Even though the COVID-19 pandemic is now into its fourth year, plaintiffs’ lawyers continue to file pandemic-related securities class action lawsuits, increasingly in conjunction with allegations involving other macroeconomic factors, such as rising interest rates, economic inflation, supply chain disruption, and labor supply shortages. In the latest example of litigation of this type, last week plaintiffs’ lawyers filed a securities class action lawsuit against tool maker Stanley Black & Decker, alleging that the company misled investors that the pandemic-fueled surge in demand for the company’s product would continue even as conditions changed. A copy of the March 24, 2023, complaint against the company can be found here.


Stanley manufactures tools intended for consumer use. Throughout 2021 and into 2022, the pandemic environment resulting from stay-at-home orders and remote work caused consumers to spend more time at home, spurring increased interest in home remodeling, creating high demand for Stanley’s products.

The subsequently filed securities class action lawsuit alleges that the company “misrepresented to investors and the public that despite rising inflation and interest rates, and Stanley’s multiple rounds of product price increases, that pandemic-fueled, heightened consumer demand for tools and outdoor products would be sustainable through 2022 due to continuing construction and DIY products.” The complaint also alleges that the defendants “misrepresented to investors throughout the Class Period that they were closely monitoring the effects of inflation and price increases on consumer demand, and that defendants would react accordingly if the demand environment changed.”

The complaint alleges that in two quarterly earnings announcements, one if April 2022 and the other in July 2022, the supposed truth about the company disclosed the “truth” about consumer demand for the company’s products and the impact of rising interest rates and economic inflation on the company’s financial results. The April 2022 disclosures, showing that companies net sales had dropped during the company’s first fiscal quarter, resulted in an 8.6% drop in the company’s share price. The July 2022 disclosures, in which the company “fully revealed” the “truth,” the company disclosed as a result of a softening demand environment, the company’s sales volume had dropped by double digits. The company also reduced its earnings guidance for the full year 2022. The complaint alleges that the company’s share price dropped another 16% on this news.

The Lawsuit

On March 24, 2023, a plaintiff shareholder filed a securities class action lawsuit in the District of Connecticut against Stanley and certain of its directors and officers. The complaint purports to be filed on behalf of a class of investors who purchased the company’s securities between October 28, 2021 and July 28, 2022.

The complaint alleges that during the class period, the defendants failed to disclose that: “(i) rising interest rates, inflation, and trends in returning to work away from home were in fact quickly eroding then-heightened demand for Stanley’s tools and outdoor products; (ii) the heightened, extraordinary demand Stanley had enjoyed as a result of the COVID-19 pandemic in 2021 and into 2022 was returning to 2019 pre-pandemic levels; (iii) Stanley’s operations were already showing signs of slowing demand; (iv) as a result of reorganization, share repurchasing, and dividend growth, Stanley lacked the cash to reach with agility to changes in demand; and (v) as a result of Stanley’s inability to react to a sharp decline in demand, the Company’s results and metrics, particularly sales volume, were severely negatively impacted. As a result of the foregoing, Stanley’s public statements were materially false and misleading at all relevant times.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the class.


By my count, this lawsuit is the fourth COVID-19-related securities class action lawsuit to be filed so far in 2023, and the 65th overall to be filed since the initial COVID-19 outbreak in the U.S. in 2020. The continued filing of these lawsuits shows that even thought the pandemic is now in its fourth year, the COVID-related factors remain a significant part of ongoing securities litigation filings.

The three prior COVID related suits to be filed this year include the lawsuit filed on January 27, 2023, against National Vision Holdings (discussed here); the lawsuit filed on January 31, 2023 against Invivyd (discussed here); and the lawsuit filed on February 24, 2023 against Catelent (discussed here).

It is worth noting that while this lawsuit is only just being filed now and therefore counts as a 2023 filing, the complaint relates to events that happened at a much earlier time, so the complaint’s filing may have little to say about the likelihood of further COVID-related securities suit filings in 2023.

In the first few months of the outbreak, as the first of the COVID-related securities suits were filed, the cases generally fell in to one of three categories: suits against companies that had experienced a COVID outbreak in their facilities (e.g., cruise ships, private prison systems); suits against companies that tried to portray themselves as positioned to profit from the pandemic (e.g., diagnostic testing companies, vaccine manufacturers); and companies whose operations or finances were disrupted by the pandemic (e.g., hospital systems, real estate development companies).

Later, as the pandemic progressed, a fourth category of cases emerged – this fourth category involved companies that initially prospered at the outset of the pandemic but whose fortunes lagged as the pandemic evolved. An example of this fourth category is the athletic equipment company Peloton, or the lawsuit to which I linked above relating to pharmaceutical delivery device firm Catelent.

This new lawsuit against Stanley clearly is in this fourth category, involving as it does a company whose fortunes soared due to the unusual conditions resulting from the government stay-at-home orders, but whose fortunes then sagged as stay-at-home orders were lifted and as conditions changed.

In addition to representing a COVID-related lawsuit, this lawsuit also represents an illustration of the way that disruptive macroeconomic factors can lead to securities litigation. That is, in addition to the impact on the company’s operations and results from the changing COVID-19-related conditions, the complaint also alleges that investors were misled with respect to changing macroeconomic conditions, such as rising interest rates and economic inflation.

Readers know that I have recently highlighted a number of newly filed lawsuits pertaining to companies whose operations or results were disrupted from similar macro factors. For example, as discussed here, last week I wrote about the new lawsuit filed against organic foods company, United Natural Foods, with allegations pertaining to the impact on the company from inflationary pressures. Perhaps a more significant example of securities litigation arising from changing economic conditions is the lawsuit filed earlier this month against Silicon Valley Bank; readers know that the bank’s recent collapse was caused in significant part because of the losses the bank sustained on its bond portfolio due to rising interest rates.

While I think this new lawsuit against Stanley is interesting as another example of securities litigation arising from COVID-19-related causes, the case arguably is of even greater interest to the extent it shows how the impacts of significant macro factors can translate into securities litigation. This case, along with the examples cited in the preceding paragraph, suggest that the macro factors could continue to have a significant impact on securities litigation filings as the year progresses.