In Re Exodus Communications, Inc. Securities Litigation 01-CV
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1 DAVID M. FURBUSH (SBN 83447; [email protected]) DHAIVAT H. SHAH (SBN 196382; [email protected]) 2 O’MELVENY & MYERS LLP 2765 Sand Hill Road 3 Menlo Park, CA 94025 Telephone: (650) 473-2600 4 Facsimile: (650) 473-2601 5 Attorneys for Defendants Ellen M. Hancock, R. Marshall Case, Dick Stoltz, 6 Herbert A. Dollahite, Adam W. Wegner, Beverly Brown, Sam S. Mohamad, and William Yeack 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 11 In re Master File No. C-01-2661-MMC 12 EXODUS COMMUNICATIONS, INC. SECURITIES LITIGATION 13 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF DEFENDANTS’ 14 This Document Relates To: MOTION FOR CERTIFICATION 15 ALL ACTIONS Hon. Maxine M. Chesney 16 Hearing Date: Not Set 17 18 19 20 21 Pursuant to Federal Rule of Evidence 201, defendants Ellen M. Hancock, R. Marshall 22 Case, Dick Stoltz, Herbert A. Dollahite, Adam Wegner, Sam S. Mohamed, William Yeack, and 23 Beverly Brown respectfully request that this court take judicial notice of each of the following 24 documents, true and correct copies of which are attached as Exhibits A through C hereto: 25 A. In re Stac Electronics Securities Litigation, Second Amended Consolidated Class 26 Action Complaint For Violation Of The Federal Securities Laws, Master File No. 92-1120- 27 R(BTM), filed November 18, 1993. A true and correct copy of that complaint is hereto attached 28 as Exhibit A. REQUEST FOR JUDICIAL NOTICE MASTER FILE NO. C-01-2661-MMC 1 B. In re Daou Systems, Inc. Securities Litigation, Third Amended Class Action 2 Complaint For Violation Of The Federal Securities Laws, Master File No. 98cv1537-L(CGA), 3 filed May 16, 2002. A true and correct copy of that complaint is hereto attached as Exhibit B. 4 C. In re Portal Software, Inc. Securities Litigation, Master File No. C-03-5138-VRW, 5 Consolidated Third Amended Complaint, filed May 19, 2005. A true and correct copy of that 6 complaint is hereto attached as Exhibit C. 7 These complaints are proper subjects for judicial notice because they have been duly filed 8 in the Ninth Circuit and in the United States District Court of the Northern District of California, 9 and they are part of the court record in those proceedings. See Grimes v. Pinn Bros. Constr. Co., 10 No. C-01-2787 EDL, 2002 WL 356521, at *2 (N.D. Cal. Feb. 26, 2002) (“It is proper for a court 11 to take judicial notice of the contents in court files in other lawsuits.”) (citing Mullis v. U.S. Bank, 12 Ct., 828 F.2d 1385, 1388 n.9 (9th Cir. 1987)). 13 Respectfully submitted, 14 DAVID M. FURBUSH DHAIVAT H. SHAH 15 O’MELVENY & MYERS LLP 16 17 Dated: October 12, 2005 By: /s/ David M. Furbush David M. Furbush 18 Attorneys for Individual Defendants 19 Ellen M. Hancock, R. Marshall Case, Dick Stoltz, Herbert A. Dollahite, Adam W. Wegner, Beverly 20 Brown, Sam S. Mohamad, and William Yeack 21 MP1:969048.1 22 23 24 25 26 27 28 -2- REQUEST FOR JUDICIAL NOTICE MASTER FILE NO. C-01-2661-MMC EXHIBIT A 1 WILLIAM S . LERACH (68581) LEONARD B . SIMON (58310) 2 THEODORE J . PINTAR (131372) MILBERG WEISS BERSHAD 3 HYNES & LERAC H 600 West Broadway, .Suite 1800_' 4 San Diego, CA 92101 Telephone : 619/231-1058 d 5 JOSEPH H . WEIS S KEVIN J . YOURMAN (1W7159) 6 DAVID C . KATZ LAW OFFICES OF JOSEPH H . LAW OFFICES OF JOSEPH H . WEIS S 7 WEISS 1800 Avenue of the Stars 319 Fifth Avenue Suite 100 0 8 New York, NY 10016 Los Angeles, CA 90067 Telephone : 212/532-417 1 Telephone : 310/277-157 4 9 - and - 10 Co-Lead Counsel for Plaintiffs 11 UNITED STATES DISTRICT COURT 12 SOUTHERN DISTRICT OF CALIFORNI A 13 TIMOTHY J . ANDERSON, NEIL SINGER ) Master File No . and ARTHUR SINGER, on Behalf of ) 92-1120-R(BTM) 14 Themselves and All Others Similarly ) Situated, ) CLASS ACTIO N 15 Plaintiffs , 16 vs . 17 GARY W . CLOW, DOUGLAS L . WHITING, ROBERT W . JOHNSON ; . ARTHUR J . 18 COLLMEYER, JOHN R . WITZEL, ROBERT A . HOFF, CROSSPOINT VENTURE 19 PARTNERS, LAWRENCE G . FINCH, SIGMA MANAGEMENT, SIGMA MANAGEMENT II, 20 L .P ., SIGMA PARTNERS, RUSSELL J . SECOND AMENDED CONSOLIDATED ROBELEN, IDANTA PARTNERS, STAC CLASS ACTION COMPLAINT FOR 21 ELECTRONICS, ALEX . BROWN & SONS, VIOLATION OF THE FEDERAL INC . and MONTGOMERY SECURITIES , SECURITIES LAW S 22 Defendants . 23 24 In re STAC ELECTRONICS SECURITIES 25 LITIGATION 2 6 Plaintiffs Demand A This Document Relates To : Trial By Jury 27 ALL ACTIONS . 