`
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`
`ANNEMARIE TARARA, Individually and
`On Behalf of All Others Similarly Situated,
`
`
`
`
`
`TREEHOUSE FOODS, INC., SAM K.
`REED, and DENNIS F. RIORDAN,
`
`
`
`
` Case No.: 16-CV-10632
`
`
`CLASS ACTION COMPLAINT FOR
`VIOLATIONS OF THE FEDERAL
`SECURITIES LAWS
`
`
`JURY TRIAL DEMANDED
`
`
`
`Plaintiff,
`
`Defendants.
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`
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`
`
`
`
`
`
`v.
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`
`
`
`
`
`
`
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 2 of 23 PageID #:2
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`
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`Plaintiff Annemarie Tarara (“Plaintiff”), by and through her attorneys, alleges the
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`following upon information and belief, except as to those allegations concerning Plaintiff, which
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`are alleged upon personal knowledge. Plaintiff’s information and belief is based upon, among
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`other things, her counsel’s investigation, which includes without limitation: (a) review and
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`analysis of regulatory filings made by TreeHouse Foods, Inc., (“TreeHouse” or the “Company”),
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`with the United States (“U.S.”) Securities and Exchange Commission (“SEC”); (b) review and
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`analysis of press releases and media reports issued by and disseminated by TreeHouse; and (c)
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`review of other publicly available information concerning TreeHouse.
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`NATURE OF THE ACTION AND OVERVIEW
`
`1.
`
`This is a class action on behalf of persons and entities that acquired TreeHouse
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`securities between February 1, 2016, and November 2, 2016, inclusive (the “Class Period”),
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`against the Defendants, seeking to pursue remedies under the Securities Exchange Act of 1934
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`(the “Exchange Act”).
`2.
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`TreeHouse is a food manufacturer that operates approximately 24 manufacturing
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`facilities in the United States and Canada. The Company’s stated goal is to be a leading supplier
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`of private label food and products including coffee-creamer, canned soups, salad dressings, salsa
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`and Mexican sauces, jams and pie fillings.
`3.
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`On February 1, 2016, TreeHouse announced that it completed the acquisition
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`of ConAgra Foods, Inc.’s (“ConAgra’s”) private brands operations. The Company stated that it
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`paid $2.7 billion in cash plus transaction expenses for the business. TreeHouse touted the
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`acquisition as a boon to the Company, stating, “[t]he acquisition of ConAgra’s private brands
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`operations meaningfully expands TreeHouse’s presence in private label dry and refrigerated
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`grocery, and will be called TreeHouse Private Brands.”
`4.
`
`Throughout the Class Period, Defendants made materially false and misleading
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`statements regarding
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`the Company’s business, operations, and prospects. Specifically,
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`Defendants made false and/or misleading statements and/or failed to disclose that: (1) the
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`Company’s private label business was underperforming; (2) the Company’s acquisition strategy
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`CLASS ACTION COMPLAINT
`1
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 3 of 23 PageID #:3
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`was underperforming; (3) that the Company had overstated its full-year 2016 guidance; and (4)
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`that, as a result of the foregoing, Defendants’ statements about TreeHouse’s business, operations,
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`and prospects, were false and misleading and/or lacked a reasonable basis.
`5.
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`On November 3, 2016, TreeHouse lowered its full year adjusted earnings per
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`share forecast to $2.80-$2.85, from $3.00-$3.10 due to underperformance of the Private Brands
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`acquisition and over softness in the private label manufacturing business. The Company also
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`announced the closure of a plant in Delta, British Columbia, and reported job cuts at its facility
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`in Battle Creek, Michigan.
`6.
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`The Company also surprised investors by announcing the resignation of its newly-
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`appointed President, Chris Sliva, who had been President for less than six months, and the
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`appointment of a new Chief Financial Officer.
`7.
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`On the above news, the Company’s shares fell $16.87 per share, or nearly 20%, to
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`close at $69.72 per share on November 3, 2016.
`8.
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`As a result of Defendants’ wrongful acts and omissions, and the precipitous
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`decline in the market value of the Company’s securities, Plaintiff and other Class members have
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`suffered significant losses and damages.
