On May 23, 2025, in a significant decision with implications for future short-swing trading claims, the United States Court of Appeals for the Second Circuit Court affirmed two district court decisions holding that a controlling shareholder’s sales of an issuer’s common stock cannot be matched with the issuer’s repurchases of its common stock for purposes of Section 16(b) of the Securities Exchange Act (“Exchange Act”).  Roth v. LAL Family Corp., et al., No. 24-2464 (2d. Cir. 2025); Roth v. Patrick Drahi, et al., No. 24-2761 (2d Cir. 2025).  

On May 21, 2025, Judge Karin J. Immergut of the United States District Court for the District of Oregon granted a motion to dismiss a proposed securities fraud class action against a nuclear energy company (the “Company”) and certain of its officers (the “Individual Defendants”) asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act (the “Exchange Act”) and Rule 10b-5.  Sigman v. NuScale Power Corp., et al., Nos. 3:23-cv-01689-IM, 3:23-cv-1956-IM (D. Ore. May 21, 2025).  

On May 19, 2025, Judge Edward J. Davila of the United States District Court for the Northern District of California dismissed without prejudice a proposed securities fraud class action asserting claims against a social networking platform (the “Company”), certain of its executives, and the sponsor of a special purpose acquisition company (“SPAC”) with which the Company merged under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 10b-5 and 14a-9. Hollingsworth v. Nextdoor Holdings, Inc. et al., No. 5:24-cv-01213-EJD (N.D. Cal. May 19, 2025).  

On May 20, 2025, the New York Court of Appeals affirmed the dismissal of a derivative action asserting claims for breach of fiduciary duty against officers and directors of a corporation incorporated under the laws of England and Wales.  Ezrasons, Inc. v. Rudd, —N.Y.3d—, 2025 WL 1436000 (May 20, 2025). 

On May 9, 2025, Judge Edward J. Davila of the Northern District of California granted a motion to dismiss a purported securities class action against a grocery delivery company (the “Company”), certain of its officers and directors, and the underwriters to the Company’s IPO.  Stephens v. Maplebear Inc. (d/b/a Instacart), et al., No. 5:24-cv-00465-EJD (N.D. Cal. May 9, 2025). 

On April 28, 2025, Judge Edward M. Chen of the United States District Court for the Northern District of California dismissed a putative securities fraud class action asserting claims against a solar panel manufacturer (the “Company”) and several of its executives under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5. Menon v. Maxeon Solar Techs., Ltd., et al., No. 24-cv-03869-EMC (N.D. Cal. Apr. 28, 2025).

On May 5, 2025, Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California granted a motion to dismiss a proposed class action asserting claims against a biopharmaceutical company (the “Company”) and certain of its officers (the “Individual Defendants”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5.  Klobus v. Akero Therapeutics, Inc., No. 4:24-cv-02534-YGR (N.D. Cal. May 5, 2025).  

On April 11, 2025, a cryptocurrency platform (the “Company”) moved to certify for interlocutory appeal the September 5, 2024 decision by Judge Brian R. Martinotti of the United States District Court for the District of New Jersey, granting in part and denying in part the Company’s motion to dismiss.  In re Coinbase Global, Inc. Sec. Litig., Civ. No. 2:22-cv-4915-BRM-LDW (D.N.J.).  

On April 23, 2025, the Fourth Appellate District Court of Appeal of the State of California affirmed the dismissal of a putative class action asserting claims under the Securities Act of 1933 against an electric vehicle company and the underwriters of its IPO.  Bullock v. Rivian Auto., Inc., 2025 WL 1177303 (Cal. App. 4th Dist. Apr. 23, 2025).  

On April 18, 2025, Judge André Birotte Jr. of the Central District of California granted a motion to dismiss a putative class action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, against a healthcare technology company (the “Company”) and certain of its officers (the “Individual Defendants”).  Barsuli v. GoodRx Holdings, Inc., No. 2:24-cv-3282-AB (C.D. Cal. Apr. 18, 2025).

On April 4, 2025, Judge Gordon P. Gallagher of the United States District Court for the District of Colorado dismissed with prejudice a putative class action asserting claims under the Securities Act of 1933 and the Securities Exchange Act of 1934 against a software company and certain of its executives.  Cupat v. Palantir Techs., Inc., No. No. 22-cv-02384, slip op. (D. Colo. Apr. 4, 2025), ECF No. 123

On April 11, 2025, Judge Brian M. Cogan of the United States District Court for the Eastern District of New York granted in part and denied in part a motion to dismiss a putative class action alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against a security products company (the “Company”) and certain of its officers and directors (the “Individual Defendants”), and violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) against the Company, the Individual Defendants, and certain of the underwriters (the “Underwriter Defendants”) of the Company’s secondary public offering (the “SPO”).  Zornberg v. Napco Sec. Techs., Inc., No. 23-cv-6465-BMC (E.D.N.Y. Apr. 11, 2025).

