Doller v. Hertz Global Holdings, Inc.

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

EDWARD M. DOLLER,

Individually and on Behalf of All

Others Similarly Situated,

Plaintiff,

Case No. 2:24-cv-513-KCD-DNF

v.

HERTZ GLOBAL HOLDINGS,

INC., STEPHEN M. SCHERR and

ALEXANDRA BROOKS,

Defendants.

/

ORDER

Plaintiff Edward M. Doller, individually and on behalf of all others

similarly situated, sues Defendants Hertz Global Holdings, Inc., Stephen M.

Scherr, and Alexandra Brooks for securities fraud. (Doc. 50.)1 Defendants

move to dismiss the complaint for failure to state a claim. (Doc. 51.) Doller

has responded (Doc. 53), making this matter ripe. For the reasons below,

Defendants’ motion is GRANTED IN PART AND DENIED IN PART.

I. Background

Here are the relevant facts taken from the operative complaint, which

must be accepted as true at this stage. Hertz is a publicly traded rental car

company. (Doc. 50 ¶¶ 15, 16.) Defendant Scherr served as Hertz’s Chief

1 Unless otherwise indicated, all internal quotation marks, citations, case history, and

alterations have been omitted in this and later citations.

Executive Officer and sat on the company’s board from February 2022 to

April 2024. (Id. ¶ 17.) Defendant Brooks was Hertz’s Executive Vice

President and Chief Financial Officer from July 2023 to June 2024. (Id. ¶ 18.)

In 2021, Hertz announced it was making “a significant investment to

offer the largest rental fleet” of electric vehicles “in North America and one of

the largest in the world.” (Doc. 51 at 3.) Hertz consequently purchased

100,000 Teslas and agreed to buy an additional 240,000 EVs. (Doc. 50 ¶¶ 56,

58, 61.) Things didn’t quite go as planned.

By 2023, EV rental demand turned out to be far less than Hertz

expected. (Doc. 51 at 4.) This led Hertz to sell half of its EV fleet. (Doc. 50 ¶

8.) It afterward took “a massive write-off of $245 million to account for the

inflated carrying values [it] had on its books from acquiring Tesla EVs at top-

dollar,” and later recorded “an additional $195 million write-off to mark-

market its inflated EVs being sold.” (Id. ¶¶ 6, 8.) The company’s stock price

ultimately “declined $5.49 per share, or 54% on abnormally high trading

volume.” (Id. ¶ 10.)

Doller now sues Defendants for securities fraud under §§ 10(b) and

20(a) of the Securities Exchange Act of 1934. (Id.) He alleges that “[d]espite a

lack of demand for EVs, Defendants falsely told investors through the Class

Period that EV rental demand is very strong and strong across all aspects of

[their] business.” (Id. ¶ 5.) According to Defendants, however, Doller has not

alleged sufficient facts to proceed under either theory. (Doc. 51.)

II. Legal Standards

“Section 10(b) of the Securities Exchange Act of 1934 prohibits the use

or employ, in connection with the purchase or sale of any security . . . [of] any

manipulative or deceptive device or contrivance in contravention of such

rules and regulations as the [Securities and Exchange Commission] may

prescribe as necessary or appropriate in the public interest or for the

protection of investors.” Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307, 1316

(11th Cir. 2019). Under this authority, the SEC passed Rule 10b-5, which

provides:

It shall be unlawful for any person, directly or indirectly,

by the use of any means of instrumentality of interstate

commerce, or the mails or of any facility of any national

securities exchange,

(a) To employ any device scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to

omit to state a material fact necessary in order to make

the statements made, in light of the circumstances under

which they were made, not misleading, or

(c) To engage in any act, practice, or course of business

which operates or would operate as a fraud or deceit upon

any person, in connection with the purchase or sale of any

security.

17 C.F.R. § 240.10b-5. To state a securities-fraud claim under Rule 10b-5, a

plaintiff must allege: “(1) a material misrepresentation or omission; (2) made

with scienter; (3) a connection with the purchase or sale of a security; (4)

reliance on the misstatement or omission; (5) economic loss; and (6) a causal

connection between the misrepresentation or omission and the loss[.]”

Carvelli, 934 F.3d at 1317.

Section 20(a) of the Securities Exchange Act “imposes derivative

securities-fraud liability on certain company individuals.” Id. at 1330. This

section “has three elements: (1) a primary violation of the securities laws—

here, allegedly, of § 10(b) and Rule 10b-5; (2) individual defendants who had

requisite the power to control the general business affairs of the company;

and (3) individual defendants who had the power to directly or indirectly

control or influence the specific corporate policy which resulted in primary

liability.” Id.

