Charles Paddock, Et Al. V. Dreamworks Animation SKG, Inc
Total Page：16
File Type：pdf, Size：1020Kb
Case 2:14-cv-06053-SJO-E Document 1 Filed 08/01/14 Page 1 of 24 Page ID #:1 1 LIONEL Z. GLANCY (#134180) MICHAEL GOLDBERG (#188669) 2 ROBERT V. PRONGAY (#270796) 3 GLANCY BINKOW & GOLDBERG LLP 4 1925 Century Park East, Suite 2100 Los Angeles, California 90067 5 Telephone: (310) 201-9150 6 Facsimile: (310) 201-9160 E-mail: [email protected] 7 [email protected] 8 [email protected] [email protected] 9 10 Attorneys for Plaintiff Charles Paddock 11 [Additional counsel on signature page] 12 13 UNITED STATES DISTRICT COURT 14 CENTRAL DISTRICT OF CALIFORNIA : 15 CHARLES PADDOCK, Individually Case No.: and on Behalf of All Others Similarly : 16 : Situated, : CLASS ACTION 17 Plaintiff, : COMPLAINT FOR 18 : VIOLATIONS OF THE v. : FEDERAL SECURITIES 19 : : LAWS 20 DREAMWORKS ANIMATION SKG, INC., JEFFREY KATZENBERG, and : DEMAND FOR JURY TRIAL 21 : LEWIS W. COLEMAN : Defendants. 22 : : 23 24 25 26 27 28 CLASS ACTION COMPLAINT Case 2:14-cv-06053-SJO-E Document 1 Filed 08/01/14 Page 2 of 24 Page ID #:2 1 Plaintiff Charles Paddock (“Plaintiff”), individually and on behalf of all other 2 persons similarly situated, by his undersigned attorneys, for his complaint against 3 defendants, alleges the following based upon personal knowledge as to himself and his 4 own acts, and information and belief as to all other matters, based upon, inter alia, the 5 6 investigation conducted by and through his attorneys, which included, among other 7 things, a review of the defendants’ public documents, conference calls and 8 announcements made by defendants, United States Securities and Exchange 9 Commission (“SEC”) filings, wire and press releases published by and regarding 10 DreamWorks Animation SKG, Inc., (“DreamWorks” or the “Company”), analysts’ 11 12 reports and advisories about the Company, and information readily obtainable on the 13 Internet. Plaintiff believes that substantial evidentiary support will exist for the 14 allegations set forth herein after a reasonable opportunity for discovery. 15 NATURE OF THE ACTION 16 17 1. This is a federal securities class action brought on behalf of a class 18 I consisting of all persons and entities, other than Defendants (defined below) and their 19 affiliates, who purchased or otherwise acquired the securities of DreamWorks from 20 October 29, 2013 to July 29, 2014, inclusive (the “Class Period”). Plaintiff seeks to 21 pursue remedies against DreamWorks and certain of its officers and directors for 22 23 violations of the federal securities laws under the Securities Exchange Act of 1934 (the 24 “Exchange Act”). 25 2. Defendant DreamWorks Animation SKG, Inc. is a Delaware corporation 26 engaged in the development, production, and exploitation of animated films and their 27 associated characters worldwide. The Company was founded in 1985 and is 28 CLASS ACTION COMPLAINT 1 Case 2:14-cv-06053-SJO-E Document 1 Filed 08/01/14 Page 3 of 24 Page ID #:3 1 headquartered in Glendale, California. Shares of DreamWorks trade on the NASDAQ 2 Exchange under the ticker symbol “DWA”. 3 3. In the summer of 2013, the Company released “Turbo,” an animated film 4 about a snail given super-speed powers. The film, which cost $135 million, grossed 5 6 only $83 million at the domestic box office when it was released in July 2013, and just 7 $282.6 million worldwide, a massive disappointment for the Company. However, it 8 was not until February 2013 before the Company announced a $13.5 million write- 9 down for the Turbo movie. 10 4. The Turbo write-down is one of three recent write-downs at the Company; 11 12 I the others were announced after the disappointing returns on the films “Rise of the 13 Guardians” and “Mr. Peabody & Sherman.” 14 5. Throughout the Class Period, Defendants made false and/or misleading 15 statements, and failed to disclose material adverse facts about the Company’s business, 16 17 operations, prospects and performance. Specifically, during the Class Period, 18 Defendants made false and/or misleading statements and/or failed to disclose that: (i) 19 DreamWorks failed to take a write-down for its Turbo movie in a timely fashion; (ii) as 20 a result, the Company’s net income for the fiscal year of 2013 was materially 21 overstated; (iii) the Company lacked adequate internal and control over financial 22 23 reporting; and (iii) as a result of the above, the Company’s financial statements were 24 materially false and misleading at all relevant times. 25 6. On July 29, 2014, during a conference call with analysts, DreamWorks 26 Animation revealed that the Company is under investigation by the Securities and 27 Exchange Commission for the $13.5 million write-down the studio took in February in 28 CLASS ACTION COMPLAINT 2 Case 2:14-cv-06053-SJO-E Document 1 Filed 08/01/14 Page 4 of 24 Page ID #:4 1 I relation to the poor performance of Turbo. The Company indicated that it is cooperating 2 with the SEC but would not elaborate on the scope of the extent of the investigation. 