On April 10, 2025, Judge Charles R. Breyer of the United States District Court for the Northern District of California granted a motion for summary judgment in favor of a software company (the “Company”) in a purported class action alleging that the Company violated Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”).  Sundaram v. Freshworks Inc., No. 22-cv-06750-CRB, 2025 WL 1083168 (N.D. Cal. Apr. 10, 2025).  

On April 8, 2025, the United States Court of Appeals for the Fourth Circuit affirmed the district court’s denial of a motion to amend a class action complaint against a quantum computing company (the “Company”) and the special purpose acquisition company (“SPAC”) that acquired it alleging violations of Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5.  DeFeo et al. v. IonQ, Inc., No. 24-1709 (4th Cir. Apr. 8, 2025). 

On March 31, 2025, Judge Arun Subramanian of the United States District Court for the Southern District of New York denied a motion to dismiss a putative securities class action against a cosmetics company (the “Company”), its former CEO, and its CFO, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  In re The Estée Lauder Co., Inc., 23-cv-10669 (S.D.N.Y. Mar. 31, 2025).  The Court held that plaintiffs sufficiently pled that defendants knowingly made misleading statements and omissions regarding the Company’s reliance on “gray market” sales of its products in Asia.  

On March 27, 2025, Judge John G. Koeltl of the United States District Court for the Southern District of New York granted a motion to dismiss a putative securities class action asserting claims against a software company and certain of its officers (the “Individual Defendants”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  In re Adobe Inc., No. 23-cv-9260 (S.D.N.Y. Mar. 27, 2025).

On March 24, 2025, Judge Rita F. Lin of the United States District Court for the Northern District of California granted in part and denied in part a motion to dismiss a putative class action against a technology company (the “Company”) and certain of its officers.  Ami-Government Emps. Provident Fund Mgmt. Co. LTD., et al., v. Alphabet Inc., et al., No. 23-cv-01186-RFL (N.D. Cal. March 24, 2025).  

On March 20, 2025, Judge Gordon P. Gallagher of the United States District Court for the District of Colorado granted a motion to dismiss a proposed securities class action asserting claims against a satellite technology company (the “Company”) and certain of its executives (together, “defendants”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5.  Lingam, et al. v. Dish Network Corp., et al., No. 23-cv-00734-GPG-KAS (D. Colo. Mar. 20, 2025). 

On March 19, 2025, Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York dismissed with prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a technology company and certain of its officers.  Damri v. LivePerson, Inc., 2025 WL 863322 (S.D.N.Y. March 19, 2025).  Plaintiff alleged that defendants made misrepresentations concerning various aspects of the company’s performance.  The Court held that plaintiff failed to adequately allege any actionable misstatement or omission and failed to adequately plead scienter.

On March 19, 2025, Judge Charles E. Fleming of the United States District Court for the Northern District of Ohio dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 and the Securities Act of 1933 against a medical services company, certain of its executives, the underwriters in its initial and secondary public offerings, and certain private equity firms alleged to have sold stock in those offerings.  

On March 14, 2025, Judge John P. Cronan of the United States District Court for the Southern District of New York granted summary judgment in favor of defendants in an action brought under Section 16(b) of the Securities Exchange Act against a broker-dealer and its CEO.  Clarus Corp. v. HAP Trading, LLC, —F. Supp. 3d—, 2025 WL 833453 (S.D.N.Y. 2025).  Plaintiff Clarus Corporation (“Clarus”) alleged that defendants’ so-called “packaged trades” for Clarus securities generated insider short‑swing profits in violation of Section 16(b) of the Exchange Act.  Addressing a question of first impression, the Court held that the transactions at issue fell within the exception in Section 16(d) for purchases and sales of securities incident to a dealer’s involvement in over-the-counter (“OTC”) market making.

On March 7, 2025, Judge John P. Cronan of the Southern District of New York granted a motion for judgment on the pleadings in a putative class action asserting claims under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”) against a Chinese software company (the “Company”) and certain of its directors, officers, and underwriters.  Lian v. Tuya Inc., et al., 22-cv-6792 (JPC) (S.D.N.Y. Mar. 7, 2025).  

