Joinder in Motion to Dismiss — In re Carvana Securities

Record facts

U.S. District Court for the District of Arizona · No. 2:22-cv-02126-MTL · Doc. 87 · 2024-05-28 · Docket on CourtListener

Full text

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
FENNEMORE CRAIG, P.C.
Douglas C. Northup (No. 013987) 
Andrea L. Marconi (No. 022577) 
2394 E. Camelback Road 
Suite 600 
Phoenix, Arizona  85016 
Telephone:  (602) 916-5000 
Email:  dnorthup@fennemorelaw.com 
Email:  amarconi@fennemorelaw.com 
 
PAUL, WEISS, RIFKIND, WHARTON & 
GARRISON LLP 
Susanna M. Buergel (pro hac vice) 
David P. Friedman (pro hac vice) 
1285 Avenue of the Americas 
New York, New York 10019 
Telephone: (212) 373-3000 
Email: sbuergel@paulweiss.com 
Email: dfriedman@paulweiss.com 
 
Counsel for Defendants Citigroup Global Markets 
Inc. and J.P. Morgan Securities LLC 
 
UNITED STATES DISTRICT COURT 
DISTRICT OF ARIZONA 
In re Carvana Co. Securities Litigation,
No. CV-22-2126-PHX-MTL
JOINDER OF UNDERWRITER  
DEFENDANTS IN THE CARVANA 
DEFENDANTS’ MOTION TO 
DISMISS LEAD PLAINTIFFS’ 
AMENDED CONSOLIDATED 
COMPLAINT 
 
(Oral Argument Requested) 
This Document Relates to: 
 
ALL ACTIONS. 
 
Pursuant to Rules 9(b) and 12(g) of the Federal Rules of Civil Procedure, 
Defendants Citigroup Global Markets Inc. (“Citigroup”) and J.P. Morgan Securities LLC 
(“J.P. Morgan,” and, collectively, “Underwriter Defendants”) respectfully join in the 
Motion to Dismiss Lead Plaintiffs’ Amended Consolidated Complaint and Memorandum 
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 1 of 11

 
- 2 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
of Points and Authorities filed by Defendants Carvana Co. (“Carvana”), Ernest Garcia III 
(“Garcia Junior”), Mark Jenkins, Stephen Palmer, Michael Maroone, Neha Parikh, Ira 
Platt, and Greg Sullivan (collectively, “Carvana Defendants”) with respect to the claims 
asserted against the Underwriter Defendants in the Amended Consolidated Complaint 
(“Amended Complaint”), including all arguments set forth in the Carvana Defendants’ 
Motion as to such claims.  The Underwriter Defendants submit this joinder to further 
explain how certain arguments for dismissal apply to the claims against them, and 
respectfully request that the Court dismiss the claims against the Underwriter Defendants 
with prejudice.  
MEMORANDUM OF POINTS AND AUTHORITIES 
I. BACKGROUND 
The Underwriter Defendants are financial institutions that contracted with Carvana 
to sell Carvana shares to investors in connection with a secondary offering in April 2022 
(the “Offering”).  Am. Compl. ¶ 371.  Only 28 of the Complaint’s 448 paragraphs mention 
the Underwriter Defendants.  Id. ¶¶ 22–23, 366, 371–72, 400–20, 433, 440.  In terms of 
factual allegations, Plaintiffs describe in generalities the Underwriter Defendants’ role as 
underwriters of the Offering.  See id. ¶¶ 402–09, 420.  Plaintiffs further describe a separate 
Carvana debt offering on which affiliates of the Underwriter Defendants (but not the 
Underwriter Defendants themselves) allegedly worked.  Id. ¶¶ 410–13.  The Amended 
Complaint alleges that Plaintiffs purchased Carvana Class A common stock in the Offering 
from Citigroup.  Id. ¶¶ 22–23, 366, 433.  There are no allegations that J.P. Morgan sold 
Carvana shares to Plaintiffs in the Offering or was involved in soliciting Plaintiffs’ alleged 
purchases of shares in the Offering. 
II. ARGUMENT 
The Underwriter Defendants join in and incorporate by reference the arguments and 
authorities set forth in the Carvana Defendants’ Motion with respect to the claims against 
the Underwriter Defendants, which are asserted under Sections 11 and 12(a)(2) of the 
Securities Act of 1933.  First, the Section 11 and 12(a)(2) claims fail because Plaintiffs do 
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 2 of 11

