On November 16, 2023, the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part a motion to dismiss a derivative action brought by a shareholder of a publicly traded biotechnology company (the “Company”) under Section 16(b) of the Securities Exchange Act of 1934 against the Company, its beneficial owner (the “Beneficial Owner”), one of the Company’s directors (the “Director Defendant”) and his wife, and their trust (the “Trust”).  Andrew E. Roth v. Foris Ventures LLC, et al., 22-16632 (9th Cir. Nov. 13, 2023).

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 November 2, 2023, the New York Appellate Division, First Department, held that the automatic discovery stay in the Private Securities Litigation Reform Act (“PSLRA”) applies to actions brought in New York state court during the pendency of a motion to dismiss, although not during any interlocutory appeal from the denial of such a motion.  Camelot Event Driven Fund v. Morgan Stanley & Co., —N.Y.S.3d—, 2023 WL 7198938 (1st Dep’t Nov. 2, 2023).  Prior to this ruling, New York state trial courts had divided on the question of whether the PSLRA stay applies only to actions filed in federal court or also to actions filed in state court.  This decision resolves that split within the First Department, which includes New York County.

On October 11, 2023, a divided panel of the United States Court of Appeals for the Ninth Circuit dismissed for lack of standing an appeal from the dismissal of a putative class action asserting claims under the Securities Exchange Act of 1934 against a medical device company and its former CEO.  Habelt v. iRhythm Technologies, Inc., —F.4th—, 2023 WL 6614359 (9th Cir. 2023).  Lead plaintiff alleged that the Company made misrepresentations regarding the regulatory process prior to the company receiving a historically low Medicare reimbursement rate for one of its products.  After the district court granted defendants’ motion to dismiss, lead plaintiff declined to appeal.

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 29, 2023, Judge Andrew L. Carter, Jr. 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 the owner of a social media company and his beneficial trust.  Oklahoma Firefighters Pension and Retirement System v. Musk, No. 22-cv-03026 (ALC) (S.D.N.Y. Sept. 29, 2023).  Plaintiff alleged that defendants violated Sections 10(b), 20A, and 20(a) of the Securities and Exchange Act of 1934 by allegedly concealing the owner’s ownership interests in the Company to investors who sold shares of the Company between March 25, 2022, and April 4, 2022, the putative class period.

On August 31, 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, its officers, directors and underwriters, violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  In re Eargo, Inc. Sec. Litig., No. 21-cv-08597 (N.D. Cal. Aug. 31, 2023).  Plaintiffs alleged that the Company misrepresented the Company’s revenue and growth opportunities in its offering materials and allegedly downplayed an audit that allegedly led to a Department of Justice investigation in later SEC filings and public statements.

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 September 25, 2023, Judge Lorna Schofield of the United States District Court for the Southern District of New York granted a motion to dismiss a proposed class action against a biopharmaceutical company alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Gru v. Axsome Therapeutics, Inc., No. 22 CIV. 3925 (LGS), 2023 WL 6214581 (S.D.N.Y. Sept. 25, 2023).  Plaintiff alleged that the Company omitted details concerning its migraine drug development in its Form 10-Q, 10-K and 8-K filings with the SEC and in statements made during conference calls with investors and analysts.  Plaintiff further alleged that the Company’s statements discussing the timing and prospect of FDA approval of its new migraine drug were false or misleading as a result of these alleged omissions.  The Court dismissed the complaint, finding that plaintiffs failed to plead loss causation.

On August 21, 2023, Judge Paul A. Crotty of the United States District Court for the Southern District of New York granted a motion for reconsideration of his denial of an earlier motion to dismiss a putative securities class action against a pharmaceutical and cannabis company that sells cannabis, hemp, and related products (the “Company”) and certain of its officers (the “Individual Defendants”).  Kasilingam et al. v. Tilray Inc., et al., No. 1:20-cv-03459 (S.D.N.Y. Aug. 21, 2023).  Based on the Court’s reconsidered analysis, the Court granted defendants’ second motion to dismiss.  Plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder by making false and misleading statements to inflate the Company’s stock price.

