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Case Status:    SETTLED
On or around 10/04/1999 (Date of order of final judgment)

Filing Date: May 09, 1997

According to the Docket dated May 16, 2000, the Court dismisses the lawsuit in its entirety, with prejudice and without costs, except as otherwise provided in the stipulation. The Court authorized payments from the Gross Settlement Fund of Class Counsel in the amounts of $300,000.00 for attorneys' fees and $86,987.86 for costs and expenses, plus interest and $31,155.76 for all costs associated with notice and settlement administration through August 30, 1999 terminating case.

Prior to the Court's dismissal, Notice was sent to the class and there was no opposition to the proposed settlement. For the reasons stated in open court and all of the findings in the proposed order of final judgment of dismissal, the Court recommends to Judge Andersen that he enter the order of final judgment of dismissal in the form proposed by the parties. All matters relating to the referral of this action having been resolve, the case is returned to the assigned judge.

The Court overruled the objections and adopted the magistrate's report and recommendation. Thus, auditors' motion to dismiss the complaint based on the one-year statute of limitations was denied. The motion to dismiss based on the three-year statute of repose was granted in part and denied in part.

The Court found that the three-year repose period for Section 10(b) and Rule 10b-5 claims began to run when auditors made an affirmative misrepresentation. In consequence, claims based on purchases made in reliance on a Form 10-K issued more than three years before suit was filed were barred.

More specifically, purchasers filed a class action against auditors following other purchasers filing of individual actions. The court held that although pleadings filed in related actions and disclosures in SEC Form 10-K filings might have created suspicious circumstances as to auditors' knowledge and activities, these documents did not conclusively provide inquiry notice of auditors' supposed recklessness or intentional misconduct. It was an equally reasonable inference that these documents merely put purchasers on notice that auditors acted only in a negligent manner. The court found that purchasers had inquiry notice of the instant claim against auditors only when they received auditors' work papers, less than one year before they filed this action. The court further held that the repose period was triggered by the alleged misrepresentation rather than by an individual's purchase of a security.

The original Complaint alleges, among other things, that Arthur Andersen, LLP, the outside auditor for Discovery Zone during the Class Period, violated generally accepted accounting principles ("GAAP") and generally accepted auditing standards ("GAAS") in issuing an unqualified or "clean" audit opinion with respect to Discovery Zone's 1993 and 1994 year-end financial statements.

COMPANY INFORMATION:

Sector: Services
Industry: Business Services
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: ZONE
Company Market: NASDAQ
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: N.D. Illinois
DOCKET #: 97-CV-3456
JUDGE: Hon. Wayne R. Andersen
DATE FILED: 05/09/1997
CLASS PERIOD START: 03/31/1994
CLASS PERIOD END: 09/15/1995
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abbey Gardy & Squiteri LLP (San Francisco)
    595 Market Street, Suite 2500, Abbey Gardy & Squiteri LLP (San Francisco), CA 94105
    415.538.3725 ·
  2. Berger & Montague PC
    1622 Locust Street, Berger & Montague PC, PA 19103
    800.424.6690 215.875.4604 · investorprotect@bm.net
  3. Bernstein Litowitz Berger & Grossmann LLP (former San Diego)
    12544 High Bluff Drive, Suite 150, Bernstein Litowitz Berger & Grossmann LLP (former San Diego), CA 92130
    858.793.0070 858.793.0323 · blbg@blbglaw.com
  4. Kenneth A. Elan (Chicago )
    30 North LaSalle Street, Suite 3200, Kenneth A. Elan (Chicago ), IL 60602
    312782.4880 · mmiller@millerfauchner.com
  5. Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA)
    600 West Broadway, 1800 One America Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA), CA 92101
    800.449.4900 · support@milberg.com
  6. Zwerling, Schachter, Zwerling & Koppell LLP
    767 Third Avenue , Zwerling, Schachter, Zwerling & Koppell LLP, NY 10017
    ·
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