VANCOUVER (NEWS1130) – Vancouver-based Lululemon is expected to be cleared in a shareholders lawsuit over its too-sheer yoga pants.
US Judge Katherine Forrest has released a draft decision that proposes the case be dismissed.
The lawsuit by shareholders accused the athletic-wear company of failing to disclose the quality defects in its Luon yoga pants.
It also accused the company of making misleading statements and omissions that caused its stock price to become artificially inflated.
However, the draft decision by Forrest says many of the statements were “simple puffery” by the company and that no reasonable investor would base their decisions on them.
Forrest also proposed dismissing a second lawsuit against 13 current or former Lululemon directors or executives for breaking securities laws. In that case, the executives and directors including former chief executive Christine Day and chairman Chip Wilson are accused of breach of their fiduciary duty and gross mismanagement.
Did the controversy deter you from buying the popular active wear?
It was a mixed bag for shoppers in front of the Lululemon concept store on Broadway.
It didn’t change anything for one woman. “I think that sometimes things get mismanaged or misquoted.”
This woman says she pays more attention to the product. “I am definitely concerned about the quality of the material.”
Another woman says it wasn’t the clothing she had an issue with. “The controversy did not steer me aware from Lululemon because i already knew about it. But there are other things that did.”
Lululemon Founder Chip Wilson’s comments that Some Women’s Bodies are Not Right For the Pants also sparked further outrage.
A New York judge says says the suit should be dismissed.
Shareholders accused the company of defrauding them by hiding defects and concealing plans to replace its CEO.
The controversy erased about two-billion dollars from Lululemon’s stock market value.