(CN) – A federal judge dismissed with prejudice a securities fraud class action against Best Buy and three of its executives.
The International Brotherhood of Electrical Workers Local 98 led the class action against Best Buy in Minneapolis, claiming senior executives mislead investors by, among other things, artificially boosting its projected earnings. According to the class, executives Brian Dunn, Mike Vitelli and Jim Muehlbauer concealed Best Buy’s declining financial outlook and made public statements before and during the 2010 holiday season that promised a hike in profits.
Local 98 says its pension fund took a hit when the company’s alleged scheme failed and share prices fell.
U.S. Judge Donovan Frank dismissed the amended complaint Tuesday, noting the class failed to show that the electronics giant had intentionally misled investors.
“Plaintiffs have not alleged such facts, but rather make general assertions that defendants, considering declines in store sales and traffic, could not possibly have reached their guidance forecasts, and that therefore, their statements must have been knowingly false,” Frank wrote.
“The fact that defendants’ predictions of future growth turned out to be wrong, however, does not itself render Defendants’ projections fraudulent,” Frank added.
Local 98 will not get another chance to amend its complaint.
“Plaintiffs have submitted an 89-page amended complaint which took them five months to complete,” he wrote. “Given the amount of time plaintiffs took to complete their amended complaint, as well as the large number of amended allegations, the court cannot envision a set of facts or circumstances wherein a second amended complaint could survive a motion to dismiss.”
Best Buy’s attorney Michael Ciresi said the judge made the right call.
“We didn’t believe that the complaint had merit and the court’s carefully reasoned opinion agreed with us,” said Ciresi, a partner at Robins, Kaplan, Miller & Ciresi, in a statement to Courthouse News.
“Indeed, the court dismissed the complaint with prejudice because the court did not believe the plaintiffs could maintain a viable cause even if allowed to replead.”