If you suffered losses in Xponential stock, contact Xponential stock loss lawyer Timothy L. Miles about a Xponential lawsuit
INTRODUCTION
The Xponential class action lawsuit has already garnered some attention since its filing. As plaintiffs seek to hold the company accountable for alleged misstatements or omissions, it is crucial to understand the complexities involved in defeating a motion to dismiss under the Private Securities Litigation Reform Act (PSLRA).
In this article, we will delve into the fundamental aspects of the Xponential class action lawsuit and explore the key elements that plaintiffs must overcome to defeat a motion to dismiss. By examining the unique requirements set forth by the PSLRA, we aim to provide a comprehensive understanding of the strategies and considerations involved in pursuing a successful securities class action claim. THE FOUNDATIONS OF THE XPONENTIAL CLASS ACTION LAWSUIT
The Xponential class action lawsuit alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (i) Xponential had permanently closed at least 30 stores; (ii) Xponential’s reported same-store sales (“SSS”) and average unit volume (“AUV”) metrics had been misstated by excluding underperforming stores; (iii) 8 out of 10 Xponential brands were losing money monthly; (iv) over 50% of Xponential studios did not make a positive financial return; (v) over 60% of Xponential’s revenue was one-time and non-recurring; (vi) more than 100 of Xponential’s franchises were for sale at a price that is at least 75% less than their initial cost; (vii) Xponential had misled many of its franchisees into opening franchises by misrepresenting the financial profile and profitability of its studios, as well as the expected rate of return for new studio openings; and (viii) many Xponential franchisees were substantially in debt, suffering high attrition rates and running non-viable studios that had no realistic path to profitability.
On June 26, 2023, Fuzzy Panda published a report on Xponential, which, among other things, represented that: (i) Xponential CEO, defendant Anthony Geisler, has had a long history of misleading investors; (ii) Xponential has issued a series of misleading statements about its store closures and the overall financial health of its franchisee base; (iii) more than 50% of Xponential’s studios never make a positive financial return; (iv) more than 100 of Xponential’s franchises are for sale at a price that is at least 75% less than their initial cost; (v) 8 out of 10 Xponential brands are losing money monthly; (vi) Xponential’s publicly reported SSS and AUV metrics misleadingly exclude underperforming stores; (vii) over 60% of Xponential’s revenue is one-time and non-recurring; and (viii) at least 30 Xponential stores had been permanently closed. On this news, the price of Xponential common stock fell more than 37%. Then, on December 7, 2023, Businessweek published an article titled “Club Pilates, Pure Barre Owners Say Xponential Left Them Bankrupt” which stated that Businessweek had interviewed dozens of former business partners, employees, and franchisees of Xponential who revealed that Xponential misled many franchisees into a “financial nightmare.” The article further stated defendant Geisler “has a track record of combative management, deploying growth-at-all-costs tactics and unleashing aggressive reprisals against anyone who gets in his way.” On this news, the price of Xponential common stock fell more than 26% over two trading days. THE SIGNIFICANCE OF CLASS ACTION SECURITIES CLAIMS
Class action securities claims such as those in the Xponential class action lawsuit carry substantial stakes for both corporations and their leaders. Plaintiffs in these cases seek substantial monetary compensation, sometimes amounting to hundreds of millions of dollars. Additionally, the lengthy legal process associated with securities class actions introduces significant uncertainty for all parties involved and the Xponential class action lawsuit is no exception.
THE POTENTIAL OF RULE 12(B)(6) MOTIONS TO DISMISS IN THE XPONENTIAL CLASS ACTION LAWSUIT
Securities class action lawsuits often face dismissal at the pleadings stage through Rule 12(b)(6) motions. From 1997 to 2018, 43% of core federal class action filings were dismissed, while 49% were settled, and only 7% remained live cases. Recent data sets indicate even higher dismissal rates, highlighting the importance of understanding and leveraging the Rule 12(b)(6) motion to dismiss as a strategic opportunity for defendants in the Xponential class action lawsuit.
MAXIMIZING THE OPPORTUNITY: KEY CONSIDERATIONS FOR DEFENDANTS IN THE XPONENTIAL CLASS ACTION LAWSUIT
To maximize the opportunity presented by a Rule 12(b)(6) motion to dismiss, defendants in the Xponential class action lawsuit must take specific steps at the outset of a securities class action. Here are three essential considerations that defendants should bear in mind.
1. Individual Legal Response and Counsel
While the deadline for a defendant to answer or move is typically 21 days after service of process, class action cases often involve delays as plaintiffs' law firms compete for lead attorney status. This is particularly true in securities fraud class actions where the court first has to consolidate multiple cases and appoint a lead plaintiff. During these delays, defendants should carefully assess whether their interests align with those of the company or other individual defendants. In many cases, retaining individual counsel representing each defendant's unique perspective and interests is crucial. It is equally important for defendants to collaborate with co-counsel when appropriate to advance arguments that benefit all parties involved. Corporate liability insurance policies often cover the cost of individual counsel for key personnel through Directors-and-Officers (D&O) Policies.
2. Seeking Dismissal through a 12(b)(6) Motion
Obtaining dismissal of class action lawsuits often involves filing a 12(b)(6) motion. Such a motion argues that, even if the facts alleged by plaintiffs are true, the Xponential class action lawsuit should be thrown out of court due to a failure to state a valid legal claim. In securities class action cases, the plaintiffs must also satisfy the stringent requirements of the PSLRA. When multiple defendants and defense teams are involved, some elements of each defendant's motion to dismiss may overlap. In such cases, parties can incorporate relevant sections of a lead brief by reference, allowing individual legal teams to focus on issues unique to each defendant.
