City of Warren General Employees' System v. Teleperformance SE et al

Filing 75

ORDER denying 72 Motion to Dismiss. Joint Scheduling Report due by 9/6/2024. Signed by Chief Judge Cecilia M. Altonaga on 8/28/2024. See attached document for full details. (ps1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 23-24580-CIV-ALTONAGA/Reid
CITY OF WARREN GENERAL
EMPLOYEES’ RETIREMENT
SYSTEM, et al.,
Plaintiffs,
v.
TELEPERFORMANCE SE, et al.,
Defendants.
_______________________________/

ORDER

THIS CAUSE came before the Court on Defendants, Teleperformance SE, Daniel Julien,
Olivier Rigaudy, and Akash Pugalia’s Motion to Dismiss [ECF No. 72], filed on June 17, 2024.
Plaintiffs, City of Warren General Employees’ Retirement System and City of Westland Police
and Fire Retirement System filed a Response [ECF No. 73]; to which Defendants filed a Reply
[ECF No. 74]. The Court has carefully considered the Second Amended Class Action Complaint
(“SAC”) [ECF No. 71], the parties’ written submissions, and applicable law. For the following
reasons, the Motion is denied.
I. BACKGROUND
This is a putative securities fraud class action arising from alleged misstatements and
omissions made by Defendants between February 20, 2020 and November 9, 2022 (the “Class
Period”). (See SAC ¶ 1). The Court previously dismissed Plaintiffs’ First Amended Complaint
without prejudice. (See generally May 22, 2024 Order [ECF No. 68]). Plaintiffs have now filed
a Second Amended Class Action Complaint. The Court recounts only the relevant facts and
assumes the reader’s familiarity with the May 22, 2024 Order.

CASE NO. 23-24580-CIV-ALTONAGA/Reid
Teleperformance is a French company headquartered in Paris, France. (See id. ¶ 7). Its
shares trade on the Paris Stock Exchange, while its American Depositary Receipts (“ADRs”) 1 are
traded over the counter in the United States under the ticker symbol “TLPFY.” (See id. ¶¶ 7, 13).
Teleperformance provides “outsourced omnichannel customer experience management services
and related digital services”; these “include the operation of customer service call centers, handling
the recruitment of employees, payment collection services, or content moderation for social media
companies.” (Id. ¶ 13). During the Class Period, Julien, Teleperformance’s founder, was its
Chairman and Chief Executive Officer; Rigaudy was its Deputy Chief Executive Officer and Chief
Financial Officer; and Pugalia was its Global President of Trust & Safety. (See id. ¶¶ 8–10).
Plaintiffs purchased Teleperformance ADRs during the Class Period. (See id. ¶¶ 5–6).
Teleperformance entered the content moderation business and began conducting
moderation services for TikTok in July 2018. (See id. ¶ 28). “Content moderation for social media
refers to the act of checking user-generated content against applicable laws and regulations and
community guidelines” and is intended to “protect the public from bad actors in the digital world.”
(Id. ¶ 26). “Content moderation can involve the removal of material that, while impermissible, is
not necessarily offensive to the platform’s users — for example, the illegal streaming of
copyrighted material.” (Id. ¶ 31). It can also involve the removal of offensive or disturbing
material — typically referred to as “egregious” content — “such as visual depictions of
cannibalism or child sexual abuse material (‘CSAM’).” (Id. ¶¶ 31–33).
Teleperformance’s content moderators are tasked with (1) reviewing profile pictures,
feeds, and videos; and (2) filtering, flagging, reviewing, and escalating content that violates the
social media platform’s policies. (See id. ¶ 29). Teleperformance’s content moderation business

1

ADRs represent one-half of one share of Teleperformance’s common stock. (See SAC ¶ 7).

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accounts for about 7 percent of its total revenue, and according to Plaintiffs, “was inextricably
linked to the moderation of egregious material[.]” (Id. (alteration added)).
During the Class Period, Defendants allegedly made materially false and misleading
statements and omissions related to Teleperformance’s content moderation business (see id. ¶¶
42–45), and articles addressing the subject (see id. ¶¶ 55–69). According to Plaintiffs, “two
investigative exposés published by two preeminent business and news publications in the United
States” eventually revealed the truth about Teleperformance: it “subjected its content moderation
employees to extremely inappropriate — and potentially criminal — working conditions which
directly contradicted Defendants’ representations during the Class Period[.]” (Id. ¶ 15 (alteration
added)).
Specifically, on August 4, 2022, an article was published in Forbes with the title “TikTok
Moderators Are Being Trained Using Graphic Images of Child Sexual Abuse[.]” (Id. ¶ 47
(alteration added; quotation marks omitted)). The article revealed that moderators were shown
sexually exploitative images of children as part of their training, and their training materials
included a “widely accessible” document containing hundreds of images of naked or abused
children. (Id. ¶ 48). The article suggested Teleperformance’s practices had serious negative
effects on its moderators and raised concerns about whether Teleperformance was complying with
applicable laws and regulations. (See id. ¶¶ 49–50). The Forbes article “sparked intense scrutiny”
by the United States Senate. (Id. ¶ 54).
Teleperformance responded to the Forbes article, stating through a spokesperson that it
took the “allegations very seriously” and had “conducted an internal audit which found no
evidence of the use of or access to CSAM images in training.” (Id. ¶ 55 (quotation marks
omitted)). Yet, the information contained in the Forbes article was corroborated by a confidential

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witness “who worked at Teleperformance as a content moderator from June 2020 to February
2021[.]” (Id. ¶ 53 (alteration added)). Prior to being hired, the witness “received no psychological
testing or screening to evaluate [his or her] resilience or fitness for the content moderation role”
and was exposed to “‘jaw-dropping’ videos[,]” including exposed minors. (Id. (alteration added)).
The witness further stated that “links to unredacted CSAM were sent to content moderators
through TikTok’s Lark application” — the same application on which the widely accessible
training document with egregious content was stored. (Id. (alteration added)).
On October 20, 2022, another article was published in Time, titled “Behind TikTok’s
Boom: A Legion of Traumatized, $10-A-Day Content Moderators[.]” (Id. ¶ 56 (alteration added;
quotation marks omitted)).

