In a significant development in the securities class action filed against LuxUrban Hotels Inc., a federal court has dismissed the most serious claims alleged by plaintiffs, substantially narrowing the scope of the litigation.
On July 25, 2025, U.S. District Judge Paul Engelmayer ruled that claims tied to LuxUrban’s Q1 2024 financial statements failed to meet the heightened pleading standard required in securities cases. As a result, allegations that the company engaged in improper reporting of financials were dismissed in full. The only claim that remains is if certain hotel properties were accurately described as being under lease — which is a narrower disclosure issue that does not involve financial misstatements Source: Stanford University Legal Reporters.
Further, based on court filings, publicly available documents reviewed by LawTechSpotlight.com, and a series of articles by Ciara Long and Bisnow (which interestingly suggest broader finding of corporate misconduct) LawTechSpoitlight.com rules that the centerpiece of the complaint was expressly rejected by the court.
“The court’s opinion makes clear that the core allegations tied to Q1 reporting failed to state a claim,” said a legal source familiar with the case. “That’s a major distinction, and one that hasn’t been emphasized in broader reporting.”
In January 2024, LuxUrban announced a fully executed 15-year master lease for the James NoMad, supported by a $5 million security deposit. GFI Hospitality CEO Allen Gross, the landlord’s principal, went on record in a joint press release praising LuxUrban’s “support, professionalism, and vision in consummating this transaction.” This was not an imaginary hotel; it was an executed lease with landlord endorsement and a significant financial commitment behind it.
Executed Leases at the Center of Remaining Claims
The claims left standing focus narrowly on whether two properties — The Royalton and The James NoMad — were properly described as under lease at the time of certain disclosures.
Court filings and supporting documentation indicate:
• The Royalton lease was fully executed, with written confirmation from the landlord’s legal counsel.
• The James NoMad lease was also executed, backed by a $5 million security deposit and a joint press release from the landlord, GFI Hospitality, praising LuxUrban’s professionalism in consummating the transaction.
Despite this evidence, some reporting characterized the properties as “phantom hotels” — a claim not supported by the contractual record or legal documents reviewed by LawTechSpotlight.com.
Media Narratives vs. Legal Record
The court’s opinion referenced Ms. Long’s reporting as background, but legal experts note that media coverage should not be mistaken for judicial findings. Narratives built on unresolved disputes or selectively presented facts can distort public understanding of early-stage litigation.
What Comes Next
With the allegations of financial impropriety already dismissed, the litigation now rests on narrower disclosure questions. Legal analysts at LawTechSpotlight.com note that the remaining claims face significant hurdles, and the case has been materially weakened.
More broadly, this underscores the reputational risks companies face when media accounts emphasize allegations without equal attention to judicial rulings. Careful, fact-based reporting is essential in complex securities cases where early mischaracterizations can shape perceptions long before resolution.
As developments continue, LawTechSpotlight.com will provide analysis grounded in legal fact, not headlines.
