Citations
- 175 F. Supp. 3d 837
Full opinion text
OPINION & ORDER
ALGENON L. MARBLEY, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
Plaintiffs IBEW Local No. 58 Annuity Fund, Electrical Workers Pension Trust Fund of IBEW Local No. 58, and IBEW Local No. 58 have filed a securities class action complaint against Defendants on behalf of all purchasers of EveryWare Global, Inc. (“EveryWare”) securities between May 21, 2013 and May 16, 2014, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Sections 11, 12, and 15 of the Securities Act of 1933 (“Securities Act”). Six Defendants or groups of Defendants have filed Motions to Dismiss Plaintiffs’ Amended Complaint on various grounds: Defendants Oppenheimer & Co. Inc., CJS Securities, Inc., Telsey Advisory Group, LLC, Imperial Capital, LLC and BTIG, LLC (the “Underwriter Defendants”) (Doc. 110); Defendants Daniel Collin, Stephen W. Presser, Monomoy Capital Partners, LLC, Monomoy Capital Partners, L.P., MCP Supplemental Fund, L.P., Monomoy Executive Co-Investment Fund, L.P., Monomoy Capital Partners II, L.P., MCP Supplemental Fund, II, L.P., Monomy General Partner, L.P., Monomoy General Partner II, L.P., and Monomoy Ultimate GP, LLC (the “Monomoy Defendants” or, without Collin and Presser, the “Monomoy Entities”) (Doc. Ill); Defendant John K. Sheppard, former Chief Executive Officer of Every-Ware (Doc. 112); Defendant Bernard F. Peters, former Chief Financial Officer of EveryWare (Doc. 113); Defendants Thomas J. Baldwin, Barry L. Kasoff, Ronald McCray, William Krueger, Joseph A. De Perio, and Ron Wainshal (the “Non-Management Directors”) (Doc. 114); and Defendant Michael Jurbala, EveryWare’s Controller and Principal Accounting Officer (Doc. 115).
For the following reasons, the Court GRANTS the six Motions to Dismiss because Plaintiffs have not stated a claim for relief under Federal Rule of Civil Procedure 12(b)(6).
II. BACKGROUND
A. Factual History
This action concerns a purported “pump and dump” scheme by the Monomoy Defendants (a group of New York City-based private equity funds as well as their two principals, Defendants Collin and Presser), Sheppard, and Peters to inflate the price of EveryWare Global Inc. stock so that the Monomoy Defendants could sell their 15 million shares before the share price plummeted. Plaintiffs’ complaint alleges the following facts.
In March of 2012, Monomoy combined two private kitchenware companies already under its control, Oneida, Ltd. and Anchor Hocking LLC, into EveryWare Global Inc., a producer, marketer, and distributor of kitchenware. (Am. Compl., Doc. 38 at ¶¶ 56-58.) Sheppard served as CEO beginning in April of 2012. (Id. at ¶ 22.) On May 21, 2013, EveryWare Global Inc. merged with ROI Acquisition Corp. (“ROI”), a “blank check” company, defined as a publicly traded company that raises money to pursue an acquisition of an existing company. (Id. at ¶ 59.) After the merger was complete, the Monomoy Defendants were the controlling shareholders of the new public company EveryWare (“Every-Ware” or “the Company”), owning more than 60% of the Company’s common stock. (Id. at ¶ 61.) Under the terms of the merger, the Monomoy Defendants received a $90 million payment and approximately 15 million shares of common stock in Every-Ware, while ROI’s shareholders received about 35% of the shares in the new company. (Id. at ¶ 63; 5/21/13 8-K, Doc. 111-3.) These terms were disclosed publicly. (5/21/13 8-K, Doc. 111-3.) Before the merger, EveryWare had assets of $320 million and liabilities of $310 million and, after the merger, EveryWare had assets of $323 million and liabilities of $382 million. (Am. Compl., Doc. 38 at ¶ 63.) EveryWare stock began trading at $10 per share following the merger. (Doc. 111-24.)
The merger agreement between ROI and EveryWare (“Merger Agreement”) provided that shares owned by the Monomoy Defendants were subject to a six month Lock-Up Agreement that barred them from selling their shares until November 18, 2013 unless the share price exceeded $12.50 for 20 trading days within a 30-trading-day period commencing at least 90 days after May 21, 2013 or the Audit Cqmmittee of the EveryWare Board waived the lock-up restriction. (Am. Compl., Doc. 38 at ¶¶ 65-66; 5/21/13 Form 8-K, Doc. 111-3 at 44.) The Merger Agreement also entitled Monomoy to retain up to 3.5 million “earn-out” shares if the price of EveryWare stock hit certain targets for 20 trading days in a 30-day trading period: 1 million shares if the price reached $11; 1.25 million additional shares if it hit $12.50; and 1.25 million additional shares if it reached $15. (Id. ¶ at 67.) If the price did not hit the targets for at least 20 days in a 30-day period, Monomoy would lose the shares. (Id.) .
On January 31, 2013, before the merger with ROI, the former EveryWare publicly issued its 2013 revenue and earnings projections. (Id. at ¶ 71.) The company projected annual revenue of $457 million for 2013 as well as an adjusted EBITDA of $61.1 million. (Id.) The Company also calculated EveryWare’s “Enterprise Value” at approximately $420 million. (Id.) According to Plaintiffs, a confidential witness (“CW1”), the Senior Vice President of Sales for Oneida-from 2011 until June 2013 when he left the company, has stated that he was personally involved in the formulation of the 2013 projections. (Id. at ¶ 74.) CW1 worked on the 2013 estimates between October and December 2012, and along with a coworker he was “responsible for providing estimates for one of the largest segments of the Company in terms of its earnings and revenue.” (Id. at ¶¶75, 76.) CW1 and his coworker formulated their estimates based on the Company’s past performance and recent trends. (Id. at ¶ 76.) They discussed their estimates with former Chief Financial Officer Andrew Church; all three agreed the estimates were reasonable and they, were ultimately presented to CEO Sheppard. (Id.) Church later told CW1 that Sheppard had rejected his 2013 estimates because the sales revenue projection was too low. (Id. at ¶ 77.) CW1 countered to Church that neither he nor his co-worker thought a higher projection was supportable, but Sheppard adopted substantially higher estimates than those that CW1 provided. (Id. at ¶¶ 77-78.) CW1 left the company because he was “disgusted” by this incident. (Id. at 78.) Plaintiffs also stated that CW1 knew that the projections were baseless because Bill Grannis, EveryWare’s Senior Vice President for sourcing, informed CW1 that Grannis had been instructed to cut his inventories for 2013, which would make it difficult to hit the targeted sales numbers that could lead to higher revenue. (Id. at ¶ 79.)
