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.
Snap Inc. Wins Dismissal of Securities Class Action Over Data Privacy Changes
- Client News
- March 20, 2023
Practices
Paul, Weiss achieved a significant victory for Snapchat creator Snap Inc., its co-founder and CEO Evan Spiegel and former Chief Business Officer Jeremi Gorman when the U.S. District Court for the Central District of California granted a motion to dismiss a putative securities class action alleging that the defendants had defrauded investors in connection with Apple’s 2021 rollout of privacy changes to its iPhone operating system.
The complaint alleged that the defendants made material misstatements and omissions concerning Snap’s preparations for the rollout and the changes’ impact on prospective advertising revenue. The plaintiffs brought securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
U.S. District Judge George H. Wu agreed with the defendants that almost all of the challenged statements and omissions were not materially false or misleading, including because several of the alleged misstatements constituted nonactionable corporate optimism and/or were forward-looking statements, and Snap’s SEC filings clearly and consistently disclosed the impact of Apple’s privacy changes on the company’s operations and financials. The court also found that the plaintiff failed to plead a strong inference of scienter, in part because the plaintiff’s theory—that the defendants possessed greater knowledge than disclosed regarding Snap and its advertisers’ preparations for the privacy changes and the potential impact of those changes on prospective advertising revenue—was less compelling than the non-fraudulent alternative that the defendants’ optimistic predications in the face of uncertainty did not pan out. The dismissal is without prejudice, and the plaintiff has until April 12, 2023, to file a third amended complaint.
The Paul, Weiss team includes litigation partners Daniel Kramer and Audra Soloway, who argued the motion.