Chicago & Vicinity Laborers' District Council Pension Fund v. Amplitude, Inc.

Background

Chicago & Vicinity Laborers’ District Council Pension Fund brought securities claims against Amplitude, Inc., Skates, Vuong, and other defendants. The opinion addresses allegations that the defendants made materially misleading statements or omissions about Amplitude’s business, including the effect of early renewals, the company’s sales strategy, digital adoption, customer churn, customer spending, and the state of the company’s growth.

The court also granted the defendants’ request for judicial notice. It stated that SEC filings, press releases, conference-call transcripts, and analyst reports could be judicially noticed to determine what information was available to the market.

Reasons for the Decision

The court held that the plaintiff had not adequately pleaded falsity, meaning that it had not identified materially misleading statements or omissions. The court concluded that the defendants had disclosed that Amplitude’s strong second-quarter results were driven by early renewals and that a reasonable investor would understand that renewals counted early would not be counted again in a later quarter.

The court also found that the defendants had disclosed that Amplitude’s sales strategy could take years to produce results. It determined that several statements cited by the plaintiff concerned customers’ growth or digital adoption generally, rather than Amplitude’s own adoption or growth. The court further noted that Amplitude had forecast lower year-over-year growth for the fourth quarter and that the company’s slowing growth had been discussed at the third-quarter earnings call.

The complaint also lacked specific facts about the extent of partial churn, customers’ difficulty obtaining approval for additional spending, and the degree to which early renewals drove second-quarter results. The court held that these general allegations did not make the defendants’ statements materially misleading.

The court separately held that the complaint did not establish scienter, a strong inference that the defendants acted knowingly or with deliberate recklessness. The court said the most compelling inference from the allegations was that the defendants acted in good faith by disclosing risks and caveats and lowering projections when they had reason to do so. It also found that the alleged financial motive connected to a direct listing was insufficient by itself to establish scienter.

Other Claims and Disposition

The court held that because the plaintiff’s Section 10 and Rule 10b-5 claim failed, the plaintiff’s scheme and Section 20(a) claims failed as well. The court stated that the plaintiff had already been given leave to amend once, but the second amended complaint had not fixed issues identified in the earlier dismissal order. It concluded that further amendment would be futile.

Judge Vince Chhabria granted the motion to dismiss and dismissed the case with prejudice.