`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`
`
`Civil Action No. 1:20-CV-01966-RM-MEH
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`UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION LOCAL
`464A, THE TRUSTEES OF WELFARE AND PENSION FUNDS OF LOCAL 464A –
`PENSION FUND, THE TRUSTEES OF RETIREMENT PLAN FOR OFFICERS,
`BUSINESS REPRESENTATIVES AND OFFICE EMPLOYEES OF LOCAL 464A,
`THE TRUSTEES OF LOCAL 464A FINAST FULL TIME EMPLOYEES PENSION PLAN,
`THE TRUSTEES OF LOCAL 464A WELFARE AND PENSION BUILDING INC., and
`THE TRUSTEES OF NEW YORK-NEW JERSEY AMALGAMATED PENSION PLAN
`FOR ACME EMPLOYEES, Individually and on Behalf of All Others Similarly Situated,
`
`
`
`
`Plaintiffs,
`
`v.
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`PILGRIM’S PRIDE CORPORATION, JAYSON J. PENN,
`WILLIAM W. LOVETTE, and FABIO SANDRI
`
`Defendants.
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`
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`Defendants Pilgrim’s Pride Corporation and Fabio Sandri’s Motion to Dismiss Plaintiff’s
`Amended Class Action Complaint and Incorporated Memorandum of Law
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`
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`Defendants Pilgrim’s Pride Corporation (“Pilgrim’s”) and Fabio Sandri move to dismiss
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`Plaintiff’s Amended Class Action Complaint (“AC”) pursuant to the Private Securities Litigation
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`Reform Act of 1995 and Fed. R. Civ. P. 8(a), 9(b) and 12(b)(6), and submit this incorporated
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`memorandum of law in support of their motion.1
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`PRELIMINARY STATEMENT
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`The AC suffers from a fatal flaw: It conflates antitrust violations with securities fraud.
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`1 On July 13, 2021, counsel for all parties conferred telephonically regarding the issues set forth in this motion,
`pursuant to Civ. Practice Standard IV.N.2.a. Plaintiff did not agree to the relief sought herein and declined to file an
`amended complaint.
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`Plaintiff conclusorily asserts that because Pilgrim’s did not disclose the anticompetitive conduct
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`alleged in the AC, all of Defendants’ public statements regarding the drivers of Pilgrim’s
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`performance in the broiler chicken industry must have been false or misleading. But a violation of
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`the antitrust laws does not automatically establish securities fraud. Unlike an antitrust claim,
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`stating a Section 10(b) claim requires a plaintiff to meet the heavy burden of pleading
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`particularized factual allegations showing that the defendant made a materially false statement or
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`omission in connection with the purchase or sale of securities, acted with the specific intent to
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`deceive at the time they made each challenged statement, and that the revelation of the truth caused
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`a cognizable loss. As set forth below, Plaintiff fails to meet this burden and its claims should be
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`dismissed on three independent grounds.
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`First, the AC does not plead with particularity that each disputed statement made during
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`the Class Period was contemporaneously false or misleading. There is a glaring disconnect
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`between the timing of the anticompetitive conduct described by Plaintiff and that of the alleged
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`misstatements. In the AC, Plaintiff describes anticompetitive conduct by Pilgrim’s and its
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`competitors before the Class Period (in many cases, years before)—but that is not enough to
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`establish that Defendants’ subsequent Class Period statements about the drivers of Pilgrim’s
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`quarterly earnings were misleading when made. Plaintiff nowhere explains—much less pleads the
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`requisite particularized facts supporting—how the scheme it describes as occurring from 2012
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`through 2017 renders false any of Defendants’ statements about Pilgrim’s contemporaneous
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`financial performance from February 2017 to June 2020.
