Jones Soda Securities Suit Still Lacks Fizz: Judge

Jones Soda Securities Suit Still Lacks Fizz: Judge - 6/23/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Jones Soda Securities Suit Still Lacks Fizz: Judge
Evan Weinberger

Securities Law 360. June 23, 2009
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EXCERPT: A group of plaintiffs alleging that Jones Soda Co. intentionally overstated its ability to penetrate the carbonated soft drink market and increase revenues will not have a chance to file a second amended complaint now that a federal judge has called such an effort “futile.” In a ruling Monday, Judge Robert S. Lasnik of the U.S. District Court for the Western District of Washington said that the plaintiffs had provided a great deal of facts that showed Seattle-based Jones may have intentionally misled investors about its plans to expand nationwide. […] “Outsized expenditures coupled with disappointing sales will, of course, adversely affect revenues,” Judge Lasnik wrote. That explanation was far more compelling than the plaintiffs' argument that Jones Soda was “simply lying in November 2006” when it announced that it had placed its products on 25 percent of all store shelves in the United States. Judge Lasnik dismissed the case in February, saying that the plaintiffs had not sufficiently alleged scienter under the Private Securities Litigation Reform Act in their complaint. According to Monday's ruling, the investor class was unable to make up for the deficiencies in the original complaint in an April motion to amend. The plaintiffs added statements Jones Soda executives made about their business plan, saying that these statements were evidence that the company was lying to investors. The plan, Judge Lasnik said, did not provide enough detail to be intentionally misleading. According to his ruling Monday, the plan mainly consisted of a November 2006 announcement that Jones Soda had received commitments from approximately 15,700 stores nationwide to place at least one can of Jones Soda on their shelves. Judge Lasnik dismissed those arguments as “plaintiffs' wishful thinking,” and said that a misinterpretation of a plan could not be used as an argument for scienter under the PSLRA.

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