Laborers' Local #231 Pension Fund v. Cowan et al
MEMORANDUM Signed by Judge Mark A. Kearney on 3/13/2018. (nmfn)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
LABORERS’ LOCAL #231 PENSION
RORY J. COWAN, et al
: CIVIL ACTION
: NO. 17-478
March 13, 2018
A shareholder challenging proxy disclosures under federal securities law must plead the
specific disclosures violating the securities laws. As recently instructed by our court of appeals,
when the proxy discloses the specific information given to the directors’ financial advisor and
then discloses the financial advisor’s projections as a matter of fact with several disclaimers, a
shareholder cannot transform the securities law mandate of disclosure into challenging whether
the directors should have given more information to the financial advisor. The directors’ proxy
disclosure of the specific information given to the advisor is fact-based. It either happened as
represented or it did not. Today we review a shareholder’s challenge to the directors’ disclosure
of information given to the financial advisor to prepare projections and then copied into a proxy
statement. The shareholder does not challenge other misleading statements in the proxy. With
several disclaimers, the proxy’s representation of giving financial information to the advisor and
then disclosing the advisor’s projections is a true statement.
We decline to transform the
disclosure of the information given to the advisor and the advisor’s resultant projections reported
in the proxy into a fiduciary obligation of disclosing all aspects of the assumptions which
possibly should or could have been given to the advisor particularly with lengthy and specific
disclaimers under the securities law. The disclosures challenged today do not state a federal
securities claim and we grant the motion to dismiss in the accompanying Order.
Facts alleged in the amended complaint.
Lionbridge Technologies, Inc. sells worldwide translation and localization, digital
marketing, global content management, and application testing services.1 For several years,
Lionbridge pursued an acquisition growth strategy as confirmed to investors through media
reports and its annual report to shareholders. 2 For example, in 2015, Lionbridge acquired two
companies touting they “significantly expanded Lionbridge’s capabilities” and would accelerate
its growth.3 In 2016, Lionbridge completed a major reorganization for the purpose of facilitating
its acquisition growth strategy.4 Lionbridge shifted from a “functional organization” divided
between sales, operations, and technology to a “strategic business unit” structure. 5 Lionbridge
Chairman, CEO, and President Rory Cowan explained the reorganization allowed Lionbridge to
more easily “plug in smaller acquisitions” into focused business units and facilitated the
acquisitions’ integration into Lionbridge.6
Mr. Cowan further explained Lionbridge
implemented the reorganization and acquisition strategy in hopes of getting Lionbridge “to the
$1 billion . . . level over the coming years.”7
While pursuing its acquisition strategy, Lionbridge also began reviewing inquiries from
potential acquirers in early 2016.8 Lionbridge’s board elected a special committee of three
independent directors to consider its potential sale, investigate alternatives, negotiate terms with
potential acquirers, and make recommendations regarding the potential transactions.9
HIG Capital LLC expressed interest in acquiring Lionbridge in late 2016.10 HIG wanted
to merge Lionbridge into one of its affiliates. Several potential acquirers, including HIG’s
affiliates, represented they would retain Lionbridge’s existing management team after
completing the proposed merger.11 In December 2016, Lionbridge signed a plan of merger
agreement with HIG affiliates LBT Acquisition, Inc. and LBT Merger Sub, Inc. 12
agreement described HIG’s offer of $5.75 for each Lionbridge share.13
Lionbridge retained Union Square Advisors LLC to opine on the fairness of the proposed
merger with the HIG affiliates.14 Lionbridge gave Union Square its financial forecasts, and to
the extent available, the 2016 and 2017 available financial results. 15 Union Square used this
information to assist in preparing Lionbridge’s financial projections for 2018 through 2020.16
Lionbridge approved Union Square’s use of the 2018 through 2020 projections in analyzing the
We today review a shareholder’s challenge of specific disclosures in the January 31, 2017
definitive proxy statement filed with the Securities and Exchange Commission and sent to
Lionbridge’s shareholders seeking approval of the merger with the HIG affiliate.18 Lionbridge’s
proxy statement included Union Square’s summary chart of the 2016 through 2020 projections.19
Lionbridge told its shareholders it developed the projections “under the assumption of continued
standalone operation as a publicly-traded company and did not give effect to any changes or
