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In re Target Corporation Securities Litigation

United States District Court, D. Minnesota

July 31, 2017

In re Target Corporation Securities Litigation In re Target Corporation ERISA Litigation THIS ORDER RELATES TO: All Actions

          ORDER

          JOAN N. ERICKSEN United States District Judge.

         Shareholders of Target Corporation stock brought suit against the company and its current and former agents under the Securities Exchange Act of 1934 (the “Exchange Act”), codified at 15 U.S.C. § 78a et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), codified in relevant part at 29 U.S.C. ch. 18, for conduct related to Target's expansion into Canada during the years 2013 and 2014. The Court consolidated the shareholder suits into the two above-referenced actions, and Target filed motions to dismiss in each action. For the following reasons, the Court grants Target's motions to dismiss.

         II. BACKGROUND

         Target is a large retailer in the United States with over 1, 800 store locations. (Securities Amended Complaint (“SAC”) ¶ 43, S. Dkt. No. 57.)[1] By as late as 2010, Target evaluated opportunities for opening stores in international markets, such as Canada. (See Id. ¶ 46.) An opportunity to expand into Canada presented itself, and in January 2011, Target announced that it would open stores in the country starting in 2013. (Id. ¶ 49.)

         The expansion into Canada became a “key component” of Target's “growth story” and efforts to compete with other retailing rivals, such as Wal-Mart. (Id. ¶ 53; see Id. ¶¶ 43, 45, 48.) In pursuit of these ends, Target embarked on an ambitious plan to open over 100 stores in Canada in two years. (See Id. ¶ 49.) Accomplishing this tall order required “Target Canada” to rapidly develop stores, distribution centers, vendor relationships, and supply chain information technology systems. (See Id. ¶¶ 47, 49.)

         Large-scale retailers like Target rely heavily on supply chain systems to keep track of inventory, shipments, costs, product information, replenishment, sales, and more. (See Id. ¶ 61.) In order to operate effectively, systems performing supply chain functions must be integrated and have the ability to share crucial business data. (See id.) Accordingly, part of Target's success in the U.S. is due to its “well-developed supply chain and IT infrastructure . . . . customized and adjusted over the years to meet [Target's] specific needs.” (Id. ¶ 62.) Although Target already had a refined U.S. supply chain infrastructure in place when it announced expansion into Canada, the company chose to use a different, new set of supply chain systems for the expansion because extending its existing U.S. systems “would have been too complex and taken too much time.” (Id. ¶ 71.) Thus, Target purchased a new, central “Enterprise Resource Planning” (“ERP”) system and other new systems for its Canadian supply chain infrastructure. (Id. ¶ 64.)

         From the beginning, the central ERP system contained data integrity issues, which caused problems in other systems. (See Id. ¶¶ 64-65, 78-80.) The new warehouse management system had troubles communicating with the central system. (See Id. ¶¶ 65, 85.) The inventory replenishment system was “dysfunctional” and required “manual overrides.” (Id. ¶ 66; see Id. ¶ 94.) The long-term inventory demand software “did not provide accurate sales forecasts, and Target employees did not know how to use it.” (Id. ¶ 67; see Id. ¶ 95.) And the point-of-sale systems “often malfunctioned.” (Id. ¶ 68; see Id. ¶ 97.) Prior to opening any Canadian stores, the supply chain systems suffered from “systemic problems” related to “most” of the above-mentioned issues. (Id. ¶¶ 60, 69, 100.) When Target Canada finally opened its first stores in March 2013, customers were “confronted with empty store shelves, ” but, at the same time, Target Canada's “three massive distribution centers were overwhelmed with excess products.” (Id. ¶¶ 82-83.) Other “various problems persisted through 2015.” (Id. ¶ 92; see Id. ¶ 102.) As more stores opened, the problems “magnified” and became “more disruptive and difficult to correct.” (Id. ¶ 114.)

         Target Canada incurred significant net operating losses throughout 2013 and 2014. (See Id. ¶¶ 126, 157.) On May 5, 2014, Target's Board of Directors issued a statement announcing that Target's CEO, Gregg Steinhafel, resigned from his roles at the company. (Id. ¶ 127.) The resignation was due in part to Target Canada's underperformance, as well as Target's “massive credit card data breach.” (Id. ¶ 128.) On May 20, 2014, Target announced that Target Canada's President, Tony Fisher, had been terminated. (Id. ¶ 132.) Then, on August 12, 2014, Target announced a variety of initiatives to address inventory issues, including a “physical count of inventory at all stores, resulting in a reset of systems, and more accurate ordering and shipping data.” (Id. ¶ 146 (emphasis omitted).)

