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CHRISTIAN ANDERSON PLC 

JAMES S. CHRISTIAN (SBN 023614) 

5050 North 40th Street, Suite 320 

Phoenix, Arizona 85018 

Telephone: (602) 478-6828 

Email: James@ChristianAndersonLaw.com 

Local Counsel for Public Employees’ Retirement System of Mississippi 

LABATON SUCHAROW LLP

JAMES W. JOHNSON (pro hac vice to be filed) 

MICHAEL H. ROGERS (pro hac vice to be filed) 

JAMES T. CHRISTIE (pro hac vice to be filed) 

140 Broadway 

New York, New York 10005 

Telephone: (212) 907-0700 

Facsimile: (212) 818-0477 

jjohnson@labaton.com 

mrogers@labaton.com 

jchristie@labaton.com 

Counsel for Public Employees’ Retirement System of Mississippi 

UNITED STATES DISTRICT COURT 

DISTRICT OF ARIZONA 

Public Employees’ Retirement System of 

Mississippi, Individually and on Behalf of All 

Others Similarly Situated, 

Plaintiff, 

v. 

Sprouts Farmers Market, Inc., J. Douglas 

Sanders, Amin N. Maredia, Donna 

Berlinski, Andrew S. Jhawar, Shon Boney, 

Joseph Fortunato, Lawrence P. Molloy, 

Steven H. Townsend, AP Sprouts Holdings, 

LLC, AP Sprouts Holdings (Overseas), L.P., 

Barclays Capital Inc., and Morgan Stanley & 

Co. LLC, 

Defendants. 

 

CASE NO.: _____________________ 

CLASS ACTION 

COMPLAINT FOR VIOLATION OF 

THE SECURITIES ACT OF 1933 

JURY TRIAL DEMANDED

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CLASS ACTION COMPLAINT 

Plaintiff, Public Employees’ Retirement System of Mississippi (“Mississippi PERS” 

or “Plaintiff”) alleges the following based upon the investigation of Plaintiff’s counsel, 

which included a review of U.S. Securities and Exchange Commission (“SEC”) filings by 

Sprouts Farmers Market, Inc. (“Sprouts” or the “Company”), as well as regulatory filings 

and reports, securities analysts’ reports and advisories about the Company, press releases and 

other public statements issued by the Company, and media reports about the Company. 

Plaintiff believes that substantial additional evidentiary support will exist for the allegations 

set forth herein after a reasonable opportunity for discovery. 

NATURE OF THE ACTION 

1. This is a securities class action on behalf of all purchasers of the common stock 

of Sprouts pursuant to the Offering Documents (as defined herein) issued in connection with 

the underwritten secondary public offering for an aggregate of 15,847,800 shares of Sprouts 

common stock by AP Sprouts Holdings, LLC (“AP Sprouts Holdings”) and AP Sprouts 

Holdings (Overseas), L.P. (“AP Sprouts Overseas,” and together with AP Sprouts Holdings, 

the “Selling Stockholders”), which closed on or about March 10, 2015 (the “Offering”), 

seeking to pursue remedies under the Securities Act of 1933 (the “Securities Act”). 

2. Pursuant to the Securities Act, Defendants (as defined herein) are strictly liable 

for the material misstatements and omissions in the Offering Documents issued in 

connection with the Offering, and the claims herein specifically exclude any allegations of 

knowledge or scienter. The claims in this action are based solely on strict liability and 

negligence, and are not based on any reckless or intentionally fraudulent conduct by or on 

behalf of Defendants—i.e., they do not allege, arise from, or sound in, fraud. Plaintiff 

specifically disclaims any allegation of fraud, scienter, or recklessness in these non-fraud 

claims. 

JURISDICTION AND VENUE 

3. The claims alleged herein arise under Sections 11, 12(a)(2), and 15 of the 

Securities Act of 1933. See 15 U.S.C. §§ 77k, 77l(a)(2), and 77o. Jurisdiction is conferred 

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by and venue is proper pursuant to Section 22 of the Securities Act as Sprouts is 

heaquartered in this District.Many of the acts and omissions giving rise to the violations of 

law complained of herein, including the preparation and dissemination to the investing 

public of the materially untrue and misleading Offering Documents took place in this 

District. 

4. In connection with the allegations herein, Defendants, directly or indirectly, 

used the means and instrumentalities of interstate commerce, including, but not limited to, 

the mails, interstate telephone communications and the facilities of the national securities 

markets. 

