Meryl L. Young Orange County
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Jonathan C. Dickey Palo Alto
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Robert F. Serio New York
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Thad A. Davis San Francisco
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​In the wake of the financial crisis and the corporate scandals of the past several years, U.S. corporations have been engulfed by securities class action litigation.  These lawsuits pose a significant financial risk not only to the company, but also to its senior management and directors, who are frequently named as individual defendants. 


Gibson Dunn has an outstanding record of obtaining favorable results for our clients in major securities class actions. 

Recent representations include: 

  • Obtained a complete dismissal of all securities fraud claims against Herbalife Ltd. and its CEO.  Tossing the third amended complaint without leave to amend, the Central District of California found that plaintiffs failed to plead material misstatements or scienter in support of the allegations that the company lied about its compliance with the anti-pyramid scheme laws.  The court ruled that any misstatements were not material, because Herbalife made extensive warnings to investors that its multi-level marketing business model could potentially be challenged as a pyramid scheme.  The court also firmly rejected plaintiffs' arguments that the complaint sufficiently alleged that defendants did anything with an intent to defraud Herbalife shareholders. 
  • Secured complete dismissal of all claims against Molycorp, Inc. and five of its current and former senior executives under the Securities Exchange Act of 1934 in the Southern District of New York.  Plaintiffs claimed that the defendants were liable to Molycorp's shareholders for making false and misleading statements regarding: (1) the progress of "Project Phoenix," an effort to modernize Molycorp's rare earth mine in Mountain Pass, Calif. and expand its production capacity, (2) the amount of inventory, cost of sales, and income tax benefit reported in Molycorp's first quarter 2013 financial results, which were subsequently restated, and (3) the marketability of Molycorp's cerium-based water filtration product known as "SorbX."  Based on the strength of Gibson Dunn's motion papers, the court held that plaintiffs failed to raise a strong inference of scienter with respect to their allegations regarding Project Phoenix and the financial restatement, and that defendants' statements regarding SorbX were forward-looking and protected under the Private Securities Litigation Reform Act's "safe harbor."
  • Secured dismissal and Second Circuit affirmance of a securities fraud class action against clients UBS AG and four of its senior executives.  The case arose from unauthorized trades by UBS London employee Kweku Adoboli that led to more than $2 billion in losses to UBS's proprietary account.  UBS promptly disclosed the incident, leading to a stock price decline.  Plaintiffs sued under Securities Exchange Act Sections 10(b) and 20(a), alleging that statements by UBS and the individual defendants concerning the quality of the company's risk management and controls were false or misleading.  In affirming the Southern District of New York dismissal the Circuit held that plaintiffs had failed to adequately plead scienter. 
  • Secured complete dismissal on behalf of The Royal Bank of Scotland plc, RBS Securities Inc., RBS Financial Products Inc. and RBS Acceptance Inc. (the RBS defendants) of a securities class action in the Commercial Division of the New York State Supreme Court.  The case, brought against the RBS defendants and Financial Asset Securities Corp., alleged fraud and negligent misrepresentation in connection with the sale of over $337 million worth of residential mortgage-backed securities issued in 29 different offerings.  The court agreed with Gibson Dunn that the complaint failed to plead the plaintiffs' justifiable reliance on the alleged misrepresentations. 
  • Successfully represented a former executive of a major international insurer in a securities class action relating to the company's exposure to the subprime mortgage market.  The Southern District of New York preliminarily approved a proposed class settlement pursuant to which Gibson Dunn's client will bear no responsibility for a financial contribution to the settlement and will have all claims against him released.
  • Obtained complete dismissal for Microsoft and its senior management in a high-profile class action filed in the wake of a $900 million accounting charge in July 2013 relating to the company's first-generation Surface RT tablet products. Reflecting the trend of securities class actions brought following the announcement of negative news by high-tech companies related to their paradigm-shifting products, plaintiffs filed suit after a decline in the price of Microsoft stock, leading to a multibillion-dollar drop in market capitalization for a short time.  While the plaintiffs claimed "fraud," the Western District of Washington accepted all of our arguments for dismissal. Plaintiffs then declined the opportunity to amend their complaint, and the district court entered a final judgment ending the case. 
