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Welgus v. Trinet Grp., Inc.

United States District Court for the Northern District of California, San Jose Division

January 17, 2017, Decided; January 17, 2017, Filed

Case No. 15-cv-03625-BLF

Opinion

ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART

[Re: ECF 66, 69, 70, 74, 76, 77, 89]

Howard Welgus, as lead plaintiff in this securities fraud case, alleges that Defendant TriNet Group, Inc. ("TriNet" or "Company") and its officers and directors falsely claimed to have near invincible risk management capabilities, breakthrough data analytics, and limits on the Company's exposure to excessive insurance claims, which it touted as ensuring significant profitability in its human resources and insurance management business. When TriNet's stock dropped precipitously three times on the announcement of three unanticipated revenue shortfalls in its core insurance business, this suit followed. [*3] 

Before the Court are four motions to dismiss filed by (1) TriNet, Burton M. Goldfield, and William Porter (collectively, "Officer Defendants"), Officer Defs.' Mot., ECF 89; (2) Martin Babinec, H. Raymond Bingham, David C. Hodgson, Katherine August-deWilde, Kenneth Goldman, John H. Kispert, and Wayne B. Lowell (collectively, "Outside Directors" or "Director Defendants"), Outside Dirs.' Mot., ECF 70; (3) General Atlantic LLC ("General Atlantic"), General Atlantic Mot., ECF 74; and (4) J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., Jefferies LLC, Stifel, Nicolaus & Company, Incorporated, and William Blair & Company, LLC (collectively, "Underwriter Defendants"), Underwriter Defs.' Mot., ECF 77. The Court heard oral argument on November 3, 2016. For the reasons set forth herein, the motions to dismiss are GRANTED WITH LEAVE TO AMEND IN PART and WITHOUT LEAVE TO AMEND IN PART. The parties have also filed two requests for judicial notice, which the Court GRANTS. ECF 72, 97.

I. BACKGROUND

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2017 U.S. Dist. LEXIS 6347 *; Fed. Sec. L. Rep. (CCH) P99,607

HOWARD WELGUS, Plaintiff, v. TRINET GROUP, INC., et al., Defendants.

Prior History: Welgus v. TriNet Grp., Inc., 2015 U.S. Dist. LEXIS 162547 (N.D. Cal., Dec. 3, 2015)

CORE TERMS

allegations, Underwriter, registration statement, scienter, offering, shares, risk management, motion to dismiss, solicitation, disclosure, seller, misleading, falsity, Securities Act, secondary, purchasers, announced, strong inference, capabilities, argues, judicial notice, Exchange Act, certifications, experienced, weaknesses, investors, omission, courts, stock, false statement