Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 1 of 33
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`IN RE BUMBLE, INC.
`SECURITIES LITIGATION
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`Civil Action No. 22-cv-624 (DLC)
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`CLASS ACTION
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`LEAD PLAINTIFF’S MEMORANDUM OF LAW
`IN OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 2 of 33
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`TABLE OF CONTENTS
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`Page
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`PRELIMINARY STATEMENT .................................................................................................... 1
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`STATEMENT OF FACTS ............................................................................................................. 5
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`I.
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`BACKGROUND ................................................................................................................ 5
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`A.
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`B.
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`C.
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`D.
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`Blackstone Acquired Control of Bumble and Sold It as a Growth Story ............... 5
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`Defendants Internally Acknowledged Faltering Growth At Bumble ..................... 5
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`The Misleading SPO Offering Documents ............................................................. 6
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`The Truth Emerged Shortly After The SPO ........................................................... 7
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`ARGUMENT .................................................................................................................................. 7
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`II.
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`PLAINTIFF’S SECURITIES ACT CLAIMS SHOULD BE SUSTAINED ...................... 7
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`A.
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`B.
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`C.
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`D.
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`The Applicable Pleading Standard .......................................................................... 8
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`The SPO Materials Included False and Misleading Statements and
`Omissions ................................................................................................................ 8
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`1.
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`2.
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`3.
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`4.
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`5.
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`Defendants’ “Opinion” Arguments Fail ..................................................... 8
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`Defendants’ Puffery Arguments Fail ........................................................ 10
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`Defendants Misrepresented Materialized Risks As Hypothetical ............ 11
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`a)
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`b)
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`c)
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`Defendants Do Not Address Key Misleading Risk
`Statements ..................................................................................... 11
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`Defendants Incorrectly and Improperly Dispute Whether
`Business and Financial Risks Had Materialized ........................... 12
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`Defendants’ Incorrect Truth-On-The-Market Defense Fails ........ 15
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`Defendants’ Historical Results Statements Were Misleading .................. 17
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`Defendants Misrepresented Bumble’s Overall Growth ............................ 17
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`Defendants’ Fact-based Materiality Disputes Fail ................................................ 18
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`Plaintiff Adequately Alleges An Item 303 Violation ........................................... 20
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`III.
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`PLAINTIFF’S § 12(a)(2) CLAIMS SHOULD BE SUSTAINED ................................... 23
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`i
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 3 of 33
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`A.
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`Complaint Pleads Section 12(a)(2) Liability Against Bumble ............................. 23
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`IV.
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`PLAINTIFF’S §15 CONTROL PERSON CLAIMS SHOULD BE SUSTAINED ......... 24
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`A.
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`The Complaint Sufficiently Pleads §15 Violations .............................................. 24
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`CONCLUSION ............................................................................................................................. 25
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`ii
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 4 of 33
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`
`
`CASES
`
`
`Alpha Cap. Anstalt v. Intellipharmaceutics Int’l Inc.,
`2020 WL 3318029 (S.D.N.Y. June 18, 2020) .....................................................................3, 18
`
`Alphabet, Inc. Sec. Litig.,
