Securities and Derivative Litigation: Quarterly Update

2024 Securities Class Action Landscape

Last year saw a slight increase in federal securities class-action filings, with plaintiffs filing 225 cases in 2024, up from 215 in 2023 and marking a continued upswing in filings. [1] As in previous years, filings in district courts in the Second and Ninth Circuits dominated, with nearly two-thirds of new filings in those circuits (64 in the Second Circuit and 69 in the Ninth Circuit) in 2024. [2]

Artificial intelligence-filings doubled in 2024, and COVID-19 and SPAC filings rounded out the top three trending categories, together totaling nearly 20% of federal filings in 2024. [3] Of note, the number of SPAC-related filings fell by nearly 60% year-over-year (27 in 2023 to 11 in 2024) and the number of cryptocurrency-related filings fell by 50% year-over-year (15 in 2023 to 7 in 2024). [4] This reduction in cryptocurrency-related filings continues a trend from a high of 23 filings in 2022. [5]

While filings against U.S. issuers increased in 2024, filings against Non-U.S. Issuers fell to approximately 16% of federal filings; far below the 33% proportion that Non-U.S. Issuer suits commanded in 2020. [6]

Although the United States Supreme Court granted certiorari in two securities cases, the Court dismissed each case following oral argument, concluding that the writ of certiorari had been improvidently granted. [7]  We discuss those arguments in greater detail below.

Zillow and Class Certification Denials under Goldman

Recent class certification denials [8] have been influenced by the application of Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System. [9] Courts are now more rigorously scrutinizing whether securities plaintiffs can prove that the alleged misstatements had a price impact, often requiring expert testimony and a comprehensive economic analysis. [10] Indeed, a key factor is the examination of corrective disclosures—plaintiffs must demonstrate that such disclosures revealed the truth about the misstatements and caused a measurable impact on the stock price. [11] As a result, plaintiffs are facing greater challenges in obtaining class certification, with courts more frequently finding that the evidence does not directly support a finding of price impact.

While Goldman has been a frequent subject of discussion in federal district courts, only the Second Circuit has addressed its application. However, the Ninth Circuit’s recent decision to grant interlocutory appeal in Jaeger v. Zillow Grp., Inc. promises further guidance.

In Jaeger, the Western District of Washington certified a class of Zillow shareholders alleging that Zillow misrepresented the accuracy of its home pricing algorithm for buying, renovating, and selling houses, and that the subsequent corrective disclosure caused a decline in stock prices. [12] On appeal, Zillow argued that the district court’s decision had failed to accurately apply the Goldman standard because it had ignored the testimony of Zillow’s expert witness, who had opined that the alleged misstatements about Zillow’s home pricing algorithm did not directly impact the company’s stock price. [13] Further, Zillow argued that the district court had failed to adequately consider evidence of a “mismatch” between its initial statements about its pricing algorithm and the alleged corrective disclosure, [14] noting that the Ninth Circuit “has not addressed Goldman, leaving district courts without guidance on how to interpret it.” [15] As a result, lower courts have failed to apply Goldman’s mismatch standard to rebut the presumption of reliance, applying instead the standard for loss causation. [16] Zillow stressed that the “back-end” statements upon which plaintiffs rely as indication of a corrective disclosure must “expressly and specifically negate[]” the misstatement to impact market prices, a standard which they allege plaintiffs have failed to meet. [17] Specifically, it argued that because there is a mismatch between the contents of the alleged misrepresentations and the alleged corrective disclosures, they have shown a lack of price impact and rebutted the fraud-on-the market presumption of reliance. [18] Finally, Zillow argued that the district court committed a reversible error when it declined to evaluate evidence submitted demonstrating a lack of price impact, including its expert analyses and market data, “under the incorrect view that such evidence should be reserved for merits-stage proceedings.” [19] Indeed, Goldman requires an evaluation of “all evidence” affecting price impact even if it overlaps with the merits. [20]

If the Ninth Circuit adopts Zillow’s interpretation of Goldman, it would confirm the high evidentiary bar for securities plaintiffs to establish reliance through the fraud-on-the-market theory—potentially reducing settlements and litigation costs for companies. Conversely, a more relaxed standard could increase litigation risks and settlement pressures for companies.

Overall, a favorable decision for Zillow would help provide guidance for companies and allow them to navigate securities class actions with greater confidence and mitigate the impact of such suits on their operations and bottom-line.

The Supreme Court Dismisses Two PSLRA Cases Following Oral Argument, Leaving the Status Quo on Pleading Standards

The stringent pleading standards of the Private Securities Litigation Reform Act (“PSLRA”) require plaintiffs to state, inter alia, “facts giving rise to a strong inference that the defendant acted with the required state of mind” and the reasons why an alleged misrepresentation is misleading. 15 U.S.C. § 78u–4(b)(1); (b)(2)(a). In late 2024, the Supreme Court twice declined to clarify these standards, issuing two per curiam dismissals of securities cases from the Ninth Circuit following oral argument.

