Several purported shareholder class action lawsuits have been filed against Able Laboratories, Inc. and certain of its present and former executive officers charging the defendants with violations of the Securities Exchange Act of 1934. 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 Company's laboratory testing practices significantly deviated from standard operating procedures employed in the industry; (2) that as a consequence of the foregoing, the Company suspended shipment of all of its products and had to withdraw seven of its approved Abbreviated New Drug Applications filed with the FDA; and (3) that this disruption of business would have a material adverse effect on the Company's business and results of operations.
The complaint further alleges that on or around May 19, 2005, Able announced that it had identified apparent departures from standard operating procedures with respect to certain laboratory testing practices. On the same day, Able also announced that defendant, the Company's Chairman and Chief Executive Officer, would be resigning from those positions. The news shocked the market. Shares of Able fell $18.37 per share, or 74.59 percent, on May 19, 2005, to close at $6.25 per share.
NOTE: On July 18, 2005, Able filed a petition to reorganize under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey, Trenton Division. Able is no longer named as a defendant.
On January 26, 2006, the Court entered the Order signed by U.S. District Judge Joseph A. Greenaway, Jr., consolidating the actions with 05-2681. On March 17, 2006, the Court entered the Order granting the motions to appoint of Deka International (Ireland) and the Denver Employees Retirement Plan as lead plaintiffs and Grant & Eisenhofer P.A. and Murray, Frank & Sailer LLP as co-lead counsel. On June 19, 2006, the plaintiffs filed a Consolidated Class Action Complaint, and on September 12, 2006, the defendants filed motions to dismiss the Consolidated Class Action Complaint. On June 29, 2007, the Court entered the Order denying the Defendants’ motion to dismiss. Defendants filed motions for reconsideration, which were denied on March 24, 2008.
On March 19, 2009 the judge provisionally closed the case in light on a pending settlement agreement. The order stipulates that the case may be reopened if the settlement is not consummated. On May 14, 2009, the lead plaintiffs filed a motion to reopen the case to allow consummation of settlement. On December 11, 2009, the motion to reopen the case to consummate settlement was granted. On January 4, 2010, a Stipulation and Agreement of Settlement was filed. The proposed settlement is in the amount of $9,150,000 in cash. On February 24, 2010, the settlement was preliminarily approved. The Fairness Hearing is scheduled on June 16, 2010.
On August 25, 2010, the Court entered the Order and Final Judgment signed by Chief Judge Garrett E. Brown, Jr. The settlement was approved and co-lead counsel was awarded attorney fees and expenses. The case is now dismissed with prejudice and closed.