Shutterfly investors fail to convince court of class suit merits

Shutterfly Inc. investors lost their bid to revive a would-be class suit over the 2019 merger with Apollo Global Management LLC because the investors failed to show the company misled them, the Third Circuit said, according to Bloomberg Law. Investors, led by a former shareholder Robert Garfield, accused the retailer of misleading them in a proxy statement intended to secure approval for the merger. But the challenged valuation range statement wasn’t misleading, the U.S. Court of Appeals for the Third Circuit said in an unpublished opinion:

“While the Complaint included five allegedly misleading statements in the Proxy, Plaintiff confines his appeal to only the inclusion of the share valuation ranges that were based on the Sensitivity Case Projections. Therefore, the only remaining alleged misstatement is that the Proxy included Sensitivity Case valuation ranges and misled shareholders regarding the true value of the company. This lone remaining statement fails to establish a cause of action because it was not misleading, and any misleading aspect of the share valuation ranges was not material. We reach this conclusion due to the ample disclosures provided in the Proxy that the values were created by Morgan Stanley, the estimates should not be taken as the true value of the company, and—most importantly—the Sensitivity Case Projections were based on downside assumptions the company itself believed were less likely to occur.”