NEW YORK (GenomeWeb) – A federal court this week preliminarily approved an agreement in which Celera will pay former shareholders $23 million to settle a five-year-old lawsuit that alleged the company made materially false and misleading financial statements, inflating its stock price.
As part of the decision handed down on Tuesday by the US District Court for the Northern District of California, co-defendant PriceWaterhouseCoopers has also agreed to pay $1.75 million to settle the litigation.
In June 2010, the Washtenaw County Employees' Retirement System sued Celera and several of its executive team, including former CEO Kathy Ordonez, alleging that between April 24, 2008 and July 22, 2009 the company issued false and misleading statements about its business and financial results.
Specifically, the plaintiffs accused Celera of failing to account for a large part of its Berkeley HeartLab business' accounts receivables that were "critically impaired" and uncollectible. Because of the improper accounting, Celera materially overstated its financial results between March 31, 2008 and March 28, 2009, the lawsuit alleged, and the company consequently had to record a $20.1 million charge for bad debt in 2009.
The lawsuit was granted class status in October 2013. Last May, the plaintiff, Celera, and other parties reached a settlement agreement, and in August, they executed the proposed agreement, according to court documents. At a hearing, though, the court found that there was not enough evidence to determine whether the agreement was reasonable and it requested additional information and documents that would demonstrate the fairness of the proposed $24.75 million that Celera and PriceWaterhouseCoopers would pay as part of the deal.
The court determined this week that the agreement is "fair, reasonable, and adequate."
Class members have until May 14 to file any objections to the settlement. A hearing on the final approval for the deal has been scheduled for July 16.
Celera was acquired by Quest Diagnostics in 2011 for $671 million. Through a spokesman, Quest declined to comment on the ruling.