On April 10, 1997, the Court dismissed the class action suit, writing that the "plaintiffs have not alleged that there was any intentional wrongdoing by defendants" and that Ernst had properly disclosed their business risks.

According to the complaint, the Class Period commences with Ernst's initial public offering ("IPO") of common stock which raised approximately $41.5 million from investors. The IPO was possible only as a result of defendants' misrepresentations and omissions of fact concerning the financial performance and condition of Ernst. These misrepresentations and omissions operated to artificially inflate the price of Ernst's common stock at the initial offering and throughout the Class Period. The IPO offering material presented a rosy picture of a company well positioned in an industry which was experiencing dramatic growth.

As reported in the Company’s FORM 10-Q For the Quarterly Period Ended July 27, 1996, on July 12, 1996, Ernst Home Center, Inc. (the "Company") filed a voluntary petition for relief under Chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware. Two former Directors, one former officer and one current officer, who is a Director, of the Company are named as defendants in a class action complaint alleging among other things, misrepresentation and omissions of fact in connection with the Company's initial public offering of common stock. The complaint was filed in the United States District Court for the Western District of Washington at Seattle. The Company is not named as a defendant in this complaint.