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`The AC also fails to supply any of the requisite particulars—which drivers of which
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`financial metrics were rendered false, by what amount, and when—supporting its claim that all of
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`2
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`Pilgrim’s statements concerning its performance were false and misleading. Plaintiff makes much
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`of Pilgrim’s guilty plea to one count of conspiracy in restraint of competition from “at least as
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`early as 2012 and continuing through at least early 2017.” But the anticompetitive conduct in the
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`plea agreement (the “Agreement”) involved three contracts with a single customer that impacted
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`$361 million of sales. To put those figures into context, during that period, Pilgrim’s had between
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`5,000-6,500 customers and brought in over $54 billion in net sales. Misconduct affecting only one
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`of Pilgrim’s thousands of customers and less than 1% of its sales does not support Plaintiffs’
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`unspecified, broad-brush assertion that an antitrust conspiracy constituted the “true” driver of all
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`of the Company’s financial performance during the Class Period. Similarly, Plaintiff’s allegation
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`that Defendants’ statements during that time were false because the U.S. Department of Justice
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`(“DOJ”) subsequently indicted Defendant Penn, former Pilgrim’s employee Roger Austin, and
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`two former Claxton Poultry employees for antitrust violations on June 3, 2020 (the “Initial
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`Indictment”) does not save its claims. The unadjudicated allegations of anticompetitive conduct in
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`the Initial Indictment do not demonstrate that Defendants’ statements about the drivers of the
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`Company’s success were contemporaneously false or misleading; the securities laws do not require
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`companies to characterize their conduct as illegal. And neither Pilgrim’s nor any its executives had
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`been charged with, found liable of, or pled guilty to, any wrongdoing during the Class Period.
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`Second, Plaintiff’s scienter allegations do not come close to meeting the exacting pleading
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`standards of the PSLRA. Because of the mismatched timing between when the challenged
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`statements were made and the anticompetitive conduct described in the AC, Plaintiff is unable to
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`plead with particularity that any Defendant had the requisite contemporaneous intent to deceive.
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`Critically, Plaintiff fails to allege that the Pilgrim’s executives who made the supposed
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`3
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`misstatements were engaged in any anticompetitive conduct—or even aware of any continuing
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`wrongdoing—during the Class Period. The AC fails to state a claim against Mr. Sandri on this
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`ground—there is not one allegation that Mr. Sandri had knowledge of any anticompetitive conduct
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`at Pilgrim’s. Plaintiff’s generalized allegations that he should have known do not suffice under the
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`PSLRA.
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`Third, the AC is deficient because it fails to establish loss causation, i.e., a link between
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`the “truth,” which Plaintiff claims was revealed when the DOJ announced the Initial Indictment
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`on June 3, 2020, and the allegedly false and misleading statements. The announcement of the
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`Initial Indictment does not relate to—let alone “correct”—any of the challenged statements. And
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`the market was fully aware, beginning in 2016, that Pilgrim’s was the target of litigations and
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`government investigations concerning Pilgrim’s alleged participation in an anticompetitive
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`conspiracy, and the attendant risks that Pilgrim’s might suffer adverse consequences as a result of
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`those proceedings. In every public filing during the Class Period, Pilgrim’s fully disclosed that
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`there was ongoing litigation alleging that Pilgrim’s had been involved in antitrust violations.
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`For these reasons, and those set forth below, the AC should be dismissed with prejudice.
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`STATEMENT OF FACTS2
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`Pilgrim’s is one of the largest producers of chicken and pork products in the United States,
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`the United Kingdom and Europe, Mexico, and approximately 110 other countries.3 Mr. Sandri has
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`been the CEO of Pilgrim’s since June 2020; Messrs. Lovette and Penn each previously served as
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`2 These facts are drawn from the AC, documents incorporated therein, a plea agreement that is publicly filed, and
`documents filed with the SEC, of which the Court may take judicial notice to establish market awareness and the fact
`of such filings. See Chipman v. Aspenbio Pharma, Inc., 2012 WL 4069353, at *2 (D. Colo. Sept. 17, 2012).
