# Edge v. Tupperware Brands Corporation

> District Court, M.D. Florida · September 28, 2023

URL: https://www.frixlaw.com/law-library/cases/10114146

## Case

- **Court:** District Court, M.D. Florida
- **Decided:** September 28, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION

MICHAEL EDGE; MICHAEL J.
DENNEHY; and RALPH ESTEP,

Plaintiffs,

v. Case No. 6:22-cv-1518-RBD-LHP

TUPPERWARE BRANDS
CORPORATION; MIGUEL
FERNANDEZ; and CASSANDRA
HARRIS,

Defendants.
____________________________________

ORDER
Before the Court is Defendants’ motion to dismiss. (Doc. 56 (“Motion”).) The
Motion is due to be denied.
BACKGROUND
In this securities fraud case, Plaintiffs allege that Defendant Tupperware
Brands Corporation (“Tupperware”), via statements made by Defendants Miguel
Fernandez, Tupperware’s Chief Executive Office (“CEO”), and Cassandra Harris,
Tupperware’s former Chief Financial Officer (“CFO”), misrepresented
Tupperware’s profitability, approach to product pricing, and success of the
company’s turnaround plan (“Turnaround Plan”) to investors. (Doc. 44.) Plaintiffs
allege that Defendants knowingly made these misrepresentations, so they sue
Defendants for violating the Exchange Act. (Id. ¶¶ 173–86.) Defendants now move
to dismiss (Doc. 56), and Plaintiffs oppose. (Doc. 59.) The matter is ripe. (Docs. 56,

59, 71.)
STANDARDS
To survive a motion to dismiss, a fraud claim brought under the Securities

and Exchange Act of 1934 must satisfy: (1) the notice pleading requirements in
Federal Rule of Civil Procedure 8(a)(2); (2) the fraud pleading requirements in
Federal Rule of Civil Procedure 9(b); and (3) the additional pleading requirements
in the Private Securities Litigation Reform Act of 1995 (“PSLRA”). See In re Galectin

Therapeutics, Inc. Sec. Litig., 843 F.3d 1257, 1269 (11th Cir. 2016).
First, to satisfy Rule 8(a)(2), a plaintiff must plead “a short and plain
statement of the claim . . . .” Fed. R. Civ. P. 8(a)(2). The factual allegations must

“state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007). The Court must accept the factual allegations as true and
construe them “in the light most favorable” to the plaintiff. See United Techs. Corp.
v. Mazer, 556 F.3d 1260, 1269 (11th Cir. 2009). But this “tenet . . . is inapplicable to

legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). So a pleading that
offers mere “labels and conclusions” is insufficient. Twombly, 550 U.S. at 555.
Second, under Rule 9(b), “[i]n alleging fraud . . . , a party must state with

particularity the circumstances constituting fraud . . . .” Fed. R. Civ. P. 9(b). So a
plaintiff alleging fraud must set forth:
(1) precisely what statements or omissions were made in which documents
or oral representations; (2) the time and place of each such statement and
the person responsible for making (or, in the case of omissions, not making)
them; (3) the content of such statements and the manner in which they
misled the plaintiff, and; (4) what the defendant obtained as a consequence
of the fraud.

Galectin, 843 F.3d at 1269. “Failure to satisfy Rule 9(b) is a ground for dismissal of
a complaint.” Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005).
Third, under the PSLRA, there are other pleading requirements for
securities fraud actions. Galectin, 843 F.3d at 1269. For claims based on allegedly
false or misleading statements or omissions, the PSLRA requires that “the
complaint shall specify each statement alleged to have been misleading[] [and] the
reason or reasons why the statement is misleading . . . .” 15 U.S.C. § 78u-4(b)(1).
The complaint must “state with particularity facts giving rise to a strong inference
that [each] defendant acted with the required state of mind” for each act or
omission. Id. § 78u-4(b)(2)(A). If these requirements are not met, the complaint

must be dismissed. See id. § 78u-4(b)(3)(A).
ANALYSIS
I. Falsity

First, Defendants argue that Plaintiffs’ claims fail because Defendants’
present-tense statements were not false or misleading. (Doc. 56, pp. 13–18.)
To state a claim for securities fraud, a plaintiff must allege: “(1) a material
misrepresentation or omission; (2) made with scienter; (3) a connection with the
purchase or sale of a security; (4) reliance on the misstatement or omission;

