Arconic Inc. recently filed a memorandum of law in support of the courts’ motion to dismiss a complaint by investors that accused Arconic of violating the U.S. federal securities laws.
Investors first filed the complaint in August 2017, a month after a devastating fire ripped through 24-story Grenfell Tower in London killing almost 70 people. The accident allegedly occurred due to the presence of an Arconic-subsidiary’s cladding product Reynobond PE, a brand of aluminum composite material, which was believed to have caused the fire to spread more quickly.
Investors brought the first amended complaint (FAC) to the Western District Court of Pennsylvania only to have it thrown out by the judge this June. In a second amended complaint (SAC), investors argued that Arconic had omitted facts from public representation of the product, knowingly sold the product for unsafe use and neglected a responsibility to disclose alleged misuse of the product.
The defendants’ memorandum refuted the SAC saying they predicted the Plaintiffs’ amendments would be “futile” due to the many “shortcomings” that prompted dismissal of the first complaint.
The Arconic lawyers also criticized the investors’ ability to take the courts’ direction of providing precisely specific new allegations in their amendment.
“Plaintiffs have opted again for length over substance and specificity,” the memorandum ridiculed. “The SAC adds more than 30 pages to what was already a 108-page complaint, but does nothing to cure fundamental deficiencies identified by the Court.”
Furthermore, the defendant refuted the allegations saying there is unsubstantial evidence to prove the points the made in the SAC.
“The SAC still fails to adequately allege that Defendants knew that Arconic allegedly sold Reynobond PE for unsafe use, let alone knew that such alleged sale rendered the Company’s public statements misleading,” the brief says.
Arconic said that the Plaintiffs’ accusation that certain employees of the Arconic indirect-European-subsidiary knew about the allegedly inappropriate sale of the product “does not cure this deficiency.”
It was argued in the brief that whether or not the assertions were true, any argument that Arconic management had knowledge could not be proven therefore, the SAC’s “hindsight-driven claims should be dismissed in full, with prejudice.”
This case officially closed on June 21, 2019 but a stipulation for extension of time to answer and expand page limitations was accepted by the court thus prompting the SAC. No further action has been taken since the memorandum in support of the courts’ motion for dismissal on September 11 was filed.