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Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 1 of 27
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`IN RE TWITTER, INC. SECURITIES
`LITIGATION
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`CASE NO. 19-cv-07149-YGR
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`ORDER GRANTING DEFENDANTS’ MOTION
`TO DISMISS THE CONSOLIDATED CLASS
`ACTION COMPLAINT
`Re: Dkt. No. 53
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`Lead plaintiffs the Weston Family Partnership LLLP and the Twitter Investor Group bring
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`this consolidated securities class action litigation alleging false and misleading statements and
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`omissions between July 26, 2019 and October 23, 2019 (the “Class Period”) against defendants
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`Twitter, Inc. (“Twitter” or the “Company”), chief executive officer Jack Dorsey (“Dorsey”), and
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`chief financial officer Ned Segal (“Segal”). Specifically, plaintiffs raise two causes of action,
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`namely, violation of (1) Section 10(b) of the Securities Exchange Act (“Exchange Act”) and Rule
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`10b-5 against all defendants, and (2) Section 20(a) of the Exchange Act against the individual
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`defendants.
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`All defendants move to dismiss pursuant to Federal Rules of Civil Procedure 9(b) and
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`12(b)(6) and the Private Securities Litigation Reform Act of 1995 (“PSLRA”). Defendants
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`challenge plaintiffs’ Section 10(b) and Rule 10b-5 claim on three grounds: plaintiffs fail to (i)
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`allege statements that are materially false or misleading, or otherwise actionable; (ii) establish a
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`strong inference of scienter; and (iii) establish loss causation. Without a primary violation of
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`Section 10(b), defendants argue plaintiffs’ Section 20(a) claim similarly fails.
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`Having considered the papers submitted and the pleadings in this action, the hearing held
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`on November 10, 2020, and for the reasons set forth below, the Court hereby GRANTS the motion
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`Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 2 of 27
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`to dismiss WITH LEAVE TO AMEND.1
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`1 In connection with their motion to dismiss, defendants submitted a request for judicial
`notice (Dkt. No. 55) for the following documents attached as exhibits to the Declaration of Susan
`E. Engel dated June 12, 2019 (Dkt. No. 54): (i) Ex. 1, Twitter’s Annual Report on Form 10-K for
`the period ended December 31, 2018 (the “2018 Form 10-K”); (ii) Ex. 2, a screenshot entitled
`“Twitter Support on Twitter,” https://twitter.com/TwitterSupport/status/1158876245716697089
`(last accessed June 10, 2019) (the “August 6 Tweet”); (iii) Ex. 3, a webpage entitled “An issue
`with your settings choices related to ads on Twitter,” available at https://help.twitter.com/en/ads-
`settings (last accessed June 3, 2020) (the “August 6 Blog Post”); (iv) Ex. 4, Twitter’s Quarterly
`Report on Form 10-Q for the period ended September 30, 2019 (the “Q3 2019 Form 10-Q”); (v)
`Ex. 5, Twitter’s Q2 2019 Shareholder Letter dated July 26, 2019 (the “Q2 2019 Shareholder
`Letter”); (vi) Ex. 6, Twitter’s Quarterly Report on Form 10-Q for the period ended June 30, 2019
`(the “Q2 2019 Form 10-Q”); (vii) Ex. 7, the transcript of Twitter’s Question and Answer
`Presentation at the Citi Global Technology Conference dated September 4, 2019, available for
`download from https://s22.q4cdn.com/826641620/files/doc_downloads/2019/Citi-2019-
`Transcript.pdf (downloaded on June 3, 2020) (the “CGTC Tr.”); (viii) Ex. 8, Twitter’s Responses
`and Objections to KBC Asset Management NV’s Fifth Set of Interrogatories, dated May 31, 2019
`and filed as Ex. 20 to Plaintiffs’ Opposition to Defendants’ Motion for Summary Judgment in In
`re Twitter, Inc. Sec. Litig., Case No, 4:16-CV-5314 (JST) (N.D. Cal. filed. Sept. 16, 2016) (Dkt.
