.1 In an effort
`to increase its earnings before interest, taxes, depreciation, and amortization
`(“EBITDA”), Six Flags entered into licensing agreements with international
`partners to build theme parks abroad. Under the agreements, Six Flags
`received initial fees from the international partners during the parks’
`development, with plans to receive substantial, continuing licensing and
`management fees after the parks opened. The company stated that
`international licensing was one of its “biggest opportunities,” as it required
`“no capital investment” and yielded “80% to 90% EBITDA margins,”
`notably higher than typical operating revenue margins.
`
`In 2014, Six Flags announced a partnership with Riverside Investment
`Group, a Chinese real estate developer, to develop multiple Six Flags-
`branded theme parks in China. Between 2015 and May 2018, Six Flags
`announced 11 China parks at three locations: Zhejiang, with three parks on
`track to open by late 2019; Chongqing, with four parks to open in 2020; and
`Nanjing, with four parks to open in 2021. The parks were complex projects
`that involved partnerships with local Chinese governments and the services
`of outside designers, consultants, engineers, and ride vendors. Together, the
`parks were projected to contribute, at minimum, $60 million to Six Flags’
`annual EBITDA post-opening.
`
`
`1 The first park was called Six Flags over Texas, opening in 1961 between Dallas
`and Fort Worth. Its name refers to the flags of the countries that had sovereignty over
`Texas, starting with Spain, then France, Mexico, the Republic of Texas, the United States,
`the Confederacy, and the United States again. Claude Cox, Six Flags Over Texas, 5 NEW
`HANDBOOK OF TEXAS 1069 (1996). “Texas” is not part of the name of a park outside of
`that state, but six remains the number of flags irrespective of the locale’s vexillology.
`
`2
`
`

`

`Case: 21-10865 Document: 67-2 Page: 3 Date Filed: 02/09/2023
`
`No. 21-10865
`
`According to the complaint, from the beginning of the Putative Class
`Period,2 Six Flags and individual Defendants James Reid-Anderson (then-
`Executive Chairman and Chief Executive Officer) and Marshall Barber
`(then-Chief Financial Officer), misled investors by projecting unrealistic or
`impossible timelines for the China park openings. The complaint relies
`largely on information from a former Six Flags employee (Former Employee
`1, or “FE1”).3 From May 2018 to September 2019, FE1 was Director of
`International Construction and Project Management for what the complaint
`and parties refer to as Six Flags International, presumably an affiliate of the
`corporate defendant. FE1 was responsible for overseeing the construction of
`the China parks and reporting on their progress internally at Six Flags. The
`complaint states that FE1, from his arrival in China in May 2018, believed it
`was “obvious” the parks could not open on schedule because the Chinese
`development partner, Riverside, was unable or refused to fund the theme
`park rides, had not commissioned the necessary blueprints, and had barely
`begun construction. The complaint also alleges that Riverside had fallen
`behind on making licensing payments to Six Flags by August 2018.
`
`Throughout 2018, Defendants maintained publicly that the China
`parks were “progressing nicely towards their anticipated opening dates.” In
`October 2018, Defendant Barber announced on an earnings call that the
`Zhejiang park opening date had shifted back from late 2019 to “the first of
`2020,” but that the Chongqing parks and Nanjing parks were still on time,
`slated for 2020 and 2021, respectively.
`
`
`2 The parties identify the “Class Period” in their pleadings as being from April 24,
`2018, to February 19, 2020.
`3 The complaint uses “he” and “his” in connection with FE1, without confirming
`that FE1 is male. At oral argument, counsel for the Plaintiff stated that FE1 was a male
`employee.
`
`3
`
`