On February 7, 2025, Judge Brett H. Ludwig of the United States District Court for the Eastern District of Wisconsin dismissed a putative class action alleging that an energy product sales company (the “Company”) and its chief executive officer and chief financial officer (the “Officer Defendants”) violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.City Pension Fund for Firefighters & Police Officers in the City of Tampa Bay v. Generac Holdings, 22-cv-1436-bhl (E.D. Wis. Feb. 7, 2025).According to plaintiffs, defendants allegedly failed to disclose negative trends regarding the decrease in demand of the Company’s products post-pandemic as well as defects and risks with its solar energy products.The Court dismissed the complaint for failure to plausibly allege falsity, scienter, and materiality, noting that the pleading was “heavy in sheer number of its allegations and in its conclusory allegations of fraud” but “light on specific plausible factual allegations” supporting plaintiffs’ claims.

The United States Court of Appeals for the Ninth Circuit, on remand from the United States Supreme Court, unanimously reversed the district court’s denial of a technology company’s (the “Company”) motion to dismiss claims brought under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”).  Pirani v. Slack Techs., Inc., No. 20-16419 (9th Cir. Feb. 10, 2025).  The case turned on whether plaintiff sufficiently pleaded that he had standing to bring Securities Act claims in respect of a direct listing in which shares registered under an allegedly misleading registration statement were made available in the market alongside unregistered shares.  The Supreme Court, in a decision covered here, held that Section 11 requires plaintiffs to plead that they purchased securities traceable to the at-issue registration statement but did not address whether the complaint satisfied that requirement.  The Supreme Court also declined to address whether the complaint sufficiently alleged standing to pursue a claim under Section 12(a)(2).  We previously covered the Ninth Circuit’s now-vacated decision, the Supreme Court’s grant of the petition for certiorari to review the Ninth Circuit’s decision, and the parties’ oral argument before the Supreme Court.

On February 7, 2025, Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York denied a motion for judgment on the pleadings in a putative class action against a cryptocurrency exchange company (the “Company”), its parent, and the parent’s CEO for alleged violations of Sections 12 and 15 of the Securities Act of 1933 (the “Securities Act”), Section 29(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and securities laws of California, Florida, and New Jersey.  Underwood v. Coinbase Glob., Inc., No. 21 Civ. 8353 (PAE) (S.D.N.Y. Feb. 7, 2025).  

On February 14, 2025, Judge Margo Brodie of the United States District Court for the Eastern District of New York granted a motion to dismiss a putative class action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against an exercise equipment company (the “Company”) and certain of its officers and directors (the “Individual Defendants”).  Jia Tian, et al. v. Peloton Interactive, Inc., et al., 23-cv-4279-MKB (E.D.N.Y. Feb. 14, 2025).  Plaintiffs alleged that defendants made material misstatements and omissions regarding the safety of the Company’s products.  The Court granted defendants’ motion to dismiss with leave to amend, holding that plaintiffs failed to sufficiently allege any materially misleading statements or omissions, or scienter.

On February 27, 2025, Judge Lewis A. Kaplan of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under the Securities Act of 1933 against a railroad company, certain of its officers and directors, and the underwriters of senior notes the company issued.  In re Norfolk Southern Corp. Bond/Note Sec. Litig., 2025 WL 641089 (S.D.N.Y. Feb. 27, 2025).  Plaintiffs alleged that offering materials for the notes contained misrepresentations relating to:  (i) improving safety; (ii) the company’s financial and operational metrics; and (iii) the company’s implementation strategy to reduce operation expenses and increase efficiencies, as allegedly revealed following a train derailment which received widespread media attention.  The Court held that plaintiffs failed to sufficiently allege any actionable false or misleading statements.

On February 26, 2025, the United States Court of Appeals for the Second Circuit affirmed the dismissal of federal securities claims against the developers of a decentralized cryptocurrency exchange and the exchange’s venture capital investors.  Risley v. Universal Navigation Inc., 2025 WL 615185 (2d Cir. Feb. 26, 2025).  As discussed in our prior post, plaintiffs alleged that defendants were aware of the trading of allegedly fraudulent “scam tokens” on the exchange but ignored those “scam tokens” to profit from transaction fees, and further alleged that the “scam tokens” constituted unregistered securities.  

