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 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 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.

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 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 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 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 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 24, 2024, Judge Jane J. Boyle of the United States District Court for the Northern District of Texas dismissed a putative securities class action alleging that a bond issuer (the “Company”) and certain of its directors and officers violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”). In re GWG Holdings, Inc. Sec. Litig., No. 3:22-CV-0410-B (N.D. Tex. Oct. 24, 2024). The Court found that lead plaintiff failed to establish it had statutory standing sufficient to assert claims under Sections 11 and 12—and by extension, also Section 15—of the Securities Act. The Court dismissed the case without prejudice with leave to amend.

On September 30, 2024, Judge Lynn Adelman of the United States District Court for the Eastern District of Wisconsin granted a motion to dismiss a putative securities class action asserting claims under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5 and 14a-9, against a retail department store chain (the “Company”) and certain of its officers and board members (“Individual Defendants” and, collectively, “Defendants”). Thomas Frame v. Kohl’s Corp., No. 22-CV-1016 (E.D. Wis. Sept. 30, 2024). Plaintiff alleged that Defendants made materially misleading statements and omissions in order to stave off a hostile takeover by an activist investment firm. The Court held that plaintiff failed to identify a single actionable misstatement or omission and, therefore, dismissed the action without prejudice. 

On October 2, 2024, Judge William J. Martini of the United States District Court for the District of New Jersey dismissed a putative class action against a pool equipment company (the “Company”), its private equity majority shareholders, an investment advisor for one of the private equity firms, and two of the Company’s senior executives (the “Individual Defendants”) alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5. City of Southfield Fire & Police Ret. Sys. v. Hayward Holdings, Inc., No. 2:23-CV-04146 (WJM) (D.N.J. Oct. 2, 2024). The Court dismissed the complaint because it did not plead with specificity which portions of the Company’s or Individual Defendants’ statements were actionable, why they were actionable, or whether the Individual Defendants acted with the required state of mind.

On September 30, 2024, Judge Franklin U. Valderrama of the United States District Court for the Northern District of Illinois granted in part a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against an airplane manufacturing company and certain of its executives. Seeks v. The Boeing Company, No. 19‑2394, 2024 WL 4367846 (N.D. Ill. Sept. 30, 2024). Plaintiffs alleged that the company had made misrepresentations in public statements regarding the safety of its airplanes and in connection with two accidents involving company airplanes. After prior claims were dismissed without prejudice, plaintiffs added detail in support of their claims. The Court held that plaintiffs had sufficiently alleged falsity as to certain statements but not others and that scienter was adequately alleged.

On September 30, 2024, Judge Araceli Martínez-Olguín 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 asserting claims under the Securities and Exchange Act of 1934 against a social media company and certain of its executives. Ohio Public Emps. Ret. Sys. v. Meta Platforms, Inc., et al., 2024 WL 4353049 (N.D. Cal. 2024). Plaintiffs alleged that the company made misrepresentations regarding various business operations. Although it dismissed claims relating to certain statements, the Court held that plaintiffs adequately alleged that others were false or misleading and that plaintiffs had adequately alleged scienter and loss causation.

On September 13, 2024, Judge K. Michael Moore of the United States District Court for the Southern District of Florida dismissed a complaint alleging that an equity fund (the “Company”), its affiliate companies, and several directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5. Kosowsky v. Icahn Enterprises L.P., et al., 1:23-cv-21773-KMM (S.D.Fla. Sep 13, 2024). According to plaintiffs, defendants allegedly engaged in a scheme to artificially inflate the Company stock price by issuing dividends while supposedly concealing key financial information from investors to support the Company’s majority shareholder’s personal borrowing and financial interests. The Court dismissed the complaint without prejudice, holding that plaintiffs failed to allege any material misstatement or omission or facts giving rise to a strong inference of scienter. 

On August 19, 2024, the United States Court of Appeals for the Second Circuit dismissed, on remand from the United States Supreme Court, putative class action claims brought under Section 10(b) of the Securities Exchange Act of 1934 because they were based on a “pure omissions” theory. Moab Partners, L.P., v. Macquarie Infrastructure Corp., No. 21-2524, 2024 WL 3867669 (2d Cir. Aug. 19, 2024). As addressed in our prior post, the Supreme Court held that, contrary to prior authority in the Second Circuit, Section 10(b) and Rule 10b-5 promulgated thereunder do not impose an affirmative duty to disclose information but rather only require information to be disclosed if necessary to make other statements clear and complete.

On August 12, 2024, Judge David C. Godbey of the United States District Court for the Northern District of Texas denied a motion for judgment on the pleadings in an action alleging that an oil company (the “Company”) and a former senior manager violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Yoshikawa v. Exxon Mobil Corp., No. 3:21-CV-0194-N (N.D. Tex. Aug. 12, 2024). According to plaintiffs, the former manager allegedly artificially inflated the net present value (“NPV”) of certain oil and gas assets by using impossible drilling assumptions so that the valuation could support publicly-stated production forecasts. The Court denied defendants’ motion for judgment on the pleadings, holding, among other things, that the complaint adequately alleged that the inflated valuation was incorporated into public statements.

On August 8, 2024, the United States Court of Appeals for the Ninth Circuit affirmed United States District Judge Yvonne Gonzalez Rogers’s dismissal of a putative securities class action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 against an electric vehicle company (the “Company”) and certain of its executives.  In re CCIV / Lucid Motors Sec. Litig., No. 23-16049 (9th Cir. Aug. 8, 2023). 

On July 2, 2024, Judge Haywood S. Gilliam of the United States District Court for the Northern District of California granted a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a cybersecurity company and certain of its officers.  In re SentinelOne, Inc. Sec. Litig., No. 23-cv-2786-HSG (N.D. Cal. July 2, 2024).  Plaintiff alleged that defendants artificially inflated key business metrics in its SEC filings, necessitating a downward revision of revenue and projection figures.  The Court dismissed plaintiff’s claims without prejudice, primarily for lack of scienter.

On July 1, 2024, Judge Denise J. Casper of the United States District Court for the District of Massachusetts granted a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a drug-development company and certain of its officers.  State Teachers Ret. Sys. v. Charles River Lab. Int’l, Inc., No. 23-cv-11132-DJC (D. Mass. July 1, 2024).  Plaintiff alleged that defendants misled investors to believe that the company complied with all applicable laws in its importation of endangered non-human primates (“NHPs”) for animal testing of biologic pharmaceuticals.  The Court dismissed the action, holding that plaintiff failed to identify any actionable statement or omission in the company’s filings or to adequately allege that defendants acted with the requisite scienter.

On July 2, 2024, the United States Court of Appeals for the First Circuit affirmed the dismissal with prejudice of a putative class action asserting claims under the Securities Exchange Act of 1934 against a biotechnology company, its CEO, and its Chief Development Officer (“CDO”).  Quinones v. Frequency Therapeutics, Inc., —F.4th—, 2024 WL 3275030 (1st Cir. 2024).  Plaintiffs alleged the company made misrepresentations regarding clinical trials for the company’s treatment for severe sensorineural hearing loss.  The district court determined that plaintiffs’ amended complaint adequately alleged certain misstatements but failed to demonstrate that those statements were made with the required degree of scienter, and on that basis dismissed the amended complaint.  The First Circuit affirmed both rulings.

On June 10, 2024, the United States Court of Appeals for the Second Circuit affirmed the dismissal of a putative shareholders’ class action against a real estate company (the “Company”) and several of its directors (the “Individual Defendants”), asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder. Maso Cap. Invs. Ltd. v. E-House (China) Holdings Ltd., No. 22-355 (2d Cir. June 10, 2024). Plaintiffs alleged the Company made false and misleading statements and omissions to entice approval of a go-private merger with a buyer group comprised of the Individual Defendants. The district court granted the Company’s motion to dismiss. Reviewing the district court’s decision de novo, the Court affirmed finding that plaintiffs failed to identify a single actionable statement or omission.

On June 10, 2024, the United States Supreme Court granted certiorari to review a decision of the United States Court of Appeals for the Ninth Circuit that partially reinstated a putative class action asserting claims under the Securities Exchange Act against a social media company. Facebook v. Amalgamated Bank, —S. Ct.—, 2024 WL 2883752 (2024). Plaintiffs alleged that the company made misrepresentations relating to the misuse of user data by a third party. The Supreme Court granted 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?”

On May 22, 2024, Judge Cecilia M. Altonoga of the United States District Court for the Southern District of Florida granted a motion to dismiss a putative shareholder action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against a French company that provides outsourced content-moderation services for social media platforms (the “Company”) and certain of its former executives (the “Individual Defendants”). City of Warren Gen. Emps.’ Ret. Sys. v. Teleperformance SE, No. 23-cv-24580 (S.D. Fla. May 22, 2024). The complaint alleged that defendants made false and misleading statements about the treatment and training of the Company’s content moderators and the Company’s plan to exit the “highly egregious portion” of the content-moderation business. Judge Altonoga dismissed the complaint without prejudice, holding that plaintiffs did not adequately plead as a threshold matter that they purchased the Company’s shares within the United States and that plaintiffs had engaged in improper “puzzle pleading” in violation of Federal Rule of Civil Procedure 8(a)(1). Nevertheless, construing the complaint generously and relying on the parties’ briefing to organize the alleged misstatements, the Court identified several alleged misstatements that would be actionable, as pled, in an amended complaint with the noted deficiencies cured. 

On April 29, 2024, the United States Court of Appeals for the Sixth Circuit affirmed the dismissal with prejudice of a putative class action asserting claims under the Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, alleging that a car insurance technology company (the “Company”), certain of its officers, and the underwriters of the Company’s initial public offering (“IPO”) misled investors in the Company’s initial public offering materials. Kolominsky v. Root, Inc., No. 23-3392 (6th Cir. Apr. 29, 2024). Reviewing the district court decision de novo, the Court held that the complaint sounded in fraud and that the heightened pleading standard required by Rule 9(b) of the Federal Rules of Civil Procedure applied to the Securities Act claims and that the challenged statements were not actionable because they were based either on past performance and historical data or protected by the “Bespeaks Caution” doctrine. 

On April 30, 2024, Judge Marilyn L. Huff of the United States District Court for the Southern District of California dismissed with leave to amend a putative class action asserting claims under the Securities Exchange Act of 1934 against a medical device company and certain of its former officers. Lowe v. Tandem Diabetes Care Inc., 2024 WL 1898473 (S.D. Cal. Apr. 30, 2024). Plaintiffs alleged that the company made misrepresentations regarding the demand for its products. The Court held plaintiffs failed to adequately allege that any challenged statement was false at the time it was made and also failed to adequately allege scienter.

On May 1, 2024, Judge Arun Subramanian of the United States District Court for the Southern District of New York largely denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a manufacturer of dental products and certain of its former executives. San Antonio Fire and Police Pension Fund v. Dentsply Sirona Inc., –—F. Supp. 3d—, 2024 WL 1898512 (S.D.N.Y. May 1, 2024). Plaintiffs alleged the company made misrepresentations regarding its inventory, supply chain, product quality, and overall financial health. The Court held that plaintiffs’ allegations were largely sufficient as to the required elements of falsity, scienter, and loss causation, but the Court dismissed allegations regarding certain alleged misrepresentations and claims against one former executive.

On April 18, 2024, the United States Court of Appeals for the Fifth Circuit reversed the dismissal of and reinstated a putative shareholders’ class action against an amusement park company (the Company”) and certain of its executives, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder. Okla. Firefighters & Pension Ret. Sys. v. Six Flags Entm’t Corp., No. 23-10696 (5th Cir. Apr. 18, 2024). The district court granted the Company’s motion for judgment on the pleadings, holding that plaintiff lacked standing because it purchased Company shares too late to have relied on any actionable misstatements, and therefore dismissed the action with prejudice. Reviewing the district court’s decision de novo, the Court reversed, finding that plaintiffs’ economic loss was fairly traceable to the alleged misconduct because the Company’s alleged fraud had not been fully disclosed when plaintiff purchased the stock. We previously covered the district court’s decision here.

On April 15, 2024, the United States Court of Appeals for the Second Circuit affirmed in a non-precedential summary order the summary judgment dismissal of securities fraud claims against a pharmaceutical company (the “Company”) under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. In re Mylan N.V. Sec. Litig., No. 23-720-cv (2d Cir. Apr. 15, 2024). Reviewing the district court decision de novo, the Court held that appellants waived their argument related to scienter and that their failure to disaggregate the losses caused by the Company’s alleged omissions warranted summary judgment for defendants. 

On April 12, 2024, the United States Supreme Court unanimously reversed a decision of the United States Court of Appeals for the Second Circuit which held that Section 10(b) of the Securities Exchange Act of 1934 permitted a private right of action based solely on an issuer’s alleged failure to disclose a known trend or uncertainty required to be disclosed under Item 303 of Regulation S‑K. Macquarie Infrastructure Corp. v. Moab Partners, L.P., —U.S.—, 2024 WL 1588706 (2024). As explained in our prior post addressing the oral argument before the Supreme Court, the case concerned whether a company that operates a portfolio of infrastructure-related businesses needed to disclose that a proposed regulation by a United Nations agency would negatively impact one of its subsidiary’s businesses. Writing for a unanimous Court, Justice Sotomayor explained that the “pure omission” of information required to be disclosed by Item 303—i.e., a situation where there is no allegation that the omission rendered any affirmative statement misleading—is insufficient to support a claim under Section 10(b) of the Exchange Act.

On April 5, 2024, the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the dismissal of a putative class action asserting claims under the Securities Exchange Act of 1934 against a company that licenses children’s entertainment content and certain of its officers. In re Genius Brands Int’l, Inc. Sec. Litig., —F.4th—, 2024 WL 1473942 (9th Cir. 2024). Plaintiffs alleged that the company made actionable misstatements after it was told that its shares would be delisted from the NASDAQ exchange. The Court held that plaintiffs adequately alleged that the company’s conduct rendered certain challenged statements misleading, that plaintiffs adequately alleged loss causation for certain claims, and that one claim was appropriately dismissed for failure to plead loss causation.

On February 26, 2024, Judge Gregory H. Woods of the United States District Court for the Southern District of New York narrowed claims in a putative class action asserting claims under the Securities Exchange Act of 1934 and Securities Act of 1933 against a China-based real estate brokerage company, certain of its executives, and the underwriters in connection with a secondary offering by the company. Saskatchewan Healthcare Emps.’ Pension Plan v. KE Holdings Inc., 2024 WL 775195 (S.D.N.Y. Feb. 26, 2024). Plaintiff alleged, based largely on a short-seller report, that the company made misrepresentations that significantly overstated the gross transaction value (“GTV”) of real estate transactions facilitated by the company, the number of agents and stores using its online platform, and the commissions the company received. Id. at *3–7. The Court held that plaintiff adequately alleged misrepresentations with respect to certain statements but failed to adequately allege scienter, and therefore largely declined to dismiss the Securities Act claim but dismissed the Exchange Act claim with leave to replead.

On February 23, 2024, Judge Katherine Polk Failla of the United States District Court for the Southern District of New York largely denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a financial institution and certain of its executives. In re Barclays PLC Sec. Litig., 2024 WL 757385 (S.D.N.Y. Feb. 23, 2024). Plaintiff alleged that the company had issued securities in excess of what it had registered for with the U.S. Securities and Exchange Commission, which allegedly rendered misleading certain of its statements regarding compliance with securities laws and internal controls. Id. While the Court held that certain alleged misrepresentations were adequately pleaded to survive a motion to dismiss, the Court dismissed claims as to statements made after the alleged over-issuances were disclosed and rejected plaintiff’s control person liability theory as to certain defendants.

On March 5, 2024, Judge John P. Cronan 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 shareholders’ class action, alleging that a software company (the “Company”), several of its executives and directors (“Individual Defendants”), and three banks who underwrote the Company’s initial public offering (“IPO”) violated Sections 11 and 15 of the Securities Act of 1933. Lian v. Tuya Inc., 22 Civ. 6792 (JPC) (S.D.N.Y. Mar. 5, 2024). Plaintiff alleged that the Company failed to disclose at the time of its IPO, as required by Items 105 and 303 of Regulation S-K, that its sales and growth could be impacted by the involvement of a significant percentage of its customers in a pervasive and far-reaching fake customer reviews scheme. Furthermore, plaintiff alleged that the Company’s failure to disclose the scheme rendered several statements in the IPO registration statement (“Registration Statement”) false and misleading. The Court dismissed the claims predicated upon Items 105 and 303 but found the Section 11 claims based upon alleged misstatements in the Registration Statement to be sufficiently pled.

On March 1, 2024, Judge Marsha J. Pechman of the United States District Court for the Western District of Washington dismissed with prejudice a putative shareholders’ class action against a software company (the “Company”) and its Board of Directors (“Board”), alleging violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”). Sohovich v. Avalara, Inc., No. C22-1580 MJP (W.D. Wash. Mar. 1, 2024). Plaintiff alleged that the Company and its Board misled investors to vote to approve its $8.4 billion sale—priced at $93.50 per share—allegedly by deflating its financial projections and misrepresenting the Company’s performance and outlook in the proxy statement (“Proxy”). The Court found that plaintiff failed to adequately plead the falsity of any one of the four misstatements and dismissed it with prejudice. 

On March 14, 2024, Judge Lewis Kaplan of the United States District Court for the Southern District of New York denied defendants’ motions to dismiss a putative class action against a China-based ride hailing company, certain of its officers and directors, and the underwriters of the company’s IPO, asserting claims under the Securities Act of 1933 and the Securities Exchange Act of 1934. In re Didi Global Inc. Sec. Litig., 2024 WL 1119483 (S.D.N.Y. Mar. 14, 2024). Plaintiffs alleged that the company omitted from its filings in connection with its New York Stock Exchange (“NYSE”) IPO that the Chinese government had directed it to postpone its IPO, with the Chinese government imposing penalties after the company allegedly disregarded this directive. The Court held that plaintiffs’ allegations were adequate to state a claim with respect to nearly all of their asserted claims.

On March 25, 2024, the United States Court of Appeals for the Ninth Circuit unanimously affirmed a trial court decision dismissing a putative securities class action brought by investors against a biopharmaceutical company (“Company”) and certain of its officers and executives, alleging violations Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5. In re Sorrento Therapeutics, Inc. Securities Litigation, No. 22-55641 (9th Cir. Mar. 25, 2024). Plaintiff alleged that defendants made false statements about developments regarding the Company’s new COVID-19 antibody treatment, which allegedly misled investors and the public to believe that the Company had discovered a “cure” for the virus in order to boost the Company’s stock prices to improve its allegedly “dire financial situation.” Judge Anthony J. Battaglia of the United States District Court for the Southern District of California dismissed plaintiff’s claims without prejudice, holding that plaintiff had not plausibly pleaded falsity or scienter. The trial court entered judgment after plaintiff failed to file an amended pleading. Plaintiff appealed and the Ninth Circuit affirmed, holding that (1) the allegedly misleading statements were inactionable puffery and (2) standing alone, the Company’s allegedly poor financial position was not sufficient to warrant an inference of scienter.

On March 21, 2024, the United States Court of Appeals for the Third Circuit affirmed the dismissal of a putative class action against a biopharmaceutical company (the “Company”) and certain of its officers under Sections 10(b) and 20(a) of the Securities Exchange Act. In re Ocugen, Inc. Sec. Litig., No. 23-1570 (3d Cir. Mar. 21, 2024). Plaintiffs alleged that the Company’s statements and omissions about its partnership with an Indian biotechnology company to develop a COVID-19 vaccine for Emergency Use Authorization (“EUA”) with the U.S. Food and Drug Administration (“FDA”) were false and misleading. The Court affirmed the district court’s dismissal of the complaint with prejudice based on plaintiffs’ failure to allege a material misrepresentation.

On March 18, 2024, Judge Rachel P. Kovner of the United States District Court for the Eastern District of New York dismissed with prejudice a putative shareholders’ class action against a mobile game development company (the “Company”), its officers and directors, and its underwriters, alleging violations of Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”). In re Playtika Seg. Litig., No. 21-CV-06571-RPK-SJB (E.D.N.Y. Mar. 18, 2024). Plaintiff alleged that the Company failed to disclose an infrastructure overhaul of two of its most popular mobile games in its initial public offering (“IPO”) registration statement even though the overhaul was in progress at the time of the Company’s IPO. The Court held that plaintiff failed to adequately allege that omissions rendered the registration statement misleading, and that Item 105 did not impose a duty to disclose specific infrastructure projects that allegedly were omitted. Accordingly, the Court dismissed the action with prejudice.

On February 4, 2024, Judge Arun Subramanian of the United States District Court for the Southern District of New York dismissed a proposed securities class action against a biopharmaceutical company (the “Company”) alleging violations under Sections 11 and 15 of the Securities Exchange Act of 1934 (the “Exchange Act”).  Merritt v. Molecular Partners AG, 22-CV-5925 (AS) (S.D.N.Y. Feb. 4, 2024).

On February 5, 2024, Judge Valerie Caproni 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 Act of 1933 against a media company and certain of its officers and directors.  Ohio Public Emps. Ret. Sys. v. Discovery, Inc., 2024 WL 446466 (S.D.N.Y. Feb. 5, 2024).  Plaintiffs alleged that the offering documents in connection with the merger that created the company contained misrepresentations that painted a misleadingly positive image of the strength of the combined company.  The Court held that none of the six categories of misrepresentations alleged by plaintiffs was actionable.

On January 22, 2024, Judge William H. Orrick of the United States District Court for the Northern District of California dismissed a putative class action complaint alleging that a software company (the “Company”) and certain of its executives violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934. City of Hollywood Firefighters Pension Fund v. Atlassian Corp., 3:23-cv-00519-WHO (N.D. Cal. Jan. 22, 2024). Plaintiffs alleged that the Company made false and misleading statements about the strength of its financial outlook. The Court dismissed the complaint with leave to amend, holding that plaintiffs failed to allege falsity with respect to most of the alleged misrepresentations or sufficient facts giving rise to a strong inference of scienter with respect to one omission that was alleged plausibly.

On January 16, 2024, the Supreme Court of the United States heard oral argument in Macquarie Infrastructure Corp. v. Moab Partners, No. 22-1165, a case considering whether a private plaintiff may plead a claim under Section 10(b) of the Securities Exchange Act based on an issuer’s failure to disclose a known trend or uncertainty required to be disclosed under Item 303 of Regulation S-K even without identifying a particular statement rendered misleading by the alleged omission.

On January 17, 2024, Judge Otis D. Wright, II of the United States District Court for the Central District of California dismissed a putative class action asserting claims under Section 10(b) of the Exchange Act and Sections 11 and 12(a)(2) of the Securities Act against a medical apparel company, certain of its officers, and the underwriters of its stock offerings.  Ryan v. FIGS, Inc., 2024 WL 187001 (C.D. Cal. Jan. 17, 2024). 

On December 28, 2023, Judge Jed S. Rakoff of the United States District Court for the Southern District of New York dismissed a putative class action alleging that a biopharmaceutical company (the “Company”) and certain of its officers and directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 14a-9 based on alleged misstatements in a proxy statement (the “Proxy”) filed in connection with the acquisition of the Company by its controlling shareholder. Zappia v. Movant Scis. Ltd., No. 23-cv-8097 (JSR) (S.D.N.Y. Dec. 28, 2023). Plaintiff alleged that the law firm engaged by the Company’s special committee (the “Special Committee”) to consider the acquisition had a conflict of interest and that this rendered the Proxy misleading. The Court held that the complaint failed to allege the existence of a conflict or a misrepresentation.

On December 11, 2023, Judge Charles Breyer of the United States District Court for the Northern District of California narrowed a putative class action asserting claims under the Securities Exchange Act of 1934 against the purchaser of a social media company. Pampena v. Musk, — F. Supp. 3d — 2023 WL 8588853 (N.D. Cal. 2023). Plaintiffs alleged that they sold shares in the target company at depressed prices after the purchaser allegedly made material misstatements suggesting that he would not go forward with the acquisition. The Court held that certain of the challenged statements were actionable and granted leave to replead with respect to the others.

On November 27, 2023, Judge Kathleen M. Williams of the United States District Court for the Southern District of Florida granted in part and denied in part a motion to dismiss a proposed securities class action alleging that an electric vehicle charging company and certain of its officers violated Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934.  Bush v. Blink Charging Co., No. 1:20-cv-23527-KMW (S.D. Fla. Nov. 27, 2023).  Plaintiffs allege that the Company made false and misleading statements and omissions concerning the size and functionality of the Company’s electric vehicle (“EV”) charging station network.  The Court dismissed plaintiffs’ claim as to the size of the EV charging station network, but permitted plaintiffs’ claim regarding its functionality.

On December 6, 2023, Judge John G. Koeltl of the U.S. District Court for the Southern District of New York granted a motion to dismiss a putative securities class action brought against an operator of private schools in Western China.  Dagan Invs., LLC v. First High-Sch. Educ. Grp. Co., 2023 BL 442686, No. 22-cv-3831 (S.D.N.Y. Dec. 6, 2023).  Plaintiff, on behalf of a purported class of U.S. investors, alleged that the Company violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 by making material misstatements and omissions about the likelihood and severity of impending Chinese government regulations impacting the private education sector.

On November 3, 2023, Judge Rachel P. Kovner of the United States District Court for the Eastern District of New York granted a motion to dismiss a proposed putative securities class action alleging that a Russian electronic payments company (the “Company”) and certain of its officers violated Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).  In re Qiwi PLC Sec. Litig., No. 1:20-cv-06054-RPK-CLP (E.D.N.Y. Nov. 3, 2023).

On November 6, 2023, Judge Jed S. Rakoff 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 securities class action alleging that a Chinese grocery delivery company (the “Company”) violated Sections 11, 12(a), and 15 of the Securities Act of 1933 (the “Securities Act”).  Chen v. Missfresh Ltd., 1:22-cv-09836 (JSR) (S.D.N.Y. Nov. 6, 2023).

On October 11, 2023, the United States Court of Appeals for the First Circuit affirmed in part and reversed in part the dismissal of a putative class action asserting claims under the Securities Exchange Act of 1934 against a pharmaceutical company and certain of its former executives.  Shash v. Biogen, Inc., —F.4th—, 2023 WL 6617278 (1st Cir. 2023).  Plaintiffs alleged that the company made misstatements and omissions regarding the clinical trial results of the company’s drug to treat Alzheimer’s.  The district court granted defendants’ motion to dismiss, but the First Circuit reversed the dismissal in part, holding that plaintiffs’ allegations were sufficient with respect to one challenged statement, while affirming that plaintiffs failed to adequately allege scienter with respect to other challenged statements.

On October 6, 2023, Judge Hector Gonzalez of the United States District Court for the Eastern District of New York granted a motion to dismiss a putative securities class action against a battery recycling company and the former officers and directors of the SPAC that merged with the Company in 2021, alleging violations of Sections 11 and 15 of the Securities Act of 1933 and Section 14(a) the Securities Exchange Act of 1934.  Lanigan Grp., Inc. v. Li-Cycle Holdings Corp., 22-cv-02222 (HG) (RML) (E.D.N.Y. Oct. 6, 2023).

On September 18, 2023, Judge Manish S. Shah of the United States District Court for the Northern District of Illinois narrowed a putative class action asserting claims under the Securities Exchange Act of 1934 against an airplane manufacturer and its former CEO and CFO.  College Ret. Equities Fund v. Boeing Co., 2023 WL 6065260 (N.D. Ill. Sept. 18, 2023).  Plaintiffs alleged the company made misrepresentations regarding two crashes of a new model of plane and the company’s responsive measures in an effort to return the fleet to service.  The Court held that various challenged statements were not actionable because plaintiffs failed to adequately allege falsity or scienter.  With respect to the remaining challenged statements, the Court further pared the claims by holding that loss causation was not sufficiently alleged in connection with certain purported corrective disclosures.

On September 25, 2023, Judge Pamela K. Chen 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 securities class action alleging that an IT portfolio management services company, its CEO, and its CFO violated Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934.  Handal v. Tenet Fintech Grp. Inc., No. 1:21-cv-06461 (PKC) (RER) (E.D.N.Y. Sept. 25, 2023).  Plaintiffs alleged that defendants made material misstatements regarding several business transactions in the Company’s registration statement and the CEO’s subsequent public statements.  The Court denied the motion with respect to the Securities Act claims but granted it with respect to the Exchange Act claim because plaintiffs failed to adequately allege reliance.

On August 25, 2023, Judge Georgette Castner of the United States District Court for the District of New Jersey dismissed with prejudice a putative class action asserting claims under the Securities Exchange Act against a company that supports and operates blockchain technologies and certain of its executives and investors.  Takata v. Riot Blockchain, Inc., No. 18-cv-2293, slip op. (D.N.J. Aug. 25, 2023), ECF No. 251.  The Court’s prior decision dismissing the action with leave to amend was the subject of our prior post.  As this was plaintiff’s third amended complaint and the Court determined that plaintiff still failed to adequately allege misrepresentations or scienter, the Court dismissed the action with prejudice.

On August 25, 2023, a sharply divided panel of the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the dismissal of a putative class action asserting claims under the Securities Exchange Act against a producer of graphics processing units and certain of its executives.  E. Ohman J:or Fonder AB v. NVIDIA Corp., —F.4th—, 2023 WL 5496507 (9th Cir. 2023).  As discussed in our prior post, plaintiffs alleged that the company made misrepresentations regarding the extent to which its revenues and growth depended on sales of graphics processing units to the volatile cryptocurrency mining industry.  The Ninth Circuit held that plaintiffs adequately alleged that statements by two executives were misleading, and adequately alleged scienter as to the company’s CEO.

On August 10, 2023, Judge Ronnie Abrams 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 securities class action alleging that a cryptocurrency mining company (the “Company”) and certain of its officers and directors violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”).  Winter v. Stronghold Digital Mining, Inc., No. 22-CV-3088 (RA), 2023 WL 5152177 (S.D.N.Y. Aug. 10, 2023).  Plaintiffs allege that the Company made false and misleading statements in its registration statement and prospectus filed in connection with the Company’s October 2021 initial public offering (“IPO”) regarding the Company’s supply chain risks.  The Court granted the motion to dismiss the Section 12(a)(2) claim of one plaintiff for lack of standing, but otherwise denied the motion to dismiss.

On July 24, 2023, Judge William G. Young of the United States District Court for the District of Massachusetts granted in part, and denied in part, a motion to dismiss a putative class action brought against a software company (the “Company”) and two of its executives for violations of Sections 10(b) and 20(A) of the Securities Exchange Act of 1934.  City of Fort Lauderdale Police & Firefighters’ Ret. Sys. V. Pegasystems Inc., No. CV 22-11220-WGY, 2023 WL 4706741 (D. Mass. July 24, 2023). The class action followed a decision in a separate civil trade secret case in which the Company was found to have maliciously misappropriated another software company’s trade secrets in violation of Virginia law.

On July 25, 2023, Judge Jed S. Rakoff of the United States District Court for the Southern District of New York denied a motion to dismiss a putative securities class action against an online food ordering and delivery platform (the “Company”), alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934.  Steamship Trade Ass’n of Baltimore-Int’l Longshoreman’s Ass’n Pension Fund v. Olo Inc., No. 22-CV-8228 (JSR), 2023 WL 4744197 (S.D.N.Y. July 25, 2023).  Plaintiff alleged that the Company and two of its officers misled investors by (1) failing to disclose that one of its restaurant partners intended to terminate its partnership with the Company; and (2) misrepresenting the number of “active” restaurant locations that utilized the Company’s product.

On June 13, 2023, the United States Court of Appeals for the Third Circuit affirmed in part and reversed in part the dismissal of a putative class action against an insurance company (the “Company”) and certain of its executives under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  City of Warren Police & Fire Ret. Sys. v. Prudential Fin., Inc., No. 21-1147, 2023 WL 3961128 (3d Cir. June 13, 2023).  Plaintiffs alleged that the Company misled investors by misrepresenting the adequacy of their reserves, which are funds to pay for anticipated benefit claims by their policy holders.  The district court had held that plaintiffs failed to plead falsity with respect to all the alleged misstatements.  The Third Circuit affirmed the dismissal on all but one of the alleged misstatements, holding that plaintiffs adequately alleged falsity with respect to that statement including through allegations attributed to a confidential informant, and remanded to the district court to consider the elements of loss causation and scienter.

On June 2, 2023, Judge Denise Cote of the United States District Court for the Southern District of New York granted a motion to dismiss a proposed class action against a software company (the “Company”), alleging violations of Sections 11 and 15 of the Securities Act of 1933.  In re Riskified Ltd. Sec. Litig., No. 1:22-cv-03545, 2023 WL 3791653 (S.D.N.Y. June 2, 2023).  The Company’s core product offering was a credit card fraud detection service for online merchants.  As part of this offering, the Company agreed to reimburse online merchants for any payment reversals or “chargebacks” resulting from fraudulent transactions that were disputed by cardholders.  Plaintiffs alleged that, in connection with the Company’s initial public offering (“IPO”) in July 2021, the Company made several misstatements and omissions concerning the Company increasingly taking on clients with higher chargeback rates, its ability to control chargeback rates, and COVID-19’s impact on its business.  The Court dismissed plaintiffs’ second amended complaint in its entirety, finding that plaintiffs failed to plead an actionable misstatement or omission.

On June 1, 2023, the United States Court of Appeals for the Fourth Circuit affirmed the grant of summary judgment dismissing claims under Sections 14(a) of the Securities Exchange Act of 1934 against a financial company and certain of its directors.  Karp v. First Connecticut Bancorp, Inc., —F.4th—, 2023 WL 3743604, at *1 (4th Cir. 2023).  Plaintiff alleged that the company in which he held stock made misrepresentations in a proxy solicitation in connection with a proposed stock-for-stock merger with another company.  The Fourth Circuit held that plaintiff failed to allege any material omission from the proxy statement and also failed to establish loss causation.

On May 16, 2023, the United States Court of Appeals for the Second Circuit affirmed a district court’s dismissal of a putative class action asserting claims against a pharmaceutical company (the “Company”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Nandkumar v. AstraZeneca PLC, No. 22-2704-CV, 2023 WL 3477164 (2d Cir. May 16, 2023).  Plaintiffs alleged that the Company made misstatements and omissions about the progress of their clinical trials for the COVID-19 vaccine.  The district court held that plaintiffs failed to plead falsity or scienter, a decision we previously covered.  The Second Circuit, in a summary order, affirmed the dismissal, holding that plaintiffs failed to plead with specificity facts that would explain why and how investors were misled.

On March 30, 2023, Judge Andrew L. Carter, Jr. of the United States District Court for the Southern District of New York granted a motion to dismiss a putative securities fraud class action brought against a fitness technology company (the “Company”) and certain of its executives. Robeco Capital Growth Funds SICAV – Robeco Global Consumer Trends v. Peloton Interactive, Inc., et al., No. 21-cv-9582 (ALC)(OTW) (S.D.N.Y. Mar. 30, 2023). Plaintiff alleged that defendants violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, by making material misstatements and omissions about the demand for the Company’s product following the peak of the COVID-19 pandemic. The Court dismissed the amended complaint, holding that certain of defendants’ alleged statements were non-actionable under the PSLRA safe harbor, and that plaintiff had not alleged sufficient facts to demonstrate other statements were false when made.

On March 31, 2023, Judge John P. Cronan of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 against a financial institution that offered certain Exchange Traded Notes (the “ETN”) linked to a natural gas price index. Gomez v. Credit Suisse AG, No. 22 Civ. 115 (JPC) (BCM), 2023 WL 2744415 (S.D.N.Y. Mar. 31, 2023).

On March 14, 2023, Judge Rossie D. Alston, Jr. of the United States District Court for the Eastern District of Virginia dismissed without prejudice a putative class action against an automobile manufacturer, its U.S. based based subsidiary, and certain of its officers, asserting claims under the Securities Exchange Act of 1934. In re Volkswagen AG Sec. Litig., 2023 WL 2505539 (E.D. Va. Mar. 14, 2023). Plaintiffs alleged that the company’s U.S. subsidiary misrepresented that the company would change its name to one suggesting an increased focus on electric vehicles, which the company later indicated had been intended as an April Fool’s joke. The Court held that plaintiffs adequately alleged falsity and scienter but failed to show that the challenged statements were sufficiently connected to the securities at issue to be actionable.

