In Re: Exodus Communications Inc. Securities Litigation 01-CV-2661
Total Page:16
File Type:pdf, Size:1020Kb
Case 3:01-cv-02661-MMC Document 306 Filed 04/24/2006 Page 1 of 3 1 DAVID M. FURBUSH (State Bar No. 83447) DHAIVAT H. SHAH (State Bar No. 196382) 2 ROBERTA L. HARTING (State Bar No. 225067) O’MELVENY & MYERS LLP 3 2765 Sand Hill Road Menlo Park, California 94025 4 Telephone: (650) 473-2600 Facsimile: (650) 473-2601 5 E-Mail: [email protected] [email protected] 6 [email protected] 7 Attorneys for Defendant ELLEN M. HANCOCK 8 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 12 In re Master File No. C-01-2661-MMC 13 EXODUS COMMUNICATIONS, INC. DEFENDANT ELLEN HANCOCK’S SECURITIES LITIGATION REQUEST FOR JUDICIAL NOTICE 14 Honorable Maxine M. Chesney 15 Hearing Date: May 5, 2006 16 Time: 9:00 a.m. This Document Relates To: 17 ALL ACTIONS. 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT HANCOCK’S REQUEST FOR JUDICIAL NOTICE - C-01-2661-MC Case 3:01-cv-02661-MMC Document 306 Filed 04/24/2006 Page 2 of 3 1 Pursuant to Federal Rule of Evidence 201, defendant Ellen M. Hancock respectfully 2 requests that this Court take judicial notice of each of the following documents, true and correct 3 copies of which are attached as Exhibits A through D hereto: 4 A. “First Amended Consolidated Class Action Complaint,” In re Exodus, Inc. 5 Securities Litigation, Master File No. C-01-2661-MMC, filed on July 11, 2002 in the United 6 States District Court for the Northern District of California. A true and correct copy of that 7 complaint is hereto attached as Exhibit A. 8 B. “Notice of Motion and Motion of Underwriter Defendants Goldman, Sachs & 9 Co., Merrill Lynch & Co., Morgan Stanley Dean Witter, and J.P. Morgan to Dismiss the First 10 Amended Consolidated Complaint; and Memorandum and Points and Authorities,” In re Exodus, 11 Inc. Securities Litigation, Master File No. C-01-2661-MMC, filed on October 23, 2002 in the 12 United States District Court for the Northern District of California. A true and correct copy 13 of that document is hereto attached as Exhibit B. 14 C. “Plaintiffs’ Opposition to Underwriter Defendants’ Motion to Dismiss,” In re 15 Exodus, Inc. Securities Litigation, Master File No. C-01-2661-MMC, filed on December 18, 16 2002 in the United States District Court for the Northern District of California. A true and 17 correct copy of that document is hereto attached as Exhibit C. 18 D. “Order Granting Underwriter Defendants’ Motion to Dismiss With Leave 19 to Amend; Granting Individual Defendants’ Motion to Dismiss With Leave to Amend,” In re 20 Exodus, Inc. Securities Litigation, Master File No. C-01-2661-MMC, dated August 19, 2003 21 and filed in the United States District Court for the Northern District of California. A true 22 and correct copy of that document is hereto attached as Exhibit D. 23 Exhibits A through D are proper subjects for judicial notice because they have been duly 24 filed in the United States District Court of the Northern District of California, and they are part of 25 the court record in these proceedings and are also public records. See Lee v. City of Los Angeles, 26 250 F.3d 668, 688-690 (9th Cir. 2001). 27 28 DEFENDANT HANCOCK’S REQUEST FOR JUDICIAL NOTICE - C-01-2661-MC Case 3:01-cv-02661-MMC Document 306 Filed 04/24/2006 Page 3 of 3 1 For the foregoing reasons, defendant respectfully requests that the Court take judicial 2 notice of the documents attached as exhibits hereto. 3 4 Dated: April 21, 2006 DAVID M. FURBUSH DHAIVAT H. SHAH 5 ROBERTA L. HARTING O’MELVENY & MYERS LLP 6 7 By: ___________________________________/s/ Dhaivat H. Shah 8 Dhaivat H. Shah 9 Attorneys for Defendant ELLEN M. HANCOCK 10 11 12 MP1:979993.1 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 2 - DEFENDANT HANCOCK’S REQUEST FOR JUDICIAL NOTICE - C-01-2661-MC Exhibit A (Part 1 of 3) M E 1 MILBERG WEISS BERSHAD HYNES & LERACH LLP 2 REED R. KATHREIN (139304) JOHN K. GRANT (169813 ) 3 EX KANO S. SAMS II (192936) 100 Pine Street, Suite 260 0 4 San Francisco, CA 94111 Telephone: 415/288-4545 5 415/288-4534 (fax ) - and - WEISS & YOURMAN 6 WILLIAM S. LERACH (68581) JOSEPH H. WEIS S 401 B Street, Suite 170 0 551 Fifth Avenue, Suite 1600 7 San Diego, CA 92101 New York, NY 10176 Telephone: 619/231-1058 Telephone: 212/682-3025 8 619/231-7423 (fax ) 212/682-3010 (fax ) 9 Co-Lead Counsel for Plaintiffs 10 [Additional counsel appear on signature page .] 11 UNITED STATES DISTRICT COUR T 12 NORTHERN DISTRICT OF CALIFORNIA 1 3 14 PAUL RUTHFIELD, et al., On Behalf of Master File No. C-0 1 -266 1 -MM C Themselves and All Others Similarly Situated, 15. CLASS ACTION Plaintiffs, 16 FIRST AMENDED CONSOL IDATED vs. CLASS ACTION COMPLAINT FOR 17 VIOLATION OF THE FEDERAL ELLEN M. HANCOCK, R . MARSHALL SECURITIES LAWS 18 CASE, SAM S . MOHAMAD, DICK STOLTZ, HERBERT A . DOLLAHITE, ADAM W . 