UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

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1 Case 2:16-cv RGK-GJS Document 60 Filed 08/23/16 Page 1 of 8 Page ID #:747 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA JS-6 CIVIL MINUTES - GENERAL Case No. 2:16-CV RGK-GJS Date August 23, 2016 Title ERIC ARDOLINO et al. v. MANNKIND CORPORATION. et al. Present: The Honorable R. GARY KLAUSNER, U.S. DISTRICT JUDGE Sharon L. Williams (Not Present) Not Reported N/A Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiffs: Not Present Attorneys Present for Defendants: Not Present Proceedings: (IN CHAMBERS) Order re: Defendant s Motion to Dismiss (DE 50) 1. INTRODUCTION On June 15, 2016, investors Vladamir Rivkin and Pasoud Paydar (collectively Plaintiffs ) filed an Amended Class Action Complaint ( FAC ) against MannKind Corporation ( MannKind or the Company ) and MannKind executives Matthew Pfeffer ( Pfeffer ) and Hakan Edstrom ( Edstrom ) (collectively Defendants ). Plaintiffs allege violations of: (1) 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 against Defendants MannKind, Pfeffer, and Edstrom; and (2) 20(a) of the Securities Exchange Act of 1934 against Defendants Pfeffer and Edstrom. Presently before the Court is Defendants Motion to Dismiss ( Motion ) both of Plaintiffs claims. For the following reasons, the Court GRANTS Defendants Motion to Dismiss WITHOUT LEAVE TO AMEND. II. FACTUAL BACKGROUND MannKind is a pharmaceutical company focusing on the development of new drugs. The Company s only FDA-approved drug, Afrezza, is a rapid-acting inhaled insulin drug for adults with diabetes. (First Am. Compl. 2, ECF No. 49.) At the time it was developed, Afrezza was unique because its route of administration (inhalation) largely eliminates the need for diabetics to inject themselves with insulin. (First Am. Compl. 4, ECF No. 49.) Because the drug is administered via inhalation, however, the FDA imposed strict rules on physicians prescribing Afrezza due to concerns over complications for patients with serious lung conditions. (First Am. Compl. 5, ECF No. 49.) The FDA rules include a requirement that physicians CV-90 (06/04) CIVIL MINUTES - GENERAL Page 1 of 8

2 Case 2:16-cv RGK-GJS Document 60 Filed 08/23/16 Page 2 of 8 Page ID #:748 administer a lung function test prior to prescribing Afrezza. This test, while rather simple, requires a specialized medical device called a spirometer. (First Am. Compl. 5, ECF No. 49.) The FDA further mandated that a spirometry test be re-administered every six months, and that the prospective patients go through a ten day trial period before receiving a full prescription. (First Am. Compl. 5, ECF No. 49.) After Afrezza achieved FDA approval in June, 2014, MannKind entered into a worldwide collaboration and licensing agreement with Sanofi-Aventis U.S. LLC ( Sanofi ), a global healthcare company, which began in September, (First Am. Compl. 2; 6, ECF No. 49.) Sanofi was to be responsible for the development and commercialization of Afrezza, while MannKind would be responsible for manufacturing the drug. (First Am. Compl. 6, ECF No. 49.) MannKind maintained joint-supervisory control over the commercialization of Afrezza through a joint committee with Sanofi created under the agreement called the Joint Afrezza Committee ( JAC ). (First Am. Compl. 6, ECF No. 49.) Afrezza became publicly available by prescription in the U.S. in February, (First Am. Compl. 6, ECF No. 49.) Despite the appeal of an inhaled insulin product, FDA rules requiring spirometry testing erected a barrier to Afrezza s successful commercialization. Most endocrinologists and diabetologists (the doctors most likely to treat diabetic patients) do not have spirometers in their offices. (First Am. Compl. 7, ECF No. 49.) As a result, patients to be prescribed Afrezza had to see multiple doctors even before beginning the 10-day trial period. (First Am. Compl. 8, ECF No. 49.) Unfavorable treatment by insurance plan formularies (a common challenge for new drugs) also posed a significant barrier to Afrezza s successful commercialization. (Def. s Mot. To Dismiss 4:18, ECF No ) At the outset of Afrezza s commercialization, MannKind publicly disclosed the FDA rules relating to the drug, and printed the spirometry requirement on the drug s label. (Def. s Mot. To Dismiss 4:7, ECF No ) On May 8, 2015 MannKind made it clear that the FDA s requirement posed [an] obstacle delaying the initiation of therapy, and was a barrier to prescribing Afrezza. (Def. s Mot. To Dismiss 2:5 6, ECF No. 50-1; Ex. F 60, ECF No ) MannKind s SEC filings also mentioned problems associated with Afrezza s commercialization as investment risk factors, though the filings did not mention spirometry specifically. (First Am. Compl. 