Walker v. Chidambaran. — Entry #105: REPLY to Response to Motion re 85 MOTION to Dismiss the Amended Complaint filed by Matthew Barger, Ian Davis, Bruce Mehlman, Michael Moe.(Bondi, Bradley)…

Case 8:24-cv-02900-DKC         Document 105   Filed 10/22/25   Page 1 of 16


                        UNITED STATES DISTRICT COURT
                           DISTRICT OF MARYLAND
                               (Southern Division)


DANNY WALKER, Individually and on
Behalf of All Others Similarly Situated,    Civil Action No. 8:24-cv-02900-DKC

                             Plaintiff,

                 v.

ILEARNINGENGINES, INC., et al.,

                              Defendants.


           REPLY IN SUPPORT OF DEFENDANTS MATTHEW BARGER,
             IAN DAVIS, BRUCE MEHLMAN, AND MICHAEL MOE’S
               MOTION TO DISMISS THE AMENDED COMPLAINT


       Case 8:24-cv-02900-DKC                          Document 105                   Filed 10/22/25                Page 2 of 16

                                                     TABLE OF CONTENTS

                                                                                                                                           Page

I.      INTRODUCTION .......................................................................................................................... 1
II.     PLAINTIFFS’ ALLEGATIONS CONCERNING TRACEABILITY ARE
        INSUFFICIENT FOR A SECTION 11 CLAIM ............................................................................ 3
III.    THE OPPOSITION HIGHLIGHTS PLAINTIFFS’ INSUFFICIENT SECTION 15
        ALLEGATIONS ............................................................................................................................. 8
IV.     CONCLUSION ............................................................................................................................. 10


                                                                        i


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                                              TABLE OF AUTHORITIES

                                                                                                                              Page(s)
CASES

Ashcroft v. Iqbal,
   556 U.S. 662 (2009) .......................................................................................................1, 3, 4, 9

Barbour v. Garland,
   105 F.4th 579 (4th Cir. 2024) ....................................................................................................4

Bell Atl. Corp. v. Twombly,
    550 U.S. 544 (2007) .......................................................................................................1, 3, 4, 9

Ciarciello v. Bioventus, Inc.,
   No. 1:23-CV-32, 2023 WL 7300081 (D. Md. Nov. 6, 2023) ....................................................4

Cupat v. Palantir Techs., Inc.,
   No. 1:22-CV-02805-GPG-SBP, 2025 WL 1141534 (D. Colo. Apr. 4, 2025) ...................1, 3, 4

Davidco Inv’rs, LLC v. Anchor Glass Container Corp.,
   2006 WL 547989 (M.D. Fla. Mar. 6, 2006) ..............................................................................7

Doherty v. Pivotal Software, Inc.,
   No. 3:19-CV-03589-CRB, 2019 WL 5864581 (N.D. Cal. Nov. 8, 2019) .............................5, 7

Fam. of Care Real Est. Holding Co. v. Chapman Prop., LLC,
   No. CV DKC 23-0574, 2023 WL 4134427 (D. Md. June 22, 2023).........................................4

Fanucchi v. Enviva Inc.,
   No. DKC 22-2844, 2024 WL 330256 (D. Md. July 3, 2024) ................................................4, 5

Grand Lodge of Pa. v. Peters,
   550 F. Supp. 2d 1363 (M.D. Fla. 2008) .....................................................................................7

In re Alstom SA Sec. Litig.,
    406 F. Supp. 2d 433 (S.D.N.Y. 2005)................................................................................2, 8, 9

In re Ariad Pharms., Inc. Sec. Litig.,
    842 F.3d 744 (1st Cir. 2016) ......................................................................................................7

In re Century Aluminum Co. Sec. Litig.,
    729 F.3d 1104 (9th Cir. 2013) ...............................................................................................2, 5

In re Charles Schwab Corp. Sec. Litig.,
    257 F.R.D. 534 (N.D. Cal. 2009) .........................................................................................9, 10

