According to the latest docket posted, on January 13, 2000, the Court entered the Memorandum and Order by U.S. District Judge Douglas P. Woodlock granting the defendants’ motion to dismiss. That day, the Court further entered the Order of Dismissal and the case was closed. On July 13, 2000, the plaintiffs filed a notice of appeal, but later withdrew the appeal.
As summarized by the Company’s FORM 10-K for the fiscal year ended January 1, 2000, the putative class consists of "all persons, other than the defendants named herein, who purchased or otherwise acquired the common stock of [the Company] either in or traceable to the Company's secondary offering of its common stock conducted on or about July 29, 1998 . . . through September 24, 1998[.]" The consolidated amended class action complaint alleges that the Company and the individual defendants violated Sections 11 and 12(a)(2) of the Securities Act of 1933 and the individual defendants violated Section 15 of the Securities Act of 1933. The asserted violations of the Securities Act of 1933 are based upon allegations that the Company's July 29, 1998 prospectus contained materially false or misleading statements and omitted to state material facts necessary to make statements made in the prospectus not misleading. The damages sought are unspecified as to amount. In addition to damages, plaintiffs seek an award of rescission to the extent plaintiffs and the members of the putative class still hold the Company's shares. The Company and the individual defendants have moved to dismiss the consolidated amended class action complaint. Oral argument of the motion to dismiss was heard on January 12, 2000 and the court has reserved decision.
Previously, according to the same SEC filing, in September and October 1998, the Company and certain of its officers and directors were named as defendants in four putative class actions filed during September 1998 relating to the Company's public offering of 3.2 million shares of common stock that was completed on August 4, 1998 (the "Offering"). Three of the actions were commenced in the United States District Court for the District of Massachusetts: Neng Yang, etc. v. Quaker Fabric Corp., et al., Honora Shapiro, etc. v. Quaker Fabric Corp., et al., and Ed Forstein v. Quaker Fabric Corp., et al. One action, Bruno DeLuca, etc. v. Quaker Fabric Corp., et al., was filed in the United States District Court for the Eastern District of New York. On July 9, 1999, the action commenced in the Eastern District of New York was transferred to the District of Massachusetts. On July 15, 1999, the four actions were consolidated and on September 13, 1999, a consolidated amended class action complaint was filed.
The original Complaint alleges that the Registration Statement and Prospectus for a secondary offering of common stock contained "materially false and misleading" information that resulted in the stock price being artificially high.