The 2nd US Circuit Court of Appeals in New York said the lawsuit failed to state a plausible claim and sent it back to a lower court judge to reconsider whether to let the plaintiffs amend their complaint in light of what they said was new evidence.
BlackBerry launched its Z10 phone in January 2013 in a bid to recoup market share lost to Apple iPhone, and Samsung devices powered by Google Android.
While the BlackBerry Z10 had positive reviews, it had terrible sales and saw a $930 million writedown for unsold inventory. BlackBerry shares lost about one-sixth of their value that day.
As a result, the outfit ousted its chief executive officer, Thorsten Heins, less than two months later.
However the lawsuit alleged that BlackBerry attempted to conceal the poor performance of the Z10 in order to artificially inflate its stock price.
The 2nd Circuit upheld US District Judge Thomas Griesa’s March 2015 dismissal of the lawsuit for the failure to allege that BlackBerry and its executives knowingly misled investors.
The three judge appeals panel said the plaintiffs’ claims amounted to “fraud by hindsight” by saying that the defendants must have known the device would be unsuccessful.
The court said that the plaintiffs could try to persuade Griesa to let them amend their complaint in light of new legal developments and evidence that the plaintiffs said would support their claims.
If Griesa refuses to let the plaintiffs amend their complaint, he should explain his reasons, which he had not done before, the judges said.