`3 See Ex. 1 (2019 10-K dated Feb. 21, 2020) at 1. All references to “Ex.” refer to Exhibits to the accompanying
`Declaration of Caroline Zalka. All citations to “¶ _” are to the AC.
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`4
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`CEO of Pilgrim’s from January 2011 to March 2019 and March 2019 to June 2020, respectively.
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`¶¶ 14-16. Pilgrim’s common stock trades on the NASDAQ under the symbol “PPC.” ¶ 13.
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`During the Class Period of February 9, 2017 to June 2, 2020, Pilgrim’s regularly updated
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`investors regarding its business, its financial performance, and the drivers behind that performance
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`in filings with the U.S. Securities and Exchange Commission (the “SEC”) and earnings calls.
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`Pilgrim’s generally attributed its strong financial results to a variety of factors, such as its leading
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`market position in the chicken industry, broad product portfolio, and strong customer relationships.
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`See, e.g., ¶ 142. Pilgrim’s also disclosed that its “key customer approach also promotes trust,
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`enhances long-term relationships and strengthens [its] margin structure.” See, e.g., ¶ 194. In
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`addition, Pilgrim’s disclosed that the chicken industry was “highly competitive” and that it
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`“primarily compete[s] with other vertically integrated chicken companies.” See e.g., ¶ 124.
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`Pilgrim’s regularly listed factors that made it competitive, including “price, product quality,
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`product development, brand identification, breadth of product line and customer service.” See, e.g.,
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`¶ 140. Between 2012 and 2017, Pilgrim’s net sales were approximately $54.5 billion, and Pilgrim’s
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`served between 5,000 and 6,500 customers annually.4
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`Plaintiff alleges that virtually every disclosure that Pilgrim’s or its executives made
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`regarding Pilgrim’s business or the Company’s results, in 13 quarterly earnings calls and 17 public
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`filings and press releases between February 9, 2017 and April 30, 2020, was materially misleading
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`for the same reason: The statements purportedly concealed that Pilgrim’s financial results during
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`the Class Period were driven primarily by an “illegal bid-rigging scheme orchestrated by
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`4 See Ex. 2 (2012 10-K dated Feb. 15, 2013) at 4, 7; Ex. 3 (2013 10-K dated Feb. 21, 2014) at 4, 7; Ex. 4 (2014 10-K
`dated Feb. 12, 2015) at 2, 6; Ex. 5 (2015 10-K dated Feb. 12, 2016) at 1; Ex. 6 (2016 10-K dated Feb. 9, 2017) at 1;
`Ex. 7 (2017 10-K dated Feb. 16, 2018) at 1, 6.
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`5
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`Defendants and their co-conspirators.” See, e.g., ¶ 141.5 Plaintiff then alleges that the “truth”
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`concerning the “true reason behind Pilgrim’s purportedly successful operations” was revealed to
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`investors for the first time when the DOJ announced the Initial Indictment on June 3, 2020. ¶¶ 11,
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`256. The announcement indicated that two Pilgrim’s executives (including Defendant Penn) had
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`been indicted for conspiracy to fix prices and rig bids for broiler chickens across the United States
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`from “at least as early as 2012 and continuing through at least early 2017.”6 Following this
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`announcement, Pilgrim’s stock price declined $2.58 per share, from a close of $20.87 on June 2,
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`2020, to close at $18.29 on June 3, 2020. ¶ 257. Plaintiff’s Class Period ends the day before this
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`announcement.
