The original complaint charges defendants with violations of the Securities Exchange Act of 1934. US Unwired holds direct or indirect ownership interests in five Sprint PCS affiliates: Louisiana Unwired, Texas Unwired, Georgia PCS, IWO Holdings and Gulf Coast Wireless. 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) the Company was increasing its subscriber base by signing up high-credit-risk customers; (2) that accounting changes implemented by the Company were done in order to conceal the Company's declining revenues; (3) that the Company had been experiencing high involuntary disconnections related to its high-credit- risk customers; (4) that the Company experienced lower subscription growth as a result of its policy that required credit-challenged customers to pay substantial deposits upon the initiation of services; and (5) that the Company was engaged in a dispute with Sprint PCS regarding its business relationship with Sprint PCS and Sprint PCS was pressuring the Company.
The complaint further alleges that on August 13, 2002, US Unwired announced in a press release the financial results for the second quarter period ended June 30, 2002. The Company revealed that it experienced lower subscription growth as a result of its policy that required credit-challenged customers to pay substantial deposits upon the initiation of services. In response to this string of negative announcements, on August 13, 2002, the price of US Unwired common stock closed at $.90 per share, down 94.8% from its Class Period high of $17.25 per share.
On November 22, 2004, the Court entered the Order consolidating the cases and establishing a master file. On December 7, 2004, the Court entered the Order appointing Billy Lormand as lead plaintiff and approving the lead plaintiff’s choice of Lerach Coughlin Stoia Geller Rudman & Robbins LLP as lead counsel. On March 14, 2005, the plaintiff filed an Amended Complaint, and the defendants responded by filing a motion to dismiss the Amended Complaint on June 14, 2005. Before any ruling on the motion to dismiss, the plaintiff filed a Second Amended Complaint on September 16, 2005, and the defendants again responded by filing a motion to dismiss.
On August 14, 2006, the Court entered the Order signed by U.S. District Judge Lance M Africk granting the motions to dismiss the securities class action and the derivative action, both without prejudice. On September 11, 2006, the plaintiff filed a renewed motion for clarification.
On November 2, 2006, the Court entered the Order granting the motion for clarification and rescinded the Court’s previous order on the motion to dismiss the case. That day, the Court entered the Judgment in favor of the defendants and against the plaintiff. The plaintiff’s complaint was dismissed with prejudice and with costs. On November 16, 2006, the plaintiff filed a motion for reconsideration, which was later denied by the Order entered on November 22, 2006.
On December 12, 2006, the plaintiff filed a Notice of Appeal within the Fifth Circuit Court of Appeals. On June 2, 2009, the Court entered the Judgment from the U.S. Court of Appeals for the Fifth Circuit. According to the Order, the Court of Appeals affirmed in part, reversed in part and remanded the action to District Court. The case was reopened. On July 21, 2009, the lead plaintiff filed a Third Amended Complaint. The defendants then filed a Motion for Judgment on the Pleadings on August 20, 2009, which was denied on February 23, 2010. On January 8, 2010, a motion to certify the class was filed.
On July 15, 2010, a consent motion for preliminary approval was filed. The proposed settlement is in the amount of $9,700,000.00 in cash. On August 16, 2010, Judge Lance M Africk granted the motion for preliminary approval of the settlement. The Settlement Hearing is scheduled for December 17, 2010.
According to the Minute Order filed on January 14, 2011, the plaintiff's motions to certify the settlement class, approve the settlement and approve the allocation plan are granted. Further, according to the Order, the lead counsel's motion for attorneys fees and costs is granted in part and denied in part. The Court awards class counsel $357,674.03 in expenses. The Court awards a total fee of $1,681,618.67 or 18% of the settlement fund after expenses are deducted. The lead plaintiff is awarded $4,000.