• Opinion sets helpful precedent that damages in Section 11 cases are calculated based on stock price, not alleged value
• The court issued a comprehensive decision granting GoodRx’s motion to dismiss in its entirety, rejecting the plaintiffs’ claims that GoodRx and certain of its officers made false and misleading statements regarding Amazon’s plans to enter the prescription discount market in November 2020 and compete with GoodRx

A California-based Latham team achieved full dismissal of a shareholder class action against GoodRx, which focuses on providing consumers with free information that enables them to identify and secure lower prescription drug prices. On January 6, 2022, Judge David O. Carter of the Central District of California issued a detailed opinion and order dismissing all of plaintiffs’ claims.

Plaintiffs, represented by Robbins Geller Rudman & Dowd LLP and Pomerantz LLP, asserted claims under Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act, and Items 303 and 105 of Regulation S-K. The claims arose from GoodRx’s disclosures both in connection with and after its IPO. Specifically, Plaintiffs sought to recover for alleged losses after Amazon announced the launch of its PrimeRx service and discount card program in November 2020, programs that Plaintiffs claimed would compete with GoodRx. Plaintiffs claimed that GoodRx knew or should have known that Amazon would enter the market as a competitor, and therefore should have disclosed that information in its Registration Statement.

Judge Carter issued a comprehensive decision granting GoodRx’s motion to dismiss in its entirety. Perhaps most importantly, Judge Carter provided important precedent on the proper measurement of damages in Section 11 cases. In the motion to dismiss, Latham argued that Plaintiffs could not have suffered Section 11 damages because GoodRx’s share price never fell below its IPO price of US$$33 per share. Plaintiffs countered by claiming that despite the stock price, the IPO price did not accurately reflect the value of GoodRx’s stock, which was inflated as a result of GoodRx’s purported misstatements and omissions. The court sided with Latham, dismissing the Section 11 claim and holding that Section 11’s language is clear that the starting point for damages is the price that Plaintiffs actually paid for the stock, capped at the IPO price. Judge Carter then dismissed all of the plaintiffs’ remaining claims, holding that GoodRx’s statements were not false and misleading because GoodRx had warned of the possibility of future competition, and the plaintiffs failed to allege that GoodRx or its executives had any knowledge of Amazon’s plans prior to Amazon’s announcement.

This result was achieved by partners Michele Johnson (OC) and Colleen Smith (SD), associates Jordan Cook (OC), Morgan Whitworth (Bay Area), Sheridan Caldwell (Bay Area), and Ashley Gebicke (SD), with invaluable assistance from paralegal Karen Patterson (OC) and litigation services senior coordinator Khadijah Fields (OC).