`

`Case: 21-10865 Document: 67-2 Page: 4 Date Filed: 02/09/2023
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`No. 21-10865
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`In February 2019, however, the company admitted to investors that
`the opening of the China parks would be delayed 6-12 months due to
`“macroeconomic events” affecting Riverside’s ability to finance the parks,
`resulting in a negative revenue adjustment of $15 million for the fourth
`quarter of 2018.4 As a result, Six Flags did not reach its target EBITDA of
`$600 million for fiscal year 2018, and Defendants failed to earn large equity
`bonuses. Despite this setback, Six Flags maintained that construction in
`China was “progressing” and that Riverside was “fully committed to
`developing and opening these parks.” A few weeks later, on March 7, 2019,
`Six Flags announced that Reid-Anderson would retire from his position as
`CEO by February 28, 2020.
`
`In 2019, Defendants began speaking more cautiously about the parks
`but still assured investors that there was “ongoing building” and “no delays”
`to the new opening timelines. In October 2019, however, the Company
`admitted the China parks could be further delayed, disclosing there was “a
`very high likelihood going forward that we will see changes in the timing of
`the park openings.”
`
`On January 10, 2020, Six Flags disclosed that Riverside had defaulted
`on its payment obligations, admitting this could lead “to the termination of
`all Six-Flags-branded projects in China.” As a result, Six Flags expected “a
`negative $1 million revenue adjustment” and “aggregate one-time charges of
`approximately $10 million.” On February 20, 2020, Six Flags announced the
`termination of its agreements with Riverside and that Barber would retire as
`
`
`4 As permitted under U.S. Generally Accepted Accounting Principles (“GAAP”),
`Six Flags recognized revenue for the China parks based on projected future revenues under
`the terms of the Company’s partnership agreements with Riverside. This meant that when
`the parks were under construction, Six Flags recognized pro rata amounts as revenue each
`quarter. A delay in the opening dates of the parks therefore required the company to adjust
`the revenue recognition downward to accommodate the extended project timeline.
`
`4
`
`

`

`Case: 21-10865 Document: 67-2 Page: 5 Date Filed: 02/09/2023
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`No. 21-10865
`
`Chief Financial Officer. Throughout the Class Period, Six Flags’ stock
`declined from a high of $73.38 on June 22, 2018, to close at $31.89 on
`February 20, 2020, the company’s lowest stock price in over seven years.
`
`In February 2020, Electrical Workers Pension Fund, Local 103,
`I.B.E.W. filed suit, alleging that Six Flags and the individual defendants
`violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
`The district court appointed Oklahoma Firefighters Pension and Retirement
`System (“Oklahoma Firefighters”) as Co-Lead Plaintiff on May 8, 2020.
`Plaintiffs filed the operative complaint on July 2, 2020. In August 2020,
`Defendants moved to dismiss for failure to state a claim. The district court
`held the complaint failed to make adequate allegations of material
`misrepresentations or omissions, or a strong inference of scienter, and,
`therefore, failed to plead an actionable Section 10(b) claim or state a Section
`20(a) claim. Elec. Workers Pension Fund, Loc. 103, I.B.E.W. v. Six Flags Ent.,
`Corp., 524 F. Supp. 3d 501, 533–534, 537–538 (N.D. Tex. 2021). The court
`dismissed the case with prejudice. Id.
`
`Plaintiffs moved to set aside the judgment and amend their complaint.
`They later moved to file a supplemental brief in support of their motion in
`order to add details of a Securities and Exchange Commission (“SEC”)
`investigation into Six Flags’ partnership with Riverside and the China parks.5
`Both motions were denied. Oklahoma Firefighters alone appealed from the
`final judgment.
`
`
`
`
`5 In May 2021, Six Flags disclosed, in a separate lawsuit, that it had received a
`subpoena from the SEC in February 2020, “requesting documents regarding Six Flags’
`partnership with Riverside” and “the development and operation of Six Flags-branded
`parks in China and the negative revenue adjustment of $15 million in the fourth quarter of
`2018.”
`
`5
`
`