`No. 413-6) (the “May 2019 Discovery Responses”); (ix) Ex. 9, the Declaration of Michael
`Nierenberg dated September 12, 2019, filed as Exhibit 1 to Defendants’ Administrative Motion to
`File Under Seal Defendants’ Motion for Summary Judgment in In re Twitter, Inc. Sec. Litig., Case
`No, 4:16-CV-5314 (JST) (N.D. Cal. filed. Sept. 16, 2016) (Dkt. No. 340-1) (“Nierenberg Decl.”);
`(x) Ex. 10, Statement of Changes of Beneficial Ownership of Securities on Form 4 of Twitter on
`behalf of Ned Segal dated August 4, 2019; (xi) Ex. 11, Statement of Changes of Beneficial
`Ownership of Securities on Form 4 of Twitter on behalf of Ned Segal dated September 3, 2019;
`(xii) Ex. 12, Statement of Changes of Beneficial Ownership of Securities on Form 4 of Twitter on
`behalf of Ned Segal dated September 12, 2019; and Ex. 13, Statement of Changes of Beneficial
`Ownership of Securities on Form 4 of Twitter on behalf of Ned Segal dated October 9, 2019
`(collectively, with Exs. 10, 11, and 12, the “Form 4s”). Plaintiffs do not oppose.
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`Exhibits 1 through 9 are judicially noticed as documents which are incorporated into the
`complaint by reference. See, e.g., Gammel v. Hewlett-Packard Co., 905 F. Supp. 2d 1052, 1061–
`62 (C.D. Cal. 2012). Exhibits 1, 4, 5, and 6 are also appropriately noticed as documents filed with
`the Securities Exchange Commission (“SEC”). See In re Silicon Graphics Inc., Sec. Litig., 183
`F.3d 970, 986 (9th Cir. 1999), abrogated on other grounds as rec’d in S. Ferry LP, No. 2 v.
`Killinger, 542 F.3d 776, 784 (9th Cir. 2008); In re Netflix, Inc. Sec. Litig., No. 04-CV-2978
`(FMS), 2005 WL 1562858, at *5 (N.D. Cal. June 28, 2005) (finding that “SEC filings are
`appropriately noticed by the Court” on a motion to dismiss, even when those documents were filed
`with the SEC outside the class period). Exhibits 2 through 3 are noticed in a securities fraud
`action as documents reflecting publicly available information about the company, see Heliotrope
`Gen., Inc. v. Ford Motor Co., 189 F.3d 971, 981 n.18 (9th Cir. 1999) (holding that it is appropriate
`to take judicial notice of news articles on motion to dismiss); SEC v. Mozilo, No. 09-CV-3994
`(JFW), 2009 WL 3807124, at *7 n.2 (C.D. Cal. Nov. 3, 2009) (taking judicial notice of
`“transcripts of earnings conference calls and investor forums, newspaper articles” and other
`documents). Additionally, Exhibits 8 and 9, which form a basis for plaintiffs’ scienter allegations,
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`Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 3 of 27
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`I. BACKGROUND
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`Relevant facts based on judicially noticeable documents and allegations from plaintiffs’
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`Consolidated Class Action Complaint (“CCAC”) are set forth below:
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`A. TWITTER’S ADVERTISING BUSINESS AND THE MAP PRODUCT
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`Twitter is a “global platform for public self-expression and conversation in real time”
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`centered around short-form text, image, and video content. (CCAC ¶¶ 4, 39, 41.) Users can
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`“tweet” their thoughts to which other users can reply, “like,” or “retweet.” (Id. ¶ 39.) Available in
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`more than 40 languages, Twitter can be accessed on the Internet via twitter.com, by mobile device,
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`and through text messages. (Id.)
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`Twitter generates the majority of its revenue from the sale of advertisements. (Id. ¶¶ 5, 43
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`(citing the 2018 and 2019 Form 10-K’s, each reporting that the Company received approximately
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`86% of its revenue from advertising).) The interactive platform enables Twitter to collect data
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`about its users, which it shares with advertisers to target users with focused advertisements. (Id.
