Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
Paul, Weiss Wins Dismissal of Securities Class Action Against Ericsson
- Client News
- January 10, 2020
Practices
Paul, Weiss secured the dismissal of a putative securities class action brought against our clients Telefonaktiebolaget LM Ericsson and various Ericsson executives relating to Ericsson’s accounting for various long-term service contracts.
The lawsuit stemmed from a write-down by Ericsson in 2017 of long-term service contracts with its customers. At the time, management attributed the write-downs to, among other things, “additional product costs” that were “not expected to be covered by future project revenue.” In their lawsuit filed in U.S. District Court for the Southern District of New York in April 2018, shareholders alleged that Ericsson misled investors about the company’s financial condition by misstating the performance of certain long-term service contracts and by overstating their profitability by underestimating the cost of performance and prematurely recognizing revenue on the sale of services, thus deferring losses to later quarters.
In granting Paul, Weiss’s motion to dismiss, U.S. District Judge Jesse M. Furman held that plaintiffs had failed to demonstrate that any of the financial results disclosed in Ericsson’s financial statements were inaccurate, and that, even if plaintiffs could demonstrate that Ericsson had made false statements, they could not establish the requisite scienter. Finally, the court held that several statements on which plaintiffs’ claims relied—including predictions about future earnings, and statements touting Ericsson’s compliance with legal and accounting standards—were nonactionable puffery or forward-looking statements that are exempt from securities claims under the Private Securities Litigation Reform Act. Because plaintiffs failed to plead any violation of the securities laws, the court also dismissed plaintiffs’ related “control person” claims under Section 20(a) of the Exchange Act against several of Ericsson’s officers and directors.
The Paul, Weiss team included litigation partners Brad Karp, Daniel Kramer and Susanna Buergel.