Heinze v. Tesco Corp., No. 19-20298 (5th Cir. 2020)Annotate this Case
The Fifth Circuit affirmed the district court's dismissal of plaintiff's claims in a putative class action alleging that defendants' omissions from a proxy statement led Tesco shareholders to approve an all-stock acquisition by Nabors.
Under the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA), the court held that plaintiff failed to state a claim upon which relief can be granted. In regard to plaintiff's claims under Section 14(a) of the Securities Exchange Act of 1934 that the proxy statement was misleading because it omitted certain material facts, the court held that plaintiff failed to identify how the four allegedly omitted pieces of information were necessary in order to make the statements therein not false or misleading. The court rejected plaintiff's remaining contentions as to this issue. In regard to plaintiff's claims under Section 20(a) of the 1934 Act that the individual defendants are liable for any violations committed by people they controlled, plaintiff failed to state a predicate claim under Section 14(a) and SEC Rule 14a-9. Finally, the court held that amendment would be futile and that the district court did not abuse its discretion in denying leave to amend.