Court Grants S.J. for Defendants in 2004 Sears Case

Court Grants S.J. for Defendants in 2004 Sears Case - 12/22/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Court Grants S.J. for Defendants in 2004 Sears Case
Bruce Carton

Compliance Week. December 22, 2009
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EXCERPT: Securities class actions resolved by a motion for summary judgment are fairly unusual. To get to that stage, a case must survive the defendants’ initial motion to dismiss the case, a process that can itself take years to complete. If a case does survive a motion to dismiss, the statutory “stay of discovery” under the Reform Act is lifted, and plaintiffs are then entitled to obtain discovery from the defendants regarding the allegations, including documents, depositions and requests for admissions. As such discovery can be extremely expensive and time-consuming for defendants, and can open the door for plaintiffs to obtain potentially damaging and embarrassing documents and testimony, many cases that survive a motion to dismiss promptly settle when the motion to dismiss is denied, before the discovery process gets underway and well before any motion for summary judgment is filed. Last week, however, an opinion was issued in a case against Sears Roebuck and its former CEO that did reach the summary judgment stage. On December 18, 2009, U.S. District Judge Robert W. Gettleman (N.D. Ill.) granted the motions for summary judgment of all of the defendants in the securities class action, including Sears and the former CEO. In 2006, defendants’ motions to dismiss had been denied, and in 2007 a class had been certified of purchasers of certain Sears securities. In their complaint, plaintiffs alleged that the Sears defendants violated the securities laws by failing to disclose merger negotiations between Sears and Kmart during the class period. In their motions for summary judgment, the defendants argued that the merger negotiations began on October 31, 2004, not prior to the start of the class period (September 9, 2004) as alleged in the complaint.

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