Lionsgate has emerged triumphant in a suit brought against the company by its shareholders, according to court papers obtained by TheWrap.
An order issued in federal court in New York on Monday noted that “the Court has considered all of the remaining arguments of the parties. To the extent not specifically addressed in the Order, they are either moot or without merit. For the foregoing reasons, the Defendants’ motion to dismiss is granted; accordingly, the case is closed.”
In a class-action lawsuit, shareholders had contended that Lionsgate had concealed efforts to dilute shares when successfully thwarting a 2014 hostile takeover from investor Carl Icahn.
Lionsgate filed a motion to dismiss in March 2015. The studio argued that it wasn’t required to disclose tactics for keeping control of the production company, despite admitting wrongdoing to the Securities and Exchange Commission and paying a settlement of $7.5 million to the committee in March 2014.
“No court has ever held that any statute or regulation imposes an affirmative duty to disclose a government investigation before the agency has even decided to institute proceedings,” Lionsgate’s legal team argued at the time.
The shareholders’ lawsuit took issue with Lionsgate issuing millions of new shares in order to dilute Icahn’s stake in the company. Attorneys for the company said they were under no obligation to inform other shareholders of those efforts.
In their complaint, the shareholders alleged scienter — that is, that Lionsgate displayed reckless disregard by issuing statements that were materially false or misleading. But U.S. District Judge John G. Koeltl sided with Lionsgate on the matter in a judgment issued Friday.
“There are no statements that the plaintiffs reply upon that were false and thus they have not alleged that the defendants knew or were reckless in not knowing that the statements were false.”
Pamela Chelin contributed to this report.