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`JURISDICTION AND VENUE
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`9.
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`The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange
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`Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17
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`C.F.R. § 240.10b-5).
`10.
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`This Court has jurisdiction over the subject matter of this action pursuant to 28
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`U.S.C. § 1331 and Section 27 of the Exchange Act (15 U.S.C. § 78aa).
`11.
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`Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(b) and
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`Section 27 of the Exchange Act (15 U.S.C. § 78aa(c)). Substantial acts in furtherance of the
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`alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts
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`charged herein, including the dissemination of materially false and/or misleading information,
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`occurred in substantial part in this Judicial District, as TreeHouse is headquartered in this district.
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`CLASS ACTION COMPLAINT
`2
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 4 of 23 PageID #:4
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`12.
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`In connection with the acts, transactions, and conduct alleged herein, Defendants
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`directly and indirectly used the means and instrumentalities of interstate commerce, including the
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`United States mail, interstate telephone communications, and the facilities of a national securities
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`exchange.
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`PARTIES
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`13.
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`Plaintiff Annemarie Tarara, as set forth in the accompanying certification,
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`incorporated by reference herein, purchased TreeHouse common stock during the Class Period,
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`and suffered damages as a result of the federal securities law violations and false and/or
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`misleading statements and/or material omissions alleged herein.
`14.
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`Defendant TreeHouse is incorporated in Delaware, and the Company’s principal
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`executive offices are located in Oak Brook, Illinois. TreeHouse’s common stock trades on the
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`New York Stock Exchange (“NYSE”) under the symbol “THS.”
`15.
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`Defendant Sam K. Reed (“Reed”) has served at all relevant times as the
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`Company’s Chief Executive Officer and Chairman.
`16.
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`Defendant Dennis F. Riordan (“Riordan”) served at all relevant times as the
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`Company’s Chief Financial Officer (“CFO”) and currently serves as the Company’s President
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`effective November 3, 2016.
`17.
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`Defendants Reed and Riordan (collectively the “Individual Defendants”), because
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`of their positions with the Company, possessed the power and authority to control the contents of
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`TreeHouse’s reports to the SEC, press releases and presentations to securities analysts, money
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`and portfolio managers and institutional investors, i.e., the market. The Individual Defendants
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`were provided with copies of the Company’s reports and press releases alleged herein to be
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`misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent
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`their issuance or cause them to be corrected. Because of their positions and access to material
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`non-public information available to them, the Individual Defendants knew that the adverse facts
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`specified herein had not been disclosed to, and were being concealed from, the public, and that
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`the positive representations which were being made were then materially false and/or
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`CLASS ACTION COMPLAINT
`3
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 5 of 23 PageID #:5
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`misleading. The Individual Defendants are liable for the false statements pleaded herein.
`SUBSTANTIVE ALLEGATIONS
`
`
`Materially False and Misleading
`Statements Issued During the Class Period
`
`18.
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`The Class Period begins on February 1, 2016. On that day the Company issued a
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`press release announcing the completion of its acquisition of ConAgra’s private brands
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`operations, stating:
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`OAK BROOK, Ill., Feb. 1, 2016 /PRNewswire/ -- TreeHouse Foods (NYSE:
`THS) announced today that it has completed the acquisition of ConAgra
`Foods’ (NYSE: CAG) private brands operations. TreeHouse paid $2.7 billion in
`cash plus transaction expenses for the business and financed the transaction
`through the closing of its previously announced offerings of $775 million in
`aggregate principal senior notes due 2024 with a 6.0% annual interest rate and
`common stock issuance of 13.3 million shares at a price of $65per share (which
`includes the exercise, in full, of the overallotment option), aggregating $862.5
`millionin gross proceeds. The remainder of the purchase price was financed
`under the Company’s revolving credit facility.
`
`“We are pleased to have closed the acquisition, and will continue to focus on
`driving shareholder value and offering our customers value without compromise
`through economies of scale, quality products and superior customer service,”
`said Sam K. Reed, Chairman, President and Chief Executive Officer
`of TreeHouse Foods.