On February 25, 2025, Judge Jennifer L. Rochon of the United States District Court for the Southern District of New York granted in part and denied in part motions to dismiss amended complaints filed in a putative class action asserting claims under Sections 10(b) and 14(a) of the Securities Exchange Act against a special purpose acquisition company (“SPAC”), its former CEO, and former officers of the target company, an online lottery-sales company (the “Company”), as well as an individual action consolidated with the putative class action and asserting similar claims. In re Lottery.com, Inc. Sec. Litig., No. 1:22-cv-07111 (JLR) (S.D.N.Y. Feb. 25, 2025). 

On February 26, 2025, Circuit Judge Stephanos Bibas, sitting by designation in the District Court for the District of Delaware, granted a motion for summary judgment in a securities action brought by an investment firm against a racing game developer (the “Company”) and several of its officers after the firm sold shares in one of its portfolio companies to the Company.  Plaintiff alleged that the sale occurred at a lower price because of misstatements and omissions made by defendants regarding the profitability of the portfolio company in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”).  The Court granted summary judgment for defendants, stating that “not every poor investment decision is due to securities fraud” and holding that plaintiff failed to establish any actionable misstatements or omissions.

On February 26, 2025, Judge Michael W. Fitzgerald of the United States District Court for the Central District of California granted a motion to dismiss a putative class action against a producer of plant-based meat substitutes (the “Company”) and one of its officers (together, the “defendants”).  Saskatchewan Healthcare Emps.’ Pension Plan v. Beyond Meat, Inc. et al., No. CV 23-03602-MWF (C.D. Cal. Feb. 26, 2025).  We previously covered the Court’s decision dismissing plaintiffs’ initial complaint without prejudice.  In their amended complaint, plaintiffs asserted claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 based on alleged misrepresentations regarding the Company’s ability to scale production to meet partner demands.  The Court held that plaintiffs failed to plead any actionable misstatements or omissions and dismissed the action with prejudice.

On January 27, 2025, Judge Jesse M. Furman of the United States District Court for the Southern District of New York partially granted a motion to dismiss a putative securities class action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”) against an e-commerce platform (the “Company”), the underwriter of its IPO, and certain of its officers and directors.  In re Gigacloud Tech. Inc. Sec. Litig., 23-cv-10645-JMF (S.D.N.Y. Jan. 27, 2025).  

On January 29, 2025, Judge Robert Kirsch of the United States District Court for the District of New Jersey granted a motion to dismiss a securities action asserting claims under Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 against a financial technology company (the “Company”) and certain of its former officers.  In re PayPal Holdings Inc. Sec. Litig., 22-cv-5864-RK (D.N.J. Jan. 29, 2025).  Plaintiffs claimed that defendants misstated the Company’s growth and future prospects, through statements concerning its Net New Active Accounts (“NNAs”) and Total Payment Volume (“TPV”).  The Court dismissed the action, holding that plaintiffs failed to adequately allege any material false or misleading statement.

On January 16, 2025, Judge Trina L. Thompson of the United States District Court for the Northern District of California granted a motion to dismiss a securities action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 against a ridesharing company (the “Company”) and its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Chen v. Lyft, Inc., et al., No. 24-cv-01330-TLT (N.D. Cal. Jan. 16, 2025). Plaintiff claimed that defendants fraudulently misstated the Company’s earnings forecast and failed to correct the misstatement quickly enough. The Court held that (i) the alleged misstatements were inactionable forward-looking statements, (ii) plaintiff in any event failed to allege scienter despite purporting to support its allegations with expert opinions, and (iii) defendants’ update was sufficiently quick to discharge any claimed duty to update even though there is an open question as to whether such a duty exists. On this basis, the Court dismissed the action with leave to amend.

On January 23, 2025, Judge James C. Dever III of the United States District Court for the Eastern District of North Carolina dismissed a putative securities class action against an auto parts retailer (the “Company”) and certain of its former executives alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.  Suarez v. Advanced Auto Parts, Inc. et al., No. 5:23-cv-00563 (E.D.N.C., Jan. 23, 2025). The Court granted defendants’ motion to dismiss on the ground that plaintiff failed to plead facts giving rise to a strong inference of scienter, holding that a reasonable person would find the cogent, non-culpable explanations for the alleged misconduct more compelling.

