In re Spectrum Brands Litigation

Court: United States District Court for the Western District of Wisconsin
Case Number: 3:19-CV-00347
Class Period: 06/14/2016 - 11/16/2018
Case Leaders: Avi Josefson, Katherine M. Sinderson
Case Team: Jai K. Chandrasekhar, Matthew Traylor, Catherine E. van Kampen

Lead Plaintiffs Have Reached a Proposed Settlement of the Action for $32 Million

The Court-appointed Lead Plaintiffs, the Public School Teachers’ Pension and Retirement Fund of Chicago and the Cambridge Retirement System, have reached a settlement for $32,000,000 in cash that, if approved, will resolve the Action as to members of the Spectrum Class (the “Settlement”).

If you are a member of the Spectrum Class, your rights will be affected and you may be eligible for a payment from the Settlement.  The Settlement Class consists of:

all persons and entities that: (i) purchased common stock of Spectrum Brands Legacy, Inc. (“Old Spectrum”) from January 26, 2017 to July 13, 2018; and/or (ii) purchased common stock of and Spectrum Brands Holdings, Inc. (“Spectrum”) from July 13, 2018 to November 19, 2018 (January 26, 2017 to November 19, 2018, the “Class Period”) and were damaged thereby

Certain persons and entities are excluded from the Spectrum Class by definition (see paragraph 28 of the Notice), or if they previously requested exclusion from the class, or they may request exclusion pursuant to the instructions set forth in the Notice (see paragraph 80 of the Notice).

PLEASE NOTE: You may have received notice of a previous proposed settlement of this Action in late 2020. That earlier proposed settlement was not approved by the Court due to the scope of the proposed settlement class. The prior settlement has been withdrawn and is no longer before the Court. The previously proposed settlement included claims arising from purchases of Old Spectrum common stock and Spectrum common stock, as well as HRG Group, Inc. (“HRG”) common stock. As further described in the Notice, the new Settlement relates only to claims arising from the purchases of Old Spectrum or Spectrum common stock. The claims arising from purchases of HRG common stock will not be settled or released by this newly proposed Settlement. The claims arising from purchases of HRG common stock will continue to be litigated in a separate action by a new lead plaintiff, Jet Capital Master Fund LP, which was appointed by the Court to serve as a representative for that group of investors in June 2021. That action is Jet Capital Master Fund, L.P. v. HRG Group Inc., No. 21-cv-552-jdp (W.D. Wis.). A proposed settlement of the Jet Capital action, which is separate from the Settlement discussed here, has been reached and if you purchased HRG common stock during the Class Period you may also receive notice of that proposed settlement.

Please read the Notice to fully understand your rights and options.  Copies of the Notice and Claim Form can be found in the Case Documents list on the right of this page.  You may also visit the case website, SpectrumBrandsSecuritiesLitigation.com, for more information about the Settlement.

To be eligible to receive a payment under the proposed Settlement, you must submit a Claim Form postmarked (if mailed) or submitted on-line by no later than January 25, 2022.  PLEASE NOTE: If you submitted a Claim Form in connection with the Prior Settlement, you DO NOT need to submit another form.

Payments to eligible claimants will be made only if the Court approves the Settlement and a plan of allocation, and only after any appeals are resolved, and after the completion of all claims processing.  Please be patient, as this process will take some time to complete.

IMPORTANT DATES AND DEADLINES

January 25, 2022

Claim Filing Deadline. Claim Forms must be postmarked (if mailed) or submitted on-line no later than January 25, 2022.

PLEASE NOTE: If you submitted a Claim Form in connection with the Prior Settlement, you DO NOT need to submit another form.

February 22, 2022

Exclusion Deadline. To exclude yourself from the Spectrum Class, you must submit a written request for exclusion so that it is received no later than February 22, 2022, in accordance with the instructions in the Notice.  

February 22, 2022

Objection Deadline. Any objections to the proposed Settlement, the proposed Plan of Allocation, or the motion for attorneys’ fees and expenses, must be submitted or filed so they are received no later than February 22, 2022, in accordance with the instructions in the Notice.

March 18, 2022
at 10:00 a.m. Central Time

Settlement Hearing.  The Settlement Hearing will be held March 18, 2022 at 10:00 a.m. Central Time.  The Settlement Hearing, which is scheduled to be conducted by video conference, will be held by the Court to consider, among other things, whether the proposed Settlement is fair, reasonable, and adequate and should be approved; whether the proposed Plan of Allocation is fair and reasonable and should be approved; and whether Lead Counsel’s motion for attorneys’ fees and expenses should be approved.