`
`“The Private Brands acquisition broadens our portfolio of offerings for our
`customers. We remain unwaveringly committed to supporting our customers’
`efforts to build their corporate brands and offer consumers the best combination
`of choice and value,” Mr. Reed continued. “We are looking forward to working
`as one go-to-market team to achieve success and will work tirelessly to develop
`the systems and infrastructure to deliver a seamless integration.”
`
`The acquisition of ConAgra’s private brands operations meaningfully expands
`TreeHouse’s presence in private label dry and refrigerated grocery, and will be
`called TreeHouse Private Brands. Bay Valley Foods (with Flagstone Foods) and
`TreeHouse Private Brands will be the operating platforms of TreeHouse Foods,
`Inc. Following the Private Brands acquisition, TreeHouse Foods, Inc. has pro
`forma sales of approximately $7 billion for the twelve months ended December
`31, 2015, more than 50 manufacturing facilities and over 16,000 employees.
`
`19.
`
`On February 11, 2016, the Company issued a press release announcing fourth
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`CLASS ACTION COMPLAINT
`4
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`quarter 2015 financial results, and announced financial guidance for 2016 of $2.95 to $3.10 in
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`adjusted earnings per share. For the fourth quarter 2015, the Company announced earnings per
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`share of $1.08 on net sales of $865.4 million. Commenting on the Company’s results, Defendant
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`Reed told investors:
`
`We finished the year strong, and our employees deserve a great deal of credit for
`continuing to focus on improving our operations and driving excellent margin
`progress. While overall market conditions remained soft and weakness in the
`Canadian dollar persisted, both of which weighed on our top line, we are very
`proud to have delivered margin expansion of 150 basis points in the fourth
`quarter.
`
`This year marks the beginning of an important journey for us, as we press forward
`with our strategic vision and relentlessly focus on tactical execution. We remain
`fully committed to growth and simplification, and believe that our greatest
`opportunities continue to lie ahead. We remain dedicated to building a private
`label platform that offers a broad portfolio of products that are important to our
`customers and supports their efforts to build their corporate brands, while offering
`consumers the best combination of choice and value.
`
`20.
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`On February 18, 2016, the Company filed its annual report on Form 10-K with the
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`SEC. The Company reiterated the results previously published in its press release for the fourth
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`quarter 2015, and reported earnings per share of $2.67 on net sales of $3.2 billion. The Company
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`also touted to investors the tremendous growth available for private label manufacturing in the
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`United States:
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`According to independent market research studies, private label grocery products
`have increased their market share in the United States from 12.7% in 1989 to
`approximately 17.8% in 2015. Despite gains in market share, private label
`penetration in the United States remains below that of many other developed
`economies, including France (27%), Spain (42%), Germany (35%), the United
`Kingdom (41%) and Switzerland (45%) (market research estimates based on 2014
`data). Over time, we expect private label market share in the United States will
`approach the levels currently present in Europe, but due to structural differences,
`we do not anticipate this in the short term.
`
`21.
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`On May 5, 2016, the Company issued a press release announcing first quarter
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`results for the period ended March 31, 2016. Therein, the Company reported earnings per share
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`CLASS ACTION COMPLAINT
`5
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 7 of 23 PageID #:7
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`of $0.48 on net sales of $1.3 billion, “a 62.2% increase from 2015, driven by the Private Brands
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`acquisition.” The Company also “tightens full year 2016 adjusted earnings per share guidance
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`range to $3.00 to $3.10,” with Defendant Reed commenting in relevant part:
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`We delivered sequential progress in the first quarter and are off to a solid start,
`despite the ongoing challenges of a stagnant retail landscape. In the first quarter,
`growth in retail single-serve coffee and broad gains in snacks led our combined
`Bay Valley Foods and TreeHouse Private Brands organization, while our cold
`season products such as non-dairy creamers, hot cereal, and soup were negatively
`affected by the unseasonably warm weather.
