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Case Status:    SETTLED
On or around 09/29/2005 (Date of order of final judgment)

Filing Date: March 25, 2003

According to the Order and Final Judgment entered on September 29, 2005, the settlement is approved. The court awarded fees and reimbursement of expenses. The civil case is terminated.

In a press release dated April 23, 2005, AFC Enterprises will pay shareholders $ 15 million to settle consolidated lawsuits over financial restatements that two years ago sent the company into a tailspin. The owner of the Popeyes Chicken & Biscuits fast-food chain said Friday the cash payment is its first response to multiple suits filed after it announced plans to restate results for 2000, 2001 and part of 2002. The company, which still faces other restatement-related lawsuits, said it is not admitting any guilt through the settlement. The deal awaits federal court approval.

As reported by the Form 10-K/A for the fiscal year ended December 26, 2004, on December 29, 2004, the Court entered an Order granting in part and denying in part the Defendants’ Motions to Dismiss the Complaint. The Court dismissed all insider trading claims; dismissed Section 10(b) and Rule 10b-5 claims against certain current and former officers and directors. Because Plaintiffs declined to re-plead their allegations, the foregoing claims have been dismissed with prejudice. Subsequent to the Court’s December 29, 2004 Order, Defendants AFC and the former CFO filed a Motion to Dismiss the Section 10(b) and Rule 10b-5 claims of the named Plaintiffs for lack of standing (jurisdiction), as both remaining Plaintiffs continue to hold the AFC stock made the subject of their claims and, therefore, given the recovery and continuing rise of the AFC stock price, Plaintiffs can prove no damages under Section 10(b) or Rule 10b-5. Also, pending are certain motions filed by the outside directors for reconsideration of portions of the December 29, 2004 Order. Discovery commenced on February 23, 2005.

On March 25, 2003, plaintiffs filed the first of eight securities class action lawsuits in the United States District Court for the Northern District of Georgia against AFC and several of its current and former directors and officers. By order dated May 21, 2003, the district court consolidated the eight lawsuits into one consolidated action. On January 26, 2004, the plaintiffs filed a Consolidated Amended Class Action Complaint (the “Consolidated Complaint”) on behalf of a putative class of persons who purchased or otherwise acquired AFC stock between March 2, 2001 and March 24, 2003. In the Consolidated Complaint, plaintiffs allege that the registration statement filed in connection with AFC’s March 2001 initial public offering (“IPO”) contained false and misleading statements in violation of Sections 11 and 15 of the Securities Act of 1933 (“1933 Act”). The defendants to the 1933 Act claims include AFC, certain of AFC’s current and former directors and officers, an institutional shareholder of AFC, and the underwriters of AFC’s IPO. Plaintiffs also allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“1934 Act”) and Rule 10b-5 promulgated thereunder. The plaintiffs’ 1934 Act allegations are pled against AFC, certain current and former directors and officers of AFC, and two institutional shareholders. The plaintiffs also allege violations of Section 20A of the 1934 Act against certain current and former directors and officers and two institutional shareholders based upon alleged stock sales. The Consolidated Complaint seeks certification as a class action, compensatory damages, pre-judgment and post-judgment interest, attorney’s fees and costs, an accounting of the proceeds of certain defendants’ alleged stock sales, disgorgement of bonuses and trading profits by AFC’s CEO and former CFO, injunctive relief, including the imposition of a constructive trust on certain defendants’ alleged insider trading proceeds, and other relief.

