Moreover, a relevant portion of the 4 February 1998 Press
Release states that it is "[NSL's] goal is to offer . . .
systems that are easily integrated with . . . existing computer
network and telecom environments," Second Amended Complaint at ¶
30 (emphasis added). This is simply an aspiration, a statement of
optimism; it is non-actionable "puffery." In re Advanta Corp.
Sec. Litig., 180 F.3d at 538; see also pp. 60-63, infra.
With regard to the 4 February 1998 Press Release, Lead
Plaintiffs provide no more than simple assertions and legal
conclusions which are insufficient to satisfy the pleading
requirements of Rule 9(b) and the PSLRA. In re Burlington Coat
Factory Sec. Litig., 114 F.3d at 1417; In re Westinghouse Sec.
Litig., 90 F.3d at 710.
b) The 3 March 1998 Press Release
In the 3 March 1998 Press Release, NSL announced the
acquisition of IBS, a company in the business of making software
used by call centers. Second Amended Complaint at ¶ 40. The 3
March 1998 Press Release made several positive statements about
the IBS acquisition and its potential benefits for NSL. Id.
Specifically, Levin stated: "We believe that the acquisition of
IBS, . . . will support our ongoing expansion into the fast
growing call center market." Id. Levin also stated: "With IBS'S
technology, system and customer base, and Nice's CTI[L] and
quality measurement solutions, we now have the broadest range of
call center logging and quality solutions on the market." Id.
Lead Plaintiffs maintain that "statements concerning the
breadth and success of the Company's call center solutions were
deceptive in light of the serious problems affecting the
[System]." Id. at ¶ 41. Defendants, however, contend that the 3
March 1998 Press Release represented mere corporate puffery.
Moving Brief at 30.
The statement "[w]e believe that the acquisition of IBS . . .
will support our ongoing expansion into the fast growing call
center market" is not a general, non-specific statement. In re
MobileMedia Sec. Litig., 28 F. Supp.2d at 928 ("The statement
`MobileMedia believes the MobileComm acquisition will enhance its
competitive position' . . . draws a link between future success
and the acquisition of MobileComm. This is not inactionable
puffery."); see also e.g. Weiner, 129 F.3d at 320 (statement
that corporation was confident of achieving at least 7% real
earning growth was not the type of vague expression of optimism
that has been found to be immaterial). If as Lead Plaintiffs
allege, NSL had no reasonable basis for this belief given the
problems it was experiencing with the System, this statement may
serve as the basis for liability. In re MobileMedia Sec.
Litig., 28 F. Supp.2d at 928.
Lead Plaintiffs, however, fail to allege how this statement was
false on 3 March 1998. Second Amended Complaint at ¶ 40. The
announcement involved the acquisition of IBS, a company in the
business of making software used by call centers. Id. at ¶ 40.
According to the 3 March 1998 Press Release, the acquisition was
intend to bring new technology and a new customer base into NSL.
Id. Lead Plaintiffs make a conclusory allegation that the
statement was deceptive because the System had problems. Id. at
¶ 41. "[M]isguided optimism, [however,] is not a cause of action
. . .[,] nothing alleged indicates that management was promoting
a fraud. People in charge of an enterprise are not required to
take a gloomy, fearful or defeatist view of the future." In re
Carter-Wallace, Inc. Sec. Litig., 220 F.3d 36, 42 (2d Cir.
The statements in the 3 March 1998 Press Release reported
changed corporate circumstances flowing from the IBS acquisition.
Id. When viewed in the "context in which the alleged
misrepresentations were made," the statement by Levin is not
actionable. See In re Donald Trump Casino Sec. Litig., 7 F.3d
at 364. The factual allegations do not support an inference that
on the eve of the IBS acquisition, Defendants believed anything
other than "the acquisition of IBS . . . w[ould] support [NSL's]
ongoing expansion into the fast growing call center market."