 

The Litigation

This is a securities class action lawsuit filed on behalf of all persons who purchased Spectrum Brands Holdings, Inc.'s (“Spectrum”) or HRG Group, Inc.’s (”HRG”) (collectively, “the Companies”) publicly traded securities from January 26, 2017 to November 19, 2018, inclusive (the “Class Period”). The action is brought against Spectrum, HRG, and certain of the Companies’ current and former senior executives (collectively, “Defendants”), and asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5.  A copy of the Amended Class Action Complaint is available here.

Spectrum is a consumer-brands company that provides a wide variety of consumer products through its retail partners, including Walmart, Home Depot, and Lowe’s.  During the Class Period, Defendants falsely stated that Spectrum was successfully executing two major supply-chain consolidation projects in its critical Global Auto Care (“GAC”) and Home & Hardware Improvement (“HHI”) divisions.  From their inception, both consolidations suffered severe logistical, operational, and technical problems such as poor inventory management, product quality control, and employee training and retention policies.  These problems materially damaged Spectrum’s supply-chain and distribution networks, production lines, and consequently, its customer relationships.  While the consolidation projects were experiencing these problems, Defendants repeatedly told the market that the GAC and HHI consolidations were progressing effectively and on schedule, and any problems were merely temporary, transitory, and being quickly corrected.  In truth, Defendants knew that the GAC and HHI consolidations were suffering from fundamental logistical, operational, and technical problems that were far more serious than those disclosed to investors.

On April 26, 2018, Spectrum disclosed disappointing financial results for the second quarter of 2018 based on the poorly executed consolidation projects.  On the same day, CEO Andreas Rouvé resigned.  Spectrum’s stock price declined about 22.1%, from $93.14 to $72.56 per share.  Defendants immediately represented that the problems plaguing the GAC and HHI facilities were being swiftly corrected.  Then, on November 16, 2018, the Company disclosed another disastrous quarter driven by a $92.5 million goodwill write-down for GAC, again due to the poorly executed consolidations.  Spectrum’s stock price declined another 19%, from $59.35 to $48.05 per share.  Finally, on January 2, 2019, Spectrum sold its entire GAC division to Energizer Holdings, Inc.

In June 2019, the Court appointed the Public School Teachers’ Pension and Retirement Fund of Chicago and the Cambridge Retirement System as Lead Plaintiffs, and BLB&G as Lead Counsel for the Class.  In July 2019, Lead Plaintiffs filed an Amended Class Acton Complaint on behalf of the class of investors who purchased or otherwise acquired securities of Spectrum or HRG between January 26, 2017 and November 19, 2018, inclusive.  In August 2019, Defendants filed a motion to dismiss the Amended Complaint. Lead Plaintiffs’ opposition motion was filed in October 2019 and Defendants filed their reply in further support of their motion to dismiss in November 2019.  

On August 10, 2020, Lead Plaintiffs and Defendants entered into the Stipulation and Agreement of Settlement setting forth the terms and conditions of the proposed settlement of the Action for $39 million in cash (the prior “Settlement”). Pursuant to the Court’s September 28, 2020 Order preliminarily approving the proposed Settlement, notice of the Settlement was mailed to potential class members beginning on October 28, 2020. On February 6, 2021, the Court denied without prejudice Lead Plaintiffs’ motion to approve the prior Settlement of the Action on account of a class member objection, and requested that Lead Plaintiffs either send out an amended notice or dismiss the claims of class members who purchased HRG stock. On April 2, 2021, Lead Plaintiffs published an amended notice for shareholders of HRG securities pursuant to the Court’s order. On June 10, 2021, the Court appointed Jet Capital Master Fund LP as Lead Plaintiff for purchasers of HRG stock. 

Lead Plaintiffs, Defendants, and Jet Capital engaged in mediation before Jed Melnick, Esq. in an effort to reach a settlement on behalf of both the Spectrum Class and the HRG Class, which included a formal mediation session on July 22, 2021.  Lead Plaintiffs, Defendants, and Jet Capital were unsuccessful in negotiating a mutually acceptable allocation of the $39,000,000 in settlement consideration that had previously been agreed for both subclasses.

Lead Plaintiffs and Defendants then reached an agreement in principle to settle the Action with respect to the Spectrum Class for $32,000,000.  The proposed Settlement does not affect the claims of the HRG Class.  On August 27, 2021, Lead Plaintiffs and Defendants entered into the Stipulation and Agreement of Settlement, which sets forth the terms and conditions of the Settlement.  On August 27, 2021, the Court also entered an order severing the claims of the Spectrum Class from the claims of the HRG Class and allowing the two sets of claims to proceed independently.

On November 17, 2021, the Court preliminarily approved the Settlement and scheduled the Settlement Fairness Hearing to consider whether to grant final approval of the Settlement for March 18, 2022.