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Bracewell Wins Second Motion to Dismiss Securities Class Action Against Pier 1

HOUSTON  Bracewell LLP successfully defended Pier 1 Imports, Inc. (Pier 1) and its former CEO and CFO in a putative class action asserting claims of securities fraud. In a 30-page order, Judge Karen Gren Scholer of the US District Court for the Northern District of Texas granted Bracewell’s second motion to dismiss.

The case dates back to 2015, when a class action group alleged that Pier 1 and its two most senior former executives
violated provisions of the Securities Exchange Act of 1934. The suit claimed that the company and its executives knowingly or recklessly made material misstatements or omissions regarding Pier 1’s financial metrics; distribution network, inventory levels and markdown risk; internal controls; and increasing costs tied to excess inventory.

In October 2016, Bracewell moved to dismiss these claims. The court dismissed the claims in August 2017, finding that the lead plaintiff failed to plead sufficient facts to infer that Pier 1’s former CEO and CFO misled investors and that the case was based on “fraud by hindsight.” The court, however, gave the plaintiff an opportunity to re-plead its case. In September 2017, the plaintiff filed an amended complaint with several new allegations in an attempt to address the deficiencies that the court identified in the first dismissal. Bracewell asked the court to dismiss the amended complaint on the grounds that it failed to overcome the deficiencies in the previous complaint and still failed to allege adequately that the defendants made any misleading statements or omissions with the intent to deceive, manipulate or defraud.

On June 25, 2018, Judge Scholer granted Bracewell’s second motion to dismiss with prejudice and without leave to amend.

Bracewell lawyers involved in this case (Town of Davie Police Pension Plan v. Pier 1 Imports Inc. et al, Case No. 3:15-cv-03415-S) included:

Partners: Stephen B. Crain, Bradley J. Benoit, Amy E. Parker and Joseph M. Cox

Associate: Clark A. Donat