On August 06, 2007, an Order was granted on a Joint Motion for Preliminarily Approval of Class Settlement and Notice Plan. On December 04, 2007, there was unopposed Motion for Final Approval of Class Action Settlement and Plan of Allocation, Request for Incentive Award, Attorneys' Fees and Reimbursement of Expenses. On December 11, 2007, a Final Order And Judgment on the Motion for Final Approval of Class Action Settlement and Plan of Allocation, Request for Incentive Award, Motion for Attorneys' Fees was entered.
According to a press release dated August 15, 2007, hearing will be held in this case on December 11, 2007 at 10:00 A.M. before United States District Judge Jane Boyle, at the United States Courthouse, 1100 Commerce Street, Dallas, Texas 75242, to determine: (1) whether the settlement of claims asserted in this Action in return for payment of One Million, Two Hundred Thousand Dollars ($1,200,000.00) in cash plus accrued interest (the "Settlement Fund"), from which all administrative expenses, taxes owed and Court-awarded attorneys' fees and expenses will be paid, should be approved by the Court as fair, reasonable and adequate to the members of the Settlement Class; (2) whether the proposed plan of allocation for the Settlement Fund after payment of all administrative expenses, taxes owed and Court-awarded attorneys' fees and expenses (the "Plan of Allocation") is fair, reasonable and adequate to the members of the Settlement Class; (3) whether and in what amount to approve an incentive award to the Lead Plaintiff and whether to approve the application of the Class' Lead Counsel for an award of attorneys' fees not in excess of 33% and expenses not in excess of $150,000.00 should be approved; and (4) whether the Action should be dismissed with prejudice as set forth in the
Settlement Agreement dated as of March 15, 2007 and filed with the Court.
On October 30, 2006, the plaintiff filed a Second Amended Consolidated Class Action Complaint. The parties went into mediation, and on March 20, 2007, the Court entered and Order signed by U.S. District Judge Jane J. Boyle. As stated by the Order, the parties have informed the Court that this case has settled. Accordingly, the Court orders the parties to present to the Court a final judgment or agreed order of dismissal on or before April 9, 2007.
On August 16, 2006, the Court entered the Memorandum Order signed by U.S. District Judge Jane J. Boyle denying the defendants’ motion to (1) To Amend June 2, 2006 Order to Certify Question for Interlocutory Appeal and (2) To Stay Litigation. On October 18, 2006, the Court issued its First Scheduling Order. According to the Order, pursuant to Rule 16(b) of the Federal Rules of Civil Procedure, the Court finds that this case should preliminarily proceed according to the following schedule: Plaintiffs shall file a Second Amended Consolidated Class Action Complaint ("SCAC") by October 30, 2006. Defendants shall have until November 22, 2006 in which to answer or otherwise move to dismiss Plaintiffs' SCAC.
According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, in September 2005, the Court dismissed the action because the lead plaintiff previously selected by the Court had failed to state a claim upon which relief could be granted. As a result, the Court also dismissed the class action complaint. Subsequently, a different member of the purported class asked to be substituted as a new lead plaintiff. In June 2006, the Court granted that request and reinstated the action. The defendants believe that the Court erred in doing so and has asked the Court to certify the issue for an immediate appeal to the United States Court of Appeals for the Fifth Circuit. The new lead plaintiff has opposed that request. The Court has yet to rule.
The complaint charges Ryland Group and certain of its officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. Between October 22, 2003 and January 7, 2004, the defendants issued a series of material misrepresentations to the market concerning the Company's financial results. More specifically, the defendants' statements during the Class Period were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the Texas market (and particularly Dallas) was in a freefall; (2) that Texas buyers were proving highly resistant to the entry level homes that Ryland Group was offering; and (3) that the defendants knew or recklessly disregarded that offerings of "move up" properties would be better received in that market, but that Ryland Group was not in a position to offer these types of properties.
The complaint further alleges that on January 8, 2004, Ryland Group shocked the market by announcing that new orders for the fourth quarter had decreased 8.9%, largely due to an astounding 33% decline in Texas orders. Indeed, only 344 new homes were sold by Ryland Group in that quarter, as contrasted with sales of 770 new units in the third quarter of 2003. According to the complaint this development stood in stark contrast to the positive statements issued during the Class Period by defendants. Ryland Group stock dived $10.16, to $72.89 per share, after closing at $83.05 per share on January 7, 2003 on heavy trading volume.