Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Bielousov v. GoPro, Inc.

United States District Court, N.D. California

July 26, 2017

ANTON BIELOUSOV, Individually and on Behalf of All others Similarly Situated, Plaintiff,
v.
GOPRO, INC. and NICHOLAS D. WOODMAN, Defendants.

          ORDER DENYING MOTION TO DISMISS FIRST AMENDED COMPLAINT (DOCKET NOS. 57, 58, 64)

          CLAUDIA WILKEN United States District Judge.

         Defendants GoPro, Inc., Nicholas Woodman, Brian McGee, and Anthony Bates move to dismiss Lead Plaintiff Troy Larkin's Amended Class Action Complaint (1AC).[1] Plaintiff opposed the motion and Defendants filed a reply. The Court held a hearing on June 27, 2017. Having considered the parties' papers and argument, the Court denies the motion to dismiss.[2]

         BACKGROUND

         The following facts are alleged in the 1AC.

         GoPro is a publicly traded Delaware corporation headquartered in San Mateo, California. 1AC ¶ 28. It makes and sells mountable and wearable cameras, drones and accessories. Id. ¶¶ 2, 28, 32. Nicholas Woodman is GoPro's founder and chief executive officer. Id. ¶ 29. Brian McGee is the company's chief financial officer. Id. ¶ 30. Anthony Bates is a director of the company and previously served as its president. Id. ¶ 31.

         On September 19, 2016, GoPro unveiled two new HERO5 model cameras and the Karma® quadcopter drone, which was GoPro's entry into the drone market. Id. ¶¶ 3-4; 64-66; 94. GoPro stated that the Karma drone would be available on October 23, 2016, globally, at select retailers and announced pricing for the drone. Id. ¶¶ 4, 70, 94. McGee told investors that the drone would take GoPro to “new heights” and that the company was on track to meet February 3, 2016 revenue guidance of $1.35-1.5 billion revenue for 2016. Id. ¶ 6; see also Id. ¶¶ 56, 70, 96-101.

         Plaintiff alleges, however, that these and other statements by Defendants were false and misleading. GoPro was suffering a severe shortage of Karma drones. Id. ¶¶ 7-8, 18, 71-76, 80. There also was a shortage of HERO5 cameras. Id. ¶¶ 81-84. Those drones that were available had an obvious battery latch design defect that led to a product recall on November 8, 2016. Id. ¶¶ 10, 18, 67-69, 78-80, 88-89. As this information became public, GoPro's share price fell from a class period high of $17.68 per share on October 5, 2016 to close at $10.41 per share on November 9, 2016. Id. ¶¶ 9, 11, 16, 19-21, 90-93, 160-163.

         Plaintiff alleges that Defendants knew of the product shortages due to GoPro's use of a cloud-based NetSuite enterprise resource planning system that gave them real-time access to supply chain information. Id. ¶¶ 11-13, 22, 33-47, 61, 63, 135. They were motivated to use the NetSuite system because of previous inventory issues. Id. ¶¶ 13, 50-53. They also were or should have been aware of the design defect because it would have been obvious during adequate product testing and Woodman himself had used the drone extensively. Id. ¶¶ 11, 14, 22, 60.

         Additionally, GoPro scoured the Internet for videos captured via the company's devices, and thus Defendants likely were aware of user videos of crashing drones that were posted on YouTube. Id. ¶¶ 14, 48-49, 78-79, 137.

         On November 16, 2016, Plaintiff Anton Bielousov filed the original complaint in this action. On February 6, 2017, the Court appointed Troy Larkin as lead plaintiff for a putative class of purchasers of GoPro stock. On March 14, 2017, Lead Plaintiff Larkin filed the 1AC, alleging that Defendants made various false or misleading statements between September 19, 2016 and November 8, 2016 about GoPro's HERO5 camera and Karma drone and misled investors regarding its ability to meet its previous revenue guidance. Plaintiff asserts two claims for violations of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. §§ 78a-78lll. The first claim is against all Defendants for violations of § 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5. The second claim is against the individual Defendants only as control persons of GoPro, for violations of § 20(a) of the Exchange Act, 15 U.S.C. § 78t(a).

         LEGAL STANDARD

         A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). On a motion under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the Court takes all material allegations as true and construes them in the light most favorable to the plaintiff. Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008). However, this principle is inapplicable to legal conclusions; “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are not taken as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555).

         “In addition to the pleading requirements of Rule 8, there are more demanding pleading requirements for certain causes of action, especially securities fraud.” In re Rigel Pharm., Inc., Sec. Litig, 697 F.3d 869, 876 (9th Cir. 2012). Rule 9(b) provides that in “alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). The allegations must be “specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Statements of the time, place and nature of the alleged fraudulent activities are sufficient, provided the plaintiff sets forth “what is false or misleading about a statement, and why it is false.” In re GlenFed, Inc., Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994), superseded by statute on other grounds, Private Securities Litigation Reform Act of 1995 (PSLRA), Pub. L. No. 104-67.

         In 1995, Congress enacted the PSLRA, which amends the Exchange Act. Under the PSLRA, a plaintiff must “state with particularity both the facts constituting the alleged violation, and the facts evidencing scienter, i.e., the defendant's intention to deceive, manipulate, or defraud.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 313 (2007) (internal quotation marks omitted).

         The PSLRA requires that the complaint “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(1). “This means that a plaintiff must provide, in great detail, all the relevant facts forming the basis of her belief.” In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 985 (9th Cir. 1999), abrogated on other grounds by S. Ferry LP, No. 2 v. Killinger, 542 F.3d 776, 784 (9th Cir. 2008). Factual allegations that are not based on a plaintiff's personal knowledge are allegations that are made on information and belief. See Id. at 985, 998 n.21. Thus, for example, if a plaintiff's sole basis for an allegation is a statement from a non-plaintiff witness, that allegation is made on information and belief, and the plaintiff must plead all facts on which that belief is based. See Id. at 985, 998 n.21. This does not mean, however, that a plaintiff must, for each allegation plead on information and belief, state every fact possessed that is in any way related to the allegation. Id. at 999 & n.24.

         Although Rule 9(b) does not require that scienter be plead with particularity, see Concha v. London, 62 F.3d 1493, 1503 (9th Cir. 1995), the PSLRA does. See 15 U.S.C. § 78u-4(b)(2). The PSLRA provides that “the complaint shall, with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). The “‘required state of mind' in § 78u-4(b)(2) refers to the scienter requirement applicable to the underlying securities fraud claim brought by the plaintiff.” Silicon Graphics, 183 F.3d at 975.

         Section 10(b) of the Exchange Act makes it unlawful for any person to “use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” 15 U.S.C. § 78j(b). Rule 10b-5(b) provides that it is “unlawful for any person, directly or indirectly, . . . to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading[.]” 17 C.F.R. § 240.10b-5(b). The PSLRA thus requires that a plaintiff plead with particularity ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.