expenses as a result of the merger or any effects of the merger.”20 The financial projections
estimated Lionbridge’s revenues would grow from $550 million to $641 million by 2020. 21 The
projections contemplated revenue growth of approximately 3.9% per year for the next several
years.22 Based on the information given to it, Union Square concluded HIG’s $5.75 per share
offer fell within the range of fairness.23 The $5.75 offered share price represented a 3.2%
premium on Lionbridge’s share price immediately before Lionbridge entered into the merger
Following the filing of at least two shareholders’ suits challenging the HIG acquisition25,
a majority of Lionbridge’s shareholders voted in favor of the merger.26
Acquisition, and LBT Merger Sub completed the merger the same day.27
Three days after its shareholders approved the merger and the merger closed, Lionbridge
announced its acquisition of Exequo.28 Lionbridge’s Vice President of Corporate Development
and Investor Relations explained its Exequo acquisition underscored HIG’s support for
Lionbridge’s acquisition growth strategy.29
Pension Fund now sues HIG, LBT Acquisition, LBT Merger Sub, Lionbridge, and
Lionbridge’s board of directors and executives alleging the January 31, 2017 proxy violated the
Securities Exchange Act of 1934 and its implementing regulations. Pension Fund claims the
proxy statement contained materially false and misleading statements and omissions.30 Pension
Fund also claims HIG, its affiliates, and Lionbridge’s board and executives are “controlling
persons” as defined under Section 20(a) of the ’34 Act 31 and should be held liable for the
misleading statements and omissions.
HIG, its affiliates, Lionbridge, and Lionbridge’s board and executives move to dismiss
the amended complaint. They argue the proxy statement did not contain material false or
misleading statements or omissions. They also argue the statements and omissions relate to
forward-looking statements accompanied by cautionary language and are not actionable under
the safe harbor found in the Private Securities Litigation Reform Act32 and the “bespeaks
caution” doctrine. Finally, they argue Pension Fund failed to plead a claim against HIG, LBT
Acquisition, LBT Merger Sub and Lionbridge Senior Vice President Finance and Chief Financial
Officer Marc Litz.
A. Pension Fund fails to plead a misleading or false statement or omission under
Pension Fund alleges specific nondisclosures violate the securities laws. First, Pension
Fund claims the projections table included in the “Projected Financial Information” section of
the proxy statement is materially misleading because the projections did not incorporate
anticipated growth through Lionbridge’s acquisition strategy. Second, Pension Fund claims the
financial projections did not incorporate the financial impact of the Exequo acquisition
completed days after Lionbridge’s merger with LBT Merger Sub. Third, Pension Fund claims
four statements relating to the assumptions underlying the projections are misleading and false,
including the statement the projections “were developed under the assumption of continued
standalone operation as a publicly traded company and did not give effect to any changes or
expenses as a result of the merger or any effects of the merger.” Pension Fund claims the
assumptions are misleading because Lionbridge omitted the fact the financial projections did not
incorporate Lionbridge’s acquisition strategy.
Defendants argue the projections cited by Pension Fund cannot be interpreted as a
statement of fact regarding management’s expectations for the future.
included the projections to provide the voting shareholders with the same projections Lionbridge
management and Union Square used in evaluating the potential merger.
Pension Fund invokes our subject matter jurisdiction and limits its claim based on
specific disclosures which allegedly violate federal securities law. It does not allege breach of
fiduciary duty under Delaware Law. “[T]he fundamental purpose of the Securities Exchange Act
is to implement ‘a philosophy of full disclosure;’ once full and fair disclosure has occurred, the
fairness of the terms of the transaction is beyond the scope of the Act.”33 A breach of fiduciary
duty unaccompanied by misrepresentation, nondisclosure, or deception, does not violate the ’34
Section 14(a) of the ‘34 Act prohibits any person “in contravention of such rules and
regulations as the [Securities and Exchange Commission] may prescribe . . . to solicit or to
permit the use of his name to solicit any proxy or consent or authorization in respect of any
security . . . registered pursuant to section 12.”35 “Section 14(a) seeks to prevent management or
others from obtaining authorization for corporate actions by means of deceptive or inadequate
disclosures in proxy solicitations.”36 Securities and Exchange Commission Rule 14a-9 provides
“[n]o solicitation subject to this regulation shall be made by means of any proxy statement . . .