On February 14, 2023, Judge Charles R. Breyer of the United States District Court for the Northern District of California granted a motion to dismiss a putative securities class action alleging that a hearing aid company (the “Company”) and its officers, directors, and IPO underwriters falsely or misleadingly inflated the Company’s revenue and growth opportunities and allegedly downplayed an insurance audit, leading to a Department of Justice investigation for insurance fraud.  In re Eargo, Inc. Sec. Litig., No. 21-cv-08597 (N.D. Cal. Feb. 14, 2023).  Plaintiffs alleged violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) against all defendants, and violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder against the Company and its officers.  The Court granted defendants’ motion to dismiss, holding that plaintiffs failed to sufficiently plead falsity and scienter.

On February 16, 2023, Judge Josephine L. Staton of the United States District Court for the Central District of California dismissed without prejudice a putative securities class action asserting claims under the Securities Exchange Act of 1934, the Securities Act of 1933, and Regulation S K against an electric automobile company, certain of its executives and directors, and underwriters in the company’s initial public offering. Crews v. Rivian Automotive, Inc., No. 2:22-cv-01524-JLS-E, slip op. (C.D. Cal. Feb. 16, 2023), ECF No. 149. Plaintiffs alleged that the company made various misrepresentations relating to the pricing and profitability of the company’s vehicles, while allegedly knowing that it would need to increase pricing to address rising costs. The Court held that plaintiffs failed to adequately allege any false statement or actionable omission.

On January 11, 2023, the United States District Court for the Northern District of California dismissed a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b) against an electric vehicle company and its CEO.  In re CCIV/Lucid Motors Sec. Litig., No. 4:21-cv-9323, slip op. (N.D. Cal. Jan. 11, 2023), ECF No. 151.  Plaintiffs, who allegedly purchased shares in a Special Purpose Acquisition Company (“SPAC”) that later merged with the electric vehicle company (with the electric vehicle company becoming the surviving entity of the merger), alleged that, prior to the merger, the company had made misrepresentations and omissions about its value.  Plaintiffs claimed to have invested in the SPAC after the press had announced the SPAC was “in talks” with the electric vehicle company, but before the merger was officially announced by the SPAC and the company themselves.  Following post-merger statements that allegedly contradicted the company’s pre-merger statements, plaintiffs sued, claiming that defendants’ alleged misrepresentations regarding the electric vehicle company’s value had caused them to pay an inflated price for the SPAC’s stock.  The Court held that plaintiffs had standing to sue the electric vehicle company, but dismissed their claims for failure to identify any material misrepresentations because the challenged statements were made before the SPAC and the electric vehicle company had announced or confirmed that they were in merger discussions.

On January 10, 2023, Judge Paul 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 an online sports gaming and betting company and certain of its executives.  In re DraftKings Inc. Sec. Litig., 2023 WL 145591 (S.D.N.Y. Jan. 10, 2023).  Plaintiffs alleged that the company made misrepresentations and omissions regarding whether a target company it acquired had gambling operations in jurisdictions where gambling was illegal.  The Court held that plaintiffs failed to adequately allege actionable misrepresentations or scienter.

On December 7, 2022, the United States District Court for the Western District of Washington largely denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against an online real estate listing company and certain of its executives.  Jaeger v. Zillow Group, Inc., 2022 WL 17486297 (W.D. Wash. Dec. 7, 2022). Plaintiff alleged that the company made misrepresentations in connection with a real estate purchasing program.  While the Court dismissed one allegation as a non-actionable forward-looking statement, the Court held that the remainder of plaintiff’s allegations stated a claim.

On December 5, 2022, Judge Denise Cote of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 against an alcoholic beverage manufacturer and certain of its executives.  Siegel v. Boston Beer Co., Inc., 2022 WL 17417111 (S.D.N.Y. Dec. 5, 2022). Plaintiff alleged that the company made misleading statements related to the performance of the company’s products in the hard seltzer market as the pandemic subsided and consumers returned to bars and restaurants. The Court assessed three categories of alleged misstatements and held that none was actionable.

On November 7, 2022, Judge Allyne R. Ross of the United States District Court for the Eastern District of New York granted in part a motion to dismiss a putative securities class action against a space exploration company (the “Company”), its founder, and certain of its current and former executives. Kusnier and Scheele v. Virgin Galactic Holdings, Inc., et al, No. 21-cv-03070-ARR (E.D.N.Y. Nov. 7, 2022). Plaintiffs alleged that defendants violated Section 10(b) of the Securities Exchange Act (the “Exchange Act”), Rule 10b-5 promulgated thereunder, and Sections 20(a) and 20A of the Exchange Act, by making materially false and misleading statements regarding the safety history and functioning capabilities of the Company’s spacecraft. The Court granted the motion in part but found sufficient at the pleading stage certain alleged misstatements.
 

On October 20, 2022, Judge George A. O’Toole, Jr. of the United States District Court for the District of Massachusetts (the “Court”) denied a motion to dismiss a putative securities class action against a business communications infrastructure company (the “Company”) and three of its executives.  Miller v. Sonus Networks, Inc., et al, No. 18-12344-GAO (D. Mass Oct. 20, 2022).  Plaintiff alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, by making materially false and misleading statements regarding the Company’s projected sales and revenue forecast.  The Court denied the motion, finding that plaintiff adequately pled scienter.

On September 30, 2022, Judge Margo K. Brodie of the Unites States District Court for the Eastern District of New York granted in part and denied in part a motion to dismiss a securities fraud class action against a bedding company (the “Company”) alleging that the Company misled investors about the Company’s strength and potential for growth in violation of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Lematta v. Casper Sleep, Inc., et al., No. 20-CV-2744 (MKB), 2022 WL 4637795 (E.D.N.Y. Sept. 30, 2022).  The Court held that (i) alleged misstatements about optimizing pricing and promotional strategies in offering materials for the Company’s initial public offering (“IPO”) were not misleading and (ii) alleged misstatements about anticipated growth were puffery or forward-looking statements accompanied by sufficient cautionary language.  The Court otherwise denied the motion to dismiss.

On September 30, 2022, 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 Act of 1933 against an e-cigarette manufacturer, certain of its officers and directors, and the underwriters of the company’s initial public offering in the United States.  Garnett v. RLX Tech., Inc., No. 21-cv-5125, 2022 WL 4632323 (S.D.N.Y. Sept. 30, 2022).  Plaintiffs alleged that the China-based company failed to disclose the likelihood of increased e-cigarette regulations in China that would harm the company’s financial prospects.  The Court held that plaintiffs failed to adequately allege any actionable misrepresentation.

On September 29, 2022, Chief Judge David C. Godbey of the United States District Court for the Northern District of Texas dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 against an oil company and certain of its officers.  Yoshikawa v. Exxon Mobil Corp., No. 3:21-CV-00194-N, 2022 WL 4677621 (N.D. Tex. Sept. 29, 2022).  Plaintiffs alleged that the company made misrepresentations in connection with the company’s purchase of certain oil and gas assets and its expected production from those assets.  The Court held that plaintiffs failed to adequately allege scienter but granted plaintiffs’ request for leave to amend with respect to certain alleged misstatements as to which the Court held plaintiffs had alleged a plausible theory of falsity and materiality.

On September 30, 2022, a panel of the United States Court of Appeals for the Second Circuit affirmed a decision of the United States District Court for the Southern District of New York dismissing a putative securities fraud class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder against a flavoring and fragrance products company (the “Company”) and several of its executives.  Menora Mivtachim Ins. Ltd., et al. v. Frutarom Indus. Ltd., et al., No 21-1076 (2d Cir. Sept. 30, 2022).  Plaintiffs alleged that, from 2002 to 2018, the Company engaged in a “long-running bribery scheme,” and that defendants made materially misleading statements about the Company’s compliance with anti-bribery laws and its business growth in public documents filed when the Company was acquired in 2018.  The district court granted the motion to dismiss as against the Company and its officers, holding that plaintiffs failed to sufficiently allege statutory standing to pursue their securities fraud claims.  The Second Circuit affirmed.

On September 12, 2022, Judge J. Paul Oetken 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 pharmaceutical company and certain of its executives.  In re AstraZeneca plc Sec. Litig., 2022 WL 4133258 (S.D.N.Y. Sept. 12, 2022).  Plaintiffs alleged that the company made misstatements and omissions with respect to clinical trials of its COVID-19 vaccine.  The Court held that plaintiffs failed to identify any misleading statements and failed to adequately allege scienter.

On August 18, 2022, a unanimous panel of the United States Court of Appeals for the First Circuit affirmed a decision by the United States District Court for the District of Rhode Island granting a motion to dismiss a putative securities fraud class action asserting claims under Section 10(b) of the Securities Exchange Act (the “Exchange Act”), Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange against a health care and pharmaceutical company (the “Company”) and two of its senior executives. City of Miami Fire Fighters’ and Police Officers’ Retirement Trust, et. al. v. CVS Health Corporation, No. 21-1479 (1st Cir. Aug 18, 2022). Plaintiffs alleged that, following the Company’s 2015 acquisition of another health care company (the “Merger”), the Company’s executives issued false statements and misleading omissions about various post-Merger issues. In affirming dismissal of the amended complaint, the First Circuit held that the district court’s assessment was “right on the mark” and that “[p]laintiffs failed to allege that defendants made statements of fact that were false when made or misleadingly incomplete in light of the contemporaneous circumstances.”

On August 18, 2022, a unanimous panel of the United States Court of Appeals for the First Circuit affirmed a decision by the United States District Court for the District of Rhode Island granting a motion to dismiss a putative securities fraud class action asserting claims under Section 10(b) of the Securities Exchange Act (the “Exchange Act”), Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange against a health care and pharmaceutical company (the “Company”) and two of its senior executives.  City of Miami Fire Fighters’ and Police Officers’ Retirement Trust, et. al. v. CVS Health Corporation, No. 21-1479 (1st Cir. Aug 18, 2022).  Plaintiffs alleged that, following the Company’s 2015 acquisition of another health care company (the “Merger”), the Company’s executives issued false statements and misleading omissions about various post-Merger issues.  In affirming dismissal of the amended complaint, the First Circuit held that the district court’s assessment was “right on the mark” and that “[p]laintiffs failed to allege that defendants made statements of fact that were false when made or misleadingly incomplete in light of the contemporaneous circumstances.”

On August 4, 2022, the United States District Court for the Middle District of Florida dismissed without prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a recycling services company, certain of its officers and directors, and the former CEO of a special purpose acquisition company (SPAC) that acquired the company.  Theodore v. PureCycle Tech. Inc., No. 6:21-cv-809-PGB-GJK, slip op. (M.D. Fla. Aug. 4, 2022), ECF No. 112.  Plaintiffs alleged that the company made misrepresentations with respect to its management team’s experience, the value of its patented recycling process, and its future production and financial projections, which were allegedly revealed in a short-seller report.  The Court held that the complaint on its face failed to state precisely which statements or omissions were at issue and where they were made, that plaintiffs adequately alleged certain misrepresentations but not others, and that plaintiffs adequately alleged loss causation but not scienter.

On August 4, 2022, the United States District Court for the District of New Jersey dismissed a putative securities class action asserting claims under the Securities Exchange Act of 1934 against a pharmaceutical company and certain of its executives.  Paxton v. Provention Bio, Inc., No. 3:21-cv-11613, slip op. (D.N.J. Aug. 4, 2022), ECF No. 57.  Plaintiffs alleged the company made misrepresentations in connection with the company’s candidate drug intended to delay or prevent the progression of Type One Diabetes.  The Court held that plaintiffs failed to adequately allege actionable misrepresentations, scienter, or loss causation.

On August 1, 2022, the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal of a putative securities class action asserting claims under the Securities Act of 1933 against a medical technology company, certain of its officers and directors, and the underwriters of the company’s stock offerings.  Einhorn v. Axogen, Inc., —F.4th—, 2022 WL 3022297 (11th Cir. 2022).  The appeal solely concerned plaintiffs’ claim that the company had overstated the frequency of peripheral nerve injuries and repairs.  The Court held that these statements were forward-looking statements that were not actionable under the safe-harbor provision of the Securities Act.

On July 26, 2022, Judge Robert W. Gettleman of the United States District Court for the Northern District of Illinois Eastern Division granted in part and denied in part a motion for summary judgment in a securities fraud class action against an insurance company (the “Company”) and certain of its executives.  In re The Allstate Corp. Sec. Litig., No. 16-C-10510 (N.D. Ill. July 26, 2022).  Plaintiffs alleged that defendants violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, by making material misstatements and omissions regarding a spike in the frequency of automobile policy claims, which plaintiffs alleged had a negative impact on the Company’s financial condition and stock price.

On July 13, 2022, the United States District Court for the Central District of California largely denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a special purpose acquisition company (SPAC), a space industry startup that was the SPAC’s target, certain executives of both companies, and an investor that served as sponsor of the SPAC.  In re Stable Road Acquisition Sec. Litig., No. 2:21-cv-05744, slip op. (C.D. Cal. July 13, 2022), ECF No. 154.  Plaintiff alleged that the target company made misrepresentations regarding the viability of its technology and the immigration and national security status of its CEO, which the SPAC allegedly repeated without conducting adequate due diligence.  The Court held that plaintiff’s allegations were largely sufficient but that plaintiff failed to adequately allege scienter or control person liability with respect to certain executives.

On July 5, 2022, Chief Judge Richard Seeborg of the Northern District of California granted motions to dismiss a putative securities class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), Rule 10b-5 thereunder, Section 20(a) of the Exchange Act, and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (“Securities Act”), against a mobile gaming technology company (the “Company”), certain of its officers and directors, and its underwriters.  Jedrzejczyk, et al. v. Skillz Inc., et al., No. 21-cv-03450-RS (N.D. Cal. July 5, 2022).  Plaintiffs alleged that defendants made material misstatements and omissions regarding the Company’s financial condition, technical capabilities, and business prospects.  The Court granted defendants’ motions to dismiss, holding that plaintiffs failed to adequately plead falsity, scienter, or loss causation as to the Exchange Act claims, and that plaintiffs had not established standing or adequately pled material untrue statements or omissions as to the Securities Act claims.

On June 9, 2022, Judge David O. Carter of the United States District Court for the Central District of California granted a motion to dismiss a putative class action lawsuit alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act (the “Exchange Act”) and Rule 10b-5 thereunder, and Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”) against a healthcare company (the “Company”), its directors, and the underwriters of the Company’s initial public offering.  R. Brian Terenzini v. GoodRx Holdings, Inc. et al., No. 2:20-cv-11444, (C.D. Cal. June 9, 2022).  Plaintiffs alleged in their amended complaint that at the time of the Company’s IPO it failed to disclose in its Registration Statement and subsequent investor communications the significant risk of competition from a large online retailer.  The Court held that—as with the original complaint—plaintiffs failed to allege actionable misstatements or omissions as well as scienter and granted defendants’ motion to dismiss with prejudice.
 

On May 31, 2022, Judge Beth Labson Freeman of the Northern District of California dismissed without prejudice a putative class action asserting claims under the Securities Exchange Act against a synthetic biology company and certain of its executives.  Joseph v. Precigen, Inc., No. 20-cv-06936-BLF (N.D. Cal. May 31, 2022).  Plaintiff alleged that the company misrepresented the efficiency and economic viability of its methane conversion program.  The Court held that plaintiff failed to adequately allege scienter and failed to allege falsity with respect to certain alleged misrepresentations; however, the Court granted leave to replead.

On May 31, 2022, the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal of a putative class action asserting claims under Georgia state law for breach of fiduciary duty against a brokerage firm and its parent company.  Cochran v. Penn Mut. Life Ins., No. 20-13477 (11th Cir. May 31, 2022).  Plaintiff alleged that the brokerage firm breached a fiduciary duty when it advised plaintiff to use funds in a retirement account to invest in a variable annuity, a product that allegedly resulted in higher fees for the broker and no benefit to plaintiff because his retirement account was already tax-advantaged.  The district court dismissed the class action allegations and the Eleventh Circuit affirmed, holding that the Securities Litigation Uniform Standards Act (“SLUSA”) precludes bringing such claims as a class action.

On May 4, 2022, Judge Victor Marrero of the United States District Court for the Southern District of New York denied a motion to dismiss a putative class action alleging, among other things, violations of Sections 10(b) and 20(a) of the Securities Exchange Act (the “Exchange Act”) and Rule 10b-5 thereunder against an investment company (the “Company”), its related entities, and its president and co-founder.  Michael Tecku et al. v. YieldStreet Inc. et al., No. 1:20-cv-07327 (S.D.N.Y May 4, 2022).  Plaintiffs alleged that the Company “misrepresented material facts about the stability and attractiveness of their investment products in its offering documents” by making misleading statements or omissions in private placement memoranda (“PPMs”) and series notes supplements (“SNSs”).  The Court held that, accepting plaintiffs’ allegations as true, plaintiffs sufficiently alleged securities fraud violations for certain alleged misstatements and omissions.

On April 18, 2022, the United States District Court for the Central District of California dismissed without prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a computer game development company and certain of its executives.  Cheng v. Activision Blizzard, Inc., No. 21-cv-6240, slip op. (C.D. Cal. Apr. 18, 2022), ECF No. 75.  Plaintiffs alleged the company made statements that were misleading because they failed to disclose certain government investigations and the prevalence of sexual harassment and gender-based discrimination at the company.  The Court held that plaintiffs failed to identify any actionable misrepresentations or to adequately raise an inference of scienter but granted plaintiffs leave to replead.

On April 12, 2022, Judge Rachel P. Kovner of the Eastern District of New York granted a motion to dismiss a putative securities class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, as well as Section 20(a) of the Exchange Act against an airline company (the “Company”) and certain of its officers and directors.  In re GOL Linhas Aéreas Inteligentes S.A. Securities Litigation, No. 1:20-cv-04243-RPK-TAM (E.D.N.Y. Apr. 12, 2022).  Plaintiffs alleged that defendants made materially misleading statements and omissions regarding the Company’s financial strength in an earnings report issued in the early days of the COVID-19 pandemic, despite allegedly knowing that its auditor would be issuing a report emphasizing a going concern and raising material weaknesses concerning the Company’s internal controls.  The Court granted defendants’ motion to dismiss, holding that plaintiffs failed to adequately plead material misstatements or omissions as well as scienter.

On March 25, 2022, Judge Mary Kay Vyskocil of the Southern District of New York granted in part and denied in part a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a telecommunications company and certain of its executives.  Solomon v. Sprint Corp., 1:19-cv-05272 (MKV) (S.D.N.Y. Mar. 25, 2022).  Plaintiffs primarily alleged that the company made misrepresentations regarding its reporting of new phone subscriptions and its participation in a government-subsidized discounted phone program.  The Court held that plaintiffs adequately alleged misrepresentations and scienter with respect to statements regarding new subscriptions but held that plaintiffs failed to adequately allege scienter with respect to statements regarding the discounted phone program and concluded that certain other challenged statements were mere puffery.

On March 30, 2022, Judge Robert Pitman of the Western District of Texas denied the majority of a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against an information technology company, certain of its executives, and private equity firms that owned the company’s securities.  In re SolarWinds Corp. Sec. Litig., No. 1:21-CV-138-RP (W.D. Tex. Mar. 30, 2022).  Plaintiffs alleged that company statements regarding its cybersecurity policies and practices were revealed to be false and misleading upon the disclosure of a security breach.  The Court held that plaintiffs adequately alleged falsity, scienter, and loss causation, except as to the company’s CEO, the allegations as to whom the Court granted plaintiffs leave to replead.

On March 25, 2022, the United States District Court for the Eastern District of Pennsylvania largely denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a pharmaceutical company and certain of its executives.  Halman Aldubi Provident & Pension Funds Ltd. v. Teva Pharm. Indus. Ltd., No. 20-cv-4660-KSM (E.D. Pa. Mar. 25, 2022).  Plaintiff alleged that the company made misrepresentations with respect to the reasons one of its drugs was commercially successful.  The Court held that except for allegations against the company’s CFO, plaintiff adequately alleged misrepresentations, scienter, and loss causation.

On March 30, 2022, the United States District Court for the Northern District of Illinois dismissed, without prejudice, a putative class action asserting claims under the Securities Exchange Act of 1934 against a cosmetics retailer and certain of its executives. Chandler v. Ulta Beauty, Inc., No. 18-CV-1577, 2022 WL 952441, at *1 (N.D. Ill. Mar. 30, 2022).  Plaintiffs alleged that the company made various statements that were misleading because they failed to disclose the company’s alleged practice of reselling used returned products.  The Court held that plaintiffs failed to identify any actionable misrepresentations and failed to adequately allege scienter, but granted plaintiffs leave to replead.

On March 21, 2022, Judge Lewis J. Liman of the Southern District of New York granted a motion to dismiss a claim under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, as well as Section 20(a) of the Exchange Act against a pharmaceutical company (the “Company”) and certain of its executives.  Rice v. Intercept Pharmaceuticals, Inc., No. 1:21-cv-00036 (S.D.N.Y. Mar. 21, 2022).  Plaintiffs alleged that defendants omitted material information concerning the safety of the Company’s liver disease drug that resulted in a stock drop once alleged corrective disclosures were made.  The Court granted defendants’ motion to dismiss plaintiffs’ first amended complaint (the “FAC”), holding that plaintiffs failed to sufficiently allege material omissions, scienter, or loss causation, but granted plaintiffs leave to replead.

On March 7, 2022, Judge Algenon L. Marbley of the Southern District of Ohio largely denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 (“Exchange Act”) and the Securities Act of 1933 (“Securities Act”) against an energy company, certain of its executives and directors, and certain underwriters of its bond offerings.  In re FirstEnergy Corp. Sec. Litig., No. 2:20-cv-3785 (S.D. Ohio Mar. 7, 2022).  Plaintiffs alleged that the company engaged in an anti-competitive scheme that included bribing state officials in exchange for a government bailout of its nuclear power facilities.  The lawsuit relates to the Ohio House Bill 6 scandal, in connection with which Ohio’s former Speaker of the House and others have been arrested on racketeering charges, political strategists and lobbyists have pleaded guilty to a racketeering conspiracy; the company fired certain executives for violating company policies and its code of conduct, and the company entered into a deferred prosecution agreement under which it paid a $230 million penalty and acknowledged having “conspired with public officials and other individuals and entities to pay millions of dollars to and for the benefit of public officials in exchange for specific official action” for the company’s benefit.  The Court held that plaintiffs had sufficiently alleged the various elements of their claims and declined to dismiss any defendant from the case, although the Court dismissed certain claims with respect to certain individual defendants.

On March 8, 2022, the United States District Court for the District of Colorado dismissed with prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a chicken producer and certain of its executives.  United Food & Com. Workers Int’l Union Local 464A v. Pilgrim’s Pride Corp., No. 20-CV-01966-RM-MEH, 2022 WL 684169 (D. Colo. Mar. 8, 2022).  The crux of plaintiff’s allegations was that the company made various statements touting its performance and attributing those positive results to factors such as its market position, product portfolio, customer base, and management team; when in fact those results were supposedly inflated by an alleged bid-rigging scheme that was revealed through an indictment by the Department of Justice, in connection with which the company later entered a plea agreement and agreed to pay a criminal fine.  The Court held that plaintiff failed to allege an actionable misrepresentation with respect to any of the challenged statements.

On March 7, 2022, Judge P. Kevin Castel of the Southern District of New York granted in part and denied in part a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a coal mining company and certain of its executives.  In re Peabody Energy Corp. Sec. Litig., No. 20-cv-8024 (PKC), slip op. (S.D.N.Y. Mar. 7, 2022), ECF No. 50.  Plaintiff alleged that the company made misrepresentations concerning its safety practices, a fire that took place at one of its mines, and its ability to subsequently reopen that mine and resume operations.  The Court held that the complaint adequately alleged misrepresentations and scienter with respect to the mine fire but dismissed the remaining challenged statements as non-actionable puffery, protected forward-looking statements, or statements of opinion.

On February 11, 2022, the United States District Court for the District of Connecticut denied a motion to dismiss a putative securities class action asserting claims under the Securities Exchange Act of 1934 (“Exchange Act”) against a consumer financial services company that issues private-label credit cards and certain of its executives.  In re Synchrony Fin. Sec. Litig., No. 3:18-CV-1818 (VAB), 2022 WL 427499 (D. Conn. Feb. 11, 2022).  As discussed in our prior post the Court had previously dismissed the action in its entirety, including with respect to claims under the Securities Act of 1933 (“Securities Act”).  The Court of Appeals for the Second Circuit upheld the dismissal of the Securities Act claims and certain of the Exchange Act claims but remanded for further proceedings regarding one challenged statement—that the company misrepresented the alleged “pushback” it had received from retail partners with respect to its underwriting standards.  Id. at *2.  On remand, the district court held that plaintiffs adequately alleged falsity, scienter, and loss causation with respect to the remaining challenged statement.

On February 16, 2022, Judge James Donato of the Northern District of California granted in part and denied in part a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a videoconferencing company and certain of its executives.  In re Zoom Sec. Litig., No. 20-cv-02353-JD (N.D. Cal. Feb. 16, 2022).  Plaintiff alleged that the company made misrepresentations concerning the level of encryption on its primary videoconferencing product.  The Court held that plaintiff sufficiently alleged falsity, scienter, and loss causation as to the CEO’s challenged statements regarding encryption, but it dismissed claims as to certain other alleged misstatements, and all claims against one executive, for failure to sufficiently allege scienter, while granting leave to amend.

On January 14, 2022, Judge William H. Orrick of the Northern District of California denied 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 Rule 10b-5, against a lithium battery development company (the “Company”) and certain of its executives (collectively, “defendants”).  In re Quantumscape Securities Class Action Litigation, No. 3:21-cv-00058-WHO (N.D. Cal. Jan. 14, 2022).  The Company’s “solid-state” battery is an aspiring competitor to conventional lithium-ion batteries for use in electric vehicles.  The Court denied defendants’ motion to dismiss, holding that the Complaint was adequately plead with the exception of one of the challenged statements that it dismissed.

On December 20, 2021, the United States District Court for the Southern District of Ohio dismissed a putative class action against a public utility company and certain of its executives under the Securities Exchange Act.  Nickerson v. Am. Elec. Power Co., No. 2:20-cv-4243 (S.D. Ohio Dec. 20, 2021).  Plaintiffs alleged that defendants made various statements regarding prospective energy legislation in Ohio which were misleading because they omitted that the company was actively involved in an alleged lobbying scheme to create that legislation.  The Court held that plaintiffs failed to adequately allege any actionable misrepresentations.

On December 22, 2021, the United States District Court for the Northern District of California declined to dismiss most of the claims asserted in a putative class action against a biotechnology company, certain of its executives, and the company’s former majority investor under the Securities Exchange Act.  In re Vaxart, Inc. Sec. Litig., No. 20-cv-05949-VC (N.D. Cal. Dec. 22, 2021).  Plaintiffs alleged that the company made misrepresentations during the early months of the COVID-19 pandemic in 2020 regarding its efforts to develop a vaccine, and further alleged that the investor engaged in a scheme to inflate the company’s stock price in order to exit its position at a profit.  The Court held that plaintiffs adequately alleged misrepresentations and scienter as against the company and its executives named as individual defendants but dismissed the claims against the investor.

On December 22, 2021, the United States Court of Appeals for the First Circuit reversed the dismissal of a putative class action asserting claims against a software company and certain of its current and former executives under the Securities Exchange Act.  Constr. Indus. and Laborers Jt. Pension Tr. v. Carbonite, Inc., —F.4th—, 2021 WL 6062622 (1st Cir. 2021).  Plaintiffs alleged that the company misleadingly touted the capabilities of a new cloud-based data backup product, even though defendants knew that the product did not work.  The district court dismissed the action for failure to adequately allege scienter, but the First Circuit reversed, holding that plaintiffs adequately alleged scienter and that the challenged statements were actionable.

On December 17, 2021, the Court of Appeals for the Second Circuit unanimously vacated and remanded for reconsideration the dismissal by the United States District Court for the Eastern District of New York of a putative securities class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5(b) promulgated thereunder, against a health food product manufacturing company (the “Company”) and certain of its executives, for alleged misstatements regarding the Company’s sales and internal controls.  In re: The Hain Celestial Group, Inc. Securities Litigation, No. 20-1517 (2d Cir. Dec. 17, 2021).  The late District Judge Arthur Spatt granted defendants’ motion to dismiss, with prejudice, the Second Amended Complaint (the “SAC”), holding that plaintiffs failed to allege a fraudulent scheme or business practice in violation of the terms of Rule 10b-5(a)-(c), and further failed to sufficiently plead scienter.  Plaintiffs appealed the district court’s dismissal with respect to their Rule 10b-5(b) claims.  The Second Circuit vacated the dismissal, holding that the district court erred in finding that plaintiffs’ Rule 10b-5(b) claim relied on plaintiffs’ pleading a fraudulent business scheme or plan.

On December 8, 2021, Judge Philip S. Gutierrez of the U.S. District Court for the Central District of California dismissed, with prejudice, a suit against a Canadian cannabis manufacturer (the “Company”), alleging that the Company failed to disclose material information about its facilities in Colombia and its transactions with other companies in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  In re Pharmacielo Ltd. Sec. Litig., No. 20-2182-PSG (C.D. Cal. Dec. 8, 2021).  Plaintiffs—whose complaint was once dismissed—amended their complaint to bolster their allegations based on an assortment of Company statements regarding its facilities and expansion plans that plaintiffs alleged were designed to artificially inflate the Company’s stock price.  The Court dismissed the amended complaint for failure to plead falsity or materiality and did so with prejudice because any amendments would be futile based on their “failed attempt to remedy” the deficiencies of the prior complaint.

On November 24, 2021, the United States Court of Appeals for the Second Circuit vacated the dismissal of a putative class action asserting claims under the Securities Exchange Act of 1934 against an internet company and one of its directors.  Altimeo Asset Mgmt. v. Qihoo 360 Tech. Co. Ltd., —F.4th—, 2021 WL 5499455 (2d Cir. 2021).  Plaintiffs alleged that the company, which was headquartered in China and had previously had depository shares listed in the United States, made misrepresentations and omissions in connection with the shareholder buyout that took the company private by failing to disclose the company’s alleged intent to relist in China.  The district court dismissed the action but the Second Circuit vacated that dismissal, holding that plaintiffs adequately alleged facts from which an inference could be drawn that the company “must have been planning to relist [in China] at the time of the shareholder vote.”  Id. at *1.

On November 15, 2021, Judge Richard G. Andrews of the United States District Court for the District of Delaware dismissed a derivative suit against a company that provides hardware, software, and services for wireless technology (the “Company”), alleging the Company violated Section 14(a) of the Securities Exchange Act of 1934 and breached its fiduciary duty by allegedly allowing “unlawful and discriminatory practices to proliferate at the Company.”  Kiger v. Mollenkopf, No. 21-409-RGA (D. Del. Nov. 15, 2021).  Plaintiffs alleged that the Company made misrepresentations in 2019 and 2020 proxy statements about its commitment to diversify its board of directors (the “Board”).  The Court dismissed the complaint for failure to plead an actionable misstatement or omission and for failure to plead demand futility.

On November 2, 2021, Judge Sharon Johnson Coleman of the Northern District of Illinois Eastern Division granted in part defendants’ motion for summary judgment and denied plaintiff’s partial motion for summary judgment in a securities class action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against a retail drugstore chain (the “Company”) and two of its former senior executives.  Washtenaw County Employees' Retirement System v. Walgreen Co. et al., No. 15-cv-03187 (N.D. Ill. Nov. 2, 2021).  Plaintiff alleged defendants made materially false and misleading statements concerning the Company’s earnings before interest and taxes (“EBIT”) projections and its ability to meet it.  The Court granted in part defendants’ motion for summary judgment, holding that one of the alleged misstatements was a non-actionable forward-looking statement under the Private Securities Litigation Reform Act’s (“PSLRA”) safe harbor, that defendants proved the truth of certain alleged misstatements, but that triable issues of material fact remained with respect to a number of other alleged misstatements.  The Court denied plaintiff’s motion for partial summary judgment regarding one of the individual defendant’s intent to deceive, holding that there was a genuine issue of material fact as to the falsity of that defendant’s statements and is therefore a question for the jury.

On October 27, 2021, Judge Richard Seeborg of the United States District Court for the Northern District of California denied plaintiffs’ motion for class certification in a putative class action against a major financial services company (the “Company”) alleging violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  Crago v. Charles Schwab & Co., Inc., No. 16-CV-03938-RS (N.D. Cal. Oct. 27, 2021).  Plaintiffs alleged that the Company stated that it adhered to the duty of “best execution” without disclosing key information about an agreement (the “Agreement”) to route most of its customers' retail trade orders to a particular vendor (the “Vendor”) without verifying that the Vendor was providing best execution.  The Court previously dismissed an earlier complaint in this action, in a decision that was covered here.  After declining to dismiss an amended complaint, the Court denied plaintiffs’ motion for class certification, finding that plaintiffs were not entitled to a presumption of reliance and that individualized proof of reliance was therefore required.  This defeated the commonality requirements of Rule 23(a).

On October 19, 2021, Chief Judge Richard Seeborg of the United States District Court for the Northern District of California narrowed the claims in a putative securities class action asserting claims under the Securities Exchange Act of 1934 against a pharmaceutical company and certain of its executives.  Sheet Metal Works Nat’l Pension Fund v. Bayer AG, No. 20-cv-4737, slip op. (N.D. Cal. Oct. 19, 2021), ECF No. 90.  Plaintiffs alleged that the company made misrepresentations relating to its acquisition of Monsanto.  The Court held that plaintiffs adequately alleged actionable misrepresentations and scienter with respect to only some of the challenged statements, and further held that plaintiffs adequately alleged loss causation for those statements.

On October 18, 2021, the United States Court of Appeals for the Eighth Circuit affirmed a decision of the United States District Court for the Southern District of Iowa dismissing a putative securities class action asserting claims under the Securities Exchange Act of 1934 against a media company and certain of its executives.  City of Plantation Police Officers Pension Fund v. Meredith Corp., –F.4th–, 2021 WL 4823411 (8th Cir. 2021).  Plaintiff alleged that the company made misrepresentations in connection with the expected benefits from its acquisition of a magazine publisher.  The district court dismissed the action with prejudice, holding that all but one of the challenged statements was not sufficiently alleged to be false, and that scienter was not adequately alleged for the remaining statement.  The Eighth Circuit affirmed.

On September 29, 2021, Judge George J. Hazel of the District of Maryland dismissed a putative class action asserting claims under the Securities Act of 1933 and Securities Exchange Act of 1934 against a pharmaceutical company and certain of its executives.  Employees’ Retirement System of the City of Baton Rouge and Parish of East Baton Rouge v. Macrogenics, Inc., No. GJH-19-2713, slip op. (D. Md. Sept. 29, 2021).  Plaintiff alleged that defendants made misrepresentations regarding clinical trials for a drug that was “critically important” to the company.  The Court dismissed the action for failure to adequately allege misrepresentations or scienter.

On September 30, 2021, Judge Andrew L. Carter, Jr. of the Southern District of New York dismissed an action asserting claims under the Securities Act of 1933, the Securities Exchange Act of 1934, and common law claims for breach of contract, fraud in the inducement, and negligent misrepresentation against a cannabis company and certain of its executives.  SUN, A Series Of E Squared Investment Fund, LLC, et al. v. Sundial Growers Inc., et al., No. 1:20-cv-03579 (ALC), slip op. (Sept. 30, 2021).  Plaintiffs were investors that allegedly acquired convertible notes prior to the company’s initial public offering (“IPO”) and later converted those notes into shares shortly after the IPO, with one also purporting to receive shares in the IPO itself.  Plaintiffs alleged that defendants provided misleading information about a target entity that the company was on the verge of acquiring.  The Court dismissed the action, holding that plaintiffs failed to adequately allege that the challenged statements were materially misleading in context at the time they were made, and that plaintiffs also failed to adequately allege scienter.

