The Ninth Circuit Court of Appeals on Monday dismissed an investor class action against Slack Technologies Inc., expanding on a 2023 U.S. Supreme Court ruling that questioned whether the plaintiffs could trace their stock purchases back to Slack’s direct listing.
A three-judge panel ruled that none of the investors’ claims were legally viable due to the way Slack went public, leaving plaintiff Fiyyaz Pirani without a path forward.
Supreme Court and Ninth Circuit Rulings
The U.S. Supreme Court had previously ruled that Slack’s direct listing structure complicated claims under Section 11 of the Securities Act of 1933, making it difficult for Pirani to prove that he bought newly issued shares rather than existing investor-held stock.
On Monday, the Ninth Circuit went further, ruling that Pirani’s Section 12 claims under the same law also failed. The court concluded that none of Pirani’s shares could be traced directly to Slack, since a direct listing allows both new and existing shareholders to sell shares simultaneously.
