Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—2d Cir.: Second Circuit affirms Teladoc plaintiffs failed to plead scienter over Livongo integration, (Jul 28, 2026)

By Rodney F. Tonkovic, J.D.

Panel affirms dismissal of revived merger-integration claims, finding stock-sale, confidential-witness, and core-operations allegations insufficient.

A Second Circuit panel affirmed that securities fraud plaintiffs failed to plead that Teladoc Health knowingly hid integration issues after its $18.5 million merger with Livongo. The panel held that the complaint did not support a strong inference that the challenged statements about sales-team integration, marketing data integration, or merger-related risk disclosures were made with fraudulent intent or recklessness. The court also rejected the plaintiffs' reliance on executive stock sales and the core-operations doctrine. The ruling is by summary order and is without precedential effect (In re Teladoc Health, Inc. Securities Litigation, No. 25-1022 (2d Cir. July 27, 2026)).

Teladoc, a provider of virtual healthcare services, merged with Livongo in October 2020, and the company's chronic care business is now called Livongo.

The complaint alleged that Teladoc hid the true extent of the difficulties and risks it faced in integrating with Livongo and the competitive pressures it faced. The statements at issue concerned: the integration of the companies' sales teams; the integration of Livongo's marketing data and tech; and statements in risk disclosures about possible integration issues when those had already been discovered.

Back and forth. The district court dismissed the complaint in July 2023, concluding that none of the challenged statements were material misrepresentations. This holding was reversed in part by the Second Circuit, which found that four of the statements were, in fact, material misrepresentations. The action was remanded to address the issues of scienter and loss causation, which had not been reached in the original action.

On remand, the district court dismissed for lack of scienter. The court said that the allegations showed neither an inference of conscious misbehavior or recklessness, nor an inference of motive and opportunity to commit fraud.

No scienter. The panel affirmed that the plaintiffs failed to adequately plead scienter. The complaint first pointed to the CEO's stock sales during the period at issue as evidence of motive, but the court disagreed, noting that the sales were made for tax purposes and pursuant to a 10b5-1 plan. There was also no showing of recklessness because the plaintiffs failed to plead facts suggesting that the CEO knew that his statements about the sales team integration were inaccurate when they were made or that he should have known that he was misrepresenting the facts.

The plaintiffs further failed to plead scienter under the core operations doctrine. The court acknowledged that Teladoc's $18.5 million acquisition of Livongo was important to Teladoc, the plaintiffs did not plausibly plead that the details of the sales-team staffing arrangements and technical integration of marketing databases were sufficiently "core" to the acquisition and Teladoc's operations to support a core operations argument. Finally, the complaint failed to show that Teladoc itself had scienter because none of the individual defendants possess scienter.

The case is No. 25-1022.

Judge: Per curiam.

Attorneys: Lauren Amy Ormsbee (Labaton Keller Sucharow LLP) for Hui Ma. Daniel J. Kramer (Paul, Weiss, Rifkind, Wharton & Garrison LLP) for Teladoc Health, Inc.

Companies: Teladoc Health, Inc.

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