View this article online: https://www.claimsjournal.com/news/national/2006/04/09/67169.htm
A judge has approved a $2.65 billion (euro2.18 billion) class-action settlement of claims that advertising revenue was counted in a fraudulent manner prior to the merger of America Online Inc. and Time Warner Inc.
U.S. District Judge Shirley Wohl Kram signed a ruling approving the deal last Thursday. She had given the settlement tentative approval in September 2005.
The settlement resulted from lawsuits brought by shareholders who complained that AOL improperly accounted for dozens of advertising transactions, inflating revenue for 15 quarters between 1998 and 2002.
AOL and Time Warner announced they were merging in early 2000. AOL’s steadily declining dial-up subscriber base became a drain on Time Warner, though the Internet provider has risen in stature with the recent boom in online advertising.
According to the deal approved by Kram, Time Warner will pay the bulk of the settlement while its auditor, Ernst & Young LLP, will pay $100 million (euro82 million).
The judge noted in her ruling that the settlement resulted from seven months of intense negotiations overseen by a court-appointed special master.
She said it was clear that class members will not recover their entire loss, but added that the settlement was “all the more impressive” when the parties continue to dispute the very existence of damages.
She said the settlement had received overwhelming support by nearly all of the estimated 600,000 claimants.
The lead plaintiff was the Minnesota State Board of Investment, which manages the investment of retirement fund assets of the Minnesota State Retirement System, Teachers Retirement Association and the Public Employees Retirement Association.
The Minnesota board, with total assets exceeding $50 billion (euro41.05 billion), lost an estimated $249 million (euro204.45 million) and had the largest financial stake in the litigation, Kram said.
Kathy McKiernan, a Time Warner spokeswoman, said the company had no comment.