b'negative outlook for 4Q 2018 to facilitate privatizationMindbodys personal interests and discussions with at a below-market price, and failed to disclose, beforeVista, including the preliminary and definitive proxy shareholders voted on the deal, that 4Q 2018 resultsstatements indication that [a]t the time of the signing exceeded expectations or their intentions to continueof the Merger Agreement, Vista and M[indbody] had working for Mindbody after the company went private.not engaged in any employment or retention related Defendants moved to dismiss the first amendeddiscussions . The court next held plaintiffs pleaded complaint, which the court granted in part, holding thatscienter because the CEO was undoubtedly aware plaintiffs pleaded actionable statements or omissionsof his own discussions with Vista Finally, the court based on defendants alleged failure to disclose 4Qdetermined the misrepresentation was material on the 2018 revenue figures after January 5, 2019, and basedbasis that investors may have considered the CEOs on defendants denials of employment discussions withinterest in his own employment as an indication that Vista prior to the signing of the merger agreement, buthis priorities were misplaced, and that his evaluation of dismissing plaintiffs claims in all other respects. the benefits to shareholders was less than rigorous. First, the court held that plaintiffs adequately pleaded aThe court rejected plaintiffs remaining allegations Section 10(b) claim based on allegations of defendantsof misstatements or omissions, on the grounds that purported failure to disclose better-than-expectedthey were inactionable forward looking statements or 4Q 2018 revenue figures after January 5, 2019,otherwise immaterial. The court held that defendants because the unexpectedly positive performance was4Q 2018 guidance reduction was not actionable substantially likely to affect shareholders assessment ofbecause the statements were forward looking and share value and defendants were aware of the over- plaintiffs failed to allege that defendants knew that performance before the shareholder vote on the Vistatheir statements were inaccurate, reasoning that transaction. The court stated there was no seriousdefendants early optimism about integration was question that plaintiffs pleaded scienter, reasoning thatnot inconsistent with integration issues emerging in alleged emails from the CEO and CFO on January 5October 2018 and resulting in the company altering and 8, 2019, discussing preliminary 4Q 2018 revenueits 4Q 2018 expectations. The court also rejected of $68.3 million which was a massive beat againstplaintiffs allegation that defendants proxy materials the 4Q 2018 consensus midpoint of $66 millionwere misleading because they failed to disclose Vistas established that defendants knew then that Mindbodyinterest in acquiring Mindbody in 2015 before the had beaten its reduced 4Q 2018 revenue guidancecompany went public, stating that it could not conceive and realized the significance. The court further heldof why Mindbodys apparent rejection of Vistas that allegations that the CFO emailed the auditoffer (if there was one) in 2015 would be material to committee on January 24, 2019, recommending thatshareholders deciding in 2019 whether to sell to Vista. this information be disclosed, but that it was not beforeThe court similarly rejected plaintiffs assertion that the shareholders voted on the transaction, adequatelydefendants misstated or omitted the fact that they gave pleaded that defendants deliberately (or, at minimum,Vista preferential treatment during the deal process, recklessly) withheld the information from shareholdersacknowledging that absent a misleading statement to prior to their vote.the contrary[,] which plaintiffs did not allege, there is no duty under federal securities law to disclose that a Second, the court held that plaintiffs adequatelypotential buyer received preferential treatment during pleaded that defendants misrepresented the extentthe bidding process.to which Mindbody and Vista discussed employmentThe court summarily disposed of plaintiffs Section and other incentives for Mindbodys management10(b) claim premised on scheme liability, pleaded as in attempt to portray Mindbodys management asa separate count, reasoning the entire conduct or neutral arbiters of Vistas proposal. The court reasonedscheme plaintiffs complained of was the dissemination that plaintiffs allegations that the CEO told Qatalystof misleading information rendering it indistinguishable in early August 2018 that his condition for sellingfrom the misstatements and omissions alleged, in support Mindbody to a private equity fund was the retentionof plaintiffs other Section 10(b) count. The court did, of existing management, that the CEO emailed thehowever, hold that plaintiffs adequately alleged violations CFO and others that the a sale to Vista would notof Sections 14(a) and 20(a) of the Exchange Act and be an automatic exit for any of us or our princip[als,]Rule 14a-9 promulgated thereunder, based on the same and that Vistas offer letter emphasized its interest inreasons the court held plaintiffs adequately alleged a partner[ing] with superior management teams, takenSection 10(b) claim based on defendants post-January 5, together, paint a compelling picture of a CEO who2019, statements or omissions about Mindbodys share minimized and hid the extent to which he made hisprice and defendants misstatements about the CEOs own employment prospects a top priority, renderingpre-signing employment discussions with Vista. misleading defendants statements concerning 75'