Dismissed: That Class Action Suit Against MakerBot Dies Completely

By on July 12th, 2016 in Corporate

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 Stratasys and MakerBot logos
Stratasys and MakerBot logos

Remember that class action suit against MakerBot / Stratasys? Well, it’s now concluded and Stratasys has come out on top. 

The gist of the lawsuit was something like this: the plaintiffs alleged that Stratasys had artificially inflated their stock value based huge anticipated growth from the sales of the (then) new MakerBot Replicator Fifth Gen, with its Smart Extruder. However, the allegations continue, significantly poor financial performance occurred, largely as a result of issues with the Smart Extruder. (Note that the issues have subsequently been resolved). The plaintiffs sought resolution based on this claim.

The court, in this case the United States District Court, District of Minnesota, dismissed the allegations. They explain: 

Applying the strict standards of the PSLRA, the Court finds that plaintiffs’ complaint must be dismissed.  First, the bulk of defendants’ allegedly misleading statements about the quality of the 5G printers consists of non‐actionable puffery. Second, plaintiffs’ allegations fall short of establishing a strong inference of scienter.

“Puffery”. This is what the court thought of the numerous statements by MakerBot and Stratasys team members regarding the quality of the new product. 

By the way, “scienter” means:

A legal term that refers to intent or knowledge of wrongdoing. This means that an offending party has knowledge of the “wrongness” of an act or event prior to committing it.

They continue: 

Under these standards, nearly all of defendants’ statements regarding the quality of the 5G printers are inactionable puffery.  Statements claiming that the 5G printers offer “improved” or “unmatched” quality, reliability, and connectivity, “seamless production workflow,” ease of use, “a lot of innovation,” “superior printing qualities,” and “amazing build volume” are not verifiable. 

This is very likely true because such statements are all subjective. “Superior” to what, exactly? And more: 

The Court therefore concludes that all of the statements that defendants made about the quality of the printers during the class period are non‐actionable, either because they are puffery or because their falsity is not sufficiently pleaded.

The end result was this: 

Plaintiffs’ consolidated amended complaint is dismissed with prejudice.

For the non-lawyers in the audience, “with prejudice” means that the judgement is final and may not be pursued further. 

At this point it appears the entire Smart Extruder story has drawn to a close, with only residual reputations damaged. However, MakerBot is still standing and selling a much improved product (sorry for the puffery there). 

If you care to read the very lengthy saga in full, AdaFruit has conveniently stored the documents for your evening reading pleasure here

But there are lessons here for everyone, and specifically for those considering buying 3D printing equipment. 

The lesson is that you should take subjective statements with a grain of salt, as they are likely just more “puffery”. Stick to actual statistics or relative comparisons for more concrete information. Independent testimonials are also far more valuable than puffery. Read everything very carefully: “Savings up to 100%” clearly includes ZERO, too.

By Kerry Stevenson

Kerry Stevenson, aka "General Fabb" has written over 8,000 stories on 3D printing at Fabbaloo since he launched the venture in 2007, with an intention to promote and grow the incredible technology of 3D printing across the world. So far, it seems to be working!