Stradling Secures Complete Dismissal of Securities Fraud Class Action for Former CFO of Tattooed Chef

Tattooed Chef, a plant-based food company that listed on Nasdaq following a SPAC transaction, had previously announced ambitious plans to expand its branded frozen food products into grocery stores. However, the First Amended Complaint against our client alleged that his resignation arose from a disagreement on how to account for slotting fees tied to product shelf placements.

In the aftermath of our client’s resignation, Tattooed Chef restated its financial statements due to various accounting errors, including those related to slotting fees. The plaintiffs contended that these financial statements and projections misled investors by suggesting a plan to improperly account for slotting fees, thereby artificially inflating revenues.

In addressing the claims, the Court supported our argument that our client lacked the requisite scienter to commit securities fraud, noting that the plaintiffs themselves alleged he resigned based on principle. Despite amendments made in the Second Amended Complaint, the Court found that the plaintiffs failed to substantiate their claims regarding our client’s intent to commit fraud, ultimately ruling to dismiss him from the case with prejudice.

While the case will proceed against other defendants, this ruling marks a significant victory for our client. The case is cited as Mihaylov, et al., v. Tattooed Chef, Inc., et al. in the U.S. District Court for the Central District of California.  

Marc Schneider, Steve Ram, Andrew Mason, and Mike Mosher represented the client.