Heckmann Corporation (n.k.a. Nuverra Environmental Solutions, Inc.)
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Heckmann Corporation Securities Settlement
The lawsuit was settled for at least $27 million and is comprised of the following two components: (i) $13.5 million in cash (the Settlement Cash) and (ii) the greater of 847,990 shares of Nuverra Environmental Solutions, Inc. (Nuverra) common stock or the number of shares of Nuverra common stock that equals $13.5 million in value as of the date preceding the final settlement hearing (the Settlement Shares) as set forth in the Stipulation of Settlement dated as of March 4, 2014. The following is a summary of the proceedings in this lawsuit: ‘On October 8, 2010, Lead Plaintiff filed the Amended Complaint alleging that Defendants violated the federal securities laws by obtaining shareholder approval of the Merger by means of the Proxy and other proxy solicitations that misrepresented China Water operations, assets, and financial results, and omitted material information regarding known fraudulent conduct at China Water. The Amended Complaint also alleged that Defendants made materially false and misleading statements and omitted material facts about China Water and the Merger throughout the period May 20, 2008 through May 8, 2009, inclusive. The Amended Complaint was served upon all Defendants other than Defendant Xu Hong Bin, who could not be located and who has never appeared in this lawsuit. The remaining Defendants moved to dismiss the Amended Complaint on December 10, 2010. Lead Plaintiff opposed Defendants motions to dismiss on January 28, 2011, and Defendants filed a reply in support of their motions on February 18, 2011. By Report and Recommendation dated June 16, 2011, the Magistrate Judge appointed by the Court denied Defendant motions in their entirety. On July 5, 2011, Defendants filed objections to the June 16, 2011 Report and Recommendation denying their motions to dismiss, and Lead Plaintiff filed a response to Defendants objections on July 19, 2011. By Memorandum Order dated May 25, 2012, the District Court overruled Defendants objections to the Magistrate Judge June 16, 2011 Report and Recommendation denying Defendants motions to dismiss. On July 9, 2012, Defendants answered the Amended Complaint denying all claims and asserting a number of defenses to liability. Thereafter, the parties commenced discovery. On October 19, 2012, the Settlement Class Representatives filed a motion for class certification. After class certification discovery and a full round of briefing, on June 6, 2013, the Magistrate Judge issued a Report and Recommendation recommending, among other things, that Plaintiffs Motion for Class Certification and Appointment of Class Representatives and Class Counsel should be granted. Defendants objected to the June 6, 2013 Report and Recommendation and the District Court had yet to rule upon these objections as of the date the Settlement was reached. Fact discovery commenced on June 25, 2012 and concluded on September 3, 2013. During the course of fact discovery, Co-Lead Counsel, on behalf of the Settlement Class Representatives, engaged in extensive motion practice, conducted and/or defended seventeen depositions (over nineteen deposition days) and reviewed and analyzed over 1.9 million pages of documents produced by Defendants and third parties. Expert discovery commenced at the conclusion of fact discovery and opening expert reports were exchanged on November 22, 2013, in the areas of damages and loss causation, materiality of accounting misstatements in Heckmann disclosures, and the adequacy of Heckmann due diligence into the China Water merger. After several failed attempts to resolve the Litigation, including in person sessions and mediation presentations in April 2013 overseen by Hon. Layn Phillips, United States District Judge for the Western District of Oklahoma (Ret.), and as expert discovery was ongoing, the Settling Parties made one final push to reach a resolution. On January 6, 2014, the Settling Parties each agreed to a mediator proposal presented by Judge Phillips to reach an agreement in principle which is embodied in the Stipulation.’