21 I Plaintiffs, by their undersigned attorneys, for their 2 Complaint against defendants, allege upon information and belief 3 except ¶1[20-21 which are alleged upon personal knowledge, as 4 follows : 5 NATURE OF THE ACTION 6 1 . This is a class action on behalf of all purchasers of the 7 stock of Stac Electronics ('"Stac" or the "Company") between May 7, 8 1992 and July 20, 1992 . Stac manufactures data compression 9 products that increase the effective capacity of storage device s 10 and are used by . owners of personal computers that use Microsoft 11 Corporation's MS-DOS or comparable operating systems . Stac's 12 "Stacker" software products provide an increase in the data storage 13 capacity of personal computers for much less cost than purchasing 14 additional "hard disk" storage capacity . By 1990, millions of 15 personal computers using the MS-DOS or comparable operating systems 16 existed and appeared to provide a large potential market for Stac's 17 Stacker products . Because Stac was first to market with a data 18 compression software product, during 1991, sales of Stac's Stacker 19 products exploded as users of personal computers found those 20 products an inexpensive and effective way to increase the data 21 storage capacity of the MS-DOS operating systems of their 22 computers . This allowed Stac to achieve significant growth in its 23 net income, as well as earnings per share through December 31, 24 1991 . 25 2 . By late 1991, 90% of Stac's revenues and over 90% of its 26 profits came from the sale of its Stacker 2 .0 data compression 27 product . Because the then currently available versions of 28 Microsoft's MS-DOS operating system did not have data compression - 1 - 1 capability, the sale of Stacker 2 .0 to owners of personal computers 2 using the MS-DOS operating system and purchasers of new computers 3 which came with the MS-DOS operating systems was the main market 4 for Stac's Stacker 2 .0 product . However, Stac's business would-be 5 severely injured if Microsoft included data compression capability 6 in its MS-DOS operating system (which Microsoft periodically 7 updated), as computer owners using the MS-DOS, system could then 8 obtain data compression capability at no extra cost by obtaining 9 the upgraded MS-DOS operating system and purchasers of, new persona l 10 computers supplied with the MS-DOS operating system would obtain 11 that capability with the purchase of their computer and have no 12 need to purchase separate software providing such capability . 13 3 . As a result of the niche Stac had found in the personal 14 computer software market, its revenue and net income exploded in 15 the latter part of calendar 1991 and early 1992 . However, Stac's 16 top executives knew by late 1991 that Stac's competitive position 17 was being impaired and that its strong growth in revenues and 18 earnings would shortly come to an end because of the increased -19 availability and popularity of competitive compression data 20 products and because (as they had learned) Microsoft intended to 21 include data compression capabilities in its next version of its 22 MS-DOS operating system, which it was then currently developing and 23 intended to release as soon as possible in 1992, and that this data 24 compression capability would be included at no additional cost in 25 Microsoft's upgraded MS-DOS system . This presented a terrible 26 threat to Stac and its insiders . Thus, they decided to undertake 27 a public offering of stock of the corporation, part of which was to 28 be sold by the corporation and part of which was to be sold by - 2 - 1 insider and controlling stockholders in an effort to raise capital 2 for the corporation to help it service the upcoming downturn in its 3 business and allow the insiders to cash out of their illiquid Stac 4 stock before these adverse facts became public knowledge, which 5 they knew would destroy the value of their stock before they were 6 able to complete a public offering . 7 4 . However, by late 1991 and continuing up to the date of 8 Stac's initial public offering on May 7, 1992 (the "Offering") , the 9 market and demand for Stac's products changed and Stac's insider s 10 and controlling shareholders realized that Stac's profitable growth 11 had peaked and that Stac would soon suffer declining revenues, net 12 income and earnings per share . By the date of the public offering, 13 Stac's insiders knew, but the public did not, that two very adverse 14 facts existed that were negatively affecting Stac's business . 15 First, demand for Stac's most important data compression product 16 (Stacker 2 .0) had weakened due to the introduction of a new popular 17 competitive product and due to customer resistance to purchasing 18 separate data compression software products'in anticipation of the 19 availability of upgraded personal computer operating systems that 20 included data compression capacity .