July 11, 2023
On July 10, 2023, Weil secured a decisive win for Sleep Number Corporation and certain of its senior executives in a securities fraud class action in the U.S. District Court for the District of Minnesota, which granted, with prejudice, the defendants’ motion to dismiss all claims asserted against them.
The plaintiffs challenged certain statements made by Sleep Number concerning its sales demand, expected growth, and supply chain strains, and asserted federal securities law claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. According to the plaintiffs, Sleep Number experienced a significant disruption to its supply chain as a result of Winter Storm Uri, a disruption that purportedly caused material shortages and created uncertainty about when foam supplies would be restored to the level needed to manufacture products on demand and deliver them in a timely manner. The plaintiffs allege that Sleep Number’s statements during the purported class period were false and misleading because Sleep Number allegedly concealed the impact of Winter Storm Uri from its investors.
Following oral argument, in its opinion granting the motion to dismiss, the court found that, among other things, the plaintiffs failed to plead that the challenged statements were false or misleading and failed to plead scienter. In particular, the court held that the “complaint must be dismissed because it fails to adequately plead that any of defendants’ statements were false or misleading. In addition, setting aside the issue of falsity, plaintiffs’ allegations fall far short of giving rise to a strong inference of scienter.”
The Weil team was led by Securities Litigation practice Co-Head John Neuwirth, Securities Litigation partner Joshua Amsel, counsel Stefania Venezia, and associates Rasheed Stewart, Michelle Gemmell, Samin Mossavi and Bill Mo.