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 29, 2023, Judge Katherine Polk Failla of the United States District Court for the Southern District of New York dismissed with prejudice a putative class action against a decentralized cryptocurrency trading platform and certain of its investors under Section 12(a)(1) of the Securities Act and Section 29(b) of the Securities Exchange Act.  Risley v. Universal Navigation Inc., 2023 WL 5609200 (S.D.N.Y. Aug. 29, 2023).  Plaintiffs alleged that they purchased fraudulent cryptocurrency tokens on the exchange.  The Court held, assuming but not deciding that the tokens were securities, that plaintiffs failed to state a claim for rescission.

On August 21, 2023, the United States Court of Appeals for the Tenth Circuit affirmed dismissal of a consolidated putative class action alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, against a large aerostructures manufacturing company (the “Company”) and certain of its executives.  Meitav Dash Provident Funds and Pension Ltd., et al. v. Spirit AeroSystems Holdings, et al., No. 22-5013 (10th Cir. Aug. 21, 2023).  The Northern District of Oklahoma dismissed plaintiffs’ complaint, holding that plaintiffs failed to adequately plead scienter.  In a split decision, the Tenth Circuit affirmed.

On August 23, 2023, the United States Court of Appeals for the Second Circuit affirmed in part and vacated in part an order dismissing a putative securities class action against a property and casualty insurer (the “Company”), various corporate officers and board members of the Company, the Company’s outside auditor, and multiple underwriters of the Company’s sale of securities.  New England Carpenters Guaranteed Annuity and Pension Funds, et al. v. AmTrust Financial Services Inc., et al., 20-1643 (Aug. 23, 2023).  In vacating the district court’s dismissal in part, the Second Circuit held that in light of its more recent precedent, certain alleged misstatements of opinion were actionable as alleged in the complaint, and therefore reversed the district court’s dismissal of claims related to those alleged misstatements, but otherwise affirmed the district court’s decision dismissing the remaining claims.

On August 24, 2023, the United States Court of Appeals for the Second Circuit affirmed a decision by the United States District Court for the Southern District of New York dismissing claims brought under state securities laws against a group of banks which acted as arrangers (“Defendants” or the “Arrangers”) for a term loan on behalf of a California-based medical testing company (the “Company”), holding that term loan “notes” issued as part of a syndicated loan were not “securities” subject to securities laws and regulations.  Kirschner v. JP Morgan Chase Bank, N.A., et al., 21-2726-cv (2d Cir. Aug. 24, 2023).  The Second Circuit also affirmed that the district court had jurisdiction pursuant to the Edge Act.

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 August 8, 2023, the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal of a putative class action asserting claims under the Securities Exchange Act of 1934 against a direct-to-consumer marketing company and certain of its officers.  In re Tupperware Brands Corp. Sec. Litig., 2023 WL 5091802 (11th Cir. Aug. 8, 2023).  Plaintiff alleged that the company misrepresented its financial performance as a result of a fraudulent sales scheme orchestrated at the company’s subsidiary.  The Eleventh Circuit affirmed the lower court’s dismissal of plaintiff’s third amended complaint with prejudice, holding that plaintiff failed to allege scienter on the part of the makers of the challenged statements and failed to allege scheme liability.

On August 10, 2023, the United States Court of Appeals for the Second Circuit reversed the district court’s class certification order in a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 against a global financial institution and certain of its officers.  Ark. Tchr. Ret. Sys. v. Goldman Sachs Grp., Inc.,—F.4th—, 2023 WL 5112157 (2d Cir. Aug. 10, 2023) (“ATRS III”).  This long-running litigation has been the subject of prior posts in this newsletter in 2018, 2020, and three times in 2021 (wherein we assessed decisions by the U.S. Supreme Court, the Second Circuit, and the district court).

On July 21, 2023, Judge Lewis J. Liman 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 an agriculture company (the “Company”) and certain of its officers (the “Individual Defendants”) violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder.  In Re Appharvest Sec. Litig., No. 21-cv-7985 (LJL), 2023 BL 261952 (S.D.N.Y. July 31, 2023).  Plaintiffs alleged that defendants made misleading statements about the impact of the Covid-19 pandemic on quality control, training, yield, and employee attrition at the Company’s main plant.

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 10, 2023, Chief Judge Patrick J. Schiltz of the United States District Court for the District of Minnesota granted a motion to dismiss a putative securities fraud class action against a mattress and bedding company (the “Company”) and two of its executives.  Steamfitters Local 449 Pension & Retirement Securities Funds v. Sleep Number Corp., et al, No. 21-CV-2669 (PJS/DTS) (D. Minn. July 10, 2010).  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 an alleged disruption to the Company’s supply chain after a natural disaster that forced certain of the Company’s distributors to temporarily shut down.  The Court dismissed the amended complaint with prejudice, holding that plaintiffs failed to adequately plead falsity and scienter.