PARTIES 

5. Plaintiff Mississippi PERS was established in 1952 and provides retirement 

and related benefits for all Mississippi state and public education employees, officers of the 

Mississippi Highway Safety Patrol, and certain elected officials, among others. As of June 

30, 2014, Mississippi PERS oversaw approximately $29 billion on behalf of more than 

387,000 members and their beneficiaries. Mississippi PERS, as set forth in the 

accompanying certification, attached hereto as Exhibit A, purchased Sprouts common stock 

pursuant to the Offering, and was damaged as a result of Defendants’ wrongdoing as alleged 

herein. 

6. Defendant Sprouts is a Delaware corporation that maintains its principal place 

of business at 11811 N. Tatum Boulevard, Suite 2400, Phoenix, Arizona 85028. Sprouts 

operates a chain of grocery markets with 208 stores in 13 states as of June 28, 2015. 

7. Defendant J. Douglas Sanders (“Sanders”) currently serves as the Company’s 

Executive Chairman of the Board. At the time of the Offering, Sanders served as the 

Company’s President and Chief Executive Officer (“CEO”). CEO Sanders signed, among 

other documents, the Company’s Annual Report on Form 10-K for the year ended December 

31, 2014 and the Registration Statement (as defined herein). CEO Sanders has served as the 

Company’s Executive Chairman of the Board since August 2015. CEO Sanders resides in 

Maricopa County, Arizona. 

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8. Defendant Amin N. Maredia (“Maredia”) has served as the Company’s CEO 

since August 2015. At the time of the Offering, Maredia served as the Company’s Chief 

Financial Officer (“CFO”). CFO Maredia signed, among other documents, the Company’s 

Annual Report on Form 10-K for the year ended December 31, 2014 and the Registration 

Statement. CFO Maredia resides in Maricopa County, Arizona. 

9. Defendant Donna Berlinski (“Berlinski”) was, at the time of the Offering, the 

Controller and a Vice President of the Company. Controller Berlinski, as the Company’s 

principal accounting officer, signed the Company’s Registration Statement. Controller 

Berlinski resides in Maricopa County, Arizona. 

10. Defendant Andrew S. Jhawar (“Jhawar”) currently serves as a member of the 

Company’s Board, and at the time of the Offering, was the Chairman of the Board of 

Sprouts. Chairman Jhawar signed the Registration Statement, and is a senior partner of 

Apollo Management, L.P. (“Apollo Management”), which, as set forth below, controlled the 

Selling Stockholders at the time of the Offering. Chairman Jhawar resides in Los Angeles 

County, California. 

11. Defendant Shon Boney (“Boney”) is, and was at the time of the Offering, a cofounder and director of Sprouts. Director Boney signed the Registration Statement. Director 

Boney resides in San Diego County, California. 

12. Defendant Joseph Fortunato (“Fortunato”) is, and was at the time of the 

Offering, a director of Sprouts. Director Fortunato signed the Registration Statement. 

Director Fortunato resides in Collier County, Florida. 

13. Defendant Lawrence P. Molloy (“Molloy”) is, and was at the time of the 

Offering, a director of Sprouts. Director Molloy signed the Registration Statement. Director 

Molloy resides in Jefferson County, Alabama. 

14. Defendant Steven H. Townsend (“Townsend”) is, and was at the time of the 

Offering, a director of Sprouts. Director Townsend signed the Registration Statement. 

Director Townsend resides in Windham County, Connecticut. 

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15. The defendants named in paragraphs 7 through 14 are referred to herein as the 

“Individual Defendants.” Each of the Individual Defendants signed the Offering Documents 

(as defined herein) and/or otherwise participated in the drafting and dissemination of the 

Offering Documents. 

16. AP Sprouts Holdings, LLC (“AP Sprouts Holdings”) is a limited liability 

company organized under the laws of Delaware, with an address set forth in the Offering 

Documents of One Manhattanville Road, Suite 201, Purchase, New York, in Westchester 

County. Corporation Service Company of Wilmington, Delaware serves as the registered 

agent for AP Sprouts Holdings. At the time of the Offering, the manager of AP Sprouts 

Holdings was Apollo Management VI, L.P. (“AMVI”). The general partner of AMVI was 

AIF VI Management, LLC (“AIFVI”). The sole member and manager of AIFVI was Apollo 

Management. AP Sprouts Holdings participated in the drafting and dissemination of the 

Offering Documents. 

