A securities fraud class action against a major player in dating apps will proceed, following last Friday’s ruling that the revised complaint meets the applicable heightened pleading standards. The 2019 Northern District of Texas case accuses Match Group Inc., the owner and operator of popular dating websites and apps like match.com and Tinder, and its executives of misrepresenting financial performance and forecast information by failing to account for significant fraudulent accounts controlled by “bots.”
The operative complaint specifies that fake accounts across several Match Group platforms were controlled by people who “sought to extract money or things of value from Match’s legitimate customers,” and accounted for 15-20% of one of the company’s reported revenue streams. In addition, it alleges that the defendants concealed information about sex offender users on its sites. As a result of its purported deceptions, the complaint claims that the company’s stock price fell as the truth came to light.
Judge Karen Gren Scholer granted dismissal last March after adjudging the pleading deficient in numerous ways. In particular, the Dallas, Texas court said that the plaintiffs failed to allege sceinter, failed to demonstrate that purported misstatements were untrue and that the defendants had knowledge of the company’s allegedly faulty internal controls.
The shareholders subsequently filed an amended complaint. Match moved to dismiss in July, arguing that their additions were unhelpful and that they failed to allege certain critical factual details.
Last week’s two-page opinion explained that the court “carefully scrutinized” the 164-page amended complaint. The judge ruled that it addressed previous defects, including satisfying the Federal Rules of Civil Procedure’s and the Private Securities Litigation Reform Act’s heightened pleading standards.
“Plaintiffs have adequately specified at least some allegedly misleading statements or omissions,” the opinion said. In addition, the court noted that though the plaintiffs pleaded an inference of scienter requisite to surviving a dismissal motion, Judge Scholer anticipated revisiting the issue after the completion of discovery.
The same day the court issued its opinion, it set a trial date for October 2022, and instructed the parties to complete mediation before an appointed mediator 90 days prior to trial.