The original complaint charges Panera Bread and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Panera Bread engages in the ownership and franchising of bakery-cafes in the United States under the Panera Bread and Saint Louis Bread Company names.
According to the complaint, throughout the Class Period, the Company highlighted its increasing system-wide sales and, as a result, continuously increased its earnings guidance. Moreover, the Company was rapidly opening new locations throughout the United States. Unbeknownst to shareholders, the Company’s aggressive growth strategy was causing the Company to experience declining sales at its existing stores.
Additionally, the complaint alleges that, throughout the Class Period, defendants issued materially false and misleading statements and failed to disclose (i) that the Company was experiencing negative trends in its business which were causing it to experience rising expenses and slow growth; (ii) that the Company’s store expansion strategy was causing the Company to yield a lower return on capital and experience a decline in sales per restaurant as the Company’s new store openings began to cannibalize sales from existing stores; and (iii) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company, its prospects and revenue growth rate.
Then, on July, 26, 2006, Panera Bread announced its financial results for the second quarter of 2006, the period ended June 27, 2006. In response to this announcement, the price of Panera Bread common stock fell $7.34 per share, or approximately 12%, to close at $51.93 per share, on extremely heavy trading volume.
On June 23, 2008, the Court entered the Memorandum and Order consolidating the action and approving the motion to appoint Western Washington Laborers-Employers Pension Trust as lead plaintiff and approving lead plaintiff’s selection of Coughlin Stoia Geller Rudman & Robbins as lead counsel and Dysart Taylor as liaison counsel. On August 7, 2008, the lead plaintiff filed an Amended Class Action Complaint. The defendants responded by filing a motion to dismiss the case for failure to state a claim on October 6, 2008.
According to the Memorandum and Order signed by the Honorable E. Richard Webber on June 25, 2009, it is hereby ordered that Defendants’ Motion to Dismiss the Consolidated Complaint [doc. #29] is converted to a motion for summary judgment under Fed. R. Civ. P. 56, and is denied, without prejudice, for failure to comply with Local Rule 7-4.01(E). Any motion for summary judgment shall be filed no later than July 20, 2009.
On August 10, 2009, the defendants filed a motion for summary judgment. On March 16, 2010, the Honorable E. Richard Webber granted in part and denied in part the defendants’ motion for summary judgment.
According to the Company’s Form 10-Q for the quarterly period ended September 28, 2010, on April 5, 2010, the Court granted a joint motion by the parties to stay the case through July 6, 2010, which stay was subsequently extended by the Court until July 30, 2010, pending an attempt by the parties to resolve through mediation. Mediation was not successful and on August 30, 2010, the Company answered the complaint.
On February 11, 2011, the lead plaintiff filed a motion for settlement. The pending settlement is in the amount of $5,750,000. On February 22, 2011, the settlement was preliminarily approved. The final settlement hearing was set for June 22, 2011.
On June 22, 2011, the Honorable E. Richard Webber approved the settlement, awarded attorneys' fees and expenses, and approved the plan of allocation as set forth in the Stipulation and Agreement of Settlement dated as of February 11, 2011. Judgment was entered and the action is now dismissed with prejudice.