17. AP Sprouts Holdings (Overseas), L.P. (“AP Sprouts Overseas”) is a limited 

partnership organized under the laws of Delaware, with an address set forth in the Offering 

Documents of One Manhattanville Road, Suite 201, Purchase, New York, in Westchester 

County. Corporation Service Company of Wilmington, Delaware serves as the registered 

agent for AP Sprouts Overseas. At the time of the Offering, the general partner of AP 

Sprouts Overseas was AMVI. The general partner of AMVI was AIFVI. The sole member 

and manager of AIFVI was Apollo Management. AP Sprouts Overseas participated in the 

drafting and dissemination of the Offering Documents. 

18. The defendants named in paragraphs 16 and 17 are referred to herein as the 

“Selling Stockholders.” 

19. Defendant Barclays Capital Inc. (“Barclays”) is a financial services company 

that acted as underwriters of the Offering. Barclays participated in the drafting and 

dissemination of the Offering Documents. Barclays maintains its headquarters in New York 

County, New York. 

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20. Morgan Stanley & Co., LLC (“Morgan Stanley”) is a financial services 

company that acted underwriters of the Offering. Morgan Stanley participated in the drafting 

and dissemination of the Offering Documents. Morgan Stanley maintains an office in 

Maricopa County, Arizona. 

21. The defendants named in paragraphs 19 and 20 are referred to herein as the 

“Underwriter Defendants.” Pursuant to the Securities Act, the Underwriter Defendants are 

liable for the false and misleading statements in the Offering Documents as follows: 

(a) The Underwriter Defendants are investment banking houses that 

specialize in, inter alia, underwriting public offerings of securities. They served as the 

underwriters of the Offering and received more than $5.2 million in the Offering through an 

underwriting discount of $0.33 per share. The Underwriter Defendants determined that in 

return for their share of the Offering proceeds, they were willing to merchandize Sprouts 

stock in the Offering. The Underwriter Defendants marketed the Offering and presented 

favorable information about the Company, its operations, and its financial prospects; 

(b) The Underwriter Defendants requested and obtained an agreement from 

Sprouts that the Company would indemnify and hold harmless the Underwriter Defendants 

from certain liabilities, including liabilities under the federal securities laws, or to contribute 

to payments the Underwriter Defendants may be required to make in respect to those 

liabilities; 

(c) Representatives of the Underwriter Defendants assisted Sprouts, the 

Selling Stockholders, and the Individual Defendants in planning the Offering including 

discussions regarding the following: (i) the strategy to best accomplish the Offering; (ii) the 

terms of the Offering, including the price at which Sprouts stock would be offered to the 

public; (iii) the language to be used in the Offering Documents; and (iv) the disclosures 

regarding Sprouts and its business that would be made in the Offering Documents. As a 

result of this course of contact and communication between the Underwriter Defendants’ 

representatives and the Company’s management and senior executives, the Underwriter 

Defendants knew of, or in the exercise of reasonable care should have known of, the 

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existence, scope and extent of the then-current trend of price deflation that Sprouts was 

experiencing, as well as the resulting effect of that trend on the Company’s outlook for 

revenue growth; and 

(d) The Underwriter Defendants caused the Offering Documents to be filed 

with the SEC and declared effective in connection with the offers and sales of securities 

registered thereby, including those to Plaintiff and the other members of the Class. 

22. Sprouts, the Individual Defendants, the Selling Stockholders, and Underwriter 

Defendants are collectively referenced herein as “Defendants.” 

SUBSTANTIVE ALLEGATIONS 

23. Founded in 2002, Defendant Sprouts operates a chain of grocery stores that has 

grown to include 208 stores in thirteen states as of June 28, 2015. 

Sprouts’ Ownership Structure 

24. On August 6, 2013, Sprouts completed its initial public offering (the “IPO”). 

Immediately prior to the Company’s IPO, a majority of Sprouts common stock, 

approximately 51.8 percent, was held by certain investment funds affiliated with and 

managed by Apollo Management VI, L.P., including AP Sprouts Holdings and AP Sprouts 

Overseas, the Selling Stockholders. Apollo Management VI, L.P. and the Selling 

Stockholders (among other related funds) are affiliates of Apollo Global Management, LLC 

(collectively referenced herein as “Apollo”). 