`

`Case: 21-10865 Document: 67-2 Page: 6 Date Filed: 02/09/2023
`
`No. 21-10865
`
`DISCUSSION
`
`Plaintiff seeks reversal of the district court’s two primary rulings: the
`dismissal of the complaint and the refusal to allow post-judgment
`amendments to the complaint. As to the dismissal, Plaintiff argues it
`sufficiently pled (1) actionable misstatements, (2) scienter, and (3) control-
`person liability. As to the failure to allow an amendment, Plaintiff alleges it
`timely and sufficiently corrected the claimed deficiencies in the complaint.
`
`“We review a district court’s dismissal of federal securities law claims
`under Rule 12(b)(6) de novo.” Owens v. Jastrow, 789 F.3d 529, 535 (5th Cir.
`2015). A “complaint will survive a Rule 12(b)(6) motion to dismiss if,
`accepting its factual allegations as true, the complaint plausibly states a claim
`for relief.” Loc. 731 I.B. of T. Excavators & Pavers Pension Tr. Fund v. Diodes,
`Inc., 810 F.3d 951, 956 (5th Cir. 2016).
`
`The complaint alleges Defendants violated Section 10(b) of the
`Securities Exchange Act and SEC Rule 10b-5, and that the individual
`Defendants violated Section 20(a) of the Act. To state a Section 10(b) and
`Rule 10b-5 claim, a plaintiff must allege: “(1) a material misrepresentation or
`omission; (2) scienter (a ‘wrongful state of mind’); (3) a connection with the
`purchase or sale of a security; (4) reliance; (5) economic loss; and (6) a
`‘causal connection between the material misrepresentation and the loss.’”
`Mun. Emps.’ Ret. Sys. of Mich. v. Pier 1 Imports, Inc., 935 F.3d 424, 429 (5th
`Cir. 2019) (quoting Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 341–42
`(2005)).
`
`A complaint alleging a violation of Section 10(b) of the Securities
`Exchange Act must meet the heightened pleading requirements for fraud
`claims under Federal Rule of Civil Procedure 9(b), which requires that the
`complaint “state all allegations of fraud with particularity.” Owens¸789 F.3d
`at 535. The heightened pleading requirements of the Private Securities
`
`6
`
`

`

`Case: 21-10865 Document: 67-2 Page: 7 Date Filed: 02/09/2023
`
`No. 21-10865
`
`Litigation Reform Act (“PSLRA”) also apply. Under that Act, the plaintiffs
`must “first, allege with particularity why each one of defendants’
`representations or omissions was ‘misleading’ under 15 U.S.C. § 78u–4(b)(1)
`and, second, allege with particularity those facts giving rise to a ‘strong
`inference’ that the defendant acted with the required state of mind under 15
`U.S.C. § 78u–4(b)(2).” Spitzberg v. Hous. Am. Energy Corp., 758 F.3d 676,
`683 (5th Cir. 2014).
`
`Denials of post-judgment motions are reviewed for an abuse of
`discretion. Schiller v. Phys. Res. Grp. Inc., 342 F.3d 563, 566 (5th Cir. 2003).
`When considering Rule 59(e) motions to set aside judgment and for leave to
`amend, district courts are afforded broad discretion; such motions are
`properly denied on the basis of undue delay or futility. Id.
`
`We will analyze the arguments about the sufficiency of this complaint
`principally by grouping the allegations into two time periods, 2018 and 2019,
`in which the supposed material misstatements were made. For each section,
`we consider as relevant (1) whether the statements were forward-looking and
`protected by the safe harbor; (2) whether the statements were material
`misstatements or omissions; and (3) if scienter was properly alleged.6
`
`Before beginning our examination, though, we consider a matter that
`applies across all time periods: whether the allegations based on the
`assertions of an anonymous source, which are key to most of the complaint,
`should have been significantly discounted.
`
`
`
`
`6 The district court held that Plaintiff “fail[ed] to challenge the inactionability of
`numerous statements” and therefore waived its opposition to those arguments. Six Flags,
`524 F. Supp. 3d at 525. Plaintiff, though, argues its Opposition “squarely addressed these
`issues.” We agree with Plaintiff that the Opposition adequately addressed Defendants’
`arguments even if it did not expressly cite every relevant statement in the complaint.
`
`7
`
`

