Panera Bread Co. has agreed to pay $5.75 million to settle a class action lawsuit brought by shareholders who alleged the chain of bakery cafes misled investors about the success of its Crispani pizza, a product Panera discontinued in 2008.
Western Washington Laborers-Employers Pension Trust filed the lawsuit in January 2008 in the U.S. District Court in St. Louis on behalf of shareholders who bought Panera common stock between Nov. 1, 2005, and July 26, 2007.
Mike Bongiorno, an attorney representing Sunset Hills-based Panera, said the settlement amount is covered by Panera's insurers, and will not be borne by the company or executives.
"Panera and the individual defendants deny any wrongdoing in respect to the claims and make no admissions whatsoever in wrongdoing in connection with the settlement," he said. "The company denied all of the allegations, but this is an opportunity to put this behind us."
The lawsuit alleges that executives, including executive chairman Ron Schaich, made false and misleading statements about Crispani from 2005 to 2007, which artificially inflated Panera's stock. Crispani was a highly touted new flatbread pizza Panera launched in late 2006 but ultimately shelved two years later due to high labor costs.
According to the lawsuit, Panera executives did not disclose that Crispani was a drag on sales in press releases and filings with the Securities and Exchange Commission, and gave misleading growth projections.
The "misstatements and omissions had the cause and effect of creating in the market an unrealistically positive assessment of Panera Bread and its business, prospects and operations," the lawsuit stated.
Judge E. Richard Webber granted preliminary approval of the settlement Tuesday, which was reached after a mediation process. The settlement will be distributed to those who bought or acquired the stock during the disputed period.
A hearing to approve the settlement is set for June 22.
Doug Britton, an attorney representing Western Washington Laborers-Employers Pension Trust, could not be reached for comment.