On July 20, 2007 the judge entered a Final Order and Judgment cementing the settlement and dismissing the case with prejudice. Both parties agreed to a settlement amount of $14.94 million and the Court awarded lead counsel fees of 30% of the Settlement Fund and reimbursement of expenses in an aggregate amount of $531,085.07 together with the interest earned for the same time period and at the same rate as that earned on the Settlement Fund until paid. Lead Plaintiff John Dzaugis was awarded $7,300.00
According to a press release dated March 2, 2007, Direct General Corporation announced that it entered into a Memorandum of Understanding with other defendants and the plaintiffs to settle a consolidated class action pending in the United States District Court for the Middle District of Tennessee, Nashville Division, entitled In re Direct General Corporation Sec. Litig. The stipulated settlement amount is $14.94 million, which is apportioned to the defendants, and the plaintiffs agree to dismiss with prejudice all claims against all defendants to the action. The memorandum of understanding is subject to several conditions, including approval by the court. The parties to the action intend to submit a stipulation of settlement to the court seeking preliminary approval of the settlement.
On August 8, 2006, the Court entered the Order granting the motion to certify class.
On April 26, 2005, the Court entered the Order granting the motion to appoint the Structural Ironworkers Local Union #1 Annuity, Pension and Welfare Funds and John Dzaugis as lead plaintiffs and to approve lead plaintiff’s choice of Lerach Coughlin Stoia Geller Rudman & Robbins LLP as lead counsel. The motion for the consolidation of all related actions is also granted. On June 17, 2005, a Consolidated Amended Complaint was filed, and the defendants responded by filing motions to dismiss the Consolidated Amended Complaint. On November 9, 2005, the Court entered the Order granting in part and denying in part certain defendants’ motions to dismiss and granting in part another defendants’ motion to dismiss.
The original class action lawsuit has been filed on behalf of purchasers of the securities of Direct General Corp., seeking to pursue remedies under the Securities Exchange Act of 1934. Specifically, the complaint alleges that Defendants issued, or caused to be issued, false and misleading statements to artificially inflate the value of Direct General Stock. Specifically, Defendants concealed from the investing public the negative effect a change in the Florida Personal Injury Protection scheme would have on the Company's business operations. The Company also failed to properly reserve for its insurance losses as a result of the change in the Florida statute. While the stock's value was just a few dollars from its Class Period high, and almost $15 from its current price, Defendants and other insiders sold over 3.3 million shares for net proceeds of $108 million. Further, on or around January 26, 2005, the Company admitted that its current reserves were inadequate and disclosed for the first time the substantial impact the revised Florida PIP Statute was having on its operations.