The E.D. of Mich. has dismissed the securities class action against several former Kmart executives and PricewaterhouseCoopers. The complaint alleged that the defendants misled Kmart investors in 2000 and 2001 prior to the company’s bankruptcy.
According to an article in yesterday’s Detroit News, the case was dismissed by Judge Gerald Rosen on pleading grounds, despite his determination that the plaintiffs had established a strong inference of fradulent intent for two of the individual defendants. The article also reports that a related ERISA class action on behalf of former Kmart employees has survived a motion to dismiss.
Quote of note: “Rosen said he dismissed the lawsuit strictly on technical legal grounds. Congress may have set ‘a virtually unreachable’ standard for lawsuits that charge private companies with securities fraud, he said. But his decision ‘by no means should be construed as giving defendants a completely clean bill of health,’ Rosen wrote in the 65-page opinion issued Friday.”