containing any statement which, at the time and in light of the circumstances under which it is
made, is false or misleading with respect to any material fact, or which omits to state any
material fact necessary in order to make the statements therein not false or misleading . . .”37
“To be actionable under Rule 14a–9, ‘a statement or omission must have been misleading at the
time it was made; liability cannot be imposed on the basis of subsequent events.’” 38 The filer of
a proxy statement is not obligated to predict the future, unless the filer has reason to believe a
future event will occur.39
To plead a Section 14(a) violation, Pension Fund must allege “(1) a proxy statement
contained a material misrepresentation or omission which (2) caused the plaintiff injury and (3)
that the proxy solicitation itself, rather than the particular defect in the solicitation materials, was
an essential link in the accomplishment of the transaction.”40 An omission is material if “there is
a substantial likelihood that a reasonable shareholder would consider it important in deciding
how to vote . . . Put another way, there must be a substantial likelihood that the disclosure of the
omitted fact would have been viewed by the reasonable investor as having significantly altered
the ‘total mix’ of information made available.”41 Scienter is not an element of a Section 14(a)
Our court of appeals instructs us claims sounding in fraud brought under Section 14(a)
are subject to the heightened pleading standards found in the Private Securities Litigation
Reform Act.43 Under the heightened standard, “the complaint shall specify each statement
alleged to have been misleading, the reason or reasons why the statement is misleading, and, if
an allegation regarding the statement or omission is made on information and belief, the
complaint shall state with particularity all facts on which that belief is formed.”44 The Reform
Act is designed to restrict abuses of class action securities litigation.45 The Reform Act mandates
we dismiss a complaint failing to meet the heightened pleading requirements.46
Under the ‘34 Act and Reform Act, we limit our review to the statements alleged to be
false or misleading in Pension Fund amended complaint. We express no opinion on any other
statement in the proxy statement filed by Lionbridge on January 31, 2017. Limiting our analysis
to the Pension Fund’s challenge, we find the specifically challenged statements are not
In OFI Asset Mgmt. v. Cooper Tire & Rubber,47 our court of appeals affirmed the
dismissal of a complaint based on alleged misleading financial projections included in a proxy
statement.48 The plaintiff in OFI Asset alleged the proxy statement contained materially false
and misleading financial projections because the projections did not provide accurate estimates
of the defendant’s future revenue and operating profits.49
The shareholder alleged the
management team created updated financial projections before filing the proxy statement but
only included the older projections.50 The court found the financial projections did not stand
alone as a statement of affirmative fact, rather the defendant accompanied the projections with “a
lengthy and specific disclaimer.”51
The disclaimer stated, “[The] financial projections set forth below are included in this
proxy statement only because this information was provided to the [potential acquirer] . . . in
connection with a potential transaction involving [the defendant] . . . You should not regard the
inclusion of these projections in this proxy statement as an indication that [the defendant], [the
potential acquirer], [or other relevant parties] considered or consider the projections to be
necessarily predictive of actual future events, and you should not rely on the projections as
The disclaimer listed the defendant’s financial advisor as having received the
projections during the negotiation process, as well.53 The financial advisor used the projections
to form a fairness opinion regarding the potential merger.54 The proxy statement also labelled
the projections as “outdated” and explained the defendant did not intend to update the
The court concluded “[t]he projections are plainly not included as statements of fact.
