Kurt v. Ou — Entry #64

Brian P. O’Connell
                                                           Of Counsel

                                                                                August 21, 2026
VIA ECF
Judge Ramon E. Reyes, Jr.
United States District Court
Eastern District of New York
225 Cadman Plaza East
Courtroom 2E North
Brooklyn, NY 11201

           RE: Kurt v. Ou et al., 1:25-cv-05017-RER-CHK (E.D.N.Y.)

Dear Judge Reyes:

        Lead Plaintiffs Fredrik Melin (“Melin”) and Ringkallens Holding AB (“Plaintiffs”) write
in response to the letter from Defendants Fly-E Group, Inc. (“Fly-E” or the “Company”), Zhou Ou
(“Ou”), Ruifeng Guo (“Guo”), Shiwen Feng, Bin Wang, Lun Feng, and Alan Jacobs (collectively,
“Fly-E Group Defendants” and “Fly-E Group Letter”, ECF No. 62) requesting leave to file a
motion to dismiss. Although Plaintiffs maintain that their First Amended Complaint (the
“Complaint,” ECF No. 60), is well-pled, Plaintiffs respectfully request leave to amend their
complaint to add additional allegations to remove any potential uncertainty in connection with the
Section 11 claim.1

        Plaintiffs Plead Actionable Misstatements. Fly-E Group Defendants argue that the
statements about Fly-E’s manufacturing, design, and compliance risks were merely general,
forward-looking statements, and therefore could not be relied upon. But the safe harbor for
forward-looking statements categorically does not apply to statements “made in connection with
an initial public offering[,]” see 15 U.S.C. §78u-5(b)(2)(D). Moreover, the safe harbor provides
no protection, as here, for misrepresentations of historical and current material facts. See City of
Providence v. Aeropostale, Inc., 11-Civ-7132(CM)(THK), 2013 WL 1197755, at *12-13
(S.D.N.Y. Mar. 25, 2013). Nor is Fly-E Group Defendants’ truth-on-the-market defense
appropriate. See Ganino v. Citizens Utils. Co., 228 F.3d 154, 167 (2d Cir. 2000) (holding that the
inquiry is intensely fact specific and rarely appropriate to consider on a motion to dismiss); Gimpel
v. Hain Celestial Grp., Inc., 156 F.4th 142-43 (2d Cir. 2025) (rejecting truth-on-the-market defense
where, as here, defendants relied on tangentially related SEC filings to seek dismissal). Fly-E
Group Defendants did not disclose that they were using counterfeit UL Certification marks until

1
    References herein to ¶ or ¶¶ are to the Complaint.


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they disclosed the Consent Judgment on May 28, 2025. Until then, they expressly denied any
impropriety, obfuscating rather than disclosing the truth.2 Nor are the statements mere puffery:
they claimed compliance with regulations while being inundated with safety violations, claimed
that Fly-E “principally engaged in designing” electric vehicles when primarily all it did was re-
brand them, and claimed that Fly-E manufactured when the electric vehicles in fact arrived almost
entirely pre-assembled. ¶¶6, 33, 60, 101; see Karimi v. Deutsche Bank Aktiengesellschaft, 607 F.
Supp. 3d 381, 392-93 (S.D.N.Y. 2022) (rejecting puffery argument where statements contradicted
true state of internal affairs).

        Plaintiffs Plead Scienter for Exchange Act Claims. An inference of scienter “need not
be irrefutable . . . or even the most plausible,” and Plaintiffs are not required to provide a “smoking-
gun.” Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308, 324 (2007) (internal quotations
omitted). Three of the Exchange Act Defendants (the Company, Ou, and Guo) have admitted that
they “had reason to know that they did not have authorization to use the UL Marks” and that “UL
previously notified Defendants on multiple occasions that they did not have authorization to use
the UL Certification Marks.” Ou also admitted knowledge of the component electric vehicle parts,
including defective batteries, and senior employees testified that the Company did not principally
manufacture or design its own bikes. ¶¶33, 100-01.

        The Complaint bolsters these allegations by pleading that the sale of electric micromobility
vehicles was Fly-E’s core operation. ¶103; see Oklahoma Firefighters Pension & Ret. Sys. v.
Lexmark Int'l, Inc., 367 F. Supp. 3d 16, 38 (S.D.N.Y. 2019) (misstatements about a company’s
“primary profit engine” support scienter). Also, the Exchange Act Defendants personally signed
and falsely certified to the accuracy of the offending filings under the Sarbanes-Oxley Act
(“SOX”). ¶¶104-07; see Plumbers and Pipefitters Nat’l Pension Fund v. Davis, 16-cv-3591-GHW,
2020 WL 1877821, at *14 (S.D.N.Y. Apr. 14, 2020). Moreover, that Fly-E was in a precarious
financial condition supports the inference that Exchange Act Defendants were motivated to
conceal the truth from investors while they continued to raise capital. See ¶108; Leone v. ASP
Isotopes Inc., 811 F. Supp. 3d 563, 607 (S.D.N.Y. 2025). In addition, the widespread resignations
among Defendants and senior employees bolster the inference of fraud. See ¶¶109-10; In re Scot.
Re Grp. Sec. Litig., 524 F. Supp. 2d 370, 394 n.176 (S.D.N.Y. 2007).3

