author: ' HOWARD, Chief Judge.

text:
    IN RE: ARIAD PHARMACEUTICALS, INC. SECURITIES LITIGATION Joseph Bradley; Pension Trust Fund for Operating Engineers; City of Fort Lauderdale Police & Fire Retirement System; Automotive Industries Pension Trust Fund; William A. Gaul, D.M.D., Plaintiffs, Appellants, Nabil Elmachtoub, individually and on behalf of all others similarly situated; James L. Burch, individually and on behalf of all others similarly situated; Greater Pennsylvania Carpenters’ Pension Fund, individually and on behalf of all others similarly situated; Jimmy Wang, individually and on behalf of all others similarly situated, Plaintiffs, v. Ariad Pharmaceuticals, Inc; Harvey J. Berger; Frank G. Haluska; Timothy P. Clackson; Edward M. Fitzgerald; Jefferies & Company, Inc.; Wayne Wilson; Jay R. Lamarche; BMO Capital Markets Corp.; Athanase Lavidas; Cowen and Company, LLC; RBC Capital Markets, LLC; JP Morgan Securities LLC; Leerink Swann LLC; Norbert G. Riedel; Massimo Radaelli; Robert M. Whelan, Jr.; UBS Securities LLC, Defendants, Appellees, David E. I. Pyott; Mike R. Bowlin; John T. Cardis; Wesley W. Vonschack; Robert A. Ingram; William J. Link; Michael A. Mussallem; Barbara J. McNeil, Defendants.
    No. 15-1491
    United States Court of Appeals, First Circuit.
    November 28, 2016

      John C. Browne, with whom Kristin Ann Meister, Bernstein Litowitz Berger & Grossmann, LLP, Ariana J. Tadler, Arvind Khurana, Melissa Ryan Clark, Milberg LLP, Johnathan Gardner, Carol Villegas, Labaton Sncharow LLP, Glen DeValerio, and Berman DeValerio were on brief, for appellants.-
    John F. Sylvia, with whom Andrew N. Nathanson, Matthew D. Levitt, Rebecca L. Zeidel, and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. were on brief, for appellees ARIAD Pharmaceuticals, Inc., Harvey J. Berger, Frank G. Haluska, Timothy P. Clackson, Edward M. Fitzgerald, Wayne Wilson, Jay R. Lamarche, Atha-nase Lavidas, Norbert G. Reidel, Massimo Radaelli, and Robert M. Whelan, Jr.
    Brian E, Pastuszenski, with whom Mark Holland, Brian C. Devine, and Goodwin Procter LLP were on brief, for appellees Jefferies & Company, Inc., BMO Capital Markets Corp., Cowen and Company, LLC, RBC Capital Markets, LLC, JP Morgan Securities LLC, Leerink Swann LLC, and UBS Securities LLC.
    Before HOWARD, Chief Judge, SOUTER, Associate Justice, LIPEZ, Circuit Judge.

       Hon. David H. Souter, Associate Justice (Ret.) of the Supreme Court of the United States, sitting by designation.

   ' HOWARD, Chief Judge.

When a company’s stock declines, a shareholder lawsuit often follows. This case is no exception. Following a drop in the share price of ARIAD Pharmaceuticals, Inc., investors filed suit against the company and four corporate officers (together “ARIAD”), alleging securities fraud in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 783(b) and 78t(a), as well as the Securities and Exchange Commission’s (“SEC”) Rule 10b-5, 17 C.F.R. § 240.10b-5. The complaint also raised claims under Sections 11 and 15 of the Securities Act of- 1933 (“Securities Act”), 15 U.S.C. §§ 77k and 77o, against ARIAD, its directors, and‘various under: writers involved in the company’s January 2013 offering of common stock. The district court stopped the- litigation in its tracks by dismissing the complaint in its entirety. See In re ARIAD Pharm., Inc., 98 F.Supp.3d 147 (D. Mass. 2015). The plaintiffs timely appealed.

We affirm the district court’s dismissal of the securities fraud -counts, except with respect to,one particular alleged misstatement for which we find the allegations set forth in the complaint sufficient to state a claim. We also affirm the disposition of the plaintiffs’ claims under Sections 11 and 15, albeit on different grounds than those articulated by the district court.

I. Facts

Fairly read, the complaint alleges the following. ARIAD Pharmaceuticals, Inc. is a publicly traded company headquartered in Cambridge, Massachusetts. At all times relevant to this litigation, Defendant-Ap-pellee Harvey Berger served as ARIAD’s Chairman and Chief Executive Officer (“CEO”), Defendant-Appellee Edward Fitzgerald served as the company’s Executive Vice .President and,. Chief Financial Officer, (“CFO”), Defendant-Appellee Frank Haluska served as its Senior Vice President and Chief Medical Officer, and Defendant-Appellee Timothy Clackson served as its President of Research and Development, Senior Vice President, and Chief Scientific Officer.

In 2008, ARIAD embarked on the development of ponatinib, a tyrosine kinase inhibitor (“TKI”) designed to treat patients suffering from chronic myeloid leukemia (“CML”). As with any experimental drug, the development process entailed a series of clinical trials. See N.J. Carpenters Pension & Annuity Funds v. Biogen IDEC Inc., 537 F.3d 35, 39 (1st Cir. 2008) (discussing typical three-phase trial.structure). The first trial, dubbed “PACE 1,” was intended to determine the maximum tolerable dose (“MTD”) of ponatinib. After settling on 45mg as the MTD, ARIÁD began a second trial, “PACE 2.” The purpose of this follow-on study was to determine the safety, efficacy, and durability of ponatinib, in order to support its limited approval for CML patients who are resistant to or intolerant of other TKI treatments. In November 2012, with PACE 2 on-going, ARIAD began to screen subjects for its third clinical trial, “EPIC,” which was designed to compare ponatinib directly against the leading CML drug on the market, Gleevec.

In July 2012, ARIAD began the process of submitting a rolling application to the FDA for limited approval to market pona-tinib. In conjunction with the application, ARIAD submitted a July 2012 Interim Report consisting of data from the on-going PACE 2 trial, with a cut-off date of July 23, 2012. The Center for Drug Evaluation and Research (“CDER”), located within the FDA, subsequently analyzed the data and issued a series of reports of its own (collectively the “CDER Report”).

By October 2Q12, ARIAD and the FDA began corresponding in earnest about potential approval of ponatinib for limited applications. As part of this process, AR-IAD submitted a proposed label. The FDA, however, rejected ARIAD’s proposal, citing concerns about adverse cardiovascular events and dosage reductions. On December 14, 2012, after some additional back-and-forth, ARIAD announced that the FDA had approved the marketing of ponatinib on a limited basis. It was not all good news, however, as the FDA required ARIAD to include a “black box” warning on ponatinib’s label about the risk of adverse cardiovascular events. Following disclosure of these developments, ARIAD’s per share stock price fell from $23.88 to $18.93.

In the wake of the black box warning, ARIAD nevertheless continued to publicly project confidence in ponatinib. But more troubling news arose' in October 2013. First, on October 9, ARIAD informed investors that, based on additional data from an August 2013 Interim Report, it was pausing enrollment in all clinical studies of ponatinib due to increased instances of medical complications in the PACE 2 trial. Days later, on October 18, ARIAD issued a Form 8-K and accompanying press release indicating that it had agreed to halt the EPIC trial entirely. Finally, on October 31, ARIAD announced that it was “temporarily suspending the marketing and commercial distribution” of ponatinib at the direction of the FDA. The market reacted harshly, and ARIAD’s stock price fell to $2.20 per share. The instant shareholder lawsuit followed.

II. Procedural History

On the defendants’ motion, the district court dismissed the complaint in its entirety. As to the Exchange Act claims, the court found that the complaint sufficiently alleged material misrepresentations or omissions about ponatinib, but that it failed to give rise to a “strong inference” of scienter as required by the Private Securities Litigation Reform Act of 1995 (“PSLRA”). For the Securities Act claims, the district court held that the complaint did not plausibly allege any material misrepresentations or omissions in relation to AKIAD’s January 2013 common stock offering.

We review the grant of a motion to dismiss for failure to state claim de novo. See Aldridge v. A.T. Cross Corp., 284 F.3d 72, 78 (1st Cir. 2002). In doing so, we assume the truth of “the raw facts” set forth in the complaint. In re Bos. Sci. Corp. Sec. Litig., 686 F.3d 21, 27 (1st Cir. 2012). By contrast, we need not credit the plaintiffs’ “legal conclusions or characterizations.” Id.

III. Exchange Act Claims

Section 10(b) of the Exchange Act “forbids the ‘use or employ, in connection with the purchase or sale of any security ..., [of] any manipulative or deceptive device ....”’ Tellabs Inc. v. Makor Issues & Rights, Ltd., 651 U.S. 308, 318, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (alteration in original) (quoting 15 U.S.C. § 78j(b)). The SEC has implemented this provision via Rule 10b-5, which proscribes, among other things, “any untrue statement of a material fact” or omission of any “material fact necessary in order to make the statements made ... not misleading.” 17 C.F.R. § 240.10b-5. To state a claim under Section 10(b) and Rule 10b-5, a plaintiff must plead the following elements: (1) a material misrepresentation or omission; (2) scienter; (3) a connection with the purchase or sale of a security; (4) reliance; (5) economic loss; and (6) loss causation. ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46, 58 (1st Cir. 2008) (citing Dura Fharm., Inc, v. Broudo, 544 U.S. 336, 341-42, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005)).

The only two elements implicated by this appeal are the existence of a material misrepresentation and scienter. Ultimately, because we find that the complaint fails to adequately plead scienter with respect to most of the alleged misstatements, we need not determine whether those statements contained any misrepresentations or, if so, whether such misrepresentations were material.