`1 F.4th 687 (9th Cir. 2021) ......................................................................................................14
`
`In re Aratana Therapeutics, Inc. Secs. Litig.,
`315 F. Supp. 3d 737 (S.D.N.Y. 2018)......................................................................................16
`
`In re Chicago Bridge & Iron Co. N.V. Sec. Litig.,
`2018 WL 2382600 (S.D.N.Y. May 24, 2018) ...........................................................................9
`
`In re Cigna Corp. Sec. Litig.,
`2006 WL 782431 (E.D. Pa. Mar. 24, 2006) .............................................................................18
`
`Citiline Holdings, Inc. v. iStar Fin. Inc.,
`701 F. Supp. 2d 506 (S.D.N.Y. 2010)......................................................................................24
`
`City of Omaha Police and Fire Ret. Sys. v. Evoqua Water Techs. Corp.,
`450 F. Supp. 3d 379 (S.D.N.Y. 2020)................................................................................14, 25
`
`City of Sterling Heights Police & Fire Ret. Sys. v. Abbey Nat’l, PLC,
`423 F. Supp. 2d 348 (S.D.N.Y. 2006)......................................................................................11
`
`CompuDyne Corp. v. Shane,
`453 F. Supp. 2d 807 (S.D.N.Y. 2006)......................................................................................25
`
`Cornwell v. Credit Suisse Grp.,
`689 F. Supp. 2d 629 (S.D.N.Y. 2010)......................................................................................23
`
`In re Coty Inc. Sec. Litig.,
`2016 WL 1271065 (S.D.N.Y. Mar. 29, 2016) .........................................................................23
`
`In re CPI Card Grp. Inc. Sec. Litig.,
`2017 WL 4941597 (S.D.N.Y. Oct. 30, 2017) ..........................................................................22
`
`In re Deutsche Telekom AG Secs. Litig.,
`2002 WL 24459 (S.D.N.Y. Feb. 20, 2022). .............................................................................24
`
`In re Dynagas LNG Partners LP Sec. Litig.,
`504 F. Supp. 3d 289 (2020) ...............................................................................................15, 16
`
`Emerson v. Mut. Fund Series Tr.,
`393 F. Supp. 3d 220 (E.D.N.Y. 2019) .....................................................................................16
`
`iii
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`

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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 5 of 33
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`
`
`Erie Cnty. Employees’ Ret. Sys. v. NN, Inc.,
`71 Misc. 3d 1220(A), 144 N.Y.S.3d 848 (N.Y. Sup. Ct. 2021)...............................................24
`
`In re Facebook, Inc. IPO Sec. & Derivative Litig.,
`986 F. Supp. 2d 487 (S.D.N.Y. 2013)..........................................................................11, 12, 22
`
`Fed. Hous. Fin. Agency v. JPMorgan Chase & Co.,
`902 F. Supp. 2d 476 (S.D.N.Y. 2012)........................................................................................8
`
`Freudenberg v. E*Trade Fin. Corp.,
`712 F. Supp. 2d 171 (S.D.N.Y. 2010)............................................................................7, 10, 17
`
`Ganino v. Citizens Utils. Co.,
`228 F.3d 154 (2d Cir. 2000)...........................................................................................3, 16, 19
`
`GeigTech E. Bay LLC v. Lutron Elecs. Co.,
`2019 WL 1768965 (S.D.N.Y. Apr. 4, 2019)..............................................................................9
`
`In re Gen. Elec. Co. Sec. Litig.,
`857 F. Supp. 2d 367 (S.D.N.Y. 2012)......................................................................................23
`
`Haw. Structural Ironworkers Pension Tr. Fund v. AMC Ent. Holdings, Inc.,
`422 F. Supp. 3d 821 (S.D.N.Y. 2019)......................................................................................10
`
`Herman & MacLean v. Huddleston,
`459 U.S. 375 (1983) ...................................................................................................................8
`
`In re Interpublic Sec. Litig.,
`2003 WL 21250682 (S.D.N.Y. May 29, 2003) .........................................................................8
`
`In re Lehman Bros. Sec. & Erisa Litig.,
`799 F. Supp. 2d 258 (S.D.N.Y. 2011)......................................................................................15
`
`Litwin v. Blackstone Grp., L.P.,
`634 F.3d 706 (2d Cir. 2011)...........................................................................................8, 19, 23
`
`Martin v. Quartermain,
`732 F. App’x 37 (2d Cir. 2018) .................................................................................................9
`
`In re Mindbody, Inc. Sec. Litig.,
`489 F. Supp. 3d 188 (S.D.N.Y. 2020)................................................................................17, 22
`
`In re Netsolve, Inc. Sec. Litig.,
`185 F. Supp. 2d 684 (W.D. Tex. 2001)....................................................................................13
`
`In re NovaGold Res. Inc. Sec. Litig.,
`629 F. Supp. 2d 272 (S.D.N.Y. 2009)......................................................................................23
`
`iv
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`

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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 6 of 33
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`
`
`Novak v. Kasaks,
`216 F.3d 300 (2d Cir. 2000).....................................................................................................10
`
`Ohr Somayach/Joseph Tanenbaum Educ. Ctr. v. Farleigh Int’l Ltd.,
`483 F. Supp. 3d 195 (S.D.N.Y. 2020)......................................................................................12
`
`In re Omega Healthcare Inv’rs Sec. Litig.,
`563 F. Supp. 3d 259 (S.D.N.Y. 2021)......................................................................................17
`
`Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund,
`575 U.S. 175 (2015) .............................................................................................................9, 10
`
`Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt., LLC,
`595 F.3d 86 (2d Cir. 2010)...................................................................................................4, 17
`
`Panther Partners Inc. v. Ikanos Comm’ns Inc.,
`681 F.3d 114 (2d Cir. 2012).....................................................................................................21
