According to a press release dated July 3, 2001, the Company has received final approval from the U.S. District Court for the Northern District of Texas of the Stipulation of Settlement in the class action lawsuit, as well as agreements to settle claims with Reliance Insurance Company, Deloitte & Touche LLP and Deloitte & Touche. In accordance with the terms of the settlement, Dynamex will receive a net recovery of approximately $750,000 in connection with its claims against Reliance Insurance Company, Deloitte & Touche LLP and Deloitte & Touche. Additional amounts received from these entities, as well as Dynamex's primary carrier of directors and officers liability insurance will be paid to class members. The Company has previously funded its $1 million cash obligation under the terms of the settlement. The net recovery will be used to offset the cash payment made by Dynamex. Consistent with the terms of the settlement agreement, Dynamex will also issue one million shares of common stock to members of the class, and counsel for the class.
As reported by the Company’s FORM 10-Q for the quarterly period ended October 31, 2000, on April 10, 2000, Reliance Insurance Company filed a notice of action in the Superior Court of Justice in Ontario, Canada, seeking a declaratory judgment that defendants in the shareholder class action are not entitled to reimbursement under the Reliance insurance policy for losses incurred in connection with that action. The Reliance policy provides $3 million in excess coverage to supplement the $2 million in coverage provided to the Company pursuant to the underlying policy issued by American Home Assurance Company. Dynamex, Richard McClelland, and Robert Capps have filed a complaint in the United States District court for the Northern District of Texas that names Reliance Insurance Company as a defendant. The complaint alleges claims for breach of contract and breach of the duty of good faith and fair dealing arising from the failure of Reliance to contribute to the settlement of the above-referenced shareholder litigation. The plaintiffs seek unspecified damages
According to the docket posted, on June 29, 2001, the Court entered two Order and Final Judgments which settled the case against Dynamex and Deloitte & Touche. By the Order and Final Judgment with Dynamex, the Plaintiffs' Counsel was awarded the sum of $1,320,750.00 and $300,000 shares of Dynamex stock, in fees, and $39,090 in reimbursement of expenses. By the Order and Final Judgment with D&T, Plaintiffs' Counsel was awarded the sum of $605,475 in fees, and $13,030 in reimbursement of expenses.
By the Notice Of Pendency Of Class Action dated April 27, 2001, a settlement amount of $8,170,750 has been established. The Settlement Amount of $8,170,750 includes $3,000,000 cash plus $1,750,000 (for value of 1,000,000 shares at a price of $1.75 per share based on the recent market price of such shares in April, 2001) plus $1,402,500 (net recovery from Dynamex's excess insurer) and $2,018,250 (net recovery from Deloitte). A hearing will be held before the on June 28, 2001 to determine whether proposed settlements of the action as set forth in the Stipulation and Agreement of Settlement with Certain Defendants, dated as of December 15, 2000, and as set forth in the Stipulation and Agreement of Settlement With Deloitte & Touche, dated April 2, 2001, are fair, reasonable and adequate and to consider the proposed Plan of Allocation for the Settlement proceeds and the application of Plaintiffs' Counsel for attorneys' fees and reimbursement of expenses.
As reported by the Company’s FORM 10-K For The Fiscal Year Ended July 31, 1999, on October 14, 1999, pursuant to a stipulation of the parties, plaintiffs filed a second amended class action complaint, which added allegations relating to information disclosed in the Company's June 14 and September 1999 press releases. In addition to the defendants named in the original complaint, the Second Amended Class Action Complaint named Deloitte & Touche and Deloitte & Touche LLP (the Court subsequently dismissed Deloitte & Touche LLP without prejudice pursuant to the stipulation of the parties). The Second Amended Class Action Complaint alleges that the defendants issued a series of materially false and misleading statements and omitted material facts concerning the Company's financial condition and business operations. The lawsuit alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The plaintiffs seek unspecified damages on behalf of all other purchasers of the Company's common stock during the period of September 18, 1997 through and including September 17, 1999. On December 8, 1999, Dynamex moved to dismiss the complaint in its entirety on the grounds that plaintiffs' complaint fails to meet the required pleading standards and that the claims are deficient as a matter of law. Briefing of the motion was completed on June 1, 2000, and the motion is now awaiting disposition. At this date, no class has been certified nor has any discovery commenced. The Company is unable to determine the likely outcome of this matter or to reasonably estimate the amount of loss with respect to this matter.
In November and December 1998, two class action lawsuits were filed in the United States District Court for the Northern District of Texas, naming the Company and certain of its executive officers as defendants. The lawsuits arise from the Company's November 2, 1998 announcement that it was (I) revising its
results of operations for the year ended July 31, 1998 from that which had been previously announced on September 16, 1998 and (ii) restating its results of operations for the third quarter of fiscal 1998 from that which had been previously reported. These revisions generally related to non-cash charges associated with various acquisitions consummated by the Company. The lawsuits allege violations of the Securities Act of 1933 and Securities Exchange Act of 1934 in connection with the Company's public filing under such laws during fiscal 1998. On February 5, 1999, the Court entered an Order consolidating the actions and approved the selection of three law firms as co-lead counsel. A consolidated and amended complaint was filed on March 22, 1999. On May 6, 1999, defendants filed a motion to dismiss the consolidated and amended complaint in its entirety.