The original complaint charges Darden and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Darden, through its subsidiaries, engages in the ownership and operation of casual dining restaurants in the United States and Canada. The Company operates restaurants under the names Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones, and Seasons 52.
According to the complaint, during the Class Period, defendants issued materially false and misleading statements that misrepresented and failed to disclose: (a) that the Company’s core restaurants, such as Olive Garden, Red Lobster and LongHorn, were underperforming and same-store sales were experiencing negative trends; (b) that the Company was experiencing rising food costs which were above internal expectations; and (c) that, as a result of the forgoing, the defendants had no reasonable basis for their positive statements about the Company’s prospects and guidance for fiscal 2008.
On December 18, 2007, Darden announced its financial results for the fiscal second quarter of 2008, the period ended November 25, 2007. For the quarter, the Company reported net earnings from continuing operations of $44.1 million, or $0.30 per diluted share, and sales of $1.52 billion. Moreover, the Company dramatically reduced its diluted net earnings per share growth for fiscal 2008 from 10-12% to 7-9%. Upon this news, shares of the Company’s stock fell $7.68 per share, or over 21%, to close at $28.39 per share, on extremely heavy trading volume.
On April 22, 2008, Chief Judge Patricia C. Fawsett signed the Order consolidating two related filings. On July 1, 2008, Judge Fawsett signed the Order granting the motion to appoint the Carpenters Pension Trust Fund for Northern California and Carpenters Annuity Trust Fund for Northern California as lead plaintiffs. Bernstein Liebhard & Lifshitz, LLP, was appointed lead counsel. On September 2, 2008, the lead plaintiffs filed an Amended Class Action Complaint. The defendants responded by filing a motion to dismiss the Amended Class Action Complaint on November 25, 2008.
On May 14, 2009, Judge Mary S. Scriven referred the defendants’ motion to dismiss to the Magistrate David A. Baker for a report and recommendation. On July 2, 2009, Magistrate Baker issued the Report and Recommendation recommending that the motion be granted. The lead plaintiff objected to the Report and Recommendation, however, on August 11, 2009, Judge Scriven signed the Order adopting the Report and Recommendation. The motion to dismiss was granted, all pending motions were terminated and the case was closed.