SmarTalk Teleservices, Inc. : Common Stock and Call Options

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Copyright (c) 2001
Stanford Law School

SmarTalk Teleservices, Inc. : Common Stock and Call Options Summary: Prior to Lead Plaintiffs filing their responses to the D&O Defendants' Motion for Summary Judgment and the Court's ruling on the SmarTalk Partners Defendants' Motion for Summary Judgment, the parties agreed to settle the litigation. Pursuant to the terms of the proposed settlement, which the Court preliminarily approved on July 31, 2003, a Settlement Fund consisting of $11,100,000 cash has been established for the benefit of the Class. On April 7, 2004, the Court entered the Final Order and Judgment signed by Judge Edmund A. Sargus, Jr. approving the settlement.

Earlier, Plaintiffs and PwC agreed to settle the case against PwC. Pursuant to the terms of the proposed partial settlement, a Settlement Fund consisting of $15,000,000 cash has been established for the benefit of the Class. By Order of the Court dated November 14, 2001, the proposed partial settlement with PwC was preliminarily approved. The Court issued an Order on May 10, 2002 granting final approval of this partial settlement with PwC.

On February 22, 1999, Plaintiffs filed a Consolidated and Amended Complaint. The Amended Complaint does not name SmarTalk as a defendant due to the Company filing for Bankruptcy protection on January 22, 1999. On December 17, 1999 the Individual Defendants and PwC filed motions to dismiss Plaintiffs' Amended Complaint. On November 1, 2000 the Court issued an Order denying all of Defendants' motions to dismiss the Amended Complaint except for PwC's. The case continued against all of the Individual Defendants. On May 22, 2001 Plaintiffs filed a Notice of Appeal with the United States Court of Appeals for the Sixth Circuit to appeal the District Court's dismissal of the claims against PwC.

The case was first filed in the U.S. District Court for the Eastern District of New York. On September 28, 1998, the Court entered the Order transferring the case to the U.S. District Court for the Southern District of Ohio.

The original complaint alleges that defendants, while amassing over $50 million in proceeds from insider sales of the SmarTalk stock, concealed from the investing public the fact that they had been committing gross violations of the federal securities laws, including misleading the public by claiming that SmarTalk was expanding its business opportunities through favorable acquisitions and distribution agreements with other companies and that the Company was generating "record" financial results. The complaint alleges that SmarTalk failed to disclose to the investing public that: a) they artificially recognized the sales figures announced during the Class Period; b) they were recognizing revenues prematurely and improperly in violation of GAAP; c) SmarTalk's distributors were not selling prepaid cards at the levels represented; d) SmarTalk's management was encountering severe difficulties in integrating the companies acquired; and e) defendants were not controlling costs. On August 10, 1998, SmarTalk announced that it was postponing the release of its quarterly results due to SmarTalk's auditors questioning SmarTalk's accounting methods. This news caused SmarTalk shares to drop over 60 percent on extraordinary volume.

INDUSTRY CLASSIFICATION:
SIC Code: 4899
Sector: Services
Industry: Communications Services

COMPANY/ISSUER NAME:	SmarTalk Teleservices
COMPANY/ISSUER TICKER:	SMTK
COMPANY WEBSITE:	http://www.att.com/prepaidcard

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Dorothy J. Coven, et al. vs. Smartalk Teleservices, Inc. et al.

COURT: E.D. New York	DOCKET NUMBER: 98-CV-05163
JUDGE NAME: Hon. Reena Raggi
DATE FILED: 08/11/1998	SOURCE: Complaint
CLASS PERIOD START: 08/14/1997	CLASS PERIOD END: 08/10/1998
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Bernstein Litowitz Berger & Grossmann LLP (San Diego, CA) 12544 High Bluff Drive, Suite 150, San Diego, CA, 92130 (voice) 858.793.0070, (fax) 858.793.0323, blbg@blbglaw.com Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY) One Pennsylvania Plaza, New York, NY, 10119-1065 (voice) 212.594.5300, (fax) , Pomerantz Haudek Block Grossman & Gross LLP 100 Park Avenue, 26th Floor, New York, NY, 10017-5516ven (voice) 212.661.1100, (fax) 212.661.8665, info@pomerantzlaw.com/ Stull, Stull & Brody (New York) 6 East 45th Street, New York, NY, 10017 (voice) 310.209.2468, (fax) 310.209.2087, SSBNY@aol.com Weiss & Yourman (New York, NY) The French Building, 551 Fifth Ave., Suite 1600, New York, NY, 10126 (voice) 212.682.3025, (fax) 212.682.3010, info@wyca.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 5

