Keurig Green Mountain, Inc. fka Green Mountain Coffee Roasters, Inc. Securities Litigation (2011)

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Lawsuit Overview

Defendant:Keurig Green Mountain, Inc.
Date Filed:November 29th, 2011
Sector:Consumer Non-Durables
Industry:Packaged Foods
Settlement Website: http://www.greenmountainsecuritieslitigation.com/
Settlement Deadline:December 1st, 2018

According to the Complaint, Keurig Green Mountain, Inc. ("GMCR" or the "Company") and its subsidiaries operate in the specialty coffee and coffee maker businesses. The Company has achieved significant growth in recent years, driven by sales from its popular Keurig single-cup brewing system, which uses "K-Cup" portion packs to brew single servings of coffee and other beverages.

Three months prior to the start of the Class Period, on September 28, 2010, GMCR disclosed that it was the subject of an inquiry being conducted by the United States Securities and Exchange Commission (the "SEC") concerning revenue recognition practices and the Company's relationship with a key fulfillment vendor - M. Block & Sons ("MBlock". Within two months of disclosing the SEC's inquiry, GMCR announced a sweeping restatement of previously issued financial statements for fiscal 2006-2009 and the first three quarters of 2010.

Throughout the Class Period, the Company was portrayed to the investing public as a healthy and growing business, with rapidly increasing revenues and K-Cup sales. GMCR was frequently described as one of the hottest stories on the NASDAQ Global Market (''NASDAQ'') during the Class Period, with shares nearly quadrupling in price from January 2011 to September 2011.

The Complaint alleges that during the Class Period, Defendants systematically manipulated and strategically managed the Company's revenues. The fraudulent scheme at GMCR involved materially overstating the Company's revenues based on falsified sales orders-including through sham inventory shipments-for hundreds of millions of dollars in K-Cup and Keurig brewer products. GMCR booked "revenues" associated with these false sales orders and shipments as though they were real. These acts caused a ripple effect throughout the Company's financial statements, resulting in the material overstatement of multiple metrics on which investors and analysts relied, including the Company's profits, and inventory and product demand levels. Throughout the Class Period, Defendants also fraudulently overstated GMCR's assets in proportion to the Company's fictitious revenues by carrying the proceeds of dummy sales as assets on the Company's balance sheet. In short, GMCR essentially ran a shell game through MBlock, which it secretly controlled, to manufacture earnings during the Class Period.

This action seeks to recover the damages caused by Defendants' misconduct.

On April 27, 2012, the Court issued an Order appointing Lead Plaintiffs and Counsel. Lead Plaintiffs filed a consolidated Complaint on October 29. On November 5, Lead Plaintiffs filed a corrected consolidated Complaint.

Defendants filed a Motion to Dismiss the consolidated Complaint on March 1, 2013. On December 20, the Court issued an Order granting Defendants' Motion to Dismiss with prejudice. Plaintiffs filed a notice appealing the Order of dismissal on January 21, 2014. On August 18, 2015, the Court of Appeals vacated the District Court's judgment of dismissal, remanding for proceedings consistent with their opinion.

Plaintiffs filed a Motion for Class Certification on December 12, 2016. On July 21, 2017, the Court issued an Order granting the Motion for Class Certification. The parties entered into a Stipulation of Settlement on June 18, 2018.

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Reference Complaint

Louisiana Municipal Police Employees' Retirement System, et al. v. Keurig Green Mountain, Inc., et al.

Date Filed:November 5th, 2012
Class Period Start:February 2nd, 2011
Class Period End:November 9th, 2011
Reference Complaint Filings
#Document TitleFiling Date
 
First Identified Complaint

Louisiana Municipal Police Employees' Retirement System, et al. v. Keurig Green Mountain, Inc., et al.

Date Filed:November 29th, 2011
Class Period Start:February 2nd, 2011
Class Period End:November 9th, 2011
First Identified Complaint Filings
#Document TitleFiling Date