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`The AC, however, relies heavily on two post-Class Period events that are not alleged as
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`corrective disclosures or loss-causing events. First, on October 7, 2021, the DOJ issued the
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`Superseding Indictment (superseding the Initial Indictment), which alleged that various
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`individuals in the broiler chicken industry allegedly “sold and accepted payment for broiler
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`chicken products . . . through until at least approximately early 2019.”7 The only conduct in the
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`Superseding Indictment engaged in by a Pilgrim’s employee during the Class Period—a low-level,
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`anonymous sales manager alleged to have participated in two phone calls with a competitor
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`regarding a proposal for one chicken-buying cooperative, and the subsequent submission of a
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`proposal to that cooperative—took place in September 2017. Second, on October 13, 2021,
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`Pilgrim’s announced that it had entered into the Agreement with the DOJ “for restraint of
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`5 See also ¶¶ 143, 145, 147, 150, 152, 154, 156, 158, 160, 162, 164, 166, 168, 171, 173, 175, 177, 179, 181, 183, 186,
`188, 191, 193, 195, 197, 199, 201, 204, 206, 208, 210, 212, 214.
`6 Ex. 8 (Indictment, U.S. v. Jayson Penn, 20-CR-00152, (D. Colo. Jun. 2, 2020), ECF No. 1) ¶ 41.
`7 Ex. 9 (Superseding Indictment, U.S. v. Jayson Penn, 20-CR-00152 (D. Colo. Oct. 6, 2020), ECF No. 101) ¶ 50.
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`6
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`competition that affected three contracts for the sale of chicken products to one customer in the
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`United States.”8 As part of the Agreement, Pilgrim’s admitted that “at least one of its current and/or
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`former employees . . . participated in a conspiracy with at least one competitor . . . to suppress and
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`eliminate competition.”9 As set forth in the Agreement, which was made public on February 23,
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`2021, this conduct took place from “at least as early as 2012 and continuing through at least early
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`2017,” affected three contracts for the sale of chicken products to one customer, and impacted
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`sales of $361 million.10 Pilgrim’s stock price increased after the announcements of the
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`Superseding Indictment (2.77% increase)11 and the Agreement (5.68% increase).12
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`Plaintiff claims that the allegations in the Initial Indictment solely and newly revealed the
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`previously concealed information that Pilgrim’s had participated in an antitrust conspiracy, thus
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`revealing the truth about Pilgrim’s financial results and operations. ¶ 256. But an allegation that
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`Pilgrim’s had participated in an antitrust conspiracy was hardly new information. Throughout the
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`Class Period, Pilgrim’s informed investors that a series of private lawsuits and government
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`investigations had been commenced “alleging violations of federal and state antitrust and unfair
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`competition laws.” Specifically, Pilgrim’s SEC filings stated:
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`• “Between September 2, 2016 and October 13, 2016, ten purported class action lawsuits
`were filed . . . against Pilgrim’s and 13 other producers[.] These actions are now styled [as]
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`8 Ex. 10 (8-K dated Oct. 14, 2020).
`9 Ex. 11 (Plea Agreement, U.S. v. Pilgrim’s Pride Co., 20-CR-00330 (D. Colo. Feb. 23, 2021), ECF No. 58) ¶ 4.
`10 Id.; see also Ex. 10 (8-K dated Oct. 14, 2020).
`11 The Superseding Indictment was announced on October 7, 2020 during the trading day, and Pilgrim’s stock price
`closed at $15.96 per share, a $0.43 increase (or a 2.77% increase) from a close of $15.53 per share on October 6. See
`Ex. 12 (U.S. indicts six chicken industry officials over alleged price fixing, REUTERS (Oct. 7, 2020)); see also Ex. 13
`(Pilgrim’s Pride Co. Oct. 6-14, 2020 NASDAQ Real Time Price, Historical Data, YAHOO! FINANCE). The Court may
`take judicial notice of Pilgrim’s published stock price data “[b]ecause stock price data is capable of ready and accurate
`determination.” In re Molycorp, Inc. Sec. Litig., 2015 WL 1514712, at *2 (D. Colo. Mar. 30, 2015) (Moore, J.).
`12 The Agreement was announced before market open on October 14, 2020. See Ex. 14 (Pilgrim’s Pride strikes plea
`deal over U.S. chicken price-fixing charges, REUTERS (Oct. 14, 2020). Pilgrim’s stock price closed that day at $16.57
`per share, a $0.89 increase (or a 5.68% increase) from a close of $15.68 per share on October 13. See Ex. 13.
