Fourth law firm files class action suit against Goodyear
Federman & Sherwood is the fourth law firm to file a class action lawsuit against the Goodyear Tire & Rubber Co. in the wake of its announcement that accounting errors will force it to restate five years of financial results.
Based in Oklahoma City, Okla., Federman & Sherwood filed the securities class action suit on behalf of Goodyear shareholders who purchased stock at any time from Oct. 22, 1998, through Oct. 22, 2003. The lawsuit alleges that Goodyear "issued false and misleading earnings, thereby causing Goodyear shares to trade at artificially inflated levels."
On Oct. 23, Goodyear announced it would have to adjust its financial statements for fiscal years 1998-2002 because of accounting errors primarily resulting from the implementation of an enterprise resource planning accounting system in 1999 and "errors in inter-company billing systems." The adjustments are expected to decrease net income over the restatement period by up to $100 million, according to Goodyear.
Goodyear also anticipates a reduction in shareholders' equity (as of June 30, 2003) of up to $120 million, $20 million of which relates to periods prior to 1998.
It is expected that the adjustments "will result in an improvement in the net loss for the first half of 2003" because certain charges previously recognized during the first half now will be reflected in the restatement for prior years, according to Goodyear.
Three other firms filed class action lawsuits in the United States District Court for the Northern District of Ohio two days after Goodyear's announcement.