On September 21, 2021, Judge Michael A. Shipp of the District of New Jersey overruled an objection to a special master’s report and recommendation to deny a motion for judgment on the pleadings concerning claims under Section 11 of the Securities Act of 1933 (the “Securities Act”) against an accounting firm (the “Firm”).  In re Valeant Pharmaceuticals Intl., Inc. Securities Litigation, No. 15-7658 (MAS) (LHG) (D. N.J. Sept. 21, 2021).  We previously covered the district court’s decision denying a motion to dismiss by other defendants in this action.  The Firm is the only defendant left in a purported class action lawsuit related to a pharmaceutical company’s public offering in 2015.  The Court agreed with the special master’s findings, among other things, that plaintiff was not required to plead damages for a Section 11 claim at the pleading stage.

On September 7, 2021, Judge Charles Ronald Norgle of the United States District Court for the Northern District of Illinois denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against an online food delivery company and certain of its executives.  Azar v. Grubhub, Inc., No. 1:19-CV-07665, 2021 WL 4077327 (N.D. Ill. Sept. 7, 2021).  Plaintiff alleged that the company made misrepresentations regarding the success of its marketing and expansion initiatives.  The Court held that plaintiff adequately alleged actionable misrepresentations and scienter.

On September 7, 2021, Judge Vernon S. Broderick 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 and the Securities Exchange Act of 1934 against an infrastructure management company, certain of its executives, and the underwriter of its stock offering.  City of Riviera Beach Gen. Emps. Ret. Sys. v. Macquarie Infrastructure Corp., et al., 2021 WL 4084572 (S.D.N.Y. Sept. 7, 2021).  Plaintiff alleged that the company made misstatements and omissions concerning decreased demand for a particular form of fuel oil that the company stored for customers, which plaintiff alleged allowed the company to maintain an artificially high stock price while the company completed a secondary stock offering and acquired a competitor.  The Court held that plaintiff failed to adequately allege any misrepresentation or scienter and, therefore, dismissed the action.

On August 25, 2021, the United States Court of Appeals for the Second Circuit unanimously affirmed the dismissal of a putative class action against a Danish bank (the “Company”) and certain of its former officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Plaintiffs alleged misstatements and omissions concerning the Company’s anti-money laundering (“AML”) controls and protocols.  Plumbers & Steamfitters Local v. Danske Bank, No. 20-3231 (2d Cir. Aug. 25, 2021).  The Second Circuit affirmed the dismissal for failure to allege an actionable misrepresentation or a scheme to defraud investors.

On August 17, 2021, Judge Beth Labson Freeman of the United States District Court for the Northern District of California dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 against an energy technology company and certain of its executives.  Hurst v. Enphase Energy, Inc., et al., No. 5:20-cv-04036-BLF, slip op. (N.D. Cal. Aug. 17, 2021).  Plaintiff alleged, based on a short seller report released the same day plaintiff’s complaint was filed, that the company misrepresented its revenues, engaged in improper deferred revenue accounting practices, and overstated the growth in its gross margins.  The Court held that plaintiff failed to adequately allege any misrepresentation or scienter and, therefore, dismissed the action, while granting plaintiff leave to amend to attempt to “rectify the defects” identified by the Court.

On August 4, 2021, Judge Marilyn L. Huff of the United States District Court for the Southern District of California denied a motion to dismiss a putative class action lawsuit against a biopharmaceutical company (the “Company”) and certain of its officers for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  Kendall v. Odonate Therapeutics, Inc., et al., No. 3:20-cv-01828-H-LL (S.D. Cal. Aug. 4, 2021).  The Court held that plaintiff’s Second Amended Complaint (the “SAC”) adequately alleged material misstatements and omissions by defendants concerning the efficacy and safety of the Company’s flagship cancer drug (tesetaxel) during the course of a Phase 3 clinical trial, and further held that plaintiff adequately alleged scienter.

On July 19, 2021, Judge Vernon S. Broderick of the Southern District of New York granted a motion to dismiss claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder against a clothing company (the “Company”), its executives, and its majority shareholder.  Cheng v. Can. Goose Holdings Inc., No. 19-cv-08204 (S.D.N.Y. July 19, 2021).  Plaintiffs alleged defendants made materially false and misleading statements concerning the shifting timeframe of sales in its direct-to-consumer (“DTC”) channel (the “Timing Shift” allegations), and inventory growth rates.  The Court granted defendants’ motion to dismiss plaintiffs’ Consolidated First Amended Complaint (“CFAC”).

On July 20, 2021, a panel of the United States Court of Appeals for the Ninth Circuit unanimously affirmed a decision of the United States District Court for the Western District of Washington dismissing with prejudice a putative class action lawsuit asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) against a wholesale retailer (the “Company”) and certain of its executives, as well as Section 20(a) claims against those individual defendants.  Davoli, et al. v. Costco Wholesale Corp., et al., No. 20-35821 (9th Cir. July 20, 2021).  Plaintiff alleges that defendants made false statements regarding the strength of the Company’s internal controls over financial reporting.  The district court dismissed plaintiff’s Second Consolidated Amended Complaint (the “SAC”) for failure to adequately plead scienter and the Ninth Circuit affirmed.  The Panel’s unpublished opinion cannot be cited as precedent except as provided by Ninth Circuit rules.

On July 6, 2021, Judge John Michael Vazquez of the U.S. District Court for the District of New Jersey dismissed a putative class action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against a Canadian company that manufactures and distributes cannabis products (the “Company”) and certain of its executives.  In re Aurora Cannabis, Inc. Sec. Litig., No. 19-cv-20588 (JMV) (JBC), slip op. (D.N.J. July 6, 2021).  Plaintiffs alleged that defendants made material misstatements and omissions relating to the Company’s earnings projections that allegedly failed to disclose certain headwinds in the industry.  The Court held that plaintiffs failed to identify any materially false or misleading statements, and also noted weaknesses in plaintiffs’ allegations with respect to the scienter and loss causation requirements.  Accordingly, the Court dismissed the first amended complaint in its entirety, but granted plaintiffs leave to replead to cure the identified defects.

On June 25, 2021, a divided panel of the United States Court of Appeals for the Ninth Circuit reversed a decision of the United States District Court for the Northern District of California denying summary judgment to defendants in a putative securities fraud class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against an automobile manufacturer and its wholly owned subsidiary. In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, —F.3d—, 2021 WL 2621171 (9th Cir. 2021) (“In re Volkswagen”).  Plaintiff alleged that, in connection with bonds issued through three private placements, defendants made omissions and affirmative misrepresentations related to the use of emissions “defeat devices” in their vehicles.  Defendants moved for summary judgment on the reliance element of plaintiff’s claims, but the district court denied the motion, reasoning that plaintiff’s claims were based primarily on defendants’ alleged omissions rather than affirmative misstatements, and a presumption of reliance therefore applied.  Considering the issue on interlocutory appeal, a divided panel of the Ninth Circuit reversed and remanded.

On June 16, 2021, the United States Court of Appeals for the Ninth Circuit reversed in part the dismissal of a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against a technology company and certain of its executives.  In re Alphabet, Inc. Sec. Litig., –F.3d–, 2021 WL 2448223 (9th Cir. 2021).  Plaintiffs alleged that the company failed to disclose a security flaw that risked exposing customer data on its social networking site to third-party developers without customer consent.  The district court granted a motion to dismiss, determining that the complaint failed to allege any misrepresentation or omission and failed to adequately allege scienter.  The Ninth Circuit reversed, holding that plaintiffs had adequately alleged actionable misrepresentations and scienter.  However, the Court affirmed the dismissal of certain allegations that it held were too vague to be actionable.

On June 3, 2021, Justice Andrew Borrok of the Supreme Court of the State of New York, Commercial Division, granted a motion to dismiss a putative securities class action against a Canadian cannabis company (the “Company”), certain of its officers and directors, and its underwriters, alleging violations of Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”).  Leung v. Hexo Corp., et al., No. 20-cv-150444 (N.Y. Sup. Ct. Jun. 3, 2021).  Plaintiff alleged that the Company’s offering documents misled investors regarding one of the Company’s key supply agreements.  In dismissing the complaint, the Court held that plaintiff failed to adequately allege contemporaneous facts indicating that the Company knew at the time of the offering that issues would arise with respect to that agreement.  In so holding, the Court cited a March 9, 2021 decision by Judge Naomi Reice Buchwald of the Southern District of New York, in which Judge Buchwald granted a motion to dismiss a first-filed action in federal court asserting similar claims against the Company, certain of its officers and directors, and its underwriters, relying on the same allegations.

On May 28, 2021, Judge K. Michael Moore of the United States District Court for the Southern District of Florida granted a motion to dismiss a putative securities class action against a cruise line (the “Company”) and its CEO for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Plaintiffs alleged that the Company made false and misleading statements and omissions about the risks posed by COVID-19 and the Company’s health and safety protocols during the early stages of the pandemic.  Consistent with another recent decision covered here, the Court dismissed plaintiffs’ claims for failure to adequately plead falsity and scienter, but granted leave to amend.

On May 20, 2021, Judge Dora L. Irizarry of the United States District Court for the Eastern District of New York dismissed with prejudice a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a car manufacturer and certain of its current and former Board members.  Mucha v. Volkswagen Aktiengesellschaft, — F. Supp. 3d —, 2021 WL 2006079 (E.D.N.Y. May 20, 2021).  Plaintiffs alleged the company engaged in anticompetitive conduct which rendered a number of statements in the company’s SEC filings false or misleading.  The Court held that plaintiffs failed to sufficiently allege that the alleged misstatements were false, and therefore dismissed the complaint in its entirety.

On May 24, 2021, United States Magistrate Judge Stacie F. Beckerman of the United States District Court for the District of Oregon granted summary judgment in favor of defendants upon a motion for reconsideration in a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against an industrial manufacturing company and certain of its executives.  Murphy v. Precision Castparts Corp., No. 3:16-CV-00521-SB, 2021 WL 2080016 (D. Or. May 24, 2021).  Plaintiffs primarily alleged that defendants made misrepresentations that the company remained on target to meet earnings projections.  The Court had previously granted summary judgment for defendants with respect to certain alleged misstatements, but had determined that certain statements regarding the company’s progress toward its projections contained an element of present fact and were therefore actionable.  On a motion for reconsideration based on the decision of the Ninth Circuit Court of Appeals in Wochos v. Tesla, Inc., 985 F.3d 1180 (9th Cir. 2021), the Court dismissed these remaining allegations, holding that the challenged statements did not contain the “concrete” description of present facts that is required for such statements to be actionable.

On May 6, 2021, Judge Kevin McNulty of the United States District Court for the District of New Jersey granted a motion to dismiss a putative securities class action against the largest cannabis company in Canada (the “Company”) and several of its officers for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Ortiz v. Canopy Growth Corp., No. 19-cv-20543 (D.N.J. May 6, 2021).  Plaintiffs alleged the Company made numerous false and misleading statements and omissions about the Company’s inventory levels.  Although the Court held that certain of the Company’s representations regarding inventory and revenue in its financial statements were statements of opinion that were actionable, the Court ultimately dismissed these claims because plaintiffs failed to adequately allege scienter.

On April 20, 2021, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a putative securities class action against an information technology security company (the “Company”), its chief executive officer, and Board of Directors (the “Directors”), alleging that a proxy statement issued in connection with a sale of the Company violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 14a-9.  Golub v. Gigamon Inc., No. 19-16975 (9th Cir. Apr. 20, 2021).  In a unanimous decision, the Ninth Circuit, joining the Fourth Circuit (Paradise Wire & Cable Defined Benefit Pension Plan v. Weil, 918 F.3d 312 (4th Cir. 2019)), held that the standard articulated in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 575 U.S. 175 (2015) governing whether a plaintiff has sufficiently alleged the falsity of a statement of opinion under Section 11 of the Securities Act of 1933 (the “Securities Act”), also applies to claims under Section 14(a) of the Exchange Act and Rule 14a-9, and affirmed the district court’s dismissal of the complaint for failure to allege falsity.  The Court further explained its application of the Omnicare standard to Section 14(a) in an accompanying summary opinion.

On April 21, 2021, Judge Virginia M. Kendall of the United States District Court for the Northern District of Illinois denied a motion to dismiss a putative securities class action against a large Illinois-based electric company (the “Company) for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 as well as Items 105 and 303 of Regulation S-K.  Flynn v. Exelon Corp., No. 19-C-8209 (N.D. Ill. April 21, 2021).  Plaintiff alleged that the Company made false and misleading statements and omissions about an eight-year scheme to bribe Illinois state lawmakers, which, when finally disclosed to the market, caused substantial losses to investors.  The Court denied the motion to dismiss with respect to most claims.  Significantly, although the Court recognized that the Seventh Circuit has not held that Items 105 and 303 impose a general duty to disclose regulatory non-compliance, the Court nevertheless found that the Company violated Items 105 and 303 because it knew of and attempted to conceal the bribery scheme, all while making public statements that it was in compliance with its internal anti-bribery guidelines.

On April 10, 2021, Judge Robert N. Scola, Jr. of the United States District Court for the Southern District of Florida dismissed with prejudice a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a cruise line and certain of its executives.  Douglas v. Norwegian Cruise Lines, No. 20-21107-CIV, 2021 WL 1378296 (S.D. Fla. Apr. 12, 2021).  Plaintiff alleged the company made misrepresentations in February 2020 regarding the impact of COVID-19 on its business.  The Court held that plaintiff failed to adequately allege any actionable misrepresentations or scienter.

On March 31, 2021, Judge Alfred H. Bennett of the Southern District of Texas denied a motion to dismiss claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against a company that operates live adult entertainment businesses and bar-restaurants (the “Company”) and certain of its executives, as well as members of its audit, compensation, and nominating committees.  Hoffman, et al v. RCI Hospitality Holdings, Inc., et al, No. 4:19-cv-01841 (S.D. Tex. Mar. 31, 2021).  Plaintiffs alleged defendants made misleading statements or omissions concerning certain related-party transactions (RPTs), executive compensation, and other financial points in several of the Company’s Form 10-K annual reports.  The Court denied defendants’ motion to dismiss the amended complaint, holding that plaintiffs sufficiently pled material misstatements and scienter.
 

On April 1, 2021, Judge Matthew F. Kennelly of the Eastern District of Illinois denied a motion to dismiss a claim under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 thereunder, against a surgical implants manufacturer (the “Company”) and certain of its current and former officers.  Lowry v. RTI Surgical Holdings Inc., No. 20-cv-01939 (N.D. Ill. Apr. 1, 2021).  Plaintiffs alleged that defendants made materially false and misleading statements regarding the Company’s accounting and revenue recognition practices which caused a stock drop once corrective disclosures were made.  The Court denied defendants’ motion to dismiss the amended complaint, holding that plaintiffs sufficiently pled material misstatements and scienter.
 

On March 22, 2021, Judge Beth Labson Freeman of the United States District Court for the Northern District of California dismissed certain of the claims asserted in a putative class action brought under the Securities Exchange Act of 1934 against a technology company and certain of its executives.  City of Sunrise Firefighters’ Pension Fund, et al. v. Oracle Corporation, et al., No. 18-cv-04844-BLF, slip op. (N.D. Cal. Mar. 22, 2021).  Plaintiffs alleged that the company made misrepresentations regarding its transition from locally installed software to cloud-based products, which plaintiffs alleged was driven through undisclosed “coercive sales practices.”  After the Court dismissed an earlier iteration of the complaint without prejudice for failure to allege any actionable misstatements, plaintiffs filed an amended complaint.  The Court held that a number of allegations failed to establish falsity or scienter, but permitted some claims to go forward against certain defendants on a limited theory of liability.

On March 19, 2021, Judge Stefan R. Underhill of the United States District Court for the District of Connecticut dismissed with prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a transportation and logistics company and certain of its executives.  Labul, et al. v. XPO Logistics, et al., No. 3:18-cv-2062 (SRU), slip op. (D. Conn. Mar. 19, 2021).  Plaintiffs alleged that the company misrepresented the extent to which it relied on a single customer to drive revenue growth and the financial impact of declining business from that customer.  The Court held that plaintiffs failed to adequately allege the existence of material misrepresentations, scienter, or loss causation, and therefore dismissed the action.

On March 13, 2021, Judge John G. Koeltl of the Southern District of New York granted a motion to dismiss claims brought under Sections 10b and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b5-1 promulgated thereunder, as well as Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”), against a Norwegian browser services company (the “Company”), its individual directors, and the underwriters of its initial public offering (the “IPO”). Lau v. Opera Limited et al., No. 1:2020-cv-00674 (S.D.N.Y. Mar. 13, 2021).  Plaintiffs alleged that the Company’s IPO offering materials contained materially false and misleading statements and omissions, and defendants made false or misleading statements in other documents and analyst calls regarding the Company’s market share and entry into the “fintech” market.  The Court granted defendants’ motion to dismiss plaintiffs’ consolidated class action complaint (the “CCAC”), with leave to amend.
 

On March 12, 2021, Judge Denise Casper of the District of Massachusetts granted a motion to dismiss a claim under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, as well as Section 20(a) of the Exchange Act, against a robot vacuum cleaner (“RVC”) manufacturer (the “Company”) and certain of its executives.  In re iRobot Corporation Securities Litigation, No. 19-cv-12536-DJC (D. Mass. Mar. 12, 2021). Plaintiffs alleged that defendants made materially false and misleading statements regarding the Company’s ability to compete within the RVC market.  The Court granted defendants’ motion to dismiss plaintiffs’ consolidated class action complaint (the “CAC”), holding that plaintiffs failed to sufficiently plead material misstatements and scienter.
 

On March 9, 2021, Judge Naomi Reice Buchwald of the United States District Court for the Southern District of New York granted a motion to dismiss a putative class action complaint against a Canadian cannabis producer (the “Company”), certain of its officers and directors, and its underwriters that asserted claims under Sections 11, 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.  In re HEXO Corp. Sec. Litig., No. 19-CV-10965 (S.D.N.Y. Mar. 9, 2021).  Plaintiffs alleged the Company made misrepresentations about one of its key supply agreements, a new production facility, and its expected revenue.  The Court dismissed the claims under the Securities Act because they were based on impermissible hindsight pleading and the Exchange Act claims for failure to plead falsity and scienter. 
 

On March 8, 2021, Judge Lewis J. Liman of the United States District Court for the Southern District of New York dismissed a putative securities class action against a midstream oil company (the “Company”), its general partner, and an infrastructure firm that was an affiliate of the general partner and acquired the Company (the “Firm”), as well as certain of the Company’s officers and directors, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Kraft v. Third Coast Midstream, No. 19-cv-9398 (S.D.N.Y. Mar. 8, 2021).  Plaintiffs alleged that the Company and the Firm orchestrated a scheme to manipulate the price of the Company’s common units (“CUs”) through a series of misstatements and omissions so that the Firm could acquire the Company at a deflated price.  The Court dismissed the claims for failure to plead any actionable misstatement or omission or a manipulative act, as well as loss causation or scienter.
 

On March 1, 2021, Judge Ann M. Donnelly of the United States District Court for the Eastern District of New York dismissed with prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a telecommunications company and certain of its executives.  Salim v. Mobile Telesystems PJSC, No. 19-CV-1589 (AMD) (RLM), slip op. (E.D.N.Y. Mar. 1, 2021).  Plaintiffs alleged that the company made misrepresentations with respect to an alleged scheme to bribe foreign officials.  The Court held that plaintiffs failed to adequately allege any misrepresentations or scienter and therefore dismissed the complaint.
 

On February 16, 2021, the Appellate Division of the New York Supreme Court, First Judicial Department, unanimously affirmed the dismissal of a putative class action against a Canadian cannabis producer (the “Company”), certain of its officers and directors, and its underwriters for violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 and Item 303 and Item 105 of Regulations S-K.
 

On February 16, 2021, Judge Brian M. Cogan of the United States District Court for the Eastern District of New York dismissed a putative securities class action against a medical and wellness cannabis operator and certain of its officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. In re Curaleaf Holdings Inc. Securities Litigation, No. 19-cv-04486 (E.D.N.Y. 2021). Plaintiffs alleged the Company made false and misleading statements regarding the benefits and legality of its cannabinol (“CBD”) products. The Court dismissed the complaint, holding that the Company disclosed what plaintiffs claimed was not disclosed and that plaintiffs thus failed to plead falsity or, with respect to certain alleged misstatements, loss causation.
 

On February 3, 2021, Judge Kimba M. Wood of the Southern District of New York granted a motion to dismiss claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, as well as Section 20(a) of the Exchange Act against an international chain restaurant (the “Company”) and two of its senior former executives.  Okla. Law Enf’t Ret. Sys. v. Papa John’s International Inc. et al., No. 18-CV-7927 (KMW) (S.D.N.Y. Feb. 3, 2021).  In the First Amended Complaint (“FAC”), plaintiffs alleged the Company made materially false and misleading statements concerning the Company’s culture and failed to disclose material information concerning the Company’s workplace.  The Court granted the Company’s motion to dismiss the FAC with leave to amend, holding certain alleged misstatements were not actionable as mere puffery and that statements about the Company’s culture were too speculative to be actionable.  See Oklahoma Law Enf’t Ret. Sys. v. Papa John’s Int’l, Inc., 444 F. Supp. 3d 550 (S.D.N.Y. 2020) (“Papa John’s I”).  In addressing the sufficiency of plaintiffs’ Second Amended Complaint (“SAC”), the Court found that it “failed to plausibly allege that [defendants’] positive assurances about the Company’s toxic culture exceeded the protected bounds of generic puffery.”  The Court also found that allegations that the Company would face harmful consequences from the allegedly toxic workplace was not “so concrete and substantial that there arose an affirmative duty to disclose it.”  Accordingly, the Court granted defendants’ motions to dismiss with prejudice.

On February 4, 2021, Judge Ronnie Abrams of the Southern District of New York granted a motion to dismiss putative class action claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5, against a global logistics and shipping company (the “Company”) and certain of its executives.  In re FedEx Securities Litigation, No. 19-cv-05990 (S.D.N.Y. Feb. 4, 2021).  Plaintiffs alleged defendants made materially false and misleading statements concerning the financial impacts to the Company resulting from a cyberattack affecting a recently acquired European shipping subsidiary (the “Subsidiary”).  The Court granted defendants’ motion to dismiss plaintiffs’ consolidated class action complaint (the “CAC”) with prejudice.

On January 26, 2021, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a putative securities class action against an electric car manufacturer (the “Company”) and certain of its officers for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.
 

On January 21, 2021, Judge Stanley R. Chesler of the United States District Court for the District of New Jersey dismissed with prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a real estate services company and certain of its current and former executives.  Tanaskovic v. Realogy Holdings Corp., No. 19-cv-15053, slip op. (D.N.J. Jan. 21, 2021).  Plaintiff alleged that the company made misrepresentations concerning:  (1) the effect of increased commissions paid to its agents; (2) technology offerings; (3) the company’s acquisition strategy; and (4) allegedly anticompetitive behavior that inflated the company’s average commissions.  The Court held that the alleged misstatements were either not alleged to be false with the required particularity or were otherwise not actionable.
 

On January 7, 2021, Judge Sterling Johnson, Jr. of the Eastern District of New York granted a motion to dismiss, with prejudice, in 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 SEC Regulation S-K, Item 303, against a life insurance company (the “Company”) and certain of its executives.  Parchmann v. Metlife, et al., No. 18-cv-00780-SJ-RLM (E.D.N.Y. Jan. 7, 2021).  Plaintiff alleged that defendants made materially misleading statements regarding the Company’s financial condition and internal controls with respect to one of the Company’s Retirement and Income Solution (“RIS”) programs.  The Court granted defendants’ motion to dismiss with prejudice, holding, among other things, that plaintiffs failed to adequately plead falsity, loss causation, and scienter.
 

On January 11, 2021, the Ninth Circuit in an unpublished decision affirmed in part and reversed in part the dismissal at the pleading stage of Section 10(b) claims under the Exchange Act of 1934 against a pharmaceutical manufacturer (the “Company”) and several of its officers for alleged misstatements regarding an alleged price fixing scheme and the performance of one of its generic drugs.  N.Y. Hotels Trades Council & Hotel Association of NYC Inc. Pension Fund et al. v. Impax Laboratories, Inc., et al., No. 19-16744 (9th Cir. Jan. 11, 2021).  The Court held that plaintiffs’ Second Amended Complaint (the “SAC”) adequately alleged falsity with respect to statements allegedly made by defendants concerning the performance of one of the Company’s drugs (diclofenac) as well forward-looking statements regarding earnings projections and revenue guidance, and further held that plaintiffs adequately alleged loss causation.  Our prior analysis of the district court’s decision can be found here.
 

On January 5, 2021, Judge Jesse M. Furman 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 securities class action against a data analytics company (the “Company”) for alleged violations of Section 10(b), Rule 10b-5, and Section 20(a) of the Securities Exchange Act of 1934, and Item 303 of Regulation S-K (“Item 303”).  In re Nielsen Holdings PLC Securities Litigation, No. 1:18-cv-07143 (S.D.N.Y. Jan. 5, 2021).  Plaintiffs alleged the Company made misstatements about the financial performance of some of its business segments and the impact of the enactment of the General Data Protection Regulation (“GDPR”) in the European Union on the Company’s measurement and analytics services.  The Court dismissed some of plaintiffs’ claims, pared down others based on the Company’s knowledge at the time of certain alleged misstatements, and granted plaintiffs’ request for leave to amend.
 

On December 30, 2020, Judge Haywood S. Gilliam of the United States District Court for the Northern District of California granted a motion to dismiss a putative class action against a biopharmaceutical company (the “Company”) and certain of its officers for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Malquin v. Nektar Therapeutics, No. 18-cv-06607 (N.D. Cal. Dec. 30, 2020).  Plaintiffs alleged that the Company made false and misleading statements and omissions about the efficacy of its flagship cancer drug in development.  The Court dismissed the amended complaint with prejudice, confirming that securities claims cannot be based on allegations that a company failed to use the best or preferred statistical methods for evaluating the effectiveness of a new drug and that short seller reports will not constitute corrective disclosures sufficient to allege loss causation unless the reports can be characterized plausibly as revealing new information to the market.
 

On December 10, 2020, Judge Lucy Koh of the United States District Court for the Northern District of California dismissed with prejudice a putative securities class action asserting claims under the Securities Exchange Act of 1934 against a manufacturing and design company and certain of its officers.  Kipling v. Flex Ltd., No. 18-CV-02706-LHK, 2020 WL 7261314 (N.D. Cal. Dec. 10, 2020).  Plaintiff alleged that the company made misrepresentations concerning a major contract to manufacture shoes for a shoe company.  The Court held that plaintiff failed to adequately allege actionable misstatements or omissions and, because the Court had already granted plaintiff an opportunity to replead in a prior order, dismissed the case with prejudice.
 

On December 10, 2020, Judge Yvonne Gonzalez Rogers of the Northern District of California granted a motion to dismiss a claim under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, as well as Section 20(a) of the Exchange Act, against a social media platform (the “Company”) and certain of its executives.  In re Twitter Securities Litigation, No. 19-cv-07149 (N.D. Cal. Dec. 10, 2020).  Plaintiffs alleged that defendants made materially false and misleading statements concerning the Company’s advertising products and revenue predictions that caused the Company’s stock price to drop more than 20% when the Company made purportedly corrective disclosures.  The Court granted defendants’ motion to dismiss plaintiffs’ consolidated class action complaint (the “CCAC”), but granted plaintiffs leave to replead.
 

On November 22, 2020, Judge Howard C. Nielson, Jr. of the United States District Court for the District of Utah dismissed with prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a biotechnology company and certain of its executives.  In re PolarityTE, Inc. Sec. Litig., No. 2:18-cv-00510, 2020 WL 6873798 (D. Utah Nov. 22, 2020).  Plaintiffs alleged that the company made material misstatements in the course of a reverse merger and in subsequent SEC filings.  The Court held that plaintiffs failed to adequately allege falsity with respect to certain challenged statements and failed to establish loss causation for the remainder.
 

On November 16, 2020, Judge Haywood S. Gilliam, Jr. of the Northern District of California granted a motion to dismiss a Section 10(b) claim under the Securities Exchange Act of 1934 (the “Exchange Act”), as well as a Section 20(a) claim under the Exchange Act as it relates to the Section 10(b) claim, against a lead-acid battery recycler (the “Company”) and three of its senior officers.  In re Aqua Metals Inc. Securities Litigation, No. 17-cv-07142 (N.D. Cal. Nov. 16, 2020).  Plaintiffs alleged that defendants made materially false and misleading statements concerning the Company’s novel recycling technology and its commercialization process.  The Court granted defendants’ motion to dismiss, holding that plaintiffs failed to plead any actionable material misstatements or scienter.  Certain claims in the case addressed in connection with a prior motion to dismiss were not the subject of this decision and will survive.
 

On November 10, 2020, Judge Kiyo Matsumoto of the United States District Court for the Eastern District of New York granted a motion to dismiss a putative securities class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against a South African precious metals mining company (the “Company”) and its CEO and CFO.  In re Sibanye Gold Ltd. Sec. Litig., No. 18-CV-3721 (E.D.N.Y. Nov. 10, 2020).  Plaintiffs alleged that the Company made false and misleading statements and omissions about its mine safety program and the reasons for miner fatalities.  The Court dismissed these claims for failure to allege plausible facts supporting plaintiffs’ conclusionary allegations.
 

On November 10, 2020, Judge Charles R. Breyer of the United States District Court for the Northern District of California dismissed without prejudice a putative class action against a software company (the “Company”) and several of its officers, for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Reidinger v. Zendesk Inc. et al., No. 3:19-cv-06968 (N.D. Cal. Nov. 10, 2020).  Plaintiff alleged that defendants made false and misleading statements and omissions regarding the Company’s performance and sales capabilities in Europe, the Middle East, and Africa (“EMEA”) and the Asian Pacific (“APAC”) and the strength of its data security.  The Court dismissed the complaint with leave to amend because plaintiff failed to allege falsity or scienter, highlighting the formidable challenges plaintiffs face in pleading event-driven claims based on worse than expected earnings results.
 

On November 4, 2020, Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California granted in part and denied in part a motion to dismiss claims asserted under the Securities Exchange Act of 1934 against a technology company and certain of its executives.  In re Apple Inc. Sec. Litig., No. 19-cv-02033-YGR, slip. op. (N.D. Cal. Nov. 4, 2020), ECF No. 118.  Plaintiffs alleged that the company and its CEO made material misstatements relating to the company’s earnings guidance, which the company ultimately did not meet.  Slip. op. at 4.  The Court dismissed claims based on certain of the alleged misstatements, which it held were not false or misleading, but determined that falsity and scienter were sufficiently alleged as to other alleged misstatements.
 

On October 26, 2020, Judge John A. Gibney, Jr. of the Eastern District of Virginia denied motions 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 a building products company (the “Company”), certain of its executives, and an institutional majority shareholder of the Company.  Cambridge Retirement System v. Jeld-Wen Holding, Inc., et al., No. 3:20-cv-112 (E.D. Va. Oct. 26, 2020).  Plaintiffs alleged defendants made material misstatements and omissions concerning the Company’s pricing strategy, alleged anti-competitive conduct, and the impact of a finding of liability in a separate antitrust private suit.  The Court denied defendants’ motions to dismiss the amended complaint, holding that plaintiffs adequately pled material misrepresentations or omissions, falsity, scienter and loss causation.
 

On October 15, 2020, Judge Martha M. Pacold of the United States District Court for the Northern District of Illinois granted a motion to dismiss a putative securities class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 against a large packaged foods company (the “Company”), as well as certain of its officers and directors, and its underwriters.  W. Palm Beach Firefighters’ Pension Fund v. Conagra Brands, Inc., No. 19-cv-101323, 2020 WL 6118605 (N.D. Ill. Oct. 15, 2020).  Plaintiffs alleged that, in connection with a secondary public offering (“SPO”) to finance the acquisition of another packaged foods company (the “Acquired Company”), the Company failed to disclose that the Acquired Company had engaged in channel stuffing—a form of accounting fraud—to disguise the fact its key brands were struggling.  The Court dismissed these claims in their entirety because, among other reasons, plaintiffs failed to allege adequately that the Acquired Company engaged in fraudulent channel stuffing.
 

On October 21, 2020, Judge Beth Labson Freeman of the United States District Court for the Northern District of California dismissed a putative securities class action against a large online cloud-based storage provider (the “Company”), certain of its officers and directors, certain of its controlling shareholders, and the underwriters of its IPO, for alleged violations of Sections 11 and 15 of the Securities Act of 1933 and Item 303 of SEC Regulation S-K.  In re Dropbox Securities Litigation, No. 19-cv-06348 (N.D. Cal. Oct. 21, 2020).  Plaintiffs alleged that the offering materials filed in connection with the Company’s IPO omitted to disclose the decelerating rate at which the Company was converting non-paying registered users into paying subscription users, which gave investors a false impression of the Company’s revenue growth.  The Court dismissed the complaint with leave to amend because plaintiffs failed to allege the offering materials were false or misleading and because plaintiffs’ claims were time-barred.
 

On October 8, 2020, Judge Michael W. Fitzgerald of the United States District Court for the Central District of California dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 against a food company and certain of its executives.  Larry Tran v. Beyond Meat, Inc., et al., No. 20-CV-00963-MWF-AFM, slip op. (C.D. Cal. Oct. 8, 2020).  Plaintiffs alleged that the company made misleading statements in public filings falsely suggesting that litigation brought against the company by a supplier, after the company had terminated a manufacturing agreement with that supplier, was meritless.  The Court held that plaintiffs failed to adequately allege an actionable misstatement or omission.
 

On October 14, 2020, Judge Alison J. Nathan 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 pharmaceutical company, certain of its executives, and investors that participated in a go-private merger with the company.  Altimeo Asset Management v. WuXi PharmaTech (Cayman) Inc., No. 19-cv-1654 (AJN), slip op. (S.D.N.Y. Oct. 14, 2020).  Plaintiff alleged that the company made misstatements about its long-term plans and future prospects in connection with the going-private transaction.  The Court held that plaintiff failed to plausibly allege that the company made a material misrepresentation or omission.
 

On October 14, 2020, Judge Alison J. Nathan 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 lending company and certain of its executives.  Burr v. Equity Bancshares, Inc., No. 19-cv-4346 (AJN), slip op. (S.D.N.Y. Oct. 14, 2020).  Plaintiffs alleged that the company failed to disclose problems with its largest credit relationship—involving two companies that ultimately declared Chapter 11 bankruptcy—and that its loan loss reserves in its disclosures to the SEC were false and misleading.  The Court held that plaintiffs failed to adequately allege any actionable misstatement or omission.
 

On October 7, 2020, Judge Allison Burroughs of the District of Massachusetts granted in full 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 a cloud-based remote software services company (the “Company”) and certain of its executives.  Wasson v. LogMeIn Inc., No. 18-cv-12330 (D. Mass. Oct. 7, 2020).  Plaintiffs alleged defendants made materially false and misleading statements concerning the Company’s integration of a newly acquired competitor.  The Court granted defendants’ motion to dismiss plaintiffs’ amended complaint, holding that plaintiffs failed to plead any actionable material misstatements or scienter, but granted plaintiffs leave to amend.
 

On October 8, 2020, the Court of Appeals for the Ninth Circuit reversed the dismissal of 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 Rule 10b-5 promulgated thereunder, against a federally chartered savings bank and its holding company (collectively the “Bank”) and several of its executives, for alleged misstatements regarding the Bank’s underwriting standards, internal controls, and compliance program.  In re BofI Holding, Inc. Securities Litigation, No. 18-55415 (9th Cir. Oct. 8, 2020).  The district court granted defendants’ motion to dismiss the third amended complaint, holding that although plaintiffs adequately pled material misstatements and scienter, plaintiffs failed to sufficiently plead loss causation.  The Ninth Circuit (with Judge Paul J. Watford writing for the majority) vacated the dismissal, holding that plaintiffs sufficiently pled loss causation based on a whistleblower lawsuit filed by a former employee.  Judge Kenneth K. Lee concurred in part and dissented in part.
 

