According to a press release dated February 3, 2009, the complaint charges Level 3 and certain of the Company's executive officers with violations of federal securities laws. Level 3 engages in the communications business in North America and Europe. The Company's network and Internet services include transport services, high speed Internet protocol services, dedicated Internet access, virtual private network services, colocation services and dark fiber services. Between December 2005 and January 2007, Level 3 also acquired several companies.
The Complaint alleges that throughout the Class Period defendants knew or recklessly disregarded that their public statements concerning Level 3's business, operations and prospects were materially false and misleading. Specifically, the Complaint alleges that defendants' public statements were false and misleading or failed to disclose or indicate that: (1) the Company's efforts to integrate the numerous acquired companies were not going well; (2) specifically, the Company was experiencing an increase in service activation times, which was negatively impacting the Company's service installation intervals and rate of revenue growth; (3) the Company was also experiencing challenges in its service management processes that were resulting in longer response times to resolve customers' network service issues; (4) steps taken by the Company to remedy the problems were not working, and actually were further complicating the issues and making them worse; (5) as a result of the above, the Company did not have adequate provisioning capability to convert its increasing sales, or signed orders, into revenue generating service; (6) the Company lacked adequate internal controls; and (7), as a result of the above, the statements made by the Company and management during the Class Period lacked a reasonable basis.
On October 23, 2007, Level 3 shocked the market when it revealed that the Company was having extensive difficulties integrating the systems and customer-service processes of the numerous companies it had acquired, and these difficulties were causing an increase in service activation times. Moreover, Level 3 revised downward the Company's previously issued guidance for fourth quarter 2007 and full year 2008. On this news, shares of Level 3 declined $1.04 per share, or approximately 24%, to close on October 23, 2007 at $3.28 per share, on unusually heavy trading volume.
On May 5, 2009, Judge Philip A. Brimmer approved the appointment of William A. Poppo as lead plaintiff. On May 19, 2009, Judge Brimmer approved lead plaintiff William A. Poppos selection of lead and liaison counsel is approved. Coughlin Stoia Geller Rudman & Robbins LLP and Johnson Bottini, LLP shall serve as co-lead counsel and Dyer & Berens LLP shall serve as liaison counsel. On June 29, 2009, the lead plaintiff filed a Consolidated Class Action Complaint. The defendants responded by filing a motion to dismiss.
On March 23, 2010, a Minute Order denying as moot the Defendants' Motion to Dismiss was entered by the Court.
On the same day, an Amended Consolidated Class Action Complaint for Violations of the Federal Securities Laws and Jury Demand against the Defendants.
On December 13, 2010, an Order was issued by the Court, dismissing with prejudice, the Plaintiffs’ amended consolidated class action complaint.
On January 14, 2011, lead plaintiff filed a notice of appeal with the United States Court of Appeals for the Tenth Circuit from the judgment entered in this action on December 16, 2010, including the order of dismissal entered on December 10, 2010.