42, ECF No. 49.) Despite the obstacles the FDA rules created, MannKind publicly discussed the steps that it and Sanofi were taking to progress with commercialization. (Def. s Mot. To Dismiss 5:2 18.) MannKind disclosed the potential development of an inexpensive, nonrecording spirometer and discussed how Sanofi sales representatives were working with doctors on how they could acquire standard spirometers, or send their patients to nearby facilities with such devices. (Def. s Mot. To Dismiss 5:2 18.) Based on these efforts, Pfeffer, MannKind s CEO, stated on August 10, 2015 that at this point, [spirometry] doesn t seem to be the issue that s holding things up very much... [i]t slows things down, but it s not a blocking issue. (Def. s Mot. To Dismiss, Ex. M , ECF No ). He explained that while the spirometry issue had not completely gone away MannKind does not believe[] that [spirometry is] significantly impacting our sales. (Def. s Mot. To Dismiss, Ex. M , ECF No ) He cautioned, however, that if Afrezza sales increase, spirometry may have to be readdressed, but we re not quite there yet. (Def. s Mot. To Dismiss, Ex. M 165, ECF No ). During this time, insurance coverage continued to pose a problem for Afrezza s commercialization, as many insurance companies placed Afrezza into the least favorable tier of prescription drugs. (Def. s Mot. To Dismiss 4:21 28, ECF No ) Thus, Afrezza was relatively more expensive for patients, and doctors were required to obtain prior authorization to prescribe the drug. (Def. s Mot. To Dismiss 6:1, ECF No ) Defendants also repeatedly disclosed the insurance coverage setbacks to investors, stating: [t]he requirement for prior authorization... ha[s] significantly delayed and complicated the prescription process, (Def. s Mot. To Dismiss, Ex. F 62, ECF No. 50-8), CV-90 (06/04) CIVIL MINUTES - GENERAL Page 2 of 8

3 Case 2:16-cv RGK-GJS Document 60 Filed 08/23/16 Page 3 of 8 Page ID #:749 [i]nsurance coverage continues to slow the process, (Def. s Mot. To Dismiss, Ex. M 163, ECF No ) and [w]e and Sanofi ultimately may be unable to gain market acceptance of Afrezza for a variety of reasons, including... lack of coverage or adequate reimbursement. (Def. s Mot. To Dismiss, Ex. I 95, ECF No ) A former diabetic sales specialist ( Former Employee 1 or FE1 ) who sold Afrezza for Sanofi in the greater Atlanta, Georgia area until August, 2015 (the very beginning of the class period) reports that the spirometry issue was the major impediment to Afrezza prescription sales. (First Am. Compl. 54, ECF No. 49.) However, FE1 also listed numerous other problems with Afrezza s commercialization, including that Sanofi made little to no effort to deal with insurance coverage issues, dedicated few resources or support to Afrezza sales, or to physician outreach, and provided its sales force with limited marketing materials. (First Am. Compl. 56, ECF No. 49.) Prior to his departure, a Sanofi supervisor told FE1 that Sanofi needed to increase Afrezza sales numbers or it might stop promoting the drug. (First Am. Compl , ECF No. 49.) Under the MannKind-Sanofi Agreement, Sanofi had the option to terminate the contract after January 1, 2016 if either: (1) Sanofi determines in good faith that Commercialization of [Afrezza] is no longer economically viable in the United States or (2) upon delivery of at least six months prior written notice for any reason. (Def. s Mot. To Dismiss 6:17 23, ECF No ) On January 4, 2016, Sanofi informed MannKind that it was exercising its termination options, and both MannKind and Sanofi publicly announced the termination the following day. (Def. s Mot. To Dismiss 6:21 28, ECF No ) MannKind announced that Sanofi terminated the agreement because sales forecasts were not met. (Def. s Mot. To Dismiss 6:17 23, ECF No ) Sanofi explained that it elected to terminate the agreement because prescription levels for Afrezza never met even modest expectations and that sales were low despite our substantial efforts. (Def. s Mot. To Dismiss 6:27 28, ECF No ) After news broke of the MannKind-Sanofi agreement s termination on January 5, 2015, MannKind s stock price fell over 48% dropping from $1.45 to $0.75 per share. (First Am. Compl. 74, ECF No. 49.) Plaintiffs are investors who owned MannKind securities, and have brought the instant action on behalf of all persons or entities who purchased or otherwise acquired MannKind securities between August 10, 2015 and January 5, 2016, inclusive (the Class Period ). Plaintiffs allege that Defendants made several false or misleading statements and omissions during the Class Period regarding spirometry issues and Sanofi s eventual termination of the Sanofi- MannKind agreement. III. JUDICIAL STANDARD A complaint must contain a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the... claim is and the grounds upon which it rests. Fed.R.Civ.P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir.2008). Courts must accept all factual allegations in the CV-90 (06/04) CIVIL MINUTES - GENERAL Page 3 of 8