On July 10, 2023, the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal of a consolidated putative class action alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against a biomedical company (the “Company”), certain of its executives, and its former auditor.  Carpenters Pension Fund of Ill. v. MiMedx Group, Inc., No. 22-10633 (11th Cir. July 10, 2023).  The United States District Court for the Northern District of Georgia dismissed plaintiff’s second amended complaint (“SAC”), holding that plaintiff lacked standing to bring the claim and further holding that plaintiff failed to plead loss causation.  While the Eleventh Circuit determined that the district court erred in holding that plaintiff lacked standing, it affirmed the district court’s holding that plaintiff failed to sufficiently plead loss causation.

On July 13, 2023, the United States Court of Appeals for the Tenth Circuit reversed the dismissal of a putative class action asserting claims against a poultry producer and certain of its officers under Section 10(b) of the Securities Exchange Act of 1934.  Hogan v. Pilgrim’s Pride Corp., —F.4th—, 2023 WL 4508545 (10th Cir. 2023).  Plaintiff alleged that the company made misrepresentations regarding its financial results, business operations, and a purported price-fixing scheme.  The district court dismissed plaintiff’s second amended complaint as barred by the Exchange Act’s statute of repose, but the Tenth Circuit reversed, holding that the statute of repose did not apply.

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 July 24, 2023, the United States Court of Appeals for the Fourth Circuit affirmed the dismissal of claims under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 against a biopharmaceutical company (the “Company”) and certain of its officers and directors.  San Antonio Fire & Police Pension Fund v. Syneos Health Inc., 2023 WL 4688178 (4th Cir. 2023).  Plaintiffs alleged that the Company misled investors about its projected growth following its merger with another company.  The Fourth Circuit held that plaintiffs failed to adequately allege scienter, and that they also failed to allege that the alleged misstatements were material, stating that “not every financial disappointment is actionable under federal law.”

On July 3, 2023, Judge Josephine L. Staton of the United States District Court for the Central District of California denied a motion to dismiss a putative class action against an electric automobile company (the “Company”), alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), Sections 11, 12(a)(2), and 15 of the Securities Exchange Act of 1933 (“Securities Act”), and Regulation S-K.  Crews v. Rivian Auto., Inc., No. 2:22-CV-01524-JLS-E, 2023 WL 4361098 (C.D. Cal. July 3, 2023).  We previously covered the Court’s decision dismissing plaintiffs’ initial complaint without prejudice.  In their amended complaint, plaintiffs alleged that the company made various misleading statements relating to the pricing and profitability of its vehicles despite knowing for several years prior to the Company’s 2021 IPO that it would need to increase pricing to address higher-than-anticipated costs for materials needed for production.  The Court held that plaintiffs’ amended complaint sufficiently alleged actionable misrepresentations and raised a plausible inference of scienter.

On June 15, 2023, Judge Michael A. Shipp of the United States District Court for the District of New Jersey, in an unpublished opinion, adopted a Special Master’s Report and Recommendation denying a motion to dismiss claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, against an accounting firm (the “Firm”) in connection with an audit report it issued for a pharmaceutical company’s (the “Company”) financial statements in connection with the Company’s public offering.  In re Valeant Pharmaceuticals Intl., Inc. Securities Litigation, No. 15-7658 (MAS) (LHG) (D.N.J. June 15, 2023).  We previously covered the district court’s decision denying a motion for judgment on the pleadings in this action, as well as the district court’s decision denying a motion to dismiss by other defendants in the action.

On June 27, 2023, the Supreme Court of the United States held 5-4 that a Pennsylvania statute requiring an out-of-state company to submit to general personal jurisdiction within the Commonwealth when registering to do business there did not violate the Due Process Clause of the Fourteenth Amendment.  Mallory v. Norfolk S. Ry. Co.,—U.S.—, 2023 WL 4187749 (2023).  The Court left open, however, whether Pennsylvania’s statute might violate the dormant Commerce Clause doctrine, a question which will likely be considered by the Pennsylvania Supreme Court on remand.