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`7
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`In re Broiler Chicken Antitrust Litigation. The current operative complaints . . . allege,
`among other things, a conspiracy among defendants to reduce output and fix, increase,
`maintain, and stabilize the prices of broiler chickens in violation of the U.S. antitrust laws
`from the period of January 2008 to the present.”13
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`• “On October 10, 2016, Patrick Hogan . . . filed a class action complaint . . . against
`Pilgrim’s and its named executive officers. The complaint alleges . . . that Pilgrim’s SEC
`filings contained statements that were rendered materially false and misleading by
`Pilgrim’s failure to disclose that (i) the company colluded with several of its industry peers
`to fix prices in the broiler chicken market as alleged in the In re Broiler Chicken Antitrust
`Litigation, (ii) its conduct constituted a violation of federal antitrust laws, (iii) Pilgrim’s
`revenues during the class period were the result of illegal conduct[.]”14
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`• “On March 9, 2017, a stockholder derivative action styled as DiSalvio v. Lovette . . . was
`brought against all of the Company’s directors and its Chief Financial Officer, Fabio Sandri
`. . . alleg[ing], among other things, that the named defendants breached their fiduciary
`duties by failing to prevent the Company and its officers from engaging in an antitrust
`conspiracy as alleged in the In re Broiler Chicken Antitrust Litigation, and issuing false
`and misleading statements as alleged in the Hogan class action litigation.”15
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`• “On June 21, 2019, the DOJ filed a motion to intervene and stay discovery in the In re
`Broiler Chicken Antitrust Litigation for a period of six months . . . . On July 1, 2019, the
`DOJ issued a subpoena to PPC in connection with its investigation. PPC is currently in the
`process of complying with the subpoena.”16
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`Moreover, in every Pilgrim’s Form 10-K filed during the Class Period, Pilgrim’s warned
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`the market that it faced substantial risks stemming from these proceedings, including that
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`unfavorable outcomes “could result [in] material damages, which could adversely affect
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`[Pilgrim’s] financial condition and results of operations.”17
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`Even before the Class Period, Pilgrim’s involvement in these proceedings was widely
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`reported in the news media. For example, on September 6, 2016, CNBC published an article about
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`13 See, e.g., Ex. 6 (2016 10-K dated Feb. 9, 2017) at 19.
`14 Id.
`15 See, e.g., Ex. 7 (2017 10-K dated Feb. 16, 2018) at 23.
`16 See, e.g., Ex. 1 (2019 10-K dated Feb. 21, 2020) at 17.
`17 See, e.g., Ex. 15 (2018 10-K dated Feb. 14, 2019) at 16.
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`8
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`the Broiler Chicken lawsuit.18 This reporting continued well into the Class Period. On June 25,
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`2019, the Wall Street Journal, New York Times, Forbes, and Reuters each reported that the DOJ
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`had launched a criminal investigation into allegations that poultry producers, including Pilgrim’s,
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`colluded to keep prices artificially high.19
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`PROCEDURAL HISTORY OF RELATED ACTION
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`On October 20, 2016, a putative class action, Hogan v. Pilgrim’s Pride, was filed in this
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`Court on behalf of purchasers and sellers of Pilgrim’s stock between February 2014 and October
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`2016, premised on related allegations that Pilgrim’s SEC filings contained statements that were
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`rendered materially false and misleading by Pilgrim’s failure to disclose its alleged participation
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`in the same conspiracy alleged in this case.20 This related action was originally dismissed on March
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`14, 2018,21 for failure to plead falsity under the PSLRA’s heightened pleading standard. The
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`Hogan plaintiff amended his complaint on June 8, 2020, following the Initial Indictment, and
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`incorporated many of the same allegations relating to the conspiracy between 2012 and 2017. That
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`complaint was dismissed on April 19, 2021 as time-barred under the applicable statue of repose
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`and for lack of standing.22 On May 17, 2021, the Hogan plaintiff filed a motion for amended
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`judgment under Rule 59(e), which is currently pending.
