`Case 3:19-cv-02356-S Document 84 Filed 02/24/22 Page 1 of 45 PageID 2644Case 3:19-cv-02356-S Document 84 Filed 02/24/22 Page 1 of 45 PageID 2644
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF TEXAS
`DALLAS DIVISION
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`SAMIR ALI CHERIF BENOUIS,
`Individually and On Behalf of All Others
`Similarly Situated,
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`Plaintiff,
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`v.
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`Case No.: 3:19-cv-02356
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`Class Action
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`MATCH GROUP, INC., AMANDA W.
`GINSBERG, and GARY SWIDLER,
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`Defendants.
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`PLAINTIFF’S MEMORANDUM OF LAW IN SUPPORT OF
`MOTION FOR CLASS CERTIFICATION AND APPOINTMENT
`OF CLASS REPRESENTATIVE AND CLASS COUNSEL
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`TABLE OF CONTENTS
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`PRELIMINARY STATEMENT .....................................................................................................1
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`PROCEDURAL HISTORY .............................................................................................................4
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`STATEMENT OF FACTS ..............................................................................................................5
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`I.
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`THE CWS DETAILED THE ALLEGED FRAUD .............................................................6
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`A.
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`Pervasive Fraudulent And Bad Actor Accounts ......................................................6
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`B.
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`Deficient Anti-Fraud Measures Despite Dangerous Users ......................................8
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`II.
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`THE SAC PLEADS ACTIONABLE MISSTATEMENTS ................................................9
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`A.
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`The Membership Integrity Fraud ...........................................................................10
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`B.
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`The Reported Results Fraud...................................................................................11
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`III.
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`DEFENDANTS’ SCIENTER ............................................................................................11
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`IV.
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`PARTIAL REVELATIONS OF FRAUD DAMAGED CLASS MEMBERS ..................13
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`ARGUMENT .................................................................................................................................14
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`I.
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`II.
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`APPLICABLE LEGAL STANDARDS ............................................................................14
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`THE CLASS SHOULD BE CERTIFIED UNDER FED. R. CIV. P. 23 WITH THE LEAD
`PLAINTIFF AS CLASS REPRESENTATIVE.................................................................15
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`A.
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`Rule 23(a)’s Four Requirements Are All Satisfied ................................................15
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`1.
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`2.
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`3.
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`4.
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`The Proposed Class Is So Numerous That Joinder Is Impracticable .........15
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`Numerous Questions Of Law Or Fact Are Common To The Class ..........17
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`Lead Plaintiff’s Claims Are Typical Of The Class Members’ Claims ......18
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`Lead Plaintiff Will Fairly And Adequately Protect The Class Interests ....19
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`B.
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`Rule 23(b)(3) Class Action Certification Is Appropriate .......................................21
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`1.
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`Common Questions Of Law And Fact Predominate .................................22
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`i
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`a.
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`Lead Plaintiff Is Entitled To Presumed Class-wide Reliance ........23
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`i.
`
`ii.
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`iii.
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`iv.
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`v.
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`Cammer 1: Match Actively Traded On NASDAQ ...........25
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`Cammer 2: Analysts Widely Covered Match ....................26
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`Cammer 3: Market Makers Facilitated Trading .................27
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`Cammer 4: Match Filed Forms S-3 ...................................27
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`Cammer 5: A Cause-and-Effect Relationship Existed
`............................................................................................28
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`vi.
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`Krogman / Unger Factors Show Market Efficiency ..........29
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`Reliance Is Also Presumed Under Affiliated Ute ...........................30
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`Individual Calculations Will Not Defeat Predominance ...............31
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`b.
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`c.
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`2.
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`3.
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`Class Adjudication Is Superior To Other Available Methods ...................32
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`Lead Plaintiff Should Be Approved As A Class Representative ...............33
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`III.