To survive a motion to dismiss, a plaintiff bringing a securities-fraud

claim under Rule 10b-5 must satisfy three pleading standards. See, e.g.,

FindWhat Inv. Grp. v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir. 2011).

First is Fed. R. Civ. P. (8)(a)(2)’s “run-of-the-mill federal notice-pleading

requirement.” Carvelli, 934 F.3d at 1317. It requires a “short and plain

statement of the claim showing that the pleader is entitled to relief[.]” Fed. R.

Civ. P. (8)(a)(2).

Second is Fed. R. Civ. P. 9(b), which requires the plaintiff to “state with

particularity the circumstances constituting fraud or mistake.” Id. Under this

standard, the complaint must “allege specifically (1) which statements or

omissions were made in which documents or oral representations; (2) when,

where, and by whom the statements were made (or, in the case of omissions,

not made); (3) the content of the statements or omissions and how they were

misleading; and (4) what the defendant received as a result of the fraud.”

Carvelli, 934 F.3d at 1318.

Lastly, we have the Private Securities Litigation Reform Act of 1995

(“PSLRA”). See 15 U.S.C. § 78u-4. Designed to curb abusive litigation by

private parties, the PSLRA requires securities-fraud claimants to “specify

each statement alleged to have been misleading” and “the reason or reasons

why the statement is misleading.” 15 U.S.C. § 78u-4(b)(1)(B); see also Tellabs,

Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 313 (2007). Additionally,

the complaint must “state with particularity facts giving rise to a strong

inference that the defendant acted” with an intent to defraud or severe

recklessness. FindWhat, 658 F.3d at 1296.

III. Discussion

Defendants press several arguments. (Doc. 51.) They contend Doller’s §

10(b) claim fails because he does not explain how any of the underlying

statements were false. (Id. at 8-11.) But even assuming falsity, they argue

the alleged statements are immaterial or lack scienter. (Id. at 11, 18-24.)

These pleading failures, according to Defendants, also prevent Doller’s

derivative § 20(b) claim. (Id. at 24-25.) The Court largely agrees—with two

exceptions discussed below. For organizational purposes, Doller’s claims are

sorted into three groups: (1) statements lacking falsity, (2) immaterial

statements, and (3) the surviving statements.

a. Falsity

As mentioned, securities-fraud claimants must explain how the

defendant’s statements were false or misleading. See, e.g., Gladney v.

Consumers Credit Union, No. 23-13959, 2024 WL 2797914, at *3 (11th Cir.

May 31, 2024). “A statement is misleading if, in light of the facts existing at

the time of [the statement] . . . [a] reasonable investor, in the exercise of due

care, would have been misled by such statement.” FindWhat, 658 F.3d at

1305. So the “appropriate primary inquiry is into the meaning of the

statement to the reasonable investor and its relationship to truth.” Id.

According to the complaint, Defendants misled investors by praising

the general demand for Hertz’s vehicles and EV demand among its corporate

clients. (Doc. 50 ¶¶ 100, 104, 106, 108, 116, 118, 121, 123, 125, 127.)

Likewise, Defendants falsely claimed Hertz was growing its charging

network. (Id. ¶¶ 112, 129.) But Doller doesn’t adequately demonstrate how

any of these statements were false. He cites evidence that overall EV demand

was weak; that Hertz’s charging network was insufficient; and general

allegations that corporate demand for EVs “had not materialized.” (See, e.g.,

id. ¶¶ 101, 113, 126, 128.) But these facts do not sufficiently undermine

Hertz’s statements. Doller’s evidence is at best tangential (and at worst

irrelevant) to what Defendants said. That won’t cut it. See FindWhat, 658

F.3d at 1306; Mulvaney v. GEO Grp., Inc., 237 F. Supp. 3d 1308, 1319 (S.D.

Fla. 2017). Without an adequate showing of falsity, the above referenced

statements cannot proceed. See Meide v. Pulse Evolution Corp., No. 3:18-CV-

1037-J-34MCR, 2020 WL 5350325, at *15 (M.D. Fla. Sept. 4, 2020);

Henningsen v. ADT Corp., 161 F. Supp. 3d 1161, 1192-93 (S.D. Fla. 2015).

b. Materiality

The PSLRA is only concerned with material misrepresentations or

omissions. Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1236 (11th Cir. 2008).

