In re Computer Sciences Corporation Securities Litigation
The Complaint alleges that Computer Sciences Corporation ("CSC"), an IT consulting and outsourcing company based in Northern Virginia, fraudulently inflated its stock price by misrepresenting and omitting the truth about the state of its most visible contract and the state of its internal controls. The revelation of the truth led to a 50% drop in CSC's stock value.
CSC entered into a $5.4 billion dollar contract with the U.K. National Health Service ("NHS"). Throughout the Class Period, which runs from August 5, 2008 through August 9, 2011, CSC assured the market that CSC was performing on the NHS Contract.In fact, however, CSC internally knew as of May 2008, at the latest, that CSC could not deliver on the contract, had departed from the terms of the contract, and as a result was not properly accounting for the contract.These problems and others evidence that CSC's internal controls over financial reporting were ineffective, which similarly was not disclosed to the investing market.CSC's inability to perform on the contract and its improper accounting under the contract, materialized during 2011, when CSC missed several key delivery deadlines, the NHS threatened to terminate CSC due to its repeated breaches of contract, and CSC ultimately disclosed that it would need to take a write-down of its entire investment in the contract: $1.5 billion.
As the true extent of CSC's problems were disclosed during 2011, CSC's stock price dropped by 50%.
In October 2011, the parties briefed lead plaintiff's motion for class certification and defendants' motion to dismiss the Complaint. On November 6, 2011, the Court heard oral argument. A decision on the motion to dismiss was issued on August 29, 2012. The decision largely denied the motion to dismiss and upheld lead plaintiff's allegations concerning the NHS Contract and CSC's ineffective internal controls. The decision also denied lead plaintiff's class certification motion, without prejudice to renewal following the filing of any amended complaint. On September 12, 2012, lead plaintiff filed a Notice of Filing to apprise the Court that lead plaintiff would not be amending the Complaint and would instead proceed with respect to the Complaint as sustained. Lead plaintiff also noticed the Court that it renewed its motion for class certification, as previously submitted.
On November 15, 2012, the Court heard oral argument on lead plaintiff's motion for class certification. On November 30, 2012, the Court issued an Order granting lead plaintiff's motion for certifying the Class, appointing Ontario Teachers' as Class Representative and appointing Labaton Sucharow as Class Counsel. A Memorandum Opinion in support of the November 30, 2012 Order was issued on December 19, 2012.
On December 14, 2012, defendants filed a petition in the United States Court of Appeals for the Fourth Circuit ("Fourth Circuit") seeking leave to approve the Court's order on class certification. On March 5, 2013, the Fourth Circuit denied defendants' petition. On February 27, 2013, Class Representative filed a motion for approval of the form, content and method for providing Notice to the Class. On March 15, 2013, the Court entered an Order approving the form and content of the Notice to be disseminated to the Class. A copy of the Notice of Pendency of Class Action can be accessed by clicking on the links to the right.
Trial was scheduled to begin on May 21, 2013.
On May 16, 2013, Labaton Sucharow announced that it reached a $97.5 million settlement that will resolve the Action and moved for preliminary approval of the settlement. Additional information will be available once the Court rules on the motion.