Pension Fund Group, et al v. Tempur-Pedic International, In, et al

Filing

OPINION: We discern no error in the distrrict court's dismissal of the amended complaint or abuse of discretion in its order denying the pension funds' motion to file a second amended complaint. Amendment was futile because the proposed second amended complaint included the same factual and legal allegations as the first amended complaint, and the district court properly considered the new exhibits appended to the proposed amended complaint when ruling on the motion to dismiss. We AFFIRM, decision not for publication. Damon J. Keith, Circuit Judge; Deborah L. Cook, Authoring Circuit Judge and Bernice Bouie Donald, Circuit Judge.

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 1

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 15a0405n.06
Case No. 14-5696

FILED

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

PENSION FUND GROUP, consisting of
Norfolk County Retirement System, Plymouth
County Retirement System and Oklahoma
Police Pension & Retirement System;
POLICE AND FIRE RETIREMENT
SYSTEM OF THE CITY OF DETROIT,
Plaintiffs-Appellants,
and
ARTHUR BENNING, JR.,
Plaintiff,
v.
TEMPUR-PEDIC INTERNATIONAL, INC.;
MARK A. SARVARY; DALE E.
WILLIAMS,
Defendants-Appellees.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Jun 04, 2015
DEBORAH S. HUNT, Clerk

ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF
KENTUCKY

BEFORE: KEITH, COOK, and DONALD, Circuit Judges.
COOK, Circuit Judge. After posting record sales for five straight quarters, mattress
manufacturer Tempur-Pedic International, Inc.’s business declined in the second quarter of 2012.
Plaintiffs-Appellants—a group of pension funds who purchased Tempur-Pedic stock before the

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 2

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
price-per-share fell nearly seventy-five percent over a seven-week period—filed a consolidated
class-action complaint against Defendants-Appellees Tempur-Pedic, president and chief
executive officer Mark A. Sarvary, and executive vice president and chief financial officer Dale
E. Williams (collectively, “Tempur-Pedic”) on behalf of all investors who purchased TempurPedic common stock between January 25, 2012, and June 5, 2012 (“the Class Period”). The
complaint alleges that Tempur-Pedic misled investors by issuing rosy financial projections and
failing to disclose the company’s deteriorating competitive position.
The district court dismissed the complaint for failure to state a plausible claim of
securities fraud. We AFFIRM.
I.
Tempur-Pedic manufactures and distributes viscoelastic (i.e., memory-foam) mattresses
and pillows. Its primary competitors—Sealy, Serta, and Simmons—historically sold innerspring mattresses, which accounted for the bulk of mattresses sold in the United States.
Tempur-Pedic, in contrast, targets the “specialty premium” market for non-inner-spring
mattresses that retail for at least $1,000.
In April 2011, Serta launched its competing “iComfort” gel-foam mattress line.
According to the complaint, several iComfort mattresses cost less than Tempur-Pedic’s cheapest
model, and Serta’s advertising touted the gel-based iComfort’s technological superiority over
traditional memory-foam mattresses.

The pension funds contend that Tempur-Pedic’s

management grew concerned about Serta’s inroads in the memory-foam market even though
Tempur-Pedic’s sales continued to grow in the aggregate throughout 2011. According to a
former Tempur-Pedic business development manager, sales at his retail accounts declined forty
to sixty percent within a three-month period after retailers began selling the iComfort. He