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`PROPOSED CLASS COUNSEL SHOULD BE APPOINTED ........................................33
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`CONCLUSION ..............................................................................................................................34
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`ii
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`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Affiliated Ute Citizens of Utah v. U.S.,
`406 U.S. 128 (1972) .......................................................................................................3, 22, 30
`
`Alaska Elec. Pension Fund v. Flowserve Corp.,
`572 F.3d 221 (5th Cir. 2009) ...................................................................................................15
`
`Amchem Prods., Inc. v. Windsor,
`521 U.S. 591 (1997) .........................................................................................14, 15, 20, 21, 22
`
`Amgen Inc. v. Conn. Ret. Plans & Trust Funds,
`568 U.S. 455 (2013) ...............................................................................................15, 22, 23, 24
`
`Asarco LLC v. Ams. Mining Corp.,
`396 B.R. 278 (S.D. Tex. 2008) ................................................................................................26
`
`Basic, Inc. v. Levinson,
`485 U.S. 224 (1988) .......................................................................................................2, 23, 31
`
`Bell v. Ascendant Solutions, Inc.,
`422 F.3d 307 (5th Cir. 2005) ...................................................................................................25
`
`Berger v. Compaq Computer Corp.,
`257 F.3d 475 (5th Cir. 2001) ...................................................................................................20
`
`Buettgen v. Harless, No. 3:09-CV-791-K,
`2011 WL 1938130 (N.D. Tex. May 19, 2011) ........................................................................17
`
`Bywaters v. U.S.,
`196 F.R.D. 458 (E.D. Tex. 2000) .............................................................................................14
`
`Cammer v. Bloom,
`711 F. Supp. 1264 (D.N.J. 1989) .....................................................3, 16, 24, 25, 26, 27, 28, 29
`
`Cheney v. Cyberguard Corp.,
`213 F.R.D. 484 (S.D. Fla. 2003) ........................................................................................29, 30
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`City of Sterling Heights Gen. Emps. Ret. Sys. v. Prudential Fin., Inc., No. 12-5275,
`2015 WL 5097883 (D.N.J. Aug. 31, 2015) .......................................................................28, 29
`
`Comcast Corp. v. Behrend,
`569 U.S. 27 (2013) .........................................................................................................3, 31, 32
`
`
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`iii
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`Crutchfield v. Match Group, Inc., No. 19-cv-2356-S,
`2021 WL 1167578 (N.D. Tex. Mar. 26, 2021) ..........................................................................4
`
`Crutchfield v. Match Group, Inc., No. 19-cv-2356-S,
`2021 WL 5480682 (N.D. Tex. Nov. 19, 2021) ..........................................................................5
`
`Dura Pharm., Inc. v. Broudo,
`544 U.S. 336 (2005) .................................................................................................................14
`
`Erica P. John Fund, Inc. v. Halliburton Co.,
`563 U.S. 804 (2011) ...........................................................................................................15, 22
`
`Finkel v. Docutel/Olivetti Corp.,
`817 F.2d 356 (5th Cir. 1987) ...................................................................................................30
`
`Halliburton Co. v. Erica P. John Fund. Inc.,
`573 U.S. 258 (2014) .................................................................................................................23
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`Hayes v. MagnaChip Semiconductor Corp., No. 14-cv-01160-JST,
`2016 WL 7406418 (N.D. Cal. Dec. 22, 2016) .........................................................................16
`
`Horton v. Goose Creek Indep. Sch. Dist.,
`690 F.2d 470 (5th Cir. 1982) ...................................................................................................14
`
`In re Banc of Cal. Sec. Litig.,
`326 F.R.D. 640 (C.D. Cal. 2018) .............................................................................................16
`
`In re Blech Sec. Litig.,
`187 F.R.D. 97 (S.D.N.Y. 1999) ...............................................................................................32
`
`In re BP p.l.c. Sec. Litig., No. 10-md-2185,
`2014 WL 2112823 (S.D. Tex. May 20, 2014),
`aff’d sub nom.,
`Ludlow v. BP, P.L.C., 800 F.3d 674 (5th Cir. 2015) ...............................................................31
`
`In re Cobalt Int’l Energy, Inc. Sec. Litig., No. H-14-3428,
`2017 WL 2608243 (S.D. Tex. June 15, 2017) .........................................................................18
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`In re Deepwater Horizon,
`739 F.3d 790 (5th Cir. 2014) .............................................................................................17, 21