4 Case 2:16-cv RGK-GJS Document 60 Filed 08/23/16 Page 4 of 8 Page ID #:750 complaint as true and construe the pleadings in the light most favorable to the nonmoving party. Knievel, 393 F.3d at However, the court need not accept conclusory allegations or unwarranted inferences when deciding on the motion. In re Daou Sys., Inc., 411 F.3d 1006, 1013 (9th Cir. 2005). Securities fraud class actions, however, must meet higher, more exacting pleading standards of both Fed. R. Civ. P. 9(b) and the Private Securities Litigation Reform Act (PSLRA). See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, (2007). Rule 9(b) requires that [i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Fed. R. Civ. P. 9(b). To satisfy this standard, a complaint must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about the purportedly fraudulent statement, and why it is false. Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1133 (9th Cir.2013). The PSLRA significantly altered pleading requirements in private securities fraud litigation by requiring that a complaint plead with particularity both falsity and scienter. In re Vantive Corp. Sec. Litig., 283 F.3d 1079, 1084 (9th Cir.2002). The PSLRA requires that the complaint shall, with respect to each act or omission... state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind. 15 U.S.C. 78u 4(b)(2)(A). The PSLRA also requires that the complaint shall specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed. Id. at 78u 4(b)(1)(B); Oregon Public Employees Retirement Fund v. Apollo Group Inc., 774 F.3d 598 (9th Cir. 2014) [hereinafter OPERF]. IV. JUDICIAL NOTICE & INCORPORATION BY REFERENCE When ruling on a 12(b)(6) motion to dismiss a 10(b) action, courts must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, [1] documents incorporated into the complaint by reference, and [2] matters of which a court may take judicial notice. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). A document is incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff s claim. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Such documents are considered part of the pleading and are therefore presumed true for purposes of a motion to dismiss. A court may also consider matters that are subject to judicial notice. Tellabs, 551 U.S. at 322. Judicial notice is appropriate for facts not subject to reasonable dispute that are generally known or are capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b). Defendants have asked this Court to either take judicial notice of, or consider under the incorporation by reference doctrine various documents attached to Defendants Motion to Dismiss, listed as Exhibits A R. (Def s Request For Judicial Notice, 1:2, ECF No ). Exhibits A E, G, I L, and P consist of copies or excerpts of publicly available SEC filings for MannKind and Sanofi. Exhibits F, H, M, N, and R consist of transcripts of earnings conference calls. Finally, Exhibit O is a copy of a Los Angeles Times article and Exhibit Q is a MannKind press release dated January 5, Federal courts routinely take judicial notice of press releases, news articles, SEC filings, and CV-90 (06/04) CIVIL MINUTES - GENERAL Page 4 of 8

5 Case 2:16-cv RGK-GJS Document 60 Filed 08/23/16 Page 5 of 8 Page ID #:751 conference call transcripts cited in securities complaints. See, e.g., Wietschner v. Monterey Pasta Co., 294 F. Supp. 2d 1102, (N.D. Cal. 2003) (judicially noticing SEC filings and press releases); Brodsky v. Yahoo!, Inc., 630 F. Supp. 2d 1104, 1111 (N.D. Cal. 2009) (judicially noticing conference call transcripts, press releases, and news articles). Plaintiffs also extensively reference these documents throughout their Complaint. The Court thus GRANTS Defendants request and will consider these documents in ruling on Defendants Motion to Dismiss. The Court does not, however, consider these documents in order to determine the truth of the statements contained therein, but instead considers them to determine what statements were made and how these statements relate to the allegations in Plaintiffs Complaint. IV. DISCUSSION A. Plaintiffs 10(b) & Rule 10b-5 Claim Plaintiffs first claim is that Defendants violated 10(b) of the Exchange Act of 1934, 15 U.S.C. 78j(b), and Securities and Exchange Commission Rule 10b-5, promulgated under the authority of 10(b). Section 10(b) makes it unlawful for any person... [t]o use or employ, in connection with the purchase or sale of any security... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe[.] 