On September 30, 2020, the United States Court of Appeals for the Second Circuit affirmed the dismissal of a putative securities fraud class action asserting violations of Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 14a-3, and 14a-9 against a company that provides tax preparation services (the “Company”) as well as certain of its officers.  In re Liberty Tax, Inc. Sec. Litig., No. 20-652, 2020 WL 5807566 (2d Cir. Sept. 30, 2020).  Plaintiffs alleged that the Company made false or misleading statements and omissions concerning its compliance efforts and the termination of its CEO and Chairman, in light of an ongoing internal investigation into allegations that he had engaged in sexual misconduct.  The district court dismissed the suit for failure to adequately allege material misrepresentations and loss causation.  The Second Circuit, in a summary order, affirmed the district’s courts dismissal of the claims for failure to adequately allege any material misrepresentations.
 

On September 28, 2020, Judge Dale A. Kimball of the United States District Court for the District of Utah granted a motion to dismiss a putative securities fraud class action asserting violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against an online home goods retailer (the “Company”) and certain of its current and former officers.  Mangrove Partners Master Fund, Ltd. v. Overstock.com, No. 2:19-CV-709-DAK-DAO (D. Utah Sept. 28, 2020).  Plaintiff, a short seller, alleged that the Company (i) manipulated the market by issuing a digital dividend through the Company’s newly developed alternative trading platform and triggering a “short squeeze,” and (ii) misrepresented the purpose of the digital dividend by not disclosing it would result in a short squeeze and the Company’s financial condition by adjusting its earnings guidance upwards.  The Court dismissed the claims because they were based on “speculation and fraud-by-hindsight.”
 

On September 17, 2020, Judge Rachel P. Kovner of the United States District Court for the Eastern District of New York dismissed without prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a cosmetics company and certain of its executives.  Lachman v. Revlon, Inc., No. 19-CV-2859 RPK RER, 2020 WL 5577406 (E.D.N.Y. Sept. 17, 2020).  Plaintiffs alleged that the company made misrepresentations regarding a new software system that was supposed to combine the tracking of different areas of the company’s operations but allegedly led instead to production delays, lost sales, and a material weakness in the company’s internal controls with respect to financial reporting.  The Court held that plaintiffs failed to identify any actionable misstatement or to plead that defendants acted with scienter.
 

On September 11, 2020, Judge William H. Orrick of the Northern District of California denied 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 Rule 10b-5 promulgated thereunder, against a software company (the “Company”) and two of its executive officers.  Scheller v. Nutanix Inc., No. 19-cv-01651 (N.D. Cal. Sept. 11, 2020).  This case was previously dismissed with leave to amend by Judge Orrick in March, and was covered in our newsletter.  Plaintiffs filed a Second Amended Complaint (“SAC”) in an attempt to cure the prior pleading defects.  The Court noted that the SAC “suffers from many of the same deficiencies as [the] prior complaint” and held that certain categories of allegations were insufficient, but the Court allowed certain claims to proceed.
 

On September 14, 2020, Judge Pamela K. Chen of the Eastern District of New York granted in full 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 a steel products manufacturer (the “Company”) and certain of its executives and former employees.  Ulbricht v. Ternium S.A. et al., No. 18-cv-06801-PKC (E.D.N.Y. Sept. 14, 2020).  Plaintiffs, investors of the Company’s American Depository Shares (“ADSs”), alleged that defendants made materially false and misleading statements and omissions in connection with the purchase of the Company’s subsidiary by the Venezuelan government by failing to disclose the alleged bribery scheme that helped facilitate the transaction.  The Court granted defendants’ motion to dismiss plaintiffs’ consolidated amended complaint, and—although “skeptical” of plaintiffs’ likelihood of success—the Court granted plaintiffs leave to amend.
 

On September 8, 2020, Judge Haywood S. Gilliam, Jr. 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 securities fraud class action against a ridesharing company (the “Company”) and certain of its directors under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”). In re Lyft Inc. Securities Litigation, No. 19 Civ. 2690 (HSG), 2020 WL 5366325 (N.D. Cal. Sept. 8, 2020).  Plaintiff alleged that the Company’s prospectus and registration statement (the “Registration Statement”) contained numerous false or misleading statements and omissions, including those concerning reported sexual assaults by the Company’s drivers and defects with bicycles that were part of the Company’s bikeshare fleet.  Although the Court found that certain statements and omissions regarding rider safety were actionable, the Court dismissed plaintiff’s remaining claims for failure to allege falsity or because the statements constituted non-actionable puffery.
 

On September 9, 2020, Judge Lucy H. Koh 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 securities class action against a medical device company (the “Company”) and certain of its executive officers under Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5.  SEC Investment Mgmt. AB, et al. v. Align Technology, Inc., et al., No. 18-cv-06720-LHK (N.D. Cal. Sept. 9, 2020).  Plaintiff alleged that the Company made false or misleading statements regarding its strategies to curb competition in the market.  Plaintiff also asserted an insider trading claim against the Company’s CEO.  The Court largely granted defendants’ motion to dismiss, holding that plaintiff failed to adequately plead falsity for all but one alleged misrepresentation and, for the insider trading claim, that the trading activities of plaintiff and the CEO were not “contemporaneous.”
 

On September 1, 2020, Judge Charles R. Norgle of the United States District Court for the Northern District of Illinois denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a pharmaceutical company and certain of its executives.  Holwill v. AbbVie Inc., No. 1:18-cv-6790, slip. op. (N.D. Ill. Sept. 1, 2020).  Plaintiffs alleged that the company made material misstatements regarding the reasons for the success of the company’s principal drug that were rendered misleading because the company failed to disclose a kickback scheme that allegedly contributed to the drug’s success.  The Court held that the complaint adequately alleged actionable misrepresentations as well as the elements of scienter and loss causation.
 

On August 28, 2020, Judge Cynthia Rufe of the United States District Court for the Eastern District of Pennsylvania denied three separate motions to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a biopharmaceutical company, its CEO, and its Chief Medical Officer.  Tomaszewski v. Trevena, Inc., No. 18-cv-4378, slip op. (E.D. Pa. Aug. 28, 2020).  Plaintiffs alleged that the company and its executives made various misrepresentations and omissions regarding interactions with the FDA concerning a drug candidate.  The Court denied the motions of the company and CEO, after granting plaintiffs’ motion to strike certain documents on which those motions relied, and further held that plaintiffs adequately alleged actionable misstatements and scienter with respect to the Chief Medical Officer (“CMO”).
 

On August 25, 2020, the United States Court of Appeals for the First Circuit affirmed the dismissal of a putative securities fraud class action asserting violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) as well as Section 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 against a medical robotics company (the “Company”) as well as certain of its officers.  Yan v. ReWalk Robotics Ltd., et al., No. 19-1614, 2020 WL 5014858 (1st Cir. Aug. 25, 2020).  Plaintiffs alleged that the Company made false or misleading statements and omissions in its IPO registration statement (the “Registration Statement”) and subsequent quarterly and annual disclosures concerning its dealings with the Food and Drug Administration (the “FDA”) regarding one of the Company’s devices.  The First Circuit affirmed the district court’s dismissal of the Securities Act claims, finding that plaintiffs failed to allege a material misstatement or omission.  Although it disagreed with the district court’s reasoning in dismissing the Exchange Act claims for lack of standing, the First Circuit nevertheless found that the Exchange Act claims were properly dismissed because plaintiffs failed to sufficiently allege a material misstatement or scienter.
 

On August 14, 2020, United States District Judge Paul A. Engelmayer dismissed with prejudice a putative securities class action against a Chinese internet company (the “Company”) and its co-founders and a director under Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 and Rule 10b-5.  Altimeo Asset Mgmt. v. Qihoo 360 Tech. Co., et al., 19 Civ. 10067 (PAE) (S.D.N.Y. Aug. 14, 2020).  Plaintiffs, relying on statements from a confidential witness (the “CW”) and several media reports, alleged that defendants deliberately withheld the Company’s plans to relist on a Chinese stock exchange after they took the Company private in a merger transaction.  The Court granted defendants’ motion to dismiss because the CW statements and newspaper articles failed to provide the type of particularized facts needed to state a claim under the securities laws.
 

On August 14, 2020, United States District Judge Katherine Polk Failla 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 securities fraud class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 against an insurance company (the “Company”) as well as certain of its officers, who were members of the family that founded the Company and were long-time controlling stockholders.  Martinek v. Amtrust Fin. Serv., Inc., No. 19 Civ. 8030 (KPF), 2020 WL 4735189 (S.D.N.Y. August 14, 2020).  Plaintiff alleged that the Company made false or misleading statements and omissions about whether the Company’s preferred stock would continue to trade on the New York Stock Exchange (“NYSE”) following a proposed buyout of the common stock by the controlling stockholders.  The Court largely denied defendants’ motion to dismiss, holding that plaintiff had adequately alleged scienter and the falsity of two categories of alleged misstatements. 
 

On August 6, 2020, Judge Jed S. Rakoff of the United States District Court for the Southern District of New York denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a sports entertainment company and certain of its executives.  City of Warren Police & Fire Ret. Sys., v. World Wrestling Ent. Inc., No. 20-CV-2031 (JSR), 2020 WL 4547217, at *1 (S.D.N.Y. Aug. 6, 2020).  Plaintiff alleged that the company made misrepresentations about its media contracts in the Middle East and North Africa (“MENA”).  The Court held that the complaint, “while not a model of clarity, adequately alleges an overall claim of securities fraud,” including with respect to actionable misrepresentations, scienter, and loss causation.
 

On August 6, 2020, the United States Court of Appeals for the Second Circuit affirmed in a summary order the judgment of the district court that granted defendants’ motion to dismiss certain claims in a putative securities class action, while vacating the district court’s decision on plaintiff’s motion for reconsideration.  Colbert v. Rio Tinto PLC, et al., No. 19-2711 (2d Cir. Aug. 6, 2020).  Plaintiff alleged that defendants—a mining company (“the Company”) and certain of its officers—violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder, by making materially false or misleading statements with respect to certain business investments.  The Second Circuit affirmed the dismissal in a summary order, but reversed the denial of the motion for reconsideration, holding that the district court incorrectly refused to reconsider the determination that plaintiff had abandoned his claim by not explicitly opposing dismissal of the claim.  Summary orders do not have binding precedential effect.
 

On July 24, 2020, United States District Judge Allison D. Burroughs of the District of Massachusetts dismissed a putative securities class action against a biopharmaceutical company (the “Company”) and certain of its executives under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Hackel v. Aveo Pharmaceuticals Inc. et al., No. 1:19-cv-10783, 2020 WL 4274542 (D. Mass. July 24, 2020).  Plaintiffs alleged that defendants misrepresented the status of clinical trials of a cancer drug required for approval from the U.S. Food and Drug Administration (“FDA”).  The Court granted defendants’ motion to dismiss because the statements at issue were forward-looking and because plaintiffs failed to allege falsity.
 

On July 21, 2020, Judge Charles Breyer of the United States District Court for the Northern District of California dismissed a putative class action asserting claims under the Securities Act of 1933 and the Securities Exchange Act of 1934 against an information technology and software company, certain of its executives, and the underwriters for the company’s IPO.  In re Pivotal Sec. Litig., No. 3:19-cv-3589, slip op. (N.D. Cal. July 21, 2020), ECF No. 100.  Plaintiffs alleged that the company made misleading statements in IPO offering documents and in subsequent public statements regarding its financial and business condition.  The Court held that plaintiffs failed to adequately allege any actionable misstatement or omission, and further that plaintiffs failed to establish that the alleged misstatements with respect to the Exchange Act claims were made with scienter.  However, the Court granted leave to amend as to certain allegations.
 

On July 20, 2020, Judge Denise Cote 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 manufacturer of recreational vehicles and certain of its executives.  In re Textron, Inc. Sec. Litig., No. 19-CV-7881 (DLC), 2020 WL 4059179 (S.D.N.Y. July 20, 2020).  Plaintiff generally alleged the company made misleading statements suggesting that it was successfully integrating an acquired company when in fact it allegedly was struggling to do so.  Id. at *3.  The Court held that none of the alleged misstatements were materially false or misleading.
 

On July 16, 2020, Judge Jesse Furman of the United States District Court for the Southern District of New York dismissed a putative class action against a Chinese computer application developer and certain of its executives asserting claims under the Securities Exchange Act of 1934.  Marcu v. Cheetah Mobile Inc., No. 18-CV-11184 (JMF), 2020 WL 4016645 (S.D.N.Y. July 16, 2020).  Plaintiffs asserted an “omissions case”;  i.e., they alleged that the company made statements regarding its revenue, the popularity of its applications, and the importance of the Google Play store to its business model that were rendered misleading because the company did not disclose an alleged scheme through which the company earned improper referral bonuses on application downloads.  The Court held that plaintiffs failed to adequately allege that the challenged statements were false or misleading or made with scienter.  Because plaintiffs had previously been granted leave to amend their complaint, and the Court found nothing to suggest that the deficiencies identified could be cured, the Court denied leave to amend.
 

On July 13, 2020, the Second Circuit affirmed in part and vacated in part the dismissal of Exchange Act claims against a pharmaceutical company (the “Company”) and certain individual defendants in connection with alleged misstatements regarding the efficacy of its pancreatic cancer drug, the design of the Company’s clinical trial, and the scientific literature concerning pancreatic cancer.  Nguyen v. NewLink, No. 19-642 (2d Cir. July 13, 2020).  The Second Circuit held that while some alleged misstatements were inactionable puffery, others were statements of opinion as to which, under the United States Supreme Court’s decision in Omnicare, plaintiffs adequately pled falsity.  The Second Circuit also held that plaintiff sufficiently pled loss causation.
 

On July 8, 2020, United States District Judge Douglas P. Woodlock of the United States District Court for the District of Massachusetts dismissed a putative securities fraud class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 against a large online home goods retailer (the “Company”) and its three most senior executives (collectively, “Defendants”).  In re Wayfair, Inc. Sec. Litig., Civ. No. 19-10062-DPW (D. Mass. July 8, 2020).  Plaintiffs alleged that defendants falsely implied that the Company was profitable and that it was experiencing positive advertising-revenue leverage—meaning that the Company was becoming more effective at generating revenue for every advertising dollar spent.  The Court granted defendants’ motion to dismiss because plaintiffs failed to adequately allege any material misstatements or omissions, scienter, or loss causation.  Notably, the Court repeatedly called attention to the absence of factual support for the allegations and described the complaint as “precisely the kind of pleading the Private Securities Litigation Reform Act was designed to prevent.”
 

On June 22, 2020, a Seventh Circuit panel of three judges affirmed a district court ruling dismissing securities fraud claims against a biopharmaceutical company (the “Company”) and one of its officers in connection with a Dutch auction tender offer the Company made to repurchase certain of the Company’s outstanding shares.  Walleye Trading LLC v. AbbVie Inc., et al., No. 19-3063 (7th Cir. June 22, 2020).  Plaintiff, a shareholder of the Company, alleged that the Company violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) when the Company announced preliminary results of the tender offer and subsequently announced corrected results later that same day after trading closed.  Plaintiff also alleged that one of the Company’s officers violated section 20(a) of the Exchange Act.  The District Court dismissed the complaint for failure to state a claim and the Seventh Circuit affirmed.
 

On June 18, 2020, a Third Circuit panel of three judges partially reversed a district court ruling, reviving certain securities fraud claims against a bank (the “Bank”) and several individual defendants in connection with alleged statements made in a joint proxy statement issued to shareholders prior to the Bank’s merger.  Jaroslawicz v. M&T Bank Corp, et al., No. 17-3695 (3d Cir. June 18, 2020).  Plaintiffs, a putative class of shareholders, alleged violations of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 14(a)-9 promulgated thereunder, as well as breach of fiduciary duty under Delaware law.  Plaintiffs alleged defendants made misstatements or omissions in proxy statements in violation of Item 105 of Regulation S-K by inadequately disclosing the risks involved in the Bank’s compliance with federal anti-money laundering regulations (AML) and practices concerning its consumer checking program.
 

On June 12, 2020, Judge Kevin McNulty of the of United States District of New Jersey granted in part and denied in part a motion to dismiss a putative securities fraud class action asserting violations of Sections 9(a), 10(b), and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against a Chinese manufacturer of wheels for commercial vehicles (the “Company”) as well as the Company’s CEO and CFO (collectively, “Defendants”).  He v. China Zenix Auto Int’l Ltd. et al., Civ. No. 2:18-cv-15530, 2020 WL 31695006 (D.N.J. June 12, 2020).  Plaintiffs alleged that, in an effort to prevent the Company from being de-listed by the New York Stock Exchange (the “NYSE”), certain of the Company’s employees engaged in improper trading that artificially inflated the Company’s stock price.  Plaintiffs further alleged that the Company’s ongoing statements regarding its compliance with NYSE listing requirements were materially misleading, because these statements did not disclose that it achieved compliance only as a result of improper trading.  The Court denied Defendants’ motion to dismiss as to the Section 10(b) claims against the Company and the CEO, but granted the motion to dismiss the Section 10(b) claims against the CFO for failure to adequately allege scienter.  The Court dismissed the Section 9(a) claims for failure to adequately allege a series of purportedly manipulative transactions.
 

On June 16, 2020, Judge Gregory H. Woods 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 securities fraud class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against a biotech company (the “Company”) as well as certain of its officers (collectively, “Defendants”).  Skiadas v. Acer Therapeutics Inc. et al., Civ. No. 1:19-cv-6137, 2020 WL 3268495 (S.D.N.Y. June 16, 2020).  Plaintiffs alleged that Defendants falsely stated that the Food and Drug Administration (“FDA”) agreed that it would approve the Company’s New Drug Application for EDSIVO, a drug for the treatment of Vascular Ehlers-Danolos Syndrome (“vEDS”), a rare genetic connective tissue disorder.  The Court denied Defendants’ motion to dismiss as to most of the alleged misstatements, because plaintiffs adequately alleged falsity and scienter.
 

On June 12, 2020, Judge Beth Labson Freeman of the United States District Court for the Northern District of California dismissed a purported securities class action against a peer-to-peer lending company (the “Company”) and certain of its officers under Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  Veal v. LendingClub Corporation, et. al., No. 5:18-cv-02599 (N.D. Cal. June 12, 2020).  Plaintiffs alleged that defendants made misstatements and omissions regarding an investigation by the Federal Trade Commission (“FTC”) into the Company’s allegedly deceptive conduct related to certain consumer practices.  The Court dismissed plaintiffs’ claims (mostly without prejudice), because plaintiffs failed to adequately allege falsity or scienter.
 

On June 5, 2020, Judge Susan D. Wigenton of the United States District Court for the District of New Jersey denied a motion to dismiss a putative securities class action against a government services company and certain of its executives under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  Emps. Ret. Sys. of the Puerto Rico Elec. Power Auth. v. Conduent Inc., No. CV-19-8237-SDW-SCM, 2020 WL 3026536 (D.N.J. June 5, 2020).  Plaintiff alleged that the company had overstated the progress it was making in modernizing the IT infrastructure that supported its electronic toll collection business.  The Court held that plaintiff adequately alleged actionable misrepresentations, as well as scienter and loss causation.
 

On June 5, 2020, Judge Esther Salas of the United States District Court for the District of New Jersey sustained in part a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against an information technology services company and certain of its current and former executives.  In re Cognizant Technology Solutions Corp. Sec. Lit., No. 16-6509 (D.N.J. June 5, 2020).  Plaintiffs alleged that the company made misrepresentations promoting the advantages of its facilities in India by failing to disclose an alleged scheme to bribe government officials to secure permits necessary to operate one such facility.  After portions of their prior complaint were dismissed by the late Judge Walls without prejudice, plaintiffs filed an amended complaint, and the case was transferred to Judge Salas.  Relying in part on the prior decision as law of the case, the Court held that plaintiffs’ allegations, which were drawn primarily from a government investigation, sufficiently alleged actionable misstatements and scienter.
 

On June 1, 2020, Judge Paul Oetken of the Southern District of New York granted in part and denied in part a motion to dismiss securities claims against an “ultra-low fare” airline company (the “Company”) and its chief executive.  City of Birmingham Firemen's and Policemen's Supplemental Pension System v. Ryanair Holdings plc et al., No. 18-cv-10330 (S.D.N.Y. June 1, 2020).  Plaintiffs alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, in connection with alleged misstatements concerning the Company’s labor practices and profitability.  The Court granted in part defendants’ motion to dismiss, finding plaintiffs failed to adequately plead falsity, materiality, and scienter for all but one category of alleged misstatements, but granted plaintiffs’ motion for leave to amend.
 

On June 2, 2020, Judge Yvonne Gonzalez Rogers of the Northern District of California granted in part 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 Rule 10b-5 promulgated thereunder, against a multinational technology company (the “Company”) and two of its senior executives.  In re Apple Securities Litigation, No. 4:19-cv-02033 (N.D. Cal. June 2, 2020).  Plaintiffs alleged that defendants made materially false and misleading statements and omissions concerning the Company’s flagship product and its China business.  The Court stripped away most of plaintiff’s allegations, holding that those alleged misrepresentations failed to sufficiently allege falsity, scienter, and loss causation, but let remain two alleged misstatements made by the Company’s CEO to analysts that it found to be sufficiently pled.
 

On May 18, 2020, Judge William J. Martini of the United States District Court for the District of New Jersey denied a motion to dismiss a putative class action asserting claims under Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder against a consumer and industrial products company and certain of its executives.  Kanefsky v. Honeywell Int’l Inc., No. 18-cv-15536, slip op. (D.N.J. May 18, 2020), ECF No. 106.  Plaintiff alleged that the company made misrepresentations in SEC filings and public statements regarding the projected asbestos liability arising from its acquisition of a manufacturer of automobile brakes.  The Court held that plaintiff adequately alleged falsity, scienter, and loss causation as to certain alleged misstatements.
 

On April 22, 2020, Judge William F. Kuntz II, 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 securities fraud class action based on purportedly misleading statements in the prospectus and registration statement (the “Offering Materials”) filed by a subscription-based meal kit service (the “Company”) in connection with its initial public offering (“IPO”).  The complaint asserted claims under Sections 11 and 15 of the Securities Act of 1933 against the Company and certain of its officers.  In re Blue Apron Holdings, Inc. Sec. Litig., No. 17-CV-4846 (E.D.N.Y. Apr. 22, 2020).  Plaintiffs alleged that the Company, which provides meal kits to customers through a weekly subscription service, concealed known risks and made misleading statements concerning challenges the Company faced with one of its product fulfilment centers.  Although the Court denied defendants’ motion to dismiss claims that the Company had failed to disclose risks associated with the performance of this fulfillment center, it rejected plaintiffs’ claims based on the alleged non-disclosure of declines in a Company statistic for measuring the number of meal kits delivered on time with all of their ingredients, which were announced by the Company in the quarter immediately following the IPO.  Confirming that Section 11 claims generally cannot be based on disclosures in earnings announcements following an offering, even when the quarterly earnings announcements closely follow, the Court held that the complaint failed to allege sufficiently that the declines were known even though the quarter ended one day after the IPO.
 

On April 28, 2020, Judge Edward J. Davila of the United States District Court for the Northern District of California granted a motion to dismiss a putative securities fraud class action based on purportedly misleading statements in the prospectus and registration statement (the “Offering Materials”) filed by a ticketing platform provider (the “Company”) in connection with its initial public offering (“IPO”).  The complaint asserted claims under Sections 11 and 15 of the Securities Act of 1933 and Section 10(b) and 20(a) of the Securities Exchange Act of 1934 against the Company and certain of its officers, and violations of Section of 11 of the Securities Act against the underwriters for the IPO.  In re Eventbrite Inc. Sec. Litig., No. 5:18-CV-02019-EJD (N.D. Cal. Apr. 28, 2020).  In granting the motion to dismiss, the Court held that it could rely on documents incorporated into the complaint by reference to negate conclusory allegations in the complaint and for context, and further held that plaintiffs failed to adequately plead falsity and that the Company, in any event, sufficiently disclosed risks associated with the acquisition.  The Court also held that the heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure applied to the Section 11 claims and that its risk disclosures were sufficient under Item 303.
 

On April 28, 2020, Judge Susan Illston of the United States District Court for the Northern District of California denied a motion to dismiss a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against an enterprise software company and certain of its executives.  Roberts v. Zuora, Inc., No. 19-cv-03422-SI, slip op. (N.D. Cal. Apr. 28, 2020), ECF No. 75.  Plaintiff alleged that, prior to its initial public offering, the company misstated that its two flagship products could be integrated together and that such integration was a key part of its business strategy, when in fact the product integration was not functional.  The Court held that plaintiff adequately alleged that such statements were false or misleading and made with the requisite scienter.
 

On April 30, 2020, Chief Judge Freda L. Wolfson of the United States District Court for the District of New Jersey dismissed a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against a company that supports and operates blockchain technologies and certain of its executives and investors.  Takata v. Riot Blockchain, Inc., No. 18-02293 (FLW), slip op. (D. N.J. Apr. 30, 2020).  Plaintiff alleged that defendants engaged in a “pump-and-dump” scheme to inflate the price of the company’s stock before selling to unsuspecting retail investors.  Id.  The Court held that plaintiff failed to adequately allege any actionable misrepresentations and otherwise failed to establish “scheme” liability, and dismissed the action without prejudice.
 

On April 28, 2020, Judge Victor Marrero of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against a biopharmaceutical company and certain of its executives.  Schaeffer v. Nabriva Therapeutics plc, No. 19-cv-4183, slip op. (S.D.N.Y. Apr. 28, 2020), ECF No. 40.  Plaintiffs alleged that the company made false or misleading statements suggesting that a drug it submitted to the FDA for marketing approval would be approved in 2019.  The Court held that the alleged misstatements were either non-actionable puffery, or were protected forward-looking statements, or were not sufficiently alleged to have been made with scienter.
 

On April 21, 2020, Judge Susan Illston 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 lawsuit asserting claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) against a software company (the “Company”), certain of its executives and directors, and three venture capital firms (the “VC Defendants”) that held a significant percentage of the Company’s voting power.  Fiyyaz Pirani v. Slack Technologies, Inc., et. al., No. 19-cv-05857-SI (N.D. Cal. Apr. 21, 2020).  Plaintiff alleged that defendants were liable for materially misleading statements and omissions concerning the Company’s service outages, competition, scalability, and growth strategy in offering materials in connection with the Company’s direct listing of preexisting shares to the public.  The Court granted in part and denied in part defendants’ motion to dismiss, and granted plaintiff leave to amend to cure the amended complaint’s deficiencies.
 

On April 8, 2020, Chief Judge G. Murray Snow of the United States District Court for the District of Arizona granted in part and denied in part a motion to dismiss a putative securities class action filed against a renewable energy company (“Company”) and its executives, alleging violations of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 and SEC Rule 10b-5.  Zhu v. Taronis Techs. Inc., 2020 WL 1703680 (D. Ariz. Apr. 8, 2020).  Plaintiffs alleged defendants misled investors about the existence of a contract with the City of San Diego.  The Court denied defendants’ motion to dismiss as to plaintiffs’ claims under Rule 10b-5(b) but granted the motion as to claims asserted under Rule 10b-5(a) and (c).
 

On April 15, 2020, Judge Edward M. Chen of the United States District Court for the Northern District of California denied a motion to dismiss a putative securities fraud class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against a designer and manufacturer of electric cars (the “Company”), its co-founder and CEO and its directors.  In re Tesla Inc. Securities Litigation, No. 3:18-cv-04865 (N.D. Cal. Apr. 15, 2020).  Plaintiff alleged that the statements made by the Company’s CEO on Twitter regarding securing funding for a going-private transaction were materially misleading.  The Court denied defendants’ motion to dismiss for failure to state a claim, finding that plaintiff adequately pleaded falsity, scienter, and loss causation.
 

On April 10, 2020, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal of a putative class action against a large American retailer (the “Company”) and certain of its current and former executives for violations of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5.  In re Target Corp. Sec. Litig., 2020 WL 1814268 (8th Cir. 2020).  Plaintiffs alleged that defendants made materially misleading statements about problems facing the Company’s Canadian subsidiary (“Canadian Subsidiary”), which filed for bankruptcy less than two years after opening in the Canadian market.  The district court dismissed the action, holding that plaintiffs failed to meet the pleading standards of the Private Securities Litigation Reform Act (“PSLRA”), and denied reconsideration and leave to amend.  The Eighth Circuit affirmed, holding that plaintiffs failed to plead scienter adequately for any of the alleged misleading statements and falsity for some of the alleged misstatements. 
 

On April 6, 2020, Judge J. Paul Oetken of the United States District Court for the Southern District of New York partially granted a motion to dismiss claims under the Securities Exchange Act of 1934 against a pharmaceutical company and certain of its executives, and then granted plaintiffs’ unopposed motion for class certification.  In re Mylan N.V. Sec. Litig., No. 16-CV-7926 (JPO), 2020 WL 1673811 (S.D.N.Y. Apr. 6, 2020).  As noted in our prior posts regarding the company’s motions to dismiss the first and second amended complaints, plaintiffs alleged that defendants made misleading statements regarding, among other things, an alleged rebate scheme involving the company’s EpiPen, and that defendants engaged in an illegal conspiracy to inflate the prices for various of the company’s generic drugs.  After plaintiffs filed a third amended complaint attempting to address deficiencies identified by the Court in its prior opinions, the Court held that plaintiffs had met their burden to plead scienter with respect to some, but not all, of the alleged misstatements.
 

On April 2, 2020, Judge Ronnie Abrams of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 against a manufacturer of automotive seating and certain of its executives.  In re Adient PLC Sec. Lit., No. 18-CV-9116 (RA) (S.D.N.Y. Apr. 2, 2020).  Plaintiffs alleged that the company made false and misleading statements with respect to improvements in the projected margin of “Adient,” a business spun off of its parent company, and in a particular Adient business segment (the “Metals” segment).  The Court held that plaintiffs failed to adequately allege an actionable misstatement or scienter, and, noting that plaintiffs had already voluntarily amended their complaint after defendants filed a previous motion to dismiss, denied leave to amend.

On March 31, 2020, Judge Victor A. Bolden of the District of Connecticut dismissed a putative securities class action against a provider of private label credit cards (the “Company”), certain of its officers and directors, and its underwriters in connection with a notes offering.  In re Synchrony Financial Sec. Litig., No. 3:18-cv-1818 (VAB) (D. Conn. Mar. 31, 2020).  Plaintiffs alleged violations of Section 11 of the Securities Act of 1933 (the “Securities Act”) by all defendants, as well as Section 15 of the Securities Act against the individual defendants.  Plaintiffs also alleged violations of Sections 10(b), 20A, and 20(a) of the Securities and Exchange Act of 1934 (the “Exchange Act”) by the Company and certain of the individual defendants.  The Court granted defendants’ motion to dismiss the Amended Complaint in its entirety with prejudice.
 

On March 12, 2020, Judge Naomi Reice Buchwald of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a shoe manufacturer and certain of its executives.  In re Skechers USA, Inc. Sec. Lit., No. 18-CV-8039 (NRB) (S.D.N.Y. Mar. 12, 2020).  Plaintiffs alleged that the company made misstatements and omissions in earnings calls and SEC filings regarding the growth rate of expenses in comparison to the growth rate of sales.  The Court held that plaintiffs failed to adequately allege either an actionable misrepresentation or scienter, and denied leave to amend.

 

On March 16, 2020, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California dismissed a putative class action against a technology company and its executives asserting claims under Section 10(b) of the Securities Exchange Act of 1934.  Iron Workers Loc. 580 Jt. Funds v. NVIDIA Corp., No. 18-CV-07669-HSG, 2020 WL 1244936 (N.D. Cal. Mar. 16, 2020).  Plaintiffs alleged that the company made misrepresentations regarding its sales of graphic processing units (“GPUs”) for computer gaming and the proportion of such sales that were actually made to cryptocurrency miners—for which demand was allegedly more volatile.  The Court dismissed the action, holding that plaintiffs failed to adequately plead that the alleged misstatements were materially false or made with scienter, while permitting plaintiffs to file an amended complaint to attempt to cure these deficiencies.

 

On March 16, 2020, Judge Kimba Wood of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a restaurant chain and certain of its executives.  Oklahoma Law Enforcement Ret. Sys. v. Papa John’s Int’l, Inc., No. 18-CV-7927 (KMW), 2020 WL 1243808 (S.D.N.Y. Mar. 16, 2020).  Plaintiff alleged that the company made misleading public statements regarding the company’s culture while at the same time enabling workplace sexual harassment.  The Court held that plaintiff had failed to adequately allege any actionable misstatements or omissions but granted plaintiff leave to amend to attempt to cure the deficiencies.

 

On March 9, 2020, Judge William H. Orrick of the United States District Court for the Northern District of California 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 Rule 10b-5 promulgated thereunder, against a software company (the “Company”) and two of its executive officers.  Ryan Scheller, et. al. v. Nutanix, Inc., et. al., No. 19-cv-01651-WHO (N.D. Cal. Mar. 9, 2020).  Plaintiffs alleged—based primarily on statements allegedly made by seven confidential witnesses (the “CWs”)—that defendants made false and misleading statements and omissions concerning, among other things, the Company’s internal operations, business relationships, product quality, and sales performance.  The Court granted defendants’ motion to dismiss, finding that plaintiffs failed to allege that the Company’s public statements were false or misleading, and that plaintiffs failed to sufficiently allege scienter.
 

On March 9, 2020, Justice Andrew Borrok of the Supreme Court of the State of New York, New York County, Commercial Division, granted in part a motion to dismiss a putative securities class action asserting claims under Sections 11, 12 and 15 of the Securities Act of 1933 (the “Securities Act”) against a used car e-commerce company (the “Company”), certain of its executives and directors, and the underwriters for its initial public offering (“IPO”) of American Depository Shares (“ADSs”).  In re Uxin Limited Securities Litigation, No. 650427/2019 (N.Y. Sup. Ct. Mar. 9, 2020).  Plaintiffs alleged that the Company made materially false and misleading statements and omissions concerning changes to the Company’s business model and certain financial and operational data reported by the Company in connection with its IPO.  The Court granted in part and denied in part defendants’ motion to dismiss.
 

On March 2, 2020, Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York dismissed a putative securities fraud class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against a foreign insurance company (the “Company”) and certain current and former officers (the “individual defendants,” and collectively, “defendants”).  Long v. Fanhua Inc. et al., No. 1:18-CV-08183 (S.D.N.Y. Mar. 2, 2020).  Plaintiff, who commenced the action on behalf of all persons who purchased the Company’s American Depository Shares (“ADSs”), alleged that defendants failed to disclose certain related-party dealings and that the Company’s stock price declined once those dealings were disclosed to the market.  The Court dismissed plaintiff’s complaint and held that plaintiff’s reliance on uncorroborated short-seller reports was insufficient to state a claim. 
 

On February 21, 2020, Judge George H. Wu of the United States District Court for the Central District of California adopted as final its tentative ruling, dated February 20, dismissing a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a real estate investment trust and certain of its executives.  Brian Barry v. Colony NorthStar, Inc. et al., No. 18-CV-02888 (C.D. Cal. Feb. 21, 2020).  Plaintiff alleged that the company made misrepresentations in public statements regarding financial projections and fundraising that were misleading because those projections had become unreachable.  The Court held that plaintiff failed to allege an actionable misstatement or omission and, because plaintiff had already amended its complaint twice before, the Court denied leave to amend.
 

On February 27, 2020, Judge Loretta A. Preska of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a precious metals mining company and certain of its executives.  In Re Pretium Resources Inc. Sec. Lit., No. 18-CV-08199 (S.D.N.Y. Feb. 27, 2020).  Plaintiffs alleged that the company made misleading public statements expressing confidence in an existing plan for a particular gold mine, notwithstanding substantially increased excavation costs the mine was facing.  As noted by the Court and discussed in our prior post, the Southern District of New York previously dismissed another action filed against the company regarding alleged misrepresentations relating to its projections for the same mine.  Here, too, the Court held that plaintiffs failed to allege an actionable omission or scienter.
 