-2-

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 3

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
provided the pension funds with company emails soliciting weekly sales reports and a document
titled “iComfort Risk Analysis for Mark Meeting Sept 11” that compared Tempur-Pedic’s sales
at certain retailers before and after Serta introduced the iComfort. According to the pension
funds, the “Risk Analysis” document shows that Tempur-Pedic’s year-over-year sales grew by
three percent between April and September 2011 at retailers that carried the iComfort and thirtythree percent at comparable mid-size retailers that did not. The former business development
manager also disclosed that company executives learned at an August 2011 industry conference
that four of the company’s highest-grossing accounts planned to start carrying the iComfort in
January 2012.
Notwithstanding Serta’s inroads, Tempur-Pedic reported a company-record $1.4 billion
in net sales in 2011—a twenty-eight percent increase over 2010. On January 24, 2012, TempurPedic released financial guidance projecting that its annual net sales would grow by about fifteen
percent in 2012 and total between $1.6 and $1.65 billion for the year. By mid-April, the
company appeared to be on track to meet or exceed its projections: net sales for the first quarter
of 2012 surpassed the previous year’s first-quarter sales by eighteen percent. But business
slowed soon thereafter. On June 6, the company revised its full-year guidance downward to
$1.43 billion in projected net sales, explaining in a press release that “[s]ales trends in our North
America business during the second quarter have been disappointing and below plan, primarily
due to changes in the competitive environment, including an unprecedented number of new
competitive product introductions, which have been supported by aggressive marketing and
promotion.” (R. 91-31, June 6, 2012 Form 8-K.)
Tempur-Pedic’s stock price hit a Class Period high of $87.26 per share on April 19, 2012,
before declining precipitously over the next month-and-a-half. The stock price dropped to

-3-

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 4

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
$66.53 on April 20 after the company adhered to its full-year guidance despite its better-thanpredicted first quarter. It fell again to $48.29 per share in early May after Tempur-Pedic issued a
press release announcing a Memorial Day discount on its Cloud Supreme mattress line. Finally,
after the company revised its yearly projections downward on June 6, the stock price hit a Class
Period low of $22.39 per share.
Ultimately, Tempur-Pedic’s 2012 net sales totaled $1.4 billion. According to the pension
funds, those results confirm that the initial projection ($1.6 to $1.65 billion) was “wildly off the
mark and . . . had no reasonable basis in fact.” They maintain that Tempur-Pedic, Sarvary, and
Williams violated Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and
related Securities and Exchange Commission (SEC) Rule 10b-5, 17 C.F.R. § 240.10b-5, by
touting the company’s recent successes and issuing rosy financial projections while failing to
disclose that sales growth slowed at retailers carrying Serta’s iComfort.
Tempur-Pedic, Sarvary, and Williams moved to dismiss the pension funds’ consolidated
amended complaint for failure to state a plausible securities-fraud claim. The pension funds
opposed that motion and sought leave to file a second amended complaint that included two
exhibits referenced in the first amended complaint. The district court granted the motion to
dismiss and denied the motion to amend, finding that none of the challenged statements were
actionable and that amendment would be futile. The pension funds timely appealed.
II.
We review the district court’s decision to dismiss the complaint de novo, “constru[ing]
the complaint in the light most favorable to the plaintiff” and “accept[ing] all well-pleaded
factual allegations as true.” La. Sch. Emps. Ret. Sys. v. Ernst & Young, LLP, 622 F.3d 471, 477
(6th Cir. 2010).

-4-

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 5

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
“To state a securities fraud claim . . . , a plaintiff must allege, in connection with the
purchase or sale of securities, the misstatement or omission of a material fact, made with
scienter, upon which the plaintiff justifiably relied and which proximately caused the plaintiff’s
injury.” Frank v. Dana Corp., 547 F.3d 564, 569 (6th Cir. 2008) (internal quotation marks and
citation omitted). A defendant is liable for omitting a fact only if he had a duty to disclose it.
City of Monroe Emps. Ret. Sys. v. Bridgestone Corp., 399 F.3d 651, 669 (6th Cir. 2005). But a
defendant who speaks voluntarily on a subject when he has no duty to do so “‘assume[s] a duty
to speak fully and truthfully on th[at] subject.’” Helwig v. Vencor, Inc., 251 F.3d 540, 561 (6th
Cir. 2001) (en banc) (first alteration in original) (quoting Rubin v. Schottenstein, Zox & Dunn,
143 F.3d 263, 268 (6th Cir. 1998) (en banc)), overruled on other grounds as recognized in
Ricker v. Zoo Entm’t, Inc., 534 F. App’x 495, 501 n.3 (6th Cir. 2013).
“A misrepresentation or an omission is material only if there is a substantial likelihood
that ‘a reasonable investor would have viewed the misrepresentation or omission as having
significantly altered the total mix of information made available.’” In re Ford Motor Co. Sec.
Litig., 381 F.3d 563, 570 (6th Cir. 2004) (quoting In re Sofamor Danek Grp., Inc., 123 F.3d 394,
400 (6th Cir. 1997)). A court may dismiss a securities-fraud action if the challenged statements
“are so obviously unimportant to a reasonable investor that reasonable minds could not differ on
the question of their unimportance.” Helwig, 251 F.3d at 563 (quoting Ganino v. Citizens Util.
Co., 228 F.3d 154, 162 (2d Cir. 2000)). Applying that standard,
[c]ourts everywhere “have demonstrated a willingness to find immaterial as a
matter of law a certain kind of rosy affirmation commonly heard from corporate
managers and numbingly familiar to the marketplace—loosely optimistic
statements that are so vague, so lacking in specificity, or so clearly constituting
the opinions of the speaker, that no reasonable investor could find them important
to the total mix of information available.”