Instead, the only relevant statement of fact is that the projections were, in fact, the projections
that [the defendant] provided to [the potential acquirer] and the financing bank during the
negotiation of the deal.”56 Because the plaintiff did not allege the projections included in the
proxy statement were different from what the defendant provided to the potential acquirer and its
financial advisor, the plaintiff did not plead an actionable false or misleading statement under the
The court also found the projections covered under the Reform Act’s safe harbor for
forward-looking statements.58 The court cited the fact the preamble to the projections identified
them as forward-looking, included a warning describing the projection as “outdated,” and
explained no party involved considered the projections to be “predictive of actual future
As in OFI Asset Mgmt., Lionbridge accompanied its financial projections with “a lengthy
and specific disclaimer.” Close to the disclaimer analyzed in OFI Asset Mgmt., Lionbridge
explained the financial projection “is included solely to give the Lionbridge stockholders access
to certain financial projections that were made available to the Special Committee, our Board of
Directors and Union Square, and is not included in this proxy statement to influence a
Lionbridge stockholder’s decision whether to vote for the merger agreement or for any other
purpose.”60 Lionbridge’s disclaimer further provides, “The inclusion of the selected elements of
the forecasts in the table and accompanying narrative above should not be regarded as an
indication that Lionbridge and/or any of our affiliates, officers, directors, advisors or other
representatives consider the forecasts to be predictive of actual future events, and this
information should not be relied upon as such.”61 The disclaimer also warns shareholders
Lionbridge and its advisors “undertake no obligation to update or otherwise revise or reconcile
the forecasts to reflect the circumstances existing after the dates on which the forecasts were
prepared or to reflect the occurrence of future events, even in the event that any or all of the
assumptions and estimates underlying the forecasts are shown to be in error.”62 The disclaimer
ends with a final instruction, “In light of the foregoing factors and the uncertainties inherent in
the forecasts, Lionbridge stockholders are cautioned not to place undue, if any, reliance on the
Lionbridge included the projections cited by Pension Fund in the proxy statement for the
purpose of providing the voting shareholders with information Lionbridge’s board, special
committee, and financial advisor used to assess the potential merger. Based on the disclaimer
accompanying the projections, the only relevant statement of fact a shareholder may draw from
the inclusion of the projections is Lionbridge provided the same projections to its special
committee of independent directors and to Union Square in assessing the proposed merger with
LBT Merger Sub.
Pension Fund claims the projections are materially misleading because they fail to
incorporate potential growth through Lionbridge’s acquisition strategy. Pension Fund alleges
Lionbridge experienced compound annual revenue growth of 7% from 2011 to 2015. 64 In 2016,
Lionbridge disclosed a preliminary outlook for fiscal year 2017 estimating its year-on-year
revenue growth to be 4%-6%.65 Pension Fund also alleges Lionbridge’s Chairman and CEO
stated his intention to make Lionbridge a $1 billion company in the near future, largely through
acquisitions.66 But the projections included in the proxy statement provided for a compound
annual growth rate of around 3.9%.67 Pension Fund accounts for the reduced growth rate
estimate of 3.9% by alleging Lionbridge failed to incorporate potential growth through
Even assuming Pension Fund alleged sufficient facts to attribute the reduction in
Lionbridge’s growth estimates to its failure to include estimated growth through its acquisition
strategy, Pension Fund does not allege a false or misleading statement based on the projections.
Pension Fund does not allege how the omission of potential growth through an acquisition
strategy is materially misleading or false based on the information reported to Union Square.
Pension Fund does not allege Lionbridge’s board did not provide the projections to its special
committee, or financial advisor. Whether the projection incorporated the acquisition strategy
does not negate Lionbridge’s representation it provided the same projection to others involved in
assessing the merger. The representation in the proxy statement is true. Pension Fund’s claim
the Defendants should have told Union Square more information may have been or could have
been part of the pre-merger Chancery Court litigations, but this “should have disclosed” is not
part of the plead Section 14 claim here.
