MARSHALL Ã¯Â¿Â½ Alleging Pilgrim's Pride violated the Securities Exchange Act, investors are seeking to recover millions from the poultry producer.
A recently filed class action alleges investors lost millions in Pilgrim's Pride stock after the company misrepresented business, operation and management material facts.
Individually and on behalf of the proposed class, plaintiff Ronald Acaldo filed suit against Pilgrim's Pride, Lonnie "Bo" Pilgrim, Lonnie Ken Pilgrim, Clifford E. Butler, J. Clinton Rivers and Richard A. Cogbill on Oct. 29, in the Marshall Division of the Eastern District of Texas.
The proposed class will encompasses hundreds of people or entities who acquired the common stock of Pilgrim's Pride Corporation between May 5, 2008, and Sept. 24, 2008.
According to the complaint, Pilgrim's Pride released its second quarter results that acknowledge problems, but reassured investors that the company was making changes to address those problems.
The release stated in part, "At Pilgrim's Pride, we have made a series of tough decisions over the past two months to address the challenges facing our business."
The plaintiffs argue this reassurance helped stabilize stock price, which had been dropping since 2007. In late May, Pilgrim's Pride stock closed as high as $26.85 per share.
However just a few months later, in August, Pilgrim's Pride issued a press release detailing the idling of chicken processing plants in Clinton, Ark., and Bossier City, La.
In September the company issued another press release that described how the company was predicting a significant loss in the fourth quarter. After the news release of the predicted loss and public revelations of business prospects, shares dropped to $3.84 per share.
The plaintiffs allege that Pilgrim's Pride did not disclose information that contradicted their public statements. The complaint states the undisclosed information includes:
How the company hedges to protect it from adverse changes in costs were not working and in fact were harming the company's results more than helping;
The company's inability to continue to use illegal workers would adversely affects its margins;
The company's financial results were continuing to deteriorate rather than improve, such that the company's capital structure was threatened;
The company was in a much worse position than its competitors due to its inability to raise prices for customers sufficient to offset cost increases, whereas its competitors were able to raise prices to offset higher costs affecting the industry; and
The company had not made sufficient changes to its business to succeed in the more difficult industry conditions.
The plaintiff argues these actions of misleading, misrepresenting, or failing to disclose material facts violated the Securities Exchange Act and caused the proposed class to invest money in stock artificially inflated.
The class is seeking certification of a class, an unknown amount of compensatory damages to be determined at a trial, and attorney's fees.
Dallas attorneys Joe Kendall, Karl Rupp, and Hamilton Lindley of the Kendall Law Group LLP and San Deigo attorneys Darren J. Robbins and David C. Walton of the Coughlin, Stoia, Geller, Rudman, and Robbins LLP will represent the proposed class.
U.S. District Judge T. John Ward will preside over the litigation.
At the beginning of the week, Pilgrim Pride's stock was attempting to come back from a low of $0.84 per share after the research firm CreditSights Inc. said bankruptcy for the company seems "highly probable."
The stock is currently at $1.16.
Case No: 2:2008cv00419