Metropolitan News-Enterprise


Monday, July 17, 2017


Page 1


C.A. Says Twitter’s Tweet Wasn’t Tortious


By a MetNews Staff Writer


A tweet by Twitter, Inc. that it would post its quarterly earnings at the end of the day does not give rise to a cause of action in favor of an investment company that bought Twitter stock in expectation of selling it at a profit just before the market closed but couldn’t, based on the premature release of the financial report with unfavorable figures, the Court of Appeal has held.

The opinion, by Presiding Justice Ignazio Ruvolo of the First District’s Div. Four, was filed Thursday and not certified for publication. It affirms a judgment of dismissal following the sustaining of demurrers without leave to amend.

Plaintiff Pope Trading, LLC alleged that on April 28, 2015, Twitter tweeted to investors at 10:08 a.m. ET:

“Twitter Q1’15 earnings today after market close. Listen to our call at 2pm PT via @twitterIR or #TWTReanrings.”

Relying on that, Pope Trading purchased a large chunk of Twitter stock on April 28, hoping to unload it at a profit before the financials were released. By mistake, however, the company Twitter contracted with to release the financial statement disseminated it at 3:07 pm, in advance of the 4 p.m. closing of the stock market.

Pope Trading asserted that Twitter was liable for its losses, saying that its 10.08 a.m. tweet constituted a negligent misrepresentation.

Past or Existing

That tort, Ruvolo responded, requires a “misrepresentation of a past or existing material fact.”

The tweet in question, he said, “was a statement to the public about a future action, i.e. the anticipated release of Twitter’s Q1 2015 financials.”

Statements as to future events, the jurist wrote, are viewed as “opinions.”

On appeal, Pope Trading argued that Twitter had made a promise not to release the report until after the stock market closed. But promissory estoppel, Ruvolo noted, is a species of deceit, which requires an intent to defraud, which wasn’t alleged.

“Under California law, a negligent false promise is not actionable deceit,” he said.

 Pope Trading also argued that Twitter “did not allege a promise about an event in the future (e.g., a promise to announce stock market results weeks later)” but, rather, “alleged a misstatement about the existing trading day.”

‘Weeks Later’

Ruvolo wrote:

“By offering a parenthetical example about a promise to announce stock results ‘weeks later,’ Pope Trading intimates that an event cannot be a future event if it happens on the same day. Clearly though, Twitter’s announcement was about a future event notwithstanding the fact that the event was expected to occur later that same day. Further, Pope Trading’s construction of the announcement as a statement about the existing trading day ignores the words that were actually used. Twitter’s announcement pertained to the future release of its own financial information. It did not make any representation about the existing nature of the stock trade industry.”

Fine-tuning its argument in a reply brief, Pope Trading said that “Twitter’s statement should be read as a promise that the already underway trading day would be devoid of news about Twitter’s earnings,” thus constituting “a statement about an existing, ongoing event, not a promise about the future.”

The jurist declared that “a cause of action for negligent misrepresentation must be based on a ‘positive assertion’ of fact,” and said:

“The only positive assertion in the Twitter announcement pertained to the timing of the future release of financial information. It did not make a positive assertion about the already underway trading day.”

Superior Knowledge

Pope Trading had one further argument. If Twitter’s tweet is regarded as an opinion, it gives rise to liability as an opinion expressed by somebody with superior knowledge.

Under some circumstances, statements of professional opinions have been construed as representations of fact,” Ruvolo acknowledged, but said:

“Pope Trading fails to cite any authority applying this expert opinion rule to a statement about a future event.”

The case is Pope Trading v. Twitter, Inc, A148840.


Copyright 2017, Metropolitan News Company