On August 9, 2023, Sidley secured a victory on behalf of Tupperware Brands Corporation in the U.S. Court of Appeals for the Eleventh Circuit, which affirmed the dismissal of a securities class action arising out of the company’s investigation into accounting issues at its subsidiary Fuller Mexico. The investigation concerned the alleged falsification of sales by the subsidiary which, the plaintiffs alleged, resulted in material misstatements in Tupperware’s financial statements. The Court found that the plaintiffs had failed to adequately plead scienter because their allegations did not show that any of the defendants were responsible for the allegedly misleading statements.
The case presented novel issues relating to “corporate scienter,” i.e., the ability of a plaintiff to attribute the mental state of a lower-level officer to the company itself. The Eleventh Circuit clarified its existing precedent by holding that a plaintiff seeking to hold a company liable under principles of corporate scienter must show that the lower-level official was “responsible for” the alleged misstatements.
The Securities and Shareholder Litigation partners Jim Ducayet and Ian Ross led the Sidley team, which also included partner Liz Austin and senior managing associates Stephanie Peral and Jennifer Wheeler.