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`In re Dell Inc., No. A-06-CA-726-SS,
`2010 WL 2371834 (W.D. Tex. June 11, 2010),
`aff’d, appeal dismissed sub nom.,
`Union Asset Mgmt. Holding A.G. v. Dell, Inc., 669 F.3d 632 (5th Cir. 2012) ........................16
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`iv
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`In re DVI, Inc. Sec. Litig.,
`639 F.3d 623 (3d Cir. 2011),
`abrogated on other grounds by,
`Amgen, 568 U.S. 455 ...............................................................................................................23
`
`In re Dynegy, Inc. Sec. Litig.,
`226 F.R.D. 263 (S.D. Tex. 2005) .............................................................................................22
`
`In re Elec. Data Sys. Corp. Sec. Litig., 226 F.R.D. 559 (E.D. Tex. 2005),
`aff’d sub nom.,
`Feder v. Elec. Data Sys. Corp., 429 F.3d 125 (5th Cir. 2005) ........................15, 18, 21, 22, 33
`
`In re Enron Corp. Sec. Derivative & “ERISA” Litig.,
`529 F. Supp. 2d 644 (S.D. Tex. 2006) ...................................................2, 14, 18, 20, 24, 25, 28
`
`In re JPMorgan Chase & Co. Sec. Litig., No. 12 Civ. 03852 (GBD),
`2015 WL 10433433 (S.D.N.Y. Sept. 29, 2015) .......................................................................32
`
`In re Reliant Energy ERISA Litig.,
`2005 WL 2000707 (S.D. Tex. Aug. 18, 2005) ........................................................................32
`
`In re Reliant Sec. Litig., No. H-02-1810,
`2005 WL 8152605 (S.D. Tex. Feb. 18, 2005) .........................................................................17
`
`Johnson v. U.S.,
`208 F.R.D. 148 (W.D. Tex. 2001) ...........................................................................................14
`
`KB Partners I, L.P. v. Barbier, No. A-11-CA-1034-SS,
`2013 WL 2443217 (W.D. Tex. June 4, 2013) ...................................................................28, 29
`
`Krogman v. Sterritt,
`202 F.R.D. 467 (N.D. Tex. 2001) ..........................................................................24, 25, 27, 29
`
`Lehocky v. Tidel Techs., Inc.,
`220 F.R.D. 491 (S.D. Tex. 2004) ...........................................................................20, 27, 32, 33
`
`Ludlow v. BP, p.l.c.,
`800 F.3d 674 (5th Cir. 2015) ...................................................................................................31
`
`Marcus v. J.C. Penney, No. 6:13-cv-736-MHS-KNM,
`2016 WL 8604331 (E.D. Tex. Aug. 29, 2016) ......................................................17, 18, 31, 32
`
`McIntire v. China MediaExpress Holdings, Inc.,
`38 F. Supp. 3d 415 (S.D.N.Y. 2014) ........................................................................................29
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`Phillips Petroleum Co. v. Shutts,
`472 U.S. 797 (1985) .............................................................................................................2, 14
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`v
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`Prause v. TechnipFMC, PLC, No. 17-cv-2368,
`2020 WL 3549686 (S.D. Tex. March 9, 2020) ........................................................2, 19, 20, 21
`
`Rooney v. EZCORP, Inc.,
`330 F.R.D. 439 (W.D. Tex. 2019) .........................................................................16, 18, 19, 20
`
`Rougier v. Applied Optoelectronics, Inc., No. 17-cv-02399,
`2019 WL 6111303 (S.D. Tex. Nov. 13, 2019),
`report and recommendation adopted,
`No. 17-cv-2399, 2019 WL 7020349 (S.D. Tex. Dec. 20, 2019) ....16, 18, 26, 27, 28, 29, 30, 31
`
`Slade v. Progressive Sec. Ins. Co.,
`856 F.3d 408 (5th Cir. 2017) ...................................................................................................19
`
`Stirman v. Exxon Corp.,
`280 F.3d 554 (5th Cir. 2002) ...................................................................................................18
`
`Stoffels v. SBC Communs., Inc.,
`238 F.R.D. 446 (W.D. Tex. 2006) ...........................................................................................20
`
`Stott v. Cap. Fin. Servs. Inc.,
`277 F.R.D. 316 (N.D. Tex. 2011) ............................................................................................21
`
`Strougo v. Barclays PLC,
`312 F.R.D. 307 (S.D.N.Y. 2016) .............................................................................................28
`
`Teamsters Local 445 Freight Div. Pension Fund v. Bombardier, Inc., No. 05 Civ. 1898 (SAS),
`2006 WL 2161887 (S.D.N.Y. Aug. 1, 2006), aff’d, 546 F.3d 196 (2d Cir. 2008) ..................25
`
`Tellabs, Inc. v. Makor Issues and Rights, Ltd.,
`551 U.S. 308 (2007) .................................................................................................................14
`
`Todd v. STAAR Surgical Co., No. CV-14-05263-MWF-RZ,
`2017 WL 821662 (C.D. Cal. Jan. 5, 2017) ..............................................................................26
`
`Torres v. S.G.E. Mgmt., L.L.C.,
`838 F.3d 629 (5th Cir. 2016) ...................................................................................................22
`
`Unger v. Amedisys Inc.,
`401 F.3d 316 (5th Cir. 2005) .............................................................................3, 24, 25, 28, 29
