April 19, 2021
On April 19, 2021, Weil secured a decisive victory in a putative securities class action brought against Pilgrim’s Pride Corporation (PPC) and certain current and former senior executives when the U.S. District Court for the District of Colorado granted the defendants’ motion to dismiss all claims.
In the action, a plaintiff purporting to represent a class of purchasers of PPC stock during the period of February 21, 2014 to November 17, 2016, attempted to revive previously-dismissed claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, based on the plaintiff’s alleged theory that the defendants failed to disclose PPC’s participation in a price-fixing conspiracy with other major players in the U.S. broiler chicken market.
In its order granting the defendants’ motion to dismiss, the court agreed with Weil’s argument that many of the plaintiff’s claims were time-barred because they fell outside the applicable five-year statute of repose. The court noted that, although the plaintiff had timely filed the initial complaint (which was previously dismissed without prejudice), he had waited some 576 days following dismissal of the prior complaint (until June 8, 2020) to file his amended pleading. The court ruled that, during that time, the statute of repose had continued to run, cutting off liability for all of the alleged misstatements occurring prior to June 8, 2015. The court explained that the plaintiff’s position that the date of the amended complaint should have no bearing on the timeliness of the pleading “subverts the very purpose of statutes of repose,” adding that, “[i]f the Court were to adopt plaintiff’s position, a plaintiff could file a case, have it dismissed without prejudice, and then file an amended complaint at any time irrespective of any repose period.” The court further rejected the plaintiff’s arguments that his second amended complaint should be considered timely under a continuing fraud exception and through application of the relation back doctrine. As the court observed, statutes of repose are designed to provide defendants with “explicit and certain protection.”
Next, the court addressed the defendants’ arguments that any claims not time barred should be dismissed because the plaintiff lacked Article III standing to pursue them as all of his purchases of PPC stock pre-dated any of the remaining alleged misstatements. Consistent with the U.S. Supreme Court’s holding in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975), the court found that the plaintiff, a mere holder of securities during the period when misstatements were allegedly made, was not an actual purchaser or seller of securities, and thus lacked Article III standing to bring a Section 10(b) claim. Accordingly, the court agreed with Weil and dismissed the remaining claims, noting that “unless [the plaintiff] can plead that he bought or sold defendant’s stock within the period of repose, his claims are effectively dismissed with prejudice.”