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 2, 2023, the United States District Court for the Northern District of Texas dismissed a putative class action against an amusement park operator and certain of its executives asserting claims under Section 10(b) of the Securities Exchange Act of 1934.  Okla. Firefighters Pension & Ret. Sys. v. Six Flags Ent. Corp., —F. Supp. 3d—, 2023 WL 3781645 (N.D. Tex. June 2, 2023).  Plaintiff alleged that the company made misrepresentation about its plans to develop amusement parks in China.  The Court held that plaintiff lacked standing because it purchased shares too late to have relied on any actionable misstatements and therefore dismissed the action with prejudice.  The Court also denied a motion to intervene by another potential plaintiff that claimed to have purchased shares earlier.

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.

As we previously covered, on May 22, 2020, Judge Paul G. Gardephe of the United States District Court for the Southern District of New York dismissed a complaint asserting claims under state blue-sky laws as well as common-law claims against financial institutions that acted as arrangers on a syndicated term loan, holding that the term loan at issue was not a “security.”  2020 WL 2614765 (S.D.N.Y. May 22, 2020).  In October 2021, plaintiff filed an appeal to the Second Circuit challenging the issue of whether the syndicated loan in question was a security and therefore subject to securities laws and regulations.  No. 0:21-cv-02726 (2d Cir., Oct. 28, 2021).

On June 1, 2023, the United States Supreme Court held in a unanimous decision that, under Section 11 of the Securities Act of 1933 (the “Securities Act”), plaintiffs must plead and prove that they purchased securities that were traceable to the registration statement that plaintiffs claim contained a material misstatement or omission.  Slack Technologies, LLC v. Pirani, No. 22-200 (June 1, 2023).  At issue was whether a plaintiff who purchased shares of a company through a direct listing, in which shares that were registered under the alleged misleading registration statement were sold alongside unregistered shares, had standing to bring a Securities Act claim when plaintiff had not adequately pled that the shares it purchased were registered.  We previously covered the now-vacated Ninth Circuit’s decision, the Supreme Court’s grant of the petition for certiorari to review the Ninth Circuit’s decision and the parties’ oral argument before the Supreme Court.

On May 15, 2023, the Appellate Division of the Superior Court of New Jersey unanimously affirmed the dismissal with prejudice of a putative securities class action asserting claims under the Securities Act of 1933 against a bioelectric medicine company, its officers and directors, and the underwriters of its initial public offering. Kuehl v. electroCore, Inc., No. A-1539-21, 2023 WL 3444383 (N.J. App. Div. May 15, 2023). Plaintiffs alleged that the IPO offering documents did not disclose sufficient information about the company’s competitors or the challenges the company was facing in its business. The Court held that a federal forum selection provision in the Delaware-incorporated company’s charter was enforceable and had not been waived, and therefore affirmed the action’s dismissal with prejudice.

On May 25, 2023, the United States Supreme Court unanimously held that a post-trial motion under Federal Rule of Civil Procedure (“FRCP”) 50(b) is not required to preserve appellate review of a purely legal issue resolved at summary judgment.  Dupree v. Younger, No. 22-210, 2023 WL 3632755 (U.S. May 25, 2023).

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 May 19, 2023, Judge Victor Marrero 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 solar equipment manufacturing company (the “Company”) alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act (the “Exchange Act”) and Sections 11 and 12(a)(2) of the Securities Act (the “Securities Act”).  Plymouth Cnty. Ret. Ass’n v. Array Techs., Inc., No. 21-cv-04390 (S.D.N.Y. May 19, 2023). Plaintiffs alleged that the Company failed to warn investors about the impact rising steel prices would have on its business and misled investors about its business prospects in filings associated with the Company’s October 2020 initial public offering (“IPO”) and subsequent secondary public offerings (“SPOs”).  The Court dismissed the complaint in its entirety with leave to amend.

On April 18, 2023, Judge William H. Orrick of the United States District Court for the Northern District of California denied a motion to dismiss a putative securities class action alleging a software company (the “Company”) and several of its officers (the “individual defendants”) violated Sections 10(b) and 20(a) of the Securities Exchange Act (the “Exchange Act”). Weston v. DocuSign, Inc. et al., No. 22-cv-00824 (Apr. 18, 2023).  Plaintiff claimed that defendants made false and misleading statements to investors about the sustainability of the Company’s COVID-19 pandemic-driven growth.  The Court denied defendants’ motion to dismiss, holding that at least some of the alleged material misstatements or omissions were not protected by the safe-harbor provision of the Private Securities Litigation Reform Act (“PSLRA”), and that plaintiff had sufficiently pled falsity, scienter, and loss causation as it related to those statements.

