In re Spectrum Brands Litigation

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

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.  

Lead Plaintiffs Have Reached a Proposed Settlement for $39 Million

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 “Settlement”). Simultaneously, Lead Plaintiffs filed their motion for preliminary approval of the Settlement with the Court. On September 28, 2020, the Court granted Lead Plaintiffs’ motion for preliminary approval and set a final approval hearing for January 29, 2021 at 3:00 p.m. (CST).

If you are a member of the Settlement 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 HRG from January 26, 2017 to July 13, 2018; (ii) purchased common stock of Spectrum Brands Legacy, Inc. (formerly known as Spectrum Brands Holdings, Inc.) from January 26, 2017 to July 13, 2018; and (iii) purchased common stock of Spectrum from July 13, 2018 to November 19, 2018 (January 26, 2017 to November 19, 2018, the “Class Period”) and were damaged thereby, except for certain persons and entities who are excluded from the Settlement Class by definition as set forth in paragraph 23 of the Notice.

Please read the Notice to fully to 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 maintained by the Claims Administrator, www.SpectrumBrandsSecuritiesLitigation.com.

If you are a member of the Settlement Class, in order to be potentially eligible to receive a payment from the Settlement, you must submit a Claim Form with adequate supporting documentation by mail postmarked no later than February 25, 2021 or online no later than February 25, 2021 using the Settlement website, www.SpectrumBrandsSecuritiesLitigation.com.

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 DEADLINE:

SUBMIT A CLAIM FORM BY MAIL POSTMARKED NO LATER THAN FEBRUARY 25, 2021 OR ONLINE NO LATER THAN FEBRUARY 25, 2021.

This is the only way to be eligible to receive a payment from the Settlement Fund.  If you are a Settlement Class Member and you remain in the Settlement Class, you will be bound by the Settlement as approved by the Court and you will give up any Released Plaintiffs’ Claims (defined in paragraph 33 of the Notice) that you have against Defendants and the other Defendants’ Releasees (defined in paragraph 34 of the Notice), so it is in your interest to submit a Claim Form.

EXCLUDE YOURSELF FROM THE SETTLEMENT CLASS BY SUBMITTING A WRITTEN REQUEST FOR EXCLUSION SO THAT IT IS RECEIVED NO LATER THAN JANUARY 8, 2021.

If you exclude yourself from the Settlement Class, you will not be eligible to receive any payment from the Settlement Fund.  This is the only option that allows you ever to be part of any other lawsuit against any of the Defendants or the other Defendants’ Releasees concerning the Released Plaintiffs’ Claims.

OBJECT TO THE SETTLEMENT BY SUBMITTING A WRITTEN OBJECTION SO THAT IT IS RECEIVED NO LATER THAN JANUARY 8, 2021.

If you do not like the proposed Settlement, the proposed Plan of Allocation, or the request for an award of attorneys’ fees and Litigation Expenses, you may write to the Court and explain why you do not like them.  You cannot object to the Settlement, the Plan of Allocation, or the fee and expense request unless you are a Settlement Class Member and do not exclude yourself from the Settlement Class.

PARTICIPATE IN A HEARING ON JANUARY 29, 2021 AT 3:00 P.M., AND FILE A NOTICE OF INTENTION TO APPEAR SO THAT IT IS RECEIVED NO LATER THAN JANUARY 8, 2021.

Filing a written objection and notice of intention to appear by January 8, 2021 allows you to speak in Court, at the discretion of the Court, about the fairness of the proposed Settlement, the Plan of Allocation, and/or the request for attorneys’ fees and Litigation Expenses.  In the Court’s discretion, the January 29, 2021 hearing may be conducted by telephone or video conference (see paragraphs 82-83 of the Notice).  If you submit a written objection, you may (but you do not have to) participate in the hearing and, at the discretion of the Court, speak to the Court about your objection.

DO NOTHING.

If you are a member of the Settlement Class and you do not submit a valid Claim Form, you will not be eligible to receive any payment from the Settlement Fund.  You will, however, remain a member of the Settlement Class, which means that you give up your right to sue about the claims that are resolved by the Settlement and you will be bound by any judgments or orders entered by the Court in the Action.

 

 

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