3. FOUR KEY ELEMENTS FOR DISMISSAL
To succeed in a 12(b)(6) motion to dismiss, plaintiffs in the Xponential class action lawsuit must establish four essential elements:
a. Misstatements or Omissions
The Lead Plaintiff in the Xponential class action lawsuit must demonstrate that the defendant company and/or its officers made false misstatements or omissions of fact that were essential to make other statements "not misleading." The plaintiffs must identify specific misleading misstatements or omissions, considering the complex rules governing the existence of a duty to disclose.
b. Materiality
The Lead Plaintiff in the Xponential class action lawsuit must convince the court that the allegedly withheld or misstated information were material, meaning it could have influenced a reasonable investor's decision to buy or sell the company's stock. Materiality is assessed based on the total mix of public information available.
c. Scienter
The Lead Plaintiff in the Xponential class action lawsuit is also required to show either an intent to deceive or extreme recklessness on the part of each defendant. This showing must be individualized, considering that the state of mind of one defendant cannot be imputed to another. The PSLRA imposes stringent requirements on plaintiffs to specify each misleading statement, reason, and all facts supporting their belief.
d. Loss Causation
Finally, the Lead Plaintiff in the Xponential class action lawsuit must establish a clear connection between the alleged misstatement or omission and investors' losses. This usually involves demonstrating that the stock price was artificially inflated by false statements or omissions and subsequently declined when the truth was revealed through corrective disclosures. The timing of relevant disclosures and historical stock price data during the relevant period are crucial factors in determining loss causation.
FINAL CONSIDERATIONS AT THE PLEADINGS STAGE IN THE XPONENTIAL CLASS ACTION LAWSUIT
To proceed beyond the motion to dismiss stage, the lead plaintiff in the Xponential class action lawsuit must plead facts that, if proven, would establish all four key elements. Overcoming these requirements poses significant challenges, as demonstrated by the high rate of dismissals in securities class action cases. However, even if a motion to dismiss fails, subsequent opportunities to seek relief exist, such as challenging class certification, filing motions for summary judgment, or limiting damages after a settlement or judgment.
In conclusion, the Xponential class action lawsuit presents complex legal challenges for both plaintiffs and defendants. Understanding the intricacies of securities class action claims and the unique requirements set forth by the PSLRA is crucial for effectively navigating this legal landscape. By leveraging the strategies and considerations outlined in this article, plaintiffs can increase their chances of overcoming a motion to dismiss and pursuing a successful securities class action claim in the Xponential class action lawsuit. CONTACT A XPONENTIAL STOCK LOSS LAWYER TODAY ABOUT A XPONENTIAL CLASS ACTION LAWSUIT
If you suffered losses in Xponential stock, contact Xponential stock loss lawyer Timothy L. Miles today for a free case evaluation about an Xponential class action lawsuit. Call today and see what an Xponential stock loss lawyer could do for you if you suffered losses in Xponential stock.
The Law Offices of Timothy L. Miles
Tapestry at Brentwood Town Center 300 Centerview Dr., #247 Brentwood, TN 37027 Phone: (855) 846–6529 Email: [email protected] Xponential stock loss lawyer Timothy L. MilesNashville attorney Timothy L. Miles is a nationally recognized shareholder rights attorney raised in Nashville, Tennessee. Mr. Miles has dedicated his career to representing shareholders, employees, and consumers in complex class-action litigation. Whether serving as lead, co-lead, or liaison counsel, Mr. Miles has helped recover hundreds of millions of dollars for defrauded investors, shaped precedent-setting decisions, and delivered real corporate governance reforms. Judges and peers have repeatedly recognized Mr. Miles’ relentless advocacy for the underdog, as well as his unbendable ethical standards. Mr. Miles was recently selected by Martindale-Hubbell® and ALM as a 2022 Top Ranked Lawyer, 2022 Top Rated Litigator. and a 2022 Elite Lawyer of the South. Mr. Miles also maintains the AV Preeminent Rating by Martindale-Hubbell®, their highest rating for both legal ability and ethics. Mr. Miles is a member of the prestigious Top 100 Civil Plaintiff Trial Lawyers: The National Trial Lawyers Association,Class Action: Class Action: Top National Trial Lawyers, National Trial Lawyers Association (2023), a superb rated attorney by Avvo, a recipient of the Lifetime Achievement Award by Premier Lawyers of America (2019) and recognized as a Distinguished Lawyer, Recognizing Excellence in Securities Law, by Lawyers of Distinction (2019); a Top Rated Litigator by Martindale-Hubbell® and ALM (2019-2022); America’s Most Honored Lawyers 2020 – Top 1% by America’s Most Honored (2020-2022). Mr. Miles has published over sixty articles on various issues of the law, including class actions, whistleblower cases, products liability, civil procedure, derivative actions, corporate takeover litigation, corporate formation, mass torts, dangerous drugs, and more. Please visit our website or call for free anytime. Comments are closed.
|
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
October 2024
Categories
All
|
CONTACT
The Law Offices of Timothy L. Miles Tapestry at Brentwood Town Center 300 Centerview Dr., #247 Brentwood, TN 37027 Phone: (855) 846-6529 Email: [email protected] HOURS OF OPERATION Mon-Fri: 24/7 Sat-Sun: 24/7 |
SECURITIES FRAUD
GitLab, Inc. Acadia Healthcare Sunlight Financial Iris Energy Limited Edwards Lifesciences Elanco Animal Health, Inc. MASS TORTS
Takata Airbag Settlement |