CULVER CITY, Calif., July 12, 2010 (GLOBE NEWSWIRE) -- Bidz.com (Nasdaq:BIDZ), a leading online retailer of jewelry, today announced that the Superior Court of California, County of Los Angeles, dismissed Bahram Akhavan v. Bidz.com, Inc. et al., the first of two shareholder derivative cases filed against the Company's Board of Directors.
"We are very pleased with the dismissal of yet another lawsuit, which will allow us to continue to move forward and focus on our operations," said David Zinberg, Chairman and Chief Executive Officer. "The dismissal of this complaint validates the position we have long maintained – that these claims were without merit and that Bidz has acted in the best interests of its shareholders."
The most recent dismissal follows the February 2010 dismissal of a consumer class action complaint against the Company alleging that the Company engaged in unfair business practices, including "shill bidding."
Motions to Dismiss Pending Federal Securities Fraud and Federal Derivative Case
The Federal Securities Fraud Class Action
In May and June, 2009, the Company and certain of its officers were named as defendants in three parallel class action complaints filed in the United States District Court for the Central District of California (Ramon Gomez v. Bidz.com, Inc., et al., cv09-3216 (CBM) (C.D. Cal.; filed on May 7, 2009); James Mitchell v. Bidz.com, Inc., et al., cv09-03671 (CBM) (C.D. Cal.; filed on May 22, 2009); Mark Walczyk v. Bidz.com, Inc., et al., cv09-0397 (CBM) (C.D. Cal.; filed on June 3, 2009)). On July 30, 2009, the Court consolidated the cases. The consolidated complaint charges violations of §10(b) and §20(a) of the Securities Exchange Act of 1934 and alleges that the Company failed to disclose unethical and fraudulent business practices, that it did not have controls in place to prevent "shill bidding," that it uses unreliable or false appraisal prices on its merchandise, and that it failed to correctly account for and disclose in detail its co-op marketing contributions and minimum gross profit guarantees.
On May 25, 2010, in a 30-page opinion, the Honorable Consuelo B. Marshall of the United States District Court granted the Company's Motion to Dismiss the securities fraud complaint with leave to amend. On June 22, 2010, the plaintiff filed its amended complaint. The Company will file a Motion to Dismiss the amended complaint this month and anticipates that the Court will hear the motion in September, 2010.
The Federal and State Derivative Cases
In May and July, 2009, the Company and certain of its officers and its Board of Directors were named as defendants in two shareholder derivative lawsuits filed in the Superior Court of California, County of Los Angeles, and the United States District Court for the Central District of California, respectively (Bahram Akhavan v. Bidz.com, Inc. et al. BC414198 (filed May 20, 2009) (the "State Derivative Action") and Farris Hassan v. Bidz.com, Inc., et al., cv09-04984 (CBM) (C.D. Cal. (filed July 10, 2009) (the "Federal Derivative Action")). The State and Federal Derivative actions allege violations of law, including breaches of fiduciary duties, waste of corporate assets, unjust enrichment and violations of California Corporations Code. Amended complaints in both actions also include allegations relating to the Company's co-op marketing contributions and minimum gross profit guarantees.
On April 27, 2010, the United States District Court granted the Company's Motion to Dismiss the Federal Derivative Action with leave to amend. The plaintiff filed an amended complaint, and, later this month, the Company will file another Motion to Dismiss, which the Company anticipates will be heard by the Court in November 2010.
On February 26, 2010, the Superior Court of California granted the Company's Motion to Dismiss the State Derivative Action with leave to amend. In response, on April 9, 2010, Mr. Akhavan, the plaintiff in the State Derivative Action, made a demand to inspect certain books and records of the Company, which the Company rejected on the grounds, among other reasons, that the request lacked a proper purpose under Delaware law. On May 5, 2010, Mr. Akhavan filed an action in the Delaware Court of Chancery to compel the Company to permit inspection of the requested documents. In June 2010, after the Company filed a Motion to Dismiss the Delaware action, Mr. Akhavan withdrew both the State Court Derivative Action, as well as the Delaware action, resulting in the dismissal of both cases.
Please see the Company's Form 10-Q for the quarter ended March 31, 2010, for a description of other legal proceeding involving the Company.
About Bidz.com
Bidz.com, founded in 1998, is a leading online retailer of jewelry. Bidz offers its products through a live auction format as well as a fixed price online retail store, Buyz.com. Bidz.com's auctions are also available in Arabic, German and Spanish. To learn more about Bidz.com visit its website at www.globenewswire.com/newsroom/ctr%3Fd=185163%26amp;l=3%26amp;a=www.bidz.com%26amp;u=http%253A%252F%252Fcts.businesswire.com%252Fct%252FCT%253Fid%253Dsmartlink%2526url%253Dhttp%25253A%25252F%25252Fwww.bidz.com%2526esheet%253D5957032%2526lan%253Den_US%2526anchor%253Dwww.bidz.com%2526index%253D1">www.bidz.com. Bidz also operates Modnique, a division of Bidz.com, an exclusive private sale shopping site for members-only, offering authentic premium brand name merchandise. Modnique offers its members exclusive access to 24-72 hour sales events on designer apparel, accessories, shoes, and houseware and much more at price points up to 85% below traditional retail prices. To learn more about Modnique visit its website at www.globenewswire.com/newsroom/ctr%3Fd=185163%26amp;l=3%26amp;a=www.modnique.com%26amp;u=http%253A%252F%252Fwww.modnique.com">www.modnique.com.
Safe Harbor Statement
This press release includes forward looking statements about the Company's estimated revenue and earnings within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this release, including statements regarding the Company's future financial position, business strategy and plans and objectives of management for future operations, are forward looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions, as they relate to the Company, are intended to identify forward looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect the Company's financial condition, results of operations, business strategy and financial needs. Risks and uncertainties include that our common stock is subject to short selling and trading, and prices of our stock may be volatile; that we are subject to "prank" bidding; that we may face increasing costs to acquire new customers; the ability of the Company to attract customers to its website and offer attractive products; the ability to maintain profit levels while expanding international sales; the ability to detect fraud if we fail to maintain an effective system of internal controls; the ability to maintain our website, electronic data processing systems, and systems hardware; the ability to forecast accurately net revenue and plan for expenses; that we do not have a guaranteed supply of jewelry products and that we have a heavy concentration of inventory purchases from our top two suppliers; the ability to protect our intellectual property rights; and potential litigation and government enforcement actions that may result from our prior securities offerings and other activities. Please refer to Bidz.com's reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. Bidz.com undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.