b'and analysts, LogMeIn communicated that it madeare encouraging and that the CFO was impressed very good progress on converting GetGo customers.that the transition moved forward in conjunction In December 2017, LogMeIns CEO acknowledgedwith the companys announced synergy plan were to investors that converting people from monthly toinactionable statements of corporate optimism.annual payments . has somewhat of a dampeningThe court did analyze two of the alleged misstatements effect on retention but reiterated that the Companyor omissions as close calls. Plaintiffs alleged that remained optimistic. the CEO and vice president of investor relations each On July 26, 2018, the Company announced its secondmade false statements at separate analyst technology quarter 2018 earnings results, disclosing that theconferences that LogMeIn was not forcing customers business segment that absorbed the majority of theto either move to an annual subscription or pay higher GoTo suite of products experienced a 3.5% declinesubscription fees. The court held that plaintiffs failed to in renewal rate. The CEO acknowledged during aplead falsity because the alleged confidential witness shareholder conference call that day that [a]ggressivelystatements indicate that the Company was employing moving customers from monthly to annual payments,aggressive techniques but do not indicate the Company changing business terms and conditions and barrierswas unilaterally transitioning customers from monthly we created to the auto-renewal process all contributedto annual payment plans against their will or without to friction for our customers and made us harder toother options. The court noted that each of plaintiffs do business with. The day after these disclosures,confidential witnesses stops short of saying that the LogMeIns share price declined 25.47%. Company was transitioning customers against their will. On August 20, 2018, investors filed a putative classWhat they do say is that the Company was creating action lawsuit in the U.S. District Court for the Centralfrustrating hoops for customers to jump through and District of California, later transferred to the U.S.being overly aggressive. Making it challenging for District Court for the District of Massachusetts, againstcustomers or otherwise aggravating them is not the LogMeIn and certain of its officers alleging violationssame as transitioning unwilling customers. of Sections 10(b) and 20(a) of the 1934 Act, on theAs to these two close calls, the court held plaintiffs grounds that defendants purportedly made fraudulentfailure to plead scienter further supported dismissal. misrepresentations and omissions to shareholdersThe court explained that none of the confidential regarding the post-merger conversion of GetGowitnesses were alleged to have ever even interacted customers to the LogMeIn billing model. In supportwith the individual defendants, general conclusory of their allegations, plaintiffs included allegations ofstatements about discussions at senior leadership confidential witness statements from alleged LogMeInmeetings did not establish that the individual employees claiming that LogMeIn managementdefendants attended those meetings, and that even botched the transition and engaged in underhandedif the individual defendants were told that they could billing and business practices to convert customerslose customers because of transition efforts does to LogMeIns annual subscription-based model, whichnot mean they knew customers were allegedly being the CEO knew or should have known would result inforced to transition. Having found plaintiffs failed to lost customers. adequately plead an actionable Section 10(b) claim, Defendants moved to dismiss the amended complaintthe court concluded that the Section 20(a) claim must arguing that plaintiffs puzzle pleading (requiring thealso be dismissed.court to figure out why various statements were false)In its ruling, the court limited plaintiffs leave to amend failed to allege falsity with requisite particularity, andonly as to the two close call statements. Plaintiffs filed that it alleged fraud by hindsight. Although the courta second amended complaint on November 11, 2020, disagreed with defendants puzzle pleading and fraudwhich defendants moved to dismiss on December by hindsight argument, it agreed that the amended16, 2020. On March 18, 2021, the court dismissed the complaint fell short on other grounds and dismissedsecond amended complaint, with prejudice, holding it with limited leave to amend. Specifically, the court[i]n granting Defendants motion to dismiss the [first held that plaintiffs failed to allege facts that wouldamended complaint], the Court made observations make statements regarding financial projections,intended to guide Plaintiffs efforts to amendThe gross renewal rates, growth or expected growth, or[second amended complaint] does not cure these cautionary disclaimers false or misleading. And thedeficiencies and although Plaintiffs new allegations court held that the companys forward-looking growthpaint a more detailed picture of potential corporate expectations, accompanied by appropriate cautionarymismanagement and poor customer service, they language, were protected by the PSLRAs safe harbor.still do not make out a claim for securities fraud.Similarly, the court found that statements regardingFocusing on those close call statements, the court the process of the transition, such as initial effortsheld that the allegations do not suggest that they were 89'