`
` I
`
` am very pleased with the progress our teams are making integrating the Private
`Brands business, and our sense of functional unity is growing. Our Private Brands
`team is already making great progress in customer service improvements and is
`starting to regain lost distribution that resulted from past service issues. Our
`integration activities are on track and on budget as a result of the strong
`collaboration of our teams during the transition.
`
`22.
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`On the same day, May 5, 2016, the Company filed its quarterly report on Form
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`10-Q with the SEC. The Company reiterated the results previously published in press release
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`issued earlier that day, and noted its continued focus on expanding the Private Brands business,
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`and the expected overall growth in the United States private label business.
`23. On August 4, 2016, the Company issued a press release announcing second quarter
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`results for the period ended June 30, 2016. Therein, the Company reported earnings per share of
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`$0.27 on net sales of $1.5 billion, “a 103.0% increase from 2015, driven by the Private Brands
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`acquisition.” The Company also reaffirmed its 2016 outlook, with Defendant Reed commenting
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`in relevant part:
`
`We continue to progress in accordance with our plans for the year and our second
`quarter results represent further sequential improvement. Total Company revenue
`was up significantly due to the Private Brands acquisition. Volume/mix grew 4%
`in North American Retail Grocery, representing one of our best quarters in many
`years. Our operating results continue to show steady improvement, as we focus
`on customers, categories, consumers, and organizational capabilities.”
`
`The detailed integration of legacy TreeHouse and Private Brands is well
`underway, and we are gaining momentum. I’m pleased to report that we
`completed a virtually flawless integration of the acquired condiments business
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`CLASS ACTION COMPLAINT
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 8 of 23 PageID #:8
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`onto the TreeHouse SAP system in early July, linking seven product categories
`and eleven plants that serve over 500 customers. The work that is being
`undertaken across
`the organization
`to establish standardized processes,
`organizational structures, functional responsibilities and reporting relationships is
`extraordinary and is a testament to the robust level of collaboration within our
`organization.
`
`24.
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`On the same day, August 4, 2016, the Company filed its quarterly report on Form
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`10-Q with the SEC. The Company reiterated the results previously published in its August 4,
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`2016 press release, and noted its continued dominance of the private label food manufacturing
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`business, the success of the Private Brands acquisition, and the expected growth in the overall
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`United States private label market.
`25.
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`On August 4, 2016, the Company announced that Christopher D. Sliva had been
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`elected President of TreeHouse Foods. Defendant Reed commented on the appointment of Mr.
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`Sliva:
`
`Chris’ contributions over the last four years have both strengthened and advanced
`our organization and culture. I’m proud of the way Chris has led our Company
`through the operational complexity that is inherent in private label. Because of his
`leadership and efforts to focus our organization on simplification, our legacy
`business has delivered gross margin expansion year in, year out.
`
`Chris has also been the driving force in focusing our organization on the private
`label fundamentals of customers, categories, consumers and organizational
`capabilities. As we look forward, it is under Chris’ tutelage that we are designing
`an organizational structure to deliver on the transformative potential of the
`TreeHouse promise to our customers.
`
`26.
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`The above statements contained in ¶¶18-25 were materially false and/or
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`misleading, as well as failed to disclose material adverse facts about the Company’s business,
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`operations, and prospects. Throughout the Class Period, Defendants made materially false and/or
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`misleading statements, as well as failed to disclose material adverse facts about the Company’s
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`business, operations, and prospects. Specifically, Defendants made false and/or misleading
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`statements and/or failed to disclose: (1) that the Company’s private label business was
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`underperforming; (2) that the Company’s acquisition strategy was underperforming; (3) that the
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`Company had overstated its full-year 2016 guidance; and (4) that, as a result of the foregoing,
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`CLASS ACTION COMPLAINT
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 9 of 23 PageID #:9
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`Defendants’ statements about TreeHouse’s business, operations, and prospects, were false and
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`misleading and/or lacked a reasonable basis.
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`Disclosures at the End of the Class Period
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`27.
