Recent securities class action lawsuit filing analyses have noted (as discussed, for example here), that the number of COVID-related securities suit filings has declined so far this year relative to last year. Arguably the more interesting observation is that these lawsuits are being filed at all in 2025, now well over five years since the initial outbreak of COVID-19 in the United States. In the latest example of the continued filing of these kinds of suits, late last week, a plaintiff shareholder filed a securities class action lawsuit against Lineage, a cold storage focused real estate investment trust (REIT). The complaint alleges that in the run-up to the company’s July 2024 IPO, the company soft-pedaled the impact of the downturn of pandemic-driven demand. The new complaint against Lineage can be found here.

Background

In the years prior to its 2024 IPO, Lineage expanded and became the largest cold-storage company globally, a development the company accelerated through a series of acquisitions in the period 2020-2024. The complaint alleges that during this time, the company’s results were “buoyed by the effects of the COVID-19 pandemic, as supply chain disruption and temporary shortages of food and medicine led to efforts by businesses and governments to improve cold-storage supply chain and distribution networks.”

The complaint alleges that the company represented that the company’s growth metrics were “stable and sustainable” based on its industry’s characteristics, stating at the time of its IPO that “the U.S. temperature-controlled warehousing industry has experienced relatively stable revenue growth, even in periods marked by significant turmoil in the financial markets” and during “the global COVID-19 pandemic and the ensuing supply chain disruption.”

The company completed its IPO in late July 2024, raising more than $5 billion in gross offering proceeds, making it one of the largest U.S. IPOs in 2024.

The complaint alleges that the company’s Registration Statement “failed to disclose that Lineage’s financial and operational results had been temporarily inflated leading up to the IPO as a result of artificial market distortions caused by the COVID-19 pandemic, increased supply of cold-storage facilities, and the imposition of unsustainable price increases.”

These conditions, the complaint alleges, peaked in the latter half of 2023, but, rather than disclose these facts, the complaint alleges, the Registration Statement characterized the company’s “more muted” results as due to a “rationalization period.” In truth, the complaint alleges, the company was “in the midst of a sustained downturn” as customers worked off excess inventory built up during the pandemic and shifted to lower inventory maintenance on a go-forward basis. The complaint alleges the company share price has declined by approximately half.

Discussion

On August 1, 2025, a plaintiff shareholder filed a securities class action lawsuit in the Eastern District of Michigan against the company, its offering underwriters, and certain of its directors and officers. The complaint purports to be filed on behalf of investors who purchased the company’s securities in or traceable to the company’s July 2024 IPO.

The complaint alleges that during at the time of the IPO, the defendants failed to disclose:

(a) that Lineage was the experiencing sustained weakening in customer demand, as additional cold-storage supply had come on line, the Company’s customers destocked a glut of excess inventory built up during the COVID-19 pandemic, and the Company’s customers shifted to maintaining leaner cold-storage inventories on a go-forward basis in response to changing consumer trends;

(b) that Lineage had implemented price increases in the lead-up to the IPO that could not be sustained in light of the weakening demand environment facing the Company;

(c) that Lineage was unable to effectively counteract the adverse trends listed in (a)-(b) above through the use of minimum storage guarantees or as a result of operational efficiencies, technological improvements, or its purported competitive advantages;

(d) that, as a result of (a)-(c) above, rather than enjoying stable revenue growth, high occupancy rates, and steady rent escalation as represented in the Registration Statement, Lineage was in fact suffering from stagnant or falling revenue, occupancy rates, and rent prices; and

(e) that, as result of (a)-(d) above, Lineage’s financial results, business operations, and prospects were materially impaired.

The complaint alleges that the defendants violated Sections 11 and 15 of the Securities Act of 1933. The complaint seeks to recover damages on behalf of the class.

Discussion

I am sure I am not the only one that finds it kind of amazing that even after all this time, COVID-related securities lawsuits are still being filed. By my count, this lawsuit is in fact the third COVID-related suit to be filed so far this year, after 16 were filed last year. While the number of these kinds of cases isclearly declining, the fact is that these kinds of suits are still being filed.

This new lawsuit follows that factual pattern that has seemed to predominate in the recently filed COVID-related securities suits – that is, the complaint alleges that at the outset of the pandemic, the company prospered, but that as the pandemic evolved, the company’s fortunes began to wane, while company management protested that the pandemic boost the company had enjoyed was sustainable.

It is a measure of just how disruptive to company operations and financial results the pandemic was that we are still seeing pandemic-related litigation filed, now well into the sixth year since the initial pandemic outbreak in the U.S. To be sure, the complaint in this case suggests that the pandemic boost the company experienced began to wane in 2023, more than two years ago, and the lawsuit itself concerns the company’s IPO, which took place more than a year ago. Arguably, there could be a bit of a lag effect going on with the fact that this lawsuit is only just being filed now. Nevertheless, the lawsuit itself was only just filed, which suggest at least the possibility that there could still be further pandemic-related lawsuits ahead.

 Though the pandemic’s impact on securities litigation filings may be declining, it may not yet have played itself out.