-5-

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 6

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
Ford, 381 F.3d at 570–71 (quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1217 (1st Cir.
1996)).
The Private Securities Litigation Reform Act of 1995 (PSLRA), Pub. L. 104-67, 109 Stat.
737, created a limited safe harbor for “forward-looking statements.” Helwig, 251 F.3d at 547–
48. Forward-looking statements covered by the Act include projections of revenues, income, and
earnings-per-share; statements concerning a company’s future economic performance; and
statements about the assumptions underlying forward-looking statements. 15 U.S.C. § 78u5(i)(1). Such statements are actionable as securities fraud only if (1) a reasonable investor would
find the statement material, (2) the defendant failed to identify its statement as forward looking
or provide “meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those in the forward-looking statement,” and (3) the
defendant made the statement “with actual knowledge . . . that [it] was false or misleading.” 15
U.S.C. § 78u-5(c)(1); see also Miller v. Champion Enters., Inc., 346 F.3d 660, 672 (6th Cir.
2003).
III.
The pension funds allege that Tempur-Pedic, Williams, and Sarvary made numerous false
and misleading statements during the Class Period. We agree with the district court that none of
the challenged statements or omissions constituted securities fraud.
A. January 24 Press Release
On January 24, 2012, Tempur-Pedic issued a press release announcing the company’s
2011 financial results and issuing financial guidance for the upcoming year. The pension funds
argue that the company’s financial guidance and a statement about “competitiveness” were
materially false or misleading. Both arguments fail. The financial guidance falls within the

-6-

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 7

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
PSLRA safe harbor, and Sarvary’s vague mention of “competitiveness” was immaterial
corporate puffery that no reasonable investor would find important.
1. 2012 Financial Guidance
For the upcoming year, Tempur-Pedic projected between $1.60 and $1.65 billion in net
sales and between $3.80 and $3.95 in earnings-per-diluted-share. Such guidance falls squarely
within the PSLRA’s definition of forward-looking statements. See 15 U.S.C. § 78u-5(i)(1).
The pension funds nevertheless argue that Tempur-Pedic’s 2012 financial guidance was
not, in fact, forward looking because it omitted how Serta had already affected the company’s
sales growth. But they find no support in our precedent for characterizing financial projections
as representations of historical or current fact. Under the PSLRA, we ask if a statement meets
the statutory definition of forward looking; if it does, we look to whether the defendant
meaningfully alerted investors to the risks that might prevent it from reaching its financial
targets. See Miller, 346 F.3d at 672, 678. In other words, we ask if Tempur-Pedic “convey[ed]
substantive information about factors that realistically could cause results to differ materially
from those projected in the forward-looking statements.” Helwig, 251 F.3d at 558–59.
Here, the January 24 press release warned about competitive risks and incorporated
warnings in other SEC filings by reference. The press release identified numerous “risks and
uncertainties that could cause actual results to differ materially” from projected results, including
“industry competition.” (R. 91-14, Jan. 24. 2012 Form 8-K.) The warning referred readers to
the company’s SEC filings, particularly the “Risk Factors” section of the company’s most recent
Form 10-K annual report. That report, released in January 2011, disclosed: “The mattress and
pillow industries are highly competitive. Participants in the mattress and pillow industries have