15 U.S.C. 78j(b). Rule 10b-5 provides: It shall be unlawful for any person... (a) To employ any device, scheme, or artifice to defraud, (b) To 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, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R b-5. Section 10(b) and Rule 10b-5 create a private right of action which resembles, but is not identical to, common-law tort actions for deceit and misrepresentation. Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 341 (2005). The basic elements for a private action under 10(b) and Rule 10b-5 are: (1) falsity (a misrepresentation or omission); (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation. See Dura, 544 U.S. at ; Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1061 (9th Cir.2008). Defendants argue in their Motion to Dismiss that Plaintiffs have failed to adequately plead three of the six required elements: (1) falsity; (2) scienter; and (3) loss causation. Because a failure to adequately plead falsity is dispositive, the Court analyzes only this element of Plaintiffs 10(b) claim. 1. Falsity Under the PSLRA, a well-pled allegation of falsity must identify (1) each false statement alleged to have been misleading; (2) the reasons why those statements are misleading; and (3) if the allegation is made on information and belief, the particular facts that give rise to the belief. Id. Further, the allegations must create a strong inference of falsity, and allege facts giving rise to this inference with particularity. 15 U.S.C. 78u 4(b). Plaintiffs allege that three groups of statements Defendants made are false or misleading: (a) CV-90 (06/04) CIVIL MINUTES - GENERAL Page 5 of 8

6 Case 2:16-cv RGK-GJS Document 60 Filed 08/23/16 Page 6 of 8 Page ID #:752 statements made in earnings calls relating to spirometry, (b) omissions in SEC filings relating to spirometry; and (c) statements made in an earnings call relating to Sanofi s future termination of the MannKind-Sanofi agreement. Defendants argue that as to all of these statements, Plaintiffs fail to plead with particularity facts showing that the statements are materially false or misleading. The Court agrees. a) Earnings Call Statements About Spirometry Plaintiffs first allege that Defendants Edstrom and Pfeffer made statements during earnings calls on August 10, 2015 and November 9, 2016 that were materially false or misleading. Plaintiffs point to Edstrom s statement that Sanofi was making excellent moves in addressing the spirometry issue, and that research showed that spirometry was no longer a critical gating item. Plaintiffs also point to Pfeffer s statement that based on the statistics... it isn t believed that [the spirometry issue] [is] significantly impacting our sales, that [spirometry] doesn t seem to be the issue that s holding things up very much, and that its not a blocking issue. (Def. s Mot. To Dismiss, Ex. M, ECF No ) Plaintiffs finally point to Edstrom s statement that while spirometry was initially a delay, doctors now know how to address spirometry. (Def. s Mot. To Dismiss, Ex. H, ECF No ) Plaintiffs basic theory is that Defendants falsely asserted that spirometry was no longer an issue, and that Plaintiffs relied on this assertion to their detriment when making investment decisions. Plaintiffs argue that Defendants knew or should have known that spirometry issues persisted and were negatively affecting prescription[s] and sale of Afrezza. (First Am. Compl. 60, ECF No. 49.) However, a review of the documents judicially noticed and incorporated by reference shows that Defendants never claimed that spirometry issues did not persist or were not still affecting Afrezza sales. Taken in their entirety, Defendants allegedly false statements suggest only that the spirometry issue while still problematic was no longer the main bottleneck in Afrezza s successful commercialization. For instance, Defendants expressly stated during the August 10, 2016 earnings call that the spirometry issue was not completely gone, that it still slow[ed] things down, and that while spirometry may have to be readdressed in the future, [i]t seems to be insurance coverage is a bigger factor than [spirometry]. (Def. s Mot. To Dismiss, Ex. M, 8 9, ECF No ). Plaintiffs allegations simply ignore these parts of Defendants earnings call statements, and Plaintiffs offer no particularized facts sufficient to contradict the statements in their entirety, beyond bare conclusions that the spirometry issue had never been solved. (First Am. Compl. 