Frequently Asked Questions
Securities Class Action
- What is this lawsuit about?
- Why is this a class action?
- Why is there a settlement?
- How do I know if I am part of the Settlement?
- Are there exceptions to being included?
- What if I am still not sure if I am included?
- What does the Settlement provide?
- How much will my payment be?
- How can I get a payment?
- When would I get my payment?
- What am I giving up to get a payment or to stay in the Class?
- How do I get out of the proposed Settlement?
- If I do not exclude myself, can I sue the Settling Defendants and the other Released Parties for the same thing later?
- Do I have a lawyer in this case?
- How will the lawyers be paid?
- How do I tell the Court that I do not like the proposed Settlement?
- When and where will the Court decide whether to approve the proposed Settlement?
- May I speak at the hearing?
- What happens if I do nothing at all?
- Are there more details about the proposed Settlement?
- How do I get more information?
Derivative Action
- What is the Derivative Action?
- What does the Derivative Action Settlement provide?
- How will the Attorneys be paid?
- When and where will the Court decide whether to approve the proposed Settlement?
- How do I tell the Court that I do not like the proposed Settlement?
Securities Class Action
The Consolidated Class Action Complaint for Violations of Federal Securities Laws dated March 12, 2007 (the “Complaint”) filed in the Action generally alleges, among other things, that Defendants issued false and misleading press releases and other statements regarding the financial condition of Home Solutions during a Class Period of April 11, 2006 through and including March 5, 2007, in a scheme to artificially inflate the value of Home Solutions’ securities.
The Complaint further alleges that the Class Plaintiffs and other Class Members purchased Home Solutions common stock during the Class Period at prices artificially inflated as a result of the Defendants’ dissemination of materially false and misleading statements regarding Home Solutions and were damaged thereby, and assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
Defendants denied that they violated any laws or committed any improper acts and asserted affirmative defenses. Defendants maintain that their actions were proper under the federal securities laws and deny that they are liable to Class Plaintiffs or the Class for the claims asserted in the Complaint.
In a class action, one or more people called Class Plaintiffs (in this case, Reze Taherian, Ray Roehuer, William Shockley and Howard Louie) sue on behalf of people who have similar claims. All of the people with similar claims are referred to as a Class or Class Members. One court resolves the issues for all Class Members, except for those who exclude themselves from the Class.
Beginning in June 2006, various class actions alleging violations of federal securities laws were filed in this Court and were subsequently consolidated under the caption Hansen, et al. v. Fradella, et al., and are hereinafter referred to collectively as the “Class Action.” On January 10, 2007, the Court appointed Reze Taherian, Ray Roehuer, William Shockley and Howard Louie collectively as the Lead Plaintiffs and appointed Scott + Scott, LLP as Lead Counsel.
The Consolidated Class Action Complaint for Violations of Federal Securities Laws dated March 12, 2007 (the “Complaint”) filed in the Action generally alleges, among other things, that Defendants issued false and misleading press releases and other statements regarding the financial condition of Home Solutions during a Class Period of April 11, 2006 through and including March 5, 2007, in a scheme to artificially inflate the value of Home Solutions’ securities in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
Defendants deny any wrongdoing whatsoever and this Stipulation shall in no event be construed or deemed to be evidence of or an admission or concession on the part of Defendants with respect to any claim or of any fault or liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that Defendants have asserted.
The Court did not decide in favor of Class Plaintiffs or Settling Defendants. Instead, both sides agreed to the Settlement to avoid the risks and cost of a trial, and so Class Members will receive compensation. The case would require all parties to engage experts and much of the proof would be highly technical making the outcome of any trial unpredictable. The Settling Defendants have vigorously contested this litigation and there is no assurance that a trial would have produced any recovery for the Class. Lead Plaintiffs and Plaintiffs’ Lead Counsel have concluded that the terms and conditions of this Stipulation are fair, reasonable and adequate to the Class Members and in their best interests in light of the real possibility that continued litigation would delay any recovery by the Class and could result in no recovery at all.
How do I know if I am part of the Settlement?
The Court directed, that everyone who fits this description is a Class Member: all persons who purchased the common stock of Home Solutions during the period between April 11, 2006 and March 5, 2007, inclusive (the “Class Period”), and were damaged thereby.
Are there exceptions to being included?
Excluded from the Class are the Defendants, their officers, directors, and partners at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns, and any entity in which Defendants have or had a controlling interest. For purposes of this Settlement, the term “controlling interest” shall include any interest of 10% or more of the common stock of any entity. Also excluded from the Class are any putative Class Members who now exclude themselves by filing a timely request for exclusion in accordance with the requirements set forth in the Notice.
If one of your mutual funds owns shares of Home Solutions common stock, that alone does not make you a Class Member. You are a Class Member only if you directly purchased or otherwise acquired Home Solutions common stock during the Class Period. Contact your broker to see if you have or held Home Solutions common stock.