“A misrepresentation or omission is material if, in the light of the facts

existing at the time, a reasonable investor, in the exercise of due care, would

have been misled by it.” Carvelli, 934 F.3d at 1317. “In other words,

materiality depends on whether a ‘substantial likelihood’ exists that a

reasonable investor would have viewed a misrepresentation or omission as

significantly alter[ing] the ‘total mix’ of information made available.” Id.

A statement is immaterial, however, if it qualifies as corporate puffery.

See, e.g., In re Health Ins. Innovations Sec. Litig., No. 8:17-CV-2186-T-17SPF,

2019 WL 3940842, at *7 (M.D. Fla. June 28, 2019). Corporate puffery

“comprises generalized, vague, nonquantifiable statements of corporate

optimism.” Carvelli, 934 F.3d at 1318. “The puffery doctrine presumes a

relatively (but realistically) savvy consumer—the general idea being that

some statements are just too boosterish to justify reasonable reliance.” Id.

Here, paragraphs 100, 102, 114, 116, 119, and 123 all include

inactionable puffery. They contain statements like “we will always remain

attentive to customer preference,” (Doc. 50 ¶ 100), and “we are making more

fleet available for more revenue earning activities, which better enables us to

serve base demand as well as demand across our new ventures,” (id. ¶ 116).

None provide any real substance. Instead, they are the sort of lofty,

aspirational comments reasonable investors routinely shrug off. See, e.g.,

MAZ Partners LP v. First Choice Healthcare Sols., Inc., No.

619CV619ORL40LRH, 2019 WL 5394011, at *14 (M.D. Fla. Oct. 16, 2019);

Emps. Ret. Sys. v. Whole Foods Mkt., Inc., 905 F.3d 892, 901-02 (5th Cir.

2018); In re Royal Caribbean Cruises Ltd. Sec. Litig., No. 1:11-22855-CIV,

2013 WL 3295951, at *12 (S.D. Fla. Apr. 19, 2013) (optimistic discussion of

“healthy demands,” an “intention to compete successfully,” and the

“‘encouraging’ prospect of early bookings” considered puffery). So these

statements must also be dismissed.

c. The Surviving Statements

That leaves paragraphs 98 and 110. Defendants contend neither are

actionable since they weren’t false, are immaterial, or are protected forward-

looking statements. (Doc. 51 at 12-17.) They alternatively argue that Doller

has not alleged scienter.

i. ¶ 98

Paragraph 98 alleges that Defendant Scherr—then Hertz’s CEO—

stated “EV rental demand is very strong and strong across all aspects of our

business.” (Doc. 50 ¶ 98.) Defendants claim this statement is not false, and in

any event, it’s inactionable puffery. Neither argument prevails.

Starting with falsity. A claimant must specifically plead “the reason or

reasons why the statement is misleading.” 15 U.S.C. § 78u-4(b)(1). As

relevant here, when done through a confidential witness, courts look to

“whether, taken as true, the confidential witnesses’ accounts are enough to

make it ‘plausible’ that the defendant’s statement was false or misleading

when made . . . and whether the complaint provides an adequate foundation

for the confidential witnesses’ accounts.” Mogensen v. Body Cent. Corp., 15 F.

Supp. 3d 1191, 1214 (M.D. Fla. 2014).

The complaint checks these boxes. It identifies a confidential witness

(CW2) who was Hertz’s Revenue Management Analyst for the Midwestern

Region “from before the Class Period to February 2023.” (Doc. 50 ¶ 20.) And

according to this witness, “EV utilization was between 55% to 60% in CW2’s

Midwestern US region, as well as for 70% to 75% of the other regions in the

country, and was at that level throughout CW2’s employment and sometimes

fell as low as 30% to 35%[.]” (Id. ¶ 99(d).) Considering this evidence, which

comes from a witness with access to Hertz’s rental data, it’s plausible that EV

demand was not in fact “very strong” when Scherr claimed it to be. See

Mogensen, 15 F. Supp. 3d at 1214-15. Doller has sufficiently shown falsity.

Defendants’ puffery argument also fails. To be sure, statements using

descriptors like “strong” are often inactionable. See, e.g., Next Century

Commc'ns Corp. v. Ellis, 318 F.3d 1023, 1029 (11th Cir. 2003) (deeming

“strong performance” to be puffery); Murphy v. Precision Castparts Corp., No.

3:16-CV-00521-SB, 2020 WL 4040827, at *16 (D. Or. July 17, 2020); In re

Splash Tech. Holdings, Inc. Sec. Litig., 160 F. Supp. 2d 1059, 1076-77 (N.D.

