On Tuesday, Central District of California Judge Michael W. Fitzgerald dismissed a class-action complaint filed against Beyond Meat, Inc., a company that provides vegetarian meat replacement products, specifically using protein from peas. The plaintiffs in the case, including Larry Tran and a putative class, claimed that the company breached federal securities laws. The complaint was dismissed with prejudice, and the court ordered each party to pay their own fees.
Larry Tran and the other plaintiffs’ allegations reportedly followed complaints from Pro Portion Foods, LLC, a manufacturing partner of the defendant, and Don Lee Farms, a former supplier. The Don Lee Farms complaint in the Los Angeles Superior Court claimed that Beyond Meat “employed lax food safety practices,” the plaintiff claimed to have found plastics, cardboard, unidentified white powder, and metal in ingredients supplied by Beyond Meat.
Based on these other lawsuits, the plaintiffs in the current suit hoped to represent any who acquired securities of Beyond Meat between May 2, 2019, and January 27, 2020, and alleged that the company did not represent the accurate threat of this lawsuit as it launched its Initial Public Offering. The plaintiffs alleged that the defendants “materially misrepresented to investors that a pending lawsuit against the Company brought by its former co-manufacturer, Don Lee Farms, lacked validity, and that its risks from the lawsuit were not extraordinary.”
After the close of markets on January 27, the company released a press release about the litigation with Don Lee Farms and the stock price dropped $4.63 and landed at $120.12 per share, reportedly losing investors “hundreds of millions of dollars.”
The motion to dismiss the amended complaint and another motion filed by the plaintiffs were heard in a telephonic hearing on October 6 before the decision was made by the court. The court, however, agreed with the defendants that the plaintiffs had not adequately supported their securities claims, it said they “failed to allege with particularity any omitted facts in Defendants’ possession that plausibly demonstrate how the opinion statements were misleading,” and that “it is far from clear that a more-detailed disclosure of the risks posed by the DLF Litigation was required.” In the Civil Minutes on the hearing, the court said that other allegations could “rescue the claim” and gave the plaintiffs a final opportunity to amend their complaint, but an amended complaint was not filed.
Of the plaintiffs, Larry Tran was represented by Pomerantz; Jie Ling Guo and Neeraj Tulsian were represented by Kaplan Fox & Kilsheimer, as well as Bernstein Liebhard. Beyond Meat and the two other named defendants, Etahn Brown and Mark J. Nelson, were represented by Stoel Rives with Spertus Landes & Umhofer.