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IBEW Local 98 Pension Fund v. Best Buy Co., Inc.

United States District Court, D. Minnesota

March 8, 2019

IBEW Local 98 Pension Fund, Marion Haynes, and Rene LeBlanc, individually and on behalf of all others similarly situated, Plaintiffs,
v.
Best Buy Co., Inc.; Brian J. Dunn; Jim Muehlbauer; and Mike Vitelli, Defendants.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         Plaintiffs are stockholders of Defendant Best Buy Co., Inc. (“Best Buy”). Plaintiffs filed suit against Defendants for securities fraud and sought to represent a class of stockholders who were injured. This case came back on remand from the Eighth Circuit's reversal of this Court's order certifying the class. The case is now before the Court on a motion for summary judgment brought by Defendants Best Buy, Brian J. Dunn, Jim Muehlbauer, and Mike Vitelli. (Doc. No. 329.) For the reasons discussed below, the Court grants Defendants' motion.

         BACKGROUND

         On 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. A few hours later, Best Buy held a conference call where its Chief Financial Officer (“CFO”) 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 (“EPS”) 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.

         Plaintiffs filed suit for securities fraud based on the alleged misstatements in the September 14, 2010 press release and conference call. After a first motion to dismiss was granted, Plaintiffs amended their complaint and filed their First Amended Consolidated Class Action Complaint. (Doc. No. 61 (“First Am. Compl.”).) Plaintiffs did not allege actual reliance on the asserted statements, but instead explained that they would “rely upon the presumption of reliance established by the fraud-on-the-market doctrine.” (Id. ¶ 176.) Defendants again moved to dismiss. (Doc. No. 65.) This Court granted the motion to dismiss in part. (Doc. No. 78.) The Court concluded that claims based on the EPS guidance statement in the press release were not actionable, but also found that the conference call statements were actionable. Later, the Court granted Plaintiffs' motion to certify a class. (Doc. No. 200.) Defendants appealed. On appeal, the Eighth Circuit reversed the certification and remanded the case. In doing so, the Eighth Circuit held that Defendants had rebutted the presumption of reliance by submitting direct evidence of no price impact, namely evidence that severed any link between the alleged conference call misstatements and the stock price at which Plaintiffs purchased. Eighth Circuit Order at 782-83. On remand, the Court denied Plaintiffs' request to file a renewed motion for class certification, explaining that because the Eighth Circuit found that Plaintiffs failed to show price impact, they will have to proceed with traditional evidence of reliance. “That is, Plaintiffs will have to show that they heard the September 14 conference call and bought or sold the stock because of the call.” (Doc. No. 282 at 9.)

         Plaintiffs then moved to amend the complaint, seeking to allege substantial evidence of additional actionable misrepresentations and omissions. The motion to amend was denied. (Doc. Nos. 311, 324.) Defendants now move for summary judgment.

         DISCUSSION

         I. Legal Standard

         Summary judgment is appropriate if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Courts must view the evidence, and the inferences that may be reasonably drawn from the evidence, in the light most favorable to the nonmoving party. Weitz Co., LLC v. Lloyd's of London, 574 F.3d 885, 892 (8th Cir. 2009). However, “[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy and inexpensive determination of every action.'” Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Fed.R.Civ.P. 1).

         The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Enter. Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir. 1996). The nonmoving party must demonstrate the existence of specific facts in the record that create a genuine issue for trial. Krenik v. Cty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). A party opposing a properly supported motion for summary judgment “may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).

         II. Plaintiffs' Claims

         Plaintiffs bring claims under §§ 10(b) and 20(a) of the Securities Exchange Act. The elements of a claim under Section 10(b) are: (1) a material misrepresentation or omission; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance; (5) economic loss; and (6) loss causation. Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 460-61 (2013). At issue here is the element of reliance.

         A plaintiff can demonstrate reliance by showing that he knew about the statement and that he bought or sold stock based on that statement. Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804, 810 (2011) (“Halliburton I”). “A plaintiff unaware of the relevant statement, on the other hand, could not establish reliance on that basis.” Id. at 810. In light of 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. Halliburton Co. v. Erica P. John Fund, Inc., 134 S.Ct. 2398, 2407-08 (2014) (“Halliburton II”). ...


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