  • In cross-border litigation for Vancouver-based Nevsun Resources, Ltd. and its senior executives we achieved court-approved settlements of parallel class actions in the Southern District of New York and Ontario, Canada. Nevsun is a mining company with major operations in Eritrea, Africa; its shares trade on both the New York and Toronto stock exchanges. The case arose out of Nevsun's February 2012 announcement that its 2012 gold production would be over 30% lower than previously estimated when the mine first commenced commercial production in early 2011. This announcement led to a significant drop in Nevsun's common stock. In the initial motion practice, we obtained dismissal of many of the alleged misstatements in the U.S. action, while the court reserved ruling on certain other potentially dispositive legal issues involving the interplay between U.S. and Canadian securities laws, including whether the U.S. action could certify a "global" class of investors that would have included shareholders who purchased their shares on the Toronto Stock Exchange. After extensive mediation, both the U.S. and Canadian cases were resolved for a fraction of the total damages exposure, with neither of the two settlements permitting a class to be certified that included citizens of the other country
  • Secured dismissal of securities fraud class action and entry of final judgment for KV Pharmaceutical Company and three senior executives in the Eastern District of Missouri, in a case arising from KV's launch of a drug that reduced the risk of pre-term births.  After KV announced the FDA's grant of statutory market exclusivity and that it would charge substantially more for the drug than compounding pharmacies, the FDA exercised its discretion not to enforce the market exclusivity and KV's stock price declined.  Plaintiffs alleged that defendants failed to warn investors of the risk that the FDA could choose not to enforce market exclusivity.  The court dismissed with limited leave to amend the complaint and subsequently denied plaintiffs' motion for reconsideration, reiterating that most of the allegedly false statements were forward-looking, accompanied by cautionary language and thus protected by a statutory safe harbor.  The court further reaffirmed that the remaining allegedly false statements and omissions did not meet pleading requirements. 
  • Successfully opposed certification of a putative securities class action in the Northern District of Texas for the syndicate of underwriters for the initial public offering of Kosmos Energy.  The lawsuit, brought on behalf of stock purchasers in the IPO, asserted Section 11, 12(a) and 15 claims under the Securities Act of 1933 against Kosmos, its directors and senior officers, and 11 underwriters led by Citibank, Credit Suisse and Barclays.  Noting that the U.S. Supreme Court's Comcast decision, a Gibson Dunn win, required that "plaintiffs seeking certification must produce quality evidence for each Rule 23 element—period," the court concluded that plaintiff had failed to meet its evidentiary burden of demonstrating that common issues predominated.  Gibson Dunn worked closely with counsel for Kosmos in defending the case and opposing class certification. 
  • Won dual victories on behalf of Leidos Holdings, Inc. (formerly SAIC, Inc.), in cases arising from SAIC's $500 million settlement and deferred prosecution agreement with the U.S. Department of Justice related to SAIC's involvement with CityTime, the New York City payroll system.  In the wake of that resolution shareholders filed derivative suits and securities class actions in federal and state courts around the United States.  We secured dismissal and subsequent Second Circuit affirmance of all derivative claims against the directors.  In the Southern District of New York we then obtained dismissal of all remaining claims in the securities class actions, pertaining to allegations that Leidos failed to make proper FAS 5 disclosures.  These dual rulings dismissed all remaining shareholder litigation against Leidos, and clarified the standards for pleading director liability under Delaware law, and for FAS 5 liability in 10(b) practice
  • Won dismissal and Fourth Circuit affirmance of all class action claims against Merrill Lynch Pierce Fenner & Smith Inc. and RBC Capital Markets, LLC under the Securities Act of 1933.  The case arose from price declines in the stock of Municipal Mortgage & Equity, LLC ("MuniMae") when the company announced accounting errors and cuts in its dividend payments. The plaintiffs claimed that MuniMae was liable to its shareholders for making false and misleading statements, and that Merrill Lynch and RBC, underwriters for a secondary public offering of MuniMae stock in 2005, were liable under Sections 11 and 12(a)(2) for incorporating those statements into underwriting documents.  The appeals court held that the Section 11 claims were barred by the three-year statute of repose and that the plaintiffs lacked standing to sue under Section 12(a)(2). 
  • Secured dismissal in the Southern District of New York in majority of claims filed against UBS AG and 15 other banks in three class actions and four individual actions that claimed unlawful manipulation and collusion in the process of setting the U.S. Dollar LIBOR reference rate.  The court dismissed all state and federal antitrust claims because plaintiffs lacked antitrust standing, dismissed all RICO claims because plaintiffs' invocation of the statute was barred by the PSLRA and impermissibly extraterritorial, and dismissed a significant portion of the Commodity Exchange Act claims as barred by the statute of limitations.  The court further significantly narrowed the theories by which plaintiffs could recover for their timely Commodity Exchange Act claims. 
  • Won Tenth Circuit affirmance of dismissal of all claims under Section 11 of the Securities Act of 1933 against clients Citigroup, Oppenheimer, RBC Capital Markets, Stifel, Nicolaus & Company, Wells Fargo (Wachovia) and BB&T in a subprime-related securities class action arising out of the 2008 collapse and subsequent bankruptcy of New Mexico-based Thornburg Mortgage, Inc., an originator and syndicator of MBS securities during the subprime boom.  The claims against Gibson Dunn clients centered on two public offerings of Thornburg securities in May and June 2007, in which our clients served as underwriters.  After the district court first dismissed the case, the plaintiffs filed an amended complaint following which the court again granted Gibson Dunn's motion to dismiss. 
