According to the co-lead counsel’s website, additional cases have been filed on behalf of investors. On November 3, 2001, the various cases were consolidated and Lead Plaintiffs were appointed; Wolf Haldenstein Adler Freeman & Herz LLP was appointed Co-Lead Counsel. On December 21, 2000, a consolidated amended complaint was filed with the Court. On February 1, 2001, Defendants moved to have the complaint dismissed. On April 10, 2001, Judge Katz granted defendants' motion to dismiss the complaint.
The original class action lawsuit commenced charging the Company and related defendants with violations of Sections 10(b), 14(e) and 20(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14D-9 promulgated thereunder. The Complaint alleges, among other things, that defendants failed to reveal that, on or before January 28, 2000, CDnow's outside auditor advised CDnow management of its "substantial doubt about [CDnow's] ability to continue as a going concern , that this "going concern" qualification would impede the merger with Columbia House and that CDnow could not survive without a merger partner. In its July 26, 2000 Form 14D-9, in connection with the tender offer for CDnow made by Bertelsmann, CDnow also failed to disclose the same material information. The auditor's "going concern" qualification was first disclosed in CDnow's Form 10-K filed with the SEC on March 28, 2000.