I. Question Presented This memorandum serves to address whether Pied Piper’s (“Defendant’s”) motion to dismiss for failure to state a claim should be granted or denied. Defendant seek dismissal of Hanneman’s (“Plaintiff’s”) two claims. The first claim alleges that Defendant’s statements discussing the future of the company were materially false and misleading in violation of Rule 10b-5. The second claim alleges that Defendant’s omitted a material fact from their statements, which renders those statements pertaining to the safety of Defendant’s application material false and misleading, also in violation of Rule 10b-5.
II. Brief Answer This Court should grant Defendant’s motion to dismiss regarding the claim that Defendant’s statements …show more content…
The announcement also indicated that Pied Piper “expect[ed] to meet [its] projected revenue goals.” (Id.). Hooli and Pied Piper then conducted the large-scale study which analyzed the application on 5,000 Hooli phones. (Id. at 35). The results of the study found that four phone caught fire while running the application in the background, and six phones caught fire while downloading 3D video, concluding that “[t]he number of phone catching fire while the Pied Piper app is downloading 3D videos is not statistically significant.” (Id.). After consulting an attorney who determined that Pied Piper did not have to disclose the results to investors because they were not material, Hendricks and Belson decided not to disclose the study to investors and went ahead with the application release and IPO. (Id.). The release of the application and the IPO were an initial success, but soon after a blog post was written that exposed that phone with the Pied Piper app were catching fire. (Id. at 36-7). This caused Pied Piper’s stock to drop in value. (Id.). When reports first began circulating that Defendant’s application might be causing phones to ignite, Defendant’s again made a statement, this time maintaining that “[a]ll Pied Piper products are considered safe.” (Id. at 38). Stock prices recovered slightly, but not to the level from the IPO.
II. Brief Answer This Court should grant Defendant’s motion to dismiss regarding the claim that Defendant’s statements …show more content…
The announcement also indicated that Pied Piper “expect[ed] to meet [its] projected revenue goals.” (Id.). Hooli and Pied Piper then conducted the large-scale study which analyzed the application on 5,000 Hooli phones. (Id. at 35). The results of the study found that four phone caught fire while running the application in the background, and six phones caught fire while downloading 3D video, concluding that “[t]he number of phone catching fire while the Pied Piper app is downloading 3D videos is not statistically significant.” (Id.). After consulting an attorney who determined that Pied Piper did not have to disclose the results to investors because they were not material, Hendricks and Belson decided not to disclose the study to investors and went ahead with the application release and IPO. (Id.). The release of the application and the IPO were an initial success, but soon after a blog post was written that exposed that phone with the Pied Piper app were catching fire. (Id. at 36-7). This caused Pied Piper’s stock to drop in value. (Id.). When reports first began circulating that Defendant’s application might be causing phones to ignite, Defendant’s again made a statement, this time maintaining that “[a]ll Pied Piper products are considered safe.” (Id. at 38). Stock prices recovered slightly, but not to the level from the IPO.