Charter Communications, Inc. - Securities Class Action

Company and Case Information

IMPORTANT INFORMATION | INDEX OF FILINGS | SEARCH

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright (c) 2001
Stanford Law School

Charter Communications, Inc. Summary: According to a press release dated January 15, 2008, a U.S. Supreme Court ruling on Tuesday makes it harder for investors to sue companies after a fraud, a decision that could make it tougher for swindled Enron investors to recover any money from the failed energy firm's bankers. In Stoneridge Investment Partners LLC vs. Scientific-Atlanta Inc. et al., Stoneridge sued after shares of Charter Communications Inc. fell once the cable operator admitted that it had fraudulently manipulated its quarterly reports by altering its business arrangements with Scientific-Atlanta and Motorola. The Supreme Court's majority opinion said Scientific-Atlanta's "deceptive acts were not communicated to the public." Therefore, the petitioner "cannot show reliance upon any of respondents' actions except in an indirect chain that we find too remote for liability," according to the opinion, which was written by Anthony Kennedy and joined by John Roberts Jr., Antonin Scalia, Clarence Thomas and Samuel Alito Jr. The decision from the high court is the latest in a string of disappointments for investors, as justices decided 5-to-3 that shareholders can not necessarily sue third parties that help companies deceive investors.

According to a press release dated May 31, 2006, the Eighth U.S. Circuit Court of Appeals affirmed a district court's dismissal of a securities fraud class action as to claims against third-party vendors not alleged to have made material misrepresentations or omissions to the shareholders of a company. The Eighth Circuit ruled that the third-party vendors could at most be liable for aiding and abetting, which does not give rise to a securities fraud claim. Stoneridge Investment Partners, on behalf of investors who purchased Charter Communications Inc. stock, sued Charter for securities fraud, alleging Charter participated in a fraudulent scheme to falsely inflate its financial health by delaying the disconnection of customers who were no longer paying their bills and entering into sham transactions with equipment vendors. Stoneridge named the vendors, Scientific-Atlanta Inc. and Motorola Inc (the vendors), alleging violations of the Securities Exchange Act of 1934 §10(b) and Rule 10b-5. Specifically, Stoneridge claimed that Charter, a provider of cable services, engaged in sham transactions where Charter paid an additional $20 per vendor-provided set-top boxes to the vendors, and the vendors agreed to pay Charter additional payments in the form of advertising fees. …The Eighth Circuit ruled that the claims against the vendors were aiding and abetting claims that are not covered by §10(b) and Rule 10b-5.

According to the Company’s Form 10-K for the fiscal year ended December 31, 2005, on June 30, 2005, the Court issued its final approval of the settlements. At the end of September 2005, after the period for appeals of the settlements expired, Stipulations of Dismissal were filed with the Eighth Circuit Court of Appeals resulting in the dismissal of the two appeals with prejudice. Procedurally therefore, the settlements are final. As amended, the Stipulations of Settlement provided that, in exchange for a release of all claims by plaintiffs against Charter and its former and present officers and directors named in the Actions, Charter would pay to the plaintiffs a combination of cash and equity collectively valued at $144 million, which was to include the fees and expenses of plaintiffs’ counsel. Of this amount, $64 million was to be paid in cash (by Charter’s insurance carriers) and the $80 million balance was to be paid in shares of Charter Class A common stock having an aggregate value of $40 million and ten-year warrants to purchase shares of Charter Class A common stock having an aggregate warrant value of $40 million, with such values in each case being determined pursuant to formulas set forth in the Stipulations of Settlement. However, Charter had the right, in its sole discretion, to substitute cash for some or all of the aforementioned securities on a dollar for dollar basis. Pursuant to that right, Charter elected to fund the $80 million obligation with 13.4 million shares of Charter Class A common stock (having an aggregate value of approximately $15 million pursuant to the formula set forth in the Stipulations of Settlement) with the remaining balance (less an agreed upon $2 million discount in respect of that portion allocable to plaintiffs’ attorneys’ fees) to be paid in cash. In addition, Charter had agreed to issue additional shares of its Class A common stock to its insurance carrier having an aggregate value of $5 million; however, by agreement with its carrier, Charter paid $4.5 million in cash in lieu of issuing such shares. As a result in 2004, the Company recorded a $149 million litigation liability within other long-term liabilities and a $64 million insurance receivable as part of other non-current assets on its consolidated balance sheet and an $85 million special charge on its consolidated statement of operations.