Like the Forbes article, the Time article “revealed that

Teleperformance content moderators were exposed to egregious content that had an adverse effect
on their wellbeing.” (Id. ¶ 57). It also discussed the inadequacy of Teleperformance’s mental
health support, employee monitoring, and alleged union-busting tactics. (See id. ¶¶ 58–61). On
November 7, 2022, Teleperformance published a letter explaining that the results of an external
audit were consistent with its internal audit and reiterating that no CSAM could be found in its
training materials. (See id. ¶ 68).
On November 8, 2022, the Colombian minister of labor relations announced a
governmental investigation into Teleperformance. (See id. ¶ 70). The next day, a second Time
article was published under the title, “Colombia’s Ministry of Labor has launched an investigation
into TikTok subcontractor Teleperformance, relating to alleged union-busting, traumatic working
conditions and low pay.” (Id. ¶ 72 (alteration adopted; quotation marks omitted)). The article
explained that the Colombian government had opened an investigation into Teleperformance
because of the earlier Time article. (See id.).

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After the truth was revealed, “the price of Teleperformance ADRs was hammered by
massive sales, causing significant financial losses and economic damage to Plaintiffs and other
members of the Class.” (Id. ¶ 95). The trading price dropped from $168.69 per ADR on August
4, 2022 to $160.94 on August 5, the day after the Forbes article was published. (See id. ¶ 113).
Similarly, the ADR trading price dropped from $132.32 to $107.77 on November 10, the day after
the Time article was released. (See id. ¶ 114).
On November 17, 2022, Teleperformance announced it was exiting the “highly egregious”
content moderation business. (Id. ¶ 76 (quotation marks omitted)). During a conference call with
analysts regarding the exit, an analyst asked “about the share of growth coming from content
moderation in 2022 compared to 2021[.]”

(Id. ¶ 78).

Teleperformance’s President of

Transformation responded that content moderation represented “a lot” of Teleperformance’s
growth that year. (Id. (alteration added; quotation marks omitted)). Ultimately, Defendants were
unable to extricate egregious and “nonegregious” content moderation from each other, despite
posturing otherwise. (See id. ¶ 79). Thus, Teleperformance eventually reentered the highly
egregious content moderation business in March 2023. (See id. ¶ 89).
Plaintiffs bring this putative class action against Defendants on behalf of all investors who
purchased Teleperformance ADRs during the Class Period. (See generally id.). In Count I, they
allege Defendants made material misrepresentations and omissions during the Class Period, in
violation of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C.
section 78j(b), and SEC Rule 10b–5, 17 C.F.R. section 240.10b–5. (See id. ¶¶ 128–32). In Count
II, they allege the individual Defendants — Julien, Rigaudy, and Pugalia — were controlling
persons of the company whose conduct also violated Section 20(a) of the Exchange Act, 15 U.S.C.
section 78t(a). (See id. ¶¶ 133–34).

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As the basis for their present claims, and following the May 22, 2024 Order’s conclusions,
Plaintiffs now identify only eight misstatements. (See SAC ¶¶ 42–46, 55, 68). Plaintiffs’
allegations center on Defendants’ statements regarding the hiring, training, and treatment of their
content moderators. (See generally id.). Plaintiffs allege the following statements were false or
misleading:
[Misstatements 1–3:] A number of measures have been taken, including hiring
people with appropriate profiles and skill, resilience training during the induction
seminar, a positive working environment enhanced by a custom-developed
infrastructure, expert counseling to foster psychological and emotional well-being
and a 24/7 support program.
(Id. ¶ 42 (alteration added), see also id. ¶ 43 (noting the alleged misstatement was made three
times)).
[Misstatement 4:] Specific procedures have been developed for [the content
moderators], including:
•

an appropriate hiring procedure involving a series of psychometric tests
designed to identify resilient candidates suited to this type of position;

•

resilience training provided to all managers, trainers, team leaders and advisors
to help them identify signs of emotional stress and know how to deal with them;

•

personalized organization and infrastructures to provide the right working
environment: relaxation times, wellbeing workshops, regular employee
surveys, the chance to disconnect, regular rotation on the most sensitive
positions;

•

continuous access to counseling, including by certified therapists; [and]

•

a 24/7 support program during and after the work cycle.

(Id. ¶ 44 (alterations added)).
[Misstatement 5:] [Teleperformance has] designed and implemented policies to
safeguard the users of these platforms and [its] digital first responders while
ensuring brand trust for [its] clients. [It] continues to invest heavily in moderator
training, coaching, and education along with multiple additional safeguards to
address content moderation realities for all stakeholders including users, brands and
clients.
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(Id. ¶ 45 (alterations added)).
[Misstatement 6:] Teleperformance constantly enhances training, support services
and analytical technologies to protect [its] people and to assist [its] clients in
identifying and removing harmful content.
(Id. ¶ 46 (alterations added; quotation marks omitted)).
[Misstatement 7:] [Teleperformance] take[s] these allegations very seriously[,]
and [it] recently conducted an internal audit which found no evidence of the use of
or access to CSAM images in training.
(Id. ¶ 55 (alterations added; quotation marks omitted)).
[Misstatement 8:] [Teleperformance] found no . . . CSAM . . . content in
Company-provided ongoing education materials or guidance documents.
(Id. ¶ 68 (alterations added; quotation marks omitted)).
Defendants seek dismissal of the Second Amended Class Action Complaint, with
prejudice, for failure to state claims upon which relief can be granted. (See generally Mot.; Reply).
II. DISCUSSION
As stated, Plaintiffs bring claims for securities fraud and to impose liability on control
persons. (See generally SAC). To state a claim for securities fraud in Count I, Plaintiffs must
sufficiently allege “(1) a material misrepresentation or omission; (2) made with scienter; (3) a
connection with the purchase or sale of a security; (4) reliance on the misstatement or omission;
(5) economic loss; and (6) a causal connection between the misrepresentation or omission and the
loss, commonly called loss causation.” Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307, 1317 (11th
Cir. 2019) (quotation marks and citation omitted). Defendants argue Plaintiffs (1) do not plead an
actionable misrepresentation or omission (see Mot. 12–17) 2; (2) fail to show scienter (see id. 17–
22); and (3) do not sufficiently allege loss causation (see id. 23–26).

