According to the law firm press release, La Quinta describes itself as a leading owner, operator and franchisor of select-service hotels serving primarily the midscale and upper-midscale markets.
The complaint alleges that the Registration Statement and Prospectus issued in connection with the SPO failed to disclose the following material trends, events and/or uncertainties: (i) the Company was experiencing declining customer demand in La Quinta’s key Texas market; (ii) there were on-going disruptions caused by the transitioning of the Company’s call center operations; and (iii) the Company was experiencing declining customer demand and market share losses due, in part, to certain of La Quinta’s facilities being outdated and in need of major renovation, thereby necessitating that the Company make significant capital expenditures and undergo operational disruptions.
Moreover, the complaint alleges that throughout the Class Period, defendants failed to disclose material adverse facts about the Company’s true financial condition, business and prospects. Specifically, defendants misrepresented and/or failed to disclose, among other things, the following adverse facts: (a) that there was a material slowdown in demand for its hotel rooms in its key Texas market during the Class Period; (b) that La Quinta was experiencing disruptions associated with a “transition” of the Company’s reservation call center, which was having a material adverse effect on the Company’s operations; (c) that La Quinta was facing market share losses and declining customer demand due, in part, to its outdated facilities; (d) that a significant number of La Quinta’s hotels were in need of major renovation, which would require significant capital expenditures and result in operational disruptions; (e) that La Quinta had overstated the amounts buyers were willing to pay for certain of its properties; (f) that (a)-(e) above were reasonably likely to have a material adverse effect on La Quinta’s future operating results; and (g) that, based on the foregoing, defendants lacked a reasonable basis for the Company’s 2015 guidance and their positive statements about La Quinta’s then-current business and future financial prospects.
On July 29, 2015, the Company announced its financial results for the second quarter of 2015, ended June 30, 2015. Among other things, La Quinta reported that the Company’s earnings had been adversely affected by a $4 million loss on the sale of a property and an approximate $42 million impairment charge associated with the potential sale of 24 Company-owned hotels. In response to these revelations, the price of La Quinta common stock declined approximately 3.5% on July 30, 2015.
On September 17, 2015, La Quinta announced that it had further reduced its 2015 financial guidance and that its President and Chief Executive Officer had stepped down from his leadership positions in the Company by mutual agreement with the Company’s Board of Directors. In response to these revelations, the price of La Quinta common stock declined more than 15% on September 18, 2015.
On July 21, 2016, the Court issued an Order granting Lead Plaintiff and Counsel. Lead Plaintiff filed an amended complaint on September 30. A second amended complaint was filed on December 30.
On August 24, 2017, the Court issued an Order granting Defendants' Motions to dismiss with prejudice, and closing this case. A Notice of Appeal of this decision was filed on September 20. On September 10, 2018, the Court of Appeals affirmed the District Court's decision.