 
- 3 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
not plausibly allege facts to establish that any of the challenged statements or alleged 
omissions were false, misleading, or material.  See Carvana Mot. to Dismiss at 42–44.  
Furthermore, the Amended Complaint itself establishes negative causation for the three  
alleged misstatements, thereby providing another independent basis for dismissal.  See 
Carvana Mot. to Dismiss at 44–45.  Second, the Section 12(a)(2) claim against at least J.P. 
Morgan fails for the independent reason that Plaintiffs do not allege facts to plead that J.P. 
Morgan was a statutory seller.1  
A. 
Plaintiffs Fail to Plead Violations of Sections 11 and 12(a)(2)  
Section 11 of the Securities Act creates liability for material misstatements or 
omissions in a registration statement.  See 15 U.S.C. § 77k(a).  Section 12(a)(2) creates 
liability only for statutory “sellers” in a securities offering for material misstatements or 
omissions in a prospectus.  See id. § 77l(a).  Plaintiffs allege the same statements were 
misleading in support of both their Section 11 and Section 12(a)(2) claims.  To successfully 
plead a Section 11 claim, a plaintiff must allege “(1) that the registration statement 
contained an omission or misrepresentation, and (2) that the omission or misrepresentation 
was material, that is, it would have misled a reasonable investor about the nature of his or 
her investment.”  In re White Elec. Designs Corp. Sec. Litig., 416 F. Supp. 2d 754, 764 (D. 
Ariz. 2006) (quotation marks omitted).  The same standard applies to Section 12(a)(2) 
claims.  In re Pivotal Sec. Litig., 2020 WL 4193384, at *5 (N.D. Cal. July 21, 2020); see 
also In re Bare Escentuals, Inc. Sec. Litig., 745 F. Supp. 2d 1052, 1072–73 (N.D. Cal. 
2010) (dismissing plaintiffs’ Section 12(a)(2) claim because their Section 11 claim had 
been dismissed for failure to adequately allege the existence of any material misstatements 
or omissions).  Plaintiffs fail to plausibly allege either a Section 11 or 12(a)(2) claim.    
 
1. 
Plaintiffs’ Securities Act Allegations Must Meet Rule 9(b)’s 
Pleading Standard 
As an initial matter, Plaintiffs’ Securities Act claims are subject to Rule 9(b)’s 
 
1 As set forth in the Carvana Defendants’ Motion to Dismiss, the Amended Complaint 
should be dismissed for the threshold reason that it continues to violate Rule 8 and the 
PSLRA’s pleading requirements.  Carvana Mot. to Dismiss at 10–12; see also Order at 14, 
17–18, ECF No. 70. 
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 3 of 11

 
- 4 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
heightened pleading standard.  Securities Act claims must be pled with the particularity 
required by Rule 9(b) if the claims “sound[] in fraud.”  Rubke v. Capitol Bancorp Ltd., 551 
F.3d 1156, 1161 (9th Cir. 2009).  Where plaintiffs’ ‘“[Securities Act] claim merely relies 
on the same alleged misrepresentations that are central to [p]laintiffs’ Section 10(b) fraud 
claim, [p]laintiffs’ [Securities Act] claim is grounded in fraud and must meet Rule 9(b)’s 
pleading requirements.”’  Alich v. Opendoor Techs. Inc., 2024 WL 839146, at *16 (D. 
Ariz. Feb. 28, 2024) (cleaned up) (quoting In re Rigel Pharms., Inc. Sec. Litig., 697 F.3d 
869, 885–86 (9th Cir. 2012)).  Such is the case here, as Plaintiffs’ Securities Act allegations 
are premised on the same subjects and theories of falsity as the corresponding portions of 
their Exchange Act allegations.  Compare Am. Compl. ¶ 209 (alleged misstatement No. 18 
regarding “vehicle acquisition”), with Am. Compl. ¶ 381 (alleged misstatement A 
regarding “vehicle acquisition”); compare Am. Compl. ¶ 214 (alleged misstatement No. 
20 regarding retail units sold), with Am. Compl. ¶ 383 (alleged misstatement B regarding 
retail units sold); compare Am. Compl. ¶ 184 (alleged misstatement No. 6 regarding risk 
disclosures), with Am. Compl. ¶ 385 (alleged misstatement C regarding risk disclosures).  
In an attempt to avoid Rule 9(b)’s pleading standards, Plaintiffs state that they “expressly 
disclaim any allegations of knowing or reckless misconduct or fraud.”  Id. ¶ 365.  However, 
such a disclaimer “does not, on its own, evade Rule 9(b).”  Alich, 2024 WL 839146, at *16.  
“Instead, Plaintiffs’ reliance on the same false or misleading statements alleged in its 
Section 10(b) claim controls the outcome.”  Id. 
 