`
`In re Petrobras Sec. Litig.,
`116 F. Supp. 3d 368 (S.D.N.Y. 2015)................................................................................10, 25
`
`Pfizer, Inc. v. United States,
`2017 WL 4350581 (S.D.N.Y. June 30, 2017) .........................................................................12
`
`Pinter v. Dahl,
`486 U.S. 622 (2011) .................................................................................................................24
`
`Porat v. Lincoln Towers Cmty. Ass’n,
`464 F.3d 274 (2d Cir. 2006).....................................................................................................25
`
`Provenz v. Miller,
`102 F.3d 1478 (9th Cir. 1996) .................................................................................................17
`
`Rombach v. Chang,
`355 F.3d 164 (2d Cir. 2004).......................................................................................................8
`
`Rosi v. Aclaris Therapeutics, Inc.,
`2021 WL 1177505 (S.D.N.Y. Mar. 29, 2021) .........................................................................15
`
`In re Scholastic Corp. Sec. Litig.,
`252 F.3d 63 (2d Cir. 2001).......................................................................................................20
`
`Tongue v. Sanofi,
`816 F.3d 199 (2d Cir. 2016).......................................................................................................9
`
`In re Van Der Moolen Holding N.V. Sec. Litig.,
`405 F. Supp. 2d 388 (S.D.N.Y. 2005)......................................................................................13
`
`v
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`

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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 7 of 33
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`
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`Willard v. UP Fintech Holding Ltd.,
`527 F. Supp. 3d 609 (S.D.N.Y. 2021)......................................................................................20
`
`OTHER AUTHORITIES
`
`Fed. R. Civ. P. 8(a) ....................................................................................................................8, 19
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`vi
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 8 of 33
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`PRELIMINARY STATEMENT
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`This securities class action arises from Defendants’ misrepresentations and omissions
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`concerning a key growth metric of Bumble Inc. (“Bumble” or the “Company”), the public holding
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`company that operates two online dating applications (“Apps”) called Bumble and Badoo. These
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`misstatements were made in Bumble’s secondary public offering of common stock in September
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`2021 (the “SPO”). Plaintiff asserts strict liability and negligence claims under §§11, 12(a)(2) and
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`15 of the Securities Act of 1933 (the “Securities Act”).1
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`In the SPO, Bumble’s controlling stockholder and “Sponsor”—private equity behemoth
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`Blackstone Inc. and its affiliates (collectively, “Blackstone”)—cashed out over a billion dollars’
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`worth of holdings to take advantage of Bumble’s stock price just before the Company announced
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`disappointing news. Blackstone was aided by Bumble and the other Defendants who issued SPO
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`Offering Documents that misrepresented and omitted the truth regarding the Company’s growth
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`and, in particular, growth in paying users for Bumble’s Apps. In November 2021, shortly after the
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`SPO, Defendants shocked the market when they announced that growth in Bumble’s paying users
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`had reversed, with the Baboo App suffering substantial declines. Bumble’s stock price plunged,
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`causing the Company’s unsuspecting public investors to suffer enormous losses. In sum, this case
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`concerns a private equity giant, together with the Company it controlled, misleading investors so
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`it could cash out shortly before negative Company results were publicly announced.
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`The SPO Offering Documents contained three main categories of misstatements. One,
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`Defendants affirmatively misrepresented Bumble’s growth prospects, including with respect to
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`paying users by, for example, boasting of a purported “increasing propensity for users to pay.”
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`1 Unless otherwise stated, capitalized terms have the meaning in the Complaint (ECF No. 42); emphasis is added;
`internal citations and punctuation are omitted; “Def. Br.” refers to Defendants’ Memorandum of Law (ECF No. 48);
`“Def. Ex.” refers to the exhibits to the Youngwood Declaration (ECF No. 49); and “Ex.” refers to the exhibit to the
`Robinson Declaration filed herewith.
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 9 of 33
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`This statement was contradicted by the reality at the time, which was that Bumble’s paying user
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`numbers were declining, as confirmed by former Bumble employees and as Defendants themselves
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`admitted shortly after the SPO. Indeed, when Defendants revealed the truth in November 2021,
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`analysts lamented that Bumble was suffering a “lagging propensity to pay”—words directly
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`contrary to the “increasing propensity” that Defendants had touted in the SPO.