The amended complaint also states that several other witnesses, including a sales manager, a district sales manager, an inventory control manager, a national sales manager, and the Director of Finance for EveryWare’s United Kingdom office, attested to a “serious cut back in Every-Ware’s inventory and a deterioration in EveryWare’s operations.” (Id. at ¶ 83.) The confidential witnesses reported: staff reductions, inventory shortages, and declining sales (id. at ¶¶ 85-86); information from vendors that EveryWare had begun slowing payments to them between June 2013 and September 2013 (id. at ¶ 92); products being “stuck on the docks” due to Every-Ware’s inability to pay for them (id. at ¶ 94); and a statement to Confidential Witness 7 (“CW7”), the Director of Finance in the United Kingdom office, from the head of EveryWare International, Colin Walker, in November 2013 that there was a lack of capital to pay the Company’s debts. (Id. at ¶ 97.) CW7 also stated that in July 2013 it would have been “unmistakable” to Every-Ware management that the Company was running out of money and in danger of defaulting on its debt because of the fact that the nature of the business required substantial lead time for orders to be delivered; therefore, the Company would have known that it was on the verge of insolvency well in advance of payments becoming due. (Id. at ¶ 98.)
In January of 2013, Peters became the CFO of EveryWare. (Id. at ¶ 23.)
In its January 31, 2013 presentation to investors, the Company displayed a chart representing the value of its stock in relation to comparable companies, suggesting that its share price was a relative bargain. (Id. at ¶ 123.) It also laid out its 2013 financial projections, which included predictions of an 8% increase in revenue and a 10% increase in EBITDA over 2012. (Id. at ¶ 124.) The investor presentation was incorporated by reference into the first amendment to the Registration Statement for the Secondary Offering. (Id. at ¶ 125.)
In late May, EveryWare released its financial results from the first quarter of 2013, which reflected growth in both revenue and EBITDA. (5/21/13 Form 8-K, Doc. 111-3 at 64.) On August 1, 2013, Every-Ware disclosed financial results for the second quarter of 2013, reporting that revenue for the first six months of 2013 had increased 2.8% over the first six months of 2012 and that adjusted EBITDA was up 3.4% over that same time period. (Am. Compl., Doc. 38 at ¶137.) Sheppard also reported that the results “were in line with our internal expectations” and that the “fundamentals and outlook for our business and industry remain strong.” (Id. at ¶ 138.) On a conference call with analysts in which Defendants Sheppard and Peters participated, Sheppard reaffirmed that Ev-eryWare was “on track to meet our stated financial commitments for 2013.” (Id. at ¶ 140.) Peters also stated that the Company was “sticking to the numbers that we’ve disclosed before” with regard to its EBIT-DA prediction of $61 million. (Id. at ¶ 145.) Sheppard also stated that the revenue estimate may even be low, musing that $460 million might be more accurate, and that even that prediction was “an attempt to be conservative.” (Id. at ¶¶ 146-47.) One of the Underwriter Defendants, the Telsey Advisory Group, in recommending a target share price of $14, noted in an analyst report that “EveryWare maintained its adjusted EBITDA guidance of $61 million and now expects sales to be [approximately] $460 million, $3 million higher than previously forecast, due to the contribution of the recently announced acquisition in the U.K.” (Id. at ¶ 150.)
The Company’s August 2013 earnings statement noted that its projections “involve a number of risks and uncertainties” and that EveryWare’s “actual results or performance may be materially different from those expressed or implied by these forward-looking statements.” (8/1/13 Form 8-K, Doc. 111-6 at 9.)
According to the amended complaint, as an “accounting gimmick” EveryWare included $5.9 million in factory expenses as inventories, rather than recognizing them as expenses at the time they were incurred, and then waiting until after the Secondary Offering to reveal them as expenses in the fourth quarter of 2013. (Id. at ¶¶ 10, 100.) Plaintiffs allege that this accounting .maneuver was intended to make the Company’s profit margins appear stronger than they were, and that once the accounting adjustment was made in the fourth quarter, adjusted EBITDA decreased by 113% compared to 2012. (Id. at ¶ 102.) Further, Plaintiffs allege that the Company sold products below the cost of production in order to record sales and build up revenues, even though its profits were taking a hit, because ,it would make the Company appear strong in the lead-up to the Secondary Offering. (Id. at ¶ 103.) Sheppard’s successor as CEO, Sam Solomon, later stated on an April 1, 2014 call with investors that “we recognize that we’re selling some things that we don’t make money on.... [W]e’re taking the opportunity to stop doing that going forward.” (Id. at ¶ 104.) Underwriter Defendants Telsey and Oppenheimer, Inc. later noted that the decision to exit some of these product lines led to a sales shortfall and weaker financial results than expected. (Id. at ¶ 105.)
In the three months leading up to the Secondary Offering, EveryWare’s stock was trading at an average daily closing price of $12.68. (Doc. 118, Ex. 4.) Meanwhile, the Company was preparing for the Secondary Offering. On June 17, 2013, Ev-eryWare filed a Form S-3 Registration Statement (“Registration Statement”) with the Securities and Exchange Commission (“SEC”) in which it announced its intent to sell 21,313,334 shares of EveryWare common stock, more than 15 million of which would be sold by the Monomoy Defendants, comprising all of the Monomoy Defendants’ shares. (Am. Compl., Doc. 38 at ¶ 107.) Defendant Sheppard also announced his intent to sell 8,171 shares. (Id.) On August 13, 2013, the Company filéd an amendment to the Registration Statement, reducing the number of shares it intended to sell to 6.5 million, 5.1 million of which would be sold by the Monomoy Defendants and 2,763 by Sheppard. (Id. at ¶ 108.) The Company filed another amendment on September 3, 2013, slightly revising its target number of shares to sell, and on September 9, 2013, the SEC granted EveryWare and the selling stockholders the right to conduct the Secondary Offering. (Id. at ¶ 109.)
On September 12, 2013, the Company announced both that it would sell 4 million shares of common stock in the Secondary Offering and that the Audit Committee had waived the lock-up restrictions to permit the Monomoy Defendants to sell their stock. (Id. at ¶ 110.) On September 16, 2013, EveryWare released the Prospectus for the Secondary Offering, providing for an initial sale of 1.75 million shares at a price of $11.50 per share. (Id. at ¶ 159.) The Monomoy Defendants sold just under I.7 million shares of common stock in the Secondary Offering, approximately 90% of the shares sold in the Secondary Offering. (Id. at ¶ 115.) The sales by the Monomoy Defendants, after payment of fees and costs to Underwriter Defendants, totaled approximately $18.5 million. After the Secondary Offering, the Monomoy Entities continued to hold about 60% of Every-Ware’s common stock. (Id. at ¶ 35.) Neither Sheppard nor Peters sold any stock in the Secondary Offering. (9/16/13 Prospectus, Doc. 111-11 at 91.) As of September II, 2013, Sheppard owned 40,691 shares of common stock and Peters owned 100 shares. (Id.)