2. 
Plaintiffs Fail to Allege Any Material Misrepresentations or 
Omissions 
Plaintiffs’ allegations cannot support a Securities Act claim regardless of which 
pleading standard applies.  Plaintiffs challenge three statements made in the Offering 
Documents tied to Carvana’s vehicle acquisitions, sales, and risks surrounding regulatory 
compliance.  See Am. Compl. ¶¶ 381, 383, 385 (Statements A–C).  Further, Plaintiffs allege 
Carvana’s Registration Statement violated Item 105 of Regulation S-K because its risk 
disclosures—Statement C—were purportedly deficient and inaccurate.  Id. ¶¶ 387–91.   
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 4 of 11

 
- 5 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
Plaintiffs do not allege that any of the three challenged statements were false.  
Rather, they allege that all three statements contained material omissions that rendered 
them misleading.  However, none of the alleged omissions are actionable. 
Statement A relates to the bases on which Carvana “determine[s] an appropriate 
offer” for a car.  Am. Compl. ¶ 381.  Plaintiffs allege that the statement omits certain 
alleged facts, including that Carvana was “intentionally buying lower quality cars,” that 
“Carvana sold cars at wholesale at significantly lower prices than those sold at retail,” that 
Carvana “excluded certain per-vehicle operations expenses from its calculation of 
wholesale GPU,” that Carvana’s ‘“intentionally buying lower quality cars’ also led to 
significant logistics constraints,” and that “Carvana lacked critical infrastructure necessary 
to process the huge surplus of wholesale vehicles.”  See Am Compl. ¶ 382.  None of the 
alleged omissions relate to Statement A because the statement concerns the bases on which 
Carvana determines how much to pay for a car, not whether to buy a car or the effect of 
buying a car on Carvana’s sales, profits, or operations.  See also Carvana Mot. to Dismiss 
at 19.  And none of the alleged omissions correct or contradict Statement A’s assertions 
that Carvana (i) used proprietary algorithms to assess vehicles on certain bases in support 
of identifying in-demand and profitable vehicles for acquisition, and (ii) used those 
assessments to determine its offer price.  These alleged omissions thus do not render 
Statement A actionable.  See Ng v. Berkeley Lights, Inc., 2024 WL 695699, at *8 (N.D. 
Cal. Feb. 20, 2024) (dismissing omission claim that “fails to adequately allege a link 
between any of Defendants’ specific representations and Plaintiffs’ generalized allegations 
. . . so as to plausibly plead that omitting information regarding these topics affirmatively 
led Plaintiffs in a wrong direction” (alterations and quotation marks omitted)). 
Statement B relates to Carvana’s increase in retail units sold from December 2020 
to December 2021.  Am. Compl. ¶ 383.  Plaintiffs again do not allege that the statement 
was false, but rather allege that the statement was misleading because Carvana failed to 
disclose that its growth was primarily fueled by: “(i) sales to customers awaiting proper 
title and registration process, (ii) ‘less profitable sales’ in ‘markets with lower profitability 
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 5 of 11