`
`On November 3, 2016, TreeHouse lowered its full year adjusted earnings per
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`share forecast to $2.80-$2.85 per share from $3.00-$3.10. In relevant part, the Company stated:
`
`“We are lowering our full year 2016 earnings expectations due to the combination
`of lower than expected third quarter sales from the Private Brands business, along
`with our belief that fourth quarter Private Brands sales will fall short of our goal
`to stem its year-over-year sales declines,” said Mr. Reed. “We do believe this is a
`short term situation. Our new go-to-market sales structure is designed to improve
`our ability to help customers merchandise and drive their private label
`programs. Our resumed focus on our products and customers in the fourth quarter
`will quickly restore our Company to our original expectations for the
`combined TreeHouse Foods business.”
`
`The Company expects fourth quarter GAAP and adjusted earnings to be in the
`range of $1.07 to $1.12per fully diluted share. Because the Company cannot
`predict some of the items included in reported GAAP results, such as the impact
`of foreign exchange, the fourth quarter forecast for both GAAP and adjusted
`earnings are the same. Please refer to the “Comparison of Adjusted Information
`to GAAP Information” below for further detail. With regard to the full year,
`TreeHouse expects GAAP earnings to be in the range of $1.95 to $2.00 per fully
`diluted share and adjusted earnings to be in a range of $2.80 to $2.85 per fully
`diluted share. The difference between the high end and low end of the full year
`GAAP and non-GAAP guidance ranges is consistent with the $0.85 impact of
`adjusting items per fully diluted share for the nine months ended September 30,
`2016, as outlined in the chart above.
`
`28.
`
`Defendant Reed, in commenting on the poor performance of the Private Brands
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`business, stated in relevant part:
`
`The third quarter was a tale of two cities. Our legacy business continued to
`perform well, paced by Retail volume/mix growth of 4.6% and 80 basis points of
`direct operating income margin expansion. On the other hand, while the Private
`Brands business showed sequential improvement, its results fell short of our
`expectations for the quarter.
`
`We believe the underperformance of the Private Brands business is attributable to
`our all-encompassing efforts to smoothly integrate the operations of the new
`business. While we have made great progress in consolidating plants, stabilizing
`the workforce and reducing our reliance on the transition services, the shift in
`management attention led to less robust Private Brands sales than we experienced
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`CLASS ACTION COMPLAINT
`8
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 10 of 23 PageID #:10
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`in the legacy organization. We will be unveiling a new go-to-market sales
`structure to better align and focus our sales teams to drive new and consistent
`growth.
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`29.
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`The Company further announced the closure of a plant in Delta, British Columbia,
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`and reported job cuts at its facility in Battle Creek, Michigan. In relevant part, the Company
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`stated:
`
`-- TreeHouse Foods,
`Ill., Nov. 3, 2016 /PRNewswire/
`OAK BROOK,
`Inc. (NYSE: THS) today announced its intention to close a facility in Delta,
`British Columbia and reduce
`its manufacturing footprint in Battle Creek,
`Michigan. The decision follows an analysis of the Company’s plant network to
`align operations with the current and future needs of its customers and eliminate
`excess manufacturing capacity.
`
`The Delta facility employs approximately 90 employees and produces frozen
`griddle products, primarily for the North American Retail Grocery segment.
`Production is expected to cease in early 2018. The Company operates two
`facilities in Delta, and this announcement only affects the frozen griddle facility.
`
`The Battle Creek facility produces ready-to-eat cereal, primarily for the North
`American Retail Grocerysegment. The partial closure will affect approximately
`100 of the current 160 employees over a 15 month period beginning in January
`2017. The decision is being announced in advance of the downsizing in order to
`provide employees with as much notice as possible and to ensure a seamless
`transition for customers.
`
`Both the Battle Creek and Delta griddle facilities were part of the Company’s
`acquisition of the ConAgra Foods private brands business in February 2016. The
`Company will provide support to employees whose positions are being
`eliminated.
`
`Total costs to close the Delta facility and downsize Battle Creek are expected to
`be approximately $14.7 million, or $0.16 per fully diluted share, of which
`approximately $6.8 million, or $0.08 per fully diluted share, is expected to be in
`cash. Components of
`the charges
`include non-cash asset write-offs of
`approximately $7.9 million, employee-related costs of approximately $4.6
`million and other closure costs of approximately $2.2 million. The Company
`expects approximately $4.0 million and $3.1 million of the charges to be incurred
`in the fourth quarter of this year and the first quarter of 2017, respectively, with
`the balance of the charges being incurred through the end of 2018.
