This language, whether in the Code of Business Ethics itself, or Miller's acknowledgement of his “understanding of, and commitment to” the standards contained therein are “inherently aspirational” and hence immaterial. See Andropolis v. Red Robin Gourmet Burgers, Inc., 505 F.Supp.2d 662, 685–86 (D.Colo.2007) ; see also Retail Wholesale & Dept. Store Union Local 338 Retirement Fund v. Hewlett–Packard Co., 52 F.Supp.3d 961, 969–970, 2014 WL 2905387, at *6 (N.D.Cal.2014) ; Cement & Concrete, 964 F.Supp.2d at 1138. No reasonable investor would have construed either the statement in Miller's offer letter or Polycom's Code of Business Ethics as “not just an aspirational statement of intention, but a warranty that [Miller was] compliant.”
This language, whether in the Code of Business Ethics itself, or Miller's acknowledgement of his “understanding of, and commitment to” the standards contained therein are “inherently aspirational” and hence immaterial. See Andropolis v. Red Robin Gourmet Burgers, Inc., 505 F.Supp.2d 662, 685–86 (D.Colo.2007); see also Retail Wholesale & Dept. Store Union Local 338 Retirement Fund v. Hewlett–Packard Co., 52 F.Supp.3d 961, 969–970, 2014 WL 2905387, at *6 (N.D.Cal.2014); Cement & Concrete, 964 F.Supp.2d at 1138. No reasonable investor would have construed either the statement in Miller's offer letter or Polycom's Code of Business Ethics as “not just an aspirational statement of intention, but a warranty that [Miller was] compliant.”
Courts routinely find similar statements to be non-actionable puffery or aspirational (and hence immaterial). See, e.g., Retail Wholesale & Dep't Store Union Loc. 338 Ret. Fund v. Hewlett-Packard Co., 845 F.3d 1268, 1276 (9th Cir. 2017) (statements “to commit to certain ‘shared values . . . not capable of objective verification' ”); Lopez v. Ctpartners Exec. Search, Inc., 173 F.Supp.3d 12, 19, 26-29 (S.D.N.Y. 2016) (company's statements about commitment to a “diverse workforce” and “an inclusive and positive working environment” were “immaterial puffery”); Nathanson v. Polycom, Inc., 87 F.Supp.3d 966, 976-77 (N.D. Cal. 2015) (commitment to ethical practices “‘inherently aspirational and hence immaterial' ”); Retail Wholesale & Dep't Store Union Loc. 338 Ret. Fund v. Hewlett-Packard Co., 52 F.Supp.3d 961, 965, 970 n.2 (N.D. Cal. 2014) (“commitment to highest standards of governance [is] quintessential, non-actionable puffery”), aff'd, 845 F.3d 1268 (9th Cir. 2017); Ocegueda, 2021 WL 1056611, at *9.
First, courts hold that similar statements are non-actionable puffery or aspirational (and hence immaterial). See, e.g. , Retail Wholesale & Dep't Store Union Loc. 338 Ret. Fund v. Hewlett-Packard Co. , 845 F.3d 1268, 1276 (9th Cir. 2017) (statements "to commit to certain ‘shared values ... not capable of objective verification’ "); Lopez v. Ctpartners Exec. Search, Inc. , 173 F. Supp. 3d 12, 19, 26–29 (S.D.N.Y. 2016) (company's statements about commitment to a "diverse workforce" and "an inclusive and positive working environment" were "immaterial puffery"); Nathanson v. Polycom, Inc. , 87 F. Supp. 3d 966, 976–77 (N.D. Cal. 2015) (commitment to ethical practices " ‘inherently aspirational and hence immaterial’ "); Retail Wholesale & Dep't Store UnionLoc. 338 Ret.Fund v. Hewlett–Packard Co. , 52 F. Supp. 3d 961, 965, 970 n.2 (N.D. Cal. 2014) ("commitment to highest standards of governance [is] quintessential, non-actionable puffery"), aff'd , 845 F.3d 1268 (9th Cir. 2017). Second, the allegations do not support the claim of widespread unlawful practices.