Three weeks after the Secondary Offering, Kerri Love, EveryWare’s Chief Administrative Officer and General Counsel, was fired. (Am. Compl., Doc. 38 at ¶ 111.) According to a complaint filed by former EveryWare employee Michael Stewart, Love had complained to top managers, including Peters, about inaccurate financial disclosures and threatened to report her discovery to the SEC. (Id. at ¶¶ 112-13.) Stewart was tasked with investigating Love’s records. (Id. at ¶ 112.) Love eventually entered a confidential separation agreement with the Company. (Id. at ¶ 113.) After she was fired, Stewart was eventually terminated as well, which he characterized as retaliatory. (Id. at ¶ 114.)
Plaintiffs allege that the Registration Statement, which incorporated by reference the earlier 2013 projections from the Company’s Forms 8-K, was false and misleading because it failed to disclose that the Company was in the midst of collapse and had essentially run out of money. (Id. at ¶ 155.) Further, Plaintiffs claim that the Registration Statement omitted the following material trends and conditions: (1) that the Merger Transaction had stripped Ev-eryWare of its capital to such a degree as to render it insolvent and unable to pay suppliers; (2) that the Monomoy Defendants and Sheppard imposed draconian cost reductions, which led to inventory shortages, alienated longtime customers, and impaired the Company’s ability to retain its existing business and increase revenues; (3) that Company management did not believe the 2013 revenues and earnings projections; (4) that EveryWare was selling products at negative profits in order to boost revenue artificially; and (5) that Ev-eryWare had improperly failed to recognize certain already incurred factory costs as expenses and instead capitalized them to inventory in violation of the Company’s accounting policies. (Id. at ¶ 158.)
The Final Prospectus accompanying the Secondary Offering incorporated by reference a draft agreement between the underwriters and selling shareholders, including Monomoy, which provided that “[t]he sale of Shares by each Selling Stockholder pursuant to this Agreement is not prompted by such Selling Stockholder’s knowledge of any material information concerning the Company or any of its subsidiaries which is not set forth in the Prospectus.” (Id. at ¶ 156.) The Agreement also contained a statement that no selling shareholder would take any action that would reasonably be expected to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of shares. (Id. at ¶ 157.) Plaintiffs allege that these statements were false and misleading because the Monomoy Defendants knew that they had stripped EveryWare of its capital and strangled it of the resources it needed to survive, and had also taken a number of steps to manipulate the price of the stock. (Id. at ¶¶ 156,157.)
On October 30, '2013, EveryWare released its third quarter financial results. (Id. at ¶ 164.) Based on a reported loss of $1.1 million for the third quarter of 2013, the Company revised its expected revenues from $460 million to $445-455 million and its expected EBITDA from $61 million to $55-57 million. (Id.) On a call with investors that same day, Peters stated that the declining profits were caused by a drop in sales in the highly profitable food service division of the company. (Id.) Later that day, three of the Underwriter Defendants issued analyst reports dropping the target price for the stock to $13 from previously issued target prices of $14 or $15. (Id. at ¶ 165.) The share price on the market plummeted from $19.00 on October 29, 2013 to $8.36 on November 1. 2013. (Id. at ¶ 166.) On November 19, 2013, one of the underwriters, Oppenheimer & Co., opined that EveryWare’s management had a “meaningful credibility deficit” among investors. (Id. at ¶ 167.)
On February 25, 2014, Sheppard resigned as CEO and the Board of Directors replaced him with Sam Solomon. (Id. at ¶¶ 14, 168.) The stock price dropped from $7.58 to $5.45 from February 24, 2014 to February 26, 2014. (Id. at ¶ 168.) Oppenheimer wrote in its analyst report that it was “blindsided” by the announcement and again reduced its rating, criticizing the company’s “execution” and noting “a distinct lack of visibility into the company’s strategy.” (Id. at ¶ 169.) On March 5, 2014, EveryWare announced that it was postponing its fourth quarter and full-year 2013 earnings release, triggering a further decline in the share price from $5.46 to $4.07. (Id. at ¶ 170.)
On March 31, 2014, the Company belatedly issued those results, reporting total revenue of $439.8 million for 2013 and adjusted EBITDA of $51.5 million. (Id. at ¶ 171.) These numbers were significantly below the original 2013 projections of $457 million in revenue and $61,1 million in earnings. By May 14, 2014, the stock had fallen to $1.40 per share. (Id. )
On May 15, 2014, EveryWare announced a net loss for the first quarter of 2014 of $38.4 millión, compared to a net income of $0.2 million for the first quarter of 2013. (Id. at ¶ 172.) The Company further announced that it was in default on its financial debt covenants in its loan agreements with banks, and that, it would require an infusion of $18.7 million in additional capital to cure the default. (Id.) The Company announced the temporary closing of two factories and a mass layoff, as well as decreases in net sales, along with significant decreases in revenue across all but the international segment of the business. (Id. at ¶ 173.)
By the next day, the share price reached an all-time low of $0.94/share. (Id. at ¶ 175.) On April 7, 2015, EveryWare filed for bankruptcy. (Id. at ¶ 176.)
B. Procedural History
Plaintiffs filed a class action complaint in this Court on October 7, 2014. (Doc. 1.) The original complaint named EveryWare, Sheppard, Peters, and current EveryWare CEO Solomon as Defendants. (Id. at ¶¶ 11-14.) Plaintiffs asserted causes of action for violations of Section 10(b) of the Exchange Act and Rule 10b-5 against all Defendants and violations of Section 20(a) of the Exchange Act against Sheppard, Peters, and Solomon, (Id. at ¶¶ 42-54.)
Plaintiffs filed an amended class action complaint on May 15, 2015. (Doc. 38.) The amended complaint added the Monomoy Defendants, the Non-Management Director Defendants, and the Underwriter Defendants. (Id. at ¶¶ 22-53.) The amended complaint ■ includes the following counts, the third, fourth, and fifth of which were new:
• Count I for violation of Section 10(b) of the Exchange Act and Rule 10b-5 against Sheppard, Peters, and the Mo-nomoy Defendants;
• Count II for violation of Section 20(a) of the Exchange Act against Sheppard, Peters, and the Monomoy Defendants;
• Count III for violations of Section 11 of the Securities Act of 1933 against Sheppard, Peters, Collin, Presses Jurbala, the Non-Management Director Defendants, and the Underwriter Defendants;
• Count IV for violations of Section 12(a)(2) of the Securities Act of 1933 against Sheppard, Peters, Collin, Presser, Jurbala, the Non-Management Director Defendants, and the Underwriter Defendants;
• Count V for violation of Section 15 of the Securities Act of 1933 against Sheppard, Peters, and the Monomoy Defendants.
