Sarria v. TELUS International (Cda) Inc. — Entry #43: DECISION AND ORDER granting 35 Motion to Dismiss

Case 1:25-cv-00889-VM Document 43 Filed 08/11/26 Page 1 of 63

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
UNITED STATES DISTRICT COURT DOC #:
SOUTHERN DISTRICT OF NEW YORK DATE FILED:_ 8/11/2026

JOSE LUIS CERON SARRIA, Individually

and on Behalf of All Others Similarly 25 CV 889 (VM)
Situated,
DECISION AND ORDER
Plaintiff,
- against -

TELUS INTERNATIONAL (CDA) INC.,
JEFFREY PURITT, VANESSA KANU,
GOPI CHANDE, and MICHAEL RINGMAN,

Defendants.

VICTOR MARRERO, United States District Judge.

In this putative class action, Lead Plaintiff Mohommed
Mohiuddin (“Lead Plaintiff” or “Plaintiff”), individually and
on behalf of all others similarly situated, alleges
violations of 15 U.S.C. §§ 78] (b) and 78t(a) (“Section 10(b)”

au

and “Section 20(a),” respectively) of the Securities Exchange
Act of 1934 (the “Exchange Act”) and 17 C.F.R. § 240.10b-5
(“Rule 10b-5”) promulgated thereunder. Plaintiff brings one
claim pursuant to Section 10(b) and Rule 10b-5 against
Defendants TELUS International (CDA) Inc. (“TI”), Jeffrey
Puritt (“Puritt”), Vanessa Kanu (“Kanu”), Gopi Chande

ur

(“Chande”), and Michael Ringman (“Ringman,” and together with
TI, Puritt, Kanu, and Chande, the “Defendants”). Plaintiff

asserts a second claim pursuant to Section 20(a) against

Puritt, Kanu, Chande, and Ringman (together, the “Individual

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Defendants”). Defendants now move to dismiss the Amended
Class Action Complaint (see “Amended Complaint” or “AC,” Dkt.
No. 24) pursuant to Federal Rule of Civil Procedure (“Rule”)
12(b) (6). (See “Motion to Dismiss” or “Motion,” Dkt. No. 35.)
For the reasons set forth below, the Defendants’ Motion to
Dismiss is GRANTED.

I. BACKGROUND1+

A. FACTUAL BACKGROUND

TI is a publicly traded technology company that provides
services and related offerings to clients, including customer
experience management (“CX”) services, trust and safety
products, digital solutions, and artificial intelligence
(“AI”) data solutions. (See AC GF 11.) The Individual
Defendants are current or former TI executives. Puritt served
as TI’s president and chief executive officer from 2016 until
his retirement, effective September 2024. (See id. FI 25.)
Kanu served as TI’s chief financial officer from September 7,
2020, until February 9, 2024, when TI announced that Kanu
would be leaving TI effective March 31, 2024. (See id. @ 26.)
Chande replaced Kanu in March 2024, after previously serving

in other capacities at TI’s parent corporation. (See id. 1

27.) Ringman has served as TI’s chief information officer

1 Derived from the Amended Complaint unless otherwise noted. (See AC.)

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Since May 2012. (See id. @ 28.) Lead Plaintiff Mohommed

Mohiuddin purchased TI shares during the period between
February 9, 2023, and August 1, 2024 (the “Class Period”).
(See id. at 1; id. J 22.)

Although TI’s CX and trust and safety offerings were
historically its “high-margin products,” before the Class
Period began, the industry began to shift toward automation
and Al-based solutions. (See id. (WI 2, 43.) Accordingly, TI
recognized that in order to grow and retain existing
customers, it needed to enter the AI market and offer AI
capabilities to clients. (See id. @ 43.) In December 2020,
executing on this plan, TI acquired Lionbridge Technologies,
Inc., a provider of a proprietary annotation solution used in

the development of AI algorithms to power machine learning.

(See id. @ 44.) To further expand its AI offerings, TI

acquired two additional digital product and = services
providers: Playment in July 2021 and WT Blocker Corp.,
commercially known as WillowTree (“WillowTree”), in October
2022. (See id. WI 31, 38, 43-45, 48.)

Following those acquisitions, TI experienced financial
decline, and the price of TI’s stock on the New York Stock
Exchange decreased from a close of $21.73 on February 9, 2023,

to a close of $4.15 on August 2, 2024, the day after the end

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of the Class Period. (See id. 7 17.) Relevant to this action,
Defendants issued partially corrective disclosures on May 9,
2024, and August 2, 2024, revealing disappointing financial
figures for the first and second quarters of 2024 and lowering
TI’s full-year 2024 guidance. (See id. (7 135, 149.) After
the May 9, 2024, corrective disclosure, TI’s stock price fell
$1.41, or 18.14%, to close at $6.36. (See id. @ 142.) After
the August 2, 2024, press release, TI’s stock price fell
$2.33, or 36%, to close at $4.15. (See id. @ 164.)

Beginning on February 9, 2023, and throughout the Class
Period, Plaintiff alleges that Defendants made materially
false and/or misleading statements to the market regarding:
(1) TI’s ATI capabilities and growth; (2) TI’s margins,
including loss of revenue and margin pressure due to
competition and pricing; and (3) the impact of TI’s cost-
cutting initiatives. (See id. @ 77.)

In the Amended Complaint, Plaintiff relies in part on
four confidential witnesses (“CW”) to support the allegations
that those statements were either false or materially

misleading. (See id. F@ 30-33.) CW-1 worked as a senior

analyst at Telus Communications Inc., an affiliate of TI,
until the end of 2022. (See id. {I 30.) CW-1 contributed to

automation and AI initiatives, trained and coached other


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employees, observed software development, interacted with TI
programmers and coders, and helped support pre-launch testing

efforts for new features and offerings. (See id.)

CW-2 worked aS an account director for business
development at WillowTree from 2021 until January 2023 and,
after TI acquired WillowTree, worked in that same capacity
until February 2024. (See id. @7 31.) CW-2 sold services to
existing clients, looked for new customers, and participated

in calls with WillowTree and TI senior management. (See id.)

CW-3 worked as a senior software engineer at WillowTree
from 2021 to May 2023 - serving in the same capacity after TI
acquired WillowTree. (See id. { 32.) CW-3 developed apps and

wrote software programs. (See id.)

CW-4 worked as a software engineer at WillowTree from
2021 to 2024 - also serving in the same capacity after TI
acquired WillowTree. (See id. {7 33.) CW-4 dealt with customer
contracts, was a part of WillowTree’s hiring team prior to
its acquisition, trained WillowTree employees in AI, and

participated in company meetings. (See id.)

The Court provides a streamlined summary of Plaintiff's

factual assertions, which rely largely upon statements made


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by the CWs, alleged in support of Plaintiff’s claims as stated

in the Amended Complaint: 4#

TI’s employees and the reassignment of personnel:
Rather than hire employees with AI experience, to
save costs TI reassigned the personnel it had, even
though they had no background or experience in AI,
to try to develop ideas for AI offerings and support
AI product development (id. @@ 80); TI conferred
titles on personnel that made it appear they had
Significant AI experience when such personnel had
no training or background in AI (id.); TI diverted
numerous employees to “AI teams” to try to develop
AI capabilities, notwithstanding the employees’
lack of AI experience (id.); there was
consternation within TI’s WillowTree division at
having employees reassigned from their core
competencies (id.); TI diverted engineers from
billable projects to non-billable work trying to
brainstorm ideas related to ATI (1d.); the
diversions from high-margin, paid projects to
developmental projects decreased revenue (id.
106); work on AI projects was inefficient and took
an extraordinary amount of personnel because TI did
not have engineers with previous sophisticated
experience in AI, resulting in higher costs and
decreased margins (id. @ 86).

Nature of TI’s AI capabilities, services, and
offerings: CW-3 was not aware of any functioning AI
product at WillowTree (id.); outside of TI’s data
annotation services, TI had no proprietary AI
technology or software to sell and had not created
any large language models or “innovative”
technologies (id. (9 49, 80); TI used other
companies’ products -—- including OpenAI’s ChatGPT
and Google’s Gemini - and built user interface
applications around them (id. @@ 60, 80); TI
pitched “pilot projects” to clients, offering to
co-develop AI products and charge reduced rates,
but customers “were not interested” in those

2 The same factual assertions appear throughout the Amended Complaint to
support different alleged false or materially misleading statements. The
Court cites only one example.

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offerings (id. 94971 59, 103); TI billed Fuel iX as a
generative AlI-backed solution that provided clients
“a comprehensive suite of services” but’ the
offering was “little more than a product[] that
other companies had built,” “a meaningless
marketing label” that “did not constitute any
substantive product or innovation,” and was merely
ChatGPT packaged under a user interface displaying
TI’s name (id. G7 117-18); Fuel iX did not generate
any revenue (id. @ 118).

e Cost-efficiency programs: TI stated it was
implementing cost-saving measures, including by
Capitalizing on the same AI solutions it was
purportedly offering to customers, but TI was
unable to develop “any significant AI capabilities”
and thus did not “generate any cost efficiencies
from the application of its AI initiatives
internally” (id. GI 67, 106).

e May 2024 disclosures: Puritt stated that TI had
been deploying “pilots” and that it was “hard to
charge full freight for a pilot when you’re trying
to prove out your credentials and capabilities and
you’ re experimenting at a relatively small scale in
order to avoid potential catastrophe” (id. @1 139,
171).

e August 2024 disclosures: Puritt stated that “when
we demonstrate the capability set that we have, we
can then look to expand the margin yield derived
from that” despite TI’s Class Period AI programs
being “pilot,” “experimental,” and “nascent” (id.
I 62, 160, 176); Puritt stated that “TI just
keep[s] losing opportunities because of price,” and
that TI kept being “told in the postmortem
that we were just too expensive and the competition
[was] willing to provide a similar solution” (id.
{ 158); Puritt stated that TI “expect[ed] to start
seeing meaningful revenue contributions from Fuel
iX in 2025” (id. @ 118).


