The US Supreme Court has declined to hear Zillow Group’s appeal seeking to stop a class-action lawsuit accusing the real estate company of misleading investors about its failed home-flipping business.
The court’s decision on Monday, October 5, leaves in place a ruling by the 9th US Circuit Court of Appeals that allowed the lawsuit to proceed as a class action.
The case centres on Zillow Offers, the company’s home-buying and resale business, which Zillow shut down in November 2021 after acknowledging that it could not accurately predict future home prices. The company recorded about $300 million in losses during the previous quarter and announced plans to cut roughly 25% of its workforce.
Investors sued, arguing that statements made by Zillow executives before the shutdown had presented an overly positive picture of the business and failed to disclose the extent of its problems.
Zillow has denied securities fraud, arguing that it had disclosed the risks associated with entering the home-flipping market and that the venture ultimately failed as a business decision.
The Supreme Court’s refusal to take the case means the investor lawsuit can continue in federal court in Washington state. The decision could also have wider implications for publicly traded companies facing securities class actions based on claims that earlier statements helped prevent their share prices from falling.
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