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SALT LAKE CITY (AP) -- Novell's $13.9 million settlement of a class-action shareholder securities fraud lawsuit has been finalized in federal court.
U.S. District Judge Tena Campbell granted final approval to the settlement Thursday.
Novell, a networking software and Linux distribution firm that originated in Utah but relocated its headquarters to Waltham, Mass., last year, continued to deny all claims by plaintiffs Domenico Pirraglia, Bella and Bernard Pasternak and other shareholders.
But it said its attorneys had concluded further litigation would be protracted and expensive and payment of the settlement was justified given the uncertainty and risk of such a complex case.
"Novell is pleased to have this matter finally resolved and is satisfied with the outcome," Novell attorney Jeffrey Hunt said.
Richard Burbidge, whose Salt Lake City law firm of Burbidge & Mitchell will share a payout of 30 percent with other plaintiff firms from Los Angeles, San Diego, San Francisco and New York City, said the settlement "certainly is fair, adequate and reasonable and brings to a close nearly 71/2 years of very intense litigation."
How many investors will share in the more than $9 million left after legal costs is uncertain
Campbell had granted preliminary approval for the deal in February, ending litigation that had begun with two proposed class action complaints filed in February 1998 in San Jose, Calif.'s federal court. The suits were consolidated and transferred to Utah.
Campbell dismissed the lawsuit in April 2002, but the 10th U.S. Circuit Court of Appeals ruled that shareholders should be allowed to litigate "various accounting shenanigans" that purportedly boosted the company's financial reports.
Specifically, shareholders were entitled to a trial on claims that former Novell President Joseph Marengi, then-board Chairman Robert Frankenberg and ex-Chief Financial Officer James Tolonen, among others, created a fictional "in transit" category and improperly recorded shipments to third-party retailers and resellers as revenue, the 10th Circuit ruled.
Those earnings details, plaintiffs charged, led to heavy investor losses when Novell stock slipped from $13 to $7 between Nov. 1, 1996, and April 22, 1997.
Novell's stock closed Thursday at $5.83 per share, down 45 cents.
(Copyright 2005 by The Associated Press. All Rights Reserved.)
