Case5:11-Cv-00640-LHK Documental Filed06/30/11 Pagel of 33
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Case5:11-cv-00640-LHK Documental Filed06/30/11 Pagel of 33 1 FARUQI & FARUQI, LLP VAHN ALEXANDER (167373) 2 1901 Avenue of the Stars, Second Floor Los Angeles, CA 90067 3 Telephone: (310) 461-1426 Facsimile: (310) 461-1427 4 valexanderriblaruqilalAi.corn 5 Attorneys for Plaintiff 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 SAN JOSE DIVISION 9 JOEL KRIEGER, Individually and on Behalf Case Number 11-CV-00640-LHK (HRL) 10 of All Others Similarly Situated, CLASS ACTION 11 Plaintiff, FIRST AMENDED CLASS ACTION 12 vs. COMPLAINT FOR VIOLATIONS OF SECTIONS 14(a) AND 20(a) OF THE 13 SECURITIES EXCHANGE ACT OF ATHEROS COMMUNICATIONS, INC., 1934 14 DR. WILLY C. SHIH, DR. TERESA H. MENG, DR. CRAIG H. BARRATT, JURY TRIAL DEMANDED 15 ANDREW S. RAPPAPORT, DAN A. ARTUSI, CHARLES E. HARRIS, Judge: Hon. Lucy H. Koh 16 MARSHALL L. MOHR, CHRISTINE Ctrm.: #4 5th Floor KING, QUALCOMM INCORPORATED, Date Action Filed: February 10 2011 17 and T MERGER SUB, INC., 18 Defendants. 19 20 21 22 23 24 25 26 27 28 FIRST AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF SECTIONS 14(a) AND 20(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Case5:11-cv-00640-LHK Document50 Filed06130111 Page2 of 33 1 Plaintiff Joel Krieger ("Plaintiff'), by and through his attorneys, alleges the following as to 2 himself and on information and belief (including the investigation of counsel and review of publicly 3 available information) as to all other matters stated herein: 4 INTRODUCTION 5 1. This is a shareholder class action brought by Plaintiff on behalf of himself and 6 similarly situated shareholders of Atheros Communications, Inc. ("Atheros" or the "Company") 7 concerning the acquisition of the Company by Qualcomm Incorporated, and its wholly owned 8 subsidiary T Merger Sub, Inc., (collectively "Qualcomm"). 9 2. On January 5, 2011, Atheros and Qualcomm issued a press release announcing that 10 they had entered into a definitive merger agreement (the "Merger Agreement") pursuant to which 11 Qualcomm would acquire Atheros for $45.00 per share in an all-cash deal valued at approximately 12 $3.1 billion (the "Merger"). 13 3. On February 11, 2011, Atheros and the Individual Defendants (defined below) filed 14 a Schedule 14A Definitive Merger Proxy ("Definitive Proxy") with the United States Securities and 15 Exchange Commission ("SEC"). 16 4. On March 7, 2011, as a result of and to address this litigation as well as parallel 17 related proceedings in Delaware state court, Atheros and the Individual Defendants amended their 18 Definitive Proxy (the "Proxy Supplement"). The Proxy Supplement disclosed the following 19 material facts, among others, that had been omitted and/or mischaracterized in the Definitive Proxy: 20 (i) approximately 98% of the $24,000,000 fee owed by the Company to Qatalyst Partners 21 ("Qatalyst"), the Company's financial advisor on the Merger, was contingent upon the completion 22 of the Merger; and (ii) the Company's Chief Executive Officer ("CEO"), defendant Craig Barratt, 23 had learned at least as far back as October 29, 2010, that Qualcomm intended to employ him after 24 any merger between the companies. 25 5. On March 28, 2011, 74.6% of Atheros shareholders voted to approve the Merger 26 based on the statements in the Definitive Proxy and the Proxy Supplement. 27 1 28 FIRST AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF SECTIONS 14(a) AND 20(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Case5:11-cv-00640-LHK Document50 Filed06130111 Page3 of 33 1 6. Unbeknownst to Atheros' shareholders, the Definitive Proxy failed to disclose the 2 existence and nature of two key financial analyses that were performed by Qatalyst in support of its 3 fairness opinion and provided to and relied upon by the Company's board of directors (the "Board") 4 in connection with the Board's decision to to approve the Merger. The two analyses at issue were a 5 "Summary of Analyst Estimates & Valuation Methodologies" and a "Historical Termination Fee 6 Analysis." Each of these analyses is set forth in detail below and was omitted from the Definitive 7 Proxy. 8 7. As a result of the false and misleading Definitive Proxy and related filings thereto, 9 the Merger was consummated and Atheros' public stockholders were unlawfully divested of their 10 holdings in the Company. 11 JURISDICTION AND VENUE 12 8. This Court has jurisdiction over all claims asserted herein pursuant to 28 U.S.0 13 §1331 in that Plaintiff's claims arise in part under the Constitution and laws of the United States, 14 including the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §78aa1 and 28 U.S.C. 15 §1331. This Court also has supplemental jurisdiction pursuant to 28 U.S.C. §1367(a). 16 9. Venue is proper in this Court pursuant to 28 U.S.C. §1391 because Atheros 17 maintains its principal place of business in San Jose, California, and is therefore a resident of this 18 District. 