As stated in the August 17, 2006 order from the US Court of Appeals, this case has been selected for inclusion the mediation program. No updates to the case have been posted as of August 2, 2007.
According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, on December 15, 2005, the U.S. District Court for the District of Arizona granted the Company’s motion and dismissed the lawsuit with prejudice. Plaintiffs have appealed the dismissal to the 9th Circuit Court of Appeals.
A consolidated amended class action complaint was filed against the Company and five of its current and former officers on March 31, 2005 in the U.S. District Court for the District of Arizona, consolidating three lawsuits previously filed on August 9, 2004, August 27, 2004 and September 30, 2004. The amended complaint asserted claims against all defendants under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and claims against the officers under Section 20(a) of the Securities Exchange Act. The complaint alleged that from February 10, 2004 to September 13, 2004, the defendants caused false and misleading statements to be issued in the Company’s public filings and public statements regarding the Company’s anticipated results for fiscal year 2004. The lawsuit sought an unspecified amount of damages. The Company filed a motion to dismiss the complaint on May 2, 2005.
The original complaint charges Allied Waste and individual defendants with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of Allied Waste securities. More specifically, the complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that Company's internal growth, which the defendants touted as being strong, was lagging due to poor management execution and the loss of a large contract; (2) that defendants had failed to successfully implement the Company's 'best practices' initiatives because the Company lacked adequate internal controls; (3) that defendants knew or recklessly disregarded the fact that much-anticipated cyclical volume pickup of trash was not materializing; and (4) that as a result of the above, the defendants' statements about the Company were lacking in any reasonable basis when made.
The complaint further aleges that on July 27, 2004, Allied Waste posted earnings, excluding special items, of 15 cents a share on revenue of $1.36 billion. Wall Street, on average, had expected earnings of 18 cents a share on sales of $1.39 billion. Including costs related to early retirement of debt, Allied Waste posted a net loss of 7 cents a share. Following this announcement, J.P. Morgan cut the stock to 'neutral' vs. 'overweight' on the news. 'AW's big new focus on its 'best practices' initiatives now makes the investment story one primarily about management execution,' said analyst Amanda Tepper. News of this shocked the market. Shares of Allied Waste fell $2.55 per share, or 20.83 percent, on unusually high trading volume, to close at $9.69 per share. This was Allied Waste's biggest drop in five years.
Note: Allied Waste is a non-hazardous solid waste management company in the United States that provides collection, transfer, recycling and disposal services for approximately 10 million residential, commercial and industrial customers.