In re Quality Systems, Inc. Securities Litigation
|Court:||United States District Court, Central District of California|
|Judge:||Hon. Cormac J. Carney|
|Case Contacts:||Gerald H. Silk, Avi Josefson, Benjamin Galdston|
This is a securities fraud class action on behalf of purchasers of Quality Systems, Inc. (“QSI” or the “Company”) common stock during the period from May 26, 2011 through July 25, 2012, inclusive (the “Class Period”), alleging claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against QSI; the Company’s founder and Chairman, Sheldon Razin; its Chief Executive Officer, Steven T. Plochocki; and its Chief Financial Officer, Paul Holt (collectively, “Defendants”).
Lead Plaintiffs Have Reached a Proposed Settlement for $19.5 Million
The Court-appointed Lead Plaintiffs, Arkansas Teacher Retirement System and City of Miami Fire Fighters’ and Police Officers’ Retirement Trust, have reached a proposed settlement of this action for $19,000,000 in cash with Defendants that, if approved by the Court, will resolve all claims in the action.
If you are a member of the Class, your rights will be affected and you may be eligible for a payment from the settlement. The Class consists of:
all persons or entities who purchased or otherwise acquired QSI common stock during the period from May 26, 2011 through July 25, 2012, inclusive, and were damaged thereby, except for certain persons and entities who are excluded from the Class by definition (see paragraph 18 of the Notice) or who request exclusion pursuant to the instructions set forth in the Notice (see paragraphs 58 to 60 of the Notice).
Please read the Notice to fully understand your rights and options. Copies of the Notice and Claim Form can be found on the Case Documents page. You may also visit the Settlement website, www.QSISecuritiesSettlement.com, for more information about the Settlement.
If you are a member of the Class, in order to be potentially eligible to receive a payment under the proposed Settlement, you must submit a Claim Form postmarked no later than December 12, 2018. 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
December 12, 2018
Claim Filing Deadline. Claim Forms must be postmarked no later than December 12, 2018 to be eligible for a payment from the Settlement.
October 29, 2018
Exclusion Deadline. To exclude yourself from the Settlement Class, you must submit a written request for exclusion so that it is received no later than October 29, 2018, in accordance with the instructions in the Notice.
October 29, 2018
Objection Deadline. Any objections to the proposed Settlement, the proposed Plan of Allocation, and/or the request for attorneys’ fees and reimbursement of expenses, must be received no later than October 29, 2018, in accordance with the instructions in the Notice.
November 19, 2018
Settlement Hearing. The Settlement Hearing will be held on November 19, 2018 at 1:30 p.m., before the Honorable Cormac J. Carney at the United States District Court, Central District of California, Southern Division, Ronald Reagan Federal Building and United States Courthouse, 411 West Fourth Street, Santa Ana, CA 92701, Courtroom 9B. The Settlement Hearing 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.
QSI develops and sells practice management software to medical and dental providers, including software related to scheduling and billing. Throughout the Class Period, QSI portrayed itself as a high-growth company, repeatedly touting its record growth in revenue and earnings, and robust pipeline of business that contained hundreds of millions of dollars of software sales that the Company sought to realize within the next six to eight months. QSI also repeatedly issued bullish annual guidance to investors, stating that it was confident that it would achieve annual growth rates in earnings per share (“EPS”) well in excess of 20%.
Lead Plaintiffs allege that, in truth, Defendants knew and recklessly disregarded that QSI’s growth was materially slowing. Lead Plaintiffs allege that, throughout the Class Period, Defendants were privy to real-time data concerning the revenues and earnings of each of QSI’s operating divisions, and QSI’s guidance was continuously updated based on that real-time data. Accordingly, Lead Plaintiffs contend that Defendants knew and recklessly disregarded that the fiscal 2012 guidance calling for earnings growth of as much as 33% was directly contradicted by the reality of QSI’s performance.
On May 7, 2012, the Company announced that it was experiencing delays in closing sales, which raised investor concerns about the Company’s fiscal 2012 performance. Following this announcement, QSI’s stock price declined 17% over the next two trading days, falling from a closing price of $36.99 on May 6 to a closing price of $30.99 on May 8, on very high volume.
A few days later, on May 10, 2012, QSI revealed that its ability to generate earnings had materially slowed in fiscal 2012. Specifically, QSI announced that it would report EPS of between $1.27 and $1.30 for fiscal 2012 – or as much as 36% below its guidance. Following this announcement, QSI’s stock price immediately declined 6%, falling from $32.09 to $30.12 on May 10, on extremely high volume.
Then, before the market opened on July 26, 2012, Defendants announced that the Company’s EPS had materially declined from the year-ago quarter, and withdrew QSI’s highly favorable fiscal 2013 guidance. That disclosure caused the price of QSI stock to decline from $23.63 per share to $15.95 per share on July 26, 2012.
On April 7, 2014, Lead Plaintiffs filed an Amended Complaint For Violations Of The Federal Securities Laws (“Amended Complaint”). In June 2014, Defendants filed a motion to dismiss the Amended Complaint, which Lead Plaintiffs opposed. In October 2014, the court granted the motion to dismiss. In January 2015, the court denied Lead Plaintiffs’ motion for reconsideration. Following Lead Plaintiffs’ appeal of these decisions, on July 28, 2017, the Ninth Circuit Court of Appeals reversed the district court’s order and remanded for further proceedings.
Following the Court of Appeals’ decision, Lead Plaintiffs and Defendants began formal discovery. After substantial document discovery and settlement negotiations, including before mediation before Gregory P. Lindstrom, Esq., of Phillips ADR, a nationally recognized mediator, the parties reached an agreement to settle all claims in the action for $19 million.
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