Class Action Suits: It’s No Slam Dunk for Plaintiffs
At least four class action suits have been prepared against former executives of Riverside, Calif.-based Fleetwood Enterprises Inc. alleging violations of the Securities Exchange Act by issuing false and misleading statements about the company’s financial condition between Dec. 6, 2007 and March 10, 2009.
Each firm is seeking shareholders who bought shares of Fleetwood Enterprises during that time. Fleetwood, an RV and manufactured home maker, filed for bankruptcy protection on March 10, according to the Riverside Press-Enterprise.
The only suit that’s been filed with the U.S. Central District Court of California so far comes from New York-based Coughlin Stoia Geller Rudman & Robbins LLP, which names Fleetwood’s president and CEO Elden Smith and former CFO Boyd Plowman as defendants.
Before the suits can move forward though, the court will need to decide whether to certify them or not.
“The fact that you file a class-action doesn’t automatically make it so,” said Piero Dallarda, a partner with Best Best & Krieger in Riverside specializing in business litigation, who has argued class-action cases before.
Best Best & Krieger has not filed a class-action suit on behalf of Fleetwood shareholders.
Dallarda said the court considers a few standards before deciding whether to certify a class-action suit, namely whether the number of shareholders suing the company’s executives is large enough, if there are common characteristics among the shareholders based on law and fact, and if the lead plaintiff adequately represents the rest of the shareholders.
In its 38 page filing made Sept. 1, Coughlin Stoia Geller Rudman & Robbins LLP pointed to statements made in press releases by Elden Smith since Dec. 6 that it alleges painted a rosier picture of Fleetwood’s condition.
An e-mail to Smith seeking comment was not returned. Smith has said in a prior interview that the company’s financial condition, steeped in debt and losses for several years after pricey acquisitions in the late 1990s, was improving but high gas prices followed by a “once in a lifetime” recession stymied the company’s attempts to recover.