Horizon Lines Prevails in Appeal of Securities Class Action

Skadden secured a significant victory in the U.S. Court of Appeals for the Third Circuit, which affirmed the dismissal of an amended putative securities class action complaint that alleged Horizon Lines fraudulently inflated its revenues by entering into illegal price-fixing arrangements with competitors. In a 2-1 decision issued on August 24, the Third Circuit panel agreed with the Delaware district court's May 2010 ruling (also secured by Skadden) that although three individual defendants had pleaded guilty to violating federal antitrust laws, the complaint did not adequately allege that those defendants "made materially false or misleading statements during the class period on which plaintiffs reasonably relied," and that plaintiffs "failed to plead sufficient facts in their amended complaint to give rise to a strong inference of corporate scienter."