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`Two, Defendants made misleading risk statements that presented the prospect of Bumble
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`suffering a paying user decline as a hypothetical possibility—even though that reality had
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`materialized by the time of the SPO. For example, the SPO Offering Documents stated that “at
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`some point we may face challenges increasing our Paying Users” and “if … users … do not convert
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`to paying users, our revenue, financial results and business may be significantly harmed.” The
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`truth was that, by the SPO, these risks were not hypothetical—they had already occurred as paying
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`users had declined and Bumble’s business and financial health had been harmed. Three,
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`Defendants omitted from the SPO Offering Documents the fact that Bumble suffered a decrease
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`in paying users—contrary to their duty to disclose this reality under Item 303. These statements
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`were revealed as misleading when Bumble announced in November 2021 that overall paying users
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`had declined, driven by a precipitous decline in paying users for the Badoo App. The market was
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`shocked, Bumble’s stock price plunged more than 24% over the next two days on heavy trading
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`volume, and investors suffered significant damages.
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`In the face of these facts showing that investors were misled, Defendants assert that they
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`did not make a single misstatement or omission and, even if they did, they cannot be held liable.
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`Defendants’ arguments for dismissal do not withstand scrutiny.
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`First, Defendants argue that their “increasing propensity for users to pay” statement is an
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`“opinion” that is not alleged to be misleading. Defendants are wrong. The statement is facially a
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`2
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 10 of 33
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`statement of fact, not opinion. And even if part is treated as an opinion, the “increasing propensity”
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`part is factual and was inconsistent with the truth at the time of the SPO. Regardless, the statement
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`omitted relevant facts about paying user declines, which made it misleading. See infra § II.B.1.
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`Second, Defendants say their hypothetical risk disclosures were not misleading. For
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`example, they argue that the risks warned of were business or financial harms, which they claim
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`had not materialized by the SPO. As to COVID risks, which they admit had materialized,
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`Defendants assert that the truth was known to the market. Neither argument provides a basis for
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`dismissal. Defendants’ claim that certain risks had not materialized as of the SPO is premised on
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`their disregard of the facts in the Complaint and their mischaracterization of the relevant
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`statements. Plus, this argument raises fact disputes that cannot be resolved now. See infra §
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`II.B.3(b).
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`Defendants are also mistaken to claim that investors knew the truth before the SPO. If so,
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`investors would not have reacted so dramatically when Bumble revealed that its paying user
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`numbers had declined in November 2021. Defendants also ignore that they reassured investors that
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`any impact from COVID would be minimal. Plus, this argument is a “truth-on-the-market” defense
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`that is “intensely fact-specific” and “rarely an appropriate basis” for dismissal. Ganino v. Citizens
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`Utils. Co., 228 F.3d 154, 167 (2d Cir. 2000). See infra § II.B.3(c).
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`Third, Defendants dispute materiality. But their misguided, fact-based materiality
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`challenges fail. Materiality is a mixed question of fact and law that is “not ordinarily a question
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`appropriate for resolution … in a motion to dismiss.” Alpha Cap. Anstalt v. Intellipharmaceutics
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`Int'l Inc., 2020 WL 3318029, at *3 (S.D.N.Y. June 18, 2020) (Cote, J.). Also, Defendants’
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`materiality disputes cannot be credited because inter alia the declines affected Bumble’s overall
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`paying user numbers and specifically impacted a key operating segment—the Badoo App—where
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`3
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 11 of 33
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`paying users declined dramatically. Plus, all these metrics were specifically identified as “key
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`operating metric[s]” by the Company. Further, materiality is powerfully confirmed by the massive
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`stock price declines caused by the disclosure of the truth in November 2021, analysts’ reactions to
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`the negative results, and the fact that Bumble missed consensus expectations. See infra § II.C.
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`Fourth, Defendants launch additional attacks on falsity—none of which justifies dismissal.
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`For example, Defendants argue that accurate historical data cannot ever be misleading. This is
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`incorrect. In the Second Circuit, “literally accurate statements can, through their context and
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`manner of presentation, [become] devices which mislead investors.” Operating Local 649 Annuity
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`Trust Fund v. Smith Barney Fund Mgmt., LLC, 595 F.3d 86, 92 (2d Cir. 2010). Here, Defendants
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`misleadingly touted stale paying user data so they could unload over a billion dollars’ worth of
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`stock on investors who did not know the paying user numbers had declined. See infra § II.B.4.