We have, however, recognized that “the materiality and scienter inquiries are linked.” Abiomed, 778 F.3d at 240. This is because the marginal materiality of an omitted fact “tends to undercut the argument that defendants acted with the requisite intent ... in not disclosing” it. Id. at 242 (citation omitted). Accordingly, we must bear in mind that a fact is material where there is “a substantial likelihood that” its disclosure “would have been viewed by the reasonable investor as having significantly altered the total mix of information made available.” Basic Inc. v. Levinson, 485 U.S. 224, 231-32, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988) (citation omitted).

The Supreme Court has described scienter as “a mental state embracing intent to deceive, manipulate, or defraud.” Tellabs, 551 U.S. at 319, 127 S.Ct. 2499 (citation omitted). The plaintiffs correctly point out that scienter also encompasses “a high degree of recklessness.” Miss. Pub. Emps.’ Ret. Sys. v. Bos. Sci. Corp., 649 F.3d 5, 20 (1st Cir. 2011) (citation omitted). But, in this context, recklessness requires “an extreme departure from the standards of ordinary care, ... which presents a danger of misleading buyers ... that is either known to the defendant' or is so obvious the actor must have been aware of it.” Id (citation omitted).

At the pleading stage, the PSLRA requires plaintiffs to “state with particularity facts giving rise to a strong inference that the defendant acted with” scienter. 15 U.S.C. § 78u-4(b)(2)(A) (emphasis added). “To qualify as ‘strong1 ... an inference of scienter must be more than merely plausi-. ble or reasonable—it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs, 551 U.S. at 314, 127 S.Ct. 2499. We have found this exacting standard satisfied where the complaint “contains clear allegations of admissions, internal records or witnessed discussions suggesting that at the time they made the statements claimed to be misleading, the defendant officers were aware that they were withholding vital information or at least were warned by others that this was so.” Bos. Sci., 686 F.3d at 31. In imposing this heightened pleading standard, Congress recognized and accepted the “[i]nherent” risk of leaving “without remedy some wrongs that discovery or trial might have disclosed.” Id. at 32.

Here, ARIAD’s alleged misstatements fall into two broad categories: (1) those made before the FDA’s December 14, 2012 limited approval of ponatinib and the corresponding disclosures; and (2) those made after such approval. We address.each of these categories in turn below, and, with the exception of one pre-approval statement, we agree with the district court that the complaint fails to give rise to the required strong inference of seienter. We also find the plaintiffs’ allegations of insider trading insufficient to resuscitate the inadequate fraud claims.

A. Pre-Approval

The first alleged misstatement identified during the pre-approval period occurred in a December 11, 2011 press release about the PACE 2 trial data. The release indicated that “[i]nitial safety data show ponatinib to be well tolerated.” It went on to list the rates' of some adverse events, including rash, thrombocytopenia, dry skin, abdominal pain, headache, and pancreatitis, but it-did not mention the rate of cardiovascular events. As required by the PSLRA, the complaint purports to explain “why the statement [wa]s misleading,” 15 U.S.C. § 78u-4(b)(l), by referencing the CDER Report based on data collected through July 23, 2012. The complaint identifies several similar statements by ARIAD about the safety of po-natinib between December 2011 and mid-July 2012. The plaintiffs claim that each of these statements was materially misleading in light of the data reflected in the CDER Report.

But the plaintiffs’ theory of fraud suffers from a glaring omission. The complaint contains conclusory allegations that the defendants possessed “contemporaneous[ ]” knowledge of various facts in the CDER Report, including the 8% rate of serious cardiovascular events, “based on their continuous monitoring of the PACE 2 trial data.” The plaintiffs do not, however, allege any specific facts about when the defendants learned of these adverse events or even when the adverse events occurred. Rather, they impermissibly seek to establish fraud by hindsight, suggesting that, as early as December 2011, the defendants must have known about adverse events occurring up until the July 23, 2012 cut-off date. Not only does this theory defy logic, it also ignores our caselaw’s instruction that “[a] statement cannot be intentionally misleading if the defendant did not have sufficient information at the relevant time to form an evaluation that there was a need to disclose certain information and to form an intent not to disclose it.” Biogen, 537 F.3d at 45; see also id at 50 (finding complaint insufficient to support inference of scienter where the plaintiffs “failed to allege when” the relevant adverse events “became known”); Auto. Indus. Pension Tr. Fund v. Textron. Inc., 682 F.3d 34, 39 (1st Cir. 2012) (affirming dismissal where “warnings by subordinates or expressions of concern' by executives”- were “notably absent”).

The complaint’s allegations about access to the PACE 2 data do not fill this gap. Only one such allegation relates to the pre-approval period, and it stands for the unremarkable proposition that, as of May 9, 2012, ARIAD was “in the process of collecting, QCing, [and] processing the data.” The paragraph is silent on the crucial questions of when the serious adverse events occurred and when the defendants became aware of them.

In addition to statements about ponatin-ib’s safety, the complaint also cites various allegedly misleading statements about dose reductions. For example, on December 12, 2011, Haluska, ARIAD’s Chief Medical Officer, told investors, “we haven’t quantified yet the number of dose interruptions or dose reductions” in the PACE 2 study. The plaintiffs’ theory.of fraud follows a familiar pattern: this statement was purportedly misleading because of the defendants’ contemporaneous knowledge of certain facts in the CDER Report, including the fact that- 73% of patients required a dose interruption or dose reduction. Subsequent paragraphs contain similar allegations. We are, however, left to guess as to precisely when the defendants became aware of the dose reductions.

For these reasons, we have little trouble concluding that the complaint fails to create a compelling inference of scienter with respect to statements made before the July 23, 2012 cut-off date for the CDER Report. Indeed, the plaintiffs come close to conceding as- much by alleging that the defendants possessed knowledge of the relevant adverse events and dosage reductions “[b]y no later than July 23, 2012.”

Arguably, the analysis could be different for time periods after that date if the defendants were familiar with the data that ARIAD provided to the FDA. But the complaint contains no such allegation. ■ In fact, aside from a conclusory statement that Haluska “participated in the creation” of ARIAD’s-July submission, the complaint fails to indicate whether and to what extent the defendants were involved in collecting -or reviewing the relevant data. Accordingly, we find the plaintiffs’ allegations insufficient to state a claim with respect to the purported misstatements from July 23 through October 2012.

On October 25, 2012, the FDA sent an email to unspecified individuals at AR-IAD rejecting the company’s proposed label for ponatinib due to inadequate safety disclosures. The agency cited the 8% rate of serious cardiovascular events in the PACE 2 trial data, as well as the 73% dose reduction rate. A follow-up meeting was held on November 1, 2012, which included FDA personnel, Haluska, and Clackson, ARIAD’s Chief Scientific Officer, among others. After that meeting, the FDA directed ARIAD to submit a revised label with a black box warning.

In light of these later communications with the FDA, the plaintiffs’ allegations are sufficient to support a strong inference of scienter with respect to one particular material misstatement. On December 11, 2012, an investment bank published a report on ARIAD based on a breakfast meeting the previous day with Chairman and CEO Berger, Haluska, and Clackson, among others. The report stated, in pertinent part, that “management continues to be optimistic about ponatinib’s prospects for approval in the U.S. ... with a favorable label.” It further indicated that the drug’s “profile continues to look veiy benign, -with few worrisome signals.” The report cited pancreatitis as “the most prevalent” sérious adverse event (occurring in 5% of patients) and noted “low rates of cardiovascular issues.”

Assuming these, allegations are-true, it was knowingly or recklessly misleading for Haluska and Clackson to express optimism about ponatinib’s chances for approval with a “favorable label” weeks after learning that the FDA had rejected ARIAD’s proposed label. While management may have held out hope of achieving this result, the expression of that hope without disclosure of recent troubling developments created an impermissible risk of misleading investors. See Zak v. Chelsea Therapeutics Int’l, Ltd., 780 F.3d 597, 610 (4th Cir. 2015) (finding “a strong inference that the defendants either, knowingly or recklessly misled investors by failing to disclose critical information received from the FDA ..., while releasing less damaging information that they knew was incomplete”). Similarly, after the FDA specifically noted the 8% rate of serious cardiovascular events, it was knowingly or recklessly misleading for ARIAD to cite pancreatitis as the most prevalent serious adverse event. See Aldridge, 284 F.3d at 83 (“[T]he fact that -the defendants published statements when they knew facts suggesting the statements were inaccurate or misleadingly incomplete is classic evidence of scienter.”).

ARIAD fails to develop any argument that these misstatements were not material, and, in any event, we have little difficulty concluding that disclosure of the FDA’s concerns or the rate of serious cardiovascular events with respect to 'ARIAD’s leading product would have altered the total mix of information available to investors. For these'reasons, we reverse the district court’s dismissal of the Section 10(b) and Rule 10b-5 claims predicated upon this December 11,2012 press release.

B. Post-Approval

The plaintiffs’ post-approval allegations rely on the same type of fraud by hindsight theory that doomed the majority of their pre-approval claims. It is undisputed that, on December 14, 2012, ARIAD disclosed to investors the 8% rate of serious cardiovascular events as well as the FDA’s requirement of a black box warning. The complaint nonetheless identifies various subsequent statements about pona-tinib that were purportedly misleading for failure to disclose an increase in the rate of adverse events after the July 2012 cut-off date. More specifically, the rate of serious cardiovascular events is said to have increased from 8% to 11.8%. The alleged misstatements occurred between March 1 and August 9, 2013, but the plaintiffs rely on data collected through an unspecified date in August to claim that those statements were fraudulent. Because the complaint fails to indicate when the adverse events occurred, let alone when the defendants became aware of them, it fails to create a strong inference of scienter.