-7-

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 8

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
traditionally competed based primarily on price.” (R. 91-4, FY 2010 Form 10-K at 4.) It
mentioned Serta specifically:
The standard mattress market in the U.S. is dominated by manufacturers of
innerspring mattresses, with three nationally recognized brand names: Sealy,
Serta and Simmons. These three competitors also offer premium innerspring
mattresses and collectively have a significant share of the premium mattress
market in the U.S. . . . [Many of our] competitors and, in particular, the three
largest brands of innerspring mattresses named above, have significant financial,
marketing and manufacturing resources, strong brand name recognition, and sell
their products through broader and more established distribution channels.
During the past several years, a number of our competitors, including Sealy,
Serta and Simmons, have offered viscoelastic mattress and pillow products.
(Id. at 5 (emphasis added).) The “Risk Factor” section further explained: “[A] number of our
significant competitors offer non-innerspring mattress and viscoelastic pillow products. Any
such competition by established manufacturers or new entrants into the market could have a
material adverse effect on our business, financial condition and operating results by causing our
products to lose market share.” (Id. at 8.)
The press release’s warning about industry competition—which incorporates by
reference the Form 10-K’s more thorough risk disclosures, see Miller, 346 F.3d at 677–78—
adequately disclosed the risk that Tempur-Pedic would fail to sustain its current rate of growth
due to increased competition from Serta for share of the memory-foam market. We found
similar disclosures meaningful in Miller v. Champion Enterprises, Inc., rejecting the argument
that a model-home company should have disclosed its loan to a struggling retailer whose default
might leave it saddled with excess inventory:
The July 8 letter cited Champion’s risk disclosures in its 1998 Form 10-K, which
included a risk related to inventory levels of manufactured housing retailers.
Additionally, the letter itself contained warnings that “housing stocks in general
have underperformed the markets in 1999,” and that “in certain regions we see too
many retail locations, suggesting an over supply of retail inventory of homes in
that region.” Plaintiff argues that Champion should also have disclosed the nature
of their loans to Parker Homes. This goes too far. Champion disclosed the exact
-8-

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 9

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
risk that occurred in this situation: excess retailer inventory that could lead to
negative economic effects on Champion. Champion is not required to detail
every facet or extent of that risk to have adequately disclosed the nature of the
risk.
346 F.3d at 677–78. Similarly, having disclosed the risks posed by competition, Tempur-Pedic
was not required to disclose its internal analyses of how a specific competitor affected sales to
claim safe-harbor protection.
The pension funds’ argument to the contrary finds no support in Helwig v. Vencor, Inc.,
which denied safe-harbor protection to a healthcare provider’s “cursory and abstract” statements
disclaiming any knowledge of how a pending federal law might affect its business. 251 F.3d at
558–59.

Helwig stands for the proposition that a defendant fails to provide meaningful

cautionary language when it refuses to identify or address imminent risks; it does not address the
level of specificity required once a defendant discloses such risks. Id. at 559. Miller, not
Helwig, controls our consideration of Tempur-Pedic’s cautionary language.
Further, Tempur-Pedic’s warning remained meaningful even if sales at certain retailers
grew at a slower rate in the months leading up to the January 24 press release. Although several
district courts have denied safe-harbor protection when defendants’ risk disclosures treat
currently existing conditions as mere possibilities, they have done so only where the warnings
clearly misrepresented facts. See, e.g., In re Compuware Sec. Litig., 301 F. Supp. 2d 672, 685
(E.D. Mich. 2004) (“Defendants’ statement that ‘there can be no assurance that IBM will not
choose to offer significant competing products in the future,’ implied that IBM’s development of
competing software was a possibility as opposed to an actuality, and therefore, this statement
does not qualify as meaningful cautionary language.”). We decline to find Tempur-Pedic’s risk
disclosures inadequate merely because the company’s growth appeared to slow—but not
reverse—due to competition in 2011. Holding otherwise would deny safe-harbor protection any
-9-

