LeapFrog Enterprises Litigation
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Welcome to the LeapFrog Enterprises Litigation Website

The hearing on Motion for Final Approval of Settlement  has been rescheduled from 10/18/2018 to 10/25/2018 01:30 PM in San Francisco, Courtroom 05, 17th Floor before Judge Edward M. Chen.

This website has been established to provide general information related to the proposed settlement of the lawsuit referred to as In re LeapFrog Enterprises, Inc. Securities Litigation, Master File No. 3:15-cv-00347-EMC (the “Action”) and is pending before the Honorable Edward M. Chen in the United States District Court for the Northern District of California (the “Court”). The capitalized terms used on this website, and not otherwise defined, shall have the same meanings ascribed to them in the Stipulation of Settlement (the "Stipulation") dated February 22, 2018, which can be found and downloaded by clicking on the Case Documents tab above.

The Court ordered that the law firms of Motley Rice LLC and Robbins Geller Rudman & Dowd LLP represent the Settlement Class, including you. These lawyers are called Lead Counsel. You will not be charged for these lawyers. They will be paid from the Settlement Fund to the extent the Court approves their application for fees and expenses. If you want to be represented by your own lawyer, you may hire one at your own expense.

What is this lawsuit about?

Lead Plaintiff brought this Action as a securities class action on behalf of purchasers and acquirers of LeapFrog common stock during the period from May 5, 2014 through June 11, 2015, inclusive, against LeapFrog and its former Chief Executive Officer John Barbour and former Chief Financial Officer Raymond L. Arthur (collectively, “Defendants”), alleging that Defendants violated §10(b) of the 1934 Act and that defendants Barbour and Arthur violated §20(a) of the 1934 Act. Defendants deny these allegations.

On May 5, 2015, the Court appointed KBC as lead plaintiff, and its counsel, Motley Rice LLC and Robbins Geller Rudman & Dowd LLP, were appointed lead counsel.

Lead Plaintiff filed the Corrected Consolidated Class Action Complaint for Violation of the Federal Securities Laws (“CAC”) on July 10, 2015, alleging violations of §§10(b) and 20(a) of the 1934 Act.

On July 24, 2015, each of the Defendants moved to dismiss the CAC and filed a Request for Judicial Notice. Lead Plaintiff filed its responses on August 25, 2015. The Court heard oral argument on the motion to dismiss on October 8, 2015. At the Court’s direction, Lead Plaintiff filed a First Amended Consolidated Class Action Complaint for Violation of the Federal Securities Laws (the “FAC”) on December 4, 2015.

Defendants moved to dismiss the FAC on January 15, 2016, and Lead Plaintiff filed its opposition on February 12, 2016. Defendants filed their reply on March 11, 2016, and the Court heard oral argument on the motion on April 11, 2016. On August 2, 2016, the Court dismissed the FAC (“August 2 Order”).

Lead Plaintiff moved for leave to file a motion for reconsideration of the Court’s August 2 Order with respect to Lead Plaintiff’s goodwill and long-lived asset allegations. The Court denied the motion on August 31, 2016.

On September 20, 2016, Lead Plaintiff filed the Second Amended Consolidated Class Action Complaint for Violation of the Securities Laws (the “SAC”). Defendants moved to dismiss the SAC on November 4, 2016, and Lead Plaintiff filed its opposition on December 19, 2016. The motion was fully briefed by January 19, 2017, and on February 24, 2017, the Court issued an order granting in part and dismissing in part the motion (“February 24 Order”).

On April 6, 2017, the Court referred the case to private mediation and ordered the parties to meet and confer on a focused pre-mediation discovery plan to be submitted to the Court. The parties submitted their Joint Pre-Mediation Discovery Plan to the Court on April 27, 2017.

On July 5, 2017, Defendants moved for leave to file a motion for reconsideration of the Court’s February 24 Order granting in part and denying in part their motion to dismiss the SAC. The Court denied Defendants’ motion for leave to seek reconsideration by order dated August 10, 2017.

On August 30, 2017, the parties attended a full-day mediation with the Hon. James Ware (Ret.). The parties negotiated in good faith but did not reach an agreement, and litigation continued.

Lead Plaintiff filed its motion for class certification on November 7, 2017. On November 29, 2017, the parties participated in a subsequent mediation before Judge Ware. After extensive negotiations, the parties reached an agreement-in-principle to settle the case on the terms set forth in the Stipulation and the Exhibits thereto.

Lead Plaintiff, through Lead Counsel, conducted a thorough investigation relating to the claims, defenses, and underlying events and transactions that are the subject of the Action. This process included reviewing and analyzing: (i) documents filed publicly by the Company with the U.S. Securities and Exchange Commission; (ii) publicly available information, including press releases, news articles, and other public statements issued by or concerning Defendants; (iii) research reports issued by financial analysts concerning the Company; (iv) approximately 14,000 pages of documents produced by Defendants and third parties; and (v) the applicable law governing the claims and potential defenses. Lead Counsel also consulted with experts on damages and market efficiency issues, as well as forensic accountants.