Facebook, Inc. v. Amalgamated Bank

On November 22, 2024, the Court dismissed Facebook, Inc. v. Amalgamated Bank, letting stand the Ninth Circuit’s ruling that a shareholder challenge relating to Facebook’s (now Meta’s) disclosures regarding the Cambridge Analytica scandal could proceed. [21] Facebook had allegedly described third-party misuse of users’ personal data as “a purely hypothetical risk that could harm the company if it materialized,” even though Cambridge Analytics had misused such data already. [22] The Ninth Circuit had held that “the problem is that Facebook represented the risk of improper access to or disclosure of Facebook user data as purely hypothetical when that exact risk had already transpired,” thus constituting falsity and allowing the plaintiffs’ claim to proceed. [23]  Facebook petitioned for a writ of certiorari, urging the Supreme Court to hold that corporations do not have to disclose past events with no known risk of ongoing or future business harm. [24]

At oral argument, the Justices and litigants sparred for nearly two hours, discussing various scenarios where past events would or would not need to be disclosed, and how a “reasonable investor” would interpret those scenarios. [25] Justices Kagan and Alito pressed Kevin Barber of the U.S. Office of the Solicitor General, appearing in support of the investors, whether a devastating fire at a manufacturing plant would require disclosure—and if that answer changed based on whether the fire was caused by “a meteorite” or “a crazy Molotov cocktail thrower,” whether investors would then “think the place is haunted,” or how much damage the plant sustained. [26] Justice Barrett stated, “based on a lot of the hypotheticals that you’ve gotten and the ones written in the briefs, that it’s about more than just the regulatory context but also about the context of the business, the nature of the risk, et cetera, which makes it not easily susceptible to a categorical rule.” [27] Despite the lively discussion, the Court’s dismissal came as a surprise. What was even more surprising was the fact that only a few weeks later, the Justices did the same thing again.

NVIDIA Corp. v. E. Ohman J:Or Founder AB

On December 11, 2024, the Court dismissed its second securities case post-argument: NVIDIA Corp. v. E. Ohman J:Or Fonder AB. [28] There, the appellant company invited the Court to address two questions: first, whether PSLRA plaintiffs alleging scienter based on allegations about internal company documents must plead the contents of those documents with particularity; second, whether PSLRA plaintiffs may rely on expert opinion to satisfy the PSLRA’s falsity requirement.[29]

As detailed in the Ninth Circuit’s opinion, NVIDIA concerned allegations from plaintiffs, shareholders of the graphics processing unit (“GPU”) manufacturer NVIDIA, that NVIDIA and its executives had misleadingly downplayed the extent to which demand for its GPUs were driven by cryptocurrency miners rather than video game users. [30] To support this position, plaintiffs relied on reports from independent research firms, statements of NVIDIA employees, and—most importantly—an expert witness’s analysis of public data about the activities of cryptocurrency miners which he used to develop estimates on how many GPUs would be needed to support such activity, and what percentage of those GPUs were manufactured by NVIDIA. [31] The Ninth Circuit held that this evidence sufficed to show that a “very substantial part of NVIDIA’s revenues during the Class Period” came from GPUs used for crypto mining, and thus the complaint stated a claim. [32]

NVIDIA filed a petition for certiorari to the Supreme Court, arguing that the Ninth Circuit’s opinion deepened an existing Circuit split regarding the required pleading standard for the PSLRA’s scienter requirement. It noted that five Circuits have held that the PSLRA requires plaintiffs to describe the actual contents of internal company documents allegedly reviewed by company executives that contradict the alleged misstatements, while two have held that plaintiffs must only allege what those internal documents might have shown. [33] NVIDIA also argued that the Ninth Circuit’s decision created a new Circuit split regarding whether a plaintiff may plead falsity based on an expert opinion, because the Second and Fifth Circuits had previously rejected that practice. [34]

At oral argument, however, the Supreme Court justices paid little attention to these legal arguments and instead focused on whether the issues before them were too fact-intensive to warrant the Court’s attention. Justice Sotomayor pressed Neil Katyal, arguing on NVIDIA’s behalf, on whether he was simply looking for the Court to “error-correct” the Ninth Circuit’s application of law to the specific facts of the case. [35]  She also questioned whether NVIDIA was correct to characterize Circuit Court rulings on the PSLRA’s falsity requirement as a “split,” noting that “none of the cases you cited in the split hold the rule you’re claiming.” [36]  Despite Katyal’s efforts to cast the Ninth Circuit’s legal analysis as “too loosey-goosey and [allowing] basically a recipe for fraud by hindsight,” the justices continually pushed back that NVIDIA was really asking the Court to reapply the law to the facts and re-weigh the complaint’s factual allegations. Justice Kagan even remarked to Katyal, “It just seems to me that you’re asking us to engage in a kind of analysis that we are not very good at and weren’t expecting to [do] when we took this case, to decide whether this report is flawed or not in the way you suggest.” [37]

Based on the Justices’ critical statements during the NVIDIA oral argument, the ultimate dismissal of the case a month later was no real shock to Court-watchers. But the rapid succession of this dismissal following the Facebook dismissal was notable. The Court had the opportunity to use these as vehicles to make resolve significant issues relating to the pleading standards and potential causes of action under the PSLRA, but chose not to do so. This reluctance suggests the Court may have little appetite to engage in sweeping changes to this body of law, particularly when presented with highly specific, fact-bound cases.

