According to the docket, a hearing was held on November 4, 2004. At the hearing, U.S. District Judge Lynn N. Hughes approved the settlement, and the Court entered the Final Judgment.
In a press release dated May 3, 2004, a memorandum of understanding to settle the securities class action lawsuit has been entered. The terms of the proposed settlement call for Service Corp. to make payments into an escrow account totaling approximately $65 million in settlement of these claims for the benefit of former Equity Corp. International Shareholders who converted their shares to Service Corp. International shares pursuant to a merger dated January 19, 1999, or who purchased Service Corp. International securities on the open market from July 17, 1998 through January 26, 1999. The proposed settlement is subject to court approval following notice to members of the class, an opportunity for class members to object or opt out of the proposed settlement and other conditions. T. Rowe Price filed a separate lawsuit in Texas state court in June 2004.
The various cases were consolidated under the caption In re: Service Corporation International, Civil Action No. H-99-280. Lead plaintiffs and counsel were appointed pursuant to an order dated June 9, 1999. The Court granted plaintiffs' motion for class certification in an order entered August 25, 1999. Plaintiffs filed a consolidated amended class action complaint with the court on September 3, 1999. Defendants answered the consolidated complaint on September 17, 1999. On October 8, 1999, defendants filed a motion to dismiss the complaint. Plaintiffs filed their opposition to defendants' motion to dismiss on November 5, 1999. Defendants filed a reply in support of their motion to dismiss on November 24, 1999. By a letter dated February 9, 2004, plaintiffs informed the Court of a mediation session scheduled for April 19, 2004. On April 20, 2004, Reuters reported that Service Corp. had agreed to settle the litigation pending against it for $65 million, of which $30 million will come from the Company's insurance carriers and the remaining $35 million will be recognized by the company as litigation expenses on a pretax basis for the first quarter of 2004.
The original Complaint alleges that defendants made false and misleading statements during the Class Period. Specifically, the Complaint alleges that defendants misled the public with regard to the effects of adverse trends, market conditions and demographics on service Corp.'s business and operations. The Complaint further alleges that defendants' misleading positive statements artificially inflated the price of Service Corp.'s common stock during the Class Period. On January 26, 1999, only six days after completing the merger with Equity Corp., Service Corp. announced disappointing fourth quarter and year-end 1998 financial results. The market reacted sharply to the announcement, with Service Corp. stock falling $15.19, or 44% to $19.25 per share, after touching $18.38, the lowest price in 3-1/2 years. Service Corp. common stock had traded above $35 per share for much of the Class Period.