Skechers USA, Inc. - Securities Class Action

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Copyright (c) 2001
Stanford Law School

Skechers USA, Inc. Summary: The original complaint charges that beginning in 2002, Skechers began assuming the role of distributor of its products in several international markets such as Spain, Italy, Portugal, the Benelux region, and Austria. Once unencumbered by a third party distributor, Skechers was able to increase their profit margin on sales without moving any additional inventory. Yet, this benefit was short-lived. While temporarily enjoying increased profits by reaping greater margins on sales, Skechers' overall merchandise sales ultimately began to slow and Skechers was forced to significantly reduce earnings accordingly. The market, unprepared for the temporary effect this role of distributor would have on earnings, was stunned once the Company, having recorded record revenue in the first and second quarter of 2002, began revising earnings and ultimately recorded a loss. Even more alarming, while Skechers stock was soaring as a result of the market's favorable reaction to its increased profits, the Individual Defendants, knowing the truth about the Company's long-term outlook, sold off considerable personal holdings in the Company and reaped more than $42 million profit from stock sales during the Class Period.

According to the Company’s Form 10-Q or the quarterly period ended September 30, 2005, in July 2003, the court in the federal securities class actions, all pending in the United States District Court for the Central District of California, ordered the cases consolidated and a consolidated complaint to be filed and served. On September 25, 2003, the plaintiffs filed a consolidated complaint entitled In re SKECHERS USA, Inc. Securities Litigation, Case No. CV-03-2094-PA in the United States District Court for the Central District of California, consolidating all of the federal securities actions above. The complaint names as defendants Skechers and certain officers and directors and alleges violations of the federal securities laws and breach of fiduciary duty on behalf of persons who purchased publicly traded securities of Skechers between April 3, 2002 and December 9, 2002. The complaint seeks compensatory damages, interest, attorneys’ fees and injunctive and equitable relief. Skechers moved to dismiss the consolidated complaint in its entirety. On May 10, 2004, the court granted Skechers’ motion to dismiss with leave for plaintiffs to amend the complaint. On August 9, 2004, plaintiffs filed a first amended consolidated complaint for violations of the federal securities laws. The allegations and relief sought were virtually identical to the original consolidated complaint. Skechers has moved to dismiss the first amended consolidated complaint and the motion was set for hearing on December 6, 2004. On March 21, 2005, the court granted the motion to dismiss the first amended consolidated complaint with leave for plaintiffs to amend one final time. On April 7, 2005, plaintiffs elected to stand on the first amended consolidated complaint and requested entry of judgment so that an appeal from the court’s ruling could be taken. On April 26, 2005, the court entered judgment in favor of Skechers and the individual defendants, and on May 3, 2005, plaintiffs filed an appeal with the United States Court of Appeals for the Ninth Circuit.

On May 2, 2008, the Court entered the Mandate from the U.S. Court of Appeals affirming the Judgment of the District Court.

INDUSTRY CLASSIFICATION:
SIC Code: 3140
Sector: Consumer Cyclical
Industry: Footwear

COMPANY/ISSUER NAME:	Skechers USA, Inc.
COMPANY/ISSUER TICKER:	SKX
COMPANY WEBSITE:	http://www.skechers.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Harvey Solomon, et al. v. Skechers USA, Inc., et al.

COURT: C.D. California	DOCKET NUMBER: 03-CV-2094
JUDGE NAME: Hon. Dean D. Pregerson
DATE FILED: 03/25/2003	SOURCE: Business Wires
CLASS PERIOD START: 04/03/2002	CLASS PERIOD END: 12/09/2002
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
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 Cauley Geller Bowman Coates & Rudman, LLP (New York) 200 Broadhollow, Suite 406, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, Cauley Geller, Bowman Coates & Rudman, LLP (Boca Raton, FL) One Boca Place. 2255 Glades Road, Suite 421A, Boca Raton, FL, 33431 (voice) 561.750.3000, (fax) 561.750.3364, Glancy and Binkow 1801 Avenue of the Stars, suite 311, Los Angeles, CA, 90067 (voice) 310-201-9150, (fax) , info@glancylaw.com Schiffrin & Barroway LLP 3 Bala Plaza E, Bala Cynwyd, PA, 19004 (voice) 610.667.7706, (fax) 610.667.7056, info@sbclasslaw.com 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: 6

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Complaint For Breach Of Fiduciary Duty And Violations Of Federal Securities Laws
Type: Complaint		Date on the document: 03/25/2003

REFERENCE COMPLAINT

In Re: Skechers USA, Inc. Securities Litigation

COURT: C.D. California	DOCKET NUMBER: 03-CV-2094
JUDGE NAME: Hon. Percy Anderson
DATE FILED: 08/09/2004	SOURCE: Business Wires
CLASS PERIOD START: 04/03/2002	CLASS PERIOD END: 12/09/2002
TYPE OF COMPLAINT: First Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
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 (Los Angeles, CA) 355 S Grand Ave - Ste 4170, Los Angeles, CA, 90071-3172 (voice) 213.617.9007, (fax) , _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE REFERENCE COMPLAINT
Order Granting Defendants' Motion to Dismiss the First Amended Consolidated Complaint
Type: Order		Date on the document: 03/21/2005
Judgment of Dismissal
Type: Other		Date on the document: 04/25/2005
U.S. District Court Civil Docket
Type: Docket		Date on the document: 09/15/2005
U.S. District Court Civil Docket
Type: Docket		Date on the document: 05/02/2008

OTHER DOCUMENTS
Mandate
Case Name and/or Number: In Re: Skechers USA, Inc. Securities Litigation
Type: Other		Date on the document: 05/02/2008

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