According to the Opinion and Order signed by Judge Algenon L. Marbley on December 31, 2007, for the reasons stated herein, the Court grants Lead Counsel's request for expenses in the amount of $2,241,821.10 and grants Lead Plaintiff's request for expenses in the amount of $82,452.81. Further, it awards Class Counsel 18% of the net recovery in attorneys' fees.
On July 27, 2007, a Stipulation of Settlement was filed. On July 31, 2007, the Court entered the Order preliminarily approving the settlement. On September 17, 2007, the Lead Plaintiffs’ filed a motion for final approval of the class action settlement. On November 14, 2007, the Court entered the Order approving the Plan of Allocation and also the Final Judgment and Order of Dismissal with Prejudice.
In a press release dated May 31, 2007, Cardinal Health Inc. agreed to pay $600 million to settle a lawsuit filed by shareholders accusing the medical products and services company of accounting irregularities and inflated earnings, according to the company. In a regulatory filing on Wednesday, the company denied any wrongdoing and said it settled to eliminate the uncertainties and expense of further litigation. The settlement is subject to approval in U.S. District Court. The Medical products and services company had established a $600 million reserve for the settlement in its third quarter ended March 31.
As disclosed by the Company’s Form 10-Q For The Quarter Ended September 30, 2006, on March 27, 2006, the Court granted a Motion to Dismiss with respect to the Company’s external auditors and a former officer and denied the Motion to Dismiss with respect to the Company and the other individual defendants. On September 8, 2006, the plaintiffs filed a Motion for Class Certification. Discovery is now proceeding.
As disclosed by the same SEC filing, since July 2, 2004, 10 purported class action complaints have been filed by purported purchasers of the Company’s securities against the Company and certain of its current and former officers and directors, asserting claims under the federal securities laws (collectively referred to as the “Cardinal Health federal securities actions”). To date, all of these actions have been filed in the United States District Court for the Southern District of Ohio. On December 15, 2004, the Cardinal Health federal securities actions were consolidated into one action captioned In re Cardinal Health, Inc. Federal Securities Litigation, and on January 26, 2005, the Court appointed the Pension Fund Group as lead plaintiff in this consolidated action. On April 22, 2005, the lead plaintiff filed a consolidated amended complaint naming the Company, certain current and former officers and employees and the Company’s external auditors as defendants. The complaint seeks unspecified money damages and other unspecified relief against the defendants and includes the aforementioned Section 10(b), Rule 10b-5 and Section 20 claims.
The original complaint seeking class action status was filed against Cardinal Health, Inc. The Complaint alleges that Cardinal, and certain of its officers and directors issued materially false statements concerning the Company's financial condition. Specifically, defendants failed to disclose: (i) that Cardinal manipulated various aspects of its accounting practices to continuously portray profitability to market; (ii) that Cardinal held inventory for an average of two months, and reaped exorbitant profits from price inflation; (iii) Cardinal improperly accounted for the $22 million recovered from Vitamin makers accused of overcharging Cardinal by booking such recoveries as revenue when the antitrust cases had not been resolved; and (iv) that Cardinal's pharmaceutical distribution business improperly classified revenues by reporting the revenues as either operating revenue or revenues form bulk deliveries to consumer warehouses when revenues were not derived from such. The Complaint is on behalf of all persons who purchased the publicly traded securities of Cardinal Health, Inc. between October 24, 2000 and June 30, 2004 inclusive. Also included are all those who acquired Cardinal's shares through its acquisitions of Alaris Medical, Intercare, Medicap, Syncor, Boron Lepore, InGel, Ni-Med, SP Pharmaceuticals, or International Processing Corp. Present and former employees who purchased stock through Cardinal's Retirement Savings Plans are also included.
On June 30, 2004, Cardinal announced expected earnings per share for fiscal 2004 which were below prior guidance. Separately, the company announced that on June 21, as part of the Securities and Exchange Commission's (SEC) formal investigation disclosed by the company on May 14, it received an SEC subpoena. On this news, Cardinal fell $17.19 per share or 24.54% on July 1, 2004 to close at $52.86 per share.