Cal. 2001). But they can create liability when tied to more concrete facts. See,

e.g., In re Harman Int'l Indus., Inc. Sec. Litig., 791 F.3d 90, 109 (D.C. Cir.

2015); Shupe v. Rocket Companies, Inc., 660 F. Supp. 3d 647, 669 (E.D. Mich.

2023). That’s because “the critical inquiry” isn’t what adjective was used, but

“whether the statement could have misled a reasonable investor.” In re

Harman, 791 F.3d at 109; see also Carvelli, 934 F.3d at 1320 (“[W]hen

considering a motion to dismiss a securities-fraud action, a court shouldn’t

grant unless the alleged misrepresentations—puffery or otherwise—are so

obviously unimportant to a reasonable investor that reasonable minds could

not differ on the question of their importance.”).

As relevant here, Hertz had announced that it was betting big on EVs.

(Doc. 51-2 at 2.) It touted and doubled down on this bet and even rolled out

an ad campaign specifically designed to showcase its EV fleet. (Id. at 2-3;

Doc. 50 ¶¶ 58-63.) So when Hertz’s CEO later characterized EV demand as

“very strong,” reasonable investors could have interpreted this statement to

mean the bet was paying off. Against this backdrop, Scherr’s statement is not

immaterial puffery. See In re Dentsply Sirona, Inc. Sec. Litig., 665 F. Supp.

3d 255, 283 (E.D.N.Y. 2023) (concluding reasonable investors could be misled

by statements hailing “strong demand” for company’s products); see also

Plumbers & Pipefitters Nat'l Pension Fund v. Davis, No. 1:16-CV-3591-GHW,

2020 WL 1877821, at *9 (S.D.N.Y. Apr. 14, 2020).

ii. ¶ 110

As for paragraph 110, it concerns an April 2023 earnings call where

Scherr stated:

Hertz posted strong results in the first quarter, reflecting

continued growth in demand across our customer

segments and a stable pricing environment in both the U.S. and

abroad.

* * *

Our fleet acquisition costs are generally aligned with vehicle

delivery timing. As a result, we have been benefitting from recent

declines from EV OEMS. We are forecasting nearly 2 million

EV rentals in 2023, approximately 5x the number of the

prior year.

(Doc. 50 ¶ 110.)

Defendants argue the first portion is generic and Doller has not pled

falsity. (Doc. 51 at 9.). The Court agrees and therefore dismisses the

statement about “continued growth in demand.” See FindWhat, 658 F.3d at

1306; Mulvaney, 237 F. Supp. 3d at 1319.

As for the latter portion, Defendants contend it is inactionable since it

was forward-looking and accompanied by meaningful cautionary statements.

(Doc. 51 at 12-13.) Specifically, Defendants point to their Form 10-K

disclosure that “[d]emand for EVs which may be impacted by customer

sentiment regarding EVs overall” could impact its EV initiative’s success. (Id.

at 13; Doc. 51-7 at 7.) Doller responds that this cautionary language was

meaningless because the risk of insufficient EV demand had already

materialized. (Doc. 53 at 14.)

The PSLRA “includes a ‘safe harbor’ provision that immunizes certain

‘forward-looking’ statements from liability.” Carvelli, 934 F.3d at 1324. “A

forward-looking statement is what it sounds like—a prediction, projection, or

plan.” Carvelli, 934 F.3d at 1324. This includes “statement[s] containing a

projection of revenues” or “statement[s] of future economic performance.” 15

U.S.C. § 78u-5(c)(1)(A), (C). Such declarations are inactionable if they “are

either immaterial or, if material, are identified as forward-looking and

accompanied by meaningful cautionary statements identifying important

factors that could cause actual results to differ materially from those in the

forward-looking statement[s].” Mogensen, 15 F. Supp. 3d at 1215. Cautionary

language is “meaningful” “when an investor has been warned of risks of a

significance similar to that actually realized, and the cautionary statement is

tailored to the risks the business faces.” Id. at 1216. But “cautionary

language can’t be ‘meaningful’ if it is nothing more than a front for present

problems.” Carvelli, 934 F.3d at 1327. After all, “to warn that the untoward

may occur when the event is contingent is prudent,” but “to caution that it is

only possible for the unfavorable events to happen when they have already

occurred is deceit.” FindWhat, 658 F.3d at 1299. And so the question

becomes: was the cautionary language here meaningful?