In a press release dated March 9, 2005, Plaintiff's Counsel announced that the Class Action Plaintiff in the action pending in the United States District Court, Eastern District of Missouri entitled, In re Charter Communications, Inc. Securities Litigation, MDL Docket No. 1506 (CAS), has entered into Stipulations of Settlement, dated as of January 24, 2005 with Settling Class Action Defendants Charter Communications, Inc., Individual Defendants, and Arthur Andersen LLP to resolve the issues raised in the Class Action. The Settlement Hearing will be held on May 23, 2005, to determine: (1) whether the settlement of claims in the Class Action against the Settling Class Action Defendants for $146,250,000, consisting of cash in the amount of $66.25 million (plus accrued interest), Charter common stock having an aggregate value of $40 million and warrants to purchase Charter common stock having an aggregate value of $40 million subject to a potential upward adjustment, (as well as the adoption of certain corporate governance provisions), should be approved as fair, just, reasonable and adequate to all members of the Settlement Class; (2) whether the proposed Plan of Allocation is fair, just, reasonable, and adequate; (3) whether the application of Class Action Plaintiff's Counsel for an award of attorneys' fees and expenses should be approved; (4) whether the Class Action Plaintiff should be granted a Compensatory Award; and (5) whether the Class Action should be dismissed with prejudice as set forth in the Stipulations filed with the Court.

As summarized by the Company’s FORM 10-K for the year ended December 31, 2004, fourteen putative federal class action lawsuits (the “Federal Class Actions”) were filed against Charter and certain of its former and present officers and directors in various jurisdictions allegedly on behalf of all purchasers of Charter’s securities during the period from either November 8 or November 9, 1999 through July 17 or July 18, 2002. In October 2002, Charter filed a motion with the Judicial Panel on Multidistrict Litigation (the “Panel”) to transfer the Federal Class Actions to the Eastern District of Missouri. On March 12, 2003, the Panel transferred the six Federal Class Actions not filed in the Eastern District of Missouri to that district for coordinated or consolidated pretrial proceedings with the eight Federal Class Actions already pending there. The Panel’s transfer order assigned the Federal Class Actions to Judge Charles A. Shaw. By virtue of a prior court order, StoneRidge Investment Partners LLC became lead plaintiff upon entry of the Panel’s transfer order. StoneRidge subsequently filed a Consolidated Amended Complaint. The Court subsequently consolidated the Federal Class Actions into a single action (the “Consolidated Federal Class Action”) for pretrial purposes. On June 19, 2003, following a status and scheduling conference with the parties, the Court issued a Case Management Order setting forth a schedule for the pretrial phase of the Consolidated Federal Class Action. Motions to dismiss the Consolidated Amended Complaint were filed. On February 10, 2004, in response to a joint motion made by StoneRidge and Defendants Charter, Vogel and Allen, the Court entered an order providing, among other things, that: (1) the parties who filed such motion engage in a mediation within ninety (90) days; and (2) all proceedings in the Consolidated Federal Class Actions were stayed until May 10, 2004. On May 11, 2004, the Court extended the stay in the Consolidated Federal Class Action for an additional sixty (60) days. On July 12, 2004, the parties submitted a joint motion to again extend the stay, this time until September 10, 2004. The Court granted that extension on July 20, 2004. On August 5, 2004, Stoneridge, Charter and the individual defendants who were the subject of the suit entered into a Memorandum of Understanding setting forth agreements in principle to settle the Consolidated Federal Class Action. These parties subsequently entered into Stipulations of Settlement dated as of January 24, 2005 which incorporate the terms of the August 5, 2004 Memorandum of Understanding.

