In re Meta Platforms, Inc., Securities Litigation

Background

Plaintiffs moved to partially modify the Private Securities Litigation Reform Act’s (PSLRA) automatic discovery stay. They sought documents that defendants had produced to state attorney general offices and to civil plaintiffs in other litigation. Defendants also had a motion to dismiss the complaint pending before the court.

The PSLRA generally requires a court to stay discovery while a motion to dismiss is pending, unless exceptional circumstances make specific discovery necessary to preserve evidence or prevent serious unfairness. The purpose of the stay includes preventing unnecessary discovery costs and requiring the complaint to stand or fall based on information plaintiffs had before filing, rather than information obtained from defendants afterward.

Discovery-Stay Ruling

The court denied plaintiffs’ motion. It concluded that the request for all materials produced in three sets of cases was not specific enough because plaintiffs did not identify the volume or subject matter of the requested documents. The court also concluded that plaintiffs had not shown serious unfairness. Plaintiffs’ stated concerns—that they could not fully assess their position or litigation strategy and would lack information available to other parties—did not justify lifting the stay. Plaintiffs also did not allege a risk that evidence would be lost.

New Chart for Motion to Dismiss

The court had previously asked the parties to submit a table concerning 59 statements that plaintiffs alleged were misleading or false. The court found that the submitted 431-page table did not assist its analysis of whether the complaint adequately stated claims.

The court ordered plaintiffs to prepare a new chart within 30 days and send it to defendants as a Word document. For each statement, the chart must identify when and where it was made, the speaker or speakers, the statement, the complaint paragraphs showing falsity or misleading content, and the complaint paragraphs showing scienter, meaning the required state of mind. Plaintiffs were not to include argument.

Defendants then had 15 days to add short phrases and limited citations explaining why a statement was not misleading or false or why the complaint did not show scienter. The court directed defendants not to add argument beyond those limited phrases and citations or material not already presented in their briefing.

Disposition

The court denied plaintiffs’ motion to modify the PSLRA discovery stay and ordered the parties to provide the new chart. The court stated that defendants’ motion to dismiss would not be considered ready for decision until the chart was submitted. The opinion therefore did not rule on the motion to dismiss.