King Pharmaceuticals, Inc. - Securities Class Action

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_______________
Copyright (c) 2001
Stanford Law School

King Pharmaceuticals, Inc. Conclusion: According to a press release dated August 28, 2008, King Pharmaceuticals Inc. has agreed to pay $13.5 million in legal fees and make changes to its corporate governance to settle a shareholder derivative lawsuit that accused the company of breaching its fiduciary duty by underpaying commitments to Medicaid. The company revealed the settlement in a U.S. Securities and Exchange Commission filing on Wednesday.

On January 9, 2007, the Court entered the Order from the Final Settlement Conference proceedings held before Judge Thomas W. Phillips and Judge Dennis H. Inman. The Court entered the Order granting the Motion for Settlement and Plan of Allocation. The Court also entered the Order granting the Motion for Attorney Fees and Reimbursement of Litigation Expenses. Lastly, the Court entered the Final Judgment and Order of Dismissal with Prejudice.

According to a press release dated August 7, 2006, King Pharma has paid $38.25 million in class-action lawsuit settlement. The lawsuit alleged King broke federal securities laws. The firm said the amount, which is pending approval by the court, is likely to be paid by its insurance carriers.

As previously disclosed by the Company’s Form 10-Q for the quarterly period ended March 31, 2006, in November 2005, the parties agreed to submit the matter to non-binding mediation. After an extensive mediation process, an agreement in principle to settle the litigation was reached on April 26, 2006. The parties have not yet completed the negotiation and execution of a definitive settlement agreement, and no assurance can be given that such an agreement will be reached. Further, any such agreement will be subject to approval by the court.

Beginning in March 2003, 22 purported class action complaints were filed by holders of the Company’s securities against the Company, its directors, former directors, executive officers, former executive officers, a Company subsidiary, and a former director of the subsidiary in the United States District Court for the Eastern District of Tennessee, alleging violations of the Securities Act of 1933 and/or the Securities Exchange Act of 1934, in connection with the Company’s underpayment of rebates owed to Medicaid and other governmental pricing programs, and certain transactions between the Company and the Benevolent Fund. These 22 complaints have been consolidated in the United States District Court for the Eastern District of Tennessee. In addition, holders of the Company’s securities filed two class action complaints alleging violations of the Securities Act of 1933 in Tennessee state court. The Company removed these two cases to the United States District Court for the Eastern District of Tennessee, where these two cases were consolidated with the other class actions. The district court has appointed lead plaintiffs in the consolidated action, and those lead plaintiffs filed a consolidated amended complaint on October 21, 2003 alleging that King, through some of its executive officers, former executive officers, directors, and former directors, made false or misleading statements concerning its business, financial condition, and results of operations during periods beginning February 16, 1999 and continuing until March 10, 2003. Plaintiffs in the consolidated action have also named the underwriters of King’s November 2001 public offering as defendants. The Company and other defendants filed motions to dismiss the consolidated amended complaint. On August 12, 2004, the United States District Court for the Eastern District of Tennessee ruled on defendants’ motions to dismiss. The Court dismissed all claims as to Jones and as to defendants Dennis Jones and Henry Richards. The Court also dismissed certain claims as to five other individual defendants. The Court denied the motions to dismiss in all other respects. Following the Court’s ruling, on September 20, 2004, the Company and the other remaining defendants filed answers to plaintiffs’ consolidated amended complaint. Discovery in this action has commenced. The Court has set a trial date of April 10, 2007.

The original Complaint charges King Pharmaceuticals and certain of its officers with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and the dissemination of materially false and misleading statements concerning King Pharmaceuticals' business operations and earnings caused King Pharmaceuticals' stock price to become artificially inflated, inflicting damages on investors. King Pharmaceuticals manufactures, markets and sells primarily branded prescription pharmaceutical products to general and family practitioners and internal medicine physicians and hospitals across the United States. The Complaint alleges that during the Class Period Defendants misrepresented that the prices paid by governmental Medicaid agencies were the "best price" - i.e., the cheapest price offered to distributors and other purchasers - for a particular drug, resulting in government overpayment for drugs purchased through the Medicaid program. The complaint further alleges that the Company recognized revenue subject to "pharmaceutical rebate" payments provided by King Pharmaceuticals to distributors to stock up on the Company's blood-pressure drug, Altace(R). On March 11, 2003, defendants disclosed that the Securities and Exchange Commission is investigating King Pharmaceuticals and has subpoenaed, among other things, the Company's "best price" lists and all documents related to the pricing of the Company's pharmaceutical products to any governmental Medicaid agency during 1999 and the accrual and payment of rebates on Altace. News of the SEC investigation caused a 23% drop in the price of King Pharmaceuticals' stock on the day the investigation was disclosed.