For the same reason, Pension Fund’s claim fails to the extent it relies on the alleged
exclusion of the Exequo acquisition from the projections. Pension Fund does not allege how this
renders the statement the projections were available to Lionbridge and Union Square in assessing
the merger false or misleading under Section 14(a).68 Because Pension Fund does not allege the
projections included in the proxy statement are not the same projections provided to
Lionbridge’s board and Union Square in assessing the proposed merger, Pension Fund does not
state a claim under 14(a) based on the projections.69
Pension Fund claims the assumptions underlying the projections are false and misleading
because the projections did not incorporate Lionbridge’s acquisition growth strategy. Directed
by our court of appeals in OFI Asset Mgmt, we analyze only the statements alleged to be false
and misleading in Pension Fund’s amended complaint. Pension Fund alleges four statements
relating to the underlying assumptions of the financial projections as false or misleading.
Specifically, Pension Fund cites the Defendants’ statement the projections “were developed
under the assumption of continued standalone operation and did not give effect to any changes or
expenses as a result of the merger or any effects of the merger.”; “The forecasts . . . were based
on numerous variables and assumptions that necessarily involve judgments with respect to,
among other things, future economic, competitive and regulatory conditions and financial market
conditions . . .”; “The forecasts also reflect assumptions as to certain business decisions that are
subject to change . . .”; and finally, “The forecasts also reflect assumptions that are subject to
change and are susceptible to multiple interpretations and periodic revisions based on actual
results, revised prospects for our business, changes in business or economic conditions, or any
other transaction or event that has occurred or that may occur and that was not anticipated when
the forecasts were prepared.”
Pension Fund’s claim fails for the same reason its claim based on the projection numbers
failed. Pension Fund does not identify how these assumptions render the statement of fact the
same projections were provided to Lionbridge’s board and Union Square is materially false or
misleading. Allowing Pension Fund to backdoor a claim based on the projections by alleging
false and misleading assumptions would allow Pension Fund to wholly bypass our court of
appeals’ decision in OFI Asset Mgmt.
Pension Fund’s claim based on the projections’
assumptions is equivalent to its claim based on the numbers. Even assuming it is true the
assumptions do not reflect Lionbridge’s acquisition strategy, it would not negate the
representation by Lionbridge it provided the same projections based on the same purported
assumptions to its board, special committee and financial advisor. Pension Fund does not allege
Lionbridge provided different projections to its board, special committee, or financial advisor.
Based on our liberal reading of Pension Fund’s amended complaint, Lionbridge provided the
same allegedly flawed projections to its board, special committee, and financial advisors as it did
to its shareholders.70 Pension Fund now seeks to hold Lionbridge’s board and others liable for
failing to provide accurate projections. This theory is not viable under our court of appeals’
guidance in OFI Asset Mgmt. If it did, we would be recognizing a claim challenging the board’s
adherence to the fiduciary duties of loyalty, candor and care in the context of a 14(a) claim. We
decline to transform Section 14(a) focusing on disclosure into a second shot at a fiduciary duty
claim for failing to disclose information to the financial advisor.
This may be a claim in
Chancery Court but we do not see a viable claim under Section 14(a) after OFI Asset Mgmt.
Pension Fund fails to allege a false or misleading statement in the proxy statement under Section
B. Pension Fund’s Section 20(a) claim fails because it does not allege an
underlying violation of the ‘34 Act.
Pension Fund claims Lionbridge’s board members and executives and HIG, LBT
Acquisition, and LBT Merger Sub are liable for the alleged false and misleading statements and
omissions as “controlling persons” under Section 20(a). Section 20(a) of the ‘34 Act imposes
liability on every person who controls any person liable under any provision of the ‘34 Act. 71 A
Section 20(a) claim is predicated on an underlying ‘34 Act violation.72 Because we find Pension
Fund does not allege a Section 14(a) violation, Pension Fund Section 20(a) claim fails.73
We dismiss Pension Fund’s Section 14(a) claim for failure to allege a misleading or false
statement or omission in the proxy statement. The challenged statements are true as stated. We
dismiss Pension Fund’s Section 20(a) as Pension Fund fails to plead Defendants violated the ‘34
In the accompanying Order, we grant the Defendants’ motion to dismiss the amended
ECF Doc. No. 13 ¶ 12.
Id. ¶ 54.
Id. ¶ 55.
