Kaye Scholer has obtained an agreement to settle an eight-year securities class action against our clients, the Canadian electronics manufacturing company Celestica Inc. and its former CEO and CFO, for $30 million—a fraction of the alleged investor losses that plaintiffs sought to recover. The settlement agreement is currently pending court approval.
Plaintiffs, a group of Canadian and American pension funds, filed a consolidated class action complaint against Celestica and its former officers in 2007 in the US District Court for the Southern District of New York before Judge George B. Daniels. Plaintiffs alleged that defendants made various false and misleading statements and omissions regarding Celestica’s plans to conduct a worldwide restructuring beginning in January 2005 and Celestica’s accounting for inventory and operational performance at a manufacturing facility in Mexico between 2005 and 2007. Early in the case, Judge Daniels granted Kaye Scholer’s motion to dismiss the complaint in its entirety, but the US Court of Appeals for the Second Circuit reversed the lower court’s dismissal in 2011 and remanded the case for further proceedings.
On remand to the district court, the parties engaged in two years of discovery, involving the production of hundreds of thousands of pages of documents, nearly 40 depositions throughout the United States and Canada, and substantial motion practice. At the close of discovery, Kaye Scholer successfully defeated class certification with respect to class members who purchased Celestica securities on foreign exchanges, including two of the four lead plaintiffs. However, Judge Daniels rejected both parties’ attempts to resolve the case on cross-motions for summary judgment.
As defendants were gearing up for trial, plaintiffs agreed to end their lawsuit in exchange for a payment representing a small percentage of the alleged investor losses—a very satisfactory result for Celestica and its former officers.
The Kaye Scholer team representing Celestica and its former officers included partners Phillip A. Geraci and Jeffrey A. Fuisz and associates Michael S. Bullerman, Aaron Miner, Michael Gruver, Danelco Moxey, and Yonina Rosenbaum.
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