Richard Gammel, Et Al. V. Hewlett-Packard Company, Et Al. 11

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Richard Gammel, Et Al. V. Hewlett-Packard Company, Et Al. 11 Case 8:11-cv-01404-AG-RNB Document 89 Filed 10/19/12 Page 1 of 128 Page ID #:1526 1 LAB ATON SUCHAROW LLP JONATHAN GARDNER 0 2 jardner(à)labaton. corn c r' ANGBLINA NGUYEN rn 3 anguyen(Tclabaton. corn 140 BroaLway - 4 New York, New York 10005 Telephone: (212) 907-0700 5 Facsirmle: (212) 8118-0477 I 6 MOTLEY RICE LLP MARK I. LABATON (159555) 7 rn1abatonrnotleyrice.com C) 1100 Glendon Avenue, 14th Floor 8 Los Angeles, California 90024 Telephone: (310) 500-3488 9 Facsimile: (310) 824-2870 10 Attorneys for Lead Plaintiff Institutional Investor Group and 11 Co-Lead Counsel for the Class 12 Additional counsel jisted on signature page] 13 14 UNITED STATES DISTRICT COURT 15 CENTRAL DISTRICT OF CALIFORNIA 16 SOUTHERN DIVISION 17 RICHARD GAMMEL, Individually No. SA CV 11-01404 AG (RNBx) 18 and on behalf of all others similarly situated, CLASS ACTION 19 Plaintiff, SECOND AMENDED CLASS 20 ACTION COMPLAINT vs. FOR VIOLATIONS OF THE 21 FEDERAL SECURITIES LAWS FWWLBTT-PACKARD COMPANY 22 LEO APOTHEKER and CATHERH'SfE Jury Trial Demanded A. LBS JAK, 23 Defendants. 24 25 26 27 28 Fii.si' AMENDED CLASS ACTION COMPLAINT No. SA CV 11..01404 AG (RNBx Case 8:11-cv 1404-AG-RNB Document 89 Filed 10/19/12 Page 2 of 128 Page ID #:1527 1 TABLE OF CONTENTS 2 3 I. NATURE AND SUMMARY OF THE ACTION.........................................2 4 IT. JURISDICTION AND VENUE.....................................................................6 5 11111. PARTIES........................................................................................................6 6 A. LeadPlaintiffs......................................................................................6 7 B. Defendants...........................................................................................8 8 1. Hp ..........................................................................8 9 Al Individual Defendants................................................................9 10 IIIV. FACTUAL BACKGROUND AND SUBSTANTIVE ALLEGATIONS..........................................................................................11 11 £ HP Business Overview ......................................................................11 12 I. I. HP Acquires Palm and Presents webOS as the Base for 13 Multiple Connected Devices...............................................................12 14 C. HP Introduces Its Strategy to Extend WebOS Across Multiple Devices as a Universal Software Platform for a Connected 15 Ecosystem..........................................................................................15 16 D. Defendants Had No Basis for Their Repeated Statements Regarding WebOS PCs or Printers .................................................... 22 17 1. UP's Development Cycle ........................................................23 18 2. Neither webOS PCs nor webOS Printers Progressed 19 Beyond "Concepting"............................................................25 20 The webOS Software Team Focused Exclusively on the TouchPad.................................................................................33 21 Defendants' False and Misleading Timeline for webOS 22 PCsand Printers ....................................................................... 39 23 E. Defendants Knowingly Release the TouchPad With Serious SoftwareProblems ............................................................................. 41 24 V. DEFENDANTS' MATERIALLY FALSE AND MISLEADING 25 CLASS PERIOD STATEMENTS AND ANALYST AND MARKET REACTIONSTHERETO............................................................................51 26 February 9, 2011 webOS Announcement .......................................... 51 27 F.' 1Q11 Earnings Conference Call ........................................................57 28 'c AMENDED CLASS ACTION COMPLAINT 1 SA CV 11-01404 AG (RNBx) Case 8:11 1404-AG-RNB Document 89 Filed 10/19/12 Page 3 of 128 Page ID #:1528 1 C. March 14, 2011 HP Summit..............................................................58 2 D. March 14, 2011 HP Summit Press Release .......................................67 3 E. 2Q11 Earnings Conference Call ........................................................70 4 F. June 1, 2011 All Things Digital D9 Conference................................73 5 G. June 2, 2011 Sanford C. Bernstein & Co. Strategic Decisions Conference.........................................................................................76 6 H. 2Q11 Form 10-Q Quarterly Report ...................................................79 7 I. July 6, 2011 All Things Digital Article..............................................80 8 J. July 11, 2011 Press Release...............................................................81 9 July 20, 2011 Bloomberg News Interview.........................................83 10 VI. INVESTORS SUFFERED DAMAGES WHEN HP'S STOCK PRICE 11 COLLAPSED AFTER THE MARKET LEARNED THE TRUTH BEHIND THE WEBOS "ECOSYSTEM .................................................... 