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`¶¶ 5, 42.) Twitter collects this data in two ways. First, Twitter compiles a set of inferences about
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`the user based on their tweets, Likes, Retweets, and accounts the user follows, which helps
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`“determine what topics the user is interested in, the user’s age, the languages the user speaks and
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`other signals.” Second, it accesses users’ data and device setting, which provides “critical insight
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`regarding other websites that the device visits.” (Id. ¶¶ 48–51.) Twitter shares this personalized
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`information with advertisers and “measurement partners” who then tailor specific advertisements
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`for the user. (Id. ¶ 53.)2
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`To purchase an advertisement, Twitter’s customers place bids on a continuous and
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`are noticed as court documents that are already in the public record, see Harris v. County of
`Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (“We may take judicial notice of undisputed matters
`of public record, including documents on file in federal or state courts.”), and Exhibits 10 through
`13, which are SEC Form 4s, are judicially noticed “even when not referenced in the pleading, to
`prove that stock sales were made pursuant to a Rule 10b5-1 trading plan.” See City of Royal Oak
`Ret. Sys. v. Juniper Networks, Inc., 880 F. Supp. 2d 1045, 1059 (N.D. Cal. 2012). Accordingly,
`the Court GRANTS defendants’ requests and takes judicial notice of the exhibits attached to
`Docket Number 54.
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` Measurement partners help advertisers plan and manage advertising campaigns. (Compl.
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`3
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`¶ 52.)
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`automated real-time bidding auction platform. (Id. ¶ 44.) The bidding process begins when a user
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`logs-in to Twitter. (Id. ¶ 45.) After being provided with data about the user, advertisers who have
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`a matching advertisement submit their bids and are entered into the auction. (Id.) The
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`personalized advertisement of the highest bidder is then shown to the user at the exact moment
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`that it is relevant. (Id.) This process happens in less than a second. (Id.) According to discovery
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`produced in an unrelated litigation involving the Company, for a period in 2015, Dorsey, the then-
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`chief financial officer (not Segal), and other senior executives at Twitter received daily reports
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`about certain key metrics (as defined in Twitter’s SEC filings), including cost per ad engagement
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`(“CPE”). (Id. ¶¶ 13–14, 46, 88; May 2019 Discovery Responses (Response to Interrogatory No.
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`17).) CPE measures demand for Twitter’s advertising products on the auction platform. (CCAC
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`¶ 46.)
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`One such advertising product is the Mobile Application Promotion (“MAP”), which, rather
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`than simply generating brand awareness, prompts users to install an advertiser’s mobile
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`application on their devices, or re-engage with a mobile application that the user has already
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`downloaded. (Id. ¶¶ 8, 56–58.) As a “direct-response” advertisement, MAP is most effective
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`when an advertiser knows information about the user’s device settings. (Id. ¶ 8.) Advertisers only
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`pay for each click on the “install” or “open” buttons in the advertisement. (Id. ¶¶ 47, 59.) To
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`evaluate the product’s performance, Twitter tracks various MAP-specific metrics. (Id. ¶¶ 60–61.)
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`According to the declaration of one of Twitter’s sales finance managers filed in another
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`unrelated litigation, new direct-response products like MAP were “the primary source of expected
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`revenue growth” for Twitter in 2015. (Id. ¶ 62; Nierenberg Decl. ¶ 13.) Further, a confidential
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`witness (“CI-1”), “a former AdOps Specialist for Twitter from 2014 through 2018[,] who worked
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`with Twitter’s advertising customers[ ] during 2014 [through] 2016,” claims that MAP itself
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`accounted for approximately 20% of the Company’s global revenue. (CCAC ¶ 63.) At various
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`times prior to the Class Period, defendants represented that they planned to improve the MAP
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`product given that such direct-response advertisements were viewed as revenue drivers for the
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`Company. (Id. ¶¶ 9, 64, 74.)
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`Even though its ability to generate advertising revenue relies heavily on sharing user data
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`Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 5 of 27
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`with advertisers, Twitter permits its users to opt-out of the data sharing program. (Id. ¶¶ 5, 7, 54–
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`55, 65–71.) Users are also able to opt-out of receiving targeted advertising. (Id.)