(Id. at ¶¶ 190-225.) Plaintiffs seek compensatory damages for all class members, including interest, and attorneys’ fees and costs. (Id. at 75-76.) Plaintiffs assert no claims against EveryWare in the amended complaint because it is currently in bankruptcy proceedings in the United States Bankruptcy Court for the District of Delaware and, therefore, subject to the automatic stay under 11 U.S.C. §§ 362(d)(1). (Id. at ¶ 21.)
All Defendants all moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim: the Underwriter Defendants (Doc. 110), the Monomoy Defendants (Doc. Ill), Defendant Sheppard (Doc. 112), Defendant Peters (Doc. 113), the Non-Management Director Defendants (Doc. 114), and Defendant Michael Jurbala (Doc. 115). The motions are fully briefed and ripe for review.
III. STANDARD OF REVIEW
The Court may dismiss a cause of action under Federal Rule of Civil Procedure 12(b)(6) for “failure to state a claim upon which relief can be granted.” Such a 'motion “is a- test of the plaintiffs cause of action as stated in the complaint, ■ not a challenge to the plaintiffs factual allegations.” Golden v. City of Columbus, 404 F.3d 950, 958-59 (6th Cir.2005). Thus, the Court must construe the complaint in the light most favorable to the. non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir.2008). The Court is not required, however, to accept as true mere legal conclusions unsupported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Generally, a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The allegations need not be detailed but must “give the defendant fair notice of what the claim is, and the grounds upon which it rests.” Nader v. Blackwell, 545 F.3d 459, 470 (6th Cir.2008) (quoting Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007)). In short, a complaint’s factual allegations “must be enough to raise a right to relief above the. speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). It must contain “enough facts to state a claim to relief that is plausible on its face.” Id. at 570, 127 S.Ct. 1955.
With regard to Plaintiffs’ claims sounding in fraud, Plaintiffs must also satisfy Federal Rule of Civil Procedure 9(b). Rule 9(b) requires that “in any complaint averring fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 563 (6th Cir.2003) (quoting Fed. R. Civ. P. 9(b)). The requirement “reflects the rule-makers’ additional understanding that, in cases involving fraud and mistake, a more specific form of notice is necessary to permit a defendant to draft a responsive pleading.” United States ex rel. SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 504 (6th Cir.2008) (internal quotation marks omitted). The Sixth Circuit has explained that to satisfy Rule 9(b), a plaintiff must at a minimum “allege the time, place, and content of the alleged misrepresentation” as well as “the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.” Bennett v. MIS Corp., 607 F.3d 1076, 1100 (6th Cir.2010) (internal citations omitted). Plaintiffs may plead fraud based “upon information and belief,” but the complaint “must set forth a factual basis for such belief, and the allowance of this exception must not be mistaken for license to base claims of fraud on speculation and conclu-sory allegations.” Sanderson v. HCA-The Healthcare Co., 447 F.3d 873, 878 (6th Cir.2006) (internal quotation marks omitted). In its analysis, the Court will address which claims sound in fraud and, therefore, must satisfy the more stringent requirements of Rule 9(b).
IV. ANALYSIS
Defendants move for dismissal of all of Plaintiffs’ claims. First, they assert that Plaintiffs’ claims under Section 10(b) of the Securities Act (Count I) must be dismissed because Plaintiffs have not pleaded a materially false or. misleading statement or omission attributable to any Defendant or, in the alternative, have not properly pleaded scienter or loss causation. (Doc. Ill at 18.) Second, they argue that Defendants’ claims under Sections 11 ■ and 12(a)(2) of the Securities Act (Counts III and IV) are barred by the applicable statute of limitations and, alternatively, because Plaintiffs lack statutory standing under both Sections 11' and 12(a)(2), (Id.) In the alternative, they contend that the Section 11 and 12(a)(2) claims fail because Plaintiffs have not alleged any materially false or misleading statements or omissions in the Registration Statement or the Prospectus. (Id.) Finally, they contend that Plaintiffs’ “control person” claims under both Section 20(a) of the of the Exchange Act (Count II) and Section 15 of the Securities Act (Count V) are facially deficient because: (1) they do not plead a primary violation of either statute by a “controlled person”; and (2) they do not allege sufficient facts to plead that the allegedly “controlling” Defendants were sufficiently involved in the challenged statements. (Id.) The Court will address each argument in turn.
As a preliminary matter, the Court grants Defendants’ request to take judicial notice of public documents, including documents filed with the SEC, attached to their various motions to dismiss. In ruling on a motion to dismiss, the Court “may consider materials in addition to the complaint if such materials are public records or are otherwise appropriate for the taking of judicial notice.” New England Health Care Employees Pension Fund v. Ernst & Young, LLP, 336 F.3d 495, 501 (6th Cir.2003). In ruling on a motion to dismiss in a securities fraud case, the Court “may consider the full text of the SEC filings, prospectus, analysts’ reports and statements integral to the complaint, even if not attached, without converting the motion into one for summary judgment” under Federal Rule of Civil Procedure 56. Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 360-61 (6th Cir.2001) (internal quotation marks omitted). The Court may take judicial notice of such documents, however, “only to the extent that their ‘existence or contents prove facts whose accuracy cannot be reasonably questioned.’” Beaver Cnty. Ret. Bd. v. LCA-Vision Inc., No. 1:07-CV-750, 2009 WL 806714, at *4 (S.D.Ohio Mar. 25, 2009) (quoting Passa v. City of Columbus, 123 Fed.Appx. 694, 697 (6th Cir.2005)).
A. Section 10(b) Claims
Section 10(b) of the Securities Exchange Act of 1934 forbids (1) the “use or employ[ment] ... of any ... deceptive device,” (2) “in connection with the purchase or sale of any security,” and (3) “in contravention of’ Securities and Exchange Commission “rules and regulations.” 15 U.S.C. § 78j(b). Commission Rule 10b-5 forbids, among other things, the making of “any untrue statement of a material fact” or the omission of any material fact “necessary in order to make the statements made ... not misleading.” 17 C.F.R. § 24010b-5(b). See Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 341, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005). Plaintiffs’ Section 10(b) and Rule 10b-5 claims are subject to the particularity pleading requirements of Rule 9(b), which, in the context of an Exchange Act claim, require a plaintiff to specify the fraudulent statements, identify the speaker, state where and when the statements were made, and explain why the statements were fraudulent. Frank v. Dana Corp., 547 F.3d 564, 569-70 (6th Cir.2008) (citation omitted). Plaintiffs must also allege the time, place, and contents of the misrepresentation. Id. at 570. Further, the Private Securities Litigation Reform Act of 1995 (“PSLRA”) requires that in a private claim of securities fraud under the Exchange Act, a plaintiff must “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if any allegation regarding the statement or omission is made on information and belief, - the complaint shall state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(l). A plaintiff must also “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). In other words, the PSLRA requires plaintiffs “to state with particularity both the facts constituting the alleged violation, and the facts evidencing scienter, ie., the defendant’s intention ‘to deceive, manipulate or defraud.’ ” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 313, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (quoting Ernst & Ernst v. Hochfelder, 425 U.S. 185, 194, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976)).