In re Coinbase Glob., Inc. Sec. Litig.,
    No. 2:22-CV-04915, 2024 WL 4053009 (D.N.J. Sept. 5, 2024) ...............................................7


                                                                   ii


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In re Constellation Energy Grp.,
    738 F. Supp. 2d 614 (D. Md. 2010) .....................................................................................8, 10

In re Creditrust Corp. Sec. Litig.,
    Civil Action Nos. MJG-00-2174, MJG-00-2297, 00-2343, 00-2346, 00-2347, 00-
    2539, 2002 WL 35691716 (D. Md. Aug. 1, 2002) ................................................................2, 8

In re Evergreen Ultra Short Opportunities Fund Sec. Litig.,
    705 F. Supp. 2d 86 (D. Mass. 2010) ..................................................................................2, 8, 9

In re EveryWare Glob., Inc. Sec. Litig.,
    175 F. Supp. 3d 837 (S.D. Ohio 2016) ......................................................................................7

In re Mirant Corp. Sec. Litig.,
    No. 1:02-CV-1467-RWS, 2008 WL 11334395 (N.D. Ga. Aug. 5, 2008) .................................7

In re Mun. Mortg. & Equity, LLC,
    876 F. Supp. 2d 616 (D. Md. 2012) ...........................................................................................8

In re Sourcefire, Inc. Sec. Litig.,
    No. CIV. JFM 07-1210, 2008 WL 1827484 (D. Md. Apr. 23, 2008)........................................9

In re Ubiquiti Networks, Inc. Sec. Litig.,
    33 F. Supp. 3d 1107 (N.D. Cal. 2014) .......................................................................................7

John v. Whole Foods Mkt. Grp., Inc.,
   858 F.3d 732 (2d Cir. 2017).......................................................................................................4

Johnson v. CBD Energy, Ltd.,
   No. H-15-1668, 2016 WL 3654657 (S.D. Tex. July 6, 2016) ...............................................5, 7

Krim v. pcOrder.com, Inc.,
   402 F.3d 489 (5th Cir. 2005) ........................................................................................... passim

NB v. District of Columbia,
   682 F.3d 77 (D.C. Cir. 2012) .....................................................................................................4

Northumberland Cnty. Ret. Sys. v. Kenworthy,
   No. CIV-11-520-D, 2013 WL 5230000 (W.D. Okla. Sept. 16, 2013) ......................................5

Perry v. Duoyuan Printing, Inc.,
   No. 10 CIV. 7235 GBD, 2013 WL 4505199 (S.D.N.Y. Aug. 22, 2013)...................................5

Pirani v. Slack Techs., Inc.,
   127 F.4th 1183 (9th Cir. 2025) ..............................................................................................2, 5

Ret. Sys. v. Chubb Corp.,
    394 F.3d 126 (3d Cir. 2004).......................................................................................................8


                                                                  iii


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SD3, LLC v. Black & Decker (U.S.) Inc.,
   801 F.3d 412 (4th Cir. 2015) .....................................................................................................4

Starr v. Baca,
    652 F.3d 1202 (9th Cir. 2011) ...................................................................................................4

Stenlund v. Marriott Int’l, Inc.,
    172 F. Supp. 3d 874 (D. Md. 2016) ...........................................................................................8

TransEnterix Inv. Grp. v. TransEnterix, Inc.,
   272 F. Supp. 3d 740 (E.D.N.C. 2017)........................................................................................7

Wachovia Equity Sec. Litig. v. Wachovia Corp.,
  753 F. Supp. 2d 326 (S.D.N.Y. 2011)........................................................................................5

RULES

Rule 8 ...................................................................................................................................1, 3, 4, 8

Rule 9(b) ..........................................................................................................................................8

Rule 12(b)(6) ....................................................................................................................................9


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I.      INTRODUCTION

        Plaintiffs’ Opposition fails to cure the fatal deficiencies in their Amended Complaint. 1

Rather than identify well-pleaded facts sufficient to satisfy Twombly, Iqbal, and Rule 8, Plaintiffs

rely on decisions that pre-date those cases and other out-of-circuit law. See ECF No. 90 at 19.

