Qudian Inc. doesn’t have to face a security fraud class action tied to a data breach after a federal court rejected a motion to reconsider previously dismissed claims.
Plaintiffs attempted to re-litigate a previously rejected argument against the Chinese online lender with their motion, the U.S. District Court for the Southern District of New York said in rejecting it July 10.
The ruling shows how companies hit with securities fraud class actions following breaches can beat claims through early motions over standing, jurisdiction, or showing that allegations are unfounded.
The plaintiffs’ attorneys did not immediately respond to a request for comment.
Plaintiffs, including Alan Hertz and Carlos Maia, sued Qudian in December 2017, alleging the company gave false and misleading registration statements concerning its initial public offering. The court, in dismissing the suit last year, gave the plaintiffs an opportunity to renew their claims.
The plaintiffs argued the court overlooked the company’s registration statement regarding data-security protocols. They alleged Qudian failed to disclose they “had already experienced a massive data breach in early 2017,” and that negative consequences of that incident were ongoing at the time of the IPO.
But the court, in its ruling, said Qudian did provide statements that “the company’s security systems were far from perfect, might not comply with applicable laws, and might have been breached in the past.”
The case is In re Qudian Secs. Litig., 2020 BL 256810, S.D.N.Y., 17-CV-9741 (JMF), 7/10/20.