Lumber Liquidators Discloses $30M Settlement
Lumber Liquidators Holdings, Inc. (“Holdings”) previously disclosed that, in March 2019, Lumber Liquidators, Inc. (the “Company”), who is a defendant in a putative class action litigation captioned Dana Gold, Tammy Emery, Mary Louise Ference, Laura Norris, Donald Fursman, and John Triana, on behalf of themselves and all other similarly situated v. Lumber Liquidators, Inc., a Delaware corporation; and Does 1 through 200, inclusive (the “Gold Litigation”), entered into a Memorandum of Understanding (“Gold MOU”) with the lead plaintiff in the Gold Litigation, Dana Gold, on behalf of herself and all others similarly situated (collectively, the “Gold Plaintiffs”) to memorialize an agreement in principle to settle the Gold Litigation on a nationwide basis.
On September 30, 2019, the Company entered into a definitive settlement agreement with the Gold Plaintiffs consistent with the terms of the Gold MOU (the “Settlement Agreement”). The Settlement Agreement is subject to approval by the United States District Court for the Northern District of California (the “Court”) and other contingencies.
The Settlement Fund will be used to pay notice and administrative fees relating to the Gold Litigation and to compensate those individuals that were Putative Class Members during the Class Period. Under the terms of the Settlement Agreement, the Company will contribute $14 million in cash and provide $14 million in store-credit vouchers, with a potential additional $2 million in store-credit vouchers possible based on obtaining a claim’s percentage of more than 7% (collectively, the “Vouchers”), for an aggregate settlement of up to $30 million (the “Settlement Fund”) to settle all claims asserted in the Gold Litigation (or which could have been asserted in the Gold Litigation) on behalf of all persons in the United States who purchased for personal, family or household use, Morning Star Strand Bamboo flooring (the “Putative Class Members”) at any time between January 1, 2012 through March 15, 2019 (the “Class Period”).
Holdings believes that its cash flow from operations, together with existing liquidity sources, is sufficient to fund the Settlement Fund, of which $1,000,000 of the cash portion will be paid to the fund within five days of the Court’s preliminary approval of the settlement and will be used to pay the notice and settlement administrator’s fees and the remaining $13,000,000 cash amount will be paid within 30 days of the Court’s final approval order of the Settlement Agreement and the dismissal of the Gold Litigation. The Company will work together with counsel for the Gold Plaintiffs and the settlement administrator to prepare the Vouchers for distribution to approved claimants as set forth in the Settlement Agreement. The Gold Plaintiffs’ legal fees and costs, not to exceed 33.33% of the Settlement Fund, are included as part of the Settlement Fund.
Holdings previously disclosed that it had accrued within selling general and administrative expenses (“SG&A”) a $28 million liability with the offset in the caption “Accrual for Legal Matters and Settlements Current” in its December 31, 2018 financial statements.
There can be no assurance that a settlement will be finalized by the parties and approved by the Court or as to the ultimate outcome of the Gold Litigation. The execution of the Settlement Agreement does not constitute an admission by the Company of any fault or liability and the Company does not admit fault or liability. If the settlement cannot be finalized by the parties or the Settlement Agreement is not approved by the Court, the Company will defend the Gold Litigation vigorously and believes there are meritorious defenses and legal standards that must be met for, among other things, success on the merits. If the parties are unable to finalize the settlement, the Gold Litigation could have a material adverse effect on Holding’s financial condition and results of operations.
About Lumber Liquidators
With 416 locations, Lumber Liquidators is one of North America’s leading specialty retailers of hard-surface flooring. The Company features more than 400 varieties of floors in the latest styles, including solid and engineered hardwood, bamboo, cork, laminate, waterproof vinyl plank and porcelain tile flooring. Additionally, Lumber Liquidators provides a wide selection of flooring enhancements and accessories to complement, install and maintain new floors. Every location is staffed with flooring experts who can provide advice, pro services and installation options for all of Lumber Liquidators’ products, much of which is in stock and ready for delivery.
Danielle O’Brien -Investor Relations Contact – firstname.lastname@example.org – (757) 566-7512
Source: Lumber Liquidators Holdings, Inc.