         Finally, on January 15, 2015, Target announced that it would discontinue operating its Canadian stores and that Target Canada would file for insolvency protection. (Id. ¶ 158.) Target's new CEO, Brian Cornell, noted that continued operations in Canada would require additional investments in the supply chain “to make further operational improvements and enable Target to sell online in Canada.” (Id. ¶ 159.) He further explained that the company was “unable to map out a scenario which would allow Target Canada to generate profits or cash flow until at least 2021.” (Id. (emphasis omitted).) In the insolvency filings, Target Canada's general counsel stated that the venture did not succeed due to issues in four principal categories, one of which was the supply chain. (See Id. ¶ 161.)

         III. THE SECURITIES ACTION

         Plaintiffs[2] allege that between March 20, 2013 and August 4, 2014 (the “Securities Class Period”), certain Defendants made a series of false and/or misleading statements regarding Target Canada's performance and supply chain.[3] (See Id. ¶¶ 1, 170-261.) Generally speaking, Plaintiffs allege that these Defendants represented that Target Canada was progressing well and facing minor or common problems, when in reality the supply chain issues were much larger and success was much less certain or impossible. (See Id. ¶¶ 3, 8-9.) Plaintiffs assert causes of action under (1) § 10(b) of the Exchange Act and Securities and Exchange Commission (“SEC”) Rule 10b-5 and (2) § 20(a) of the Exchange Act. (See Id. ¶¶ 336-51.) Defendants move to dismiss both counts. (See S. Dkt. No. 69.)

         A. Exchange Act § 10(b) and Rule 10b-5 Claims

         Section 10(b) of the Exchange Act, codified at 15 U.S.C. § 78j(b), makes it unlawful for any person “[t]o use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” SEC Rule 10b-5 makes it unlawful to, among other things, “make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.” 17 C.F.R. § 240.10b-5(b). Together, § 10(b) and Rule 10b-5 create a private cause of action for fraud. See Halliburton Co. v. Erica P. John Fund, Inc., 134 S.Ct. 2398, 2407 (2014) (citing Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 730 (1975)). Claims brought pursuant to these provisions have six elements:

(1) a material misrepresentation or omission;
(2) scienter;
(3) a connection with the purchase or sale of a security;
(4) reliance;
(5) economic loss; and
(6) loss causation.

Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 37-38 (2011); Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 341 (2005).

         To survive a motion to dismiss, plaintiffs must plausibly plead a claim to relief under § 10(b) and Rule 10b-5 when accepting all of the alleged facts as true. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). In addition, plaintiffs must plead facts as to elements (1) and (2) with the level of particularity required by the Private Securities Litigation Reform Act of 1995 (“PSLRA”), codified in relevant part at 15 U.S.C. § 78u-4.

         The PSLRA's pleading standards are “more rigorous than those under Rule 9(b) of the Federal Rules of Civil Procedure.” Lustgraaf v. Behrens, 619 F.3d 867, 874 n.2 (8th Cir. 2010). They “are unique to securities and were adopted in an attempt to curb abuses of securities fraud litigation.” In re Navarre Corp. Sec. Litig., 299 F.3d 735, 741 (8th Cir. 2002). One of those abuses is “the practice of pleading ‘fraud by hindsight.'” Id. at 742 (citing In re Vantive Corp. Sec. Litig., 283 F.3d 1079, 1084-85 (9th Cir. 2002)).

         Defendants primarily argue that Plaintiffs failed to plead enough facts as to elements (1) and (2) to meet the PSLRA's requirements. (See Securities Defendants' Memorandum in Support of Their Motion to Dismiss (“S. Def. Br.”) 2, S. Dkt. No. 71.) Their overarching theory as to why this is the case is that Plaintiffs' claims are really just “impermissible fraud-by-hindsight claim[s].” (Id.) They argue, for example, that the SAC “[f]ails to identify particular facts or sources showing that any of Defendants' public statements were materially false or misleading in context and when made.” (Id. (emphasis omitted).) Plaintiffs counter that the SAC contains sufficient facts and that their reliance on confidential witnesses and well-sourced news articles as a basis for their allegations helps Plaintiffs clear the PSLRA's pleading hurdle and is not an attempt to plead fraud by hindsight. (See Securities Plaintiffs' Response Memorandum in Opposition to the Motion to Dismiss (“S. Pl. Br.”) 3, 14-16, 25-27, S. Dkt. No. 87.)