25. As part of the IPO, the Company offered 17,702,215 shares of common stock 

as well as granting the underwriters an option to purchase up to an additional 2,775,000 

shares at the IPO price within 30 days of the IPO. Ultimately, the entire underwriters’ 

overallotment option was exercised in its entirety. 

26. After the completion of the IPO, Apollo owned 65,217,769 shares, or 

approximately 44.5 percent, of the Company’s outstanding common stock. 

27. Pursuant to a stockholders agreement (the “Stockholders Agreement”) between 

Sprouts, Apollo, and other entities entered into in contemplation of the IPO, Sprouts granted 

Apollo the right to require the Company to file up to five registration statements with the 

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SEC for the resale of Apollo’s shares of Sprouts common stock, subject to certain 

limitations. 

28. Thereafter, Apollo sold portions of its holdings of Sprouts common stock in a 

series of four registered offerings pursuant to prospectuses dated: (1) November 25, 2013; 

(2) March 27, 2014; and (3) August 12, 2014; and a prospectus supplement dated November 

12, 2014. During this period, Apollo also sold Sprouts common stock via unregistered open 

market transactions. 

29. As of March 5, 2015, Apollo still held 15,847,800 shares of Sprouts common 

stock through the Selling Stockholders, comprising 10.4 percent of the Company’s common 

stock, and was eligible to require the Company to conduct one final registered offering of 

Sprouts common stock pursuant to the Stockholders Agreement. 

Sprouts’ Business Model 

30. Sprouts’ business model includes offering a broad range of products intended 

to cater to consumers’ growing interest in healthy eating and living, including fresh, natural, 

and organic produce. Focusing on natural and organic offerings, Sprouts purports to offer 

high-quality alternatives to traditional, national branded consumer packaged goods generally 

found at conventional grocery retailers. 

31. Specifically, Sprouts seeks to position itself as a value leader in fresh produce, 

a strategy intended to drive trial visits by shoppers who will then become loyal customers. 

32. The sale of fresh produce represents a substantial portion of the Company’s 

revenues, a measure that the Company closely tracks. For example, on August 7, 2014, 

during the Company’s conference call for investors and analysts to discuss results of 

operations for the second quarter of 2014, CEO Sanders stated in part: 

As many of you know Sprouts attracts the everyday grocery 

shopper by offering fresh, high quality produce at the best prices 

in town. Why produce? It’s because produce is a healthy 

product the everyday grocery shopper understands and buys 

every week. With approximately 25% of our revenue coming 

from the produce department, we continue to benefit from the 

consumer’s growing interest in improving their diet by making 

healthier food choices. 

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(All emphases are added unless otherwise noted.) 

False and Misleading Statements and Omissions in Connection with the Offering 

33. Among other metrics, Sprouts tracks and reports sales growth as an indicator 

of the Company’s financial performance and periodically offered guidance regarding 

management’s projections for sales growth. For example, on February 25, 2015, Sprouts 

issued a press release discussing the Company’s results of operations for the fourth quarter 

and full year of 2014, which included guidance for sales growth of between five and six 

percent for the first quarter of 2015, and between six and seven percent for the full fiscal year 

of 2015. 

34. As part of its description of the Company’s competitive strengths in its Annual 

Report on Form 10-K for fiscal year ended December 28, 2014, filed with the SEC on 

February 28, 2015 (as amended, the “2014 10-K”), Sprouts stated: 

Resilient business model with strong financial performance. We 

achieved positive, pro forma comparable store sales growth of 

9.9%, 10.7%, 9.7%, 5.1% and 2.3% in fiscal 2014, 2013, 2012, 

2011 and 2010, respectively . . . . We believe the consistency of 

our performance over time, even through the economic downturn 

from 2008 to 2010, and across geographies and vintages is the 

result of a number of factors, including our distinctive value 

positioning and merchandising strategies, product innovation and 

a well-trained staff focused on customer education and service.

In addition, we believe our high volume and low-cost store 

model enhance our ability to consistently offer competitive 

prices on a complete assortment of fresh, natural and organic 

products. 

35. Sprouts’ 2014 10-K also set forth certain risk factors related to the Company, 

its operations, and outlook, including the following: 

General economic conditions that impact consumer spending 

could adversely affect our business. 

