According to the Order and Final Judgment dated March 22, 2004, the Court certifies the action as a class action and approves the settlement. Plaintiffs’ counsel is awarded 33 1/3 percent of Gross Settlement Fund in fees, which sum the Court finds to be fair and reasonable, and $280,000.00 in reimbursement of expenses, which amounts shall be paid to plaintiffs’ lead counsel from settlement fund with interest. The complaint is dismissed with prejudice and the case terminated.
By the Notice of Pendency of Class Action, a settlement fund consisting of $4,000,000 in cash, plus interest, has been established. A hearing will be held before the Honorable Charles A. Pannell, Jr. in the United States Courthouse, 75 Spring Street, S.W., Atlanta, Georgia 30303-3361, at 10:00 a.m., on March 22, 2004 (to determine whether a proposed settlement of the above-captioned action as set forth in the Stipulation and Agreement of Settlement dated December 19, 2003, is fair, reasonable and adequate and to consider the proposed Plan of Allocation for the settlement proceeds and to consider the application of Plaintiffs’ Counsel for attorneys’ fees and reimbursement of expenses.
Earlier, according to the same notice, on November 15, 2000, Medirisk filed for bankruptcy protection and is no longer a party to this Action. Following the Court’s October 16, 2000 decision, Plaintiffs’ Lead Counsel conducted a thorough campaign of discovery into the merits of the allegations. By Order dated March 19, 2002, the Court certified this Action to proceed as a class action under Rule 23 of the Federal Rules of Civil Procedure on behalf of all persons who purchased or otherwise acquired Medirisk common stock pursuant or traceable to the Secondary Offering. On May 31, 2002, Plaintiffs filed a Second Consolidated and Amended Class Action Complaint adding the Underwriter Defendants as defendants in this Action. This complaint continued to assert claims under the Exchange Act to preserve such claims for appeal.
On January 13, 1999, Plaintiffs filed a Consolidated and Amended Class Action Complaint alleging that Medirisk and the Individual Defendants publicly disseminated materially false and misleading statements during the Class Period. On March 12, 1999, the Individual Defendants moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure and the Private Securities Litigation Reform Act of 1995. By Order dated October 16, 2000, the Court dismissed Plaintiffs’ claims under the Exchange Act but upheld Plaintiffs’ claims under the Securities Act.
On November 5, 1998, Plaintiffs entered into a Stipulated Dismissal Without Prejudice as to Certain Defendants and Tolling Agreement with certain of Medirisk’s officers and/or directors as well as the Underwriter Defendants (the “Dismissed Defendants”), pursuant to which the Dismissed Defendants were dismissed without prejudice from the consolidated actions, with Plaintiffs retaining the right, under certain stipulated circumstances, to add the Dismissed Defendants as defendants in any future complaint without doing so in the contemplated first consolidated and amended complaint. On November 6, 1998, the Court appointed thirteen lead plaintiffs and approved their selection of Plaintiffs’ Lead counsel and Plaintiffs’ Liaison Counsel. Subsequent thereto, the actions were consolidated.
The original complaint alleges that Medirisk and certain officers and directors of the
Company violated Sections 10(b) and 20(a) of the Securities Exchange Act of
1934 and Rule 10b-5 thereunder by, among other things, misrepresenting the
Company's business, sales, products and prospects. Specifically, the complaint
alleges that defendants concealed weakening demand for Medirisk's products and
declining sales in order to complete a $48 million secondary offering (the
"Secondary Offering") of common stock on June 10, 1998. A mere twenty days
after the completion of the Secondary Offering, Medirisk stunned the market by
announcing that it would miss analysts' earnings expectations for the fiscal
quarter ended June 30, 1998, by a wide margin and that sales in two of its
three product lines would be weak for the balance of the fiscal year.
Furthermore, Medirisk stated that, in order to reverse declining sales, it
would be changing sales management, implementing new product distribution
channels and attempting to create new product enhancements.
The complaint further alleges that in response to these announcements, the price of Medirisk common stock plunged 69%, falling from $20.25 per share to $6.3125 per share -- a decline of 67% from the Secondary Offering price of $19.375 per share.