`
`30.
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`Finally, the Company disclosed the resignation of its newly appointed President,
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`Chirs Sliva, and the appointment of a new Chief Financial Officer.
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`CLASS ACTION COMPLAINT
`9
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`31.
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`On this news, the Company’s shares fell $16.87 per share, or nearly 20%, to close
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`at $69.72 per share on November 3, 2016.
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`CLASS ACTION ALLEGATIONS
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`32.
`
`Plaintiff brings this action as a class action pursuant to Federal Rule of Civil
`
`Procedure 23(a) and (b)(3) on behalf of a class, consisting of all persons and entities that
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`acquired TreeHouse’s securities between February 1, 2016, and November 2, 2016, inclusive,
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`and who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the
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`officers and directors of the Company, at all relevant times, members of their immediate families
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`and their legal representatives, heirs, successors, or assigns, and any entity in which Defendants
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`have or had a controlling interest.
`33.
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`The members of the Class are so numerous that joinder of all members is
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`impracticable. Throughout the Class Period, TreeHouse’s common stock actively traded on the
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`NYSE. While the exact number of Class members is unknown to Plaintiff at this time and can
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`only be ascertained through appropriate discovery, Plaintiff believes that there are at least
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`hundreds or thousands of members in the proposed Class. Millions of TreeHouse shares were
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`traded publicly during the Class Period on the NYSE. As of September 30, 2016, the Company
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`had 56,729,138 shares of common stock outstanding. Record owners and other members of the
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`Class may be identified from records maintained by TreeHouse or its transfer agent and may be
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`notified of the pendency of this action by mail, using the form of notice similar to that
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`customarily used in securities class actions.
`34.
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`Plaintiff’s claims are typical of the claims of the members of the Class as all
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`members of the Class are similarly affected by Defendants’ wrongful conduct in violation of
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`federal law that is complained of herein.
`35.
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`Plaintiff will fairly and adequately protect the interests of the members of the
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`Class and has retained counsel competent and experienced in class and securities litigation.
`36.
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`Common questions of law and fact exist as to all members of the Class and
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`predominate over any questions solely affecting individual members of the Class. Among the
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`CLASS ACTION COMPLAINT
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 12 of 23 PageID #:12
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`questions of law and fact common to the Class are:
`
`(a)
`
`whether the federal securities laws were violated by Defendants’ acts as alleged
`
`herein;
`
`(b)
`
`whether statements made by Defendants to the investing public during the Class
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`Period omitted and/or misrepresented material facts about the business, operations, and prospects
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`of TreeHouse; and
`
`(c)
`
`to what extent the members of the Class have sustained damages and the proper
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`measure of damages.
`37.
`
`A class action is superior to all other available methods for the fair and efficient
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`adjudication of this controversy since joinder of all members is impracticable. Furthermore, as
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`the damages suffered by individual Class members may be relatively small, the expense and
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`burden of individual litigation makes it impossible for members of the Class to individually
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`redress the wrongs done to them. There will be no difficulty in the management of this action as
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`a class action.
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`UNDISCLOSED ADVERSE FACTS
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`38.
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`The market for TreeHouse’s securities was open, well-developed and efficient at
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`all relevant times. As a result of these materially false and/or misleading statements, and/or
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`failures to disclose, TreeHouse’s securities traded at artificially inflated prices during the Class
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`Period. Plaintiff and other members of the Class purchased or otherwise acquired TreeHouse’s
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`securities relying upon the integrity of the market price of the Company’s securities and market
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`information relating to TreeHouse, and have been damaged thereby.
`39.
