On February 26, 2025, Judge Michael W. Fitzgerald of the United States District Court for the Central District of California granted a motion to dismiss a putative class action against a producer of plant-based meat substitutes (the “Company”) and one of its officers (together, the “defendants”).
Saskatchewan Healthcare Emps.’ Pension Plan v. Beyond Meat, Inc. et al., No. CV 23-03602-MWF (C.D. Cal. Feb. 26, 2025). We
previously covered the Court’s decision dismissing plaintiffs’ initial complaint without prejudice. In their amended complaint, plaintiffs asserted claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 based on alleged misrepresentations regarding the Company’s ability to scale production to meet partner demands. The Court held that plaintiffs failed to plead any actionable misstatements or omissions and dismissed the action with prejudice.
The Company produces “meat directly from plants” by replicating the look, taste, and texture of animal meat using only vegan, nongenetically modified ingredients. Plaintiffs claimed that the Company’s statements in several earnings calls and press releases regarding scaling, production, and partnerships were misleading. Regarding scaling and production, for example, the Company’s officer stated that large partnerships were “prime examples of what we’ve been scaling and preparing for” and that the Company was “continuing to optimize commercial production” to prepare for partnerships. Regarding partnerships, for example, the officer stated that the Company was “working toward more permanent menu placement with all of our . . . partners” and that the Company had “done well with continuing to maintain relationships with our [partners].” Plaintiffs alleged that these statements misleadingly reassured investors that the Company was reducing production costs and improving manufacturing when production inefficiencies were allegedly adversely impacting new product sales and margins.
The Court first held that plaintiffs “failed to sufficiently allege that the challenged statements” regarding scaling and production “were false or misleading when made.” Plaintiffs argued that defendants’ statements “concerning [the Company]’s investments misleadingly reassured Plaintiffs that the investments were reducing production costs and improving manufacturing, but in actuality, ‘undisclosed production inefficiencies were adversely impacting new product sales and margins.’” But the Court noted that plaintiffs’ allegations of undisclosed production inefficiencies consisted of vague, generalized statements about alleged production problems and critiques of the CEO’s management style drawn from newspaper articles. The Court held that the time period for these allegations was “undefined.” As such, plaintiffs failed to state with particularity “facts giving rise to a reasonable inference that the challenged statements were false or misleading
when made.”
The Court next addressed the statements plaintiffs challenged regarding the Company’s partnerships. Plaintiffs argued that the defendants’ statements “were misleading when made because Defendants knew or recklessly disregarded the fact that the Company’s efforts ‘were already doomed’” to fail. The Court noted that these challenged statements were not false or misleading for similar reasons as the scaling and production statements the Court previously assessed and observed that, in fact, “Defendants provide[d] evidence that the Company saw success with some of its major partners.”
The Court also addressed two additional statements that plaintiffs challenged, finding each to be non-actionable. One of the statements was, “we believe we are steadily executing against our vision of being tomorrow’s global protein company.” The Court determined this statement was non-actionable corporate puffery, articulating an opinion “about a forward-looking vision or goal of the Company.” The other statement—”we do not expect these higher costs to persist indefinitely”—was a non-actionable forward-looking statement about the Company’s performance that fell within the PSLRA’s safe harbor.
Because plaintiffs failed to allege actionable misrepresentations or omissions, the Court found that plaintiffs could not allege that the defendants “had knowledge of falsity or acted with deliberate recklessness as to any of the challenged statements.” And because plaintiffs failed to plead actionable misstatements or omissions, the Court observed that it did not need to address loss causation. Finding that granting leave to amend a second time would be futile, the Court dismissed the amended complaint with prejudice.