`

`Case: 21-10865 Document: 67-2 Page: 8 Date Filed: 02/09/2023
`
`No. 21-10865
`
`I.
`
`Discounting former employee allegations
`
`
`A significant consideration for whether the complaint adequately
`alleges material misrepresentations and scienter is the weight to afford the
`confidential informant (FE1’s) allegations, which form the basis of the
`complaint. The district court “generally” discounted the allegations of FE1,
`and “significantly” discounted his allegations about Riverside’s financial
`health, because in this circuit “courts must discount allegations from
`confidential sources.”7 Six Flags, 524 F. Supp. 3d at 524–25; Pier 1, 935 F.3d
`at 433 (quoting Ind. Elec. Workers’ Pension Tr. Fund IBEW v. Shaw Grp., Inc.,
`537 F.3d 527, 535 (5th Cir. 2008)). Under the heightened PSLRA pleading
`standard, courts must “weigh the strength of plaintiffs’ favored inference in
`comparison to other possible inferences.” Shaw, 537 F.3d at 535 (quoting
`Higginbotham v. Baxter Int’l Inc., 495 F.3d 753, 757 (7th Cir. 2007)). This
`process is obstructed when the witness is anonymous, so courts must apply a
`discount to confidential witness allegations.8 Id.
`
`Discount does not mean unfettered discretion to discard. The degree
`of discounting depends on the circumstances involved. Courts may rely on
`assertions from confidential sources if the person is “described in the
`
`
`7 Though Plaintiff fully briefs why the district court improperly discounted FE1’s
`allegations, there is no argument about why this conclusion was wrong as to FE2. “Failure
`adequately to brief an issue on appeal constitutes waiver of that argument.” Roy v. City of
`Monroe, 950 F.3d 245, 251 (5th Cir. 2020) (quotation marks and citation omitted). Plaintiff
`has therefore waived this issue as to FE2.
`8 Although the Supreme Court in Tellabs only discussed the PSLRA’s heightened
`pleading requirement in the context of scienter when it held courts “must consider, not
`only inferences urged by the plaintiff . . . but also competing inferences rationally drawn
`from the facts alleged,” the PSLRA imposes a particularity requirement on all allegations,
`whether offered in support of a statement’s falsity or a defendant’s scienter. Tellabs, Inc.
`v. Makor Issues & Rights, Ltd., 551 U.S. 308, 314 (2007); 15 U.S.C. § 78u–4(b)(1), (b)(2).
`The analysis regarding the discount of confidential witnesses’ allegations therefore applies
`when evaluating both material misrepresentations and scienter.
`
`8
`
`

`

`Case: 21-10865 Document: 67-2 Page: 9 Date Filed: 02/09/2023
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`No. 21-10865
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`complaint with sufficient particularity to support the probability that a person
`in the position occupied by the source would possess the information
`alleged.” Owens, 789 F.3d at 542 n.11 (quoting ABC Arbitrage Plaintiffs Grp.
`v. Tchuruk, 291 F.3d 336, 352 (5th Cir. 2002)).9 A court must consider the
`details in the description of the source and whether those details substantiate
`that the source has the necessary knowledge. As with complaints more
`generally, the important assertions must be factual and not mere conclusory
`statements.
`
`Here, FE1 is described as “Six Flags International’s Director of
`International Construction and Project Management” from May 2018
`through September 2019. The complaint details that he was “responsible for
`overseeing the construction of the China parks and reporting internally on
`their progress,” that he worked onsite at the Zhejiang location, travelled to
`Chongqing “to perform site inspections and check construction progress,”
`and attended meetings with Six Flags and Riverside personnel. When
`confidential sources “consist of persons who from the description of their
`jobs were in a position to know at first hand the facts,” and there is
`“convincing detail” to the information they provide, there is reason to credit
`the informants’ reliability. Makor Issues & Rights, Ltd. v. Tellabs Inc., 513 F.3d
`702, 712 (7th Cir. 2008). Another factor in the Seventh Circuit opinion was
`
`
`9 When we have discussed discounting allegations by confidential sources, it is
`usually in circumstances where the person’s credentials are less clear, or the relevance of
`the person’s job is more attenuated to the allegations, than is the case here. For example,
`in Shaw, this court discounted the allegations of several confidential sources because the
`plaintiffs “generally fail[ed] to provide sufficient details about their sources to credit their
`statements,” and discounted one source’s statement in particular because he was “not
`identified sufficiently by his title, work location, or dates of employment.” Shaw, 537 F.3d
`at 537–38. In Pier 1, the court discounted witnesses’ statements because the plaintiffs
`“fail[ed] to tie the[] statements to the alleged fraud” and because the witnesses “[did] not
`relate any interaction with [the defendants].” Pier 1, 935 F.3d at 434 (quotation marks and
`citation omitted).
`
`9
`
`

