On October 10, 2008, the judge entered a Final Order And Judgment Of Dismissal With Prejudice Of Class Action. The case has now been closed.
On October 10, 2008, an order was entered by the Judge concluding that the Fee Request requested by Lead Plaintiffs counsel of 25% of the Settlement Fund, is under the circumstances, fair and reasonable, and, therefore, the Court awards Lead Plaintiffs counsel $2,500,000, plus interest hereafter from until paid based on the same rate of interest earned by the Settlement Fund, to be paid from the Settlement Fund as provided in the Stipulation.
On October 06, 2008, a Notice of Motion and Motion for Settlement Approval of Final Approval of Settlement Plan and Allocation was filed by Plaintiff.
Plaintiffs filed a Consolidated Complaint on October 4, 2007. Defendants replied with motions to dismiss the complaint on October 31. After more than 6 months of arguing the motions both parties reached an agreement to settle the case for $10,000,000 prior to any ruling regarding dismissal. The settlement has been preliminarily approved and is awaiting final approval.
On May 15, 2007, the Court entered the Stipulation and Order signed by U.S. District Judge George H. Wu consolidating two related actions. The consolidated action shall be captioned: "In re U.S. Auto Parts Network, Inc. Securities Litigation."
According to a press release dated March 28, 2007, the complaint charges U.S. Auto Parts and certain of its officers and directors with violations of the Securities Act of 1933. U.S. Auto Parts is an online provider of aftermarket auto parts, including body parts, engine parts, performance parts and accessories.
The complaint alleges that on February 8, 2007, U.S. Auto Parts accomplished its IPO of 10 million shares at $10.00 per share (including 8 million shares sold by U.S. Auto Parts and 2 million shares sold by stockholders, including certain of the defendants) for net proceeds of $100 million, pursuant to the false and misleading Registration Statement. The Registration Statement failed to disclose that U.S. Auto Parts was having difficulty with its acquisition of PartsBin – a company it acquired in May 2006 – which would adversely affect its fourth quarter 2006 and first quarter 2007 results. Due to defendants’ positive but false statements, by March 2007 the stock was trading around $11 per share.
Then on March 20, 2007, after the market closed, U.S. Auto Parts issued a press release announcing disappointing fourth quarter 2006 and year end results. On this news, U.S. Auto Parts’ stock price collapsed in one day from $11.07 per share on March 20, 2007 to close at $6.49 per share on March 21, 2007.
The true facts which were omitted from the Registration Statement were as follows: (a) the Company was having difficulty with the integration of PartsBin due in large part to the different distribution methods utilized by U.S. Auto Parts and PartsBin to fill customer orders; (b) PartsBin was suffering from certain internal control deficiencies which caused or led to at least the following problems for U.S. Auto Parts: (i) the Company was having trouble filling customer orders under its drop-ship distribution system and was required to issue credits to its customers for out-of-stock products that it had previously recorded as sales; and (ii) the products offered via the drop-ship distribution method generated lower product margins than the products offered under the stock-and-ship distribution method, which further eroded and would continue to erode U.S. Auto Parts’ already suffering margins; and (c) the Company had experienced a disastrous fourth quarter which would result in disappointing 2006 results.