On January 10, 2025, the United States Court of Appeals for the Ninth Circuit Court affirmed the dismissal of a putative securities class action brought by a pension plan alleging that a hearing aid manufacturer (the “Company”) violated the Securities Act of 1933 (the “Securities Act”) by issuing a prospectus for its initial public offering (“IPO”) that allegedly included false and misleading statements regarding revenue recognition, risk factors, and potential growth. Cai v. Eargo, Inc., No. 23-3470, 3:21-cv-08597-CRB (9th Cir. Jan. 10, 2025).  Plaintiffs also alleged violations of the Securities Exchange Act of 1934 (the “Exchange Act”) based on certain post-IPO statements concerning an audit by an insurance carrier, revenue recognition, risk factors, and the Company’s growth. The Court, in an unpublished opinion, affirmed the district court’s decision dismissing the complaint (which we previously covered here) holding that the alleged misstatements were not misleading or were puffery and thus not actionable under the securities laws and that plaintiffs failed to plead facts giving rise to a strong inference of scienter.

On December 31, 2024, the United States Court of Appeals for the Fifth Circuit and the New York Appellate Division, First Department, both issued decisions evaluating the validity of so-called “uptier” transactions under New York law. In re Serta Simmons Bedding, LLC, Excluded Lenders, No. 23-20181 (5th Cir. Dec. 31, 2024) (“Serta”); Ocean Trails CLO VII, et al. v. MLN TopCo Ltd., et al., No. 2024-00169 (N.Y. App. Div. 1st Dep’t Dec. 31, 2024) (“Mitel”).

On January 2, 2025, Judge Cathy Ann Bencivengo of the United States District Court for the Southern District of California granted a motion to dismiss a securities action asserting claims under Sections 10(b), 20(a), and 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) against a hardware company (the “Company”) and certain of its former and current officers.  HBK Master Fund L.P. v. MaxLinear Inc., et al., No. 3:24-cv-01033-CAB-VET (S.D. Cal. Jan. 2, 2025).

On January 10, 2025, Judge Reed O’Connor of the United States District Court for the Northern District of Texas ruled, following a four-day bench trial, that an airline breached ERISA fiduciary duties when investing employees’ 401(k) plan retirement assets utilizing investment managers and funds with environmental, social, and governance (“ESG”) objectives.  Spence v. American Airlines Inc., et al., No. 23-cv-00552, 2025 WL 225127 (N.D. Tex. Jan. 10, 2025). 

On December 12, 2024, Judge Lewis A. Kaplan of the United States District Court for the Southern District of New York granted a motion to dismiss a putative securities class action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against an insurance underwriter (the “Company”) and certain of its former and current executives (the “Individual Defendants” and, with the Company, the “Defendants”). Police & Fire Ret. Sys. City of Detroit, et al. v. Argo Grp. Int’l Holdings, Ltd., et al., 22-cv-8971 (S.D.N.Y. Dec. 12, 2024). 

On December 17, 2024, Judge Vince Chhabria of the United States District Court for the Northern District of California granted a renewed motion for class certification in a securities action against a majority shareholder of a biotechnology company (the “Company”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. In re Vaxart, Inc. Sec. Litig., 20-cv-05949 (N.D. Cal. Dec. 17, 2024). 

 

On December 4, 2024, Judge John L. Badalamenti of the United States District Court for the Middle District of Florida denied a motion to dismiss a putative securities fraud action against a retail company (the “Company”), its CEO, and its Board of Directors, alleging violations of Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14a-9 promulgated thereunder.  Craig v. Target Corp., et al., No. 2:23-cv-599-JLB-KCD (M.D. Fla. Dec. 4, 2024).  

On November 26, 2024, Judge Jon S. Tigar of the United States District Court for the Northern District of California granted a motion to dismiss a putative securities fraud class action against a subscription streaming services company (the “Company”), and its CEOs, CFO, and COO (the “Individual Defendants”).  Pirani v. Netflix, Inc., et al., No. 22-cv-02672-JST (N.D. Cal. Nov. 26, 2024). 

On November 19, 2024, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a putative class action complaint alleging that a data management and analytics software company (the “Company”) and certain of its officers and directors made misleading statements and omissions regarding the technical capabilities of the Company’s products and its financial outlook in violation of Sections 11(a), 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. In re Cloudera Securities Litigation, No. 22-16807 (9th Cir. Nov. 19, 2024). The Court held that plaintiff failed to allege falsity and affirmed the dismissal with prejudice based on plaintiff’s failure to cure the deficiencies of which he had been warned.

