The City of Hialeah Employees’ Retirement System v. Toll Brothers Inc.
Plaintiffs alleged Defendant Toll Brothers Inc. made misleading statements between December 2004 and November 2005 regarding its current and future conditions and failed to disclose adverse developments that were negatively affecting the business. These misleading statements included “falsely and adamantly” maintaining that Toll Brothers’ business model of focusing on expensive homes for a niche market of high-end buyers was immune from the adverse impact of rising interest rates and other negative macroeconomic factors.
In September 2008, the court denied Defendant’s motion to dismiss, and ruled that plaintiffs had met the pleading requirements of the Private Securities Litigation Reform Act of 1995. In 2009, the court denied Defendant’s motion for judgment on the pleadings but stayed discovery and certified the case for an interlocutory appeal to the U.S. Court of Appeals for the Third Circuit. The Third Circuit refused to certify the appeal and discovery commenced. The parties have since settled the matter for $25 million.