Rite Aid class action alleges company did not disclose regulatory action risks in 2017 annual report

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Rite Aid class action lawsuit overview: 

• Who: David Holland filed a class action lawsuit against Rite Aid Corp. and a group consisting of its current and former executives. 
• Why: Holland claims Rite Aid has been making misleading statements in its annual reports submitted to the Securities and Exchange Commission since 2018.
• Where: The class action lawsuit was filed in Ohio federal court.

Rite Aid made materially false and misleading statements in annual reports filed with the U.S. Securities and Exchange Commission (SEC) between 2018 and 2022, a new class action lawsuit alleges. 

Plaintiff David Holland claims Rite Aid failed to disclose in its 2017-2021 annual reports that the company was “at higher risk of regulatory action and possible prosecution as a result of systematically and improperly filling unnecessary prescriptions.” 

Holland argues the U.S. Department of Justice (DOJ) ultimately filed a lawsuit against Rite Aid earlier this month, alleging the company “knowingly filled unlawful prescriptions for controlled substances.” 

The DOJ’s lawsuit intervened in a whistleblower lawsuit that accused Rite Aid and various of its subsidiaries of violating the False Claims Act, according to the Rite Aid class action. 

Further, Holland claims the federal agency also announced it was also suing the drugstore chain for alleged violations of the Controlled Substances Act. 

Holland wants to represent a nationwide class of persons or entities who purchased or otherwise acquired publicly traded Rite Aid securities from between April 26, 2018 and March 13, 2023. 

Rite Aid shares drop after DOJ lawsuit revealed to public, class action says

Rite Aid securities dropped 18.9% on March 14 upon the public revelation of the DOJ’s lawsuit, and an additional 3.8% by the end of closing March 15, according to the Rite Aid class action. 

“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common shares, Plaintiff and the other Class members have suffered significant losses and damages,” the Rite Aid class action states. 

Holland claims Rite Aid is in violation of the Securities and Exchange Act of 1934. He is demanding a jury trial and requesting declaratory relief along with an award of damages for himself and all class members. 

A consumer filed a separate class action lawsuit against Rite Aid — along with CVS Pharmacy — in October 2022, arguing the companies failed to warn consumers about the alleged dangers of prenatal exposure to acetaminophen. 

Are you a Rite Aid shareholder that was injured when its stock price dropped earlier this month? Let us know in the comments! 

The plaintiff is represented by Daniel Karon of Karon LLC and Phillip Kim and Laurence M. Rosen of The Rosen Law Firm PA. 

The Rite Aid class action lawsuit is Holland, et al. v. Rite Aid Corp., et al., Case No. 1:23-cv-00589, in the U.S. District Court for the Northern District of Ohio.

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