HARRISBURG - The U.S. District Court for the Middle District of Pennsylvania has ruled against a Rite Aid investor who alleged that he was misled by Rite Aid and Walgreens during their attempt to merge.
The court said the investor, Jerry Hering, doesn’t have standing to file a class-action lawsuit.
According to the opinion, Hering said Rite Aid Corp. and Walgreens Boots Alliance Inc. misled him and other shareholders during their attempt to merge. Hering’s argument was denied on Oct. 24, the opinion stated.
“Hering filed an Amended Complaint on Dec. 11, 2017, alleging fraudulent misrepresentations made by Rite Aid and Walgreens related to the merger from Oct. 27, 2015, to June 28, 2017,” the opinion stated.
Rite Aid and Walgreens separately filed motions to dismiss for failure to state a claim on Feb. 14, 2018, the district court said.
“After providing the parties additional time for briefing, we granted Rite Aid’s motion and denied Walgreens’ motion,” the opinion stated. “With respect to statements made by Walgreens, however, we noted that only the statements made on and after Oct. 20, 2016, were actionable.”
On Aug. 24, Walgreens filed the instant Motion for Judgment on the Pleadings, arguing that the limitation on which statements were actionable removed Hering’s standing, as his last alleged purchase of Rite Aid stock occurred prior to the first actionable statement of Walgreens, the opinion stated.
According to the opinion, Walgreens believes it is entitled to judgment on the pleadings because Hering lost standing when the court dismissed his non-actionable claims. A motion for judgment on the pleadings should be granted if the movant establishes that there are no material issues of fact and he is entitled to judgment as a matter of law, the opinion stated.
“In considering a motion for judgment on the pleadings, a court must accept all of the allegations in the pleadings of the party against whom the motion is addressed as true and draw all reasonable inferences in favor of the non-moving party,” the district court said.
According to the opinion, standing requires that the plaintiff “must have suffered an injury in fact that is fairly traceable to the challenged conduct of the defendant and that is likely to be redressed by a favorable judicial decision.”
“Hering, in this case, last purchased Rite Aid stock before the actionable statements by Walgreens,” the opinion stated. “Thus, Walgreens argues that even if Hering did suffer an injury, he cannot show causation and standing is not satisfied.”
The court agreed with Walgreens, saying “an actual controversy must be extant at all stages of review, not merely at the time the complaint is filed.”
“Because Hering purchased Rite Aid stock before the now more clearly defined actionable statements, he does not have a legal right to bring an individual Rule 10b-5 claim and, therefore, would appear to have lost his personal stake in the outcome of the dispute,” the opinion stated.
The court added that Hering has not only lost standing with respect to the merits of his individual claim, but also with respect to seeking class certification.
Hering’s Joint Motion to Intervene was also denied, according to the court.