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B. ALLEGEDLY FALSE OR MATERIALLY MISLEADING STATEMENTS

Plaintiff alleges that the following statements are

false or materially misleading:3

e Statement No. 1 - February 9, 2023, press release
filed on Form 6-K, signed by Kanu; May 9, 2024,
press release filed on Form 6-K, signed by Chande;.
April 10, 2023, press release posted on TI’s
website:© “[TI] (NYSE and TSX: TIXT), a leading
digital customer experience innovator that designs,
builds, and delivers next-generation solutions,
including AI and content moderation, for global and
disruptive brands[.]” (Id. (1 78-79.)

e Statement No. 2 —- February 9, 2023, earnings call,
Puritt: TI’s content moderators were “[w]lorking
alongside AI _ technology, where TI has meaningful
capability at scale to bring to bear.” (Id. 7 81.)

e Statement No. 3 - February 9, 2023, earnings call,
Puritt: “[W]le’ve also secured an exciting infusion
of digital talent at scale into our already robust
end-to-end digital transformation capabilities,
including premium content moderation services, AI
data solutions and IT lifecycle services.” (Id.
82.)

e Statement No. 4 - February 9, 2023, Form 20-F,
Signed by Puritt: “Although we are focused on
maintaining and enhancing the range of our
offerings, we may not be successful in anticipating
or responding to our clients’ expectations and the
integration of our technology solutions into our
offerings may not achieve the intended enhancements
or cost reductions in our operations. New services

3 All emphases in original. (See AC.)
4 Kanu signed additional press releases containing the same language on
May 4, 2023, July 13, 2023, August 4, 2023, November 3, 2023, and February
9, 2024. (See id. F 79.)
° Chande signed an additional press release containing the same language
on August 2, 2024. (See id.)
6 Additional press releases containing the same language were posted on
TI’s website on May 10, 2023, June 1, 2023, and October 30, 2023. (See
id.)

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and technologies offered by our competitors may
make our service offerings uncompetitive, which may
reduce our clients’ interest in our offerings and
our ability to attract new clients. Our failure to
innovate, maintain technological advantages or
respond effectively and timely to _ changes_in
technology could have a material adverse effect on
our business, financial performance, financial
condition and cash flows.” (Id. TI 84-85.)

e Statement No. 5 - February 9, 2023, Form 20-F,
signed by Puritt: “If we are unable to accurately
forecast our pricing models or optimize the mix of
products and services we provide to meet changing
client demands, or if we are unable to adapt to
changing pricing and procurement demands of our

clients, our business, financial performance,
financial condition and cash flows may be adversely
affected. .. . I£ we make inaccurate assumptions

in pricing our contracts, our profitability may be
negatively affected. In addition, if the number of
our clients that request alternative pricing models
continues to increase in line with industry trends,
we may be unable to maintain our historical levels
of profitability under these evolving alternative
pricing models and our financial performance may be
adversely affected, or we may not be able to offer
pricing that is attractive relative to our
competitors. Some of our clients’ [sic] may
continue to evolve their procurement methodology by
increasing the use of alternative methods, such as
reverse auctions. These methods may impact our
ability to gain new business and maintain profit
margins, and may require us _ to adapt our sales
technigues, which we may be unsuccessful in doing
in a timely manner or at all.” (Id. { 87.)

e Statement No. 6 - February 16, 2023, call with
analysts and investors, Puritt: “As a result of our
Lionbridge AI acquisition back in December 2020, we
have AI enablement competencies of consequence, and
we are better positioned than most to help enable
this gold rush for years to _ come. It’s like we’re
selling the picks and shovels.” (Id. 7 89.)


Case 1:25-cv-00889-VM Document 43 _ Filed 08/11/26 Page 10 of 63

Statement No. 7 - February 16, 2023, call with
analysts and investors, Puritt: “TI has
purposefully put together the combination of new
economy services of AI and content moderation that
I_think go together, just like peanut butter and
jelly. Despite Significant technology
advancements, harmful content is still making its
way to consumers. We feel brands should be doing
more. We have a unigue value proposition here, and

we’re not alone in that view... . Other than
Accenture, no one else has what we have in this
space. As you can see from the image taken [] on

the screen here, this iS a space that seemingly
everyone wants to get into, but I suspect many don’t
realize just how difficult it is to do well at scale
and on a suStained basis. . . . TI holds a position
of scale [a]ls 1 of only 2 providers with more than
10% overall share. And trust and safety isn’t just
content moderation for social platforms.” (Id.
90.)

Statement No. 8 - February 16, 2023, call with
analysts and investors, Ringman: Regarding whether
ChatGPT was a threat or an opportunity for TI, “we
are a premium provider. We are not here to solve
the simple tasks[.]” (Id. @™ 91.)

Statement No. 9 - February 16, 2023, call with
analysts and investors, Puritt: “I haven’t seen a
deterioration, degradation or change of consequence
that makes me feel less certain about our ability
to anticipate and predict where we think our
revenues will be this year.” (Id. { 93.)

Statement No. 10 - February 16, 2023, call with
analysts and investors, Beth Howen (“Howen”): TI’s
portfolio includes “the AAA trifecta of analytics,
artificial intelligence and automation,” which TI
combines “to support some of the world’s largest
and most disruptive brands[.] .. . TI leveraged
our heavy capabilities in AI and machine learning
to develop a workforce management solution.” (Id.
7 95.)

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e Statement No. 11 - February 16, 2023, call with
analysts and investors, Ringman: “This __ slide
[displaying TI’s ‘cognitive AI suite’] represents
our full suite of cognitive AI capabilities. We
have invested in building a wide gamut of services
from voice and text to images.” (Id. 7 96.)

e Statement No. 12 - February 16, 2023, call with
analysts and investors, Puritt: “[Wle feel like
we've been quite prescient in building out the
scope and scale of our technology-enabled service
line so that we have something relevant to say and
sell to all of these businesses.” (Id. {™ 97.)

e Statement No. 13 - May 4, 2023, earnings call,
Puritt: “[TI] is well positioned to benefit from
the continued proliferation of AI _ through [its]
meaningful and ongoing investments in this space
and to support the emerging ecosystem, including
multiple fee clients with the development of core
generative AI data sets [an] area experiencing
extraordinary growth. .. . As part of our generic
AI software engineering services, we’re advising
clients contemplating the use of Gen AI-based
technology, and we’re able _to design, build and
deliver bespoke software engineering and_ data
science services specifically geared for Gen AI
applications [and] process automation for Gen AI
workflows.” (Id. J 100.)

e Statement No. 14 - May 12, 2023, annual general
meeting, Puritt: TI was “at the beginning of [its]
next chapter of growth with disruptive tech like
generative AI,” and was “equipped to develop and
deliver cutting-edge AI solutions[.] . . . Looking
longer term, we believe we’re at the beginning of
our next chapter of growth with disruptive tech
like generative AI[.]” (Id. @ 102.)

e Statement No. 15 - July 13, 2023, guidance update
call, Puritt: “[W]le’ve actioned multiple cost
efficiency programs that include both team member
reduction along with accelerating automation and
Generative AI initiatives within our internal
processes and platform.” (Id. { 104.)

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e Statement No. 16 - July 13, 2023, guidance update
call, Kanu: TI’s updated guidance “implies an
improvement in our adjusted EBITDA margin in the
second half, which is primarily attributed to our
in-progress cost efficiency program _as_we both
rightsize our team to match demand and implement
further automation and Gen AI solutions
internally.” (Id. { 105.)

e Statement No. 17 - July 13, 2023, guidance update
call, Kanu: “[W]jle see _ meaningful opportunities
being amplified by generated AI adoption” which
“will be a tailwind” for TI. (Id. @{ 107.)

e Statement No. 18 - July 13, 2023, guidance update
call, Puritt: “[W]le anticipate that because of our
unique differentiated AI and part enable [sic]
capabilities that are really focused on delivering
a superior client experience, but we think there’s
value for money to _ be recognized in that we'll
continue to be able to distinguish ourselves from
the competition[.]” (Id. 7 108.)

e Statement No. 19 - July 13, 2023, guidance update

call, Puritt: “[T]here really is a counter
cyclicality to the relationship TI enjoys [with
Telus Corporation and] the opportunities to

continue to enable Telus [Corporation] in its own
digital transformation journey now more than ever
using our AI capabilities and then thereafter to
take those referenceable instances on the road, so
to speak, continue to be a real source of optimism
and confidence, frankly, for the continued future
success of TI.” (Id. J 109.)

e Statement No. 20 - August 4, 2023, earnings call,
Puritt: “I want to reiterate my belief that TI’s
long-term investment thesis is very much intact and
our competitive positioning remains strong. Indeed
there are meaningful opportunities ahead in digital
transformation and generative AI, in particular

areas where [TI] is uniquely positioned and
credentialed to design, build, and deliver
differentiated, responsible, and market-leading
solutions for our clients. .. . [C]onversations

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. with existing and prospective customers
continue to indicate a desire to procure from us
the very capabilities that we’ve perfected over the
last many years, including, in particular, more
recently our exciting new GenAI-enabled
capabilities.” (Id. %2 111, 113.)

e Statement No. 21 - August 4, 2023, earnings call,
Puritt: “We see generative AI as a_ net positive
development for our business, thanks to our
existing capabilities and the benefits we stand to
realize by deploying generative AI solutions within
our own operations and on behalf of our clients. To
this end, [TI] has a comprehensive suite of data-
driven end-to-end generative AI solutions that
integrate the best of GenAI capabilities and human
expertise to transform  digitally-led customer
experiences across the entire customer journey.”
(Id. {@ 112.)

e Statement No. 22 - August 4, 2023, earnings call,
Puritt: ‘[W]le have now successfully actioned
meaningful cost savings” and “efficiency,”
including the “benefits we stand to realize by
deploying generative AI solutions within our own
operations. Due to the strong progress and
execution of these and other remediation efforts

we expect to quickly return to our typical
20% plus adjusted EBITDA margin for the balance of
the year. (Id. @ 115.)

e Statement No. 23 - October 30, 2023, press release:
As a “a leading digital customer experience (CX)
innovator that designs, builds and delivers next—
generation solutions, including artificial
intelligence (AI),” TI was announcing the launch of
Fuel iX, an “enhanced solution backed by the power
of generative AI (GenAI) to deliver end-to-end CX
innovation and AlI-fueled intelligent experiences
(1X) .” With Fuel iX, TI was providing customers “Na
comprehensive suite of services, combin[ing]
digital consulting, data services and analytics,
web and mobile application development, and an AI-
fueled platform.” (Id. 7 117.)

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Statement No. 24 - November 3, 2023, earnings call,
Puritt: TI was “seeing good momentum and demand
this year, in particular, led by the work we do to
support market-leading generative AI foundational
model builders[.] . . .I think one of the sources
of turning things around is really leveraging our
capability set, particularly, as I referred to
earlier, in the AI space. I think, obviously,
content moderation in particular has seen an
interesting evolution as many of our clients,
particularly in the social media space, look to
rely more and more on Al-enabled capabilities as a
first line of identification and defense, and less
and less so on human digital engagement where
possible. And so, we hope, we believe that once
again, we have what the doctor is ordering in terms
of addressing this opportunity and evolution.” (Id.
Ti 119-20.)