Second Amended Complaint at ¶ 40.
c) The 23 April 1998 Press Release
On 23 April 1998, NSL issued a press release announcing the
installation of the System at Advanta Mortgage ("Advanta"). Id.
at ¶ 42. The 23 April 1998 Press Release stated, in pertinent
This installation showcases Nice's newest Computer
Telephony Integrated (CTI[L]) quality measurement
solution, NiceUniverse 3.0, fully integrated with
Aspect's Automated Call Distributor (ACD).
Id. Lead Plaintiffs allege that the above statement, in
conjunction with a comment by Sturdy that "[w]e are pleased to
introduce a truly reliable quality assurance solution tightly
integrated with Aspect's ACD," was fraudulent and made with
conscious disregard for the truth. Id.
It appears the 23 April 1998 Press Release offered concrete
factual statements about the performance of a technical product.
Id. Statements such as "fully integrated with," "truly reliable
. . . solution," and "tightly integrated with," are the type of
statements that a reasonable investor would consider as
significantly altering the "total mix of information made
available." In re Advanta Corp. Sec. Litig., 180 F.3d at 538
(citing TSC Indus., Inc. v. Northway, 426 U.S. 438, 449, 96
S.Ct. 2126, 48 L.Ed.2d 757 (1976)).
Lead Plaintiffs allege that in April 1998, several CIBC
employees visited Advanta and saw only a few dozen simulated
calls on the System. Id. at 43. According to Lead Plaintiffs,
NSL did not demonstrate that the System "was fully integrated
with Aspect's ACD and was fully operational." Id.
Lead Plaintiffs, however, do not allege sufficient facts to
suggest Defendants knew the System was not "truly reliable" or
"tightly integrated" with the Advanta call center on 23 April
1998. Id. Lead Plaintiffs do not reveal when in April the CIBA
employees visited Advanta. Id. The Second Amended Complaint,
moreover, fails to indicate whether the "few dozen simulated
calls" actually worked. Id. Additionally, Lead Plaintiffs do
not indicate whether NSL represented to CIBA they would
demonstrate more than a "few dozen simulated calls." Id.
Lead Plaintiffs also allege Advanta was dissatisfied with the
System and purchased a different product from an NSL competitor.
Id. Lead Plaintiffs, however, do not indicate when Advanta
experienced problems with the System, when, or if, Advanta
notified NSL of the problems and when Advanta purchased the
substitute product. Id. at ¶ 44.
In order to satisfy Rule 9(b) in connection with a Rule 10b-5
claim, Lead Plaintiffs must show, inter alia, a
misrepresentation of material fact and knowledge by the
Defendants of its falsity. In re Westinghouse Sec. Litig., 90
F.3d at 710. The facts and circumstances, as alleged, do not
provide enough specificity to determine whether the 23 April 1998
Press Release was false when issued. Second Amended Complaint at
¶ 43. Nor are the facts, as alleged, sufficient to form the basis
belief that NSL knew the statement was false when made. In re
Carter-Wallace, Inc. Sec. Litig., 220 F.3d at 39.
d) The 18 May 1998 Press Release
The 18 May 1998 Press Release announced the implementation of
the System at Electric Insurance Company ("EIC"). Second Amended
Complaint at ¶ 48. Lead Plaintiffs contend that several comments
in the 18 May 1998 Press Release were misleading or false. Id.
Relevant portions of the 18 May 1998 Press Release stated:
EIC has fully-implemented [the System] and integrated
the system with its Microsoft Windows-NT network and
Lucent PBX. . . . [the System], integrated with
Lucent's Definity G3, will provide EIC simultaneous
voice recording and screen capture for quality
measurement as well as recording on demand
capabilities to verify transactions.