The Court relies on the pagination generated by the electronic CM/ECF database, which appears in the
headers of all court filings.
2

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Regarding Count II, Section 20(a) of the Exchange Act imposes liability on control persons
of companies that violate the securities laws. See 15 U.S.C. § 78t(a). To state a Section 20(a)
claim, Plaintiffs must allege:
(1) [the corporate entity] committed a primary violation of the securities laws; (2)
the Individual Defendants had the power to control the general business affairs of
[the corporate entity]; and (3) the Individual Defendants had the requisite power to
directly or indirectly control or influence the specific corporate policy which
resulted in primary liability.
In re KLX, Inc. Sec. Litig., 232 F. Supp. 3d 1269, 1274 (S.D. Fla. 2017) (alterations added;
quotation marks omitted; quoting Theoharous v. Fong, 256 F.3d 1219, 1227 (11th Cir. 2001),
abrogated on other grounds by Merck & Co. v. Reynolds, 559 U.S. 633, 653 (2010)). If a plaintiff
does not adequately plead that the corporate defendant violated Section 10(b) and Rule 10b-5, a
claim under Section 20(a) necessarily fails. See id. (citing Garfield v. NDC Health Corp., 466
F.3d 1255, 1261 (11th Cir. 2006)). Defendants argue that because Plaintiffs fail to sufficiently
allege a Section 10(b) violation, Count II also fails to state a claim. (See Mot. 26).
A.

Count I

Plaintiffs allege Defendants committed securities fraud by making the eight identified
misstatements or omissions concerning Teleperformance’s content moderators. (See id. 12–17;
see also SAC ¶¶ 41–69). Defendants argue Plaintiffs do not state claims for securities fraud
because their allegations of falsity, scienter, and loss causation are insufficient. (See Mot. 17–26).
The Court addresses each of these requirements in return, concluding — with a few exceptions —
that Plaintiffs plausibly allege the challenged elements of their claim.

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1.

Falsity

First, Defendants argue misstatements 1–4 and 7 are not false because they contain
inactionable puffery; and, separately, that the misstatements have not been adequately alleged to
be false. (See id. 12–17). Neither argument is persuasive.
a. Puffery
Beginning with puffery, Defendants assert the Court previously dismissed portions of
misstatements 1–4 and 7 as corporate puffery and opinion and argue the Court should do so again.
(See id. 12 (citing SAC ¶¶ 42–44, 55; May 22, 2024 Order 17–22)). Corporate puffery consists of
“generalized, vague, nonquantifiable statements of corporate optimism[,]” Carvelli, 934 F.3d at
1318 (alteration added; citation omitted); as opposed to “determinate, verifiable statement[s,]”
Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 575 U.S. 175, 184 (2015)
(alteration added).

The puffery doctrine “presumes a relatively (but realistically) savvy

consumer — the general idea being that some statements are just too boosterish to justify
reasonable reliance.” Carvelli, 934 F.3d at 1318; see also City of Monroe Emp.’s Ret. Sys. v.
Bridgestone Corp., 399 F.3d 651, 671 (6th Cir. 2005) (noting that “statements describing a product
in terms of ‘quality’ or ‘best’ or benefitting from ‘aggressive marketing’ are too squishy, too
untethered to anything measurable, to communicate anything that a reasonable person would deem
important to a securities investment decision.”).
The Court previously concluded that many, but not all, of Defendants’ alleged
misstatements regarding the content moderators were inactionable as puffery. (See generally May
22, 2024 Order). Several of the earlier misstatements in Plaintiffs’ Amended Complaint were
generalized commitments to employee wellbeing and affirmations that Defendants were
committed to keeping their employees safe. (See id. 22). Defendants argue Plaintiffs are once

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more seeking to bring claims based on language that is mere puffery and opinion, pointing to
phrases like “special attention, positive working environment enhanced by a custom-developed
infrastructure[,] . . . personalized organization and infrastructures to provide the right working
environment[,]” and “we take these allegations very seriously[.]” (Mot. 12 (quoting SAC ¶¶ 43–
44, 55; alteration adopted; other alterations added; quotation marks omitted)).
Yet, Plaintiffs do not allege these phrases to be the basis of their claims. A close read of
the Seconded Amended Class Action Complaint reveals that, while some of the misstatements
contain language similar to the previously rejected statements, Plaintiffs’ focus is on the actionable
portions of the alleged misstatements. (See, e.g., SAC ¶¶ 42–46, 55, 68).
Regarding misstatements 1–4, Plaintiffs target specific and quantifiable portions of what
Defendants stated they did — specifically, “[a] number of measures” allegedly taken to protect
content moderators, including the implementation of specialized hiring practices, resilience
training, and counseling and support services. (Id. ¶ 42 (alteration added)). Plaintiffs allege
Defendants’ statements were “false and misleading” because no such actions were taken. (See
id.).

Because the targeted portions of Defendants’ statements use concrete language,

“represent[ing] tangible, verifiable actions[,]” these statements are not objectionable as puffery.
Tung v. Dycom Indus., Inc., 454 F. Supp. 3d 1244, 1257 (S.D. Fla. 2020) (alterations added).
Similarly, Plaintiffs do not allege misstatement 7 was false because Defendants failed to
take “allegations very seriously”; rather, Plaintiffs allege falsity regarding the performance and
adequacy of an audit. (See SAC ¶ 55). Again, Plaintiffs’ allegation, if proven, would show that
Defendants falsely claimed they performed an audit; or if they performed such an audit, that it was
insufficient. (See id.). In other words, the allegation targets a “tangible, verifiable action[]” that
can be proven or disproven. Tung, 454 F. Supp. 3d at 1257 (alteration added).

