This case is brought as a federal securities class action on behalf of all individuals and entities that purchased or acquired Patriot National common stock between January 15, 2015 and November 28, 2017, and were damaged thereby.
Two class action complaints were filed in the New York Court, which by Order dated October 12, 2017, were consolidated and recaptioned as In re Patriot National, Inc. Securities Litigation, Master File No. 1:17-cv-01866-ER. Lead Plaintiffs and Lead Counsel were approved and appointed by the Court in February 2018.
On October 18, 2018, Plaintiffs filed and served their Consolidated Amended Class Action Complaint for Violations of the Federal Securities Laws (the “Complaint”) asserting claims against Defendants under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. Among other things, the Complaint alleged that Patriot National and the Defendants made materially false and misleading statements about Patriot National’s business, including the company’s failure to adhere to its publicly disclosed Policy Regarding Transactions with Related Persons and the fact that Patriot National’s most important customer was on the brink of failure. The Complaint further alleged that the prices of Patriot National common stock were artificially inflated as a result of these false and misleading statements, and the stock price declined when the truth was revealed.
On January 30, 2018, Patriot National filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Bankruptcy Court ordered that all parties with an interest in claims that may be covered by director and officer insurance policies, including the Parties to the Action, participate in mediation.
The Parties engaged in extensive, arm’s-length negotiations regarding the settlement of Plaintiffs’ and the Settlement Class Members’ claims against Defendants. Following multiple mediation sessions overseen by mediator Robert A. Meyer, Esq. of JAMS—in-person on April 18, 2018, April 19, 2018, June 26, 2018, and August 10, 2018, and by telephone on June 6, 2018—and numerous additional communications among counsel for the Parties over the course of many months, the Parties reached an agreement to settle the Action for $6,500,000.
Based on the investigation and mediation of the case and Lead Plaintiffs’ direct oversight of the prosecution of this matter and with the advice of their counsel, each of the Plaintiffs has agreed to settle and release the claims raised in the Action pursuant to the terms and provisions of the Stipulation, after considering, among other things, (a) the financial benefit that Plaintiffs and the other members of the Settlement Class will receive under the proposed Settlement; (b) the significant risks and costs of continued litigation and trial; and (c) the practical risks and limitations on recovering from these defendants and the risks as to the amount and availability of their insurance coverage and the limitations on recovery imposed by Patriot National’s filing for bankruptcy. Plaintiffs and Lead Counsel have concluded that the Settlement is fair, reasonable, adequate, and in the best interests of Plaintiffs and the Settlement Class.
Defendants are entering into the Stipulation solely to eliminate the uncertainty, burden and expense of further protracted litigation. Each of the Defendants denies any wrongdoing, and the Stipulation is not and shall in no event be construed or be deemed to be evidence of or an admission or concession on the part of any of the Defendants, or any other of the Defendants’ Releasees, with respect to any claim or allegation of any fault or liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that the Defendants have, or could have, asserted. Similarly, the Stipulation is not and shall in no event be construed or be deemed to be evidence of, or an admission or concession on the part of any Plaintiff of any infirmity in the claims asserted in the Action, or an admission or concession that any of the Defendants’ defenses to liability had any merit.
On July 22, 2019, the Court preliminarily approved the Settlement, authorized the Notice to be disseminated to potential Settlement Class Members, and scheduled the Settlement Hearing to consider whether to grant final approval to the Settlement.