In re Walgreens Boots Alliance Securities Litigation

Summary

This memorandum opinion and order addresses defendants’ motions to dismiss a putative securities class action concerning Walgreens’ investment in VillageMD and its healthcare strategy. The court considered claims under Section 10(b), Rule 10b-5, and Section 20(a) of the Securities Exchange Act, as well as plaintiffs’ use of confidential-witness allegations and an appendix. The court granted the motion to dismiss in part and denied it in part, and denied the motion to strike the appendix.

Holdings

1. The appendix was not stricken because striking it and dismissing the complaint would merely lead to an amended complaint and increased cost and delay; however, the court would not consider facts in the appendix that were not contained in the complaint.
2. Plaintiffs did not adequately plead that the pre-mid-2022 statements concerning clinic openings were materially false or misleading.
3. Plaintiffs adequately pleaded that Kehoe's statement that Walgreens was 'doubling down' on clinic openings and Driscoll's statement that Walgreens remained on track for 600 clinics by 2025 and 1,000 by 2027 were materially false or misleading.
4. Plaintiffs adequately alleged that Brewer's statement that VillageMD served Medicaid patients and Kehoe's statement that VillageMD accepted all types of insurance were materially false or misleading, but plaintiffs failed to plead scienter as to those statements.
5. Plaintiffs adequately pleaded that Brewer's statement that Walgreens was not seeing a labor issue in its U.S. Healthcare business was materially false or misleading and that Brewer acted with scienter.
6. Plaintiffs adequately pleaded scienter for statements 47, 48, and 68, but not for the Medicaid statements or the remaining alleged statements.
7. The Section 20(a) claim was dismissed as to all alleged statements except statements 47, 48, and 68 because a control-person claim depends on an adequately pleaded primary Section 10(b) violation.

Questions Presented

1. Whether plaintiffs adequately pleaded that Walgreens and its executives made materially false or misleading statements in violation of Section 10(b) and Rule 10b-5.
2. Whether plaintiffs adequately pleaded scienter as to the individual speakers for the surviving alleged misstatements.
3. Whether plaintiffs adequately pleaded control-person liability under Section 20(a).
4. Whether the court should strike plaintiffs' appendix as an improper attempt to amend the complaint.
5. Whether plaintiffs should receive leave to amend.

Disposition

other