According to the docket, on February 20, 2004, the Court entered the Final Judgment and Order signed by U.S. District Judge Lawrence M. McKenna. The settlement was approved, and the case is closed.
In a Press Release dated November 20, 2003, Warnaco Group, Inc. agreed to settle the securities class-action suit for $12.85 million in cash. According to the court docket, on November 13, 2003, a settlement conference was held before Judge Lawrence M. McKenna and preliminary approval order was given on the same day.
As reported by the Company’s Form 10-Q For The Quarterly Period Ended October 4, 2003, on April 25, 2002, the District Court granted the motion to dismiss this action based on the statute of limitations. On May 10, 2002, the plaintiffs filed a motion for reconsideration in the District Court. On May 24, 2002, the plaintiffs filed a notice of appeal with respect to such dismissal. On July 23, 2002, plaintiffs' motion for reconsideration was denied. On July 30, 2002, the plaintiffs voluntarily dismissed, without prejudice, their claims against the Company. On October 2, 2002, the plaintiffs filed a notice of appeal with respect to the District Court's entry of a final judgment in favor of the individual defendants. On July 7, 2003, the United States Court of Appeals for the Second Circuit reversed and remanded the District Court's entry of a final judgment in favor of the individual defendants. On September 15, 2003, the individual defendants filed a renewed motion to dismiss based upon, among other things, failure to plead actionable fraud, failure to plead fraud with particularity and failure adequately to plead scienter. On November 13, 2003, the parties to the Shareholder I Class Action entered into a Stipulation and Agreement of Settlement. On the same day, the court entered a preliminary order approving the settlement.
Between August 22, 2000 and October 26, 2000, seven putative class action complaints were filed in the U.S. District Court for the Southern District of New York. On November 17, 2000, the District Court consolidated the complaints into a single action, and appointed a lead plaintiff and approved a lead counsel for the putative class. A second amended consolidated complaint was filed on May 31, 2001. On October 5, 2001, the defendants filed a motion to dismiss based upon, among other things, the statute of limitations, failure to state a claim and failure to plead fraud with the requisite particularity.
The original complaint charges Warnaco and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants' made false and misleading statements about the strong sales of Warnaco's existing Calvin Klein products, and its purported strong revenues and earnings, together with the quality and value of its inventory. The complaint further alleges that, defendants' engaged in a fraudulent scheme and course of business that (i) deceived the investing public regarding Warnaco's prospects and business; (ii) artificially inflated the prices of Warnaco's common stock; (iii) allowed defendants to sell over 1 million shares of their Warnaco stock for $14.6 million in insider trading proceeds; (iv) allowed defendants to use Warnaco stock as currency to fund its stock-for-stock acquisitions; and (v) caused plaintiff and other members of the Class to purchase Warnaco common stock at inflated prices.