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Lululemon lawsuits: Too big of a 'stretch,' says judge

Lululemon lawsuits: A federal judge dismissed the lawsuits that claimed management concealed defects in Lululemon yoga pants. Black Luon yoga pants were too sheer and prompted a March 2013 recall.

  • By Nate Raymond and Jonathan Stempel Reuters

| New York

A U.S. judge has issued final dismissals of lawsuits accusing Lululemon Athletica Inc and various company officials of defrauding shareholders by concealing defects in yoga pants.

U.S. District Judge Katherine Forrest in Manhattan had on April 4 issued "draft" decisions dismissing a shareholder lawsuit against Lululemon, and two lawsuits accusing 11 executives and directors of missing red flags about poor quality control.

The judge issued a final, longer ruling dismissing the proposed shareholder class action on Friday, after having done the same in the other two lawsuits last week.
Shareholders accused Lululemon of failing to disclose how its black Luon yoga pants were too sheer, culminating in an expensive March 2013 recall.

They also accused the Vancouver, British Columbia-based company of overstating its ability to ensure good quality control and of concealing plans to replace its since departed chief executive, Christine Day.

But Forrest wrote on Friday that the plaintiffs' "narrative requires the court to stretch allegations of, at most, corporate mismanagement into actionable federal securities fraud."

"This is not the law," she added.

The lawsuits had sought damages for an estimated $2 billion decline in Lululemon's market value. Lululemon has denied wrongdoing.

A lawyer for the plaintiffs and representatives for Lululemon did not immediately respond to requests for comment.

The cases are in the U.S. District Court, Southern District of New York. They are In re: Lululemon Securities Litigation, No. 13-04596; Canty v. Day et al, No. 13-05629; and Federman v. Day et al, No. 13-05977. (Reporting by Jonathan Stempel in New York; Editing by Jonathan Oatis)

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