Lu v. Cheer Holding Inc, 1:24-cv-00459

Plaintiff Kevin X. Lu, a shareholder, sued Cheer Holding, Inc. and affiliates for securities fraud under Sections 10(b), 13(e), and 20(a) of the Securities Exchange Act, stemming from a failed take-private merger.
The merger agreement would have taken Cheer private at $1.55 per share, but its completion was subject to various conditions, including regulatory approvals and material compliance by both sides.
After shareholder approval, the merger was not consummated due to the Buyer Defendants' failure to meet certain conditions; Cheer Holding terminated the agreement and its stock price dropped.
Plaintiff initially sued in state court asserting common law claims; after removal and dismissal on forum non conveniens grounds, he amended his complaint to bring federal securities claims.
Defendants moved to dismiss, asserting the complaint failed to meet the pleading standards required by Rule 12(b)(6), Rule 9(b), and the PSLRA.

Issue	Plaintiff's Argument	Defendant's Argument	Held
10(b) Fraud—Merger Statements	Defendants made misleading statements about merger conditions and intentions in public filings.	All merger risks and conditions were fully disclosed; allegations are speculative.	Dismissed—plaintiff failed to plead specific facts or meet PSLRA standards.
10(b) Fraud—Merger Enforcement Rights	Statements about right to enforce merger were misleading because company did not exercise them.	Company disclosed it only had a right, not an obligation, to enforce; failure to enforce does not imply fraud.	Dismissed—statements about rights were accurate; not enforcing is not actionable.
Section 13(e) Disclosure	Plaintiff can bring a private cause and alleges material omissions in disclosures.	Legal basis for private right is unsettled; no material misstatements alleged.	Dismissed—court declines to decide private right; no actionable misstatements.
Leave to Amend	Plaintiff should be allowed to further amend the complaint.	Plaintiff already amended once; new facts/theories could have been previously raised; further amendment would be futile.	Denied—further amendment futile and previously allowed.

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (articulates plausibility standard for 12(b)(6) motions)
Ashcroft v. Iqbal, 556 U.S. 662 (details pleading standards for facial plausibility)
Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (discusses PSLRA pleading standards for securities fraud)
Stoneridge Inv. Partners, LLC v. Sci.-Atlanta, 552 U.S. 148 (sets out 10(b) private damages action elements)
ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (explains requirements for securities fraud pleading and control person liability)
McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184 (discretionary standard for granting leave to amend)