(5) economic loss; and (6) a causal connection between the misrepresentation or
omission and the loss, commonly called loss causation.” Carvelli v. Ocwen Fin.
Corp., 934 F.3d 1307, 1317 (11th Cir. 2019) (cleaned up). Defendants only contest

the first two elements, so the Court need not analyze the others. (Doc. 56, pp.
13– 25.) “A plaintiff can satisfy the materiality requirement by demonstrating a
substantial likelihood that a reasonable investor would view the disclosure of the
misrepresented or omitted fact as having significantly altered the total mix of

information made available.” Kinnett v. Strayer Educ., Inc., No. 8:10-cv-2317, 2012
WL 933285, at *6 (M.D. Fla. Jan. 3, 2012), report and recommendation adopted, No.
8:10-cv-2317, 2012 WL 933275 (M.D. Fla. Mar. 20, 2012), aff'd, 501 F. App'x 890 (11th

Cir. 2012).
Plaintiffs allege that Defendants made the following false or misleading
material misrepresentations relating to profitability, product price increases, and

the success of the Turnaround Plan:
• May 5, 2021 Press Release: Harris stated, “Our cash earnings in the first
quarter illustrate the benefits of the ongoing Turnaround Plan, which is
creating a more profitable company.” (Doc. 44, ¶ 84 (cleaned up).)
• May 5, 2021 Earnings Call: Fernandez discussed Tupperware’s profit
margins, stating, “[W]e’re shifting to more profitable sales in this market,
and we will reduce some of the highly promotional programs and improved
distribution costs.” (Id. ¶¶ 86–87 (cleaned up).)
• May 27, 2021 Conference Call: Harris stated that Tupperware’s margin
performance would not suffer as Defendants began rolling out their
omnichannel strategy. (Id. ¶ 90.)
• August 4, 2021 Press Release: Harris represented that Tupperware was
“delivering profit.” (Id. ¶ 93.)
• August 4, 2021 Earnings Call: Harris stated, “Looking forward to the second
half, we do expect higher product costs versus a year ago, primarily as a
result of higher resin and logistics. However, our turnaround plan efforts
will continue to drive efficiencies through the supply chain and when
coupled with the impact of price increases, we believe we can largely
neutralize the overall impacts.” (Id. ¶ 96 (cleaned up).)
• November 3, 2021 Earnings Call: Harris stated, “As we look forward to 2022,
we will look for opportunities to reduce cost, increase efficiencies and
opportunistically raise prices where appropriate.” (Id. ¶ 108 (cleaned up).)
• November 3, 2021 Earnings Call: When questioned by analysts if prices were
increasing to offset margin erosion, Harris stated, “Yes, absolutely. So we
will be looking to take price, and that is part of our plan. We have taken
some pricing. We talked about it in our Q. So we’ve had some opportunistic
pricing this year, especially in more the inflationary markets, that with the
higher cost of resin. And now with less of an ability to help offset that
manufacturing, we will be looking to take further price increases as we go
into next year.” (Id. ¶ 109 (cleaned up).)
• February 23, 2022 Earnings Call: Harris represented that Tupperware
instituted price increases that could address margin erosion, stating: “We
also believe that 2022 will be another tale of 2 halves, the trending opposite
of 2021, with tougher comps in the first half exacerbated by COVID and
persistent cost pressures, followed by relatively easier comps in the second
half. We also expect our pricing actions to catch up with cost increases by
the second half and for results to benefit from business expansion efforts
that began to take root in the latter part of the year.” (Id. ¶ 112 (cleaned up).)
• February 23, 2022 Earnings Call: Harris stated, “I think you asked about
pricing, too. So pricing actions are going to happen in the first half, but the
timing of the new channels and products is as [the CEO] stated.” (Id. ¶ 113
(cleaned up).)
• February 23, 2022 Earnings Call: Fernandez suggested Tupperware had
begun raising prices “effectively” to offset margin erosion, stating, “So
pretty much, it’s across the board. And obviously, we’re going to take
advantage of new products to make sure that we price accordingly. We
literally started pricing in—towards the end of Q4. But absolutely, every
single market is increasing prices effectively in Q1. And there’s a few of
them, very little portion of them in Q2, but in all of them, we’re going at
least with the rate of inflation.” (Id. ¶ 114.)

