The complaint alleges that the Company concealed from investors that its three large, ongoing construction contracts for the installation of marine oil and gas pipelines off the coast of Qatar were substantially delayed and that the delays caused the Company to incur major losses on those contracts. As a result, plaintiffs said, the Company's oil and gas division posted a $19.7 million loss during the third quarter of 2008, resulting from $90 million in contract losses related to delays on the three pipeline contracts. Investors finally learned of the severity of the production setback and the resulting negative impact to the Company's earnings on November 5, 2008 when the Company filed its third quarter 2008 Form 10-Q with the SEC. McDermott's stock price plunged on the news, from $15.56 per share at
close on November 5, 2008 to $10.39 per share at close on November 6, 2008 -- a loss of $5.17 per share, or 33%.
On February 2, 2009, the Court entered the Order granting the motion so consolidate three cases under Master File civil action No. 08 Civ. 9943 (DC), captioned In Re: McDermott International, Inc. Securities Litigation. On February 9, 2009, the defendants filed a motion to transfer the case to the U.S. District Court for the Southern District of Texas. On March 6, 2009, the Adams Family was appointed lead plaintiff and lead plaintiff’s choice of Izard Nobel P.C. was also approved. On April 14, 2009, the defendants' motion to transfer the case was granted. The case was transferred from the U.S. District Court for the Southern District of New York to the Southern District of Texas.
According to the Company’s FORM 10-K for the fiscal year ended December 31, 2009, in May 2009, the plaintiffs filed an amended consolidated complaint, which, among other things, added JRMSA’s former President and Chief Executive Officer as a defendant in the proceedings. In July 2009, the defendants filed a motion to dismiss the complaint. The plaintiffs filed two responses to the motion to dismiss: (1) a motion to convert the motion to dismiss to a motion for summary judgment and granting the plaintiffs leave to conduct discovery, which motion was denied in August 2009; and (2) an opposition to the motion to dismiss. In September 2009, the Court advised us that the motion to dismiss has been referred to a Magistrate Judge. On February 23, 2010 the Magistrate Judge entered a Memorandum and Recommendation on Defendants’ Motion to Dismiss. The Magistrate Judge found that plaintiffs had failed to state a claim for relief under the securities laws and therefore recommended to the District Court that the Defendants’ Motion to Dismiss be granted. The plaintiffs have fourteen days from the date of service of the Magistrate Judge’s Memorandum and Recommendation in which to file any written objections to the proposed findings and recommendation of the Magistrate Judge. After that time period has elapsed, the Court will rule on the motion to dismiss.
On March 26, 2010, Judge Vanessa D. Gilmore adopted the Memorandum and Recommendation. According to the Order, the Plaintiff's case is dismissed without prejudice to give the Plaintiff the opportunity to seek leave to amend their pleadings. On December 14, 2010, Magistrate Judge Mary Milloy signed the Memorandum and Recommendations, recommending that Plaintiffs' motion for leave to amend complaint be denied. On February 28, 2011, Judge Vanessa D. Gilmore adopted the Recommendation. The case is dismissed.