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`Defendants also assert that an intra-quarter, two-month-long problem cannot suffice for
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`Item 303. Defendants are wrong again. They ignore that Item 303 covers “uncertainties” and
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`“events” as well as trends. And the fact that a problem occurred intra-quarter does not excuse
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`Defendants for misleading investors about it in an intra-quarter offering. Further, Defendants’
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`factual dispute over trend length cannot not be resolved here. See infra § II.D.
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`Fifth, Defendants’ challenges to the §12(a)(2) and §15 claims fail. For §12(a)(2) liability,
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`the SPO Documents effectively admitted that Bumble was soliciting investors. For §15 liability,
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`the SPO Documents admitted that “Bumble Inc. is controlled by investment funds of Blackstone
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`Inc.,” which, coupled with facts like the Blackstone funds’ controlling ownership of Bumble stock,
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`readily pleads control person claims. See infra §§ III; IV. The Motion should be denied.
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`4
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 12 of 33
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`I.
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`STATEMENT OF FACTS
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`BACKGROUND
`A.
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`Blackstone Acquired Control of Bumble and Sold It as a Growth Story
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`In January 2020, Blackstone, the private equity behemoth with nearly $1 trillion in assets
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`under management, acquired a majority stake in Bumble for $2 billion. ¶67. Blackstone solidified
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`its control over the Company through a Stockholders Agreement and a Registration Rights
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`Agreement. ¶¶4-6, 76-81. The Stockholders Agreement empowered Blackstone to designate a
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`majority of Bumble’s directors depending its ownership stake. Id. at ¶¶76-81. As of the SPO, a
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`majority of Bumble’s Board members were affiliated with Blackstone. ¶79. It also mandated that
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`Blackstone be given vital non-public information regarding Bumble’s operations and finances.
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`¶¶4,67, 77, 80. The Registration Rights Agreement gave Blackstone sweeping rights to cause
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`Bumble to sell its shares to the investing public—at the Company’s expense. ¶¶4-6, 67-68, 80, 85.
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`After Blackstone and CEO Herd consolidated their overwhelming control over Bumble,
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`they quickly took it public. ¶¶82-85, 89, 91-93. Following the IPO, Blackstone and Herd owned
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`approximately 96% of the combined voting power of Bumble’s Class A and Class B common
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`stock. ¶91. This dominance rendered Bumble a “controlled company” under NASDAQ standards.
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`¶¶4, 23, 25, 92. According to its SEC filings, Bumble’s paying user growth was a “key operating
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`metric.” ¶94. After the IPO, Bumble claimed it was experiencing paying user growth. ¶97.
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`B.
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`Defendants Internally Acknowledged Faltering Growth At Bumble
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`Unbeknownst to investors, but as Bumble later admitted, the Company’s paying user
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`growth reversed in the third quarter of 2021. Bumble overall lost over 60,000 paying users, driven
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`by a drop in Badoo App paying users from 1.45 million to 1.33 million and a significant slowing
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`of Bumble App paying user growth. ¶¶98, 116.
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`5
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 13 of 33
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`The declines were known internally at Bumble. One former Bumble employee, FE-1 (a
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`U.K. marketing director), reported that the decline in growth in the U.S. market was explicitly
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`discussed in meetings including Bumble’s CMO Dominic Gallello. ¶¶9, 102. FE-1 said the
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`message from executives was that the growth slowdown was due to the natural maturity of the
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`U.S. market. ¶103; see also ¶¶102-4. Another former Bumble employee, FE-2 (a U.K. Global
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`Integrated Marketing Lead), explained that growth at Badoo was non-existent during 3Q21 based
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`on customer registrations and returning customers and because most users were using it as a free
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`app. ¶¶9, 106. FE-2 further confirmed that it was clear from the numbers that Badoo was struggling
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`and that, in discussions in July and August 2021, CMO Gallello said a new marketing plan was
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`needed because Badoo was in decline. ¶106. Further, the data showing declining growth was at
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`Defendants’ fingertips. Defendants tracked paying user numbers at least monthly and admitted
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`they “regularly review[ed] metrics” including paying users to “evaluate growth trends.” ¶¶107-10.
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`C.
