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Shareholder lawsuit for TerraVia
Bronstein, Gewirtz & Grossman - Class Action New York
Corporate litigation boutique in New York with primary expertise is the aggressive pursuit of Class Action litigation claims for institions and investors.
If you happen to hold stock in TerraVia, formerly a suppier of algal protein to Rosa Foods, maker of Soylent, you have another week to join a class-action lawsuit against the company.
The lawsuit stems from the loss of stock value following revelations that TerraVia's algal products might cause gastrointestinal upset in some who consume them. The revelations came from a single source, an article in Bloomberg News -- an article that was quoted here in FutureFood shortly after it appeared. The critical sentence in that article was the claim that
TerraVia had sent a letter in July to EN-R-G Foods, LLC, a separate customer, warning that TerraVia’s algal protein ingredient had been linked to a "modest number of reports" with similar complaints and ailments, like nausea and vomiting, connected with EN-R-G’s Honey Stinger energy bar.
Mind you, the Bloomberg article did not claim the writer had seen the letter, and did not quote it directly, nor did it quote any specific person at TerraVia, EN-R-G Foods, or any other source.
The legal notice that is linked above is not about suing TerraVia for selling bad food. It really has nothing to do with TerraVia's products or with Soylent. It is a lawsuit of a very common kind: the class action by shareholders, suing a company's officers because they failed to tell investors the truth about the company's status.
It's the law that a company whose stock is publicly traded must honestly and promptly inform its investors of any factor that might affect the share price. Often, company officers don't do that, or don't do it soon enough or frankly enough -- in the opinion of shareholders. The law makes it possible for shareholders then to sue the company to recover their losses from a decline in the stock value. (Does anyone ever sue when a company's stock unexpectedly rises?)
Anyway, these suits are very, very common. Any company can expect to be hit with one when its stock drops sharply, as TerraVia's stock did when Soylent announced they were no longer using TerraVia protein.
Many law firms specialize in filing this type of suit. The firm running this one, Bronstein Gewirtz and Grossman, are a self-described "Corporate Litigation Boutique Specializing in Class Actions." Corporate CEOs have harsher descriptions for such firms, phrases in which the word "vulture" may appear.
These firms watch the market for a company that has suffered some type of sudden drop in value (for any reason or no reason), and then file a suit claiming that the company didn't inform its investors soon enough. The law gives them the power to conduct a "discovery" process in which they can question corporate officers under oath. In such a deposition the truth will come out about how much TerraVia knew about digestive problems with its products. BG&G attorneys will be very eager to learn the contents of the reputed letter to EN-R-G Foods, or any other letters, and what else TerraVia knew.
But will we ever know these facts? Probably not. Most likely TerraVia will arrange a settlement, pay a chunk of cash to the plaintiffs (with much of it going to BG&G); the case will be dropped and nothing more will be known to the public.
If the plaintiffs ask for too much, TerraVia's lawyers might decide to roll the dice and go to trial, hoping they can convince a judge that they did not deceive their investors, and should be allowed to collect their costs from the plaintiffs. If a trial starts, some content from the sworn depositions will become public record. In that event, we may learn quite a bit about the algal food business.