`

`Case: 21-10865 Document: 67-2 Page: 10 Date Filed: 02/09/2023
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`No. 21-10865
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`that the informants were numerous, id., but we consider the significance of
`FE1’s reported role in the project to substitute for numbers. As another
`circuit held, “the weight accorded to anonymous sources will depend in large
`part on the level of detail with which they are described.” Institutional Invs.
`Grp. v. Avaya, Inc., 564 F.3d 242, 262 (3d Cir. 2009) (discussing the Seventh
`Circuit’s Tellabs opinion). Indeed, the use of what would appear to be FE1’s
`unique and significant corporate title makes us wonder just how unknown he
`is to the parties.
`
`While FE1 is only one source, the complaint’s details about the
`responsibilities of his position are directly relevant to the events at issue in
`this case. Moreover, FE1’s account is supported by at least some
`corroborating evidence — a photo of the Zhejiang site in April 2018 showing
`essentially no construction.
` Therefore, FE1’s allegations should be
`discounted only minimally for his anonymity and lack of corroborating
`witnesses.10 Our conclusion that the discount here should be minimal is
`consistent with not only our court’s precedent, but also with other circuits’
`conclusions when details about the confidential source support reliability.11
`
`
`10 Of course, a confidential witness may be adequately described but still fail to
`establish the falsity of a statement or to give rise to a strong inference of scienter.
`Nonetheless, as another circuit noted, “for analytical purposes, it is important to
`distinguish deficiencies relating to the content of allegations from those relating to their
`form.” Avaya, Inc., 564 F.3d 242, 263 n.33.
`11 “In the case of confidential witness allegations, we apply [the particularity]
`requirement by evaluating the ‘detail provided by the confidential sources, the sources’
`basis of knowledge, the reliability of the sources, the corroborative nature of other facts
`alleged, including from other sources, the coherence and plausibility of the allegations, and
`similar indicia.’” Avaya, Inc., 564 F.3d at 263 (quoting Cal. Pub. Emps.’ Ret. Sys. v. Chubb
`Corp., 394 F.3d 126, 147 (3rd Cir. 2004)). “If anonymous source allegations are found
`wanting with respect to these criteria, then we must discount them steeply.” Id.; See also
`Yates v. Municipal Mortg. & Equity, LLC, 744 F.3d 874, 885–56 (4th Cir. 2014).
`
`10
`
`

`

`Case: 21-10865 Document: 67-2 Page: 11 Date Filed: 02/09/2023
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`No. 21-10865
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`In addition to the “general” discount it applied to FE1’s global
`allegations, the district court also applied a “significant” discount to FE1’s
`allegations about Riverside’s financial health. Six Flags, 524 F. Supp. 3d at
`524–25. The district court held that Plaintiff did not sufficiently plead FE1
`would have personal knowledge of Riverside’s internal finances or access to
`funding, so those required an even larger discount. Id.
`
`The complaint, though, outlines that FE1 was responsible for
`“protecting Six Flags’ brand by overseeing the construction . . . and ensuring
`that Riverside was building the parks correctly and safely.” Consequently,
`FE1 would have knowledge of Riverside’s lack of payments to vendors, even
`if the reason for the default was not known. Moreover, the complaint alleges
`that in May 2018, FE1 attended a meeting in Beijing with the two Six Flags
`China Park presidents, where they informed FE1 that Riverside “did not
`have the money to pay for the additional construction drawings and the
`process had ‘stalled out.’” It further alleges that FE1 had direct contact with
`Riverside personnel, where he raised concerns about the lack of construction.
`Finally, the complaint also alleges that FE1 wrote a letter in August 2019 to
`Six Flags’ Senior Vice President, Human Resources, where he stated, among
`other grievances, that Riverside “made it clear that they have zero funds
`remaining,” that it was “forcing abused employees to resign under duress,”
`that it “owed nearly 3 months back pay,” and that there was a “complete
`lack of monetary support from our own company (Six Flags).” Given FE1’s
`stated role in the Company and contemporaneous details of his knowledge of
`Riverside’s condition, there is enough here to conclude that FE1 had
`personal and relevant, even if not comprehensive, knowledge about
`Riverside’s financial health.
`
`Therefore, the complaint details enough about FE1’s relationship to
`Riverside that his statements about its financial health should also be
`considered with only a minimal discount.
`
`11
`
`

