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 September 2, 2021, the United States Court of Appeals for the Third Circuit affirmed the decision by a district court to permit plaintiffs to file a third amended complaint, on behalf of a putative class, against a bank (the “Company”) and certain of its former officers, its underwriters, and its independent auditors, alleging violations of Sections 11, 12(a) and 15 of the Securities Act of 1933, as well as Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Southeastern Penn. Trans. Authority v. Orrstown Financial, No. 20-2829 (3d Cir. Sept. 2, 2021).  Plaintiffs’ Third Amended Complaint was filed after the applicable repose period had expired, and after certain defendants had successfully moved for dismissal.  Defendants argued the relation back doctrine under Rule 15(c) of the Federal Rules of Procedure—which allows an amended pleading under certain circumstances to be treated as if filed on the date of an initial pleading despite any applicable statute of limitations—should not similarly apply against the statute of repose, which bars claims after a certain period of time.  The Third Circuit held the district court did not err in granting plaintiffs leave to amend under Rule 15(a)(2), because the relation back doctrine was not in conflict with the statute of repose, and because defendants had not yet had a vested substantive right to repose as the action was still ongoing and plaintiffs sought only to amend to reassert claims they originally brought against the same parties.

On August 30, 2021, Judge Lewis A. Kaplan 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 (“Exchange Act”) and Rule 10b-5 thereunder against a cannabis company (“Company”), its senior secured lender (“Financing Company”), and certain executives at both companies.  In re iAnthus Capital Holdings Inc. Securities Litigation, 1:20-cv-03135 (S.D.N.Y. Aug. 30, 2021).  Plaintiffs, in consolidated purported class actions and an individual action brought by a shareholder, alleged the Company failed to disclose the nature of its relationship with the Financing Company, which allegedly obtained approximately half of the equity of the Company after the Company defaulted on its loan.  The Court granted defendants’ motion to dismiss plaintiffs’ first amended class action complaint (“Amended Complaint”), holding that plaintiffs failed to allege their transactions with the Company satisfied the jurisdictional limitations of the Exchange Act established by the Supreme Court in Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 267 (2010).  The Court permitted plaintiffs to move for leave to further amend.

On August 17, 2021 and August 20, 2021, a purported shareholder of certain special purpose acquisition companies (“SPACs”) filed three derivative lawsuits in the United States District Court for the Southern District of New York asserting that the SPACs are investment companies under the Investment Company Act of 1940, because proceeds from their initial public offerings are invested in short-term treasuries and qualifying money market funds.  Assad v. Pershing Square Tontine Holdings, Ltd., No. 21-cv-6907 (S.D.N.Y Aug. 17, 2021); Assad v. E.Merge Technology Acquisition Corp., No. 21-cv-7072 (S.D.N.Y Aug. 20, 2021); Assad v. GO Acquisition Corp., No. 21-cv-7076 (S.D.N.Y Aug. 20, 2021).

On August 26, 2021, the United States Court of Appeals for the Second Circuit vacated and remanded a district court order certifying a class of stockholders asserting securities fraud against a global financial institution (the “Company”) under the Securities Exchange Act of 1934 because it was “unclear” as to whether the district court considered the generic nature of the Company’s alleged misrepresentations in its price impact inquiry in accordance with the legal standard recently clarified by the United States Supreme Court.  Arkansas Tchr. Ret. Sys. v. Goldman Sachs Grp., Inc., No. 18-3667, 2021 WL 3776297 (2d Cir. Aug. 26, 2021).  The Second Circuit held that on remand, the district court should consider all record evidence relevant to price impact regardless of whether that evidence overlaps with materiality or any other merits issue, as instructed by the Supreme Court.

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 August 10, 2021, the United States Court of Appeals for the Seventh Circuit affirmed a decision of the United States District Court for the Northern District of Illinois, Eastern Division that dismissed a putative securities fraud class action asserting claims under Rule 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.  City of Taylor Police and Fire Retirement System v. Zebra Technologies Corp., et al, No. 20-3258 (7th Cir. Aug. 10, 2021).  Plaintiff alleged that defendants, a commercial electronics manufacturer (the “Company”) and two of its executives, misled investors by issuing false statements about the integration of assets following the Company’s acquisition of a separate commercial electronics company.  The district court dismissed the claims, holding that plaintiff failed to adequately allege scienter and falsity.  The Seventh Circuit affirmed the dismissal.

