According to the closing Order and Final Judgment, dated December 28, 2000 from U.S. District Judge A Joe Fish of the Federal District Court for the Northern District of Texas, the case was settled by agreement in June 2000.
Originally on August 3, 1998, EEX, several of its current and/or former
officers and directors, Texas Utilities Company ("TUC") and TUC's Chief
Executive Officer were named in a class action lawsuit filed in the Northern
District of Texas that was designated as Gracy Fund L.P. v. EEX Corporation,
et al., ("Gracy Fund"). The Gracy Fund complaint alleged violations of the
Securities Act of 1933 ("33 Act") and the Securities Exchange Act of 1934 ("34
Act") against various defendants.
Additionally, on August 3, 1998, EEX, several of its current and/or former officers and directors, and two additional companies (ENSERCH Corporation and DeGolyer & MacNaughton) were named in a class action lawsuit filed in the Southern District of Texas that was designated as Stan C. Thorne v. EEX Corp.,
et al ("Thorne"). The Thorne complaint alleged violations of the 34 Act and
common law-based negligent misrepresentations and fraud claims.
On October 5, 1998, the Thorne defendants filed a motion to transfer the Thorne action to the Northern District of Texas. On November 20, 1998, the Thorne action was transferred to the Northern District of Texas and consolidated with the Gracy Fund action. On January 22, 1999, plaintiffs filed an amended class action complaint in the consolidated Gracy Fund action against EEX, several of its current and/or former officers and directors and another company, ENSERCH Corporation ("Consolidated Complaint").
The Consolidated Complaint alleges violations of Sections 11, 12(a)(2) and 15 of the 33 Act and violations of Sections 10(b), 14(a) and 20(a) of the 34 Act against various defendants. The Consolidated Complaint alleges the Sections 10(b), 15 and 20(a) claims on behalf of a class of plaintiffs who acquired EEX's stock pursuant to an October 1996 Registration Statement and Proxy/Prospectus ("EEX Subclass"). Plaintiffs allege that during the class period, defendants made materially false and misleading statements, and failed to disclose material facts, regarding the value and volume of EEX's proved reserves from its East Texas operations. According to plaintiffs, these purported misrepresentations artificially inflated the price of EEX's common stock throughout the class period, induced the EEX Subclass to approve the merger that spun EEX off from ENSERCH and induced the EEX Subclass to acquire stock pursuant to the Registration Statement and Proxy/Prospectus issued regarding this merger.
The Company filed a motion to dismiss the Consolidated Complaint on March 8, 1999. The case was later settled by an agreement in June 2000.