Company: TRUE
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001327318-25-000065
Chunk: 125

Company: TrueCar, Inc.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part II, Item 1A
Chunk 125
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 Federal Securities Litigation, based on allegations that the defendants made false or misleading statements in violation of applicable securities laws in connection with our secondary offering of common stock in 2017. The case was ultimately dismissed pursuant to a settlement which was covered by our directors’ and officers’ liability insurance. Following the resolution of the Federal Securities Litigation, we were subject to a number of derivative actions in Delaware based upon substantially the same factual allegations as the Federal Securities Litigation and received demands from the plaintiffs that we pursue related claims against certain of our former officers and directors. Each such derivative action was ultimately dismissed and is currently resolved and a special committee of our board of directors recommended that our board refuse the plaintiffs’ related demands in their entirety. However, if similar litigation is filed against us, we may incur significant legal fees, settlements or damages awards. If any such matter is not ultimately resolved in our favor, losses arising from the 

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results of litigation or settlements, as well as ongoing defense costs or adverse changes in our dealer network, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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In the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action lawsuits have often been instituted against affected companies, and as noted above, this type of lawsuit has been instituted against us in the form of the Federal Securities Litigation and the related derivative litigation, among others. Additional lawsuits of this type or similar types, if instituted against us or one or more of our officers or directors, whether arising from alleged facts the same as, similar to or different from prior litigation, could result in significant legal fees, settlements or damage awards, as well as the diversion of our management’s attention and resources, and thus could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Further, in April 2024 we initiated a lawsuit in Los Angeles Superior Court against the landlord of our former principal executive offices in Santa Monica. The lawsuit, which we filed in connection with providing the landlord with a termination notice with respect to the lease agreement pursuant to which we leased such offices, sought declaratory judgment that our termination was justified under applicable California law, along with certain other relief. In May 2024, following our initiation of the lawsuit, the landlord of our former executive offices filed a cross-complaint against us alleging breach of contract as a result of our termination of the lease and seeking an unspecified amount of damages. A trial for