Statement No. 25 - November 3, 2023, earnings call,
Puritt: “So, almost everybody is talking to us
about AI. .. . But I think we really do have
something quite unique, differentiated because of
the AI experience and expertise and because of the
comprehensive nature of the offering, where we can
engage in a conversation in terms of a _ consulting
advisory basis to really explore, together with our
customers, the art of the possible and how their
environment might lend itself favorably to GenAI
implementation and adoption to help both their own
internal team members exploit that capability, as
well as to better serve their customers.” (Id. 9
121.)

Statement No. 26 - November 3, 2023, earnings call,
Puritt: “And so, as you heard Vanessa detail in her
prepared remarks earlier, we have undertaken a
fairly comprehensive optimization effort that’s not
just right-sizing labor to demand, but also looking
to, as you’ve heard me say often in these calls,
drink our own champagne, eat our own gourmet
cooking, where we're deploying AI-enabled_ and
automation capability inside TI to drive down our
own cost to serve to create that headroom we need

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so we can continue to enjoy our targeted margins.”
(Id. @ 123.)

Statement No. 27 - February 9, 2024, Form 20-F,
signed by Puritt: “We design, build and deliver
next-generation solutions, including AI and content
moderation, to enhance the CX for global and
disruptive brands. The Company’s services support
the full lifecycle oof its clients’ AI-led
transformation journeys[.]” (Id. 7 126.)

Statement No. 28 - February 9, 2024, Form 20-F,
signed by Puritt: “Changes in technology and client
expectations could outpace our service offerings
and the development of our internal tools and
processes, which could have a material adverse
effect on our business, growth, financial
performance, financial condition and cash flows.

Although we are focused on maintaining and
enhancing the range of our offerings, we may not be
successful _in anticipating or responding to our
clients’ expectations and the integration of our
technology solutions into our offerings may not
achieve the intended enhancements or cost
reductions in our operations. New services and
technologies offered by our competitors may make
our service offerings uncompetitive, which may
reduce our clients’ interest in our offerings and
our ability to attract new clients. This may
increasingly become a challenge for us with respect
to revenue derived from our customer experience
(CX) business, which may be negatively impacted by
the introduction of AI capabilities into our
marketplace. Our failure to innovate, maintain
technological advantages or respond effectively and
timely to changes _in_ technology could have a
material adverse effect on our business, financial
performance, financial condition and cash flows.”

(Id. 7 129.)
Statement No. 29 - February 9, 2024, Form 20-F,
Signed by Puritt: “If we are unable to accurately

forecast our pricing models or optimize the mix of

products and services we provide to meet changing

client demands, or if we are unable to adapt to the

changing pricing and procurement demands of our
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clients, our business, financial performance,
financial condition and cash flows may be adversely
affected. .. . [W]e are seeing the commoditization

of our services in the market place, where our
competitors are offering services similar to ours
at a lower cost. While we believe our services to
be of higher quality, this commoditization has
created competitive, pricing and other pressures,
such that our pricing models may not _ be
representative of new contracts, adversely
affecting the accuracy of our forecasting. .. . If
we make inaccurate assumptions in pricing our
contracts, our profitability may be _ negatively
affected. In addition, if the number of our clients
that request alternative pricing models continues
to increase in line with industry trends, we may be
unable to maintain our historical levels of
profitability under these _ evolving alternative
pricing models and our financial performance may be
adversely affected, or we may not be able to offer
pricing that is attractive relative to our
competitors. Some of our clients’ may continue to
evolve their procurement methodology by increasing
the use of alternative methods, such as reverse
auctions. These methods may impact our ability to
gain new business and maintain profit margins, and
May require us to adapt our sales techniques, which
we may be unsuccessful in doing in a timely manner
or at all.” (Id. 7 131.)

e Statement No. 30 - February 9, 2024, earnings call,
Puritt: “And in terms of service line, again, we
think all 4 service lines will see meaningful
improvement, particularly in the back half of the
year. And for sure, AI is going to be the standout
for us going through the entirety of 2024 and
beyond, not just in the back half.” (Id. I 133.)

e Statement No. 31 - May 9, 2024, earnings call,
Puritt: “[W]le anticipate demand starting to recover
in the latter part of the year.” Regarding client
additions and expansions, “[t]he demand we’re
seeing now... . is really across all four services
lines.” (Id. J 143.)

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e Statement No. 32 - May 2i, 2024, investor
conference, Puritt: TI had “transform[ed] our own
cost[s] ... . so that we can continue to generate

these industry-leading margins and ensure _ the
headroom in our cost structure[.]” (Id. 7 145.)

e Statement No. 33 - May 21, 2024, investor
conference, Puritt: “[T]he near-term gold rush for
us_has been helping the hyperscalers build these
large language models, and we’ve been privileged to
support a number of the large language model
builders. . . . We kind of see this supply demand
bifurcation around AI and GenAI, in particular. And
the gold rush today is helping to build these LLMs.

[W]e’ve built some proprietary tools” for
clients’ AI needs. (Id. @™ 147.)

Cc. PROCEDURAL HISTORY

Plaintiff brings one claim against all Defendants
pursuant to Section 10(b) of the Exchange Act and Rule 10b-5
promulgated thereunder, alleging that Defendants knowingly
and materially misrepresented the operational and financial
success, profitability, status and prospects of TI to
investors. (See id. (7 1, 231-41.) Plaintiff brings a second
claim against the Individual Defendants, alleging that they
acted as controlling persons of TI and are therefore liable
under Section 20(a) of the Exchange Act. (See id. FI 242-45.)

On October 23, 2025, Defendants filed their Motion to
Dismiss (see Motion), supported by a memorandum of law (see
“MTD,” Dkt. No. 36) and the declaration of Audra J. Soloway
(see “Soloway Decl.,” Dkt. No. 37). On December 10, 2025,

Plaintiff filed an opposition. (See “Opp’n,” Dkt. No. 38.) On
17


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January 1, 2026, Defendants filed a reply (see “Reply,” Dkt.
No. 39), along with a second declaration (see “Reply Decl.,”
Dkt. No. 40).

II. LEGAL STANDARD

To survive a motion to dismiss pursuant to Rule 12(b) (6),
“a complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its

face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim

is facially plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556). When ruling on a motion to
dismiss pursuant to Rule 12(b)(6), the Court accepts all
factual allegations in the complaint as true and draws all

reasonable inferences in the plaintiff’s favor. See Holmes v.

Grubman, 568 F.3d 329, 335 (2d Cir. 2009).
When a claim sounds in fraud, such as claims brought
under Section 10(b) and Rule 10b-5, the heightened pleading

requirement of Rule 9(b) applies. First, “the circumstances
constituting fraud. . . shall be stated with particularity.”

Novak v. Kasaks, 216 F.3d 300, 306 (2d Cir. 2000) (citation

omitted) (alteration in original). Rule 9(b) requires that a

18


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complaint “(1) specify the statements that the plaintiff
contends were fraudulent, (2) identify the speaker, (3) state
where and when the statements were made, and (4) explain why
the statements were fraudulent.” Id. (internal quotations
omitted). Second, the Private Securities Litigation Reform
Act of 1995 (“PSLRA”) requires that a complaint (1) “‘specify
each statement alleged to have been misleading, the reason or
reasons why the statement is misleading, and, if an allegation
regarding the statement or omission is made on information
and belief, . . . state with particularity all facts on which

that belief is formed,’” ATSI Commc’ns, Inc. v. Shaar Fund,

Ltd., 493 F.3d 87, 99 (2d Cir. 2007) (quoting 15 U.S.C. § 78u
4(b)(1)), and (2) ™“‘state with particularity facts giving
rise to a strong inference that the defendant acted with the
required state of mind,’” id. (quoting 15 U.S.C. § 78u-
4(b) (2)). Accordingly, the heightened pleading standards of
Rule 9(b) and the PSLRA reguire that plaintiffs “do more than
say that the statements .. . were false and misleading; they
must demonstrate with specificity why and how that is so.”

Rombach v. Chang, 355 F.3d 164, 174 (2d Cir. 2004).

“

Finally, [i]n considering a motion to dismiss for
failure to state a claim pursuant to Rule 12(b) (6), a district

court may consider the facts alleged in the complaint,

19


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documents attached to the complaint as exhibits, and
documents incorporated by reference in the complaint.” United

States ex rel. Foreman v. AECOM, 19 F.4th 85, 106 (2d Cir.

2021) (internal quotations omitted). “Where a document is not
incorporated by reference, the court may never[the]less
consider it where the complaint relies heavily upon its terms
and effect, thereby rendering the document integral to the
complaint.” Id. (internal quotations omitted) (alteration in
original) ..’

III. DISCUSSION

Defendants move to dismiss the Section 10(b) claim on
the basis that Plaintiff fails to sufficiently plead falsity,
scienter, or loss causation. (See MTD at 9-27.) Defendants
further argue that because Plaintiff fails to plead a primary
Section 10(b) violation, the Section 20(a) claim necessarily

fails. (See id. at 27.)

7 Defendants submitted 19 exhibits in support of their Motion to Dismiss,
including transcripts or other statement source materials. (See Soloway
Decl.; Reply Decl.) To the extent those documents are either “incorporated
by reference in the complaint” or “integral to the complaint,” Foreman,
19 F.4th at 106, the Court will consider those exhibits when they are
useful in providing the full language that Plaintiff excerpts in the
Amended Complaint. To the extent the documents provided by Defendants as
exhibits are wholly independent from any documents referenced or quoted
in the Amended Complaint, the Court will not consider those exhibits at
this stage. Id.
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Case 1:25-cv-00889-VM Document 43 _ Filed 08/11/26 Page 21 of 63

A. SECTION 10 (b)

Under Section 10(b) and Rule 10b-5, it is unlawful to
“make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the
statements made, in the light of the circumstances under which
they were made, not misleading . . . in connection with the
purchase or sale of any security.” 17 C.F.R. § 240.10b-5(b);

see also 15 U.S.C. § 78j(b). To state a claim under Section

10(b) and Rule 10b-5 for fraudulent misrepresentations, a
plaintiff must plausibly allege “(1) a material
misrepresentation or omission by the defendant; (2) scienter;
(3) a connection between the misrepresentation or omission
and the purchase or sale of a security; (4) reliance upon the
misrepresentation or omission; (5) economic loss; and (6)

loss causation.” GAMCO Invs., Inc. v. Vivendi Universal,

S.A., 838 F.3d 214, 217 (2d Cir. 2016) (quoting Halliburton

Co. v. Erica P. John Fund, Inc., 573 U.S. 258, 267 (2014)).

