The court cited Professor Steven Grenadier’s negative causation analysis extensively in granting defendants’ motion for summary judgment in this securities class action with Section 11 and 12 claims.
Retained by Morrison Foerster
Cloudera, a data management company, filed a registration statement in late 2018 in connection with its merger with Hortonworks. The plaintiffs alleged that the registration statement contained false and misleading statements about Cloudera’s pre-merger product capabilities and asserted violations of the Securities Act of 1933. Counsel for the Cloudera retained Cornerstone Research to support Steven Grenadier of Stanford University.
Professor Grenadier opined that:
- Prior to the merger, there was a wealth of publicly available information regarding Cloudera’s pre-merger product capabilities;
- In an efficient market, information that was publicly available prior to the merger cannot be the cause of any stock price declines following the merger because reiteration of previously publicly available information would not have an impact on the stock price;
- There was no economic evidence that any disclosures of previously-undisclosed information about Cloudera’s pre-merger product capabilities caused a statistically significant residual stock price decline.
The court’s opinion extensively cited Professor Steven Grenadier’s negative causation analysis.
In May 2024, the court found for the defendants and granted the motion summary judgment. The court cited Professor Grenadier’s reports extensively in its analysis of the negative causation defense and found that his analysis was “sufficient to meet Defendants’ burden on their negative causation defense, as Dr. Grenadier’s study and its conclusions demonstrate that none of the price declines experienced by Cloudera were attributable to new information revealing the ‘truth’ about Cloudera’s pre-Merger products….”
Noting the myriad sources of information regarding Cloudera’s product capabilities prior to the merger, the court also found that “Defendants have demonstrated that Plaintiffs cannot establish the element of materiality given the total mix of information concerning Cloudera’s cloud products that was publicly available at the time the Registration Statement was issued.”