Screenshot of TrueCar's website.

Investors in TrueCar Inc. are resisting a bid by the Santa Monica-based car-pricing company's directors to temporarily halt a Delaware derivative lawsuit over allegedly inflated stock prices while a federal panel mulls whether to consolidate shareholder claims into multidistrict litigation.

Plaintiffs in the Delaware matter argued this week that request for a stay was an unjustified  attempt to stymie the case, which accuses the firm's leaders of failing to warn investors about changes to its co-branded car-selling website with USAA—a decision investors blamed for costing the company hundreds of millions of dollars in market capitalization last year.

In a brief filed Wednesday, shareholders said both the Delaware suit and a similar case in California federal court were still in their “infancy” and that the defendants had not supported their arguments in favor of a stay.

“Accordingly, there is no risk of differing findings or conflicting rulings, as such rulings or findings will be made in the future,” attorneys for plaintiffs Ara Afarian and Shelley Niemi wrote in a 14-page filing. “Instead, the only deadline in the action is the deadline for defendants' response to the complaint—an event that will occur no matter where the derivative litigation proceeds.”

Earlier this month TrueCar's officers and directors asked U.S. District Judge Colm F. Connolly of the District of Delaware to pause the litigation, after they had asked the Judicial Panel on Multidistrict Litigation to combine the two cases and transfer them to the Delaware court. Briefing on the motion is set to wrap up June 4, with a decision expected “shortly thereafter,” defense attorneys said.

The TrueCar directors argued that the move would simplify the litigation and avoid inconsistent rulings that could harm both sides.

“A short stay of this case pending the panel's decision would best serve the interests of the court and the parties by conserving judicial resources, avoiding duplicative litigation, and avoiding inconsistent rulings—the very interests the MDL procedure was designed to promote,” TrueCar's Wilson Sonsini Goodrich & Rosati said in a May 8 brief.

Shareholders first sued members of the board, along with TrueCar's CEO, chief financing officer and chief accounting officer, March 6 in the Central District of California, claiming that the company had mislead investors in 2017 about coming changes to the car-buying site USAA shared with TrueCar.

According to the suit, the board said the changes merely presented a future risk to the company's bottom line, when in fact they had already been underway for about nine months.

Afarian sued on behalf of the company in Delaware about a month later, saying in his lawsuit that TrueCar's misleading statements cause the company's stock to be traded at inflated prices. When news of USAA's changes did break, he said, TrueCar was “hammered by massive sales” that wiped out any gains it had made on the market.

USAA, which is based in San Antonio, Texas, has historically operated as TrueCar's largest partner for directing customers to the TrueCar website in exchange for marketing fees. The partnership, Afarian said, has generated nearly one-third of TrueCar's annual unit sales, but also gives USAA ”broad discretion” to make adjustments to how the firms' co-branded selling site was operated, marketed and promoted.

According to the Delaware complaint, USAA decided in January 2017 to implement changes to the site, which included questions requiring USAA members to detail their personal finances and monthly budgets. However, the redesign, which formally launched that June, was not disclosed to investors until November, when TrueCar issued a “dismal earnings report and announced that it had failed to meet its third-quarter guidance,” the complaint said.

On Wedneday, Afarian's lawyers said TrueCar was the “real party at interest” in the suit and that any delay would hurt its ability to have its claims heard.

“The individual defendants are self-interestedly seeking a stay in order to delay litigation that is targeting them—using speculative harm to the company as a shield,” the filing said. “In reality, a stay only would further harm TrueCar as it would be forced to wait to have its claims proceed, and permit those accused of mismanaging and damaging the Company to remain in their leadership positions.”

Afarian and Niemi are represented in the Delaware case by Frank J. Johnson and Phong L. Tran of Johnson Fistel in New York and Michael I. Fistel Jr. from the firm's Marietta, Georgia, office. Blake A. Bennett of Cooch and Taylor is acting as local counsel.

The TrueCar defendants are represented by Shannon E. German and  Jessica A. Hartwell of WIlson Sonsini in Wilmington.

The case is captioned Afarian v. Perry.