12; 60, ECF No. 49.) Plaintiffs have not satisfied their burden of pleading particularized facts showing that the challenged statements are false or misleading. Additionally and independently, at least some of Defendants earnings call statements constitute puffery. Puffery concerns expressions of opinion, as opposed to knowingly false statements of fact. OPERF, 774 F.3d at 606. When valuing corporations,[ ] investors do not rely on vague statements of optimism like good, well-regarded, or other feel good monikers. Id. The Ninth Circuit has held that mildly optimistic, subjective assessment[s] hardly amount[] to [] securities violation[s], and that statements that are not capable of objective verification cannot be considered materially false. Id. Statements preceded by qualifiers, such as we believe may also be too vague and subjective to constitute misrepresentations under federal securities laws. Id. at 607. Several of Defendants allegedly false statements contain subjective qualifiers, including that spirometry doesn t seem to be holding things up very much, and that it isn t believed that spirometry is significantly affecting sales. The use of these qualifiers further weakens Plaintiffs argument that Defendants statements were objectively false or misleading at the time they were made. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 6 of 8

7 Case 2:16-cv RGK-GJS Document 60 Filed 08/23/16 Page 7 of 8 Page ID #:753 b) Spirometry Omissions in SEC Filings Plaintiffs next allege that Defendants SEC filings, including their K, and two Form 10- Qs from 2014 and 2015, were materially false and misleading by omission because they failed to mention spirometry. Rule 10b 5 prohibit[s] only misleading and untrue statements, not statements that are incomplete. Brody v. Transitional Hosps. Corp., 280 F.3d 997, 1006 (9th Cir. 2002). To be actionable under the securities laws, an omission must be misleading; in other words it must affirmatively create an impression of a state of affairs that differs in a material way from the one that actually exists. Id.; accord In re Amgen Inc. Sec. Litig., 544 F. Supp. 2d 1009, 1029 (C.D. Cal. 2008). Plaintiffs omission theory fails to state a claim because Plaintiffs do not plead facts suggesting that Defendants disclosures materially mislead investors. On the contrary, despite not being mentioned in MannKind s SEC disclosures, Plaintiffs Complaint shows that spirometry was frequently discussed in public earnings calls by both Defendants and analysts from investment banks. That Defendants neglected to use the term spirometry in their SEC disclosures does not by itself give rise to a strong inference that the disclosures were materially misleading, as required under the heightened pleading standards of Rule 9(b) and the PSLRA. c) Earnings Call Statements About Sanofi s Termination Plaintiffs finally allege that Defendant Edstrom s statement during a November 9, 2015 earnings call that at this time we have certainly no indication that Sanofi is [planning] [to terminate] the partnership was materially false and misleading. Plaintiffs cite no particularized facts, however, to suggest that Defendants had any indication in early November that Sanofi would exercise its right to terminate the agreement the following January. Instead, Plaintiffs simply allege that Defendants must have known about Sanofi s plans to terminate because Defendants were in transparent and frequent contact with Sanofi (First Am. Compl. 70, ECF No. 49.) Contrary to the heightened pleading requirements, Plaintiffs offer no particularized facts to support these bare assertions. As to all three groups of statements, Plaintiffs have failed to allege sufficiently particularized facts suggesting that Defendants statements during the Class Period constituted material misrepresentations or omissions in violation of 10(b) and Rule 10b-5. After reviewing the facts as alleged in the Complaint, as well as the documents that are incorporated by reference and judicially noticed, the Court finds that Plaintiffs cannot cure this defect. Therefore, the Court DISMISSES Plaintiffs 10(b) claim WITH PREJUDICE. B. Plaintiffs 20(a) Claim Plaintiffs only other claim is that Defendants violated 20(a) of the Exchange Act of Section 20(a) confers liability on those who direct others to commit violations of the Exchange Act, stating: Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 7 of 8

8 Case 2:16-cv RGK-GJS Document 60 Filed 08/23/16 Page 8 of 8 Page ID #: U.S.C. 78t(a). To allege a violation of 20(a), a plaintiff must establish (1) a primary violation of federal securities laws; and (2) that the defendant exercised actual power or control over the primary violator. See Howard v. Everex Systems, Inc., 228 F.3d 1057, 1065 (9th Cir.2000). Thus, where a complaint does not plead a primary violation of 10(b), the control person claim under 20(a) may be dismissed summarily. Zucco, 552 F.3d at 990. Because Plaintiffs have failed to allege a 10(b) claim, the Court DISMISSES Plaintiffs 20(a) claim WITH PREJUDICE. V. CONCLUSION For the foregoing reasons, the Court GRANTS Defendant s Motion to Dismiss the First Amended Class Action Complaint WITHOUT LEAVE TO AMEND since amendment would be futile. IT IS SO ORDERED. Initials of Preparer : CV-90 (06/04) CIVIL MINUTES - GENERAL Page 8 of 8