Blockbuster Suit Dismissed7 Jun, 2004 By: Holly J. Wagner
A federal court judge has dismissed a shareholder lawsuit brought against Blockbuster Video after the company's shares lost more than 30 percent of their value because of an unexpected drop in rentals after Thanksgiving 2002.
The sudden decline in rentals forced the company to lower its forecast for the 2002 fourth quarter, which sent the company's shares tumbling from $19.40 to $13.64 Dec. 18, 2002.
Investors later sued in U.S. District Court, alleging the nation's No. 1 rentailer had concealed critical information from investors.
The Hon. Barbara Lynn dismissed all claims in the securities class action lawsuit, finding the plaintiffs' claims insufficient to support their case.
"We're obviously pleased with the court's ruling, which we believe should bring an end to this litigation," said Blockbuster EVP and general counsel Edward B. Stead. "The judge issued a thorough opinion that supports Blockbuster and soundly rejects the plaintiffs' claims. Blockbuster has consistently said that it acted in its shareholders' best interests at all times and fully disclosed all material information to allow the shareholders to make an informed opinion."
Blockbuster shares were up 24 cents, to $15.91, on the news.