Broker-Dealer Litigation - Greenberg Traurig LLP

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Healthy Habits, Inc., v. Fusion Excel Corp., 2011 WL 2448256 (C.D.Cal. June 17, 2011).
Plaintiffs brought suit against defendants for alleged violations of federal securities laws
and defendants moved to dismiss for failure to state a claim as required under the heightened
pleading standards of the PSLRA. Plaintiffs’ claims arose out of an alleged “multi-level
marketing” program of certain products of defendant corporation which plaintiffs claim should
have been characterized as the sale of alleged unregistered securities. Further, plaintiffs alleged
that defendants made fraudulent misrepresentations associated with sales under the program. The
court found that plaintiffs had adequately pleaded their claims and denied defendants’ motion to
dismiss.
In re Stec Inc. Securities Litigation, 2011 WL 2669217 (C.D.Cal. June 17, 2011).
Plaintiffs brought suit against defendants for violations of federal securities laws and
defendants moved to dismiss for failure to state a claim as required under the heightened
pleading standards of the PSLRA. Plaintiffs alleged that defendants made false statements and
omissions that dramatically inflated the company’s stock price and ultimately caused the stock
price to collapse when the truth of the misstatements and omissions was disclosed. Specifically,
plaintiffs’ claimed that defendants misrepresented an extraordinary purchase by a single buyer as
an ordinary course contract, that defendants were expecting other similar large volume purchases
by other customers and that such misrepresentations were incorporated in faulty revenue
projections. The court denied defendants’ motion, finding that plaintiffs had adequately alleged
the requisite elements in their allegations about statements and omissions regarding the large
customer contract and that scienter had been sufficiently pled.
In re Toyota Motor Corp. Securities Litigation, 2011 WL 2675395 (C.D.Cal. July 7, 2011).
Plaintiffs brought suit against defendant automobile manufacturers alleging violations of
federal securities laws and defendants moved to dismiss for failure to state a claim as required
under the heightened pleading standards of the PSLRA. Plaintiffs alleged violations relating to
defendants failure to disclose or properly handle a massive internal defect in one of their major
car lines relating to reported unintended acceleration of the vehicle. The court granted
defendants’ motion in part and denied in part, holding that (i) scienter was not adequately alleged
by the plaintiffs for a variety of misstatements and (ii) some statements were not sufficiently
alleged to be false, but other statements alleged were adequately pled.
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