Blackberry has announced that it will settle an eight-year-old shareholder class action lawsuit filed against the company in 2013, accusing it of inflating the success and profitability of its Blackberry 10 smartphones, driving up its share price.
Other defendants in the lawsuit include former chief executive officer Thorsten Heins, former chief financial officer Brian Bidulka and former chief legal officer Steve Zipperstein.
U.S. District Judge Colleen McMahon of Federal Court in Manhattan granted a request by lawyers representing Blackberry and shareholders to postpone the planned trial so that both parties could sit at the negotiating table to agree on a preliminary settlement.
The company announced today that an agreement in principle has been reached that will involve payment of US$165 million to settle the claims, with the stipulation that the settlement provide a full release of all claims against all defendants, including the company and its officers, and will expressly deny any liability, wrongdoing or responsibility by any of the defendants. BlackBerry anticipates that, upon final approval of the settlement, the litigation will be dismissed with prejudice.
In 2013, the then newly launched Blackberry 10 received much praise from critics but was never popular with consumers. The Blackberry 10 was eventually overshadowed by Android and Apple devices, which still dominate the smartphone market today.
The Canadian company ceased all smartphone production in 2016 and now focuses on offering products and services related to cybersecurity.
Lawsuits against companies that allegedly mislead shareholders are common in the U.S. and Canada. However, very few of these cases actually end up in court. Between 1997 and 2021, less than one per cent of similar cases went to court, as the vast majority were dismissed or settled.
The settlement requires court approval.