According to a press release dated March 11, 2010, the complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. Specifically, during the Class Period defendants misrepresented the strength of Schweitzer’s competitive position and concealed problems with Schweitzer’s most important customer. As a result of defendants’ false and misleading statements, Schweitzer’s stock traded at artificially inflated prices during the Class Period, reaching a high of $82 per share on January 14, 2010. As a result of this inflation, Schweitzer was able to consummate a secondary offering of 1.8 million shares of its stock at $60 per share in November 2009.
On February 10, 2010, after the market closed, Schweitzer reported its fourth quarter and full year 2009 financial results. In the conference call following the release, defendants disclosed the Company’s most important customer’s decision to try competitive products and announced its filing of a patent lawsuit against competitors. As a result, Schweitzer’s stock tumbled $23.58 per share to close at $46.65 per share on February 11, 2010, a one-day decline of nearly 34%, on volume of nearly 14 million shares.
According to the complaint, the true facts, which were then known by or available to the defendants during the Class Period, were: (a) Schweitzer’s competitive position was not adequately protected from foreign competition as to low ignition propensity (“LIP”) paper, as such competitors were increasingly developing alternative methods to manufacture banded LIP paper; (b) the Company’s most important customer was not in agreement with Schweitzer as to a license agreement between the two companies; and (c) the Company’s competitive position was much more precarious than represented by defendants and the efforts by other manufacturers to invade Schweitzer’s territory were growing.
On August 26, 2010, the Court is issued Order Appointing the Institutional Investors As Lead Plaintiffs and Approving the Investors’ Selection Of Lead Counsel.
On October 11, 2010, an Amended Class Action Complaint was filed by the Lead plaintiffs against the defendants in this action. The defendants responded by filing a motion to dismiss the Amended Class Action Complaint, which was granted withouth prejudice on August 26, 2011. The plaintiffs have been given leave to file an second amended complaint on or before September 23, 2011.
On August 26, 2011, the Defendants' motion to dismiss was granted without prejudice allowing Plaintiffs leave to file a second amended complaint.
On September 30, 2011, pursuant to Rule 41(a)(1) of the Federal Rules of Civil Procedure this action was dismissed with prejudice also granting each party to bear its own attorneys’ fees and costs incurred in the action.