Shearman & Sterling LLP | Securities Litigation Blog | Arbitration
Securities Litigation
This links to the home page

FILTERS
  • District Of Delaware Dismisses Suit Against Wireless Technology Company For Failure To Plead Actionable Misstatement
     
    11/24/2021

    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.
  • Northern District Of Illinois Eastern Division Grants In Part Drugstore Chain’s Motion For Summary Judgment In Connection With Securities Class Action Lawsuit
     
    11/09/2021

    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.
  • Northern District Of California Denies Class Certification For Failure To Demonstrate Commonality As To Reliance
     
    11/03/2021

    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).
  • Northern District Of California Narrows Claims In Putative Securities Class Action Against Pharmaceutical Company
     
    10/26/2021

    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.
  • Eighth Circuit Affirms Dismissal Of Putative Securities Class Action For Failure To Adequately Allege Falsity And Scienter
     
    10/26/2021

    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.
  • District Of Minnesota Dismisses Putative Class Action Against Industrial Chemical Manufacturer Related To Environmental Litigation
     
    10/13/2021

    On September 30, 2021, Judge Nancy E. Brasel of the United States District Court for the District of Minnesota granted a motion to dismiss a putative class action against an industrial chemical manufacturer (the “Company”) 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 3M Co. Sec. Litig., No. 19-CV-2488 (D. Minn. Sept. 30, 2021).  Plaintiffs alleged that the Company downplayed its potential legal and financial exposure over its production and disposal of toxic per- and poly-fluoroalkyl substances (“PFAS”) by failing to estimate the contingent losses associated with the Company’s PFAS liabilities.  The Court dismissed plaintiffs’ complaint for failure to plead an actionable misrepresentation or allegations sufficient to support a strong inference of scienter.
    CATEGORIES : Exchange ActFalsityScienter
  • New Jersey District Court Denies Motion To Dismiss Opt-Out Action
     
    10/06/2021

    On September 30, 2021, Judge Katherine S. Hayden of the United States District Court for the District of New Jersey denied a motion to dismiss an “opt-out” action arising from a pending class action that asserts claims under the Securities Exchange Act of 1934 against a pharmaceutical company, certain of its executives, and alleged “co-conspirators,” in connection with an alleged price-fixing scheme for generic drugs.  TIAA-CREF Large-Cap Growth Fund v. Allergan PLC, No. 17-CV-11089-KSH-CLW, 2021 WL 4473156 (D.N.J. Sept. 30, 2021).  The opt-out action also added claims under the Securities Act of 1933 and related to an illegal “market allocation” scheme.  The Court denied defendants’ motion to dismiss the opt-out action, holding that the action was timely and that scienter was adequately alleged.
  • District Of Maryland Dismisses Putative Class Action Against Pharmaceutical Company For Failure To Adequately Allege Misrepresentations And Scienter
     
    10/06/2021

    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.
  • Southern District Of New York Dismisses Putative Class Action Against Cannabis Company For Failure To Allege Scienter
     
    10/06/2021

    On September 27, 2021, Judge Paul Crotty 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 cannabis company and its CEO and CFO.  Kasilingam v. Tilray, Inc., No. 20-CV-03459 (PAC), 2021 WL 4429788 (S.D.N.Y. Sept. 27, 2021).  Plaintiffs alleged defendants made material misrepresentations that inflated the company’s stock price ahead of a planned share exchange.  The Court held that plaintiffs failed to adequately allege scienter and dismissed the action but granted plaintiffs leave to amend to attempt to cure the deficiencies in their complaint.
    CATEGORY : Scienter
  • Southern District Of New York Dismisses Action Against Cannabis Company For Failure To Sufficiently Allege Misrepresentations, Scienter
     
    10/06/2021

    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.
  • District Of New Jersey Denies Motion For Judgment On The Pleadings Involving Securities Act Claims Against Accounting Firm, Holding Plaintiffs Are Not Required To Plead Damages As An Element Of A Section 11 Claim
     
    09/29/2021

    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.
  • Ninth Circuit Affirms District Court’s Order Holding Plaintiff Had Standing To Sue Defendants Based On Shares Purchased Through Direct Listing
     
    09/29/2021

    On September 20, 2021, the Ninth Circuit, in a split decision, held that plaintiff—a shareholder who allegedly purchased shares through a direct listing by a technology company (the “Company”)—had standing to bring claims under Sections 11, 12(a)(2), and 15(a) of the Securities Act of 1933 (the “Securities Act”).  Fiyyaz Pirani v. Slack Technologies, Inc., et al, No. 20-16419 (9th Cir. Sept. 20, 2021).  The Ninth Circuit affirmed the district court’s order denying in part a motion to dismiss securities fraud claims.  The Company challenged plaintiff’s standing to sue under Sections 11 and 12(a)(2) of the Securities Act for failure to prove his shares were registered under the alleged misleading registration statement.  The Court held that plaintiff had standing to bring Securities Act claims because, whether registered or unregistered, his shares could not have been purchased without the issuance of the Company’s registration statement.  The Court concluded that the shares purchased by plaintiff were governed by Sections 11 and 12 of the Securities Act and affirmed the district court’s partial denial of the Company’s motion to dismiss.
    CATEGORIES : Securities ActStanding
  • Northern District Of California Dismisses Putative Class Action Against Cybersecurity Company Related To Its Merger For Failure To Allege Subjective Falsity
     
