Invisalign maker Align Technology and investors who claim the company misled them about the financial consequences of a discount program have asked a California federal judge to approve a $16 million settlement.
The agreement comes after "nearly three years of contentious litigation," according to a court document filed July 15 in the U.S. District Court for the Northern District of California. At the heart of the dispute is whether Align made false or misleading statements regarding an Invisalign discount program.
The investors first filed a lawsuit in November 2019 claiming that Align failed to disclose it would offer greater discounts for its invisible aligners -- an action that would impact revenue. As a result, Align provided misleading information about its business, operations, and prospects, the investors said.
In September 2020, a court dismissed all but one allegedly misleading statement, according to the new court document. Align argued that other factors, such as a change in the exchange rate and shift in the company's product mix, influenced a decline in its stock's average sales price.
By the investors estimates, the one remaining allegedly misleading statement resulted in up to $482 million in estimated damages among the class members. The $16 million settlement is between 3.3% and 9.1% of likely recoverable damages, according to the investors.
The proposed class members would include people without close ties to Align who bought the company's common stock between May 23 and October 23, 2018, and lost money as a result. Eligible class members would split the settlement dollars after the deduction of fees and expenses.