`
`Wal-Mart Stores, Inc. v. Dukes,
`564 U.S. 338 (2011) .................................................................................................................17
`
`Wilson v. LSB Indus., Inc., No. 15 Civ. 7614 (RA),
`2018 WL 3913115 (S.D.N.Y. Aug. 13, 2018) .........................................................................26
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`vi
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`Zeidman v. J. Ray McDermott & Co., Inc.,
`651 F.2d 1030 (5th Cir. 1981) .................................................................................................16
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`Private Securities Litigation Reform Act of 1995 .................................................................4, 5, 19
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`Statutes
`
`Rules
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`Fed. R. Civ. P. 12 .................................................................................................................1, 13, 27
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`Fed. R. Civ. P. 23 .......................................................1, 2, 14, 15, 16, 17, 18, 19, 20, 21, 22, 32, 33
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`Fed. R. Civ. P. 26 .............................................................................................................................5
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`Local Civil Rule 7.1 .........................................................................................................................1
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`Local Civil Rule 23.2 .......................................................................................................................1
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`vii
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`Lead Plaintiff Samir Ali Cherif Benouis (“Lead Plaintiff”) respectfully moves, pursuant to
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`Fed. R. Civ. P. 23, and in accordance with Local Civil Rule 23.2, for an Order: (i) certifying the
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`above-captioned securities fraud class action (“Action”) as a class action; (ii) certifying the Class
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`as defined below; (iii) appointing Lead Plaintiff as Class Representative; and (iv) appointing Lead
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`Plaintiff’s choice of counsel, Pomerantz LLP (“Pomerantz”), as well as Glancy Prongay & Murray
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`LLP (“Glancy”) as Class Counsel, and Kendall Law Group, PLLC (“Kendall”) as Local Counsel
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`for the Class. Pursuant to Local Rules 7.1(a)–(b), (h), Lead Plaintiff’s counsel conferred with
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`Defendants’ counsel and the parties cannot agree about the disposition of this motion, as set forth
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`in the parties’ previously filed report pursuant to Fed. R. Civ26(f) (Dkt. No. 71) at 3.1
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`PRELIMINARY STATEMENT
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`Lead Plaintiff’s claims are ideally suited for class adjudication. He was allegedly injured,
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`like all other Class members, by Defendants’ material misrepresentations and omissions regarding
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`two separate threads of alleged class-wide fraud at Defendant Match Group, Inc. (“Match”) – the
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`Membership Integrity Fraud and the Reported Results Fraud. Both threads arise from common
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`factual allegations that Defendants concealed and failed to sufficiently address widespread
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`fraudulent and bad actor accounts on Match’s branded websites and apps on a scale that materially
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`impacted, both directly and indirectly, Match’s user metrics and reported results, while they
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`misrepresented the purported integrity of Match’s user base, the strength of its anti-fraud measures,
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`and the favorability of trends underlying its financial performance. After two rounds of dispositive
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`motions under Fed. R. Civ. P. 12(b)(6), the Court has fully upheld these operative pleadings.
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` “Rule 23 is a remedial rule [and, as such, is to] be construed liberally to permit class
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`1
`Herein, unless stated otherwise: “S¶” refers to numbered paragraphs of the Second Amended Class Action
`Complaint (Dkt. No. 51) (“SAC”), capitalized terms have the definitions assigned in the SAC, “Dkt. No.” refers to
`entries on the Action’s docket, all emphasis is added, and all internal citations and quotations are omitted.