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 10

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
time a plaintiff could show that a defendant perceived a general negative trend, even if the trend
had not yet affected its bottom line. Such a rule would undermine the PSLRA’s pro-disclosure
objective. See Helwig, 251 F.3d at 559.
2. Sarvary’s “competitiveness” statement
The January 24 press release also attributed the following comment to Sarvary: “In 2011,
we delivered strong financial performance, strengthened our competitiveness and implemented a
range of strategic growth initiatives.” (R. 91-14, Jan. 24, 2012 Form 8-K.) The pension funds
contend that Sarvary’s statement was false or misleading because he knew that Tempur-Pedic’s
growth slowed at retailers carrying the iComfort. But Sarvary’s unspecific reference to the
company’s “competitiveness” is immaterial as a matter of law: the term is “too squishy, too
untethered to anything measurable, to communicate anything that a reasonable person would
deem important to a securities investment decision.” City of Monroe, 399 F.3d at 671. The
pension funds fail to identify a “standard against which a reasonable investor could expect
[Sarvary’s reference to competitiveness] to be pegged.” Id.
B. January 24 Earnings Call
Williams and Sarvary also discussed the company’s 2011 results and 2012 guidance
during a January 24 “earnings call.” The pension funds challenge several of their statements.
1. Statements about growth and competition
Sarvary and Williams both spoke about the company’s recent successes during the call.
For instance, Sarvary said: “Sales growth [in 2011] was strong, both in the U.S. and overseas,
and we have gained share domestically and around the world.” (R. 91-15, Jan. 24, 2012
Earnings Call Tr. at 4.) Williams informed investors that the company “experienced improving
growth rates by month” during the final quarter of 2011 and that “sales trends through the first

- 10 -

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 11

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
23 days [of the first quarter of 2012] have continued to be strong.” (Id. at 7.) Later, he said:
“We’re very pleased with how the business is performing . . . . Both the international business
and the North American business are performing well but it’s early in the quarter and this can be
a fluctuating industry so we don’t take 23 days lightly but we also don’t project it out forever.”
(Id. at 10.)
Although most of the analysts on the call asked about Tempur-Pedic’s recent
performance and future plans, one asked whether Sarvary and Williams perceived a connection
between competitors’ recent launches and the overall growth in consumer demand for memoryfoam mattresses. (Id. at 14–15.) Sarvary acknowledged that Tempur-Pedic operated in a “tough
market with some very good competitors in it and they will continue to introduce products.”
(Id. at 15.) He attributed both Tempur-Pedic’s recent successes and the increase in memoryfoam sales generally to “customers [who] are increasingly prepared to pay a premium for a
product that will enable them to sleep better.” (Id.)
The pension funds do not contend that Tempur-Pedic misstated its sales figures in 2011
or early 2012. Instead, citing the duty to “provide complete and non-misleading information
with respect to subjects on which [one] undertakes to speak,” Helwig, 251 F.3d at 561, the
pension funds argue that Williams and Sarvary misled investors by speaking about growth and
competition without disclosing how Serta specifically affected Tempur-Pedic’s growth rate.
They also contend that Sarvary’s response to the analyst’s question about competition falsely
implied that Tempur-Pedic maintained a competitive edge over Serta.
But we do not read Helwig to require Williams and Sarvary to disclose that TempurPedic’s sales might have grown more without competition from Serta’s iComfort once they
chose to speak about the company’s recent positive results or competition generally. Holding an

- 11 -

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 12

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
earnings call did not obligate them to disclose all facts contributing to or undermining the
company’s recent successes. “Such a rule would require almost unlimited disclosure on any
conceivable topic related to an issuer’s financial condition whenever an issuer released any kind
of financial data.” Miller, 346 F.3d at 682.
2. Statements forecasting that the current state of affairs would “continue”
The pension funds also challenge Williams’s statement that Tempur-Pedic’s domestic
business “will continue to perform” and Sarvary’s statement that the company would look “to
capitalize on this fundamental trend [of consumers buying specialty mattresses] by continuing to
have products that are both genuinely differentiated and preferred by consumers.” (R. 91-15,
Jan. 24, 2012 Earnings Call Tr. at 9, 15.)
To the extent that Williams and Sarvary’s statements predict that the current state of
affairs will continue into the future, they are protected by the PSLRA safe harbor. See Miller,
346 F.3d at 677. At the beginning of the call, a Tempur-Pedic executive cautioned investors that
any forward-looking statements, including financial projections, fell within the safe harbor,
added that “economic, competitive, operating and other factors” could cause actual results to
differ materially from projected results, and referred investors to the annual Form 10-K report
discussed above. (R. 91-15, Jan. 24, 2012 Earnings Call Tr. at 3.) Those warnings meaningfully
warned investors of the risks of purchasing Tempur-Pedic stock.
Moreover, to the extent that Williams and Sarvary’s statements suggest that TempurPedic was currently “performing” and producing customer-preferred mattresses, such
representations are the kind of “loosely optimistic” statements that we have elsewhere found
immaterial. See City of Monroe, 399 F.3d at 670–72 (finding general claims about quality and