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`B. EVENTS DURING THE CLASS PERIOD
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`On July 26, 2019, the start of the Class Period, defendants disclosed Twitter’s financial
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`results for the quarter ended June 30, 2019 in a letter to shareholders. (Id. ¶¶ 10, 104.) Both in the
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`letter and during a same-day conference call with investors, Dorsey and Segal represented that
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`improvements to MAP’s stability, performance, and scale were ongoing and would have a positive
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`gradual impact on revenue. (Id.; see also Q2 2019 Shareholder Letter.) The Company’s Q2 2019
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`Form 10-Q dated July 31, 2019 repeated the substance of these statements. (CCAC ¶ 107; Q2
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`2019 Form 10-Q.) In the Q2 2019 Form 10-Q, both Segal and Dorsey certified the following
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`risks: “Our products and services may contain undetected software errors, which could harm our
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`business and operating results[]”; “If new or enhanced products, product features or services fail to
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`engage users, content partners and advertisers, we may fail to attract or retain users or to generate
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`sufficient revenue or operating profit to justify our investments, and our business and operating
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`results could be affected[]”; and “[C]hanges to existing products, services and initiatives could fail
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`to attract users, content partners, advertisers and platform partners or generate revenue.” (CCAC
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`¶¶ 109, 111; Q2 2019 Form 10-Q.)
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`On August 6, 2019, Twitter announced to its users that it had “recently discovered and
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`fixed issues related to your setting choices for the way we deliver personalized ads, and when we
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`share certain data with trusted measurement and advertising partners.” (Id. ¶¶ 15, 113; see also
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`August 6 Tweet.) More specifically, the Company explained:
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`“(a) If you clicked or viewed an advertisement for a mobile
`application and subsequently interacted with the mobile
`application since May 2018, we may have shared certain data . . .
`with trusted measurement and advertising partners, even if you
`didn’t give us permission to do so.
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`(b) As part of a process we use to try and serve more relevant
`advertising on Twitter and other services since September 2018,
`we may have shown you ads based on inferences we made about
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`the devices you use, even if you did not give us permission to do
`so. . . .”
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`(CCAC ¶ 79; see also id. ¶¶ 72–73; August 6 Blog Post.) Twitter stated that it had “fixed these
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`issues on August 5, 2019,” referring to the two aforementioned issues. (CCAC ¶¶ 80–81, 113;
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`August 6 Blog Post.) According to CI-1, the former AdOps specialist, “these were fundamental
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`bugs that would have taken at least 3 to 6 months to isolate and fix.” (CCAC ¶ 82.)
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`One month later, on September 4, 2019, Segal attended the Citi Global Technology
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`Conference in New York City. (Id. ¶¶ 17, 115.) At the conference, when asked why it was
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`“taking so long to roll [the improved MAP] out” and “[w]here [Twitter was then] in that
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`initiative,” Segal stated that “MAP work is “ongoing,” that Twitter had made improvements to
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`MAP, and that it “continued to sell the existing MAP product.” (Id.; CGTC Tr. at 7.) In addition,
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`when asked “why [the Company has] particular strength in monetization outside the US,” Segal
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`stated, in part, that Twitter’s “strength just varies from one geography to another” and “Asia, for
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`example, has tended to be more MAP-focused historically.” (CCAC ¶ 118; CGTC Tr. at 9.)
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`During the Class Period, Segal did not purchase any Twitter shares on the open market but
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`sold approximately 10% of his holdings (excluding restricted stock). (CCAC ¶ 32; Form 4s.)
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`C. END OF CLASS PERIOD DISCLOSURE
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`On October 24, 2019, before the market opened, Dorsey and Segal conducted an investor
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`conference call regarding Twitter’s financial results for the quarter ended September 30, 2019.
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`(CCAC ¶¶ 19, 89–91, 120, 146.) During the call, Segal disclosed that the changes implemented to
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`address the privacy violations—i.e., turning off user data sharing—had negatively affected third
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`quarter revenue growth by “3 or more points” and that these negative effects would continue
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`through at least the fourth quarter of 2019 by “4 or more points.” (Id. ¶¶ 19, 89–91, 94.) In
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`addition, defendants reported that “[t]he 1% decline in Japanese revenue was due to a meaningful
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`drop in MAP, related to bugs in our legacy product” and that CPE “was down 12%, reflecting a
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`mix shift from MAP to video ad formats (which have lower CPEs) and like-for-like price
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`decreases across most ad formats . . . .” (Id. ¶ 89.) When asked about the “cost from the bugs,”
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`Segal responded that “from a resourcing perspective[,] when things like this come up is that we—
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`Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 7 of 27
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`people, we end up shifting, or people are spending their time sometimes where we work on
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`remediation when we may have preferred to work on other things.” (Id. ¶ 93.)
