Case Page

 

Case Status:    DISMISSED    
On or around 12/19/2006 (Date of order of final judgment)

Filing Date: April 02, 2004

The original complaint charges McDonalds and certain of its officers and directors with violations of the Securities Exchange Act of 1934 (the 'Exchange Act'). The complaint alleges that during the Class Period, defendants issued false and misleading statements to the marketplace that artificially inflated the price of McDonald's shares. In particular, the Company misrepresented its business and future prospects by failing to disclose and misrepresenting that hundreds of its restaurants were underperforming and that the Company had incurred hundreds of millions of dollars in unrecorded asset impairment and other charges.

The complaint further alleges that defendants' scheme began to unravel when in September 2002, the Company reported that 'comparable sales' (i.e., year-over-year sales comparisons for restaurants that had been open for more than thirteen months) had continued to decline, especially in U.S. and European markets, making it impossible for the Company to meet its 2002 earnings guidance. Then on January 23, 2003, defendants announced that the Company had incurred losses of more than $810 million related, primarily, to the closure of over 700 underperforming restaurants and the write-off of hundreds of millions of dollars of previously capitalized technology costs. Prior to the disclosure of the adverse facts described above, the Company completed fixed-rate debt offerings of at least $900 million at highly favorable interest rates. In addition, the Individual Defendants, as well as other McDonald's insiders, sold over 939,000 shares of McDonald's common shares, at or near market highs, generating proceeds of more than $26 million.

According to the Company’s FORM 10-K For the fiscal year ended December 31, 2006, on April 2, 2004, a class action lawsuit was filed in the United States District Court for the Northern District of Illinois (Case No. 04C-2422) (Allan Selbst v. McDonald’s Corporation, Jack M. Greenberg, Matthew H. Paull and Michael J. Roberts), alleging violation of federal securities laws. Two nearly identical actions were subsequently filed in the same court. On October 19, 2004, the lead plaintiff filed its amended and consolidated class action complaint, alleging, among other things, that the Company and individual defendants misled investors by issuing false and misleading financial reports and earnings projections in a series of press releases and other public statements between December 14, 2001 and January 22, 2003, thereby overstating the Company’s current and anticipated earnings. The amended complaint seeks class action certification, unspecified compensatory damages, and attorneys’ fees and costs. On January 18, 2005, the defendants filed a motion to dismiss the amended complaint. On September 21, 2005, the Court denied this motion. The lead plaintiff then filed its first amended complaint on October 7, 2005. On November 16, 2005, the defendants moved to dismiss the first amended complaint. On May 17, 2006, the court granted the defendants’ motion to dismiss the amended complaint without prejudice, giving the plaintiffs another chance to state a claim.

According to a press release date June 15, 2006, on May 17, 2006, the U.S. District Court for the Northern District of Illinois dismissed a securities fraud class action for failure to adequately plead the alleged facts and scienter with particularity. Shareholders of McDonald's Corp. sued McDonald's for violation of the Securities Exchange Act of 1934 § § 10(b), 20(b) and Rule 10b-5, alleging that McDonald's knowingly made false forward-looking and historical statements with regards to its financial growth (see 4 Cl.Act.L.Mon. 7-4, Apr. 30, 2004). The shareholders claimed that McDonald's violated GAAP in a venture known as the "Innovate Project," where the shareholders contended that McDonald's failed timely write down the value of hundreds of underperforming restaurants. McDonald's moved to dismiss the complaint, arguing that the shareholders failed to plead with particularity the factual allegations and the element of scienter. The district court initially declined to dismiss the suit, giving the shareholders an opportunity to amend their complaint to include more specific facts regarding a confidential informant. … The district court granted McDonald's motion to dismiss, ruling that, even though the shareholders adequately pled that McDonald's violated GAAP in its accounting of the Innovate Project, they failed to plead scienter with particularity. Further, the district court ruled that the shareholders failed to plead the particular factual basis in support of their forward-looking statements, noting that the complaint failed to allege that the confidential informant had first-hand knowledge of the company's allegedly fraudulent misstatements.

On June 16, 2006, the plaintiffs filed their second amended complaint. On July 17, 2006, the defendants filed their motion to dismiss the complaint. On December 15, 2006, the Court granted defendants’ motion to dismiss with prejudice. On January 16, 2007, the plaintiffs filed their notice of appeal from the Court’s order of dismissal.

On August 29, 2007, the Court entered the certified copy of the Order from the Seventh Circuit Court of Appeals. According to the Order, the appeal is dismissed.

COMPANY INFORMATION:

Sector: Services
Industry: Restaurants
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: MCD
Company Market: New York SE
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. Illinois
DOCKET #: 04-CV-2422
JUDGE: Hon. Blanche M. Manning
DATE FILED: 04/02/2004
CLASS PERIOD START: 12/14/2001
CLASS PERIOD END: 01/22/2003
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Cauley Geller Bowman & Rudman (Melville)
    200 Broadhollow Road, Suite 406, Cauley Geller Bowman & Rudman (Melville), NY 11747
    631.367.7100 ·
  2. Miller Faucher and Cafferty LLP
    30 North LaSalle Street, Miller Faucher and Cafferty LLP, IL 60602
    312.782.4880 ·
  3. Schiffrin & Barroway LLP
    3 Bala Plaza E, Schiffrin & Barroway LLP, PA 19004
    610.667.7706 610.667.7056 · info@sbclasslaw.com
No Document Title Filing Date
COURT: N.D. Illinois
DOCKET #: 04-CV-2422
JUDGE: Hon. Blanche M. Manning
DATE FILED: 06/16/2006
CLASS PERIOD START: 12/14/2001
CLASS PERIOD END: 01/22/2003
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    200 Broadhollow, Suite 406, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 · info@lerachlaw.com
No Document Title Filing Date
No Document Title Filing Date