Household International, Inc. Securities Litigation
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Case Background And Summary

The “Class” for this litigation is defined as: 


On August 19, 2002, Lawrence E. Jaffe Pension Plan initiated an action in the United States District Court for the Northern District of Illinois, Eastern Division, by complaint styled as Lawrence E. Jaffe Pension Plan v. Household International, Inc. et al., Lead Case No. 02-C-5893, alleging violations of the federal securities laws and naming as defendants Household, Chief Executive Officer William F. Aldinger, Chief Financial Officer David A. Schoenholz and outside auditor Arthur Anderson (the “Jaffe Complaint”). Dkt. No. 1. The Jaffe Complaint brought claims on behalf of all persons who purchased Household securities between October 23, 1997 and August 14, 2002. Thereafter, a number of similar, related, class action complaints were filed. In all, a total of 7 actions involving similar claims were filed. On December 9, 2002, these cases were consolidated by Court order. Dkt. No. 33. On December 18, 2002, the Court entered an order granting the Glickenhaus Institutional Group’s motion for appointment as lead plaintiffs. Dkt. No. 38. Robbins Geller was appointed as lead counsel, and Miller Law as liaison counsel. 

On March 13, 2003, Plaintiffs filed the Consolidated Complaint which included claims for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and §§11, 12(a)(2) and 15 of the Securities Act of 1933, and added Defendant Gary Gilmer. The Consolidated Complaint asserted claims on behalf of all persons who purchased or otherwise acquired securities of Household during the period from October 23, 1997 to October 11, 2002. On May 13, 2003, Defendants moved to dismiss the Consolidated Complaint. On March 19, 2004, the Court entered an Order granting in part and denying in part Defendants’ motions to dismiss the Consolidated Complaint. Dkt. No. 135. 

By order entered December 3, 2004, the Court certified a class (the “Class”) with the Class defined as follows: all Persons who purchased or otherwise acquired the securities of Household during the period between October 23, 1997 and October 11, 2002.

On June 30, 2005, the Household Defendants filed a motion to dismiss pursuant to the Seventh Circuit’s decision in Foss v. Bear, Sterns Co., 394 F.3d 540 (7th Cir. 2005). Dkt. No. 243. On February 28, 2006, following briefing on Defendants’ motion, the Court granted Defendants’ motion, dismissing Plaintiffs’ §10(b) claims that arose prior to July 30, 1999. Dkt. No. 434.

On August 16, 2005, the parties filed a Joint Motion and [Proposed] Order for Entry of Modification to Stipulation and Order Regarding Class Action Certification Entered December 3, 2004. Dkt. No. 277. Under the terms of the modified stipulation, the parties agreed that Defendants would waive their right to decertify in part the Class as set forth in the stipulation. The parties also requested that the Court direct that notice be sent to the class. On August 22, 2005, the Court entered an order approving the parties’ modification to the stipulation and order regarding class certification. Dkt. No. 287.

On June 16, 2005, Plaintiffs and Arthur Andersen reached a settlement, pursuant to which Arthur Andersen agreed to pay cash consideration of $1,500,000. On January 31, 2006, a notice was sent to Class Members informing them of the Arthur Andersen settlement, of the certification of the Class, and notifying Class Members of the right to be excluded from the litigation. On March 30, 2006, Lead Plaintiffs filed a motion for final approval of the settlement with Arthur Andersen. Dkt. No. 452. On April 6, 2006, the Court approved the settlement, entering final judgment and an order of dismissal with prejudice as to Arthur Andersen. Dkt. No. 485.

A six (6) week jury trial of the Litigation commenced on March 30, 2009 against Defendants Household, Aldinger, Schoenholz and Gilmer (the “Trial Defendants”) on behalf of all purchasers of Household common stock from July 30, 1999 through October 11, 2002. On May 7, 2009, the jury rendered a verdict in the case. The jury found that the Trial Defendants did not violate the federal securities laws for statements made during the time period of July 30, 1999 through March 22, 2001. Plaintiffs did not appeal this determination. For Class Members who purchased Household common stock during that time frame, there is no recovery. The jury found that the Trial Defendants did violate the federal securities laws for certain public statements regarding Household made in connection with purchases of Household common stock from March 23, 2001 through October 11, 2002. The jury also awarded per share damages for each trading day during this period.

On November 22, 2010, the Court entered an Order creating the protocol for Phase II of this case. Dkt. No. 1703. On January 10, 2011, the Court approved a Notice of Verdict to be sent to all persons who purchased or otherwise acquired the common stock of Household between October 23, 1997 and October 11, 2002. In light of the Court’s rulings and the jury’s verdict, only persons who purchased or otherwise acquired Household common stock between March 23, 2001 and October 11, 2002 were entitled to a recovery. After the submission of claims and the claims administration process was completed, the Claims Administrator filed reports with the Court on December 22, 2011 identifying potentially valid claims and claims that were rejected. Thereafter, the Court allowed defendants to object to any potentially valid claims. Defendants’ objections were filed on February 27, 2012, and plaintiffs responded to these objections on March 28, 2012. The Court also required all class members to answer the “reliance question,” which was set forth on page five (5) of the Proof of Claim form. Persons who failed to answer the reliance question, either in 2011 as part of the claims process or, thereafter, during a second opportunity provided by the Court in 2013, had their claims rejected.

On October 17, 2013, the Court entered a partial final judgment pursuant to Fed. R. Civ. P. 54(b) in the amount of $1,476,490,844.21 plus prejudgment interest in the amount of $986,408,772.00, for a total amount of $2,462,899,616.21, along with post-judgment interest and taxable costs. Dkt. No. 1898.

Defendants filed a notice of appeal on October 17, 2013. The appeal was fully briefed on April 11, 2014. On appeal, defendants raised issues with respect to three elements: loss causation, the Court’s instruction on what it means to “make” a false statement, and reliance. On May 21, 2015, the Court of Appeals reversed the judgment and remanded the case for a new trial on three issues: (1) loss causation; (2) damages; and (3) whether the three Individual Defendants “made” certain statements under the Supreme Court’s decision in Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296 (2011). In addition, the Court of Appeals held that the new jury would need to reapportion liability in light of the Janus issue described above. A new trial was scheduled to begin on June 6, 2016, before the Honorable Jorge L. Alonso.

On February 24, 2016, each of the Individual Defendants filed motions for partial summary judgment regarding whether they “made” certain of the statements at issue. Dkt. Nos. 2106, 2110, 2112. The parties subsequently reached a stipulation regarding which Individual Defendants “made” which statements, and the stipulation was submitted to the Court on March 16, 2016, together with a motion to withdraw the Individual Defendants’ motions for partial summary judgment. Dkt. No. 2122. The Court granted that motion on March 17, 2016. Dkt. No. 2123.

The parties engaged in mediation sessions in May 2005, May 2008, June 2011, June 2014; before this Court on August 22, 2005; and in the Seventh Circuit’s mediation program in December 2013 and January 2014. At various times during the course of the Litigation, the parties engaged the services of Judge Layn R. Phillips (Ret.), a nationally recognized mediator. The parties engaged in numerous telephonic mediation sessions with Judge Phillips during 2016 regarding a potential settlement of the Litigation. On June 5, 2016, Judge Phillips issued a mediator’s proposal to settle the Litigation for $1,575,000,000.00. The parties accepted Judge Phillips’ mediator’s proposal to settle the Litigation for that amount on June 6 subject to the negotiation of the terms of a Stipulation of Settlement and approval by the Court.

Class Members cannot request exclusion from the Litigation at this time. In addition, Class Members may no longer submit a Proof of Claim form in this matter.

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