Rayonier Inc.

Case Details

Class Period: October 26, 2010 - November 7, 2014
Date Filed: November 12, 2014
Case Number: 3:14-cv-01395
Jurisdiction: Middle District of Florida
icon-casetype Case Type: Securities Case

Case Summary

The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against Rayonier, Inc. and certain of its senior executives. The Complaint alleged that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired Rayonier common stock during the class period.

Rayonier is one of the country’s largest producers and sellers of timber, with its premier timberlands located in the Pacific Northwest. For years, Defendants assured investors that the Company harvested its Pacific Northwest timber at “sustainable harvest levels,” specifying a purported “sustainable rate” below which the Company was harvesting and claiming that “sustainable forestry [is] the past, present and future of Rayonier.”

Specifically, the Complaint alleged that Defendants made false and misleading statements regarding Rayonier’s harvesting practices, its reported merchantable timber inventory, and certain financial results that caused the Company to have to restate its interim consolidated financial statements for the quarters ended March 31, 2014 and June 30, 2014 following an internal review of Rayonier’s operations by new management. This restatement resulted from Rayonier’s understatement of depletion in the cost of goods sold. With Rayonier’s timber business in a “death spiral” due to years of undisclosed overharvesting, and after a two-year, “in-depth” investigation of the Company’s business, Defendants announced in January 2014 that the Company would “spin-off” its Performance Fibers business from its timber division to form a new company, Rayonier Advanced Materials. As part of the “spin-off,” Rayonier executives and directors resigned from the timber company, leaving its problematic, overharvested timber assets to new Rayonier management. Starting in late June 2014, new management uncovered the Company’s overharvesting in the Pacific Northwest and its overstatement of merchantable timber. On November 10, 2014, following the close of the class period, the Company’s new management disclosed the results of the internal review, admitting that Rayonier had overharvested its Pacific Northwest timber for over a decade and by an average of over 44% each year above the sustainable level. The Company further admitted that, as a result of its overharvesting, it would have to substantially reduce its harvests over the next decade, forcing Rayonier to slash its dividend payment to investors to about half of what it had been just months earlier. Indeed, the Company’s total timber inventory in the Pacific Northwest had actually declined each year since 2008, with a precipitous drop of approximately 17% between 2012 and 2013. In response to Rayonier’s November 2014 disclosures, the Company’s stock price plummeted by over 20%, wiping out over $900 million in market capitalization.

On January 12, 2015, the Court appointed Saxena White P.A. as Lead Counsel, notably stating the firm had “substantial experience in securities class actions.” On September 25, 2015, Lead Plaintiffs filed the Amended Complaint. The Amended Complaint included additional allegations concerning the Defendants’ alleged false and misleading statements regarding Rayonier’s harvesting practices, and its reported merchantable timber inventory.

After Defendants motions to dismiss were fully briefed, the Court denied these motions stating: “Even taking into account the heightened pleading standards under the Private Securities Litigation Reform Act and Eleventh Circuit precedent, the Court finds that Lead Plaintiffs have met those pleading standards.”

On December 15, 2016, Lead Plaintiffs’ filed their motion for class certification. While this motion was still pending and following over two year and half years of contested litigation, the parties participated in mediation on March 6, 2017, and extended these discussions until March 13, 2017. As a result of these extensive negotiations, Saxena White successfully obtained a settlement in the amount of $73,000,000 for the benefit of the class. On June 1, 2017, the Court preliminarily approved the settlement, and on September 19, 2017 entered final judgment finding the settlement to be fair, adequate and reasonable. The Court emphasized that the settlement was “the second largest recovery from a securities class action achieved in the Middle District of Florida,” and stressed “the exceptional results achieved for the benefit of the Settlement Class.” Further, the Court added that “in addition to the settlement being objectively outstanding….the reaction of those involved in the case confirms this characterization….based on their comparatively robust participating in the claims process and lack of objections to the settlement amount and attorneys’ fee request, the Settlement Class apparently agrees.”