On November 4, 2024, Judge Denise L. Cote of the United States District Court for the Southern District of New York granted in part and denied in part a motion to dismiss a putative class action brought under Sections 10b-5 and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5, as well as under Sections 11 and 15 of the Securities Act of 1933 (“Securities Act”), against a robotic process automation (“RPA”) software company (“Company”) and certain of its executives (“Individual Defendants”). In re UiPath, Inc. Sec. Litig., 23-cv-7908 (DLC) (S.D.N.Y. Nov. 4, 2024). Plaintiffs alleged that the Company misrepresented its financial condition and business operations. Although it dismissed all of plaintiffs’ Securities Act claims as time-barred and most of plaintiffs’ Exchange Act claims, the Court held that plaintiffs identified several actionable misstatements and adequately alleged scienter to support claims under the Exchange Act. 

On November 22, 2024, the United States Supreme Court dismissed Meta’s appeal of the United States Court of Appeals for the Ninth Circuit’s decision to partially reinstate a putative class action asserting claims under the Securities Exchange Act of 1934 against the social media company, alleging that Meta (the “Company”) made misrepresentations relating to the misuse of user data by a third party. Facebook v. Amalgamated Bank, No. 23-980, 604 U.S. --- (2024). As we covered in a previous post, the Supreme Court granted the Company’s petition for certiorari to address the following question: “Are risk disclosures false or misleading when they do not disclose that a risk has materialized in the past, even if that past event presents no known risk of ongoing or future business harm.” The Court dismissed the Company’s appeal in a single-sentence, per curiam order, stating “The writ of certiorari is dismissed as improvidently granted.”

On November 13, 2024, the United States Supreme Court heard oral argument in an appeal from a decision of the United States Court of Appeals for the Ninth Circuit in a putative class action asserting claims under the Securities Exchange Act of 1934 against a technology company and certain of its officers. NVIDIA Corporation v. E. Ohman J:or Fonder AB, No. 23-970. Relevant to the appeal, plaintiffs allege that (a) expert analysis revealed that defendants had materially understated the extent to which the company’s graphics processing units were purchased by the volatile cryptocurrency mining industry and (b) the company’s CEO had known of the misrepresentations because he received internal reports reflecting the truth. As discussed in prior posts, the district court dismissed the case entirely and with prejudice, but the Ninth Circuit, in a 2-1 decision, partially reversed, holding that plaintiffs adequately alleged that statements by two executives had been misleading, and adequately alleged scienter as to the company’s CEO. The Supreme Court granted certiorari to address the following questions: “1. Whether plaintiffs seeking to allege scienter under the Private Securities Litigation Reform Act (“PSLRA”) based on allegations about internal company documents must plead with particularity the contents of those documents”; and “2. Whether plaintiffs can satisfy the PSLRA’s falsity requirement by relying on an expert opinion to substitute for particularized allegations of fact.”

On October 30, 2024, Judge Terry A. Doughty of the United States District Court for the Western District of Louisiana adopted the September 30, 2024 Report and Recommendation of Magistrate Judge Kayla Dye McClusky and granted with prejudice a motion to dismiss a putative securities class action against a telecommunications company (the “Company”) and certain of its officers (the “Individual Defendants”). In re Lumen Techs., Inc. Sec. Litig., No. 3:23-00286 (W.D. La. Sept. 30, 2024). Plaintiffs alleged that defendants violated Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by allegedly making false statements regarding the Company’s fiber optics expansion project. The Court granted defendants’ motion to dismiss with prejudice, holding that plaintiffs failed to adequately plead any actionable misstatements or omissions or loss causation and that plaintiffs failed to plead a strong inference of scienter as to any defendant.

On October 31, 2024, the United States Court of Appeals for the Second Circuit revived claims brought under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 against an outside auditor (the “Auditor”) that performed audit and assurance services for a property and casualty insurer (the “Company”), in which plaintiffs are investors. New England Carpenters Guaranteed Annuity & Pension Funds, et. al.v. AmTrust Fin. Servs. Inc., et. al., 20-1643 (Oct. 31, 2024). In an earlier opinion, dated August 23, 2023, which we previously covered here, the Second Circuit affirmed the district court’s conclusion that plaintiffs failed to plausibly allege that alleged misstatements in the Auditor’s 2013 audit opinion were sufficiently material to support a claim under the Exchange Act. However, the Second Circuit granted plaintiffs’ petition for reconsideration and held that it had erred in its materiality analysis. It, therefore, vacated and remanded the district court’s dismissal of plaintiffs’ Exchange Act claims against the Auditor.