The cash settlement represents an “excellent recovery” compared to maximum damage estimates ranging from $320 million to $550 million, the toymaker’s investors said in documents filed as part of their preliminary settlement approval bid in the U.S. District Court for the Central District of California.
The investors accuse Mattel of deceiving them about a financial statement that understated the company’s net loss by at least $109 million. Judge Mark C. Scarsi rejected Mattel and PwC’s dismissal bids in January and granted class certification in October.
Payment of the settlement amount “shall be pursuant to the allocation among Mattel and PwC agreed during mediation,” according to the parties’ stipulation of settlement. The defendants denied any wrongdoing.
The settlement class consists of everyone who acquired Mattel common stock from Aug. 2, 2017, through Aug. 8, 2019, and lost money as a result, with exceptions for those with close ties to the company. There’s a subclass made up of investors who acquired Mattel common stock after PwC’s first alleged misrepresentation, from Feb. 27, 2018, through Aug. 8, 2019.
Class counsel Bernstein Litowitz Berger & Grossmann LLP plans to ask for up to 25% of the settlement fund—$24.5 million—in attorneys’ fees, the Nov. 24 settlement filings said. The firm will also seek as much as $1.5 million as reimbursement for litigation expenses.
Munger, Tolles & Olson LLP represents Mattel. Wilmer Cutler Pickering Hale & Dorr LLP represents PwC.
The case is In re Mattel Inc. Sec. Litig., C.D. Cal., No. 2:19-cv-10860, preliminary settlement approval motion filed 11/24/21.