In cases involving publicly traded securities, the essential elements of an action under Section 10(b) and Rule 10b-5 can be summarized as: (1) a material misrepresentation or omission; (2) scienter, that is, a wrongful state of mind; (3) a connection with the purchase or sale of a security; (4) reliance; (5) economic loss; and (6) loss causation, a causal connection between the misrepresentation and the loss. Dura, 544 U.S. at 341-42, 125 S.Ct. 1627. Defendants argue that Plaintiffs’ Section 10(b) claim must be dismissed because Plaintiffs have: (1) not alleged any materially false or misleading statements or omissions; (2) failed to state facts giving rise to an inference of scienter; and (3) failed to plead loss causation. (Doc. Ill at 42-59.) They do not dispute that Plaintiffs can establish the other elements of a Rule 10(b) claim, and the Court agrees that Plaintiffs have sufficiently pleaded facts to support the third, fourth, and fifth elements of a Section 10(b) claim.
The Court will first determine whether Plaintiffs have properly pleaded any actionable false or misleading statements. Plaintiffs have identified the following allegedly false and misleading statements: (1) the 2013 earnings and revenue projections; (2) misleading statements from the Monomoy Defendants and Sheppard that EveryWare was being priced at a discount compared to comparable companies; and (3) statements by Sheppard, Peters, and the Monomoy Defendants that the company remained “on track” to meet the 2013 projections.
1. The 2013 Projections
The parties do not dispute that revenue and earnings projections are generally considered “forward-looking” within the meaning of the PSLRA. See 15 U.S.C. § 78u-5(i)(l) (“The term ‘forward-looking statement’ means ... a statement containing a projection of revenues, income (including income loss), earnings (including earnings loss) per share, capital expenditures, dividends, capital structure, or other financial items.”) Ordinarily, the maker of such a forward-looking statement is protected from liability for that statement under the PSLRA safe-harbor provision. 15 U.S.C. § 78u-5(c)(l). The safe harbor does not apply, however, if: “the statement was material; if defendants had actual knowledge that it was false or misleading; and if the statement was not identified as ‘forward-looking’ or lacked meaningful cautionary statements.” Helwig v. Vencor, 251 F.3d 540, 548 (6th Cir.2001) (en banc), overruled on other grounds by Tellabs, 551 U.S. at 314, 127 S.Ct. 2499 (citing 15 U.S.C. § 78u-5(c)(l)). The parties dispute whether Defendants had actual knowledge that the 2013 projections were false or misleading and, if they did, whether the forward-looking statement lacked meaningful cautionary statements.
Plaintiffs contend that they have shown that Sheppard and Monomoy had actual knowledge of the falsity of the 2013 projections because Sheppard “disregard[ed] the views of EveryWare’s senior finance officials in issuing 2013 projections that were ‘substantially higher’ than what they recommended and without disclosing to investors the dissenting views of these officials.” (Doc. 118 at 27.) Plaintiffs contend that the statements they have identified are actionable because they do not “fairly align[] with the information in the issuer’s possession at the time” and were not based on a “meaningful ... inquiry.” Omnicare, Inc. v. Laborers Dist. Council Const. Indus. Pension Fund, - U.S. -, 135 S.Ct. 1318, 1328-29, 191 L.Ed.2d 253 (2015) (noting that a plaintiff can state a Section 11 omissions claim “if a registration statement omits material facts about the issuer’s inquiry into or knowledge concerning a stateinent of opinion, and if those facts conflict with what a reasonable investor would take more the statement itself’). In support of this contention, Plaintiffs point to the statements of CW1, which they contend indicate that three Every-Ware senior officials responsible for the 2013 projections all agreed with the original revenue projection they submitted to Sheppard, who overruled it and mandated a projection that was “substantially higher.” (Am. Compl., Doc. 38 at ¶¶ 76-77.) Because the statements Sheppard rejected were formulated based on EveryWare’s past performance and the projections that were ultimately used were not, Plaintiffs contend that they were not based on a meaningful inquiry or fairly aligned with the information in EveryWare’s possession. (Doc. 118 at 38.)
Confidential witnesses “may assist securities fraud plaintiffs ... so long as they are not vague and conclusory.” Local 295/Local 851 IBT Bmp’r Grp. Pension Tr., 731 F.Supp.2d 689, 721 (S.D.Ohio 2010) (citing Ley v. Visteon Corp., 543 F.3d 801, 811 (6th Cir.2008), abrogated on other grounds by Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 131 S.Ct. 1309, 1323-25, 179 L.Ed.2d 398 (2011)). The complaint must allege that the confidential witnesses were in a position “to establish their basis of knowledge of the alleged misconduct (‘what, when, where, and how) and they must establish that the defendants were aware of the misconduct.” Id. (quoting Ley, 543 F.3d at 811); see, e.g., Ricker v. Zoo Entertainment, Inc., 534 Fed.Appx. 495, 496 n. 2 (6th Cir.2013) (“Witness 3’s employment in [the defendant’s] accounting department positioned her to learn of the facts now alleged.”). The Sixth Circuit has said that “generalized statements cannot substitute for specific facts through which a factfinder can strongly infer that the Defendants themselves knew of or recklessly disregarded the falsity of the earnings statements, especially because the majority of the Confidential Witnesses are not identified as having any contact or interaction with any of the Defendants.” Konkol v. Diebold, Inc., 590 F.3d 390, 401 (6th Cir.2009), abrogated on other grounds by Matrixx Initiatives, 131 S.Ct. at 1323-25). Plaintiffs further contend that they have pleaded with particularity that CW1 was in a position to know the facts attributed to him because he was one of three senior officials responsible for preparing the 2013 projections and regularly worked with Sheppard and then-CFO Church. (Doc. 118 at 28.)