Nor do the plaintiffs’ allegations of access to post-approval data get them over the PSLRA’s pleading hurdle. To be sure, these allegations are more extensive and detailed than their pre-approval counterparts. But the plaintiffs still fail to allege specifically when the defendants became aware of any adverse events. See Police Ret. Sys. of St. Louis v. Intuitive Surgical, Inc., 759 F.3d 1051, 1063 (9th Cir. 2014) (affirming dismissal despite alleged access to undisclosed data absent “allegations linking specific reports and their contents to the executives”). And, more fundamentally, the defendants self-evidently could not have been aware of adverse events that had not yet occurred. The complaint is silent with respect to the rate of adverse events at the time that each of the alleged misstatements was made. This omission is fatal where, as here, the collection of data may have continued after the last of the purported misstatements and the total increase was a relatively modest 3.8%.

C. Insider Trading

The plaintiffs seek to bolster their fraud claims with allegations of insider trading by the officer defendants. As an initial matter, while such insider trading may be “probative of scienter,” it is not sufficient to establish an inference of scien-ter on its own. Greebel v. FTP Software, Inc., 194 F.3d 185, 197-98 (1st Cir. 1999).

Here, during the pre-approval period, the complaint alleges that Haluska, Clackson, and Fitzgerald sold “irregular amounts of shares.” These three defendants made their last pre-approval trades on May 2, August 15, and October 1, 2012, respectively. Thus, both Haluska and Clackson ceased pre-approval sales more than a month and a half before the October 5 high-point of ARIAD’s share price. Accordingly, the timing of their trades “does not appear very suspicious.” Id. at 206. Fitzgerald, the defendant who traded closest to that date, was ARIAD’s CFO and the least likely of the three to have been privy to material nonpublic information about the clinical trials. Moreover, the defendants’ trades are readily explainable by the steady increase in ARIAD’s share price during the class period, which “create[d] á substantial incentive for holders to sell” regardless of any material non-public information. Local No, 8 IBEW Ret. Plan & Tr. v. Vertex Pharm., Inc., 838 F.3d 76, 84-85 (1st Cir. 2016).

Plaintiffs’ insider trading allegations with respect to the post-approval period do not fare any better. For one thing, • the post-approval trades, by definition, occurred after the December 14, 2012 disclosure of the black box warning and the corresponding decline in share price. Additionally, Berger, Fitzgerald, Haluska, and Clackson are all alleged to have entered into the operative 10b5-l plans within days of that disclosure. At this early date, any information about an undisclosed increase in the rate of serious adverse events would likely have been minimal. Where, as here, the complaint is otherwise devoid of facts supporting the defendants’ knowledge of material non-public information, these alleged insider sales are insufficient to salvage the plaintiffs’ fraud claims.

IV. Securities Act Claims

The second set of claims allege- violations of Section 11 of the. Securities Act stemming from a January 2013 common stock offering. The Securities Act “was designed to provide investors with full disclosure of material information concerning public offerings.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 195, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). Section 11 advances this goal by creating virtually strict liability for any “untrue statement” or misleading omission of material fact in a registration statement. 15 U.S.C. § 77k(a).

The right to sue under Section 11 is limited to “any person acquiring such security.” Id. Thus, “an action ... may be maintained only by' those who purchase securities that are the direct subject of the prospectus and registration statement.” Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp., 632 F.3d 762, 768 n.5 (1st Cir. 2011) (citation omitted). But, in order to state a claim, the plaintiffs “need not have purchased shares in the offering.” In re Century Aluminum Co. Sec. Litig., 729 F.3d 1104, 1106 (9th Cir. 2013). Rather, “those who purchased shares in the aftermarket have standing to sue provided they can trace their shares back to the relevant offering.”. Id. (citing cases); see also, e.g., Krim v. pcOrder.com, Inc., 402 F.3d 489, 495-96 & n.28 (5th Cir. 2005) (citing cases). This requirement is satisfied where, for example, “all of a company’s shares have been issued in a single offering under the same registration statement.” Century, 729 F.3d at 1106; see also Nomura, 632 F.3d at 766 (involving alleged misstatements in offering- documents for “trust certificates representing mortgage-backed securities,” each of which was associated with one of two challenged registration statements).

This “statutory standing” inquiry becomes more complicated where, as here, the company has issued shares under multiple registration statements. In these circumstances, “the plaintiff must prove that [his or] her shares were issued under the allegedly false hr misleading registration statement, rather 'than some other registration statement.” Century, 729 F.3d at 1106. The parties disagree about the import of this requirement at the pleading stage. The plaintiffs cite cases for the proposition that mere “general allegations” that their shares are traceable to the offering in question are sufficient to avoid dismissal. The defendants counter that these cases fail to account appropriately for the Supreme Court’s decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Because we agree with the defendants on this point, we affirm the dismissal of the Section 11 claims.

Twombly teaches that, in order to survive a motion to dismiss, a complaint must include “enough facts to state a claim to relief that is plausible on its face.” 550 U.S. at 570, 127 S.Ct. 1955. This standard requires more than a mere “forrhulaic recitation of the elements of a cause of action.” Id. at 555, 127 S.Ct. 1955; see also Iqbal, 556 U.S. at 681, 129 S.Ct. 1937 (holding that “conclusory” allegations are “not entitled to be assumed true”). Accordingly, “allegations that merely parrot the relevant legal standard are disregarded.” Manning v. Bos. Med. Ctr. Corp., 725 F.3d 34, 43 (1st Cir. 2013). Moreover, “[w]here a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of “entitlement to relief.” ’ ” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955).

We find this binding precedent difficult to square with the plaintiffs’ contention that general allegations of traceability, without more, are sufficient at the pleading stage. Indeed, traceability is an element of a Section 11 claim. See, e.g., Nomura, 632 F.3d at 768 n.5; Century, 729 F.3d at 1106. And, almost by definition, a general allegation that a plaintiffs shares are traceable to the offering in question is nothing more than a “formulaic recitation” of that element. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Accordingly, we agree with the other circuit that has squarely addressed this issue and hold that such general allegations alone are not sufficient to avoid dismissal. See Century, 729 F.3d at 1107; see also Yates v. Mun. Mortg. & Equity, LLC, 744 F.3d 874, 901 (4th Cir. 2014) (reaching same result under the analogous, though not identical, Section 12(a)(2)).

The question now becomes whether the complaint sets forth sufficient facts to plausibly suggest that the shares purchased- by the plaintiffs were issued as part of the January 2013 offering. The plaintiffs could have met this bar by pleading that they “purchased their shares directly in the secondary offering itself.” Century, 729 F.3d at 1106. But the complaint expressly precludes this possibility, instead alleging that the named plaintiffs all bought their shares “on the open market.” Accordingly, they must plead sufficient facts to suggest that “their shares, although purchased in the aftermarket, can be traced back to the secondary offering.” Id. About 15.3 million shares were issued in connection with the January 2013 offering, but an additional 166 million were already outstanding at that time. Moreover only' one of the named plaintiffs bought on the day of the offering and none of them paid the offering price. See Yates, 744 F.3d at 900 n,13 (noting price difference). In these circumstances, the complaint fails to give rise to a plausible inference that the plaintiffs’ shares were issued as part of the January 2013 offering. Indeed, the “ ‘obvious alternative explanation’ is that they could instead have come from the pool of previously issued shares.” Century, 729 F.3d at 1108 (quoting Twombly, 550 U.S. at 567, 127 S.Ct. 1955).

V. Conclusion

For the foregoing reasons we REVERSE the district court’s dismissal of the Section 10(b), Rule 10b-5, and Section 20(a) claims predicated upon the Décem-ber 11, 2012 press release. We otherwise AFFIRM the dismissal of the fraud claims. Similarly, we AFFIRM the dismissal of the Section 11 and Section 15 claims. The case is remanded for further proceedings consistent with this opinion. The parties shall bear their own costs.

      . ARIAD markets and sells ponatinib under the moniker "Iclusig.”

      . Because our review is de novo, we need not specifically address each of the plaintiffs’ quibbles with the district court’s analysis. See Fire & Police Pension Ass'n of Colo, v. Abiomed, Inc., 778 F.3d 228, 241 & n.5 (1st Cir. 2015).

      . The plaintiffs point -to two other purported misstatements between October 25 and December 11, 2012. The complaint fails to cre■ate an inference that these statements were knowingly false.
      First, the plaintiffs cite Berger’s November 7 response on an analyst conference call, “I can't speak to what the label [for ponatinib] is going to look like.” Because ARIAD was, at the time, in negotiations with the FDA about the label, this statement was literally true. Nor was it materially misleading for Berger to omit certain details of the company's interactions with the FDA. See Abiomed, 778 F.3d at 244 (citing the need for "give and take” with the regulator).
      Second, the plaintiffs take issue with AR-IAD’s November 9, -2012 Form 10-Q, which indicated that there had been "no material changes to. the risk factors” included in the prior Form 10-K. Even assuming that this statement was materially misleading, the plaintiffs point to no allegation that Berger or CFO Fitzgerald, the two defendants who signed the document, were involved in the October 25 or November 1 communications with the FDA. Accordingly, the complaint fails to support a compelling inference of scienter.

      . Because the district court dismissed the Section 10(b) and Rule. 1 Ob-5 claims, it also dismissed the derivative Section 20(a) claims without any additional analysis. We vacate that dismissal with respect to the December 11, 2012 release.

