Late last week, Zoom Video Communications, Inc. filed a motion to dismiss the consolidated class action lawsuit alleging it overstated its data privacy and security measures and failed to disclose that its service is not end-to-end encrypted.
California resident Michael Drieu filed the initial suit against the video communications application company in April of 2020 on behalf of all shareholders who acquired Zoom securities between April 18, 2019 and April 6, 2020. In the complaint, he claims that a series of news reports highlighting the company’s security concerns caused its stock prices to plummet and damaged investors. This suit was later consolidated with Brams v. Zoom Video Communications, Inc., and individual investor Adam Butt was named as the lead plaintiff.
Zoom seeks to dismiss the suit on the grounds that the plaintiff cannot prove that any statement made by the company concerning its security features was false or misleading when made or why, that it acted with fraudulent intent, or that the alleged misstatements caused stock prices to decline.
In fact, the defendants said that not only have Zoom stock prices rebounded since the company’s brief period of media scrutiny, but they have also increased more than 300 percent. They claim that the plaintiff “seeks to turn a brief period of stock volatility into a securities fraud claim.”
Zoom has faced a series of lawsutis since its explosion in popularity last year, which was caused by an increase in teleworking during the COVID-19 pandemic. According to court documents, its daily meeting participants skyrocketed from ten million in December of 2019 to hundreds of millions in April of 2020.