First American Financial Ditches Suit Stemming from Data Breach – Bloomberg Law

first-american-financial-ditches-suit-stemming-from-data-breach-–-bloomberg-law

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First American Financial Corp. exited a would-be class action over a 2018 data breach, as a federal court in California said the shareholders again fell short of alleging it made any actionable misrepresentations.

Investors alleged that the financial services company misrepresented its security practices and controls, causing them to purchase stock at inflated prices. The share price fell more than 6% shortly after a May 2019 news story said First American had exposed around 850 million documents, some containing personal information, they alleged.

The suit was dismissed last year but the US District Court for the Central District of California allowed lead plaintiff St. Lucie County Fire District Firefighters Pension Trust Fund to file an amended complaint.

The additional detail in the latest attempt still fails to state a viable claim, Judge Dale S. Fischer said Wednesday.

Previously, the court said general statements First American made about its information security program and data protection were either true, too vague to be material, or mere puffery.

The fund didn’t raise any new allegations showing that First American made actionable misrepresentations in these general statements, the court said.

And the fund again failed to plausibly allege that First American’s risk factor disclosures regarding data security were false and misleading, the court said. The fund didn’t adequately plead that First American had actual knowledge of the data breach at the time of the disclosures, or that the disclosures were specific enough to misrepresent the current state of affairs, it said.

Although new facts in the amended complaint plausibly allege First American was aware of general information security vulnerabilities, they don’t establish that it was aware of existing compromised data, the court said.

The fund also again failed to plausibly allege that First American’s statements about the data breach were false or misleading, the court said. It dismissed the suit for good.

Pomerantz LLP represented St. Lucie’s Fund. Gibson Dunn & Crutcher LLP represented First American.

The case is In re First Am. Fin. Corp. Fin. Sec. Litig., C.D. Cal., No. 2: 20-cv-09781, 5/11/22.

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