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To summarize, Plaintiffs’ allegations are supported by concrete portions of misstatements
1–4 and 7; and not the puffery or opinions that Defendants identify (and that the Court already
rejected). (See SAC ¶ 55; Resp. 13 n.4).
b. Pleading Falsity
Moving on, Defendants argue Plaintiffs do not adequately plead the falsity of each of the
alleged misstatements because: (1) the Second Amended Class Action Complaint fails to show the
statements were false when they were uttered; (2) the Second Amended Class Action Complaint
does not identify enough contradictory facts to plead falsity; and (3) Defendants’ omissions of the
alleged unnecessary exposure to CSAM and grueling working conditions do not make the
statements misleading by omission, as they were inconsequential and “isolated” occurrences. (See
Mot. 13–17). The Court begins with Defendants’ first two arguments, which are essentially the
same, and then turns to Defendants’ third argument.
i. Contemporaneous and Contradictory Statements
Defendants’ first two arguments attempt to identify essentially the same flaw with
Plaintiffs’ pleading: Defendants argue Plaintiffs do not meet the requisite pleading standard
because they do not allege contemporaneous false statements or contradictory facts. (See id.).
Plaintiffs insist they have done so. (See, e.g., Resp. 14–17 (citing SAC ¶¶ 58, 64, 116)).
Defendants’ arguments are unavailing for a more fundamental reason, however. It appears
“Defendants’ argument[s] conflate[] the heightened pleading standard for scienter with the lower
standard for pleading a false or misleading statement.” Mogensen v. Body Cent. Corp., 15 F. Supp.
3d 1191, 1214 (M.D. Fla. 2014) (alterations added). While pleading fraud does subject Plaintiffs
to a heightened pleading standard, it does not demand they plead precise, contemporaneous
accounts contradicting the alleged misstatements. See id. Defendants’ emphasis on the existence

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
of contemporaneous statements and contradictory facts holds Plaintiffs to a standard not required
by the Federal Rules of Civil Procedure or the Private Securities Litigation Reform Act
(“PSLRA”). (See Mot. 13–15).
In fact, Plaintiffs need only (1) comply with Rule 9(b) of the Federal Rules of Civil
Procedure and the PSLRA; (2) satisfy the plausibility standard of Bell Atlantic Corporation v.
Twombly, 550 U.S. 544 (2007); and (3) plead an adequate foundation for their confidential
witness’s account. Mogensen, 15 F. Supp. 3d at 1214 (citation omitted). The Court considers
whether Plaintiffs satisfy these requirements, finding they have.
Rule 9(b) and the PSLRA. To satisfy Rule 9(b), Plaintiffs must state:
(1) precisely what statements or omissions were made in which documents or oral
representations; (2) the time and place of each such statement and the person
responsible for making (or, in the case of omissions, not making) them; (3) the
content of such statements and the manner in which they misled the plaintiff; and
(4) what the defendant obtained as a consequence of the fraud.
Mogensen, 15 F. Supp. 3d at 1214 (citing FindWhat Inv. Grp. v. FindWhat.com, 658 F.3d 1282,
1296 (11th Cir. 2011)). Additionally, Plaintiffs can satisfy the PSLRA’s pleading standard by
“specify[ing] each statement alleged to have been misleading [and] the reason or reasons why the
statement is misleading[.]” 15 U.S.C. § 78u–4(b)(1) (alterations added).
Plaintiffs satisfy Rule 9(b) and the PSLRA for misstatements 1–6. Plaintiffs allege
misstatements 1–3 were misleading,
because Teleperformance’s hiring process for content moderators was not designed
to identify candidates with resilient profiles and did not include psychological
testing or screening, resulting in lasting psychological trauma to those moderators;
and Teleperformance’s purported counseling and support programs were “woefully
inadequate” and “just for show[.]” Furthermore, this statement omitted material
information from investors, specifically, that Teleperformance’s training
procedures were inadequate and included needless exposure to CSAM and other
horrific content; and that Teleperformance’s content moderators worked long
hours, with little pay, under grueling conditions that included oppressive video

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surveillance in their homes, an inability to take breaks, and inadequate access to
support services[.]
(SAC ¶ 42 (alterations added; in-text citations omitted; citing id. ¶¶ 47–51, 53, 57–61)).
Further, Plaintiffs allege Defendants made these statements on February 20, 2020,
February 25, 2021, and February 28, 2022, in each year’s respective Universal Registration
Documents. (See id. ¶ 43). Plaintiffs claim these statements were false, considering contrary
statements from former employees which were published in Forbes and Time. (See id. ¶¶ 49, 53,
57–58). Lastly, Plaintiffs allege content moderation was a significant portion of Defendants’
business, and Defendants financially benefitted from hiding damaging information about this
aspect of their business. (See id. ¶¶ 36–40, 95). With that, Plaintiffs satisfy the requirements of
Rule 9(b) and the PSLRA.
Similarly, misstatements 4–6 are alleged to be false because Teleperformance did not
implement — or, at least, implement adequately — any of the safeguards it claimed it had put in
place for content moderators. (See SAC ¶¶ 44–46). Again, Plaintiffs point to a source for the
alleged misstatements, allege when they were published, and explain — based on published news
articles — why they were false. (See id.). Plaintiffs thus meet the standards set by Rule 9(b) and
the PSLRA for these statements as well.
Finally, Plaintiffs allege misstatements 7–8 were “false and misleading and omitted
material information from investors because, to the extent any audit was performed, it was
inadequate and failed to address the numerous, contemporaneous reports from Teleperformance
employees that demonstrated both the ‘use of’ and ‘access to’ CSAM during the training of
Teleperformance content moderators.” (Id. ¶ 55 (citations omitted); see also id. ¶ 68). The Court
need not consider the falsity of these statements because, for the reasons stated below, these

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statements — true or not — were not accompanied by a corrective disclosure and cannot support
a claim under Count I.
Twombly.

Plaintiffs also meet Twombly’s plausibility standard.