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`Following this news, Twitter’s shares declined from a closing price of $38.83 per share on
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`October 23, 2019, to close at $30.73 per share, a drop of $8.10 per share, or more than 20%, on
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`heavier than average trading volume (more than 105 million shares traded). (Id. ¶¶ 20, 97, 121,
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`148.) On October 30, 2019, defendants filed Twitter’s third quarter report Form 10-Q with the
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`SEC for the quarter ended September 30, 2019. (Id. ¶ 98; Q3 2019 Form 10-Q.) The report
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`repeated the disclosures made on October 24, 2019 concerning the negative impact that the
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`changes to MAP had on the Company’s reported revenue:
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`In the third quarter of 2019, we discovered, and took steps to
`remediate, bugs that primarily affected our legacy MAP product,
`impacting our ability to target ads and share data with our
`measurement and ad partners. We also discovered that certain
`personalization and data settings were not operating as expected.
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`(Id.)
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`II. LEGAL FRAMEWORK
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`A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in
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`the complaint. Ileto v. Glock, Inc., 349 F. 3d 1191, 1199–1200 (9th Cir. 2003). “Dismissal can be
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`based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a
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`cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).
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`All allegations of material fact are taken as true and construed in the light most favorable to the
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`plaintiff. Johnson v. Lucent Techs., Inc., 653 F.3d 1000, 1010–11 (9th Cir. 2011). To survive a
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`motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a
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`claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
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`Bell Atl. Corp. v. Twombly, 550 U.S 544, 577 (2007)). That requirement is met “when the
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`plaintiff pleads factual content that allows the court to draw the reasonable inferences that the
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`defendant is liable for the misconduct alleged.” Id.
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`Rule 9(b) requires a party bringing a fraud claim to “state with particularity the
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`circumstances constituting [such] fraud . . . .” Fed. R. Civ. P. 9(b). This “requires . . . an account
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`of the time, place, and specific content of the false representations as well as the identities of the
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`parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007)
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`(citing Rule 9(b)) (internal quotation marks omitted). Similarly, in pleading a cause of action for
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`securities fraud under the PSLRA, “the complaint shall specify each statement alleged to have
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`been misleading, the reason or reasons why the statement is misleading, and, if an allegation
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`regarding the statement or omission is made on information and belief, the complaint shall state
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`with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b). The PSLRA
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`also requires particularity in pleading the required state of mind: “in any private action arising
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`under this chapter in which the plaintiff may recover money damages only on proof that the
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`defendant acted with a particular state of mind, the complaint shall, with respect to each act or
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`omission alleged to violate this chapter, state with particularity facts giving rise to a strong
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`inference that the defendant acted with the required state of mind.” Id. Thus, the PSLRA requires
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`a plaintiff alleging securities fraud to “plead with particularity both falsity and scienter.” Zucco
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`Partners, LLC v. Digimarc Corp., 552 F.3d 981, 990 (9th Cir. 2009) (internal quotation and
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`citation omitted); see also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 313 (2007);
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`15 U.S.C. § 78u-4(b)(1)–(2). The Ninth Circuit has dubbed the pleading requirements under the
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`PSLRA “formidable” for a plaintiff seeking to state a proper claim and avoid dismissal. Metzler
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`Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1055 (9th Cir. 2008).
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`III. ANALYSIS
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`A. SECTION 10(B) CLAIM
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`A Section 10(b) claim requires a plaintiff to “show that the defendant made a statement
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`that was ‘misleading as to a material fact.’” Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27,
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`38 (2011) (quoting Basic Inc. v. Levinson, 485 U.S. 224, 238 (1988)) (emphasis in original).
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`Thus, a plaintiff must allege: “(1) a material misrepresentation or omission by the defendant; (2)
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`scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a
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`security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss
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`causation.” Id. at 37–38 (quoting Stoneridge Investment Partners, LLC v. Scientific–Atlanta, Inc.,
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`552 U.S. 148, 157 (2008)). Here, defendants challenge the sufficiency of the first, second, and
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`Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 9 of 27
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`sixth elements. The Court examines each in turn with the majority of the analysis focused on the
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`first.
