Davis Polk won a significant victory on behalf of CVS Caremark Corporation (CVS) on Monday, June 18, 2012, when Judge Laplante in the District Court of New Hampshire granted CVS and three of its former senior executives’ motion to dismiss a class-action securities fraud suit brought on behalf of shareholders that held CVS stock between October 30, 2008, and November 5, 2009.
Plaintiffs filed this suit shortly after CVS’s third-quarter 2009 earnings call, during which its then-CEO announced that the Company would not be able to achieve the earnings per share growth that he had previously predicted on the prior quarter’s earnings call due to unanticipated events that had occurred during the third quarter. CVS’ stock price dropped by approximately 20% following the announcement. In Judge Laplante’s decision, which followed oral argument held on May 18, he adopted both of defendants’ main arguments – that plaintiffs had failed to plead loss causation and that Mr. Ryan’s second-quarter earnings per share prediction was a forward-looking statement protected by the PSLRA’s safe harbor and therefore could not form the basis of a securities fraud suit.
The Davis Polk team included partners Lawrence Portnoy, Edmund Polubinski III, associates Jessica Kate Foschi, Jason M. Spitalnick, William D. Pollak, Jillian Rennie Stillman, Nadia Moore, Bryan McArdle and Virginia A. Farmer, and former associate Alex A. Crohn. All members of the Davis Polk team are based in the New York office.
