In re Spectrum Brands Litigation

Court: United States District Court for the Western District of Wisconsin
Case Number: 3:19-CV-00347
Class Period: 01/26/2017 - 11/19/2018
Case Leaders: Avi Josefson, Katherine M. Sinderson
Case Team: Jai K. Chandrasekhar, Catherine E. van Kampen

Lead Plaintiffs Have Settled 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 resolves the Action as to members of the Spectrum Class (the “Settlement”).

On March 18, 2022, the Court held a hearing to consider final approval of the Settlement and related matters. On March 21, 2022, the Court entered a final Judgment approving the Settlement, an Order approving the Plan of Allocation for the proceeds of the Settlement, and an Order awarding attorney's fees and litigation expenses.

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 requested exclusion from the class.

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 The prior settlement has been withdrawn and is no longer before the Court.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 Settlement, you must submit a Claim Form. The deadline for submission of a Claim Form was 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 after the completion of all claims processing.  Please be patient, as this process will take some time to complete.

IMPORTANT DEADLINE

January 25, 2022

Claim Filing Deadline. The deadline to submit a Claim Form was 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.

 

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 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.

Following the final approval hearing on March 18, 2022, the Court entered a final Judgment approving the Settlement, an Order approving the Plan of Allocation for the proceeds of the Settlement, and an Order awarding attorney's fees and litigation expenses.