        Plaintiffs Allege Loss Causation for the Exchange Act Claims. 4 The Complaint pleads
loss causation by alleging that the stock dropped precipitously after two corrective disclosures on
May 28, 2025 and August 14, 2025. ¶¶111-14. On May 28, 2025, Fly-E disclosed a $1 million

2
  The Court should reject the Fly-E Group Defendants’ attempt at introducing documents that are neither subject to
incorporation by reference nor judicial notice, or to draw factual inferences from them.
3
  Fly-E Group Defendants’ group pleading arguments are misplaced because the Complaint raises a strong inference
of scienter as to each Exchange Act Defendant, and scienter may be imputed to Fly-E even absent individual scienter.
See Teamsters Loc. 445 Freight Div. Pension Fund v. Dynex Cap. Inc., 531 F.3d 190, 196 (2d Cir. 2008).
4
  Loss causation is not an element of a Securities Act claim. See In re Arqit Quantum Inc. Sec. Litig., 774 F. Supp. 3d
505, 534 (E.D.N.Y. 2025).
                                                          2


settlement with UL and agreed to stop selling bikes with counterfeit UL Certifications, causing its
stock to fall 9.59%. In August, Fly-E reported a 32% decline in net revenue driven by reduced e-
bike sales amid an increasing number of lithium-battery explosions, sending its stock down more
than 87% in one day. See Abramson v. Newlink Genetics Corp., 965 F.3d 165, 179 (2d Cir. 2020)
(“[P]laintiffs sufficiently plead loss causation when they allege that their share’s price fell
significantly after the truth became known.”) (internal quotation omitted). Unlike in Lentell v.
Merrill Lynch & Co., 396 F.3d 161, 175 (2d Cir. 2005), where the eventual downgrade of a stock
did not reveal the falsity of a prior recommendation, the disclosures relate back to the alleged false
statements and omissions. Plaintiffs do not have to rule out other causes of drops at the pleading
stage. City of Birmingham Ret. & Relief Sys. v. Credit Suisse Grp. AG, No. 17 CIV. 10014 (LGS),
2019 WL 719751, at *8 (S.D.N.Y. Feb. 19, 2019).5

        Although Fly-E Group Defendants’ Standing Arguments Are Misplaced, Plaintiffs
Request Leave to Amend Section 11 Allegations. Plaintiffs allege that they purchased or
acquired shares traceable to the Defective Registration Statement. ¶18. At the pleading stage, that
allegation is generally sufficient. In re Petrobras Sec. Litig., 116 F. Supp. 3d 368, 384 (S.D.N.Y.
2015).

        Nevertheless, Plaintiffs agree that the allegation of additional facts would eliminate any
uncertainty regarding the issue. Plaintiffs believe such amendment would conserve the parties’ and
the Court’s resources, and respectfully request leave to do so by September 14, 2026.6 See Johnson
v. City of New York, No. 16-CV-6426(KAM)(VMS), 2018 WL 5282874, at *6 (E.D.N.Y. Oct. 24,
2018) (noting that the “fundamental purpose” of a premotion letter and conference is to discuss
potential defects in the pleading, and to allow plaintiffs to replead to address such defects); Baez
v. American Honda Motor Company, Inc et al., No. 2:25-cv-05290, ECF No. 9, Minute Entry
(E.D.N.Y. Sep 29, 2025) (granting leave to file a second complaint after plaintiff requested it in
response to a pre-motion to dismiss letter).


5
  In re Omnicom Grp., Inc. Sec. Litig., 597 F.3d 501, 505 (2d Cir. 2010), is not applicable, as that was a summary
judgment holding. Moreover, unlike in Omnicom, the Fly-E Group Defendants disputed the reported facts. Fly-E
Group Defendants’ claim that the declines were delayed is likewise incorrect: both corrective disclosures caused
market losses the next trading day, unlike Huey, which involved a two-trading-day delay after the disclosure until
shares meaningfully declined. See Huey v. Anavex Life Scis. Corp., 180 F.4th 56, 71 (2d Cir. 2026).
6
  Plaintiffs request the September 14, 2026 deadline because of several pre-existing deadlines during the next three
weeks, including class certification briefing, motion to dismiss briefing in another matter, and deadlines for filing two
other complaints. Plaintiffs also respectfully request this additional time to accommodate pre-scheduled personal
obligations of Plaintiffs’ counsel, as well as the upcoming federal holiday and Rosh Hashanah, which certain attorneys
on this case observe.

                                                           3


                                          Sincerely,


                                          /s/ Brian P. O’Connell
                                          Joshua B. Silverman (pro hac vice
                                          forthcoming)
                                          Brian P. O’Connell (pro hac vice)
                                          POMERANTZ LLP
                                          10 South LaSalle Street, Suite 3505
                                          Chicago, Illinois 60603
                                          Tel.: (312) 377-1181
                                          Fax: (312) 377-1184
                                          [email protected]
                                          [email protected]

                                          Lead Counsel for Plaintiffs

                                          KEHOE LAW FIRM, P.C.
                                          Michael K. Yarnoff
                                          2001 Market Street Suite 2500
                                          Philadelphia, PA 19103
                                          Tel: (215) 792-6676
                                          [email protected]

                                          Additional Counsel for Lead Plaintiffs

Cc: All counsel of record (via ECF)


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