District Judge Harold Baer
Under defendant Perez’s leadership, Eastman Kodak launched a digital transformation strategy in 2004. Transformation was to be partly financed from income generated by the sale and licensing of Kodak’s intellectual property. Plaintiffs’ amended complaint charged Perez and other Kodak executives with making false and misleading statements about Kodak’s financial condition in the year before its 2012 bankruptcy application. The court dismissed plaintiffs’ complaint, which it viewed as asserting “fraud in hindsight.” The pleading requirements of FRCP 9(b) and the Private Securities Litigation Act were not satisfied. Further, certain alleged statements that plaintiffs asserted showed defendants’ scienter more plausibly demonstrated defendants’ failure to avoid Kodak’s bankruptcy despite their best efforts to fund and successfully complete a digital transformation. Those statements showed that Kodak began to consider bankruptcy as an option among others in 2011 while simultaneously pursuing other alternatives to avoid bankruptcy. However, contrary to plaintiffs’ assertion, those statements did not contradict defendants’ 2011 statement that Kodak had “no intention” of filing for bankruptcy.