Id. ¶ 58.
Id. ¶ 38.
Id. ¶ 40.
Id. at ¶ 24.
Id. ¶¶ 42-43.
Id. ¶ 1.
Id. ¶ 65.
Laborers’ Local #231 Pension Fund (“Pension Fund”) owned over 4,000 Lionbridge shares.
Id. ¶ 11.
Id. ¶¶ 65-66.
Id. ¶ 65.
Id. ¶ 67.
Id. ¶ 70.
In evaluating a motion to dismiss, we may consider matters of public record. Buck v. Hampton
Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006).
The public record confirms we are reviewing the third Lionbridge shareholder challenge to the
HIG merger. Lionbridge shareholders, including Pension Fund, sued to enjoin or alter this
merger in the Chancery Court challenging the directors’ disclosures made in the proxy statement
twice before the merger. On January 13, 2017, a Lionbridge shareholder filed a class action
hoping to enjoin the HIG merger claiming a preliminary January 5, 2017 proxy statement
omitted material information including regarding “Lionbridge’s financial projections and the
analyses performed by Lionbridge’s financial advisor… Union Square in support of its so-called
fairness opinion.” Verified Class Action Compl., ¶ 52, Paul Parshall v. Lionbridge Techs., Inc.,
et al., No. 2017-0022 (Jan. 13, 2017).
On February 28, 2017, Pension Fund sued Lionbridge in the Court of Chancery. Verified
Compl. to Compel Books and Records under 8 Del. C. § 220, Laborers’ Local #231 Pension
Fund v. Lionbridge Techs., Inc., No. 2017-151 (Feb. 28, 2017). Pension Fund sought books and
records alleging HIG’s offer of $5.75 per share described in the proxy statement undervalues
Lionbridge and “the opportunity to participate in Lionbridge’s expected long-term growth will be
taken away from them and handed to HIG for what is clearly an unfair price.” Id. ¶ 28.
ECF Doc. No. 13 ¶ 7.
Id. ¶ 74.
15 U.S.C. § 78n(a).
15 U.S.C. § 78t(a).
15 U.S.C. § 78u-5.
Craftmatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 638 (3d Cir. 1989) (citing Santa Fe Indus.,
Inc. v. Green, 430 U.S. 462, 477-78 (1977)).
15 U.S.C. § 78n(a)(1).
Seinfeld v. Becherer, 461 F.3d 365, 369 (3d Cir. 2006) (citing Shaev v. Saper, 320 F.3d 373,
379 (3d Cir. 2003)).
17 C.F.R. § 240.14a-9.
Tracinda Corp. v. Daimler Chrysler AG, 502 F.3d 212, 228 (3d Cir. 2007) (quoting In re
NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1330 (3d Cir.2002)).
In re NAHC, Inc. Sec. Litig., 306 F.3d at 1330 (citation omitted).
Cal. Pub. Emps. Ret. Sys. v. Chubb Corp., 394 F.3d 126, 144 (3d Cir. 2004) (citing Gen. Elec.
Co. v. Cathcart, 980 F.2d 927, 932 (3d Cir. 1992)).
TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976) (footnote omitted); Shaev v.
Saper, 420 F.3d 373, 379 (3d Cir. 2003).
Cal. Pub. Emps. Ret. Sys., 394 F.3d at 143.
Id. at 144; 15 U.S.C. § 78u-4(b)(1). Although Section 14(a) claims only require a showing of
negligence, Pension Fund’s amended complaint sounds in fraud. Pension Fund alleges HIG, its
affiliates, and Lionbridge’s board and executives knowingly provided false and misleading
statements to its shareholders. ECF Doc. No. 13 at ¶¶ 69, 74, 81. Pension Fund alleges
Lionbridge offered these false statements to allow its financial advisor to approve HIG’s offered
per share purchase price and in an effort to induce shareholders to vote in favor of the merger.
Id. ¶¶ 70, 81. Pension Fund alleges Lionbridge’s management team induced its shareholders’
favorable vote because HIG offered the management team continued employment and allowed
Mr. Cowan to rollover a portion of his Lionbridge stock into the surviving company’s stock Id.
