Twitter headquarters. Photo: Jason Doiy/ALM

Nearly two years after being put on hold, a case alleging Twitter Inc.'s directors misled shareholders about seeing growth in the number of users on the social media platform has been reopened.

A stipulation and scheduling order filed Friday and signed by U.S. District Judge Maryellen Noreika of the District of Delaware indicated the three shareholder plaintiffs intend to file an amended complaint in U.S. District Court for the District of Delaware by July 2.

The case was administratively closed in 2018 pending the resolution of a securities action in the U.S. District Court for the Northern District of California that involves San Francisco-based Twitter Inc. and two of the individual defendants named in the Delaware case.

Judge Maryellen Noreika

The Delaware case began in October 2016, when plaintiff Atul Verma accused Twitter's board members and officers of misrepresenting data to investors by claiming the social media platform was seeing an increase in its number of monthly active users—a measurement no longer used by the company—despite the number of the site's daily active users decreasing in 2015.

The original complaint, made public with some redactions in 2018, argued that because advertising is Twitter's primary sense of revenue and the amount of revenue generated from ads is dependent on how frequently those ads are viewed, information about user engagement is key for investors' understanding of revenue potential.

Additionally, the complaint stated knowing only the growth rate of the number of users doesn't give a complete picture of that revenue potential without also considering rates of user engagement.

The defendants are accused of causing damages to Twitter by breaching their duties to the company, including by issuing multiple incomplete or inaccurate statements. Twitter reported July 28, 2015, that the number of monthly users was not growing and user engagement was on the decline.

An unjust enrichment claim was filed against Chief Financial Officer Anthony Noto, who the complaint stated was permitted to keep almost $80 million in equity compensation while allegedly misrepresenting information about Twitter's business. A Brophy claim was also brought against Twitter's founders, Evan Williams and Jack Dorsey, accusing the two of selling more than $276 million in Twitter stock for their benefit despite knowing information that would lower the stock's value if publicly known. Both are on Twitter's board of directors and have held executive roles with the company.

Attorneys for Twitter's directors asked for the case not to proceed further until the California matter was settled, asserting that juggling both cases at once would require Twitter to take contradictory stances.

U.S. Magistrate Chief Judge Mary Pat Thynge of the District of Delaware, who presided over the Delaware case at the time, ordered a stay in July 2018, ruling that delaying a resolution in Delaware would not be prejudicial to the plaintiffs.

On May 15 of this year, Raymond J. DiCamillo of Richards, Layton and Finger, who is representing the defendants, wrote in a letter to Noreika that the California matter was scheduled to go to trial June 22 and that the defendants planned to move for the dismissal of the Delaware case. The California case was continued at the end of May, with no trial date set as of Monday afternoon and a motions hearing and case management conference scheduled for July 8.

DiCamillo and plaintiffs attorney Blake A. Bennett of Cooch and Taylor did not respond to calls Monday.

The June 12 scheduling order indicated if the plaintiffs file an amended complaint by July 2, Twitter would have until Aug. 3 to respond. If Twitter and its board were instead to file a motion to dismiss, the June 12 order stated, the plaintiffs would have until September to respond.