According to the latest docket, on November 22, 2002, U.S. District Judge Vanessa D. Gilmore granted the joint motion for attorney fees and compensation awards. Further, Judge Gilmore issued a Final Judgment and Order dismissing the case with prejudice. Soon after, a Notice of Appeal was filed by the plaintiffs regarding attorney fees. On February 7, 2003, the USCA ordered the appellant’s motion of appeal dismissed.
By the Notice of Pendency and Proposed Settlement of Class Action dated July 26, 2002, a settlement hearing will be held on November 1, 2002. The purpose of the Settlement Hearing will be to determine whether to certify the Class, whether the proposed settlement of the claims in the Litigation for the sum of $28,650,000 plus interest should be approved by the Court, whether to approve the Plan of Allocation is fair, reasonable and adequate; (4) whether the application for an award of attorneys’ fees and reimbursement of costs and expenses and an award to Lead Plaintiffs should be approved; and (5) whether the Litigation should be dismissed with prejudice.
As summarized in the same Notice of Pendency, on February 28, 2002, Lead Plaintiffs renewed their motion for class certification. Hearing on that motion was set for April 19, 2002, and subsequently adjourned in view of the ensuing settlement discussions.In January 2002, the parties began discussing settlement in earnest. In March 2002, the parties retained Gary V. McGowan, Esq. of Houston as mediator, and a mediation session was held on April 9-10, 2002 in New York City. All four of the Lead Plaintiffs participated in the mediation. With Mr. McGowan’s assistance, the parties reached agreement on the principal terms of the Settlement set forth in the Stipulation.
On January 20, 2000, Plaintiffs moved for certification of the Class. Lead Plaintiffs Mark Berger, Mark A. Salitan, Michael A. Brown and John Butler, were deposed. By Order dated July 18, 2000, the District Court directed that the Litigation proceed as a class action on behalf of all purchasers of Compaq securities during the Class Period, and appointed the four Lead Plaintiffs as class representatives. On July 28, 2000, Defendants again petitioned the Court of Appeals, seeking review of the class certification order pursuant to Fed. R. Civ. P. 23(f). The Court of Appeals granted that petition on October 6, 2000. On November 15, 2000, Defendants moved the District Court for a stay of all proceedings pending determination of their Rule 23(f) appeal. The District Court denied that motion on January 19, 2001. Defendants next moved the Court of Appeals, on January 23, 2001, for a stay pending determination of their appeal, which motion was granted on February 6, 2001. On July 25, 2001, the Court of Appeals reversed and vacated the class certification order. On August 8, 2001, Plaintiffs filed a petition for rehearing or rehearing en banc, which the Court of Appeals denied by order and opinion dated January 14, 2002.
On May 17, 1999, Defendants moved pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6) to dismiss the Litigation in its entirety. That motion was denied on December 21, 1999, and on January 20, 2000, Defendants moved for reconsideration of the Court’s decision or, alternatively, for certification under 28 U.S.C. § 1292(b). Defendants’ motion for reconsideration was subsequently denied on March 10, 2000. Defendants petitioned the Court of Appeals for the Fifth Circuit for a writ of mandamus on the denial of their motion to dismiss, on July 27, 2000, requesting that Court to direct the District Court to dismiss the Amended Complaint. The Court of Appeals denied Defendants’ mandamus petition on August 8, 2000.
By Order dated January 15, 1999, the District Court consolidated the various actions, appointed the 39 lead plaintiffs, and approved the lead plaintiffs’ selection of Wolf Haldenstein Adler Freeman & Herz LLP and Stull Stull & Brody as Lead Counsel. This consolidated suit is referred to herein as the “Litigation”. The Consolidated Amended Class Action Complaint (the “Amended Complaint”) alleges that Defendants violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 by issuing materially false and misleading statements regarding Compaq’s sales, revenues, and business model during the Class Period. The Amended Complaint also alleges that Defendants’ conduct operated as a fraud on the market for Compaq securities throughout the Class Period.
The original Complaint charges Compaq and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 for misrepresenting material information concerning Compaq's financial results by failing to inform the market that the Company's reported growth in sales and earnings was actually the product of "channel stuffing" and factoring of receivables, which were short term strategies of borrowing sales from future periods resulting in artificially inflated earnings.