Taking Plaintiffs’

allegations as true, it is plausible that misstatements 1–6 were false when made; Plaintiffs have put
forth multiple accounts from former content moderators describing how they were needlessly
shown CSAM, given little training or breaks, and not given promised psychological counseling or
support. (See id. ¶¶ 48–51, 57–58). These accounts contradict Defendants’ statements. (See, e.g.,
id. ¶¶ 42, 43).
Similarly, taking these accounts as true, Teleperformance’s statements about its workplace
policies also omitted material information about the true nature of the employment conditions
revealed by the news articles. (See, e.g., id. ¶¶ 44–46). 3 It is plausible that — at the time
Defendants issued their reassuring public statements to investors — the moderation program was,
in fact, overwhelmed and unable to properly address the challenges of this rapidly developing
portion of Defendants’ business. Certainly, the Court can “draw the reasonable inference that
[Defendants are] liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(alterations added; citation omitted).
Sufficient Factual Basis. Finally, the Second Amended Class Action Complaint establishes
a sufficient factual basis for the witness account Plaintiffs rely on. (See SAC ¶ 53 (identifying the
dates of the witness’s employment, his or her work location, roles within the company, and
experiences as a content moderator)); cf. Mogensen, 15 F. Supp. 3d at 1215 (noting that a pleading
detailed “the positions that [confidential] witnesses held, the stores they supervised, and the
duration of their employment” (alteration added; citation omitted)).

3

Plaintiffs allege Defendants omitted the same information from misstatements 1–6. (See SAC ¶¶ 42–46).

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The articles discussing Defendants’ actions further bolster these accounts. One moderator
interviewed for the October 20, 2022 Time article revealed she sought help for months but was
ultimately told to “seek out support through the Colombian healthcare system.” (SAC ¶ 58).
Another claimed to be shown CSAM material as part of his training “a few days into
onboarding[.]” (Id. ¶ 49 (quotation marks omitted; alteration added)). The Forbes 2022 article
also stated employees were “under-trained and overworked, and that, in order to keep up with
TikTok’s demand for content moderation, management pressured trainers to go ahead and get the
people through even with inadequate preparation.” (Id. ¶ 51 (quotation marks omitted)).
To summarize, Plaintiffs adequately plead falsity. Their allegations do not focus on puffery
and otherwise satisfy the relevant pleading standards. The Court now turns to Defendants’ final
argument regarding falsity: whether any statements were misleading by omission.
ii. Omissions
Defendants argue misstatements 1–6 are not misleading by omission. (See Mot. 15–16).
Defendants assert that even if they allegedly omitted information about working conditions for
content moderators, misstatements 1–6 would not be misleading by omission because Plaintiffs’
allegations identify “isolated accounts” involving an “isolated operational problem[.]” (Id. 14–15
(alteration added; citations and quotation marks omitted)).
The Court previously rejected this argument and rejects it again now. (See May 22, 2024
Order 25). The severity of the allegations, the apparent interest of the United States and Colombian
governments, and the drop in Teleperformance’s stock price coincidental with the August 2022
Forbes article all weigh against Defendants’ characterization of an “isolated operational
problem[.]” (Mot. 14 (alteration added; quotation marks omitted); see also SAC ¶¶ 54, 70, 113–
14).

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Moreover, while Defendants “do not have an obligation to offer an instantaneous update
of every internal development,” they “must disclose a negative internal development [] if its
omission would make other statements materially misleading.” Weston Fam. P’ship LLLP v.
Twitter, Inc., 29 F.4th 611, 620 (9th Cir. 2022) (alteration added; citations omitted). Here,
misstatements 1–6 were, in essence, assuring Defendants’ investors that, while content moderation
has uniquely challenging issues, Defendants provided their employees the tools to deal with and
overcome such issues. (See ¶¶ SAC 44–46). Plaintiffs’ allegations that Defendants omitted
information about how content moderators were needlessly shown CSAM and endured terrible
working conditions could render Defendants’ assurances false — or, at the very least, misleading
— by omission. (See, e.g., id. ¶¶ 47–51, 57, 61).
2.

Scienter

The Court next turns to Defendants’ arguments that Plaintiffs fail to adequately plead
scienter. (See Mot. 17–23). The Court previously concluded that “[a] reasonable person would
deem the inference of scienter as cogent and as compelling as any opposing inference one could
draw from the facts alleged.” (May 22, 2024 Order 39 (alteration added)). Defendants argue the
Court should depart from its previous finding for two reasons: (1) the Second Amended Complaint
has been narrowed to a set of only eight statements, and so Plaintiffs cannot show scienter for the
individual Defendants (see Mot. 18); and (2) the Court cannot consider content moderation a core
business “[n]ow [that] the challenged statements involve only training and support services” (id.
21 (alterations added)).
Plaintiffs point to language showing the Court only considered Defendants’ previous
scienter arguments regarding the Amended Complaint with respect to the surviving misstatements
in that pleading. (See Resp. 18; May 22, 2024 Order 34). Plaintiffs argue those surviving

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misstatements are largely the same as misstatements 1–6 here. (See Resp. 18). They also readopt
their arguments as to whether content moderation was one of Defendants’ core operations. (See
id.).
a. Repeating Arguments
To start, the surviving statements from the Amended Complaint are very similar, and in
some cases identical, to the misstatements alleged in the Second Amended Class Action
Complaint. (See generally id.; SAC). For example, misstatements 4–6 are repeated nearly
verbatim in both the Amended and Second Amended Class Action Complaints. (Compare Am.
Compl. ¶¶ 47, 52, 109; SAC ¶¶ 44–46). 4 The Court already concluded these statements were
actionable because Plaintiffs adequately plead that Julien and Pugalia “acted with scienter[.]” (May
22, 2024 Order 39 (alteration added)). Because the alleged misstatements in the Second Amended
Class Action Complaint are largely identical to the surviving misstatements from the first
Amended Complaint, the Court sees no reason to change its position.
Indeed, the arguments addressed in the Court’s previous Order apply with equal force here.
Plaintiffs’ allegations permit the inference of scienter because (1) content moderation was a
“critical driver of the Company’s growth[;]” (2) “repetition of [the] misstatements supports a
finding of scienter[;] (3) Defendants’ evasive responses to questions about the allegations
contribute to a finding of scienter[;]” and (4) “the existence of the Colombian government’s
investigation into Teleperformance ‘further bolsters the inference of scienter.’” (Resp. 17–20
(alterations added; citing May 22, 2024 Order 37–39)). The Court also noted that Julien’s and