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`1
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`actions, especially in the context of securities fraud suits.” In re Enron Corp. Sec. Derivative &
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`“ERISA” Litig., 529 F. Supp. 2d 644, 670 (S.D. Tex. 2006). Certification of class actions to
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`adjudicate securities claims like those at issue is commonplace and well-justified. See, e.g., Prause
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`v. TechnipFMC, PLC, No. 17-cv-2368, 2020 WL 3549686, at *1 (S.D. Tex. March 9, 2020)
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`(granting motion for class certification); Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985)
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`(“most of the plaintiffs would have no realistic day in court if a class action were not available.”).
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`This lawsuit is no different. Trial of the claims will focus on issues common to all Class members:
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`control, falsity, materiality, scienter, reliance, and loss causation. Simply put, this is a
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`quintessential securities fraud class action, where class certification is appropriate and where it
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`should be granted expeditiously, particularly given the length of time that this lawsuit has been
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`pending without any relief to Class members who suffered losses.
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`All requirements for class certification are readily met. That the Fed. R. Civ. P. 23(a)
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`requirements are satisfied cannot credibly be challenged. Numerosity is a proverbial slam dunk in
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`securities class action lawsuits involving publicly traded stocks. Common questions are easily
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`identified. Lead Plaintiff is entirely typical of the Class he seeks to represent. Moreover, Lead
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`Plaintiff, assisted by proposed Class Counsel has zealously and successfully prosecuted the claims
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`at issue past multiple amendments and dispositive motions and into discovery.
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`The Fed. R. Civ. P. 23(b)(3) standards are also met. First, common questions of law or
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`fact predominate over individual issues. Lead Plaintiff can rely on the fraud-on-the-market
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`presumption to establish class-wide reliance, pursuant to Basic, Inc. v. Levinson, 485 U.S. 224
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`(1988), given that Match’s common stock at issue traded in an efficient market reflecting all public
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`material information – including the alleged misstatements – in its price. The Fifth Circuit has
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`said that “market efficiency will not even be an issue” for “heavily-traded or well-known stocks”
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`2
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`on a national exchange. Unger v. Amedisys Inc., 401 F.3d 316, 322–23 (5th Cir. 2005). Moreover,
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`as supported by the accompanying expert report, market efficiency is clear for Match’s common
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`stock under the five “Cammer factors” and three “Krogman / Unger factors” used by Fifth Circuit
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`courts. Match traded on the NASDAQ with high volume (Cammer 1), securities analysists widely
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`covered it (Cammer 2), many market makers traded a large volume of its shares (Cammer 3),
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`Match filed SEC Form S-3 (Cammer 4), its public disclosures had a cause-and-effect relationship
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`with its stock price movements (Cammer 5), and Match had a large market capitalization
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`(Krogman / Unger 1), a small bid-ask spread (Krogman / Unger 2), and a large public float
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`(Krogman / Unger 3). Alternatively, as pled in the operative complaint, reliance can be presumed
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`under Affiliated Ute Citizens of Utah v. U.S., 406 U.S. 128 (1972), because the claims involve
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`primarily omissions of material information. Either way, individualized damages calculations will
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`not defeat predominance because, as explained by Lead Plaintiff’s expert, damages can be
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`measured on a class-wide basis consistent with Lead Plaintiff’s theory of liability, through the
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`traditionally accepted “out-of-pocket measure,” in line with Comcast Corp. v. Behrend, 569 U.S.
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`27 (2013). Second, class adjudication of the claims is superior to any alternative. The thousands
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`of Class members have low interest in pursuing individual, cost-ineffective claims. Indeed, to
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`date, none are known to have been filed. It is highly desirable to concentrate all litigation
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`concerning the facts and claims at issue before this Court to avoid inconsistent rulings and to
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`conserve judicial resources. Lead Plaintiff and Co-Lead Counsel expect no unusual difficulties in
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`managing the litigation and will use their substantial experience to efficiently bring it to trial.
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`For all these reasons, Lead Plaintiff respectfully asks the Court to certify the Class, appoint
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`him to serve as Class Representative, and appoint Pomerantz and Glancy as Class Counsel and
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`Kendall as Local Counsel for the Class.
