512 F.Supp.3d 518
S.D.N.Y.2021Background
- Bemis agreed to merge with Amcor; the definitive proxy (filed Mar. 27, 2019) solicited Bemis shareholder votes for the merger that closed June 11, 2019, creating New Amcor.
- The Proxy disclosed four sets of forward-looking forecasts (including “Net Synergies” projected as future cost savings), described them as jointly developed by Bemis and Amcor management, and included a Goldman Sachs fairness opinion.
- The Proxy contained detailed cautionary language about forward-looking statements, assumptions underlying the Forecasts, and that such Forecasts were not intended to induce votes.
- Lead Plaintiff Dixon alleged the Proxy violated Section 14(a) and Rule 14a-9 by omitting material information about: (a) assumptions/methodologies for the Net Synergies, (b) the roles of Bemis management/Goldman/Amcor’s consultant, and (c) undisclosed Bemis internal synergy projections; Plaintiff also alleged an undisclosed Goldman conflict.
- Defendants moved to dismiss under Rule 12(b)(6). The Court considered the Proxy and SEC filings and dismissed the complaint with prejudice, holding the challenged statements were protected by the PSLRA safe harbor and that Plaintiff failed to plead actionable omissions, falsity, or scienter.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the Net Synergies and Forecasts actionable disclosures or protected forward‑looking statements? | Dixon: Net Synergies were material forecasts whose omission/basis made the Proxy misleading. | Bemis/Directors: Net Synergies are forward‑looking, accompanied by meaningful cautionary language, so PSLRA safe harbor applies; alternatively Plaintiff cannot plead actual knowledge. | Court: Protected by PSLRA safe harbor (identified as forward‑looking + meaningful cautions); Plaintiff failed to plead actual knowledge. |
| Did the Proxy omit material facts (assumptions, methodologies, Bemis internal projections, role of third‑party consultant) making it misleading? | Dixon: Proxy omitted key assumptions/methodologies, the identity/role of Amcor’s consultant, and a pre‑existing Bemis projection that differed from disclosed synergies. | Bemis: Proxy disclosed assumptions, the joint development and roles, and the extent of due diligence; Plaintiff failed to plead existence/materiality of the alleged Bemis projection. | Court: No actionable omission; Proxy supplied sufficient assumptions/roles; Plaintiff failed to plead existence or materiality of any undisclosed Bemis projections. |
| Are the Board’s statements of belief about the Forecasts actionable opinions? | Dixon: The Board’s professed belief in the Forecasts was misleading because it adopted Amcor’s estimates rather than Bemis’s own. | Bemis: Opinion statements are protected; plaintiff must identify omitted facts about the basis of the opinion that would make it misleading. | Court: Statements were nonactionable opinions under Omnicare; Plaintiff did not identify omitted, material facts undermining the Board’s belief. |
| Was Goldman’s potential conflict of interest inadequately disclosed? | Dixon: Proxy failed to disclose (1) timing/detail of Bemis approval for Goldman Merchant Banking participation and (2) content of Goldman’s discussions about participating in divestiture bids. | Bemis: Proxy plainly disclosed Goldman’s potential participation and economic interest in any divestiture sale process. | Court: Disclosure was sufficient; claim abandoned in Opposition and, in any event, fails on the merits. |
| Section 20(a) derivative control claim | Dixon: Directors are liable as control persons of Bemis for Section 14(a) violations. | Bemis: Section 20(a) depends on a primary violation; if Section 14(a) dismissed, 20(a) fails. | Court: Dismissed Section 20(a) because no underlying Section 14(a) violation was adequately pleaded. |
Key Cases Cited
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (collective evaluation of allegations required to infer scienter)
- Slayton v. American Express Co., 604 F.3d 758 (2d Cir. 2010) (PSLRA safe harbor—actual knowledge requirement and meaningful caution language analysis)
- Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 575 U.S. 175 (opinion‑statement liability requires omitted facts that make the opinion misleading)
- Va. Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (materiality standard for proxy disclosures)
- Resnik v. Swartz, 303 F.3d 147 (2d Cir. 2002) (omission in a proxy actionable if it renders other disclosures materially misleading)
- Rombach v. Chang, 355 F.3d 164 (2d Cir. 2004) (pleading standards for misrepresentation/omission claims)
- Gray v. Wesco Aircraft Holdings, Inc., 454 F. Supp. 3d 366 (S.D.N.Y. 2020) (PSLRA safe harbor applied to board belief statements in proxy)
- Mills v. Electric Auto‑Lite Co., 396 U.S. 375 (1970) (requirement to disclose conflicts to prompt investor scrutiny)