BlackBerry and two of its highest-ranking executives were hit on Friday with a proposed class action lawsuit by a shareholder claiming the company misled investors in reports made regarding the BlackBerry 10 smartphone line.  The suit, filed in the Southern District of New York, alleges that, despite BlackBerry’s promise that the Blackberry 10 platform would be the catalyst for the company’s resurgence, the line was in fact poorly received by the market and BlackBerry’s “business, operations and financial situation was made even worse.”

The suit, Pearlstein v. BlackBerry Ltd., et al., No. 1:13-cv-07060, is brought on behalf of a putative class of thousands of BlackBerry common stock purchasers who invested in the company between September 27, 2012 and September 20, 2013.  The team representing the proposed class includes former Louisiana Attorney General, Charles Foti, Jr.  The case has been assigned to Judge Thomas Griesa.

The suit alleges that BlackBerry, formerly Research in Motion, confessed the true state of the company in a September 20, 2013, press release which revealed that the company would have to write down between $930 million and $960 million in losses related to unsold BlackBerry 10 devices.  After this write-down announcement, the suit claims that BlackBerry’s share price plummeted 24%, from $10.52 on September 19 to $8.01 on September 25.  As a result of BlackBerry 10’s poor sales, the company was allegedly forced to lay off approximately 40% of its workforce and plan to cut operating expenditures by 50% by the end of the first quarter in 2015.  On September 23, 2013, BlackBerry announced that it had signed a letter of intent to be acquired by Fairfax Financial Holdings for $9.00 a share, or roughly $4.7 billion.

The suit comes on the heels of BlackBerry’s successful dismissal earlier this year of a similar class action filed against it in 2011.  That suit also accused BlackBerry of seeking to obscure its failing market position and mislead investors who bought stock at inflated prices.  That case, Shemian v. Research in Motion Ltd., 2013 WL 1285779 (S.D.N.Y. Mar. 29, 2013), was dismissed after Judge Richard Sullivan determined that the plaintiffs failed to adequately allege that the company or its executives made deliberate and material misstatements.  In Shemian, the court noted that while BlackBerry had failed to keep pace with rivals in developing smartphones and information technology, “corporate failings alone do not give rise to a securities fraud claim.”  The current suit will certainly be one to watch.