San Antonio Fire and Pension Fund v. Dole Food Company, Inc. (D. Del.)
On April 14, 2016, the United States District Court for the District of Delaware appointed E&C as Co-Lead Counsel in this securities fraud class action on behalf a class of persons and entities who sold Dole Food Company, Inc. (“Dole” or the “Company”) common stock (i) during the period from January 2, 2013 through October 31, 2013 or (ii) on November 1, 2013, where those shares were sold on the open market and were not held as of the closing of a take-private transaction on that date.
The action alleged a fraudulent scheme to artificially depress the price of Dole’s common stock orchestrated by the Company’s controlling shareholder and Chief Executive Officer, David H. Murdock and Dole’s President, COO, General Counsel and Director C. Michael Carter (the “Individual Defendants”) so that Murdock could take the company private at a significantly discounted price.
On June 23, 2016, Lead Plaintiffs filed an Amended Consolidated Class Action Complaint (the “Complaint”) asserting claims against Dole and the Individual Defendants under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, and against the Individual Defendants under Section 20(a) of the Exchange Act. The Complaint sought to recover damages on behalf of a class of investors who sold their Dole shares at artificially deflated prices during the period of January 2, 2013 through October 31, 2013. The class was later amended to include investors who sold on November 1, 2013, prior to the closing of a take-private transaction on that date. During the class period, defendants allegedly made materially false and misleading statements in order to deflate Dole’s stock price. For example, following a strategic transaction with the ITOCHU Corporation of Japan, defendants allegedly falsely told investors that the transaction would produce $20 million in annual cost savings when internal projections showed that Dole could easily achieve annual cost savings of at least $50 million. Defendants also allegedly gave investors a pretextual reason for cancelling its stock repurchase program and undervalued its real estate assets to further depress its stock price. Further, defendants allegedly provided Dole’s Special Committee with inaccurate financial information and interfered with the Special Committee process to support Murdock’s lowball take-private offer.
On August 22, 2016, Defendants filed their answer to the Complaint, which, among other things, denied that any of the statements or omissions at issue were materially false or misleading, made with scienter, or caused any losses. Discovery in the action commenced in October 2016. Defendants and third parties produced more than 770,000 pages of documents to Lead Plaintiffs and Lead Plaintiffs produced more than 25,000 pages of documents to the defendants. E&C also worked extensively with financial experts to conduct an in-depth analysis of the applicable damages. Damages were a significant issue in the litigation, as the case is one of the first securities class actions to allege a company misled investors to create artificial deflation of its stock price.
On January 9, 2017, Lead Counsel and Defendants’ Counsel participated in a full-day mediation session before former federal district Judge Layn R. Phillips. After the mediation session, the parties reached an agreement in principle to settle the Action for $74,000,000 in cash. The Court preliminarily approved the settlement on March 30, 2017.
On June 18, 2017, the Court granted Lead Plaintiffs’ Motion for Final Approval of Class Action Settlement and Plan of Allocation. On August 14, 2018, the Court entered an order approving the distribution of settlement funds.
To view the relevant documents in this matter, please use the following links:
Amended Consolidated Class Action Complaint
Judgment Approving Class Action Settlement