On February 26, 2020, Judge Phyllis J. Hamilton of the United States District Court for the Northern District of California dismissed certain claims in a putative class action asserting violations of the Securities Act of 1933 and California state law by a cryptocurrency firm and certain of its executives.  Vladi Zakinov, et al. v. Ripple Labs, Inc., et al., No. 18-CV-06753-PJH (N.D. Cal. Feb. 26, 2020).  Plaintiff alleged that the cryptocurrency created by the company was an unregistered security and, further, that the company had misrepresented the cryptocurrency’s long-term value.  The Court held that plaintiff had sufficiently alleged that the cryptocurrency was an unregistered security, but dismissed the misrepresentation claims for failure to allege an actionable misstatement or omission.
 

On February 19, 2020, Judge Pamela A. Barker of the United States District Court for the Northern District of Ohio 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 Rule 10b-5 promulgated thereunder, against an aerospace component design and manufacturing company (the “Company”) and two of its executive officers.  In re TransDigm Group Inc., No. 17-cv-01677-PAB (N.D. Ohio Feb. 19, 2020).  Plaintiffs alleged that defendants made materially false and misleading statements and omissions concerning the Company’s operations, business, and prospects that resulted in a drop in the Company’s stock price when the Company made certain purported corrective disclosures.  The Court granted defendants’ motion to dismiss plaintiffs’ Third Amended Complaint, finding that plaintiffs failed to sufficiently allege materiality or loss causation, and denied leave to amend.
 

On February 6, 2020, Judge James S. Moody, Jr. of the United States District Court for the Middle District of Florida dismissed a putative class action asserting violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder against a foodservice equipment company (the “Company”) and certain of its former officers.  Metropolitan Transportation Authority Defined Benefit Pension Plan Master Trust v. Welbilt Inc., No. 8:18-cv-03007 (M.D. Fl. Feb. 6, 2020).  Plaintiffs alleged that the Company made misleading statements about its disclosure controls in quarterly and annual reports from February 2017 to November 2018, and that its share price fell after it revealed that its financial statements should not be relied upon because of various accounting and reporting errors.  The Court dismissed the complaint without prejudice, holding that plaintiffs failed to plead sufficient facts to give rise to a strong inference of scienter.
 

On February 7, 2020, Judge Richard G. Andrews of the United States District Court for the District of Delaware granted in part and denied in part motions to dismiss a putative securities class action against an automotive aftermarket parts provider (the “Company”), certain members of its management (the “Company Individual Defendants”), a hedge fund that owned approximately four percent of the Company’s shares, and the fund’s Chief Executive Officer who was a member of the Company’s board of directors.  In re Advance Auto Parts, Inc., Sec. Litig., No. CV-18-212-RGA (D. Del. Feb. 7, 2020).  Plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making misleading misstatements and omissions about the Company’s projected growth and financial condition.  The Court dismissed the claims to the extent it found them to be puffery or lacking sufficient allegations of falsity, but denied the motion with respect to claims based on statements related to projections and opinions regarding the Company’s financial outlook. 
 

On February 4, 2020, Judge James Donato of the United States District Court for the Northern District of California partially dismissed a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a food supplement company and certain of its former executives.  In Re TerraVia Holdings, Inc. Sec. Litig., No. 16-CV-06633-JD, 2020 WL 553939 (N.D. Cal. Feb. 4, 2020).  Plaintiffs alleged that the company made misrepresentations regarding the health benefits and commercial viability of certain ingredients it created and sourced for its food manufacturing partners, based on the company having received reports that these ingredients were causing illnesses, ultimately leading to product recalls.  The Court held that certain of the alleged misstatements were non-actionable, but that plaintiffs’ allegations respecting certain other alleged misstatements were sufficient to state a claim.

On February 4, 2020, Judge Catherine C. Blake of the United States District Court for the District of Maryland dismissed certain claims in a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a media company and certain of its executives.  In re Sinclair Broadcast Group, Inc. Sec. Litig., slip op., No. 18-cv-2445 (D. Md. Feb. 4, 2020).  Plaintiffs alleged that the company made various misstatements to the FCC in connection with an ultimately unsuccessful merger with another media company, and that the company had engaged in an illegal price-fixing conspiracy regarding advertising rates.  The Court dismissed most of plaintiffs’ claims, but held that plaintiffs had sufficiently alleged falsity and scienter with respect to certain specific statements concerning proposed divestitures in connection with the merger.

On February 5, 2020, Judge Matthew F. Kennelly of the United States District Court for the Northern District of Illinois sustained some but not all claims in a putative class action asserting violations of Sections 10(b) and 18 of the Securities Exchange Act of 1934 against a pharmaceutical company and certain of its executives.  Twin Master Fund, Ltd. v. Akorn, Inc., No. 19-CV-3648 (N.D. Ill. Feb. 05, 2020).  Plaintiffs alleged that the company knowingly made false statements and omissions regarding the company’s compliance with FDA regulations governing data integrity and manufacturing in public statements and filings and in a publicly filed merger agreement.  The Court held that plaintiffs had adequately alleged misrepresentations as to a number of statements, but dismissed plaintiffs’ claims with respect to certain others.

On February 4, 2020, Judge Ronnie Abrams of the United States District Court for the Southern District of New York dismissed a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a tobacco company and certain of its executives.  In re Philip Morris Int’l Inc. Sec. Litig., No. 18-CV-08049 (S.D.N.Y. Feb. 4, 2020).  Plaintiffs alleged that the company made misrepresentations in securities filings and public statements regarding clinical studies it published in connection with its application to the U.S. Food and Drug Administration to sell its vapor-based product in the United States and to market it as presenting a lower risk than traditional tobacco products.  Plaintiffs also alleged that the company made misrepresentations regarding sales growth in Japan for the same product.  The Court held that plaintiffs failed to allege an actionable misstatement or omission or to establish scienter, but granted leave to amend with respect to certain allegations.

On January 27, 2020, Judge Richard G. Seeborg of the United States District Court for the Northern District of California 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 Rule 10b-5 promulgated thereunder, against a pharmaceutical company (the “Company”) and two of its executive officers.  Immanuel Lake, et al. v. Zogenix, Inc., et. al., No. 19-cv-01975-RS (N.D. Cal. Jan. 27, 2020).  Plaintiffs alleged that defendants made material omissions concerning the Company’s New Drug Application (“NDA”) it was submitting to the U.S. Food and Drug Administration (“FDA”) for a medication designed to treat seizures.  According to plaintiffs, the Company’s stock price fell approximately 20% when the alleged omission was revealed to the market through the FDA’s rejection of the NDA.  The Court granted defendants’ motion to dismiss, finding that plaintiffs failed to sufficiently allege a misstatement or omission of a material fact and scienter, but granted leave to amend.
 

On December 10, 2019, Judge Jennifer A. Dorsey of the United States District Court for the District of Nevada denied a motion to dismiss a putative securities class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a life science company specializing in cannabidiols (“CBD”) and certain of the company’s executives.  In re CV Sciences, Inc. Sec. Litig., 2019 WL 6718086 (D. Nev. Dec. 10, 2019).  Plaintiffs alleged that the company made misleading statements that a CBD product was proprietary and had a patent application pending by failing to disclose that the U.S. Patent and Trademark Office (“USPTO”) had rejected its patent application twice, including a “final rejection” on the ground that the proposed invention was obvious.  Id. at *1.  The Court held that plaintiffs had sufficiently alleged the falsity of the alleged misrepresentations at the motion-to-dismiss stage, and therefore declined to dismiss the complaint.

On December 10, 2019, the United States Court of Appeals for the Second Circuit affirmed the dismissal of a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a chicken producing company and certain of its executives.  Gamm v. Sanderson Farms, Inc., —F.3d—, 2019 WL 6704666 (2d Cir. 2019).  Plaintiffs alleged that defendants’ SEC filings contained misrepresentations because they failed to disclose an illegal antitrust conspiracy to drive up chicken prices by reducing supply and to manipulate a chicken price index.  The Court held that the complaint was properly dismissed because plaintiffs failed to plead with sufficient particularity facts supporting the alleged antitrust conspiracy, explaining that “when a securities fraud complaint claims that statements were rendered false or misleading through the nondisclosure of illegal activity, the facts of the underlying illegal acts must be pleaded with particularity in accordance with the requirements of Rule 9 and the PSLRA.”  Id. at *9.

On December 3, 2019, Judge John W. Lungstrum of the United States District Court for the District of Kansas denied a motion to dismiss a putative securities class action involving claims brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, against a financial services company (the “Company”), three of its senior officers and several of its founder directors.  Yellowdog Partners, LP and Carpenters Pension Fund of Illinois v. CURO Group Holdings Corp. et al., 18-cv-02662 (D. Kan. Dec. 3, 2019).  Plaintiffs alleged that the Company and the three officer defendants made false and materially misleading statements concerning the Company’s business transition away from its most profitable product and its effect on the Company’s financial condition.  The Court denied defendants’ motion to dismiss, finding that plaintiffs sufficiently pleaded falsity and scienter.
 

On November 6, 2016, Judge Michael A. Anello of the United States District Court for the Southern District of California denied defendants’ motion for summary judgment in a securities class action against a theme park and entertainment company (“defendant” or the “Company”), certain members of its management, and its largest shareholder.  Baker v. SeaWorld Entm’t, Inc., No. 14CV2129-MMA (AGS), 2019 WL 6118448 (S.D. Cal. Nov. 18, 2019).  Plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially misleading misstatements and omissions about the effect of Blackfish, a documentary film concerning killer whales in captivity, on attendance at the theme park and its earnings.  The Court denied defendants’ motion for summary judgment on the basis that there were genuine issues of material fact with respect to each element of a securities fraud claim. 

On November 19, 2019, Judge William M. Campbell of the United States District Court for the Middle District of Tennessee granted in part and denied in part motions to dismiss a putative class action under the Securities Act of 1933 and the Securities Exchange Act of 1934 against a healthcare company, certain of its officers and directors, and a private equity firm that previously owned the company.  Plaintiffs alleged that the company failed to disclose that allegedly improper business practices were responsible for its revenue growth.  In re Envision Healthcare Corp. Sec. Litig., No. 3:17-CV-01112, 2019 WL 6168254 (M.D. Tenn. Nov. 19, 2019).  The Court held that certain of the claims against the company and the individual defendants were adequately pleaded and others were not, but dismissed all claims against the private equity firm for failure to adequately allege scienter.
 

On November 13, 2019, Judge Leo T. Sorokin of the United States District Court for the District of Massachusetts dismissed a putative securities class action involving claims brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, against a biopharmaceutical company (the “Company”) and two of its senior officers.  LSI Design and Integration Corp. v. Tesaro Inc. et al., 18-cv-12352 (D. Ma. Nov. 13, 2019).  Plaintiff alleged that the Company and its CEO and CFO made materially misleading statements in violation of the Exchange Act concerning the Company’s financial condition and drug sales.  The Court dismissed the amended complaint finding that plaintiff failed to sufficiently plead falsity or scienter.
 

On October 24, 2019, Judge Charles T. Lee of the Connecticut Superior Court granted a motion to strike claims alleging violations of Sections 11, 12(a) and 15 of the Securities Act of 1933 (the “Securities Act”) in connection with an initial public offering brought against the issuer, certain of its officers, and the underwriters of the offering.  City of Livonia Retiree Health & Disability Benefits Plan v. Pitney Bowes Inc., No. X08 FST CV 18 6038160 S (Conn. Super. Ct. Oct. 24, 2019).  The Court had previously granted a protective order staying discovery pending the disposition of the motion to strike pursuant to the discovery stay provided in the Private Securities Litigation Reform Act, in one of the first state court decisions after the Supreme Court’s decision in Cyan Inc. v. Beaver Cty. Employees Ret. Fund, 138 S. Ct. 1061 (2018).  See State Court Stays Discovery Under the PSLRA During Pendency of Motion to Strike, Need to Know Litigation Newsletter (May 29, 2019), https://www.lit-sl.shearman.com/State-Court-Stays-Discovery-Under-The-PSLRA-During-Pendency.  In granting the motion to strike, the Court held that plaintiffs had failed to plead violations of the Securities Act because they did not identify any actionable misstatements or omissions from the relevant offering documents.
 

On October 29, 2019, Judge Charles R. Breyer of the United States District Court for the Northern District of California denied a motion to dismiss a putative securities class action brought against a pharmaceutical wholesaler and two of its former executives.  Evanston Police Pension Fund v. McKesson Corp., et al., 18-cv-06525-CRB (N.D. Cal. Oct. 29, 2019).  Plaintiffs asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, alleging that defendants knew about and participated in a price-fixing conspiracy that allowed the company to profit from the inflated prices of generic drugs during the alleged class period and caused the company to suffer decreased earnings once reports revealed government investigations into alleged price-fixing and prices dropped.  The Court denied defendants’ motion to dismiss, holding that plaintiffs adequately alleged material misstatements, scienter, and loss causation at the pleading stage.
 

On October 16, 2019, Judge Jorge L. Alonso of the United States District Court for the Northern District of Illinois Eastern Division dismissed a putative securities class action against an in-flight internet connectivity services provider (the “Company”) and some of its current and former executives.  Pierrelouis v. Gogo Inc., et al., No. 18-cv-04473 (N.D. Ill. Oct. 16, 2019).  Plaintiffs, who brought claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, alleged that defendants misrepresented the Company’s financial health and the performance and reliability of its in-flight internet services by failing to disclose the extent of a de-icing fluid issue that was affecting its ability to provide those services, and that the eventual disclosure of the issue caused the Company’s stock price to decline.  The Court held that plaintiffs failed to plead a material misrepresentation or omission and also failed to adequately allege a strong inference of scienter, and therefore dismissed the amended complaint without prejudice.
 

On October 18, 2019, Judge Edward J. Davila 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 asserting claims under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”) and Item 303 of Regulation S-K against a medical technology company (the “Company”) and certain of its executives and directors, venture capital firms, and underwriters.  In re Restoration Robotics, Inc. Securities Litigation, No. 18-cv-03712 (N.D. Cal. Oct. 18, 2019).  Plaintiff alleged that defendants made materially misleading statements and omissions concerning the Company’s marketing function, hair transplant technology, product sales and revenue in offering documents in connection with the Company’s initial public offering (“IPO”).  The Court granted in part and denied in part defendants’ motion to dismiss, and granted plaintiff leave to amend to cure the complaint’s deficiencies.
 

On October 4, 2019, Judge Robert Lasnik of the United States District Court for the Western District of Washington granted in part and denied in part a motion to dismiss a putative securities class action asserting claims under the Securities Exchange Act of 1934 against a technology company and certain of its executives.  In re Impinj, Inc., Sec. Litig., No. C18-5704 RSL, 2019 WL 4917101 (W.D. Wash. Oct. 4, 2019).  The Court held that plaintiffs failed to alleged falsity as to certain alleged misrepresentations and dismissed claims against one of the company’s executives for failure to adequately allege scienter, but otherwise upheld plaintiffs’ claims.

 

On September 26, 2019, Justice Saliann Scarpulla of the New York State Supreme Court, County of New York, Commercial Division, dismissed a putative class action against a dental products and services company and certain of its executives and directors asserting claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933.  In re Densply Sirona, Inc. S’holders Litig., No. 155393/2018 (Sup. Ct. N.Y. Cnty., Sept. 26, 2019).  Plaintiffs alleged that defendants made material misrepresentations in a registration statement filed with the SEC in connection with a merger.  The crux of plaintiffs’ allegations was that the registration statement failed to disclose material information about an alleged “anticompetitive scheme” to control supply and distribution of the company’s products.  The Court held that, even though New York’s heightened pleading standard for fraud claims did not apply in the case at bar, the alleged misstatements were non-actionable statements of opinion or puffery or were not misleading when made.

 

On October 9, 2019, Judge C. Darnell Jones, II of the United States District Court for the Eastern District of Pennsylvania dismissed a putative securities class action asserting claims under the Securities Exchange Act of 1934 against a manufacturer of equipment and tools used to assemble semiconductors and its CEO and CFO.  Kumar v. Kulicke & Soffa Indus., Inc., No. CV 19-0362, 2019 WL 5081896 (E.D. Pa. Oct. 9, 2019).  Based on the company’s disclosure of control deficiencies, improper transactions by an unnamed “senior finance employee,” the resignation of the company’s CFO, and amended financial statements, plaintiffs alleged that the company’s SEC filings and SOX certifications contained material misrepresentations.  Id. at *2.  The Court held that plaintiffs had identified actionable misstatements as to the CFO but had not adequately alleged scienter and, therefore, dismissed the case, while allowing plaintiffs leave to file an amended complaint.

 

On September 30, 2019, Judge Ann M. Donnelly of the United States District Court for the Eastern District of New York dismissed a putative securities class action asserting claims brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against a footwear retailer (the “Company”) and several of its executives.  City of Warren Police and Fire Retirement System v. Foot Locker Inc. et al., 18-cv-01492 (E.D.N.Y. Sept. 30, 2019).  Plaintiffs alleged that the Company and its executives made materially misleading statements and omissions in violation of the Exchange Act concerning its competitive position in the market, the strength of the Company’s relationship with its vendors, and its product allocation and inventory.  The Court dismissed the complaint without prejudice, holding that plaintiffs failed to sufficiently plead falsity and scienter, and granted plaintiffs leave to amend.

On September 18, 2019, Judge Charles P. Kocoras of the United States District Court for the Northern District of Illinois dismissed a putative class action against a pharmaceutical company asserting claims under Section 10(b) of the Securities Exchange Act and Section 14(e) of the Williams Act.  Walleye Trading LLC v. AbbVie, Inc., No. 18 C 05114, 2019 WL 4464392 (N.D. Ill. Sept. 18, 2019).  Plaintiff alleged that the company’s statement announcing the preliminary results of a tender offer contained misrepresentations regarding the number of shares tendered and the price per share at which the tendered shares would be acquired, which later had to be corrected in a revised statement.  The Court held that plaintiff failed to allege that the alleged misrepresentation was false when made or to adequately allege a strong inference of scienter.

On September 18, 2019, Judge Edward M. Chen of the United States District Court for the Northern District of California dismissed a putative class action against a digital payment services company and certain of its officers asserting claims under Section 10(b) of the Securities Exchange Act.  Sgarlata v. PayPal Holdings, Inc., 17-CV-06956-EMC (N.D. Cal. Sept. 18, 2019).  Plaintiffs alleged that the company made misrepresentations in a series of press releases regarding a data breach.  The Court held that plaintiffs’ allegations were insufficient to raise a strong inference of scienter. 

On August 29, 2019, Judge Jesse M. Furman of the U.S. District Court for the Southern District of New York dismissed most of the securities fraud claims in a putative class action against a major industrial conglomerate (the “Company”), and certain of its current and former executives, brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.  AP-Fonden v. Gen. Elec. Co., 2019 BL 325702 (S.D.N.Y. Aug. 29, 2019).  Plaintiffs alleged defendants concealed performance problems in the Company’s insurance and power divisions.  The Court found, among other things, that plaintiffs did not adequately plead claims based upon allegedly misrepresented liabilities in the Company’s long-term care (“LTC”) insurance portfolio.  The Court did not, however, dismiss plaintiffs’ claim that the Company failed to disclose that it used “factoring” arrangements to generate current revenue by selling future revenues to third parties.

On August 28, 2019, Judge Lorna G. Schofield of the United States District Court for the Southern District of New York dismissed a putative class action against the digital services and development company Synacor, Inc. and certain of its officers asserting claims under Section 10(b) of the Securities Exchange Act of 1934.  Lefkowitz, et al. v. Synacor, Inc., et al., 18-CV-2979 (LGS) (S.D.N.Y. Aug. 28, 2019).  Plaintiffs alleged misrepresentations regarding revenue projections relating to a contract with a major customer, the customer’s control over monetizing the contract and weaknesses in the company’s internal controls for financial reporting.  The Court held that the alleged misrepresentations in question were either not actionable or were inadequately pleaded with respect to scienter, and therefore dismissed the complaint in its entirety, but granted leave to replead. 

On August 29, 2019, Judge K. Michael Moore of the United States District Court for the Southern District of Florida dismissed a putative class action against National Beverage Corporation and certain of its officers asserting claims under Section 10(b) of the Securities Exchange Act of 1934.  Luczak v. National Beverage Corporation, et al., 18-cv-61631-KMM (S.D. Fla. Aug. 29, 2019).  Plaintiff alleged that defendants’ public statements contained misrepresentations regarding the company’s main product (a brand of sparkling water), the use of purportedly unique proprietary methods to drive growth, and sexual harassment allegations with respect to the company’s CEO.  The Court held that the alleged misrepresentations were inadequately pleaded with respect to either falsity, scienter or loss causation, and therefore dismissed the complaint in its entirety.

​On August 19, 2019, Judge Richard Bennett of the United States District Court for the District of Maryland dismissed a putative securities class action involving claims brought under Sections 10(b), 20(a) and 20A of the Securities Exchange Act of 1934 (the “Exchange Act”) against a sports apparel company (the “Company”) and one of its executives.  In re Under Armour Securities Litigation, No. 17-cv-00388 (D. Md. Aug. 19, 2019).  Plaintiffs alleged that the Company misrepresented its financial health by concealing that consumer demand had declined and the Company had resorted to discounting to prop up its sales.  In a prior decision, the Court had dismissed plaintiffs’ claims but permitted plaintiffs to replead the Exchange Act claims to attempt to plead scienter.  The Court held, however, that plaintiffs’ further amended complaint suffered from the same defects as their prior complaint, and therefore dismissed the action with prejudice.

On August 19, 2019, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal by a Northern District of Texas court of a putative securities class action asserting a Section 10(b) claim under the Securities Exchange Act of 1934 (the “Exchange Act”) against a home furnishings retailer (the “Company”) and two of its senior officers.  Municipal Employees’ Retirement System of Michigan v. Pier 1 Imports Inc. et al., No. 18-10998 (5th Cir. Aug. 19, 2019).  Plaintiff alleged that defendants failed to disclose that the Company’s inventory was too high and was subject to significant “markdown risk” because it had too much inventory that was too “seasonal” and “subject to changing consumer tastes.”  The Court affirmed the district court’s decision that plaintiff’s allegations did not adequately support the required strong inference of scienter.

On August 12, 2019, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California dismissed without leave to amend a putative securities class action against a pharmaceutical company, and certain of its officers, under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.  New York Hotel Trades Council & Hotel Assoc. of N.Y.C., Inc. Pension Fund v. Impax Laboratories Inc., No. 16 Civ. 6577 (N.D. Cal. Aug. 12, 2019).  As to alleged misrepresentations regarding alleged price fixing, the Court held that the announcement of a government investigation cannot, as a matter of law, amount to a “corrective disclosure” sufficient to allege loss causation.  As to other alleged misrepresentations regarding price erosion as to certain drugs, the Court held that plaintiff failed to plead a false statement, materiality, and/or scienter.    

On August 6, 2019, Judge Katherine S. Hayden of the United States District Court for the District of New Jersey denied a motion to dismiss a putative securities class action asserting claims under Sections 10(b) and 14(a) of the Securities Exchange Act of 1934, and Rules 10b-5 and 14a-9 promulgated thereunder.  In re Allergan Generic Drug Pricing Sec. Litig., No. 16- CV-9449, 2019 WL 3562134 (D.N.J. Aug. 6, 2019).  Plaintiffs alleged that a pharmaceutical company and several of its executives participated in a price-fixing conspiracy that caused the prices of six generic drugs sold by the company to increase dramatically during the alleged class period—as ultimately revealed through a U.S. Department of Justice investigation—and that defendants made material misstatements and omissions regarding the alleged conspiracy.  The Court held that plaintiffs adequately pleaded their claims, including with respect to material misstatements, scienter and loss causation.

On August 6, 2019, Judge Edward R. Korman of the United States District Court for the Eastern District of New York dismissed a putative securities class action asserting claims against a pharmaceutical company and certain of its officers under Section 10(b) of the Securities Exchange Act of 1934.  In re Aceto Corp. Sec. Litig., No. 18-CV-2425 (ERK-AYS) (E.D.N.Y. Aug. 6, 2019).  Plaintiff alleged that defendants made misrepresentations in connection with disclosures concerning the company’s compliance with internal controls, earnings forecasts, and regarding the valuation of goodwill and intangible assets.  The Court held that the complaint failed to plead an actionable misstatement or scienter, but granted leave to replead.

On July 12, 2019, Judge Valerie Caproni of the United States District Court for the Southern District of New York dismissed a putative securities class action brought against the building materials company Cemex and certain of its officers, asserting claims under the Securities Exchange Act of 1934.  Schiro v. Cemex, S.A.B. de C.V., No. 18-CV-2352 (VEC), 2019 WL 3066487 (S.D.N.Y. July 12, 2019).  Plaintiffs alleged that defendants misrepresented the company’s internal controls and compliance with anti-bribery laws and failed to disclose an alleged bribery scheme involving the company’s Colombian subsidiary.  The Court held the misrepresentations in question were either not actionable or were inadequately pleaded with respect to scienter, and therefore dismissed the complaint in its entirety, while granting leave for plaintiffs to amend.

On July 11, 2019, Justice Andrew Borrok of the New York State Supreme Court, County of New York, Commercial Division, dismissed a putative securities class action against a Brazilian based online retailer (the “Company”), certain of its executives and directors, and its underwriters in connection with the Company’s initial public offering (“IPO”).  In re Netshoes Sec. Litig., Index No. 157435/2018 (Sup. Ct., N.Y. Cty., July 11, 2019).  Plaintiffs—purchasers of the Company’s stock—brought claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”), claiming that defendants made materially false and misleading statements in a registration statement filed with the SEC in connection with the IPO.  The Court dismissed the Securities Act claims without prejudice, finding that the allegations were inactionable opinions under the Supreme Court’s decision in Omnicare, Inc. v. Laborers Dist. Council Const. Indus., 135 S. Ct. 1318 (2015), or were inactionable because they were about past performance, were forward-looking, or were expressions of puffery.

On July 16, 2019, the United States Court of Appeals for the Fifth Circuit affirmed a decision by the United States District Court for the Northern District of Texas that dismissed a putative class action against the oil and gas pipeline operator Plains All American Pipeline, certain of its officers, directors and related parties, and the underwriters for the securities offerings at issue.  Police & Fire Ret. Sys. of the City of Detroit v. Plains All Am. Pipeline, L.P., —Fed. App’x—, 2019 WL 3213543, slip. op. (5th Cir. 2019).  As discussed in our prior post, plaintiffs, investors who purchased equity and debt instruments issued by entities affiliated with Plains All American Pipeline in seven different public offerings, brought claims under the Securities Exchange Act of 1934 and the Securities Act of 1933, alleging that statements regarding the company’s compliance program were false in light of events surrounding a May 2015 oil spill.  The district court dismissed plaintiffs’ second amended complaint with prejudice, finding that plaintiffs either did not allege an actionable misstatement or did not sufficiently plead scienter.  The Fifth Circuit affirmed.

On June 25, 2019, Judge Arthur Spatt of the United States District Court for the Eastern District of New York dismissed with prejudice a putative securities class action brought by investors in a mutual fund asserting violations of the Securities Act of 1933 (“Securities Act”) against the fund’s registrant, certain executives, investment advisor, and underwriter.  Emerson v. Mutual Fund Series Trust, No. 2:17-CV-02565 (ADS) (GRB), 2019 WL 2601664 (E.D.N.Y. June 25, 2019).  Plaintiffs alleged that the fund’s offering materials misrepresented that the fund was low-risk, when in fact it engaged in speculative investments that exposed the fund to substantial downside risk in rising markets.  Id. at *1.  The Court held that the complaint alleged “no actionable misstatements or omissions,” and dismissed the complaint with prejudice.  Id. at *15.

On June 14, 2019, Judge William Alsup of the United States District Court for the Northern District of California dismissed a putative class action against a cybersecurity company (the “Company”) and certain of its executives. SEB Inv. Mgmt. AB v. Symantec Corp., No. 18-02902 (N.D. Cal. June 14, 2019). After the Company announced that its audit committee had commenced an internal investigation and had voluntarily contacted the SEC after a former employee raised unspecified concerns, plaintiff, an investor in the Company, alleged that defendants made misrepresentations in connection with the Company’s growth as a result of its acquisition of two security firms, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. The Court held that plaintiff failed to allege actionable material misrepresentations and/or scienter as to various categories of alleged misstatements, and dismissed the complaint without prejudice.
 

On June 11, 2019, Judge Colleen McMahon of the United States District Court for the Southern District of New York denied defendants’ motion for judgment on the pleadings in a putative securities class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against a jewelry retailer (the “Company”) and certain of its senior executives.  In re Signet Jewelers Limited Sec. Litig., No. 16-cv-6728, 2019 WL 2428529 at *1 (S.D.N.Y. Nov. 26, 2018).  Plaintiff alleged that certain declarations filed in connection with a separate gender discrimination case rendered false and misleading the Company’s public statements about its commitment to preventing gender discrimination.  Rejecting defendants’ argument that the Company’s statements were inactionable puffery, the Court ruled that plaintiff had adequately pleaded that the statements were material because, among other things, they appeared to be directly and specifically at odds with the conduct alleged in the complaint.
 

On June 3, 2019, Judge Analisa Torres of the United States District Court for the Southern District of New York dismissed a putative class action against the mining company Rio Tinto and certain of its executives.  Colbert v. Rio Tinto plc, 17 Civ. 8169 (AT) (DCF) (S.D.N.Y. June 3, 2019).  Plaintiff—purportedly on behalf of a class of purchasers of Rio Tinto’s American Depositary Receipts (“ADRs”)—alleged that defendants made misrepresentations regarding Rio Tinto’s investment and mining operations in Mozambique, in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder.  The Court held that certain of plaintiff’s claims were time-barred and the remaining claims failed to adequately allege an actionable misrepresentation or scienter.

On May 15, 2019, the United States Court of Appeals for the Fifth Circuit partially revived a securities fraud suit brought by a doctor and his business partner against two former business associates under the Securities Exchange Act of 1934 (the “Exchange Act”).  Masel v. Villarreal, —F.3d—, 2019 WL 2120536 (5th Cir. May 15, 2019).  Plaintiffs alleged that defendants induced them to enter into a joint business enterprise through material misrepresentations and omissions about the effectiveness of defendants’ medical billing service.  The Court held that the complaint adequately stated a claim against one of the individual defendants and her associated business entities, but that it was properly dismissed as to another individual defendant.

On April 30, 2019, the United States District Court for the District of Massachusetts granted a motion to dismiss a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder against a biopharmaceutical company (the “Company”) and certain of its executives, and claims under Section 20(a) of the Exchange Act against the executives.  In re Ocular Therapeutix, Inc. Securities Litigation, No. 17-CV-12288 (D. Mass. Apr. 30, 2019).  Plaintiffs alleged that defendants made misstatements regarding manufacturing issues with respect to an ocular pain drug developed by the Company.  The Court held that plaintiffs failed to adequately allege actionable misstatements or omissions and scienter, and granted the motion to dismiss.

On May 7, 2019, the United States Court of Appeals for the Second Circuit summarily affirmed the judgment by Judge Edgardo Ramos of the United States District Court for the Southern District of New York granting defendants’ motion to dismiss in a putative securities class action.  In re Express Scripts Holdings Co. Securities Litigation No. 18-cv-1850 (2d Cir. May 7, 2019).  Plaintiffs alleged that defendants—a pharmacy benefit manager (“the Company”) and certain of its officers—violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) by making materially false or misleading statements in connection with the purchase or sale of securities.  As discussed in our prior post, the District Court granted defendants’ motion to dismiss, finding that plaintiffs did not adequately plead that defendants made any misleading statements or that defendants acted with the requisite scienter.  On appeal, plaintiffs argued that the District Court incorrectly held that the Amended Complaint failed to adequately allege that defendants made materially false and misleading statements and omission and acted with scienter.  The Second Circuit affirmed in a summary order.  Summary orders do not have binding precedential effect.

On April 29, 2019, the United States Court of Appeals for the Second Circuit affirmed the denial of plaintiffs’ motion for leave to file an amended complaint alleging securities fraud against an international pharmaceutical corporation (the “Company”) and several of its past and present executives.  Steamfitters’ Indus. Pension Fund v. Endo Int’l PLC, 18-1669-cv (2d Cir. Apr. 29, 2019).  Upon reviewing the district court’s decision de novo, the Second Circuit concluded that an amendment would be futile because the alleged misrepresentations and omissions contained in plaintiffs’ proposed amended complaint (the “Proposed Amended Complaint”) failed to allege any plausible violation of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5.

On April 23, 2019, the Supreme Court dismissed the writ of certiorari as “improvidently granted” in a closely-watched appeal raising the question whether an assertion of mere negligence is sufficient to plead and prove a claim under Section 14(e) of the Securities Exchange Act of 1934 and—perhaps—whether a private right of action exists under Section 14(e) at all.  Emulex Corporation, et al. v. Varjabedian, —U.S.—, slip op. (Apr. 23, 2019).  As discussed in our prior post, most of the oral argument concerned whether a private right of action under Section 14(e) exists, but some justices expressed concern over whether the Court should weigh in on that question because it was not presented below.

On April 19, 2019, Judge John C. Coughenour of the United States District Court for the Western District of Washington denied a motion to dismiss a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against Zillow Group, Inc. and certain of its executives.  In re Zillow Group, Inc. Securities Litig., No. C17-1387-JCC, 2019 WL 1755293 (W.D. Wash. Apr. 19, 2019).  Plaintiffs alleged misstatements by defendants regarding a Consumer Financial Protection Bureau (“CFPB”) investigation into, among other things, potential violations of the Real Estate Settlement Procedures Act (“RESPA”) that allegedly arose out of Zillow’s “co-marketing” program between real estate agents and mortgage lenders.  As discussed in our prior post, the Court had previously granted defendants’ motion to dismiss plaintiffs’ first amended complaint, but allowed plaintiffs leave to file a second amended complaint.  In considering the second amended complaint, the Court explained how plaintiffs had cured the defects the Court noted in its prior ruling regarding allegations of material misstatements and scienter.

On March 25, 2019, Judge Christina A. Snyder of the United States District Court for the Central District of California denied a motion to dismiss a class action filed against a Canadian silver company (the “Company”), current and former executives of the Company, and its auditor and tax consultant (the “Auditor”), alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  In Re Silver Wheaton Corp. Secs. Lit., No. 2:15-cv-05146; 2:15-cv-5173 (C.D. Cal. Mar. 25, 2019).  Plaintiffs allege defendants failed to disclose USD$207 million in Canadian tax liabilities and that the Auditor wrongfully issued clean audit opinions.  The Court held that plaintiffs sufficiently pleaded claims against all defendants.  Of particular note, while the Court acknowledged several hurdles that generally result in the dismissal of claims against auditors, it held that those hurdles had been surmounted by plaintiffs given the unique circumstances of the case.

On March 29, 2019, Judge Wiley Y. Daniel of the United States District Court for the District of Colorado dismissed with prejudice a putative securities class action asserting claims under the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against the restaurant chain Chipotle and certain of its executives.  Nardy v. Chipotle Mexican Grill, Inc., No. 1:17-cv-1760 (WYD) (STV), slip op. (D. Colo. Mar. 29, 2019), ECF No. 64.  Plaintiffs alleged that, in the wake of foodborne illness outbreaks at Chipotle restaurants, defendants made misrepresentations and omissions regarding the company’s compliance with food safety regulations and its implementation and training of employees on food safety practices.  The Court held that plaintiffs’ various allegations failed to assert actionable misrepresentations, or in certain cases did not adequately allege scienter, or loss causation.

On March 28, 2019, Judge William H. Pauley 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 the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against a pharmaceutical company and certain of its executives.  Gagnon v. Alkermes PLC, —F. Supp. 3d—, 2019 WL 1388700 (S.D.N.Y. Mar. 28, 2019).  Plaintiff alleged that defendants made misleading statements in investor and analyst calls and public filings concerning the efficacy of the company’s opioid-dependence drug Vivitrol and the reasons for increased revenue from Vivitrol, which plaintiff alleged actually resulted from deceptive marketing and lobbying tactics.  Id. at *2.  The Court held that all but one of the alleged misstatements were not actionable, and as to the one actionable misstatement, plaintiff had failed to adequately allege scienter.  Because the Court had previously given plaintiff an opportunity to replead, the action was dismissed with prejudice.

