Today, Judge Forrest dismissed a putative securities fraud class action against yoga apparel company Lululemon and, as has come to be a regular practice, provided a draft of the opinion to counsel before issuing the final order. As she did last week, Judge Forrest provided the draft the morning before a scheduled court conference and invited comment from the parties. Unlike past instances, the final order on Lululemon’s motion to dismiss differs somewhat substantially from the draft order. Notably, the draft order ran to 39 pages, while the final opinion is 54 pages long. A comparison of the draft and final opinions does not reveal whether most of the changes were the result of input from counsel or were simply revisions made by the Court.
Ultimately, however, Judge Forrest’s decision in the draft and final opinions were the same: the securities fraud claims were dismissed. As she wrote in the final decision:
Boiled down to a summary version, lead plaintiff alleges that if only Lululemon had someone try on its black luon yoga pants before they shipped, it would have realized they were sheer; similarly, if Lululemon had only had someone exercise in certain athletic wear (enough to produce sweat), it would have realized that the colors bled. As a result, lead plaintiff alleges that defendants’ various statements referencing, inter alia, the high quality of Lululemon’s products and the steps the company took to fix the quality issues were materially false or misleading. This narrative requires the Court to stretch allegations of, at most, corporate mismanagement into actionable federal securities fraud. This is not the law.
Our prior post on the case is here.