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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 Second Circuit Affirmance of Securities Class Action Dismissal

Paul, Weiss achieved a significant victory for XPO Logistics, Inc. and its Chairman and CEO Bradley Jacobs when the Second Circuit affirmed the dismissal, with prejudice, of a securities class action alleging that XPO had defrauded its investors. The complaint, filed in Connecticut federal court, 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 revenue growth, and concealing the fact that Amazon began cutting ties with XPO around March 2018. The plaintiffs alleged that XPO’s stock price dramatically declined when these facts were revealed in the wake of a disappointing Q4 2018.

The district court dismissed the complaint with prejudice in March 2021 on four independent grounds, agreeing with the defendants that the plaintiffs failed to adequately allege falsity, scienter, materiality or loss causation. The plaintiffs appealed to the Second Circuit, arguing that the district court had erred in failing to accept well-pleaded allegations as true and accepting defendant-friendly statistical assumptions, among other contentions.

The Second Circuit agreed with the district court that, contrary to the plaintiffs’ allegations, the defendants’ statements regarding XPO’s revenue growth and strategy were neither false nor misleading. The court also affirmed the holding that the defendants did not have an affirmative duty under Item 303 of the SEC’s Regulation S-K to disclose that Amazon was winding down its business with XPO, in large part because the plaintiffs had not alleged that any defendant had “actual knowledge” of this purportedly concealed wind-down. Finally, the Second Circuit affirmed the dismissal of control person claims against the CEO.

The Paul, Weiss team included litigation of counsel Martin Flumenbaum, partner Julia Tarver Mason Wood, who argued the appeal, and securities litigation and enforcement counsel Daniel Sinnreich.

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