The original complaint charges Charter and certain of its officers and directors with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and the dissemination of materially false and misleading statements regarding the nature of Charter's revenue and earnings caused Charter's stock price to become artificially inflated, inflicting damages on investors. The Complaint alleges that defendants overstated Charter's revenue, failed to appropriately account for installation costs and artificially inflated the number of subscribers for the Company's basic cable services. On July 18, 2002, when a Merrill Lynch analyst expressed concerns about potentially misleading accounting practices, Charter's stock fell more than 13%. Additionally, a subsequent article in Forbes discusses a Credit Suisse First Boston report that further amplifies these concerns and describes how Charter handles the impact of "churn" -- labor and advertising costs -- on the Company's balance sheet, by improperly capitalizing approximately 30% of its installation labor costs over an extended time period.

INDUSTRY CLASSIFICATION:
SIC Code: 4841
Sector: Services
Industry: Broadcasting & Cable TV

COMPANY/ISSUER NAME:	Charter Communications, Inc.
COMPANY/ISSUER TICKER:	CHTR
COMPANY WEBSITE:	http://www.chartercom.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Mytien Ngo, et al. v. Charter Communications, Inc., et al.

COURT: C.D. California	DOCKET NUMBER: 02-CV-06004
JUDGE NAME: Hon. Percy Anderson
DATE FILED: 07/31/2002	SOURCE: Business Wires
CLASS PERIOD START: 11/09/1999	CLASS PERIOD END: 07/17/2002
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Bernstein Liebhard & Lifshitz LLP (New York, NY) 10 E. 40th Street, 22nd Floor, New York, NY, 10016 (voice) 800.217.1522, (fax) , info@bernlieb.com Carey & Danis, L.L.C. 8235 Forsyth - Suite 1100, St. Louis, MO, 63105 (voice) 314.725.7700, (fax) , Cauley Geller Bowman Coates & Rudman LLP (Little Rock, AR) P.O. Box 25438, Little Rock, AR, 72221-5438 (voice) 501.312.8500, (fax) 501.312.8505, Glancy and Binkow 1801 Avenue of the Stars, suite 311, Los Angeles, CA, 90067 (voice) 310-201-9150, (fax) , info@glancylaw.com Kirby McInerney & Squire LLP 830 Third Avenue 10th Floor, New York Ave, NY, 10022 (voice) 212.317.2300, (fax) , Law Offices of Marc S. Henzel 335 Central Avenue, Lawrence, NY, 11559 (voice) 516.374.0707, (fax) 516.295.3473, securitiesfraud@comcast.net Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY) One Pennsylvania Plaza, New York, NY, 10119-1065 (voice) 212.594.5300, (fax) , Murray, Frank & Sailer LLP 3181 South 27th Street, Milwaukee, WI, 53215 (voice) 866.264.3995, (fax) 414.482.8001, info@murrayfrank.com 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/ Rabin & Peckel LLP 275 Madison Avenue, 34th Floor, New York, NY, 10016 (voice) 212.682.1818, (fax) 212.682.1892, email@rabinlaw.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 10

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
U.S. District Court Civil Docket
Type: Docket		Date on the document: 04/21/2003

REFERENCE COMPLAINT

StoneRidge Investment Partners, LLC, et al. v. Charter Communications, Inc., et al.

