In re CenturyLink Sales Practices and Securities Litigation
|Court:||United States District Court for the District of Minnesota|
|Case Number:||3:17-md-02795-MJD-KMM (MDL); 0:18-cv-00296-MJD-KMM (Securities)|
|Judge:||U.S.D.J. Michael J. Davis.; U.S.M.J. Katherine M. Menendez|
|Class Period:||03/01/2013 - 07/12/2017|
|Case Contacts:||John C. Browne, Michael D. Blatchley, Richard D. Gluck, Michael Mathai, Alex Dickin|
This securities class action asserts claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against CenturyLink, Inc. (“CenturyLink” or the “Company”), and certain of its senior executives (collectively with CenturyLink, the “Defendants”), arising out of false and misleading statements concerning the Company’s fraudulent billing practices from March 1, 2013 through July12, 2017 (the “Class Period”).
CenturyLink is a communications company that provides a wide variety of telecom services, including broadband internet, Ethernet, managed hosting, video entertainment, television, and phone and VoIP, throughout the United States. During the Class Period, CenturyLink made a series of false and misleading statements, including that its employees were subject to a strict code of conduct that prohibited employees from “placing…an order for our products and services for a customer without that customer’s authorization,” that the Company promoted its services based on customer “needs," and that its strategy of “bundling” services helped “maintain…customer relationships” and “enhance customer loyalty.” The Company also reported strong revenue growth and sales, and represented that its financial condition was strong and growing.
In truth, CenturyLink incentivized unethical and unlawful behavior, including by allowing CenturyLink employees to add services, lines, and accounts for customers without their permission, resulting in millions of dollars in unauthorized charges to CenturyLink customers. Further, contrary to CenturyLink’s representations, the Company’s revenues and earnings growth were unsustainable because they were dependent upon improper and illegal conduct that subjected the Company to heightened regulatory scrutiny, governmental action, and significant sanctions that could severely curtail its business.
Investors learned the true facts about the Company’s business practices and financial condition through a series of corrective disclosures. First, on June 16, 2017, Bloomberg reported that a former CenturyLink employee filed a whistleblower lawsuit alleging that she was wrongfully terminated after notifying CenturyLink’s CEO about the Company’s improper sales practices, including secretly billing millions of dollars of unauthorized charges to CenturyLink customers. On June 19, 2017, Bloomberg reported that a consumer class action lawsuit against the Company had been filed on behalf of CenturyLink customers seeking up to billions of dollars in damages in connection with CenturyLink’s unlawful billing practices. Then, on July 12, 2017, the Minnesota Attorney General announced that it had filed a lawsuit against CenturyLink alleging violations of state consumer protection laws after a year-long investigation which provided extensive detail concerning CenturyLink’s billing misconduct. These revelations resulted in sharp declines in the prices of CenturyLink’s securities, causing investors to incur substantial losses
In the wake of these disclosures, on June 21, 2017, the first of several securities class actions was filed against the Company. On October 20, 2017, Magistrate Judge H. L. Perez-Montes of the Western District of Louisiana consolidated the related securities class actions and appointed the State of Oregon by and through the Oregon State Treasurer and the Oregon Public Employee Retirement Board, on behalf of the Oregon Public Employee Retirement Fund as Lead Plaintiff, and Bernstein Litowitz Berger & Grossmann LLP and Stoll Stoll Berne Lokting & Shacter, P.C. as Co-Lead Counsel.
In February 2018, the Judicial Panel on Multidistrict Litigation transferred the consolidated actions to the District of Minnesota before the Honorable Michael J. Davis. On April 20, 2018, Judge Davis consolidated a subsequently-filed securities class action against CenturyLink under Oregon’s leadership.
On June 25, 2018, Oregon filed a consolidated securities class action complaint. Briefing on Defendants’ motion to dismiss was completed on November 9, 2018. Defendants’ motion to dismiss was heard on June 7, 2019. On July 30, 2019, Judge Davis issued an order denying Defendants’ motion to dismiss in its entirety.
Plaintiffs filed their motion for class certification on January 21, 2020 and completed briefing on June 19, 2020. On September 14, 2020, the class was certified when Judge Davis granted Plaintiffs' motion for class certification in full. The class is defined as all persons and entities that purchased or otherwise acquired publicly-traded CenturyLink, Inc. common stock or 7.60% Senor Notes due September 15, 2039, during the period between March 1, 2013 to July 12, 2017, inclusive, and who were damaged thereby.
The parties have reached an agreement to settle the action for $55 million, subject to court approval. On February 1, 2021, Plaintiffs filed their motion for preliminary approval of the proposed settlement, which is pending before the Court.
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