Opinion · Court of Appeals for the Second Circuit

Sheriffs' Pension & Relief Fund v. Lululemon Athletica Inc.

604 F. App'x 62

Type: Opinion
Court: Court of Appeals for the Second Circuit
Jurisdiction: Federal
Date: 2015-05-15
Topic: litigation

declining to find suspicious sales where a defendant’s “stock sales fail[ed] to match up closely with her allegedly false and misleading statements” | dismissing Section 10(b) claim where the plaintiff “d[id] not allege that the announcement of [the CEO’s] resignation itself revealed any fraud” | “Trades made pursuant to a Rule 10b5-l trading plan do not give rise to a strong inference of scienter.” | “A statement believed to be true when made, but later shown to be false, is insufficient.” | “A state- ment believed to be true when made, but later shown to be false, is insufficient.” | “No CW sets forth facts that suggest that any of the alleged statements were false when they were made.” (emphasis in original) | “[W]ithout contemporaneous falsity, there can be no fraud.” (emphasis in original) | “general allegations” regarding quality control issues “do not render the [defendants’] statements described herein, considered in context, false or misleading,” where the complaint does not also “contain the . . . required specific factual allegations (by CWs or otherwise)” | “[W]ithout contemporaneous falsity, there can be no fraud.” (citation omitted).

Citator

Cited by: 30 opinions

Louisiana Sheriffs’ Pension & Relief Fund (the Fund) appeals from the'District Court’s dismissal of its consolidated class action complaint for failure to state a claim under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. The Fund alleged that Lululemon Athletica Inc., its founder and former chairman Dennis Wilson, and its former CEO Christine Day materially misrepresented to investors the quality of Lululemon’s popular black luon yoga pants and the degree to which Lululemon implemented controls to prevent or minimize product quality deficiencies. We assume the parties’ familiarity with the facts and record of the prior proceedings, to which we refer only as necessary to explain our decision to affirm.

For substantially the reasons provided by the District Court in its April 18, 2014, opinion and order, we conclude that the Fund has failed adequately to plead that any of the statements attributed to the defendants were materially misleading at the time that they were made. See San Leandro Emergency Med. Grp. Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 812 (2d Cir.1996). Insofar as the defendants are alleged to have omitted information from Lululemon’s corporate website, filings with the SEC, press releases, or investor calls, the Fund has failed adequately to plead with particularity that these omissions rendered the defendants’ statements “inaccurate, incomplete, or misleading” or that the defendants were otherwise under a duty to disclose such information.1 Stratte-McClure v. Morgan Stanley, 776 F.3d 94, 101 (2d Cir.2015) (quotation marks omitted). Because the *64 Fund has not adequately alleged any relevant material misrepresentations or omissions, we agree with the District Court that it failed to state a claim for securities fraud under §§ 10(b) or Rule 10b5. See Starr ex rel. Estate of Sampson v. Georgeson Shareholder, Inc., 412 F.3d 103, 109 (2d Cir.2005). The District Court therefore also did not err in dismissing the Fund’s claim of control person liability pursuant to § 20(a) of the Exchange Act. See ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir.2007). We have considered the Fund’s remaining arguments and conclude that they are without merit. For the foregoing reasons, the judgment of the District Court is AFFIRMED.

. Indeed, in at least one of its SEC filings, Lululemon disclosed the possibility of product quality deficiencies and the potential adverse financial impact of these deficiencies, should they arise.