Despite Mid-Litigation Bankruptcy, Robbins Geller Team Secures $85 Million for Former EarthLink Shareholders

Result Comes Two Months Before Jury Trial in Federal Court in Arkansas

After six years of litigation, Robbins Geller Rudman & Dowd LLP secured an $85 million recovery in a securities class action case against EarthLink, Windstream, and certain former officers and directors of both companies. The case resolved as it approached a November 2024 three-week jury trial in federal court in Arkansas.

The proposed settlement, if approved, would be the largest securities class action recovery achieved in the Eastern District of Arkansas and the second-largest such recovery ever achieved in any Arkansas federal court. It would also become the largest securities class action recovery in the Eighth Circuit in the past five years.

The case concerns the 2017 stock-for-stock merger between EarthLink and Windstream, both network communications companies. The complaint alleges that EarthLink, Windstream, and various insiders at both companies issued false and misleading statements in a proxy and registration statement issued to shareholders in connection with that merger. Among other issues, the proxy/registration statement touted Windstream’s purported strength, financial stability, and reliable dividend. But at the same time, according to the complaint, Windstream’s business was predicated on a fundamentally flawed foundation, its business was crumbling, and its dividend was unstable and on the verge of being eliminated.

As a result of those misleading statements, as the complaint alleges, EarthLink stockholders voted in favor of the merger, and they received Windstream stock in exchange for their EarthLink shares. Not long after the merger, Windstream’s stock price began plummeting. Just two years after the merger, Windstream filed for Chapter 11 bankruptcy. And just a short time after that, all Windstream common stock – including the shares plaintiff received in the merger – were declared “cancelled, discharged and of no force and effect.”

The litigation was unusually complex and survived Windstream’s bankruptcy reorganization, which occurred during the litigation.

“We had to survive a bankruptcy and overcome quite a few other roadblocks in litigation against very aggressive defendants. But our client, Arkansas resident Bob Murray, and our team persevered for six years to secure significant relief for shareholders. We are pleased with this outstanding result and look forward to presenting this settlement for court approval,” said David A. Knotts, a Robbins Geller partner who served as lead counsel in this case.

“Our discovery plan was aggressive, took some hard work, and involved a successful motion to compel. We’re confident that the documents uncovered from those efforts helped lead to a favorable settlement and would have played an important role at trial had the case not settled,” added Lion Wintemute, a Robbins Geller attorney who represented the plaintiff.

Robbins Geller attorneys David A. Knotts, Randall J. Baron, A. Rick Atwood, Jr., Jonathan Zweig, Andrew W. Hutton, Lion Wintemute, Michaela Park, and Cristelle R. Rabban represent lead plaintiff Robert Murray.

About Robbins Geller

Robbins Geller Rudman & Dowd LLP is one of the world’s leading complex class action firms, representing plaintiffs in securities fraud, shareholder derivative, antitrust, corporate takeover, and consumer fraud and privacy cases. With 200 lawyers in 10 offices, Robbins Geller is one of the world’s largest plaintiffs’ firms and the Firm’s attorneys have obtained many of the largest securities, antitrust, and consumer class action recoveries in history.

Over the last decade, our Firm has been ranked #1 on the ISS Securities Class Action Services law firm rankings for six out of the last ten years for securing the most monetary relief for investors. In the last four years, Robbins Geller recovered $6.6 billion for investors in securities-related class action cases – over $2.2 billion more than any other law firm during that time. The Firm secured the largest-ever securities fraud class action settlement – $7.2 billion – in In re Enron Corp. Securities Litigation.

For media inquiries, please contact media@rgrdlaw.com or call (619) 338-3821.

Murray v. EarthLink Holdings Corp., No. 4:18-c-v-00202-JM (E.D. Ark.).