TranS1 Securities Settlement

You or someone in your family may have purchased TranS1 securities between February 23, 2009 and October 17, 2011, both dates inclusive (the “Class Period”).

The Court directed that the Notice be sent to Settlement Class Members because they have a right to know about the proposed Settlement of this class action lawsuit and about all of their options before the Court decides whether to approve the Settlement.

You may review a copy of the Notice here.

This case is known as Singer v. TranS1, Inc., et al., Case No. 7:12-CV-00023-D (the “Action”). The United States District Court for the Eastern District of North Carolina, Southern Division is in charge of the Action, and the case is currently assigned to the Honorable James C. Dever III.

This Action brings claims against TranS1, Kenneth Reali, Joseph P. Slattery, Richard Randall, and Michael Luetkemeyer (the “Defendants”). TranS1 designed, developed, and marketed medical devices to treat degenerative disc disease affecting the lower lumbar region of the spine. Plaintiff asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) & 78t(a), and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5. Specifically, Plaintiff alleges that in order to sustain TranS1’s revenues, the Defendants encouraged physicians to utilize improper billing codes related to certain TranS1 products and services in order to increase reimbursement from federal and state healthcare insurance programs, such as Medicare and Medicaid. Plaintiff alleges that Defendants made false and/or misleading statements and/or omissions between February 23, 2009 and October 17, 2011, inclusive, regarding TranS1’s sales and marketing practices and compliance with healthcare fraud and abuse laws, including the False Claims Act, thereby exposing TranS1 to regulatory investigations and legal proceedings, as well as resulting fines and penalties. The operative complaint further alleges that partial disclosures and events revealed Defendants’ fraud, thereby injuring Plaintiff and Settlement Class Members. Plaintiff alleges that partial revelations of Defendants’ fraud caused stock declines, causing investors to suffer tremendous injury. The Defendants deny all of these allegations.

Classes are generally used in lawsuits that affect a large number of individuals. A class action consolidates into a single action all of the claims of individuals allegedly harmed by the same conduct or course of conduct in the same period of time, thus removing the need for members of the class to file their own individual lawsuits to separately seek to recover for the harm alleged. Once the class is certified, the Court is empowered to resolve all issues on behalf of members of the class, except for those, if any, who specifically choose to exclude themselves from the class.

As part of the preliminary approval process, Plaintiff will ask the Court to certify a class for settlement purposes only. The proposed Settlement Class will consist of all persons or entities who purchased or acquired TranS1 securities (including through the exercise of warrants or options) during the Class Period who were allegedly damaged thereby. Excluded from the Settlement Class are (i) the Defendants; (ii) the officers and directors of TranS1 during the Class Period; (iii) members of the immediate families of the Individual Defendants and the officers and directors of TranS1 during the Class Period; (iv) any entity in which any Defendant had a controlling interest during the Class Period; and (v) the successors, heirs, and assigns of any such excluded Person. Also excluded from the Settlement Class are those Persons who timely and validly seek exclusion from the Settlement Class.

This Action has not gone to trial, and the Court has not decided in favor of either side. Instead, after the lower court dismissed the Action, legal counsel for all the parties participated in a mediation before a mediator appointed by the United States District Court for the Fourth Circuit. The mediation did not succeed, and the Settling Parties pursued their respective appeals. Following the Fourth Circuit’s decision, which reversed the lower court’s decision and revived the Action, the Settling Parties entered into further negotiation. In light of the passage of time, the costs of discovery, and TranS1’s intervening bankruptcy, the Settling Parties agreed to the Settlement to avoid the costs and risks of further litigation.