The Court doesn’t think so. When Scherr forecasted “nearly 2 million

EV rentals in 2023,” EV demand had been lagging. So it doesn’t matter that

Defendants disclosed EV demand as a risk. According to Doller’s evidence,

that risk had already materialized. The cautionary language accompanying

Defendants’ forecast was thus meaningless. See FindWhat, 658 F.3d at 1299;

S.E.C. v. Merch. Cap., LLC, 483 F.3d 747, 769 (11th Cir. 2007); Sec. & Exch.

Comm'n v. Quiros, No. 16-CV-21301, 2016 WL 11578637, at *14 (S.D. Fla.

Nov. 21, 2016) (“[C]autionary statements do not render projections about

future performance immaterial where the maker of the projections is aware

of adverse information about past performance but fails to disclose it.”). So,

for now, this forecasting statement is actionable.

iii. Scienter

Finally, Defendants argue Doller hasn’t sufficiently pled scienter. The

PSLRA requires securities-fraud claimants to “state with particularity facts

giving rise to a strong inference that the defendant acted with the required

state of mind.” 15 U.S.C. § 78u-4(b)(2). This means the pleadings here must

show “either an intent to deceive, manipulate, or defraud or severe

recklessness.” Mizzaro, 544 F.3d at 1238. The Eleventh Circuit has defined

“severe recklessness” as

Limited to those highly unreasonable omission or

misrepresentations that involve not merely simple or even

inexcusable negligence, but an extreme departure from

the standards of ordinary care, and that present a danger

of misleading buyer or sellers which is either known to

the defendant or is so obvious that the defendant must

have been aware of it.

Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1282 n.18 (11th Cir. 1999).

Additionally, a “strong inference” of scienter is “more than merely

plausible or reasonable—it must be cogent and at least as compelling as any

opposing inference of nonfraudulent intent.” Tellabs, Inc., 551 U.S. at 314.

This requires courts to ask: “When the allegations are accepted as true and

taken collectively, would a reasonable person deem the inference of scienter

at least as strong as any opposing inference?” Id. at 326.

The complaint sets forth—in painstaking detail—the internal systems

Hertz used to monitor its business. (Doc. 50 ¶¶ 43-54.) These systems

“reported, in real-time, on the number and composition of the rental fleet for

each location and reservations” and could generate “a slew of reports which

could be produced on a very granular level.” (Id. ¶¶ 44-45.) Hertz could

produce “graphical representation[s] of utilization levels for specific fleet

categories, such as ICE and EV vehicles.” (Id. ¶ 48.) Hertz’s top brass had

access to these internal systems during the class period, which they

acknowledged generated crucial data. (Id. ¶¶ 50, 53-54, 168, 169, 174.) And,

according to Doller’s evidence, EV utilization hovered around 55% to 60% for

three-fourths of Hertz’s domestic markets. Altogether, it seems incredibly

unlikely that Defendants had not somehow learned EV demand was low. At a

minimum, the inference of scienter here is “at least as compelling as any

opposing inference of nonfraudulent intent.” FindWhat, 658 F.3d at 1300.

Still, Defendants contend that scienter isn’t alleged since nothing

shows they actually reviewed any reports or data on EV demand. (Doc. 51 at

21-22.) But access to such information alone suffices here. See Edge v.

Tupperware Brands Corp., No. 6:22-CV-1518-RBD-LHP, 2023 WL 6310236,

at *6 (M.D. Fla. Sept. 28, 2023); In re Sensormatic Elecs. Corp. Sec. Litig., No.

018346CIVHURLEY, 2002 WL 1352427, at *6 (S.D. Fla. June 10, 2002)

(“Where a defendant publishes a statement at a time he is in possession of or

has access to facts suggesting that the statement is inaccurate, misleading, or

incomplete . . . a classic fact pattern giving rise to a strong inference of

scienter appears.”); Fla. State Bd. of Admin. v. Green Tree Fin. Corp., □□□

F.3d 645, 665 (8th Cir. 2001) (“One of the classic fact patterns giving rise to a

strong inference of scienter is that defendants published statements when

they knew facts or had access to information suggesting that their public

statements were materially inaccurate.”). Doller has alleged sufficient facts,

at this stage, to show scienter.

IV. Conclusion

In sum, Doller’s §§ 10(a) and 20(a) claims survive only with respect to

the statements alleged in paragraph 98 and in the latter portion of paragraph

110. All other statements are dismissed. Since this case will be proceeding in

part, the Clerk is directed to LIFT THE STAY previously entered under the

PLSRA and remove the stay flag from the docket. The parties are directed to

confer and submit a case management report by October 31, 2025.

ORDERED in Fort Myers, Florida on October 10, 2025.

Kyle C. Dudek os at

United States District Judge

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