BlackBerry quit the smartphone industry years back but it is still dealing with a lawsuit regarding its long-discontinued BlackBerry 10 line of smartphones. The lawsuit dates back to 2013 and alleges that the company lied about the success of those devices, thus defrauding shareholders. Reuters today reports that BlackBerry is seeking to settle this class-action lawsuit out of court.
According to the new report, jury selection for the planned trial of this case at the Manhattan federal court was scheduled to begin on Thursday, i.e. today. However, lawyers for the defendant (BlackBerry) and plaintiff (shareholders) recently requested the court to adjourn the plans so they could negotiate a settlement. US District Judge Colleen McMahon granted the request.
BlackBerry inflated the market demand for BlackBerry 10 smartphones
BlackBerry, the smartphone maker, peaked between 2008 and 2010. After that, it was all downhill for the company. The growth of Android and iOS platforms had signed its death. Unfortunately, the company wasn’t ready to admit that and refused to change. It didn’t take Apple’s iPhone seriously nor did it move to Android. This eventually forced the company out of the smartphone industry. The BlackBerry Leap that arrived in 2015 was the last phone running BlackBerry OS.
But before that, it had to go through a few troublesome years. It launched the BlackBerry 10 in early 2013 and it received “positive reviews from critics”. However, by that point, the company was already at the fag end of its life as a smartphone maker. The device didn’t pick any traction in the market where everyone was buying either an Android or an iPhone.
The BlackBerry 10 unsurprisingly failed to attract buyers but the company seems to have lied to its shareholders about it. Later that year, shareholders filed a class-action lawsuit against the company alleging that it inflated the market demand and profitability for the phone. It didn’t reveal the “true sales prospects in public statements”. This resulted in an inflated share price.
Eight years after the lawsuit was originally filed, the two parties are now seemingly willing to settle the matter out of court. However, as the report notes, any settlement would require the judge’s approval. It will be interesting to see what comes out of these preliminary talks. From what it appears, this case will not require a court trial. More than 99 percent of such cases in the US — shareholders accusing a company of fraud or misleading — reportedly never go to trial.