Securities Class Suit Against Jones Soda Goes Flat

Securities Class Suit Against Jones Soda Goes Flat - 2/11/2009

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DISMISSAL NEWS:

Securities Class Suit Against Jones Soda Goes Flat
Evan Weinberger

Securities Law 360. February 11, 2009
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EXCERPT: A federal judge has tossed a shareholder class action against Jones Soda Co. alleging that false statements by the company's former CEO and others about market penetration led to an overvaluation of the stock and its subsequent fall after investors heard a disquieting report on the company's market penetration about a year later. On Monday, Judge Robert S. Lasnik of the U.S. District Court for the Western District of Washington called the plaintiffs' reading of Jones Soda's corporate statements “unreasonable” several times throughout the 15-page ruling, saying that they relied too heavily on a shoddy analyst's report on the company. The judge also said that the class action plaintiffs' complaint did not meet the standards necessary to survive scrutiny under the Private Securities Litigation Reform Act. Judge Lasnik provided the plaintiffs 30 days to file an amended complaint, but he cast doubt on whether they would be able to find enough evidence to survive a further review. A group of plaintiffs filed the class action in September 2007, but amended their complaint in May to include a larger number of plaintiffs and a further stock loss. The class consists of people who purchased Jones Soda stock between Jan. 10, 2007, and May 1, based on what the plaintiffs called false and misleading information of the specialty soft drink maker's plan to penetrate the $66 billion carbonated soft drink market, the ruling said. According to the ruling, beginning in January 2007, then-Jones Soda CEO Peter van Stolk made statements that ultimately led investors to believe that the company would have its product on the shelves of 25 percent of stores throughout the U.S. first by Memorial Day 2007, then by the end of July 2007, and finally by the end of 2007.

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