Plaintiffs also attempt to distinguish the actual governing law while simultaneously conceding that

their allegations mirror the very ones rejected in those precedential decisions. Id. at 21, 27.

Plaintiffs’ motion briefing cannot backfill what the Amended Complaint omits. As the Opposition

itself confirms, Plaintiffs fail to plead any facts that plausibly support either of their claims.

        First, Plaintiffs concede that (i) the registered shares under the offering documents were

commingled with non-registered shares, and (ii) they allege no facts showing their shares are

traceable to the Forms S-1 or S-8 for purposes of Section 11.2 Instead, they rely on a mere “plan”

to conduct discovery (see ECF No. 90 at 15-16) and a self-declared “high probability” of

traceability (AC ¶ 422). Neither approach satisfies Twombly and Iqbal, which require plausible

factual allegations—not conjecture or a promise of later proof. See Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Rule 8 does not entitle

plaintiffs to discovery “armed with nothing more than conclusions.” Iqbal, 556 U.S. at 678-79.

        In particular, Plaintiffs’ “high probability” pleading is insufficient. See AC ¶ 422. Despite

claiming not to rely on statistics, Plaintiffs assert that 87.1% of the outstanding shares were

registered under the offering documents—precisely the kind of statistical pleading that courts have


1
 Capitalized terms not defined herein are given their meaning assigned to them in the Independent
Directors’ Memorandum in Support of their Motion to Dismiss (the “Motion”). See ECF No. 85-
1.
2
 Plaintiffs recently moved to lift the discovery stay to obtain discovery related to traceability. ECF
No. 93. That is nothing more than a tacit acknowledgment that the Amended Complaint, as it
currently stands, lacks the factual allegations sufficient to meet traceability under Section 11.


                                                   1


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rejected repeatedly. See, e.g., Cupat v. Palantir Techs., Inc., No. 1:22-CV-02805-GPG-SBP, 2025

WL 1141534, at *16 (D. Colo. Apr. 4, 2025); Krim v. pcOrder.com, Inc., 402 F.3d 489, 496–97

(5th Cir. 2005); Pirani v. Slack Techs., Inc., 127 F.4th 1183 (9th Cir. 2025) (“Pirani II”). Even

their percentage is wrong—and, more importantly, irrelevant—because the registration statements

registered shares and did not issue them, rendering Plaintiffs’ probability analysis meaningless.

Under Century Aluminum, Plaintiffs’ own allegations present “obvious alternative explanation[s],”

i.e., that they purchased unregistered shares commingled with registered ones. In re Century

Aluminum Co. Sec. Litig., 729 F.3d 1104, 1108 (9th Cir. 2013).

       Second, Plaintiffs’ Section 15 theory fails outright. They seek to hold newly appointed

independent directors—who neither participated in the merger nor prepared the challenged

statements—liable merely because they signed two registration statements. Plaintiffs’ cited cases

do not support this result; each involved factual allegations far beyond a defendant’s title and

signature. See, e.g., In re Alstom SA Sec. Litig., 406 F. Supp. 2d 433, 476-77 (S.D.N.Y. 2005)

(alleging facts beyond simply the defendant’s positions and signatures, including, inter alia, the

importance of the topic and defendant’s involvement in the operations of the company); In re

Evergreen Ultra Short Opportunities Fund Sec. Litig., 705 F. Supp. 2d 86, 97 (D. Mass. 2010)

(alleging that the defendants participated in the drafting and/or preparation of the relevant

misstatements). Similarly, the Opposition fails to explain how any plausible inference of control

could survive based on position alone when the Amended Complaint affirmatively alleges that the

Independent Directors initiated corrective action. See In re Creditrust Corp. Sec. Litig., Civil

Action Nos. MJG-00-2174, MJG-00-2297, 00-2343, 00-2346, 00-2347, 00-2539, 2002 WL

35691716, at *19 (D. Md. Aug. 1, 2002) (“conclusory statement that ‘by virtue of their positions

as … directors of non-defendant Creditrust, [the Outside Directors] had the power, and exercised


                                                2


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the same, to control the representations’”).