COURT: E.D. Missouri	DOCKET NUMBER: 02-CV-01186
JUDGE NAME: Hon. Charles A. Shaw
DATE FILED: 08/05/2003	SOURCE: Business Wires
CLASS PERIOD START: 11/09/1999	CLASS PERIOD END: 07/17/2002
TYPE OF COMPLAINT: Consolidated and/or Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Carey & Danis, L.L.C. 8235 Forsyth - Suite 1100, St. Louis, MO, 63105 (voice) 314.725.7700, (fax) , Cauley & Geller 2255 Glades Road, #421A, Boca Raton, FL, 33431 (voice) 561.750.3000, (fax) , Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville) 58 South Service Road, Suite 200, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, Milberg Weiss Bershad & Schulman LLP (New York) One Pennsylvania Plaza, 49th Floor, New York, NY, 10119 (voice) 212.594.5300, (fax) 212.868.1229, info@milbergweiss.com 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/ Schiffrin & Barroway LLP 3 Bala Plaza E, Bala Cynwyd, PA, 19004 (voice) 610.667.7706, (fax) 610.667.7056, info@sbclasslaw.com Shapiro Haber & Urmy LLP 75 State Street, Boston, MA, 02109 (voice) 617.439.3939, (fax) 617.439.0134, info@shulaw.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 Zimmerman Reed, PLLP 651 Nicollet Mall, Suite 501, Minneapolis, MN, 55402 (voice) 612.341.0400 , (fax) 612.341.0844, info@zimmreed.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 10

DOCUMENTS FOR THE REFERENCE COMPLAINT
Order Appointing Lead Plaintiff And Approving Lead Plaintiffs' Selection Of Lead Counsel And Liaison Counsel
Type: Order		Date on the document: 01/16/2003
Final Judgment Pursuant To Fed. R. Civ. P. 54(b) As To Scientific-Atlanta, Inc. And Motorola. Inc.
Type: Order		Date on the document: 02/15/2005
Order Preliminarily Approving Settlement And Approving The Form And Manner Of Notice
Type: Order		Date on the document: 02/15/2005
Stipulation Of Settlement With Defendant Arthur Andersen LLP
Type: Settlement		Date on the document: 02/17/2005
Stipulation Of Settlement With Defendant Charter Communications, Inc. And Related Individual Defendants
Type: Settlement		Date on the document: 02/17/2005
Notice Of Pendency And Proposed Settlement Of Class Action
Type: Notice		Date on the document: 02/25/2005
Proof of Claim and Release
Type: Other		Date on the document: 02/25/2005
Judgment And Order Of Dismissal With Respect To Charter Communications, Inc. And The Individual Defendants
Type: Order		Date on the document: 06/30/2005
Judgment And Order Of Dismissal With Respect To Defendant Arthur Andersen LLP
Type: Order		Date on the document: 06/30/2005
Memorandum and Order
Type: Order		Date on the document: 06/30/2005
U.S. District Court Civil Docket
Type: Docket		Date on the document: 05/24/2006
U.S. District Court Civil Docket
Type: Docket		Date on the document: 09/24/2007

OTHER DOCUMENTS
Class Action Complaint for Violations of Federal Securities Laws
Case Name and/or Number: Andrew and Krupa Budman
Type: Complaint		Date on the document: 08/07/2002
U.S. District Court Civil Docket
Case Name and/or Number: Mytien Ngo, et al. v. Charter Communications, Inc., et al.
Type: Docket		Date on the document: 06/12/2003
U.S. District Court Civil Docket
Case Name and/or Number: In Re: Charter Comm Inc v.
Type: Docket		Date on the document: 02/17/2005
Appeal from the United States District Court for the Eastern District of Missouri (Opinion)
Case Name and/or Number: StoneRidge Investment Partners, LLC, et al. v. Charter Communications, Inc., et al.
Type: Other		Date on the document: 04/13/2006

WARNING AND DISCLAIMER OF LIABILITY:
The information included on this Web site, whether provided by personnel employed by Stanford Law School or by third parties, is provided for research and teaching purposes only. Neither Stanford University, Stanford Law School, nor any of their employees, agents, contractors, or affiliates warrant the accuracy or completeness of the information or analyses displayed herein, and we caution all readers that inclusion of any information on this site does not constitute an endorsement of the truthfulness or accuracy of that information. In particular, this Web site contains complaints and other documents filed in federal and state courts, which make allegations that may or may not be accurate. No reader should, on the basis of information contained in or referenced by this Web site, assume that any of these allegations are truthful.

Go to Search page | Go to Case Index page | Back to Top

