Dive Brief:
- For the second time this year, Graphic Packaging International, former CEO Mike Doss and former CFO Stephen Scherger are defendants in a lawsuit brought by a shareholder alleging securities law violations and fiduciary duty breaches.
- In addition, the new case names as defendants current CEO Robbert Rietbroek and all eight of the other sitting board members, plus one board member who retired in June.
- In a securities filing released after trading closed Monday, GPI noted the allegations and relief sought in the two lawsuits are “substantially similar” and the company “intends to vigorously defend against the claims.” GPI declined to provide additional comments.
Dive Insight:
Similar to the case filed in May, the new one alleges that misconduct by GPI leadership regarding financial decisions and disclosures caused damage to the company and its shareholders.
A key area of discrepancy between the two cases is the timeframe. James Wheeler, the shareholder who filed the new lawsuit, said in the complaint that he purchased GPI stock on Jan. 8, 2025. The class-action lawsuit filed earlier focuses on parties who acquired GPI shares between Feb. 4, 2025, and Feb. 2, 2026.
The new lawsuit is built around a claim noted in the other suit: Individual defendants “failed to oversee” the “mission-critical function” of inventory management, which they allegedly knew was necessary for the company to meet its publicly disclosed financial guidance amid “deteriorating customer demand.”
The court documents detail a variety of Doss and Scherger’s statements from 2023 onward assuring GPI’s financial health. The complaint details ongoing inventory challenges and decreased customer demand, while also claiming the defendants misled the public on the reasons for high inventory levels.
Like the earlier lawsuit, the new one cites GPI’s earnings release on May 1, 2025, when it revised down its full-year guidance. “Results were significantly below our expectations,” Doss said at the time. The company’s stock subsequently fell 15%.
Even so, “Doss and Scherger continued to represent that the reduced demand and increased costs were ‘near-term’ challenges” and said GPI would work to match supply and demand for the remainer of the year, the complaint says.
Then, during the company’s July 2025 earnings release, executives raised the low-end full-year guidance, with Doss and Scherger saying GPI was managing inventories “aggressively” and would return to normal levels in the second half of 2025, according to the complaint.
Executives also revealed higher-than-expected costs related to the construction of GPI’s new recycled paperboard mill in Waco, Texas — which ultimately began production in October 2025 — prompting them to bump up capital expenditure projections for the year. GPI disclosed the elevated capital spending in a securities filing this March.
Doss and Scherger both served in their respective positions for a decade. In October 2025, Amcor announced that it was hiring Scherger away from GPI to become its new CFO. That December, GPI announced a series of upcoming changes, including ending Doss’ run as CEO and replacing him with Rietbroek. The company concurrently announced it would undertake actions to accelerate inventory reductions.
While the earlier lawsuit didn’t delve deeply into conditions once Rietbroek took over Jan. 1, the new complaint does. It points to GPI’s “weak financial results” reported in February and says Rietbroek described costs for the Waco mill being 67% above the original $1 billion estimate. Company stock then fell nearly 16%, “bringing the cumulative decline from pre-May 2025 levels to over 50%,” the complaint says.
The new case describes alleged lack of action by board members to correct the executives’ misleading statements or omissions. It says the 2025 proxy filing was “materially false and misleading” yet board members certified it.
The complaint also describes board members’ stock holdings and transactions during that time. It alleges that board members’ actions were “designed to artificially inflate the price of the Company’s common stock.” The complaint also accuses former board chair Philip Martens, who retired in June after the annual stockholder meeting, of insider trading in 2025.
This case primarily targets company executives and the board, noting that “Graphic Packaging is named solely as a nominal party.”
Like the lawsuit from May, this one was filed in the U.S. District Court for the Southern District of New York and has been assigned to Judge Jeanette A. Vargas. It was filed as “accepted as related” to the earlier case, meaning the same judge has been assigned to both.
“This is purely an administrative step meant to keep related matters in front of one judge for consistency and efficiency — it does not mean the cases are combined into a single lawsuit,” said Emmanuel Hurtado, an associate at Stubbs Alderton & Markiles, via email. Hurtado reviewed the complaint but is not involved in the case.
Case consolidation is a separate legal step that parties could pursue in instances of similar cases with the same judge. It requires one of the parties to file a motion asking the court to merge the cases, and the court would decide whether that's appropriate.
No parties have filed such motion in the GPI case, but it’s still possible that it could happen, Hurtado said.
Areas of overlap include the involvement of the same parties, that the cases stem from identical or substantially similar transactions events, and that it would be likely to involve a lot of duplicate resources if different judges hear the cases, Hurtado explained. Plus, both cases were filed relatively close together in time, suggesting they’re not at notably different stages.
All things considered, “this could reasonably be seen as a good candidate for consolidation,” Hurtado said, emphasizing that it’s uncertain whether a motion will be filed.
This case seeks a variety of restitution measures, including that the individual defendants surrender “profits, benefits, and other compensation” obtained as a result of the listed allegations. It also requests that Martens pays “to the Company all profits, benefits, and other compensation obtained by his insider trading and breaches of fiduciary duties.”
Meanwhile, the previously filed class-action case continues. Vargas approved shareholder Saskatchewan Healthcare Employees’ Pension Plan as the lead plaintiff, based on SHEPP’s level of damage from the alleged actions compared with others who applied to be lead plaintfiff. On Monday, she also signed off on SHEPP’s proposed future schedule for the case, including that the lead plaintiff files an amended complaint by the end of September, defendant responses are due in November, and various opposition motions are due in early 2027.