** * 

[I]nflation or deflation can impact our business. Food deflation 

could reduce sales growth and earnings, while food inflation, 

combined with reduced consumer spending, could reduce gross 

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profit margins. As a result, our operating results and financial 

condition could be materially adversely affected. 

Sprouts’ 2014 10-K further discussed the potential effects of produce price deflation—

including highlighting a past instance in which produce price deflation led to positive effects 

on the Company’s margins—as part of the notes to the financial statements: 

Inflation and deflation in the prices of food and other products 

we sell may periodically affect our sales, gross profit and gross 

margin. The short-term impact of inflation and deflation is 

largely dependent on whether or not the effects are passed 

through to our customers, which is subject to competitive market 

conditions. In the first half of fiscal 2012, we experienced 

produce price deflation, which contributed to higher gross 

margins in our business during that period and the full fiscal 

year. 

Food inflation and deflation is affected by a variety of factors and 

our determination of whether to pass on the effects of inflation or 

deflation to our customers is made in conjunction with our 

overall pricing and marketing strategies. Although we may 

experience periodic effects on sales, gross profit and gross 

margins as a result of changing prices, we do not expect the 

effect of inflation or deflation to have a material impact on our 

ability to execute our long-term business strategy. 

36. However, the Company’s 2014 10-K did not offer any qualifying discussion of 

then-current trends in produce price deflation or the effects of such deflation on the 

Company’s sales growth or outlook. 

37. On March 4, 2015, Sprouts filed a Registration Statement on Form S-1 (the 

“Registration Statement”) with the SEC registering the Selling Stockholders’ remaining 

15,847,800 shares of Sprouts common stock for sale to the public at a maximum offering 

price of $35.85 per share. The Registration Statement included a prospectus dated March 4, 

2015. The following day, on March 5, 2015, Sprouts filed a prospectus supplement on Form 

424B4 to the prospectus included in the Registration Statement (the “Prospectus” and 

together with the Registration Statement, the “Offering Documents”), with the final offering 

price of $35.30 per share. 

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38. On or about March 6, 2015, Sprouts conducted the registered public sale of the 

Selling Stockholders remaining shares of Sprouts common stock. Plaintiff and other 

members of the Class purchased Sprouts common stock pursuant to the Offering Documents. 

39. However, the Offering Documents were negligently prepared, and, as a result, 

contained untrue statements of material facts and/or omitted to state facts necessary to make 

the statements made not misleading. 

40. Specifically, the Offering Documents incorporated by reference, among other 

documents, the Company’s 2014 10-K. However, the Offering Documents failed to offer 

any qualifying discussion of the Company’s statements regarding produce price deflation set 

forth in the 2014 10-K, or any discussion of then-current trends in price deflation and its 

effects on the Company’s revenue growth. 

41. The Offering closed on or about March 10, 2015. The Offering was successful 

for the Selling Stockholders, who sold 15,847,800 shares of Sprouts common stock to the 

public at $35.30 per share, raising more than $559.4 million in gross proceeds. 

42. The false and misleading nature of Sprouts’ Offering Documents was revealed 

in part on May 7, 2015, when the Company issued a press release after the close of the 

trading session setting forth its results of operations for the first quarter of 2015. Sprouts 

revealed disappointing results, including sales and earnings that missed analysts’ 

expectations as well as sales growth of 4.8 percent—below the lowest projected guidance 

level of between five and six percent for the quarter. 

43. That same day, Sprouts hosted a conference call for investors and analysts to 

discuss these results. As part of his prepared statement, Executive Chairman Sanders stated 

in relevant part: 

[W]e began experiencing accelerating produce deflation in 

mid-February . . . which increased significantly throughout 

March. 

Later, during the question-and-answer session, CFO Maredia engaged in the following 

exchange in relevant part: 

ANALYST: I wanted to just ask on the inflation specifically. 

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CFO MAREDIA: We were expecting full Q1 inflation of about 

2% and we ended up actuals closer to 1% range, and that was 

really driven by, we began seeing in the middle of February 

acceleration and deflation in the produce area through the end 

of February as well as all the way through March and 

continuing into April. 

44. In response to these revelations, Sprouts’ stock price fell $2.98 per share, or 

9.86 percent, to close at $27.23 per share on May 8, 2015—significantly below the $35.30 

Offering price. 