On July 28, 2021, Judge Andrew P. Gordon of the United States District Court for the District of Nevada granted in part and denied in part a motion to dismiss a putative securities class action against a resort and casino operator (the “Company”) and its current and former officers alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), Rule 10b-5, and Section 20(a) of the Exchange Act.  Ferris v. Wynn Resorts Ltd., No. 18-CV-00479 (D. Nev. July 28, 2021).  Plaintiffs alleged that the Company made material misstatements and omissions concerning allegations that its CEO engaged in sexual misconduct.  The Court denied the Company’s motion to dismiss plaintiffs’ claims relating to alleged misstatements made directly in response to a newspaper article and lawsuit concerning the CEO’s alleged misconduct, but granted the motion to dismiss with respect to the alleged misstatements that concerned the Company’s code of conduct, compliance with laws and regulations, and corporate culture.

On August 5, 2021, the United States Court of Appeals for the Third Circuit, in a non-precedential opinion, affirmed the dismissal of a putative class action against a multinational telecommunications company (the “Company”) and certain of its officers and directors for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  PAMCAH-UA Local 675 Pension Fund v. BT Group PLC, No. 20-2016 (3d Cir. 2021).  Plaintiffs alleged that the Company made false and misleading statements about its financial performance as a result of a complex, decade-long accounting fraud that occurred at its Italian subsidiary (the “Subsidiary”).  The Third Circuit affirmed dismissal on the grounds that the stronger inference from the factual allegations in the complaint as to the Company’s executives was a lack of scienter and, even if scienter was sufficiently alleged as to executives at the Subsidiary, that could not be imputed to the Company.

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 8, 2021, Judge J. Paul Oetken of the United States District Court for the Southern District of New York dismissed a putative securities class action against a Chinese manufacturer of cryptocurrency mining hardware (the “Company”) alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11 and 15 of the Securities Act of 1933.  Boluka Garment Co. v. Canaan Inc., No. 20-cv-07139 (S.D.N.Y. July 8, 2021).  Plaintiffs alleged that the Company failed to disclose material information regarding alleged related-party transactions in its registration statement.  The Court dismissed the complaint with leave to amend because plaintiffs failed to allege loss causation and materiality.

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 29, 2021, the United States Court of Appeals for the Eleventh Circuit vacated a decision by the Southern District of Florida denying a class certification motion. Jacob Rensel, et al. v. Centra Tech, Inc., No. 20-10894 (11th Cir. 2021).  Plaintiffs, investors in a cryptocurrency digital products company (the “Company”), alleged in their amended complaint violations of Sections 12(a)(1) and 15(a) of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against the Company, its co-founders, former executives, and celebrity promoters.  The district court denied plaintiffs’ motion for class certification as untimely, and alternatively for failure to establish an administratively feasible method for class identification.  The Eleventh Circuit held that, on both issues, the district court abused its discretion.

On July 2, 2021, the United States Supreme Court granted a petition for certiorari to review a decision by a California state court allowing plaintiffs to take discovery in a private action under the Securities Act of 1933 (the “Securities Act”). Pivotal Software, Inc. v. Tran, No. 20-1541 (U.S. July 2, 2021).  The issue presented by the petition is whether the Private Securities Litigation Reform Act’s (the “PSLRA”) discovery-stay provision—which provides that “[i]n any private action arising under” the Securities Act, “all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss”—applies in Securities Act cases filed in state court.

On June 21, 2021, the United States Supreme Court, in a decision delivered by Justice Amy Coney Barrett, vacated and remanded a decision of the United States Court of Appeals for the Second Circuit upholding a certification of a shareholder class asserting securities fraud against a global financial institution (the “Company”) under the Securities Exchange Act of 1934, on the basis that there was “sufficient doubt” as to whether the Second Circuit properly considered the generic nature of the Company’s alleged misrepresentations in its price impact inquiry.  Goldman Sachs Grp., Inc. et al. v. Arkansas Teacher Ret. Sys. et al., 594 U.S. ____ (2021).  The Court held that, in the context of class certification in a case involving claims under Section 10(b) of the Exchange Act:  (i) the generic nature of a misrepresentation is important evidence of price impact that courts should consider at the class certification stage, regardless of whether that evidence overlaps with materiality and any other merits issue, and (ii) defendants bear the burden of persuasion to prove a lack of price impact by a preponderance of the evidence in order to rebut the presumption of classwide reliance established under the Supreme Court’s decision in Basic Inc. v. Levinson.