        Because these defects are incurable, the Amended Complaint should be dismissed with

prejudice.

II.     PLAINTIFFS’ ALLEGATIONS CONCERNING                                  TRACEABILITY          ARE
        INSUFFICIENT FOR A SECTION 11 CLAIM

        The Opposition concedes the core deficiencies in Plaintiffs’ Section 11 claim. Plaintiffs

admit that ILE shares entered the market through multiple registration statements and pre-existing

unregistered shares—requiring Plaintiffs to plead facts establishing that their purchases are

traceable to the offering documents. See ECF No. 90 at 14 & n.4. Plaintiffs further concede that

the Amended Complaint relies on no such facts, only on a speculative “plan” to conduct discovery

and a self-serving assertion that traceability is “likely.” Id. at 15–16. Such allegations are precisely

what Twombly and Iqbal prohibit. See Twombly, 550 U.S. at 570; Iqbal, 556 U.S. at 678.

        Rule 8 does not “unlock the doors of discovery for a plaintiff armed with nothing more

than conclusions.” Iqbal, 556 U.S. at 678-79. That is exactly what Plaintiffs ask this Court to do.

As the Independent Directors’ Motion explained, the Amended Complaint alleges only that

(i) discovery is needed to “support” traceability, AC ¶¶ 423–24; (ii) Plaintiffs intend to obtain

documents from DTC and brokers to “investigate” traceability; and (iii) there is a “high probability”

that their shares are traceable. Courts routinely reject such allegations. See, e.g., Cupat, 2025 WL

1141534, at *16 & n.18 (allegations of “high probability,” “statistical likelihoods,” and need for

discovery insufficient to show a plausible inference of traceability); Krim, 402 F.3d at 496–97

(rejecting statistical tracing as inconsistent with Section 11 standing).

        Plaintiffs argue otherwise, claiming that they need not “prove” traceability at the pleading

stage. ECF No. 90 at 18. But this argument misses the mark. The Independent Directors do not

demand proof at this stage—only alleged facts from which traceability plausibly could be inferred.


                                                   3


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Plaintiffs confuse the requirement to plead facts supporting a plausible inference with the

evidentiary burden of proof.

       Plaintiffs’ cited cases exemplify their confusion. In Fam. of Care Real Est. Holding Co. v.

Chapman Prop., LLC, No. CV DKC 23-0574, 2023 WL 4134427, at *4 (D. Md. June 22, 2023),

the court held that a plaintiff in a contract action need not attach exhibits to the complaint—an

unremarkable proposition that says nothing about pleading traceability under Section 11. Similarly,

the other cases Plaintiffs cite concern entirely different pleading contexts. See SD3, LLC v. Black

& Decker (U.S.) Inc., 801 F.3d 412, 431 (4th Cir. 2015) (antitrust); NB v. District of Columbia,

682 F.3d 77, 85 (D.C. Cir. 2012) (Medicaid benefits); Barbour v. Garland, 105 F.4th 579, 581

(4th Cir. 2024) (Title VII retaliation); John v. Whole Foods Mkt. Grp., Inc., 858 F.3d 732, 737 (2d

Cir. 2017) (consumer fraud); Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) (civil rights).

None addresses what facts are necessary to plead traceability under Section 11.

