Apogee Enterprises Inc. fought off a would-be securities class action accusing it of hiding the extent of problems with a recent acquisition after a Minnesota federal district judge dismissed the case.
The glass designer and developer acquired EFCO Corp. in 2017 and took a $45.7 million charge in 2019 in part because of lingering problems with the new acquisition.
Apogee’s investors failed to allege facts showing the company and its leadership “had access to, or knowledge of, information contradicting their statements when they were made,” the U.S. District Court for the District of Minnesota said Wednesday.
The “thrust” of the investors’ complaint seems to be that Apogee “learned in due diligence that EFCO had significant problems, purchased EFCO anyway, then hid those problems from investors,” Judge Nancy E. Brasel said.
The investors argued that Apogee’s statements during an April 2018 earnings call—about problems the company “learned in due diligence"—showed that its May 2017 statements about the EFCO acquisition were false. But the earnings call actually explained how Apogee later “realized the problems were more substantial” than it had learned during due diligence, Brasel said.
The investors’ "reliance on this altered quotation does not convert an allegation of fraud by hindsight into actionable fraud,” the opinion said. And the “allegedly false or misleading statements made on other dates build the same house of cards.”
The complaint didn’t “provide specific facts or particularities as to what [Apogee] knew but failed to disclose at the time the allegedly misleading statements were made,” Brasel said. Instead, the allegations “raise an inference” that as Apogee and its leadership “learned more about problems, they disclosed them to investors.”
Brasel also rejected the investors’ arguments about intent. The opinion denied the investors’ request for leave to amend the complaint because the investors didn’t “provide a proposed amended pleading.”
Dorsey & Whitney LLP represented Apogee. Robbins Geller Rudman & Dowd LLP served as lead counsel to the investors.
The case is In re Apogee Enters. Inc. Sec. Litig., 2020 BL 111095, D. Minn., No. 18-cv-03097, dismissed without prejudice 3/25/20.