 
- 6 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
due to long distance from inventory,’ (iii) trade-in sales resulting from Carvana’s lowered 
purchasing and verification standards, (iv) sales, pursuant to a pass-through sales 
agreement with Garcia Senior’s DriveTime that lacked economic substance for Carvana, 
and (v) ‘sales that were less profitable in the immediate period.’”  Am. Compl. ¶ 384(a).  
None of the alleged omissions are actionable.  The alleged title and registration omissions 
are not actionable because Plaintiffs fail to allege how any alleged title and registration 
issues cited in the Amended Complaint affected retail sales or how any effect on retail sales 
due to the alleged title and registration issues was material.  The alleged omissions related 
to profit, a metric separate and distinct from sales, do not render Statement A misleading.  
The alleged omissions related to so-called “lowered purchasing and verification standards” 
were not omissions at all, but rather part of Carvana’s disclosed business strategy.  See 
Carvana Mot. to Dismiss at 5.  And Plaintiffs’ allegations concerning the purported impact 
of a “sham passthrough arrangement[s] with DriveTime” on Carvana’s retail unit sales, see 
Am. Compl. ¶ 383(a)(v), are wholly conclusory and therefore cannot support a claim.  See 
Carvana Mot. to Dismiss at 22–23.   
Statement C is Carvana’s risk disclosure from its 2021 10-K stating that it was 
subject to state and local title and registration laws and that its failure to comply with such 
laws could lead to regulatory penalties and reputational damage which could have a 
material adverse effect on Carvana.  Am. Compl. ¶ 385.  Plaintiffs allege that this disclosure 
failed to disclose that the risk of regulatory action “had already come to fruition” through 
certain investigations and minor penalties.  Id. ¶ 386(a).  Plaintiffs also argue that such 
alleged omissions are actionable under Item 105.  Id. ¶¶ 387–91.  But Statement C nowhere 
suggested that Carvana had never been the subject of any regulatory inquiry or action 
related to the “wide range of federal, state and local laws and regulations” that Carvana 
disclosed it was subject to.  See Carvana Mot. to Dismiss at 13–14.  And Plaintiffs fail to 
allege that any of the allegedly omitted regulatory developments were material at the time 
of the April 2022 Offering.  See Banerjee v. Zhangmen Educ. Inc., 2023 WL 2711279, at 
*11 (S.D.N.Y. Mar. 30, 2023) (omission immaterial as a matter of law where regulatory 
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 6 of 11

 
- 7 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
fine was “negligible” compared to company value); see Carvana Mot. to Dismiss at 15.  
Nor do claims by Plaintiffs’ low-level CWs alleging that Carvana was experiencing delays 
with title and registration render Statement C misleading.  Am. Compl. ¶ 386(b).  Plaintiffs 
allege no facts to show that these delays were unlawful or that the delays had a “material 
adverse effect” on Carvana’s business—which is what Carvana warned investors about in 
Statement C.  While Plaintiffs also allege it was misleading to omit that “Carvana was 
already experiencing damage to its reputation,” Am. Compl. ¶ 389, they fail to allege any 
facts suggesting that the alleged reputational damage was material to Carvana’s financials.2  
Bajjuri v. Raytheon Techs. Corp., 2023 WL 3650554, at *7 (D. Ariz. May 25, 2023) 
(conclusory statements and unwarranted inferences insufficient to plead materiality).  
Indeed, an Arizona state court has already found that a different plaintiff with near-exact 
alleged omissions regarding Carvana’s title and registration challenges failed to allege any 
omissions of material fact because plaintiff failed to quantify the extent of the title 
processing delays.  Order at 22, City of Warwick Ret. Sys. v. Carvana Co., CV 2022-
013054 (Sup. Ct. Ariz, Maricopa Cnty. Oct. 26, 2023) (filed as Exhibit A to Defendants’ 
Notice of Supplemental Authority in Support of Defendants’ Motion to Dismiss (Oct. 31, 
2023), ECF. No. 63.). 
Plaintiffs’ failure to adequately allege material omissions not only squarely 
forecloses liability under Sections 11 and 12(a)(2), it also forecloses liability under Item 
105, which requires disclosure only of “the material factors that make an investment in the 
registrant or offering speculative or risky.”  17 C.F.R. § 229.105; Reckstin Family Trust v. 
C3.ai, Inc., 2024 WL 734497, at *13 (N.D. Cal. Feb. 22, 2024).  The very risk disclosures 
Plaintiffs challenge themselves explained that Carvana was subject to a “wide range of 
evolving federal, state, and local laws and regulations,” including specifically “state and 
 
2 Plaintiffs allege that Carvana admitted in a October 2022 court filing challenging a 
Michigan suspension order that damage to Carvana’s reputation from the suspension order 
was “incalculable and irreparable.”  Am Compl. ¶ 386(c).  But the reference to 
“incalculable and irreparable” harm refers to the inability to quantify the harm and says 
nothing about whether the harm was material to Carvana.  Carvana Defs’ Reply ISO Mot. 
to Dismiss, ECF No. 58, at 8.  
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 7 of 11

