New York – June 24, 2024 – Dutch Bros, an Oregon-based operator and franchiser of drive-thru shops across the United States that serve high-quality handcrafted beverages, secured a ruling dismissing a securities class action against the company and two of its former senior executives. In a rare result for a first-round motion to dismiss, the plaintiffs’ amended complaint (AC) was dismissed in its entirety and without leave to amend. The Cooley team representing Dutch Bros was led by partners Aric Wu and Patrick Gibbs, with associates Caitlin Munley and Kimberley Scimeca.
The plaintiffs challenged 26 public statements made over a period of six months, and they claimed that Dutch Bros and the former executives fraudulently misled investors about the impact of commodity inflation on the company’s operations and did not have reasonable basis for positive statements about its business. The suit was filed after the company’s stock price dropped nearly 27% following the announcement of its Q1 2022 financial results.
US District Judge Paul A. Engelmayer granted the defendants’ motion to dismiss the AC in its entirety, with prejudice. The court agreed that the 26 challenged statements were not actionable because they were accurate statements of current or historical fact; protected under the Private Securities Litigation Reform Act’s safe harbor for forward-looking statements; and opinions for which the plaintiffs failed to plead facts showing they were not genuinely held by the speaker. The court also found that the plaintiffs had failed to adequately plead a strong inference of fraudulent intent.
The case is Douglas Rein v. Dutch Bros. Inc. et al. before the US District Court for the Southern District of New York (1:23-cv-01794-PAE).
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