July 24, 2020

Tivity Health Inc. is stuck facing a certified investor class accusing it of not disclosing its biggest client’s transition to direct competitor after the Sixth Circuit ruled an interlocutory appeal wasn’t warranted.

The investors won class status over Tivity’s objection in January. Tivity argued that the district judge “applied the wrong legal standard,” but the investors made a “convincing argument” that the lower court’s “view of the evidence"—not its reasoning—"determined the outcome,” the U.S. Court of Appeals for the Sixth Circuit said Thursday.

Tivity argued that it rebutted the presumption of reliance, so the district court “would have denied class certification” if it had “applied the correct reasoning,” the order denying permission to appeal said.

But the investors convinced the Sixth Circuit that the lower court “ruled as it did because it found no evidence to support Tivity’s assertion” that investors would have discovered the new competitor even before the company disclosed it. “Speculation alone does not defeat predominance,” the order said.

“We trust that the district court will attentively resolve the defendants’ concerns about class members’ reliance on the allegedly fraudulent statements in deciding whether to decertify the class or certify subclasses,” the Sixth Circuit said.

Judges Jeffrey S. Sutton, Deborah L. Cook, and Helene N. White made up the panel.

Branstetter, Stranch & Jennings PLLC and Cohen Milstein Sellers & Toll PLLC represented the investors. King & Spalding LLP represented Tivity.

The complete article can be accessed here.