The original Complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between March 2, 2001 and March 24, 2003, thereby artificially
inflating the price of AFC securities. According to the complaint, the
Company's class period statements were materially false and misleading
because the press releases and SEC filings issued during the Class
Period failed to reveal that AFC inflated its operating results by:(1)
improperly accounting for the sale of corporate-owned stores to
franchisees; (2) improperly accounting for the value of certain
long-lived assets; (3) understating advertising costs; and (4)
improperly accounting for inventory at the Company's Seattle Coffee
Company division. As a result of the Company's fraudulent accounting,
AFC's financial statements published during the Class Period were not
prepared in accordance with Generally Accepted Accounting Principles
and, therefore, it was not true that the Company's financial statements
were a "fair presentation" of the Company's financial position. Indeed,
by announcing its intention to restate its financial statements, AFC has
admitted that its prior financial statements were materially false and
misleading when issued. On March 24, 2003, after the market closed, AFC
shocked the market by announcing that it would be restating its
financial statements for fiscal year 2001 and the first three quarters
of 2002. The Company also reported that it was examining whether or not
its financial statements for fiscal year 2000 should be restated. In
response to this negative announcement the price of AFC common stock
dropped by over 20% on extremely heavy trading volume. AFC insiders
privy to the Company's fraudulent accounting practices did not share
investors' losses. In a December 2001 public offering, AFC insiders
unloaded 7,000,000 shares of their holdings at $23 per share. Indeed,
during the Class Period, defendants and other Company insiders cashed
out at prices as high as $34 per share, reaping profits of over $30
million.

COMPANY INFORMATION:

Sector: Services
Industry: Restaurants
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: AFCE
Company Market: NASDAQ
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: N.D. Georgia
DOCKET #: 03-CV-0817
JUDGE: Hon. Thomas W. Thrash
DATE FILED: 03/25/2003
CLASS PERIOD START: 03/02/2001
CLASS PERIOD END: 03/24/2003
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abbey Gardy, LLP (New York)
    212 East 39th Street, Abbey Gardy, LLP (New York), NY 10016
    212.889.3700 · info@abbeygardy.com
  2. Bernstein Liebhard & Lifshitz, LLP (New York)
    10 E. 40th Street, 22nd Floor, Bernstein Liebhard & Lifshitz, LLP (New York), NY 10016
    800.217.1522 · info@bernlieb.com
  3. Faruqi & Faruqi LLP (New York) (former)
    320 East 39th Street, Faruqi & Faruqi LLP (New York) (former), NY 10016
    212.983.9330 212.983.9331 · Nfaruqi@faruqilaw.com
  4. Goodkind Labaton Rudoff & Sucharow LLP
    100 Park Avenue, Goodkind Labaton Rudoff & Sucharow LLP, NY 10017
    212.907.0700 212.818.0477 · info@glrslaw.com
  5. Hoffman & Edelson
    45 West Court Street, Hoffman & Edelson, PA 18901-4223
    215.230.8043 ·
  6. Landskroner - Grieco, Ltd.
    1360 West 9th St., Suite 200, Landskroner - Grieco, Ltd. , OH 44113-1904
    866.522.9500 · jack@landskronerlaw.com
  7. Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY)
    One Pennsylvania Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY), NY 10119-1065
    212.594.5300 ·
  8. Much Shelist Freed Denenberg Ament & Rubenstein, PC

    800-470-6824 312-621-1750 ·
  9. Terry D. Goldberg & Associates

    215.354.9100 · no1piguy@aol.com
  10. Wolf Haldenstein Adler Freeman & Herz LLP (New York)
    270 Madison Avenue, Wolf Haldenstein Adler Freeman & Herz LLP (New York), NY 10016
    212.545.4600 212.686.0114 · newyork@whafh.com
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COURT: N.D. Georgia
DOCKET #: 03-CV-0817
JUDGE: Hon. Thomas W. Thrash
DATE FILED: 06/16/2005
CLASS PERIOD START: 03/02/2001
CLASS PERIOD END: 03/24/2003
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Chitwood Harley Harnes LLP (Atlanta)
    2300 Promenade II; 1230 Peachtree Street, N.E., Chitwood Harley Harnes LLP (Atlanta), GA 30309
    888.873.3999 404.876.4476 · info@chitwoodlaw.com
  2. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Boca Raton)
    197 South Federal Highway, Suite 200, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Boca Raton), FL 33432
    561.750.3000 56.750.3364 · info@lerachlaw.com
  3. Milberg Weiss Bershad & Schulman LLP (Boca Raton)
    5355 Town Center Road, Suite 900, Milberg Weiss Bershad & Schulman LLP (Boca Raton), FL 33486
    561.361.5000 561.367.8400 ·
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No Document Title Filing Date