1. Actionable Statements

The Court begins by assessing whether the statements
made by Defendants during the Class Period are actionable.
Defendants contend that the statements at issue are: (1)
protected by the PSLRA safe harbor; (2) statements of opinion;

(3) puffery; and/or (4) otherwise not false or materially

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misleading. The Court addresses each argument in turn,
finding that the alleged statements are non-actionable and
therefore cannot sustain Plaintiff’s claims.

a) Safe Harbor

Defendants argue that certain alleged statements are
forward-looking and thus cannot serve as the basis’ for
Plaintiff’s securities fraud claims. (See MTD at 14-17.) “The
PSLRA creates ae statutory ‘safe harbor’ for certain

statements.” City of Omaha Police & Fire Ret. Sys. v. Evogua

Water Techs. Corp., 450 F. Supp. 3d 379, 396 (S.D.N.Y. 2020).

Under the safe-harbor provision, “a defendant is not liable

if (1) ‘the forward-looking statement is identified and
accompanied by meaningful cautionary language,’ (2) the
forward-looking statement ‘is immaterial,’ or (3) ‘the

plaintiff fails to prove that [the forward-looking statement]
was made with actual knowledge that it was false or

misleading.’” In re Vivendi, S.A. Sec. Litig., 838 F.3d 223,

245 (2d Cir. 2016) (quoting Slayton v. American Express Co.,

604 F.3d 758, 766 (2d Cir. 2010)). “[A] forward-looking
statement is protected under the safe harbor if any of the
three prongs applies.” Id. at 245-46 (internal quotations and

Citation omitted).

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The Second Circuit has held that “[a] statement may
contain some elements that look forward and others that do
not, and forward-looking elements may be severable from non-
forward-looking elements.” Vivendi, 838 F.3d at 246. “Mixed
present and future statements are not entitled to the safe
harbor with respect to the part of the statement that refers

to the present.” In re Supercom Inc. Sec. Litig., No. 15-CV-

9650, 2018 WL 4926442, at *21 (S.D.N.Y. Oct. 10, 2018).
Additionally, “[t]o avail themselves of safe harbor
protection under the meaningful cautionary language prong,
defendants must demonstrate that their cautionary language
was not boilerplate and conveyed substantive information.”
Slayton, 604 F.3d at 772. To overcome the existence of such
language, plaintiffs may “show[], for example, that the
cautionary language did not expressly warn of or did not
directly relate to the risk that brought about plaintiffs’

loss.” Halperin v. eBanker USA.com, 295 F.3d 352, 359 (2d

Cir. 2002). “[T]he court must keep in mind that a complaint
fails to state a claim of securities fraud if no reasonable
investor could have been misled about the nature of the risk
when he invested.” Id.

The Court finds that Statement Nos. 4, 5, 28, 29, and 31

—- in whole or in part - are forward-looking statements

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protected by the safe harbor provision. At the outset,
Statement Nos. 4, 5, 28, and 29 are statements pulled from
TI’s Form 20-F “Risk Factors” section and are merely
disclosures of TI’s business and operational risks. (See AC
Qi 84, 85, 87, 129, 131.) Plaintiff argues that the risk
disclosures were false or materially misleading because TI
was “already losing market share to the competition” and thus
the risks warned about “had already materialized” - rendering
TI’s portrayal of its current financial situation inaccurate.
(Id. G2 85, 86, 88, 131, 132.) Plaintiff supports this
contention, in part, by pointing to TI’s later August 2, 2024,
earnings call in which Puritt stated that TI “keep[s] losing
opportunities because of price” and kept being “told in the
postmortem . . . that we were just too expensive.” (Id. 19
86, 88, 130, 132.)

The Court finds Plaintiff’s arguments unavailing. First,
even if TI was “losing opportunities” or had not yet
“demonstrate[d] [its] capability set” at the time that the
statements were made, those circumstances would not render
TI’s risk disclosures false or materially misleading. The
statements are not merely accompanied by meaningful
cautionary language but instead constitute that cautionary

language. As Defendants argue, finding those statements

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Case 1:25-cv-00889-VM Document 43 _ Filed 08/11/26 Page 25 of 63

actionable would convert the “cautionary language into the
fraud itself.” (MTD at 16.)

Furthermore, counter to Plaintiff’s contention that TI’s
disclosures were “presented as mere hypotheticals,” TI
specifically stated that it “face[d] intense competition from
companies” (Soloway Decl. EX. 3 at 5), that the
“commoditization [of its services] ha[d] created competitive,
pricing and other pressures” (id. at Ex. 4 at 17), and that
those and other factors were “adversely affecting the
accuracy of [TI’s] forecasting” (1d.). Nothing Puritt
disclosed on later earnings calls, or any of the other
allegations Plaintiff asserts, makes TI’s earlier risk
disclosures false or materially misleading at the time they
were made.

Finally, Statement No. 31 - “we anticipate demand

Starting to recover in the latter part of the year” (id. 1

143) - “fall[s] squarely within the definition of ‘a statement
containing a projection of .. . income (including income
loss), earnings (including earnings loss) per share, ... or

other financial items’ and ‘a statement of future economic
performance, including any such statement contained in a
discussion and analysis of financial condition by the

uy

management.’” Gray v. Wesco Aircraft Holdings, Inc., 454 F.

25


Case 1:25-cv-00889-VM Document 43 Filed 08/11/26 Page 26 of 63

Supp. 3d 366, 386 (S.D.N.Y. 2020) (quoting 15 U.S.C. § 78u-

5(i) (1) (A) & (C)); see also Robeco Cap. Growth Funds SICAV -

Robeco Glob. Consumer Trends v. Peloton Interactive, Inc.,

665 F. Supp. 3d 522, 531, 538 (S.D.N.Y. 2023) (finding
statements concerning demand projections - for example, a
statement that “guidance reflects our expectation of
continued strong demand” - are forward-looking and fall
within the safe harbor). Accordingly, this statement is
protected by the safe harbor and is thus non-actionable.

b) Opinion

Defendants next contend that certain alleged statements
are non-actionable statements of opinion. (See MTD at 17-18.)

[S]ubjective statements of opinion are generally not

actionable as fraud.” Afr. v. Jianpu Tech. Inc., No. 21-CV-

1419, 2022 WL 4537973, at *5 (S.D.N.Y. Sept. 28, 2022).
“Statements of opinion are actionable if (1) the speaker did
not hold the belief she professed, (2) the supporting fact[s]
she supplied were untrue, or (3) the speaker omit[ted]
information whose omission makes the statement misleading to

a reasonable investor.” In Re Shanda Games Ltd. Sec. Litig.,

128 F.4th 26, 43 (2d Cir. 2025) (cleaned up). “In other words,
when a statement of opinion implies facts or the absence of

contrary facts, and the speaker knows or reasonably should

26


Case 1:25-cv-00889-VM Document 43 Filed 08/11/26 Page 27 of 63

know of different material facts that were omitted, liability

under Rule 10b-5 may follow.” Abramson v. Newlink Genetics

Corp., 965 F.3d 165, 175 (2d Cir. 2020).

“Statements of opinion often include qualifying language
(like ‘I believe’ or ‘TI think’) that conveys a lack of
certainty about the thing being expressed, marks’ the
statement as reflecting the speaker’s impression or point of
view rather than an objective truth, and makes it easier to
identify the statement as one of opinion rather than fact.”

New England Carpenters Guaranteed Annuity & Pension Funds v.

DeCarlo, 122 F.4th 28, 41 (2d Cir. 2024). “But not all
statements of opinion include such gualifying language,” and
thus, “[t]he core inquiry . . . 1s whether the omitted facts
would conflict with what a reasonable investor would take

from the statement itself.” In re AppHarvest Sec. Litig., 684

F. Supp. 3d 201, 254 (S.D.N.Y. 2023) (internal quotations and
citation omitted).

The Court finds that Statement Nos. 6, 7, 12, 13, 17,
18, 24, and 30 - in whole or in part - fall into this category
and are thus non-actionable. For example, statements such as
“we have AI enablement competencies of consequence, and we
are better positioned than most” (AC @ 89), “[w]le have a

unique value proposition” (id. { 90), “[TI] is well positioned

27


Case 1:25-cv-00889-VM Document 43 _ Filed 08/11/26 Page 28 of 63

to benefit from the continued proliferation of AI” (id. 1
100), “we see meaningful opportunities being amplified by
generated AI adoption” (id. @ 107), and “AI is going to be
the standout for us” (id. {@ 133), express “inherently
subjective” assessments rather than facts “ascertain[able]

with certainty.” In Re Philip Morris Int’l Inc. Sec. Litig.,

89 F.4th 408, 418 (2d Cir. 2023) (internal quotations and
Citation omitted).
Moreover, many of those statements include qualifying

language (see, e.g., Statement Nos. 18, 24, AC FI 108, 120)

or, alternatively, if lacking such language, are nevertheless
statements of opinion given “the nature of the information
conveyed.” DeCarlo, 122 F.4th at 41. The representation that
TI has “a unique value proposition” (AC { 90), for example,
merely expresses a “belief, a view, or a sentiment” that the
Court finds would not be misleading to a reasonable investor.

In re Lottery.com, Inc. Sec. Litig., 765 F. Supp. 3d 303, 335

(S.D.N.Y. 2025) (internal guotations and citation omitted).
Plaintiff contends that the statements are nevertheless
actionable because they are based on false embedded
representations. (See Opp’n at 18.) However, the Court is not
persuaded by this argument. As will be explained further

below, any representations embedded within those statements

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Case 1:25-cv-00889-VM Document 43 _ Filed 08/11/26 Page 29 of 63

relating to TI’s offerings, services, or cost-saving efforts
were not false or materially misleading. Accordingly, the
Court finds that the statements listed above - in whole or in
part - meet the definition of non-actionable statements of
opinion.

Cc) Puffery

Defendants also argue that various statements contained
in the Amended Complaint cannot support a securities claim
because they are puffery or statements of corporate optimism.
(See MTD at 18.) Puffery encompasses “statements [that] are
too general to cause a reasonable investor to rely upon them,”

ECA, Local 134 IBEW Joint Pension Trust of Chicago v. JP

Morgan Chase Co., 553 F.3d 187, 206 (2d Cir. 2009), and thus

“cannot have misled a reasonable investor,” San Leandro

Emergency Med. Grp. Profit Sharing Plan v. Philip Morris Cos.,

75 F.3d 801, 811 (2d Cir. 1996).
“[G]leneral statements about reputation, integrity, and

compliance with ethical norms are inactionable puffery[.]