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1 Depending on the source, the number of federal securities class-action filings may slightly differ. Here, unless otherwise noted, our count tracks the count used in the filings database of the Stanford Law School Securities Class Action Clearinghouse in collaboration with Cornerstone Research. See Securities Class Action Clearinghouse: Filing Database, (last visited Feb. 10, 2025); Cornerstone Research, Securities Class Action Filings 2024 Year in Review (last visited Feb. 10, 2025) (“Cornerstone Research”). (go back)

2 Cornerstone Research at 1. (go back)

3 Id. at 2. (go back)

4 Id. (go back)

5 See Dechert LLP, Securities and Derivative Litigation: Quarterly Update (Feb. 20, 2024). (go back)

6 Cornerstone Research at 21. (go back)

7 Id. at 25 (citing Facebook Inc. v. Amalgamated Bank, 604 U.S. 4 (2024) (per curiam); Nvidia Corp. v. E. Hohman J:or Fonder, AB, 604 U.S. 20 (2024) (per curiam). (go back)

8 See In re Kirkland Lake Gold Ltd. Sec. Litig., No. 20-CV-4953, 2024 WL 1342800, at *1 (S.D.N.Y. Mar. 29, 2024); Shupe v. Rocket Companies, Inc., No. 1:21-cv-11528, 2024 WL 4349172 (E.D. Mich. Sep. 30, 2024). (go back)

9 141 S. Ct. 1951 (2021). (go back)

10 Id. at 1961. (go back)

11 Id. (go back)

12 See Jaeger v. Zillow Grp., Inc., No. C21-1551 TSZ, 2024 WL 3924557, at *1 (W.D. Wash. Aug. 23, 2024), petition for interlocutory appeal granted, No. 24-6605 (9th Cir. 2024). (go back)

13 Appellant’s Opening Brief at 37, Jaeger v. Zillow Grp. Inc., No. 24-6605 (9th Cir. Jan. 8, 2025), available at: https://assets.law360news.com/2281000/2281815/jaeger%20v%20zillow%20appellant%20brief.pdf. (go back)

14 Id. at 41-42. (go back)

15 Id. at 2. (go back)

16 Id. (go back)

17 Id. at 51. (go back)

18 Id. at 34-37. (go back)

19 Id. at 19. (go back)

20 Goldman, 141 S. Ct. at 1961. (go back)

21 In re Facebook, Inc. Sec. Litig., 87 F.4th 934 (9th Cir. 2023). (go back)

22 Id. at 944, 949. (go back)

23 Id. at 949-50. (go back)

24 See Pet. for Writ of Certiorari, Facebook, Inc. v. Amalgamated Bank, No. 23-980 (Mar. 4, 2024) available at: https://www.supremecourt.gov/DocketPDF/23/23-980/302143/20240304124120337_Meta%20Petition%20for%20Certiorari.pdf. (go back)

25 See generally Oral Argument Tr., Facebook, Inc. v. Amalgamated Bank, No. 23-980 (Nov. 6, 2024) available at: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2024/23-980_q8l1.pdf. (go back)

26 Id. at 87:10-88:19. (go back)

27 Id. at 41:13-21. (go back)

28 https://www.supremecourt.gov/opinions/24pdf/23-970_2dq3.pdf. (go back)

29 See Pet. For Writ of Certiorari, NVIDIA Corp. v. E. Ohman J:Or Fonder AB, No. 23-970 (Mar. 4, 2024), available at: https://www.supremecourt.gov/DocketPDF/23/23-970/302146/20240304124922302_NVIDIA%20Cert%20Petition.pdf (hereinafter “Petition”). (go back)

30 E. Ohman J:or Fonder AB v. NVIDIA Corp., 81 F.4th 918, 924-26 (9th Cir. 2023). (go back)

31 Id. at 929-32. (go back)

32 Id. at 932. (go back)

33 Petition at 15-23. (go back)

34 Id. at 26-31. (go back)

35 See Oral Argument Tr. at 11:11-19, NVIDIA Corp. v. E. Ohman J:Or Fonder AB, No. 23-970 (Nov. 13, 2024), available at: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2024/23-970_4425.pdf.(go back)

36 Id. at 13:6-9. (go back)

37 Id. at 34:15-19. (go back)