Here, for each statement, Plaintiffs specifically identify the maker, the time
and place it was made, and why or how it was misleading. (Id. ¶¶ 84–88, 90–91,
93–94, 96–98, 110, 115–16.) So Plaintiffs have satisfied the heightened pleading
requirements of Rule 9(b) and the PSLRA. See Fed. R. Civ. P. 9(b); 15 U.S.C. § 78u-
4(b)(1); Galectin, 843 F.3d at 1269. Further, to explain why each statement was false

or misleading, Plaintiffs rely on later statements made by Defendants and
information from a confidential former Tupperware employee who was the
Demand Planning and Sales & Operations Planning Manager for the United States
and Canada between February 2019 and June 2022. (Doc. 44, ¶¶ 85, 88, 91, 94, 98,

110, 115–16.) Accepting Plaintiff’s factual allegations as true, as the Court must at
this stage, Plaintiffs plausibly allege that Defendants’ statements were false or
misleading; actual falsity is a question for another day. See Edward J. Goodman Life

Income Tr. v. Jabil Circuit, Inc., 594 F.3d 783, 790 (11th Cir. 2010); Theodore v. Purecycle
Techs., Inc., No. 6:21-cv-809, 2022 WL 20157415, at *11 (M.D. Fla. Aug. 4, 2022). So
the Motion is due to be denied on these grounds.
II. Safe Harbor

Next, Defendants argue that the forward-looking statements1 are protected

1 Certain statements, including Harris’ May 27, 2021 statement responding in the
affirmative that Tupperware’s margin performance would not suffer as Defendants began rolling
by the PSLRA’s safe harbor provision because they were accompanied by
meaningful cautionary language, and they were not made with actual knowledge

of falsity. (Doc. 56, pp. 18–25.)
The PSLRA’s safe harbor provision “provides three independent,
alternative means of inoculating forward-looking statements: those that are

(1) accompanied by meaningful cautionary language, (2) immaterial, or (3) made
without actual knowledge of their falsity.” Carvelli, 934 F.3d at 1317.
For meaningful cautionary language, the statute requires the warning only
to mention “important factors that could cause actual results to differ materially

from those in the forward-looking statement.” 15 U.S.C. § 78u-5(c)(1)(A)(i). The
statute does not require “a listing of all factors.” Harris v. Ivax Corp., 182 F.3d 799,
807 (11th Cir. 1999). “Nor [must the warning] specify all factors that could cause

results to differ from a forward-looking statement’s projections.” Mogensen v. Body
Cent. Corp., 15 F. Supp. 3d 1191, 1215 (M.D. Fla. 2014). “Rather, the requirement
that a cautionary statement be meaningful is satisfied when an investor has been

warned of risks of a significance similar to that actually realized, and the

out their omnichannel strategy (Doc. 55, ¶ 90), are present-tense statements that cannot be
afforded a protected forward-looking status. See In re Physician Corp. of Am. Sec. Litig., 50 F. Supp.
2d 1304, 1318 (S.D. Fla. 1999) (“[T]he statutory safe harbor . . . does not protect defendants from
liability based on statements that misrepresent historical/hard or current facts.” (cleaned up));
Schultz v. Applica Inc., 488 F. Supp. 2d 1219, 1229 (S.D. Fla. 2007) (“[T]he safe harbor of the PSLRA
only applies to forward-looking statements and not misstatements or omissions of historical or
contemporaneous facts.”).
cautionary statement is tailored to the risks the business faces.” Id. at 1216 (cleaned
up).