 
- 8 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
local licensing requirements, state laws, regulations, and systems and process requirements 
related to title and registration.”  Am. Compl. ¶ 385.  Carvana warned that these laws and 
regulations subjected it to certain risks detailed in the disclosure.  Id.  No more was required 
under Item 105.  See In re Playtika Holding Corp. Sec. Litig., 2024 WL 1174329, at *8 
(E.D.N.Y. Mar. 18, 2024) (“Item 105 did not require defendants to disclose those risks at 
a more granular level because . . . [defendants’] disclosures were broad enough to cover 
those specific risks.” (alterations and quotation marks omitted)).  And while Plaintiffs 
emphasize small fines and temporary suspensions Carvana incurred in a few locations in 
the years prior to the Offering, they nowhere explain how those minor infractions rendered 
an investment in Carvana “speculative or risky.”  See Carvana Mot. to Dismiss at 44.   
 
3. 
Plaintiffs’ Amended Complaint Pleads Negative Causation  
Plaintiffs’ Securities Act claims are not actionable for the independent reason that 
negative causation is apparent from the Amended Complaint.  “Although loss causation is 
not an element of a Section 11 cause of action, defendants are nevertheless afforded an 
affirmative defense to avoid liability if they can show that, on the face of the complaint, 
the absence of loss causation is apparent.”  Brown v. Ambow Educ. Holding Ltd., 2014 WL 
523166, at *14 (C.D. Cal. Feb. 6, 2014).  That is the case here.  Plaintiffs’ “Loss Causation” 
Section contains alleged corrective disclosures related to alleged title and registration 
issues; alleged disappointing 2022 results, including declines in 2022 retail sales from 
2021; and employee layoffs, see Am. Compl. ¶¶ 307–28, but none of these alleged 
corrective disclosures reveal anything about Carvana’s statements regarding its method for 
determining the price to pay for cars or Carvana’s 2021 retail unit sales.  As such, negative 
causation as to Statements A and B is apparent on the face of the complaint.  In re Shoretel 
Inc., Sec. Litig, 2009 WL 248326, at *5–6 (N.D. Cal. Feb. 2, 2009) (plaintiffs’ alleged loss 
causation revealed nothing about the alleged misstatement, thereby establishing negative 
causation on the face of the complaint); Brown, 2014 WL 523166, at *15 (same).  And as 
to Statement C, the two post-April 2022 disclosures relating to title and registration 
inquiries, Am. Compl ¶¶ 320, 322, did not disclose any new facts that corrected Statement 
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 8 of 11

 
- 9 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
C, which itself warned of future potential risks relating to the wide range of title and 
registration laws to which Carvana was subject.  See Carvana Mot. to Dismiss at 29–30.   
For these reasons and those set forth in the Carvana Defendants’ Motion, the Section 
11 and Section 12(a)(2) claims against the Underwriter Defendants should be dismissed. 
B. 
The Section 12(a)(2) Claim Against J.P. Morgan Also Fails 
Because Plaintiffs Do Not Allege J.P. Morgan Was a Statutory 
Seller  
To state a claim under Section 12(a)(2), Plaintiffs must allege that a Defendant 
either (i) directly passed title or interest in the security to Plaintiffs or (ii) solicited the sale 
of the security to Plaintiffs.  See Pinter v. Dahl, 486 U.S. 622, 642–43 (1988).  Here, 
Plaintiffs do not—and cannot—allege that J.P. Morgan directly passed title in Carvana 
stock to Plaintiffs in the Offering.  See Am. Compl. ¶¶ 22–23, 366, 433. 
Nor do Plaintiffs allege that J.P. Morgan solicited the sale of such stock to Plaintiffs.  
The Supreme Court has held that “participation” in a stock offering does not suffice to state 
a Section 12 claim.  Pinter, 486 U.S. at 650, 651 n.27; see 15 U.S.C. § 77l(a)(2) (limiting 
12(a)(2) liability to claims brought by a “person [who] purchas[ed] such security from him” 
(emphasis added)).  But that is all that the Amended Complaint alleges as to J.P. Morgan.  
The Amended Complaint asserts only that the “Underwriter Defendants,” as a group, 
“marketed Carvana common stock to potential investors,” “caused the Offering Documents 
to be filed with the SEC and to be declared effective,” “promoted and sold, for the benefit 
of themselves and their associates, Carvana common stock,” and “participated in the 
preparation and dissemination of . . . Offering Documents.”  Am. Compl. ¶¶ 406, 420, 439–
40.3  These generic allegations describe an underwriter’s role in any public securities 
offering; allegations that underwriters “merely did their job and rendered professional 
services to [the issuer] in connection with a transaction for securities do not amount to 
allegations that the underwriters are ‘sellers’ under § 12(a)(2).”  Welgus v. TriNet Grp., 
 