    09/21/2021

    On September 13, 2021, Judge Edward M. Chen of the United States District Court for the Northern District of California dismissed with prejudice a putative class action against a cybersecurity company (the “Company”) and its CEO for violations of Section 14(e) and 20(a) of the Securities Exchange Act of 1934.  In re Finjan Holdings, Inc. Sec. Litig., No. 20-cv-04289 (N.D. Cal. Sep. 13, 2021).  Plaintiff alleged that defendants made material misrepresentations about the value of the Company in connection with the sale of the Company through a tender offer (the “Merger”) and that the CEO was motivated by his desire to retain his position at the Company.  The Court dismissed the claims, holding that (i) the sales process indicated that the offer price reflected the market value of the Company’s stock, and (ii) plaintiff failed to present particularized evidence that the CEO had a motive to mislead shareholders.
    CATEGORIES : Exchange ActFalsity
  • District Of New Jersey Dismisses Putative Class Action Against Medical Device Manufacturer For Failure To Allege Falsity And Scienter
     
    09/21/2021

    On September 15, 2021, Judge Stanley R. Chesler of the United States District Court for the District of New Jersey dismissed a putative class action against a medical device manufacturer (the “Company”) and certain of its officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Industriens Pensionsforsikring A/S v. Becton Dickinson & Co., No. 20-cv-02155 (D.N.J. Sept. 15, 2021).  Plaintiff alleged the Company made misleading statements concerning regulatory approval of one of its medical devices, its regulatory compliance program, and financial projections.  The Court dismissed plaintiff’s claims without prejudice in an unpublished opinion confirming the many challenges to pleading securities fraud claims based on alleged misrepresentations regarding U.S. Food and Drug Administration (“FDA”) approval processes.
    CATEGORIES : Exchange ActFalsityScienter
  • Illinois District Court Denies Motion To Dismiss Putative Class Action Against Food Delivery Company
     
    09/15/2021

    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.
  • Southern District Of New York Dismisses Putative Class Action Against Infrastructure Company For Failure To Adequately Allege Misrepresentations Or Scienter
     
    09/15/2021

    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.
  • Third Circuit Affirms District Court’s Decision Granting Plaintiffs Leave To File Third Amended Class Action Complaint After Expiration Of Repose, Because Defendants’ Right To Repose Had Not Vested
     
    09/09/2021

    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.
    CATEGORY : Statute of Repose
  • Southern District Of New York Grants Motion To Dismiss Securities Fraud Claims Against Cannabis Company, Holding Plaintiffs Failed To Overcome Jurisdictional Limitations
     
    09/09/2021

    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.
    CATEGORIES : Exchange ActJurisdiction
  • Plaintiff Files Derivative Lawsuits In Southern District Of New York Asserting That Special Purpose Acquisition Companies Are Investment Companies Under The Investment Company Act Of 1940
     
    08/31/2021

    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).
  • Second Circuit Vacates And Remands Class Certification Decision With Guidance From The United States Supreme Court
     
    08/31/2021

    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.
  • Second Circuit Affirms Dismissal Of Putative Class Action Against Danish Bank For Failure To Allege An Actionable Misrepresentation Or Scheme To Defraud
     
    08/31/2021

    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.
  • Northern District Of California Dismisses Putative Class Action For Failure To Adequately Allege Actionable Misrepresentations Or Scienter
     
    08/26/2021

    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.
  • Southern District Of California Denies Motion To Dismiss Securities Fraud Claims Against Pharmaceutical Company, Holding Plaintiff Adequately Pled Material Misstatements And Scienter
     
    08/19/2021

    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.
  • Seventh Circuit Affirms Dismissal Of Exchange Act Claims Against Commercial Electronics Company Holding Plaintiff Failed To Allege Scienter And Falsity
     
    08/19/2021

    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.
  • District Of Nevada Pares Down Class Action Against Resort And Casino Operator For Failure To Allege Falsity
     
    08/10/2021

    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.
    CATEGORIES : Exchange ActFalsityOmission
  • Third Circuit Affirms Dismissal Of Putative Class Action Against Telecommunications Company For Failure To Allege Scienter
     
    08/10/2021

    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.
    CATEGORIES : Exchange ActScienter
  • Southern District Of New York Grants Motion To Dismiss Securities Fraud Claims Against Clothing Company And Individual Defendants, Finding Plaintiffs Failed To Plead Material Misstatements And Scienter
     