Here, Defendants point to language that they provided at the outset of the
May 5, 2021 call stating that Tupperware would make “forward-looking
statements that are subject to risks and uncertainties described in [Tupperware’s]

press release and in [Tupperware’s] SEC filings.” (Doc. 26, pp. 16–17.) They also
point to language in their press release identifying factors like “the effects of the
outbreak of the novel coronavirus (COVID-19) pandemic,” the success of
[Tupperware’s] efforts to improve its profitability,” “the success and timing of

growth and turnaround initiatives,” “the success of new product introductions
and promotional programs,” and “risks related to accurately predicting,
delivering or maintaining sufficient quantities of products.” (Doc. 56-2.)

Defendants’ 2021 First Quarter form contained similar language, and identified
risks like “the ability to implement appropriate product mix and pricing
strategies” and “changes in plastic resin prices . . . .” (Doc. 56-4, p. 50.) Defendants

made similar statements at the outset of each earning call. (Doc. 56, p. 17.) But
“when a risk has already occurred and corporate officers have become aware of it,
the inclusion of cautionary language that omits mention of the realized risk will
not cure the non-disclosure.” Mogensen, 15 F. Supp. 3d at 1216. Accepting the

factual allegations in Plaintiffs’ amended complaint as true, none of Defendants’
statements disclose to the public that Tupperware allegedly knew it was cutting
prices to move inventory, reducing margins to almost zero, and abandoning the

Turnaround Plan. (Docs. 56, pp. 16–17; 56-4, p. 50; 56, p. 17.) So at this stage, the
Court cannot conclude that the cautionary statements were meaningful so as to
protect the alleged misstatements under the safe harbor.

Defendants argue that the statements were not made with actual knowledge
of falsity. (Doc. 56, pp. 22–24.) Defendants also argue that their statements were
puffery. (Id., pp. 19–20.)
“Even if the forward-looking statement has no cautionary language, the

Plaintiffs must nonetheless prove that the Defendants made the statements with
actual knowledge that they were false or misleading.” Marrari v. Med. Staffing
Network Holdings, Inc., 395 F. Supp. 2d 1169, 1188 (S.D. Fla. 2005) (cleaned up). But

“the safe harbor of the PSLRA only applies to forward-looking statements and not
material omissions or misstatements of historical or contemporaneous facts.” Id.
Actual knowledge can be alleged through reports, conversations, tips, confidential

witnesses that indicate or suggest that Defendants made the statements while
knowing them to be false. See In re KLX, Inc. Sec. Litig., 232 F. Supp. 3d 1269, 1281
(S.D. Fla. 2017).
Here, the non-forward-looking statements cannot be afforded the PSLRA’s

safe harbor protection. See Physician Corp., 50 F. Supp. at 1318 (S.D. Fla. 1999). To
the extent that other statements are forward-looking statements, Plaintiffs’
complaint alleges that Defendants knew their statements were false because

Defendants were aware pricing was not being increased, profitability was
questionable, and that the Turnaround plan was not working. (Doc. 44, ¶¶ 84–88,
90–91, 93–94, 96–98, 110, 115–16.) So the Court finds that Plaintiffs have satisfied

the standard for actual knowledge, which is also supported by CW1’s information.
“[E]xcessively vague, generalized and optimistic comments—the sorts of
statements that constitute puffery—aren't those that a reasonable investor,
exercising due care, would view as moving the investment-decision needle.”