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`18 Ex. 16 (Lawsuit Alleges There’s Been a Chicken Price Conspiracy, CNBC (Sept. 6, 2016)).
`19 See Ex. 17 (Justice Department Investigates Chicken Industry, WALL ST. J. (June 25, 2019)); Ex. 18 (Why Chicken
`Producers Are Under Investigation for Price Fixing, NEW YORK TIMES (June 25, 2019)); Ex. 19 (Justice Department
`Investigates Chicken Industry For Price Collusion, FORBES (June 25, 2019)); Ex. 20 (U.S. launches criminal probe
`into alleged chicken price fixing by Tyson, rivals, REUTERS (June 25, 2019)).
`20 See Class Action Compl., Hogan v. Pilgrim’s Pride Corp, 16-CV-02611 (“Hogan”), 2016 WL 6274456 (D. Colo.
`Oct. 20, 2016), ECF No. 1.
`21 See Hogan, 2018 WL 1316979 (D. Colo. Mar. 14, 2018).
`22 See Hogan, 2021 WL 1534602 (D. Colo. Apr. 19, 2021).
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`9
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`ARGUMENT
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`A Section 10(b) plaintiff “bears a heavy burden at the pleading stage.” In re Level 3
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`Commc’ns, Inc. Sec. Litig., 667 F.3d 1331, 1333 (10th Cir. 2012). To state a claim for securities
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`fraud, a plaintiff must allege that (1) the defendant made a materially misleading statement or
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`omission; (2) a connection with the purchase or sale of securities; (3) scienter; (4) reliance on the
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`misleading statement or omission; and (5) loss causation, a causal connection between the
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`purported fraudulent acts and the plaintiff’s subsequent loss. See id. (citing Adams v. Kinder-
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`Morgan, Inc., 340 F.3d 1083, 1095 (10th Cir. 2003); Dura Pharm., Inc. v. Broudo, 544 U.S. 336,
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`345, 347-48 (2005). Moreover, under the PSLRA and Rule 9(b), a plaintiff must “specify each
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`statement alleged to have been misleading [and] the reason or reasons why the statement is
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`misleading” and must “state with particularity facts giving rise to a strong inference that the
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`defendant acted with the required state of mind.” 15 U.S.C. § 78u–4(b)(1), (2). In other words,
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`plaintiff must plead with particularity “the who, what, when, where, and how” of the alleged
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`securities fraud with particularity. See Hogan, 2018 WL 1316979, at *5.
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`Plaintiff here seeks to manufacture a securities fraud claim—subject to the PSLRA’s
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`stringent pleading standards—based upon the antitrust allegations in the Initial Indictment and the
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`conduct described in the Agreement. But a securities law violation does not automatically follow
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`from an antitrust violation (or, in the case of the Initial Indictment, an alleged antitrust violation).
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`Indeed, a plaintiff cannot state a Section 10(b) claim merely by identifying a violation of the
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`antitrust laws; such an end-run around the PSLRA runs afoul of the most basic tenets of the
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`securities laws. Rather, to withstand a motion to dismiss, a complaint must contain particularized
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`facts supporting each element of a securities claim—elements that are entirely distinct from those
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`10
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`that may establish a violation of the antitrust laws. As set forth below, the AC fails to adequately
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`plead three independent elements of a Section 10(b) claim—falsity, scienter, and loss causation.
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`I.
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`Plaintiff Has Failed To Plead Particularized Facts Demonstrating an Actionable
`Material Misstatement or Omission
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`
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`The AC challenges dozens of statements concerning the drivers of Pilgrim’s overall
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`financial results and the conduct of its business during the Class Period. ¶¶ 135-214. Plaintiff
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`claims that each of these statements is false or misleading for a single reason: the failure to disclose
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`an “illegal bid-rigging scheme orchestrated by Defendants.” See, e.g., ¶ 150. But absent
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`particularized allegations of fact demonstrating the contemporaneous falsity of each specific
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`challenged statement, which are lacking here, Plaintiff’s securities fraud claim cannot survive.
