TELUS International Wins Complete Dismissal of Securities Fraud Class Action

Paul, Weiss secured the complete dismissal of a securities fraud class action brought against TELUS International (CDA) Inc. and four current and former TI executives regarding their alleged exaggeration of the company’s AI capabilities and financial outlook. The District Court for the Southern District of New York granted the defendants’ motion to dismiss in its entirety, finding that the plaintiff failed to adequately plead any actionable misstatement or intent to defraud.

A TI shareholder filed suit in January 2025 under Sections 10(b) and 20(a) of the Securities Exchange Act, alleging that TI and its executives made more than 30 materially false or misleading statements between February 2023 to August 2024, leading to a steep stock drop following subsequent, allegedly corrective, disclosures. The plaintiff alleged that TI, a global digital solutions and customer experience company now known as TELUS Digital, overstated its AI capabilities and that the company lacked any AI offerings beyond pilot projects; that the defendants misrepresented the company’s financial outlook; and that they misled investors about the success of AI-based cost-cutting initiatives deployed within the company’s own operations. The plaintiff pointed to two consecutive quarters of disappointing financial results in the first and second quarter of 2024 as revealing the alleged fraud.

Echoing the Paul, Weiss team’s arguments, U.S. District Judge Victor Marrero granted the defendants’ motion to dismiss, concluding that the plaintiff’s allegations did not “change the core fact” that the company “did, in fact, have AI capabilities” and that there was no allegation of “any specific AI product or service that TI falsely or misleadingly claimed it had.” The court declined to credit accounts from confidential witnesses, who were all low-level former employees with no access to strategic management decisions. Judge Marrero also found that the plaintiff pointed to no specific contradictory information available to the defendants at the time they made their statements, and that the defendants’ disclosures about pilot programs, and the risks of the competitive environment and pricing pressures “undercut any contention” that the defendants acted with an intent to defraud.

The Paul, Weiss team includes litigation partner Audra Soloway.