On March 28, 2019, Judge Ronnie Abrams of the United States District Court for the Southern District of New York largely denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  In re Global Brokerage, Inc., 17-cv-00916 (RA) (S.D.N.Y. Mar. 28, 2019).  Plaintiffs principally alleged that defendants, a foreign exchange trading and services company and certain of its executives, made misleading statements or omissions regarding (a) the company’s reliance on an agency-trading model and (b) the nature of payments the company received from another company, “Effex,” that had been spun-off from the defendant company.  The Court had dismissed plaintiffs’ prior amended complaint without prejudice, holding, inter alia, that plaintiffs had not adequately alleged scienter.  The Court held, however, that plaintiffs’ second amended complaint adequately alleged actionable misrepresentations and scienter as to the majority of claims and all but one individual defendant.

On March 29, 2019, Judge J. Paul Oetken of the United States District Court for the Southern District of New York partially granted a motion to dismiss claims under the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in a putative class action against a pharmaceutical company and certain of its executives.  In re Mylan N.V. Securities Litigation, No. 16-cv-7926 (JPO) (S.D.N.Y. Mar. 29, 2019).  Plaintiffs alleged that defendants made misleading statements regarding, among other things, an alleged rebate scheme involving the company’s EpiPen, and the alleged inflation of prices for various generic drugs.  After the Court dismissed in part plaintiffs’ first amended complaint as noted in our prior post, plaintiffs filed a second amended complaint that added an executive as a defendant, new allegations to support scienter for previously dismissed claims, a new alleged corrective disclosure in support of loss causation arguments, and additional claims asserting fraud based on the failure to disclose illegal anticompetitive misconduct.  The Court held certain of plaintiffs’ new allegations based on anticompetitive behavior were inadequately pleaded but permitted one claim to go forward, and also held that certain new allegations of scienter were sufficient.

On March 15, 2019, Judge Edward M. Chen of the United States District for the Northern District of California dismissed a putative class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against a camera technology company (“Company”), along with its officers and executives.  Park v. GoPro, Inc., et. al., 18-cv-00193-EMC (N.D. Cal. Mar. 15, 2019).  Plaintiffs claimed defendants made false statements during an earnings call following the announcement of the Company’s results for the third quarter of the 2017 fiscal year (“Q3 2017”), and engaged in suspicious stock transactions.  The Court dismissed the action on the ground that plaintiffs did not adequately plead falsity or scienter.

On March 8, 2019, Judge William H. Pauley of the United States District Court for the Southern District of New York granted a motion to dismiss an action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against a provider of logistics to automobile manufacturers and certain of the company’s officers.  River Birch Capital, LLC, v. Jack Cooper Holdings Corp., No. 17-CV-9193, 2019 WL 1099943 (S.D.N.Y. Mar. 8, 2019).  The Court held that plaintiff failed to allege any actionable misstatements or omissions and, further, that plaintiff failed to adequately allege scienter.  Because the Court had previously given plaintiff an opportunity to replead, the action was dismissed with prejudice.

On March 5, 2019, the United States Court of Appeals for the Second Circuit affirmed the dismissal of a putative securities class action against Cigna and several of its officers.  Minohor Singh v. Cigna Corporation, et al., No. 17-CV-3484 (2d Cir. Mar. 5, 2019).  Plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by making a series of materially misleading statements concerning Cigna’s compliance with regulatory requirements.  Defendants filed a motion to dismiss.  Judge Vanessa L. Bryant of the United States District Court for the District of Connecticut granted the motion, holding that plaintiffs did not adequately allege material misstatements and scienter.  Plaintiffs appealed.  The Second Circuit affirmed, emphatically, agreeing that plaintiffs failed to adequately plead actionable material misrepresentations. 

On March 1, 2019, the United States Court of Appeals for the Eighth Circuit reversed the dismissal of a class action arising from the merger of a biotechnical company (“Biotech Company”) and a cancer-diagnostics company (“Diagnostics Company”) against the Biotech Company, its former president, and the company that was formed by the merger (“Post-Merger Company”).  Campbell v. Transgenomic, Inc., No. 18-2198, 2019 WL 983676 (8th Cir. Mar. 1, 2019).  Plaintiffs, former shareholders of the Biotech Company, allege that defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act (“Exchange Act”), and Rule 14a-9 promulgated thereunder, by providing a materially false and misleading proxy statement to shareholders that failed to accurately convey the value of the Diagnostics Company.  Judge John M. Gerrard of the United States District Court for the District of Nebraska dismissed the case and held that the alleged misstatements and omissions were immaterial as a matter of law.  Plaintiffs appealed and the Eighth Circuit reversed the judgment, holding that whether the alleged misstatements and omissions were material was a question for the trier of fact.

On February 22, 2019, Judge Kevin McNulty of the United States District Court for the District of New Jersey granted defendants’ motion to dismiss a putative class action against an Israeli-based technology company (“Company”) and its senior officers, asserting violations of Sections 10(b) and 20(a) of the Exchange Act of 1934, and Rule 10b-5. Padgett v. RIT Techs. Ltd., No. 2:16-cv-4579, 2019 WL 913154 (D.N.J. Feb. 22, 2019). Plaintiffs alleged defendants failed to disclose the extent of the Company’s reliance on an agreement with a non-exclusive distributor to provide its products and services in the Commonwealth of Independent States region (“CIS”). The Court dismissed the amended complaint without prejudice, holding that plaintiffs failed to adequately allege how defendants’ public statements and failure to use specific adjectives to characterize the distributor were misleading to investors.

On February 13, 2019, United States District Judge William H. Pauley III of the United States District Court for the Southern District of New York dismissed a putative securities class action against clinical stage biopharmaceutical company New Link Genetics Corporation (the “Company”) and its co-founders.  Nguyen and Nguyen v. New Link Genetics Corp., et al., No. 16-cv-03545 (S.D.N.Y. Feb. 13, 2019).  Plaintiffs contended that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making a series of alleged misrepresentations regarding the development of the Company’s flagship pancreatic cancer drug that “painted a rosier picture for investors, who were misled into thinking the drug would obtain FDA approval.”  The Court dismissed without prejudice plaintiffs’ initial complaint, finding that, although plaintiffs adequately pled falsity concerning one alleged misstatement, plaintiffs had not sufficiently pled falsity as to any other statement and, in any event, failed to sufficiently plead loss causation for any of the alleged misstatements.  Having reviewed plaintiffs’ amended complaint and defendants’ motion to dismiss that complaint, the Court again dismissed plaintiffs’ claims, holding that plaintiffs’ new allegations regarding misstatements failed to sufficiently plead falsity and that plaintiffs’ loss causation allegations “merely parrot” the defective allegations in their previous complaint. 

On December 13, 2018, Judge Manuel L. Real of the United States District Court for the Central District of California granted defendants’ motion to dismiss plaintiffs’ first amended complaint asserting claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).  Steamfitters Local 449 Pension Plan v. Molina Healthcare, Inc., No. CV 18-3579-R, 2018 WL 6787349, at *1 (C.D. Cal. Dec. 13, 2018).  Defendants are a company that provides managed health care services (“the Company”) and certain of its senior executives.  Plaintiffs alleged that defendants repeatedly claimed that their existing administrative infrastructure was scalable and could handle an increase in business generated from its entry into the Affordable Care Act (“ACA”) marketplace, even though they allegedly knew that this statement was not true.  The Court dismissed the action, holding that the alleged misstatements were protected as a matter of law by the Private Securities Litigation Reform Act’s (“PSLRA”) safe harbor for forward-looking statements.

On December 26, 2018, the United States Court of Appeals for the Third Circuit affirmed in part and vacated in part the dismissal of a putative securities class action against M&T Bank Corporation (the “Company”) and certain of its officers and directors.  Jaroslawicz v. M&T Bank Corp., et al., No. 17-3695 (3d Cir. Dec. 26, 2018).  Plaintiffs alleged that defendants violated Section 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 14a-9 by making misleading omissions in joint proxy statement materials (“Joint Proxy”) leading up to the merger of the Company with another consumer bank.  The alleged omissions concerned two non-compliant practices: “(1) M&T’s having advertised no-fee checking accounts but later switching those accounts to fee-based accounts (the ‘consumer violations’); and (2) deficiencies in M&T’s Bank Secrecy Act/anti-money laundering compliance program, particularly its ‘Know Your Customer’ program (the ‘BSA/AML deficiencies’).”  The United States District Court for the District of Delaware dismissed plaintiffs’ first and second amended complaints for failing to plausibly allege an actionable omission.  Plaintiffs appealed to the Third Circuit.

On December 10, 2018, Judge Timothy J. Savage of the United States District Court for the Eastern District of Pennsylvania denied in large part defendants’ motion to dismiss a putative class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Sections 11 and 20 of the Securities Act of 1933 (the “Securities Act”).  SEB Inv. Mgmt. AB v. Endo Int’l, PLC, No. 17-cv-03711 (E.D. Pa. Dec. 10, 2018).  The Court held that plaintiffs adequately pled that the corporate defendant, a global pharmaceutical company (the “Company”), and five of the ten officers against whom plaintiffs asserted Exchange Act claims (collectively, the “Exchange Act Defendants”), misrepresented and omitted material facts regarding the abuse-deterrent properties of the opioid pills manufactured by the Company, such that plaintiffs could maintain an action under Section 10(b).  Furthermore, the Court concluded that plaintiffs also adequately alleged Securities Act claims against the Company and nine of its officers (the “Securities Act Defendants”) on largely similar grounds.

On December 6, 2018, Chief Judge Patti Saris of the United States District Court for the District of Massachusetts dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against the early-stage biopharmaceutical company Genocea Biosciences, Inc. and certain of its officers and directors. Emerson v. Genocea Biosciences, Inc., No. 17-12137-PBS (D. Mass. Dec. 6, 2018). Plaintiffs alleged that Genocea omitted to disclose to investors certain six-month post-dosing clinical trial test results because it knew the results to be negative, thereby causing class members to purchase Genocea stock at an inflated price. The Court dismissed the action, holding that the alleged omissions were not material and that other disclosures weighed against finding the required strong inference of scienter.

On December 3, 2018, the Supreme Court heard argument on an appeal in a case where a divided panel of the D.C. Circuit held that a defendant who did not “make” a misstatement within the meaning of Janus Capital Group v. First Derivative Traders, 564 U.S. 135, 142 (2011), nonetheless could be liable for participating in a “scheme” to defraud under Section 10(b) of the Exchange Act, SEC Rule 10-b5 promulgated thereunder, and Section 17(a) of the Securities Act, by disseminating with fraudulent intent a misstatement made by someone else.  See Lorenzo v. S.E.C., No. 17-1077. 

On November 26, 2018, Judge Colleen McMahon of the United States District Court for the Southern District of New York denied a motion to dismiss a putative securities class action against Signet Jewelers Limited (the “Company”) and certain of its officers and directors.  In re Signet Jewelers Limited Sec. Litig., No. 16-cv-6728 (S.D.N.Y. Nov. 26, 2018).  Plaintiffs—purchasers of the Company’s shares between August 2013 and March 2018—claimed that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially false and misleading statements relating to (1) the health and management of the Company’s credit portfolio and (2) the Company’s corporate culture of “pervasive” sexual harassment, leading to a sharp drop in the Company’s share price when the truth allegedly was revealed.  The Court held that plaintiffs adequately alleged false and misleading statements, scienter and loss causation, and denied defendants’ motion to dismiss.

On November 27, 2018, Judge Edward M. Chen 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 securities class action against Yelp, Inc. (the “Company”) and several of its senior officers.  Azar v. Yelp, Inc., No. 18-cv-00400 (N.D. Cal. Nov. 27, 2018).  Plaintiffs—purchasers of Company stock between February 10, 2017 and May 9, 2017—alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially false and misleading statements regarding the Company’s expected revenues in relation to its advertising program with local businesses, leading to a drop in the Company’s stock price when the Company subsequently made downward adjustments to its projections in May 2017.  The Court held that while certain of the Company’s statements were protected by safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), other alleged statements were actionable misrepresentations.  The Court also held that plaintiffs adequately pleaded scienter and loss causation.  The Court thus granted in part and denied in part defendants’ motion to dismiss.

On November 19, 2018, the United States Court of Appeals for the Second Circuit summarily affirmed the grant of summary judgment in a securities class action in favor of a financial institution (the “Company”), several of its officer and directors, and the underwriters of the Company’s April 2008 offering.  In re Barclays Bank PLC Sec. Litig., No. 17-3293-CV, 2018 WL 6040846 (2d Cir. Nov. 19, 2018), as amended (Nov. 20, 2018).  Plaintiff, on behalf of purchasers of the Company’s April 8, 2008 Series 5 offering of American Depository Shares (“ADS”), alleged that those securities were issued pursuant to materially false and misleading offering materials, and brought claims against a group of defendants under Sections 11 and 15 of the Securities Act of 1933 (“Securities Act”).  Judge Paul A. Crotty of the United States District Court for the Southern District of New York granted summary judgment in favor of defendants-appellees, finding that (i) the Company had no duty to disclose the allegedly omitted information and (ii) the Company established its negative causation affirmative defense—i.e., that the alleged omissions did not cause plaintiff’s losses.  Plaintiff appealed and the Second Circuit affirmed in a summary order.   Summary orders do not have binding precedential effect.

On November 14, 2018, the United States Court of Appeals for the Third Circuit affirmed the dismissal of and denial of leave to amend a putative class action complaint against Altisource Asset Management Corporation (“AAMC”) and certain of its former directors and officers under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Plaintiffs alleged that AAMC — a provider of asset management and corporate governance advising services related to mortgage servicing — made material misstatements concerning its relationships with the mortgage servicing company Ocwen Financial Corporation (“Ocwen”) and certain affiliated companies. City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp., —F. Supp. 3d—, 2018 WL 5931509 (3d Cir. Nov. 14, 2018). The appealed order was a July 5, 2017 decision of the District Court of the Virgin Islands that rejected plaintiffs’ motion to amend for the reasons noted in the District Court’s April 6, 2017 motion to dismiss decision, as reviewed in our prior post.

On October 26, 2018, Judge Thomas D. Schroeder of the United States District Court for the Middle District of North Carolina dismissed a putative class action brought against a biopharmaceutical company (the “Company”) and certain of its officers and directors under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Hirtenstein v. Cempra, Inc., No. 16-cv-1303 (M.D.N.C. Oct. 26, 2018). Plaintiffs sought to recover for alleged stock losses occurring after the Company allegedly failed to disclose risks associated with an experimental antibiotic used to treat pneumonia. The Court dismissed the action, finding that the challenged statements about the drug’s safety constituted opinions and plaintiffs’ allegations of motive were insufficient to establish a strong inference of scienter.

On October 10, 2018, Judge Paul G. Gardephe of the United States District Court for the Southern District of New York issued a memorandum opinion and order setting forth the reasoning for his September 30, 2018, dismissal of a putative securities class action against SuperCom Inc. (the “Company”), an Israeli manufacturer of electronic identification and location tracking products, and certain of its officers and directors.  In re SuperCom Inc. Sec. Litig., No. 20-cv-9650 (S.D.N.Y. Oct. 10, 2018).  Plaintiffs—purchasers of the Company’s common stock during a ten-month putative class period—alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) as a result of defendants allegedly making materially false and misleading statements regarding the Company’s revenue and earnings projections for 2015, which plaintiffs allege led to a 40% decline in the Company’s stock price when the Company subsequently announced lower-than-expected financial results.  The Court disagreed, finding that the alleged misstatements are protected by the Private Securities Litigation Reform Act of 1995 ( “PSLRA”) safe harbor because plaintiffs either failed to adequately allege material misstatements or failed to adequately allege the requisite scienter necessary to support their claims.

On October 9, 2018, Judge Richard Seeborg of the United States District Court for the Northern District of California dismissed with prejudice a putative class action against a solar energy company (the “Company”) and certain of its officers under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In re SunPower Corp. Secs. Litig., No. 16-cv-04710-RS (N.D. Cal. Oct. 9, 2018). Plaintiffs alleged the Company misrepresented demand for its projects by failing to report that an extension of an investment tax credit (“ITC”) and other tax rules would decrease demand in the near-term. Observing that the gravamen of the complaint is that the Company made bad predictions, the Court dismissed the action because plaintiffs failed to identify a material misrepresentation or omission and failed to plead facts sufficient to give rise to a strong inference of scienter, as required by the Private Security Litigation Reform Act (“PSLRA”).

On October 4, 2018, Magistrate Judge Bruce Reinhart of the United States District Court for the Southern District of Florida granted in part and denied in part a motion to dismiss claims asserted under Rule 10b-5 of the Securities Exchange Act of 1934 by certain investment funds against Ocwen Financial Corporation.  Owl Creek I, L.P. v. Ocwen Financial Corp., No. 18-80506-CIV (Oct. 4, 2018).  Plaintiffs alleged that Ocwen and certain of its executives induced plaintiffs to invest by making inaccurate statements regarding Ocwen’s financial statements, its purported regulatory compliance, and the effectiveness of its internal controls and procedures.  The Court dismissed claims based on statements in one conference call due to lack of scienter, but otherwise denied defendants’ motion.

On September 30, 2018, Judge Andrea R. Wood of the United States District Court for the Northern District of Illinois dismissed a putative shareholder class action against VASCO Data Security International, Inc. and certain of its officers. Plaintiff asserted claims under Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Rossbach v. VASCO Data Sec., Int’l, 2018 WL 4699796, (N.D. Ill. Sept. 30, 2018). Plaintiff alleged that VASCO made a number of misstatements suggesting that revenue sources other than the company’s largest client were stronger than they really were. When the company disclosed that the revenue associated with those other products and services remained essentially flat, the stock price allegedly fell. The Court held that plaintiff’s amended complaint failed to adequately allege a false statement or scienter. Plaintiff was, however, granted leave to file a second amended complaint.

On October 2, 2018, Judge John C. Coughenour of the United States District Court for the Western District of Washington dismissed a putative class action against Zillow Group, Inc. and certain of its executives asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  In re Zillow Group, Inc. Securities Litigation, No. C17-1387-JCC (W.D. Wash. Oct. 2, 2018).  Plaintiffs alleged misstatements by defendants regarding a Consumer Financial Protection Bureau (“CFPB”) investigation into, among other things, potential violations of the Real Estate Settlement Procedures Act (“RESPA”) arising out of Zillow’s “co-marketing” program between real estate agents and mortgage lenders.  The Court dismissed the action for failure to adequately allege material misstatements or scienter, but granted plaintiffs leave to amend.

 

On October 3, 2018, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal of a putative securities class action against Whole Foods Market, Inc. and certain of its executives under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  Emps.’ Ret. Sys. of the State of Haw. v. Whole Foods Mkt., Inc., —F.3d—, 2018 WL 4770729 (5th Cir. Oct. 3, 2018).  In connection with various regulatory investigations, Whole Foods admitted to mislabeling prepackaged foods such that it charged consumers for more food than the packages actually contained.  Plaintiffs alleged that, by virtue of those “weights and measures” violations, the company had made three categories of misstatements to investors:  (1) statements touting the company’s price competitiveness or efforts to increase its price competitiveness; (2) statements about the company’s commitment to transparency, quality, and corporate responsibility; and (3) statements announcing the company’s revenues, which plaintiffs alleged were artificially inflated as a result of the mislabeled packaging.  The Court held that the first two categories of allegations did not constitute material representations, and the third did not cause plaintiffs’ alleged loss.

On September 27, 2018, the United States Court of Appeals for the Sixth Circuit reversed the dismissal of a putative securities class action against pharmaceutical company Esperion Therapeutics, Inc. (the “Company”) and its CEO.  Dougherty v. Esperion Therapeutics, Inc., et al., No. 17-1701 (6th Cir. Sept. 27, 2018).  Plaintiffs, investors in the Company, alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) by falsely stating that, based on feedback received by the Company at a meeting with the Food and Drug Administration (the “FDA”), the FDA would not require additional testing of the Company’s pre-approval anti-cholesterol drug ETC-1002.  The Company’s stock price allegedly plummeted when, over a month later, the Company issued a press release indicating that, according to the FDA’s own final meeting minutes which had just been provided to the Company, additional testing would be required prior to any approval of the drug.  The United States District
Court for the Eastern District of Michigan had dismissed plaintiffs’ complaint, finding that plaintiffs failed to adequately plead a strong inference of scienter because they failed to identify facts demonstrating that defendants actually understood the FDA’s communications in a way that was different than what the Company publicly disclosed, and that defendants had not been reckless.  Plaintiffs appealed, and the Sixth Circuit reversed.

On September 25, 2018, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California dismissed a putative securities class action against Netflix, Inc. (the “Company”), its CEO and CFO.  Ziolkowski v. Netflix, Inc., et al., No. 17-cv-01070 (N.D. Cal Sept. 25, 2018).  Plaintiffs—purchasers of the Company’s common stock during the proposed class period—claimed that the Company violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially false and misleading statements and omissions in order to minimize the effects of a recently enacted pricing increase on subscription figures.  In dismissing the complaint without prejudice, the Court held that plaintiffs failed to adequately allege any untrue statement of material fact and also failed to adequately allege scienter.

On September 7, 2018, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California dismissed a putative class action against Impax Laboratories and certain of its officers under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder alleging that the company made material misstatements regarding (1) the cause of substantial price increases for two generic drugs and (2) trends associated with other drugs.  Fleming v. Impax Labs. Inc., No. 16 Civ. 6577 (N.D. Cal. Sept. 7, 2018).  The Court held that (a) the allegations regarding drug price increases adequately pleaded a material misstatement, but insufficiently alleged scienter or loss causation, and (b) the allegations regarding trends failed to plead either a material misstatement or scienter.  Plaintiff was, however, granted leave to replead.

On August 24, 2018, Judge Karen Gren Scholer of the United States District Court for the Northern District of Texas dismissed with prejudice a putative securities class action against an educational services company (“the Company”), certain of its officers and directors, and the underwriters of its November 2015 initial public offering (the “IPO”).  David M. Stein v. Match Group Inc., No. 3:16-cv-00549 (N.D. Tex.).  Plaintiffs—investors in the IPO—claimed that defendants violated Sections 11 and 15 of the Securities Act of 1933 because the offering documents for the IPO allegedly contained material misstatements and omissions concerning expected sales and revenues from one of the Company’s business segments and failed to disclose certain information as required by Items 303 and 503 of Regulation S-K.  The Court held that plaintiffs had failed to plausibly allege any untrue statement of material fact because the alleged misrepresentations were accurate statements of historical results.  The Court also held that plaintiffs failed to allege a known trend that was required to be disclosed under Item 303 and failed to allege a significant risk factor that was required to be disclosed under Item 503.

On August 24, 2018, Judge Charles Breyer of the United States District Court for the Northern District of California dismissed with leave to amend a putative class action against an electric car manufacturer (the “Company”), its Chief Executive Officer, and its Chief Financial Officer for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5.  Wochos v. Tesla, Inc., et al., No. 17-cv-05828 (N.D. Cal. Aug. 24, 2018).  Plaintiffs alleged that defendants made false and misleading statements regarding production projections for the Company’s Model 3 that it failed to meet.  Stating that “[f]ederal securities laws do not punish companies for failing to achieve targets,” the Court held that the challenged statements were protected by the safe harbor provision of the Private Security Litigation Reform Act of 1995 (“PSLRA”) because they were forward-looking and accompanied by meaningful cautionary language.

On August 23, 2018, Judge F. Dennis Saylor IV of the United States District Court for the District of Massachusetts dismissed the claims asserted in a putative class action against ReWalk Robotics and its officers, directors, and IPO underwriters under the Securities Act of 1933 (“Securities Act”) for misrepresentations made in a registration statement with prejudice, but dismissed the claims asserted under the Securities Exchange Act of 1934 (“Exchange Act”) for alleged post-IPO misstatements without prejudice.  Yan v. ReWalk Robotics Ltd., No. 17 Civ. 10169, slip op. (D. Mass. Aug. 23, 2018), ECF No. 107.

On August 21, 2018, Judge Kevin McNulty of the United States District Court for the District of New Jersey dismissed a putative class action against Galena Biopharma Inc. and several of its officers and employees that alleged defendants failed to make appropriate disclosures about the source of revenues associated with an opioid pain medication manufactured by Galena.  In re Galena Biopharma, Inc. Sec. Litig., 2018 WL 3993453 (D.N.J. Aug. 21, 2018).  Plaintiffs alleged that these omissions violated Item 303 of SEC Regulation S-K or, in the alternative, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder.  The Court held that, although plaintiffs had “identified several troubling practices regarding Galena,” the complaint failed to state a securities fraud claim and dismissed the complaint with leave to replead.

On August 10, 2018, Judge Kimba M. Wood of the United States District Court for the Southern District of New York dismissed a putative securities class action against foreign exchange trading company FXCM Inc. (“FXCM” or the “Company”) and its CEO.  Ret. Bd. of the Policemen’s Annuity and Benefit Fund of Chicago v. FXCM, No. 15-cv-03599 (S.D.N.Y. Aug. 10, 2018).  Plaintiff alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 by making material misstatements and omissions concerning certain risks associated with the Company’s business model.  The Court held that the alleged misrepresentations were inactionable “puffery,” too vague to be actionable, or were not misleading because the alleged risks were adequately disclosed when the Company’s disclosures were viewed as a whole.  The Court also held that plaintiff had failed to allege a strong inference of scienter.

On August 2, 2018, Chief Judge Thomas A. Varlan of the United States District Court for the Eastern District of Tennessee dismissed in part a putative securities class action against KPMG, LLP asserting claims under Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder.  Plaintiffs alleged that defendant KPMG, as independent auditor to Miller Energy Resources, Inc., allowed Miller Energy to file financial statements with the SEC that were not in compliance with generally accepted accounting principles (“GAAP”), generally accepted auditing standards (“GAAS”), and standards set by the Public Company Accounting Oversight Board (“PCAOB”), because the statements overstated the value of Miller Energy’s Alaskan energy interests.  Cosby v. KPMG, LLP, No. 3:16-cv-121 (E.D. Tenn. Aug. 2, 2018).  Of note, the Court held that while plaintiffs’ allegations stated a claim under Rule 10b-5(b), they did not support a claim for “scheme liability” under Rule 10b-5(a) and (c) because KPMG’s claimed role in the scheme was too remote.

On June 19, 2018, Judge Lee H. Rosenthal of the United States District Court for the Southern District of Texas dismissed with leave to amend a putative securities class action against Anadarko Petroleum Corporation (“Anadarko” or the “Company”) and certain of its officers. Edgar v. Anadarko Petroleum Corp., et al., No. 17-1372 (S.D. Tex., June 19, 2018). Plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5 by allegedly making material misstatements about the safety of its gas wells and compliance with regulatory requirements. The Court found all but one of the alleged misstatements was not actionable because they amounted to opinions and “corporate cheerleading.” Although the Court found one alleged misstatement actionable, it held that the complaint failed to establish scienter, and granted leave to amend the complaint.

On June 19, 2018, Judge Gonzalo P. Curiel of the United States District Court for the Southern District of California dismissed a securities class action alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against BofI Holding, Inc. (“BofI” or “Company”), an online bank, and certain of its officers and directors. Mandalevy v. BofI Holding Inc. et al., No. 3:17-cv-00667 (S.D. Cal., June 19, 2018). The complaint’s allegations were based on public articles and a whistleblower complaint accusing the Company of making loans to “criminals and politically exposed persons” and announced regulatory activities. The Court dismissed the complaint, among other reasons, for failure to allege loss causation. Relying on the principles of the efficient market theory, the Court held that corrective disclosures generally cannot be based on already public information and that even information available only through Freedom of Information Act (“FOIA”) requests to regulators is considered to be publicly available.

On June 18, 2018, Judge William G. Young of the United States District Court for the District of Massachusetts dismissed with prejudice a putative securities class action against Acacia Communications, Inc. (the “Company”), certain of its officers, certain sellers of the Company’s common stock in connection with its secondary offering, and the underwriters for the Company’s secondary offering.

On June 11, 2018, Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York dismissed with prejudice a putative securities fraud class action against veterinary pharmaceutical company Aratana Therapeutics Inc.

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On June 4, 2018, Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California dismissed with prejudice a class action alleging that Dynavax Technologies Corporation (“Dynavax” or the “Company”) and its executives violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 by alleging omitting information about its hepatitis B vaccine.  In re Dynavax Securities Litigation, No. 4:16-cv-06690-YGR (N.D. Cal. June 4, 2018).  The Court’s decision is another in a long line of decisions declining to find a securities violation when a pharmaceutical company is alleged to have concealed adverse developments in clinical trials.

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On May 22, 2018, Judge Edgardo Ramos of the United States District Court for the Southern District of New York dismissed with prejudice a putative securities fraud class action against pharmacy benefits manager Express Scripts Holding Company (“Express Scripts” or “Company”) and several of its current and former officers.  In re Express Scripts Holding Co. Secs. Litig., No. 1:16-cv-03338 (S.D.N.Y. May 22, 2018).  Plaintiff—a shareholder of Express Scripts—alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making affirmative misstatements concerning negotiations to renew the contract with its largest customer, Anthem, Inc. (“Anthem”), allegedly causing Plaintiff to suffer losses when the truth was revealed and Company’s stock price declined.  The Court disagreed, finding that plaintiff failed to plausibly allege that the Company did not believe its statements regarding its relationship with Anthem, and as a result dismissed the second amended complaint with prejudice. 

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​On May 11, 2018, the United States Court of Appeals for the Tenth Circuit affirmed the district court’s dismissal of a putative class action asserting claims under Sections 10(b) and 20(a) of the Exchange Act against Williams Companies, Inc. (“Williams” or the “Company”), its CEO, CFO, and certain affiliates.  Emps.’ Ret. Sys. of R.I. v. Williams Cos., et al., No. 17-5034 (10th Cir. May 11, 2018).  The claims alleged in the complaint related to an unconsummated merger between Williams, an energy company, and its affiliate, Williams Partners L.P. (“WPZ”), and the Company’s subsequent agreement to merge with a competing energy company, Energy Transfer Equity L.P. (“ETE”).  Plaintiff alleged that the Company misled investors by describing its proposed merger with WPZ, of which Williams held 60% of the units, as “no risk,” and by failing to disclose its merger discussions with ETE.  The Court rejected both arguments and affirmed the district court’s dismissal, reasoning that plaintiff had taken the alleged misstatement out of context, and that it otherwise failed to allege a basis for requiring the disclosure of the merger discussions with ETE. 

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On Monday, April 30, 2018, Judge Robin L. Rosenberg of the United States District Court for the Southern District of Florida dismissed a consolidated putative securities class action against financial services company Ocwen Financial Corporation (the “Company”) and two of its officers.  Carvelli et al. v. Ocwen Financial Corp. et al., No. 9:17-cv-80500 (S.D. Fla. April 30, 2018).  Plaintiffs—shareholders of the Company—alleged that defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5, and that the individual defendants violated Section 20(a) of the Exchange Act, by making materially false and misleading statements and omissions regarding operational and technological deficiencies within the Company’s mortgage servicing software platform, causing losses to plaintiffs when the deficiencies were revealed and the Company’s stock declined.  The Court disagreed, finding that the statements in question were non-actionable puffery or opinion, forward-looking statements accompanied by meaningful cautionary statements, or statements on their face not false, and therefore dismissed the action with prejudice.

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On April 20, 2018, Judge William H. Pauley III of the United States District Court for the Southern District of New York dismissed a class action against defendants GFI Group, Inc. (“GFI”) and certain executives of GFI, alleging securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5.  Gross v. GFI Group, Inc. et al., No. 1:14-cv-09438 (S.D.N.Y. Apr. 20, 2018).  Plaintiffs alleged that the defendants deceived shareholders by falsely representing in a press release that a takeover bid by CME Group (“CME”) was a “singular and unique” opportunity and implying that the CME deal was the best possible deal for GFI shareholders when it knew there were alternative potential bidders.  In fact, another bidder later waged a hostile takeover, which led GFI’s stock price to surge after plaintiffs sold their stock.  The Court granted defendants’ motion for summary judgment, holding that a proxy statement related to the proposed CME deal defeated plaintiffs’ ability to prove scienter.

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On April 10, 2018, the United States Court of Appeals for the Second Circuit revived and remanded to state court a putative class action brought against AXA Equitable Life Insurance Company.  O’Donnell v. AXA Equitable Life Ins. Co., No. 17-1085, 2018 WL 1720808 (2d Cir. 2018).  Plaintiff, a holder of a variable deferred annuity policy from defendant, brought a putative class action against defendant in Connecticut state court alleging breach of contract based on defendant’s alleged failure to obtain prior written approval before implementing a “volatility management strategy” that affected the performance of the annuity.  Defendant removed the case to the United States District Court of Connecticut, where it successfully moved to transfer the action to the United States District Court for the Southern District of New York (“SDNY”).  The district court denied plaintiff’s motion to remand the action to state court and granted defendant’s cross-motion to dismiss the case as being precluded under the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”).  The Second Circuit reversed, holding that a security holder’s passive retention of a security following an alleged misrepresentation of which the holder is unaware does not meet the requirement that an alleged misstatement be made “in connection with” the purchase or sale of a security under SLUSA, and instructed the district court to remand the action to Connecticut state court.

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On March 30, 2018, the United States District Court for the Southern District of New York dismissed with prejudice a class action complaint against Embraer S.A. (“Embraer” or the “Company”) and several of its officers, alleging securities fraud under Sections 10(b) and 20(a) of Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5.  Employees Retirement System of the City of Providence, et al. v. Embraer S.A., et al., No. 16-cv-06277 (S.D.N.Y. Mar. 30, 2018).  Plaintiff alleged that the Company made false or misleading statements about and/or failed to disclose violations of the Foreign Corrupt Practices Act (“FCPA”).  The Court dismissed the claims, finding that the Company did not have a duty to disclose uncharged, unadjudicated wrongdoing and that the Company’s disclosures about the government investigation adequately addressed the risks that could result from a finding of unlawful conduct.
 

On March 28, 2018, Judge J. Paul Oetken 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 against Mylan N.V. and several of its officers asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Section 1 of the Israeli Securities Law of 1968.  In re Mylan N.V. Securities Litigation, 16 Civ. 7926 (JPO) (S.D.N.Y. Mar. 28, 2018).  Plaintiffs alleged that Mylan (which is dual listed on NASDAQ and the Tel Aviv Stock Exchange) misclassified its drug EpiPen for purposes of Medicaid rebates; entered into anticompetitive agreements to inflate drug prices; and made materially misleading statements to investors about its conduct.  While the Court dismissed the Israeli securities law claims “in the interests of international comity,” the Court found that most of the Exchange Act claims were adequately pleaded.

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On March 22, 2018, Judge Katherine Polk Failla of the United States District Court for the Southern District of New York dismissed a putative securities class action against Chipotle Mexican Grill, Inc. (“Chipotle”), its two former co-CEOs, and its CFO.  Ong v. Chipotle Mexican Grill, Inc. et al., No. 1:16-cv-141-KPF (S.D.N.Y. March 22, 2018).  Plaintiffs—shareholders of Chipotle who allegedly purchased the company’s shares between February 5, 2015 and February 2, 2016—alleged that the company and the individual defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) by failing to disclose in securities filing and press releases certain attendant risks in the fast-food chain’s produce processing and food-safety procedures, allegedly causing plaintiffs to suffer losses when Chipotle’s stock dropped after a series of food-borne illness outbreaks occurred in 2014 and 2015.  The Court disagreed, finding that while it was “as concerned as the parties about food-borne illness outbreaks,” plaintiffs had not adequately pleaded securities fraud, and dismissed plaintiffs’ second amended complaint (“SAC”) with prejudice.

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On March 8, 2018, the United States District Court for the Middle District of Tennessee dismissed a consolidated class action alleging securities fraud claims under Section 10(b) and 20(a) of the Securities Exchange Act against Dollar General Corporation (“Dollar General”), and certain of its executives.  Iron Worker Local Union No. 405 Annuity Fund, et al. v. Dollar General Corporation, et al., No. 3:17-cv-00063 (M.D. Tenn., Mar. 8, 2018).  Plaintiffs alleged defendants misled investors about the negative impact reductions to government benefits, including Supplemental Nutrition Assistance Program (“SNAP”) benefits, would have on Dollar General’s business.  The Court held, among other things, that defendants sufficiently disclosed the importance of SNAP recipients to Dollar General’s business, the impact of an earlier reduction in SNAP benefits did not render the impact of a later change to benefits foreseeable, and that risk factors accompanying optimistic projections rendered certain forward-looking statements inactionable.

