THE KRAFT HEINZ COMPANY, ) JURY TRIAL DEMANDED BERNARDO HEES, and DAVID H
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UNITED STATES DISTRICT COURT WESTERN DISTRICT OF PENNSYLVANIA ) _______, Individually and On Behalf of All ) Others Similarly Situated, ) Case No. ) Plaintiff, ) ) CLASS ACTION COMPLAINT v. ) ) ) THE KRAFT HEINZ COMPANY, ) JURY TRIAL DEMANDED BERNARDO HEES, and DAVID H. ) KNOPF, ) ) ) Defendants. ) Plaintiff ______ (“Plaintiff”), individually and on behalf of all other persons similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against Defendants, alleges the following based upon personal knowledge as to Plaintiff and Plaintiff’s own acts, and information and belief as to all other matters, based upon, inter alia, the investigation conducted by and through Plaintiff’s attorneys, which included, among other things, a review of the Defendants’ public documents, conference calls and announcements made by Defendants, United States Securities and Exchange Commission (“SEC”) filings, wire and press releases published by and regarding The Kraft Heinz Company (“Kraft Heinz” or the “Company”), analysts’ reports and advisories about the Company, and information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of a class consisting of all persons other than Defendants who purchased or otherwise acquired Kraft Heinz securities between February 16, 2018 and February 21, 2019, both dates inclusive (the “Class Period”), seeking to 1 recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials. 2. Kraft Heinz was founded in 1869 and is headquartered in Pittsburgh, Pennsylvania. Kraft Heinz manufactures and markets food and beverage products in the United States, Canada, Europe, and internationally. The Company was formerly known as H.J. Heinz Holding Corporation and changed its name to The Kraft Heinz Company in July 2015. 3. Kraft Heinz’s products include condiments and sauces, cheese and dairy products, meals, meats, refreshment beverages, coffee, and other grocery products. The Company offers its products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Planters, Maxwell House, Capri Sun, Ore-Ida, Kool-Aid, Jell-O, Cracker Barrel, P'Tit Cheese, Tassimo, Classico, Plasmon, Pudliszki, Honig, HP, Benedicta, ABC, Master, Quero, Golden Circle, Wattie's, Glucon D, and Complan names. It sells its products through its own sales organizations, as well as through independent brokers, agents, and distributors to convenience stores, drug stores, value stores, bakeries, pharmacies, mass merchants, club stores, foodservice distributors and institutions, including hotels, restaurants, hospitals, health care facilities, and certain government agencies, as well as to chain, wholesale, cooperative, and independent grocery accounts. 4. Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Kraft Heinz’s procurement accounting policies were materially deficient, inaccurate, or noncompliant with SEC regulation; (ii) the foregoing conduct placed Kraft Heinz and certain of its employees in greater risk of regulatory investigation, thereby depreciating the Company’s stock value; (iii) Kraft 2 Heinz had in fact received a subpoena from the SEC relating to an investigation into its procurement accounting policies during the Class Period; and (iv) as a result, Kraft Heinz’s public statements were materially false and misleading at all relevant times. 5. On February 21, 2019, post-market, Kraft Heinz reported its financial and operating results for the fourth quarter and full year 2018, including earnings of $0.84 per share on revenue of $6.89 billion. These results fell short of market expectations for earnings of $0.94 per share on revenue of $6.93 billion. Kraft Heinz also cut its quarterly dividend to $0.40 per share and announced receipt of an SEC subpoena in October 2018 associated with an investigation into the Company’s procurement accounting policies. 6. Following these disclosures, Kraft Heinz’s stock price fell sharply during intraday trading on February 22, 2019. 7. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 8. The claims asserted herein arise under and pursuant to §§10(b) and 20(a) of the Exchange Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. §240.10b-5). 9. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§ 1331 and Section 27 of the Exchange Act. 10. Venue is proper in this Judicial District pursuant to §27 of the Exchange Act (15 U.S.C. §78aa) and 28 U.S.C. §1391(b). Defendants conduct business in this District, maintain 3 their principal place of business in this District, and a significant portion of Defendants’ actions and the subsequent damages took place within this District. 11. In connection with the acts alleged in this complaint, Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to, the mails, interstate telephone communications, and the facilities of the national securities markets. PARTIES 12. Plaintiff, as set forth in the attached Certification, acquired Kraft Heinz securities at artificially inflated prices during the Class Period and was damaged upon the revelation of the alleged corrective disclosures. 13. Defendant Kraft Heinz is a Delaware corporation with its principal executive offices located at One PPG Place, Pittsburgh, Pennsylvania 15222. Its common stock trades on The NASDAQ Stock Market LLC (“NASDAQ”) under the ticker symbol “KHC.” 14. Defendant Bernardo Hees (“Hees”) has served as the Company’s Chief Executive Officer (“CEO”) at all relevant times. 15. Defendant David H. Knopf (“Knopf”) has served as the Company’s Chief Financial Officer (“CFO”) at all relevant times. 16. The Defendants referenced above in ¶¶ ____ are sometimes referred to herein as the “Individual Defendants.” 17. The Individual Defendants possessed the power and authority to control the contents of Kraft Heinz’s SEC filings, press releases, and other market communications. The Individual Defendants were provided with copies of the Company’s SEC filings and press releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and 4 opportunity to prevent their issuance or to cause them to be corrected. Because of their positions with the Company, and their access to material information available to them but not to the public, the Individual Defendants knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public, and that the positive representations being made were then materially false and misleading. The Individual Defendants are liable for the false statements and omissions pleaded herein. SUBSTANTIVE ALLEGATIONS Background 18. Kraft Heinz was founded in 1869 and is headquartered in Pittsburgh, Pennsylvania. Kraft Heinz manufactures and markets food and beverage products in the United States, Canada, Europe, and internationally. The Company was formerly known as H.J. Heinz Holding Corporation and changed its name to The Kraft Heinz Company in July 2015. 19. Kraft Heinz’s products include condiments and sauces, cheese and dairy products, meals, meats, refreshment beverages, coffee, and other grocery products. The Company offers its products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Planters, Maxwell House, Capri Sun, Ore-Ida, Kool-Aid, Jell-O, Cracker Barrel, P'Tit Cheese, Tassimo, Classico, Plasmon, Pudliszki, Honig, HP, Benedicta, ABC, Master, Quero, Golden Circle, Wattie's, Glucon D, and Complan names. It sells its products through its own sales organizations, as well as through independent brokers, agents, and distributors to convenience stores, drug stores, value stores, bakeries, pharmacies, mass merchants, club stores, foodservice distributors and institutions, including hotels, restaurants, hospitals, health care facilities, and certain government agencies, as well as to chain, wholesale, cooperative, and independent grocery accounts. Materially False and Misleading Statements Issued During the Class Period 5 20. The statements referenced in ¶¶___ were materially false and misleading because Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Kraft Heinz’s procurement accounting policies were materially deficient, inaccurate, or noncompliant with SEC regulation; (ii) the foregoing conduct placed Kraft Heinz and certain of its employees in greater risk of regulatory investigation, thereby depreciating the Company’s stock value; (iii) Kraft Heinz had in fact received