Misstatements 1–3, while not appearing in both pleadings, “cover[] the same topics [as misstatement 4]
in slightly more detail.” (Resp. 18 (alterations added)).
4

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
Pugalia’s evasive responses supported an inference of scienter for them as individual Defendants.
(See May 22, 2024 Order 38 ). 5
Despite this, Defendants again argue Julien’s and Pugalia’s responses are insufficient to
show scienter. (See Mot. 20–21). Defendants assert Julien’s and Pugalia’s after-the-fact responses
to questions regarding the negative news articles “cannot support an inference of scienter for earlier
statements.” (Id. 20 (emphasis omitted; citing In re Sunterra Corp. Sec. Litig., 199 F. Supp. 2d
1308, 1331 (M.D. Fla. 2002))). Plaintiffs insist Defendants’ cited authorities do not support
Defendants’ argument, as their cases have nothing to do with evading or failing to respond to
questions. (See Resp. 19). The Court agrees with Plaintiffs.
Defendants’ argument conflates after-the-fact statements with evasive or nonresponsive
answers. (See Mot. 21 (citing In re HomeBanc Corp. Sec. Litig., 706 F. Supp. 2d 1336, 1360 (N.D.
Ga. 2010) (concluding that “after-the-fact events” do not support an inference of scienter))). In In
re Sunterra Corporation Securities Litigation, an after-the-fact statement was made in a press
release and not in response to a question. See 199 F. Supp. 2d at 1331. The court concluded that
such a statement “d[id] not contribute to or create on its own an inference of scienter.” Id.
(alteration added).
Julien’s and Pugalia’s statements were not merely made after the fact; they were prompted
by questions they ultimately failed to address.

(See May 22, 2024 Order 38).

“Directly

nonresponsive” and “evasive” answers have been held to show “a strong inference of scienter.”
(Id. (alterations adopted; quotation marks omitted; quoting In re Sanofi-Aventis Sec. Litig., 774 F.
Supp. 2d 549, 571 n.28 (S.D.N.Y. 2011); In re Terayon Commc’ns Sys., Inc. Sec. Litig., No. 0001967-Civ, 2002 WL 989480, at *12 (N.D. Cal. Mar. 29, 2002); other citations omitted)).
For reasons explained below, because Count I is dismissed against Rigaudy, the Court does not discuss
whether he acted with scienter.

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
Defendants further argue Plaintiffs are “subjective[ly] characteri[zing]” Julien’s and
Pugalia’s statements. (Reply 12 (alterations added; citations omitted)). Plaintiffs are free to do
this. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1367 (11th Cir. 1997).
(“[T]he complaint must be construed in a light most favorable to the plaintiff[.]” (alterations added;
citations omitted)). The Court remains unconvinced by Defendants’ argument and again finds
Plaintiffs adequately plead scienter as to Julien and Pugalia.
b. Core Operations
Defendants’ new argument is that the “core operations” doctrine no longer applies. (See
Mot. 21 (alteration added)). The “core operations” doctrine allows a court to infer that officers of
a company have knowledge of critical facts related to its core operations. See Plymouth Cnty. Ret.
Sys. v. Carter’s Inc., No. 08-cv-02940, 2011 WL 13124501, at *17 (N.D. Ga. Mar. 17, 2011). The
Eleventh Circuit has not adopted the doctrine, and “[c]ourts analyzing the doctrine recognize that
. . . it very rarely can create a strong inference of scienter on its own.” Id. (alteration added).
Nonetheless, where additional allegations support scienter, the doctrine can bolster the inference.
See, e.g., In re Flowers Foods, Inc. Sec. Litig., No. 16-cv-222, 2018 WL 1558558, at *14 (M.D.
Ga. Mar. 23, 2018).
The Court previously found that Plaintiffs’ allegations warranted application of the
doctrine. (See May 22, 2024 Order 36–37). Defendants argue circumstances have changed
because the challenged statements are narrower in scope. (See Mot. 21 (alteration added)). Again,
the Court’s previous application of the “core operations” doctrine only considered the surviving
misstatements, which overlap significantly with the present allegations. (See May 22, 2024 Order
34–35).

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
Defendants also argue Plaintiffs do not plead enough to show content moderation was a
core operation of Teleperformance.

(See Mot. 21–22).

Not so.

According to Plaintiffs,

Defendants described content moderation as a significant driver of Teleperformance’s growth and
a “big business in itself.” (SAC ¶¶ 28, 37, 97 (quotation marks omitted)). Teleperformance also
held out content moderation as a noble undertaking (see id. ¶ 98) and emphasized its commitment
to employee wellbeing as part of its positive corporate image (see id. ¶¶ 16–21, 40). As pleaded,
content moderation and egregious content moderation could be one of Teleperformance’s core
operations — a fact question the Court does not answer.
Again, at a minimum, the allegations weakly boost an inference of scienter based on how
important content moderation seemed to Teleperformance. See Constr. Indus. & Laborers Joint
Pension Tr. v. Carbonite, Inc., 22 F.4th 1, 9 (1st Cir. 2021) (noting “the importance of a particular
item to a defendant can support an inference that the defendant is paying close attention to that
item,” and holding that allegations of misrepresentations concerning “an important product”
supported “a very strong inference that the senior executives who gave those apparently prepared
remarks touting the product would have paid at least some attention to the product’s status”
(quotation marks omitted)).
Having concluded that Plaintiffs adequately plead actionable misstatements and omissions
made with scienter, the Court turns to Defendants’ final argument regarding loss causation.
3.

Loss Causation

Defendants argue Plaintiffs do not adequately plead loss causation — i.e., the “causal
connection” between the alleged misstatements and the alleged economic harm. MacPhee v.
MiMedx Grp., Inc., 73 F.4th 1220, 1242 (11th Cir. 2023). The loss causation element requires
“that the defendant’s fraud be both the but-for and proximate cause of the plaintiff’s later losses.”

