Cintas (asi/162167), the 14th-largest distributor in the North American promotional products industry by revenue, is preparing to defend against a class action lawsuit.

Based in Los Angeles, The Schall Law Firm has filed the suit against Cintas, which is headquartered in Cincinnati.

The complaint alleges that Cintas, a publicly traded company, made false and misleading statements about its financial situation. Those statements constitute a violation of the Securities Exchange Act of 1934, the suit alleges.

The purported impropriety allegedly affected investors who purchased Cintas securities between March 6, 2017 and Nov. 13, 2019. “When the market learned the truth about Cintas, investors suffered damages,” The Schall Law Firm said in a statement.

In particular, the suit alleges that Cintas failed to track legacy margins after it acquired uniform rental company G&K Services in 2016.

“The company continually provided guidance that it knew it could outperform in a ‘beat and raise’ scheme,” The Schall Law Firm claims. “In fact, the company breached the law in multiple instances, putting its credit agreement at risk. Based on these facts, the company’s public statements were false and materially misleading throughout the class period.”

A spokeswoman for Cintas told Counselor that the company does not comment on pending litigation. Still, she added that Cintas believes the lawsuit has no merit. Cintas will “will defend ourselves vigorously in court,” she said.  

Counselor estimates that Cintas’ 2018 North American promotional product revenue was $173.2 million, good enough to put the firm among the industry’s 20 largest distributors. Still, Cintas’ total business is much larger than promo, including channels like its flagship uniform services. For its fiscal year ended May 31, 2019, Cintas’ total global revenue across its entire business was $6.89 billion.