`

`Case: 21-10865 Document: 67-2 Page: 12 Date Filed: 02/09/2023
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`No. 21-10865
`
`II.
`
`2018 statements
`
`We now consider the statements Plaintiff alleges were materially
`misleading. We must first determine whether any statements are (1)
`protected by the forward-looking safe harbor. See Lormand v. US Unwired,
`565 F.3d 228, 245 (5th Cir. 2009). For those that are not protected, we must
`then determine whether they were (2) material misrepresentations that were
`(3) stated with the requisite scienter. Id. at 238–39. We address the
`statements chronologically, allowing us to consider the relevancy of FE1’s
`particular allegations at each point in time.
`
`Plaintiff argues that Defendants knowingly made several materially
`misleading statements in 2018 about the scheduled opening dates of the
`China parks. For example, during the April 25, 2018, earnings call, Reid-
`Anderson stated, “right now, barring some other decision that’s made, all
`our parks are progressing nicely towards their anticipated opening dates.”
`On the July 25, 2018 earnings call, he confirmed, “[t]he timing of the parks
`remains exactly the same as previously discussed, there’s no change on any
`of those.” Further, on the October 24, 2018, earnings call, Barber stated the
`Zhejiang park opening had shifted back “[a] month or 2” from late 2019 to
`“the first of 2020,” but listed the Chongqing parks and Nanjing parks as on-
`time, slated for 2020 and 2021, respectively.
`
`A.
`
`Forward-looking statements
`
`Defendants argue the projected park opening remarks are “forward-
`looking” statements that should receive protection under the PSLRA’s safe
`harbor provision because they were accompanied by appropriately cautionary
`language. 15 U.S.C. § 78u-5(c)(1)(A). The district court agreed that the
`April and July 2018 earnings calls contained cautionary language adequate to
`protect any forward-looking statements. Six Flags, 524 F. Supp. 3d at 532.
`Under the safe harbor provision, a defendant is not liable if: (1) the statement
`
`12
`
`

`

`Case: 21-10865 Document: 67-2 Page: 13 Date Filed: 02/09/2023
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`No. 21-10865
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`is identified as forward-looking and “is accompanied by meaningful
`cautionary statements”; or (2) the statement is “immaterial”12; or (3) the
`plaintiff fails to plead that the statement “was made with actual knowledge .
`. . that [it] was false or misleading.” § 78u–5(c)(1)(A)–(B); Southland Sec.
`Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 371 (5th Cir. 2004). “Each
`statement that benefits from the safe harbor must be addressed individually.”
`Lormand, 565 F.3d at 245.
`
`We first address whether, as Plaintiff argues, the relevant 2018
`statements were not forward-looking because each was a “mixed
`present/future statement [that] is not entitled to the safe harbor with respect
`to the part of the statement that refers to the present.” Spitzberg, 758 F.3d
`at 691 (quotation marks and citation omitted). The statute defines “forward-
`looking” as:
`
`(A) a statement containing a projection of revenues, income . . . or
`other financial items; (B) a statement of the plans and objectives of
`management for future operations . . .; (C) a statement of future
`economic performance . . . ; (D) any statement of the assumptions
`underlying or relating to [any of the above].
`§ 78u–5(i)(1). Plaintiff contends the statement, “right now, barring
`some other decision that’s made, all our parks are progressing nicely towards
`their anticipated opening dates,” refers to “then-present facts” rather than
`future predictions. In a similar case, the Second Circuit held the statement,
`“Vivendi Universal . . . [has] a very strong balance sheet,” was not protected
`even though the company stated in the next sentence, “we are very confident
`that we will meet the very aggressive growth targets we have set.” In re
`Vivendi, S.A. Secs. Litig., 838 F.3d 223, 246 (2d Cir. 2016). The court held
`there was “nothing prospective” about representing the company had a
`
`
`12 Defendants do not argue any statements were immaterial.
`
`13
`
`