Carvelli, 934 F.3d at 1320 (cleaned up). But “a statement that represents tangible,
verifiable actions taken by a company cannot be considered puffery.” Theodore v.
Purecycle Techs., Inc., No. 6:21-cv-809, 2022 WL 20157415, at *8 (M.D. Fla. Aug. 4,

2022) (cleaned up). So “when considering a motion to dismiss, a court shouldn't
grant unless the alleged misrepresentations—puffery or otherwise—are so
obviously unimportant to a reasonable investor that reasonable minds could not

differ on the question of their importance.” Id.
Here, Defendants’ statements are not mere puffery because the statements
regarding profitability, price increases, and the status of the Turnaround Plan
represent important information to a reasonable investor. Theodore, 2022 WL

2057415, at *8 (“Even if a statement constitutes puffery it doesn't absolve the
reviewing court of the duty to consider the possibility that in context and in light
of the total mix of available information, a reasonable investor might nonetheless

attach importance to the statement.” (cleaned up)).
III. Scienter
Third, Defendants argue that Plaintiffs fail to allege a strong inference of

scienter as to any Defendant. (Doc. 56, pp. 25–30.)
To make out a securities fraud claim, plaintiffs must allege “facts giving rise
to a strong inference that the defendant acted with the required state of mind.”
15 U.S.C. § 78u-4(b)(2). Plaintiffs must allege that “that the defendants either

intended to defraud investors or were severely reckless when they made the
allegedly materially false or incomplete statements.” Mizzaro v. Home Depot, Inc.,
544 F.3d 1230, 1238 (11th Cir. 2008). Severe recklessness is defined as

“misrepresentations that involve not merely simple or even inexcusable
negligence, but an extreme departure from the standards of ordinary care, and that
present a danger of misleading buyers or sellers which is either known to the
defendant or is so obvious that the defendant must have been aware of it.”

McDonald v. Alan Bush Brokerage Co., 863 F.2d 809, 814 (11th Cir. 1989) (cleaned up);
see Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1282 & n.18 (11th Cir. 1999). Courts
may aggregate the alleged facts to infer scienter. See Phillips v. Sci.-Atlanta, Inc.,

374 F.3d 1015, 1017 (11th Cir. 2004).
Here, Plaintiffs allege that Defendants knew or should have known their
statements about pricing, profitability, and the status of the Turnaround Plan were

false or misleading when they were made. (Doc. 44, ¶¶ 85, 88, 91, 94, 98, 110, 115–
16.) “Where a defendant publishes a statement at a time he is in possession of or
has access to facts suggesting that the statement is inaccurate, misleadingly, or

incomplete . . . a classic fact pattern giving rise to a strong inference of scienter
appears.” In re Sensormatic Elecs. Corp. Sec. Litig., No. 018346, 2002 WL 1352427, at
*6 (S.D. Fla. June 10, 2002).
First, Plaintiffs allege facts showing that Defendants were or should have

been knowledgeable on the statements. Plaintiffs allege that Harris and Fernandez
made several public statements on these topics. (Doc. 44, ¶¶ 84–88, 90–91, 93–94,
96–98, 110, 115–16.) Plaintiffs also allege that the Turnaround Plan was a core

operation of the business and so Fernandez and Harris, as senior management,
would have had knowledge on the plan’s goals and status. (Id. ¶¶ 141–45); see
Schultz, 488 F. Supp. 2d at 1226 (inferring strong inference of scienter as to the

company’s CEO regarding misrepresentations related to a product line that
bolstered the company’s financial projections); see also In re Clarus Corp. Sec. Litig.,
201 F. Supp. 2d 1244, 1251 (N.D. Ga. 2002) (inferring strong inference of scienter as
to the company’s corporate officers and insiders where one transaction accounted

for large part of the company’s revenue because “it would be an extreme departure
from the standard of ordinary care for corporate officers and insiders charged with
the control of the corporate information not to be familiar with the nature and

terms of the transaction.”).
Second, Plaintiffs allege that information has emerged that Defendants were
aware or should have known that their statements on pricing, profits, and the

