DreamWorks Animation Wins Dismissal of Securities Fraud Lawsuit over Turbo Movie

On April 1, 2015, Judge S. James Otero of the U.S. District Court for the Central District of California dismissed a consolidated securities class action lawsuit against Cravath client DreamWorks Animation SKG, Inc. and DreamWorks’s chief executive officer and former chief financial officer.

The suit, brought on behalf of purchasers of DreamWorks common stock between October 29, 2013 and July 29, 2014, alleged that defendants misrepresented the company’s financial performance related to the 2013 animated feature‑length film, Turbo, causing DreamWorks’s stock to be traded at artificially inflated prices from October 29, 2013 through July 29, 2014, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b‑5.

In dismissing the suit without prejudice, Judge Otero held that the complaint failed to plead sufficiently particularized facts supporting (a) the falsity of defendants’ statements; (b) defendants’ knowledge or reckless disregard of the falsity of statements at the time the statements were made; and (c) loss causation. Lead Plaintiff Roofers Local No. 149 Pension Fund indicated it does not intend to file an amended complaint.

The Cravath team included partners Evan R. Chesler and Karin A. DeMasi and associate Kelly A. Eno. The case is Paddock v. DreamWorks Animation SKG, Inc., et al., No. 14‑cv‑06053 (C.D. Cal.).