The original complaint charges MCI and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 for making false and misleading statements to the investing public regarding the impending merger between MCI and BT Telecommunications PLC ("BT"). Specifically, plaintiff alleges the Company failed to advise the investing public that BT was renegotiating the terms of the merger, which resulted in a lower price to be paid to MCI's shareholders, in light of the $800 million loss expected by MCI for 1997.
Several similar, purported class action complaints have also been filed in the U.S. District Court for the District of Columbia. Complaints and a derivative complaint have also been filed in Court of Chancery in the State of Delaware.
According to the docket for the action filed in the Eastern District of New York, on March 3, 1998, the Court entered the Stipulation Order signed by U.S. District Judge Reena Raggi dismissing the action without prejudice. The case is continuing in the District of Columbia.
As summarized by the co-lead counsel’s website, additional cases were filed on behalf of investors. On October 31, 1997, motions were made to consolidate the various actions and appoint lead plaintiff and lead counsel. On March 18, 1998, the court consolidated the cases under the caption In re MCI Communications Corp. Securities Litigation, No. 97-CV-1976, and appointed Wolf Haldenstein co-lead counsel. On May 8, 1998, plaintiffs filed a consolidated and amended class action complaint. On July 13, 1998, defendants filed a motion to dismiss, which was denied pursuant to an Order entered on May 8, 2002.
On July 31, 2002, lead plaintiffs moved for certification of the class consisting of all persons who purchased or acquired common stock of MCI between July 11, 1997, and August 21, 1997, and who were damaged thereby, and appointing the Plaintiff Class Representatives as representatives of the Class. On February 12, 2003, that motion was granted in full with respect to the individual defendants. The class certification did not extend to MCI, as the claims against MCI were stayed as a result of MCI’s bankruptcy proceedings.
On October 27, 2003, the Court ordered that this case was stayed pending resolution of MCI’s bankruptcy proceedings, or until such time as MCI provided discovery to plaintiffs. Pursuant to that order, the case was administratively closed.
MCI emerged from bankruptcy in April 2004. A motion to re-open discovery was never brought by plaintiffs because the individual defendants and lead plaintiffs were already engaged in settlement discussions. On March 11, 2005, the parties agreed to the principle terms of the Settlement set forth in the Stipulation. On December 29, 2005, plaintiffs voluntarily dismissed their claims against MCI.
Pursuant to the Stipulation of Settlement, dated January 3, 2006, the individual defendants agreed in principle to settle the litigation for $4,500,000.
On April 1, 2006, the Court entered the amended Order of Preliminary Approval of Settlement. On November 16, 2006, the Court entered the Final Judgment Order of Dismissal granting the motion for settlement. Further that day, the Court granted in part and denied in part the motion for attorney fees and lead plaintiff expenses.