45. The false and misleading nature of Sprouts’ Offering Documents was further 

revealed on May 21, 2015, when CFO Maredia participated in the BMO Capital Markets 

10th Annual Farm to Market Conference. As part of the presentation, CFO Maredia 

participated in the following exchange in relevant part: 

ANALYST: I guess first question following the last quarter, 

there’s a lot of questions on produce. So I was wondering if 

you can just spend a few minutes talking about produce and the 

environment there. . . . 

CFO MAREDIA: As you know, produce is 25% of our 

business. 

** * 

[W]hat we saw this year was, in the first half of the quarter, due 

to weather conditions, we saw tightness in supply in the produce 

which impacted our ability to promote. And in the back half of 

the quarter, we saw something pretty unusual which we had not 

seen before, frankly. 

[W]e started to see a tremendous amount of deflation. In 

February, we saw huge deflation in certain categories . . . . 

46. The full scope of the false and misleading nature of Spouts’ Offering 

Documents was finally revealed on August 6, 2015, when the Company issued a press 

release after the close of the trading session setting forth its results of operations for the 

second quarter of 2015. Sprouts revealed disappointing results, including sales that missed 

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analysts’ expectations, and reduced the Company’s guidance for full-year sales growth 

guidance by approximately 18 percent, to a range of between four and five percent. 

47. That same day, Sprouts hosted a conference call for investors and analysts to 

discuss these results. As part of his prepared statement, Executive Chairman Sanders stated 

in relevant part: 

The strong tonnage growth we achieved during the quarter was 

offset by deflation of nearly 10% in April which improved to mid 

single digits in the lateral weeks of the quarter. 

We expect the level of deflation to begin to settle as we work 

through the rest of the summer months. 

Later, during the question-and-answer session, the Company’s Chief Operating Officer 

(“COO”), Jim Nielsen, engaged in the following exchange in relevant part: 

ANALYST: I will ask about inflation why is it that you're still 

seeing as much deflation as you are? I thought I’d spoken to 

Amin and said that it had sort of flattened out in June but we're 

still seeing it. And can you talk maybe about the dynamics that 

are causing that? 

COO NIELSEN: I think in my the last earnings call we 

projected it to kind of subside throughout the quarter and we 

didn’t see that . . . . And we sell a disproportionate amount of 

fruit and that’s really the categories you're seeing a lot of 

pressure in and also we are starting to see a little bit of pressure 

on a year-over-year basis because chicken and pork become a 

very deflationary over the course of the last two periods. 

48. In response to these revelations, Sprouts’ stock price fell $2.73 per share, or 

11.62 percent, to close at $20.77 per share on August 7, 2015—well below the $35.30 

Offering price. 

49. Pursuant to Item 303 of Regulation S-K (17 C.F.R. § 229.303), and the SEC’s 

related interpretive releases thereto, issuers are required to disclose events or uncertainties 

that have had or are reasonably likely to cause the registrant’s financial information not to be 

indicative of future operating results, including any known trends. At the time of the 

Offering, Sprouts was experiencing a significant adverse trend in deflationary pricing that 

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was negatively affecting the Company’s revenue and its outlook for revenue growth. This 

adverse fact, and the uncertainties associated therewith, were reasonably likely to have a 

material impact on the Company’s profitability, and, therefore, were required to be disclosed 

in the Offering Documents, but were not. 

50. At the time of the filing of this action, Sprouts common stock traded at 

approximately $21.10 per share—more than 38 percent below the Offering price. 

CLASS ACTION ALLEGATIONS 

51. Plaintiff brings this action as a class action on behalf of all who purchased 

Sprouts common stock pursuant to the Offering Documents issued in connection with the 

Offering (the “Class”). Excluded from the Class are Defendants, those who served as 

officers, directors, and/or affiliates of Defendants at all relevant times, members of the 

immediate families and their legal representatives, heirs, successors, or assigns of any 

excluded person or entity, and any entity in which any Defendant has or had a controlling 

interest. 

52. The members of the Class are so numerous that joinder of all members is 

impracticable. The exact number of Class members is unknown to Plaintiff at this time and 

can be ascertained only through appropriate discovery. Plaintiff believes that there are 

hundreds of members in the proposed Class. Record owners and other members of the Class 

may be identified from records maintained by Sprouts or its transfer agent and may be 

notified of the pendency of this action by mail, using the form of notice similar to that 

customarily used in securities class actions. 

