TELECOM Digest OnLine - Sorted: Judge Okays AOL Class Action Settlement

Judge Okays AOL Class Action Settlement

Associated Press News Wire (
Fri, 7 Apr 2006 19:25:17 -0500

A judge has approved a $2.65 billion class-action settlement of claims
that advertising revenue was counted in a fraudulent manner prior to
the merger of America Online Inc. and Time Warner Inc.

U.S. District Judge Shirley Wohl Kram signed a ruling approving the
deal Thursday. She had given the settlement tentative approval in
September 2005.

The settlement resulted from lawsuits brought by shareholders who
complained that AOL improperly accounted for dozens of advertising
transactions, inflating revenue for 15 quarters between 1998 and 2002.

AOL and Time Warner announced they were merging in early 2000. AOL's
steadily declining dial-up subscriber base became a drain on Time
Warner, though the Internet provider has risen in stature with the
recent boom in online advertising.

According to the deal approved by Kram, Time Warner will pay the bulk
of the settlement while its auditor, Ernst & Young LLP, will pay $100

The judge noted in her ruling that the settlement resulted from seven
months of intense negotiations overseen by a court-appointed special

She said it was clear that class members will not recover their entire
loss, but added that the settlement was "all the more impressive" when
the parties continue to dispute the very existence of damages.

She said the settlement had received overwhelming support by nearly
all of the estimated 600,000 claimants.

The lead plaintiff was the Minnesota State Board of Investment, which
manages the investment of retirement fund assets of the Minnesota
State Retirement System, Teachers Retirement Association and the
Public Employees Retirement Association.

The Minnesota board, with total assets exceeding $50 billion, lost an
estimated $249 million and had the largest financial stake in the
litigation, Kram said.

Kathy McKiernan, a Time Warner spokeswoman, said the company had no

Copyright 2006 The Associated Press.

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