United States District Court, D. Minnesota
IBEW Local 98 Pension Fund, Marion Haynes, and Rene LeBlanc, individually and on behalf of all others similarly situated, Plaintiffs,
Best Buy Co., Inc.; Brian J. Dunn; Jim Muehlbauer; and Mike Vitelli, Defendants.
Clayton D. Halunen, Esq., and Melissa W. Wolchansky, Esq.,
Halunen & Associates; Shawn J. Wanta, Esq., Baillon Thome
Jozwiak & Wanta LLP; Aelish M. Baig, Esq., Kenneth J.
Black, Esq., Daniel J. Pfefferbaum, Esq., and Shawn A.
Williams, Esq., Robbins Geller Rudman & Dowd LLP; and
Vernon J. Vander Weide, Esq., Lockridge Grindal Nauen PLLP,
counsel for Plaintiffs IBEW Local 98 Pension Fund and Marion
Haynes, Lead Plaintiff.
Clayton D. Halunen, Esq., Halunen & Associates; Shawn J.
Wanta, Esq., Baillon Thome Jozwiak & Wanta LLP; D. Seamus
Kaskela, Esq., and David M. Promisloff, Esq., Barroway Topaz
Kessler Meltzer & Check, LLP; and Garrett D. Blanchfield,
Jr., Esq., Reinhardt Wendorf & Blanchfield, counsel for
Plaintiff Rene LeBlanc, individually and on behalf of all
others similarly situated.
J. Stujenske, Esq., George S. Wang, Esq., and Joseph M.
McLaughlin, Esq., Simpson Thacher & Bartlett LLP; Eric J
Magnuson, Esq., Jeffrey Sullivan Gleason, Esq., Nicole S.
Frank, Esq., and Stephen P. Safranski, Esq., Robins Kaplan
LLP; Jan M. Conlin, Esq., and Michael V. Ciresi, Esq., Ciresi
Conlin LLP, counsel for Defendants.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE
are stockholders of Defendant Best Buy Co., Inc. (“Best
Buy”). Plaintiffs filed suit against Defendants for
securities fraud and seek to represent a class of
stockholders who were injured. This case is back on remand
from the Eighth Circuit's reversal of this Court's
order certifying the class. Plaintiffs now request permission
to file a new motion for class certification. For the reasons
discussed below, the Court denies Plaintiffs' request
September 14, 2010, Best Buy issued a press release
summarizing its financial performance for the second quarter
of its fiscal year 2011. IBEW Local 98 Pension Fund v.
Best Buy Co., 818 F.3d 775, 777 (8th Cir. 2016)
(“Eighth Circuit Order”). The press
release drove up the stock price. Then a few hours later,
Best Buy held a conference call where its Chief Financial
Officer stated that Best Buy's earnings would be
“in line” with its original expectations and that
Best Buy was “on track” with its original
earnings-per-share guidance. Id. On December 14,
2010, Best Buy issued a press release reporting a decline in
sales for the third quarter. Id. Likewise, Best
Buy's CFO explained the lower sales in a conference call
that day. Id. at 778. After these announcements,
Best Buy's stock price fell.
filed suit for securities fraud based on the alleged
misstatement in the September 14, 2010 press release and
conference call. Defendants moved to dismiss. Id.
This Court granted the motion to dismiss in part. The Court
concluded that claims for the press release were not
actionable, but that the claims for the conference call were.
Id. Later, the Court granted Plaintiffs' motion
to certify a class. Defendants appealed. On appeal, the
Eighth Circuit reversed the certification and remanded the
case. Plaintiffs now ask the Court to revisit class
plaintiff asserting liability for securities fraud under
Section 10(b) or Rule 10b-5 must adequately allege:
“‘(1) a material misrepresentation or omission by
the defendant; (2) scienter; (3) a connection between the
misrepresentation or omission and the purchase or sale of a
security; (4) reliance upon the misrepresentation or
omission; (5) economic loss; and (6) loss
causation.'” Minneapolis Firefighters'
Relief Ass'n v. MEMC Elec. Materials, Inc., 641 F.3d
1023, 1028 (8th Cir. 2011) (quoting Stoneridge Inv.
Partners, LLC v. Sci.-Atl., Inc., 552 U.S. 148, 157
(2008)). At issue here, is the reliance element of the claim.
One way that a plaintiff can demonstrate that he relied on a
misrepresentation is by showing that he knew about the
statement and that he bought or sold stock based on that
statement. Halliburton Co. v. Erica P. John Fund,
Inc., 134 S.Ct. 2398, 2407 (2014)
(“Halliburton II”). Having recognized
the practical shortcomings of this approach in
securities-fraud cases, a plaintiff is allowed to proceed
based on a rebuttable presumption of reliance, often referred
to as the fraud-on-the-market theory. Id. at
2407-08. This theory is based on the assumption that
“well-developed markets reflect all publicly available
information, and, hence, any material
misrepresentation.” Id. at 2408. As a result,
a stock buyer or seller is presumed to rely on the accuracy
of the information because that information is deemed to be
reflected in the market price. Id.
plaintiff can invoke the fraud-on-the-market theory by
showing: “(1) that the alleged misrepresentations were
publicly known, (2) that they were material, (3) that the
stock traded in an efficient market, and (4) that the
plaintiff traded the stock between the time the
misrepresentations were made and when the truth was
revealed.” Id. Without each of these elements,
the plaintiff cannot invoke the fraud-on-the-market theory
because it cannot be presumed that the purchase price fully
incorporated all of the information in the market.
Id. The use of the presumption proves vital for
certifying a class action for securities fraud because
without it the court would have to make individual inquiries
into each plaintiff's reliance. Id. at 2416
(“Without proof of those prerequisites, the
fraud-on-the-market theory underlying the presumption
completely collapses, rendering class certification
Haliburton II, the Supreme Court acknowledged some
of the shortcomings of the fraud-on-the-market theory. In
particular, the Court conceded that we do not live in a
binary world where markets are either efficient or not. For
example, it turns out that some information is incorporated
into the market price much quicker than other information.
See Id. at 2421 (Thomas, J., concurring) (citing
articles that determine that technical filings were digested
and incorporated much slower than Wall Street Journal
articles, for example). The Supreme Court therefore examined
how to determine whether a particular misstatement had been
incorporated into the stock price.
Court noted that the first three elements of the
fraud-on-the-market theory (publicity, materiality, and
efficient market) are directed toward price impact-that is,
“whether the alleged misrepresentation affected the
market price in the first place.” Id. at 2414.
“In the absence of price impact, [the]
fraud-on-the-market theory and presumption of reliance
collapse.” Id. The Court held that after a
plaintiff invokes the fraud-on-the-market presumption by
showing price impact, a ...