Class Action Forces Corporate Wrongdoer to Come Clean

In the late 1990s, Fortune 500 giant Waste Management, Inc. became embroiled in a number of corporate scandals relating to its merger with USA Waste Services. The company misstated its finances and concealed the fact that significant amounts of reported income and earnings were due to one-time items. As a result, investors were led to believe that Waste Management’s financial position was stronger than it actually was. While the company ultimately admitted that revenues and earnings would be much lower than reported, that was not before its officers and directors sold more than one million shares—pocketing more than $57 million. When the company “came clean,” the stock price plummeted—the largest decline in its history.

On behalf of lead plaintiff Connecticut Retirement Plans and Trust Funds, Labaton Sucharow brought a class action in federal court in Texas. Following extensive litigation and high-level discussions with the Connecticut Attorney General, Connecticut State Treasurer and the Chairman of Waste Management involved parties, the Firm negotiated a $457 million settlement for the class—one of the largest securities class action recoveries in history. But our work wasn’t finished. Equally important to the significant financial recovery, Labaton Sucharow secured substantial corporate governance reforms to protect the long-term financial health of the company and its shareholders’ interests.