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`3
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`PROCEDURAL HISTORY
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`The initial complaint in this Action (Dkt. No. 1) was filed on October 3, 2019. On
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`December 2, 2019, motions were filed by Phillip Crutchfield (Dkt. No. 5), Stefan Bubik (Dkt. No.
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`7), and Samir Ali Cherif Benouis (Dkt. No. 10) seeking appointment to serve as lead plaintiff under
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`the Private Securities Litigation Reform Act of 1995 (“PSLRA”). After Mr. Bubik withdrew his
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`motion (Dkt. No. 20), Mr. Crutchfield and Mr. Benouis filed a joint stipulation (Dkt. No. 21)
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`seeking to resolve their pending lead plaintiff motions on December 23, 2019.
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`On January 6, 2020, the Court so ordered the stipulation, appointing Mr. Crutchfield and
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`Mr. Benouis to jointly serve as PSLRA lead plaintiffs and their choice of counsel, Glancy and
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`Pomerantz respectively, to serve as PSLRA lead counsel (Dkt. No. 22).
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`The Amended Class Action Complaint (Dkt. No. 37) (“FAC”) was filed on April 14, 2020.
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`Defendants filed their motion to dismiss (Dkt. No. 38) on June 12, 2020, the opposition (Dkt. No.
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`42) was filed August 26, 2020, and Defendants’ reply (Dkt. No. 43) was filed September 25, 2020.
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`On March 26, 2021, the Court granted Defendants’ motion, without prejudice by an Opinion and
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`Order (Dkt. No. 50),2 which set a deadline of April 23, 2021, for any further amended pleadings.
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`The Second Amended Class Action Complaint (Dkt. No. 51) (“SAC”), which greatly
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`expanded the pleadings with additional allegations expressly directed at the Court’s articulated
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`concerns, was filed on April 23, 2021. Defendants filed their motion to dismiss (Dkt. No. 54) on
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`May 20, 2021, the opposition (Dkt. No. 58) was filed June 22, 2021, and Defendants’ reply (Dkt.
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`No. 62) was filed July 11, 2021. On November 19, 2021, the Court denied Defendants’ motion
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`See Crutchfield v. Match Group, Inc., No. 19-cv-2356-S, 2021 WL 1167578 (N.D. Tex. Mar. 26, 2021).
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`by an Order (Dkt. No. 63)3 (the “Second MTD Order”) that upheld the SAC’s pleadings in full.
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`The Court also entered an Order (Dkt. No. 64) requiring the parties to mediate before the
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`Hon. R William Royal Furgeson by July 2022. Such mediation has not yet been scheduled.
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`Also on November 19, 2021, the Court entered a Scheduling Order (Dkt. No. 65), which
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`firmly set a jury trial for the three-week docket beginning on October 3, 2022, with various
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`antecedent deadlines. After Defendants filed their Answer (Dkt. No. 69), the parties filed their
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`Fed. R. Civ. P. 26(f) report (Dkt. No. 71) setting forth adjusted and expanded pre-trial deadlines.
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`Discovery has commenced. The parties submitted their agreed stipulation and proposed
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`protective order (Dkt. No. 76), which was so ordered on January 24, 2022 (Dkt. No. 77). The
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`parties served first interrogatories and first document requests on January 12, 2022. They
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`exchanged initial disclosures on January 19, 2022. They served discovery responses and
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`objections on February 22, 2022. They are deep into negotiations of an ESI protocol.
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`On February 16, 2022, Mr. Crutchfield filed a consent motion for voluntary withdrawal
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`from the role of PSLRA lead plaintiff (Dkt. No. 79). The Court entered an Order (Dkt. No. 81)
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`granting this request and returning Mr. Crutchfield to the status of absent class member.
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`Pursuant to the Court’s Order (Dkt. No. 80) granting extensions of time and pages, Lead
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`Plaintiff hereby respectfully files this motion seeking class certification.
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`STATEMENT OF FACTS
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`The SAC is a robust pleading, strengthened after the pleadings were first vetted by the
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`Court, which draws from extensive CW allegations, a thorough analysis of Match’s SEC filings
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`and Defendants’ other public statements, and detailed evaluation of insider transactions by
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`Defendants Ginsberg and Swidler. As detailed in Lead Plaintiff’s opposition to Defendants’
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`See Crutchfield v. Match Group, Inc., No. 19-cv-2356-S, 2021 WL 5480682 (N.D. Tex. Nov. 19, 2021).
