Lawyers for BlackBerry Ltd. BB-T have asked a New York judge to adjourn the trial for a long-gestating class-action lawsuit in order to discuss a settlement with the plaintiffs – potentially ending a nearly decade-long dispute over how BlackBerry promoted one of its final smartphones to the public.
Since the arrival of chief executive officer John Chen in November, 2013, the company has shifted its focus to secure data transmission and connected-car technology. Settling the lawsuit would effectively close the book on BlackBerry’s smartphone era. It stopped supporting its legacy phones in January and sold off the key patents that underpinned their technology for US$600-million.
BlackBerry investors brought the class action after the company made what they alleged were “misleading statements and omissions” about the success of its BlackBerry 10, or BB10, smartphone models between March, 2013, and September, 2013. The Waterloo, Ont., company was in the midst of upheaval, having lost its long-time co-CEOs Mike Lazaridis and Jim Balsillie the year prior as Silicon Valley giants with touch-screen phones – particularly those running Google’s Android operating system – effectively took over the market that BlackBerry had created.
The trial was set to begin with jury selection this week in Manhattan, and the judge, Justice Colleen McMahon of the U.S. District Court for the Southern District of New York, had said she expected a verdict by early May.
But in a document filed with the court Wednesday, BlackBerry lawyer Dan Marmalefsky of Morrison & Foerster LLP asked Justice McMahon for an adjournment “to permit the parties to negotiate and document a stipulation of settlement, and to present a motion for preliminary approval of the settlement.”
Neither BlackBerry nor counsel for the class-action plaintiffs responded to requests for comment.
The saga began with a U.S. Securities and Exchange Commission filing from March 28, 2013, in which BlackBerry heralded the BB10 as “the beginning of the organization’s transition to becoming a leading mobile computing organization.” The plaintiffs alleged in a court filing that the way the phone’s revenues were described violated Generally Accepted Accounting Principles, and that the company “misled investors” because of the way it described one of its BB10 models’ sale price, inventory and return rates.
The filing alleges that then-CEO Thorsten Heins, who is also named as a defendant in the lawsuit, further misrepresented the health of BB10 sales on a quarterly results call with analysts and in a TV interview. In September, 2013, the company announced a major writedown on unwanted BB10 phones and slashed 40 per cent of its work force as it tried to grapple with collapsing revenue.
The plaintiffs argue that investors who bought BlackBerry shares between the March filing and the September announcement in 2013 “did so at an artificially inflated price. They were harmed when the stock price dropped as these misrepresentations were revealed.”
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