  • Won Second Circuit affirmance of the dismissal of all claims against our clients, the former senior officers of Eastman Kodak Company, in a class action filed under the Securities Exchange Act of 1934 in the wake of Kodak's January 2012 bankruptcy.  The lawsuit alleged misrepresentations and omissions during 2011 that supposedly concealed that Kodak was suffering a liquidity crisis due to its inability to successfully license or sell its IP assets, and that by the fall of 2011 it was on the brink of bankruptcy.  Gibson Dunn had obtained final dismissal from the Southern District of New York, which agreed with our argument that plaintiff's claims amounted to "fraud by hindsight." The Second Circuit affirmed just two weeks after oral argument, summarily rejecting all of plaintiff's contentions. 
  • Obtained Third Circuit affirmance of dismissal of a shareholder class action alleging that UBS and its affiliates violated the federal securities laws in connection with a $2.5 billion mortgage-backed securities offering in 2007.  This was the first appellate decision to uphold the dismissal of a mortgage-backed securities case on statute of limitations grounds.  The lawsuit charged UBS affiliates with failing to disclose material information about the underwriting practices used in originating the loans that comprised the offered securities.  Agreeing with the then-novel defense advanced by Gibson Dunn, the district court twice dismissed the lawsuit on statute of limitations grounds.  In affirming, the Third Circuit concluded, as UBS had argued, that prior mortgage-backed securities litigation put the lead plaintiff on notice of its claims, and that through a reasonable investigation, it could have discovered its claim prior to the relevant statute of limitations period. 
  • Secured resolution of a major credit crisis securities class action against UBS Financial Services arising out of its role as underwriter of 84 public offerings of Lehman Brothers "Principal Protection" Structured Notes.  After the notes became largely worthless following Lehman's bankruptcy in September 2008, the class action was filed claiming that offering materials misrepresented Lehman's creditworthiness and failed to disclose its exposure to certain credit risks.  The suit, part of the larger consolidated class and ERISA litigation pending in the Southern District of New York, also contended that UBSFS failed to disclose the existence of secret "repo" transactions entered into by Lehman.  USBFS' settlement agreement to pay $120 million will fully release it from all claims related to the issuance of over $1.2 billion of Structured Notes, roughly ten cents on the dollar. 
  • Obtained Second Circuit affirmance of the denial of motions to intervene to assert class claims under the Securities Act of 1933 against clients Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., and Morgan Stanley & Co. LLC.  The lead plaintiffs in the underlying action had asserted putative class claims relating to 106 offerings of residential mortgage-backed securities.  After the district court dismissed claims relating to over 90 offerings in which the lead plaintiffs did not invest, six pension funds filed motions to intervene to assert class claims relating to eight of those offerings.  The district court denied as untimely the intervention motions to the extent they were filed more than three years after the offerings occurred.  The Circuit agreed, and rejected the attempt of absent class members to intervene as named plaintiffs to revive claims that had been dismissed from a class action complaint for lack of standing. 
  • Secured denial of class certification from the Southern District of New York in a securities class action against China Automotive Systems, Inc., several of its officers and directors, and Gibson Dunn client Schwartz Levitsky Feldman LLP, China Auto's former auditor.  Plaintiffs' 10b-5 case alleges that misrepresentations in China Auto's accounting for certain convertible notes, which had been restated in subsequent financial statements, caused a substantial decline in the company's stock price.  After the court rejected defendants' motions to dismiss, Schwartz Levitsky retained Gibson Dunn and defendants contested class certification.  The court cited adequacy and typicality grounds in denying certification, and agreed that plaintiffs had failed to prove market efficiency and were not entitled to a fraud-on-the-market theory of reliance. 
  • Secured court-approved final settlement of securities fraud claims against the former directors and officers of client Ener1, Inc., a once-high flying manufacturer of lithium batteries intended to power the next generation of electric cars.  The company foundered when the electric car market deteriorated and its stock price collapsed upon announcement of an impairment charge on an investment in a foreign electric car manufacturer, a key customer.  The action claimed the directors and officers misled the market about Ener1's prospects for future revenue growth and that the investment should have been written off nine months earlier.  Settlement came after Gibson Dunn's motion to dismiss and was funded by Ener1's D&O insurer, with our clients paying nothing. 
  • Won dismissal of amended complaint in residential mortgage-backed securities (RMBS) lawsuit for clients RBS Securities Inc. and related entities and individuals (RBS defendants).  In 2006, plaintiff Stichting Pensioenfonds ABP, one of the world's three largest pension funds, purchased RMBS that were securitized and underwritten by the RBS defendants.  After the collapse of the residential real estate market Stichting sued, alleging securitization of defective mortgage loans and asserting securities fraud claims under the Securities Exchange of 1934 as well as common law fraud and negligent misrepresentation claims.  Adopting Gibson Dunn's arguments, the court dismissed all of Stichting's claims for failure to plead a material misstatement, failure to plead a strong inference of scienter, and failure to plead the requisite "special relationship" for a negligent misrepresentation claim.