5th Circ. Invokes Chanel In Siding With Pier 1 Over Stock Drop

The Fifth Circuit affirmed the dismissal of a shareholder suit alleging Pier 1 hid the possibility that it might cut prices to sell excess inventory, using a Coco Chanel quote to reject claims executives knew their products were at risk of discounts because they were trendy.

“Fashion changes, but style endures,” the fashion designer Coco Chanel once said, the Fifth Circuit noted in its opinion Monday.

“Because we conclude that Pier 1 operates largely in the sturdier business of style and that the investors failed to adequately plead scienter, we affirm [dismissal],” a three-judge panel wrote in the opinion.

Pier 1, former CEO Alexander Smith and former CFO Charles Turner are represented by Stephen Crain and Bradley Benoit of Bracewell LLP.

Download the entire Law360 article below: