On March 30, 2024, Judge Victoria Marie Calvert of the United States District Court for the Northern District of Georgia granted a motion to dismiss a putative securities class action against an optical retail company and certain of its executive officers (the “Individual Defendants”). City of Southfield General Employees Retirement Sys. v. National Vision Holdings, et al., No. 23-cv-00425-VMC (N.D. Ga. Mar. 30, 2024). Plaintiff alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions regarding staffing and wage pressures faced by the Company leading up to and through the Covid-19 pandemic. The Court granted defendants’ motion to dismiss with prejudice, holding that plaintiff failed to adequately plead falsity and scienter. 

On February 20, 2024, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California granted with leave to amend a motion to dismiss a putative securities class action against a manufacturer of laboratory instruments and other advanced automation systems (the “Company”), certain of its current and former officers and directors, several venture capital firms that invested in the Company, and the underwriters of the Company’s July 2020 IPO. Victor J. Ng, et al. v. Berkeley Lights, Inc., et al., No. 21-cv-09497-HSG (N.D. Cal. Feb. 20, 2024). Plaintiff alleged that defendants 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 and Rule 10b-5 thereunder, by making false and misleading statements and omissions regarding the functionality of the Company’s flagship product (the “Product”).

On March 11, 2024, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California granted in part and denied in part a motion to dismiss a putative securities class action brought against a biopharmaceutical company (the “Company”) and its CEO. Pardi et al., v. Tricida, Inc., et al., No. 21-cv-00076-HSG (N.D. Cal. Mar. 11, 2024). Plaintiff alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions regarding the likelihood that the Company’s new drug would receive accelerated FDA approval. The Company filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code and was voluntarily dismissed, and the CEO moved to dismiss.

On March 8, 2024, the United States Court of Appeals for the Second Circuit reversed a trial court decision dismissing a putative securities class action brought by purchasers of crypto assets against an international crypto exchange company (the “Company”) and certain of its officers, alleging violations of Section 12(a)(1) of the Securities Act of 1933 (the “Securities Act”), as well as various state securities laws (“Blue Sky” laws), and also seeking recission of the contracts they entered into with the Company, under Section 29(b) of the Securities Exchange Act (the “Exchange Act”). Williams v. Binance, No. 22-972 (2d Cir. Mar. 8, 2024). Plaintiffs alleged that the Company unlawfully promoted, offered, and sold billions of dollars’ worth of crypto-assets without registering these as securities and without registering themselves as a securities exchange or broker-dealer. The United States District Court for the Southern District of New York granted the Company’s motion to dismiss, holding that (1) plaintiffs’ claims constitute an impermissible extraterritorial application of securities law and (2) plaintiffs’ federal claims were untimely under the applicable statute of the limitations. On appeal, the Second Circuit reversed on both counts and remanded for further proceedings.

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

On January 30, 2024, Judge Susan Illston of the United States District Court for the Northern District of California granted with leave to amend a motion to dismiss a putative securities class action against a battery company and its directors and officers.  In Re Enovix Corp. Securities Litigation, No. 23-cv-00071-SI (N.D. Cal. Jan. 30, 2024).  Plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 and Rule 10b-5(b) promulgated thereunder by failing to disclose that the Company overlooked critical testing of its manufacturing equipment, which led to equipment failure that caused the Company to miss its performance targets.

On February 1, 2024, Judge Gerald J. Pappert of the United States District Court for the Eastern District of Pennsylvania granted a motion to dismiss a putative securities class action against an IT solutions company that provides digital communication, cybersecurity and IT consulting services, its CEO and current and former CFOs.  Connor v. Unisys Corp., et al., No. 22-4529 (E.D. Pa. Feb. 1, 2024).  Plaintiff alleged that defendants made false representations about the Company’s disclosure controls and procedures and internal control over financial reporting in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  The Court dismissed the amended complaint, holding that plaintiff failed to adequately allege falsity, scienter and loss causation.

On January 19, 2024, Judge Orelia Merchant of the United States District Court for the Eastern District of New York dismissed a proposed securities class action against a lithium mining company (the “Company”) and certain of its officers and directors (the “Individual Defendants”) alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”). In re Piedmont Lithium Inc., Sec. Litig., 21-CV-4161 (OEM) (PK) (E.D.N.Y. Jan 18, 2024). Plaintiff alleged that the Company made misleading positive statements in connection with a North Carolina lithium mining project (the “Project”) and that the Individual Defendants subsequently sold Company stock prior to the release of a negative news article. The Court dismissed plaintiff’s claims, finding that plaintiff had failed to raise a strong inference of scienter.

