In re Marriott Int'l, Inc., Customer Data Sec. Breach Litig.

Opinion

MEMORANDUM OPINION

This case involves the consolidated class action complaint filed by Plaintiff Construction Laborers Pension Trust for Southern California against Defendants Marriott International, Inc. and nine of its corporate officers and directors for violations of the securities laws related to a data breach [*49]  of the Marriot-owned Starwood Hotels and Resorts, Inc.¹ It is part of the Multidistrict Litigation ("MDL") pending before me concerning the data breach. Plaintiff alleges that Defendants made 73 false or misleading statements or omissions in violation of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and SEC Rule 10b-5 promulgated thereunder ("Rule 10b-5"). Plaintiff also brings a claim for secondary liability under Exchange Act Section 20(a). Defendants moved to dismiss under the Private Securities Litigation Reform Act of 1995 ("PSLRA"), and Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure.² As explained below, Defendants' motion to dismiss is granted because Plaintiff has failed to adequately allege a false or misleading statement or omission, a strong inference of scienter, and loss causation. Plaintiff's claims are dismissed with prejudice.

BACKGROUND

Plaintiff Construction Laborers Pension Trust for Southern California is a multi-employer pension plan that alleges it acquired thousands of shares of Marriott's securities and incurred substantial losses caused by allegedly false and misleading statements and omissions related to the data breach. ¶ 49. Plaintiff brings claims on behalf of itself and all persons and entities who purchased or otherwise acquired Marriott's publicly traded securities from November 16, 2015 to November 29, 2018 (the "Class [*50]  Period") and who were damaged as a result of the allegedly false and misleading statements and omissions related to the data breach. ¶ 1.

Plaintiff names as defendants Marriott, along with nine of its corporate officers and board members (collectively, the "Individual Defendants"). Marriott is a worldwide operator, franchisor, and licensor of hotel, residential, and timeshare properties that is incorporated in Delaware and headquartered in Bethesda, Maryland. ¶ 50. Four of the Individual Defendants are Marriott corporate officers: Mr. Arne Sorenson, Marriott's Chief Executive Officer since 2012 and a board member since 2011 until his recent death in 2021; Ms. Kathleen Oberg, Marriott's Chief Financial Officer since 2016; Mr. Bao Giang Val Bauduin, Marriott's Chief Accounting Officer since 2014; and Mr. Bruce Hoffmeister, Marriott's Chief Information Officer since 2011, though Defendants state that he has recently retired. ¶¶ 51-54. The five remaining Individual Defendants are current or former members of Marriott's Board of Directors and Audit Committee. At the start of the Class Period, the Audit Committee had three members: Defendants Ms. Mary Bush, Mr. Frederick Henderson, and Mr. [*51]  Lawrence Kellner. ¶ 55. On September 23, 2016, the Audit Committee expanded to four members: Defendants Ms. Mary Bush, Mr. Frederick Henderson, Mr. George Muñoz, and Mr. Aylwin Lewis. Id.

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