The original complaint alleges that Saxton and certain of its officers and directors violated the Securities Exchange Act of 1934 by making a series of materially false and misleading statements concerning the Company's financial results during the Class Period. In particular, it is alleged that the Company's reported financial results during May 15, 1998 and May 15, 2000 which were materially inflated by the capitalization of interest expenses when such expenses should have been capitalized and the premature recognition of revenue. The Complaint alleges that as a result of these false and misleading statements the price of Saxton common stock was artificially inflated throughout that Period causing plaintiff and the other members of the Class to suffer damages.
On September 10, 2001, the Court entered the Order consolidating the actions and appointing The Komie Group as lead plaintiff and approving the lead plaintiff’s selection of Rabin & Peckel LLP as lead counsel. On October 9, 2001, the plaintiffs filed a Consolidated Class Action Complaint, and the defendants responded by filing motions to dismiss the Consolidated Class Action Complaint. On April 5, 2002, the Court issued the Order granting the defendants’ motions to dismiss. Judgment was entered and the Consolidated Class Action Complaint was dismissed with prejudice. The plaintiffs filed an appeal, and on January 17, 2006, the Court entered the Judgment of the Ninth Circuit Court of Appeals. The District Court judgment was affirmed in part, reversed in part, and the case was remanded back to the District Court.
On April 20, 2006, the plaintiffs filed a Second Amended Class Action Complaint. On June 5, 2006, the defendants filed a motion to dismiss the Second Amended Complaint. On September 22, 2006, the Court entered the Order granting the defendants’ motion to dismiss the Second Amended Complaint, allowing the plaintiffs file an amended complaint within 30 days of the Order. On October 23, 2006, the plaintiffs filed a Third Amended Complaint. On November 22, 2006, the defendants filed a motion to dismiss the Third Amended Complaint.
By the Order issued by the Honorable James C. Mahan, on March 20, 2007, the Court grants the defendants’ motion to dismiss the Third Amended Complaint. According to the Order, the defendants’ motion to dismiss is granted with prejudice. The Court finds that plaintiffs have failed to plead facts giving rise to strong inference of scienter, and that they have not pled loss causation. On April 20, 2007, the plaintiff filed an appeal.
According to a press release dated August 15, 2007, on July 31, 2007, the Ninth Circuit affirmed the district court's decision to dismiss the plaintiffs' amended complaint, finding that the plaintiffs failed to assert that the misrepresentations were made in connection with the purchase or sale of securities. The Ninth Circuit noted the plaintiffs could not claim that they did not purchase securities in order to avoid federal jurisdiction.