Herbalife Ltd. stock surged after a federal judge dismissed a shareholder lawsuit that had included many of the allegations that activist investor Bill Ackman has hurled at the company for more than two years.
U.S. District Judge Dale S. Fischer ruled Monday that the lawsuit had "not established a loss causation," meaning that there was no evidence that Herbalife's actions had caused its stock price to fall.
The lawsuit, filed last year in federal court in Los Angeles, alleged that Herbalife operated a pyramid scheme that victimized its independent salespeople.
Ackman has made the same allegations since December 2012, betting $1 billion of his clients' money that Herbalife's stock price would eventually fall.
Herbalife's stock gained $4.33, or 13%, to close at $38.76 Wednesday.
The company, which insists its business practices are perfectly legal, said in a statement that it welcomed the judge's decision.
"As we have consistently stated, we are confident in the strong fundamentals of our business model and remain committed to helping people and communities improve their nutrition," the statement said.
An attorney who represented the plaintiffs did not immediately respond to a request for comment.
Fischer gave the plaintiffs until April 8 to file an amended lawsuit that would identify Herbalife actions that caused its stock price to fall.
The plaintiffs in the lawsuit, which sought class-action status, included the Oklahoma Firefighters Pension and Retirement System and the city of Atlanta Firefighters' Pension Fund.