Plaintiff and Lead Counsel believe that the Settlement is in the Settlement Class Members’ best interest and provides them with a substantial benefit now, instead of engaging in years of further uncertain and expensive litigation – including fact and expert discovery; Plaintiff’s class certification motion, which Defendants would oppose; the parties’ cross-motions for summary judgment; pre-trial motions and a lengthy trial; likely appeals; and attempts to enforce any judgment – all with the possibility of no recovery at all. By settling the Action with the Defendants at this point, Plaintiff is not admitting that the Action lacked merit, or that the Settlement Class’s ultimate recovery would not have been greater than the Settlement Amount had litigation continued. Neither the Stipulation, nor any of its terms or provisions, nor any of the negotiations or proceedings connected with it, shall be construed as an admission or concession by the Plaintiff or the Settlement Class Members that any of their claims lack merit; that any defenses asserted by any of the Defendants in the Action have any merit; or that damages recoverable in the Action would not have exceeded the Settlement Fund.

The Defendants have denied and continue to deny all of the allegations made and claims brought by Plaintiff, maintain that they have meritorious defenses, and believe they would prevail at trial. Nonetheless, the Defendants have concluded that further litigation of this Action would be protracted and expensive, taking into account the uncertainty and risks inherent in any litigation, especially in complex cases like this Action. The Defendants have, therefore, determined that it is desirable and beneficial that the Action be fully and finally settled under the terms and conditions of this Settlement. The Settlement shall in no event be construed as, or deemed to be evidence of, an admission or concession by Defendants with respect to any claim of any fault or liability or wrongdoing or damage to the Plaintiff or the Settlement Class Members in this Action.

The Settlement must be compared to the risk of no recovery after contested dispositive motions, trial, and likely appeals. A trial is a risky proposition. The claims in the Action involve numerous complex legal and factual issues, many of which would require expert testimony. The Settling Parties disagree on both liability and damages, and do not agree on the average amount of damages per share, if any, that would be recoverable if Plaintiff was to have prevailed on each claim alleged against the Defendants. Among their many other disagreements are:

1. Whether the Defendants violated the securities laws or otherwise engaged in wrongdoing;
2. Whether the misrepresentations and omissions alleged by the Plaintiff were material, false, misleading, were made with the requisite level of intent, or otherwise actionable;
3. The extent (if any) that the alleged misrepresentations and omissions influenced TranS1’s stock price during the Class Period; and
4. The method for determining whether, and the extent to which, purchasers of TranS1 securities suffered injury and damages that could be recovered at trial.

The Settlement Class includes all persons or entities who purchased or otherwise acquired TranS1 common stock (“Common Stock”) or exchange-traded call options on TranS1 Common Stock (“Call Options”), and all persons or entities who sold (wrote) exchange-traded put options on TranS1 Common Stock (“Put Options”), between February 23, 2009 and October 17, 2011, both dates inclusive, who were allegedly damaged thereby.

Yes. You are not a member of the Settlement Class if you did not purchase TranS1 Common Stock or Call Options, or sell Put Options, on or between the dates listed above. If you purchased TranS1 Common Stock or Call Options, or sold Put Options, some other time, or did not purchase or sell TranS1 securities at all, you are not included within the Settlement Class.

You are also not a member of the Settlement Class if you are on the list of persons and entities that are specifically excluded from it, per FAQ 3 above.

If you are still not sure whether you are included, you can ask for free help. You can contact the Claims Administrator toll-free at 1-855-880-9209, by email at info@TranS1SecuritiesSettlement.com or at P.O. Box 5270, Portland, OR 97208-5270, for more information. Or you can fill out and return the Proof of Claim Form to see if you qualify.

In exchange for the Settlement and the release of the Settled Claims (as defined in the Notice) as well as dismissal of the Action, Defendants have agreed that a payment of three million two hundred fifty thousand ($3,250,000.00) in U.S. dollars (“USD”) (the “Settlement Amount”) will be made on Defendants’ behalf to be divided, after payment of Court-approved attorneys’ fees and expenses, the costs of claims administration including the costs of printing and mailing the Notice and the cost of publishing notice, any compensatory award granted to Plaintiff, and Taxes (the “Net Settlement Fund”), pro rata among all Settlement Class Members who send in a valid Proof of Claim Form.