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
Id. at 1241 (citation and quotation marks omitted). A plaintiff can plead this by alleging a
“corrective disclosure,” i.e., “a release of information that reveals to the market the pertinent truth
that was previously concealed or obscured by the company’s fraud[,] . . . showing a price drop
soon after the corrective disclosure, and . . . eliminating other explanations for the price drop.”
FindWhat, 658 F.3d at 1311–12 (alteration added; citation and footnote call number omitted).
“Corrective disclosure ‘can come from any source’ and ‘take any form from which the market can
absorb [the information] and react,’ so long as the disclosures ‘reveal[ed] to the market the falsity
of the prior misstatements.’” MacPhee, 73 F. 4th at 1242–43 (alteration in original; quotation
marks omitted; quoting FindWhat, 658 F.3d at 1311 n.28).
“In order to qualify as corrective, the disclosure must share the same subject matter as the
prior misstatement; only then can the disclosure be said to have a ‘corrective effect,’ rather than
merely a ‘negative effect.’” FindWhat, 658 F.3d at 1311 n.28 (emphasis omitted; quoting In re
Initial Pub. Offering Sec. Litig., 399 F. Supp. 2d 261, 266 (S.D.N.Y. 2005)). “To be corrective,
the disclosure need not precisely mirror the earlier misrepresentation, but its subject matter must
at least relate back to the misrepresentation and not to some other negative information about the
company.” Id. (alteration adopted; quotation marks omitted; quoting In re Williams Sec. Litig. —
WCG Subclass, 558 F.3d 1130, 1140 (10th Cir. 2009)).
Plaintiffs allege loss causation based on two corrective disclosures through which the truth
was revealed to the market: the August 4, 2022 Forbes article and the November 9, 2022 Time
article. (See SAC ¶ 111). Defendants argue neither disclosure was corrective, and any claims
based upon them should be dismissed. (See Mot. 23–26). Defendants’ first Motion to Dismiss did
not challenge the Forbes article, and the Court concludes this time that it was a corrective
disclosure. (See May 22, 2024 Order 40). Conversely, the Court’s previous Order rejected the

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
Time article as a corrective disclosure, and the Court again reaches the same conclusion. (See id.
40–41).
a. August 4, 2022 Forbes Article
Defendants argue the August 4, 2022 Forbes article was not a corrective disclosure
because, while it had a “negative effect[,]” it “did not reveal to the market the falsity of any of
Defendants’ statements[.]” (Mot. 24 (alterations added; quotation marks and citations omitted)).
Plaintiffs argue “the [Second Amended Class Action Complaint] does allege affirmative
misrepresentations that are contradicted by the Forbes article.” (Resp. 21 (alteration added)). 6
Plaintiffs are correct.
A disclosure must share the same subject as the prior misstatement to be considered
corrective, but “the disclosure need not precisely mirror the earlier misrepresentation[.]”
FindWhat, 658 F.3d at 1312 n.28 (alteration added; citations and quotation marks omitted). The
Forbes article meets this standard.
According to Plaintiffs, the Forbes article states content moderators were
shown sexually exploitative imagery of kids as part of their training and that there
was a widely accessible document, called the ‘DRR,’ short for Daily Required
Reading[,] that was filled with material determined to be violative of TikTok’s
community guidelines, including hundreds of images of children who were naked
or being abused.
(SAC ¶ 48 (alterations adopted; other alteration added; quotation marks omitted)).
Further, Plaintiffs allege the article revealed that one of Defendants’ moderators was
“struggling to just function properly” because of her exposure to harmful videos (id. ¶ 49
(quotation marks omitted)); Defendants’ moderators were “under-trained and overworked” (id. ¶

Plaintiffs correctly note that Defendants’ argument on this issue is focused solely on whether the Forbes
article contradicted any alleged misrepresentations; Defendants do not argue that the Forbes article affected
whether any of their alleged omissions was misleading. (See Resp. 21; Mot. 24).

6

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
51 (quotation marks omitted)); and Teleperformance was overwhelmed with the number of videos
it needed to moderate, resulting in employees beginning work “with inadequate preparation” (id.
¶ 51 (quotation marks omitted)). These statements in the Forbes article contradict alleged
misstatements 1–6. (See Resp. 21–22). The August 4, 2022 Forbes article is thus both a negative
and a corrective disclosure as to misstatements 1–6.
b. November 9, 2022 Time Article
Next, Plaintiffs allege the Time article announcing the Colombian government’s
investigation into Teleperformance’s labor practices revealed the truth about the company. (See
SAC ¶ 111). The Court previously agreed with Defendants that “the mere announcement of an
investigation is insufficient to constitute a corrective disclosure for the purposes of Section 10(b)
because the announcement of an investigation reveals just that — an investigation — and nothing
more.” (May 22, 2024 Order 40–41 (alteration adopted; citations omitted)). In doing so, the Court
considered Meyer v. Greene, 710 F.3d 1189 (11th Cir. 2013). (See id.).
Meyer involved a defendant’s stock prices falling after the disclosure of informal and later,
formal, SEC investigations into the defendant’s “policies and practices [of] impairment of
investment in real estate assets[.]” 710 F.3d at 1200–01 (alterations added). The Eleventh Circuit
concluded the disclosures were not corrective because “the SEC never issued any finding of
wrongdoing or in any way indicated that the [c]ompany had violated the federal securities laws.”
Id. at 1201 (alteration added). The court ascribed the drop in stock price as an “added risk of future
corrective action[;]” the stock drop did not convert the investigation into a corrective disclosure,
as there was no revelation of a prior statement as false. Id. (alteration added; emphasis omitted).
The court noted, however, that “[i]t may be possible, in a different case, for the disclosure of an
SEC investigation to qualify as a partial corrective disclosure for purposes of opening the class

