According to the docket posted, on November 1, 1999, the Court entered the Order and Final Judgment signed by U.S. District Judge Jorge A. Solis adopting the magistrate judge’s recommendations dismissing the amended class action complaint with prejudice.
Previously, on January 27, 1999, the Court entered the Order granting the motion for appointment of lead plaintiffs and approval of co-lead counsel. On February 26, 1999, the defendants filed a motion to dismiss the class action complaint, but on March 31, 1999, the plaintiff filed an Amended Complaint. On May 4, 1999, the defendants again filed a motion to dismiss the amended class action complaint. On July 30, 1999, Magistrate Judge Jeff Kaplan issued the Findings, Conclusions and Recommendations that the motion to dismiss the amended class action complaint should be granted in its entirety and this case should be dismissed with prejudice.
The original Complaint charges that Gadzooks and certain officers and directors of the company during the relevant time period violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, by, among other things, misrepresenting
and failing to disclose material information concerning the company's "to date"
July sales figures, information that would have undermined its July 9, 1998
press release and statements contained therein regarding its profitability and
inventory composition and positioning.
The Complaint alleges that by July 9, 1998, defendants had actual knowledge
of the negative, underlying material facts indicating that sales for the first
nine days of July were below expectations, that the company's inventory and
products were not being adequately accepted in the marketplace, that the sales
trend was highly negative, that the overall and budgeted sales for July, one of
the "most important profit months of the second quarter" were at risk and would
be well below expectations, and that, as a result, profitability would suffer
substantially. The scheme (i) deceived the investing public regarding
Gadzooks' business, its finances and the intrinsic value of Gadzooks' common
stock; and (ii) caused plaintiff and other members of the Class to purchase the
company's common stock at artificially inflated prices.