Robbins Geller Scores Class Certification in J.C. Penney Securities Class Action

March 13, 2017

In an order dated March 8, 2017, Judge Robert W. Schroeder III of the United Stated District Court for the Eastern District of Texas certified a class in the action against J.C. Penney Company, Inc. (“J.C. Penney”). The court considered and rejected defendants’ claims that the Magistrate Judge erred in finding that the action is maintainable under Rule 23(b)(3) in her August 2016 Report and Recommendation (the “Report”). In agreement with the Magistrate Judge’s findings and conclusions, the court ordered that the Report is to be adopted and the class be certified.

J.C. Penney is a retailer, operating 1,102 department stores in 49 states and Puerto Rico as of January 28, 2012. J.C. Penney’s business consists of selling merchandise and services to consumers through its department stores and through its internet website. J.C. Penney sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora inside J.C. Penney, and home furnishings.

The case alleges that between August 20, 2013 and September 26, 2013, J.C. Penney and certain officers and directors made misstatements and/or omissions regarding the company’s financial position that resulted in artificially inflated stock prices. Plaintiffs allege violations of §10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. After considering defendants’ objection that the Report failed to resolve whether the alleged corrective disclosures were corrective, the court agreed “with the Magistrate Judge’s finding that the Defendants did not meet their burden of production to establish that the opinions in the GS Report had been previously disclosed to the market.” In addressing defendants’ last objection – the contention that the Report erroneously concluded that numerous markets for different J.C. Penney securities (including stock and options) were efficient without analyzing them separately and without considering evidence of market inefficiency – the court concluded that “[f]irst, the Court is not required to focus on the market for each security separately,” and “[s]econd, the opinion of Defendants’ Expert . . . does not establish market inefficiency.”

The court certified a class consisting of: “All persons who, between August 20, 2013 and September 26, 2013 (the ‘Class Period’), purchased or otherwise acquired J.C. Penney Company, Inc. securities, and were damaged thereby. Excluded from the Class are current and former defendants, members of the immediate family of any current or former defendants, directors, officers, subsidiaries and affiliates of J.C. Penney Company, Inc., any person, firm, trust, corporation, officer, director or other individual or entity in which any current or former defendant has a controlling interest, and the legal representatives, affiliates, heirs, successors-in-interest or assigns of any such excluded party.”

In addition, the court appointed the National Shopmen Pension Fund as Class Representative on behalf of the Class and appointed Robbins Geller Rudman & Dowd LLP as Class Counsel.

Robbins Geller attorneys Jonah GoldsteinBobby HensslerDanielle Myers, Hillary Stakem and Rachel Cocalis obtained this result for shareholders.

Marcus v. J.C. Penney Company, Inc., et al., No. 6:13-cv-736, Order Adopting Report and Recommendation of the United States Magistrate Judge (E.D. Tex. Mar. 8, 2017).

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