California social media users who have been following the shareholder lawsuit against Facebook may have heard that its dismissal was recently upheld on appeal. The 3-0 decision was handed down on July 24 by the U.S. Court of Appeals for the 2nd Circuit, affirming the February 2013 ruling by a federal judge in New York.
The lawsuit was filed after Facebook’s share price plunged following its initial public offering in May 2012. The IPO share price was $38, but by September 2012, the price had fallen to $17.55. Numerous lawsuits were then filed against both the company and CEO Mark Zuckerberg.
The plaintiffs in the instant case had alleged that Facebook and its executives misled them about how much they could expect the company to grow. In its ruling, the three-judge panel found that the plaintiffs in the case did not have standing to sue because they did not own shares at the time Facebook made its required disclosures. Since Facebook did that before it went public, none of the plaintiffs owned shares at that time.
Business litigation may involve many different types of disputes, including shareholder disputes, breach of contract allegations, deceptive trade practices and other issues. Businesses that are involved in a dispute may want to seek a consultation with an attorney. who may be able to help resolve the dispute short of having to go to court. Legal counsel may also be able to negotiate a settlement or reach a resolution through an arbitration hearing. In the event a matter can’t be resolved through these alternative manners, an attorney may proceed to trial.
Source: FOX Business, “Facebook defeats shareholder litigation over IPO,” Reuters, July 24, 2015.