Id. Lead Plaintiffs allege these statements were false and
misleading in light of underlying System problems. Id. at ¶¶
31-36, 44, 49. Lead Plaintiffs also allege the 18 May 1998 Press
Release was deceptive because "the System's tendency to cause
corruption and loss of data created significant problems for
EIC." Id. at ¶ 50. In support of this allegation, Lead
Plaintiffs allege that an unnamed EIC employee reported: "The
[System] caused EIC to lose access to data on a number of
occasions beginning in or about May 1998, including, at least one
occasion when EIC lost access permanently to about two months of
telephone calls and other data that had been recorded." Id. at
Under Rule 9(b), "plaintiffs must plead with particularity the
`circumstances' of the alleged fraud. They need not, however,
plead the `date, place or time' of the fraud, so long as they use
an `alternative means of injecting precision and some measure of
substantiation into their allegations of fraud.'" Rolo, 155
F.3d at 658 (citing Seville Indus. Machinery Corp. v. Southmost
Machinery Corp., 742 F.2d 786, 791 (3d Cir. 1984)). The
particularity requirement of the PSLRA, moreover, has been
interpreted to mean "that a plaintiff must provide a list of all
relevant circumstances in great detail." In re Silicon Graphics
Inc. Sec. Litig., 183 F.3d at 984.
Lead Plaintiffs do not allege specific facts regarding when the
problems at EIC occurred beyond the conclusory "in or about May
1998." Second Amended Complaint at ¶ 50. Indeed, Lead Plaintiffs
allege the System caused EIC data access problems without
asserting the basis for a belief that Defendants were notified of
the problems before they issued the 18 May 2000 Press Release.
Id. at ¶¶ 49-50.
e) The 1997 Form 20-F
Lead Plaintiffs allege that on 26 June 1998, Defendants filed a
false and misleading 1997 Form 20-F with the SEC. Id. at ¶ 51.
The 1997 Form 20-F, signed by Arzi, set forth several factual
statements detailing the capabilities of the System. Id. The
1997 Form 20-F also stated: "To date the Company has not
experienced any significant product returns or requests for
Lead Plaintiffs assert that, contrary to information in the
1997 Form 20-F, "a number of customers, including among others,
CIBC, Advanta, EIC and Safilo USA ("Safilo"), had expressed a
desire to return the System or were demanding that the System be
substantially reconfigured to meet their needs." Id. at ¶ 53.
Nevertheless, the identification of four customers who allegedly
experienced problems with a new and highly technical product,
especially without any allegation as to the relative fraction of
NSL's total business they comprised, does not equal "widespread"
failure of the product and cannot support a fraud
claim. See Tuchman v. DSC Communications Corp., 818 F. Supp. 971,
977 (N.D.Tex. 1993); see also In re Health Management Sys.,
Inc. Sec. Litig., No. 97-1865, 1998 WL 283286, at *4 (S.D.N Y
June 1, 1998) (holding allegations insufficient because they did
not specify the customers involved and the nature of their
In Tuchman, the plaintiffs alleged "customer defections . . .
began to increase markedly, resulting in large-scale cancellation
of orders, returns of equipment, and a fall-off in new orders."
Tuchman, 818 F. Supp. at 977. The court determined that because
the plaintiffs failed to state which customers defected, how many
customers defected, or what equipment was returned, the complaint
failed to meet the pleading requirements of Rule 9(b). Id.
Lead Plaintiffs allege that problems with the System were
apparent after it was installed at CIBC and Safilo in February
1998, at Advanta in April 1998, and at EIC in May 1998. Second
Amended Complaint at ¶¶ 35, 42, 50, 53. Lead Plaintiffs, however,
fail to allege whether the customers identified represent a
"significant" portion of NSL business. Id. Lead Plaintiffs also
fail to allege any facts to support the allegation that these
customers "had expressed a desire to return the System" or when
this alleged desire was communicated to NSL. Id.
Lead Plaintiffs also allege that "in February 1998 NSL
attempted to install [the System] at CIBC. . . . CIBC has never
paid NSL for the . . . System." Second Amended Complaint at ¶ 35.