On January 5, 2024, Judge Jon S. Tigar of the United States District Court for the Northern District of California granted a motion to dismiss a proposed securities class action against an entertainment company that primarily operates a subscription-based streaming service, alleging that defendants made misrepresentations in public statements about the Company’s growth, customer retention, and challenges related to shared accounts in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.  

On December 26, 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 tobacco company (the “Company”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”). In re Philip Morris Int’l Inc. Sec. Litig., No. 21-2546 (2d Cir. Dec. 26, 2023). Plaintiffs alleged that the Company made false or misleading statements regarding both the scientific studies it conducted in support of an application to the Food and Drug Administration (“FDA”) and the outlook for the Company’s sales growth in Japanese markets. The district court held that plaintiffs failed to adequately plead falsity or scienter, in a decision previously covered here. The Second Circuit affirmed the dismissal, holding that plaintiffs failed to adequately plead falsity. In its decision, the Court decided two questions of first impression in the Second Circuit. First, it held a securities fraud defendant’s statement that its scientific studies comply with a methodological standard that is published and internationally recognized, but stated in general and inherently subjective terms, is properly analyzed as a statement of opinion, rather than a statement of fact. Second, the Court held that, where a securities fraud defendant’s statement expresses an interpretation of scientific data that is ultimately endorsed by the FDA, such a statement is per se “[]reasonable” (i.e., supported by “meaningful inquiry”) as a matter of law.

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 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 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 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 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 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 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 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 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 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 March 14, 2023, Judge Zahid N. Quraishi of the United States District Court for the District of New Jersey dismissed a putative class action suit against a pharmaceutical company (the “Company”) and its executives alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act. Lewakowski v. Aquestive Therapeutics, Inc. et al., No. 3:21-cv-03751, 2023 WL 2496504 (D.N.J. Mar. 14, 2023). Plaintiffs alleged that defendants misled investors regarding the efficacy of a new drug and the likelihood of approval by the Food and Drug Administration. The Court dismissed the action without prejudice, holding that the complaint “cherry-pick[ed] out-of-context quotes from the Company’s disclosures” and failed to allege falsity or scienter.

On March 21, 2023, Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York granted in part and denied in part a motion to dismiss a putative class against a Chinese internet company (the “Company”), its co-founder and chief executive officer (the “CEO”), and two other executives, alleging violations of Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 and Rule 10b-5.  Altimeo Asset Management v. Qihoo 360 Technology Co. Ltd. et al., 19 Civ. 10067, 2023 WL 2585942 (S.D.N.Y. Mar. 21, 2023).  Plaintiffs alleged that the Company engaged in a scheme to depress the price of the Company’s American Depositary Shares (“ADSs”) to enable them to pay shareholders an unfairly low price when they took the Company private as part of a merger in 2016 (the “Go-Private Merger”).  The Court held that two of the categories of alleged misstatements were actionable, while one category was not.  The Court further dismissed the claims of plaintiffs who tendered shares in connection with the Go-Private Merger (“Tenderer Shareholders”), but sustained the claims of plaintiffs who sold shares after the Go-Private Merger was announced but before the effective date (“Seller Shareholders”).  This decision follows the Court’s previous dismissal of plaintiffs’ claims, which we covered here, and the Second Circuit’s revival of those claims, which we covered here.

On March 2, 2023, the United States Court of Appeals for the Fourth Circuit affirmed the dismissal of a putative securities class action against a company that manufactures cancer drugs (the “Company”), its president and CEO, and its senior vice president and CFO, for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, and Sections 11, 12(a), and 15 of the Securities Act of 1933 (the “Securities Act”). Employees’ Retirement System of the City of Baton v. Macrogenics, Inc., No. 21-2238 (4th Cir. Mar. 2, 2023). Plaintiffs alleged that defendants made materially misleading statements or omissions concerning a clinical trial drug, which negatively affected the Company’s stock price. The Court affirmed the district court’s order granting defendants’ motion to dismiss, finding that plaintiffs failed to sufficiently allege any actionable misrepresentations or omissions that would give rise to a duty to disclose, and that most of defendants’ alleged statements also were immunized from suit.

On March 1, 2023, Judge Jesse Furman of the United States District Court for the Southern District of New York granted a motion to dismiss a putative class action against a pharmaceutical company (the “Company”) and its executives (the “Individual Defendants”), alleging violations of Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (“Securities Act”), and SEC Rules 10b-5 and 14a-9. In Re: Bristol-Myers Squibb Co. CVR Securities Litigation, No. 1:21-cv-08255 (S.D.N.Y. Mar. 1, 2023). Plaintiffs alleged that the Company secretly “slow rolled” the Food and Drug Administration (“FDA”) approval process for certain medications and made misrepresentations about its efforts to obtain timely FDA approval. Plaintiffs alleged that the Company did so to avoid having to pay $6.4 billion to the holders of Contingent Value Right securities (“CVRs”), which would expire and be worthless if the drugs were not approved by particular deadlines (the “CVR Deadlines”). The Court dismissed the complaint in its entirety but granted leave for plaintiffs to replead their claims under Section 10(b) and 20(a) of the Exchange Act.