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`First, to state a claim under Section 10(b), Plaintiff must plead particularized facts
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`demonstrating “why [each] disputed statement was untrue or misleading when made.” Grossman
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`v. Novell, Inc., 120 F.3d 1112, 1124 (10th Cir. 1997). And as this Court already held, where a
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`plaintiff’s “central allegation” is that defendants “failed to disclose an underlying antitrust
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`conspiracy, plaintiff must plead with particularity the facts that establish the existence of the
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`antitrust conspiracy” at the time of the challenged statements. Hogan, 2018 WL 1316979, at *5
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`(D. Colo. Mar. 14, 2018). Put differently, Plaintiff must “establish—at a bare minimum—that the
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`underlying fraud took place during the time period covered by the purportedly false public
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`statements.” In re PetroChina Co. Ltd. Sec. Litig., 120 F. Supp. 3d 340, 357-58 (S.D.N.Y. 2015).
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`The AC does not meet this requirement, failing to allege the existence of an antitrust
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`conspiracy that took place during the Class Period with the requisite particularity. For the most
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`part, Plaintiff’s allegations entail conduct that pre-dated the statements challenged in the AC,
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`contending that, years before the Class Period, Pilgrim’s executives engaged in a conspiracy with
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`11
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`several competitors to raise the price of broiler chickens by rigging bids. ¶¶ 70-112. But this
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`conduct has “nothing to do with [the] Class Period” and is “temporally and logically insufficient”
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`to show that Pilgrim’s statements concerning the drivers of its quarterly financial performance or
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`the competitiveness of the chicken industry23 were contemporaneously false when made,
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`especially where “there is scant else from which to infer that [the misconduct] was the company’s
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`practice at any pertinent [class period] time.” Emps. Ret. Sys. of Providence v. Embraer S.A., 2018
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`WL 1725574, at *4-11 (S.D.N.Y. Mar. 30, 2018) (finding “temporally and logically insufficient”
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`misstatement allegations premised on “pre-Class Period claims and findings of misconduct”); In
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`re Lululemon Sec. Litig., 14 F. Supp. 3d 553, 580 (S.D.N.Y. 2014) (allegations concerning quality
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`testing issues which “occurred well before the Class Period” did not render misleading company’s
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`statements regarding its quality testing made during class period).24
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`The sole instance of anticompetitive conduct that the AC describes as occurring during the
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`Class Period—two conversations that a low-level Pilgrim’s employee allegedly had with a Claxton
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`employee concerning bids for potential price reductions for the 2018 and 2019 supply of chicken
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`to one customer, and the submission of a bid in September 2017 (see ¶¶ 122-23)—are insufficient
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`to state a securities fraud claim. This conduct lacks any temporal or other connection to the
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`23 Plaintiff challenges Pilgrim’s description of the chicken industry as “highly competitive,” including that “the
`competitive factors” in the industry include “price, product quality, product development, brand identification, breadth
`of product line and customer service.” See ¶¶ 140, 146, 169, 203. Plaintiff similarly challenges Pilgrim’s descriptions
`of the factors in the broader “foodservice market” as including “consistent quality, product development, service and
`price.” Id. But these statements concern the entire chicken and food industries, not Pilgrim’s operations or drivers of
`its financial performance, and there are no particularized factual allegations in the AC demonstrating that these broader
`statements concerning the industry as a whole were contemporaneously false when made.
`24 Even when Plaintiff points to conduct occurring just prior to the Class Period—a Pilgrim’s employee (Roger Austin)
`discussing pricing and negotiations for a key customer with one of its competitors (¶¶ 113-16), as alleged in the Initial
`Indictment—the requisite particularity is notably absent, as Pilgrim’s is not alleged to have used any information
`derived from this discussion to actually rig bids or fix prices during the Class Period.