If you sold or otherwise disposed of Home Solutions common stock during the Class Period, that alone does not make you a Class Member. You are a Class Member only if you purchased Home Solutions common stock, as defined above.
What if I am still not sure if I am included?
If you are still not sure whether you are included, you can ask for free help. You can contact the Claims Administrator toll-free at 1 (800) 961-3413, or you can fill out and return the Proof of Claim Form to see if you qualify.
What does the Settlement provide?
In exchange for the Settlement and dismissal of the Action, the Settling Defendants have agreed to the payment of $3.5 million to be divided, after taxes, fees, and expenses, among all Class Members who send in a valid Proof of Claim Form.
Your share of the fund will depend on the total Recognized Claims represented by the valid Proof of Claim Forms that Class Members send in, the amount of Home Solutions common stock you purchased or acquired, and when you acquired it, and if and when you sold it.
By following the instructions on the Plan of Allocation, you can calculate what is called your Recognized Claim. It is unlikely that you will get a payment for all of your Recognized Claim. After all Class Members have sent in their Proof of Claim forms, the payment you get will be a part of the Net Settlement Fund equal to your Recognized Claim divided by the total of everyone’s Recognized Claim. See the Plan of Allocation, beginning on page 12 of the Notice, for more information on your Recognized Claim.
To qualify for a payment, you must send in a Proof of Claim Form . Read the instructions carefully, fill out the Proof of Claim form, include all the documents the form asks for, sign it, and mail it so that it is postmarked no later than February 26, 2009.
The Court will hold a Fairness Hearing on March 23, 2009 at 3:00 p.m. to decide whether to approve the Settlement. If the Court approves the Settlement after that, there may be appeals. It is always uncertain whether these appeals can be resolved, and resolving them can take time, perhaps more than a year. It also takes time for all of the Proofs of Claim to be processed. Please be patient.
What am I giving up to get a payment or to stay in the Class?
Unless you exclude yourself, you will remain a Class Member, and that means that, if the Settlement is approved, you will release all “Settled Claims”, including “Unknown Claims” against the “Released Parties” (as defined in the Notice).
How do I get out of the proposed Settlement?
To exclude yourself from the Settlement Class, you must send a letter by first class mail stating that you “request exclusion from the Class in Hansen, et al. v. Fradella, et al. Class Action.” Your letter should include the date(s), price(s), number(s) and type(s) of all purchases and sales of Home Solutions common stock during the Class Period. In addition, you must include your name, address, telephone number, and your signature. You must mail your exclusion request postmarked no later than February 26, 2009 to:
Home Solutions Securities Class Action
c/o The Garden City Group, Inc.
P.O. Box 9319
Dublin, OH 43017-4219
You cannot exclude yourself by telephone or by e-mail. If you ask to be excluded, you will not get any payment, and you cannot object to the Settlement. You will not be legally bound by anything that happens in this lawsuit, and you may be able to sue the Settling Defendants and the other Released Parties in the future.
No. Unless you exclude yourself, you give up any rights to sue the Settling Defendants and the other Released Parties for any and all Settled Claims. If you have a pending lawsuit against the Released Parties, speak to your lawyer in that case immediately. You must exclude yourself from this Class Action to continue your own lawsuit. Remember, the exclusion deadline is February 26, 2009.
Do I have a lawyer in this case?
The Court ordered that the law firm of Scott + Scott, LLP represent the Class Plaintiffs and the Class Members, including you. These lawyers are called Plaintiffs’ Lead Counsel. If you want to be represented by your own lawyer, you may hire one at your own expense.
Plaintiffs’ Lead Counsel are moving the Court to award attorneys’ fees from the Settlement Fund in an amount not greater than thirty percent (30%) of the Gross Settlement Fund and for reimbursement of their expenses and interest from the Gross Settlement Fund.
How do I tell the Court that I do not like the proposed Settlement?
If you are a Class Member, you can object to the proposed Settlement if you do not like any part of it. You can give reasons why you think the Court should not approve it. The Court will consider your views. To object, you must send a signed letter saying that you object to the proposed Settlement in the Hansen, et al. v. Fradella et al. Class Action. Be sure to include your name, address, telephone number, and your signature, identify the date(s), price(s), number(s) and type(s) of all Home Solutions common stock you purchased and sold during the Class Period, and state the reasons why you object to the proposed Settlement. Mail the objection to each of the following addresses so that it is received no later than February 26, 2009:
|
COURT Clerk of the Court United States District Court Northern District Of Texas Dallas Division 1100 Commerce Street Room 1452 Dallas, TX 75242 |
PLAINTIFFS’ LEAD COUNSEL SCOTT + SCOTT, LLP David R. Scott, Esq. 108 Norwich Avenue P.O. Box 192 Colchester, CT 06415 |
COUNSEL FOR DEFENDANTS FULBRIGHT & JAWORSKI Gerard G. Pecht 1301 McKinney St Suite 5100 Houston, TX 77010-3095 |
When and where will the Court decide whether to approve the proposed Settlement?
