Caption: Dolly, et al. v. GitLab Inc., et al.
Case No.: 24-cv-06244-EKL
Jurisdiction: U.S. District Court, Northern District of California
Judge: Hon. Eumi K. Lee
Summary
On August 14, 2025, Judge Eumi K. Lee granted defendants’ motion to dismiss in the securities class action against GitLab Inc. The Court dismissed all claims under Section 10(b) of the Exchange Act and Rule 10b-5, as well as the derivative Section 20(a) claims. The dismissal was issued with leave to amend.
Allegations Against GitLab
Plaintiff alleged that GitLab and executives Sytse Sijbrandij, Brian Robins, and David DeSanto made false and misleading statements during the Class Period, June 5, 2023 through June 3, 2024. The complaint claimed that defendants overstated GitLab’s AI capabilities, misrepresented customer feedback, exaggerated the company’s competitiveness against GitHub, and gave misleading financial projections tied to the Premium tier price increase. Plaintiff said subsequent disclosures revealed the truth and led to stock price drops in March and June 2024.
Defendants’ Motion to Dismiss
Defendants moved to dismiss under Rule 12(b)(6), Rule 9(b), and the PSLRA. They argued that the complaint was puzzle-pled, that the statements at issue were inactionable forward-looking statements, puffery, or opinions, and that plaintiff failed to allege falsity, scienter, or loss causation. Defendants also sought dismissal of the Section 20(a) claims as derivative of the Exchange Act claims.
Plaintiffs’ Opposition
Plaintiff opposed the motion, arguing that the complaint adequately identified false and misleading statements and explained why they were fraudulent. Plaintiff relied on accounts from former employees and confidential witnesses, post-Class Period events, and analyst reports to support falsity, scienter, and loss causation.
Court’s Ruling
The Court granted the motion to dismiss. Judge Lee held that:
- The complaint was not a puzzle pleading.
- Many statements were forward-looking and protected by the PSLRA safe harbor, accompanied by cautionary language.
- Other statements were puffery or corporate optimism and not actionable.
- Plaintiff failed to plead with particularity how any statements were false or misleading.
- The allegations did not establish a strong inference of scienter.
- Plaintiff failed to show that GitLab’s disclosures revealed fraud or that stock drops were caused by fraud, defeating loss causation.
- Because the Section 10(b) claim failed, the derivative Section 20(a) claim also failed.
Court’s Rationale
Falsity: The Court found no particularized facts showing that statements about AI features, customer feedback, competitiveness, or the Premium tier price increase were false or misleading.
Scienter: Witness accounts and core operations allegations did not support a strong inference of intent or deliberate recklessness. General claims of executive knowledge or executive departures were insufficient.
Loss Causation: The Court held that disclosures in March and June 2024 did not reveal fraud. Lower-than-expected growth or missed projections were not enough to show fraudulent conduct.
Section 20(a): Without a primary violation, the control-person claims under Section 20(a) also failed.
Leave to Amend: Because this was the first ruling on the sufficiency of the allegations, the Court dismissed the complaint with leave to amend.
Case Status
The second amended complaint has been dismissed, with leave to amend. Plaintiff has 30 days to file a third amended complaint and must also provide a redlined version comparing it to the prior complaint.
