This article was updated on November 4, 2020.

A court denied Jeld-Wen’s motions last week to dismiss complaints filed against the company alleging that it misled investors by failing to disclose anticompetitive conduct violating federal antitrust law. In an opinion dated October 26, U.S. District Judge John A. Gibney Jr. upheld the case by declaring that plaintiffs “adequately plead loss causation.”

In a complaint filed February 19, 2020, investors in Jeld-Wen Holding Inc. (plaintiffs) together allege that the door and window manufacturer failed to disclose intentionally anticompetitive conduct that was later found to violate federal antitrust law. Defendants Mark A. Beck, L. Brooks Mallard, Kirk S. Hachigan and Gary S. Michel (individual defendants), Jeld-Wen and Onex filed separate motions to dismiss those allegations, arguing that they had no duty to disclose Jeld-Wen’s actions. Further, officials for Onex contended that even if such a responsibility exists, plaintiffs should not be able to hold the company liable, because it couldn’t control Jeld-Wen’s disclosures to the market. In an opinion dated October 26, Judge Gibney denied both motions.

Allegations for failure to disclose stem from a case filed in 2018, alleging that Jeld-Wen conspired to fix prices. Plaintiffs that purchased interior molded doors indirectly sought relief under the Sherman Act, as well as under various state antitrust and consumer protection laws. On February 15, 2018, a jury found the company guilty, procuring a $176 million verdict. According to court documents, the same day that verdict was issued, Jeld-Wen distributed a press release saying it continued “to believe that the facts underlying this dispute do not establish either a violation of the antitrust laws or a breach of contract.”

The company further stated that it did not expect the outcome to have material impacts. On October 5, 2018, U.S. District Judge Robert E. Payne issued an opinion detailing the company’s anti-competitive behavior, ordering divestiture of one of its plants. That decision, court documents said, caused a 5% drop in the company’s stock price on October 9, 2018—a decrease that was later exacerbated by an announcement that it expected to incur $76.5 million in liability. The next day, the company also announced that its then CEO L. Brooks Mallard would resign, leaving its stock to tumble by 19%, court documents stated.

Investors in Jeld-Wen Holding Inc. filed a complaint February 19, 2020, alleging that, among other things, the company’s statements and omissions misled them by concealing its anticompetitive conduct. Officials for Jeld-Wen argue that they did not make false statements, because they “accurately described their products’ quality and their pricing strategy and because the competitiveness statements do not specifically refer to the doorskin market,” court documents said. Jeld-Wen’s statements, alongside its failure to disclose anticompetitive conduct, “would have misled a reasonable investor about the nature of” its securities, the October 26 memo stated. Under a section on Loss Causation, “The plaintiffs adequately plead loss causation because they allege ‘a sufficiently direct relationship between the plaintiff’s economic loss and the defendant’s fraudulent conduct,’” the memo added. Meanwhile, the statute of limitations does not prevent the plaintiffs’ claims, the document said, because they would not have discovered the facts about securities fraud until October 5, 2018.

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