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Case Status:    SETTLED
On or around 08/17/2001 (Date of order of final judgment)

Filing Date: March 15, 1999

According to a press release dated March 30, 2005, a federal judge has once again awarded more than $31 million in attorney fees to the team of lawyers who secured a $126 million settlement from the accounting firm KPMG for its alleged failure to blow the whistle on financial shenanigans at Rite Aid Corp. The ruling by U.S. District Judge Stewart Dalzell of the Eastern District of Pennsylvania comes just two months after an appeals court ruled that the fee award may have been too generous because Dalzell erred in his application of a lodestar "crosscheck" by focusing only on the hourly rates for the top lawyers.

In a press release on June 4, 2003, a federal judge in Philadelphia has approved a settlement of more than $126 million for investors who bought Rite Aid Corp. stock during a 2 1/2-year period in the late 1990s. Combined with a previous settlement with Rite Aid, shareholders will have access to a package of more than $334 million to partially recover their losses. The latest settlement involves a $125 million contribution from KPMG LLP, Rite Aid's former auditor, and up to $1.45 million from Martin L. Grass, former chairman and chief executive officer. The settlement applies to investors who bought and held Rite Aid stock from May 2, 1997, through Nov. 10, 1999. The shareholders contended in lawsuits that they were misled about Rite Aid's financial condition by the company's former management. Attorneys for the shareholders initially reached a settlement with Rite Aid in November 2000. U.S. Eastern District Judge Stewart Dalzell approved that agreement in August 2001, but his order was appealed by Grass, KPMG and former Chief Financial Officer Frank Bergonzi, who were all excluded from the settlement. Noonan also was excluded from the Rite Aid settlement, but he didn't file an appeal. Settlements with KPMG and Noonan were announced in March. The Grass settlement came a month later. Lawyers for the shareholders decided not to seek damages from Begonzi in return for him dropping his appeal. Dalzell held a hearing on the settlement last Friday.In approving the latest settlement, Dalzell noted that more than 300,000 notices were mailed and no objection had been filed.

As reported by the Company’s FORM 10-Q For The Quarterly Period Ended May 31, 2003, the Company's settlement of the consolidated securities class action lawsuits brought on behalf of securityholders who purchased its securities on the open market between May 2, 1997 and November 10, 1999 (and based on the allegation that the Company's financial statements for fiscal 1997, fiscal 1998 and fiscal 1999 fraudulently misrepresented its financial position and results of operations for these periods) was approved by the United States District Court for the Eastern District of Pennsylvania by Order entered August 16, 2001. Although that Order was appealed by certain non-settling defendants (including the Company's former auditor, KPMG, the Company's former chief executive officer, and the Company's former chief financial officer), those non-settling defendants have now also settled with plaintiffs, which settlement received final approval by the District Court on June 2, 2003. On June 9, 2003 all parties to the appeal filed a stipulation of dismissal of the appeal. In accordance with the agreement settling plaintiffs' claims against the Company, in April 2002, the Company issued $149,500,000 of senior secured (shareholder) notes (subsequently redeemed in February 2003) and paid $45,000,000 in cash, which was fully funded by the Company's officers' and directors' liability insurance. Several members of the class have elected to "opt-out" of the class and, as a result, they will be free to pursue their claims. Management believes that their claims, individually and in the aggregate, are not material.

Further, on May 29, 2003, the Delaware Supreme Court affirmed the dismissal by the Delaware Chancery Court of the purported class action instituted by a stockholder against the Company on behalf of stockholders who purchased shares of the Company's common stock prior to March 1, 1997, and who continued to hold them to October 18, 1999, alleging claims similar to the claims alleged in the consolidated securities class action lawsuits described above.

The original Complaint asserts that defendants violated Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The lawsuit alleges that defendants' material misrepresentations and omissions caused the Company's stock to trade at artificially inflated levels during the Class Period. In summary, the Complaint states that during the Class Period defendants made materially false and misleading statements about charges associated with theCompany's strategic exit plan, which include vacating certain markets, closing bantam
East Coast stores and consolidating certain other store locations. The Complaint alleges that these statements were materially false and misleading and artificially inflated the price of Rite Aid common stock because they mislead investors into believing that the charges would be sufficient and would lead to the enhancement of future results. Specifically, the Complaint alleges that during the Class Period the defendants knew but failed to disclose that: (1) the costs associated with opening and closing stores were running substantially higher than initially projected and that as a consequence, future results, including fourth quarter results for the period ended February 28, 1999, would be severely impacted, (2) that severe start-up software problems were occurring at Rite Aid's new distribution center in Perryman, Maryland, supplying 760 stores in the mid-Atlantic region, which meant that the closing of the older Shiremanstown, Pennsylvania, distribution center would be delayed, leading to substantial incremental costs in running both facilities at the same time, (3) that the implementation of a revised merchandising strategy during the quarter would lead to markdowns and thereby negatively impact earnings, and (4) that the Company's acquisition of PCS Health Systems was going to close in mid to late January and as a result the Company would not be able to recognize any fourth quarter benefits from synergies. Defendants' announcement on March 12, 1999, that its earnings per share would be $.30 to $.32 per share, well short of First Call analyst consensus estimates of $.52 per share shocked the marketplace. The price of Rite Aid's common stock plummeted from $37 per share to close at $22-9/16 per share, a plunge of $14-7/16 per share or over 39%, on enormous volume of 47 million shares.

COMPANY INFORMATION:

Sector: Services
Industry: Retail (Drugs)
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: RAD
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: E.D. Pennsylvania
DOCKET #: 99-CV-1323
JUDGE: Hon. Charles R. Weiner
DATE FILED: 03/15/1999
CLASS PERIOD START: 12/14/1998
CLASS PERIOD END: 03/11/1999
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Berger & Montague PC
    1622 Locust Street, Berger & Montague PC, PA 19103
    800.424.6690 215.875.4604 · investorprotect@bm.net
  2. Bernstein Liebhard & Lifshitz, LLP (New York)
    10 E. 40th Street, 22nd Floor, Bernstein Liebhard & Lifshitz, LLP (New York), NY 10016
    800.217.1522 · info@bernlieb.com
  3. Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY)
    One Pennsylvania Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY), NY 10119-1065
    212.594.5300 ·
No Document Title Filing Date
COURT: E.D. Pennsylvania
DOCKET #: 99-CV-1349
JUDGE: Hon. Charles R. Weiner
DATE FILED: 02/08/2001
CLASS PERIOD START: 05/02/1997
CLASS PERIOD END: 11/10/1999
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Berger & Montague PC
    1622 Locust Street, Berger & Montague PC, PA 19103
    800.424.6690 215.875.4604 · investorprotect@bm.net
  2. Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY)
    One Pennsylvania Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY), NY 10119-1065
    212.594.5300 ·
No Document Title Filing Date
No Document Title Filing Date