Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
J.Jill Secures Dismissal of Putative Securities Class Action
- Client News
- December 20, 2018
Practices
Paul, Weiss secured the dismissal of a putative securities class action brought against J.Jill Inc., TowerBrook Capital Partners L.P. and several of J.Jill’s executives. Seeking to represent a class of J.Jill stock purchasers, the Oregon Laborers-Employers Pension Trust brought suit against J.Jill in October 2017. The Pension Trust alleged that the women’s apparel retailer had made material omissions and untrue statements of material fact in public filings related to its IPO in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. J.Jill went public in March 2017, but after a strong showing in its first few months as a public company, it began to experience lower-than-expected performance. Accordingly, it revised its third quarter guidance in October 2017, and its stock price dropped. Two days after this announcement, the Pension Trust filed suit, claiming that J.Jill had “created the misleading impression that the Company’s unique business strategy had insulated it from adverse industry trends.”
U.S. District Judge Leo T. Sorokin rejected the Pension Trust’s claims that J.Jill’s IPO fillings were materially misleading. Judge Sorokin found that the Pension Trust had not shown J.Jill knew it would experience a downturn prior to the IPO, rejecting its interpretation of statements J.Jill’s CFO made during an earnings call that provided cautious guidance for the second half of the year. He also found that many of the alleged untrue statements of material fact were actually statements of opinion, and because the Pension Trust failed to allege that J.Jill did not sincerely hold those opinions at the time, the Pension Trust’s claims amounted to nothing more than “fraud by hindsight.” Finally, the judge found that, contrary to the Pension Trust’s claims, J.Jill had in fact made voluminous disclosures acknowledging that it was subject to adverse industry trends.
The Paul, Weiss team defending J.Jill, TowerBrook, and J.Jill’s executives included litigation partners Martin Flumenbaum and Andrew Gordon and of counsel Chuck Davidow.