TheCorporateCounsel.net

John recently blogged that emojis can create binding contracts and advised us to think long and hard before clicking “send” on that email or text with a cute little emoji. In fact, you may want to cut out emojis completely — at least in your professional life — especially if you’re a public figure. This Bryan Cave blog discusses a recent U.S. District Court decision rejecting a motion to dismiss a claim that a large investor in Bed Bath & Beyond, well-known to the meme-stock world, used a tweet with an emoji to orchestrate a pump and dump scheme.

On August 12, 2022, CNBC tweeted a negative story about the company, accompanied by a picture of a woman pushing a shopping cart at a Bed Bath store. In response, Cohen tweeted a reply: “At least her cart is full” with what was described as a “smiley moon emoji.” The court stated: “Some online communities understand the smiley moon emoji to mean ‘to the moon’ or ‘take it to the moon.’  .  .   .  In other words, according to Plaintiff, Cohen was telling his hundreds of thousands of followers that Bed Bath’s stock was going up and that they should buy or hold.”

He then filed a close-in-time, but potentially unrelated, amendment to his Schedule 13D which indicated that it “was triggered solely due to a change in the number of outstanding Shares of the Issuer” and made no mention of any plans to sell. Two days later, he filed another amendment reporting the sale of all of his Bed Bath shares.

With respect to the emoji, the blog summarizes the court’s conclusions as follows:

– Although an emoji may be ambiguous, its meaning can be clarified “by the context in which [it] is used.”
– “Emojis may be actionable if they communicate an idea that would otherwise be actionable.”
– The plaintiff “plausibly alleged that the moon tweet relayed that Cohen was telling his hundreds of thousands of followers that Bed Bath’s stock was going up and that they should buy or hold. In the meme stock ‘subculture,’ moon emojis are associated with the phrase ‘to the moon,’ which investors use to indicate ‘that a stock will rise.’ So meme stock investors conceivably understood Cohen’s tweet to mean that Cohen was confident in Bed Bath and that he was encouraging them to act” [citations omitted].
– The tweet is actionable because “plausibly material,” rather than “mere puffery,” as evidenced by investors’ reliance in driving up the stock price. Further, “[i]nvestors may have reasonably seen Cohen as an insider sympathetic to the little guy’s cause,” by interacting with followers on Twitter, his large stake and public interactions with the company.

It’s worth noting that the plaintiffs claimed that the first 13D amendment and related Form 144 were also misleading. In response to the 13D claim, the defense pointed out that Section 13(d) has no private right of action for damages. To this the court replied, “No matter. Even if that is right, it does not follow that 10(b) claims may not be based on misleading 13D filings. Those are two separate questions.”

– Meredith Ervine