Menaldi v. Och-Ziff Capital Mgmt. Grp. LLC , 277 F.Supp.3d 500, 513 (S.D.N.Y. 2017) (quoting In re FBR Inc. Sec. Litig. , 544 F.Supp.2d 346, 360 (S.D.N.Y. 2008) ); see alsoIn re Braskem S.A. Sec. Litig. , 246 F.Supp.3d 731, 755–56 (S.D.N.Y. 2017) ("Because ‘a code of ethics is inherently aspirational[,] it simply cannot be that every time a violation of that code occurs, a company is liable under federal law for having chosen to adopt the code at all.’ " (alteration in original) (quoting Retail Wholesale & Dep't Store Union Local 338 Ret. Fund v. Hewlett-Packard Co. , 52 F.Supp.3d 961, 970 (N.D. Cal. 2014) ) ). To be sure, "[s]ome statements, in context, may amount to more than ‘puffery’ and may in some circumstances violate the securities laws: for example, a company's specific statements that emphasize its reputation for integrity or ethical conduct as central to its financial condition or that are clearly designed to distinguish the company from other specified companies in the same industry."
It merits noting that courts have been skeptical toward theories of liability based on broad duties to disclose allegations of misconduct, especially when the connection between the liability sought and the alleged misconduct is attenuated. See e.g., Retail Wholesale & Dep't Store Union Local 338Retirement Fund v. Hewlett–Packard Co., 52 F.Supp.3d 961, 971 (N.D. Cal. 2014), aff'd sub nom. Retail Wholesale & Dep't Store Union Local 338 Ret. Fund v. Hewlett–Packard Co., 845 F.3d 1268 (9th Cir. 2017)
Because "a code of ethics is inherently aspirational[,] it simply cannot be that every time a violation of that code occurs, a company is liable under federal law for having chosen to adopt the code at all." Retail Wholesale & Dep't Store Union Local 338 Retirement Fund v. Hewlett–Packard Co., 52 F.Supp.3d 961, 970 (N.D. Cal. 2014), aff'd sub nom.Retail Wholesale & Dep't Store Union Local 338 Ret. Fund v. Hewlett–Packard Co., 845 F.3d 1268 (9th Cir. 2017) ; seeCity of Roseville Employees' Ret. Sys. v. Horizon Lines, Inc., 686 F.Supp.2d 404, 415 (D. Del. 2009) ("untenable" to hold that "any company with a code of ethics in compliance with § 229.406 would be required to disclose all violations of that code or face liability under federal securities law").
In this regard, the Court finds Plaintiff's argument unavailing. Courts have found that a defendant's mere adoption of a code of ethics, without statements assuring investors that its employees are in fact in compliance with the code, is not misleading. Lopez v. Ctpartners Exec. Search Inc., 173 F. Supp. 3d 12, 29 (S.D.N.Y. 2016) ("[A] code of ethics," he noted, "is inherently aspirational; it simply cannot be that every time a violation of that code occurs, a company is liable under federal law for having chosen to adopt the code at all, particularly when the adoption of such a code is effectively mandatory.") (quoting Retail Wholesale & Department Store Union Local 338 Retirement Fund v. Hewlett-Packard Co., 52 F. Supp. 3d 961, 964-66 (N.D. Cal. 2014)). Plaintiff does not allege that SQM assured its investors that its employees were in fact complying with the adopted code.
In Retail Wholesale & Department Store Union Local 338 Retirement Fund v. Hewlett–Packard Co., Hewlett-Packard (“HP”) had made public statements, in the wake of an ethics scandal, regarding its commitment to its Standards of Business Conduct (“SBC”). 52 F.Supp.3d 961, 964–66 (N.D.Cal.2014). HP repeatedly stated that its ethics policies applied to all employees and board members.
(emphasis omitted) (alterations in original)); see also Retail Wholesale & Dep't Store Union Local 338 Ret. Fund v. Hewlett–Packard Co., 52 F.Supp.3d 961, 970 (N.D.Cal.2014) (noting, in securities regulation context, that “a code of ethics is inherently aspirational; it simply cannot be that every time a violation of that code occurs, a company is liable under federal law for having chosen to adopt the code at all”).