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In re: Lululemon Securities Litigation

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL

EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER

JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE

OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE

32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED

WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL

APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION

“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST

SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second 1

Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley 2

Square, in the City of New York, on the 15 th day of May, two thousand fifteen. 3

4

PRESENT: PIERRE N. LEVAL, 5

RAYMOND J. LOHIER, JR., 6

CHRISTOPHER F. DRONEY, 7

Circuit Judges

. 8

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IN RE: LULULEMON SECURITIES LITIGATION 11

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‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐ 13

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LOUISIANA SHERIFFS’ PENSION & RELIEF FUND, 15

16

Plaintiff

‐ Appellant

, 17

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v. No. 14

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LULULEMON ATHLETICA INC., DENNIS J. 21

WILSON, CHRISTINE McCORMICK DAY, 22

232 Defendants

‐ Appellees

. * 1 1

2

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4

FOR APPELLANT: R OBERT D. K LAUSNER

, Klausner, Kaufman, Jenson 5

& Levinson, Plantation, FL (Hannah G. Ross, Jai 6

Chandrasekhar, Katherine M. Sinderson, 7

Bernstein Litowitz Berger & Grossmann LLP, 8

New York, NY, on the brief ). 9

10

FOR APPELLEES: J OSEPH S. A LLERHAND (Caroline Hickey Zalka, 11

Melanie A. Conroy, Robert S. Ruff III, on the brief ), 12

Weil, Gotshal & Manges LLP, New York, NY, for 13

Lululemon Athletica Inc. and Christine 14

McCormick Day. 15

16

A UDRA J. S OLOWAY (Michele Hirshman, Brette 17

Tannenbaum, on the brief ), Paul, Weiss, Rifkind, 18

Wharton & Garrison LLP, New York, NY, for 19

Dennis J. Wilson. 20

21

Appeal from a judgment of the United States District Court for the 22

Southern District of New York (Katherine B. Forrest, Judge ). 23

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, 24

AND DECREED that the judgment of the District Court is AFFIRMED. 25

Louisiana Sheriffs’ Pension & Relief Fund (the Fund) appeals from the 26

District Court’s dismissal of its consolidated class action complaint for failure to 27

state a claim under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and 28

Securities and Exchange Commission Rule 10b

‐ 5. The Fund alleged that 29

Lululemon Athletica Inc., its founder and former chairman Dennis Wilson, and 30

* 1 The Clerk of the Court is respectfully directed to amend the caption of this case

as set forth above.3 its former CEO Christine Day materially misrepresented to investors the quality 1

of Lululemon’s popular black luon yoga pants and the degree to which 2

Lululemon implemented controls to prevent or minimize product quality 3

deficiencies. We assume the parties’ familiarity with the facts and record of the 4

prior proceedings, to which we refer only as necessary to explain our decision to 5

affirm. 6

For substantially the reasons provided by the District Court in its April 18, 7

2014, opinion and order, we conclude that the Fund has failed adequately to 8

plead that any of the statements attributed to the defendants were materially 9

misleading at the time that they were made. See San Leandro Emergency Med. 10

Grp. Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 812 (2d Cir. 1996). 11

Insofar as the defendants are alleged to have omitted information from 12

Lululemon’s corporate website, filings with the SEC, press releases, or investor 13

calls, the Fund has failed adequately to plead with particularity that these 14

omissions rendered the defendants’ statements “inaccurate, incomplete, or 15

misleading” or that the defendants were otherwise under a duty to disclose such 16

information. 1 Stratte

‐ McClure v. Morgan Stanley, 776 F.3d 94, 101 (2d Cir. 2015) 17

(quotation marks omitted). Because the Fund has not adequately alleged any 18

relevant material misrepresentations or omissions, we agree with the District 19

Court that it failed to state a claim for securities fraud under § 10(b) or Rule 10b

‐ 20

5. See Starr ex rel. Estate of Sampson v. Georgeson Shareholder, Inc., 412 F.3d 21

103, 109 (2d Cir. 2005). The District Court therefore also did not err in dismissing 22

1 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.4 the Fund’s claim of control person liability pursuant to § 20(a) of the Exchange 1

Act. See ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir. 2007). 2

We have considered the Fund’s remaining arguments and conclude that 3

they are without merit. For the foregoing reasons, the judgment of the District 4

Court is AFFIRMED. 5

FOR THE COURT: 6

Catherine O’Hagan Wolfe, Clerk of Court 7