b'firms (VC Defendants). Plaintiffs alleged purportedtwo quarters, and contained appropriate cautionary misrepresentations in and omissions from the Registrationlanguage warning of potential future risks to revenue Statement regarding assertions that Natera was rapidlygrowth. The court also rejected plaintiffs alternative basis growing despite a decline in revenues and an increase infor Section 11 liability that asserted that Nateras failure expenses and net loss from 4Q 2014 to 2Q 2015. Plaintiffsto include 2Q 2015 financial results in its Registration alleged defendants knew of the 2Q 2015 financial resultsStatement purportedly constituted a material omission, before the IPO due to Nateras cash basis accountingholding that the Registration Statement properly and and its simplicity and predictability of the costs andaccurately forewarned of the now-realized risks disclosed expenses that increased, but did not include them in thein the 2Q 2015 financial results. The court reasoned Registration Statement, thus rendering it misleading. that the Registration Statement described the various The trial court sustained VC Defendants demurrer, withrisk factors, upon which plaintiffs relied, specifically prejudice, as to plaintiffs Sections 12 and 15 causesand in depthfor example, by incorporating cautions of action, resulting in dismissal of the VC Defendantsthroughout that historical results do not necessarily from the case entirely. The trial court also sustainedindicate expected future results. Moreover, the court held defendants demurrer with leave to amend as to plaintiffsthat Natera had no obligation to include interimSection 11 cause of action. The trial court further directed2Q 2015 results in its Registration Statement as the court the remaining defendants to thereafter file and servecould find no regulatory requirement to disclose such responsive Pleading by way of Answer and Motion forinterim financials. Judgment on the Pleadings, precluding a second roundThe court also held that plaintiffs failed to adequately of demurrers. plead an actionable omission to support a Section 11 Plaintiffs filed an amended complaint on November 21,violation by broadly alleging a violation of Item 303 of SEC 2017 to which defendants responded by filing answersRegulation S-Kwhich requires the disclosure of known and moving for judgment on the pleadings, which wasnegative trends in a registration statementbased on entered for defendants on August 21, 2018, dismissing [g]eneral and conclusory allegations of defendants the case with prejudice. Plaintiffs appealed and onknowledge. The court explained that because actual February 28, 2020, the California Court of Appealknowledge of omitted information is an essential element affirmed, agreeing with the trial court that statementsof a violation of Item 303[,] it is also an essential element in the Registration Statement that Natera was rapidlyof a Section 11 claim that is based on a violation of Item growing and noting corporations rapid growth revenue,303. Thus, plaintiffs Item 303 theory for liability could not were not false or misleading, and the Registrationsurvive because plaintiffs failed to allege sufficient facts to Statement refuted any argument that defendants failed todemonstrate defendants had actual knowledge of interim disclose the negative trend of declining reimbursementsor final results for 2Q 2015 at the time of the IPO. Rather, and revenues with increasing costs and losses. the Registration Statement refute[d] any argument that defendants failed to disclose the negative trend[s] by First, the court of appeal addressed plaintiffs alternativedisclos[ing] in some depth, outlining and analyzing the theories of liability for their Section 11 claim, dismissingrevenue decline upon which plaintiffs based their claim. plaintiffs assertion that Nateras characterizations ofFinally, the court affirmed dismissal of plaintiffs Section rapid growth in its Registration Statement, paired with15 claim, holding that plaintiffs failure to allege a primary its omission of 2Q 2015 financial results, were falseviolation of the securities laws was fatal to their claim. and misleading. In reaching this conclusion, the court focused on the context of each statements placement within the overall Registration Statement, as well as the Registration Statement as a whole, noting that the phrase rapid growth of revenues appeared in a paragraph titled Quarterly Trends with data reflecting historical quarterly results over the prior three years. The court reasoned that the at-issue statements placement clearly refer[ed] to historical growth of revenue and did not imply that the growth had been or would continue to be constant. Thus, the statement that Natera was experiencing rapid growth was neither false nor misleading because the rest of the Registration Statement clearly stated revenues had declined, and the reasons for that decline, in the previous 52'