Turnaround Plan were false or misleading. Plaintiffs allege that Fernandez and
Harris made statements that directly contradicted their earlier statements about
pricing, profitability, and the success of the Turnaround Plan. (Doc. 44, ¶¶ 130–
35.) “[I]ncongruity between word and deed establishes a strong inference of

scienter.” In re Citigroup Inc. Sec. Litig., 753 F. Supp. 2d, 206, 238 (S.D.N.Y 2010)
(inferring strong inference of scienter where it was alleged that a company was
internally acting to address certain risks but concurrently the company was

continuing to mislead investors about the significant problems associated with
those risks).
And Plaintiffs allege that information revealed by a former employee in

upper management shows that Defendants had an excess of inventory and aimed
to reduce inventory and overall sales, including at discounted prices, rather than
increased pricing and profits. (Doc. 44, ¶ 60.)
The weight to be afforded to allegations based on statements proffered by
a confidential source depends on the particularity of the allegations made
in each case, and confidentiality is one factor that courts may consider.
Confidentiality, however, should not eviscerate the weight given if the
complaint otherwise fully describes the foundation or basis of the
confidential witness's knowledge, including the position(s) held, the
proximity to the offending conduct, and the relevant time frame.
Mizzaro, 544 F.3d at 1240.
Plaintiffs allege that the confidential witness (“CW1”) was employed at
Tupperware as a Demand Planning and Sales & Operations Planning Manager for
the United States and Canada between February 2019 and June 2022. (Doc. 44,

¶ 24.) Plaintiffs also allege that CW1 attended meetings with Defendant Harris’
direct report where pricing and margins were discussed. (Id. ¶¶ 60–61.) And
Plaintiffs allege that CW1 was responsible for demand planning and determining

how much inventory Tupperware needed to have available to meet Tupperware’s
various forecasted needs. (Id. ¶ 24.) Because Plaintiffs describe CW1 with a large
degree of specificity and allege CW1’s knowledge basis, CW1’s information
should not be discounted. See In re Daou Sys. Inc. Sec. Litig., 411 F.3d 1006 (9th

Cir. 2005).
Finally, Plaintiffs allege the timing of Harris’ demotion and subsequent
termination support an inference of scienter. (Doc. 44, ¶¶ 136–39.) “The departure

of corporate executive defendants is a factor that can strengthen the inference of
scienter.” In re Hertz Glob. Holdings Inc, 905 F.3d 106, 118 (3d Cir. 2018). “For a
resignation to add to an inference of scienter, a pleading must set forth allegations

suggesting a compelling inference that the resignation was the result of something
other than ‘the reasonable assumption that the resignation occurred as a result of’
the release of bad news.” Id. (quoting Zucco Partners, LLC v. Digimarc Corp., 552

F.3d 981, 1002 (9th Cir. 2009)). Plaintiffs allege that Tupperware’s stated reason for
removing Harris from her dual position as CFO/COO to COO to “permit her to
devote more of her attention to operations” was pretextual and was instead a

precursor to her termination. (Doc. 44, ¶¶ 137–38.) But Plaintiffs provide no
plausible facts raising any inference that Harris’ demotion and termination was
for some inculpatory reason.
Personnel changes that are uncharacteristic or accompanied by suspicious

circumstances lead to a strong inference of scienter. See In re WageWorks, Inc., Sec.
Litig., No. 18-CV-01523, 2020 WL 2896547, at *6 (N.D. Cal. June 1, 2020). Plaintiffs
allege that the timing of Harris’ announced position change during the May 4, 2022

earnings call was suspicious. (Id.) The timing aspects of Harris' demotion and later
termination may add some weight to the inference of scienter, but it is not
substantial. See Brophy v. Jianbo Pharms., Inc., 781 F. 3d 1296, 1305 (11th Cir.

2015).
A strong inference of scienter is one that is cogent and at least as compelling
as any opposing inference one could draw from the facts alleged. Tellabs, 551 U.S.
308, 310 (2007). Collectively, Plaintiffs allege sufficient facts to support an inference

of scienter as to each Defendant. So the Motion is due to be denied.
CONCLUSION
Accordingly, it is ORDERED AND ADJUDGED that Defendants’ Motion
(Doc. 56) is DENIED.
DONE AND ORDERED in Chambers in Orlando, Florida, on September
28, 2023.

| ROY B. DALTON, xO
United States District Judge

16

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10114146. Public record. Not legal advice.