         Focusing solely on element (1), a material misrepresentation or omission, the PSLRA requires plaintiffs to “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” § 78u-4(b)(1). This standard requires plaintiffs to plead the who, what, when, where, why, and how with regard to the challenged statements such that the alleged facts “necessarily show that the defendants' statements were misleading.” In re 2007 Novastar Fin. Inc., Sec. Litig., 579 F.3d 878, 882 (8th Cir. 2009) (quoting In re Cerner Corp. Sec. Litig., 425 F.3d 1079, 1083 (8th Cir. 2005)). Plaintiffs must plead a “link between an alleged misleading statement and specific factual allegations demonstrating the reasons why the statement was false or misleading.” Id. at 883. If a complaint fails to comply with the PSLRA's requirements, the Court must dismiss the complaint. § 78u-4(b)(3)(A).

         In general, pleading fraud by hindsight is characterized by failure to meet the PSLRA's requirement to specify facts explaining “why” a challenged statement was false or misleading when it was made. See In re Navarre, 299 F.3d at 743. For example, a business states mid-year that sales are on track to meet expected year-end projections, but later reports lower year-end sales. If a plaintiff brings a securities fraud action based only on these facts and alleges that the mid-year prediction must have been false when made, then the plaintiff is pleading fraud by hindsight. See Parnes v. Gateway 2000, Inc., 122 F.3d 539, 551 (8th Cir. 1997) (quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990)); In re Patterson Cos., Inc. Sec., Derivative & ERISA Litig., 479 F.Supp.2d 1014, 1030 (D. Minn. 2007); see also Elam v. Neidorff, 544 F.3d 921, 927 (8th Cir. 2008). In such a case, the plaintiff is merely pleading that the prediction must have been false mid-year because it conflicts with year-end facts-an unsatisfactory explanation for “why” the mid-year statement was false when made.

         Undoubtedly, Plaintiffs have met the PSLRA's requirement to “specify each statement alleged to be misleading” because they quote numerous statements throughout the SAC. § 78u-4(b)(1). However, Plaintiffs fail to “specify . . . the reason or reasons why [each] statement is misleading.” Id. For almost every challenged statement, Plaintiffs provide only the expansive, undefined explanation that the supply chain suffered from “systemic problems” and that the existence of such problems rendered the statement false or misleading. (E.g., SAC ¶ 170.) Even accepting that supply chain system problems existed throughout the Securities Class Period, Plaintiffs do not connect any specific problems to any specific statements. Rather, Plaintiffs primarily allege only that there were persistent, overarching systemic problems. For many statements, their explanation as to “why” shows pleading fraud by hindsight. Without more detailed allegations, Plaintiffs fail to necessarily show that Defendants' statements were false or misleading when made, as required by the PSLRA.[4] See In re 2007 Novastar, 579 F.3d at 882. A review of representative challenged statements in the SAC reveals the inadequacies:

         1. March 20, 2013 Statements

         The earliest challenged statement is from March 20, 2013, shortly after Target Canada opened its first pilot stores. (See SAC ¶ 171.) On that date, Target filed its annual Form 10-K for the fiscal year ending February 2, 2013. (See id.) The Form 10-K stated, in part:

Our ability to deliver a shopping experience that is preferred by our customers, referred to as “guests, ” is supported by our strong supply chain and technology infrastructure, a devotion to innovation that is ingrained in our organization and culture, and our disciplined approach to managing our current business and investing in future growth.
Effective inventory management is key to our ongoing success. We utilize various techniques including demand forecasting and planning and various forms of replenishment management. We achieve effective inventory management by being in-stock in core product offerings, maintaining positive vendor relationships, and carefully planning inventory levels for seasonal and apparel items to minimize markdowns.

(Id. ¶ 172 (some emphasis omitted).)

