Class Actions

Subscribe to Class Actions

Today, Judge Engelmayer dismissed with prejudice a putative securities class action filed against DraftKings, Inc., and denied Plaintiffs’ leave to replead. Plaintiffs’ Second Amended Complaint alleged that a company that DraftKings had acquired in the course of going public, SBTech (Global) Limited (“SBTech”), had secretly operated in “black-market” jurisdictions, thereby exposing DraftKings to regulatory and criminal risks. It further alleged that DraftKings made materially false and misleading statements about, and failed to disclose, SBTech’s violations of foreign law and their potential consequences.

Plaintiffs argued that DraftKings’s shares traded at artificially inflated prices until June 15, 2021, when a short seller, Hindenburg Research published a report that revealed SBTech’s ostensible operations in black market jurisdictions and the risks to which the merger with SBTech allegedly exposed DraftKings. That day, DraftKings’s shares fell 4.17%.

In dismissing the Second Amended Complaint, the Court focused on Plaintiffs’ reliance on the Hindenburg report without having verified the information contained in the report:…

Continue Reading Judge Engelmayer Dismisses Putative Securities Class Action Because Allegations Were Based On Unconfirmed Allegations in Short Seller’s Report

In a new putative class action complaint filed today, former Miami Dolphins head coach Brian Flores accuses the NFL of racial discrimination in hiring. One aspect of the allegations concerns the “Rooney Rule,” by which teams are supposed to interview at least one diverse candidate when coaching and management vacancies arise.
Continue Reading Complaint: Bill Belichik’s Text to the Wrong “Brian” Proves Giants Engaged in “Sham” Interview of Black Coaching Prospect

In an opinion today, Judge Furman dismissed a putative class action against a retailer, Bonobos, whose customer data (names, addresses, emails, and the like) was stolen and posted online. Judge Furman found that the plaintiff, Bradley Cooper, did not allege a level of impending harm or risk that was sufficient to establish standing to sue. Judge Furman contrasted the facts at issue with those in other cases where more sensitive information was stolen (like Social Security numbers), giving rise to high risk of identity theft.

Cooper had sought to establish standing based on his alleged risk of “credential stuffing,” which is described in the opinion as a “technique in which [hackers] enter credentials gained from a hack into third-party websites, hoping that they will match an existing account because the consumer has reused the same password elsewhere,” but Judge Furman was not persuaded:…
Continue Reading Judge Furman Dismisses Data Breach Class Action Because Stolen Information Didn’t Give Rise to “Impending” Harm

In an opinion Tuesday, Judge Marrero allowed a putative consumer fraud class action to proceed (in part) against Canada Goose.  The plaintiff purchased a jacket that he claims was falsely marketed with a paper hang tag stating that the company supports the “ethical, responsible, and sustainable sourcing and use of real fur.”  Judge Marrero rejected the company’s argument that these statements were “too general and subjective” to be actionable, and instead found that the allegations, though “thin,” were enough to proceed beyond a motion to dismiss:…
Continue Reading Judge Marrero Allows Consumer Fraud Claims Over Jackets Marketed as Made with Ethically-Sourced Fur

In an opinion yesterday, Judge Broderick dismissed a putative class action brought by former participants in the Catholic Church’s Independent Reconciliation and Compensation Programs who had accepted settlements relating to childhood sex abuse claims. The plaintiffs sought to undo the settlements on the theory that the settlement amounts were fraudulently induced, insofar as they were not determined “independently” but instead were the product of interference from the Church itself and subject to an undisclosed cap of $500,000.

Judge Broderick found that the factual allegations supporting these theories, which had been pleaded as based only on “information and belief,” was insufficient:…
Continue Reading Judge Broderick: Participants in Catholic Church’s “Reconciliation” Program Cannot Unwind Settlements

Last week, Judge Daniels dismissed a putative class action against NYU over its decision to conduct classes remotely during the COVID-19 pandemic.  He concluded the plaintiff could not identify any actual promise or agreement by which NYU stated its classes would be held in person:…
Continue Reading Judge Daniels: NYU’s Remote Learning During the Pandemic Is Not a Contract Breach Because NYU Never Clearly Promised In-Person Classes

In an opinion yesterday, Judge Engelmayer dismissed a class action accusing Whole Foods of exaggerating the weights of certain pre-packaged foods, so as to overcharge customers.  The genesis of the suit was an analysis by New York City’s Department of Consumer Affairs (DCA) finding that 89% of tested products had incorrect weights.

The lead plaintiff, Sean John, claimed to have bought cupcakes and cheese from Whole Foods, but, since he could only speculate that those particular purchases were weighed wrongly, Judge Engelmayer found he lacked standing:

Although John’s testimony can establish that he purchased cupcakes and cheeses from two Whole Foods stores, there is no competent, non-speculative, evidence that any cupcake or cheese item John bought weighed less than the weight used to price it. The DCA investigation, in the form of spot checks at certain stores, does not support the inference of systematic over-pricing. And John in discovery did not adduce competent evidence of a uniform practice by Whole Foods of falsely inflating the weight of its pre-packaged goods in general, or of cupcakes and cheese in particular.

John’s argument that there was systematic overpricing was as follows: because “Whole Foods utilizes uniform recipes and procedures for pre-packaged cupcakes and cheeses,” “a single instance of a short-weight cupcake or cheese item could be found to dictate that all food items of the same type, having been produced pursuant to the same specifications, must have been identically short-weight.” Judge Engelmayer found this argument “in tension with lived kitchen experience”:…
Continue Reading Judge Engelmayer: “Short Weighting” Class Action Against Whole Foods Disproven by “Lived Kitchen Experience”

Yesterday, Judge Rakoff sanctioned an attorney for an objector to the $3 billion Petrobras securities litigation settlement (see our full coverage of the Petrobras litigation here).  Judge Rakoff had approved the settlement over the objections, after which the objectors filed an appeal.  According to the class plaintiff, the appeals were part of an “extortionist agenda” to extract a monetary settlement in exchange for dismissing their appeals.

Judge Rakoff warned against the rise of frivolous objections to class settlements:…
Continue Reading Judge Rakoff Grants Sanctions for “Objector Extortion” in Proposed Class Action Settlement