      . The plaintiffs cite the FDA’s finding that, "[i]n some patients,” adverse events "occurred as early as 2 weeks” after taking pona-tinib. But the agency’s indication that some patients experienced adverse events as early as two weeks into therapy tells us nothing about whether the rate of overall adverse events had increased and, if so, by how much as of the relevant dates.

      . We note at the outset that the defendants’ use of 10b5-l trading plans, see 17 C.F.R. § 240.10b5-l(c), is not dispositive in light of the plaintiffs’ allegation that those plans were executed after the beginning of the fraudulent scheme. See Emps. Ret. Sys. of Gov't of the V.I. v. Blanford, 794 F.3d 297, 309 (2d Cir. 2015).

      . The parties refer to this issue as statutory standing, and the district court correctly noted that it does not implicate Article III. See Cooperman v. Individual Inc., 171 F.3d 43, 47 n.3 (1st Cir. 1999). Rather, the defendants’ attack on the sufficiency of the complaint is appropriately analyzed under Fed. R. Civ. P. 12(b)(6). See Century, 729 F.3d at 1109

      . The complaint also includes derivative claims under Section 15. See Shaw v. Dig. Equip. Corp,, 82 F.3d 1194, 1201 n.2 (1st Cir. 1996),. superseded by statute on other grounds, 15 U.S.C. § 78u-4(b)(2). Because the Section 11 claims were properly dismissed, we affirm the dismissal of the derivative claims as well.

      . The complaint fails to allege traceability sufficient to state a Section 11 claim for any member .of the purported class; accordingly, we need not address the lead plaintiffs' contention that they should be permitted to pursue such a claim on behalf of the class irrespective of their individual statutory standing.


source: Caselaw Access Project

author: LYNCH, Circuit Judge.

license: Public Domain

text:
    PARKVIEW ADVENTIST MEDICAL CENTER, Appellant, v. UNITED STATES of America, ON BEHALF OF the DEPARTMENT OF HEALTH AND HUMAN SERVICES, Centers for Medicare & Medicaid Services, Appellee.
    No. 16-1731
    United States Court of Appeals, First Circuit.
    November 29, 2016

      George J. Marcus, with whom Jennie L. Clegg, David C. Johnson, Andrew C. Hel-man, and Marcus Clegg were on brief, for appellant.
    Jeffrey Clair, with whom Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Thomas E. Delahanty II, United States Attorney, and Michael S. Raab were on brief, for appellee.
    John A.E. Pottow and Asher Steinberg . on brief as amicus curiae.
    Before LYNCH, STAHL, and BARRON, Circuit Judges.
   LYNCH, Circuit Judge.

This is an important case resting at the intersection of the Bankruptcy Code and Medicare law. It concerns the efforts of the Parkview Adventist Medical Center (“Parkview”) in Brunswick, Maine, which filed for bankruptcy on June 16, 2015, to use the Bankruptcy Code to challenge the actions of appellee United States, through the Centers for Medicare & Medicaid Services (“CMS”), in terminating its “Provider Agreement” with Parkview and declining to reimburse Parkview for certain services provided after the effective date of that termination.

After receiving a letter from Parkview, CMS concluded that Parkview’s Provider Agreement was to be terminated, because CMS found that Parkview was no longer a “hospital” under the Medicare statute. See 42 U.S.C. § 1395x(e)(l). An administrative law judge (“ALJ”) has issued a determination upholding the termination but adjusting the effective date.

Both the bankruptcy court and the reviewing U.S. district court, see Parkview Adventist Med. Ctr. v. United States, No. 2:15-cv-00320-JDL, 2016 WL 3029947 (D. Me. May 25, 2016), denied Parkview’s “Motion to Compel Post Petition Performance of Executory Contracts,” which sought, inter alia, a “[d]etermin[ation] that the Termination Notice [from CMS] is null and void and that the Provider Agreement [governing Parkview’s eligibility for Medicare reimbursement] remains in full force and effect.” It also sought relief “requiring CMS to honor the terms of the Provider Agreement and [to] reimburse [Parkview] for Part B Services provided by [Park-view] from , and after June 18, 2015, in accordance with the terms of the Provider Agreement,” as well as “such other and further relief as is just and equitable.”

In this motion, Parkview argued that the Provider Agreement was an “executory contract” under 11 U.S.C. § 365, and accordingly within the bankruptcy court’s-jurisdiction. As such, Parkview contended, CMS’s termination of the Provider Agreement was “a post-petition termination .,. without court authority, and prior to the Debtor having exercised its right to assume or reject the Provider Agreement,” in violation of “[11 U.S.C.] §§ 365, 362 and 525 of the Code.” Parkview further argued that CMS’s termination of the Provider Agreement violated (1) the “automatic stay” in 11 U.S.C. § 362(a)(3), which stays “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate,” and (2) the non-discrimination provision in 11 U.S.C. § 525(a), which provides that governmental agencies may not revoke a license or a similar grant solely on account of a party’s insolvency or the fact that a party has filed a bankruptcy petition.

The bankruptcy court concluded that it lacked jurisdiction over the motion until Parkview’s claims were administratively exhausted and that CMS had not violated either the automatic stay or the non-discrimination provision. The district court affirmed, reasoning that 42 U.S.C. §§ 405(g) and 405(h) “[tjogether ... require the exhaustion of administrative remedies through the agency review process before judicial review takes place.” Parkview, 2016 WL 3029947, at *5. Section 405(g) provides in part that:

Any individual, after any final decision of the.[Secretary] made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time ás the [Secretary] may allow.

42 U.S.C. § 405(g). Section 405(h) further provides that:

The findings and decision of the [Secretary] after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the [Secretary], or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28 to recover on any elaim arising under this subchapter.

42 U.S.C. § 405(h). The district court concluded that Parkview’s claims arose under the Medicare statute and that-the final sentence of § 405(h) bars bankruptcy jurisdiction over such administratively unex-hausted claims. Parkview, 2016 WL 3029947,, at. *6-8. The district court also affirmed the bankruptcy court’s holding that CMS had not violated the automatic stay, see 11 U.S.C. § 362(a)(3), nor the non-discrimination provision, see 11 U.S.C. § 525(a). Parkview, 2016 WL 3029947, at *8.

We acknowledge that there is a circuit split on the lack-of-jurisdiction holding pertaining to § 405(h), as described by the district court, As the district court correctly observed, the majority of circuits have adopted the view—based on previous versions of the statute and its legislative history—that even though § 405(h) specifically mentions a bar to jurisdiction under only 28 U.S.C. §§ 1331 (federal question jurisdiction) and 1346 (jurisdiction when the United States is a defendant), its jurisdictional bar “applies to other grants of jurisdiction under Title 28, including bankruptcy jurisdiction under § 1334.” Park-view, 2016 WL 3029947, at *5. Only the Ninth Circuit has clearly adopted a contrary position. See Do Sung Uhm v. Humana, Inc., 620 F.3d 1134, 1141 n.11 (9th Cir. 2010) (citing In re Town & Country Home Nursing Servs., Inc., 963 F.2d 1146, 1156 (9th Cir. 1991)); cf. In re Univ. Med. Ctr., 973 F.2d 1065, 1073 (3d Cir. 1992) (holding that § 405(h) did not preclude bankruptcy jurisdiction over an action to bar the offset of reimbursement of post-petition services against pre-petition over-payments because the claim did not “arise under” the Medicare statute). Rather than add our voice to the circuit split on this difficult issue, we choose to resolve this case on narrower grounds evident from the record. We affirm.

Since only statutory jurisdiction is at stake in the § 405(h) jurisdictional question and not Article III jurisdiction, we assume hypothetical jurisdiction. We have done so before when confronted with the same § 405(h) question, and we do so again here, because of the difficulty of the jurisdictional issue and because Parkview’s merits claims under the Bankruptcy Code obviously fail. See In re Ludlow Hosp. Soc., Inc., 124 F.3d 22, 25 n.7 (1st Cir. 1997) (“As the [§ 405(h)] jurisdictional question is problematic, and the merits of the Trustee’s appeal 'are not, we elect to bypass the jurisdictional issue at this time.” (citations omitted)).

Assuming arguendo that this case arises under the Bankruptcy Code, we affirm the denial of relief to Parkview. We do so because the record is clear that CMS did not violate the automatic stay provision. The statutory “police and regulatory power” exception to. the automatic stay under 11 U.S.C.' § 362(b)(4) plainly applies. It follows, then, for this and other reasons, that the non-discrimination provision of the Code is not offended. As to the arguments Parkview makes on appeal regarding the § 365 executory contract provision of the Code, we find -that Parkview’s sparse briefing amounts to waiver of the issue. See Aponte v. Holder, 683 F.3d 6, 10 n.2 (1st Cir. 2012).

I.

In the interests of brevity, we recite - only the facts necessary to this opinion. Before its petition for bankruptcy, Park-view operated as a fifty-five-bed hospital in Brunswick, Maine.- It “provided emergency services, inpatient, services, and a variety of outpatient, ambulatory climes and other medical services” to the. community. It maintained a Provider. Agreement with CMS that specified the conditions to which Parkview had to agree and adhere in order to participate in Medicare and receive reimbursements for both Part A (inpatient) and Part B (outpatient) services. See generally 42 U.S.C. §§ 1395cc(a)(1) (listing requirements of a Provider Agreement with a “provider of services”), 1395x(u) (“The term ’provider of services’ means a hospital, critical access hospital, skilled nursing facility, comprehensive outpatient rehabilitation facility, home health agency, hospice program, or, for purposes of section 1395f(g) and section 1395n(e) of this title, a fund”), 1395x(e) (defining “hospital” as an institution primarily engaged in providing specified inpatient services, and listing other conditions).

