The class action lawsuit was filed against First American Corporation on behalf of shareholders who purchased the common stock of the Company, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. Sections 78j(b), 78n(a) and 78t(a). Named as defendants are First American, the Company's Chief Executive Office and Chairman of the Board, as well as the Company's Vice Chairman and Chief Financial Officer.
The Complaint alleges that, during the Class Period, First American and certain of the Company's officers and directors engaged in an illegal scheme with Washington Mutual, Inc. ("WaMu"), whereby the defendants, through First American's real estate subsidiary, eAppraiseIT LLC, prepared artificially inflated appraisals of homes for use in connection with mortgages issued by WaMu. During the Class Period, in quarterly earnings reports, the Company's management reported increased earnings from appraisal fees and reassured investors that internal controls were adequate. The Complaint alleges that First American's fees from the improper appraisals resulted in the Company overstating its gross profit margins and net income during the Class Period and that throughout the Class Period the defendants made false and misleading statements regarding the Company's internal controls and financial
On September 18, 2008, Judge Lewis A. Kaplan granted the motion to appoint the Berks County Employees' Retirement Fund as Lead Plaintiff and further approved their selection of Grant & Eisenhofer P.A. as Lead Counsel. On December 5, 2008, the plaintiff filed an Amended Class Action Complaint. On January 23, 2009, the defendants filed a motion to dismiss the Plaintiff's Amended Class Action Complaint. On April 22, 2009, Judge Kaplan denied the defendants' motion to dismiss the Amended Class Action Complaint.
On October 15, 2009, the lead plaintiffs filed a motion to certify the class, which was denied on August 31, 2010. On September 21, 2010, the parties filed a Stipulation of Voluntary Dismissal. The case has been dismissed with prejudice.