Stamps.com Inks $100M Settlement in Stock Price Class Action Lawsuit

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Stamps.com Stock Price Class Action Settlement Overview: 

• Who: Stamps.com has agreed to pay $100 million to investors in a securities class action lawsuit.
• Why: If approved, the deal will end a class action lawsuit alleging Stamps.com misled its investors about its relationship with the United States Postal Service to inflate its stock price. 
• Where: The class action lawsuit is pending in California federal court

Stamps.com has agreed to pay $100 million to end a nationwide class action lawsuit that alleged the company misled investors about its deteriorating relationship with the United States Postal Service (USPS) to artificially inflate its stock price.

The company is accused of hiding the details of its souring union with the USPS in order to inflate Stamps.com stock value, investors alleged in a class action lawsuit. The plaintiffs filed court documents in California federal court on Monday seeking preliminary approval of the $100 million settlement offer that would end the litigation. 

The class action lawsuit was filed in March 2019 by Matt Karinski on behalf of himself and every other investor who bought Stamps.com stock between May 3, 2017 and May 8, 2019. 

Stamps.com Stock Inflated by Improper Business Practices

The lead plaintiff in the class action lawsuit was later turned over to the Indiana Public Retirement System, which filed a consolidated complaint alleging Stamps.com took advantage of its contract-based relationship with the USPS to provide customers discounted shipping. A move that was unauthorized, according to the class action. 

Stamps.com was achieving business success during this time, but was only doing so largely because of undisclosed and improper business practices, the class action lawsuit alleged. 

Once the company’s true relationship with the USPS was revealed the company’s stock value plummeted, alleged the class action lawsuit. 

Stamps.com attempted to get the class action lawsuit dismissed in January 2020, but was denied after the court found they had in fact misled investors about their relationship with the USPS. 

Stamps.com also faced a lawsuit by the City of Cambridge Retirement System, filed in August 2019 in Delaware Chancery Court, at which time they were accused of engaging in illicit schemes, unjust enrichment, corporate waste, and insider stock trading. The company settled with investors for $30 million in that case. 

News of the settlement comes only days after Stamps.com announced it was being sold to investment firm Thomas Bravo for $6.6 billion. 

Do you believe Stamps.com misled investors about its relationship with USPS? Did you lose money on Stamps.com stock? Let us know in the comments! 

The plaintiffs are represented by Steven W. Pepich, Jason A. Forge, Eric I. Niehaus, Hillary B. Stakem, and Kevin S. Sciarani of Robbins Geller Rudman & Dowd LLP. 

The Stamps.com Stock Price Class Action Lawsuit is Karinski et al v. Stamps.com Inc. et al., Case No. 2:19-cv-01828, in the U.S. District Court for the Central District of California. 

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