Case Page

 

Case Status:    SETTLED
On or around 11/17/2009 (Date of order of final judgment)

Filing Date: August 27, 2007

The original complaint charges Heelys and certain of its officers and directors with violations of the Securities Act of 1933. Heelys designs, markets and distributes wheeled footwear. Specifically, the complaint alleges that the Registration Statement used by defendants in connection with the IPO was misleading in that it represented that Heelys had a viable, well-established business plan and that its tremendous revenue growth and resulting profits were based on sound business and stable sales practices. Moreover, the Registration Statement failed to disclose the staggering number of injuries suffered by Heelys’ users in the months leading up to the IPO. The Company and certain of its senior executives and directors sold $155 million worth of Heelys stock at $21 per share in the IPO.

The complaint further alleges that on or around August 8, 2007, following the issuance of product safety warnings by the Consumer Product Safety Commission and other industry safety groups that affected the shoe’s marketability, defendants were forced to significantly downgrade the Company’s revenue and earnings guidance for the second half of 2007, admitting that retailers were sitting on huge unsold inventory and refusing to place additional orders. On this news, the Company’s stock price fell 45% in a single trading session on more than six-times the average daily trading volume over the preceding month.

According to the Company’s FORM 10-Q for the quarterly period ended March 31, 2009, several lawsuits have been transferred to a single judge and have been consolidated into a single action. Lead plaintiffs and lead counsel have been appointed. An amended consolidated complaint was filed on March 11, 2008. The amended complaint alleges that the prospectus used in connection with our IPO contained misstatements of material fact or omitted to state material facts necessary in order to make the statements made not misleading relating to among other allegations, safety concerns and injuries associated with our products and their alleged impact on demand, visibility into our sales channel and competition from knockoffs, in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and requests substantially similar damages and relief as previously mentioned. On August 14, 2008, the Court denied Defendants’ motions to dismiss the amended complaint, and discovery commenced. During a mediation conducted by the Hon. Nicholas H. Politan (ret.), Plaintiffs and Defendants reached a settlement pursuant to which Defendants will pay Plaintiffs and a proposed plaintiff settlement class a total of $7.5 million, including attorneys’ fees and expenses. The Company has reached an agreement in principal with its insurers for the Company’s insurance policies to fund the majority of this settlement amount. This settlement is subject to final documentation and approval by the Court. The Company expects that the proposed settlement will be submitted to the Court for preliminary approval within the next month. If the Court preliminarily approves the settlement, notice will be provided to shareholders, who will be provided an opportunity to object to the settlement or to opt out of the proposed settlement class.

According to a press release dated November 23, 2009, Heelys, Inc. (NASDAQ: HLYS) announced that on November 17, 2009, the federal judge presiding over the previously disclosed consolidated securities class action and consolidated shareholder derivative action approved the settlements of those lawsuits and signed a Final Judgment and Order of Dismissal with Prejudice with respect to each lawsuit. These cases were pending in the U.S. District Court for the Northern District of Texas, Dallas Division. These settlement agreements were described in the Company's prior filings. Defendants did not admit any liability or wrongdoing in the settlements.

COMPANY INFORMATION:

Sector: Consumer Cyclical
Industry: Footwear
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: HLYS
Company Market: NASDAQ
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: N.D. Texas
DOCKET #: 07-CV-01468
JUDGE: Hon. Ed Kinkeade
DATE FILED: 08/27/2007
CLASS PERIOD START: 12/07/2006
CLASS PERIOD END: 08/08/2007
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Claxton & Hill
    3131 McKinney Ave., Suite 700 LB 103, Claxton & Hill, TX 75204-2471
    214.969.9099 ·
  2. Glancy Binkow & Goldberg LLP (Los Angeles)
    1801 Ave. of the Stars, Suite 311, Glancy Binkow & Goldberg LLP (Los Angeles), CA 90067
    310.201.915 310. 201-916 · info@glancylaw.com
  3. Kaplan Fox & Kilsheimer, LLP (former New York, NY)
    805 Third Avenue, 22nd Floor, Kaplan Fox & Kilsheimer, LLP (former New York, NY), NY 10022
    212.687.1980 212.687.7714 · info@kaplanfox.com
  4. Law Offices of Howard G. Smith
    3070 Bristol Pike, Suite 112, Law Offices of Howard G. Smith, PA 19020
    215.638.4847 215.638.4867 ·
  5. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    58 South Service Road, Suite 200, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 ·
  6. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    655 West Broadway, Suite 1900, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 ·
  7. Provost & Umphrey Law Firm, LLP (Dallas )
    3232 McKinney Avenue, Suite 700, Provost & Umphrey Law Firm, LLP (Dallas ), TX 75204
    214.744.3000 214.744.3015 · info@provostumphrey.com
  8. Schwartz, Junell, Campbell & Oathout, LLP (Houston)
    909 Fannin - Suite 2000, Schwartz, Junell, Campbell & Oathout, LLP (Houston), TX 77010
    713.752.0017 713.752.0327 ·
No Document Title Filing Date
COURT: N.D. Texas
DOCKET #: 07-CV-01468
JUDGE: Hon. Ed Kinkeade
DATE FILED: 03/11/2008
CLASS PERIOD START: 12/08/2006
CLASS PERIOD END: 08/08/2007
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    655 West Broadway, Suite 1900, Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 · info@csgrr.com/
  2. Schiffrin Barroway Topaz & Kessler, LLP (Radnor)
    280 King of Prussia Road, Schiffrin Barroway Topaz & Kessler, LLP (Radnor), PA 19087
    610.667.7706 610.667.7056 · info@sbtklaw.com
No Document Title Filing Date
No Document Title Filing Date