IBEW Local No. 58 Annuity Fund v. EveryWare Global, Inc.

Summary

The United States Court of Appeals for the Sixth Circuit affirmed dismissal of investors’ securities-fraud claims against EveryWare Global, Inc., its officers, directors, shareholders, and underwriters. The court held that the plaintiffs failed to plead the requisite scienter for claims under the Securities Exchange Act and failed to plead material misrepresentations or omissions under the Securities Act.

Holdings

1. The complaint failed to state a claim because the projections were forward-looking statements and plaintiffs did not plead particularized facts giving rise to a strong inference that CEO John Sheppard had actual knowledge that the projections were false or misleading.
2. The complaint failed to state a claim because plaintiffs did not plead facts giving rise to a strong inference that CEO Sheppard and CFO Bernard Peters acted with a mental state embracing intent to deceive, manipulate, or defraud.
3. The § 20(a) claims failed because plaintiffs failed to state substantive violations of the Securities Exchange Act.
4. The complaint failed to state claims under §§ 11 and 12(a)(2) because plaintiffs did not plausibly plead that the registration statement or prospectus contained material misrepresentations.
5. The § 15 claims failed because plaintiffs did not state a substantive violation of the Securities Act.

Questions Presented

1. Whether the complaint adequately pleaded that EveryWare's January 2013 financial projections violated § 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
2. Whether the complaint adequately pleaded that EveryWare officers' August 2013 statements that the company was on track to meet its financial projections violated § 10(b) or Rule 10b-5.
3. Whether the complaint adequately pleaded primary violations necessary to support secondary-liability claims under § 20(a) of the Securities Exchange Act.
4. Whether the registration statement and prospectus contained materially misleading statements or omissions sufficient to state claims under §§ 11 and 12(a)(2) of the Securities Act of 1933.
5. Whether the complaint could state secondary liability under § 15 of the Securities Act absent a substantive Securities Act violation.

Disposition

affirmed