Green Mountain Coffee Roasters wins dismissal of shareholder lawsuit accusing company of making misleading statements to investors that resulted in financial statement, regulatory inquiry
March 21, 2013
– Green Mountain Coffee Roasters Inc has won the dismissal of a shareholder lawsuit accusing it of making misleading statements to investors that ultimately resulted in a financial restatement and a regulatory inquiry.
U.S. District Judge William Sessions in Burlington, Vermont, on Wednesday said investors fell short of making allegations to support a strong inference that the K-Cup manufacturer deliberately sought to mislead investors.
A spokeswoman for Green Mountain said it was pleased with the decision.
"This result reflects what we understood from the beginning - that there was no wrongdoing by anyone at the company and the allegations made by the Horowitz plaintiffs were baseless," Suzanne DuLong, the spokeswoman, said in a statement.
David Rosenfeld, a lawyer for the plaintiffs at Robbins Geller Rudman & Dowd, did not immediately respond on Thursday to a request for comment.
The September 2010 lawsuit was led by three individuals, and brought on behalf of shareholders who bought Green Mountain stock between July 28 and Sept. 28 of that year.
On that Sept. 28, the Waterbury, Vermont-based company revealed it had discovered an "immaterial" error in how it accounted for K-Cup inventory. It also said the U.S. Securities and Exchange Commission had opened an inquiry focused on the company's revenue recognition practices.
The following day, Green Mountain shares fell 16 percent. Less than two months later, in November 2010, Green Mountain said investors should not rely on its 2007 to 2010 financial statements, and that it had overstated pre-tax income by a cumulative $7.6 million in that period.
Sessions had dismissed the case in January 2012 but at the time gave the investors a chance to plead their case again. Wednesday's dismissal was with prejudice, meaning the investors cannot try again.
"Plaintiffs still have not alleged facts demonstrating that any of the individuals responsible for releasing the company's (quarterly) statements were confronted with information that should have made the company aware of their material falsity," he wrote.
The case is separate from two pending shareholder lawsuits filed against Green Mountain after hedge fund manager David Einhorn in October 2011 made a presentation criticizing the company, whose shares he had shorted.
Meanwhile, Green Mountain said in a Feb. 6 regulatory filing that it is cooperating with the SEC inquiry it previously disclosed in 2010.
Shares of Green Mountain were up 20 cents to $56.05 in Thursday morning trading on the Nasdaq.
The case is Horowitz v. Green Mountain Coffee Roasters Inc, U.S. District Court, District of Vermont, No. 10-00227.
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