`

`Case: 21-10865 Document: 67-2 Page: 14 Date Filed: 02/09/2023
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`No. 21-10865
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`“very strong balance sheet,” even though “some aspects of this statement
`could conceivably be characterized as forward-looking.” Id. Similarly, Six
`Flags was asserting the parks were undergoing sufficient construction to
`meet the deadlines. Although the deadline is a future projection, the crux of
`Plaintiff’s fraud claim is that Defendants misled investors about the
`Company’s present construction progress. This is a mixed present/future
`statement ineligible for safe harbor protection.
`
`We agree with Defendants, though, that some 2018 statements are
`forward-looking under Section 78u–5(c)(1)(A)–(B). A concrete plan with no
`commentary about present construction progress such as “three new parks
`in [Nanjing] China are expected to begin opening in 2021” or “those start to
`come online in Zhejiang . . . [in] early 2020” are, as the statute requires,
`“statement[s] of the plans and objectives of management for future
`operations.” § 78u–5(i)(1)(B). They are entitled to the safe harbor
`protection if Defendants can show they were either accompanied by
`meaningful cautionary language or Plaintiff failed to plead Defendants’
`“actual knowledge” of their falsity.
`
`A “meaningful” cautionary statement identifies “important factors
`that could cause actual results to differ materially from those in the forward-
`looking statement.”
` § 78u-5(c)(1)(A)(i). Companies must disclose
`“‘substantive’ company-specific warnings based on a realistic description of
`the risks applicable to the particular circumstances, not merely a boilerplate
`litany of generally applicable risk factors.” Southland, 365 F.3d at 372 (citing
`H.R. Conf. Rep. No. 369, 104th Cong., 1st Sess. 31, 44 (1995)).13
`
`
`13 The 2018 statements were made orally on earnings calls. Oral statements can
`qualify for the safe harbor if
`(i) the statement is accompanied by a cautionary statement that the ‘particular’
`oral statement is forward-looking and that actual results could differ materially
`(essentially a formality as to the form of the statement); (ii) the statement is
`
`14
`
`

`

`Case: 21-10865 Document: 67-2 Page: 15 Date Filed: 02/09/2023
`
`No. 21-10865
`
`The district court held the general cautionary statements at the
`
`beginning of each earnings call, and in the accompanying Form 10-Ks that are
`the annual report of a company’s financial condition, were “too generic to
`constitute meaningful cautionary language.” Six Flags, 524 F. Supp. 3d at
`531–32. We agree. Both disclaimers are classic boilerplate cautions,
`unattached to individual forward-looking statements. In one precedent, for
`example, we concluded that the use of an identical disclaimer for each
`misrepresentation was a reason to consider all to be boilerplate. Lormand,
`565 F.3d at 245. A similar example of boilerplate language was this
`disclaimer: “statements
`involve numerous risks, uncertainties and
`assumptions, and actual results could differ materially from anticipated
`results.” Plotkin v. IP Axess Inc., 407 F.3d 690, 694 (5th Cir. 2005).
`
`However, the district court held that the 2018 earnings calls, and other
`
`sections of the Form 10-Ks, did contain appropriately “company-specific”
`risk statements. Six Flags, 524 F. Supp. 3d at 532. These included Reid-
`Anderson’s commentary in April: “[international deals] sometimes take a
`long time to come to fruition,” and in July: “[international contribution] has
`been lumpy historically, and what makes it lumpy is opening dates.”14 Id.
`
`We disagree that this is “meaningful” cautionary language that
`identifies “important factors that could cause actual results to differ
`materially from those
`in the forward-looking statement.”
` § 78u-
`
`accompanied by an oral statement that additional information that could cause
`actual results to differ materially is contained in a readily-available written
`document; (iii) the statement identifies the document or portion thereof containing
`the additional information; and (iv) the identified document itself contains
`appropriate cautionary language.
`Southland, 365 F.3d at 372 (citing 15 U.S.C. §§ 77z–2(c)(2), 78u–5(c)(1) (1996)).
`14 Defendants did not highlight any specific risk statements other than the generic
`opening statement on the October 24, 2018, earnings call and generic language from the
`February 2018 Form 10-K.
`
`15
`
`

`

`Case: 21-10865 Document: 67-2 Page: 16 Date Filed: 02/09/2023
`
`No. 21-10865
`
`5(c)(1)(A)(i). In Lormand, we reversed the district court’s grant of “blanket
`safe harbor protection” after it “erroneously neglected to address how each
`excluded statement (or portions of those statements) is specifically and
`meaningfully protected by the safe harbor.” Lormand, 565 F.3d at 245. As in
`Lormand, the “cautionary” comments here were not connected to the
`forward-looking statements at issue — the cautionary comments came in
`response to different analysts’ questions and were not offered unprompted.
`Further, neither comment addresses the actual risk at issue — that the parks
`might be significantly