¶¶ 46, 51.
15 U.S.C. § 78u-4(b)(1).
OFI Asset Mgmt. v. Cooper Tire & Rubber, 834 F.3d 481, 490 (3d Cir. 2016) (citation
15 U.S.C. § 78u-4(b)(3)(A).
834 F.3d 481 (3d Cir. 2016).
Id. at 505.
Id. at 500.
Id. at 500-01.
Id. at 501.
Id. at 488; OFI Risk Arbitrages v. Cooper Tire & Rubber Co., No. 14-68, 2015 WL 4036179,
at *6 (D. Del. Jul. 1, 2015).
OFI Asset Mgmt., 834 F.3d at 488.
Id. at 501.
Id. Although the court conducted its analysis under Section 10(b) of the ‘34 Act, the court also
found the plaintiff failed to allege a material misrepresentation under Section 14(a) for the same
reasons articulated in its Section 10 analysis. Id. at 505.
Id. at 501 n.21.
Id. at 501.
Lionbridge Techs., Inc., Proxy Statement (Schedule 14A) at 53 (Jan. 31, 2017). (ECF Doc. No.
17-1). Pension Fund did not attach the proxy statement at issue to its amended complaint. But
we may take judicial notice of the January 31, 2017 proxy statement filed publicly with the
Securities and Exchange Commission. In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1331 (3d
Lionbridge Techs., Inc., Proxy Statement (Schedule 14A) at 54 (Jan. 31, 2017). (ECF Doc. No.
Id. The proxy statement also included a section titled “Special Note Regarding ForwardLooking Statements.” Id. at iii. The special note listed potential factors which may influence
Lionbridge’s future financial results. Id. The note stated, “You should not rely on forwardlooking statements because they involve known or unknown risks, uncertainties, and other facts,
some of which are beyond our control. These risks, uncertainties, and other factors may cause
our actual results, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by the forward
looking statements. . . . These forward-looking statements speak only as of the date on which the
statements were made and are not guarantees of future results, levels of activity, performance or
achievements. Except as may be required by applicable law, we do not intend to update and
assume no obligation to update any forward-looking statements. All forward looking statements
in this document and in documents incorporated by reference herein are qualified by this
cautionary statement.” Id.
ECF Doc. No. 13 at ¶ 67.
To the extent Pension Fund claims the proxy statement is generally misleading because
Lionbridge omitted any reference to the Exequo acquisition, Pension Fund’s claim fails. Under
Rule 14a-9 and the Reform Act, Pension Fund must identify the statement which is materially
misleading or false because of the alleged omission. 17 C.F.R. § 240.14a-9; 15 U.S.C. § 78u4(b)(1).
HIG, its affiliates, and Lionbridge’s board and executives also argue the alleged false and
misleading statements and omissions are not actionable under the Reform Act’s safe harbor for
forward looking statements. But unless specifically provided by rule, regulation or order of the
Securities and Exchange Commission, the safe harbor does not apply to forward looking
statements made in connection with a going private transaction. 15 U.S.C. § 78u-5(b)(1)(D).
Neither side addressed this exclusion in their papers. Pension Fund alleged the merger between
Lionbridge and LBT Merger Sub as a “going private buyout” resulting in Lionbridge becoming a
private entity. ECF Doc. No. 13 at ¶ 2. Because Pension Fund does not allege an actionable
statement or omission under Section 14(a), we need not address whether the alleged statements
and omissions are subject to application of the Reform Act’s safe harbor provision or whether
the transaction at issue is a “going private transaction” under the Reform Act.
Allegations of directors and executives providing false information to its financial advisors to
receive a favorable fairness opinion to in turn induce its shareholders’ favorable vote may sound
in breach of fiduciary duty. Pension Fund does not plead a breach of fiduciary duty claim here.
We express no opinion on the merits or possibility of a fiduciary duty claim.
15 U.S.C. § 78t(a).
In re Aetna Sec. Litig., 617 F.3d 272, 285 (3d Cir. 2010).
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