||Washtenaw County Employees' Retirement System v Walgreen Co., et al.
||United States District Court for the Northern District of Illinois
||Honorable Sharon Johnson Coleman
||Industriens Pensionsforsikring A/S (“Industriens”)
||Walgreen Co. (“Walgreen” or the “Company”), Gregory D. Wasson, and Wade Miquelon
||March 25, 2014 through August 5, 2014, inclusive
This securities fraud class action case arises out of Defendants’ representations and omissions regarding Walgreen’s highly publicized earnings target of $9 billion to $9.5 billion for fiscal year 2016 (the “FY16 target”) and the negative impact of hyperinflation in generic drug prices (“generic inflation”) combined with unfavorable reimbursement contracts that caused significant reductions in Walgreen’s gross margins and earnings. During the Class Period, Defendants repeatedly reaffirmed the FY16 target and represented that Walgreen was seeing “nothing unusual” with respect to generic inflation or reimbursement pressure. Plaintiff alleges that unbeknownst to investors, the systemic shift to generic inflation caused a catastrophic impact on Walgreen’s earnings and profitability because it was “locked up” in multi-year contracts with lower reimbursement rates that did not protect against generic inflation.
Industriens filed a 124-page complaint in August 2015 on behalf of a proposed class of investors alleging that Walgreen and its former executives, CEO Greg Wasson and CFO Wade Miquelon, violated Section 10(b) of the Securities Exchange Act by making false and misleading statements and concealing material facts about the magnitude and severity of generic inflation and reimbursement pressure and the combined impact on Walgreens’ margins and profitability, including the FY16 target. As alleged, following Walgreens’ disclosure of a $2 billion shortfall to its FY16 EBIT target as a direct result of generic inflation and reimbursement pressure, Walgreens’s stock price fell precipitously, causing significant losses and damages to the Company’s investors.
In September 2016, the Honorable Sharon Johnson Coleman issued an order denying in part Defendants’ motion to dismiss. In March 2018, Judge Coleman certified the case as a class action. Following Industriens’s amendment of the complaint in December 2018, Judge Coleman issued an order in September 2019 denying in part Defendants’ renewed motion to dismiss. The order held that Plaintiff’s amended complaint adequately alleged several additional false and misleading statements and omissions, including statements regarding the FY16 target and the negative impact of generic inflation and reimbursement pressure on the Company’s performance.
On November 2, 2021, the Court issued a Memorandum and Opinion and Order denying in large part Defendants’ motion for summary judgment, clearing the case to proceed to trial.
With trial approaching, the parties reached a $105 million cash settlement, which the Court preliminarily approved on June 29, 2022.
Read First Amended Consolidated Complaint Here
Read WCERS v. Walgreen Opinion and Order Granting Class Certification Here
Read WCERS v. Walgreen Opinion and Order Granting Motion to Dismiss
Read WCERS v. Walgreen Opinion and Order Granting Motions for Summary Judgement Here
Read WCERS v. Walgreen Order Granting Preliminary Approval