- 12 -

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 13

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
safety immaterial); Ford, 381 F.3d at 570–71 (finding self-praising statements about “quality,
safety, and corporate citizenship” immaterial).
C. January 30 FY 2011 Annual Report (Form 10-K)
On January 30, the company filed its annual Form 10-K for the period ending
December 31, 2011. The pension funds contend that the report contains two false statements.
First, the pension funds challenge the statement: “The TEMPUR-Cloud® collection
continues to be well received by retailers.” (R. 91-8, FY 2011 Form 10-K at 29, 38.) But they
have not alleged facts that would plausibly render the “well received” statement misleading, and
any evidence that four major Tempur-Pedic retailers decided to sell Serta’s iComfort has no
bearing on their attitude toward Tempur-Pedic’s TEMPUR-Cloud® line.
Second, the pension funds suggest that Tempur-Pedic spoke falsely when it claimed to
“provide strong channel profits to our retailers and distributors which management believes will
continue to provide an attractive business model for our retailers and discourage them from
carrying competing lower-priced products.” (Id. at 38.) They argue that the statement, among
others, “drew a false and misleading parallel between their successful results in 2011 and future
results.” As noted above, the word “continue” renders the statement both a representation of
current fact and a forward-looking projection. To the extent that the statement predicted how
retailers might respond to incentives in the future, the pension funds have not argued that
Tempur-Pedic failed to adequately warn investors of the risks underlying its channel-profit
strategy. Further, to the extent the statement represents management’s current opinion, it is
immaterial as a matter of law. The complaint includes no facts that would tend to show that
management either did not believe that strong channel profits could have that effect or lacked a
factual basis for that belief. See Helwig, 251 F.3d at 562 (“‘Material statements which contain

- 13 -

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 14

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
the speaker’s opinion are actionable . . . if the speaker does not believe the opinion and the
opinion is not factually well-grounded.’” (quoting Mayer v. Mylod, 988 F.2d 635, 639 (6th Cir.
1993))).
D. February 22 Webcast
During Tempur-Pedic’s “Investor Day” webcast in mid-February, Sarvary allegedly
referred to Tempur-Pedic’s “consumer preferred” product line. (R. 87, Am. Compl. at ¶ 114.)
That statement is immaterial puffery. As we have noted elsewhere, “[a]ll public companies
praise their products,” and Sarvary’s statement that the company sells a “consumer preferred”
product is the sort of “rosy affirmation commonly heard from corporate managers” that we hold
immaterial as a matter of law. Ford, 381 F.3d at 570–71.
During the same webcast, Sarvary allegedly said that the company had grown and
continued to grow, and added that there were “a variety of reasons why we’re very confident [in
projections of continued] growth.” (R. 87, Am. Compl. at ¶ 114.) The pension funds allege no
facts tending to show that the company lacked confidence in continued growth as of February 22
or had no reasonable basis for that confidence. See Helwig, 251 F.3d at 562. According to their
complaint, Tempur-Pedic’s internal data showed that its growth slowed at retailers carrying the
iComfort, not that it stopped or reversed course.
E. March 5 Presentation
Williams continued to tout Tempur-Pedic’s successes during the company’s presentation
at the Raymond James Institutional Investors Conference on March 5, 2012.

He told

participants: “2011 [was] another great year for the company . . . just a phenomenal year for the
company, very pleased with the performance, and we look for that kind of growth opportunity to
continue into the long-term in the future.” (R. 91-17, Mar. 5, 2012 Conf. Tr. at 3.)