3 Plaintiffs also assert that the Underwriter Defendants entered into a standard 
indemnification agreement with the issuer and that affiliates of the Underwriter Defendants 
acted as financial advisors to the issuer in connection with a debt offering, Am. Compl. 
¶¶ 408–13, but none of these allegations are relevant to whether J.P. Morgan passed title 
in Carvana stock to Plaintiffs or solicited their purchase of Carvana stock.   
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 9 of 11

 
- 10 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
Inc., 2017 WL 6466264, at *31 (N.D. Cal. Dec. 18, 2017), aff’d, 765 F. App’x 239 (9th 
Cir. 2019).  There are no allegations that J.P. Morgan played any role in Plaintiffs’ purchase 
of Carvana stock.  Courts in the Ninth Circuit routinely dismiss Section 12(a)(2) claims 
against underwriters who, like J.P. Morgan, are alleged to have participated in an offering 
but not to have sold to or solicited the plaintiffs’ purchase of stock in that offering.  See, 
e.g., Medhi v. View, Inc., 2023 WL 3592098, at *12 (N.D. Cal. May 22, 2023); In re AGS, 
Inc. Sec. Litig., 2022 WL 17406100, at *4 (D. Nev. Dec. 2, 2022); Welgus, 2017 WL 
167708, at *31; In re Vocera Commc’ns, Inc. Sec. Litig., 2015 WL 603208, at *2 (N.D. 
Cal. Feb. 11, 2015); In re Violin Memory Sec. Litig., 2014 WL 5525946, at *19 (N.D. Cal. 
Oct. 31, 2014); Katz v. China Century Dragon Media, Inc., 2011 WL 6047093, at *5 (C.D. 
Cal. Nov. 30, 2011); In re Bare Escentuals, 745 F. Supp. 2d at 1073.  This Court should 
do the same here. 
Because Plaintiffs do not allege that J.P. Morgan is a statutory seller, their Section 
12(a)(2) claim against J.P. Morgan must be dismissed for that independent reason. 
III. 
CONCLUSION  
For these reasons, and those set forth in the Carvana Defendants’ Motion, the 
Underwriter Defendants respectfully submit that the claims against them be dismissed with 
prejudice.  
Respectfully submitted this 28th day of May, 2024. 
FENNEMORE CRAIG, P.C. 
By:  s/ Andrea L. Marconi 
Douglas C. Northup 
Andrea L. Marconi 
 
 
PAUL, WEISS, RIFKIND, WHARTON & 
GARRISON LLP 
Susanna M. Buergel (Pro Hac Vice) 
David P. Friedman (Pro Hac Vice) 
 
Counsel for Defendants Citigroup Global 
Markets Inc. and J.P. Morgan Securities 
LLC
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 10 of 11

 
- 11 - 
 
 
FENNEMORE CRAIG, P.C.
ATTORNEYS AT LAW 
PHOENIX 
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 
CERTIFICATE OF NOTICE 
 
Pursuant to LR Civ. 12.1, I hereby certify that, on May 24, 2024, in a telephonic 
meet and confer, I caused counsel for Plaintiffs to be notified of the issues asserted in the 
foregoing joinder and no amendment to cure the pleading was proposed by Plaintiffs on 
which the parties were able to agree. 
 
 
 
 
 
 
 
 
/s/ David P. Friedman (with permission) 
 
 
 
 
 
 
 
David P. Friedman 
 
 
 
Case 2:22-cv-02126-MTL   Document 87   Filed 05/28/24   Page 11 of 11

File and source

File

gov.uscourts.azd.1319766.87.0.pdf

Size

299,930 bytes

SHA-256

0ae6f7194d10a9a366a91cc9d8574d2631215ab400a2b47f4178f0a7b998cc1d

Our copy

gov.uscourts.azd.1319766.87.0.pdf

Original

archive.org