Public Employees' Retirement System of Mississippi v. Sprouts Farmers Market Inc.
Status: Ongoing Case
On March 4, 2016, Labaton Sucharow, on behalf of Public Employees’ Retirement System of Mississippi, filed a securities class action against Sprouts Farmers Market, Inc. (Sprouts). Headquartered in Phoenix, Arizona, Sprouts operates a chain of grocery stores that offer a range of products that cater to consumers’ increasing interest in healthy eating and living, including fresh, natural, and organic produce.
The action arises out of materially misleading statements and omissions made by Sprouts in offering documents filed with the Securities and Exchange Commission in connection with a secondary offering conducted by the company from March 6, 2015 to March 10, 2015. The plaintiff alleges that Sprouts misled its investors and failed to disclose a known adverse trend in deflationary pricing that was negatively affecting the Sprout’s revenue and its growth outlook. The plaintiff's motion to remand the action back to state court has been fully briefed and is currently pending before the court.
In March 2016, the defendants attempted to remove the case from state court, but these attempts were unsuccessful, and the defendants appealed the decision with Ninth Circuit Court of Appeals. The parties are currently briefing the appeal in parallel with the ongoing state court action.
The defendants also filed a motion to stay the case with the Arizona Superior Court, in light of the pending appeal in this case and in two similar cases before the United States Supreme Court and the Ninth Circuit. Following the oral argument in June 2017, the court denied the defendants’ motion to stay in its entirety. And most recently, the court denied, in part, the defendants’ motion to dismiss the case.
The case is Public Employees’ Retirement System of Mississippi v. Sprouts Farmers Market, Inc., et al., No. CV 2016-050480 (Ariz. Super. Ct.). Labaton Sucharow represents Public Employees’ Retirement System of Mississippi. The defendants are Sprouts Farmers Market, Inc., its former CEO, current CEO, current CFO, Controller and Vice President, Chairman of the board, its co founder, three additional directors, two investment funds that sold their Sprouts position in the offering, and the two underwriters of the offering.