Cravath, Swaine & Moore LLP Logo
  • Practices
  • People
  • Careers
  • News & Insights
  • Practices
  • People
  • Careers
  • News & Insights
  • Our Story
  • The Cravath System
  • Diversity & Inclusion
  • Pro Bono
  • Alumni Journal
  • 200.Cravath

Cravath’s London Office Moves to 100 Cheapside

Read More

News & Insights

Root’s Sixth Circuit Win Affirming Dismissal of Putative Securities Class Action

May 02, 2024

On April 29, 2024, a three‑judge panel of the U.S. Court of Appeals for the Sixth Circuit ruled in favor of Cravath clients Root, Inc., an insurance company primarily focused on automobile insurance, and certain of its officers and directors (collectively, “Root”) in affirming the U.S. District Court for the Southern District of Ohio’s dismissal of a purported class action securities complaint. The decision is a precedential opinion that creates new law of the circuit.

In 2021, a complaint was filed against Root and Root’s underwriters on behalf of certain Root shareholders alleging that the defendants made false or misleading statements and omissions following Root’s initial public offering. The complaint alleged defendants misdescribed Root’s “customer acquisition costs” (“CAC”) in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b‑5 thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. The district court dismissed the complaint in its entirety and held, among other things, that (a) Federal Rule of Civil Procedure 9(b)’s heightened pleading standard applied to all claims because the complaint sounds in fraud, (b) certain of Root’s statements concerning its CAC were true statements of past performance and therefore unactionable, and (c) the “Bespeaks Caution” doctrine excused any liability for forward‑looking statements relating to Root’s CAC that were accompanied by meaningful cautionary statements. The plaintiff appealed the district court’s decision to dismiss plaintiff’s Sections 11, 12(a)(2) and 15 claims on those bases.

A panel of three judges for the Sixth Circuit affirmed. The panel upheld the district court’s application of Rule 9(b) to the plaintiff’s claims under Sections 11 and 12(a)(2), creating new circuit law to hold that when a fraud claim and a negligence claim brought under the federal securities laws are grounded in one fraudulent course of conduct relying on one set of facts, the complaint sounds in fraud and Rule 9(b) applies. The panel additionally held that two of the three statements whose dismissal the plaintiff appealed were unactionable because they accurately described Root’s past CAC. The panel also created new circuit law by holding that the “Bespeaks Caution” doctrine shields companies from liability for forward‑looking statements contained in a registration statement or concerning an initial public offering that are accompanied by meaningful cautionary language. On that basis, the panel held that the third statement whose dismissal the plaintiff appealed was also unactionable. Finally, the panel affirmed dismissal of the plaintiff’s Section 15 claims because its Sections 11 and 12(a)(2) claims were properly dismissed.

The Cravath team was led by partners Wes Earnhardt and Michael P. Addis, who argued the appeal, and included associate Brent E. Bomkamp.

The case is Kolominsky v. Root, Inc., No. 23‑3392 (6th Cir.).

Related Practices & Industries

  • Litigation
  • Appellate
  • Class Action Defense
  • Securities Litigation
  • Financial Services and Insurance
  • Technology

People

Photo
Name
Wes Earnhardt
Title
Litigation
Title
Partner
Email
wearnhardt@cravath.com
Phone
+1-212-474-1138
vCard
Download vCard

    Education

    • J.D., 2004, University of North Carolina School of Law
    • B.A., 2000, University of North Carolina at Chapel Hill
      Phi Beta Kappa

    Admitted In

    • New York
    Photo
    Name
    Michael P. Addis
    Title
    Litigation
    Title
    Partner
    Email
    maddis@cravath.com
    Phone
    +1-212-474-1956
    vCard
    Download vCard

      Education

      • J.D., 2010, Harvard Law School
      • M.S.T., 2007, Pace University
      • A.B., 2005, Princeton University
        magna cum laude

      Admitted In

      • New York

      Related News & Insights

      Deals & Cases

      April 01, 2023

      Root Wins Dismissal of Putative Securities Class Action

      On March 31, 2023, the U.S. District Court for the Southern District of Ohio granted a motion to dismiss with prejudice all claims brought against Cravath clients Root, Inc. and certain of its officers and directors (collectively, “Root”). Root is an insurance company, primarily focused on automobile insurance, with a “mobile‑first”, data‑driven business model that makes risk assessments, in part, based on complex behavioral data, including an individual’s actual driving behavior.

      Cravath Bicentennial

      Celebrating 200 years of partnership. In 2019, we celebrated our bicentennial. Our history mirrors that of our nation. Integral to our story is our culture.

      Explore

      Cravath, Swaine & Moore LLP Logo
      • CONTACT US
      • OUR STORY
      • ALUMNI PORTAL
      • DISCLAIMERS & NOTICES

      Attorney Advertising. ©2025 Cravath, Swaine & Moore LLP.