On August 13, 2009, the United States Court of Appeals for the Eleventh Circuit affirmed the 2008 decision of the U.S. District Court for the Middle District of Florida to grant final approval of a $1.3 million settlement in this securities class action. The appellate court affirmed the district court’s decision to approve the settlement ruling that it had properly exercised subject matter j jurisdiction over claims of non-U.S. investors of CP Ships stock who purchased shares on the New York Stock Exchange (“NYSE”).
Cohen Milstein was Co-Lead Counsel for the Lead Plaintiffs.
At the time of the litigation, CP Ships Ltd. was a prominent international container shipping company, organized under Canadian law and headquartered in England. It operated across several countries including United States. It’s executive offices and accounting department were based in Tampa, Florida. At the time, roughly 80% of CP Ships’ shares were traded on the Toronto Stock Exchange (“TSX”) and roughly 20% were traded on the NYSE.
From 1993 to 2003, CP Ships acquired nine different businesses. Each business retained its own financial accounting system. In 2004, CP Ships instituted a single accounting platform (“SAP”) over most of its businesses. After the SAP implementation, the company announced that the transition had caused it to understate its operational costs. The company’s stock price dropped approximately 22.4% on the NYSE and 21.5 % on the TSX.
Plaintiffs allege that CP Ships violated several generally accepted accounting principles and underreported the company’s profits and income. This underreporting, they claimed, helped raise money in securities offerings and gave company executives the chance to profit from artificially inflated stock prices.
In April 2007, the United States District Court for the Middle District of Florida dismissed the class action, finding that the plaintiffs had not met the heightened pleading standard required by the Private Securities Litigation Reform Act. The plaintiffs appealed the dismissal, but settled while that appeal was pending.
Case name: In Re: CP Ships Ltd. Securities Litigation, Case No. 05-01656-MD-T-27-TBM, United States District Court for the Middle District of Florida