Middle District Of Pennsylvania Dismisses Putative Class Action Based On Lead Plaintiff's Loss Of Standing

Author:Shearman & Sterling LLP
Profession:Shearman & Sterling LLP
 
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On October 24, 2018, Judge John E. Jones III of the United States District Court for the Middle District of Pennsylvania granted judgment on the pleadings and dismissed a putative securities class action against Rite Aid Corporation, Walgreens Boots Alliance, Inc., and certain of their executives under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder relating to the ultimately unsuccessful merger between the two companies. Hering v. Walgreens Boots Alliance, Inc., —F. Supp. 3d—, 2018 WL 5276189 (M.D. Pa. 2018). This decision follows from a decision issued earlier this summer and reviewed in a prior post. In that earlier decision, Judge Jones dismissed claims with respect to Rite Aid's statements and held that only Walgreens' statements made after October 2016 were actionable. In its most recent decision, the Court held that, since the named plaintiff's last alleged stock purchase predated October 2016, he no longer had standing. Further, the Court denied a motion to intervene filed by putative class members, but noted that the proposed intervenors were free to file their own actions.

The named plaintiff did not contest that, as a result of the Court's earlier decision, he had lost constitutional and statutory standing, but argued that the appropriate remedy was to proceed to class certification and discovery to identify a class representative with standing to pursue claims based on Walgreens' post-October 2016 statements. The Court explained that while a named plaintiff's loss of standing generally requires dismissal of a class action, certain exceptions may apply if other individuals (who would be part of the proposed class) have standing to pursue a claim. These exceptions are for injuries that are inherently transitory in nature or capable of repetition but evading review, as well as situations in which a...

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