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`The Misleading SPO Offering Documents
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`Armed with inside information, Blackstone forced Bumble to conduct the SPO roughly
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`two weeks before 3Q21 ended. The SPO allowed Blackstone and its affiliates to sell over 20
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`million shares at $54 per share, allowing them to pocket $1.1 billion. ¶¶2, 68, 111, 115.
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`The SPO Offering Documents contained material misstatements and omissions. One, the
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`SPO Offering Documents painted a picture of a company that, contrary to the declines it was
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`facing, was growing robustly. For example, Defendants boasted of the “increasing propensity for
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`users to pay,” that they “expect to increase paying users,” and that Bumble’s community was
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`“growing,” citing to statistics showing a nearly 25% increase in Total Paying Users. ¶¶7-8, 11, 69,
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`113, 128-33. Two, the SPO Offering Documents presented risks to Bumble’s paying users as mere
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`hypothetical possibilities, stating, for example, that “we may face challenges increasing our Paying
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`Users” and “if … users … do not convert to paying users, our revenue, financial results and
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`6
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 14 of 33
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`business may be significantly harmed.” ¶¶7-8, 113, 134-9. Three, contrary to Item 303, the SPO
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`Offering Documents omitted disclosure of the paying user declines and the resulting adverse
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`impacts to the Company’s business and finances. ¶¶7-8, 114, 140-43. Investors were misled.
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`D.
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`The Truth Emerged Shortly After The SPO
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`On November 10, 2021, Bumble announced its 3Q21 financial results. The Company
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`disclosed that its total paying user count had declined to 2.86 million. ¶¶10, 116. This overall
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`decline was driven by a dramatic decline in Bumble’s “Key Operating Metric” line item titled
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`“Badoo App and Other Paying Users,” which fell to 1.3334 million in 3Q21—a quarter-over-
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`quarter decline from 1.4543 million in 2Q21 and a year-over-year decline from 1.4577 million in
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`3Q20. ¶¶98, 116. Further, Bumble reported that this decrease caused its “Badoo App and Other”
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`revenue line item to fall to $58 million in 3Q21 from $59.7 million in 3Q20. Growth also slowed
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`in the Bumble App’s Paying User numbers. ¶¶116-17.
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`This disclosure drew concerned reactions from analysts. ¶¶118-24. For example, analysts
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`were disappointed that Bumble was “feeling the brunt of lagging propensity to pay” and with the
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`“unexpected weakness at Badoo” ¶¶120, 123. In response, Bumble’s stock price fell from a close
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`of $47.75 on November 10, 2021 to a close of $38.56 on November 11, 2021—a dramatic single-
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`day decline of 19.25% on extremely heavy trading volume—and then fell to a close of $36.55 on
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`November 12, 2021—another 5.21% decline on elevated trading volume. ¶124.
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`ARGUMENT
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`II.
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`PLAINTIFF’S SECURITIES ACT CLAIMS SHOULD BE SUSTAINED
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`Motions to dismiss are “disfavor[ed];” a complaint is “liberally construed, accepting all
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`factual allegations … as true, and drawing all reasonable inferences in the plaintiff’s favor;” and
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`it “need only contain factual allegations . . . sufficient to raise a right to relief above the speculative
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`level.” Freudenberg v. E*Trade Fin. Corp., 712 F. Supp. 2d 171, 178-9 (S.D.N.Y. 2010).
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 15 of 33
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`A.
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`The Applicable Pleading Standard
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`Sections 11 and 12(a)(2) of the Securities Act require plaintiffs to plead only that a
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`misleading statement was made in a public offering. Herman & MacLean v. Huddleston, 459 U.S.
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`375, 382 (1983). Fraud, scienter, reliance or loss causation are not required. Rombach v. Chang,
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`355 F.3d 164, 169 n.4 (2d Cir. 2004). Bumble, as issuer, faces strict liability for any material
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`misstatements. In re Interpublic Sec. Litig., 2003 WL 21250682, at *8 (S.D.N.Y. May 29, 2003)
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`(Cote, J.) (“Section 11 is a strict liability statute and does not require proof of fraud.”).
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`These Securities Act claims are governed by Rule 8(a)’s notice-pleading standard, which
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`requires only “a short and plain statement of the claim.” Fed. R. Civ. P. 8(a); see also Litwin v.
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`Blackstone Grp., L.P., 634 F.3d 706, 715 (2d Cir. 2011); Fed. Hous. Fin. Agency v. JPMorgan
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`Chase & Co., 902 F. Supp. 2d 476, 484 (S.D.N.Y. 2012) (Cote J.) (Securities Act claims “are
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`governed by … Rule 8(a) . . . which ‘place[s] a relatively minimal burden on the plaintiff.’”).
