Preliminary Settlement of Diamond Shareholder Claims Approved

A federal court in California has preliminarily approved the settlement of
shareholder claims that Diamond Foods, Inc. “deliberately understated the
costs of walnuts and improperly accounted for payments made to walnut
growers to increase apparent profits and maintain higher share prices” in
anticipation of the anticipated purchase of Pringles with company stock. In re
Diamond Foods, Inc. Securities Litig., No. 11-5386 (N.D. Cal., order
entered September 26, 2013). Additional details about the litigation appear
in issues 464 and 482 of this Update. Under the terms of the agreement,
the defendants will pay to the class $11 million and distribute 4.45 million
shares of Diamond common stock—valued at $85.1 million as of August
2013. According to the court, while the maximum aggregated damages
totaled some $430 million, the settlement is reasonable in light of “Diamond’s
weakened financial condition.” It apparently has just $7.2 million in cash and
cash equivalents and carries $579 million in long-term obligations. The final
approval hearing will be held January 9, 2014.