Parkview sent CMS a letter dated June 15, 2015, stating that Parkview was ending its participation in Medicare. The letter stated that Parkview would be filing a voluntary chapter 11 petition on June 16, .2015 and that it would be “closing as a hospital effective upon the order of the Bankruptcy Court and will no longer participate in the Medicare Program ... as an acute care hospital provider.” It further stated that Parkview “expect[ed] the Bankruptcy Court to enter its order within sixty (60) to ninety (90) days of the date of this letter.” Parkview .would “begin to transition acute care services to Mid Coast Hospital beginning June 18, 2015,” but would “continue to provide outpatient services.”. Parkview filed its voluntary chapter 11 petition on June 16, 2015.

In a letter dated June 19, 2015, CMS replied that it would terminate the Provider Agreement as of June 18,2015:

Based upon information from your hospital’s website, your statements to CMS, and your emergency motion filed, in the District of Maine bankruptcy case 15-20442, CMS has determined that the date of 'voluntary termination of your Part A Medicare Provider Agreement is June 18, 2015. See 42 C.F.R. § 489.52(b)(1).
According to the information reviewed by CMS, the hospital has closed its inpatient care services on June 18, 2015, and discharged all inpatients on or about 4:00pm on June 18, 2015. Additionally, the hospital is not accepting new inpatients, and does not plan to accept new inpatients in the future. Therefore, the hospital no longer meets the definition of “hospital,” as outlined in Section § 1861(e) of the Social Security Act. See also 42 C.F.R. § 482.1. More specifically, a Medicare-participating hospital must be an institution which is primarily engaged in providing care to inpatients. Additionally, you have also requested voluntary termination of your participation in the Medicare program.
Therefore, under the provisions of Federal regulations at 42 C.F.R. § 489.52(b)(l, 3), your Part A Medicare Provider Agreement with the Secretary of Health and Human Services is terminated, effective June 18, 2015. No payment under this agreement can be made under the Medicare program for services rendered on or after June 18, 2015.

On June 19, 2015, the Maine Department of Health and Human Services “issued a conditional license for Parkview to operate outpatient services during the pen-dency of the bankruptcy proceedings,” but “did not authorize Parkview to admit inpatients.” Parkview then “informed CMS that it was not terminating the Provider Agreement and that CMS’[s] decision to terminate the agreement would adversely affect Parkview’s bankruptcy transition plan.” In response, CMS stated that it would rescind the termination if Parkview resumed admission of inpatients. Parkview then filed its motion to compel in the bankruptcy court on July 9, 2015, and this litigation ensued.

II.

We turn to the merits of the claims Parkview has preserved for appeal. Park-view argues that CMS’s termination of the Provider Agreement violates the Code’s automatic stay. See 11 U.S.C. § 362(a)(3). And it contends that the termination was an impermissible discrimination against a debtor in bankruptcy, within the meaning of 11 U.S.C. § 525(a). These claims raise issues of law subject to de novo review. Barbosa v. Solomon, 235 F.3d 31, 35 (1st Cir. 2000). Both arguments fail on the merits.

A. Automatic Stay

Parkview argues that CMS’s termination of the Provider Agreement violated the automatic stay in § 362(a)(3). The statute provides that counterparties may not take “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.” 11 U.S.C. § 362(a)(3). Park-view contends that, because the Provider Agreement is an executory contract,, CMS may not involuntarily terminate it. It cites a number of. cases for the proposition that a counterparty, may not involuntarily terminate an executory contract post-petition. See In re Mirant Corp., 440 F.3d 238, 251-53 (5th Cir. 2006); In re Comput. Commc’ns, Inc., 824 F.2d 725, 728-31 (9th Cir. 1987).

The government does not dispute that the Provider Agreement is an executory contract within the meaning of the Bankruptcy Code. But it contests on a number of grounds Parkview’s assertion that the termination of the Provider Agreement violates § 362(a)(3). It argues that the Provider Agreement is not “property of the estate” under the meaning of § 362(a)(3); that that automatic stay does not expand Parkview’s contractual rights under the automatic stay, and that “Parkview ... has never had a cognizable property 'or contractual interest in participating in Medicare without meeting Medicare’s conditions of participation”; and that the automatic stay does not apply to the termination because it is a “nonfinal agency action[ ].” The government further asserts that even if Parkview had a property interest in the Provider Agreement and the stay applied on its face to the termination, the “police1 and regulatory power” exception to the stay in 11 U.S.C. • § 362(b)(4) would apply. Without reaching the other arguments, we agree that the police and regulatory power exception to the stay applies to CMS’s termination of the Provider Agreement.

The exception provision in § 362(b)(4) provides that the automatic stay of actions against the debtor does not apply to “an action or proceeding by a governmental unit ... to enforce such governmental unit’s ... police and regulatory power.” In turn, under In re McMullen, 386 F.3d 320, 325 (1st Cir. 2004), we make two inquiries. We ask whether the governmental action “is designed primarily to protect the public safety and welfare.” Id. If so, the government action—here the termination of the Provider Agreement—is exempt. Id. But if the action is an attempt by the government to recover property from the estate, it has a pecuniary purpose and so remains subject to the stay. Id.; see also In re Nortel Networks, Inc., 669 F.3d 128, 140 (3d Cir. 2011) (“If the purpose of the law is to promote public safety and welfare or to effectuate public policy, then the exception to the automatic stay applies. If, on the other hand, the purpose of the law is to protect the government’s pecuniary interest in the debtor’s property or primarily to adjudicate private rights, then the exception is inapplicable.”)

Parkview argues that the CMS termination was not based on findings of a threat to the health or safety of patients. The premise of this argument is true, but largely irrelevant, as it is based on too circumscribed a view of the public interest. Our precedents distinguish between “actions enforcing generally applicable regulatory laws governing the behavior of debtors,” which fall within the exception, and actions by “government agencies to enforce contractual rights against debtors,” which do not. In re Corporacion de Servicios Medicos Hospitalarios de Fajardo, 805 F.2d 440, 445 (1st Cir. 1986). The question is whether CMS’s termination enforces a generally applicable regulatory law or furthers a public policy interest beyond the contractual rights in the Provider Agreement.

CMS has a strong public policy interest in seeing that Medicare-program dollars are not spent on institutions that fail to meet qualification standards. In this instance, the standards are those for “hospitals.” See 42 U.S.C. § 1395i(t); 42 C.F.R. § 419. Reimbursing Parkview pursuant to the Provider Agreement after it had taken actions to disqualify itself from the Medicare program, rendering it unable to provide services required by that program, would have been a waste of public monies. And unlike a dispute over a contractual agreement between the government and a single private party, such as the one at issue in In re Corporación, applying the stay against CMS here would threaten CMS’s ability to enforce generally the Medicare statute’s carefully articulated regulatory structure. See In re Corporacion, 805 F.2d at 445-46 & n.5 (contrasting actions to enforce contractual rights with actions “to enforce specific provisions of general regulatory schemes,” and noting that the government had not tried to revoke the debtor hospital’s license until after filing an action to rescind its contract with the hospital, as well as the fact that the hospital had passed a “Medicare compliance inspection”). The termination here was plainly the exercise of a regulatory power provided in the Medicare statute. See 14 U.S.C. § 1395cc(b)(2)(B) (explaining that the Secretary may terminate a Provider Agreement when the provider “fails substantially to meet the applicable provisions of section 1395x of this title,” which includes the statutory definition of “hospital”)..

Further, it is clear that the termination of the Provider Agreement does not meet the pecuniary test. The government is not seeking recovery from Parkview, nor is it demanding any payment. Rather, one could reasonably view Parkview’s petition as being made for the purpose of evading CMS’s efforts to secure compliance with the Medicare statute—exactly the kind of action the police and regulatory power exception is meant to prevent. See In re McMullen, 386 F.3d at 324-25. Because CMS’s termination of the Provider Agreement enforced the generally applicable framework of the Medicare statute and advanced a significant public policy interest, the police and regulatory power exception applies, and the automatic stay does not bar the termination.

We do not reach the other arguments raised by the government as to the stay’s application.

B. Non-Discrimination Provision

Parkview also argues that CMS’s termination of the Provider Agreement violates the “non-discrimination” provision in 11 U.S.C. § 525(a), which states that:

[A] governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, [or] discriminate with respect to such a grant against, ... a person that is or has been a debtor under this title.

11 U.S.C. § 525(a). Parkview argues that, because CMS’s termination letter “came only two days after Parkview filed its chapter 11 petition and expressly stated that CMS’s termination of the Provider Agreement followed CMS’s review of court filings in this chapter 11 case,” we should conclude that CMS terminated the Provider Agreement because of Parkview’s insolvency.

We see nothing in the termination decision that depended upon Parkview’s insolvency or bankruptcy petition. CMS stated in its June 19 letter that it was terminating the Provider Agreement because Parkview had decided to close its inpatient facilities and thereby had ceased to qualify as a hospital under the Medicare statute. That termination decision involved no forbidden discrimination based on insolvency.

Parkview’s argument that CMS discriminated against it, because CMS took notice of the filing of the bankruptcy petition in its termination decision, fails on its face. That CMS used information from that filing in considering the termination question is admirable and not discrimination.

