DENVER, June 16, 2021 /PRNewswire/ -- Farmland
Partners Inc. (NYSE: FPI) (the "Company" or "Farmland") today
announced that the Maryland Circuit Court for Baltimore City has dismissed pending
shareholder derivative claims brought by two Farmland shareholders
against the Company, its officers and board of directors.
Derivative Complaints Based on Solely on False and Misleading
Statements in a "Short and Distort Attack"
Plaintiffs' demands arose from a "short-and-distort" attack on
Farmland, in which an anonymous short-seller writing under the
pseudonym "Rota Fortunae" later disclosed as Quinton Mathews, published an article on Seeking
Alpha alleging fraud at the Company, including allegations that the
company had improperly failed to disclose certain loans that it had
made to farmers as material related-party transactions. As
its author and his co-conspirators intended, the post caused a
substantial decline in the Company's stock price. In the days
after the post was published, the Company investigated the
allegations, concluded that they were unfounded, and released a
detailed public response rebutting the allegations. The
Company later sued Rota Fortunae for defamation, disparagement,
intentional interference with prospective business relations,
unjust enrichment, and violations of the Colorado Consumer
Protection Act (the "Rota Fortunae Action"). Rota
Fortunae's motion to dismiss the Rota Fortunae Action was
denied and that case remains ongoing. As a result of the
publication of the false and misleading article, a federal
securities class action was filed against the Company, its CEO
Paul Pittman, and its CFO
Luca Fabbri, adopting some of Rota
Fortunae's allegations (the "Turner Action"). That
case remains ongoing, as well.
Background of Derivative Claims
After those suits were filed, Plaintiffs Shawn Luger and
Brent Hustedde separately served
litigation demands on the members of the Company's board of
directors (the "Demands"). Plaintiffs demanded that the board
pursue claims against the Company's officers and directors based on
the allegations in the Rota Fortunae Post and in the Turner
Action. However, the Company and the board had already
investigated the allegations extensively both in connection with
the Company's initial response to the Rota Fortunae Post and in
connection with the board's oversight of the ongoing Rota
Fortunae and Turner Actions. The board responded
to Luger's demand, informing him that the board was fully aware of
Rota Fortunae's allegations, had investigated them, and had
concluded that the allegations were without merit and that pursuing
legal action based on Rota Fortunae's allegations would not be in
the Company's best interest. Luger and Hustedde then filed
shareholder derivative complaints in the Maryland Circuit Court for
Baltimore City (the "Court"),
seeking to step into the Company's shoes and sue the Company's
officers and directors on the Company's behalf. Both Luger
and Hustedde argued that they should be permitted to act on the
Company's behalf because the Board "wrongfully refused" their
Demands.
The Court's Ruling in Favor of Farmland Partners Inc. and
Other Defendants
The Court consolidated the two cases and Plaintiffs filed a
consolidated shareholder derivative complaint (the
"Complaint"). The Company then moved to dismiss the
Complaint, arguing that the Complaint failed to plead facts showing
either that the board's investigation in response to the
demands was not conducted independently and in good faith or that
the board's decision not to pursue claims based on Rota Fortunae's
allegations was unreasonable. The Court agreed and granted
the Company's motion to dismiss for lack of derivative standing
finding that Plaintiffs failed to plead facts showing that the
Board acted wrongfully when it refused Plaintiffs' Demands.
First, the Court concluded that Plaintiffs "failed to establish
facts that show more than mere suspicions that Plaintiffs'
litigation demands were wrongfully refused in regard to the board's
duty to conduct an investigation or otherwise act on an informed
basis."
Second, the Court concluded that Plaintiffs "failed to state
facts" showing "more than mere suspicions that Plaintiffs'
litigation demands were wrongfully refused in regard to the Board's
obligation to carry out its fiduciary independently and in good
faith."
Finally, the Court found "no founded claims which allege that
the Board did not honestly believe" it was "acting in the best
interest of Farmland Partners in their decision to refuse
Plaintiffs' litigation demands."
Having found no factual support for Plaintiffs' claims that the
board wrongfully refused the Demands, the Court ordered that Luger
and Hustedde's claims be dismissed.
"This is one step closer to putting the entire short and distort
attack behind us," said Paul A.
Pittman, the Company's Chairman and CEO. "We will
continue to work towards a successful resolution of the Rota
Fortunae and Turner Actions until we can finally eliminate
unnecessary litigation costs and obtain justice for the Company and
its shareholders."
About Farmland Partners Inc.
Farmland Partners Inc. is an internally managed real estate
company that owns and seeks to acquire high-quality North American
farmland and makes loans to farmers secured by farm real estate. As
of the date of this release, the Company owns approximately 157,000
acres in 16 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North
Carolina, South Carolina,
South Dakota and Virginia. We have approximately 26 crop types
and over 100 tenants. The Company elected to be taxed as a real
estate investment trust, or REIT, for U.S. federal income tax
purposes, commencing with the taxable year ended December 31, 2014. Additional information:
www.farmlandpartners.com or (720) 452-3100.
Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the federal securities laws, including, without
limitation, statements with respect to the Rota Fortunae Action and
the Turner Action. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may,"
"should," "could," "would," "predicts," "potential," "continue,"
"expects," "anticipates," "future," "intends," "plans," "believes,"
"estimates" or similar expressions or their negatives, as well as
statements in future tense. Although the Company believes that the
expectations reflected in such forward-looking statements are based
upon reasonable assumptions, beliefs and expectations, such
forward-looking statements are not predictions of future events or
guarantees of future performance and our actual results could
differ materially from those set forth in the forward-looking
statements. For a description of certain of such factors see the
section entitled "Risk Factors" in the Company's Annual Report on
Form 10-K for the year ended December 31,
2020, and the Company's other filings with the Securities
and Exchange Commission. Any forward-looking information
presented herein is made only as of the date of this press release,
and the Company does not undertake any obligation to update or
revise any forward-looking information to reflect changes in
assumptions, the occurrence of unanticipated events, or
otherwise.
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SOURCE Farmland Partners Inc.