Two Fruit of the Loom Settlements Approved
A federal judge has approved a pair of class-action settlements totaling $42 million against underwear maker Fruit of the Loom Inc.
The settlements stem from lawsuits accusing the company’s former executives of lying to analysts to boost the Bowling Green, Ky.-based company’s stock. The suits were filed by investors who bought stock in the company in the mid-1990s.
One settlement, for $23.2 million, covers shares purchased between July 24, 1996, and Sept. 5, 1997. The other settlement, for $19.1 million, covers stock purchased Sept. 28, 1998, through Nov. 4, 1999.
It was unknown how many stockholders could collect cash from the settlement, but notices were mailed to more than 28,000 people in the two lawsuits.
“There will be thousands of people involved in each case,” said plaintiffs’ attorney Amber Eck of San Diego.
Under terms of the settlements, investors will receive $1.01 to $4.07 a share, depending on when the stock was purchased. Eck said claimants would probably start receiving checks in six to 12 months.
“Clearly the public interest is served by the settlements since recovery has been obtained for such a large number of class members in the investing public,” U.S. District Judge Joseph H. McKinley Jr. wrote in his 17-page order issued Friday.
Fruit of the Loom spokeswoman Stephanie Hoefken declined to comment on the settlement.
The lawsuits, filed in 1998 and 2000 in U.S. District Court in Bowling Green, accused former Chief Executive William Farley and acting Chief Financial Officer C. William Newton of managerial incompetence and deception that inflated the company’s stock price. Neither could be reached for comment.
Fruit of the Loom filed for Chapter 11 bankruptcy protection in 1999 shortly after posting a net loss of $576.2 million. Its 66 million shares of outstanding common stock dropped in value from about $44 a share in early 1997 to just more than $1 by the spring of 2000.
Fruit of the Loom emerged from bankruptcy protection in 2002, when it was bought by Warren E. Buffett’s Berkshire Hathaway Inc.