On February 24, 2023, Judge Esther Salas of the United States District Court for the District of New Jersey granted a motion to dismiss a putative class action against a Beijing-based education company (the “Company”) and its CEO and CFO (the “Individual Defendants”). The lawsuit alleged that the Company misled investors about its student enrollment figures in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Wu v. GSX Techedu Inc., No. 20-cv-04457, 2023 WL 2207422 (D.N.J. Feb. 24, 2023). Specifically, plaintiffs alleged that the Company artificially inflated its enrollment figures by creating fake student accounts. In dismissing the action, the Court discounted the import of several purported confidential witness statements, demonstrating the rigor courts apply to such allegations, and held that the complaint failed to allege facts sufficient to give rise to a strong inference of scienter.

On February 2, 2023, Judge Steven P. Logan of the United States District of Arizona dismissed a putative class action alleging that manufacturer of hydrogen-electric vehicles (the “Company”), the Company’s former CEO (the “CEO”), and certain of its other senior executives (the “Individual Defendants”) misled investors about the Company’s hydrogen fuel cell technology and business prospects for its electric trucks in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Borteanu v. Nikola Corporation et al., No. 20-cv-01797 WL 1472852 (D. Ariz. Feb. 2, 2023).   Although the Court held that plaintiff had adequately alleged the falsity of certain categories of alleged misstatements, the Court ruled that plaintiffs failed to plead a strong inference of scienter as to certain defendants and failed to plead loss causation generally.
 

​On February 1, 2023, Judge Anthony J. Trenga of the United States District Court for the Eastern District of Virginia dismissed a putative securities fraud action against a cybersecurity company (the “Company”) and several of its executives and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Section 11 of the Securities Act.  Firemen’s Retirement System of St. Louis, et al. v. Telos Corp., et al., No. 1:22-cv-00135 (E.D. Va. Feb. 1, 2023).  Plaintiffs alleged that defendants misled investors about the status and prospects of key government contracts and falsely certified to having reasonable financial controls.  The court dismissed the action without prejudice, holding that plaintiffs failed to allege falsity or scienter. 
 

On January 18, 2023, the United States Court of Appeals for the Fifth Circuit reversed and remanded the district court’s order dismissing the putative securities class action with prejudice, holding that plaintiff sufficiently alleged that a major theme park operator (the “Company”) and two of its executives made material misstatements and omissions in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Oklahoma Firefighter Pension and Retirement Systems v. Six Flags Entertainment Corporation, No. 21-10865, 2023 WL 228268 (5th Cir. 2023).  Largely on information from a former employee (“FE”), the complaint alleged that defendants misled investors by projecting unrealistic or impossible timelines for opening theme parks in China.  After significantly discounting the FE’s allegations, the district court dismissed the complaint with prejudice.  The Fifth Circuit reversed, holding that the complaint adequately alleged the FE’s personal knowledge of the relevant topics and that the FE’s allegations should be discounted “only minimally.”

On January 22, 2023, Judge Percy Anderson of the United States District Court for the Central District of California granted a motion to dismiss the third amended class action complaint (“TAC”) in a putative class action alleging that a video game company (the “Company”) and four of its officers misled investors by making material misstatements and omissions concerning sexual harassment and discrimination at the Company.  Cheng v. Activision Blizzard Inc. et al., 2:21-cv-06240 (C.D. Cal. Jan. 22, 2023).  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 promulgated thereunder.  The Court dismissed plaintiffs’ TAC with prejudice, finding plaintiffs failed to plead falsity and scienter.

On January 6, 2023, Judge John L. Sinatra, Jr. of the United States District Court for the Western District of New York denied a motion to dismiss claims against a cannabis and tobacco engineering company (the “Company”) alleging that the Company failed to disclose an investigation by the United States Securities and Exchange Commission (“SEC”) in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Noto v. 22nd Century Group Inc., No. 1:19-cv-01285, 2023 WL 122305 (W.D.N.Y. Jan. 6, 2023). Following a January 2021 dismissal of the complaint, and the Second Circuit’s reversal of that decision, the Company again moved to dismiss plaintiffs’ claims. The Court denied the Company’s motion and permitted plaintiffs’ Section 10(b) and 20(a) claims to proceed.

