WASHINGTON — The United States Court of Appeals for the Fourth Circuit unanimously upheld a major victory for Wilkinson Walsh client MAXIMUS Inc., affirming the dismissal of a securities fraud class action case at the motion to dismiss stage, before any discovery was taken.
Just 38 days after Wilkinson Walsh’s Brant Bishop argued the case in the Fourth Circuit, the Court issued a two-page opinion stating that, after “having carefully considered the record and the briefs and arguments of the parties, we find ourselves in agreement with the district court that the complaint fails to allege a material misrepresentation.” The opinion was joined by Circuit Judges Motz, King, and Thacker.
In August 2017, MAXIMUS was sued under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, based on allegations that the company, along with several members of its executive team, had over the course of several months made eleven separate false or misleading statements on earnings calls and in SEC filings concerning MAXIMUS’s performance on a major contract with the British government. The Plaintiffs identified several stock-price drops, including one single-day price drop of nearly 22%, and claimed that these market losses reflected reactions to the disclosure of information previously omitted or misstated by the MAXIMUS defendants.
Led by Brant and Kosta Stojilkovic, Wilkinson Walsh moved to dismiss the amended complaint with prejudice, arguing that plaintiffs had failed to plead facts giving rise to an inference that MAXIMUS acted with scienter, or an intent to defraud. Wilkinson Walsh also argued that plaintiff had failed adequately to plead materiality as to certain alleged misstatements or omissions and had failed to plead loss causation. On August 27, 2018, Judge Trenga of the Eastern District of Virginia agreed with Wilkinson Walsh’s position and dismissed the claims with respect to all of the alleged misstatements and omissions.