CW1 was a Senior Vice President of Sales at EveryWare until June 2013. (Am. Compl, Doe. 38 at ¶74.) The complaint alleges that he and a co-worker worked on the formulation of the 2013 projections between October and December 2012, and that, in particular, he was “responsible for providing estimates for one of the largest segments of the Company in terms of its earnings and revenue.” (Id. at ¶¶ 75-76.) He and his coworker discussed their estimates with then-CFO Church, and all three individuals agreed that the estimates were reasonable and should be presented to Sheppard. (Id. at ¶ 76.) Church then told CW1 that Sheppard had rejected the 2013 estimates because he wanted a higher sales revenue projection, to which CW1 responded that he did not think a higher number was realistic. (Id. at ¶ 77.) According to the complaint, CW1 also states that his coworker thought that the 2013 projections were in “fantasyland” but does not state whether the coworker shared this information with anyone but CWl. (Id. at ¶78.) Additionally, the complaint describes a conversation between CWl and Bill Gran-nis, EveryWare’s senior vice president for sourcing, in which Grannis told CWl that EveryWare management had instructed him to cut inventories in 2013 and that, according to Grannis, it would be difficult to meet sales goals with lower inventory. (Id. at ¶79.) Finally, the complaint recounts CWl’s statement that he had two conversations with Defendant Collin, on unspecified dates in 2012 and 2013, to discuss sales and that Collin was “not interested” in making any improvements to Ev-eryWare’s operations that could increase revenue. (Id. at ¶ 80.)
These statements do not suffice to show that Sheppard (or Peters, who was not yet CFO during the time that CWl was involved in the formulations of the projections) had actual knowledge that the projections were false or misleading. First of all, there is no allegation that CWl or his coworker ever talked directly to Sheppard or that Church conveyed their statements to Sheppard. Second, there is no indication that Church ever told Sheppard he thought the new projections were unreasonable or misleading in any way, or that Grannis or anyone else ever told Sheppard that they believed insufficient inventory would make the sales goals unachievable. Third, the complaint states that CWl was responsible for sales figures in “one of the largest segments of the Company,” which presumably indicates that other senior officials in other segments of EveryWare also had input into the formulation of the projections, but Plaintiffs allege no facts about the recommended projections of other officials or about the process Sheppard used to craft the final overall projections. The facts Plaintiffs do offer regarding CWl do not suggest how much of a role CWl actually had in formulating the Company’s overall 2013 projections. And finally, there are no numbers behind CWl’s contentions; he does not state what his initial recommended projection was, so the size of the discrepancy between his recommendation and the final 2013- projections is unknown.
The complaint, therefore, fails to show actual knowledge on many levels. A plaintiff “must identify particular (and material) facts going to the basis for the [defendant’s] opinion — facts about the inquiry the [defendant] did or did not conduct or the knowledge it did or did not have— whose omission makes the opinion statement at issue misleading to a reasonable person.” Omnicare, 135 S.Ct. at 1332. Even if Sheppard did have knowledge of CWl’s disagreement, this fact would be insufficient to show that he had knowledge that the 2013 projections were false or misleading. See id. at 1329 (noting that an opinion statement is not necessarily misleading when an issuer knows, but fails to disclose, a fact cutting against the opinion even if the opinion is later proven incorrect because “[a] reasonable investor does not expect that every fact known to an issuer supports its opinion statement.”); Yellen v. Hake, 437 F.Supp.2d 941, 954 (S.D.Iowa 2006) (holding that the fact that management discussed lower possible forecasts “does not amount to an allegation that Defendants did not reasonably believe” the forecasts they ultimately made).
Plaintiffs simply cannot show through CWl’s statements — none of which was made directly to Sheppard or any other Monomoy Defendant, see Konkol, 590 F.3d at 401—that the 2013' projections did not “fairly align[ ] with the information in the issuer’s possession at the time” and were not based on a “meaningful ... inquiry,” Omnicare, 135 S.Ct. at 1328-29. Nor do Plaintiffs plausibly allege that Sheppard knew that the 2013 projections were false when he later relied on them in statements that he made after the company went public in May 2013. There are no allegations in the complaint, from confidential witnesses or otherwise, that anyone made any statements to Sheppard or other Monomoy Defendants about the projections or the bases for the projections. Because the 2013 projections were forward-looking statements and Plaintiffs have not shown that Defendants had actual knowledge of their falsity, such statements are protected by the PSLRA safe harbor.
2. Statements Regarding the Value of EveryWare Stock
In the January 31, 2013 investor presentation, EveryWare pegged the Company’s enterprise value at $420.5 million and characterized EveryWare’s stock as an “attractive valuation” because its enterprise value was only 6.9 times expected 2013 earnings, as compared to other similar companies whose enterprise values were 8.1 times their expected 2013 earnings. (Am. Compl., Doc. 38 at ¶ 123.) Therefore, its share price, which is commonly calculated using enterprise value and expected earnings, would seem to be a relative bargain. (Id.) The investor presentation, including statements about the enterprise value, were later incorporated by reference in SEC filings on June 11, 2013 and September 16, 2013. Plaintiffs contend that because the statements regarding the stock’s value were premised on false and misleading 2013 projections, these statements were also misleading. The parties do not dispute that these statements were not'forward-looking, and thus not protected by the safe harbor, so the Court will analyze whether these statements were false or misleading and whether Plaintiffs have sufficiently alleged with particularity the facts on which their belief was formed. See 15 U.S.C. § 78u-4(b)(l).‘
Plaintiffs have not met their burden because: (1) the calculation of the enterprise value was not derived from the 2013 projections and; (2) Defendants fully disclosed how it was calculated and why they believed the stock was an attractive valuation. In its January 31, 2013 investor presentation, EveryWare disclosed the simple formula it used to calculate enterprise value: its pro forma shares outstanding (17.6 million) multiplied by an estimated share price of $10, plus the company’s pro forma net debt ($244 million). (1/31/13 Investor Presentation, Form 8-K, Doc. 111-1 at 46.) The definition of enterprise value, as stated in the investor presentation, is “equity value plus total debt and minority interest, less cash and equivalents,” (id. at 51), and Plaintiffs make no contention that this is an incorrect definition of enterprise value or that the enterprise value was incorrectly calculated. To the extent that they argue that the Company did not disclose that its debts exceeded the value of its assets after the merger and the $90 million payout to Monomoy, this is incorrect because the enterprise value clearly stated that its debt ($244 million) outweighed its pro forma equity value ($175.6 million, the value of the pro forma shares outstanding multipled by the share price of $10). (Id. at 46.) The Court finds that the Plaintiffs have not alleged an actionable false or misleading statement with regard to the value of the Company’s stock.
