Shnayder v. Allbirds, Inc. et al

Filing 86

Order by Judge Araceli Martinez-Olguin Granting 64 Motion to Dismiss with Leave to Amend & Denying as Moot 65 Request for Judicial Notice. Amended Complaint due by 6/10/2024.(amolc1, COURTSTAFF) (Filed on 5/10/2024)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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GENNADY SHNAYDER, et al.,
Plaintiffs,

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United States District Court
Northern District of California

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Case No. 23-cv-01811-AMO

v.
ALLBIRDS, INC., et al.,
Defendants.

ORDER GRANTING MOTION TO
DISMISS WITH LEAVE TO AMEND &
DENYING AS MOOT REQUEST FOR
JUDICIAL NOTICE
Re: Dkt. Nos. 64, 65

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Defendants in this proposed securities fraud class action move to dismiss Plaintiffs’

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amended complaint and ask that the Court take judicial notice of 22 documents. ECF 64, 65. The

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parties’ briefing reflects a lack of clarity as to which statements, or portions of statements, are

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allegedly false or misleading. For example, nested under the heading “Materially False and

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Misleading Statements Issued in the Registration Statement in Violation of Section 11 of the

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Securities Act” in the amended complaint are paragraphs 115 and 116. See ECF 52 at 29-30.

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Those paragraphs read:

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115. As another reason for its success, the Company listed
a “deep connection with our community of customers”:
By making great products and telling the story of an
inspirational, purpose-driven brand, we have formed
a deep connection with our community of
customers. We have sold our products to over four
million customers since our founding.
The Registration further touted that:
Approximately 53% of our net sales in 2020 came
from repeat customers.
116. While acknowledging the significance of Allbirds’
core customers to the brand’s success, the Registration Statement
failed to disclose that the Company had begun neglecting its “deep

connection with [its] community of customers” by shifting focus
away from its core consumer and putting its resources toward
overemphasizing new product offerings (e.g., apparel) extending
beyond its core DNA.

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ECF 52 ¶¶ 115-16.
Defendants challenge this statement, and others like it, as not actionable. ECF 64 at 27;

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ECF 78 at 9-10. In response, Plaintiffs assert that their complaint “does not allege [these

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statements are] misleading and makes clear [they are] set forth to demonstrate Defendants’

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recognition of ‘the significance of Allbirds’ core customers to the brand’s success.’ ” ECF 77 at

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23 n.4.
The Court cannot reconcile Plaintiffs’ assertion with the allegations in the complaint, in

United States District Court
Northern District of California

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which, Plaintiffs explain, they “often . . . use . . . bold and italicized font” to indicate “what portion

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of each statement is misleading.” Id. at 35. Rather than guess as to which instances of bold and

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italicized font Plaintiffs intend to denote the statements (or portions of statements) they claim are

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false and misleading, the Court leaves it to Plaintiffs to make that clear – for each statement

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offered as a basis for their claims – in the first instance. See Xiaojiao Lu v. Align Tech., Inc., 417

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F. Supp. 3d 1266, 1275 (N.D. Cal. 2019) (“In light of Plaintiff’s argument that most of the

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statements are provided ‘solely for context,’ the Court cannot discern which statements are alleged

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to be actionable and which are not. By failing to articulate exactly which statements Plaintiff

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asserts to be false or misleading, Plaintiff in effect insulates the Complaint from review . . . .”)

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(emphasis in original); In re Cisco Sys. Inc. Sec. Litig., No. C 11-1568 SBA, 2013 WL 1402788, at

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*6 (N.D. Cal. Mar. 29, 2013) (dismissing complaint where complaint “reference[d] over 100

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statements, only some of which [we]re alleged to be false or misleading” and “[o]f those allegedly

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false or misleading statements, it [wa]s not entirely clear which part of the statements form[ed] the

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basis of Plaintiffs’ claims.”).
Accordingly, Defendants’ motion to dismiss is GRANTED and their request for judicial

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notice is DENIED AS MOOT. Plaintiffs may file a second amended complaint within 30 days of

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this order. A chart with the information required by Paragraph J of the Court’s Standing Order for

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Civil Cases is due 14 days thereafter. Courtesy copies of each document shall be delivered to

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chambers within three days of filing, in compliance with Paragraph H.6 of the Court’s Standing

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Order.

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IT IS SO ORDERED.
Dated: May 10, 2024

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ARACELI MARTÍNEZ-OLGUÍN
United States District Judge

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United States District Court
Northern District of California

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