         Plaintiffs allege that the statement about a “strong supply chain and technology infrastructure” was “false and misleading when made because it failed to disclose the adverse facts that [Target Canada] had neither a ‘strong' supply chain nor ‘strong' technology infrastructure.” (Id. ¶ 173.) Similarly, the averments about “effective inventory management” were “false and misleading when made because Defendants failed to disclose that Target did not have effective inventory management with respect to [Target Canada's] supply chain IT systems.” (Id.)

         The SAC does not connect the Form 10-K statements to “any specific fact that would render the . . . statements false [or misleading]” when made. Elam, 554 F.3d at 927. In an entirely different section, the SAC provides some background information about what issues existed around the time Target filed the Form 10-K. For example, plaintiffs allege that the inventory replenishment system “was so dysfunctional that it was turned off immediately after the first stores had opened, and could not be operated without constant manual overrides.” (SAC ¶ 66 (emphasis added); see Id. ¶¶ 94, 112.) They allege that in Fall 2012, Target Canada participated in a “data week” to verify product data points, but that when the first stores opened, there were unresolved data issues and excess inventory in warehouses. (Id. ¶¶ 80-83, 118.) “[I]n the weeks leading up to the first store openings . . . there was a widely held fear among employees that the stores would not be ready to open . . . .” (Id. ¶ 101 (emphasis added).) But outside these examples, Plaintiffs only paint with a broad brush by alleging that before Target opened any Canadian stores, the systems suffered from “most” of the problems summarized above, there were systemic problems, and the systems “did not function properly” throughout the Securities Class Period. (Id. ¶ 69.) Such sweeping allegations disconnected from particular facts are insufficient to comply with the PSLRA's mandate that plaintiffs specify why statements were false or misleading at the time the statements were made. See In re 2007 Novastar, 579 F.3d at 882, 883 & n.4 (finding insufficient broad allegations of, for example, undisclosed “systematic deviations”); In re Cerner, 425 F.3d at 1084 (finding that the plaintiffs did not adequately allege why the statement that demand was “strong” was false or misleading when made); In re Navarre, 299 F.3d at 743 (“The amended complaint fails to indicate why these statements would have been false or misleading at the several points in time in which it is alleged they were made.”).

         Without additional factual allegations, the Court is left with numerous questions as to why and how the Form 10-K statements were false or misleading. Why was it false or misleading to characterize Target's supply chain as a whole-or Target Canada's separate supply chain-as strong or effective? What, specifically, were the supply chain problems at this exact moment in time, and what about these problems were systemic? To what extent did any then-existing problems weaken the supply chain or render it ineffective? Because the SAC fails to allege particular facts that would answer these and other questions and “merely contains ‘[a] litany of alleged false statements, unaccompanied by the pleading of specific facts indicating why those statements were false, '” the SAC fails to meet the PSLRA's pleading standards. In re 2007 Novastar, 579 F.3d at 883 (quoting Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1070 (9th Cir. 2008)); see In re Navarre, 299 F.3d at 743 (asking similar questions).

         The SAC also contains allegations that, when taken as true, undermine Plaintiffs' general theory that statements were materially false or misleading due to the existence of systemic problems.[5] For example, on March 4, 2013-before the Securities Class Period began and just weeks before Target filed the Form 10-K-Fisher disclosed that Target Canada had “built [its] technology infrastructure from the ground up over the last two years.” (SAC ¶ 168.) And his comments also drew attention to out-of-stock merchandise, indicating that the supply chain was imperfect. (See id.; see also Id. ¶ 119.) Public statements like these undercut general allegations that the challenged statements omitted nonpublic details-unidentified in the SAC-about allegedly overarching problems. See Local 731 I.B. of T. Excavators & Pavers Pension Tr. Fund v. Diodes, Inc., 810 F.3d 951, 958 (5th Cir. 2016) (“Most reasonable investors would rather receive an accurate ‘bottom line' assessment of a disclosed company problem than all of its assumptions and nuances.”). What additional information should Target have disclosed? Why would further disclosure have significantly altered the total mix of information available to investors at the time? Plaintiffs do not allege answers to these questions.

         In summary, Plaintiffs fail to explain, with the level of detail required by the PSLRA, why the Form 10-K statements were false or misleading when made, and what little detail they do allege contradicts their sweeping, nonspecific explanations.