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On March 2, 2018, Judge Charles R. Breyer of the United States District Court for the Northern District of California granted defendants’ request for reconsideration of a motion to dismiss a putative class action brought against Volkswagen Aktiengesellschaf (“VW AG”), Volkswagen Group of America, Inc. (“VWGoA”), Volkswagen Group of America Finance, LLC (“VWGoAF”), and former executives of VW AG and VWGoA.  In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, MDL No. 2672 CRB (JSC) (N.D. Cal. Mar. 2, 2018).  Plaintiff had alleged that defendants failed to disclose Volkswagen’s use of “defeat device” software to mask emissions in the company’s diesel engines, in violation of Section 10(b) of the Securities Exchange Act of 1934.  In its previous July 19, 2017 order, the Court dismissed certain claims but found that plaintiff could rely on a presumption of reliance under Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972), because plaintiff primarily alleged omissions as opposed to misstatements.  Defendants asked the Court to reconsider that ruling in light of the Second Circuit’s November 2017 decision in Waggoner v. Barclays PLC, 875 F.3d 79 (2d Cir. Nov. 6, 2017)—which held that the Affiliated Ute presumption does not apply when the only omission alleged is the omission of the truth that an affirmative misstatement misrepresented.  The Court did so, agreed with Waggoner, and dismissed plaintiff’s remaining claims for failure to adequately plead reliance.

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On February 26, 2018, the United States Court of Appeals for the Fifth Circuit affirmed in a per curiam unpublished decision the dismissal of a putative securities class action against UBS AG and certain affiliated entities.  Giancarlo, et al. v. UBS Financial Services Inc., et al., No. 16-20663 (5th Cir. Feb. 26, 2018).  Plaintiffs—former clients of a defendant UBS affiliate who invested in former energy giant Enron using the UBS affiliate as their broker—alleged that defendants violated Section 10(b) of the Securities Exchange Act by failing to disclose information purportedly revealing problems with Enron’s accounting, leading to alleged losses when Enron’s precarious financial position was uncovered in November 2001.  The United States District Court for the Southern District of Texas dismissed plaintiffs’ claims, finding that plaintiffs failed to plead facts demonstrating that defendants’ separate corporate status should be disregarded, and thus had failed to adequately plead their “single, fully integrated entity” theory of liability.  The District Court further found that plaintiffs had failed to identify specific brokers or allege facts demonstrating that each broker had an intent to deceive, manipulate, or defraud.  The Fifth Circuit agreed, holding that plaintiffs had failed to meet the heightened specificity requirements for pleading securities fraud under Federal Rule of Civil Procedure 9(b), noting that plaintiffs had not adequately alleged that defendants had knowledge of Enron’s practices, nor a duty to disclose such information to plaintiffs.   

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On February 27, 2018, Judge Naomi Reice Buchwald of the United States District Court for the Southern District of New York dismissed with prejudice a putative securities fraud action brought against Chinese mobile internet service provider NQ Mobile, Inc. (“NQ”) and its CEO and Vice President.  Finocchiaro, et al v. NQ Mobile Inc., et al., No. 1:15-cv-06385 (S.D.N.Y. Feb. 27, 2018).  Plaintiffs—shareholders of NQ—alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act by making affirmative misstatements about NQ’s value and failing to disclose to investors certain material facts relating to NQ’s corporate acquisition strategy, allegedly causing plaintiffs to suffer losses when the truth was revealed and NQ’s stock dropped.  The Court held that the alleged affirmative misrepresentation was mere puffery which plaintiffs could not have reasonably relied upon and that the alleged material omissions were in fact properly disclosed.  Accordingly, the Court dismissed the complaint with prejudice. 

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On February 12, 2018, Judge Samuel Der-Yeghiayan of the United States District Court for the Northern District of Illinois denied a motion to dismiss a putative class action under the Securities Exchange Act of 1934 against Treehouse Foods, Inc. (“TreeHouse”) and certain TreeHouse executives.  Public Employees’ Retirement System of Mississippi v. TreeHouse Foods, Inc. et al., 16 C 10632 (N.D. Ill. Feb. 12, 2018).  Plaintiff alleged that TreeHouse, a manufacturer of store brand food products for grocery stores, materially misrepresented that its acquisitions of Flagstone Foods and the “Private Brands” business of ConAgra Foods, Inc. were successful.  The Court denied the motion to dismiss, holding among other things that plaintiff adequately alleged that defendants made actionable misstatements.

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On January 30, 2018, Judge John R. Tunheim of the United States District Court for the District of Minnesota granted class certification in a consolidated securities fraud class action against Medtronic and certain of its officers and employees.  West Virginia Pipe Trades Health & Welfare Fund v. Medtronic, Inc., et al., No. 13-cv-01686-JRT-FLN (D. Minn. Jan. 30, 2018).  Plaintiffs—institutional investors who purchased Medtronic stock during the proposed class period—allege that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by manipulating early clinical studies of INFUSE, an alternative to replacement bone-tissue graft, by knowingly concealing adverse side effects observed in clinical trials, and by failing to sufficiently disclose that it paid physician authors a total of $210 million to publish positive articles about INFUSE in medical journals.  Plaintiffs allege that Medtronic’s deception artificially inflated the company’s stock price, causing a large stock drop in August 2011, when the truth was revealed through a corrective disclosure.  Plaintiffs sought to certify a class of all purchasers of Medtronic stock between September 8, 2010 and August 3, 2011.  The Court certified the class, but shortened the class period end date to June 3, 2011, which is the date of the initial corrective disclosure.

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On December 18, 2017, Judge Aleta A. Trauger of the United States District Court for the Middle District of Tennessee denied a motion to dismiss a putative class action under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) filed against CoreCivic—a publicly traded real estate investment trust that operates private prisons—and certain CoreCivic executives.  Grae v. Corr. Corp. of Am., No. 3:16-CV-2267, 2017 WL 6442145 (M.D. Tenn. Dec. 18, 2017).  Plaintiffs alleged that CoreCivic and the individual defendants made and authorized numerous false and misleading statements concerning the quality of CoreCivic’s operations and how those operations complied with standards set by the U.S. Federal Bureau of Prisons (“BOP”) despite being on notice that their operations failed to so comply in numerous instances, and that defendants’ statements were later contradicted by a United States Department of Justice Office of Inspector General (“OIG”) audit report and a memorandum by then–Deputy Attorney General Sally Q. Yates critical of the private prison industry, causing CoreCivic’s stock price to plummet more than 50% in eight days.  In denying defendants’ motion to dismiss, the Court held that the totality of plaintiffs’ allegations sufficiently supported their “central theory of liability.”

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On December 5, 2017, the United States District Court for the Northern District of California denied class certification in a putative securities fraud class action against Finisar Corporation (“Finisar”), a technology company focused on fiber optic subsystems, and its current chairman/CEO and former CEO, in which plaintiffs alleged that defendants misled investors by denying that Finisar’s revenue growth was the result of inventory build-up by customers.  In re Finisar Corporation Securities Litigation, No. 5:11-cv-01252-EJD (N.D. Cal. Dec. 5, 2017).  In denying plaintiffs’ motion for class certification, the Court ruled that defendants successfully rebutted the fraud-on-the-market presumption of reliance by demonstrating that defendants’ statements had no statistically significant impact on Finisar’s stock price.

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On December 6, 2017, the United States District Court for the Northern District of Illinois dismissed a securities fraud lawsuit brought against DeVry Education Group, Inc. and several of its executives (“DeVry”), with leave to amend, because plaintiffs failed to sufficiently plead that DeVry executives knowingly misrepresented the employment rates and placement statistics of DeVry University (“DVU”) graduates in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Pension Trust Fund for Operating Engineers v. DeVry Education Group, Inc., No. 16 Civ. 5198 (N.D. Ill. Dec. 6, 2017).  The Court held that the Private Securities Litigation Reform Act of 1995 (“PSLRA”) requires plaintiffs to set forth “particularized factual allegations” that do more than show the “plausibility or reasonableness” of scienter allegations and that the complaint, which relied heavily on earlier lawsuits by regulators, failed to meet this standard.  The decision serves as a reminder that securities lawsuits often fail when they attempt to piggy-back on lawsuits filed by government regulators or other stakeholders.

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On October 20, 2017, Judge Michael M. Anello of the United States District Court for the Southern District of California denied in part and granted in part a motion to dismiss brought by Qualcomm, Inc. (the “Company”), its CEO, and four directors, in response to a shareholder lawsuit.  3226701 Canada, Inc. v. Qualcomm, Inc., Case No. 15-cv-2678-MMA (WVG) (S.D. Cal. Oct. 20, 2017).  Plaintiff alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), as well as violations of SEC Rule 10b-5, in connection with statements made by the Company and its directors regarding one of its microprocessors used in smartphones and other mobile devices.  The Court held that plaintiff had adequately pleaded falsity and scienter in connection with some of the alleged statements, but that other statements were not actionable.  The Court allowed the claims against the CEO and the Company to proceed, but dismissed the claims against the four directors.

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On October 18, 2017, Judge Ricardo S. Martinez of the United States District Court for the Western District of Washington dismissed with leave to amend a consolidated amended complaint asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against Seattle Genetics, Inc. (the “Company”) and certain of its current and former executives (the “Individual Defendants”).  Patel v. Seattle Genetics Inc., No. C17-41RSM (W.D. Wash. Oct. 18, 2017).  Based largely on information obtained from a confidential witness, the complaint alleged that defendants misled investors by claiming that the Company’s cancer treatment drug did not cause a toxic side effect on a patient’s liver, while failing to disclose that certain patients in a clinical trial had already experienced liver toxicity (hepatotoxicity).  Although the Court found that plaintiff adequately alleged a material omission, it dismissed the complaint for failure to plead scienter because, in the Court’s opinion, the Individual Defendants’ general knowledge of the Company’s day-to-day business was insufficient to impute to them knowledge about potential problems with hepatotoxicity in a clinical trial. 

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Resolution of whether Item 303 of Securities and Exchange Commission Regulation S-K creates an affirmative duty to disclose and a private right of enforcement under the Securities Exchange Act of 1934 will have to wait.  On October 17, 2017, the Supreme Court of the United States removed argument in Leidos, Inc. v. Indiana Public Retirement System, et al., 583 U.S. __, 16-581 (Oct. 17, 2017), from its calendar and held further proceedings in abeyance.  Leidos is an appeal in a putative shareholder class action alleging violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder against government contractor Leidos, Inc. (“Leidos”).  See U.S. Supreme Court To Consider Registrant’s Liability For Non-Disclosure Under Item 303 Of Regulation S-K, Shearman & Sterling LLP Need to Know Litig. Newsletter (Apr. 4, 2017), http://www.lit-sl.shearman.com/us-supreme-court-to-consider-registrantrsquos-lia.  The Court granted certiorari on March 27, 2017, merits briefing was completed on October 2, 2017, and the Court had set oral argument for November 6, 2017.  In their October 6, 2017, joint motion noting an agreement in principle to settle, the parties stated that they were preparing settlement documentation and will ask the Court to reschedule argument for October Term 2018 if a final settlement is not approved by May 31, 2018.

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On September 22, 2017, United States District Judge Alison J. Nathan of the United States District Court for the Southern District of New York dismissed with prejudice an amended consolidated putative class action complaint asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against Eros International Plc (“Eros”) and certain of its current and former executives.  In re Eros Int’l Sec. Litig., No. 15-cv-8956-AJN (S.D.N.Y. Sept. 22, 2017).  The complaint alleged that defendants deceived investors by touting growth in the number of “registered users” of Eros’s video streaming service, many of whom could not actually use the service, and also by overstating the number of annual releases in its video library.  In dismissing the action, the Court found that plaintiffs’ own definition of an otherwise undefined term could not make a statement actionable when other definitions of those terms were equally plausible.

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On October 2, 2017, Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California dismissed with prejudice a putative securities fraud class action against Nimble Storage, Inc. (“Nimble”), a flash storage technology company, and several of its officers.  In re. Nimble Storage Secs. Litig., No. 15-cv-05803 (N.D. Cal., Oct. 2, 2017).  Plaintiffs alleged that Defendants misrepresented Nimble’s prospects and financial condition in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  The Court found that Nimble’s statements about growth were not misleading because they were accompanied by sales and profit data, which accurately reported the company’s condition to the public.

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On September 19, 2017, Judge Andrew L. Carter, Jr. of the United States District Court for the Southern District of New York allowed a putative securities fraud class action to proceed against VEON Ltd. (“VEON”), a telecommunications company formerly known as VimpelCom, and several of its current and former executives, denying in large part the company’s motion to dismiss.  In re VEON Ltd. Sec. Litig., 15-cv-08672 (ALC) (S.D.N.Y. Sept. 19, 2017).  Plaintiffs brought claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) asserting that VEON’s failure to disclose in its SEC filings its admitted bribery scheme in Uzbekistan made the company’s statements about its growth materially misleading.  While VEON argued that plaintiffs’ claims were an impermissible attempt to enforce the Foreign Corrupt Practices Act (“FCPA”), for which there is no private right of action, the Court disagreed, holding that plaintiffs’ allegations were sufficiently distinct and sufficient to plead violations of Sections 10(b) and 20(a) of the Exchange Act.

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On September 12, 2017, United States District Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California dismissed without prejudice a consolidated putative class action against Dynavax Technologies Corporation and certain of its officers.  In re Dynavax Securities Litigation, No. 4:16-cv-06690-YGR (N.D. Cal. Sept. 12, 2017).  Plaintiff alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5, by knowingly or recklessly disseminating false and misleading statements about Dynavax’s developments and efforts to earn FDA approval of its proprietary hepatitis B vaccine.  The Court dismissed the consolidated complaint without prejudice, finding that plaintiff had not met the heightened pleading standards for securities fraud under the PSLRA.

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On September 6, 2017, Judge Fernando M. Olguin of the Central District of California granted in part and denied in part a motion by defendants to dismiss a putative securities fraud class action against Goldcorp, Inc., a gold mining company, its former CEO Charles A. Jeannes, and other current and former officers of Goldcorp.  Cowan v. Goldcorp, No. 16-CV-6391 (C.D. Cal. Sept. 6, 2017).  The complaint asserted that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by misleading investors about pollution levels at one of Goldcorp’s major mines in Mexico.  In denying in part and granting in part the motion to dismiss, the Court ruled that—with the exception of a statement by Goldcorp’s former CEO—the complaint failed to adequately allege a materially false or misleading statement, noting that the complaint relied extensively on allegations raised in a Reuters article and lacked any corroboration.
 

On September 6, 2017, Judge Andrew J. Guilford of the Central District of California denied motions to dismiss a putative securities class action asserting claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against Banc of California (“Banc”) and its former CEO, Steven Sugarman.  In re Banc of Cal. Sec. Litig., No. 17-CV-118 (C.D. Cal. Sept. 6, 2017).  Based largely on a short seller report published online, the complaint alleged among other things that defendants omitted information regarding Sugarman’s alleged financial and business ties to Jason Galanis, an individual who pled guilty to criminal securities fraud in connection with other companies.  In denying the motions to dismiss, the Court shed light on how courts might evaluate claims based on blog posts, an increasingly common basis for claims in securities cases.

On September 5, 2017, Judge Richard M. Berman of the United States District Court for the Southern District of New York dismissed a putative class action against Ambac Financial Group, Inc. (“Ambac”), asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.  Wilbush v. Ambac Fin. Grp., Inc., No. 16 Civ. 5076 (RMB), slip op. (S.D.N.Y. Sept. 5, 2017), ECF No. 41.  Plaintiff alleged that Ambac, an insurer, concealed its true credit risk and loss exposure to more than $10 billion in Puerto Rican bonds it insured.  The Court held that plaintiff failed to adequately allege actionable misstatements, and further that plaintiff’s allegations of scienter were insufficient, given that there was no indication that defendants had access to non-public information contradicting their public statements. 

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On August 24, 2017, Judge Alison J. Nathan of the United States District Court for the Southern District of New York dismissed with prejudice a putative securities class action against hotel chain La Quinta Holdings, Inc. (“La Quinta”), certain of its officers and directors, and La Quinta’s majority shareholder.  Police and Fire Retirement System of the City of Detroit v. La Quinta Holdings, Inc. et al, No. 16-cv-3068  (S.D.N.Y. Aug. 24, 2017).  Plaintiff claimed that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, based on various alleged misstatements and omissions that allegedly hid from the public operational and other difficulties facing La Quinta, including at the time of La Quinta’s secondary public offerings in November 2014 and April 2015.  The Court dismissed the second amended complaint in its entirety with prejudice, holding that the plaintiff failed to adequately plead a material misrepresentation or omission.

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On August 25, 2017, Judge Lee Yeakel of the United States District Court for the Western District of Texas dismissed with prejudice a putative securities class action against Whole Foods Market, Inc. and certain of its officers.  Markman v. Whole Foods Market Inc. et al, No. 1:15-cv-681-LY (W.D. Tex. Aug 25, 2017).  Plaintiffs alleged that defendants’ knowingly or recklessly engaged in a scheme to overcharge customers by placing inaccurate food-weight labels on prepackaged foods, thereby rendering Whole Foods’ financial statements false and misleading, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).  Lead plaintiffs—the Employees’ Retirement System of the State of Hawaii—filed a second amended complaint (“SAC”) after the Court dismissed their original complaint for failure to state a claim.  The Court held that the SAC failed to adequately plead a material misrepresentation or omission, scienter, and loss causation, and denied plaintiffs’ request for leave to amend the complaint again.

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On August 23, 2017, the United States Circuit Court of Appeals for the Third Circuit affirmed a district court decision dismissing a putative class action against Globus Medical, Inc. (“Globus” or the “Company”), a medical device company that designs, develops and sells musculoskeletal implants, and several individual officers.  Williams v. Globus Medical, Inc., No. 16-3607 (3d Cir. Aug. 23, 2017).  The lawsuit alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 based on allegations that the Company failed to disclose the termination of a distribution partnership or the impact the termination would have on its revenue projections.  The decision sheds light on how district courts in the Third Circuit should evaluate claims that are based on an alleged omission that, according to plaintiffs, rendered a prior disclosure inaccurate, incomplete or misleading, and also addresses the requirements for stating a claim based on allegedly misleading revenue projections.

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On August 22, 2017, the United States Court of Appeals for the First Circuit affirmed an order from the District of Massachusetts, dismissing a putative securities class action that asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder against drug maker Sarepta Therapeutics Inc. (“Sarepta”) and certain of its current and former officers.  Corban, et al. v. Sarepta Pharmaceutical Inc., et al., No. 16-1658 (1st Cir. Aug. 22, 2017).  The complaint alleged that Sarepta deceived investors about the significance of trial data for the company’s new muscular dystrophy drug, eteplirsen, and the likelihood that the company would obtain United States Food and Drug Administration (“FDA”) approval for that drug.  The First Circuit held that plaintiffs failed to plead a “cogent inference of scienter” that Sarepta misled investors, and also held that while opinions implying false facts may suffice to allege a fraud claim, the opinions at issue were insufficient because they “came replete with caveats.”

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On August 11, 2017, Judge Lucy H. Koh of the United States District Court for the Northern District of California dismissed a putative securities class action brought against SolarCity Corp. (“SolarCity”) and four of its senior officers that alleged the defendants made materially misleading misrepresentations in SolarCity’s SEC filings, written communications with investors, and quarterly earnings calls with analysts.  In re SolarCity Corp. Sec. Litig., No. 5:16-cv-4686, 2017 WL 3453387 (N.D. Cal. Aug. 11, 2017).  Plaintiffs asserted a claim under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder against all defendants, and a claim under Section 20(a) of the Exchange Act against the individual defendants.  In dismissing the complaint and granting leave to amend, the Court held that plaintiffs had not adequately alleged that any of the defendants had either made actionable false or misleading statements or acted with the requisite fraudulent intent.

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On August 10, 2017, Judge Sidney A. Fitzwater of the United States District Court for the Northern District of Texas dismissed a putative securities class action brought against Pier 1 Imports, Inc. (“Pier 1”) and its former CEO and CFO that alleged the defendants had misrepresented the company’s excess inventory and potential price markdown risk in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.  Town of Davie Police Pension Plan v. Pier 1 Imports, Inc. et al., No. 3:15-cv-3415-D, 2017 WL 3437215 (N.D. Tex. Aug. 10, 2017).  The Court held that the plaintiffs had failed to plead that defendants had either misrepresented Pier 1 inventory or intended to do so.

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On August 4, 2017, United States District Judge David O. Carter of the United States District Court for the Central District of California denied a motion to dismiss a putative securities fraud class action against El Pollo Loco Holdings, Inc. (“EPL”), certain of its directors and officers, and EPL’s controlling shareholders.  Turocy, et al. v. El Pollo Loco Holdings, Inc., et al., No. SACV-15-1343-DOC (C.D. Cal. Aug. 4, 2017).  Plaintiffs alleged that defendants violated Sections 10(b), 20(a) and/or 20A of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5, by failing to disclose material facts and making materially false or misleading statements as part of a scheme to artificially inflate the stock price of EPL between May 15, 2015 and August 13, 2015, and/or selling their personally held shares in EPL shortly after making the alleged false or misleading statements despite having not sold any shares during the previous six months and not selling the shares pursuant to any Rule 10b5-1 trading plan.  After dismissing without prejudice the original and amended complaints in this action, the Court held that plaintiffs sufficiently alleged misstatements and a strong inference that defendants were aware of the falsity of such statements, and denied defendants’ motion to dismiss the third amended complaint.

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On July 28, 2017, the United States Circuit Court of Appeals for the Ninth Circuit reversed a district court decision dismissing a putative class action lawsuit against Quality Systems, Inc., (“QSI” or the “Company”), a company that develops and markets management software for medical and dental providers, and several of its officers.  In re Quality Systems, Inc. Secs. Litig., No. 15-55173 (9th Cir. July 28, 2017).  Plaintiffs brought a putative shareholder class action against defendants alleging violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 in connection with statements made over the course of several months regarding the Company’s past and projected sales as well as guidance given to investors about the Company’s projected growth and revenue.  The Ninth Circuit reversed, finding that many of the defendants’ statements “mixed” forward and non-forward looking statements and holding for the first time in the Ninth Circuit that it is appropriate to consider the forward and non-forward looking aspects of a “mixed” statement separately when evaluating a securities claim.

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On July 26, 2017, Judge Claudia Wilken of the United States District Court for the Northern District of California denied a motion to dismiss a putative securities class action alleging that GoPro, Inc. (“GoPro”), its CEO, Nicholas Woodman, and other GoPro executives described in the Complaint but not named as defendants, had violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and misleading statements regarding the rollout of a new camera and line of airborne drones.  Bielousov v. GoPro, Inc., No. 16-CV-06654-CW, 2017 WL 3168522 (N.D. Cal. July 26, 2017).  In so doing, the Court found that plaintiff had adequately alleged that a statement by GoPro’s CFO that “we believe” GoPro is “on track to make” its 2016 revenue guidance, was not covered by the safe harbor provision of the Private Securities Litigation Reform Act of 1995 and, along with certain other representations, was false and mischaracterized the new drone’s availability and capabilities.

On July 19, 2017, Judge Charles R. Breyer of the United States District Court for the Northern District of California partially dismissed a putative class action against Volkswagen Aktiengesellschaf (“VW AG”), Volkswagen Group of America, Inc. (“VWGoA”), Volkswagen Group of America Finance, LLC (“VWGoAF”), and former executives of VW AG and VWGoA.  In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, And Products Liability Litigation, MDL No. 2762 CRB (JSC) (N.D. Cal. July 19, 2017).  Plaintiffs are institutional investors who purchased bonds offered by VWGoAF.  VWGoAF is a wholly-owned subsidiary of VWGoA, and the bonds were guaranteed by VW AG, the ultimate parent of VWGoA and VWGoAF.  Plaintiffs alleged that defendants failed to disclose Volkswagen’s use of “defeat device” software to mask emissions in the company’s diesel engines, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).  The Court concluded that plaintiffs had plausibly alleged that the bond offering memorandum was misleading, and that some, but not all, of the defendants made statements and omissions in the offering memorandum with scienter.

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On June 28, 2017, Judge Charles R. Breyer of the United States District Court for the Northern District of California ruled, among other things, that allegations of knowledge of “defeat devices” did not equate to knowledge of the probability of exposure from the devices and granted in part a motion to dismiss a putative securities class action against Volkswagen Aktiengesellschaft and certain of its affiliates (“VW”) and officers and directors, asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder, as well as additional “control person” claims against the officers and directors under Section 20(a) of the Exchange Act.  In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, MDL No. 2672 CRB (JSC), 2017 WL 2798525 (N.D. Cal. June 28, 2017).  Plaintiffs alleged that VW’s financial statements and statements regarding its U.S. vehicles’ compliance with diesel emissions standards were misleading because VW had failed to disclose, in various manners, that it had been using “defeat device” software to manipulate emissions tests in vehicles sold in the United States.  After plaintiffs were given leave to replead following an earlier motion to dismiss, the Court held that the amended complaint’s allegations supported claims regarding financial statements after May 2014, but dismissed claims regarding earlier alleged misstatements.  In addition, the Court dismissed claims against one individual defendant for failure to sufficiently allege scienter and “control.”

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On June 21, 2017, the United States Court of Appeals for the Second Circuit affirmed a lower court’s decision dismissing a putative class action asserting claims under the Securities Act of 1933 (the “Securities Act”) against Vivint Solar, Inc. (“Vivint”), certain of its officers and directors, and the underwriters of its October 2014 initial public offering (“IPO”).  Stadnick v. Vivint Solar, Inc., No. 16-65 (2d Cir. June 21, 2017).  On appeal, plaintiff relied on the decision of the United States Court of Appeals for the First Circuit in Shaw v. Digital Equipment Corp., 82 F.3d 1194 (1st Cir. 1996), to argue that Vivint was obligated to disclose in its IPO prospectus and registration statement financial information for the quarter that ended the day before the IPO because, according to plaintiff, the company’s performance during that time constituted an “extreme departure” from past performance.  In affirming the district court’s dismissal, the court declined to follow Shaw, holding instead that the issue of whether Vivint had an obligation to disclose the information should be based on whether the allegedly omitted information would have “significantly altered the total mix of information made available” at the time of the offering.

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On June 14, 2017, Judge Ricardo S. Martinez of the United States District Court for the Western District of Washington denied a motion to dismiss a putative securities fraud class action against Juno Therapeutics, Inc. (“Juno” or the “Company”), a biopharmaceutical corporation, and certain of its senior officers.  In re Juno Therapeutics, Inc., No. 16 Civ. 1069 (W.D. Wash. June 14, 2017).  In their complaint, plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by repeatedly touting positive results from the first phase of a clinical trial for a new cancer treatment, while failing to disclose certain negative outcomes associated with the second phase of a clinical trial.  In denying the motion to dismiss, the Court ruled that plaintiffs had adequately alleged that the omitted information was material to investors and that the defendants were deliberately reckless in failing to disclose it. 

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​On June 13, 2017, Judge Vernon S. Broderick of the United States District Court for the Southern District of New York dismissed a putative securities class action against gold mining and exploration company Pretium Resources, Inc. (“Pretium”) under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  In re Pretium Resources Inc. Sec. Litig., No. 13-CV-7552 (VSB), 2017 WL 2560005 (S.D.N.Y. June 13, 2017).  Plaintiffs alleged that Pretium’s press releases were misleading because they contained statements regarding a major gold exploration site that were contrary to views expressed to the company by its consultants.  The Court held that plaintiffs had failed to identify actionable misrepresentations or omissions and to adequately plead scienter. 

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On June 6, 2017, United States District Judge George A. O’Toole, Jr. of the United States District Court for the District of Massachusetts dismissed with prejudice a putative securities class action against Sonus Networks, Inc., its CEO and its CFO.  Sousa v. Sonus Networks, Inc., et al., No. 16-10657-GAO (D. Mass. June 6, 2017).  Plaintiffs alleged that defendants violated Sections 10(b) (and SEC Rule 10b-5 promulgated thereunder) of the Securities Exchange Act of 1934 (the “Exchange Act”), and separately alleged that the individual defendants violated Section 20(a) of the Exchange Act, by misleading investors regarding Sonus’ revenue projection for the first quarter of 2015.  The Court held that plaintiff had not met the heightened pleading standard for alleging securities fraud under the Private Securities Litigation Reform Act (“PSLRA”), finding that plaintiff had not sufficiently alleged a material misrepresentation or omission with respect to certain allegations and had not sufficiently alleged scienter with respect to other allegations.  

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On May 23, 2017, the United States Court of Appeals for the Third Circuit, in a non-precedential opinion, affirmed the dismissal of a putative securities fraud class action against Amarin Plc., a biopharmaceutical corporation, and certain of its officers.  In re Amarin Corp. Plc. Sec. Litig., No. 16-2640 (3d Cir. May 23, 2017).  Plaintiff alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) by intentionally misrepresenting the risk that the U.S. Food and Drug Administration (“FDA”) would require Amarin to complete an “outcomes study” in order to obtain approval of its drug Vascepa for the treatment of patients with elevated triglyceride levels.  In affirming the district court, the Third Circuit found that none of defendants’ statements identified in the complaint were misleading in the context in which they were made because reasonable investors understand there is “a continuous dialogue between the FDA and the proponent of a new drug.”

On May 23, 2017, Judge Victor Marrero of the United States District Court for the Southern District of New York denied in part and granted in part a motion to dismiss a putative securities class action against Inovalon Holdings, Inc. (“Inovalon”), six of Inovalon’s officers and directors (the “Individual Defendants”), and nine underwriters of Inovalon’s IPO (the “Underwriter Defendants”).  Xiang v. Inovalon Holdings, Inc., No. 16-CV-4923 (VM).  Plaintiffs asserted claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (“Securities Act”) on the basis of alleged misstatements in Inovalon’s IPO registration statement and prospectus.  The Court dismissed the Section 12 claims against the Individual Defendants and found the remaining claims to be adequately pleaded.

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On May 12, 2017, the United States Court of Appeals for the First Circuit affirmed the dismissal of a putative securities class action against biopharmaceutical company Biogen Inc. and three of its officers.  In Re: Biogen Inc. Sec. Litig., No. 16-1976, 2017 WL 1963468 (1st Cir. May 12, 2017).  Plaintiffs alleged that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) by concealing declining sales of multiple sclerosis drug Tecfidera following the death of a trial patient, leading to a stock drop when the company later reduced its growth forecasts for 2015.  The First Circuit, in affirming the prior ruling of United States District Judge F. Dennis Saylor, IV of the United States District Court for the District of Massachusetts dismissing the amended complaint with prejudice, held that although the amended complaint gave rise to a “plausible” inference of scienter on the part of defendants, it did not support a “strong” inference of scienter as required under the heightened pleading requirements of the Private Securities Litigation Reform Act (“PSLRA”).

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On May 1, 2017, Judge Jon Tigar of the United States District Court for the Northern District of California dismissed a putative securities fraud class action against GoPro, Inc. (“GoPro” or the “Company”) and certain executives, in which plaintiffs alleged that defendants made material misrepresentations about the strength of GoPro’s camera sales.  Bodri v. GoPro, Inc., No. 16-cv-00232-JST (N.D. Cal. May 1, 2017).  The Court dismissed the claims, stating that plaintiffs had taken defendants’ statements out of context and failed to point to any facts that made the statements false, and that certain of the statements were non-actionable “corporate puffery.”  This decision adds to the body of cases that caution against taking statements out of context and serves as a reminder that conclusory allegations of falsity without supporting facts will not survive dismissal.  

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On May 5, 2017, the United States Court of Appeals for the Ninth Circuit affirmed a lower court’s decision dismissing a putative securities fraud class action against orthodontics and dental products maker Align Technology, Inc., finding that plaintiff’s allegations failed to meet the falsity standard for statements of opinion established by the Supreme Court in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S. Ct. 1318 (2015).  City of Dearborn Heights Act 345 Policy & Fire Retirement Sys. v. Align Tech. Inc., No. 14-16814 (9th Cir. May 5, 2017).  Plaintiff alleged that Align and certain of its officers violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) by misleading investors about the goodwill valuation of a business unit of a company that it had recently purchased.  In affirming the district court’s decision that Align’s statements regarding goodwill were inactionable statements of opinion, the Ninth Circuit joined the Second Circuit in applying the Omnicare standard to Section 10(b) claims.

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On April 27, 2017, Judge Madeline Cox Arleo of the United States District Court for the District of New Jersey dismissed a putative securities fraud class action against Hertz Global Holdings, Inc. and certain of its executives, in which plaintiffs alleged that the company knew or consciously disregarded that statements made in multiple financial reports between 2011 and 2013 were false, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”).  In re Hertz Global Holdings, Inc. Sec. Litig., 2017 WL 1536223 (D.N.J. Apr. 27, 2017).  The Court had already dismissed this case twice without prejudice.  This time the Court dismissed the claims with prejudice.  

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On April 26, 2017, District Judge John F. Keenan of the United States District Court for the Southern District of New York granted in part and denied in part motions to dismiss brought by defendants Investment Technology Group, Inc. (“ITG” or “the company”), and three of its current and former executives.  In re: Investment Technology Group Inc., Case No. 1:15-cv-06369 (S.D.N.Y. April 26, 2017).  Plaintiff’s amended complaint alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5.  While the Court dismissed the claims against two individual defendants—ITG’s CFO and its General Counsel—on the ground that plaintiff failed to plead a strong inference of scienter as to those defendants, the Court allowed the plaintiff’s Section 10(b) claim against ITG and its former CEO to proceed, narrowing the claims to a five-month period in 2011 and holding that the alleged misstatements outside of the class period were not actionable.
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On April 21, 2017, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal of a shareholder class action lawsuit against certain officers and directors of ATP Oil & Gas Corporation (“ATP”).  Neiman et al. v. Buhlman et al., Case No. 15-31094 (5th Cir. Apr. 21, 2017).  Plaintiffs, who alleged that defendants misrepresented the production of a new oil well, the liquidity of the company, and the reason that the former CEO had resigned, brought claims under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5, as well as control-person claims under Section 20(a) of the Exchange Act.  The Fifth Circuit affirmed the Louisiana district court’s dismissal of plaintiffs’ Second Amended Complaint, holding that plaintiffs had failed to adequately plead scienter in support of each of their claims.

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On April 7, 2017, the United States Court of Appeals for the First Circuit affirmed the dismissal of a putative securities fraud class action against the biopharmaceutical developer Zafgen, Inc. (“Zafgen”) and its CEO.  Brennan v. Zafgen, Inc., No. 16-2057, 2017 WL 1291194 (1st Cir. Apr. 7, 2017).  Plaintiffs had asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, alleging that in Zafgen’s IPO registration statement and other public statements defendants omitted information regarding adverse events during clinical trials for Zafgen’s only drug in development, the obesity drug Beloranib.  The Court held that plaintiffs did not adequately plead scienter under the heightened requirements of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), stressing that a defendant’s mere knowledge of omitted information is not sufficient to support a cogent and compelling inference of fraudulent intent.

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On April 6, 2017, Judge Harvey Bartle III, sitting by designation in the United States District Court for the District of the Virgin Islands, dismissed a putative class action against Altisource Asset Management Corporation (“AAMC”) and certain of its former directors and officers under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp., No. 1:15-cv-00004, slip op. (D.V.I. Apr. 6, 2017), ECF No. 74.  Plaintiffs alleged that AAMC—a provider of asset management and corporate governance advising services related to mortgage servicing—made material misstatements in SEC filings and other disclosures relating to services it provided to the mortgage servicing company Ocwen Financial Corporation (“Ocwen”) and certain related companies.  The Court held that plaintiffs’ allegations were insufficient to demonstrate that the alleged misstatements were false or misleading, and further that plaintiffs failed to show that their claimed losses were caused by the alleged misstatements at issue. 