- 14 -

Later he

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 15

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
said: “2011 was a record year on every measure of the business. And we are looking for
continued growth.” (Id. at 5.) With respect to future growth, he advised, “We continue to see
. . . a long runway of opportunity, to continue to improve gross margins in the business.” (Id.)
The pension funds contend that Williams misled investors by linking the company’s
recent successes to its future prospects. But his statements concerning expected future growth
are forward looking and were accompanied by meaningful cautionary language that insulated
them from liability. Although the company did not issue a formal warning about forwardlooking statements, Williams began his presentation by saying: “As usual—we may say
something today that’s forward-looking, so it’s under the safe harbor provisions.” (Id. at 2.) He
described his comments as a “very condensed version” of the Investor Day webcast and referred
participants to the full presentation on the company’s website, which warned about industry
competition and referred to the more thorough disclosures in the company’s SEC filings.
F. April 19 Press Release
On April 19, Tempur-Pedic issued a press release announcing better-than-expected firstquarter results and reaffirming its financial guidance for the full year. The pension funds
contend that the reaffirmed guidance falls outside the safe harbor because Tempur-Pedic failed to
adequately amend its cautionary language as the threat posed by Serta increased. We have never
held that a company’s repeated use of similarly worded warnings renders them meaningless.
Further, Tempur-Pedic updated its warning in its 2011 Form 10-K to disclose that “[d]uring the
past several years, a number of our competitors, including Sealy, Serta and Simmons, have
offered viscoelastic mattress and pillow products, including several new prominent product
introductions in 2011.” (R. 91-8, FY 2011 Form 10-K at 5 (emphasis added).) That new

- 15 -

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 16

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
language adequately warned investors of the risks posed by Serta’s launch of the iComfort in
April 2011.
G. April 19 Earnings Call
Shortly after the company issued the press release reaffirming its full-year guidance,
Sarvary and Williams answered several questions about competition during an earnings call with
industry analysts. Sarvary acknowledged from the outset that the company faced “significant
new competitive launches and aggressive price promotion in the industry[] as it has moved
increasingly toward non-spring mattresses.” (R. 91-20, Apr. 19, 2012 Earnings Call Tr. at 4.)
One analyst asked whether increased competition influenced the decision to adhere to
their original guidance after a better-than-expected first quarter:
I think you’ve had some branded competition in this space for almost a year now.
Is there something that’s changed in the landscape in the last three months or so?
Is the competition getting more price-competitive? Have there been new entrants
in the last three months? Or, has something changed recently that’s caused you to
tone down your comments today?
(Id. at 10.) Sarvary responded that “there’s been competition forever, and the competition,
we’ve always said, is very strong,” and suggested that the company’s competitors were “very
promotional and very focused on price.” (Id.)
Another analyst pressed Williams and Sarvary to address whether they thought the
growing demand for specialty mattresses reflected a “different approach that’s being taken by
some of your competitors.” (Id. at 12–13.) Sarvary replied that the trend “provides us an
opportunity” and “it’s happening something like we expected.” (Id. at 13.)
Relying on Helwig, the pension funds argue that Williams and Sarvary incurred a duty to
disclose Serta’s adverse effect on Tempur-Pedic’s sales when they chose to speak about
competition on April 19. But they fail to explain how statements acknowledging “significant

- 16 -

Case: 14-5696

Document: 42-2

Filed: 06/04/2015

Page: 17

Case No. 14-5696
Pension Fund Grp. et al. v. Tempur-Pedic Int’l, Inc. et al.
new competitive launches” and “strong competition” required them to also disclose Serta’s
specific effects on their business. Helwig requires defendants to disclose information “essential
to complete a picture they had only partially revealed.” 251 F.3d at 560. Here, Williams and
Sarvary spoke fully when they acknowledged increased competition; they were not required to
mention specific competitors to avoid misleading investors.
IV.
We discern no error in the district court’s dismissal of the amended complaint or abuse of
discretion in its order denying the pension funds’ motion to file a second amended complaint.
Amendment was futile because the proposed second amended complaint included the same
factual and legal allegations as the first amended complaint, and the district court properly
considered the new exhibits appended to the proposed amended complaint when ruling on the
motion to dismiss. We AFFIRM.

- 17 -