On November 1, 2024 a Second Circuit panel affirmed the dismissal of a putative securities class action brought in the S.D.N.Y. against Warner Bros. Discovery and certain of its executives. The appellate court upheld an order ruling that the plaintiff investors failed to show that the defendants misled them in disclosures prior to the industry-defining $43 billion merger of WarnerMedia and Discovery, Inc., which put under one corporate umbrella ubiquitous content from HBO, DC Comics, and the Food Network, among other content publishers. The appellate decision provides important reassurance to issuers that any post-merger changes to corporate strategy cannot be used to leverage accurate pre-merger statements as a vehicle for securities claims.

After the deal closed, the stock price of the new company dropped, which eventually triggered a putative securities class action in the S.D.N.Y. against Warner Bros. Discovery and certain of its executives (among a few other parties). 

In February 2024, Weil secured a complete motion to dismiss victory. Judge Caproni’s 29-page opinion granted our clients’ motion in its entirety, including on section 11 strict liability claims brought under the Securities Act of 1933. Plaintiffs alleged that the defendants made false and misleading statements concerning the legacy WarnerMedia’s operations – including in regards to subscriber data, third-party content licensing, and direct-to-streaming release strategy, among other things – in SEC filings and other public disclosures in connection with the merger. Weil led motion to defense briefing on behalf of all of the defendants.

In our motion to dismiss briefs, Weil argued plaintiffs failed to state a claim upon which relief could be granted because none of the challenged statements was false or misleading. In its ruling, the Court agreed that plaintiffs had not adequately alleged even a single false or misleading statement, because all of the challenged statements were objectively true and the additional context plaintiffs claim defendants omitted – context which plaintiffs notably did not allege WBD was required to disclose – did not render those statements misleading.

Plaintiffs appealed to the Second Circuit and, on November 1, 2024, just two weeks after Weil’s Jonathan Polkes argued the appeal, the appellate court unanimously affirmed. 

The Weil team representing the defendants was led by Jonathan Polkes, Co-Chair of Weil’s global Litigation Department, and Caroline Zalka, Co-Head of Weil’s Securities Litigation practice. The team included counsel Amanda Pooler and Josh Wesneski, and associates Milana Bretgoltz, Brigit Crosbie, Nolan DeBrowner, Daniel Lifton, and Honghu Wang.