Sherleigh Associates, LLC v. Windmere-Durable Holdings, Inc.

178 F. Supp. 2d 1255 (2000)

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Sherleigh Associates, LLC v. Windmere-Durable Holdings, Inc.

United States District Court for the Southern District of Florida
178 F. Supp. 2d 1255 (2000)

KL

Facts

Windmere-Durable Holdings, Inc. (Windmere) (defendant) made and sold kitchen appliances and other household items. Windmere acquired some of the assets of Black & Decker, another appliance maker with strong brand recognition, including permission to use Black & Decker’s brand name in North America and Latin America. To help finance the purchase, Windmere offered company stock for sale in a public offering. As part of the offering, Windmere issued a prospectus and held a roadshow, presenting its securities to potential investors. During this process, Windmere represented that it had established a licensing arrangement with Black & Decker through which Windmere would continue to market products in the North American and Latin American markets under the Black & Decker brand and that it expected to see continued growth in those regions. At the time it made those statements, Windmere needed—but did not have—business licenses to operate in those markets under the Black & Decker brand. After Windmere’s purchase of Black & Decker closed, Windmere saw a drop in sales in the North American and Latin American markets. Sherleigh Associates, LLC (Sherleigh) (plaintiff) filed a class action on behalf of itself and other Windmere investors, alleging that Windmere’s failure to disclose that it did not have necessary business licenses to continue Black & Decker’s operations in North America and Latin America amounted to a material omission in violation of the Securities Act of 1933. Windmere filed a motion to dismiss Sherleigh’s complaint.

Rule of Law

Issue

Holding and Reasoning (Lenard, J.)

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