• Northern District of California Grants Motion To Dismiss Securities Class Action Against Payment Technology Company

  07/07/2026

  On June 29, 2026, Judge Noël Wise of the United States District Court for the Northern District of California granted a motion to dismiss a putative securities fraud class action against a payment technology company (the “Company”) and certain of its current and former officers, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  Beibei Cai v. Visa Inc., et al., No. 24-cv-08220 (N.D. Cal. June 29, 2026).  In granting the motion with prejudice, the Court held that plaintiff failed to adequately plead loss causation.  We previously covered the Court’s earlier dismissal of the consolidated class action complaint here.
  
  According to the second amended complaint, the Company is a payment technology company that, along with certain of its current and former officers, allegedly made false and misleading statements regarding the Company’s high routing volume—i.e., the number of transactions processed through its debit network—between March 2, 2023 and September 23, 2024 (the “Putative Class Period”).  Plaintiffs alleged that these alleged statements concealed the impact of the Durbin Amendment and a related regulatory disclosure (the “Regulation II Clarification”) on the Company’s debit network.  Plaintiffs alleged that the truth was revealed through (i) a September 23, 2024, Bloomberg article, published after the market closed that same day, reporting that the U.S. Department of Justice (“DOJ”) planned to file an antitrust suit against the Company, (ii) a September 24, 2024, New York Times article reporting that it expected the DOJ to sue the Company, and (iii) the DOJ antitrust complaint, which was filed on the same day as the New York Times article.  Plaintiffs alleged that, taken together, these revelations caused the Company’s stock price to drop.
  
  Addressing loss causation, the Court stated that while plaintiffs “are not required to prove loss causation at the motion to dismiss stage, they must (1) allege a ‘significant’ drop in price, and (2) allege with particularity facts plausibly suggesting that the fraud caused the stock drop, as opposed to some other fact.”
  
  The Court first assessed whether plaintiffs had adequately alleged a causal connection between the alleged corrective disclosures and the decline in the Company’s stock price.  The Court had previously dismissed the complaint for failure to do so, and the Court similarly held that the second amended complaint did not cure the pleading defect.  In so holding, the Court explained that plaintiffs’ new allegations failed to plausibly tie the stock decline to the New York Times article or to the DOJ complaint that was filed the same day.  The Court further held that plaintiffs did not “identify any allegations that the drop in stock price was due to the DOJ complaint and not some other, unrelated factor.”
  
  Turning to whether plaintiffs had alleged a significant enough stock price drop to adequately plead loss causation, the Court observed that it had previously dismissed the initial amended complaint partially because the modest price decline—amounting to approximately 6.6% over two trading days—was followed by a “quick and sustained price recovery” that undercut any inference of loss causation.  In seeking to cure this deficiency, plaintiffs attached and summarized the report of a retained expert who opined that the decline was statistically significant.  The Court held that the expert’s opinions were not an adequate substitute for well-pleaded facts.  The Court further held that “conducting and recounting the findings of an analysis is inherently an opinion.”  Because the new allegations in the second amended complaint were primarily opinions rather than well-pleaded facts, the Court concluded that plaintiffs’ second amended complaint failed to plead loss causation and dismissed the Section 10(b) claim.
  
  Having found that plaintiffs failed to state an underlying Section 10(b) claim, the Court dismissed plaintiffs’ control person liability claim against the individual defendants under Section 20(a).
  
  Because plaintiffs had already been afforded an opportunity to amend, and identified no new alleged facts that could support the claim, the Court determined that further amendment would be futile and dismissed the second amended complaint with prejudice.

  Categories: Control Person Liability,  Exchange Act,  Loss Causation
  

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• BEIBEI CAI V. VISA INC.