The United States Court of Appeals for the Fourth Circuit has affirmed an award of summary judgment in favor of defendants dismissing an action under Section 10(b) of the Securities Exchange Act of 1934 arising out of a November 1992 ABC news report identifying labor law violations and unsanitary food handling practices at several Food Lion supermarkets. The day following the report, the price of Food Lion's shares fell more than 10%. Plaintiffs claimed, among other things, that Food Lion's annual reports wrongfully (i) denied forcing employees to work overtime without pay; and (ii) asserted that Food Lion sold superior and properly handled food products, as a result of which its earnings had been artificially inflated. In affirming judgment in favor of defendants, the Court concluded that any alleged misstatements regarding Food Lion's employment practices were not material because information concerning its problems in this area had been publicly disseminated by others prior to the ABC broadcast, and that any misstatements regarding the superiority of its food products were generalizations and puffery on which no reasonable investor would rely. (Longman v. Food Lion Incorporated, 1999 WL 798878 No. 98-2116, 4 th Cir., 10/7/99)
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