       Plaintiffs’ allegations concerning how they intend to establish traceability do not satisfy

Rule 8. See ECF No. 90 at 20. The plausibility standard does not demand evidence, but it does

require factual content—not an assurance that evidence may later be found. Allowing otherwise

would nullify Twombly and Iqbal.

       Plaintiffs also rely on pre-Twombly and Iqbal Third Circuit cases as if they were controlling.

See ECF No. 90 at 18-19 (citing In re Suprema Specialties, Inc. Sec. Litig., 438 F.3d 256 (3d Cir.

2006); Shapiro v. UJB Fin. Corp., 964 F.2d 272, 286 (3d Cir. 1992)). The more recent, post-Iqbal

authority holds that conclusory allegations of traceability are insufficient. See, e.g., Cupat, 2025

WL 1141534, at *16; Fanucchi v. Enviva Inc., No. DKC 22-2844, 2024 WL 330256, at *14-16

(D. Md. July 3, 2024); Ciarciello v. Bioventus, Inc., No. 1:23-CV-32, 2023 WL 7300081 (D. Md.

Nov. 6, 2023). Plaintiffs’ attempts to distinguish these decisions fail. In Fanucchi, as here, the


                                                 4


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plaintiff did not plead facts supporting traceability, and the court found that even incorporating

stock certificates was inadequate. 2024 WL 330256, at *14-16. 3 Plaintiffs’ reliance on a “high

probability” of tracing fares no better. Plaintiffs highlight Pirani II, but that case did not hold that

statistical tracing suffices. To the contrary, Pirani II reaffirmed In re Century Aluminum Co. Sec.

Litig., 729 F.3d 1104 (9th Cir. 2013), emphasizing that alleging a percentage of registered shares

cannot show traceability in a plausible way because “it is entirely possible” that the purchased

shares were unregistered. Pirani II, 127 F.4th at 1190. And Plaintiffs’ attempt to distinguish In

re Century Aluminum Company Securities Litigation is unconvincing for the same reasons. 4

Pirani II directly referenced this precedent to explain that statistical tracing does not suffice to

fulfill the operative pleading standard.

        Excluding statistical tracing at the pleading stage aligns with Section 11’s purpose.

Accepting such allegations “would impermissibly expand the standing requirement,” since any

aftermarket purchaser could simply allege that a high percentage of shares were registered. Krim,

402 F.3d at 496–97; see also Doherty v. Pivotal Software, Inc., No. 3:19-CV-03589-CRB, 2019


3
  Plaintiffs also cite to a string of cases that do not reflect controlling law in this Circuit and are
factually distinguishable and thus, do not support that a conclusory pleading of traceability is
sufficient here. See Perry v. Duoyuan Printing, Inc., No. 10 CIV. 7235 GBD, 2013 WL 4505199,
at *9 (S.D.N.Y. Aug. 22, 2013) (finding that plaintiffs’ allegation that they purchased pursuant to
the registration statement was sufficient because all outstanding shares were registered pursuant
to the IPO at issue); Wachovia Equity Sec. Litig. v. Wachovia Corp., 753 F. Supp. 2d 326, 373
(S.D.N.Y. 2011) (finding that an allegation that the purchases were pursuant to or traceable to the
offering documents was sufficient, where no argument was made that more was required for
commingled shares); Northumberland Cnty. Ret. Sys. v. Kenworthy, No. CIV-11-520-D, 2013 WL
5230000, at *6 (W.D. Okla. Sept. 16, 2013) (relying on Second Circuit authority to hold a
conclusory pleading was enough).
4
  Moreover, as explained below, even if a statistical analysis could exclude other plausible
inferences for tracing, counter to In re Century Aluminum and Pirani II, Plaintiffs’ analysis offered
in their Opposition is incorrect. If the proper percentages were used here, this analysis only further
highlights the “obvious alternative explanation[.]” In re Century Aluminum, 729 F.3d at 1108
(internal citation omitted).


