A U.S. District Court Judge has tossed out a proposed class-action lawsuit filed by an investor against the Boston Beer Company alleging the maker of Truly Hard Seltzer and its top executives failed to disclose decelerating sales of the hard seltzer brand to investors, Law360 reported.
Denise Cote, a judge in the Southern District of New York, issued an order Monday granting Boston Beer and its executives’ request to dismiss the lawsuit and denying the plaintiff the ability to amend the complaint and refile.
In September 2021, an investor proposed the class action lawsuit, alleging that Boston Beer and its leadership made false and misleading statements during its April 2021 earnings report and filings. The plaintiff claimed they failed to disclose that Truly sales were decelerating, and the company’s financial results would be negatively affected, and it would likely incur inventory write-offs and shortfall fees payable to third-party brewers. Those statements, they claimed, inflated the stock price, which has since tumbled from a peak of just under $1,300 in mid-April 2021, to now trading at around $360.
Statements made by Boston Beer founder Jim Koch, CEO Dave Burwick and CFO Frank Smalla and cited in the plaintiffs’ complaint were “not actionable,” Cote wrote as many were opinions or “forward looking statements” and “accompanied by cautionary language.” Other statements were expressions of optimism about Truly’s potential to compete within the hard seltzer segment and thus not actionable, she added.
In addition to comments made during the April 2021 report, the plaintiffs also took issue with statements from Boston Beer execs in the months after, citing them as ”as proof that the April statements were false when made.” However, Cote found that many of those later statements were “not even inconsistent with the statements expressing optimism in April.”
“Even where later statements reflect increased caution or reduced optimism, none of the later statements can be reasonably read to impute actual knowledge of falsity as to statements made in April,” Cote wrote.
Cote rejected essentially all of the plaintiff’s arguments, from issues with Boston Beer’s forecasting methods to statements made by leadership after the April 2021 earnings report in the press and at an industry event, including Koch’s appearance at the May 2021 Beverage Forum.
Statements made by Koch at that event were “quintessential statements of opinion about the future,” Cote wrote.