Singh v. Cigna Corp., 918 F.3d 57, 63 (2d Cir. 2019) (internal

quotations and citation omitted). So too are “{[v]lague
positive statements regarding a corporate entity’s risk-
management strategy, asset quality, and business

uy

practices[.] Sherman v. Abengoa, S.A., 156 F.4th 152, 164

29


Case 1:25-cv-00889-VM Document 43 _ Filed 08/11/26 Page 30 of 63

(2d Cir. 2025) (citation omitted); see also In re Vale S.A.

Sec. Litig., No. 15-CV-9539, 2017 WL 1102666, at *22 (S.D.N.Y.

Mar. 23, 2017) (finding that statements regarding what
defendant “is ‘seeking’ to do, what it is ‘committed’ to
doing, what it is ‘focused on,’ what it is ‘aiming’ to do,

ur

and what its ‘priorities’ are” were non-actionable). Even
“misguided optimism is not a cause of action, and does not
Support an inference of fraud” because the Second Circuit has

“rejected the legitimacy of alleging fraud by hindsight.”

Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1129 (2d

Cir. 1994) (internal quotations and citation omitted).
Nevertheless, statements of optimism and puffery can be
actionable if they are “determinate [and] verifiable,” In Re

Philip Morris Int’l Inc. Sec. Litig., 89 F.4th at 418,

“contradict facts that are known to a defendant,” In re Virtus

Inv. Partners, Inc. Sec. Litig., 195 F. Supp. 3d 528, 537

(S.D.N.Y. 2016), or amount to “misrepresentations of existing
facts that were made even though the speaker knew that the

contrary was true,” Galestan v. OneMain Holdings, Inc., 348

F. Supp. 3d 282, 298 (S.D.N.Y. 2018) (internal quotations and
Citation omitted). A plaintiff must be able to point to an

“objective, black-and-white-standard by which to verify”

30


Case 1:25-cv-00889-VM Document 43 _ Filed 08/11/26 Page 31 of 63

whether the challenged statement is untrue. In Re Philip

Morris Int’l Inc. Sec. Litig., 89 F.4th at 418.

Here, the Court finds that Statement Nos. 2, 8, 10, 20,
24, and 25 - in whole or in part - cannot support Plaintiff’s
securities claim because they constitute non-actionable
puffery. For example, language that TI “has meaningful

capability at scale” (AC @ 81), is a “premium provider” (id.

{I 90), has “heavy capabilities” (id. @ 95), is “uniguely
positioned” (id. @ 111), has “something quite unigue,

differentiated” (id. 7 121), or has “comprehensive” offerings

(id.) is simply “too general” for a “reasonable investor to

rely upon” or reflects “general expressions of corporate

optimism that are too indefinite to be actionable under the

7

securities laws.” Hawaii Structural Ironworkers Pension Tr.

Fund v. AMC Ent. Holdings, Inc., 422 F. Supp. 3d 821, 845

(S.D.N.Y. 2019) (internal guotations and citation omitted).
Once again, the Court is not persuaded by Plaintiff’s
argument’ that, “[Tc]lonsidered in context, the alleged
misstatements contain objectively verifiable facts and, thus,
are not puffery.” (Opp’n at 19-20.) Reviewing that context,
many of the statements lack verifiable facts. And as the Court
addresses below, Plaintiff fails to sufficiently allege that

any verifiable facts contained in those statements were

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actually false. See Rombach v. Chang, 355 F.3d 164, 174 (2d

Cir. 2004); In Re Philip Morris Int’l Inc. Sec. Litig., 89

F.4th at 418. Further, “[u]p to a point, companies must be
permitted to operate with a hopeful outlook,” and its leaders
“can be expected to be confident about their stewardship and
the prospects of the business that they manage.” Rombach, 355
F.3d at 174. As such, the Court is convinced that the
Statements listed above - in whole or in part - are non-
actionable for this reason.

d) Falsity and Materiality

Finally, Defendants argue that various statements - even
if they are not protected by the safe harbor provision or are
not statements of opinion or puffery - are otherwise non-
actionable because they are not materially false or
misleading. (See MTD at 9-20.) “The test for whether a
statement is materially misleading under Section 10(b)
is whether the defendants’ representations, taken together
and in context, would have misled a reasonable investor.”

City of Hialeah Emps.’ Ret. Sys. v. Peloton Interactive, Inc.,

153 F.4th 288, 295 (2d Cir. 2025) (internal quotations and
Citation omitted). “The literal truth of an isolated
statement is insufficient; the proper inquiry requires an

examination of defendants’ representations, taken together

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and in context.” In re Morgan Stanley Info. Fund Sec. Litig.,

592 F.3d 347, 366 (2d Cir. 2010). Accordingly, plaintiffs
“may not cherry pick certain public statements for [their]
complaint and divorce them from the universe of disclosed

information to plausibly allege fraud.” In re Synchrony Fin.

Sec. Litig., 988 F.3d 157, 171 (2d Cir. 2021).

An omission is actionable if the omitted information was
subject to “an affirmative legal disclosure obligation” or
the omitted information was “necessary to prevent existing

disclosures from being misleading.” Litwin v. Blackstone

Grp., L.P., 634 F.3d 706, 715-16 (2d Cir. 2011). “[Section]

10(b) and Rule 10b-5(b) do not create an affirmative duty to
disclose any and all material information.” Matrixx

Initiatives, Inc. v. Siracusano, 563 U.S. 27, 44 (2011).

Essential is the “presence of a prior statement that otherwise
is or will become materially misleading” because of the

omission. DoubleLine Cap. LP v.  Construtora Norberto

Odebrecht, S.A., 413 F. Supp. 3d 187, 206 (S.D.N.Y. 2019).

Additionally, “[a] violation of Section 10(b) and Rule
10b-5 premised on misstatements cannot occur unless an
alleged material misstatement was false at the time it was

au;

made.” In re Lululemon Sec. Litig., 14 F. Supp. 3d 553, 571

(S.D.N.Y. 2014) (emphasis in original); see also Novak v.

33


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Kasaks, 216 F.3d 300, 309 (2d Cir. 2000) (“[A]llegations that
defendants should have anticipated future events and made
certain disclosures earlier than they actually did do not
suffice to make out a claim of securities fraud.”).

To sustain an action, misrepresentations or omissions
must also be material. A plaintiff must allege facts showing
that there is “a substantial likelihood that the disclosure
of the omitted fact would have been viewed by the reasonable
investor as having significantly altered the total mix of

information made available.” Basic Inc. v. Levinson, 485 U.S.

224, 231-32 (1988) (internal quotations and citation
omitted). “It is not sufficient to allege that the investor
might have considered the misrepresentation or omission

important,” Ganino v. Citizens Utils. Co., 228 F.3d 154, 162,

and Section 10(b) and Rule 10b-5(b) “do not create an
affirmative duty to disclose any and all material
information,” Matrixx, 563 U.S. at 44 (internal quotations
and citation omitted). “At the pleading stage, a plaintiff
satisfies the materiality requirement of Rule 10b-5 by
alleging a statement or omission that a reasonable investor

would have considered significant in making investment

decisions.” Caiola v. Citibank, N.A., New York, 295 F.3d 312,

34


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329 (2d Cir. 2002) (internal quotations and citation
omitted).

The Court categorizes the alleged misstatements
concerning present facts into four general categories: (1)
TI’s talent and personnel; (2) TI’s financial or business
outlook; (3) TI’s AI capabilities, services, and offerings;
and (4) TI’s cost-cutting initiatives. Put simply, the
factual allegations contained within the Amended Complaint do
not sufficiently support Plaintiff’s contention that
Defendants’ statements were materially false or misleading at

the time they were made.

(1) TI’s Talent and Personnel

First, despite the emphasis Plaintiff places on TI’s
internal employee reassignments and the inexperience of its
personnel, the alleged misrepresentations that fall directly
into this category are scarce and — when placed into context
— are not misrepresentations at all. For example, in Statement
No. 3, Puritt represented in an earnings call that TI had

“secured an exciting infusion of digital talent at scale into

8 The Court finds that all remaining statements, even if not referred to
as an example in the following analysis, are non-actionable because they
are not materially false or misleading. The Court noted above that some
statements are non-actionable “in whole or in part” because they are
protected by the safe harbor or are statements of opinion or puffery.
(See Sections A.1.(a)-(c).) Any remaining portions of those statements
are non-actionable because they are likewise not false or materially
misleading.

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[its] already robust end-to-end digital transformation
Capabilities, including premium content moderation services,
AI data solutions and IT lifecycle services.” (AC QI 82.)
Plaintiff argues that Puritt’s statement was false or
materially misleading when made because it implied that TI
“had hired ‘talent’ with AI experience when, in reality, [TI]
used its existing employees who had no AI experience.” (Id.
{ 83.) But that statement is embedded among others in which
Puritt discusses TI’s naming of the new president of
WillowTree, which TI had recently acquired, and talks about
how WillowTree would further elevate TI’s services and
offerings. (See Soloway Decl. Ex. 6 at 5.) In this context,
the Court does not read securing an “infusion of digital
talent” as implying that TI had hired a new army of AI
professionals. Plaintiff pleads elsewhere in the Amended
Complaint that TI “sought to enhance its ‘next generation’
digital service offerings primarily through acquisitions,”
including its acquisition of WillowTree. (AC @ 39 (emphasis
added).) Thus, through WillowTree, as Puritt represented, TI
had “secured an exciting infusion of digital talent.” (Id.

82 (emphasis added).) Plaintiff may not divorce a cherry-

picked statement “from the universe of disclosed information

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to plausibly allege fraud.” In re Synchrony Fin. Sec. Litig.,

988 F.3d at 171.

(11) TI’s Financial or Business Outlook

Next, Plaintiff alleges that statements concerning TI’s
financial or business outlook were false or materially
misleading at the time they were made because TI was already
experiencing margin pressure. While some of those statements
are protected by the safe harbor, which the Court addresses
above, others, when “taken together and [considered] in

7

context,” do not meet the false or materially misleading

Standard. In re Morgan Stanley Info. Fund Sec. Litig., 592

F.3d at 366 (citation omitted).

