According to the docket, on March 24, 2005, the plaintiffs filed a notice of appeal from the March 3, 2006 Memorandum Opinion and Judgment granting the defendants’ motion to dismiss the case. On March 24, 2006, the Court entered the true copy of the mandate from the U.S. Court of Appeals for the Sixth Circuit. The decision of the District Court was affirmed.
In a press release dated March 15, 2005, a federal judge in Toledo has dismissed the securities-fraud lawsuit against current and former officials of Owens Corning. The suit, which sought class-action status and was instigated by national law firms that specialize in securities litigation, is barred by the statute of limitations, Judge David Katz said in a written ruling. Judge Katz, of U.S. District Court in Toledo, didn't address the substance of the allegations but rather accepted defense arguments that the plaintiffs waited too long to file suit.
The original complaint asserts claims for violation of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 against five Owens Corning executives, including Owens Corning's Chief Executive Officer, two Chief Financial Officers, and Comptroller, as well as one Owens Corning director. Due to the automatic stay of proceedings afforded by Owens Corning's bankruptcy filing, Owens Corning is not named as a defendant in this action. The alleged violations, according to the complaint, stem from materially false and misleading statements made by the defendants during the Class Period that, as detailed below: (i) materially misrepresented Owens Corning's financial health and
performance; thereby (ii) causing Owens Corning stock to trade at artificially-inflated prices. The complaint charges that defendants described Owens Corning's financial viability in two different ways to different audiences at the same time. At the very same time that the defendants were publicly representing that Owens Corning's National Settlement Program (the "NSP") -- implemented by Owens Corning in 1999 in order to extinguish Owens Corning's asbestos liabilities -- was effectively managing and extinguishing Owens Corning's asbestos liabilities and that the NSP would leave Owens Corning largely liability-free after 2001, the defendants told a very different -- and more accurate - story to a small, select group of Owens Corning investors who were positioned to control Owens Corning in the event of a bankruptcy. To the latter group, according to the complaint, defendants revealed the truth -- the NSP plan wasn't working, and would in fact capsize Owens Corning unless NSP-mandated payments were drastically curtailed.
As the complaint charges, the share price of Owens Corning stock was artificially inflated during the Class Period by defendants' positive public statements, which materially misled the public as to Owens Corning's true financial state and very financial viability. During late 1999 and early 2000, Owens Corning stock -- supported by defendants' statements -- traded at between $15 and $25 per share. In mid- and late 2000, as defendants slowly began to reveal to the public a more accurate assessment of Owens Corning and its asbestos liabilities, Owens Corning's share price deflated. On October 5, 2000, Owens Corning shares fell to $1 per share when Owens Corning declared bankruptcy and admitted that it had been overwhelmed by the asbestos liabilities that defendants claimed publicly to have solved.