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`challenged statements, which concern the drivers of Pilgrim’s financial results. Critically, Plaintiff
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`does not quantify the impact of such conduct on Pilgrim’s financials or sales, identify which of
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`Pilgrim’s statements were rendered false by the conduct and how, or even allege that the proposed
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`price reductions were formalized or entered into—much less how they impacted Pilgrim’s
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`financial performance during the Class Period. The lone act that Plaintiff describes thus falls far
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`short of pleading the requisite “who, what, when, where, and how” required to state a Section 10(b)
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`claim premised on the contemporaneous drivers of Pilgrim’s financial results. See Hogan, 2018
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`WL 1316979, at *5.
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`Second, Plaintiff fails to plead, consistent with the PSLRA, that Pilgrim’s non-disclosure
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`of the antitrust conspiracy alleged in the AC actually rendered the challenged statements
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`misleading. The AC is bereft of any particularized allegations as to how the anticompetitive
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`conduct described in the Agreement, Indictment, or Superseding Indictment actually impacted
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`Pilgrim’s business or financial results in a manner that would have rendered Pilgrim’s statements
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`relating thereto false. Indeed, Plaintiff does not even attempt to quantify the impact of this
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`conduct—the vast majority of which took place before the statements were made—on any specific
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`Pilgrim’s financial metric, such as revenue or margin figures. Nor does Plaintiff attempt to explain
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`(much less plead with particularity) what portion of Pilgrim’s results during the Class Period were
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`purportedly driven by the antitrust conspiracy rather than the factors the Company disclosed. At
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`most, Plaintiff alleges a miniscule blip on Pilgrim’s financials that almost entirely predates the
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`Class Period—the Agreement involved one Pilgrim’s customer out of several thousand, and
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`affected sales of chicken products totaling $361 million between 2012 and 2017,25 which
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`25 See Ex. 11 (Agreement) ¶ 4.
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`constitutes a mere 0.66% of Pilgrim’s net sales during that same time period.26 Plaintiff’s failure
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`to provide particularized facts as to how Defendants’ statements were rendered false and
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`misleading is fatal to its claims. See Heck v. Orion Grp. Hldgs., Inc., 468 F. Supp. 3d 828, 849
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`(S.D. Tex. 2020) (dismissing for “fail[ure] to explain why or in what particulars” statements about
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`company’s financial results, treatment of receivables, doubtful accounts, project estimates,
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`goodwill, ICFR, or SOX certifications were inaccurate); In re Exodus Commc’ns, Inc. Sec. Litig.,
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`2005 WL 1869289, at *15 (N.D. Cal. Aug. 5, 2005) (no falsity where plaintiff did not quantify the
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`amount by which the company’s revenue recognition practices allegedly overstated revenues).
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`Third, it is well established that “[d]isclosure is not a rite of confession, and companies do
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`not have a duty to disclose uncharged, unadjudicated wrongdoing” under the securities laws. See
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`City of Pontiac Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752 F.3d 173, 184 (2d Cir. 2014).
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`At no point between the start of the Class Period and April 30, 2020 (the date of the last alleged
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`misstatement) had Pilgrim’s or any of its executives been charged with, or adjudicated to have
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`been engaged in, any anticompetitive conduct. Yet Plaintiff claims that Defendants should have
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`punctuated each disclosure concerning Pilgrim’s business or financial results with a confession
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`that the Company was engaged in an illegal antitrust conspiracy. But the securities laws impose
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`no such obligation upon a company; it need not engage in self-flagellation. See id. at 173 (company
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`had no obligation to disclose involvement in ongoing tax evasion scheme under Section 11 of the
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`’34 Act where company “disclos[ed] its involvement in multiple legal proceedings and
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`government investigations” concerning the scheme). Indeed, “joining a price-fixing conspiracy is
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`a criminal offense, an