On March 29, 2021, the U.S. District Court for the Northern District of California dismissed a securities class action complaint against Robbins Russell client Poly (Plantronics, Inc.), and some of its current and former officers. Poly is a leading global communications company that designs, manufactures, and markets integrated communications and collaboration solutions, including headsets and video-conferencing products.
Plaintiffs claimed that Poly had deliberately overstocked its distributors so that it could record sales revenue earlier than it otherwise could have (a practice known as “channel-stuffing”). This supposed practice, in plaintiffs’ view, led to Poly having to write down channel inventory in November 2019. Plaintiffs contended that the write-down triggered a massive stock-price drop, resulting in alleged damages well over $500 million. Poly categorically denies these allegations.
The district court granted our motion to dismiss, and rejected plaintiffs’ claims in their entirety. It agreed with our position that plaintiffs’ “complaint fails to adequately allege a channel-stuffing scheme” and thus failed “to satisfy the requisite standard” for pleading securities fraud. The only alleged example of the supposed channel-stuffing, the court held, reflected an “unremarkable” and legitimate price discount. The court also held that “the only plausible view” of allegations that Poly had shifted to using larger distributors who could carry more products was that the company believed “that new distributors could do a better job of moving product.” The court therefore did not reach other independent grounds for dismissal presented in our motion, including that no false or misleading statements were made and no defendant acted with scienter.
Robbins Russell partners Gary Orseck, Matthew Madden, and Alison Barnes, along with associate John Goerlich, are handling this case for Poly and its current and former officers. This dismissal order comes on the heels of Robbins Russell’s other recent victories for companies and their officers and directors in shareholder class and derivative actions, including the dismissal with prejudice of a $1.5 billion securities class action against Universal Health Services, Inc., in the Eastern District of Pennsylvania.
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