According to the court's published decision filed February 7, 2002, in affirming the District Court's dismissal, the Ninth Circuit wrote that plaintiffs failed to specify why any purported "incompleteness" or omissions in the press releases portrayed those releases as misleading or untrue. It also held that, because plaintiffs did not trade contemporaneously with defendants, they lacked standing to assert Insider Trading allegations.
As previously reported by Kindred Healthcare, Inc.'s Form 10-K for the fiscal year ended December 31, 2001, in June 1998, the court granted the Company’s motion
to dismiss with leave to amend the Section 10(b) claim and the state law claims
for misrepresentation. The court denied Company’s motion to dismiss the Section 14(e) and Section 20(a) claims, after which Company filed a motion for reconsideration. On March 23, 1999, the court granted Company’s motion to dismiss all remaining claims and the case was dismissed. The plaintiff appealed this ruling to the United States Court of Appeals for the Ninth Circuit. On February 7, 2002, the Ninth Circuit affirmed the district court's dismissal of the case.
The original complaint alleges that Transitional Hospitals purchased common shares from investors after it received an acquisition offer on the company, but without disclosing to the public that the offer had been made. Shares of Transitional Hospitals surged more than 42% one day early last month after the company disclosed it had reached an agreement to sell itself to an investor group and that a rival firm, Vencor Inc. (VC), had emerged with a better offer. Vencor and Transitional this week entered a definitive merger agreement, and Vencor Friday said more than 95% of Transitional shares were tendered into its tender offer. The complaint also alleges that, about two months later, the defendants deceptively disclosed that there were "expressions of interest" in acquiring the company, when a firm offer had been made.