AUSTIN – The Austin Division of the U.S. District Court for the Western District of Texas has dismissed a second amended securities fraud class action against Whole Foods.
According to Judge Lee Yeakel, present and former executives of the big-brand grocery retailer have been excused from a complaint initially brought on by store stock purchaser and plaintiff Yochanan Markman on behalf of a proposed class of investors who purchased stock between 2013 and 2015.
The ruling states Markman filed the original complaint in August 2015 and the court appointed the Employees' Retirement System of the State of Hawaii as the lead plaintiff in October 2015. The plaintiffs alleged that Whole Foods made false statements on its competitive prices because it "obscured the reality that Whole Foods often overcharged customers by putting inaccurate food-weight labels on prepackaged foods," the ruling states.
“The retirement system alleges that throughout the class period, Whole Foods, through the individual defendants, made false and misleading statements about the company's competitive prices, high standards for quality and transparency, and favorable financial results,” according to the Aug. 25 ruling.
But Whole Foods denied the complaint in 2016 under the Federal Rule of Civil Procedure and the Private Securities Litigation Reform Act, saying the plaintiffs did not purport their plea with “the essential elements of false or misleading statements of material fact, scienter, and loss causation,” according to the ruling.
In an August 2015 Reuters report, Michael Silverman, Whole Foods representative, said “we have upheld our responsibility to our stakeholders, and are confident that this complaint is baseless and without merit.” In August of the next year, all claims against Whole Foods were dismissed without prejudice.
Not giving up, the retirement system filed a second amended complaint. Once again, all charges against Whole Foods were dismissed. Three years later, according to the newest ruling, the claim is that affidavits from a Whole Foods data analyst “were executed to establish the amount in controversy in a consumer class-action case that was previously dismissed." The plaintiffs alleged these affidavits established that "Whole Food's financial results were materially inflated and thereby not 'earned,'" the ruling states.
Noting the second amended complaint once again failed to prove Whole Foods ever misled consumers, the judge wrote “even if the court assumes that Whole Foods did have a widespread practice of overweighing and mislabeling its prepackaged foods in violation of consumer-protection laws in this case, the second amended complaint again does not allege sufficiently that this practice also makes Whole Foods and the individual defendants liable for securities fraud.”