Keurig Green Mountain has preliminarily agreed to pay $36.5 million to investors who say the Vermont-based coffee company made misstatements about its growth in 2011, according to court documents.
Attorneys for shareholders in the class-action lawsuit are asking a federal judge to approve the settlement to end the case, according to documents obtained by VTDigger.
John Browne, a New York City-based attorney representing investors in Keurig Green Mountain, filed the settlement proposal in Vermont last week.
“If approved by the Court,” Browne said, “the Settlement will result in a significant payment to the Class and will resolve the Action in its entirety.”
John P. Bueker, of the Boston-based law firm, Ropes & Gray, representing Keurig Green Mountain, could not be reached for comment, nor could the company’s public relations office.
The company has contested the allegations throughout the case.
The class-action case is headed by several large retirement systems which invested and sold shares in the company, including the Louisiana Municipal Police Employees’ Retirement System.
Browne said in an interview that the $36.5 million settlement figure was based on “negotiations” between the two sides, with the assistance of a mediator.
“We’re happy it’s resolved,” he added.
The preliminary settlement stems from a long-running legal battle between the coffee maker and shareholders who purchased stock from the company over a roughly 10-month stretch in 2011.
The lawsuit claims during that period, the coffee company, then known as Green Mountain Coffee Roasters and based in Waterbury, inflated its stock price, painted rosy pictures of growth and did not disclose excess inventory on hand.
“The initial complaint was filed in the Action on November 29, 2011, after Green Mountain disclosed, in contradiction to prior public statements, that the Company’s inventories had increased 156 percent year-over-year, and the Company had missed sales expectations, stunning the market,” Bowles wrote in the recent filing.
The defendants and third parties turned over more than 1.1 million pages of documents to the plaintiffs, while the plaintiffs provided more than 20,000 documents to the defendants.
Browne wrote in the filing last week that the settlement protects investors in the case from the risk of litigation that might lead to “no recovery, or to a smaller recovery” for them.
In fact, at one point, the case had been thrown out. However, the 2nd Circuit U.S. Court of Appeals in New York overturned that decision in 2015, ruling that the claims by the plaintiffs revealed a “strong inference” of deception on the part that the company at that time.
To be eligible for claims through the settlement, investors either would have had to acquire stock during that period in 2011, or sold shares during that period, according to Browne.
The preliminary settlement, Browne said in an interview, comes almost two years after an initial mediation session in the case and continued talks between the parties.
According to the filing, the settlement amount is “well above” the $6 million median settlement amount in securities action in 2017. And, “the Settlement Amount also represents a reasonable percentage of the maximum damages that could be proven at trial, particularly given the risk of continued litigation,” Browne wrote.
Browne added that notice will be provided to “prospective” members of the class-action case, outlining the terms of the settlement.
“The Claims Administrator will also post the Notice of Claim Form on a website developed for the Settlement, and publish the Summary Notice in Investor’s Business Daily and transmit it over the PR Newswire,” according to the filing.
Browne said in an interview that how much each investor would receive would be determined on a case-by-case basis, including how much each person invested and how many claims are eventually submitted.
Browne said he didn’t know how many claims were expected. “We really won’t know until all the claims are filed,” he said. “We’ll send out the notice and see how many people file.”
The company was a publicly traded enterprise from 1993 to 2015. Then, in 2016, JAB Holding Co., a Luxembourg-based corporation, acquired Keurig Green Mountain in a $13.9 billion deal. It is now a privately held company.
Among the plaintiffs in the lawsuit are the Louisiana Municipal Police Employee’ Retirement System, Board of Trustees of the the City of Fort Lauderdale General Employees’ Retirement System, Employees’ Retirement System of the Government of the Virgin Islands, and Public Employees’ Retirement System of Mississippi.
Read the story on VTDigger here: Keurig Green Mountain reaches $36.5M preliminary settlement with investors.