On March 20, 2007, the Court entered the Final Order and Judgment approving the settlement and dismissing the action with prejudice. The Plan of Allocation was approved and Lead Counsel was awarded 30% of the Settlement Fund in fees and $57,239.03 in reimbursement of expenses.
According to a press release dated January 2, 2007, a hearing will be held on March 20, 2007, at 9:00 a.m., before United States District Judge Robin J. Cauthron, at the United States Courthouse, 200 NW 4th Street, Oklahoma City, OK, to determine: whether the settlement of claims in the Action in the amount of three million four hundred thousand dollars ($3,400,000) in cash, plus accrued interest (the "Settlement Fund"), should be approved as fair, reasonable and adequate to all parties; whether the proposed Plan of Allocation is fair, reasonable, and adequate; whether the application of Lead Counsel for an award of attorneys' fees and expenses should be approved; and whether the Action should be dismissed with prejudice as set forth in the Stipulation of Settlement dated as of November 6, 2006 and filed with the Court.
In a press release dated November 6, 2006, Dobson announced that it has reached an agreement in principle to settle the previously disclosed consolidated securities class action pending in the United States District Court for the Western District of Oklahoma. The settlement agreement, which is subject to court approval, would resolve all pending claims against the Company and all named individual defendants and includes all persons who purchased the Company's publicly traded securities between May 6, 2003 and August 9, 2004. The settlement provides for $3.4 million to be paid to settle claims submitted by class members and the plaintiffs' attorneys' fees. A substantial portion of the settlement amount is covered by insurance.
As disclosed by the Company’s Form 10-Q For the Quarterly Period Ended June 30, 2006, the court has consolidated these actions into No. CIV-04-1394-C and the consolidated action is pending. On July 5, 2005, motions to dismiss the consolidated complaint were filed. Plaintiffs filed their response to the motions to dismiss on September 6, 2005. The Company filed its reply briefs on October 3, 2005.
The original complaint charges Dobson with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. 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 the defendants knew or recklessly disregarded the fact that the Company's growth in roaming minutes was eroding; (2) that the Company had been missing sales quotas, as its service, marketing and customer upgrade cots spiraled out of control; (3) that the Company's largest equity interest holders AT&T and Bank of American intended to dispose of their interests in Dobson; and (4) that the Company lacked adequate internal controls to ascertain the true financial condition of the Company.
The complaint further alleges that on February 17, 2004, Dobson reported operating income of $48.6 million for the fourth quarter ended December 31, 2003. The results were disappointing due to weak growth in roaming minutes and very large reduction in 2004 guidance. This news shocked the market. Shares of Dobson fell $2.65 per share, or 36.55 percent, on February 18, 2004, to close at $4.60 per share. On August 9, 2004, Dobson reported a net loss applicable to common shareholders of $15.9 million, or $0.12 per share, for the second quarter ended June 30, 2004. On this news, shares of Dobson fell an additional $1.30 per share, or 54.17 percent, on August 10, 2004, to close at $1.10 per share.