Bernstein Liebhard LLP Announces Filing of a Class Action Against Diamond Foods, Inc.
November 8, 2011
Bernstein Liebhard LLP today announced that a lawsuit has been filed in the United States District Court for the Northern District of California on behalf of a class (the “Class”) of investors who purchased Diamond Foods, Inc. (“Diamond Foods” or the “Company”) (NASDAQ: DMND) securities between the period of April 5, 2011 and November 1, 2011 (the “Class Period”). Plaintiffs allege violations of the Securities Exchange Act of 1934 against Diamond Foods and several individual defendants.
Diamond Foods engages in processing, marketing and distributing snack products. Diamond Foods enters into exclusive purchase agreements with walnut growers for their crops. According to the Company, under these agreements, the walnut growers deliver their entire walnut crop to the Company during the fall harvest season and the Company then determines the minimum price for the crops by March 31, or later, of the following calendar year. The Company represents that it determines the purchase price in good faith, taking into account market conditions, crop size, quality, and nut varieties, among other relevant factors. Since the ultimate price to be paid by the Company to the walnut growers is determined subsequent to receiving the walnut crop, the Company estimates the cost of the walnuts for its interim financial statements.
On April 5, 2011, the Company announced that it was going to acquire the Pringles snack business (the “Acquisition”) from The Procter & Gamble Company (“P&G”). The Company represented to investors that the Acquisition would be completed by December 2011.
The Complaint alleges that throughout the Class Period defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company was underestimating the ultimate price to be paid to walnut growers; (2) that the Company was improperly accounting for its cost of sales; (3) that, as a result, the Company’s financial results were overstated; (4) that the Company lacked adequate internal and financial controls; (5) that, as a result of the foregoing, the Company’s financial statements were materially false and misleading at all relevant times; and (6) that, as a result of the foregoing, the Company’s positive statements about Diamond Foods’ business, operations, and prospects, as well as those regarding the timetable for the Acquisition, lacked a reasonable basis.
On November 1, 2011, the Company disclosed that the Acquisition would be delayed until the first half of 2012. The Company revealed that the delay was the result of an internal investigation regarding payments to walnut growers. According to the Company, the investigation was prompted by the Chairman of the Audit Committee of the Company’s Board of Directors receiving an external communication regarding Diamond Foods’ accounting for certain crop payments to walnut growers. On this news, the Company’s shares declined $11.33 per share, or 17.67%, to close on November 2, 2011, at $52.79 per share, on unusually heavy trading volume.
Plaintiffs seek to recover damages on behalf of all Class members who purchased or otherwise acquired Diamond Foods securities during the Class Period. If you purchased or otherwise acquired Diamond Foods securities during the Class Period, and either lost money on the transaction or still hold the shares, you may wish to join in this action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than January 6, 2012.
A “lead plaintiff” is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Bernstein Liebhard LLP, or other counsel of your choice, to serve as your counsel in this action.
If you are interested in discussing your rights as a Diamond Foods shareholder and/or have information relating to the matter, please contact Joseph R. Seidman, Jr. at (877) 779-1414 or firstname.lastname@example.org.
Bernstein Liebhard has pursued hundreds of securities, consumer and shareholder rights cases and recovered almost $3 billion for its clients. It has been named to The National Law Journal’s “Plaintiffs’ Hot List” in each of the last nine years.