         2. March 28, 2013 Statements

         On March 28, 2013, Defendant John Mulligan, then-CFO, attended an annual retail conference in Canada and gave a presentation in which he stated, for example:

How about Canada? Going into the year last year, we talked about four key items we needed to achieve. We needed to build out of the supply chain; build the technology; build the team; and then begin to remodel stores, primarily the ones that we're opening right now. We achieved all four of those objectives, and did so with a great deal of financial discipline. And the team did a fantastic job. We're right where we want to be right now, and did so with $0.48 of dilution versus our goal of $0.50.

         (SAC ¶ 179 (some emphasis omitted).) In response to a question recognizing that Target Canada had taken “a few shots to the chin” due to “out-of-stocks, ” he also stated:

We needed to get the first three stores open. You can do all the testing you want of systems and supply chain in the labs. Ultimately, you need to get the real world working. And so getting those three stores opening; let our teams, which is 99% Canadian team members who haven't worked in Target stores, letting them get used to things. And that's gone really well. We're very pleased. I think that supply-chain efforts, we work through I think-if we had had a normal amount of opening, we would have worked through those very rapidly. But combined with the overwhelming response, it's taken us a bit longer than we might like. But we feel very good about where we're at.

(Id. ¶ 181 (some emphasis omitted).) Plaintiffs allege that Mulligan's statements that Target Canada had “achieved” the objectives of building a supply chain and was “right where [it] wanted to be” were “materially false and misleading when made, because [the statements] failed to disclose the systemic problems experienced in Target Canada's supply chain IT systems.” (Id. ¶ 180.) Similarly, the statements that testing and training were going well and that Target Canada felt “very good” about where it was were false and misleading due to “systemic problems, ” “inadequately trained employees, ” and atypical supply chain issues. (Id. ¶¶ 182-83.) Furthermore, “these supply chain problems were both severe and systemic such that a full system reset was necessary.” (Id. ¶ 182.) The statement about customers' “overwhelming response” was also misleading for analogous reasons. (See Id. ¶ 183.)

         Here, too, the SAC does not adequately allege the who, what, when, where, and how to specifically explain why any of the challenged statements were false or misleading when made. At this time, Target Canada had built a supply chain and a technology infrastructure. In what way had they failed to build it at this moment in time? To what extent were employees untrained or the supply chain issues atypical? What made the supply chain problems severe? The SAC does not provide “the barest clue, ” and, as discussed earlier, the SAC contains too few specifics as to the alleged systemic problems. Parnes, 122 F.3d at 550.

         Plaintiffs also do not explain what a “complete reset” would entail, let alone why it was needed less than one month after Target Canada opened its first stores. That more than fifteen months later new leadership determined that a “reset” of systems was the best course of action going forward does not sufficiently explain why a reset was needed prior to that point. (See SAC ¶¶ 146, 263.) Rather, the reference to a complete reset indicates that Plaintiffs are pleading fraud by hindsight. See DiLeo, 901 F.2d at 627 (“You cannot tell from reading [the complaint] why the [plaintiffs] believe that the problems were so apparent that reserves should have been jacked up before the end of 1983-why failure to increase the reserves amounted to ‘fraud.'”).

         The March 28, 2013 challenged statements further exhibit Plaintiffs' failure to specify, with particularity, why the challenged statements were false or misleading when made.

         3. May 22, 2013 Statements

         On May 22, 2013, Target announced its financial results for Q1 2013 and posted a loss for Target Canada. (See SAC ¶¶ 184-85.) During a conference call with investors and analysts related to these results, Steinhafel stated:

After two years of preparation, in March we opened our first 24 Canadian stores in the greater Toronto area and we're very pleased with the reception we received from our new Canadian guests. . . . Two weeks ago we opened our second wave of 24 Canadian stores in British Columbia, Alberta and Manitoba and we're very pleased with the initial guest response in these markets and the ability of our teams and systems to accommodate the increasing volume of traffic and sales.

(Id. ¶ 187 (some emphasis omitted).) Plaintiffs allege that the statements referring to the ability to accommodate traffic and sales were false and misleading because “neither [Target Canada's] teams nor its supply chain IT systems were in fact equipped to handle the volume of traffic and sales, which created systemic problems that increased as a result of Target continuing with its ill-advised, rampant store opening pace in Canada.” (Id. ¶ 188.)