3 7. On the news, shares in DreamWorks fell $2.68 or almost 12%, on 4 extremely heavy trading volume, to close at $19.98 on July 30, 2014. 5 6 8. As a result of Defendants’ wrongful acts and omissions, and the precipitous 7 decline in the market value of the Company’s securities, Plaintiff and other Class 8 members have suffered significant losses and damages. 9 JURISDICTION AND VENUE 10 The claims asserted herein arise under and pursuant to §§10(b) and 20(a) of 11 9. 12 I the Exchange Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated 13 thereunder by the SEC (17 C.F.R. §240.10b-5). 14 10. This Court has jurisdiction over the subject matter of this action under 28 15 U.S.C. §1331 and §27 of the Exchange Act. 16 17 11. Venue is proper in this District pursuant to §27 of the Exchange Act (15 18 U.S.C. §78aa) and 28 U.S.C. §1391(b) as a significant portion of the Defendants’ 19 actions, and the subsequent damages, took place within this District. 20 12. In connection with the acts, conduct and other wrongs alleged in this 21 Complaint, Defendants, directly or indirectly, used the means and instrumentalities of 22 23 interstate commerce, including but not limited to, the United States mail, interstate 24 telephone communications and the facilities of the national securities exchange. 25 PARTIES 26 13. Plaintiff, as set forth in the accompanying Certification, which is 27 incorporated by reference herein, purchased the securities of DreamWorks at artificially 28 CLASS ACTION COMPLAINT 3 Case 2:14-cv-06053-SJO-E Document 1 Filed 08/01/14 Page 5 of 24 Page ID #:5 1 inflated prices during the Class Period and was damaged upon the revelation of the 2 alleged corrective disclosures. 3 14. Defendant DreamWorks is a Delaware company headquartered and 4 operating in the Campanile Building at 1000 Flower Street, Glendale, CA 91201. At all 5 6 relevant times herein shares of DreamWorks were listed on the NASDAQ under the 7 ticker symbol DWA. 8 15. Defendant Jeffrey Katzenberg (“Katzenberg”) is, and at all relevant times 9 was, the Company’s Chief Executive Officer and a Director. 10 16. Defendant Lewis W. Coleman (“Coleman”) is, and at all relevant times 11 12 was, the Company’s Vice Chairman and Chief Financial Officer. Effective June 13, 13 2014, Coleman assumed the role of Chief Accounting Officer (“COA”) after the 14 Company’s previous COA abruptly announced her resignation on May 19, 2014. 15 17. Defendants referenced above in ¶¶ 15 and 16 are sometimes referred to 16 17 herein, collectively, as the “Individual Defendants.” 18 18. DreamWorks and the Individual Defendants are referred to herein, 19 collectively, as the “Defendants.” 20 SUBSTANTIVE ALLEGATIONS 21 Background 22 23 19. DreamWorks Animation SKG, Inc. is engaged in the development, 24 I production, and exploitation of animated films and their associated characters 25 worldwide. The Company operates through four segments: Feature Films, Television, 26 Consumer Products, and Others. It creates and exploits family entertainment, including 27 animated feature films, television series and specials, live entertainment properties, and 28 related consumer products, as well as licenses distribution rights. The Company offers CLASS ACTION COMPLAINT 4 Case 2:14-cv-06053-SJO-E Document 1 Filed 08/01/14 Page 6 of 24 Page ID #:6 1 animated feature films and characters primarily in theatrical, home entertainment, 2 digital, television, merchandising and licensing, and other markets. 3 20. DreamWorks also licenses its characters, film elements, and other 4 intellectual property rights to consumer product companies, retailers, live entertainment 5 6 companies, music publishers, theme parks, cruise ships, and hotels. It has strategic 7 I alliances with McDonald’s, Hewlett-Packard, and Intel. 8 21. DreamWorks was founded in 1985 and is headquartered in Glendale, 9 California. DreamWorks is incorporated in Delaware and its shares trade on the 10 NASDAQ exchange under the ticker symbol DWA. 11 12 22. In the summer of 2013, the Company released “Turbo,” an animated film 13 about a snail given super-speed powers. The $135 million film grossed only $83 14 million at the domestic box office when it was released in July 2013, and just $282.6 15 million worldwide, a disappointment for the Company that prompted the belated $13.5 16 17 million write-down announced in February 2013. 18 23. The Turbo write-down is one of three recent write-downs at the Company; 19 the others were announced after the disappointing returns on the films “Rise of the 20 Guardians” and “Mr.