On December 12, 2022, Judge Colleen McMahon of the United States District Court for the Southern District of New York granted summary judgment to a major pharmaceutical company (the “Company”) and dismissed class action claims that the Company failed to disclose a “serious and known link” between the Company’s breast implant products and a rare form of cancer, breast implant-associated anaplastic large cell lymphoma (BIA-ALCL), in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In re Allergan PLC Securities Litigation, 2022 WL 17584155 (S.D.N.Y. 2022).  The Court held that the challenged statements were “literally true and not misleading” and that plaintiff failed to prove after extensive discovery that either scientific studies or the regulatory community had determined that the Company’s implants were in fact more closely associated with BIA-ALCL than other types of implants. Because discovery did not uncover any evidence of falsity and plaintiff failed to raise a genuine issue of fact with respect to the materiality of the alleged misrepresentations or as to loss causation, the Court granted the Company’s motion for summary judgment.

 
On November 22, 2022, the United States Court of Appeals for the Fourth Circuit affirmed the dismissal of a putative class action against an online education platform (the “Company”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. Boykin v. K12, Inc., No. 21-2351, 2022 WL 17097453 (4th Cir. 2022). Plaintiffs alleged that the Company artificially inflated the cost of its shares by misrepresenting the state of its business during the COVID-19 pandemic. The district court found that plaintiffs failed to plead falsity and scienter and granted the Company’s motion to dismiss with prejudice. The Fourth Circuit affirmed, holding that plaintiffs failed to allege actionable misrepresentations or facts giving rise to a strong inference of scienter.

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

On October 25, 2022, Judge Maxine M. Chesney of the United States District Court for the Northern District of California granted a motion to dismiss a putative class action against an enterprise data cloud platform company (the “Company”). In re Cloudera, Inc. Securities Litigation, No. 19-CV-03221-MMC, 2022 WL 14813896 (N.D. Cal. Oct. 25, 2022). Plaintiffs alleged that the Company misled investors in its characterization of the Company’s platform in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5. The Court, having dismissed an earlier complaint, dismissed the claims without further leave to amend, finding that the Company’s statements were not false or misleading.

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

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

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

On August 8, 2022, 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 of its executives alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Huei-Ting Kang v. PayPal Holdings Inc., No. 3:21-cv-06468 (N.D. Cal. Aug. 8, 2022).  Plaintiffs alleged that the Company misled investors about its compliance with (1) a Consumer Financial Protection Bureau (“CFPB”) Consent Order (the “Consent Order”) prohibiting deceptive marketing of the company’s revolving line of credit; and (2) the Federal Reserve Board’s Regulation II, which caps debit card interchange fees.  The Court’s dismissal of the complaint (with leave to amend) is a reminder of the challenges plaintiffs face when trying to assert securities claims in the wake of company announcements of regulatory investigations.

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

On July 27, 2022, a unanimous panel of 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 dismissing a putative securities fraud class action asserting a claim under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder, as well as claims under the Commodities Exchange Act, against an options and futures exchange company (the “Company”).  Brian Barry, et al. v. CBOE Global Markets, Inc., et al., No. 20-1843 (7th Cir. July 27, 2022).  Plaintiffs alleged that the Company violated the Exchange Act by trading options and futures based on an index it created (“VIX”) that was designed to estimate the near-term volatility in the S&P 500 Index, but allegedly was subject to market manipulation by unknown traders (the “Doe Defendants”) soon after its creation.  The Seventh Circuit affirmed the dismissal of the claims, holding that plaintiffs failed to plead scienter.

On July 15, 2022, Judge Edward M. Chen of the United States District Court for the Northern District of California largely denied a motion to dismiss a securities fraud class action against a biopharmaceutical company (the “Company”) and certain of its officers alleging violations of Sections 10(b) of the Securities Exchange Act of 1934.  In re FibroGen, Inc. Securities Litigation, No. 21-cv-02623-EMC (N.D. Cal. July 15, 2022).  Plaintiffs alleged that the Company made 96 false and misleading statements concerning the “safety and efficacy data of its flagship drug.”  Although the Court held that a handful of the misstatements were not actionable for failure to adequately allege falsity, the Court otherwise denied the motion to dismiss.

On July 15, 2022, the United States District Court for the Central District of California granted a motion to dismiss a putative class action against a children’s cartoon company (the “Company”) and certain of its officers alleging violations of Section 10(b) of the Securities Exchange Act of 1934.  In Re Genius Brands Int’l, Inc. Sec. Litig., CV 20-7457 DSF (RAOx) (C.D. Cal. July 15, 2022).  In a second amended complaint, plaintiffs alleged that the Company made materially false and misleading statements and omissions about the Company’s engagement of a stock promotion company, an impending acquisition by Disney or Netflix, and its economic resilience in the face of COVID-19, among other topics.  The Court dismissed the claims with prejudice for failure to adequately plead falsity or materiality, and further held that the complaint of 289 paragraphs and 84 pages violated Rule 8 of the Federal Rules of Civil Procedure that requires a “short and plain statement” of the claims.