Snap Inc. Wins Second Dismissal of Securities Class Action Challenging Statements About Apple Data Privacy Changes

Paul, Weiss achieved another significant victory for Snapchat creator Snap Inc., its co-founder and CEO Evan Spiegel and its former Chief Business Officer Jeremi Gorman when the U.S. District Court for the Central District of California again granted our clients’ motion to dismiss a putative securities class action alleging that they had defrauded investors in connection with Apple’s 2021 rollout of privacy changes to its iPhone operating system.

The plaintiff’s third amended complaint alleged that Gorman made a material misstatement in April 2021 concerning advertisers’ “successful implementation” of SKAdNetwork, Apple’s proprietary software designed to address Apple’s data privacy changes. We moved to dismiss for the third time, arguing that the plaintiff had failed to raise a strong inference that Gorman made the statement with scienter, or knowledge of wrongdoing.

U.S. District Judge George Wu agreed with the defendants that the plaintiff failed to plead a strong inference of scienter, in part because the plaintiff’s complaint lacked factual allegations that advertisers had identified problems with SKAdNetwork as early as April 2021, or communicated those purportedly discovered problems to anyone at Snap. Judge Wu also concluded that a holistic review of the plaintiff’s allegations weighed against a strong inference of scienter because Gorman lacked a motive to mislead investors and Snap repeatedly disclosed that Apple’s privacy changes presented a risk to the company. The dismissal is without prejudice, and the plaintiff has until October 27 to file a fourth amended complaint.

The Paul, Weiss team included litigation partners Daniel Kramer and Audra Soloway, who argued the motion.