On June 21, 2021, the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal of claims under Sections 12(a)(1) and 15(a) of the Securities Act of 1933 (the “Securities Act”) against the co-owners of a company (the “Company”) that sold cryptographic tokens in an initial coin offering to fund its nascent movie streaming platform.  Fedance v. Felton, No. 20-12222 (11th Cir. 2021).  Although plaintiffs brought the action after the one-year statute of limitations period had elapsed, they argued that the Company’s fraudulent concealment equitably tolled the limitations period.  The district court held that the claims were untimely because the doctrine of equitable tolling did not apply to claims brought under Sections 12(a)(1) and 15(a).  Although the Eleventh Circuit agreed that plaintiffs’ claims were untimely, the Court rejected the district court’s conclusion that equitable tolling is inapplicable to Section 12(a)(1) and 15(a) claims.  The Eleventh Circuit instead held that plaintiffs had not adequately alleged that the Company’s fraudulent concealment prevented them from bringing claims within the limitations period.

On June 16, 2021, the United States Court of Appeals for the Third Circuit reinstated a securities fraud action brought under Section 10(b) of the Securities Exchange Act of 1934 that had been dismissed as untimely.  Aly v. Valeant Pharm. Int’l Inc., –F.3d–, 2021 WL 2448108 (3d Cir. 2021).  The Third Circuit joined the Second, Ninth, and Tenth Circuits in holding that the doctrine of equitable tolling established by the United States Supreme Court  in American Pipe & Construction Company v. Utah, 414 U.S. 538 (1974), applies to individual claims that are subject to a pending putative class action and are asserted in an opt-out case prior to a decision on class certification.

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 19, 2021, the United States District Court for the District of Maryland denied a motion to dismiss 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. May 19, 2021).  Plaintiffs alleged that defendants misrepresented the Company’s financial health and the demand for its products by engaging in “channel stuffing”—the practice of pulling forward sales from a future quarter, thereby shifting earnings into earlier quarters—relying in part on a settlement between the Company and the SEC and the $9 million civil penalty paid in connection with the settlement to resolve similar allegations.

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 26, 2021, Judge Sara L. Ellis of the Northern District of Illinois granted a motion to dismiss a putative securities class action asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against a financial services provider (the “Company”) and two of its executives.  Heavy & General Laborers’ Local 472 & 172 Pension and Annuity Funds v. Fifth Third Bancorp, et. al., No. 20-C-2176 (N.D. Ill. Apr. 26, 2021).  Plaintiff, on behalf of herself and a putative class of investors who allegedly purchased and sold securities of the Company during the putative class period, alleged that defendants made materially misleading statements regarding the Company’s business practices that were the subject of a federal investigation.  The Court granted defendants’ motion to dismiss the consolidated complaint without prejudice, holding that plaintiff failed to adequately plead scienter.

On April 23, 2021, the United States Court of Appeals for the Eighth Circuit reversed the certification of a class pursuing securities fraud claims against a brokerage firm for retail investors (“the Company”).  Ford v. TD Ameritrade Holding Corp., et al., No. 18-3689 (8^th Cir. April 23, 2021).  Plaintiff, on behalf of a putative class of investors who purchased and sold securities through the Company, brought securities fraud claims under the Securities Exchange Act of 1934, alleging the Company’s order routing practices violated its “duty of best execution” by systematically sending orders to trading venues that benefited the Company, rather than to venues that provided the best outcome for customers.  The Court held that the predominance and superiority requirements of Federal Rule of Civil Procedure 23(b)(3) were not satisfied because determining economic loss, in this case, would entail a trade-by-trade individualized inquiry.  Having found that the district court abused its discretion in certifying the class, the Court reversed the district court’s order and remanded for further proceedings.

