Monster Settles 6-Year Lawsuit with Investors
Claims class action has no merit, but prefers to move past it
Published in CSP Daily News
CORONA, Calif. -- Monster Beverage Corp. entered into a settlement agreement this past week that, if approved by the court, will resolve a putative securities class-action lawsuit against the company and two of its officers in federal district court in Los Angeles.
The lawsuit (Cunha v. Hansen Natural Corp.) was originally filed in 2008. In it, some Monster shareholders accused the company of overstating the benefits of a distribution deal with Anheuser-Busch.
Monster has spent more than five years aggressively defending against the allegations in the lawsuit. However, in light of the potential costs of continued litigation, as well as the potential burden and disruption to the company and its management, Monster, together with its insurance carriers, believed it was in their best interests to settle the case for the amount set forth in the settlement agreement.
Monster noted that the full settlement payment was being funded by Monster's insurance carriers, and that the settlement would not have any impact on Monster's financial position or its income statement.
Monster further noted that the settlement contains no admission of any liability or wrongdoing on the part of the company or its officers, and that all of the defendants continue to deny all of the allegations against them and to maintain that the lawsuit has no merit.
In a press release, Monster claims, contrary to the allegations in the lawsuit, that its relationship with Anheuser-Busch was extremely successful during the proposed class period and thereafter. After that relationship began in 2006, Monster achieved record sales in each quarter during the proposed class period and significantly improved its Monster Energy product line's market share, the company stated. Further, despite the lawsuit's allegations of harm to investors, Monster's stock price rose by 75% during the proposed class period, generating nearly $1.7 billion in shareholder value during that time.
"We are fully confident that we would have prevailed if the litigation had proceeded," said Monster's CEO Rodney C. Sacks. "Nevertheless, given the terms of the settlement, the payment of which is being funded by insurance carriers entirely, we believe it is in the company's interests to put this matter behind us."
Based in Corona, Calif., Monster Beverage Corp. is a marketer and distributor of energy drinks and alternative beverages.