By the Order entered on September 27, 2004, the Court entered the Order and Final Judgment regarding the remaining defendant, PricewaterhouseCoopers LLP. At the settlement hearing, the settlement was approved, and the case was closed.
According to a law firm website, a partial settlement of $25 million was proposed with defendants Rent-Way, Inc. and certain Individual Defendants. The claims deadline for this settlement was October 23, 2003 with final judicial approval granted on December 22, 2003. On July 29, 2004, the Court granted preliminary approval to a settlement with PricewaterhouseCoopers LLP (“PwC”), the remaining defendants in the action, proposed by stipulation on July 22, 2004. Pursuant to the stipulation, PwC has agreed to pay an additional $4,400,000 to the Class to settle all claims against it arising from the Rent-Way suit.
In a news article dated March 20, 2003, Rent-Way, Inc. announced that it has reached an agreement in principle to settle the consolidated class action pending against it in the U.S. District Court for the Western District of Pennsylvania. Under the settlement, Rent-Way will pay $25 million to the class, consisting of $21 million in cash, $11 million of which is expected to be funded from available insurance proceeds, and $4 million in two year 6% subordinated, unsecured notes. The settlement is subject to negotiation of a final written settlement agreement and Court approval, and is conditioned on a refinancing or restructuring of the Company's outstanding bank debt on or before July 31, 2003.
On March 9, 2001, the District Court ordered that the actions be consolidated and, appointed Cramer Rosenthal McGlynn, LLC, an investment advisor that purchased the Company's common stock for the accounts of its clients, to serve as lead plaintiff and the firm of Gold, Bennett, Cera & Sidener LLP to serve as lead counsel.
The original complaint charges defendants with issuing materially false and misleading financial statements and press releases concerning Rent-Way's publicly reported earnings for the Company's fiscal year 2000 which ended September 30, 2000. During the Class Period, defendants reported "record" financial results for the first three quarters of 2000. The results purportedly represented a dramatic improvement over Rent-Way's fiscal year 1999 financial results.
The complaint further alleges that on or around October 30, 2000, however, the company disclosed that it was conducting an investigation into possible "accounting irregularities" and had retained outside counsel to assist in the investigation. The company also reported that it had suspended its corporate controller and that its president and chief operating officer had relinquished his operating responsibilities. Rent-Way indicated that the "accounting irregularities" would have an impact of $25 to $35 million on a pre-tax basis, meaning that it would have to reduce its 2000 fiscal year earnings by at least that amount. The company also admitted that it would be unable to meet its earnings expectations as previously indicated. On October 31, 2000, the day after Rent-Way issued its press release, the price of its common stock plunged 79% to close at $5 per share.