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`1. MATERIAL MISREPRESENTATIONS OR OMISSIONS
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`A material misrepresentation or omission is adequately alleged “when a plaintiff points to
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`[the] defendant’s statements that directly contradict what the defendant knew at that time.” Khoja
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`v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1008 (9th Cir. 2018) (citing In re Astossa Genetics
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`Inc. Sec. Litig., 868 F.3d 784, 794–96 (9th Cir. 2017)). The statement must be “capable of
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`objective verification.” Or. Pub. Emps. Ret. Fund. v. Apollo Grp. Inc., 774 F.3d 598, 606 (9th Cir.
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`2017) (internal quotation marks omitted). For example, “puffing”—expressing an opinion rather
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`than a knowing false statement of fact—is not misleading. Id.; see also Lloyd v. CVB Fin. Corp.,
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`811 F.3d 1200, 1206–07 (9th Cir. 2016); In re Cutera Sec. Litig. 610 F.3d 1103, 1111 (9th Cir.
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`2010). Qualitative buzzwords such as “good,” “well-regarded,” or other “vague statements of
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`optimism” cannot form the basis of a false or misleading statement. Apollo, 774 F.3d at 606
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`(citing Cutera, 610 F.3d at 1111 (“When valuing corporations, . . . investors do not rely on vague
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`statements of optimism like ‘good,’ ‘well-regarded,’ or other feel good monikers. This mildly
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`optimistic, subjective assessment hardly amounts to a securities violation.”)).
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`Even if a statement is not false, it may be misleading if it omits material information.
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`Khoja, 899 F.3d at 1008–09 (citing In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1054 (9th Cir.
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`2014)). “A statement of omission is misleading in the securities fraud context ‘if it would give a
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`reasonable investor the impression of a state of affairs that differs in a material way from the one
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`that actually exists.’” Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 691 (9th Cir. 2011)
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`(quoting Berson v. App. Signal Tech., Inc., 527 F.3d 982, 985 (9th Cir. 2008)). “[A]n omission is
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`material ‘when there is a substantial likelihood that the disclosure of the omitted fact would have
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`been viewed by the reasonable investor as having significantly altered the total mix of information
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`available.’” Matrixx, 563 U.S. at 38. “‘[O]nce defendants cho[o]se to tout’ positive information
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`to the market, ‘they [are] bound to do so in a manner that wouldn’t mislead investors,’ including
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`disclosing adverse information that cuts against the positive information.” Schueneman v. Arena
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`Pharm., Inc., 840 F.3d 698, 706 (9th Cir. 2016) (quoting Berson, 527 F.3d at 987).
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`Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 10 of 27
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`That said, omissions are actionable only where they “make the actual statements
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`misleading”; it is not sufficient that an investor merely “consider[ed] the omitted information
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`significant.” Markette v. XOMA Corp., No. 15-CV-3425 (HSG), 2017 WL 4310759, at *7 (N.D.
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`Cal. Sept. 28, 2017) (internal quotation marks omitted). Section 10(b) and Rule 10b-5(b) “do not
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`create an affirmative duty to disclose any and all material information,” but instead a duty to
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`include all facts necessary to render a statement accurate and not misleading, once a company
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`elects to disclose that material information. Id. at 44–45, 47; 17 C.F.R. § 240.10b-5(b). Thus,
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`“[i]f the challenged statement is not false or misleading, it does not become actionable merely
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`because it is incomplete.” In re Immune Response, 375 F. Supp. 2d at 1017 (quoting In re Vantive
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`Corp. Sec. Litig., 283 F.3d 1079, 1085 (9th Cir. 2002)). To provide sufficient notice, plaintiff, “in
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`addition to alleg[ing] the ‘time, place[,] and nature of the alleged fraudulent activities,’ must
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`‘plead evidentiary facts’ sufficient to establish any allegedly false statement ‘was untrue or
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`misleading when made.’” Wozniak v. Align Tech., Inc., 850 F. Supp. 2d 1029, 1034 (N.D. Cal.
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`2012).
