According to the latest docket posted, on June 20, 2002, the Court entered the Order and Final Judgment signed by U.S. District Judge Allen G. Schwartz. The action was certified as a class action, the settlement was approved, and the Plaintiffs’ Counsel was awarded 33 1/3 of the Cash Settlement Amount in fees and $81,318.00 in reimbursement of expenses. The case is closed.
By the Notice of Proposed Settlement of Class Action with Remaining Defendants, a Gross Settlement Fund consisting of $7,000,000 in cash, plus interest, has been established. A hearing will be held on June 18, 2002, to determine whether a proposed settlement of the action as set forth in the Stipulation and Agreement of Settlement with the AnnTaylor Defendants dated as of March 19, 2002, is 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.
According to the Company’s FORM 10-Q for the quarterly period ended August 4, 2001, the District Court granted the defendants' motions to dismiss the complaint and a subsequently filed amended complaint. On June 21, 2000, the United States Court of Appeals for the Second Circuit (the "Court of Appeals") vacated the dismissal of the amended complaint, and remanded the case to the District Court with instructions to allow plaintiffs to replead their complaint, and to reconsider whether plaintiffs' allegations are pled with sufficient particularity to satisfy the pleading standards of the Private Securities Litigation Reform Act of 1995. On or about November 27, 2000, the United States Supreme Court denied the petition for a writ of certiorari filed by the Company, Ann Taylor and their former directors and officers seeking review and reversal of the decision of the Court of Appeals.
While this action was pending before the Court of Appeals, ML&Co., its affiliates and the two directors who previously served on the Company's Board of Directors as representatives of certain affiliates of ML&Co. (the "settling defendants"), reached a settlement with the plaintiffs, which provided, among other things, for the establishment by the settling defendants of a settlement fund in the amount of $3,000,000 plus interest. On or about December 14, 1999, the District Court entered an Order and Final Judgment approving this partial settlement, dismissing the amended complaint with prejudice as to the settling defendants, and barring and enjoining any future claims by, among others, the remaining defendants against the settling defendants for contribution.
Following the decision of the Court of Appeals, plaintiffs elected not to replead their amended complaint. Accordingly, on or about September 29, 2000, the Company, Ann Taylor and their former directors and officers again moved to dismiss the amended complaint, arguing that it fails to plead fraud with sufficient particularity under the standard set forth by the Court of Appeals in its June 21, 2000 decision. On or about July 18, 2001, the District Court denied the motion. The parties are now conducting discovery.
As reported in the same SEC filing, on April 26, 1996, alleged stockholders of the Company filed a purported class action lawsuit in the United States District Court for the Southern District of New York (the "District Court"), against the Company, the Company's wholly owned subsidiary AnnTaylor, Inc. ("Ann Taylor"), certain former officers and directors of the Company and Ann Taylor, Merrill Lynch & Co. ("ML&Co.") and certain affiliatesof ML&Co. (Novak v. Kasaks, et. al., No. 96 CIV 3073 (S.D.N.Y. 1996)). The complaint alleged causes of action under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as amended, asserting that the defendants made false and misleading statements about the Company and Ann Taylor during the period commencing February 3, 1994 through May 4, 1995 (the "Putative Class Period"). The complaint sought, among other things, (1) certification as a class action on behalf of all purchasers of common stock during the Putative Class Period, (2) an award of compensatory damages to the plaintiffs and purported members of the class, pre-judgment and post-judgment interest, and reasonable attorneys' fees and (3) equitable and/or injunctive relief.