         Plaintiffs allege no facts to explain why or how, at this point in time, the supply chain systems were not equipped to handle traffic and sales. And there are no additional facts regarding systemic problems outside those already discussed. Plaintiffs' allegation as to “why, ” then, is essentially a conclusory allegation that the statements were false, without any supporting details. Such an allegation does not meet Rule 8(a)(2)'s plausibility requirement, let alone the PSLRA's heightened standards. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (holding that “naked assertion[s]” are insufficient (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007))).

         In addition, the reference to Target's “ill-advised” store opening pace signals pleading fraud by hindsight. There are no specific allegations demonstrating that company leadership knew that the rapid expansion strategy would fail. And it is facially implausible that leadership willfully or knowingly engaged in an ill-advised strategy. See Cozzarelli v. Inspire Pharm. Inc., 549 F.3d 618, 627 (4th Cir. 2008). In these circumstances, the basis for the assertion of imprudence can only reasonably be attributed to leadership's later supply chain-related regrets and the withdrawal from Canada. (See SAC ¶¶ 149, 151-52.)[6] The “ill-advised” assertion also reveals an attempt to make out a securities fraud claim using allegations that sound in breaches of fiduciary duty. But “plaintiff[s] may not ‘bootstrap' a claim for internal corporate mismanagement or breach of fiduciary duty by alleging that the corporation or its directors failed to disclose that mismanagement or breach.” Andropolis v. Red Robin Gourmet Burgers, Inc., 505 F.Supp.2d 662, 682 (D. Colo. 2007) (citing Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 473 (1977) (“The language of § 10(b) gives no indication that Congress meant to prohibit any conduct not involving manipulation or deception.”)); see also St. Louis Union Tr. Co. v. Merrill Lynch, Pierce, Fenner & Smith Inc., 562 F.2d 1040, 1048 (8th Cir. 1977) (“Section 10(b) and Rule 10b-5 were not intended to bring within their ambit simple corporate mismanagement or every imaginable breach of fiduciary duty in connection with a securities transaction.”). This implicit bootstrapping further illustrates pleading fraud by hindsight because it attempts to turn the pursuit of a strategy-later shown to be imprudent-into fraud.

         Plaintiffs also allege that, in response to a question about productivity at the early Canadian stores and expectations in relation to consumables, Steinhafel said, in part:

Over time our consumables share will grow . . . . We didn't want to come out of the blocks by hitting those categories too hard because we wanted to make sure that we led with our strength. And we wanted to make sure that all the supply chains and the operational disciplines were in place. We feel very confident now that they are. We're ready to start making those kinds of adjustments in merchandising and supply chain and in store operations to start refining the model.

(SAC ¶ 189 (some emphasis omitted).) Plaintiffs allege that Steinhafel's confidence in the “supply chain and the operational disciplines” was materially false and misleading because the statement failed to disclose the systemic supply chain problems. (See Id. ¶ 190.) The statements that Target Canada could make “adjustments” and “start refining” were false and misleading because the systemic nature of the supply chain problems “require[d] major, wholesale changes to fix.” (Id.)

         Plaintiffs again fail to allege any specific facts demonstrating that at this point in time the supply chain and operational disciplines were not in place or that Steinhafel was not actually confident in his assessment. There are also no facts showing that improving whatever deficiencies existed was impossible, rendering such a contention implausible. The assertion that major, wholesale changes-which are undescribed-were required further indicates that Plaintiffs' case is built on hindsight and informed by later determinations that supply chain issues would require additional investments and contributed to Target's withdrawal from Canada. (See SAC ¶¶ 159, 161.) In short, Plaintiffs again fail to give “particulars” as to why these statements were false or misleading when made and therefore fail to meet the PSLRA's pleading standards. In re Navarre, 299 F.3d at 743.

         4. May 30, 2013 Statements

         Eight days later, on May 30, 2013, Mulligan attended a conference in New York City. (See SAC ¶ 194.) In response to a question about Target Canada's execution risk, he said:

A lot of the execution risk is behind us. We need the initial execution risk. We're still refining. Things like replenishment systems, they take a while to tune, and so we're tuning, and each one of the stores will be different. So we're working through that. But there is a wave of system enhancements that need to come and operational enhancements that need to come, and that's just us honing the business that needed to happen naturally through time just as we've done in the U.S. over 50 years, but part of us improving and getting to that profitability we need in Canada, we don't have everything we need on day one. There's follow-on ...

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