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| 2002 News and Press Releases |
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SETTLEMENT ARCHIVED:
Judge Puts Rite Aid Settlement On Hold
By: Staff Writer
Pennsylvania Law Weekly. May 22, 2002
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Excerpt: A federal judge has refused to approve a $193 million settlement in a class-action shareholders' suit against Rite Aid Corp. after finding that its "bar order" is too broadly worded and would improperly limit the rights of several former top executives who were not included in the settlement. But U.S. District Judge Stewart Dalzell also strongly suggested that he will approve the settlement - the largest ever in a securities case in the Eastern District - once the bar order is modified.The ruling also includes a major victory for the plaintiffs' lawyers - led by Sherrie Savett and David Bershad of Milberg Weiss Bershad Hynes & Lerach in New York - because Dalzell has ruled that once it is approved, they are entitled to a fee of 25 percent of the $193 million settlement, or $ 48.25 million. In his 60-page opinion, Dalzell also rejected many of the arguments raised by the former executives including their objection that Rite Aid acted unfairly by settling without them and using up all of the available insurance funds. But Dalzell said he was forced to reject the settlement due to his "technical concerns" about the scope of the bar order. If not for those concerns, he said, the settlement would "warrant unhesitating approval." Although a bar order is a common element in a class-action settlement, in Rite Aid's case it came under attack by the three former executives who said it prejudices their rights by prohibiting them from pursuing claims they may have against the company. The three former executives who objected to the settlement - CEO Martin Grass; chief financial officer Frank Bergonzi; and president and chief operating officer Timothy Noonan - lost their jobs in the wake of revelations that Rite Aid had grossly overstated its income and earnings.
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