In addition, Lead Plaintiffs state that "in April 1998, several
CIBC employees visited Advanta to observe a demonstration of the
. . . System." Id. at ¶ 43. As well, Lead Plaintiffs allege
that "[a]ccording to an Advanta employee . . . Advanta abandoned
its use of the . . . System, and has since purchased a call
center system from one of NSL's competitors." Id. at ¶ 44. None
of these allegations, however, bear a temporal element regarding
when complaints were made to NSL or when the System was
abandoned. It appears from the facts alleged that NSL installed
the System at CIBC in February and CIBC visited Advanta in April.
Id. at ¶¶ 35, 43. The Second Amended Complaint, however, does
not indicate when either CIBC or Advanta complained about, or
abandoned, the System.
Pursuant to the PSLRA, "a plaintiff must demonstrate how the
earlier statements were misleading at the time they were made."
Shapiro, 964 F.2d at 284. Lead Plaintiffs fail to allege
sufficient facts to demonstrate that the 1997 Form 20-F was
misleading or false when issued. Nor do Lead Plaintiffs provide
sufficient facts to support an inference Defendants knew the 1997
Form 20-F was materially misleading when filed with the SEC.
Second Amended Complaint at ¶¶ 51-53.
f) The 8 September 1998 Press Release
In the 8 September 1998 Press Release, NSL announced the launch
of its Professional Services Division. Id. at ¶ 61. Lead
Plaintiffs take issue with the following statement by Sturdy:
In today's competitive call center environment,
customer-service oriented companies are looking for
more than just great technology when improving their
operations. Our suite of value-added professional
services provide customers a comprehensive program
that encompasses implementation, technical training
and call center consultative services that go beyond
Lead Plaintiffs allege that the promotion by NSL of its "great
technology" and the provision of services "that go
beyond the technology" on 8 September 1998 were false and
misleading. Id. at ¶ 62. Lead Plaintiffs assert that the 8
September 1998 Press Release was materially misleading based on
the comments of an unidentified Safilo employee. Id. According
to this unidentified Safilo employee, the System crashed in the
Spring of 1998 and NSL provided little technical assistance
troubleshooting the problems. Id. at 62. Lead Plaintiffs allege
Safilo acquired the System on or about February 1998 but provided
no specific occasions when the System crashed or what attempts
were made to obtain assistance from NSL. Id. at ¶ 53.
When the 8 September 1998 Press Release is considered in the
context in which it occurred, the alleged misrepresentation is
not so obvious. See In re Donald Trump Casino Sec. Litig., 7
F.3d at 364 ("[A] statement or omission must be considered in
context."). The 8 September 1998 Press Release focused on the
announcement of the Professional Services Division. Second
Amended Complaint at ¶ 61. Lead Plaintiffs assert that Defendants
failed to disclose System problems. Id. Defendants, however,
were not discussing the System in the 8 September 1998 Press
Lead Plaintiffs fail to sufficiently tie the allegation of the
single, unidentified Safilo employee to the Defendants in such a
way as to permit an inference that the comments in the 8
September 1998 Press Release were false when made. Second Amended
Complaint at ¶ 62.
iii. Statements Of Corporate Optimism or Puffery
Several of the alleged "misrepresentations" set forth in the
Second Amended Complaint appear to represent nothing more than
nonactionable "puffery" or accurate reports of historical
earnings. The Third Circuit has held that "[v]ague and general
statements of optimism constitute no more than `puffery' and are
understood by reasonable investors as such." In re Advanta Corp.
Sec. Litig., 180 F.3d at 538 (citing Burlington Coat Factory
Sec. Litig., 114 F.3d at 1428 n. 14). Moreover, "factual
recitations of past earnings, so long as they are accurate, do
not create liability under Section 10(b)." In re Advanta Corp.
Sec. Litig., 180 F.3d at 538; see also Grossman v. Novell,
Inc., 120 F.3d 1112, 1119 (10th Cir. 1997) (No reasonable
investor would rely on vague, optimistic statements because they
do not contain information of reasonable specificity or impart a
definite guarantee of corporate performance); In re Milestone
Scientific Sec. Litig., 103 F. Supp.2d 425, 457 (D.N.J. 2000).
