Lake Worth Firefighters’ Pension Trust Fund v. Rayonier Inc.

Court: United States District Court, Middle District of Florida
Case Number: 3:14-cv-01403-HES-MCR
Judge: Hon. Timothy J. Corrigan
Class Period: 10/26/2010 - 11/7/2014 (inclusive)
Case Contacts: Avi Josefson, David R. Stickney, Jonathan D. Uslaner, Jenny E. Barbosa

On November 13, 2014, BLB&G filed a securities class action lawsuit on behalf of Lake Worth Firefighters’ Pension Trust Fund (“Lake Worth”) against Rayonier Inc. (“Rayonier” or the “Company”) and certain of its senior executives.   On February 25, 2015, the Court appointed Lake Worth and the Pension Trust Fund for Operating Engineers Lead Plaintiffs.  On September 25, 2015, Lead Plaintiffs filed an amended consolidated class action complaint asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors in Rayonier securities during the period of October 26, 2010 to November 7, 2014, inclusive (the “Class Period”).  A copy of the complaint is available here. On October 26, 2015, Defendants filed motions to dismiss the complaint, which Lead Plaintiffs opposed. On May 20, 2016, the court denied the motions to dismiss.

Rayonier is a leading international forest products company primarily engaged in activities associated with timberland management and the sale and entitlement of real estate.  Currently, the Company claims to be the eighth largest private timberland owner in the U.S., with approximately 2.6 million acres of owned or leased timberland and real estate in the U.S. and New Zealand.  Being that Rayonier's primary business involves harvesting natural resources from forests, the Company placed an emphasis on Rayonier being able to manage the land in a sustainable manner.  Indeed, the Company voluntarily subscribed to the Sustainable Forestry Initiative program, which purportedly included independent third-party audits of Rayonier's practices, and Rayonier marketed itself as an environmentally friendly company.

Throughout the Class Period, Rayonier reported its financial results—including cost of sales, net income, operating income, and inventories of timber—certified that its financial statements were correct and that the Company's internal controls were effective.  Rayonier also represented throughout the Class Period that the Company engaged in sustainable timber harvesting practices.

These statements were false.  On November 10, 2014, before the start of trading, Rayonier reported earnings for its third quarter of 2014.  In connection with that earnings report, the Company announced that it was forced to restate its financial results for the quarterly periods ending March 31, 2014 and June 30, 2014 because Rayonier was including in its calculation of merchantable timber inventory, timber in protected areas which could not be sold.  As a result, the Company concluded that it understated its cost of sales and overstated its net income, operating income, timber inventories, and numerous other critical financial metrics.  Significantly, the Company also disclosed that its internal controls were ineffective. Rayonier further announced that it would cut its quarterly dividend from $0.30 per share to $0.25 per share, a decrease of almost 17%, because the Company had been harvesting timber in the U.S. Pacific Northwest in an unsustainable manner for over a decade. 

As a result of Rayonier's improper inventory calculation, restatement, dividend cut, and unsustainable harvesting practices, the Company also announced on November 10 that it accepted the resignation of N. Lynn Wilson, Rayonier's Executive Vice President, Forest Resources, effective November 7, 2014.  On this news, the price of the Company's stock declined from $33.90 per share to $28.82 per share on November 10, a decline of almost 15%.

If you wish to discuss this action or have any questions concerning your rights or interests, please contact Avi Josefson (212-554-1493);