Beer Marketer's Insights - Disgruntled STZ Investors Claim Clear "Structural Collapse" to Keep Suit Alive, Call Foul on Page Limit

A small group of Constellation investors sharpened their claims against the co and its lead execs in proposed class action lawsuit late last wk, asking ct to deny the co's request that the suit be dismissed. STZ ceo Bill Newlands and cfo Garth Hankinson purposely hid changes among co's core beer consumers and slowing trends in mid-2024 to sell off around $25 mil in stock at allegedly "inflated" prices, these investors reiterated. In making the case that execs knew the co wouldn't hit its net sales guidance many months before telling the public, the filing refers repeatedly to comments from an unnamed former employee, cited by the amended complaint filed in July. They also lean more heavily on more recent assertions that the challenges facing Constellation are "structural," playing up concerns about Hispanic consumers that became far more acute in 2025. At the same time, these investors also claim that STZ's filings in Sep far exceeded the page limit on its responses, asking ct to deny the co's motion to dismiss on those grounds as well.Plaintiffs Join Team "Structural" To keep this suit alive, plaintiffs must show a series of facts plausibly alleging that execs didn't just make the biz appear rosier than it was, but that they willfully misled investors. And to paint the picture of a "lie," the filing depends again and again on a small set of comments by a confidential witness (referred to as "CW1"), a former sr director of trade mktg in co's beer division who left STZ in June 2024, recall. By that early date, it was already "common knowledge" within the beer division that co was "on track to miss the initial plan" for its full fiscal yr, that ex-employee claimed. Monthly reports showed a slowdown, in their telling, and they heard STZ's cmo say that sales were "hitting the wall" in CA.These comments amount to "allegations of a structural collapse" in STZ's biz, according to the filing, and apparently prove the co knew its guidance was "unattainable." Execs reaffirmed that guidance in July and lowered it only slightly in Sep "based on the knowingly false premise that the structural collapse of their core consumer channel was merely 'transitory,'" investors claim. But execs "knew the problem was not a temporary 'blip' but a structural collapse in their core, untracked channels that had been ongoing since at least June."Downplaying (and Highlighting) Shifts Among Hispanic Consumers Comments by the former employee amount to "internal" knowledge that these plaintiffs use to claim a "deliberate fraud to mislead investors about the rapidly deteriorating state of customer demand and sales." STZ execs "were internally aware of significant, adverse macroeconomic trends that were negatively impacting their core consumer base and causing sales to falter," the filing alleges. More specifically, they "knew their core Hispanic consumers were exhibiting value-seeking behaviors that made their aggressive growth targets unattainable," investors claim. If execs downplayed these shifts, these investors play them up, using a narrative that got much louder since they filed their amended complaint in July, mirroring their embrace of the term "structural" as the structural vs cyclical debate hotted up even more in recent mos.1,167 Pages from STZ an "Egregious" Violation, "Gamesmanship" Plaintiffs have a separate, heftier bone to pick with the co, tho. STZ asked for and ct agreed to a higher 40-page limit on the co's legal arguments in support of its motion to dismiss the suit. But alongside that filing, co submitted nearly 60 pages of appendices and over 1,000 pages in exhibits. In all: it's 1,167 pages across 39 different docs. Most of those pages contain various SEC filings, call transcripts and analyst reports, which plaintiffs cited in their complaint, at least briefly. But in full, they pile up quickly.Further, introducing all that factual evidence is "improper" at this stage, investors claim, describing the tactic as "gamesmanship," since appendices contain "veiled legal arguments" that should have appeared in the co's 40-pg filing. Such an "egregious" violation of the ct's rules and its direct order should mean that either a) STZ's motion to dismiss is denied in its entirety; or b) it's "converted" into a motion for summary judgment. Either way, it would open the door to the expensive discovery stage, when plaintiffs would assuredly seek further evidence of their claim that execs knew they couldn't hit guidance long before they changed it.

Disgruntled STZ Investors Claim Clear "Structural Collapse" to Keep Suit Alive, Call Foul on Page Limit

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