Ninth Circuit’s Revival Gave the Case New Life
The dispute over a stay follows U.S. District Judge Marsha J. Pechman’s September order largely denying Avalara’s renewed motion to dismiss after the Ninth Circuit Court of Appeals revived key parts of the lawsuit in March.
The appellate panel found that Avalara’s proxy statement may have misled shareholders by omitting key details — specifically, that inorganic growth was excluded from future revenue projections in the company’s valuation.
The court also noted evidence that Avalara selectively quoted favorable portions of a report from Institutional Shareholder Services while leaving out information that might have painted a less optimistic picture.
Judge Pechman concurred, stating that the omissions were “material to investors” and that Avalara’s past practice of including inorganic growth in guidance made its absence in the buyout valuation “notable and potentially misleading.”
Avalara’s Argument for Delay
Avalara contends that both the Sohovich and Pipe Fitters cases arise from the same underlying facts — namely, whether the company’s sale to Vista undervalued its worth.
In its motion, the company argued that “resolution of Pipe Fitters will likely simplify — and possibly resolve — all remaining issues” in the federal case.
Avalara maintains that both actions target nearly identical defendants and request the same form of relief, making simultaneous proceedings inefficient.
But the investors dismissed that claim outright, asserting that the company failed to show any precedent for halting a first-filed federal action with exclusive jurisdiction simply because a later state case exists.