INDUSTRY CLASSIFICATION:
SIC Code: 2834
Sector: Healthcare
Industry: Biotechnology & Drugs

COMPANY/ISSUER NAME:	King Pharmaceuticals, Inc.
COMPANY/ISSUER TICKER:	KG
COMPANY WEBSITE:	http://www.kingpharm.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Pechter, et al. v. King Pharmaceuticals, Inc., et al.

COURT: E.D. Tennessee	DOCKET NUMBER: 03-CV-77
JUDGE NAME: Hon. Thomas G. Hull
DATE FILED: 3/12/2003	SOURCE: Business Wires
CLASS PERIOD START: 4/26/1999	CLASS PERIOD END: 3/11/2003
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Abbey Gardy, LLP 212 East 39th Street, New York, NY, 10016 (voice) 212.889.3700, (fax) , info@abbeygardy.com Brian Felgoise 230 South Broad Street, Suite 404 , Philadelphia, PA, 19102 (voice) 215.735.6810, (fax) 215/735.5185., Cauley Geller Bowman Coates & Rudman, LLP (New York) 200 Broadhollow, Suite 406, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, Chitwood & Harley LLP 1230 Peachtree Street, N.E., 2300 Promenade II, Atlanta, GA, 30309 (voice) 888.873.3999, (fax) 404.873.4476, info@chitwoodlaw.com 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 Charles J. Piven, P.A. World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202 (voice) 410.332.0030, (fax) , pivenlaw@erols.com 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 Spector Roseman & Kodroff (San Diego) 1818 Market Street, Suite 2500, Philadelphia, PA, 19103 (voice) 215.496.0300, (fax) 215.496.6611, Wolf Haldenstein Adler Freeman & Herz LLP (New York) 270 Madison Avenue, New York, NY, 10016 (voice) 212.545.4600, (fax) 212.686.0114, newyork@whafh.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 10

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violations of the Federal Securities Law
Type: Complaint		Date on the document: 03/12/2003

REFERENCE COMPLAINT

In re King Pharmaceuticals, Inc. Securities Litigation

COURT: E.D. Tennessee	DOCKET NUMBER: 03-CV-77
JUDGE NAME: Hon. Thomas Gray Hull
DATE FILED: 10/24/2003	SOURCE: Business Wires
CLASS PERIOD START: 2/16/1999	CLASS PERIOD END: 3/10/2003
TYPE OF COMPLAINT: Consolidated and/or Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Abbey Gardy, LLP 212 East 39th Street, New York, NY, 10016 (voice) 212.889.3700, (fax) , info@abbeygardy.com Abbey Spanier Rodd Abrams & Paradis, LLP 212 East 39th Street, New York, NY, 10016 (voice) 212-889-3700, (fax) 212-684-519, info@abbeyspanier.com 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 Weiss & Lurie (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 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 REFERENCE COMPLAINT
Consolidated Class Action Complaint For Violations Of The Federal Securities Laws
Type: Complaint		Date on the document: 10/24/2003
Report and Recommendation
Type: Other		Date on the document: 07/12/2004
Orders
Type: Order		Date on the document: 08/11/2004
Memorandum Of Law In Support Of Lead Plaintiffs’ Motion To Compel Production Of Documents
Type: Memorandum		Date on the document: 07/14/2005
Order
Type: Order		Date on the document: 09/21/2005
Stipulation of Settlement
Type: Settlement		Date on the document: 08/28/2006
Unopposed Motion For Preliminary Approval Of Settlement And Supporting Memorandum Of Law
Type: Motion		Date on the document: 08/28/2006
Notice of Pendency and Proposed Class Action Settlement
Type: Notice		Date on the document: 09/27/2006
Order Preliminarily Approving Settlement and Providing For Notice
Type: Order		Date on the document: 09/27/2006
Proof of Claim and Release
Type: Other		Date on the document: 09/27/2006
Compendium Of Declarations Submitted In Support Of Approval Of Attorneys’ Fees And Reimbursement Of Litigation Expenses
Type: Other		Date on the document: 12/19/2006
Declaration Of Jeffrey N. Leibell In Support Of The Proposed Settlement, Plan Of Allocation And Application For An Award Of Attorneys’ Fees And Reimbursement Of Litigation Expenses
Type: Declaration		Date on the document: 12/19/2006
The Class Representatives’ Motion For An Award Of Attorneys’ Fees And Reimbursement Of Expenses And Supporting Memorandum Of Law
Type: Motion		Date on the document: 12/19/2006
The Class Representatives’ Motion For Final Approval Of Settlement And Plan Of Allocation And Supporting Memorandum Of Law
Type: Motion		Date on the document: 12/19/2006
Final Judgment and Order of Dismissal with Prejudice
Type: Order		Date on the document: 01/09/2007
US District Court Civil Docket
Type: Docket		Date on the document: 6/22/2007

OTHER DOCUMENTS
Class Action Complaint for Violations of the Federal Securities Law
Case Name and/or Number: Kenneth Ditzel
Type: Complaint		Date on the document: 03/20/2003

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