Blockbuster Class Action Lawsuit

Update: The law firm of Milberg Weiss Bershad & Schulman issued a press release announcing that they have also filed a class action lawsuit against Blockbuster. They also mention the filing by Schatz & Nobel, P.C.:

Also on November 10, 2005, within hours of the filing, the law firm of Schatz & Noble, P.C., which had not filed its own complaint, or conducted its own investigation, published a release over the Primezone wire, replicating in material part the content of the Milberg Weiss notice and purporting to provide information about the lawsuit and the procedure for being appointed as lead plaintiff of the lawsuit. Please be advised that this press release appears to be an advertisement designed to solicit clients so that the firm can participate in this case.

There's blood in the water and now the law firms are fighting over who gets to sue Blockbuster.

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Schatz & Nobel, P.C. has filed a class action lawsuit on behalf of Blockbuster shareholders:

The Complaint alleges that defendants violated federal securities laws by issuing a series of materially false statements. It is alleged that Viacom caused Blockbuster to pay a special dividend of which Viacom was the primary beneficiary. In order to pay the dividend, Blockbuster was forced to take on debt in the amount of approximately $1.1 billion. In the Prospectus issued in connection with Viacom's divestiture of its Blockbuster shares (the "Prospectus"), defendants stated that Blockbuster planned to transform itself through a series of initiatives and that Blockbuster's debt obligations would not impede its transformation.

Unbeknownst to investors, Blockbuster was wholly unprepared to build the technological infrastructure required to integrate its in-store and online sales operations and otherwise execute the Company's transformation. Moreover, the Company's core in-store rental operations were not generating sufficient cash flow.

More information is available on the Schatz & Noble Web site or by calling 800-797-5499.

I think that it's a good year to be a lawyer.

Comments

[Eric]

Humm as a ex netflix stock holder now blockbuster holder this will be interesting to see how this plays out.

[davis freeberg]

It sounds like they are targeting Viacom more then they are Blockbuster. The attornies are smart enough to know that Blockbuster just doesn't have the deep pockets anymore. While the dividend did seem inappropriate to me, I usually view these lawsuits as children crying over spilled milk. There was no fraud here. There are very real risks to investing and the dividend was widely known and discussed by the markets. If an investor ignored this warning then they have only themselves to blame for their losses.

[CashForFlow]

In my opinion the Viacom-Blockbuster lawsuit is another law firm looking for a 'quick buck.' Yet, I do not support tort reform because any cap is itself too ambiguous.

The target is viacom on behalf of blockbuster shareholders. If anything this is GOOD news for blockbuster.

[scooter99]

In the past couple year's I had subscribed to Netflix (and at differant time - Blockbuster) and had noticed that the dvd "turn-around" time was extended. It was taking much longer for them to mail them... How can I get myself off their "LIST". I want to sign-up again but don't want to be treated as a "second class citizen". I want to get dvd's as quick (or slow) as everybody else ! HELP