The original complaint charges CROCS and certain of its officers and directors with violations of the Securities Exchange Act of 1934. CROCS and its subsidiaries design, develop and manufacture consumer products from specialty resins worldwide. The Company offers footwear for men, women and children under the “CROCS” brand.
According to the complaint, during the Class Period, Defendants issued materially false and misleading statements that misrepresented and failed to disclose: (i) that the Company was experiencing significant distribution problems in Europe as it had moved distribution facilities and was experiencing distribution problems in Japan with a third-party distributor, causing the Company to lose tens of millions of dollars in sales; (ii) that the Company’s sales were being negatively impacted by seasonal conditions as consumers reduced purchases of the Company’s products in cold weather climates; (iii) that the Company’s inventory levels were building far beyond historic levels as sales began to slow and the Company’s sales began to be impacted by seasonality; and (iv) based on the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company, its earnings and prospects.
On October 31, 2007, CROCS issued a press release announcing its financial results for the third quarter of 2007, the period ending September 30, 2007. Following the earnings announcements, CROCS held a conference call for analysts and investors. During the call, Defendants discussed problems at its European and Japanese distribution centers and its growing inventory, among other things. In response to these announcements, the price of CROCS stock declined from $74.75 per share to $47.74 per share on extremely heavy trading volume.
On December 19, 2007, U.S. District Court Judge Robert E. Blackburn granted the agreed motion to consolidate cases. According to the Order, several civil actions are consolidated under Civil Action No. 07-cv-02351-REB-KLM, "In Re Crocs, Inc., Securities Litigation.” The Order further states that a consolidated complaint shall be filed within 45 days of the entry of the order appointing lead plaintiff(s) and lead counsel. On January 7, 2008, the plaintiffs filed various motions for appointment as lead plaintiff and for selection of lead counsel. On September 17, 2008 the judge entered an order appointing lead plaintiffs and approving their selection of lead counsel. The plaintiffs' Corrected Consolidated Complaint was filed on December 31, 2008. On March 19, 2009, the defendants filed motions to dismiss the Consolidated Complaint.
According to the Order signed by Judge Philip A. Brimmer on February 28, 2011, this case, and all claims asserted therein, is dismissed. All other motions are denied as moot. The Final Judgment was entered on March 4, 2011.
On March 18, 2011, the plaintiff filed a Notice of Appeal.