Walleye Trading LLC v. AbbVie, Inc.

          ORDER

          CHARLES P. KOCORAS, UNITED STATES DISTRICT JUDGE

         Before the Court are AbbVie, Inc., and William J. Chase’s (collectively, “Defendants”) on a motion to dismiss Plaintiff Walleye Trading LLC’s (“Walleye”) First Amended Class Action Complaint under Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court grants the motion.

         STATEMENT

         For purposes of this motion, the Court accepts as true the following facts from the amended complaint. Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). All reasonable inferences are drawn in Walleye’s favor. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).

         AbbVie conducted a modified Dutch Auction (“Auction”) to repurchase $7.5 billion of its common stock.^[1] It set a tender range between $99-$114 per share (in $1.00 increments). AbbVie engaged Computershare as the depositary to facilitate the Auction.^[2] Computershare and AbbVie communicated daily regarding the tender process.

         The Auction began on May 1, 2018 and continued until midnight on May 29, 2018. At 8 a.m. EST on May 30, 2018, AbbVie issued a SCHEDULE TO (Amendment No. 7) Tender Offer Statement announcing the Auction’s preliminary results. As relevant, the accompanying press release stated:

NORTH CHICAGO, Ill., May 30, 2018 /PRNewswire/-AbbVie (NYSE: ABBV) today announced the preliminary results of its modified Dutch Auction tender offer, which expired at 12:00 midnight, New York City time, at the end of May 29, 2018. Based on the preliminary count by Computershare Trust Company, N.A., the depositary for the tender offer, a total of 75, 743, 313 shares of AbbVie’s common stock, $0.01 par value per share, were properly tendered and not properly withdrawn at or below the purchase price of $105 per share, including 49, 129, 844 shares that were tendered by notice of guaranteed delivery. AbbVie has been informed by the depositary that the preliminary proration factor for the tender offer is approximately 94.3 percent. In accordance with the terms and conditions of the tender offer, and based on the preliminary count by the depositary, AbbVie expects to acquire approximately 71.4 million shares of its common stock at a price of $105 per share, for an aggregate cost of approximately $7.5 billion, excluding fees and expenses relating to the tender offer. These shares represent approximately 4.5 percent of the shares outstanding. . . .

         Once AbbVie announced that its purchase price would be $105, its stock rose 3.5% from its May 29, 2018 closing price of $99.47, closing at $103.01 on May 30, 2018, with a trading volume of more than 31 million shares.

         Forty-six minutes after the market closed on May 30, AbbVie filed a Corrected SCHEDULE TO Tender Offer Statement. The accompanying press release stated:

NORTH CHICAGO, Ill., May 30, 2018 /PRNewswire/–AbbVie (NYSE: ABBV) today announced the preliminary results of its modified Dutch Auction tender offer, which expired at 12:00 midnight, New York City time, at the end of May 29, 2018. This update replaces the preliminary results announced at 8:00 a.m., New York City time, on May 30, 2018. This update reflects additional shares that were validly tendered by notice of guaranteed delivery, but that were erroneously omitted from the initial preliminary results provided to AbbVie by Computershare Trust Company, N.A., the depositary for the tender offer. Final results of the tender offer will be issued no later than June 4, 2018 following the expiration of the notice of guaranteed delivery period. Based on the updated preliminary count by Computershare Trust Company, N.A., the depositary for the tender offer, a total of 74, 033, 457 shares of AbbVie’s common stock, $0.01 par value per share, were properly tendered and not properly withdrawn at or below the purchase price of $103 per share, including 52, 915, 569 shares that were tendered by notice of guaranteed delivery. AbbVie has been informed by the depositary that the preliminary proration factor for the tender offer is approximately 98.4 percent. In accordance with the terms and conditions of the tender offer, and based on the preliminary count by the depositary, AbbVie expects to acquire approximately 72.8 million shares of its common stock at a price of $103 per share, for an aggregate cost of approximately $7.5 billion, excluding fees and expenses relating to the tender offer. These shares represent approximately 4.6 percent of the shares outstanding. . . .

         In sum, the updated press release showed that AbbVie’s initial statement failed to account for approximately 5, 495, 581 shares, of which 3, 785, 725 were tendered by guaranteed delivery, which led AbbVie to lower its purchase price from $105 to $103. The next trading day, AbbVie stock traded down sharply and closed at $98.94.

         Walleye brings this action under Federal Rules of Civil Procedure 23(a) and (b)(3) on behalf of all those who bought, or otherwise transacted in AbbVie securities between 9:30 a.m. and 4 p.m. EST on May 30, 2018 and were damaged thereby. Walleye alleges three claims under the Exchange Act: Count I alleges Defendants violated Section 14(e) of the Exchange Act, 15 U.S.C. § 78n(e); Count II alleges that Defendants violated Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule10b-5; and Count III alleges that Defendant William Chase (AbbVie’s CFO) violated Section 20(a) of the Exchange Act. Defendants have moved to dismiss the First Amended Complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

         LEGAL STANDARD

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the sufficiency of the complaint, not the merits of the case.” McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 878 (7th Cir. 2012). The allegations in the complaint must set forth a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Plaintiffs need not provide detailed factual allegations but must provide enough ...