For example, in Statement No. 9, Puritt stated ina call
with analysts and investors that he had not “seen a
deterioration, degradation or change of consequence” that
made him feel “less certain about TI’s ability to anticipate
and predict” revenue. (AC @ 93.) Plaintiff contends that
Puritt knew TI was “seeing lower revenues from selling pilot
projects at discounted prices, and [was] forced to cut prices
on other products.” (Id. 7 94.) But immediately after Puritt’s
statement, he asked Kanu to further elaborate on how TI was
“building [its] guide.” (Soloway Decl. Ex. 7 at 29.) Kanu
stated that “where [TI has] seen softness, whether it’s

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happened now, where [TI] think[s] [its] going to happen, [TI
has] built that in. .. . [T]hat’s how we’ve been able to get
in front” of softness. (Id. at 29, 30.) Puritt did not state
that he had not seen any “deterioration, degradation or change
of consequence” but rather that he had not seen one that
changed TI’s ability to anticipate or predict revenue. (Id.)
Kanu further explained that TI had actively built the
“softness” it was seeing into its guide. (Id.)

Plaintiff also asserts that certain disclosures by
Defendants in May and August 2024 support the contention that
Defendants’ earlier statements concerning TI’s financial or
business outlook were false or materially misleading at the
time they were made. For example, in May 2024, Puritt stated
that it was “hard to charge full freight for a pilot” and
later told investors in August 2024 that “TI just keep[s]
losing opportunities because of price” and was being “told in
the postmortem .. . that we were just too expensive and the
competition [was] willing to provide a similar solution.” (AC
WI 158, 171.) But TI often discussed the competitive
environment and pricing pressures it faced throughout the
Class Period. For example, in July 2023, Puritt told investors
that the pricing environment was continuing “to get more and

more competitive” and that it was “becoming more and more of

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that Sophie’s Choice challenge of just how much of a tradeoff
on margin yield through price reductions are we willing to
tolerate in order to preserve revenue and revenue growth.”

(Soloway Decl. Ex. 11 at 11; see also Ex. 12 at 15 (“There is

no guestion that these are levels of price sensitivity that
we certainly haven’t experienced in the past.”); Ex. 14 at 15
(“[T]here 1S a pervasive, persistent pressure around more for
less.”).) Accordingly, when the relevant representations are
taken together, Plaintiff does not offer sufficient support
that the alleged statements were false or materially
misleading.

(111) TI’s AI Products, Services, and Capabilities

The bulk of the statements Plaintiff alleges are
actionable relate to TI’s AI capabilities, services, and
offerings. For example, Plaintiff points to language such as
“[TI] designs, builds, and delivers next-generation
solutions, including AI” (Statement No. 1, AC {TU 78-79),
statements concerning TI’s “full suite of cognitive AI

capabilities” (Statement No. 11, id. 1 96), and

representations that TI had an “enhanced solution backed by
the power of generative AI” (Statement No. 23, id. @ 117).
Plaintiff relies largely on the same factual allegations in
Support of the argument that each statement is false or

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materially misleading. Therefore, the Court will address each
category of factual support.

First, Plaintiff contends that TI did not have the AI
capabilities or offerings that it represented it had because
TI did not have personnel “with the expertise or background
for developing AI technologies” and merely diverted engineers
and other employees from billable work to “ATI teams.” (Id. 11
5, 60.) But the CWs’ accounts of inexperience offer nothing
more than conclusory allegations about how the lack of ATI
training or education directly led to a failure to produce AI
products and impacted TI’s margins. As Defendants argue,
those assertions are more akin to complaints of
mismanagement, which the Second Circuit has found do not

Support a claim for securities fraud. See, e.g., Decker v.

Massey-Ferguson, Ltd., 681 F.2d 111, 115 (2d Cir. 1982)

(finding that Section 10(b) was not designed to regulate
corporate mismanagement). Plaintiff points to no specific
information, reports, or metrics about how’ personnel
decisions impacted margins or impeded development of TI’s
offerings. And vague allegations - including, for example,
that based on “conversations with others,” a “skills gap” led

to revenue losses at TI —- do not suffice. (AC QI 52.)

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Furthermore, even accepting Plaintiff’s premise as true
- i.e., TI did not have the AI capabilities it professed to
have because its staff lacked the relevant AI background —
that proposition would apply only to a specific division of
TI. Plaintiff’s factual allegations are based on statements
made by four CWs. CW-1 was employed by an affiliate of TI and
left at the end of 2022, before the Class Period began. (See
id. @ 30.) Given those circumstances, the Court cannot see
how CW-1 had relevant insight concerning the impact of TI’s
staffing and personnel beginning in 2023. The three other CWs
worked for WillowTree and, post TI’S acquisition of
WillowTree, served in the same capacity under the TI umbrella.
(See id. @W71 31-33.) Their allegations center largely around
that division specifically: “[TI] began diverting numerous
WillowTree engineers”; “WillowTree employees that worked on
AI projects during CW-3’s tenure did not have experience or
training in AI”; the appearance that “WillowTree/Telus was
involved in AI” was “*‘superficial,’ and was not what
WillowTree was doing at the time.” (Id. { 56 (emphases
added).) Even if, as Plaintiff argues, TI “focused its AI

development” at WillowTree, those allegations, the Court

finds, are not sufficient to support Plaintiff’s contention

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Case 1:25-cv-00889-VM Document 43 _ Filed 08/11/26 Page 42 of 63

that TI’s statements about company-wide AI efforts or
Capabilities were false or materially misleading.

Second, Plaintiff pleads various factual allegations
based upon the CWs’ accounts directly related to the nature
of TI’s AT products, services, and capabilities. For example,
Plaintiff contends that outside of TI’s data annotation
services, TI had no proprietary AI technology or software to
sell and had not created any large language models or

innovative technologies. (Id. @W@ 49, 80.) Plaintiff alleges

that TI merely used other companies’ products - including
OpenAI’s ChatGPT and Google’s Gemini - and built user
interface applications around them. (Id. II 60, 80.)

Plaintiff further asserts that TI pitched “pilot projects” to
clients, offering to co-develop AI products and charge
reduced rates, but customers “were not interested” in those
offerings. (Id. 9% 59, 103.)

Based on those factual allegations, Plaintiff argues
that certain statements - including, for example, Puritt’s
representation that TI was “well positioned to benefit from
the continued proliferation of AT through [its] meaningful

and ongoing investments in this space” (Statement No. 13, id.

{@ 100) - were false or materially misleading. Plaintiff’s

Amended Complaint is replete with allegations that some of

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TI’s AI offerings were not “fully developed,” “concrete,” or
“significant” and that TI had no “offerings other than the
labor-intensive data annotation services and mere pilot
programs.” (Id. G7 80, 90, 92, 148.) But those qualifiers do
not change the core fact that TI did, in fact, have AI
Capabilities, and Plaintiff fails to point to any specific AI
product or service that TI falsely or misleadingly claimed it
had.

To start, TI’s data annotation services and pilot
programs cannot be discounted,?2 and their existence alone
Supports the notion that TI was “put[ting] together the
combination of new economy services of AI and content
moderation” (Statement No. 2, id. 7 81) and that TI was making
“ongoing investments in this space” (Statement No. 13, id. @
100). Further still, Plaintiff’s own characterization of CW-
2 - ‘an Account Director who sold WillowTree/Telus’ products
and services, including AI, to clients” (Opp’n at 11) -
discredits the claim that TI lacked AI offerings or

capabilities.

° Plaintiff concedes in the Amended Complaint that TI’s data annotation
services and its pilot programs were AI products. (See, e.g., AC { 118
(setting forth that TI “had no AI products beyond data annotation and
pilot projects” (emphasis added) .)

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Moreover, Plaintiff concedes that TI did offer
additional AI solutions, beyond data annotation and pilot
programs. For example, Plaintiff alleges that TI launched
Fuel iX, which TI explained was an “enhanced solution backed
by the power of generative AI” to provide a “comprehensive
suite of services.” (Id. 97 117.) Plaintiff contends that TI’s
description of Fuel 1X was false or materially misleading
because Fuel iX was merely ChatGPT packaged under a user
interface and “a meaningless . . . marketing label.” (Id. 919
117-18.) But that allegation does not render any of the
challenged statements false or materially misleading. TI
never represented that it was building or possessed
proprietary generative AI models. Rather, TI stated outright
that it had “proprietary tools” and a “proprietary platform.”
(Id. WI 96, 147 (emphasis added).) TI further represented
that it was “helping the hyperscalers build .. . large
language models” and stated that Fuel iX was a solution
“enhanced” and “backed” by generative AI. (Id. @@Z 117, 147
(emphasis added).) Plaintiff fails to show how Fuel ix was
not, as TI announced, “a comprehensive suite of services,
combin[ing] digital consulting, data services and analytics,
web and mobile application development, and an AI-fueled

platform.” (Id. @ 117.)

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Finally, Plaintiff asserts that the May and August 2024
disclosures support the contention that Defendants’ earlier
statements about TI’s AI capabilities were materially false
or misleading at the time they were made. For example, in May
2024, Puritt stated that TI was “trying to prove out [its]
credentials and capabilities and [was] experimenting at a
relatively small scale in order to avoid = potential
catastrophe.” (Id. 9497 139, 171.) In August 2024, Puritt stated
that “when we demonstrate the capability set that we have, we
can then look to expand the margin yield derived from that”
but further explained that TI’s AI revenue streams were “still
nascent.” (Id. If 62, 160.)

The representations that TI was “trying to prove out”
its credentials and capabilities, needed to “demonstrate” its
capability set to “then” expand margins, or was’ facing
competition on pricing do not render any of the alleged
statements made earlier in the Class Period false or
materially misleading. For example, in earnings calls, Puritt
stated that TI possessed “meaningful capability at scale”
(Statement No. 2, id. @ 81) and was “able to design, build
and deliver bespoke software engineering and data science
services specifically geared for Gen AI applications”

(Statement No. 13, id. @ 100). Needing to “prove out” AI

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capabilities does not support the contention that TI lacked
those AI capabilities. Nor does the fact that AI revenue
streams were “still nascent” support the assertion that TI
did not simultaneously have meaningful capabilities in the AI
space. As Puritt stated elsewhere in the August earnings call,
the AI revenue streams were “lower-margin,” but TI hoped the
margin “trade-off [would] be resolved as [TI’s] GenAI-focused
offerings continue[d] to achieve better scale.” (Dkt. No. 29,
Ex. 6 at 21.) Having AI capabilities and earning revenue from
them are separate points, and the lack of the latter does not
render statements concerning the former false or materially
misleading. The same is true for having AI capabilities at
scale and achieving customer uptake of AI offerings at scale.