19 WEGNER, BEVERLY BROWN, WILLIAM YEACK, GOLDMAN, SACHS & CO ., 20 MERRILL LYNCH & CO ., MORGAN STANLEY DEAN WITTER AND J.P. 21 MORGAN, 22 Defendants . 23 In re : EXODUS COMMUNICATIONS, INC. 24 SECURITIES LITIGATION 25 This Document Relates To : 26 ALL ACTIONS . 27 DEMAND FOR JURY TRIAL 28 0 0 1 NATURE OF THE CASE 2 1 . This is a class action on behalf of all purchasers of the securities of Exodus 3 Communications, Inc . ("Exodus" or the "Company") between April 20, 2000 and September 25, 4 2001, inclusive (the "Class Period"), seeking remedies under the Securities Act of 1933 (the 5 "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act") . During the Class 6 Period, the defendants identified herein participated in an egregious accounting fraud designed to -7 deceive investors of Exodus, including, among other things, falsifying Exodus' financial results by 8 wrongfully booking revenues from orders that had been cancelled, invoicing customers for services 9 prior to installation, entering into barter transactions designed solely to boost revenue, and failing 10 to appropriately credit customers when required . Defendants also made highly positive statements 11 concerning Exodus during the Class Period, even though they were aware of serious problems then 12 impacting Exodus, including large amounts of bad debt from uncreditworthy customers and lack of 13 demand for their services . 14 2 . By engaging in this fraud, defendants were able to profit through personal sales o f 15 their Exodus stock, collectively selling over 1 .4 million shares of stock for proceeds of over $72.5 16 million . Defendants were also able to maintain a high credit rating and to obtain much needed 17 funding for Exodus, including successfully completing several offerings for proceeds to Exodus of 18 almost $2 billion . Also, by engaging in this fraud, defendants were able to continue to meet Wall 1 9 Street expectations, continue Exodus' acquisition strategy, delay Exodus' bankruptcy, and maintain 20 their positions, compensation and reputations . 21 3 . Exodus filed for bankruptcy on September 26,200 1 . On September 25, 2001, the da y 22 prior to its bankruptcy filing, the Wall Street Journal published an article stating that Exodus' 23 bankruptcy was forthcoming, causing Exodus' stock price to drop to $0 .17 on record volume of 193 24 million shares. Trading on Exodus shares was halted on September 26, 2001 . Upon resumption of 25 trading on October 5, 2001, Exodus stock dropped further to $0 .10 on high volume of 72 million 26 shares . During the Class Period, Exodus' stock traded for as high as $179 per share . 27 28 FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS- C-01-2661-MMC -1- 4 0 1 4. As a result of defendants' fraud, plaintiffs and other investors who acquired Exodus 2 securities during the Class Period acquired their securities at artificially inflated prices and were 3 damaged thereby. 4 JURISDICTION AND VENUE 5 5. This Court has jurisdiction over the subject matter of this action pursuant to 28 U .S .C . 6 §§ 1331 and 1337, §22(a) of the Securities Act, and §27 of the Exchange Act. 7 6. This action arises under §§11 and 15 of the Securities Act and .§ § 10(b) and 20(a) of 8 the Exchange Act and Rule 1Ob-5 promulgated thereunder (17 C .F.R. §240.1Ob-5). 9 7. Venue is proper in this district pursuant to §27 of the Exchange Act and 28 U .S.C. 10 §1391(b) because the acts charged herein, including the dissemination of materially false and 11 misleading information, occurred in this district. Exodus was located in Santa Clara, California. 12 8. In connection with the conduct complained of herein, defendants used 13 instrumentalities of interstate commerce, including the mail and interstate telephone 14 communications, and the facilities of a national securities exchange . 15 THE PARTIES 16 9 . Lead Plaintiffs Michael Klein, Teresi Trucking, Inc ., and William H.. Friedman 17 purchased Exodus securities during the Class Period and were damaged thereby . Plaintiff Thomas 18 Welsh purchased Exodus shares during the Class Period traceable to Exodus' February 6, 2001 19 Registration Statement and Prospectus for its secondary offering . Plaintiff Martin Fox purchased 20 notes during the Class Period issued in connection with Exodus' February 6, 2001 note offering . 21 10. Numerous additional plaintiffs purchased Exodus securities on the open market 22 during the, Class Period and were damaged thereby .