IN RE CARLOTZ, INC. SECURITIES LITIGATION

Nature of the Order

This is a hearing-preparation order, not a decision on the parties’ claims. The court directed the parties to be prepared to address three issues at a hearing scheduled for March 7, 2024.

Issues Identified by the Court

First, the parties must address what effect, if any, Menora Mivtachim Insurance Ltd. v. Frutarom Industries Ltd., 54 F.4th 82 (2d Cir. 2022), has on scheme-liability claims under Rule 10b-5(a) and (c), as well as case law supporting or rejecting that decision’s application in this setting.

Second, the parties must address whether the complaint adequately alleges scheme liability. The court specified that this includes whether disseminating statements that were made previously—including statements in securities filings—can, either alone or together with other factors, constitute an actionable violation of the scheme-liability provisions. The parties were instructed to have relevant supporting and opposing case citations.

Third, the parties must address when and in which filing the plaintiffs allegedly “abandoned” their scheme-liability claims, as the defendants argue in their briefing.

Disposition

The order does not grant or deny a motion, resolve whether the complaint states a claim, or decide whether the plaintiffs abandoned their scheme-liability claims. It only identifies matters for discussion at the March 7 hearing. The order was signed by Judge Arun Subramanian and dated March 5, 2024.