3. Statements that EveryWare Remained “On Track” to Meet Its Projections
a. False or Misleading
Plaintiff next points to statements from Sheppard and Peters, as well as statements that it attributes to the Monomoy Entities, that EveryWare remained “on track to meet [its] stated financial commitments for 2013.” (Id. at ¶ 140.) Sheppard made this statement on the second quarter 2013 earnings call on August 1, 2013, Peters made a similar statement on that call, and EveryWare made' a similar representation in an August 1, 2013 press release. (Id. at ¶¶ 146-47,145,138.)
Some courts have labeled statements that a company was “on track” or “still going strong” to meet its revenue projections as statements that are “not forward-looking but statements relating to current conditions.” Mulligan v. Impax Labs., Inc., 36 F.Supp.3d 942, 964 (N.D.Cal.2014); see also Makor Issues & Rights, Ltd. v. Tellabs Inc., 513 F.3d 702, 705 (7th Cir.2008); IBEW Local 98 Pension Fund v. Best Buy Co., Inc., 958 F.Supp.2d 1065, 1076 (D.Minn.2013). Having reviewed all of the statements Sheppard and Peters made on the earnings call, the Court agrees that the statements that the company was “on track” to meet revenue projections related to the Company’s then-current conditions, and now turns to whether these statements were false or misleading. For instance, Sheppard stated that “the business continues to perform well in line with our internal expectations, and we remain on track to meet our stated financial commitments for 2013,” citing the increases in total reported revenue and EBITDA for the first six months of 2013. (Am. Compl., Doc. 38 at ¶ 140.) He also represented that the company’s “top-line growth,” which was historically between 5 to 7%, would increase to 8% “as a result of all the initiatives we’ve put in place.” (Id. at ¶ 145.) The Court finds that these are statements relating to current condition because they encompass statements of present fact even if they also represent future predictions. See In re Nortel Networks Corp. Sec. Litig., 238 F.Supp.2d 613, 629 (S.D.N.Y.2003) (holding that “even when an allegedly false statement has both a forward-looking aspect and an aspect that encompasses a representation of present fact, the safe harbor provision of the PSLRA does not apply”). Therefore, the Court finds that these statements are not protected by the safe harbor.
Plaintiffs contend that these statements that the 2013 projections were on track were misleading because: (1) by August 2013 EveryWare had essentially run out of money and was forced to leave shipments from vendors sitting on the docks due to the Company’s inability to pay for them (Am. Compl., Doc. 38 at ¶¶ 92-94); (2) most of the Company’s orders for the end of 2013 had already been placed by this time, so they would have known that they were unlikely to meet their optimistic projections (id. at ¶ 98); (3) EveryWare’s reported results as of August 1, 2013 were inflated by accounting manipulations designed to hide $5.9 million in factory costs (id,- at ¶¶ 99-102); and (4) EveryWare sold products for less than the cost of production so that they could achieve their revenue projections, which ultimately cost them earnings and shows the extent to which Defendants inflated the stock price. (Id. at ¶¶ 108-05.)
b. Scienter
Ultimately, however, even though the Plaintiffs have pointed to statements regarding current conditions that Sheppard, Peters, and EveryWare made on August 1, 2013 that are not entitled to the PSLRA safe harbor, Plaintiffs cannot survive the motion to dismiss because they fail plausibly to allege scienter. The PSLRA requires that the complaint “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). The required state of mind for a Section 10(b) claim, scienter, is “a mental state embracing intent to deceive, manipulate or defraud.” Tellabs, 551 U.S. at 319, 127 S.Ct. 2499 (internal quotation marks and citation omitted). The Supreme Court has defined “strong inference” to require courts to consider not only inferences urged by the plaintiff “but also competing inferences rationally drawn from the facts alleged.” Id. at 314, 127 S.Ct. 2499. Further, an inference of scienter need not be the “most plausible of competing inferences,” but it “must be more than merely reasonable or permissible.” Id. at 324, 127 S.Ct. 2499 (internal quotation marks omitted). In sum, it must be “cogent and at least as compelling as any opposing inference one could draw from the facts alleged.” Id. Finally, the proper inquiry for thé Court in evaluating allegations of scienter is “whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.” Id. at 322-23, 127 S.Ct, 2499; see also Frank v. Dana Corp., 646 F.3d 954, 961 (6th Cir.2011) (“Our former method of reviewing each allegation individually before reviewing them holistically risks losing the forest for the trees. Furthermore, after Tellabs, conducting an individual review of myriad allegations is an unnecessary inefficiency. Consequently, we will address the Plaintiffs’ claims holistically”).
Defendants contend that Plaintiffs have failed to plead scienter because: (1) the alleged scheme makes no sense as a motive for fraud, given that the Monomoy Defendants stood to lose much more financially from the demise of EveryWare than they stood to gain from selling the stock at an inflated price; (2) the so-called Helwig factors that are indicative of scienter militate against such an inference; (3) the allegations regarding the Company’s development of its 2013 projections do not create any basis for inferring scienter; and (4) the remaining allegations related to inventory accounting and other matters fail to identify any impropriety. (Doc. Ill at 47.)
Plaintiffs put forward the following theory as to scienter, which the Court will consider holistically, taking all of Plaintiffs’ factual allegations into account. They allege that Sheppard was aware that the Company was running out of money because he was involved on an operational level in formulating the projections and tracking the revenue and earnings figures. Plaintiffs further rely on the temporal proximity between Sheppard’s “on track” statements on August 1, 2013 and the “actual disastrous year-end results.” (Doc. 118 at 39.) Further, the alleged accounting improprieties, including those cited by former General Counsel Love, and the fact that EveryWare was selling products for less than the cost of production, should have been enough for Sheppard to infer that the Company was running out of money. Finally, the fact that there is a long “lead time” for EveryWare’s orders allows an inference that sales figures would have been down by August 1, 2013, due to a decreased number of orders for the end of the 2013, so top executives would have known the Company was in trouble. Although Sheppard sold no shares in the Secondary Offering, Plaintiffs suggest that he was motivated to commit fraud by the prospect of losing his job if he told the truth about the Company’s financial situation, and that although the Monomoy Defendants initially intended to sell all 15 million shares of their stock — and filed a Form S-3 Registration Statement with the SEC that so indicated — the fact that they “were not able to sell the full amount of stock they had planned to only demonstrates that the Monomoy Defendants failed to make their fraudulent scheme as profitable as hoped, most likely because they decided that they could not conceal EveryWare’s failing condition in connection with such a large offering.” (Doc. 118 at 45.) Even the Monomoy Defendants’ sale of fewer than two million shares of stock, for a value of $18.5 million, at the Secondary Offering was still “highly unusual” in timing and “substantial” in volume, Plaintiffs contend. (Id.)
