Canada Goose Holdings Inc.
- Company Name
- Canada Goose Holdings Inc.
- Stock Symbol
- Class Period
- March 16, 2017 to August 1, 2019
- Motion Deadline
- November 2, 2019
- Southern District of New York
The complaint charges Canada Goose and certain of its officers with violations of the Securities Exchange Act of 1934. Canada Goose designs, manufactures, and sells premium outdoor apparel, including parkas, jackets, shells, vests, knitwear, footwear, and accessories. The Company uses, among other materials, animal down and furs for its winter jackets and other apparel.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and operations. Specifically, defendants failed to disclose that Canada Goose sourced the down and fur used in its clothing products in an unethical and inhumane manner, which violated relevant FTC regulations pertaining to false advertising with respect to its sourcing practices and, as a consequence, Canada Goose had been the subject of an FTC investigation regarding false advertising. As a result of this information being withheld from the market, Canada Goose securities traded at artificially inflated prices during the Class Period, with its stock reaching prices of more than $70 per share.
On November 2, 2017, People for the Ethical Treatment of Animals (“PETA”) issued a release alleging that Canada Goose suppliers used unethical measures to obtain the down and fur used in the Company’s clothing and that PETA had lodged a complaint with the FTC regarding these practices because the Company represented in communications and promotional materials that its clothing was produced with down and fur that was ethically and humanely sourced. Nevertheless, despite PETA’s release and FTC complaint, Canada Goose continued to represent that the down and fur used in producing its clothing was collected in a humane and ethical manner.
On June 17, 2019, the FTC issued a closing letter to Canada Goose’s legal counsel stating that it had investigated the Company’s advertising practices for possible violations of the Federal Trade Commission Act due to “concern[s] that Canada Goose may have made false or misleading representations about the treatment of geese whose down is used in Canada Goose’s apparel.” The FTC further stated that it had not recommended enforcement action against Canada Goose because the Company had “remov[ed] the advertising claims at issue from the marketplace and clarif[ied] its business practices in marketing materials.” However, the FTC expressly stated that “[t]his action is not to be construed as a determination that a violation of law did not occur” and “reserve[d] the right to take further action as the public interest may warrant.”
Then, on August 1, 2019, the New York Post published an article stating that Canada Goose had abandoned its claims of ethical treatment of animals used in making its winter jackets and clothing in response to the FTC’s regulatory review and had removed from its website previous claims that the Company sourced coyote fur from animals in overpopulated areas, as well as videos purporting to show where Canada Goose obtained down for its parkas. On this news, Canada Goose’s stock price fell $2.21 per share, or nearly 5%, to close at $44.58 per share on August 1, 2019.