                                                   5


     Case 8:24-cv-02900-DKC            Document 105         Filed 10/22/25      Page 11 of 16


WL 5864581, at *10 (N.D. Cal. Nov. 8, 2019); Johnson v. CBD Energy, Ltd., No. H-15-1668,

2016 WL 3654657, at *6 (S.D. Tex. July 6, 2016). Such analyses are inherently flawed because

they often ignore the critical difference between registered and outstanding shares. Even if a large

percentage of shares were registered, that does not establish those shares actually were available

for purchase in the market. This ambiguity precludes plausibility.

       Plaintiffs’ attempt to disclaim “statistical tracing” while relying on percentages of

outstanding shares (87.1%) only underscores the problem. See ECF No. 90 at 20; AC ¶ 422. This

is textbook statistical pleading. Krim, 402 F.3d at 496. Plaintiffs’ inconsistent rhetoric cannot

obscure the reality that their claim depends on purported probability, not facts.

       Even assuming arguendo such a “probability” approach were permitted (and it is not),

Plaintiffs’ math is wrong. Using the figures available by the Form S-1 for shares outstanding as

of May 2024—which, importantly, does not even account for any additional shares issued after

the June 2024 Form S-8, 157,595,089 were outstanding. 5 Of those, 16,208,318 shares (10.3%)

were registered under the Form S-8—not 87.1%. 6 For the Form S-1, even using Plaintiffs’ May

2024 baseline, the correct figure is 63.9%. ECF No. 90-2, at 74. The Form S-1 explicitly states


5
 The Independent Directors do not concede the accuracy of these figures but use the, albeit
outdated, numbers available from the Form S-1 as Plaintiffs do for their argument.
6
  Plaintiffs’ “public float” argument suffers from the same fundamental flaws. The asserted 90.9%
figure is based on share data from May 2024—months before the relevant transactions—and has
no bearing on Plaintiffs’ alleged purchases. Plaintiffs not only fail to plead this figure in their
Amended Complaint, but they also omit any allegation regarding the public float as of the dates
when their shares purportedly were purchased after August 2024. Equally unfounded is Plaintiffs’
assumption that the total public float can be derived by simply adding the 16,208,318 shares
registered under the Form S-8 to the percentage reported in the Form S-1. That assumption defies
both logic and basic market mechanics. Multiple plausible inferences exist—namely, that all,
some, or none of those shares actually were trading at the relevant time. If they were not, Plaintiffs’
“public float” theory rests on speculation rather than fact and cannot support a plausible pleading.


                                                  6


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that it registered—not issued—100,774,669 shares, further undermining Plaintiffs’ calculation.

Id. at 19.

        Plaintiffs compound these errors by failing to analyze each named plaintiff individually.

By their own allegations, Plaintiff Leveque purchased 5,000 shares in late July 2024, when only

10.3% of outstanding shares were registered; Plaintiff Al-Hamid allegedly purchased shares “after

August 9, 2024,” without alleging what shares were outstanding or issued at that time. AC ¶ 423-

24. This group pleading fails to establish traceability. See In re Ariad Pharms., Inc. Sec. Litig.,

842 F.3d 744 (1st Cir. 2016); TransEnterix Inv. Grp. v. TransEnterix, Inc., 272 F. Supp. 3d 740

(E.D.N.C. 2017).7

        Plaintiffs’ other cited cases are inapposite. In In re Ubiquiti Networks, Inc. Sec. Litig., 33

F. Supp. 3d 1107, 1119 (N.D. Cal. 2014), the plaintiffs alleged that they purchased stock during a

180-day lock-up period when unregistered shares could not be sold—making traceability

plausible. Plaintiffs here allege no such lock-up. Similarly, In re EveryWare Glob., Inc. Sec.

