Processing your request

please wait...

Case Page


Case Status:    SETTLED
On or around 01/10/2007 (Date of order of final judgment)

Filing Date: December 24, 2003

On January 10, 2007, the Settlement Conference was held before U.S. District Judge Keith P. Ellison. At the Conference, the parties announced an agreed settlement, and the settlement agreement was signed. The Court entered the Order approving the Plan of Allocation and awarding fees and expenses to plaintiffs' counsel. The Court further entered the Order of Final Judgment and Dismissal as to the Dynacq. The action is dismissed with prejudice.

According to a press release dated August 11, 2006, Dynacq Healthcare, Inc. (Nasdaq SmallCap:DYII) ("Dynacq") announced that it has reached an agreement in principle to settle the shareholder class action lawsuit pending against it for the amount of $1.5 million. The amount of the settlement will include payment of all administrative costs and class attorneys' fees as well as the payout to the class. The $1.5 million will be paid $100,000 within 30 days of final approval of the settlement by the court and the balance in 36 equal monthly interest bearing installments beginning 30 days thereafter. The settlement will fully release the Company, its two executive officers named as defendants and its subsidiaries from liability and prohibits the filing of any future claims by the members of the class relating to this matter. Conditions to the effectiveness of the settlement are: no more than 5% of the class (both in number of shareholders and in percentage of total shares in the class) opting out, confirmation that the lead plaintiffs are adequate class representatives for the proposed settlement class, and the execution of definitive settlement and release agreements acceptable to the Company's Board and the Company's primary lender. In addition, acceptance of the settlement is subject to approval of the United States District Court for the Southern District of Texas.

As disclosed by the Company’s FORM 10-Q for the quarterly period ended May 31, 2006, in the second quarter of 2004, eight class action lawsuits were filed in the United States District Court for the Southern District of Texas alleging federal securities law causes of action against the Company and various current and former officers and directors. The plaintiffs were persons who purchased shares of the Company’s common stock on the open market generally during the period of January 14, 2003 through December 18, 2003. Under the procedures of the Private Securities Litigation Reform Act, the Court consolidated the actions and appointed lead plaintiffs in the matter. An amended complaint was filed on June 30, 2004, asserting a class period of November 27, 2002, through December 19, 2003 and naming additional defendants, including Ernst & Young, LLP, the Company’s prior auditors. On July 30, 2004, the plaintiffs filed a Second Amended Consolidated Class Action Complaint on September 30, 2004. All defendants filed motions to dismiss the complaint. The plaintiffs voluntarily dismissed two of the former officers from the case. The Court dismissed the claims against one former officer and Ernst & Young, LLP, but denied the motions to dismiss of the Company and two current officers who are defendants. The Court denied the Company’s and those two officers’ motion for reconsideration of the denial of their motions to dismiss. The Company and the two current officers filed an answer on September 30, 2005. The parties participated in a mediation of the case on April 17, 2006. The mediation has not resulted in a settlement. A hearing on plaintiffs’ motion for class certification, which the Company and the two current officers oppose, is scheduled for July 21, 2006. Trial is scheduled to begin on November 6, 2006.

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.
Plaintiff charges, inter alia, that the defendants fraudulently certified that
Dynacq's financial statements for the first three quarters of fiscal 2003 were
compiled in compliance with Generally Accepted Accounting Principles ("GAAP").
On December 2, 2003, the Company announced that it was requesting an automatic
extension of up to 15 days to file its Form 10-K for fiscal year ended August
31, 2003 with the SEC. On December 18, 2003, the Company announced that its
independent auditor, Ernst & Young LLP, had resigned due to the Company's "lack
of internal controls necessary to develop reliable financial statements." Also
on December 18, 2003, the Company announced that it had received a Nasdaq Staff
Determination stating that Dynacq's stock could be delisted on December 30,
2003 due to Dynacq's failure to file its fiscal year 2003 10-K in a timely
manner. Finally, on December 18, 2003, the Company announced that it had
received notice that the SEC was conducting an investigation into Dynacq's
reporting of its financial statements, revenue and cost recognition, allowances
for doubtful accounts, and internal financial and accounting controls.

The complaint further alleges that the market reacted negatively to these disclosures. Dynacq shares, after trading during the Class Period at a high of $27.37 per share, plummeted to a low of just $4.09 per share on December 19, 2003.


Sector: Healthcare
Industry: Healthcare Facilities
Headquarters: United States


Ticker Symbol: DYII
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: S.D. Texas
DOCKET #: 03-CV-5825
JUDGE: Hon. David Hittner
DATE FILED: 12/24/2003
CLASS PERIOD END: 12/18/2003
  1. Barrack, Rodos & Bacine (Main office, Philadelphia)
  2. Brodsky & Smith, LLC (former Pennysylvania)
  3. Chitwood & Harley LLP
  4. Kirby McInerney & Squire LLP
  5. Law Offices of Bruce G. Murphy
  6. Law Offices of Charles J. Piven, P.A.
  7. Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY)
  8. Murray, Frank & Sailer LLP
  9. The Emerson Firm
  10. Wolf Popper, LLP
No Document Title Filing Date
COURT: S.D. Texas
DOCKET #: 03-CV-5825
JUDGE: Hon. David Hittner
DATE FILED: 09/30/2004
CLASS PERIOD END: 12/19/2003
  1. Chitwood & Harley LLP
    1230 Peachtree Street, N.E., 2300 Promenade II, Chitwood & Harley LLP, GA 30309
    888.873.3999 404.873.4476 ·
  2. 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 ·
  3. Cunningham, Welsh, Darlow, Zook & Chapoton, LLP
    600 Travis, Suite 1700, Cunningham, Welsh, Darlow, Zook & Chapoton, LLP, TX 77002
    713.255.5500 713.255.5555 ·
  4. Milberg Weiss Bershad & Schulman LLP (New York)
    One Pennsylvania Plaza, 49th Floor, Milberg Weiss Bershad & Schulman LLP (New York), NY 10119
    212.594.5300 212.868.1229 ·
  5. 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 ·
  6. Rabin, Murray & Frank LLP
    275 Madison Avenue, Rabin, Murray & Frank LLP, NY 10016
    212-682-1818 ·
  7. Scott & Scott LLC (Connecticut)
    P.O. Box 192, 108 Norwich Avenue, Scott & Scott LLC (Connecticut), CT 06415
    860.537.5537 860.537.4432 ·
  8. Wolf Popper, LLP
    845 Third Avenue, 12th Floor, Wolf Popper, LLP, NY 10022-6689
    877.370.7703 212.486.2093 ·
No Document Title Filing Date
No Document Title Filing Date