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`motion to dismiss it (see Dkt. No. 58 at 3-16), the SAC thoroughly addressed each of the Court’s
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`articulated concerns, and as the same brief made clear (id. at 16-20), investigative reporting
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`published after the SAC was filed fully corroborated its core allegations. On this record, the
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`Court’s Second MTD Order fully upheld the SAC and fully rejected the motion to dismiss.
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`I. THE CWS DETAILED THE ALLEGED FRAUD
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`The SAC relies on extensive Confidential Witness (CW) statements to reveal the
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`undisclosed negative facts known to Defendants but concealed from their public statements at
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`issue.4 Its CW allegations, which were fully credited by the Court in its Second MTD Order,
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`detailed the scope of illegitimate accounts across Match’s branded websites and apps, the direct
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`and indirect impacts of those accounts on Match’s user metrics and reported results, and
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`Defendants’ failure to implement necessary anti-fraud staffing and technologies.
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`A.
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`Pervasive Fraudulent And Bad Actor Accounts
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`The SAC extensively pled the scope of fraudulent and bad actor accounts on Match’s
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`branded websites and apps, quantifying their direct and indirect impacts on Match’s operations
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`and reported results. It pled that illegitimate accounts materially inflated both Match Group’s
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`consolidated reported user statistics, metrics, and trends and its reported financial results. S¶5.
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`As to Match’s metrics, the SAC realleged, inter alia: (1) CW2, Match.com’s Senior
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`Finance Manager at headquarters, prepared a Finance Department analysis showing that 15% of
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`all Match.com registrations from February 2016 – February 2019 were fraudulent, based on CW2’s
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`close review of financials for ten days each month (S¶¶21, 46); (2) CW7, Tinder’s Director of
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`Finance, said that Tinder had a working assumption that 20% of all its accounts were bots or
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`As discussed in Lead Plaintiff’s opposition to Defendants’ motion to dismiss the SAC (see Dkt. No. 58 at 1-
`2, 16-20), the ProPublica / Columbia Journalism Investigations (“CJI”) article published May 17, 2021, and its
`supporting materials (see Dkt. Nos. 58-3 and 58-4) strongly corroborated the SAC’s CW and other allegations.
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`fraudulent, citing its Director of Analytics, Bob Wilson (S¶47); and CW5, a Senior Fraud
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`Investigator on Match.com and Match Group’s affinity brands, described illegitimate accounts as
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`“slow burners” engaged in long-term fraud efforts (S¶40). The SAC explains how these metrics
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`translated into both direct and indirect impacts on the company’s reported results.
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`The SAC pleads that a “significant” percentage of scam accounts paid for extended length
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`(three-month, six-month, or 1-year) memberships (S¶¶5, 50) – a huge problem on Tinder, Match
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`Group’s highest-earning brand with $800 million+ in 2018 revenue (S¶¶6, 122), and on Match.com
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`and Match Group’s affinity brands.5 For instance, CW11, one of six Tinder Trust & Safety
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`Division members, said 15% - 20% of fake, fraudulent, and bad-actor accounts on Tinder were
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`paid subscriptions, including bots, users posing as someone else, accounts using stolen credit cards
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`to pay for subscriptions, and scammers trying to defraud other users. S¶48. CW5, a long-time
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`Senior Fraud Investigator on Match.com and the affinity brands, said all eight Fraud Department
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`members each blocked 400-500 paying accounts daily, which was roughly 25% of the total
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`accounts each of them reviewed daily or 50% - 62.5% of the accounts each removed for fraud
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`every day. S¶49. Thus, the SAC explained that Fraud Department team together removed 3,200
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`– 4,000 paying accounts every day from Match.com and the affinity brands alone (S¶49), data
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`closely tracked and analyzed in an internal company database (S¶57).6 Indeed, the Fraud
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`Department was the “most hated” internal team, because its removal of accounts caused the
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`Match.com system to automatically refund all subscription fees, even for longer six-month or one-
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`year memberships, since those subscriptions were often paid with stolen credit cards. S¶55.
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`The SAC alleges that Match Group’s so-called “affinity” brands were the People Media Group collection of
`niche sites like ourtime.com and blackpeoplemeet.com (S¶24)