Litig., 175 F. Supp. 3d 837 (S.D. Ohio 2016), involved far more detailed allegations, including the

purchase of 15% of shares traded on the first day of the offering at a uniform price just four cents


7
  Plaintiffs also attempt to distinguish the cases cited by the other Defendants, contending that
those decisions merely rely on Krim but are distinguishable on other grounds. Curiously, Plaintiffs
also suggest that these cases do not actually address whether statistical tracing is permissible—
while at the same time insisting that they are not relying on statistical analysis. Even if Plaintiffs’
position were internally consistent—which it is not—these authorities still underscore why their
pleading is deficient. See, e.g., Grand Lodge of Pa. v. Peters, 550 F. Supp. 2d 1363, 1374–76
(M.D. Fla. 2008) (holding that a bare allegation that aftermarket purchases were traceable to a
registration statement was insufficient); Davidco Inv’rs, LLC v. Anchor Glass Container Corp.,
2006 WL 547989, at *22-23 (M.D. Fla. Mar. 6, 2006) (rejecting conclusory traceability allegation
where unregistered shares were on the market at the time of purchase); Doherty, 2019 WL
5864581, at *9-10 (finding plaintiffs’ statistical argument speculative and insufficient to raise a
plausible inference of traceability); In re Mirant Corp. Sec. Litig., No. 1:02-CV-1467-RWS, 2008
WL 11334395, at *11 (N.D. Ga. Aug. 5, 2008) (holding that statistical tracing fails to meet
pleading requirements); Johnson, 2016 WL 3654657, at *6 (finding amendment to allow statistical
tracing futile under Krim and dismissing Section 11 claims with prejudice).


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above the asking price. Nothing comparable is alleged here. And In re Coinbase Glob., Inc. Sec.

Litig., No. 2:22-CV-04915, 2024 WL 4053009, at *19 (D.N.J. Sept. 5, 2024), turned on higher

percentages and shares actually offered for sale, not merely registered. Finally, in In re Mun.

Mortg. & Equity, LLC, 876 F. Supp. 2d 616, 657 (D. Md. 2012), the plaintiff alleged that he

received his shares the date the public offering closed and the first day that the company stated

they would be available for distribution and attached a purchase confirmation referencing the

prospectus—facts wholly absent here.

         Because Plaintiffs’ allegations fail to establish a plausible inference of traceability, their

Section 11 claim must be dismissed.

III.     THE OPPOSITION HIGHLIGHTS PLAINTIFFS’ INSUFFICIENT SECTION 15
         ALLEGATIONS

         The Opposition confirms that the Section 15 claim is derivative and fails for want of a

primary violation under Section 11. Plaintiffs do not respond, thereby conceding the point. See

Stenlund v. Marriott Int’l, Inc., 172 F. Supp. 3d 874, 887 (D. Md. 2016) (“In failing to respond to

this argument. Plaintiff concedes the point.”).

         Even apart from that concession, the Amended Complaint fails to allege that the

Independent Directors were “control persons.” Plaintiffs rely solely on their board positions and

signatures—allegations that courts in this Circuit consistently deem inadequate.            See In re

Constellation Energy Grp., 738 F. Supp. 2d 614, 639 (D. Md. 2010); In re Creditrust Corp., 2002

WL 35691716, at *19. Plaintiffs’ out-of-circuit authorities do not save their claim; each include

far richer factual allegations about participation in drafting, solicitation, or operational control.

See, e.g., In re Alstom, 406 F. Supp. 2d at 476-77; In re Evergreen, 705 F. Supp. 2d at 97.8 Here,

Plaintiffs allege none. The Section 15 claim must be dismissed.