On April 17, 2023, the United States Supreme Court heard oral argument in a case addressing whether “tracing” a share to specific registration statement is required in order to have standing to sue under Sections 11 and 12(a)(2) of the Securities Act of 1933.  While the case arises out of a direct listing, the Court’s anticipated ruling may have a significant impact on standing issues in the context of traditional public offerings.  Slack Technologies, LLC, et al., v. Fiyyaz Pirani, No. 22-200.  Slack Technologies (the “Company”) went public through a direct listing in which, unlike in a traditional initial public offering, a company does not issue new shares and files a registration statement for the purpose of allowing existing shareholders to sell their shares directly to the public on an exchange.  Because of applicable exemptions, both registered and unregistered shares are available for public trading from the first day of a direct listing and are intermixed in the market. The Company argued that this prevented investors from showing that they had standing to sue under the Securities Act, which generally allows suits brought only by those who purchase “such security” issued pursuant to an allegedly misleading registration statement (Section 11) or by means of a misleading prospectus (Section 12(a)(2)).

On April 26, 2023, the United States Court of Appeals for the Second Circuit affirmed the dismissal of two actions brought by issuers of collateralized debt obligations (“CDOs”) against the trustee and master servicer of certain residential mortgage-backed securities (“RMBS”) that served as collateral for the CDOs.  Phoenix Light SF Ltd. v. Bank of New York Mellon, —F.4th—, 2023 WL 3082212 (2d Cir. 2023).  The Second Circuit affirmed the district courts’ holding that, even assuming plaintiffs had Article III standing, they were precluded from relitigating prudential standing because plaintiffs were previously found to lack prudential standing in a case they had brought against one of the same defendants.

On April 27, 2023, Judge Charles R. Breyer of the United States District Court for the Northern District of California granted a motion to dismiss a proposed securities class action suit against a financial technology company (the “Company”) and four executives, including its CEO and CFO, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5(b).  Huei-Ting Kang v. PayPal Holdings Inc., No. 3:21-cv-06468 (N.D. Cal. Apr. 27, 2023).  The Court dismissed the complaint with prejudice for failure to plead falsity and failure to plead a strong inference of scienter.  The Court had previously dismissed plaintiffs’ prior complaint without prejudice, in a decision covered here.

On March 31, 2023, Judge Edward J. Davila of the United States District Court for the Northern District of California granted a motion to dismiss a putative class action against a semiconductor company (the “Company”), alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Specifically, the lawsuit alleged that the Company misled investors about its progress in creating a smaller, 7-nanometer microchip. In re Intel Corp. Sec. Litig., No. 5:20-cv-05194, 2023 WL 2767779 (N.D. Cal., Mar. 31, 2023). The Court granted the Company’s motion to dismiss, holding that plaintiffs failed to sufficiently plead falsity and scienter.

On March 29, 2023, Judge William G. Young of the United States District Court for the District of Massachusetts granted a motion to dismiss a putative securities class action alleging a pharmaceutical company (the “Company”), its former CEO, the president of its U.S. division, and its former Chief Medical Officer (“CMO”) made false and misleading statements regarding the efficacy of the Company’s new Alzheimer’s drug. Okla. Firefighters Pension and Ret. Sys. v. Biogen Inc., et al., No. 22-10200-WGY (D. Mass. Mar. 29, 2023). In granting defendants’ motion to dismiss, the Court held that plaintiffs failed to plead facts with particularity establishing that any of the challenged statements were false or misleading or that there was a strong inference of scienter.

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 April 5, 2023, the United States Court of Appeals for the Third Circuit affirmed a determination of the United States District Court for the District of Delaware that plaintiffs violated Rule 11 of the Federal Rules of Civil Procedure but vacated the portion of the lower court’s order that declined to impose sanctions. Scott v. Vantage Corp., —F.4th—, 2023 WL 2780350 (3d Cir. 2023). The Third Circuit held that, for a claim governed by the Private Securities Litigation Reform Act (“PSLRA”), some form of sanctions must be imposed for a Rule 11 violation.