Xerox Wins Appeal Affirming Summary Judgment Dismissal of Long‑Running Securities Class Action

On September 8, 2014, a unanimous Second Circuit panel affirmed the dismissal on summary judgment of a 14‑year‑old securities class action lawsuit filed against Cravath’s client, Xerox Corporation. This follows the March 2013 decision by the U.S. District Court for the District of Connecticut.

Plaintiffs filed this class action in 1999 on behalf of all purchasers of Xerox’s common stock from October 22, 1998, through October 7, 1999, alleging that Xerox and certain of its former executives committed securities fraud by misrepresenting the success of Xerox’s 1998 global restructuring program in violation of the Securities Exchange Act of 1934. Specifically, Plaintiffs alleged that defendants claimed the benefits of the restructuring program without disclosing that problems associated with one of the restructuring initiatives had negated the benefits.

In granting Xerox’s motion for summary judgment, the District Court concluded, in a 98‑page opinion, that Plaintiffs had failed both (i) to establish an actionable misstatement or omission and (ii) to demonstrate loss causation.

In affirming the District Court’s grant of summary judgment in favor of defendants, the Second Circuit panel concluded “that there is no genuine dispute of material fact with respect to the sufficiency of Xerox’s disclosures about the success and failures of the component of its worldwide restructuring.”

The Cravath team included partner J. Wesley Earnhardt, associates Leslie W. Regenbaum, Brian M. Jenks and John D. Viruet. Steven D. Pacht also worked on this matter.