Category Archives: Settlement

Bristol-Myers Squibb Co. (NYSE – BMY), a global pharmaceutical company headquartered in New York, has announced a preliminary agreement to settle the securities class action pending against the company in the D.N.J. The background of the case, which was set to go to trial, is discussed in this post from last August.

The settlement is for $185 million. The plaintiffs announced that it is the “largest recovery ever obtained against a pharmaceutical company in a securities fraud case involving the development of a new drug” and that Bristol-Myers has agreed to publicly disclose the clinical study design and the results of clinical trials for every drug it markets. The company, however, was less committal about the non-financial aspects of the settlement, telling the Associated Press that it “already had two Web sites where it discloses clinical trial results.”

In 2004, Bristol-Myers paid $300 million to settle a different securities class action relating to alleged financial misstatements.

Tenet Healthcare Corp., the second-largest U.S. hospital chain, has announced the preliminary settlement of the securities class action pending against the company in the C.D. of Cal. The case was originally filed in 2002 and alleges that Tenet made false or misleading statements about Medicare payments and other issues.

The settlement is for $215 million, including $1.5 million in personal payments from two former officers. Tenet’s insurers will contribute $75 million. A related state court derivative case is also being resolved. Bloomberg has an article on the settlement.

Royal Ahold NV (NYSE: AHO), the Dutch owner of the Giant and Stop & Shop supermarket chains, has announced the preliminary settlement of the securities class action pending against the company in the D. of Md. The case was originally filed in 2003 after Royal Ahold announced a large financial restatement.

The settlement is for $1.1 billion and is the largest U.S. securities class action settlement ever entered into by a European company. Bloomberg has this report.

The controversy over the “reverse auction” in the KPMG tax shelter class action continues (see this post). The New Jersey Law Journal reports (via law.com – free regist. req’d) that a trio of plaintiffs’ firms plan to challenge the preliminary approval of a $225 million settlement.

Qwest Communications International Inc. (NYSE:Q), a Denver-based provider of Internet, data, video, and voice services, has announced the preliminary settlement of the securities class action pending against the company in the D. of Colo. The case was originally filed in 2001 and alleges that Qwest engaged in sham transactions for fiber-optic network capacity to hide declining demand.

The settlement is for $400 million, with an additional $10 million to be paid by co-defendant Arthur Andersen. Qwest’s former CEO and CFO are also co-defendants in the case, but are not part of the settlement. According to the announcement, the settlement can be terminated under certain circumstances, “including in the event that the SEC elects not to distribute to the putative class members the $250 million penalty that Qwest has already committed to pay to the SEC.” Bloomberg has this report.

In a special Sarbanes-Oxley section, today’s Wall Street Journal has an article (subscrip. req’d) on the recent trend of requiring corporate governance reforms as part of the settlement of shareholder litigation. Although the article is generally positive about this trend, it has been the subject of some debate.

Quote of note: “There can be immediate advantages, too, such as helping to avoid a protracted fight inside a courtroom, and, more important, possibly reducing payouts. . . . [I]n a handful of cases tracked by NERA since Sarbanes-Oxley was enacted in 2002, evidence suggests that the plaintiffs in a majority of those cases agreed to reduced cash payouts in return for governance reforms. Of the eight settlement agreements tracked that included cash and governance reforms, five included financial payments that were at least 40% lower than NERA’s model had predicted, and only two turned out to be higher.”

PSS World Medical, Inc. (Nasdaq: PSSI), a Florida-based distributor of medical products, has announced the preliminary settlement of the securities class action pending against the company in the M.D. of Fla. The case was orginally filed in 1998 and arose out of PSS World’s acquisition of Gulf South Medical Suppply. Trial was set to begin this November.

The settlement is for $16.5 million, with $13.2 million to be paid for by the company’s insurers. PSS World also stated that “it expects to pursue all available legal remedies from Ernst & Young LLP, the auditor of Gulf South prior to the Company’s acquisition of the entity, for damages associated with their audits of the Gulf South financial statements and public filings.”