CMS’s termination of the Provider Agreement is distinguishable from the cases Parkview cites in its favor. In In re Psychotherapy & Counseling Center, Inc., the Department of Health and Human Services (“HHS”) attempted to exclude a mental health hospital from participation in Medicare and state health care programs after the hospital defaulted under a settlement plan with HHS and filed for chapter 11 bankruptcy. 195 B.R. 522, 524-27 (Bankr. D.D.C. 1996). The bankruptcy court rejected HHS’s argument that the police and regulatory power exception applied and concluded that HHS’s action violated § 525(a) because the record suggested that “HHS [was] seeking to exclude the debtor from a government program for non-payment of a dischargeable prepetition debt.” Id at 533. There is no basis for such an inference here. Quite the opposite—CMS has maintained throughout this litigation that its reason for terminating the Provider Agreement was Parkview’s decision, announced in its June 15 letter, to disqualify itself as a hospital under the Medicare statute, and there is no evidence to the contrary.

Similarly, in In re Sun Healthcare Group, Inc., the Health Care Financing Administration (“HCFA”), a division of HHS, refused to reinstate the subsidiary of a debtor corporation as a Medicare and Medicaid participant, even after the subsidiary had “met all compliance conditions and applied for reinstatement,” because the subsidiary owed pre-petition debts to HCFA. No. 00-986-GMS, 2002 WL 2018868, at *1 (D. Del. Sept. 4, 2002). The district court affirmed the bankruptcy court’s finding that HCFA’s action had violated § 526(a) because, although the subsidiary had “provided reasonable assurance that its health services w[ould] meet HCFA regulations,” it had discriminated against the debtor on account of its pre-petition debts. Id. at *7-8. Here, the termination had nothing to do with Parkview’s pre-petition debts, and Parkview cannot assure CMS that Parkview will bring itself back into compliance with the Medicare statute. CMS’s termination of the Provider Agreement was not impermissible discrimination.

III.

The district court’s denial of relief is affirmed. Costs are awarded against Parkview.

      . At oral argument for this appeal, Parkview attempted to reframe the relief it sought. It claimed it was not seeking the continuation of any immediate payment, but rather the effective reinstatement of the Provider Agreement for the period from July 5, 2015 to August 20, 2015. Parkview conceded at oral argument that, despite its claim that it was not seeking immediate payment, the reinstatement of the Provider Agreement for the stated period would lead to reimbursement payments totaling several million dollars. Later at oral argument, Parkview characterized the relief it seeks somewhat differently—namely, as an annulment of CMS’s termination letter.

      . Section 405(g) is made applicable to the Medicare statute via 42 U.S.C. § 1395ff(b)(l)(A).

      . Section 405(h) is made applicable to the Medicare statute via 42 U.S.C. § 1395Ü.

      . We also acknowledge the amicus brief of Professor John Pottow. As Professor Pottow himself recognizes, his brief presents arguments on the jurisdictional question not advanced by the parties, and generally "an ami-Cus cannot introduce a new argument into a case." United States v. Sturm, Ruger & Co., Inc., 84 F.3d 1, 6 (1st Cir. 1996).

      . See In re Bayou Shores SNF, LLC, 828 F.3d 1297, 1314 (11th Cir. 2016) (concluding that § 405(h)’s jurisdictional bar applies to 28 U.S.C, § 1344); Nichole Med. Equip. & Supply, Inc, v. TriCenturion, Inc., 694 F.3d 340, 346-47 (3d Cir. 2012) (concluding that § 405(h) "continues to bar virtually all grants of jurisdiction under Title 28,” and holding specifically that it bars diversity jurisdiction under 28 U.S.C. § 1332); Midland Psychiatric Assocs., Inc, v. United States, 145 F.3d 1000, 1004 (8th Cir, 1998) (holding that § 405(h)’s jurisdictional bar applies to 28 U.S.C. § 1332); Bodimetric Health Servs., Inc, v. Aetna Life & Cas., 903 F,2d 480, 488-90 (7th Cir. 1990) (same).

      . Parkview argues that we already decided in In re Slater Health Center, Inc., 398 F.3d 98 (1st Cir., 2005), that § 405 does not bar bankruptcy jurisdiction. But Slater said nothing about this jurisdictional issue, and “[wjhen a potential jurisdictional defect is neither noted nor discussed in a federal decision; the decision does not stand for the proposition that no defect existed.” Ariz. Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 131 S.Ct. 1436, 1448, 179 L.Ed.2d 523 (2011). Slater doés not settle the question.

      . See also, e.g., Telles v. Lynch, 639 Fed.Appx. 658, 659 (1st Cir. 2016) (unpublished opinion) ("Because the petitioner's claims easily fail on the merits, we assume hypothetical jurisdiction.”); Alvarado v. Holder, 743 F.3d 271, 276 (1st Cir. 2014) ("[Ujnlike Article III jurisdiction, which we may never dodge, we may occasionally bypass statutory jurisdiction.”); McBee v. Delica Co., Ltd., 417 F.3d 107, 127 (1st Cir. 2005) (discussing appropriateness of bypassing jurisdictional question where Article III jurisdiction is not in doubt and merits claim clearly fails).

      . This obviates the need to discuss the date of ’ the termination.

      . The government argues that because "Park-view’s plan of ’reorganization’ was, from the outset intended to liquidate all its assets, there is a substantial question as to whether this case was properly filed under chapter 11 rather than chapter 7.” The question is significant, the government suggests, because under chapter 7, an executory contract that is not assumed within sixty days of the commencement of the bankruptcy is deemed rejected, an action the government contends Parkview "never had any intention of taking and had no practical ability to complete after selling its inpatient hospital assets.” See 11 U.S.C. § 365(d)(1). Because Parkview’s legal arguments fail even if its chapter 11 petition was proper, we need not reach this argument.

      . On July 27, 2015, Parkview informed CMS that it considered CMS's termination an involuntary termination "because CMS based the effective date of termination on Park-view’s failure to meet a requirement to be a hospital in the Medicare program’’ and sought to rescind its notice of voluntary termination.

      . On August 17, 2015, Parkview requested a hearing before an ALJ to dispute CMS’s termination of the Provider Agreement. As already described above, the AU found, after briefing, that CMS had involuntarily terminated the Provider Agreement and that it had had a legitimate basis to do so, because Park-view had permanently closed its inpatient services on June 18, 2015. Due to the notice requirements of the relevant regulations, the ALJ adjusted the effective date of the termination to July 4, 2015. The ALJ also rejected Parkview’s argument for equitable estoppel because CMS had allegedly provided— through an employee of the Maine Department of Health and Human Services—false information to Parkview while Parkview was preparing its transition plan for bankruptcy.

      . "The Bankruptcy Code furnishes no express definition of an executory contract, see 11 U.S.C. § 365(a) (1982 ed.), but the legislative history of § 365(a) indicates that Congress intended’ the term to mean a contract 'on which performance remains due to some extent on both sides.’ ” N.L.R.B. v. Bildisco & Bildisco, 465 U.S. 513, 522 n.6, 104 S.Ct. 1188, 79 L.Ed.2d 482 (1984). (quoting H.R. Rep. No. 95-595, p. 347 (1977)).

      . Parkview also disputes the bankruptcy court’s suggestion that CMS’s termination of the Provider Agreement is exempt under 11 U.S.C. § 362(b)(2'8), which allows the Secretary of Health and Human Services to exclude debtors from participating in Medicare in certain circumstances/ Because the police and regulatory power exception applies and because the government does not argue for the "exclusion” exception, we do not reach this issue.

      . Parkview does not concede that it ceased to be a hospital under the Medicare statute. But the substantive correctness of CMS’s determination that Parkview ceased to be a hospital under the Medicare statute does not affect the analysis of whether the police and regulatory power exception to the stay applies to the decision, nor does it affect the analysis of whether the decision was discriminatory under § 525(a). In any event, Parkview in its briefing makes a point of not contesting any substantive issue of Medicare law," including whether its actions disqualified it as a "hospital” under the relevant provisions, and so the point is waived. United States v. Richardson, 225 F.3d 46, 52 n.2 (1st Cir. 2000) (explaining that issues raised for the first time at oral argument are waived).

      . Parkview claims that "CMS did not base its termination decision on any order of the Bankruptcy Court, any deficiency in the provision of services by Parkview, or any claimed breach of the provisions of the Provider Agreement itself.” This assertion seems intended to suggest that CMS had no basis for its decision other than the fact of Parkview’s filing for bankruptcy. CMS may not have based its decision on an order by the bankruptcy court, but it did consult Parkview's papers in the bankruptcy court to determine the termination date for the Provider Agreement. And CMS did base its termination decision on Parkview’s decision to cease inpatient services, which is clearly a "deficiency in the provision of services” with respect to the Medicare statute, as well as a clear breach of the Provider Agreement.

      . As part of its discrimination argument, Parkview notes that CMS’s termination decision led to the State of Maine’s termination of Parkview's MaineCare Provider Agreement and that CMS's termination of the Medicare Provider Agreement will also terminate Park-view’s Medicare Advantage Agreement and TriCare Agreement. These consequences of CMS’s termination decision say nothing about the legal question of whether the decision was discriminatory under § 525(a).

      . To be clear, the government has represented that physicians at Parkview’s remaining facilities may seek Medicare Part B reimbursement for non-hospital outpatient services.


author: THOMPSON, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Jose D. CARDONA-VICENTY, Defendant, Appellant.
    No. 15-1065
    United States Court of Appeals, First Circuit.
    December 2, 2016

      Jose Luis Noyas-Debien, III for appellant.
    Julia Meconiates, Assistant United States Attorney, with whom Nelson Pérez-Sosa, Assistant United States Attorney, Chief, Appellate Division, Francisco A. Be-sosar-Martinez, Assistant United States Attorney, and Rosa Emilia Rodríguez-Vélez, United States Attorney were on brief, for appellee.
    Before LYNCH, THOMPSON, and KAYATTA, Circuit Judges.
   THOMPSON, Circuit Judge.