    07/28/2021

    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”).
  • Ninth Circuit Affirms Motion To Dismiss Securities Fraud Claims Against Wholesale Retailer, Finding Plaintiffs Failed To Adequately Plead Scienter
     
    07/28/2021

    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.
  • Southern District Of New York Dismisses Putative Class Action Against Cryptocurrency Mining Hardware Manufacturer For Failure To Allege Loss Causation And Materiality
     
    07/20/2021

    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.
    CATEGORIES : Loss CausationMateriality
  • District Of New Jersey Dismisses Putative Class Action Against Cannabis Company For Failure To Adequately Allege Misrepresentations
     
    07/13/2021

    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.
  • Ninth Circuit Reverses Denial Of Motion For Summary Judgment In Putative Securities Fraud Class Action, Finding The Affiliated Ute  Presumption Of Reliance Did Not Apply Because Plaintiff’s Allegations Could Not Be Characterized Primarily As Claims Of Omission
     
    07/07/2021

    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.
  • Eleventh Circuit Vacates Denial Of Class Certification Motion, Finding District Court’s Determinations On Timeliness And Administrative Feasibility To Be Abuses Of Discretion
     
    07/07/2021

    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.
  • U.S. Supreme Court Grants Certiorari In Case Presenting Issue Of Whether The Private Securities Litigation Reform Act’s Automatic Stay Of Discovery Applies To Securities Act Cases Filed In State Court
     
    07/07/2021

    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.
    CATEGORY : PSLRA
  • U.S. Supreme Court Confirms That The Generic Nature Of Alleged Misstatements In Federal Securities Fraud Claims Is Relevant To Rebut Basic Presumption Of Classwide Reliance At Class Certification Stage
     
    06/29/2021

    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.
    CATEGORIES : Exchange ActReliance
  • Eleventh Circuit Affirms Dismissal Of Untimely Putative Class Action Relating To Celebrity-Backed Cryptocurrency Offering
     
    06/29/2021

    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.
  • Third Circuit Holds American Pipe  Equitable Tolling Applies To Individual Opt-Out Claims Filed Prior To Class Certification Decision
     
    06/22/2021

    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.
  • Ninth Circuit Reverses In Part Dismissal Of Putative Class Action Against Technology Company
     
    06/22/2021

    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.
  • New York State Court Dismisses Putative Securities Class Action Lawsuit Against Canadian Cannabis Producer For Failure To Plead Contemporaneous Misleading Statements
     
    06/15/2021

    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.
  • Southern District Of Florida Dismisses Putative Class Action Against Cruise Line Related To Statements Regarding COVID-19 Risks And Precautionary Measures
     
    06/08/2021

    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.
  • Eastern District Of New York Dismisses Putative Class Action For Failure To Allege Actionable Misstatements
     
    06/02/2021

    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.
  • Oregon District Court Grants Summary Judgment For Defendants Upon Motion For Reconsideration In Putative Class Action
     
    06/02/2021

    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.
  • District Of Maryland Denies Motion To Dismiss Securities Fraud Claims Against Sports Apparel Company, Finding Plaintiffs Adequately Pled Material Misstatements And Scienter In Light Of SEC Order In Parallel Proceeding
     
    05/26/2021

    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.
    CATEGORIES : Exchange ActFalsityPSLRAScienter
  • District Of New Jersey Holds Omnicare Applies To Exchange Act Claims Based On Alleged Omissions But Dismisses Claims Against Canadian Cannabis Producer Related To Inventory Surplus For Failure To Allege Scienter
     
    05/18/2021

    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.
  • Northern District Of Illinois Grants Motion To Dismiss Securities Fraud Claims Against Financial Services Provider, Finding Plaintiffs Failed To Adequately Plead Scienter
     
    05/04/2021

    ​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.
    CATEGORIES : Exchange ActScienter
  • Eighth Circuit Reverses Class Certification Of Securities Fraud Claims Against Brokerage Firm, Holding That Common Issues Do Not Predominate
     
    05/04/2021

    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 (8th 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.
  • Ninth Circuit Holds Omnicare’s Standard For Falsity Of Opinion Applies To Claims Under Section 14(a) Of The Exchange Act
     
    04/28/2021

    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.
  • Northern District Of Illinois Denies Motion To Dismiss A Putative Securities Class Action Against Electric Company For Failure To Disclose Long-Running Bribery Scheme
     
    04/28/2021

    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.
  • Southern District Of Florida Dismisses Putative Class Action Against Cruise Line For Failure To Adequately Allege Misrepresentations Or Scienter
     
    04/20/2021

    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.
  • Ninth Circuit Affirms Dismissal Of Putative Class Action Against Investment Bank For Failure To Adequately Allege Scienter
     
    04/20/2021

    ​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.
    CATEGORY : Scienter
  • Southern District Of Texas Denies Motion To Dismiss Securities Fraud Claims, Finding Plaintiffs Adequately Pled Material Misrepresentations And Scienter
     
    04/13/2021

    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.
     
View All