8
    Plaintiffs raise a straw-man argument and incorrectly assert that the Independent Directors are


                                                   8


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         None of Plaintiffs’ cited cases supports their position. For example, in In re Sourcefire,

Inc. Securities Litigation, the complaint alleged far more than the defendants’ corporate titles. The

plaintiffs there pleaded that “Individual Defendants each had a series of direct and/or indirect

business and/or personal relationships with other directors and/or officers and/or major

shareholders of Sourcefire.” In re Sourcefire, Inc. Sec. Litig., No. CIV. JFM 07-1210, 2008 WL

1827484, at *7 (D. Md. Apr. 23, 2008). Plaintiffs here allege nothing comparable. Their sole

allegation is the conclusory statement that the “Individual Defendants, in part because of their

position with iLearningEngines, possess the power and authority to control the contents of

iLearningEngines’ reports and registration statements.” AC ¶¶ 40, 453–54. This bare assertion

lacks the factual underpinnings that are central to the Rule 12(b)(6) analysis in this District.

         Plaintiffs’ reliance on In re Alstom S.A. Securities Litigation, is equally misplaced. Apart

from being out-of-circuit and decided before both Twombly and Iqbal, Alstom underscores what is

missing here. The complaint in Alstom alleged that (i) the misrepresented topic was “extremely

important” to the company’s liquidity and profile; (ii) the defendant was involved in day-to-day

operations; and (iii) the vendor-financing arrangements at issue were large and longstanding. 406

F. Supp. at 496. Plaintiffs here allege none of these particulars.

         Similarly, In re Evergreen, 705 F. Supp. 2d at 97, does not advance Plaintiffs’ cause. In

Evergreen, the plaintiffs alleged that the defendants not only signed the relevant filings but also

participated in drafting and approving the misstatements themselves. No such allegations appear

here.


arguing that Rule 9 applies to the Section 15 claim. Opp. at 22. Not so. The Independent Directors
did not argue this in their moving papers, and tellingly, Plaintiffs offer no supporting citation. The
Independent Directors did however argue that Plaintiffs’ conclusory allegations of control did not
meet even Rule 8’s more lenient standard.


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       Plaintiffs’ invitation for this Court to disregard Fourth Circuit precedent and follow district

court decisions from Washington and California is not persuasive, as those decisions involved far

more substantial factual allegations than those present here. See ECF No. 90 at 31 (citing In re

Charles Schwab Corp. Sec. Litig., 257 F.R.D. 534, 555 (N.D. Cal. 2009); In re Metropolitan Sec.

Litig., 532 F. Supp. 2d 1260, 1296 (E.D. Wash. 2007)). In Charles Schwab, for example, the

complaint alleged that defendants participated in the distribution of fund shares, directly offered

and sold those shares, and actively solicited their sale—facts entirely absent from Plaintiffs’

pleading. 257 F.R.D. at 549.

       Plaintiffs’ reliance on conclusory and vague allegations concerning the Independent

Directors’ titles and signatures—without any facts suggesting control—is insufficient under

controlling case law in this District. See In re Constellation Energy Grp., 738 F. Supp. 2d at 639

(“An individual’s position alone does not establish control person liability.”). The Section 15

claim should be dismissed.

IV.    CONCLUSION

       The Independent Directors respectfully request that the Court dismiss with prejudice all

claims against them in the Amended Class Action Complaint.


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  Case 8:24-cv-02900-DKC   Document 105     Filed 10/22/25     Page 16 of 16


Dated: October 22, 2025         PAUL HASTINGS LLP

                                s/ Bradley J. Bondi
                                Bradley J. Bondi (Bar No. 16071)
                                Lawrence E. Slusky (Bar No. 21745)
                                Ronald K. Anguas, Jr. (admitted pro hac vice)
                                2050 M Street N.W.
                                Washington, D.C. 20036
                                Tel: 202-551-1700
                                Fax: 202-551-1705
                                Email: [email protected]
                                Email: [email protected]
                                Email: [email protected]

                                D. Scott Carlton (admitted pro hac vice)
                                515 South Flower Street, 25th Floor
                                Los Angeles, CA 90071
                                Tel: 213-683-6000
                                Fax: 213-627-0705
                                Email: [email protected]

                                Attorneys for Defendants Matthew Barger, Ian
                                Davis, Bruce Mehlman, and Michael Moe


                                  11