According to the latest docket posted, on March 7, 2006, the Court entered the Order granting the motion for Attorney Fees and Expenses. The Court awarded Lead Counsel attorneys' fees in the amount of 17.48% of the net settlement fund, or attorneys' fees in the amount of $23,146,477.12, to be paid out of the settlement fund. The Court awarded Lead Counsel reimbursement of litigation expenses in the amount of $5,027,228.57 to be paid out of the settlement fund. The Court further awarded Lead Plaintiff reimbursement in the amount of $52,265.25 for costs from time spent by it in representing the Class, and reimbursement in the amount of $3,588.98 for expenses. That day, the Court also entered both the Order approving the Plan of Allocation of Settlement Proceeds, and the Final Judgment and Order of Dismissal with Prejudice. In April 2006, two notice of appeals regarding attorneys’ fees were filed. The appeals are currently pending the Fifth Circuit Court of Appeals.
By the Notice of Proposed Settlement of Class Action a settlement fund in the amount of $137,500,000 in cash has been established. A hearing (the "Final Approval Hearing") will be held on March 7, 2006 at 10:00 a.m., before the Honorable Leonard Davis, in the United States District Courthouse, Eastern District of Texas, Tyler Division, located at 211 W. Ferguson, Tyler, Texas 75702, to determine whether the proposed settlement of the Litigation on the terms and conditions provided for in the Stipulation is fair, reasonable and adequate to the Class and should be approved by the Court; whether a Judgment should be entered herein; whether the proposed Plan of Allocation should be approved; and to determine the amount of fees and expenses that should be awarded. The Court may adjourn the Final Approval Hearing without further notice to Members of the Class.
According to a press release dated November 1, 2005, the company said it entered a memorandum of understanding to settle consolidated class action securities lawsuits filed in late 2002. EDS said it took a reserve of 3 cents a share for shareholder litigation, reflecting the impact associated with the settlement.
In a press release dated May 5, 2005, the Court appointed the Department of the Treasury of the State of New Jersey and its Division of Investment on behalf of Common Pension Fund A to serve as the Lead Plaintiff for the Action. The lawsuit has now been certified to proceed as a Class Action on behalf of the Class against EDS, its former Chief Executive Officer, and its former Executive Vice President and Chief Financial Officer.
On March 18, 2003, the case was intradistrict transferred to the Eastern District of Texas, Tyler Division and assigned a new case number 6:03cv110/MDL 6:03md1512.
The original complaint alleges that defendants made misstatements of material facts and omitted to state material facts in their public statements and elsewhere, including failing to disclose that EDS's backbone revenue from its Information Solutions IT outsourcing business is highly susceptible to interruption due to terms in EDS's service contracts that enable EDS customers to unilaterally suspend discretionary spending on IT outsourcing, affirmatively misrepresenting the predictability of EDS's future cash flows by touting the anticipated revenue that EDS would supposedly receive from its IT outsourcing service contracts with customers without disclosing that payments under such contracts were not guaranteed, and failing t! o disclose that EDS faced significant potential threats to its liquidity if its share price fell because of put-option and other obligations that ultimately obligated EDS to in effect buy back a total of 5.44 million shares of EDS stock at fixed prices averaging over $60.00 per share.
The complaint further alleges that after Wall Street began to learn about the foregoing on September 18, 2002 after executives of EDS warned that a lack of new revenues would wipe out more than $0.60 per share of its Q3 earnings target of $0.74, the price of EDS stock plummeted to a 52-week low of $20, down from a class period high of $72.45. The complaint alleges that after further revelations regarding EDS's put-option and other liabilities emerged in the wake of the foregoing disclosures, EDS's share price tumbled even further, reaching an intraday low of $10.09 on September 24, 2002.