Pretium Resources Wins Second Circuit Victory Affirming Dismissal of Securities Fraud Class Action

Paul, Weiss achieved a significant victory for Pretium Resources, when the Second Circuit Court of Appeals issued a decision affirming the dismissal of a class action complaint alleging that Pretium had defrauded investors. Pretium is a gold-mining company based in Western Canada. Its focus is on developing the Brucejack Project, an underground gold mine it acquired in 2010. In 2013, an independent expert that Pretium had retained to conduct a sampling program at the Brucejack Project resigned over a dispute with the company and a second independent expert regarding projections of how much gold the mine would eventually produce. Pretium’s stock price fell sharply following the news of the expert’s resignation, and a putative class of investors sued in the Southern District of New York — claiming that Pretium had artificially inflated the value of its stock by making false and misleading statements about the projections. Paul, Weiss moved to dismiss, arguing that Pretium’s statements regarding the projections were protected statements of opinion and that plaintiffs had failed to allege that such opinions were objectively false or that Pretium did not honestly hold them at the time they were expressed — despite the fact that one of two independent experts disagreed. While the motion to dismiss was pending, the Supreme Court decided Omnicare v. Laborers Dist. Council Constr. Indus. Pension Fund, 135 S.Ct. 1318 (2015), clarifying the legal standard for determining whether a statement of opinion is false or misleading. Last year, following supplemental briefing to address Omnicare, the District Court granted Pretium’s motion to dismiss and dismissed the complaint with prejudice.

Plaintiffs appealed, and the Second Circuit heard oral argument in March. The panel (consisting of Judges Jacobs, Wesley and Livingston) issued a decision affirming the dismissal of all claims. The Court agreed with Paul, Weiss’s arguments that it was not materially misleading for Pretium to announce projections – which are inherently statements of opinion — even though one of the independent experts working on the project disagreed so strongly with the projections that it resigned.

The Paul, Weiss team includes litigation partners Dan Kramer (who argued the appeal in the Second Circuit) and Bill Michael; and corporate partner Ted Maynard.