On March 26, 2006, the Court issued an Order dismissing the consolidated amended complaint with leave to amend, except as to certain of plaintiffs’ allegations which were dismissed with prejudice. On April 28, 2006, the plaintiffs filed a Stipulation of Voluntary Dismissal, with Prejudice. The plaintiffs voluntarily dismiss all remaining claims in the action. On May 1, 2006, the Court entered the Order signed by U.S. District Judge Neil V. Wake dismissing the action with prejudice.
As disclosed by the Company’s Form 10-Q for the quarterly period ended June 30, 2006, three putative shareholder class action lawsuits (Davidco Investors LLC v. Swift Transportation Co., Inc., et al., Case No. 2:04cv02435; Greene v. Swift Transportation Co., Inc., et al., Case No. 2:04cv02492; and Tuttle v. Swift Transportation Co., Inc., et al., Case No. 2:04cv02874) were filed in the United States District Court for the District of Arizona against the Company and certain of its directors and officers, alleging violations of federal securities. On April 29, 2005, the Court issued an order consolidating the cases as In re Swift Transportation Co., Inc. Securities Litigation, Master File No., CV-04-2435-PHX-NVW. On June 8, 2005, the Court appointed United Food and Commercial Workers Local 1262 and Employers Pension Plan as the lead plaintiff. Thereafter, lead plaintiff filed a consolidated amended complaint on August 19, 2005. The consolidated amended complaint sought unquantified damages on behalf of a putative class of persons who purchased Swift’s common stock between October 16, 2003 and September 15, 2004. The allegations in the consolidated amended complaint are substantially similar to those in the previously filed complaints. Defendants filed a motion to dismiss the consolidated amended complaint on October 21, 2005. Both lead plaintiffs’ opposition to that motion and defendants’ reply brief have been filed. Oral arguments were heard on February 17, 2006 on defendants’ motion to dismiss the complaint.
The original complaint alleges that at all relevant times, Swift Transportation Co., Inc.'s CEO and Chair and entities controlled by him owned approximately 34% of the Company's outstanding shares and those shares were at all relevant times, pledged to an undisclosed lending institution as collateral for margin loans. The complaint alleges that defendants issued materially false and misleading statements to prop up and otherwise manipulate the price of Swift securities so as to prevent a margin call on Moyes's shares and to engage in improper inside trading on the basis of material nonpublic information. Specifically, the Company made materially false and misleading statements with respect to its U.S. Department of Transportation safety rating, the impact of recently enacted DOT regulations on the Company's operations, the extent to which the Company was offsetting rising costs with customer rate increases, the depreciation of its fleet, and the integrity of the Company's internal controls and reported financial statements. On September 15, 2004, the Company announced that third-quarter profit would lag analyst estimates because the Company was unable to raise rates as fuel costs increased. On news of the earnings shortfall, the Company's share price dropped from a closing price of $18.27 on September 15, 2004 to as low as $16.09 on September 16, 2004. The Class Period ends on October 1, 2004. On that date, the Company disclosed that an informal inquiry into certain stock trades by the Company and Moyes had been elevated to a formal investigation. On this news, the company's shares, which closed at $17.49 on October 1, 2004, fell to a low of $16.54 on October 4, 2004, the next trading day.