U.S. District Court for the Southern District of New York granted the defendants’ motion for summary judgment in its entirety, after previously denying class certification.
Retained by Paul Weiss
The plaintiff brought securities fraud claims based on alleged misstatements about Kirkland Lake Gold’s (Kirkland’s) M&A strategy. Specifically, the plaintiff alleged two categories of misstatements: statements made by Kirkland’s former CEO, Mr. Antony Makuch regarding Kirkland’s focus on internal growth in response questions about M&A by securities analysts; and statements made by Mr. Makuch about the cost and production targets Kirkland would apply in assessing a mine for potential acquisition. The plaintiff further asserted that these alleged misrepresentations were corrected when the company acquired Detour, another gold-mining company, resulting in a stock price decline.
Defense counsel retained Cornerstone Research to support two experts during the class certification phase, Jennifer Marietta-Westberg of Cornerstone Research and James Griffin of Griffin Mining Advisors, and two experts during the merits phase, David Smith, the Virginia Bankers Association Eminent Professor of Commerce at the McIntire School of Commerce at the University of Virginia, and George Ireland of Geologic Resource Partners.
On March 29, 2024, the Court ruled in favor of defendants on class certification, denying plaintiff’s motion for class certification in its entirety. Under the Supreme Court’s decision in Basic v. Levinson, investors are presumed to rely on the market price of a company’s security, which in an efficient market reflects all the company’s public statements, including misrepresentations. However, defendants can rebut the presumption of reliance by demonstrating that the alleged misrepresentations did not impact the price of the stock. The court ruled that the defendants had rebutted the Basic presumption, and found that “[b]ecause Defendants have rebutted the Basic presumption of reliance on all three statements, Plaintiff has not adequately demonstrated predominance, as required by Rule 23(b)(3). Class certification is therefore denied.”
In reaching its decision, the court relied on the analyses of Dr. Marietta-Westberg and Mr. Griffin, both of whom submitted expert reports and provided deposition testimony.
- In assessing whether the alleged misrepresentations had a statistically significant impact on the price of Kirkland’s stock, Dr. Marietta-Westberg analyzed the announcement of a “Deal Room” that Kirkland set up during the proposed class period to solicit potential acquisition targets. The court relied on this analysis, finding that “[p]erhaps the most probative evidence on this question” of whether “a truthful, but equally generic, substitute for the [alleged misrepresentations] would not have impacted the stock price” came “from a June 2019 statement in which Kirkland announced that it had opened a ‘Deal Room’ and invited potential acquisition candidates and partners to submit information through an online portal.”
- The court also relied on Dr. Marietta-Westberg’s analysis of market commentary throughout the proposed class period, finding that “[e]vidence from contemporaneous analyst reports also supports the absence of price impact.”
- The court added that “[t]he report of the defense expert, James Griffin, provides further support for the conclusion that the [alleged misrepresentations] did not have a price impact,” and, “[b]ased on Griffin’s extensive experience in mining and M&A, the Court credits Griffin’s expert conclusions to the extent that he is opining on how market participants would have perceived and reacted to a statement that Kirkland was not considering M&A.”
During the merits phase, Professor Smith and Mr. Ireland submitted expert reports and provided deposition testimony.
On December 13, 2024, the U.S. District Court for the Southern District of New York ruled that, based on the factual record developed, no rational trier of fact could find for the plaintiff.
Washington 