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Complaint for Violations of Federal Securities Laws
Type: Complaint		Date on the document: 08/11/1998
CIVIL DOCKET FOR CASE #: 98-CV-5163
Type: Docket		Date on the document: 10/14/1998

REFERENCE COMPLAINT

Eckstein, et al. v. Smartalk Teleservices, Inc., et al.

COURT: S.D. Ohio	DOCKET NUMBER: 98-CV-00814
JUDGE NAME: Hon. Edmund A. Sargus, Jr.
DATE FILED: 02/22/1999	SOURCE: Business Wires
CLASS PERIOD START: 08/13/1997	CLASS PERIOD END: 01/07/1999
TYPE OF COMPLAINT: Consolidated and/or Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Bernstein Litowitz Berger & Grossmann LLP (New York, NY) 1285 Avenue of the Americas, 33rd Floor, New York, NY, 10019 (voice) 212.554.1400, (fax) 212.554.1444, blbg@blbglaw.com Klafter & Olsen LLP 2121 K St., NW Suite 800, Washington, DC, 20037 (voice) 202.261.3553, (fax) 202.261.3533, info@klafterolsen.com Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego) 401 B Street, Suite 1700, San Diego, CA, 92101 (voice) 206.749.5544, (fax) 206.749.9978, info@lerachlaw.com Milberg Weiss Bershad Hynes & Lerach LLP (S.F., CA) 100 Pine Street - Suite 2600, San Francisco, CA, 94111 (voice) 415.288.4545, (fax) 415.288.4534, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA) 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101 (voice) 800.449.4900, (fax) , support@milberg.com Olsen Law Firm 2121 K Street, N.W. Suite 800, Washington, DC, 20037 (voice) 703.351.5199, (fax) , _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 6

DOCUMENTS FOR THE REFERENCE COMPLAINT
Notice Of Partial Settlement And Of Pendency Of Class Actions
Type: Notice		Date on the document: 12/07/2001
Proof of Claim and Release
Type: Other		Date on the document: 12/07/2001
U.S. District Court Civil Docket
Type: Docket		Date on the document: 02/14/2002
Notice Of Settlement Of Class Action, Application For Attorneys’ Fees And Expenses And Settlement Hearing
Type: Settlement		Date on the document: 08/08/2003
Final Order and Judgment, MDL Docket 00-MD-1315
Type: Order		Date on the document: 04/07/2004
Order of Dismissal, MDL Docket 00-MD-1315
Type: Order		Date on the document: 04/09/2007
Stipulated Notice Of Settlement And Order Of Dismissal, MDL Docket 00-MD-1315
Type: Other		Date on the document: 04/09/2007
U.S. District Court Civil Docket, MDL Docket 00-MD-1315
Type: Docket		Date on the document: 06/27/2007

OTHER DOCUMENTS
CIVIL DOCKET FOR CASE #: 98-CV-1009
Case Name and/or Number: Coven v. Smartalk Teleservice, et al
Type: Docket		Date on the document: 11/30/1998
U.S. District Court Civil Docket
Case Name and/or Number: Andres, et al. vs. Smartalk Teleservices, Inc. et al.
Type: Docket		Date on the document: 05/10/2001
Notice Of Partial Settlement Of Class Action
Case Name and/or Number: Bruno, et al. v. Smartalk Teleservices, et al.
Type: Notice		Date on the document: 04/11/2002

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