United States District Court, S.D. New York
ALEJANDRO MEDINA and ADAM FURMAN, Individually and on Behalf of All Others Similarly Situated, Plaintiffs,
TREMOR VIDEO, INC., WILLIAM DAY, TODD SLOAN, LAURA DESMOND, RANDAL GLEIN, RACHEL LAM, WARREN LEE, JAMES ROSSMAN, ROBERT SCHECHTER, CREDIT SUISSE SECURITIES (USA) LLC, JEFFERIES LLC, CANACCORD GENUITY INC. and OPPENHEIMER & CO. INC., Defendants.
OPINION & ORDER
PAUL A. CROTTY, District Judge.
Plaintiffs Alejandro Medina and Adam Furman (collectively, "Plaintiffs") bring this securities class action against Tremor Video, Inc., an online video advertisement network provider; Tremor Video's executives, William Day, Todd Sloan, Laura Desmond, Randal Glein, Rachel Lam, Warren Lee, James Rossman, and Robery Schechter; and Tremor Video's underwriters, Credit Suisse Securities (USA) LLC, Jefferies LLC, Canaccord Genuity Inc., and Oppenheimer & Co. Inc. (collectively, "Defendants").
On April 3, 2013, Defendants filed a Form S-1 Registration Statement with the Securities Exchange Commission ("SEC"). Am. Compl. ¶ 28. After several revisions, the SEC declared the Registration Statement effective on June 26, 2013. Id. at ¶ 29-30. Defendants filed their prospectus on June 27, 2013, and issued 7.5 million common shares at $10 per share. Id. at ¶ 31.
Lead Plaintiffs Medina and Furman purchased common stock, traceable to Defendants' initial public offering ("IPO") on June 27, 2013. Id. at ¶ 5. On November 7, 2013, Defendants issued a press release on their results for the third quarter of 2013; the results were not good and Defendants reduced their revenue forecast for the 2013 year. Id. at ¶ 52. Market analysts issued negative reports and stock prices fell. Id. at ¶¶ 62-63. Within two weeks, Plaintiffs commenced this action claiming Defendants' IPO Registration Statement contained material errors and omissions in violation of §§ 11 and 15 of the Securities Act, 15 U.S.C. §§ 77k, 77o.
Plaintiffs' claims focus on three alleged omissions or misstatements of material facts:
(1) that two television networks-NBCUniversal and ABC-had not yet purchased their upfront advertisements by Defendants' IPO and were, therefore, two weeks behind their 2012 purchasing schedule, Am. Compl. ¶ 38;
(2) that Defendants' customers were increasingly resistant to performance-based pricing and were trending towards "lower margin demographic-based pricing, " id. at ¶ 45; and
(3) that Defendants "lacked sufficient programmatic video offerings and, therefore, were losing such sales to competitions, " id. at ¶ 46.
These three allegations are based on comments made by Defendants' during their November 7, 2013 press release and conference call explaining the third quarter losses. Id. at ¶¶ 52-63. Plaintiffs' theory appears to be that what was disclosed in November 2013 was known earlier and should have been disclosed in the June 2013 Registration Statement.
Defendants now move to dismiss the suit for failure to state a claim under Fed.R.Civ.P. 12(b)(6). For the reasons below, Defendants' motion is GRANTED.
I. Legal Standard
Pursuant to Fed.R.Civ.P. 12(b)(6), dismissal is required when a complaint fails to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Courts must "assume the veracity" of all well-pleaded factual allegations contained in the complaint, Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), and can consider materials incorporated into the complaint by reference and other matters subject to judicial notice. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2001). However, a complaint that merely contains labels and conclusions or formulaic recitations of the elements of the claim is insufficient and not "entitled to the assumption of ...