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
period when the investigation is coupled with a later finding of fraud or wrongdoing.” Id. at 1201
n.13 (citations omitted).
Plaintiffs now argue that Meyer “did not categorically exclude investigation
announcements from being corrective disclosures” and that only “the commencement of an
investigation, without more, is insufficient to constitute a corrective disclosure.” (Resp. 22–23
(alteration adopted; emphasis in original; quoting Meyer, 710 F.3d at 1201)). Plaintiffs insist that,
on November 8, 2022, the Colombian government announced its investigation, and the November
9, 2022 Time article then provided the “more”: a description of what the Colombian ministry of
labor was investigating, and the reason for Defendants’ actions. (See id. 23).
Additionally, Plaintiffs argue that Teleperformance’s own actions, such as “negotiating and
signing agreements with labor unions[,]” also constituted something “more” for the purposes of
Meyer. (Id. (alteration added)). Lastly, Plaintiffs argue that “media scrutiny” after an investigation
is sufficient to make a disclosure corrective. (Id. 26). Defendants again insist this is not the “more”
the Eleventh Circuit spoke of; according to them, “the something ‘more’ must be a ‘later finding
of wrongdoing.’” (Reply 14–15 (internal quotations and citations omitted; quoting May 22, 2024
Order 41)).
The Court agrees with Defendants. As Defendants point out, the facts of Meyer involved
an investigation where the SEC also announced the subject matter of the investigation — yet, in
that case, and others, the investigation alone was not tantamount to a corrective disclosure. (See
Mot. 25 (citing Meyer, 710 F.3d at 1200–01; other citations omitted)).
Further, Plaintiffs’ argument that Defendants’ actions after the announcement of the
investigation are evidence of wrongdoing is unconvincing.

Plaintiffs seem to analogize

Defendants’ subsequent actions to settlements. (See Resp. 24). But Defendants’ actions are not

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
analogous to a settlement, considering the Colombian ministry of labor had not filed a lawsuit.
(See generally SAC). Defendants point to caselaw showing that “working with [a regulatory
agency] to remain in compliance” is not the “more” contemplated by Meyer. (See Reply 15 (citing
Hattaway v. Apyx Med. Corp., No. 22-cv-1298, 2023 WL 4030465, at *15 (M.D. Fla. June 15,
2023) (alterations added))). This is closer to what Plaintiffs allege. (See SAC ¶¶ 78–85).
Lastly, Plaintiffs’ argument regarding media scrutiny constituting a corrective disclosure
is unconvincing. Meyer stated an investigation with a “later finding of wrongdoing” may serve as
a corrective disclosure. 710 F.3d at 1201 n.13. Media scrutiny is neither a finding from an
investigation, nor an admission of guilt. While Plaintiffs cite cases involving media scrutiny, each
of the cited cases involved multiple news articles and events. (See Resp. 25 (citing Pub. Emps.
Ret. Sys. of Miss., P.R. Tchrs. Ret. Sys. v. Amedisys, Inc., 769 F.3d 313, 324 (5th Cir. 2014)
(combining five events, such as resignations and articles, which “collectively constitute[d] and
culminate[d] in a corrective disclosure that adequately plead[ed] loss causation” (alterations
added)); In re Questcor Sec. Litig., No. 12-cv-01623, 2013 WL 5486762, at *23 (C.D. Cal. Oct.
1, 2013) (finding an investigation announcement was part of a corrective disclosure when it “came
on the heels” of a bulletin and multiple reports); Longo v. OSI Sys., Inc., No. 17-cv-8841, 2021
WL 1232678, at *11 (C.D. Cal. Mar. 31, 2021) (finding loss causation where an investigation
announcement followed “a series of disclosures”))).

The only media events regarding the

Colombian investigation Plaintiffs allege are the announcement itself and the subsequent Time
article. (See SAC 14–15). This is not, in the Court’s view, media scrutiny sufficient to give rise
to a corrective disclosure.
In sum, the commencement of the Colombian government’s investigation does not serve
as a corrective disclosure because, as in Meyer, Plaintiffs do not allege a “later finding of

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
wrongdoing[.]” 710 F.3d at 1201 n.13 (alteration added). This means misstatements 7 and 8
cannot serve as support for Count I. Those misstatements occurred after the Forbes article; thus,
that article cannot serve as a corrective disclosure for purposes of showing loss causation. See
MacPhee, 73 F.4th at 1242–43 (explaining that a corrective disclosure should reveal the falsity of
“prior misstatements” (emphasis added; citation and quotation marks omitted)). Moreover,
because Rigaudy is only alleged to have made misstatement 8 (see SAC ¶ 68), Plaintiffs do not
state a claim against him individually. See, e.g., Edward J. Goodman Life Income Tr. v. Jabil Cir.,
Inc., 595 F. Supp. 2d 1253, 1279 (M.D. Fla. 2009).
Otherwise, the Court is satisfied Plaintiffs meet the requirements for pleading falsity,
scienter, and loss causation regarding misstatements 1-6 and state a securities fraud claim based
on those misstatements.
B.

Count II

Defendants seek dismissal of the Count II Section 20(a) claim, arguing in conclusory
fashion that the claim is dependent on sufficiently pleading an underlying securities violation by
the company. (See Mot. 26). Defendants offer no other argument for dismissal. (See generally
id.). Because Plaintiffs’ first claim survives, the Section 20(a) claim is not dismissed. 7
III. CONCLUSION
For the foregoing reasons, it is
ORDERED AND ADJUDGED that Defendants, Teleperformance SE, Daniel Julien,
Olivier Rigaudy, and Akash Pugalia’s Motion to Dismiss [ECF No. 72] is DENIED. The parties

Although Count I cannot stand against Rigaudy because he is not alleged to have made any actionable
misstatements, Plaintiffs allege Rigaudy “acted as [a] controlling person[]” and “had the power and
authority to cause Teleperformance to engage in the wrongful conduct” described in Count I. (SAC ¶ 134
(alterations added)). Defendants do not dispute this in their Motion or seek dismissal of any individual
Defendant. (See generally Mot.; Reply). Count II is therefore not dismissed against Rigaudy.

7

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CASE NO. 23-24580-CIV-ALTONAGA/Reid
are directed to prepare and file a joint scheduling report, as required by Local Rule 16.1, by
September 6, 2024.
DONE AND ORDERED in Miami, Florida, this 28th day of August, 2024.

________________________________________
CECILIA M. ALTONAGA
CHIEF UNITED STATES DISTRICT JUDGE
cc:

counsel of record

27