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 April 8, 2021, the United States Court of Appeals for the Ninth Circuit affirmed the Central District of California’s dismissal with prejudice of a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against an investment bank, certain of its executives, and one of its research analysts.  Prodanova v. H.C. Wainwright & Co., LLC,—F.3d—, 2021 WL 1307882 (9th Cir. 2021).  Plaintiff alleged that defendants had attempted to increase a company’s stock price by publishing a bullish analyst report shortly before the company announced that the bank would serve as the exclusive placement agent for an offering of the company’s shares.  The Ninth Circuit held that plaintiff failed to adequately allege a strong inference of 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 29, 2021, Judge David O. Carter of the United States District Court for the Central District of California denied a motion to dismiss a consolidated putative class action complaint against a medical device manufacturer and marketer (the “Company”) and certain of its officers, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  In re Merit Med. Sys., Inc. Sec. Litig., No. 8:19-02326 DOC (ADSx) (C.D. Cal. Mar. 29, 2021).  Plaintiffs alleged that the Company issued misleading statements regarding its acquisitions of two companies in late 2018 including with respect to the integration of those companies and their products sales.  The Court denied defendants’ motion to dismiss, adopting a report and recommendation by Magistrate Judge Autumn D. Spaeth, which found that most of the challenged statements were not forward-looking statements protected by the PSLRA’s safe harbor provisions and that plaintiffs had adequately pled all elements of their claims. 

On March 29, 2021, Judge Andrew L. Carter of the United States District Court for the Southern District of New York granted a motion to dismiss a putative securities class action against a Finnish telecommunications company (the “Company”) and its former CEO for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  In re Nokia Corp. Sec. Litig., No. 19-cv-3982 (S.D.N.Y. Mar. 29, 2021).  Plaintiff alleged the Company made false and misleading statements and omissions regarding (i) the success of its post-merger integration with another telecommunications company (the “Acquired Company”); and (ii) the Company’s readiness to transition to 5G wireless cellular network technology (“5G”).  The Court dismissed the claims for failure to plead an actionable misstatement or omission.

On March 29, 2021, the United States Supreme Court heard oral argument in Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System, which we have discussed in prior updates.  The case raises two questions in the context of class certification in a Section 10(b) case:  (i) whether a court can take into account the generic nature of alleged misstatements in a securities fraud class action in assessing whether they had any impact on the price of the stock, and (ii) who bears the burden of persuasion concerning reliance on the alleged misstatements, after a plaintiff has invoked the presumption of classwide reliance (under the Supreme Court’s decision in Basic Inc. v. Levinson) and the defendant has come forward with evidence to rebut that presumption.  

On March 25, 2021, the United States Supreme Court unanimously affirmed decisions by the Montana and Minnesota Supreme Courts holding that their lower courts had properly exercised specific personal jurisdiction over an automobile company in product liability suits arising from accidents in those states involving the company’s vehicles, even though those particular vehicles had not been designed, manufactured, or sold in those states.  Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., Nos. 19-368, 19-369, 2021 WL 1132515 (U.S. Mar. 25, 2021).  In a consolidated appeal, the company challenged the State supreme court decisions, arguing that specific personal jurisdiction is only proper where there is a strict causal relationship between the defendant’s activities in the forum state and the plaintiff’s claim.  The Court rejected the company’s argument, holding that the exercise of personal jurisdiction in those states was proper under the circumstances.

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 March 2, 2021, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California dismissed with prejudice a putative class action asserting claims under the Securities Exchange Act of 1934 against a technology company and certain of its executives.  Iron Workers Loc. 580 Jt. Funds v. NVIDIA Corp., No. 18-CV-07669-HSG, slip op. (N.D. Cal. Mar. 2, 2021).  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.  As discussed in our prior post, the Court dismissed plaintiffs’ original complaint for failure to adequately allege misrepresentations or scienter, but granted leave to replead.  After plaintiffs amended their complaint, defendants moved again to dismiss and also moved to strike certain allegations attributed to a confidential witness.  The Court denied the motion to strike but concluded that the amended complaint failed to cure the prior deficiencies with respect to scienter, and therefore dismissed the complaint with prejudice.
 

On February 26, 2021, Judge LaShann DeArcy Hall, 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 pharmaceutical company and certain of its officers.  In re Alkermes Public Ltd. Co. Sec. Litig., No. 18-CV-7410 (LDH) (RML), slip op. (E.D.N.Y. Feb 26, 2021).  Plaintiff alleged defendants made misstatements concerning clinical trials for a drug that ultimately did not secure FDA approval.  The Court held that plaintiff failed to allege facts giving rise to a strong inference of scienter and therefore dismissed the complaint in its entirety.