A New York-based Latham team achieved a significant victory for Funko, Inc. and its officers and directors when, on August 2, Judge Susan Amini of the Washington State Superior Court dismissed a putative class action lawsuit asserting claims under Sections 11, 12, and 15 of the Securities Act of 1933. This long-running litigation was the consolidated action for all five active state court complaints filed after Funko's November 2017 IPO suffered the largest first-day price drop since the year 2000.
Adopting Latham's arguments, the court decisively found that “Funko's statements regarding its financial disclosures were not materially false or misleading" and that “Plaintiffs have not shown that Funko's 'opinion statements' were false or that such statements were not simply corporate optimism or puffery."
The court's decision is especially significant given that many of the issues were matters of first impression in Washington state courts. This is the first Washington state court dismissal of federal securities law claims since the Supreme Court's Cyan decision in 2018, which held that the Securities Litigation Uniform Standards Act did not strip state courts of jurisdiction to adjudicate class actions alleging only 1933 Securities Act violations.
New York partner Kevin McDonough argued the motion to dismiss before the court. The New York-based Latham team also includes partner Benjamin Naftalis, associates Michael Watsula, Matthew Catalano, and Katherine Magaziner.