"[S]tatements of subjective analysis or extrapolation, such as
opinions, motives, and intentions" are "soft information" and
hence immaterial for purposes of Rule 10b-5. In re Craftmatic
Sec. Litig., 890 F.2d at 642; accord Lasker v. New York State
Elec. & Gas Corp., 85 F.3d 55, 59 (2d Cir. 1996); In re Donald
Trump Sec. Litig., 7 F.3d at 369 n. 11 ("The term `soft
information' refers to statements of subjective analysis or
extrapolation, such as opinion, motives, and intentions, or
forward looking statements, such as projections, estimates, and
General, non-specific statements of optimism or hope
even if arguably misleading, do not give rise to a
[F]ederal securities claim because they are not
material: there is no "substantial likelihood that
the disclosure of the omitted fact would have been
viewed by the reasonable investor as having
significantly altered the `total mix' of information
In re Advanta Corp. Sec. Litig., 180 F.3d at 538 (quoting TSC
Indus., Inc., 426 U.S. at 449, 96 S.Ct. 2126); see also San
Leandro Emergency Medical Group Profit Sharing Plan v. Philip
Morris Companies, Inc., 75 F.3d 801, 811 (2d Cir. 1996) (puffery
cannot mislead the reasonable investor and cannot constitute
actionable statements under the securities laws); Raab v.
General Physics Corp., 4 F.3d 286, 289 (4th Cir. 1993)
(statements that "[the company has] an expected annual growth
rate of 10% to 30% over the next several years" and "is poised to
carry the growth and success . . . well into the future" are not
material as a matter of law.).
The 25 February 1998 Press Release announced fourth quarter
1997 earnings of $4.6 million for NSL; the 6 May 1998 Press
Release announced first quarter 1998 earnings of $4.8 million;
and the 5 August 1998 Press Release announced second quarter 1998
earnings of $5.1 million. Second Amended Complaint at ¶¶ 37, 45,
56. Lead Plaintiffs do not allege that the published earnings
figures were false. Instead, Lead Plaintiffs allege that
statements made along with the earnings announcements were
materially misleading. Id. at ¶¶ 38, 46, 57.
It appears, nevertheless, that the following statements
constituted nothing more than mere "puffery":
I trust that in 1998 we will enjoy another year of
continuous growth. Second Amended Complaint at ¶ 37
(citing the 25 February 1998 Press Release).
The first quarter of 1998 shows that NICE continues
to benefit from its technological leadership and
strong competitive position. Id. at ¶ 45 (citing
the 6 May 1998 Press Release).
[W]e are focusing on the call center market which is
expected to grow significantly in the coming years.
Results for the second quarter reflect our improved
position in the call center market. Id. at ¶ 56
(citing the 5 August 1998 Press Release).
Our leading position in the North American call
center market is consistent with Nice's dominance in
the financial institutions and air traffic control
The call center market is an immense and growing
business sector worldwide. It generates high margins
and has the potential for increasing our revenues
significantly by the turn of the century. Id. at ¶
59 (citing the 17 August 1998 Press Release).
Each of the above referenced statements is the type of puffery
that has been found to be immaterial as a matter of law. See
e.g. In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1427
(finding statement "company believed it could continue to grow
net earnings at a faster rate than sales" to be inactionable
puffery); In re Milestone Scientific Sec. Litig., 103 F. Supp.2d
at 458 (the statement "we are very pleased with the amount of
orders we have . . . so far and expect even more orders in the
ensuing months" deemed puffery); In re MobileMedia Sec. Litig.,
28 F. Supp.2d at 927-28 (statement "[MobileMedia] believes that it
will be one of a limited number of companies that will have these
resources" is the type of "general, non-specific statement of
optimism or hope that has been found to be inactionable.").