986 F. Supp. 2d 428
S.D.N.Y.2013Background
- MDL involves 41 Facebook IPO-related actions before SDNY; plaintiffs assert NASDAQ/NASDAQ OMX and officers liability for securities and negligence claims.
- Plaintiffs seek limited PSLRA discovery stay relief to obtain SEC-related documents and to amend the CAC.
- Defendants move to dismiss the CAC under Rule 12(b)(6); court partially denies and grants in part.
- Key issues center on SRO immunity applicability to technology design/testing vs. regulatory halting decisions, and on the viability of securities claims.
- SEC Order and Accommodation Plan influence, but do not moot all claims or immunity defenses.
- Court preliminarily addresses duty analyses and economic loss considerations in negligence claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SRO immunity bars the technology negligence claims | Plaintiffs rely on non-regulatory, private-business conduct not shielded by immunity | Nasdaq and officers are immune for regulatory actions and related statements | Technology negligence claims not shielded by SRO immunity |
| Whether the halting/not halting of trading falls under SRO immunity | Defendants’ halting decisions are non-regulatory negligence claims | Halting decisions are regulatory actions protected by immunity | Halting/not halting claims are protected by SRO immunity; these negligence claims dismissed |
| Whether pre-class period omissions regarding NASDAQ's capabilities support §10(b)-5 claims | Omissions about known system flaws misled investors | Pre-class period statements are inactionable puffery or not actionable omissions until class period | Pre-class period omissions survived; Affiliated Ute reliance may apply for omissions |
| Whether Class Period misstatements during IPO are protected by SRO immunity | Statements during IPO were false/misleading and actionable | Class Period statements fall within SRO immunity as regulatory actions or disclosures | Class Period statements are shielded by SRO immunity and dismissed |
| Whether the economic loss doctrine bars negligence claims relating to NASDAQ’s design/testing | Duty to protect investors creates recoverable economic losses | Economic loss doctrine bars purely economic torts absent privity | Economic loss doctrine does not bar technology negligence claims |
Key Cases Cited
- Standard Inv. Chartered, Inc. v. Nat’l Ass’n of Sec. Dealers, Inc., 637 F.3d 112 (2d Cir.2011) (absolute immunity for SROs when acting in regulatory capacity)
- DL Capital Group, LLC v. Nasdaq Stock Mkt., Inc., 409 F.3d 93 (2d Cir.2005) (immunity for regulatory actions; immunity extends to officers)
- NYSE Specialists Sec. Litig., 503 F.3d 89 (2d Cir.2007) (immunity extends to regulatory actions and decisions to suspend/cancel trades)
- Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (U.S. 1972) (presumption of reliance for omissions when duty to disclose)
- Sommer v. Fed. Signal Corp., 79 N.Y.2d 540 (N.Y. 1992) (duty to protect with significant public interest; economic loss doctrine context)