US appeals court sends BlackBerry lawsuit back to lower court


  • TECH
  • Thursday, 25 Aug 2016

A Blackberry smartphone is displayed in this illustrative picture taken in Bordeaux, Southwestern France, August 22, 2016. REUTERS/Regis Duvignau

NEW YORK: A US appeals court upheld the dismissal of a lawsuit accusing BlackBerry Ltd of fraudulently inflating its stock price by painting an upbeat picture of the prospects for its BlackBerry Z10 smartphone line that was misleading. 

While the 2nd US Circuit Court of Appeals in New York said the lawsuit failed to state a plausible claim, it ordered a lower-court judge to reconsider whether to let the plaintiffs amend their complaint in light of what they said was new evidence. 

Neither BlackBerry nor a lawyer for lead plaintiffs Todd Cox and Mary Dinzik responded immediately to requests for comment. 

BlackBerry launched its Z10 phone in January 2013 in a bid to recoup market share lost to Apple Inc's iPhone, and Samsung Electronics Co Ltd devices powered by Google Inc's Android. 

The BlackBerry Z10 won positive reviews, but low sales led to a projected US$930mil (RM3.75bil) writedown for unsold inventory on Sept 20, 2013. BlackBerry shares lost about one-sixth of their value that day. 

The Waterloo, Ontario-based company ousted its chief executive officer, Thorsten Heins, less than two months later. 

The lawsuit alleged that BlackBerry attempted to conceal the poor performance of the Z10 in order to artificially inflate its stock price. 

In Wednesday's decision, the 2nd Circuit upheld US District Judge Thomas Griesa's March 2015 dismissal of the lawsuit for the failure to allege that BlackBerry and its executives knowingly misled investors. 

The three-judge appeals panel said the plaintiffs' claims amounted to "fraud by hindsight" by saying that the defendants must have known the device would be unsuccessful. 

The court nonetheless said the plaintiffs could try to persuade Griesa to let them amend their complaint in light of new legal developments and evidence that the plaintiffs said would support their claims. 

The appeals court said if Griesa refuses to let the plaintiffs amend their complaint, he should explain his reasons, which he had not done before. — Reuters

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