According to the docket posted, on August 11, 2004, a Settlement Fairness Hearing was held before Judge William E. Smith. That day, the Court certified the Class and heard arguments on the motion for final approval of the settlement, which was in the amount of $950,000. The Court approved the settlement and allowed the motion for attorneys’ fees and expenses. On August 12, 2004, the Court entered the Order and Final Judgment. The case was dismissed with prejudice and closed.
Earlier, on October 11, 2002, a Consolidated Amended Class Action Complaint was filed, and on December 24, 2002, the defendants filed a motion to dismiss the amended complaint. On July 25, 2003, the Court entered the Decision and Order by Judge Smith denying the motion to dismiss the amended complaint.
On July 12, 2002, LOA filed a voluntary petition for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Accordingly, all litigation against LOA was stayed pursuant to the automatic stay provisions of the U.S. Bankruptcy Code and LOA was not named as a defendant in the Consolidated Amended Class Action Complaint dated October 11, 2002. LOA’s bankruptcy proceeding was later converted to a liquidation proceeding under Chapter 7 of the Bankruptcy Code.
The original Complaint alleges that defendants LOA and certain of its executive officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading statements to the market. Specifically, throughout the Class Period, defendants repeatedly issued statements indicating that, among other things, the Company was on track to achieve the goals of its business plan and that it was successfully growing its service offerings and customer base through its numerous acquisitions. The complaint alleges that these statements were materially false and misleading because, among other things, they failed to disclose or misrepresented (a) that the revenues the Company was generating from its customer base, which was predominantly consumer-focused, were not sufficient to offset the extensive capital costs that the Company was incurring in order to build out its network and provision its products; (b) that the Company's "growth-by-acquisition" strategy was not meeting with success as the Company had acquired a collection of disparate businesses which it was unable to effectively integrate into its existing business; (c) that the Company was experiencing weakening demand for its products and services and was attempting to transition into different markets in order to reinvigorate its sales growth; and (d) that as a result of the foregoing adverse factors, the Company would not be profitable in the near-term, if at all, and would have to completely restructure its operations and slash costs.