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`B.
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`The SPO Materials Included False and Misleading Statements and Omissions
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`Defendants made materially false and misleading statements and omissions in the SPO
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`Offering Documents. ¶¶112-13, 128-43. The Complaint identifies the statements at issue and
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`adequately explains why Defendants’ statements were materially false, misleading, or incomplete.
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`Defendants offer no valid basis for dismissal.
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`1.
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`Defendants’ “Opinion” Arguments Fail
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`In the SPO, Defendants bragged that they “see significant upside … driven by …
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`increasing propensity for users to pay.” ¶130. In truth, the facts pled in the Complaint show that
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`Bumble was suffering from a lagging propensity for users to pay at the time. ¶¶11, 120, 143.
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`Defendants claim this is a statement of opinion. Def. Br. at 11-12. They are incorrect.
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`Defendants offer no support or legal basis for labeling this statement an opinion—they just declare
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`it. But whether Bumble was experiencing this purported “increasing propensity” at the time of the
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 16 of 33
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`SPO is an issue of fact. Indeed, Defendants did not identify the statement as an opinion through
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`words like “opinion” or “belief”—instead, they said there was an increasing propensity for users
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`to pay when there was not. Cf. Omnicare, Inc. v. Laborers District Council Construction Industry
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`Pension Fund, 575 U.S. 175, 182-83 (2015) (phrases such as “I believe” or “I think” can
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`“transform[] that factual statement[s] into one of opinion”). Because this is a statement of fact,
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`objectively verifiable and contradicted by the facts at the time of the SPO, it is actionable. See In
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`re Chicago Bridge & Iron Co. N.V. Sec. Litig., 2018 WL 2382600, at *6 (S.D.N.Y. May 24, 2018)
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`(“A statement of fact is objectively verifiable”); GeigTech E. Bay LLC v. Lutron Elecs. Co., 2019
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`WL 1768965, at *8 (S.D.N.Y. Apr. 4, 2019) (statements were “susceptible to proof by way of
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`objectively verifiable facts”).
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`Moreover, even if this statement is (incorrectly) treated as an opinion, it is still actionable.
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`As Defendants concede, statements of opinion are actionable if (1) “the speaker did not hold the
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`belief she professed”; (2) “the supporting fact she supplied were untrue”; or (3) “the speaker omits
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`information whose omission makes the statement misleading to a reasonable investor.” Omnicare,
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`575 U.S. at 185-86, 194; Tongue v. Sanofi, 816 F.3d 199, 210 (2d Cir. 2016); Def. Br. at 11-12.
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`Here, falsity is established under either the second or third prongs of Omnicare.
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`The second prong is satisfied because, to back up their claim to “see significant upside,”
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`Defendants asserted as a supporting fact that it was “driven by the … increasing propensity for
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`users to pay.” But the opposite was true, as Bumble was suffering from a lagging propensity for
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`users to pay. ¶¶11, 120, 143. Defendants incorrectly declare that “Plaintiff does not point to any
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`facts” contained in this statement. Def. Br. 12. They simply ignore the “increasing propensity”
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`part, which is both factual and alleged to be untrue in detail in the Complaint. ¶¶7, 11, 69, 113,
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`130, 133. This renders Martin v. Quartermain inapposite. 732 F. App’x 37, 41 (2d Cir. 2018).
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`Case 1:22-cv-00624-DLC Document 51 Filed 12/16/22 Page 17 of 33
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`Further, the third Omnicare prong is met because, in making this statement, Defendants
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`indisputably omitted mention of the fact that paying users had declined, which made the statement
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`misleading to a reasonable investor. ¶¶2, 9, 114, 133, 143.
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`Relatedly, Defendants also claim that their claim to “expect to increase paying users” was
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`an opinion.2 Def. Br. at 11-12. As above, even if treated as an opinion, the statement is actionable
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`under the third Omnicare prong. That is, in claiming that they expected to increase paying users,
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`Defendants omitted mention of the fact that paying users had declined, which made the statement
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`misleading to a reasonable investor. ¶¶2, 9, 114, 133, 143.
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`2.
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`Defendants’ Puffery Arguments Fail
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`Defendants contend that certain statements are puffery, including the above so-called
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`“opinion” statements (Def