According to a press release dated October 23, 2009, the complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. Defendants caused the Company to fail to properly account for its bad debt expense and timely write down its impaired goodwill.
As a result of defendants’ false and misleading statements, RH Donnelley’s stock traded at artificially inflated prices during the Class Period, trading as high as $66.67 in July 2007. However, beginning in February 2008, defendants began to acknowledge problems in the Company’s operations and with its financial results. On March 12, 2009, RH Donnelley announced that it had retained a financial advisor to assist in the evaluation of its capital structure, including various balance sheet restructuring alternatives. Then, on May 29, 2009, RH Donnelley filed for bankruptcy. The stock now trades at around six cents per share.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company was not adequately reserving for its bad debts in violation of GAAP, causing its financial results to be materially misstated; (b) the downward pressure the Company was experiencing with its advertising revenue was not exclusively due to cyclical challenges, as represented, but was also due to a permanent shift in customers moving away from print yellow pages advertising; (c) the Company had far greater exposure to liquidity concerns and ratings downgrades than it had previously disclosed; and (d) given the turmoil in the economy and the trends related to a shift away from print advertising, the Company had no reasonable basis to make projections about its 2008 results.
On June 22, 2010, by Judge Michael M. Baylson granted the motion to consolidate four related class actions, under lead case 09-CV-799. According to the Order, Zhengxu "John" He, Individually and as Trustee for the He & Fang 2005 Revocable Living Trust, is appointed as Lead Plaintiff. Furthermore, the law firm of Robbins Geller Rudman & Dowd LLP is appointed as Lead Counsel and Rosenthal, Monhait & Goddess, P.A. is appointed as Liaison Counsel for the class. On August 19, 2010, the lead plaintiff filed a Consolidated Class Action Complaint. The company is no longer named a defendant in the complaint due to the company's bankruptcy. On November 10, 2010, the defendants filed a motion to dismiss the Consolidated Class Action Complaint. On June 14, 2011, Judge Michael M. Baylson denied the defendants' motion to dismiss.
On September 30, 2011, the plaintiff filed a motion for class certification.
On February 17, 2012, a Stipulation of Settlement by the parties was entered into the Court's docket.
On June 20, 2012, the Court issued an Order approving the Plan of Allocation of the settlement proceeds. On the same date, the Court also issued an Order awarding attorneys' fees and expenses. Finally, the Court also issued the Final Judgment and Order of Dismissal With Prejudice.