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On March 29, 2017, Chief District Judge Lee Rosenthal of the United States District Court for the Southern District of Texas, Houston Division dismissed a putative class action against Plains All American Pipeline, a major national oil and gas pipeline operator, and its holding companies (collectively, “Plains Defendants”), as well as individual officer and director defendants of Plains All American Pipeline, L.P. (collectively, “Individual Defendants”), and financial institutions which acted as underwriters in the securities offerings at issue (collectively, “Underwriter Defendants”).  In re Plains All American Pipeline, L.P. Sec. Litig., Case No. H:15-2404 (S.D.T.X. Mar. 29, 2017).  Plaintiffs, individuals and institutional investors who purchased equity and debt instruments issued by entities affiliated with Plains All American Pipeline in seven different public offerings, brought claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”).  The claims were brought after a May 2015 oil spill allegedly caused by a ruptured Plains pipeline that resulted in approximately 101,000 gallons of oil spilling into the Pacific Ocean.  Plaintiffs alleged that, prior to and after the spill, the company falsely claimed to have a comprehensive, effective environmental and regulatory compliance program to prevent oil spills and, if such spills occurred, to quickly remediate the effects.

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On April 1, 2017, District Judge John G. Koeltl of the United States District Court for the Southern District of New York dismissed a putative class action against brokerage firm E*TRADE Financial Corporation and E*TRADE Securities LLC (collectively, “E*Trade”).  Rayner v. E*TRADE Financial Corporation et al, No. 1:16-cv-7129 (S.D.N.Y. Apr. 1, 2017).  Plaintiff brought claims for breach of fiduciary duty, unjust enrichment, and declaratory judgment, alleging that E*Trade selected third-party trading venues for the execution of trading orders based on the amount of rebates those venues paid or “kicked back” to E*Trade rather than selecting the most efficient or cost-effective trading venue for E*Trade’s clients that plaintiff contends is required by the duty of best execution.  The Court dismissed all of the claims, holding that they were precluded by the Securities Litigation Uniform Standards Act (the “SLUSA”), which prohibits class actions based on state law claims that rely on allegations that defendant made a misrepresentation or omission of material fact, or employed any manipulative or deceptive device, in connection with the purchase or sale of a covered security.  

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On March 27, 2017, the United States Supreme Court granted a petition for a writ of certiorari to resolve a circuit split on whether corporate issuers’ disclosure obligation under Item 303 of S.E.C. Regulation S-K can be an independent source of liability under Section 10(b) of the Securities Exchange Act of 1934.  Leidos, Inc. v. Ind. Pub. Ret. Sys., No. 16-581.  The appeal concerns a March 2016 decision by the United States Court of Appeals for the Second Circuit which, in a departure from earlier decisions by the Third and Ninth Circuits, held that an issuer’s failure to disclose “known trends or uncertainties” under Item 303 could give rise to a securities fraud claim under Section 10(b).  The Supreme Court’s consideration of the question could result in either a significant expansion or a significant narrowing of registrants’ potential exposure to securities fraud claims.

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On March 17, 2017, Judge Michael Watson of the United States District Court for the Southern District of Ohio certified a securities class action brought against Big Lots, Inc. (“Big Lots”) and various current and former officers for alleged misrepresentations in SEC filings in violation of the antifraud provisions of the Securities Exchange Act of 1934 (the “Exchange Act”).  Willis v. Big Lots, Inc., No. 2:12-cv-00604 (S.D. Ohio Mar. 17, 2017).  Plaintiffs alleged misleading statements concerning the company’s performance and ability to meet various sales targets.  In holding that the requirements for class certification were satisfied, the court held notably that (i) being a value investor—including using investment advisors that made their own assessments of Big Lots’ intrinsic value—is insufficient, particularly at the class certification stage, to show that the lead plaintiffs were not typical representatives of the class; and (ii) where the stock price did not rise as the result of alleged misrepresentations, defendants still bore the burden of establishing a lack of price impact under the price maintenance theory.

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On March 13, 2017, the United States District Court for the District of Delaware rejected LRR Energy L.P. (“LRR”) and Vanguard Natural Resources, LLC’s (“Vanguard”) motion to dismiss, allowing the putative shareholder class action suit against them and various current and former directors to proceed.  Robert Hurwitz v. LRR Energy, L.P., et al., Civ. No. 15-711-SLR (D. Del. March 13, 2017).  Plaintiff asserted claims under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”) and Sections 14(a) and 20(a) of the Securities and Exchange Act of 1934 (the “Exchange Act”), alleging that Vanguard and LRR Energy failed to disclose material information related to Vanguard’s debt agreements in the proxy statement and registration statement issued by LRR and Vanguard, respectively, in connection with Vanguard’s acquisition of LRR in 2015.  In denying the motion to dismiss, the Court held that plaintiffs had sufficiently pled that the proxy and registration statement failed to disclose material information as to Vanguard’s ability to service its debt, and the consequences of such debt servicing issues.

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On March 16, 2017, District Judge Ann M. Donnelly of the United States District Court for the Eastern District of New York dismissed with prejudice a putative class action against Etsy, Inc., its CEO, CFO, certain of its directors, and the underwriters of its initial public offering (“IPO”).  Altayyar, et al., v. Etsy, Inc., et al., No. 1:15-cv-2785 (E.D.N.Y. March 16, 2017).  Plaintiffs alleged that the company and the individual defendants violated Section 10(b) of the Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, by artificially inflating Etsy’s stock price through misrepresentations leading up to Etsy’s IPO, causing plaintiffs to suffer losses when additional information was revealed and the company’s stock price dropped.  Plaintiffs also brought claims under Sections 11 and 12(a)(2) of the Securities Act of 1933 (the “Securities Act”) against all defendants, as well as claims under Section 15 of the Securities Act and Section 20(a) of the Exchange Act against the individual defendants.  In dismissing the complaint in its entirety, the Court found that plaintiffs had failed to establish that the company’s statements were objectively false, intentionally inaccurate, or materially misleading when made.

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On March 6, 2017, Judge Robert Sweet of the United States District Court for the Southern District of New York dismissed a putative class action against 6D Global Technologies, Inc. (“6D” or the “Company”) and certain of its officers and directors.  Puddu v. 6D Glob. Techs., Inc., No. 15-cv-8061 (RWS) (S.D.N.Y. Mar. 6, 2017).  Plaintiffs—purported shareholders of 6D—alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 when they failed to disclose the Company’s association with an individual whom United States regulators have charged in connection with stock manipulation schemes.  The decision illustrates the challenges plaintiffs face when making claims based on alleged omissions because often there is no duty to disclose the omitted information.   

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On February 27, 2017, Judge Katherine Polk Failla of the United States District Court for the Southern District of New York dismissed with prejudice a putative class action brought on behalf of purchasers of Wal-Mart de México SAB de CV (“Wal-Mex”) American Depositary Shares (“ADRs”) against Wal-Mex, Wal-Mart Stores, Inc. (“Wal-Mart”), and two Wal-Mex executives.  Fogel v. Wal-Mart de México Sab de CV, — F. Supp. 3d —, 2017 WL 751155 (S.D.N.Y. 2017).  The complaint alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder based on allegations that Wal-Mex’s annual reports for 2004 through 2011 failed to disclose an alleged bribery scheme.  In a detailed and thorough opinion that provides an overview of the state of Rule 10b-5 jurisprudence in the Second Circuit, the Court held that many of plaintiff’s claims were time barred, and that plaintiff failed to state a claim with respect to those claims that were timely.

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On February 24, 2017, Judge Edward Chen 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 securities class action against Leapfrog Enterprises, its current CEO, and its former CFO.  The complaint alleged that Leapfrog violated the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by falsely representing in its financial disclosures that it did not need to take write-offs related to the value of its goodwill and long-lived assets.  In re Leapfrog Enterprise, Inc. Sec. Litig., No. 15-cv-00347-EMC, 2017 WL 732909 (N.D. Cal. Feb. 24, 2017).  Considering the difference in the relevant disclosures, the Court dismissed plaintiffs’ claims related to the goodwill write-off, but not the claims related to the write-off of long-lived assets.

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On February 22, 2017, Judge J. Paul Oetken of the United States District Court for the Southern District of New York denied a motion to dismiss a putative class action lawsuit brought against Chinese mobile game developer iDreamSky Technology Ltd. (“iDreamSky”), its officers and directors and four underwriters.  In re: iDreamSky Technology Limited Securities Litigation, No. 15-CV-2514 (S.D.N.Y. Feb. 22, 2017).  The complaint alleged violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), Rule 10b-5 and Section 20(a) of the Exchange Act, as well as Sections 11, 12(a)(1), 12(a)(2), and 15 of the Securities Act of 1933 (“Securities Act”), based on allegations that the Company omitted to disclose the adverse financial impact of delays in the release of iDreamSky’s Cookie Run game in China, as well as the alleged lack of an adequate third-party billing platform.  

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On February 21, 2017, the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of a putative shareholder suit brought against officers, directors, principal shareholders and underwriters of EveryWare Global, Inc. (“EveryWare”), a now-bankrupt Ohio-based manufacturer of kitchenware.  IBEW Local No. 58 Annuity Fund v EveryWare Glob., Inc., No. 16-3445, 2017 WL 677487 (6th Cir. Feb. 21, 2017).  Plaintiffs alleged that EveryWare’s officers violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), Securities Exchange Commission Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act by knowingly providing false and misleading financial projections. Plaintiffs also alleged that various defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (“Securities Act”) because the registration statement and prospectus purportedly contained material misrepresentations.  The Court dismissed both the Exchange Act and Securities Act claims, finding that plaintiffs failed to adequately plead that EveryWare’s officers acted with the requisite intent to deceive shareholders or that the registration statement and prospectus contained material misrepresentations.

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On February 9, 2017, Judge Charles Breyer of the United States District Court for the Northern District of California dismissed a putative class action lawsuit against Sunrun Inc. (“Sunrun” or the “Company”), its officers and directors, and the underwriters of its initial public offering (“IPO”).  Greenberg v. Sunrun Inc., No. 16 Civ. 2480 (N.D. Cal. Feb. 9, 2017).  Plaintiffs alleged that the offering documents for Sunrun’s IPO contained misleading representations and omissions in violation of sections 11, 12(a)(2), and 15 of the Securities Act of 1933.  In granting defendants’ motion to dismiss, Judge Breyer found that the offering materials were not misleading, stating that “at worst the Prospectus warned that the devil is in the details without describing precisely where in the details the devil might lurk.”

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On February 13, 2017, Judge Laura Taylor Swain of the United States District Court for the Southern District of New York dismissed with prejudice a putative class action against MaxPoint Interactive, Inc. (“MaxPoint” or the “Company”), several of its officers and directors, and the underwriters of its initial public offering.  Nguyen v. MaxPoint Interactive, Inc., No. 15-cv-6680-LTS, 2017 WL 570939 (S.D.N.Y. Feb. 13, 2017).  Plaintiff, who sought to bring this action on behalf of investors who purchased MaxPoint common stock that was issued in its initial public offering in March 2015 (the “IPO”), alleged that the registration statement for the IPO contained material misstatements and omissions in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933.  In granting MaxPoint’s motion to dismiss with prejudice, Judge Swain held that MaxPoint had no duty to disclose that at the time of its IPO it was signing smaller contracts with customers than it had in the past, and further held that the IPO registration statement gave investors sufficient information about the Company’s customer base. 

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On February 8, 2017, Judge Robin Rosenberg of the United States District Court for the Southern District of Florida dismissed with prejudice a putative shareholder class action against KLX Inc. and certain of its senior officers under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.  In re KLX Inc. Sec. Litig., No. 9:16-CV-80023, slip op. (S.D. Fla. Feb. 8, 2017).  Plaintiffs alleged that KLX made misstatements and omissions (i) regarding the financial health of KLX’s energy services division and its employment figures and (ii) as a result of recognizing a good will and long-term asset impairment charge later than it should have.  In a complete and thorough opinion, the Court reiterated that neither puffery nor optimism provides grounds for a fraud claim, that forward looking statements are entitled to safe-harbor protection even when combined with representations that arguably refer to current facts, that GAAP violations alone are not sufficient for fraud, and that scienter should be judged with consideration of indications of non-fraudulent intent.   

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On February 1, 2017, United States District Judge Lewis A. Kaplan of the United States District Court for the Southern District of New York dismissed a putative securities class action against Party City Holdco Inc., a global party goods retailer and supplier, two of its officers, the underwriters of its 2015 initial public offering, and two beneficial owners of Party City’s common stock who had purchased a majority of the company in a private transaction prior to the IPO.  Jones, et al. v. Party City Holdco, Inc. et al., No. 1:15-cv-9080 (S.D.N.Y. Feb. 1, 2017).  Plaintiffs alleged that the registration statement filed by Party City with the Securities Exchange Commission in advance of its IPO misled investors by failing to disclose that Party City’s success was heavily dependent on revenues from one particular license—in connection with sales of products related to Disney’s 2013 movie, Frozen—thereby causing Party City’s stock to drop more than 30% from the $17 per share IPO price to $11.80 per share when the materiality of that license allegedly was later disclosed.  Plaintiffs brought claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (the “Securities Act”).

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On January 19, 2017, the U.S. Court of Appeals for the Ninth Circuit affirmed the district court’s decision to dismiss a securities class action against Hewlett-Packard Co. (“HP”) and its former chief executive officer.  Retail Wholesale & Department Store Union Local 338 Retirement Fund v. Hewlett-Packard Co., No. 14-16433, 2017 WL 218026 (9th Cir. Jan. 19, 2017).  Plaintiffs alleged that HP and its former CEO violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) when the CEO breached HP’s code of ethics after he and the company had publicly promoted HP’s high ethical standards.  The court concluded that plaintiffs failed to allege an actionable fraud because, among other reasons, the alleged statements about HP’s code of ethics were not objectively false, but were instead “transparently aspirational.”

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On January 23, 2017, a panel of the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s decision to dismiss a proposed shareholder class action against Bank of America, N.A. and LaSalle Bank, N.A. (the “Bank”).   Richek v. Bank of America, N.A. and LaSalle Bank, N.A., 2017 WL 279498 (7th Cir. Jan. 23, 2017).  Plaintiffs alleged that the Bank was collecting a fee on their custodial accounts without informing customers, and, on this basis, brought a putative class action in state court alleging state law claims for breach of contract and breach of fiduciary duty.  The Bank removed the suit to federal court and successfully argued that the Securities Litigation Uniform Standards Act (“SLUSA”) preempted their state law claims.  The Seventh Circuit affirmed and held that SLUSA preempted the state law claims because they necessarily required consideration of whether there had been an omission in connection with the purchase or sale of a security based on plaintiffs’ claim that the Bank had not disclosed its collection of the fee.  A dissenting opinion criticized the majority’s approach, noting that the panel’s reasoning deepened a split among the Circuits over how courts should apply SLUSA to class actions alleging breach of contract or breach of fiduciary duty claims, and that this split requires resolution by the Supreme Court. 

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On January 17, 2017, Judge Beth Labson Freeman of the United States District Court for the Northern District of California dismissed with leave to amend a putative securities class action against TriNet Group, Inc. (“TriNet”), its officers and directors, a former controlling shareholder, and the underwriters of TriNet’s initial public offering (“IPO”) and a secondary offering (“SPO”).  Welgus v. TriNet, — F. Supp. 3d —, 2017 WL 167708 (N.D.Cal. 2017).  The Court held that plaintiff had not adequately alleged facts showing that the officer defendants knowingly made false statements in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) or facts sufficient to establish control person liability against TriNet’s controlling shareholder under Section 20 of the Exchange Act.  Nor had plaintiff stated a claim under Sections 11 and 12(a)(2) of the Securities Act of 1933 (the “Securities Act”) because, among other things, plaintiff had not sufficiently alleged that its shares were traceable to the IPO or SPO.

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On January 9, 2017, the United States Court of Appeals for the First Circuit affirmed the dismissal of a putative securities class action against InVivo Therapeutics Holdings Corporation and its former CEO, Frank Reynolds.  Battle Const. Co., Inc. v InVivo Therapeutics Holdings Corp., No. 15-1544, 2017 WL 74702 (1st Cir Jan. 9, 2017).  The Court held that InVivo’s press releases that allegedly failed to identify caveats and conditions imposed by the Food and Drug Administration (FDA) on clinical trials of a particular medical device did not constitute false or misleading statements under federal securities law.  Plaintiff alleged that defendants violated Sections 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5, and that Reynolds violated Section 20(a) of the Exchange Act pursuant to control person liability, by failing to disclose in the company’s press releases the FDA’s conditions that may impact the timing of the clinical trials.

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On December 29, 2016, Judge Haywood S. Gilliam of the United States District Court for the Northern District of California dismissed a putative securities class action against Solazyme, Inc. (“Solazyme”), certain of its officers and directors, and the underwriters of two of its securities offerings.  Norfolk Cty. Ret. Sys. v. Solazyme, Inc., et al., No. 15-cv-02938 (N.D. Ca. Dec. 29, 2016).  Plaintiffs, investors who allegedly purchased Solazyme securities traceable to public offerings of notes and common stock that were both made on March 27, 2014, claimed that defendants made false statements about Solazyme’s oil production facility in Moema, Brazil (the “Moema Facility”), in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (“Securities Act”) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”).  The Court granted defendants’ motion to dismiss, in part, because plaintiffs failed to plead with particularity that the challenged statements were false or misleading at the time they were made.  

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On December 27, 2016, Judge Arthur J. Tarnow of the United States District Court for the Eastern District of Michigan dismissed a putative class action against Esperion Therapeutics, Inc. (“Esperion” or the “Company”), a pharmaceutical company, and its chief executive officer.  Dougherty v. Esperion Therapeutics, Inc., No. 16 Civ. 10089 (E.D. Mich. Dec. 27, 2016).  Plaintiffs, purchasers of Esperion common stock, alleged that defendants made false statements regarding the U.S. Food and Drug Administration’s (“FDA”) approval process for a new drug in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.  The Court held, among other things, that plaintiffs failed to allege facts giving rise to a strong inference of scienter, and, in particular, that “[t]he inquiry is inherently comparative” in that it considers whether the inference of scienter is as strong or stronger than the opposing inference of non-culpability.  The Court also held that forward-looking statements about the approval process were protected under the PSLRA safe harbor.  The decision, one of many recent decisions involving statements about drug approvals, highlights the case-specific nature of the analysis and that specific disclosures about regulatory approval risks can provide a meaningful defense in securities cases.  

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On December 13, 2016, the United States Court of Appeals for the Tenth Circuit affirmed the dismissal of a securities fraud action against the manager-managed limited liability company and individual managers and officers of fast-food chain Quiznos.  Avenue Capital Management II, L.P., et al. v. Schaden et al., No. 15-1389, 2016 WL 7210052 (10th Cir. Dec. 13, 2016).  Plaintiffs, a pair of private equity firms, alleged Quiznos executives violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Securities and Exchange Commission Rule 10b-5 by fraudulently misrepresenting to plaintiffs the financial condition of Quiznos in a 2012 restructuring deal in which plaintiffs obtained an 80% equity interest in the company.  The Tenth Circuit affirmed that because plaintiffs collectively controlled the profitability of their investments, the underlying equity purchase did not constitute an “investment contract” and was thus not subject to the Exchange Act.

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On December 5, 2016, Judge Susan Illston of the United States District Court for the Northern District of California dismissed a securities class action against Hortonworks, Inc. (“Hortonworks”) and certain of its officers, with leave to amend.  Monachelli v. Hortonworks, 3:16‑cv‑00980-SI (N.D.Cal. Dec. 5, 2016).  Plaintiffs alleged that Hortonworks violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) through a series of misleading statements regarding the sufficiency of available capital that were made shortly before the company raised funds through a secondary equity offering.  The Court dismissed plaintiffs’ claims for several reasons, including because some of the alleged misstatements were forward-looking statements that qualified for protection under the safe harbor provisions of the Private Securities Litigation Reform Act (“PSLRA”).    

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On November 28, 2016, in In re ARIAD Pharm., Inc. Sec. Litig., —F.3d—, 2016 WL 6933788 (1st Cir. 2016), the United States Court of Appeals for the First Circuit affirmed the dismissal of securities class action claims brought against ARIAD Pharmaceuticals, Inc. (“ARIAD”) and certain individuals on the bases that (a) for all but one of the claims brought under the Securities Exchange Act of 1934, plaintiffs had failed to plead that the defendants had sufficient contemporaneous knowledge of facts underlying the alleged misrepresentations to establish a strong inference of scienter and (b) plaintiffs had failed to allege specific facts that plausibly suggested that their open-market share purchases could be “traced” to an allegedly misleading Registration Statement and, therefore, plaintiffs had not alleged a necessary element of their claims under the Securities Act of 1933.  The unanimous opinion was authored by Chief Judge Howard and joined by retired U.S. Supreme Court Justice Souter.  

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On November 10, 2016, Judge Lewis A. Kaplan of the United States District Court for the Southern District of New York granted in part and denied in part the motion to dismiss filed by defendants MetLife, Inc. (“MetLife”), certain of its officers and directors, and the underwriters of certain MetLife offerings.  City of Westland Police & Fire Ret. Sys. v. MetLife, Inc., No. 12-cv-0256 (LAK) (S.D.N.Y. Nov. 10, 2016).  Plaintiff alleged that MetLife misled investors regarding its financial performance because certain loss reserves underlying its financial statements failed to take into consideration policy holders who had died but had not filed claims yet.  The Court dismissed plaintiff’s claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) because plaintiff failed to plead that defendants acted with scienter, but the Court ruled that plaintiff had adequately alleged a material omission and permitted plaintiff’s claims under Sections 11, 12, and 15 of the Securities Act of 1933 (“Securities Act”) to proceed.  

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On November 7, 2016, Judge Lewis Kaplan of the United States District Court for the Southern District of New York dismissed a putative securities class action against a helicopter operating company, CHC Group Ltd. (“CHC”), and individual and underwriter defendants who participated in CHC’s initial public offering.  Rudman v. CHC Grp. Ltd., — F. Supp. 3d —, 2016 WL 6583788 (S.D.N.Y. 2016).  Plaintiffs had sued under Sections 11 and 12(a)(2) of the Securities Act of 1933 (the “Securities Act”), alleging that CHC’s IPO registration statement omitted material facts because it had not disclosed that one of CHC’s largest customers, Petroleo Brasileiro S.A. (“Petrobras”), had refused to pay fees over a period of time during which certain helicopters were grounded for industry-wide issues.  When that particular disclosure was eventually made, CHC’s stock price dropped $0.99 per share.  Nevertheless, concluding that the registration statement disclosed sufficient information to effectively put investors on notice of the Petrobras issues, and that any omitted information regarding the dispute was immaterial or puffery as a matter of law, the Court held that plaintiffs’ claims were untimely under any interpretation of the requirements of inquiry notice, and, separately, that the complaint failed to state a claim that there was any actionable omission under the Securities Act, including pursuant to any duties under Items 101, 303, and 503 of SEC Regulation S-K, Item 11A of SEC Form S-1, and SEC Regulation C.  The Court thus dismissed all claims with prejudice except as to CHC, the claims against which were subject to an automatic stay under Chapter 11 of the Bankruptcy Code.

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On October 18, 2016, Judge Christina A. Snyder of the United States District Court for the Central District of California dismissed a putative securities class action brought against defendant SouFun Holdings Ltd.“ —a Chinese online real estate business—and certain of its officers Maresca v. SouFun Holdings Ltd., No. 15 Civ. 8508 (C.D. Cal. Oct. 18, 2016).  Plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially misleading statements and omissions regarding the scale and success of SouFun’s new rental brokerage business.  The Court dismissed plaintiffs’ claims, concluding that plaintiffs failed to adequately plead materiality or scienter because (i) the brokerage activity at issue was not a significant portion of the company’s overall business and (ii) plaintiffs failed to plead facts from which to infer that senior officers in the company knew about the allegedly fraudulent transactions.   

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On October 26, 2016, the United States Court of Appeals for the Ninth Circuit reversed a district court’s dismissal of a putative securities class action against Arena Pharmaceuticals (“Arena” or the “Company”) where the district court ruled that plaintiffs failed to adequately plead scienter.  Schueneman v. Arena Pharmaceuticals, Inc., No. 14-55633, -- F.3d ---- (9th Cir. Oct. 26, 2016).  This reversal sheds light on how courts sometimes evaluate scienter when an issuer comes under “an affirmative duty to disclose” adverse information because it has disclosed positive information, and the disclosure of the adverse information is found to be necessary to make the disclosures that have been made not misleading.  

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On October 11, 2016, Vivendi, S.A. moved for panel rehearing and rehearing en banc before the United States Court of Appeals for the Second Circuit following its September 27, 2016, decision affirming a jury verdict and judgment for shareholder plaintiffs in a securities class action suit.  Petition for Rehearing En Banc, In re Vivendi, S.A. Sec. Litig., No. 15-180 (2d Cir. filed Oct. 11, 2016); Second Circuit Affirms Judgment Following Rare Jury Trial In Securities Class Action, Shearman & Sterling LLP Need-To-Know Litigation Weekly (Oct. 3, 2016).

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On October 7, 2016, Judge Anthony J. Battaglia of the United States District Court for the Southern District of California dismissed a putative class action against Celladon Corporation and two of its executives.  Tadros v. Celladon Corporation et al., No. 15-cv-01458 (S.D. Cal. Oct. 7, 2016).  The Court held that plaintiff failed to meet the heightened pleading requirements under the Private Securities Litigation Reform Act of 1995 (“PSLRA”) in alleging a material misrepresentation or omission and scienter in support of its securities fraud claims under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Securities and Exchange Commission Rule 10b-5.  Plaintiff alleged that Celladon and its executives intentionally misled investors through false or misleading statements regarding the success of early clinical trials of Mydicar, the company’s prospective cardiovascular drug.  According to plaintiff, Celladon’s stock price declined by 80% after announcements by the company in April 2015 that Mydicar failed to meet its goals in the second phase of the trial.  Plaintiff brought this action in July 2015.

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On September 27, 2016, the U.S. Court of Appeals for the Second Circuit affirmed the judgment for shareholder plaintiffs in a securities class action suit against Vivendi Universal, S.A. (“Vivendi”), following a lengthy jury trial, which found Vivendi liable for securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934.  In re Vivendi, S.A. Securities Litigation, No. 15-180-cv(L), 15-208-cv (XAP), 2016 WL 5389288 (2d Cir. Sept. 27, 2016).  Plaintiffs were a class of investors who purchased Vivendi common stock between 2000 and 2002.  In affirming, the Court found sufficient evidence in the record to support the jury’s conclusion that Vivendi materially misstated its liquidity risk in a manner that either inflated or maintained Vivendi’s stock price, and that the revelation of the truth about Vivendi’s liquidity risk caused a drop in Vivendi’s share price.  The case is significant for a number of reasons, including the affirmance of a verdict arising out of a rare securities class action trial, and its analysis of loss causation and the controversial “price maintenance” theory of loss causation.

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On September 7, 2016, the Court of Appeals for the 11^th Circuit affirmed the Southern District of Florida’s dismissal of shareholder securities fraud claims against The ADT Corporation (“ADT”).  IBEW Local 595 Pension and Money Purchase Pension Plans, et al v. The ADT Corporation et al, No. 15-13595, 2016 WL 4660814 (11th Cir. Sept. 7, 2016).  Plaintiffs claimed that ADT misrepresented and failed to disclose that its board’s motivation for approving a leveraged repurchase of company stock was to protect itself from threats of replacement by an activist hedge fund (the “Fund”) and that ADT and the Fund engaged in deceptive conduct in executing the repurchase plan, in violation of Section 10(b) of the Securities Exchange Act of 1934.  The Court held that ADT was not required to disclose its motives for the repurchase and the defendants had not engaged in manipulative conduct.

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On August 22, 2016, the United States Court of Appeals for the Third Circuit affirmed the lower court’s dismissal of a putative securities class action filed against Cooper Tire & Rubber Company (“Cooper”) and two of its officers.  OFI Asset Mgmt. v. Cooper Tire & Rubber Co., No. 15-2664 (3d Cir. Aug. 22, 2016).  The Third Circuit held that plaintiffs’ lengthy allegations amounted to nothing more than claims of fraud-by-hindsight and thus did not meet the requirement that claims of securities fraud be pled with particularity.  

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On August 18, 2016, Judge Kimba Wood of the United States District Court for the Southern District of New York dismissed a putative class action against FXCM Inc., a currency brokerage firm, and its two co-founders, with leave to replead.  Ret. Bd. of the Policemen’s Annuity and Benefit Fund of Chi. v. FXCM Inc., 15-cv-3599 (S.D.N.Y. Aug. 18, 2016).  In dismissing plaintiff’s claims under Sections 10(b) and 20(a) of the Securities Exchange Act (the “Exchange Act”), the Court found that plaintiff failed to plead allegations sufficient to give rise to a strong inference of scienter, holding that the complaint failed to allege either “motive or opportunity” or “strong circumstantial evidence of conscious misbehavior or recklessness.”  Judge Wood’s decision joins the well-established Second Circuit precedent that plaintiff cannot meet the heightened pleading requirement merely by alleging that the defendant was motivated by a common desire to keep the corporation’s profits or by alleging “fraud by hindsight,” and confirmed that the standard for pleading scienter on the basis of recklessness is high.

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On August 5, 2016, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of common law fraud and negligent misrepresentation claims against Citigroup, Inc.  AHW Investment Partnership v. Citigroup, Inc., No. 13-4488 (2d Cir. Aug. 5, 2016).  In a summary order, the Court held that plaintiffs may only recover for actual pecuniary losses sustained as the direct result of fraud, and not for hypothetical value plaintiffs may have realized by selling a stock before its price plummeted.  Plaintiffs had alleged that Citigroup and its officers made numerous fraudulent and negligent misrepresentations about the quality of plaintiffs’ investment in Citigroup between May 2007 and March 2009, causing plaintiffs to hold their Citigroup shares and incur losses of $800 million when the company’s stock price subsequently declined.

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On July 25, 2016, Judge David Carter of the United States District Court for the Central District of California dismissed, without prejudice, a putative class action brought by shareholders of El Pollo Loco Holdings, Inc. (“El Pollo”).  See Turocy v. El Pollo Loco Holdings, Inc. No. SA CV 15-1343-DOC (KESx) (C.D. Cal. July 25, 2016).  Plaintiffs alleged that El Pollo and certain of its executives made false statements concerning expected sales by failing to disclose the negative sales impact of recent changes in menu prices and offerings, in violation of Section 10(b) of the Securities Exchange Act of 1934.  The Court held, however, that plaintiffs had not alleged any actionable false statements, nor pleaded particularized facts creating a sufficiently compelling inference that El Pollo executives made the challenged statements with scienter.

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On July 6, 2016, Judge William H. Pauley III of the United States District Court for the Southern District of New York dismissed with prejudice a federal securities class action filed against Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (“Volaris”), a low-cost airline, and certain other participants in its September 2013 initial public offering (“IPO”).  See Dekalb Cnty. Emps.’ Ret. Sys. v. Controladora Vuela Compania de Aviacion, S.A.B. de C.V., No. 15 Civ. 1337 (S.D.N.Y. July 6, 2016).  In dismissing plaintiffs’ claims under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”), the Court found that the alleged misstatements were not material because they affected less than 5% of Volaris’s overall revenue and also because the drop in stock price could not be attributed solely to the alleged misstatement but rather a “host of negative market-moving facts.”  Judge Pauley’s decision serves as a reminder that the materiality standard remains a “meaningful pleading obstacle” in Securities Act claims.

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On July 6, 2016, Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York dismissed with prejudice federal securities class claims against the former CEO of an Australian pharmaceutical company, QRx Pharma Ltd. (“QRx”). Gillis v. QRx Pharma Ltd., No. 15 Civ. 4868 (S.D.N.Y. July 6, 2016).  Plaintiffs alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connections with statements about the FDA approval process made while one of the company’s drugs was under review.  Judge Engelmayer granted the CEO’s motion to dismiss the claims on the grounds that the alleged misrepresentations about the FDA’s process and the likelihood of approval were inactionable opinion and/or forward-looking statements and because the complaint failed to allege scienter adequately.  This decision signals continuing skepticism of securities claims against pharmaceutical and medical device companies that are brought when developmental products are not successful in trials and/or do not receive regulatory approvals.

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On June 21, 2016, Chief Judge Colleen McMahon of the United States District Court for the Southern District of New York dismissed with prejudice a consolidated securities fraud class action filed against Alibaba Group Holding Ltd. (“Alibaba” or the “Company”) and several of its officers and directors.  See Christine Asia Co., Ltd. v. Alibaba Gr. Holding Ltd., No. 15 MDL 2631 (S.D.N.Y. June 21, 2016).  The court ruled that Alibaba’s failure to disclose a meeting with a Chinese regulator and certain administrative guidance from that regulator was not material because the disclosure of such information would not have significantly altered the “total mix” of information available to investors.

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On June 20, 2016, Judge Lorna Schofield of the United States District Court for the Southern District of New York dismissed a securities class action against Seadrill Limited (“Seadrill”), a Bermudan company that owns and operates sea-based oil rigs, and related parties.  See In re Seadrill Ltd. Sec. Litig., No. 14 Civ. 9642 (S.D.N.Y. June 20, 2016).  The Court granted the motion to dismiss because the alleged misrepresentations were either too vague to be actionable or were inactionable statements of opinion or optimism that were not inconsistent with the privately expressed concerns of company executives.

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On June 8, 2016, the United States Court of Appeals for the Ninth Circuit and the United States District Court for the Southern District of New York issued decisions as to separate securities class action lawsuits, dismissing complaints against defendants Peregrine Pharmaceuticals, Inc. and Cellceutrix Corporation, in Fahey v. Peregrine Pharmaceuticals, Inc., et al., No. 14-5582, slip op. (9th Cir. Jun. 8, 2016) and Zagami v. Cellceutrix Corporation, et al., No. 15 Civ. 7194, slip op. (S.D.N.Y. Jun. 8, 2016).  

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On May 20, 2016,  the United States Court of Appeals for the Second Circuit affirmed the dismissal on summary judgment claims against a Hong Kong-based auditor brought under Section 10(b) of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) and Section 11 the Securities Act of 1933 (the “Securities Act”), holding that plaintiffs had not demonstrated that the auditor had either recklessly issued “clean” audit opinions or did not believe the opinions were true when issued.   In re Puda Coal Securities Litigation, Inc., — F.3d —, 2016 WL 2942415 (2d Cir. 2016).  In so holding, the Court clarified that “audit reports are statements of opinion subject to the Omnicare standard for Section 11 claims,” and held absent evidence of subjective disbelief or actionable omissions of information regarding the basis for the opinion, there could be no claim under Section 11.

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On May 10, 2016, Facebook filed a letter in the United States District Court for the Southern District of New York action in connection with class action litigation concerning its $16 billion IPO. In re Facebook Inc., IPO Securities and Derivative Litigation, Case No. 1:12-md-02389 (S.D.N.Y.).  Facebook, defending against claims under Sections 11, 12, and 15 of the U.S. Securities Act of 1933 (the “Securities Act”), contends that the absence of an effective plan for obtaining individualized discovery from unnamed class members may render the case “unmanageable” as a class action and, as a result, “the Court may wish to reconsider class certification at some point.”  Facebook further requested that, “at the very least, if the case proceeds as a class action,” the Court confirm that Facebook “will have the right to take individualized discovery from absent class members in a later phase of the case.”  The Court’s ultimate decision on these issues may impact parties in similar cases.

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On April 22, 2016, Judge Kimba Wood of the United States District Court for the Southern District of New York denied defendants’ motion to dismiss plaintiffs’ claim brought under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), holding that the Private Securities Litigation Reform Act (“PSLRA”) safe-harbor for forward-looking statements does not apply to statements that incorporate misleading representations of present fact.  In re Salix Pharmaceuticals, Ltd., No. 14 Civ. 8925, 2016 WL 1629341 (S.D.N.Y. Apr. 22, 2016).  Plaintiffs had alleged misrepresentations regarding the inventory levels of defendant’s primary products, intentionally increasing levels beyond customer demand, in order to make the company appear more financially robust than it was.

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