The Court will hold a Fairness Hearing at 3:00 p.m. on Monday, March 23, 2009, at the United States District Court for the Northern District of Texas, 1100 Commerce St., Room 1358, Dallas, Texas 75242. At the Hearing the Court will consider whether the Settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. The Court will listen to people who have asked to speak at the hearing. The Court may also decide how much to pay to Plaintiffs’ Lead Counsel. After the Settlement Fairness Hearing, the Court will decide whether to approve the Settlement. We do not know how long these decisions will take. You do not need to come to the hearing. Plaintiffs’ Lead Counsel will answer questions the Court may have.
If you object to the Settlement, you may ask the Court for permission to speak at the Fairness Hearing. To do so, you must include with your objection (see How do I tell the Court that I do not like the proposed Settlement? above) a statement saying that it is your “Notice of Intention to Appear in Hansen, et al. v. Fradella et al. Class Action.” Persons who intend to object to the Settlement, the Plan of Allocation, and/or counsel’s application for an award of attorneys’ fees and expenses and desire to present evidence at the Settlement Fairness Hearing must include in their written objections the identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the Settlement Fairness Hearing. You cannot speak at the hearing if you excluded yourself from the Class.
What happens if I do nothing at all?
If you do nothing, you will get no money from this Settlement. Unless you exclude yourself, you will not be able to start a lawsuit or be part of any other lawsuit against the Released Parties about the legal issues in this case, ever again.
Are there more details about the proposed Settlement?
This website summarizes the proposed Settlement. More details can be found in an Amended Stipulation and Agreement of Settlement with Defendants filed November 6, 2008 (the “Stipulation”). You can get a copy of the Stipulation and obtain answers to common questions regarding the proposed Settlement by contacting the Claims Administrator toll-free at 1 (800) 961-3413.
How do I get more information?
For even more detailed information concerning the matters involved in this Action, reference is made to the pleadings, to the Stipulation, to the Orders entered by the Court and to the other papers filed in the Action, which may be inspected at the Clerk of the Court’s Office, United States District Court, Northern District Of Texas – Dallas Division, 1100 Commerce Street – Room 1452, Dallas, TX 75242, during regular business hours.
Derivative Action
What is the Derivative Action?
The shareholder derivative action was brought by Plaintiff for the benefit of Nominal Defendant Home Solutions against Defendants Michael S. Chadwick, Frank J. Fradella, Willard W. Kimbrell, Charles P. McCusker, Jr., Patrick A. McGeeney and Rick J. O’Brien for breaches of fiduciary duties owed to Home Solutions during the period April 11, 2006 through the present (“relevant period”).
What does the Derivative Action Settlement provide?
In order to effect a full and final settlement of the Derivative Action, the Company has agreed to implement the following corporate governance measures:
- Home Solutions will separate the positions of Chairman of the Board and Chief Executive Officer, which shall remain separated for a period of at least four years following the date of the stipulation.
- The appointment by Home Solutions of an independent and disinterested Chairman of the Board, Michael McGrath, whom Plaintiff acknowledges is independent and disinterested.
- The appointment by Home Solutions of a new interim Chief Financial Officer.
- The resignation of Defendant Brian Marshall as an officer and director of Home Solutions.
- The retention of an outside law firm, Haynes & Boone, to conduct an investigation and report their findings to Home Solutions’ Board of Directors.
- The adoption by Home Solutions of enhanced procedures to ensure the accuracy of its press releases and public announcements.
- Home Solutions shall not make strategic equity investments in any company in which a Director or Executive Director has a direct ownership of more than 5%, subject to Home Solutions’ ability, through reasonable efforts, to determine ownership interests in any such company.
How will the Attorneys be paid?
Plaintiff’s Counsel in the Derivative Action may apply for and receive an award of attorneys’ fees and reimbursement of expenses from the District Court of $200,000 in cash and $50,000 in Home Solutions common stock (the “Settlement Stock”), and Plaintiff in the Derivative Action may apply for a Plaintiff Award of $2,000 without opposition from Defendants or Nominal Defendant.
When and where will the Court decide whether to approve the proposed Settlement?
The Settlement Fairness Hearing is scheduled to be held before The Honorable David C. Godbey, on March 23, 2009, at 3:00 p.m., at the United States District Court for the Northern District of Texas, 1100 Commerce St., Room 1358, Dallas, Texas, 75242. Pursuant to the Settlement Fairness Hearing, the Court will determine whether to approve the securities Class Action Settlement and the Derivative Action Settlement.
How do I tell the Court that I do not like the proposed Settlement?
Any Current Shareholder who objects to the proposed Settlement in the Derivative Action must submit their written objection on or before February 26, 2009, in the manner described on pages 14 and 15 of the Notice.
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