Judge Denies Signet’s Motion in Securities Fraud Lawsuit

New York—Earlier this month, a New York federal judge denied Signet Jewelers Ltd.’s request to dismiss one of the two claims contained in a lawsuit brought against it by shareholders.

The Public Employees’ Retirement System of Mississippi, a pension fund, is the lead plaintiff in a purported securities class-action against Signet originally filed in 2016.

The lawsuit accuses the jewelry retailer of misrepresenting two aspects of the company: the health of its credit portfolio (which the company has since outsourced) and allegations of a culture of “pervasive” sexual harassment.

The sexual harassment aspect of the shareholder lawsuit relates to Jock, et al. v. Sterling Jewelers Inc., a subsidiary of Signet. That case was filed in March 2008 by several women accusing the company of discriminatory pay and promotion practices based on their gender.

Though the case itself contains no allegations of sexual harassment, documents eventually unsealed in connection to the case, and reported on by The Washington Post as well as other media outlets, painted a picture of a culture where women were objectified, disrespected and scared of retaliation, generating a lot of negative publicity for the retailer and, the shareholders noted in their lawsuit, sending Signet’s stock price plummeting.

Signet previously sought to have the entire shareholder lawsuit dismissed, but U.S. District Court Judge Colleen McMahon denied that motion in November 2018.

In May 2019, the retailer sought the dismissal of the claims relating to its company culture. It filed a motion for a judgement on the pleadings, which is when a party asks the court to rule in its favor based not on new evidence but interpretation of the law.

Signet asked the court to take a look at a March ruling from the Second Circuit Court of Appeals in a case called Singh v. Cigna Corp.

In that case, a shareholder alleged that Cigna’s pamphlet about its code of ethics misled investors about its compliance with Medicare regulations, court documents show.

The code of ethics, which included statements about staying in compliance with the law and acting with integrity, was determined to be a “textbook example of puffery,” court papers state, meaning the statements were too general for a reasonable investor to take into consideration when buying shares of the company.

Signet argued in its motion for a judgement on the pleadings that its code of conduct should be viewed in the same manner, but Judge McMahon disagreed and