Jose D. Cardona-Vicenty (“Cardona”) pled guilty to conspiring to distribute narcotics near three public housing projects and possessing a firearm in furtherance of the drug trafficking offense. After accusing his first lawyer of coercing him into accepting a plea agreement, Cardona was appointed new counsel for sentencing purposes. On appeal, Cardona argues that the district court’s assignment of new counsel, who also represented a co-defendant in the drug trafficking conspiracy, resulted in a conflict of interest for counsel number two. He also claims that the district court erred in failing to hold a Foster hearing to address the purported conflict. Cardona insists that these errors require us to vacate his sentence and remand the case for re-sentencing with new counsel. But because there was no clear error with the sentencing court’s fact finding and no actual conflict of interest, we. affirm- the sentence imposed below.

Background

On April 23, 2014, Cardpna was indicted, along with forty-seven co-defendants, for his involvement, in a drug trafficking conspiracy which operated out of three public housing projects in Mayagüez,. Puerto Rico. Several months later, Cardona pled guilty to Counts One and Six of the indictment pursuant to a Plea Agreement (the “Agreement”). Count One charged him with conspiring to possess with the intent to distribute various amounts of heroin, cocaine, crack cocaine, and marijuana within a thousand feet of the three public housing projects, in violation of 21 U.S.C. §§ 841(a)(1), 860, and 846. Count Six charged him with carrying and using a firearm in relation to the drug trafficking offense, in violation of 18 U.S.C. §§ 924(c)(1)(A) . and (2). The remaining charges against him (Counts Two through Five) were dismissed pursuant to the Agreement.

By the terms of the Agreement, the parties agreed to calculate Cardona’s total offense level at 33, but made no stipulation as to Cardona’s Criminal History Category. The parties agreed to recommend a sentence at the lower end of the Sentencing Guidelines (the “Guidelines”) range for the possession count and the mandatory minimum of five years for the firearm charge. Additionally, Cardona agreed to waive his right to appeal the judgment and sentence if sentenced in accordance with the terms and conditions of the Agreement. And the government agreed that it would not seek any further adjustments to or departures from Cardona’s offense level outside of the enhancements already applied.

On August 27, 2014 (20 days after Car-dona’s. change of plea, but before sentencing), Cardona’s attorney at the time, Peter Diaz-Santiago (“Diaz”), moved to withdraw because Cardona had accused Diaz— falsely, in Diaz’s opinion—of coercing him into pleading guilty. In response to Diaz’s motion, the district court set a hearing date—September 15, ‘ 2014—to learn the details surrounding Cardona’s claims and Diaz’s desire to withdraw. The district court requested that Miguel Oppenheimer (“Oppenheimer”), an attorney for one of Cardona’s drug trafficking co-defendants, attend the hearing “to assist if need be.”

At the proceeding, -Cardona sought to withdraw his guilty plea. As per the court’s instruction, Oppenheimer interviewed Car-dona and Diaz to better understand the circumstances surrounding Cardona’s attempts to withdraw his plea and Diaz’s request to withdraw as defense counsel. After meeting with both Cardona and Diaz, Oppenheimer summarized their respective positions for the court and then questioned both individuals under oath. Cardona testified that he felt pressured to either accept the plea deal or go to trial and receive a life sentence if convicted. On the other hand, Diaz stated that he met with Cardona on multiple occasions to discuss the charges against, him, denied Car-dona’s allegations of coercion, and stated that although Cardona was unhappy with the amount of time offered in the Agreement, Cardona still chose to plead guilty and never indicated that he was hesitant to accept the plea or that he did not want to sign the Agreement. Rounding out the dispute, the government argued that Cardo-na’s request to withdraw his plea should be denied because he was essentially attempting to re-negotiate his plea deal—as the government saw it, he still wanted to plead guilty; he just wanted a better deal.

After hearing from Cardona, Diaz, and the government, the district court denied Cardona’s request to withdraw his guilty plea, finding his allegations against his attorney to be “totally frivolous” and ultimately granted Diaz’s request to withdraw, assigning Oppenheimer as Cardona’s new counsel for sentencing purposes. Upon Oppenheimer’s appointment, the government vocalized concerns regarding a potential conflict of interest arising from a murder that Cardona had allegedly ordered from jail that was ultimately executed by a co-defendant who was also represented by Oppenheimer. The government opined that this might cause a conflict because Oppenheimer “might want to argue one way for one defendant and another way for another defendant” and accordingly remarked that a Foster hearing might be necessary. However, the court did not believe that an actual conflict existed, noting that neither the Agreement nor any facts included in the Agreement contained anything regarding the alluded-to murder and that the murder was not at issue in Cardona’s case.

In any event, Oppenheimer advised the court that he would check with Cardona’s co-defendant to ensure that there were no potential conflicts and he would let the court know if a Foster hearing was necessary. Oppenheimer never informed the court of any conflict and proceeded to represent Cardona for sentencing purposes. On December 7, 2014, after Cardona’s co-defendant had already been sentenced for his role in the drug trafficking conspiracy pursuant to his own plea agreement and two days before Cardona’s sentencing hearing, Oppenheimer filed a sentencing memorandum reiterating, among other things, Cardona’s wish to recant his guilty plea.

On the day of the hearing, Cardona pressed his contention that he was coerced into pleading guilty. But after hearing Car-dona’s reiterated plaint, the court reminded Cardona that it had already denied his request to withdraw his plea and would not reconsider its decision.

After the court reaffirmed its ruling, the government, concerned about Cardona’s continued attempts to withdraw his guilty plea, decided to introduce evidence of Car-dona’s role as a leader and his use of a firearm in furtherance of the conspiracy.

The court then accepted probation’s recommendation of an applicable Criminal History Category of III (rejecting Cardo-na’s push for a lower one) and determined the appropriate offense level was 34 rather than 33, resulting in a Guidelines range of 188-235 months for Count One. Nonetheless, consistent with the plea agreement, the government recommended a sentence of 168 months for Count One and the mandatory minimum of 60 months for Count Six.

Rejecting this recommendation as inadequate, the court sentenced Cardona to a below-Guidelines sentence of 180 months on Count One and 60 months on Count Six, to be served consecutively.

. This timely appeal followed.

Discussion

Cardona contends that the district court denied him his constitutional right to the effective assistance of counsel because the court faded to hold a Foster hearing and Oppenheimer labored under a conflict of interest. The government argues that the failure to hold a Foster hearing resulted in no reversible error because there was no actual conflict of interest. “Where an ineffective assistance [of counsel] claim is premised on counsel’s alleged conflict of, interest, we review the ultimate issue de novo, but defer to the district court’s subsidiary fact findings unless they are clearly erroneous.” Reyes-Vejerano v. United States, 276 F.3d 94, 97 (1st Cir. 2002) (citing Familia-Consoro v. United States, 160 F.3d 761, 764-65 (1st Cir. 1998)).

Under the Sixth Amendment, “a defendant has a right to- conflict-free representation.” United States v. Hernandez-Lebron, 23 F.3d 600, 603 (1st Cir. 1994). A lawyer can represent multiple defendants, but not if the joint representation “gives rise to a conflict of interests adversely affecting the lawyer’s performance”—for then there would- be a Sixth Amendment violation. Id.

And given the “ubiquitous and insidious” risks of multiple representation, the Sixth Amendment imposes a duty on trial courts to investigate a defendant’s timely objections to joint representation and to inquire into the propriety of multiple representation whenever the trial court “knows or reasonably should know that a particular conflict exists.” Id. at 603-04: “Federal Rule of Criminal Procedure 44(c) expands these duties by requiring an inquiry into the possibility of a conflict in all cases where jointly-charged defendants retain the same counsel.” Id. at 604. Specifically, under Rule 44(c), “[ujnless there is good cause to believe that no conflict of interest is likely to arise,” the court is required to “take appropriate measures to protect each defendant’s right to counsel.” Fed. R. Crim. P. 44(c). Rule 44(c) requires a “district court [to] inquire into each instance of joint representation of multiple defendants, and [requires the court to] advise each defendant of his right to separate counsel.” United States v. Coneo-Guerrero, 148 F.3d 44, 47 (1st Cir. 1998). The timing and form of this inquiry is left to the discretion of the court. See Foster, 469 F.2d at 5.

“If a satisfactory inquiry does not appear on the record, the government has the burden of persuasion of demonstrating that prejudice to the defendant was improbable.” United States v. Mazzaferro, 865 F.2d 450, 454 (1st Cir. 1989) (citing Foster, 469 F.2d at 5). If a satisfactory inquiry was held, the defendant “bears the burden of persuasion that he was deprived of a fair trial resulting from a conflict of interest arising from the joint representation.” Id.

Here, no Foster inquiry was held. However, even if we assume that a Foster inquiry‘was required, the government has sufficiently' demonstrated that any prejudice to Cardona was improbable because there was no actual conflict of interest.

