Dalberth v. Xerox Corp.
766 F.3d 172
2d Cir.2014Background
- Xerox undertook a worldwide restructuring program (WWR) announced April 7, 1998, with three key initiatives, including the CBO Reorganization.
- CBO Reorganization closed one CAC and reorganized three CBCs, shifting order entry to CBCs and reassigning staff, creating disruption.
- Internal memos and analyses in 1998–1999 documented staffing losses, billing delays, rising A/R and DSO, and service quality issues.
- Public disclosures during 1998–1999 attributed A/R/DSO increases to CAC reorganizations, while acknowledging ongoing restructuring costs and anticipated savings.
- Plaintiffs allege Xerox understated the CBO Reorganization’s negative effects while overstating overall restructuring benefits.
- District court granted summary judgment for Xerox in March 2013; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were WWR benefits truthfully disclosed? | Dalberth argues benefits overstated; omissions about CBO costs. | Xerox contends benefits were real and disclosures adequate; no duty to quantify every offset. | No genuine dispute; WWR benefits disclosed and not misleading. |
| Were CBO Reorganization disclosures sufficient? | Omissions regarding CBO effects and ill-effects of staffing changes. | Public disclosures described problems and linked them to ongoing restructuring; adequate overall disclosures. | No genuine dispute; disclosures adequately informed the market. |
| Did Xerox misattribute sales force issues to the 1999 SFR instead of CBO? | Evidence shows CBO caused disruptions, not the SFR. | Public materials and investor events discussed multiple initiatives; attribution was reasonable. | No genuine dispute; market disclosures encompassed CBO effects and SFR context. |
| Did loss causation and Saunders affect the summary judgment? | Saunders supported loss causation via corrective disclosures. | Disclosures were known earlier; Saunders opinion cannot defeat summary judgment. | Loss causation not shown; Saunders failure to create triable issue supports affirmance. |
Key Cases Cited
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (materiality requires a substantial likelihood that omitted facts would alter the total mix)
- Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (U.S. 2005) (requires a showing of loss causation and material misstatement)
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (U.S. 2011) (omission must alter total mix of information; not all adverse reports are corrective)
- In re Omnicom Grp., Inc. Sec. Litig., 597 F.3d 501 (2d Cir. 2010) (summary judgment under PSLRA; weighing expert testimony in closing the record)
- In re Time Warner Inc. Sec. Litig., 9 F.3d 259 (2d Cir. 1993) (duty to disclose omissions; total mix of information inquiry)
- In re Merrill Lynch Auction Rate Sec. Litig., 704 F. Supp. 2d 378 (S.D.N.Y. 2010) (disclosures not required to be pejorative; factual disclosures suffice)