b'expect, noting Carbonites goal was to unify all itsThe court further rejected plaintiffs theory that products under its data protection platform.defendants recklessly disregarded that they were When asked about macroeconomic changes at amaking false or misleading statements about VMEs June 10, 2019 analyst conference, the CFO stated hecapability. Relying on First Circuit precedent, the court was not seeing any dramatic changes while toutingnoted that [f]or Plaintiff to plead scienter by high Carbonites data protection business and competitivedegree of recklessness, he must show not merely advantage certainly in enterprise because ofsimple, or even inexcusable negligence, but an extreme Carbonites data storage efficiency. departure from the standards of ordinary care. Under that standard, the court rejected plaintiffs assertion that On July 25, 2019, Carbonite announced its secondan intent to defraud could be inferred from Carbonites quarter 2019 financial results, significantly loweredtroubleshooting mechanism, finding instead that its guidance for fiscal years 2019 and 2020, anda competing inferencethat Carbonite believed that its CEO was resigning. Later that day, the CFOVME was fixableis more cogent and compelling announced on an investor call that VME was not at thethan Plaintiffs inference of extreme departure from level of quality customers expected, Carbonite wasthe standards of ordinary care[,] particularly given withdrawing its VME product from the marketplace and,plaintiffs own allegations of Carbonites tiger team of that maybe a third of the guidance reduction was dueengineers who met daily to address VMEs functionality, to VMEs failure. The following day, Carbonites stockan internal chat group of engineering employees price fell 24%. dedicated to fixing the many problems with the In August 2019, investors filed putative class actionproduct[,] and Carbonites numerous patches and lawsuits against Carbonite, its CEO, and CFO allegingrepair efforts. The court also observed that Carbonites violations of Sections 10(b) and 20(a) of the 1934 Actstatements that VME was expected to meaningfully and Rule 10b-5 promulgated thereunder. Plaintiffscontribute to revenue later in 2019 and 2020 amended consolidated complaint alleged thatsuggested defendants did not anticipate meaningful defendants knew or should have known that theirrevenue from VME until much later, and held that [g]projections of VMEs value and statements aboutoing forward with the product launch may have been a VMEs performance were materially misleading, andpoor business decision, especially with the benefit of that defendants failed to disclose that VME was ofhindsight, but allegations of corporate mismanagement poor quality and technologically flawed, received poorare not actionable under Rule 10b5.reviews from customers, and had been a disruptiveThe court also held that plaintiffs failed to allege any factor for the companys salesforce, preventingfacts that Carbonites CEO and CFO were on notice Carbonite from closing on several deals during 2019.prior to VMEs withdrawal that the product had no On March 10, 2020, defendants moved to dismisshope of working, and that [w]ithout that allegation, the amended consolidated complaint, assertingPlaintiff cannot show that [defendants] statements that plaintiffs failed to plead any particularized factswere sufficiently reckless to prove scienter. Plaintiffs demonstrating a strong inference of scienter as toassertion that the CFOs statement formally withdrawing the individual defendants and failed to allege anyVME indicated his access to VME information likewise actionable material misrepresentation or omission ondid not sufficiently allege he knew the product did not the basis that the challenged statements were not false,and could never work, noting plaintiffs failed to allege statements of optimism or opinion, or forward-lookingany direct evidence that the individual defendants accompanied by meaningful cautionary languageknew of alleged internal employee reports regarding protected by the PSLRAs safe harbor.VMEs problems. On October 22, 2020, the court granted defendantsThe court also rejected plaintiffs argument that the motion, with prejudice, holding that plaintiffs failedindividual defendants stock sales supported an to allege scienter, and as such did not address theinference of scienter, instead finding that they traded defendants other asserted grounds for dismissal.pursuant to 10b5-1 trading plans and ended the class Specifically, the court rejected plaintiffs contention thatperiod with the same or more shares than held at the numerous challenged statements, including that VMEbeginning of the class period, negating any inference would make Carbonite extremely competitive andof a motive to defraud. And the court rejected plaintiffs that it was a really important product, were made withassertion that the CEOs resignation reflected evidence knowledge or reckless disregard that such statementsof scienter because it was suspiciously timed, were false or misleading, noting that many of theseconcluding that plaintiffs failure to assert any other statements were made at or near the launch of VMEfacts about the resignation coupled with the fact that he in October 2018 and that no facts suggested that thewas named the CEO of another technology company defendants did not reasonably believe that VMEsthat same day was not enough to establish scienter. problems could be fixed at that time. 91'