The original complaint charges AtriCure and certain of its officers and directors with violations of the Securities Act. AtriCure is a medical device company that engages in the development, manufacture, and sale of surgical devices designed to create precise lesions, or scars, in cardiac and soft tissues. On January 23, 2007 defendants filed a motion to dismiss the complaint. The judge has scheduled oral arguments for the motions to dismiss as well plaintiff motions for appointment of lead plaintiff for August 15, 2007.
The complaint alleges that the Registration Statement and Prospectus issued in connection with the Company's IPO contained inaccurate statements of material fact because they failed to disclose that the Cleveland Clinic, where a significant portion of procedures that used the Company's products were being performed, was an investor in the Company and that doctors from the Cleveland Clinic had been paid consultants to the Company.
The complaint further alleges that on or around February 16, 2006, AtriCure issued a press release announcing its financial results for the fourth quarter of 2005 and the fiscal year ended December 31, 2005 and disclosed, among other things, that the Company was experiencing a "negative impact" on its business due to the revelations concerning the Cleveland Clinic.
In response to this announcement the price of AtriCure common stock dropped from $10.36 per share to $8.04 per share on extremely heavy trading volume.
On September 13, 2007, the Court entered the Memorandum Opinion and Order #95179. According to the Order, Defendants motion to dismiss Levine's complaint is denied and the motion to appoint James Duncan and Jackie Byrd as lead plaintiffs is granted. Further, the Court approves Duncan and Byrd's selection of Lerach Coughlin Stoia Geller Rudman & Robbins LLP and Schiffrin Barroway Topaz & Kessler, LLP as co-lead counsel. The defendants filed a motion for reconsideration of the September 13, 2007 Memorandum Opinion and Order, which was denied on January 29, 2009.
The parties soon engaged in settlement negotiation. According to the Order signed on June 29, 2010 by Judge Richard J. Holwell, the action was discontinued without costs (including attorney's fees) to either party and without prejudice to restoration of the action to the calendar of the undersigned within 30 days of the date of this Order if in fact there has not been a settlement of this matter.
On October 25, 2010, the plaintiffs filed an Unopposed Motion for Preliminary Approval of Settlement. The proposed settlement is in the amount of $2 million in cash and resolves claims against all defendants. The settlement was preliminarily approved on December 29, 2010. The Final Approval Hearing is set for May 27, 2011, to determine whether the proposed Settlement of the Litigation on the terms and conditions provided for in the Stipulation is fair, reasonable, and adequate to the Class and should be approved by the Court, among other things.
On May 27, 2011, Judge Richard J. Holwell approved the plan of allocation, granted the motion for attorney fees, and approved the final settlement. The action is dismissed with prejudice.