NEW YORK (Reuters) - A U.S. shareholder lawsuit accusing smartphone manufacturer BlackBerry of seeking to fraudulently obscure its falling market position was dismissed on Friday.
U.S. District Judge Richard Sullivan in Manhattan granted the company’s motion to dismiss the proposed class-action lawsuit, finding the plaintiffs failed to adequately allege that the company or various executives had made deliberate and material misstatements.
Sullivan said BlackBerry clearly had failed to keep pace with rivals in developing smartphones and information technology, and the defendants “have paid a price for their mistakes by way of demotions, terminations and sizable financial setbacks.”
“Nevertheless, corporate failings alone do not give rise to a securities fraud claim,” Sullivan said.
David Brower, a lawyer for the plaintiffs at Brower Piven, declined comment. A spokeswoman for BlackBerry did not immediately respond to requests for comment.
BlackBerry, known as Research In Motion Ltd until recently, has sought to achieve a turnaround its new Z10 smartphones after years of losing market share as consumers moved to Apple Inc’s iPhone as well as smartphones using Google Inc’s Android software.
The lawsuit, filed in 2011 by investor Robert Shemian, sought to recover losses on behalf of U.S. shareholders who bought the company’s stock from December 2010 through June 2011.
The lawsuit followed a series of setbacks the company suffered in 2011. The complaint cites slowing sales of its aging BlackBerry phone product line, delays in releasing a new operating system and a botched launch of its first tablet.
The lawsuit contended all those setbacks were known by the company and its executives, who nonetheless allegedly began misleading investors, who bought its stock at inflated prices.
From February 11, 2011 to June 17, 2011, when the company announced disappointing earnings and announced layoffs, the company’s stock slid from $69.86 to $27.25.
The case is Shemian v. Research In Motion Limited, U.S. District Court, Southern District of New York, No. 11-04068.
Reporting by Nate Raymond in New York