Walgreens Boots Alliance, Inc. and Walgreens’ CEO and executive vice chairman are the defendants in a proposed class action lawsuit that looks to represent those who purchased Rite Aid Corporation common stock between October 20, 2016, and June 28, 2017 (the class period). The lawsuit, filed in Pennsylvania federal court, piggybacks onto a previous suit—Hering v. Rite Aid Corp.—that stemmed from the defendants’ alleged dissemination of materially false and misleading statements concerning both a 2015 proposed merger and a revised, now-terminated 2017 merger between Rite Aid and Walgreens.
The plaintiffs allege that the defendants during the class period misled stockholders with regard to the level of regulatory risk faced by both mergers. According to the suit, Walgreens Boots Alliance and the individual defendants downplayed or disputed conflicting media reports spotlighting regulatory obstacles and played up that they possessed inside knowledge of the Federal Trade Commission, thereby lending false confidence that the deal would close.
A sticking point in the lawsuit is a July 2018 court ruling on the defendants’ motion to dismissHering v. Rite Aid Corp.The court, in sum, found that the defendants’ statements “directly contradicted reports and purportedly were based on non-public information from the FTC,” and that the plaintiff, therefore, satisfied the suit’s claims. The court, however, shortened the class period forHering, after which the defendants filed a motion for judgment arguing the plaintiff had not purchased stock during the newly cut class period. While the plaintiffs behind the lawsuit described on this page filed a motion to intervene, the court denied their motion while granting the defendants’ motion for judgment. The court indicated, however, that the plaintiffs were “free to bring their allegations in a new action.”
All told, the plaintiffs eye legal ramifications stemming from “the specific statements” that the court held were actionably false and misleading forHering v. Rite Aid Corp., as opposed to those specified by the court in its opinion as non-actionable.