53. Plaintiff’s claims are typical of the claims of the members of the Class as all 

members of the Class are similarly affected by Defendants’ wrongful conduct in violation of 

federal law as set forth herein. 

54. Plaintiff will fairly and adequately protect the interests of the members of the 

Class and has retained counsel competent and experienced in class and securities litigation. 

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55. Common questions of law and fact exist as to all members of the Class and 

predominate over any questions solely affecting individual members of the Class. Among 

the questions of law and fact common to the Class are: 

(a) whether Defendants violated the Securities Act; 

(b) whether the Offering Documents were negligently prepared and 

contained inaccurate statements of material fact and/or omitted material information required 

to be stated therein; and 

(c) to what extent the members of the Class have sustained damages and the 

proper measure of damages. 

56. A class action is superior to all other available methods for the fair and 

efficient adjudication of this controversy since joinder of all members is impracticable. 

Furthermore, as the damages suffered by individual Class members may be relatively small, 

the expense and burden of individual litigation make it impossible for members of the Class 

to individually redress the wrongs done to them. There will be no difficulty in the 

management of this action as a class action. 

FIRST CAUSE OF ACTION 

For Violation of Section 11 of the Securities Act 

Against Company, the Individual Defendants, and the Underwriter Defendants

57. Plaintiff incorporates paragraphs 1 through 56 by reference. 

58. This Cause of Action is brought pursuant to Section 11 of the Securities Act, 15 

U.S.C. § 77k, on behalf of the Class, against the Company, the Indvidual Defendants, and the 

Underwriter Defendants. 

59. The Offering Documents issued in connection with the Offering contained 

untrue statements of material facts, or omitted to state material facts necessary to make the 

statements made not misleading, or that were required to be stated therein. 

60. Defendants are strictly liable to Plaintiff and the Class for the misstatements 

and omissions contained in the Registration Statement. 

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61. None of the Defendants named herein made a reasonable investigation or 

possessed reasonable grounds for the belief that the statements contained in the Offering 

Documents were true and without omissions of any material facts and were not misleading. 

62. By reason of the conduct herein alleged, each Defendant violated, and/or 

controlled a person who violated, Section 11 of the Securities Act. 

63. Plaintiff acquired Sprouts common stock pursuant to the Offering. 

64. Plaintiff and the Class have sustained damages. The value of Sprouts common 

stock has declined substantially subsequent to and due to Defendants’ violations. 

65. At the time of their purchases of Sprouts common stock, Plaintiff and other 

members of the Class did not know the true facts concerning the wrongful conduct alleged 

herein and could not have reasonably discovered those facts prior to the disclosures alleged 

herein. 

66. Less than one year had elapsed between the time that Plaintiff discovered or 

reasonably could have discovered the facts upon which this Complaint is based and the time 

that Plaintiff commenced a prior action against the same Defendants based on the same 

claims on March 4, 2016 in Maricopa County Superior Court, Arizona. Less than three years 

has elapsed between the time that the securities upon which this cause of action is brought 

were offered to the public and the time Plaintiff commenced this action. 

SECOND CAUSE OF ACTION 

For Violation of Section 12(a)(2) of the Securities Act 

Against the Company, the Individual Defendants, and the Underwriter Defendants 

67. Plaintiff incorporates paragraphs 1 through 66 by reference. 

68. By means of the defective Offering Documents, the Company, the Individual 

Defendants, and the Underwriter Defendants promoted and sold Sprouts common stock to 

Plaintiff and other members of the Class. 

69. The Offering Documents contained untrue statements of material fact, and 

concealed and failed to disclose material facts, as set forth herein. The Company, the 

Individual Defendants, and the Underwriter Defendants owed Plaintiff and the other 

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members of the Class who purchased Sprouts common stock pursuant to the Offering 

Documents the duty to make a reasonable and diligent investigation of the statements 

contained in the Offering Documents to ensure that such statements were true and that there 

was no omission to state a material fact required to be stated in order to make the statements 

contained therein not misleading. The Company, the Individual Defendants, and the 

Underwriter Defendants, in the exercise of reasonable care, should have known of the 

misstatements and omissions contained in the Offering Documents as set forth above. 

70. Plaintiff did not know, nor in the exercise of reasonable diligence could have 

known, of the untruths and omissions contained in the Offering Documents at the time that 

Plaintiff acquired Sprouts common stock. 

