General Motors Corporation ("GM") is a large American multinational automotive manufacturing company.
As summarize by the Company’s Form 10-K for the fiscal year ended December 31, 2005, on December 28, 2005, J&R Marketing, SEP, filed a purported class action, J&R Marketing, et al. v. General Motors Corporation, et al. The action was filed in the Circuit Court for Wayne County, Michigan, against GM, GMAC, Eric Feldstein, William F. Muir, Linda K. Zukauckas, Richard J.S. Clout, John E. Gibson, W. Allen Reed, Walter G. Borst, John M. Devine, Gary L. Cowger, G. Richard Wagoner, Jr. and several underwriters of GMAC debt securities.
This class action is similar to the original Complaint, Zielezienski, et al. v. General Motors, et al., filed on November 29, 2005 in the Circuit Court for Palm Beach County, Florida. On January 6, 2006, Defendants named in the original Complaint removed this case to the U.S. District Court for the Southern District of Florida. On February 6, 2006, Plaintiff filed a motion to remand the case to Florida state court, which was then briefed by the parties. On March 28, 2006, the parties submitted a proposed stipulated order withdrawing Plaintiff’s motion to remand and transferring the case to the United States District Court for the Eastern District of Michigan. If this order is entered, the parties have agreed to seek to have this case consolidated with the J&R Marketing and Mager cases described below.
Similar to the Zielezienski case, the Complaint filed by J&R Marketing, SEP, alleges claims under Sections 11, 12(a), and 15 of the Securities Act based on alleged material misrepresentations or omissions in the registration statements for GMAC SmartNotes purchased between September 30, 2003 and March 16, 2005, inclusive. The Complaint alleges inadequate disclosure of GM’s financial condition and performance as well as issues arising from GMAC’s 2005 restatement of quarterly results for the three quarters ended September 30, 2005. The Complaint does not specify the amount of damages sought and Defendants have no means to estimate damages the Plaintiffs will seek based upon the limited information available in the Complaint. Defendants have not yet filed their response to the Complaint, but intend to vigorously defend this action. On January 13, 2006, Defendants removed this case to the U.S. District Court for the Eastern District of Michigan.
Further, according to the same SEC filing, on February 17, 2006, Alex Mager filed a purported class action, Mager v. General Motors Corporation, et al. The action was filed in the U.S. District Court for the Eastern District of Michigan and is substantively identical to the J&R Marketing case described above. Defendants have not yet filed their response to the Complaint, but intend to vigorously defend this action. On February 24, 2006, J&R Marketing filed a motion to consolidate the Mager case with its case (discussed above) and for appointment as lead Plaintiff and the appointment of lead Counsel. On March 8, 2006, the court entered an order consolidating the two cases.
On July 28, 2006, Plaintiffs filed a Consolidated Amended Complaint, which mainly differed from the initial Complaint in that it asserted claims for GMAC debt securities purchased during a different time period (July 28, 2003 through November 9, 2005), and added additional underwriter Defendants. On August 28, 2006 the underwriter Defendants were voluntarily dismissed without prejudice. On September 25, 2006, the GM and GMAC Defendants filed a motion to dismiss the amended Complaint. On February 27, 2007 Judge Edmunds entered an order granting with prejudice the Defendants' September 2006 motion to dismiss the case. One month later, on March 27, Plaintiffs filed a notice of appeal.
On October 20, 2008 the District Court entered the June 26, 2008 Amended Judgment and Mandate from the U.S. Court of Appeals for the Sixth Circuit. The judgment of the District Court dismissing the Plaintiffs’ Complaint is affirmed.