Accordingly, the Court is persuaded that TI possessed
sufficient AI solutions, capabilities, and offerings - from
Fuel iX to its “legacy AI data annotation services” and its
“pilots” - to render the statements concerning TI’s AI
capabilities non-actionable. (AC QI 9, 62, 117.) ™“{[T]he
proper inguiry requires an examination of defendants’

representations, taken together and in context.” In re Morgan

Stanley Info. Fund Sec. Litig., 592 F.3d at 366 (internal

quotations and citation omitted). The Court cannot find that

the remaining alleged statements —- from representations that

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TI could “support the full lifecycle of its clients’ AlI-led
transformation journeys” (Statement No. 27, id. @ 126) to
language that it had “services specifically geared for Gen AI
applications” (Statement No. 13, id. @ 100) or possessed AI
capabilities that were a “real source of optimism” (Statement
No. 19, id. 7 109) - were objectively false or misleading to

an ordinary investor. In re AppHarvest Sec. Litig., 684 F.

Supp. 3d at 236 (finding that courts apply an “objective”
test and must “look to the understanding of the ‘ordinary

v4“

investor (citation omitted)).

(iv) Impact of TI’s Cost-Cutting Initiatives

Finally, Plaintiff alleges that several statements
relating to TI’s “cost-cutting” efforts were false or
materially misleading. For example, Plaintiff points to
guidance that Puritt provided to investors in which he stated
that TI had “actioned multiple cost efficiency programs” that
included “accelerating automation and Generative AI
initiatives within [TI’s] internal processes and platform”
(Statement No. 15, id. @ 104) and additional earnings call
statements in which Puritt represented TI had “successfully
actioned meaningful cost savings” and that “[d]Jue to the
strong progress,” TI expected “to quickly return to [its]
typical 20% plus adjusted EBITDA margin” (Statement No. 22,

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id. @ 115). (See also Statement No. 26, id. 7 123 (“[TI has]

undertaken a fairly comprehensive optimization effort

[to] drink our own champagne, eat our own gourmet cooking,
where we’re deploying AlI-enabled and automation capability
inside TI to drive down our own cost.”).)

Plaintiff argues that those statements “gave investors
the false impression that [TI] was already successfully”
implementing its AI capabilities into its own internal
processes “when, in fact, [TI] had no AI capabilities” beyond
its data annotation services and its pilot programs. (Id. W1
106, 116, 124, 146.) Because TI allegedly had no AI
Capabilities, Plaintiff contends, the company could not
“generate any cost efficiencies from [their] application.”
(Id. { 106.)

But TI never claimed to be integrating a specific type
of AI capability internally. Instead, the statements
contained language that TI was “accelerating automation and
Generative AI initiatives” (Statement No. 15, id. @ 106) and
“deploying Al-enabled and automation capability” (Statement
No. 26, id. @ 123). As the Court has already found, TI was
implementing generative AI into solutions such as Fuel ix,

and its Al-based data annotation services and pilot programs

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cannot be so readily discounted, even if those programs were
“nascent” and “experiment[al].” (Id. @I 4, 59, 61.)
Plaintiff further points to subsequent representations
by TI that the cost-saving initiatives were “a bit forward to
roll out,” “expect [ed] to come through, ” and would
“ultimately be rolled out” as support for the assertion that
TI had not yet implemented the measures at the time the
alleged actionable statements were made. (Opp’n at 13.) But
here, again, once placed into context, those representations
do not make TI’s earlier statements about its efforts to cut
costs misleading. The representations were made by Chande
during a 2024 earnings call, in which she told investors:
[T]here are several components to [the cost efficiency
program], some that have taken flight and are going to
continue to support Q2. .. . The ones that have taken
us slightly longer than expected are ones that we’re
looking to roll globally and with some of the nuances
that we have in each of the regions, working through the
systems and the processes there is taking a little longer
than expected, but will ultimately be rolled out[.]

. So those are the ones that are a bit forward to
roll out, but we expect to come through.

(AC 7 163.) Chande’s statement was not an “admission” that TI
“had not yet implemented the measures,” as Plaintiff claims,
but rather an acknowledgment that certain components of TI’s
plan were taking longer than anticipated while others had
“taken flight.” (Id.; Opp’n at 13.) And any argument that

TI’s ultimate failure to reduce its costs in line with earlier
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projections does not make those original projections false or
materially misleading at the time they were made. “The mere
fact that the projections ultimately proved erroneous does

not state a claim for securities fraud.” Kemp v. Universal

Am. Fin. Corp., No. 0O5-CV-9883, 2007 WL 86942, at *14

(S.D.N.Y. Jan. 10, 2007). Accordingly, the Court is not
persuaded that Plaintiff’s factual allegations sufficiently
Support the notion that the alleged statements relating to
TI’s cost-savings initiatives are actionable.

2. Scienter

Under the heightened pleading standards of Rule 9(b) and
the PSLRA, a plaintiff alleging securities fraud must allege
“with particularity facts giving rise to a strong inference
that the defendant acted with the required state of mind.” 15

U.S.C. § 78u-4(b) (2) (A); see also In Re Shanda Games Ltd.

Sec. Litig., 128 F.4th 26, 51 (2d Cir. 2025). The question

“is whether all of the facts alleged, taken collectively,
give rise to a strong inference of scienter, not whether any
individual allegation, scrutinized in isolation, meets that

standard.” Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551

U.S. 308, 310 (2007). “The requisite state of mind in a

section 10(b) and Rule 10b-5 action is an intent to deceive,

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manipulate, or defraud.” JP Morgan Chase Co., 553 F.3d at 198

(internal guotations and citation omitted).

That standard can be satisfied “(a) by alleging facts to
show that defendants had both motive and opportunity to commit
fraud, or (b) by alleging facts that constitute strong
circumstantial evidence of conscious misbehavior or

recklessness.” Kalnit v. Eichler, 264 F.3d 131, 138 (2d Cir.

2001) (internal guotations and citation omitted). “[T]he
inference of scienter must be more than merely ‘reasonable’
or ‘permissible’ - it must be cogent and compelling, thus
strong in light of other explanations.” Tellabs, 551 U.S. at
324. “If an inference of fraudulent intent is not at least as
compelling as a contrary inference, it iS inadequate, even in

LA

a close case. Skiadas v. Acer Therapuetics, Inc., No. 19-

CV-06137, 2020 WL 3268495, at *10 (S.D.N.Y. June 16, 2020)
(internal guotations and citation omitted).

Here, Plaintiff attempts to satisfy the standard’s
second prong. Plaintiff alleges that Defendants acted with
scienter because they “knew or recklessly disregarded” that
the alleged statements were false or materially misleading,
knew that those statements would be disseminated to the
investing public, and knowingly participated or acquiesced in

the dissemination of the statements. (AC {I 168.)

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“Tf no motive or opportunity (other than a generalized
business motive) is shown, the circumstantial evidence of
conscious misbehavior must be correspondingly greater and
show highly unreasonable behavior or that which evinces an
extreme departure from the standards of ordinary care.”

Arkansas Pub. Emps. Ret. Sys. v. Bristol-Myers Squibb Co., 28

F.4th 343, 355 (2d Cir. 2022) (internal quotations and
Citation omitted). “The extreme departure approximates actual
intent, and not merely a heightened form of negligence.” San

Antonio Fire & Police Pension Fund v. Dentsply Sirona, Inc.,

732 F. Supp. 3d 300, 317 (S.D.N.Y. 2024) (internal quotations
and citation omitted). As the Second Circuit has explained:

Circumstantial evidence can support an inference of
Scienter in a variety of ways, including where
defendants (1) benefitted in a concrete and personal way
from the purported fraud; (2) engaged in deliberately
illegal behavior; (3) knew facts or had access to
information suggesting that their public statements were
not accurate; or (4) failed to check information they
had a duty to monitor.

Blanford, 794 F.3d at 306.

“[W]here scienter is based on a defendant’s knowledge of
and/or access to certain facts, Plaintiffs must allege facts
showing that: (1) specific contradictory information was
available to defendants (ii) at the same time they made their

misleading statements.” In re Lottery.com, 765 F. Supp. 3d at

349. “Where plaintiffs contend defendants had access to
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contrary facts, they must specifically identify the reports
or statements containing this information.” Novak, 216 F.3d
at 309.

Plaintiff groups the factual allegations supporting the
contention that Defendants acted with the requisite level of
conscious misbehavior or recklessness into three categories:
(1) Defendants’ disclosures at the end of the Class Period
that TI was conducting pilot programs, was harmed by price
competition, and had not achieved its cost-cutting goals; (2)
Defendants’ actions holding themselves out as knowledgeable;
and (3) TI’s company-wide pivot to AI. (See AC Ff 169-99.)

Notwithstanding the Court’s findings stated above that
Plaintiff fails to sufficiently plead any actionable
statements, the Court cannot say that Plaintiff’s
circumstantial evidence “taken collectively, give[s] rise to
a strong inference of scienter.” Tellabs, 551 U.S. at 310.

a) Defendants’ May and August 2024 Disclosures

First, Plaintiff argues that Puritt’s statement in May
2024 that TI had been offering AlI-related “pilots” at
discounted prices supports the contention that Defendants
knew TI “was running low-margin pilot programs throughout the
Class Period, cratering both margins and revenues.” (AC {1

171-72.) Plaintiff further points to statements made in

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August 2024, when Puritt explained that TI’s competitors’
focus on market share over margins had forced TI to cut prices
and had put TI in an “unendurable position” of allowing the
“complete eradication of margin yields.” (Id. Gf 159-60, 174-
76.) Puritt told investors that TI “just ke[pt] losing
opportunities because of price” and had been “told in the
postmortem that [TI was] just too expensive.” (Id. WI 75-76,
158.) Plaintiff contends that “because Defendants admittedly
knew [TI] did not have the claimed AI capabilities, they also
knew they could not gain the AI-based internal cost
efficiencies they touted.” (Opp’n at 23.)

As to Puritt’s discussion of TI’s “pilots,” nothing in
the pleadings or arguments here indicates that Puritt “knew
facts or had access to information suggesting” that his
earlier public statements concerning TI’s AI capabilities

were false or misleading. Blanford, 794 F.3d at 306. Plaintiff

argues that the earlier disclosures “did not address [TI’s]
initiatives or inform investors that [TI] only had pilots.”
(Opp’n at 22 (emphasis in original).) But this argument is
unavailing, as TI had other capabilities and generative-Al
backed solutions and Puritt never stated that the pilot
programs were TI’s only AI offerings. Additionally, Plaintiff

contends that Puritt “disclosed [the pilot projects] for the

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first time at the end of the Class Period.” (AC @ 59.) But
this representation, too, is false. TI disclosed to investors
as early as February 2023 and throughout the Class Period
that the company might initiate pilots. (See Soloway Decl.
Ex. 3 at 10 (“We often face a long selling cycle to secure a
new client contract or launch a new program for an existing
client[.] . . . If we are successful, a long implementation
and contract negotiation period could follow and, in some
cases, a pilot program may also occur, all of which may not

be successful.”); see also Ex. 4 at 6.)