`
`During the Class Period, Defendants materially misled the investing public,
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`thereby inflating the price of TreeHouse’s securities, by publicly issuing false and/or misleading
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`statements and/or omitting to disclose material facts necessary to make Defendants’ statements,
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`as set forth herein, not false and/or misleading. The statements and omissions were materially
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`false and/or misleading because they failed to disclose material adverse information and/or
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`misrepresented the truth about TreeHouse’s business, operations, and prospects as alleged herein.
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`CLASS ACTION COMPLAINT
`11
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 13 of 23 PageID #:13
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`40.
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`At all relevant times, the material misrepresentations and omissions particularized
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`in this Complaint directly or proximately caused or were a substantial contributing cause of the
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`damages sustained by Plaintiff and other members of the Class. As described herein, during the
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`Class Period, Defendants made or caused to be made a series of materially false and/or
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`misleading statements about TreeHouse’s financial well-being and prospects. These material
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`misstatements and/or omissions had the cause and effect of creating in the market an
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`unrealistically positive assessment of the Company and its financial well-being and prospects,
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`thus causing the Company’s securities to be overvalued and artificially inflated at all relevant
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`times. Defendants’ materially false and/or misleading statements during the Class Period
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`resulted in Plaintiff and other members of the Class purchasing the Company’s securities at
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`artificially inflated prices, thus causing the damages complained of herein when the truth was
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`revealed.
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`LOSS CAUSATION
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`41.
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`Defendants’ wrongful conduct, as alleged herein, directly and proximately caused
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`the economic loss suffered by Plaintiff and the Class.
`42.
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`During the Class Period, Plaintiff and the Class purchased TreeHouse’s securities
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`at artificially inflated prices and were damaged thereby. The price of the Company’s securities
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`significantly declined when the misrepresentations made to the market, and/or the information
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`alleged herein to have been concealed from the market, and/or the effects thereof, were revealed,
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`causing investors’ losses.
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`SCIENTER ALLEGATIONS
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`43.
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`As alleged herein, Defendants acted with scienter since Defendants knew that the
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`public documents and statements issued or disseminated in the name of the Company were
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`materially false and/or misleading; knew that such statements or documents would be issued or
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`disseminated to the investing public; and knowingly and substantially participated or acquiesced
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`in the issuance or dissemination of such statements or documents as primary violations of the
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`federal securities laws. As set forth elsewhere herein in detail, Individual Defendants, by virtue
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`CLASS ACTION COMPLAINT
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`Case: 1:16-cv-10632 Document #: 1 Filed: 11/16/16 Page 14 of 23 PageID #:14
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`of their receipt of information reflecting the true facts regarding TreeHouse, their control over,
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`and/or receipt and/or modification of TreeHouse’s allegedly materially misleading misstatements
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`and/or their associations with the Company which made him privy to confidential proprietary
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`information concerning TreeHouse, participated in the fraudulent scheme alleged herein.
`APPLICABILITY OF PRESUMPTION OF RELIANCE
`(FRAUD-ON-THE-MARKET DOCTRINE)
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`The market for TreeHouse’s securities was open, well-developed and efficient at
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`44.
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`all relevant times. As a result of the materially false and/or misleading statements and/or failures
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`to disclose, TreeHouse’s securities traded at artificially inflated prices during the Class Period.
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`On July 11, 2016, the Company’s stock price closed at a Class Period high of $104.35 per share.
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`Plaintiff and other members of the Class purchased or otherwise acquired the Company’s
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`securities relying upon the integrity of the market price of TreeHouse’s securities and market
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`information relating to TreeHouse, and have been damaged thereby.
`45.
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`During the Class Period, the artificial inflation of TreeHouse’s stock was caused
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`by the material misrepresentations and/or omissions particularized in this Complaint causing the
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`damages sustained by Plaintiff and other members of the Class. As described herein, during the
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`Class Period, Defendants made or caused to be made a series of materially false and/or
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`misleading statements about TreeHouse’s business, prospects, and operations. These material
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`misstatements and/or omissions created an unrealistically positive assessment of TreeHouse and
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`its business, operations, and prospects, thus causing the price of the Company’s securities to be
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`artificially inflated at all relevant times, and when disclosed, negatively affected the value of the
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`Company stock. Defendants’ materially false and/or misleading statements during