Case Page

 

Case Status:    SETTLED
On or around 07/26/2006 (Date of order of final judgment)

Filing Date: December 17, 2003

According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, on March 31, 2006, the parties filed a motion for preliminary approval of a class action settlement. On April 4, 2006, the Court entered an Order preliminarily approving the settlement and scheduled deadlines for the settlement approval process, including scheduling a settlement conference for July 25, 2006. The settlement was subject to a notice and comment period, during which class members could object, opt out of the settlement, or file claims under the settlement. No class members objected to the settlement or opted out of the class. On July 25, 2006, the Court approved the settlement. The Court entered an Order and Final Judgment approving the terms of the settlement in its entirety. The Order and Final Judgment is subject to any appeal within the next 30 days. The terms of the settlement require the Company’s insurance provider to pay $2,875,000 in full settlement of the claims asserted by the class. At June 30, 2006, Company’s recorded accrued litigation settlement and a receivable for insurance recovery in the amount of $2,875,000.

As summarized by the same SEC filing, on March 17, 2004, the United States District Court for the District of Massachusetts (the “Court”) consolidated a number of purported class action lawsuits filed against the Company and certain individual Network Engines defendants (collectively the “Defendants”). These suits generally concern the timing of the announcement of an amendment to Network Engines’ agreement with EMC Corporation regarding the resale of EMC-approved Fibre Channel HBAs. The Plaintiffs filed an amended consolidated complaint on June 4, 2004. The Defendants on August 13, 2004 filed a motion to dismiss the amended consolidated complaint. The Plaintiffs on October 12, 2004 filed an opposition to the Defendants’ motion to dismiss and the Defendants filed a reply to the Plaintiff’s opposition on November 12, 2004. The Court on November 22, 2004 denied the Defendant’s motion to dismiss the amended consolidated complaint. On December 9, 2004, the Defendants filed an answer to the amended consolidated complaint. Since that time the parties engaged in some informal discovery, have exchanged formal discovery requests, and then pursued active settlement discussions.

The original complaint alleges that by the start of the Class Period, defendants knew, but failed to disclose, that Network Engines was in the process of renegotiating its distribution contract with EMC, and that EMC was demanding price reductions, which, if agreed to, would negatively impact the Company's future financial results. Nevertheless, throughout the Class Period, defendants issued positive statements highlighting the Company's strong financial performance, continued growth and the success of its relationship with EMC, its largest customer. Defendants failed to disclose, however: (i) that the Company was in the process of renegotiating its distribution contract with EMC; (ii)
that EMC was demanding price concessions to bring its agreement with Network
Engines in line with the pricing that Network Engines was providing to other
customers; (iii) that the new distribution contract with EMC would negatively
impact the Company's future financial performance; (iv) that the Company would
not be able to sustain the growth in its gross margins as a result of the
amended contract; and (v) as a result, the Company's positive statements issued
during the Class Period were materially false and misleading when made.

Finally, according to the complaint, on December 10, 2003, the Company announced, among other things, that
it had renegotiated its distribution contract with EMC and the amended contract
would negatively impact the Company's gross profit related to the sale of EMC-
approved Host Bus Adapters and the Company's distribution operations gross
profit.

The complaint further alleges that after this announcement, shares of Network Engines common stock fell $3.92 per share, or 39%, to close at $6.10 per share, on extraordinarily high trading volume, and have continued to decline since that time.

COMPANY INFORMATION:

Sector: Technology
Industry: Computer Hardware
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: NENG
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: D. Massachusetts
DOCKET #: 03-CV-12529
JUDGE: Hon. Joseph L. Tauro
DATE FILED: 12/17/2003
CLASS PERIOD START: 11/06/2003
CLASS PERIOD END: 12/10/2003
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. 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
  2. Cauley Geller Bowman Coates & Rudman LLP (Little Rock, AR)
    P.O. Box 25438, Cauley Geller Bowman Coates & Rudman LLP (Little Rock, AR), AR 72221-5438
    501.312.8500 501.312.8505 ·
  3. Cohen, Milstein, Hausfeld & Toll, P.L.L.C. (Washington, DC)
    1100 New York Avenue, N.W., Suite 500, West Tower, Cohen, Milstein, Hausfeld & Toll, P.L.L.C. (Washington, DC), DC 20005
    202.408.4600 202.408.4699 · lawinfo@cmht.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. Law Offices of Charles J. Piven, P.A.
    World Trade Center-Baltimore,401 East Pratt Suite 2525, Law Offices of Charles J. Piven, P.A., MD 21202
    410.332.0030 · pivenlaw@erols.com
  6. 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 ·
  7. Schatz & Nobel, P.C.
    330 Main Street, Schatz & Nobel, P.C., CT 06106
    800.797.5499 860.493.6290 · sn06106@AOL.com
  8. Shapiro Haber & Urmy LLP (Boston)
    75 State Street, Shapiro Haber & Urmy LLP (Boston), MA 02109
    617.439.3939 617.439.0134 · info@shulaw.com
  9. Wolf Popper, LLP
    845 Third Avenue, Wolf Popper, LLP, NY 10022-6689
    877.370.7703 212.486.2093 · IRRep@wolfpopper.com
No Document Title Filing Date
COURT: D. Massachusetts
DOCKET #: 03-CV-12529
JUDGE: Hon. Joseph L. Tauro
DATE FILED: 06/04/2004
CLASS PERIOD START: 11/06/2003
CLASS PERIOD END: 12/10/2003
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Geller Rudman, PLLC.
    197 South Federal Highway, Suite 200, Geller Rudman, PLLC., FL 33432
    561.750.3000 888.262.3131 · info@geller-rudman.com
  2. 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 · info@milbergweiss.com
  3. Moulton & Gans LLP
    133 Federal Street, Moulton & Gans LLP, MA 2110
    617.369.7979 ·
No Document Title Filing Date
No Document Title Filing Date