Your share of the Net Settlement Fund will depend on several factors, including the following: how many Settlement Class Members submit timely and valid Proof of Claim Forms; the total Recognized Losses represented by the valid Proof of Claim and Release Forms that the Settlement Class Members send in; your Recognized Losses, based on the number of TranS1 securities you purchased during the Class Period, how much you paid for them, when you purchased them, and if you sold them, when and for how much you sold them.

By following the instructions in the Plan of Allocation, you can calculate what is called your Recognized Loss. It is unlikely that you will get a payment for all of your Recognized Loss. After all Settlement Class Members have sent in their Proof of Claim and Release Forms, the payment you get will be a part of the Net Settlement Fund equal to your Recognized Loss divided by the total of everyone’s Recognized Losses. See the Plan of Allocation below for more information.

To qualify for a payment, you must submit a Proof of Claim and Release Form, which is enclosed with the Notice and may also be downloaded here. Read the instructions carefully, fill out the Form completely, include all the documents that the Form asks for, sign it, and mail or submit it online so that it is postmarked no later than January 2, 2019.

Payments were issued to eligible Claimants on February 27, 2020. If you have questions about your payment, please contact the Claims Administrator at 1-855-880-9209 (toll-free) or info@TranS1SecuritiesSettlement.com.

To exclude yourself from the Settlement Class, you must send a letter by First-Class Mail (email or phone call will not suffice) stating that you “request exclusion from the Settlement Class in Singer v. TranS1, Inc., et al., Case No. 7:12-CV-00023-D.” Your letter must include the date(s), price(s), and number(s) of all purchases and sales of TranS1 securities during the Class Period. In addition, you must include your name, address, telephone number, and your signature. You must mail your exclusion to be received no later than October 29, 2018 to the following address:

Singer v. TranS1, Inc., et al.
Claims Administrator
P.O. Box 5270
Portland, OR 97208-5270

If you ask to be excluded, you will not get any payment, and you cannot object to the Settlement. You will not be legally bound by anything that happens in the Action.

No. Unless you exclude yourself from the Settlement Class, you give up any rights to sue the Defendants and the other Released Parties for the Settlement Class Claims. If you have a pending lawsuit against the Defendants or other Released Parties, speak to your lawyer in that case immediately. You must exclude yourself from this Action to continue your own lawsuit. Remember, the exclusion deadline is October 29, 2018.

No. If you exclude yourself, you may not send in a Proof of Claim and Release Form to ask for any money.

The Court ordered that the law firm of Pomerantz LLP shall represent the Settlement Class Members, including you. These lawyers are called Lead Counsel. You will not be personally liable for the fees and expenses incurred by these lawyers, which will be paid from the Settlement Fund. If you want to be represented by your own lawyer, you may hire one at your own expense.

Lead Counsel has litigated this Action since January 2012 on a wholly contingent basis, meaning that they have not been paid any attorneys’ fees for the time devoted to the lawsuit, nor have they been reimbursed their out-of-pocket expenses incurred during that time period. As such, as part of the Settlement approval process, Lead Counsel will move the Court for an award of attorneys’ fees in an amount not greater than thirty percent (30%) of the Settlement Fund and for out-of-pocket expenses and costs in an amount not to exceed seventy-five thousand dollars ($75,000.00) in connection with the litigation, plus interest on such fees, costs, and expenses at the same rate earned by the Settlement Fund. The Court will decide whether to grant this request, and, if it is granted, how much to award Lead Counsel. Such sums as may be approved by the Court will be paid from the Settlement Fund.

Lead Counsel shall file a formal motion with the Court for approval of the Settlement, the Plan of Allocation, the request for attorneys’ fees and reimbursement of expenses, plus any applicable interest, and the request for a compensatory award to the Plaintiff of up to three thousand dollars ($3,000.00) total, no later than October 22, 2018.

