NEW YORK (Legal Newsline) - A federal judge has largely rejected the motion to dismiss a stockholder class action lawsuit against Dentsply, the world's largest producer of professional dental products.
The lawsuit says former executives Donald Casey and Jorge Gomez manipulated numbers to achieve maximum compensation for the first half of 2021 during the COVID pandemic. Judge Arun Subramanian, of New York, on May 1 rejected most of Dentsply's motion to dismiss, finding statements made to the public about supply-chain disruptions could be construed as misleading.
"Given these allegations, statements downplaying supply-chain issues in the second half of 2021 are plausibly misleading," Subramanian wrote.
"In September, Casey said that 'we’re very comfortable that we’re going to be able to deliver what our customers need,' and that '[w]e feel very good that we have adequate supply.'
"And in November and December, Casey and Gomez made several statements downplaying supply-chain problems. If the company was already facing severe supply-chain issues, these statements could be misleading."
The demand for dental products fell during the onset of the COVID pandemic, and the industry also faced supply-chain issues, the judge wrote. Dentsply executives are alleged to have claimed the company was fine while they were artificially inflating sales.
They did that buy forcing distributors to take more inventory. Sales dropped after, executives were fired and the company conducted an internal investigation. Litigation followed.
Robbins Geller was picked out of three firm to lead the class action after scoring clients the City of Birmingham Retirement and Relief System, the El Paso Firemen & Policemen's Pension Fund and the Wayne County Employees' Retirement System.
That trio lost approximately $3.8 million in their investments in Dentsply. The compoany's stock price dropped more than 13% to $42.40 in April 2022.
An audit, the start of which was announced May 10, questioned whether incentives to sell products to distributors in the second half of 2021 were properly accounted for in statements filed with the SEC. The audit committee also said it was investigating allegations that former and current senior management directed those incentives to boost their executive compensation, the suit says.