United States District Court, W.D. Washington, Seattle
MAEVE INVESTMENT COMPANY LTD. PARTNERSHIP, Plaintiff,
TEEKAY CORP., et al., Defendants.
ORDER ON MOTION TO DISMISS AMENDED COMPLAINT
J. PECHMAN UNITED STATES DISTRICT JUDGE
above-entitled Court, having received and reviewed:
1. Defendants' Motion to Dismiss Amended Class Action
Complaint (Dkt. No. 75);
2. Defendants' Request for Judicial Notice (Dkt. No. 77);
3. Plaintiff's Opposition to Defendants' Motion to
Dismiss Amended Class Action Complaint (Dkt. No. 80);
4. Defendants' Reply in Support of Motion to Dismiss
Amended Class Action Complaint (Dkt. No. 84);
attached declarations, exhibits, and relevant portions of the
court records; and having heard oral argument, rules as
IT IS ORDERED that the request for judicial notice is
IT IS FURTHER ORDERED that the motion to dismiss is GRANTED;
the amended complaint is DISMISSED with prejudice.
Teekay Corporation (“Teekay”) is a provider of
international crude oil and gas marine transportation
services (¶ 2) whose primary assets are two
“daughter companies:” Teekay LNG Partners L.P.
(“TGP”) and Teekay Offshore Partners L.P.
(“TOO”). ¶¶ 61-62. Teekay, as the
general partner in the daughter companies, receives cash
distributions from them which it passes on to shareholders as
dividend payments. ¶¶ 2, 29, 33, 61-62.
daughter companies have three means of financing capital
projects: (1) issuing equity, (2) borrowing from
institutions, or (3) utilizing the cash generated by their
own operations. ¶ 52. At the outset of the class period
in this litigation (February 2015), Teekay identified a
backlog of approximately $7 billion in vessel construction
and other capital projects. ¶ 83.
September 2014, Teekay announced the approval of a new
dividend policy whereby it planned to increase its annualized
cash dividend by approximately 75 to 80 percent above its
current rate (¶ 75), and that it expected to further
increase its dividend payment by “approximately 20% per
annum for the next three years.” ¶¶ 76-77. It
reiterated that intention in February of 2015, stating that
it would implement that plan following the sale of a floating
platform to TOO, and anticipated future dividend increases.
30, 2015, Teekay declared a quarterly cash dividend which
reflected the increase it had previously announced, payable
on July 31, 2015. ¶¶ 87-88, 117. The company's
second quarter earnings announcement on August 6, 2015 stated
its target to further increase the dividend, and that
intention was repeated on the investors' call the next
day. ¶ 89. It was noted that funding on the daughter
companies' capital projects was not yet complete, that
some equity would have to be raised to that end, and that
“the majority of the remaining capital expenditure is
able to be funded with attractively-priced debt
financing.” ¶ 94.
November 2015, Teekay announced the third quarter financial
results, which were then discussed in an investors' call.
¶¶ 132-135. Despite the fact that the value of TGP
and TOO shares had been declining steadily since late 2014,
on November 15 and 18, 2015 Teekay stated that it was
“targeting” future dividend increases over the
next three years. ¶¶ 134, 138.
on December 16, 2015, Teekay announced that it would reduce
its quarterly dividend beginning in the fourth quarter of
2015. ¶ 101. On the investors' call the following
day, the company advised that TGP and TOO “require[d]
capital to fund their growth” and therefore Teekay
intended to “reallocate [the daughter companies'
cash distributions] to pay equity installments on committed
growth projects.” ¶ 103. Teekay's share price
plummeted 58% that day. ¶¶ 109, 149.
have filed a class action lawsuit against Defendants,
asserting a fraud claim under § 10(b) of the Securities
Exchange Act of 1934 (“SEA”), 15 U.S.C. §
78j(b) (“§ 10(b)”) and Securities and
Exchange Rule 10b-5, 17 C.F.R. § 240.10b-5 (“Rule
10b-5”), as well as a claim for ...