Lead Counsel believes that the requested attorneys’ fees are warranted in light of its efforts, and those of other counsel in support, on a wholly contingent basis, to investigate the underlying claims, work with a private investigator and a damages analyst, file initial and multiple amended complaints, litigate multiple motions to dismiss, litigate appeals and cross-appeals, mediate the dispute before an experienced mediator, and thereafter negotiate the Settlement and work to paper it and submit it to the Court for necessary approvals. Lead Counsel’s motion will argue that the requested fees are well within the range of fees awarded to class counsel under similar circumstances in other cases of this type and are reasonable when compared against Lead Counsel’s actual time devoted to the litigation of the Action at the applicable billing rates of Lead Counsel’s attorneys and paralegals. The Court determines what to award Lead Counsel as fees and expenses from the Settlement Fund, and may award more or less than the amount requested, in its discretion.

If you are a Settlement Class Member, you can object to the proposed Settlement, the proposed Plan of Allocation, and/or Lead Counsel’s fee, cost, and expense application. You can write to the Court setting out your objection. The Court will consider your views. To object, you must send a signed letter saying that you object to the proposed Settlement in the Singer v. TranS1, Inc., et al., Case No. 7:12-CV-00023-D. Be sure to include your name, address, telephone number, and your signature, identify the date(s), price(s), and number(s) of TranS1 securities that you purchased, otherwise acquired, sold, or otherwise disposed of during the Class Period, and state the reasons why you object to the proposed Settlement. If you object to either the Settlement, requested attorneys’ fees, or Plaintiff’s compensatory award, you subject yourself to the jurisdiction of the Court in this matter, and Plaintiff, acting through Lead Counsel, will have the right to take your deposition prior to the Settlement Fairness Hearing. If you refuse to have your deposition testimony taken upon Plaintiff’s request, your objection will be deemed invalid.

Your objection must be filed with the Court and mailed or delivered to each of the following addresses such that it is received no later than October 29, 2018.

Objecting is simply telling the Court that you do not like something about the proposed Settlement. You can object only if you stay in the Settlement Class. Excluding yourself is telling the Court that you do not want to be part of the Settlement Class and do not want to seek a payment from the Settlement Fund. If you exclude yourself, you have no basis to object because the case no longer affects you.

The Court held a fairness hearing at 2:00 p.m., on November 19, 2018 at the United States Courthouse, 310 New Bern Avenue, Raleigh, NC.

The Court approved the Settlement at the hearing.

No. Lead Counsel will answer questions the Court may have and has extensive experience handling settlement-related hearings of this nature. But you are welcome to come at your own expense. If you send an objection, you do not have to come to Court to talk about it. As long as you mailed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it is not necessary. Settlement Class Members do not need to appear at the hearing or take any other action to indicate their approval.

If you object to the Settlement, you may ask the Court for permission to speak at the Settlement Fairness Hearing. To do so, you must include with your objection (see FAQ 16) a statement saying that it is your “intention to appear in Singer v. TranS1, Inc., et al., Case No. 7:12-CV-00023-D.” Persons who intend to object to the Settlement, the Plan of Allocation, and/or the application for an award of attorneys’ fees, costs, and expenses and desire to present evidence at the Settlement Hearing must include in their written objections the identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the Settlement Fairness Hearing. You cannot speak at the hearing if you exclude yourself.

If you do nothing, all of your claims against the Defendants and the Released Parties will be released, but you will not receive any money from this Settlement because it is necessary to submit a Proof of Claim and Release Form to share in the Settlement proceeds.

This website summarizes the proposed Settlement. More details are in a Stipulation and Agreement of Settlement dated May 18, 2018 (the “Stipulation”). The Stipulation is the controlling document describing the proposed Settlement and its terms govern anything to the contrary in the Notice. You can get a copy of the Stipulation and obtain answers to common questions regarding the proposed Settlement by contacting the Claims Administrator toll-free at 1-855-880-9209 or by downloading it here.