The Court is similarly not persuaded by Plaintiff's
argument that Defendants’ later disclosures regarding price
competition and unsuccessful cost transformation initiatives
Support an inference of scienter. As already discussed, TI
made numerous disclosures warning about the risks of the
competitive environment and pricing pressures it faced

throughout the Class Period. (See, e.g., Soloway Decl. Ex. 11

at 11 (“[I]n this heightened price-sensitive environment,
it’s becoming more and more of that Sophie’s Choice challenge
of just how much of a tradeoff on margin yield through price
reductions are we willing to tolerate[.]”); Ex. 12 at 15
(“There is no question that these are levels of price

sensitivity that we certainly haven’t experienced in the

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past.”); Ex. 14 at 15 (“[T]here is a pervasive, persistent
pressure around more for less.”).) Those disclosures undercut
any contention that Defendants acted with the “actual intent”
to defraud “and not merely a heightened form of negligence.”

San Antonio Fire & Police Pension Fund v. Dentsply Sirona,

Inc., 732 F. Supp. 3d at 317.

Plaintiff’s argument regarding TI’s cost-savings
statements fares no better. Plaintiff contends that “because
Defendants admittedly knew [TI] did not have the claimed AI
Capabilities, they also knew they could not gain the AlI-based
internal cost efficiencies they touted[.]” (Opp’n at 23.) But
the Court has already found that none of the statements
Defendants made about TI’s AI capabilities were false or
materially misleading, and Plaintiff points to no “specific
contradictory information” available to Defendants suggesting
that the initiatives had no chance of success. In re

Lottery.com, 7/65 F. Supp. 3d at 349.

Therefore, the Court cannot say that Defendants acted
recklessly by representing to investors that TI, for example,
had “actioned meaningful cost savings” and stood to gain
benefits “by deploying generative AI solutions within [its]
own operations.” (Statement No. 22, AC @ 115.) Even if TI

ultimately “reduced the in-year financial benefits from [the]

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ongoing efficiency and transformation initiatives” due to
unsuccessful aspects of the measures or changes in the
expected rollout timeline, “[t]he Second Circuit has firmly

rejected this ‘fraud by hindsight’ approach.” Podany v.

Robertson Stephens, Inc., 318 F. Supp. 2d 146, 156 (S.D.N.Y.

2004) (citing Stevelman v. Alias Research, Inc., 174 F.3d 79,

85 (2d Cir. 1999)). “It is not sufficient .. . to allege
that an opinion was unreasonable, irrational, excessively
optimistic, [or] not borne out by subsequent events.” In re

Salomon Analyst Level 3 Litig., 350 F. Supp. 2d 477, 489

(S.D.N.Y. 2004).

b) Defendants Held Themselves Out as Knowledgeable

Next, Plaintiff argues that “Defendants regularly
provided detailed updates on, and were asked questions by,
analysts and media personnel about revenues and margins, and
pricing” - evidencing that they were aware of, for example,
the “existing underlying issues with the AI pricing,” “the
levels of customer demand,” the impacts on TI’s revenues and
margins, and the impacts of competitors’ pricing pressure on
customer demand. (Id. (2 182-83, 190.) But the general
allegations presented in the Amended Complaint fail to
sufficiently support an inference of scienter, as Plaintiff

points to no “specific contradictory information [Defendants]

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had and the connection (temporal or otherwise) between that

ur

information and the statements at issue.” In re Adient plc

Sec. Litig., No. 18-CV-9116, 2020 WL 1644018, at *28 (S.D.N.Y.

Apr. 2, 2020) (quoting In re Lululemon Sec. Litig., 14 F.

Supp. 3d 553, 581 (S.D.N.Y. 2014)).

As stated, to plead scienter sufficiently under the
PSLRA, a plaintiff must allege “with particularity facts
giving rise to a strong inference that the defendant acted

with the required state of mind.” JP Morgan Chase Co., 553

F.3d at 198. Allegations that Defendants, for example, “were
constantly ‘in discussions with clients’” or had “*strong
visibility’ into their financial and operational results” are

insufficient to meet that standard. (AC YI 189); see, e.g.,

City of North Miami Beach Police Officers’ & Firefighters’

Ret. Plan v. Nat’1l Gen. Holdings Corp., No. 19-CV-10825, 2021

WL 212337, at *11 (S.D.N.Y. Jan. 21, 2021) (finding that
plaintiffs failed to sufficiently allege scienter despite
arguments that defendants were “privy to information about
the nature and scope of the .. . program because they were
hands-on executives of a company that conducted due diligence
and held meetings — before which certain documents were

disseminated”); Maloney v. Ollie’s Bargain Outlet Holdings,

Inc., 518 F. Supp. 3d 772, 781 (S.D.N.Y. 2021) (finding

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allegations that “executives were ‘tight-knit’ and ‘hands-
on,’ and therefore must have been aware ‘of the critical
inventory and supply chain issues [the company] was
experiencing during the Class Period’” were insufficient to

show that defendants had access to contrary information).

Cc) TI’s Pivot to AI
Finally, Plaintiff contends that “Defendants’
realization that AI . . . was the key to [TI’s] success” and

TI’s “major change in focus to pivot to AI” support a strong
inference that Defendants understood the “facts regarding the
true state of their AI capabilities during the Class Period,
including their inability to harness AI to gain cost
efficiencies.” (AC @{ 199.) Under the “core operations”
doctrine, “a court may infer that a company and its senior
executives have knowledge of information concerning the core
operations of a business, such as events affecting a

Significant source of income.” In re Supercom Inc. Sec.

Litig., No. 15-CV-9650, 2018 WL 4926442, at *31 (S.D.N.Y.
Oct. 10, 2018) (internal quotations and citation omitted). In
other words, the doctrine allows courts to draw an inference
of scienter where the misrepresentations and omissions

allegedly made by defendants were about a company’s core

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operations. See In re Wachovia Equity Sec. Litig., 753 F.

Supp. 2d 326, 353 (S.D.N.Y. 2011).
Notwithstanding that “[i]t remains unresolved in the
Second Circuit whether the core-operations doctrine survived

the passage of the PSRLA,” City of Omaha Police & Fire Ret.

sys., 450 F. Supp. 3d at 423, even if this Court accepted and
applied this theory to the case at hand, it would be
insufficient to establish scienter in light of the Court’s
other findings. As courts in this District have held, “the
core-operations doctrine would be insufficient by itself to
Support strong circumstantial evidence of scienter.” City of

Omaha Police & Fire Ret. Sys., 450 F. Supp. 3d at 424; see

also Tyler v. Liz Claiborne, Inc., 814 F. Supp. 2d 323, 343

(S.D.N.Y. 2011) (explaining that the doctrine only “bolsters
the strength of the inference of scienter when plaintiff has
already adequately alleged facts indicating that defendants
might have known their statements were false” (emphasis
added)). In short, because Plaintiff has failed to allege
that Defendants acted with scienter under the preceding
theories of liability, there is no inference for the core-
operations doctrine to bolster.

“Regardless of the manner in which a plaintiff attempts

to plead scienter, at the end of its evaluation, [a court]

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must be convinced that the inference of scienter is at least

as compelling as any competing inferences.” Fort Worth

Employers’ Ret. Fund v. Biovail Corp., 615 F. Supp. 2d 218,

225 (S.D.N.Y. 2009) (internal quotations and citation

omitted); see also Tellabs, 551 U.S. at 308 (“[A]n inference

of scienter must be more than merely plausible or reasonable
— it must be cogent and at least as compelling as any opposing
inference of nonfraudulent intent.”). In the matter at hand,
the Court is not persuaded that the allegations set forth in
the Amended Complaint sufficiently meet this standard.

3. Loss Causation

Finally, Defendants move to dismiss the Section 10(b)
claim on the basis that Plaintiff has failed to plead loss
causation. (See MTD at 25-27.) Under the PSLRA, “the plaintiff
[has] the burden of proving that the act or omission of the
defendant alleged .. . caused the loss for which the
plaintiff seeks to recover damages.” 15 U.S.C.A. § 78u-4. In
light of the Court’s findings set forth above that the Amended
Complaint does not adequately allege either (1) an actionable
material misstatement or omission or (2) scienter, the Court
does not reach Defendants’ argument that Plaintiff has
additionally failed to sufficiently plead loss causation.

See, e.g., Oklahoma Firefighters Pension & Ret. Sys. v. Xerox

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Corp., 300 F. Supp. 3d 551, 581 (S.D.N.Y. 2018) (declining to
reach the issue of loss causation because plaintiff’s
“Amended Complaint fail [ed] to allege any material

misrepresentation or omission by the defendants”).

B. SECTION 20 (a)

To state a claim under Section 20(a) of the Exchange
Act, “a plaintiff must show (1) a primary violation by the
controlled person, (2) control of the primary violator by the
defendant, and (3) that the defendant was, in some meaningful
sense, a culpable participant in the controlled person’s

fraud.” Carpenters Pension Trust Fund of St. Louis v. Barclays

PLC, 750 F.3d 227, 236 (2d Cir. 2014) (internal quotations
and citation omitted). “If plaintiffs have not adequately
alleged a primary violation, i.e., a viable claim under
another provision of the Securities Act or Exchange Act, then

the [Section] 20(a) claims must be dismissed.” In re Sanofi

Sec. Litig., 87 F. Supp. 3d 510, 527 (S.D.N.Y. 2015). Because

Plaintiff has failed to sufficiently allege a primary
violation, the Court dismisses Plaintiff’s second claim
alleging a violation of Section 20(a).

IV. ORDER

For the reasons stated above, it is hereby

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ORDERED that the motion (Dkt. No. 35) filed by Defendants
TELUS International (CDA) Inc., Jeffrey Puritt, Vanessa Kanu,
Gopi Chande, and Michael Ringman to dismiss the Amended
Complaint (Dkt. No. 24) of Lead Plaintiff Mohommed Mohiuddin,
individually and on behalf of all others similarly situated,
is GRANTED.

The Clerk of Court is respectfully reguested to

terminate the motion at docket No. 35.

SO ORDERED.
OG Po
Dated: 11 August 2026 Se i i a
New York, New York een eee

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