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`Here, plaintiffs point to seven specific statement which fall into the following categories of
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`fraudulent statements or omissions: (a) defendants’ July 2019 statements about MAP progress and
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`revenue prediction while reporting Twitter’s financial results for the quarter ending June 30, 2019
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`(Statements 1–4); (b) Twitter’s August 2019 announcement about software bugs primarily
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`affecting MAP (Statement 5); and (c) Segal’s September 2019 statements about MAP progress
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`and Asia’s historical focus on MAP during an investor conference following the MAP bug
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`announcement (Statements 6–7).3 The Court begins with addressing the statements in the first
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`category in turn.
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`//
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`//
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`3 Although defendants, not plaintiffs, assembled the challenged statements into an
`appendix for the Court’s ease of reference (Defendants’ Motion to Dismiss the CCAC, Dkt. No.
`53, Appendix A), plaintiffs rely on defendants’ mode of organization in its opposition and do not
`oppose the identification of the statements. As such, the Court will proceed to identify the
`challenged statements in accordance with Appendix A.
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`Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 11 of 27
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`a-1. JULY 2019 STATEMENTS ABOUT MAP PROGRESS AND REVENUE
` PROJECTION (STATEMENTS 1 AND 2)
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`Plaintiffs challenge Twitter’s statements about its progress on improving MAP and
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`projected revenues therefrom made at the end of July in the Q2 2019 Shareholder Letter, on the
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`earnings call with investors, and in the Q2 2019 Form 10-Q. Thus:
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`Q2 2019 Shareholder Letter (Statement 1)
`“We are also continuing our work to increase the stability,
`performance, and flexibility of our ads platform and mobile
`application download product[.]”
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`“Increasing the stability, performance, and scale of our ads
`platform in general and our mobile application download
`product in particular will take place over multiple quarters,
`with a gradual impact on revenue.”
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`Q2 Earnings Call (Statement 1 Continued)
`“We’re still in the middle of that work and as we move forward
`with it, there may be a point where you can see the benefit from it
`ramp quickly as you described because it’s a direct response
`related product. But we’re still at the stage where we believe
`that you would its impact be gradual in nature. And so we’ll
`talk more about it when we get there and the gradual nature starts,
`but we’re not there yet. We’re still working hard to make it
`happen.”
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`Q2 2019 Form 10-Q (Statement 2)
`“[We are] continuing our work to increase the stability,
`performance and scale of our ads platform and our mobile
`application download product, and such work will take place
`over multiple quarters, and any positive revenue impact will be
`gradual in its impact.”
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`(CCAC ¶¶ 104, 107; see also Q2 2019 Shareholder Letter and Q2 2019 Form 10-Q.)4 Allegedly,
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`these statements are materially false and misleading because at the time they were made, they
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`created the “misimpression that [d]efendants’ work to improve MAP was on track[] and would
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`4 The quotes are directly lifted from the CCAC, and as plaintiffs indicate therein, “[t]he
`statements quoted in this section in underlined, bolded text are materially false and misleading
`for the reasons set forth herein. . . . Thus, additional text is provided for context and in support of
`these statements’ allegedly omissive nature.” (CCAC ¶ 103 n.10.)
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`

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`Case 4:19-cv-07149-YGR Document 64 Filed 12/10/20 Page 12 of 27
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`lead to increased revenue.” (CCAC ¶ 105.). Plaintiffs proffer that because software bugs were
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`causing glitches to MAP, defendants’ work on an improved MAP product was, in fact, “delayed”
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`and “[d]efendants had no reasonable basis to represent that MAP revenue would increase.” (Id.)
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`Plaintiffs’ theory fail for three reasons. First, given the allegations of the CCAC, the Court
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`finds defendants’ vaguely optimistic statements to fall within the category that is understood by
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`reasonable investors as puffery. See Wozniak, 850 F. Supp. 2d at 1036 (statements that “[w]e are
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`very pleased with the learning from our pilot launch,” “so far we’re getting really great feedback,”
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`and “we are very pleased with our progress to date” held not actionable as “mere puffery”); In re
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`Cornerstone Propane Partners, L.P. Sec. Litig., 355 F. Supp. 2d 1069, 1087 (N.D. Cal. 2005)
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`(“statements projecting ‘excellent results,’ a ‘blowout winner’ product, ‘significant sales gains,’
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`and ‘10% to 30% growth rate over the next several years’” held not actionable as mere puffery).
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`The statements at issue here “are not measurable and not tethered to facts that ‘a reasonable person
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`would deem important to a securiti

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