Employees’ Retirement System of the State of Rhode Island v The Williams companies, Inc. et al.

System appealed dismissal of its amended securities fraud complaint. The panel affirmed. It affirmed as to a misstatement claim as the statement in question accurately communicated past events relating to a merger and Companies issued additional statements putting investors on notice the proposed merger faced risks of not happening. It affirmed as to the omission claim because system failed to prove a duty to disclose information about a different possible merger as Companies made no statements that were misleading absent information about the second possible merger. It held that even if a duty to disclose existed, System failed to prove materiality because the compliant did not plausible allege the second potential merger was likely as of the date of the alleged misstatement and failed to plausible allege unit holders in the company being taken over in the merger would reasonably view the potential second merger as fatal to the initial merger. It finally held that even if System proved both duty to disclose and materiality, it failed to plausibly allege scienter because the small likelihood the second proposed merger would terminate the first merger does not support an inference of fraud and failed to lead any plausible motive to deceive.