According to the docket posted, on March 31, 2003, the Court issued a Final Order and Judgment signed by U.S. District Judge John F. Keenan. According to the Order, the Court certified the class, approved the settlement and the plan of allocation, and dismissed the action with prejudice. The Final Order and Judgment was entered on April 8, 2003. The case is closed.
In a Business Wire article dated September 23, 2002, Scholastic Corporation announced that it has agreed in principle to settle the shareholder class action entitled In re Scholastic Corporation Securities Litigation. Scholastic will record a non-recurring pre-tax charge of $1.9 million in the quarter ended August 31, 2002 to reflect the 25% of the $7.5 million settlement that will not be paid by the Company's insurers. On an after-tax basis, the charge is equal to approximately $1.2 million or $0.03 per share.
As reported by the Company’s FORM 10-K for the fiscal year ended May 31, 2002, on January 26, 2000, an order was entered granting the Company's motion to dismiss plaintiffs' Second Amended Consolidated Complaint without leave to further amend the complaint. Previously, on December 14, 1998, an order was entered granting the Company's motion to dismiss plaintiffs' First Amended Consolidated Complaint, with leave to amend the complaint. On June 1, 2001, the Court of Appeals for the Second Circuit reversed the dismissal of the Second Amended Consolidated Complaint and remanded the case for further proceedings. On December 10, 2001, the Supreme Court of the United States denied the Company's petition for a Writ of Certiorari to review the Second Circuit's decision.
Earlier, according to the same SEC filing, three purported class action complaints were filed in the United States District for the Southern District of New York against the Company and certain officers seeking, among other remedies, damages resulting from defendants' alleged violations of federal securities laws. The complaints were consolidated. The Consolidated Amended Class Action Complaint (the "Complaint") was served and filed on August 13, 1997. The Complaint was styled as a class action, In re Scholastic Corporation Securities Litigation, 97 Civ.II 2447 (JFK), on behalf of all persons who purchased Company common stock from December 10, 1996 through February 20, 1997. The Complaint alleged, among other things, violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, resulting from purportedly materially false and misleading statements to the investing public concerning the financial condition of the Company. Specifically, the Complaint alleged misstatements and omissions by the Company pertaining to adverse sales and returns of its popular Goosebumps book series prior to the Company's interim earnings announcement on February 20, 1997.
The original complaint alleges that Scholastic and its Vice President for Finance and Investor Relations concealed a material decline in Goosebump book sales and a material increase in returns of Goosebump books. Plaintiffs further allege that during this period, this Vice President sold 80 percent of his holdings of Scholastic stock and Scholastic sold $125 million of notes.