Ironic that WSGI could be a victim of "Inactionable Puffery"
"WSGI responded by adding 22 new allegations in the amended complaint. See Dkt. No. 38 at 4, 11-12, 20-21, 51-52, 54. But most of these additions again fail to state the time, place, specific content of the representations and identities of the parties to the misrepresentation, (see, e.g., Dkt. No. 38 at 4, 51-52, 54-55 (alleging only that sometime in 2011 and 2012, La Jolla made “certain assurances” to WSGI through agents of the companies “including but not limited to” Messrs. Estrella and Huff, and that “from the beginning of the relationship with La Jolla, La Jolla fraudulently induced WSGI, through their factual omissions, to sign the Agreements”)), or they are inactionable puffery, (see, e.g., Dkt. No. 38 at 11, 12, 20 (Mr. Huff’s statement that La Jolla was dedicated to being the “perfect [paraphrasing] financial partner,” and that he “expressed La Jolla’s committed desire to support the stock price in any way it could,” and Mr. Sanberg’s statements about La Jolla’s “continued support of and commitment to WSGI’s well-being,” and “how excited La Jolla was to be associated with WSGI”)).See In re iPass, Inc. Sec. Litig., No. C 05-0228 MHP, 2006 WL 496046, at *4 (N.D. Cal. Feb. 28, 2006) (describing puffery as “statements consist[ing] of forward-looking or generalized statements of optimism that are not capable of objective verification, and lack a standard against which a reasonable investor could expect them to be pegged.”) (internal quotations omitted).
The few allegations that get by the “who, what, when, where, and how” requirement of Rule 9(b) fail to state fraud claims because they were made well after the parties had executed the contracts. WSGI alleges that on the evening of June 28, 2012 -- approximately five months after the investment agreements were executed in January 2012 -- Mr. Huff told Glenn Estrella, an executive officer for WSGI, at Incanto restaurant in San Francisco that “La Jolla would continue to provide WSGI with capital to fully fund the ongoing operations of WSGI while sponsoring WSGI’s further research and development as well as its marketing initiatives.” Dkt. No. 38 at 11. WSGI alleges similar representations at another in-person meeting between the parties in August 2012. Id. at 20-21. These statements do nothing to support WSGI’s fraud claims because the ink was already dry on the deal documents by the time they were allegedly made, and consequently WSGI could not have relied upon them as a basis for entering into the contracts or relationship. See Manderville v. PCG & S Group, Inc., 146 Cal.App.4th 1486, 1498, 55 Cal.Rptr.3d 59, 69 (2007) (intentional misrepresentation claim requires plaintiff to allege and prove that he or she actually relied upon the misrepresentations and, in the absence of the misrepresentation, would not have entered into the contract); Julius Castle Restaurant Inc. v. Payne, 216 Cal.App.4th 1423, 1442, 157 Cal.Rptr.3d 839, 853 (2013) (fraud in the inducement claim requires reasonable reliance on assurances made prior to entering into an agreement). These claims are also dismissed with prejudice."