As mentioned above, the joint representation of co-defendants does not in itself constitute a per se violation of the Sixth Amendment right to conflict-free representation. See Burger v. Kemp, 483 U.S. 776, 783, 107 S.Ct. 3114, 97 L.Ed.2d 638 (1987); Cuyler v. Sullivan, 446 U.S. 335, 348, 100 S.Ct. 1708, 64 L.Ed.2d 333 (1980)(holding that “multiple representation does not violate the Sixth Amendment unless it gives rise to a conflict of interest” and “a reviewing court cannot presume that the possibility for conflict has resulted in ineffective assistance of counsel”). Indeed, “[t]he Sixth Amendment right to effective assistance of counsel is violated when an actual conflict of interest adversely affects counsel’s representation.” Bucuvalas v. United States, 98 F.3d 652, 656 (1st Cir. 1996) (citing Cuyler, 446 U.S. at 348, 100 S.Ct. 1708). And “[a] defendant ‘who raised no objection at trial [or at the district court below] must demonstrate that an actual conflict of interest adversely affected his lawyer’s performance.’ ” Familia-Consoro v. United States, 160 F.3d 761, 764 (1st Cir. 1998) (citing Cuyler, 446 U.S. at 349-50, 100 S.Ct. 1708)). To establish an actual .conflict of interest, a “defendant must show that (1) the attorney could have pursued a plausible alternative defense strategy, and (2) the alternative strategy was inherently in conflict with or not undertaken due to the attorney’s other interests or loyalties.” Id. (citing United States v. Soldevila-Lopez, 17 F.3d 480, 486 (1st Cir. 1994)). In other words, Cardona “can prevail only if there was a plausible alternative defense strategy that was either foreclosed or inhibited by the joint representation.” United States v. Lachman, 521 F.3d 12, 21 (1st Cir. 2008) (citing United States v. Nelson-Rodriguez, 319 F.3d 12, 41-42 (1st Cir.), cert. denied sub nom. Caribe-Garcia v. United States, 539 U.S. 928, 123 S.Ct. 2589, 156 L.Ed.2d 606 (2003)). If Cardona can demonstrate that some plausible alternative defense strategy or tactic might have been pursued, “[h]e need not show that the defense would necessarily have been successful if it had been used, but merely that it possessed sufficient substance to b’é a viable alternative.” Brien v. United States, 695 F.2d 10, 15 (1st Cir. 1982) (citing Foxworth v. Wainwright, 516 F.2d 1072, 1079 (5th Cir. 1975)).

But speculative or theoretical conflicts of interests do not amount to a Sixth Amendment violation. See Soldevila-Lopez, 17 F.3d at 487 (finding appellant’s claim of a conflict ‘of interest to be based on “mere speculation” and holding that “[a] theoretical or merely speculative conflict of interest will not invoke the per se rule”) (citing United States v. Aeillo, 900 F.2d 528, 530-31 (2d Cir. 1990)); Brien, 695 F.2d at 15 (holding that “the tactics [the appellant] suggests that his attorney could have pursued appear to be merely hypothetical choices that in reality could not have benefited [the appellant] and were often not in any conflict with. [his attorney’s] other loyalties”); Cuyler, 446 U.S. at 350, 100 S.Ct. 1708 (noting that the mere possibility of a conflict is not sufficient to establish a violation of a defendant’s right to conflict-free representation and that a defendant must “show[ ] that -his counsel actively represented conflicting interests” in order to establish an actual conflict).

Cardona begins by conjuring up three hypothetical situations which he contends could have given rise to a conflict of interest. First, he theorizes that if the’ government had sought to nullify the plea agreement given his perceived “breach” (presumably based on his attemptsto withdraw his guilty plea),- this may have resulted in a trial where he might have had to defend against murder allegations. Second, he suggests that if the court had allowed him to withdraw his guilty -plea, and if he had then chosen to plead guilty without a plea agreement, he may have had to defend against a cross reference guideline- for the murder pursuant- to USSG § 2A1.1. And third, he hypothesizes that even if his plea agreement remained intact, he may have had to defend against a § 2A1.1 cross reference at the recommendation of probation.

But even Cardona concedes that the would-be conflicts he complains of “did not materialize.” The government never moved to, find Cardona in breach of- his plea agreement (despite his continued attempts to withdraw his guilty plea), and the court repeatedly denied Cardona’s multiple attempts to withdraw his plea (a ruling he does not contest on appeal). And with that plea agreement impermeable below, Car-dona never faced trial and he never, under any other contrivance he imagines,' had to defend against a USSG § 2A1.1 .cross reference guideline for murder. Because none of the hypothetical situations he outlines actually occurred, there was no opportunity for his attorney at the time to pursue any “plausible alternative defense strategy that was either foreclosed or inhibiteid by [Oppenheimer’s] joint representation.” Lachman, 521 F.3d at 21.

As “[w]e [have] long ago cautioned,” where the conflict relies on “some attenuated hypothesis having little consequence to the adequacy of representation,” Brien, 695 F.2d at 15, we will not grant an “undeserved 'windfall’ to defendants by [automatically] vacating convictions.” Nelson-Rodriguez, 319 F.3d at 42 (citations omitted); see also United States v. Newton, 326 F.3d 253, 263-64 (1st Cir. 2003) (rejecting a rule of “automatic reversal in eases where a defense attorney’s conflict of interest does not adversely affect counsel’s performance, observing that such a rule ‘makes little policy sense’ ”) (quoting Mickens v. Taylor, 535 U.S. 162, 172, 122 S.Ct. 1237, 152 L.Ed.2d 291 (2002)). That is so because the Sixth Amendment right to effective assistance of counsel has been accorded “not for its own sake, but because of the effect it has on the ability of the accused to receive a fair trial.” Mickens, 535 U.S. at 166, 122 S.Ct. 1237 (quoting United States v. Cronic, 466 U.S. 648, 658, 104 S.Ct. 2039, 80 L.Ed.2d 657 (1984)). Where there is no conflict of interest and thus no effect on counsel’s representation or a defendant’s fair trial interests, there is no Sixth Amendment violation. See Newton, 326 F.3d at 263-64.

CONCLUSION

For the foregoing reasons, we affirm the sentence of the court below.

      . As 'this sentencing appeal follows a guilty plea, “we glean the relevant facts from’the change-of-plea colloquy, the unchallenged portions of the presentence investigation report (*PSI Report’), and the record • of the [relevant] disposition hearing[s].” United States v. Vargas, 560 F.3d 45, 47 (1st Cir. 2009).

      . The offense level at 33 was based on the following: a base offense level of 34 under USSG §§ 2D1.1(c)(4) and 2D1.2(a)(l); plus 2 levels under USSG § 3Bl.l(c) for his role as a leader, organizer, manager, or supervisor in the drug organization; minus 3 levels for acceptance of responsibility.

      . A Foster hearing requires a' trial court
      [T]o comment on some of the risks confronted where defendants are jointly represented to insure that defendants are aware of such risks, and to inquire diligently whether they have discussed the risks with their attorney, and whether they understand that they may retain separate counsel, or if qualified, may have such counsel appointed by the court and paid for by the government. United States v. Foster, 469 F.2d 1, 5 (1st Cir. 1972).

      . Although the government introduced evidence of Cardona’s role as a leader and his use of a firearm in furtherance of the conspiracy at sentencing, this was only in response to Cardona’s continued attempts to withdraw his guilty plea. The government made clear that it did not intend to violate the Agreement and only sought to introduce the evidence "to show [that Cardona] indeed possessed firearms and was a leader,” contrary to his plea withdrawal assertions. The government never asked the court to find Cardona in breach of the Agreement. Indeed, at sentencing, the government recommended an offense level and sentence in accordance with the terms of the Agreement and did not argue for any additional enhancements that were not provided for in the Agreement. The sentencing judge also noted before allowing the government to introduce the evidence that it was "not a violation of the Plea Agreement” to do so.

      .Cardona was sentenced on December 9, 2014. USSG Amendment 782 became effective on November 1, 201.4, after the plea agreement was entered. Amendment 782 per7 mits a retroactive, two-level reduction of the base offense levels for drug offenders sentenced pursuant to USSG §§ 2D1.1 and 2D 1.11. See USSG App. C. Supp., Amend. 782. Applying the new base offense level under Amendment 782, the court adopted probation's recommendation, started with a base offense level of 32, and added 2 levels for Cardona’s role as a leader pursuant to USSG § 3Bl.l(c). The court then calculated Cardo-na's total offense level at 34, declined to award Cardona credit for acceptance of responsibility because of his ongoing efforts to withdraw his plea, and declined to add any additional enhancements.

      . The government argues that Cardona’s claims are precluded by the waiver-of-appeal clause of the Agreement. Cardona's claims can easily be resolved on the merits. Therefore, "[f]or ease in analysis,” we “assume arguendo that the waiver-of-appeal provision does not bar the maintenance of this appeal.” United States v. Davila-Tapia, 491 Fed.Appx. 197, 198 (1st Cir. 2012).

      . Cardona does not challenge the appropriateness of the court’s decision to appoint Oppenheimer as his lawyer after utilizing Oppenheimer as a type of independent counsel or investigator for the court to address Diaz's motion to withdraw and Cardona’s claims of coercion. We do not consider the appropriateness of that practice here because Cardona does not raise this argument on appeal.

      . While we ultimately find that there was no conflict of interest here, given the "ubiquitous and insidious” risks of multiple representation discussed earlier, we caution that courts—in order to avoid any risk of impropriety—should give more express attention • than was afforded here when making attorney appointments which result in dual representation of co-defendants.

      . For each hypothetical scenario, Cardona seems to allege that but for the purported conflict, his attorney could have pursued alternative defense strategies: (1) the cross examination of witnesses regarding his supposed participation in a murder; and (2) the possibility of him or his co-defendant deciding to cooperate and implicate the other at trial. Because we find no conflict we need say no more.

      . Ever persistent, Cardona insists that the government’s statement after Oppenheimer was appointed—that Oppenheimer "might want to argue one way for one defendant and another way for another defendant”—satisfies his burden of "showing an alternative defense strategy, which might bear negatively on the defense of the other client” and sufficiently establishes an actual conflict. Cardona’s argument that the government's statement somehow amounts to a defense strategy is nonsensical. Nor does the government’s statement amount to an actual conflict of interest: at best, the government pointed out a potential conflict that was never actualized given both co-defendants’ guilty pleas.