A federal appeals court on Friday revived a shareholder lawsuit accusing Keurig Green Mountain Inc of misleading shareholders about its business prospects.
The 2nd U.S. Circuit Court of Appeals in New York said a lower court judge erred in dismissing the lawsuit, which accused the company, once known as Green Mountain Coffee Roasters, of inflating its share price in 2011 by overstating its growth prospects and concealing high inventory levels.
The three-judge panel ruled that the lawsuit adequately alleged false statements were made to investors and that the complaint’s claims supported a «strong inference» that the company intended to deceive shareholders.
Circuit Judge Denny Chin wrote that the lawsuit’s «allegations articulate defendants’ intent to craft a false growth story and the extraordinary opportunities for personal gain this ‘growth’ created for Green Mountain’s executives.»
Keurig in a statement said it was disappointed by the ruling and continued to believe the case is «totally without merit.»
Mark Rosen, a lawyer for the plaintiffs at Barrack, Rodos & Bacine, said he looked «forward to returning to the district court to prosecute our claims.»
The lawsuit was filed after a high-profile presentation by hedge fund manager David Einhorn in October 2011, who, as part of a bet against the maker of the Keurig brewing system, accused Green Mountain of misleading auditors and inflating its results.
Over the next two days, the company’s stock price fell to $69.80 per share from $92.09, according to the lawsuit.
Weeks later in November 2011, Green Mountain said it failed to meet sales and revenue expectations for the first time in eight quarters and disclosed that its inventory levels had sky-rocketed.
The lawsuit soon followed, accusing the company of misleading investors into believing business was booming when it was accumulating a significant overstock of expiring and unsold coffee products.
The lawsuit also named as defendants Lawrence Blanford, Green Mountain’s chief executive from May 2007 to December 2012, and Frances Rathke, its current chief financial officer.
The plaintiffs, led by five employee retirement systems including the Louisiana Municipal Police Employees’ Retirement System, sought class action status for investors who bought the company’s stock from Feb. 2, 2011, to Nov. 9, 2011.
U.S. District Judge William Sessions in Burlington, Vermont, dismissed the lawsuit in 2013, saying the plaintiffs had failed to allege any material false statements.
The case is Louisiana Municipal Police Employees’ Retirement System v. Green Mountain Coffee Roasters Inc, 2nd U.S. Circuit Court of Appeals, No. 14-199.
Источник: reuters.com/article/2015/07/24/keuriggreenmountain-lawsuit-idUSL1N10414620150724
U.S. court revives investor lawsuit vs Keurig Green Mountain
