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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.
XPO Logistics Wins Dismissal of Securities Fraud Class Action
- Client News
- March 24, 2021
Paul, Weiss achieved a significant victory for XPO Logistics, Inc. and its Chairman and CEO Bradley Jacobs when the U.S. District Court for the District of Connecticut dismissed, with prejudice, a securities class action alleging that XPO had defrauded its investors. The complaint alleged that XPO, a shipping and logistics company, misled investors in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by concealing the importance of its largest customer, Amazon, in driving the company’s recent growth, and concealing the fact that Amazon began cutting ties with XPO around March 2018. The plaintiffs alleged that XPO’s stock dramatically declined when these facts were revealed in the wake of a disappointing Q4 2018.
The district court dismissed the plaintiffs’ complaint on each of the four grounds raised in the defendants’ motion to dismiss. The court found that the defendants’ statements regarding XPO’s growth and financial results were not rendered misleading by the plaintiffs’ allegations about Amazon, and that many of the identified statements were inactionable puffery. The court separately found that none of the alleged misstatements or omissions were material, in part because Amazon’s ultimate departure impacted only 3.7% of XPO’s $17 billion total revenue. The court also found that the plaintiffs failed to plead a strong inference of scienter, explaining that the purported motive—to inflate XPO’s share price to consummate a merger—rests on “unfounded assumptions and broad inferences,” and that the plaintiffs’ allegations failed to show that any senior executive had contemporaneous knowledge of facts contradicting their statements. Finally, the court agreed that the plaintiffs failed to sufficiently link their losses to the alleged misstatements, and dismissed most of the plaintiffs’ claims for failure to plead loss causation. The court dismissed the action with prejudice, as it had previously dismissed the matter while allowing the plaintiffs to re-plead their allegations.