71. By reason of the conduct alleged herein, the Company, the Individual 

Defendants, and the Underwriter Defendants violated Section 12(a)(2) of the Securities Act. 

As a direct and proximate result of such violations, Plaintiff and the other members of the 

Class who purchased Sprouts common stock pursuant to the Offering Documents sustained 

damages in connection with their purchases of the stock. Accordingly, those members of the 

Class who continue to hold Sprouts common stock issued pursuant to the Offering 

Documents have the right to rescind and recover the consideration paid for their shares, and 

hereby tender their common stock to the Company, the Individual Defendants, and/or the 

Underwriter Defendants. Plaintiff and other members of the Class who have sold their 

common stock seek damages to the extent permitted by law. 

72. Less than one year had elapsed between the time that Plaintiff discovered or 

reasonably could have discovered the facts upon which this Complaint is based and the time 

that Plaintiff commenced a prior action against the same Defendants based on the same 

claims on March 4, 2016 in Maricopa County Superior Court, Arizona. Less than three years 

has elapsed between the time that the securities upon which this cause of action is brought 

were offered to the public and the time Plaintiff commenced this action. 

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THIRD CAUSE OF ACTION 

For Violation of Section 15 of the Securities Act 

Against the Selling Stockholders, and the Individual Defendants

73. Plaintiff incorporates paragraphs 1 through 72 by reference. 

74. This Cause of Action is brought pursuant to Section 15 of the Securities Act 

against the Company, the Selling Stockholders, and the Individual Defendants. 

75. The Selling Stockholders were each control persons of Sprouts by virtue of: 

(1) their right to enforce certain demand registration rights in the Stockholders Agreement 

requiring Sprouts to register a public offering of Sprouts common stock on their behalf; 

(2) their significant equity ownership interest in Sprouts common stock; and (3) their direct 

and/or indirect business and/or personal relationships with Defendant Jhawar and others. 

76. By reason of the foregoing, the Selling Stockholders was able to, and did 

control the contents of the Offering Documents, which contained materially untrue or 

misleading information and omitted material facts. 

77. The Individual Defendants each were control persons of Sprouts by virtue of 

their positions as directors and/or senior officers of the Company. The Individual 

Defendants each had a series of direct and/or indirect business and/or personal relationships 

with other directors and/or officers and/or major shareholders of Sprouts. Sprouts controlled 

the Individual Defendants and all of the Company’s employees. 

78. The Individual Defendants each were culpable participants in the violations of 

Section 11 of the Securities Act alleged in the First Cause of Action above, based on their 

having signed or authorized the signing of the Offering Documents and having otherwise 

participated in the process that allowed the Offering to proceed to completion. 

REQUEST FOR RELIEF 

WHEREFORE, Plaintiff prays for relief and judgment, as follows:

A. Determining that this action is a proper class action, certifying Plaintiff as Class 

representative, and appointing Plaintiff’s counsel as Class Counsel; 

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B. Awarding compensatory damages in favor of Plaintiff and other Class members 

against all Defendants, jointly and severally, for all damages sustained as a result of 

Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon; 

C. Awarding rescission or a rescissory measure of damages; and 

D. Awarding Plaintiff and the Class their reasonable costs and expenses incurred in 

this action, including counsel fees and expert fees; 

E. Awarding such other relief including equitable and/or injunctive relief as deemed 

appropriate by the Court. 

JURY TRIAL DEMANDED 

Plaintiff hereby demands a trial by jury. 

Dated: March 2, 2018 Respectfully submitted, 

CHRISTIAN ANDERSON PLC 

s/ James S. Christian 

JAMES S. CHRISTIAN (SBN 023614) 

5050 North 40th Street, Suite 320 

Phoenix, Arizona 85018 

Telephone: (602) 478-6828 

James@ChristianAndersonLaw.com 

Local Counsel for Public Employees’ 

Retirement System of Mississippi

LABATON SUCHAROW LLP

JAMES W. JOHNSON (PHV to be filed) 

MICHAEL H. ROGERS (PHV to be filed) 

JAMES T. CHRISTIE (PHV to be filed) 

140 Broadway 

New York, New York 10005 

Telephone: (212) 907-0700 

Facsimile: (212) 818-0477 

jjohnson@labaton.com 

mrogers@labaton.com 

jchristie@labaton.com 

Counsel for Public Employees’ Retirement 

System of Mississippi 

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