Although the Court cannot say that this theory is outlandish, and may even be plausible, under the Tellabs standard it is simply not “cogent and at least as compelling” as the opposing inference toward which Defendants point the Court, namely, that Defendants’ actions show that they wanted the Company to succeed. Defendants first rely on the fact that the Monomoy Defendants ultimately only sold 1.7 million shares for proceeds of $18.5 million, which was only a little over 10% of the 15 million shares they held at the time. After the stock price plummeted and the Company was in crisis, Monomoy invested an additional $20 million — more than they received from the sale of stock at the Secondary, Offering — in an attempt to prop up the flailing Company, (8/14/14 Form 10-Q, Doc. 111-20 at 32.) After EveryWare entered bankruptcy proceedings, the securities held by the Monomoy Entities were canceled .and the Monomoy Entitites were left with approximately 3% of the post-bankruptcy Company. (6/2/15 Schedule 13D/A, amend. 6, Doc. 111-23 at 12.)
Peters owned only 100 shares at the time of the Secondary Offering and he sold none of them in the Offering. (9/9/13 Prospectus Supplement, Doc. 111-11 at S-86.) He also held options for 122,000 shares that would not have vested until June 2014 at the earliest. (4/14/14 Schedule 14A, Doc. 123-3 at 5.) Sheppard did not sell any stock in the Secondary Offering and, in fact, increased his ownership stake from 8,171 shares immediately after the ROI merger to 40,691 shares at the time of the Secondary Offering, which would have been a curious choice if he planned to commit fraud that would cause the stock price to plummet, .yet not sell any shares m the Secondary Offering. (See 5/28/13 Form 8-K, Doc. 111-3 at 25 and Prospectus S ipplement, Doc. 111-11 at S-86.) Sheppard also owned a substantial number of shares that would have vested annually over a four-year period. (4/14/14 Schedule 14A, Doc. 123-5 at 5 (“All of the 2013 options issued are subject to time vesting conditions and vest ratably and become exercisable over a period of four years from the date of grant in the case of Mr. Sheppard’s options and five years from the date of grant in the case of Mr. Peter[s’] options.”).)
Having reviewed these competing inferences, the Court finds that the inferences Plaintiffs draw from the facts alleged in the complaint áre not as compelling as those of Defendants. The Monomoy Defendants had a greater motive to see Every-Ware succeed, and they ultimately lost millions more than they received in the Secondary Offering. Plaintiffs have not offered a compelling, reason why Defendants would have sold 1.7 million shares as opposed to the entire 15 million shares they owned. They cannot explain why the Mo-nomoy Entites would pump $20 million into the company in an effort to prop it up, or why a loss of more than they had gained from the merger — the $90 million cash payout and the $18 million in shares sold — creates an inference of scienter. Nor can the Court even infer that filing the S-3 Registration Statement indicated that Defendants ever intended to sell 15 million shares in the Secondary Offering. As Defendants point out, all shelf registrations, once granted by the SEC, are active for up to three years, and therefore filing a Registration Statement indicating an intent to sell 15 million shares on June 17,2013 does not necessarily show that the Monomoy Defendants intended to sell all of these shares at the Secondary Offering. See 17 C.F.R. § 230.415(a)(5) (“Securities registered on an automatic shelf registration statement ... may be offered and sold only if not more than three years have elapsed since the initial effective date of the registration statement under which they are being offered and sold... ”).
Moreover, EveryWare’s publicly available correspondence with the SEC during this period supports an inference that the Monomoy Defendants did not reduce the number of shares they sought to sell because they were worried about the appearance of trying to commit too much fraud, as it were. Rather, a more compelling inference is that the Company elected to reduce the number of shares it would sell in order to avoid the longer review process by the SEC that would have resulted if they tried to register more than one-third of the Company’s shares. And Plaintiffs’ attempts to infer fraud from the fact that the Company ultimately revised its 2013 projections downward in October 2013 are unavailing. See Albert Fadem Trust, 334 F.Supp.2d 985, 1017 (S.D.Ohio 2004) (quoting Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1129 (2d Cir.1994) (“Misguided optimism is not a cause of action, and does not support an inference of fraud. We have rejected the legitimacy of alleging ‘fraud by hindsight.’ ”)). Finally, even if the Court takes as true the vague allegation that Love revealed accounting improprieties to top management, only accounting violations that “are the type of extreme ‘in your face facts’ that ‘cry out’ scienter” are sufficient under the PSLRA. Konkol, 590 F.3d at 400 (quoting PR Diamonds, Inc. v. Chandler, 364 F.3d 671, 685 (6th Cir.2004), abrogated on other grounds by Matrixx Initiatives, 131 S.Ct. at 1323-25). Given the meager, perhaps even nonexistent, factual support Plaintiff offers for their accounting violations argument, the Court infers that these are not “in your face facts.”
Upon holistic review of these allegations, it is simply more likely that the Monomoy Defendants’ actions indicated an intent for the Company to succeed, not to inflate the stock price and ultimately let the Company fail.
As to Sheppard and Peters, they gained nothing from the Secondary Offering because they sold no shares. See PR Diamonds, 364 F.3d at 691 (“[T]he absence of inside sales dulls allegations of fraudulent motive.”); City of Pontiac Gen. Employees’ Ret. Sys. v. Stryker Corp., 865 F.Supp.2d 811, 834-35 (W.D.Mich.2012) (explaining that a lack of sales by individual defendants “actually undermines an inference of scienter,” particularly where “they suffered large losses.. .from the shares they retained”); I.B.E.W. v. Limited Brands, Inc., 788 F.Supp.2d 609, 631 (S.D.Ohio 2011) (“The[ ] purchases of shares [during the class period by individual defendants] undermine any inference of scienter.”). Plaintiffs’ suggestion that Sheppard was motivated by keeping his job, even if not by profiting from the Secondary Offering itself, does not save their claim. Although the Supreme Court has stated that the absence of pecuniary motive on the part of a defendant is not fatal to a plaintiffs Section 10(b) claim, “it can be a relevant consideration.” Tellabs, 551 U.S. at 325, 127 S.Ct. 2499.
Here, Plaintiffs have not alleged “motives to commit fraud as opposed to motives common to corporations and executives generally” such as an executive’s “desire for the company to appear successful and ... to protect his position in the company and increase his compensation.” Local 295, 731 F.Supp.2d at 720 (citing PR Diamonds, 364 F.3d at 690); see also Kalnit v. Eichler, 264 F.3d 131, 140 (2d Cir.2001) (“[A]n allegation that defendants were motivated by a desire to maintain or increase executive compensation is insufficient because such a desire can be imputed to all corporate officers.”). In other words, as the Sixth Circuit has said, a complaint “must show concrete benefits that could be realized by one or more of the false statements a