Case Explained: HOCH, ET AL. V. FIGS, INC., ET AL.

Court: United States Court of Appeals for the Ninth Circuit Filed: 2026-08-11 Docket: 2:22-cv-07939-ODW-AGR The Ninth Circuit affirmed the district court’s dismissal of a class action securities fraud complaint brought by shareholders against FIGS, Inc., its executives, and related entities under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The court held that the plaintiffs failed to state a claim because their allegations did not meet the heightened pleading standards required by Federal Rule of Civil Procedure 9(b) and the Private Securities Litigation Reform Act (PSLRA). The court applied the standard that claims sounding in fraud must allege with particularity facts giving rise to a strong inference of falsity and scienter. Regarding the Securities Act claims, the court found the plaintiffs failed to plead specific false or misleading statements concerning FIGS’s data analytics capabilities or inventory risk, noting that the company’s offering documents contained sufficient hedging language and that the allegations lacked objective verification. The court further determined that the confidential witness testimony relied upon by the plaintiffs was insufficient because the witnesses lacked personal knowledge of the alleged issues, were not employed during the relevant period, or offered only hearsay and speculation. Regarding the Exchange Act claims, the court ruled that the plaintiffs failed to allege scienter with the requisite particularity. The executives’ general statements regarding their involvement in company operations did not create a strong inference of fraudulent intent, nor did the plaintiffs provide specific facts showing access to internal reports contradicting public statements. Finally, the court affirmed the dismissal of claims against individual defendants under Sections 15 and 20(a) because no primary violations were established, and dismissed claims against Tulco, LLC, for failure to plead a primary violation of securities fraud. The practical consequence is that the plaintiffs’ complaint remains dismissed, and the judgment in favor of the defendants stands. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.