19 PARTIES 20 10. Plaintiff was a holder of Atheros common stock at all relevant times prior to the 21 consummation of the Merger. Plaintiff is a citizen of New York. 22 11. Atheros was a corporation organized and existing under the laws of the State of 23 Delaware, with a principal executive office at 1700 Technology Drive, San Jose, California 95110. 24 As a result of the consummation of the Merger, Atheros is now a wholly owned subsidiary of 25 Qualcomm and operates as Qualcomm Atheros, Inc. (also "Atheros"). Atheros is a leading global 26 provider of innovative technologies for wireless and wired communications products that are used 27 by a range of customers, including manufacturers of personal computers ("PC's"), networking 2 28 FIRST AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF SECTIONS 14(a) AND 20(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Case5:11-cv-00640-LHK Document50 Filed06130111 Page4 of 33 1 equipment for digital home, small office/home office (SOHO), enterprise and carrier deployments, 2 and consumer electronics for home and mobile applications. The Company's product portfolio 3 includes solutions for wireless local area network ("WLAN"), Mobile WLAN, Ethernet, Bluetooth, 4 global positioning system ("UPS"), and powerline communications ("PLC"). Atheros had a long- 5 standing relationship with defendant Qualcomm that has resulted in numerous Joint Design wins 6 with leading Original Equipment Manufacturers ("OEMs"). Prior to the consummation of the 7 Merger, Atheros' stock was listed on the NASDAQ exchange under the symbol "ATHR." 8 12. Defendant Dr. Willy C. Shih ("Shih") served as a Director of the Company from 9 November 2006 and was Chairman of the Company's Board starting in October 2010. 10 13. Defendant Dr. Teresa H. Meng ("Meng") was co-founder of the Company and 11 served on the Board starting in May 1998. Meng served as a consultant to the Company from 12 October 2000 through December 2006. Meng was President and CEO of the Company from May 13 1998 to October 1999. 14 14. Defendant Dr. Craig H. Barratt ("Barratt") served as the Company's President and 15 CEO starting in March 2003. Barratt served as a Director of the Company starting in May 2003. 16 Barratt was Vice President of Technology of the Company from April 2002 until March 2003. 17 15. Defendant Andrew S. Rappaport ("Rappaport") served as a Director of the Company 18 starting in December 1998. 19 16. Defendant Dan A. Artusi ("Artusi") served as a Director of the Company starting in 20 July 2008. 21 17. Defendant Charles E. Harris ("Harris") served as a Director of the Company starting 22 in January 2010. Harris is the former CEO of Intellon Corporation, which was acquired by Atheros 23 in December 2009. 24 18. Defendant Marshall L. Mohr ("Molu-") served as a Director of the Company starting 25 in November 2003. 26 19. Defendant Christine King ("King") served as a Director of the Company starting in 27 April 2008. 3 28 FIRST AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF SECTIONS 14(a) AND 20(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Case5:11-cv-00640-LHK Document50 Filed06130111 Page5 of 33 1 20. Defendants Shih, Meng, Barratt, Rappaport, Artusi, Harris, Mohr, and King are 2 sometimes collectively referred to herein as the "Individual Defendants" or the "Board." 3 21. Defendant Qualcomm is a Delaware corporation headquartered at 5775 Morehouse 4 Drive, San Diego, California 92121. Qualcomm is a designer and manufacturer of semiconductors 5 for wireless phones and other equipment for advanced commercial wireless applications. The 6 company is the chief architect and proponent of the third-generation code division multiple access 7 ("CDMA") wireless standard. Qualcomm holds an extensive intellectual-property portfolio for 8 spread-spectrum technologies, including CDMA and WCDMA/UMTS. The company produces 9 semiconductors for mobile phones as well as integrated processors and basebands for mobile PCs. 10 In addition, Qualcomm produces wireless communications and tracking systems for commercial 11 applications. The company also promotes BREW technology, which permits carriers to 12 differentiate their services with proprietary software applications. Qualcomm's stock is traded on 13 the NASDAQ under the symbol "QCOM." 14 22. Defendant T Merger Sub, Inc. ("T Merger Sub") was a Delaware corporation and a 15 wholly owned subsidiary of Qualcomm. 16 23. Defendants Qualcomm and T Merger Sub are sometimes referred to herein 17 collectively, as "Qualcomm." 18 24. The Individual Defendants, Qualcomm and Atheros are sometimes referred to herein 19 collectively, as "Defendants." 20 CLASS ACTION ALLEGATIONS 21 25. Plaintiff brings this action individually and as a class action pursuant to Rule 23 of 22 the Federal Rules of Civil Procedure on behalf of all holders of Atheros stock who were harmed by 23 Defendants' actions described herein (the "Class").