Defendants have denied and continue to deny any wrongdoing or that they have committed any act or omission giving rise to any liability or violation of law, including the U.S. securities laws. Defendants have denied and continue to deny each and every one of the claims alleged by Lead Plaintiff in the Action on behalf of the Settlement Class, including all claims in the complaints filed in the Action.

Lead Plaintiff believes that the claims asserted in the Action have merit and that the evidence developed to date supports the claims asserted. However, Lead Plaintiff and Lead Counsel recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Action through class certification, discovery, summary judgment, and trial (and any possible appeals). Lead Plaintiff and Lead Counsel also have taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as the Action, as well as the difficulties and delays inherent in such litigation. For example, the Court to date has only upheld Lead Plaintiff’s allegations with respect to failing to timely take a charge for LeapFrog’s long-lived assets. Lead Counsel also are mindful of the inherent problems of proof and the possible defenses to the claims alleged in the Action. Based on their evaluation, Lead Plaintiff and Lead Counsel believe that the Settlement set forth in the Stipulation confers substantial monetary benefits upon the Settlement Class and is in the best interests of the Settlement Class.

On March 20, 2018, the Court entered an order preliminarily approving the proposed Settlement, authorizing the mailing of the Notice of Proposed Settlement of Class Action (the "Notice") to potential Settlement Class Members, and scheduling the Settlement Hearing to consider whether to grant final approval of the Settlement.

What does the Settlement Provide?

A settlement has been reached in the Action between Lead Plaintiff and Defendants, the terms and conditions of which are set forth in the Stipulation and the Exhibits thereto. The following description of the proposed Settlement is only a summary, and reference is made to the text of the Stipulation.

The Settlement Fund consists of Five Million, Five Hundred Thousand Dollars ($5,500,000.00) in cash, plus any interest earned thereon.

A portion of the Settlement proceeds will be used to pay attorneys’ fees and expenses to Lead Plaintiff’s counsel ($1,650,000), to pay for the Notice and the processing of claims submitted by Settlement Class Members (approximately $200,000), to pay Taxes and to pay the time and expenses of Lead Plaintiff ($5,600). The balance of the Settlement Fund (the “Net Settlement Fund”) will be distributed, in accordance with the Plan of Allocation described in the Notice, to Settlement Class Members who submit valid and timely Proofs of Claim.

The effectiveness of the Settlement is subject to a number of conditions and reference to the Stipulation is made for further particulars regarding these conditions.

Additional Information

Although the information on this website is intended to assist you, it does not replace the information contained in the Notice and the Stipulation.

Your Legal Rights and Options in This Settlement

SUBMIT A PROOF OF CLAIM POSTMARKED OR SUBMITTED ONLINE BY AUGUST 8, 2018 This is the only way to be eligible to get a payment from the Settlement. If you wish to participate in the Settlement, you will need to complete and submit the Proof of Claim. Settlement Class Members who do not complete and submit the Proof of Claim in accordance with the instructions on the Proof of Claim and do not submit it within the time required will be bound by the Settlement but will not participate in any distribution of the Net Settlement Fund.
EXCLUDE YOURSELF FROM THE SETTLEMENT CLASS BY SUBMITTING A WRITTEN REQUEST FOR EXCLUSION SO THAT IT IS RECEIVED NO LATER THAN AUGUST 8, 2018 You will not be bound by the results of this lawsuit, and you will not receive any payment. This is the only option that allows you to ever be part of any other lawsuit against the Defendants or any other Released Defendant Parties about the legal claims related to the issues raised in this Action.
OBJECT TO THE SETTLEMENT BY SUBMITTING A WRITTEN OBJECTION SO THAT IT IS RECEIVED NO LATER THAN AUGUST 8, 2018 If you believe the Settlement is objectionable in any respect, you may write to the Court about why you oppose the Settlement, the Plan of Allocation, and/or the request for attorneys’ fees and expenses. You will still be a member of the Settlement Class. Even if you object, you can still submit a Proof of Claim in order to qualify for a cash payment. If you do not submit a Claim Form, you will not receive a payment.
ATTEND THE SETTLEMENT HEARING ON OCTOBER 25, 2018, AT 1:30 P.M., AND PROVIDE A NOTICE OF INTENTION TO APPEAR TO LEAD COUNSEL SO THAT IT IS RECEIVED NO LATER THAN AUGUST 8, 2018 The hearing on whether to approve the Settlement is scheduled for October 25, 2018, at 1:30 p.m. (the “Settlement Hearing”), and is open to the public. You do not need to attend the hearing unless you wish to speak either in support of the Settlement or in support of any objection you may have submitted, and have submitted to Lead Counsel a Notice of Intention to Appear so that it is received no later than August 8, 2018. The Court may postpone the Settlement Hearing without prior notice on the date scheduled for the hearing.
DO NOTHING If you are a Settlement Class Member and do not submit a Proof of Claim postmarked or submitted online by August 8, 2018, you will not be eligible to receive any payment from the Settlement Fund. You will, however, be bound by the Settlement, unless you have requested exclusion from the Settlement Class.