This lawsuit alleges that Whole Foods misrepresented to shareholders that its operational controls were strong yet the company routinely overstated the weight of its pre-packaged products and overcharged customers. This caused Whole Foods' stock to be artificially inflated.
What investors are part of this class action? The class period is currently defined as all those who purchased or otherwise acquired Whole Foods securities between August 9, 2013 and July 30, 2015 inclusive (the "Class Period"). Whole Foods' shares trade on the NASDAQ under the ticker symbol "WFM."
Procedural Status. This lawsuit was filed on August 6, 2015 and is captioned Markman v. Whole Foods Market, Inc., et al. It was filed in the United States District Court for the Western District of Texas. Its civil docket number is 1:15cv00681. The lead plaintiff deadline is October 5, 2015.
Whole Foods operates as a retailer of natural and organic foods. The Company's stores offer produce and floral, grocery, meat, seafood, bakery, prepared foods and catering, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins and body care products, as well as lifestyle products. As of May 7, 2015, the company had approximately 417 stores worldwide.
The complaint alleges that throughout the class period, Whole Foods made false and/or misleading statements and failed to disclose material, negative facts about the Company's operations and future prospects. Specifically, it is argued that:
On June 25, 2015, the New York City Department of Consumer Affairs announced that it had found "systematic overcharging for pre-packaged foods" at eight New York City Whole Foods locations. Thousands of instances of overcharging were said to have been discovered, though Whole Foods officials denied the existence of any evidence of such violations and pledge to defend itself against the claims.
Subsequently on July 29, 2015, the Company issued a press release and filed a Form 8-K with the SEC, mentioning the national media attention garnered by the weights and measures audit. In a post-market earnings call hosted by the Company that same day, Whole Foods officials directly attributed lower-than-expected quarterly results to the overcharging controversy. As a result of the negative news, Whole Foods' common stock fell $4.74 per share, or 11.61%, closing at $36.08 on July 30, 2015. The plaintiff alleges that the wrongful acts and omissions of the defendants and the consequential drop in market value of Whole Foods securities have caused class members to sustain significant financial losses and damages.
This case is in the notice period. When a shareholder brings suit under certain federal securities law, generally that shareholder must give notice via a press release. This notice starts a 60 day period of time when any shareholder can investigate the underlying claims of the lawsuit and then elect to bring suit as well. At the end of this 60 day period, the court appoints one shareholder (or a group of shareholders) to prosecute the securities litigation. We will review the docket again in June and update this page as warranted.