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United States Court of Appeals for the Ninth Circuit
November 10, 2021, Argued and Submitted, Pasadena, California; March 23, 2022, Filed
LEE, Circuit Judge:
Every day, millions of people use Twitter to share and read news, offer (often horrendous) hot takes, and fire off mean tweets. Twitter, in turn, mines the personal data of its users to better target advertisements. In August 2019, Twitter [*4] revealed that it had inadvertently shared with advertisers the personal data of users who had opted out of data-sharing, but it reassured its users that it had "fixed these issues." A few months later during its quarterly earnings announcement, Twitter disclosed that software bugs had hampered its advertisement customization and that it had suffered a $25 million revenue shortfall. The plaintiffs then filed this securities fraud lawsuit, alleging that Twitter had misled investors by hiding the scope of its software bugs when it touted its latest advertisement initiative.
] Securities laws, however, do not require real-time business updates or complete disclosure of all material information whenever a company speaks on a particular topic. To the contrary, a company can speak selectively about its business so long as its statements do not paint a misleading picture. Twitter's statements about its advertising program were not false or misleading because they were qualified and factually true. The company had no duty to disclose any more than it did under federal securities law. We thus affirm the district court's dismissal of the lawsuit.
Twitter operates a social media platform [*5] that allows people to share short 280-character messages to the public. Like most social media outlets, Twitter does not charge its users but rather earns money through advertising. Twitter shares certain user data—e.g., cell phone location data—with companies that pay more for ads tailored to certain users. But because of privacy concerns, Twitter has permitted users to opt out of such data-sharing since 2017.
At issue is Twitter's Mobile App Promotion ("MAP") product, which allows advertisers to prompt users to download their apps onto their phones or tablets. MAP is most effective when an advertiser knows information about the user's device settings, such as its operating system or which apps the user has already downloaded. Twitter has highlighted MAP as an important driver of Twitter's future revenue growth, and has invested in an improved, next generation MAP product.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2022 U.S. App. LEXIS 7635 *; __ F.4th __; 2022 WL 853252
WESTON FAMILY PARTNERSHIP LLLP; THE TWITTER INVESTOR GROUP, Plaintiffs-Appellants, and KHAN M. HASAN; KHAFRE BARCLIFT, Plaintiffs, v. TWITTER, INC.; JACK DORSEY; NED SEGAL, Defendants-Appellees.
Prior History: [*1] Appeal from the United States District Court for the Northern District of California. D.C. No. 4:19-cv-07149-YGR. Yvonne Gonzalez Rogers, District Judge, Presiding.
In re Twitter Sec. Litig., 2020 U.S. Dist. LEXIS 241119 (N.D. Cal., Dec. 22, 2020)
software, bugs, misleading, district court, users, disclose, advertising, notice of appeal, investor, data-sharing, allegations, premature, leave to amend, final order, Exchange Act, forward-looking, progress, privacy, blog, next generation, shareholder, announced, legacy
Securities Law, Express Liabilities, Misleading Statements, Elements of Proof, Civil Procedure, Appeals, Standards of Review, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Postoffering & Secondary Distributions, Securities Exchange Act of 1934 Actions, Heightened Pleading Requirements, Pleadings, Heightened Pleading Requirements, Fraud Claims, Complaints, Requirements for Complaint, Appellate Jurisdiction, Final Judgment Rule, Notice of Appeal, Business & Corporate Compliance, Regulators, US Securities & Exchange Commission, Necessity for Regulation, Implied Private Rights of Action, Elements of Proof, Connection Requirement, Penalties & Unlawful Representations, Causation, Materiality, Statements of Opinion, Initial Offerings of Securities, Registration of Securities, Forward Looking Statements, Civil Liability Considerations, Securities Litigation Reform & Standards, Safe Harbor, Puffery, Insider Trading, Contemporaneous Trading