BlackBerry Ltd to face classaction suit in the U.S. on account of making misleading statements surrounding its Blackberry 10 device

Although a similar suit was dismissed earlier in March 2015, Chief Judge Colleen McMahon of the U.S. District Court in Manhattan has allowed the proposed class action lawsuit on the grounds of new evidence coming to light.

Chief Judge Colleen McMahon of the U.S. District Court in Manhattan has rejected BlackBerry Ltd’s plea to dismiss a lawsuit claiming it inflated its stock price and defrauded shareholders by painting a misleadingly positive picture of sales prospects for its BlackBerry 10 smartphones.

The rejection of the plea comes despite an earlier version wherein a similar lawsuit was dismissed in March 2015 against BlackBerry and the development will now allow a proposed class action lawsuit to proceed against the Canadian tech firm.

According to Chief Judge Colleen McMahon, new information, available regarding BlackBerry’s alleged conduct, has now surfaced during a criminal prosecution of an executive at a retailer that sold its smartphones.

Further she also cited a new legal standard that has been adopted by the U.S. Supreme Court that makes it easier for some plaintiffs to show that statements of opinion might be misleading.

The other defendants in the proposed class action lawsuit include BlackBerry’s former CEO, Thorsten Heins, former Chief Legal Officer Steve Zipperstein and former Chief Financial Officer Brian Bidulka.

BlackBerry’s spokeswoman Sarah McKinney declined to comment.

A lawyer for the defendants did not immediately respond to requests for comment.

Although BlackBerry 10 received many positive reviews from critics it however never caught the fancy of the public which instead preferred Android-based smartphones and Apple Inc’s iPhone. In 2016, BlackBerry decided to stop manufacturing its own smartphones.

In 2013, BlackBerry’s shareholders had accused the tech firm of concealing BlackBerry 10’s true sales prospects.

The amended complaint, which is likely to be the cornerstone of the proposed class action suit is based in part on information from the 2015 prosecution of James Dunham, a former chief operating officer at retailer Wireless Zone.

The Dunham case revealed how an April 2013 report by Detwiler Fenton showed a high rate of return for the BlackBerry 10 device, which was based on data sold by Dunham from some 400 Wireless Zone stores.

Dunham has pleaded guilty to selling confidential wireless industry information and was sentenced to five months in prison.

In the proposed classa ction lawsuit, McMahon stated the plaintiffs have made out a case which shows that BlackBerry’s public response to the Detwiler report, including that its customers were “satisfied” and that the return rates were “at or below our forecasts and right in line with the industry,” contradicted data it allegedly had from Wireless Zone.

As for the merits of BlackBerry’s arguments that state that its statements were not misleading, Chief Judge Colleen McMahon said, she would address those later.


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