86 12 VII. POST-CLASS PERIOD EVENTS ..............................................................94 13 VIII. ADDITIONAL ALLEGATIONS SUPPORTING THE INDIVIDUAL 14 DEFENDANTS' SCIENTER......................................................................96 15 A. HP Presents the webOS Ecosystem as Its Core Business During theClass Period .................................................................................. 96 16 B. The Individual Defendants Were "Hands On" with webOS 17 DeviceDevelopment ........................................................................ .100 18 C. Temporal Proximity and Apotheker' s Termination Support Scienter............................................................................................. lot 19 Ix. CLASS ACTION ALLEGATIONS ..........................................................102 20 X. PRESUMPTION OF RELIANCE.............................................................104 21 XI. INAPPLICABILITY OF STATUTORY SAFE HARBOR......................106 22 A. Many of Defendants' False and Misleading Statements Were 23 NotForward-Looking ...................................................................... 106 24 1. February 9, 2011 Event .........................................................106 25 2. February 22, 2011 Earnings Call...........................................107 26 3. March 14, 2011 1-IP Summit..................................................107 27 4. March 14, HP Summit Press Conference..............................108 28 5. May 17, 2011 Conference Call..............................................108 RST AMENI)ED CLASS ACTION 0 11 o. SA CV 11-01404 AG (RNBx) Case 8:11 1404-AG-RNB Document 89 Filed 10/19/12 Page 4 of 128 Page ID #:1529 1 6. June 1, 2011 All Things Digital Interview............................109 2 7. June 2, 2011 Sanford C. Bernstein Conference.....................109 3 8. June 8 2011 2Q11 Form 10-Q ............................................... 109 4 9. July 6, 2011 Interview for All Things Digital.......................109 5 10. July 11, 2011 HP Press Release ............................................109 6 11. July 20, 2011 Bloomberg News Interview............................110 7 I i Any Statements Touching on Future Plans or Intentions are Inextricably Intertwined with and Dependent on Present Fact........110 8 C. Several False and Misleading Statements are Not Identified as 9 "Forward-Looking"........................................................................116 10 D. Defendants' False and Misleading Statements Were Not Accompanied by Meaningful Cautionary Language.......................116 11 1. March 14, 2011 HP Summit.................................................. 117 12 2. May 17, 2011 Earnings Call..................................................117 13 XII. CLAIMS FOR RELIEF .............................................................................118 14 COUNT I Violations of Section 10(b) of the Securities Exchange Act of 15 1934 and SEC Rule 1 Ob-5 (Asserted Against All Defendants).................118 16 COUNT II Violations of Section 20(a) of the Securities Exchange Act of 1934 (Asserted Against the Individual Defendants) .................................. 119 17 XIII. PRAYER FOR RELIEF.............................................................................121 18 XIV. DEMAND FOR JURY TRIAL..................................................................121 19 20 21 22 23 24 25 26 27 28 T AMENDED CLASS ACTION C 111 SA CV 11-01404 AG (RNBx) Case 8:1 1404-AG-RNB Document 89 Filed 10/19/12 Page 5 of 128 Page ID #:1530 Court-appointed Lead Plaintiff Institutional Investor Group, composed of 2 Arkansas Teacher Retirement System, Union Asset Management Holding AG, 3 Labourers' Pension Fund of Central and Eastern Canada, and the LIUNA National 4 (Industrial) Pension Fund and LIUNA Staff & Affiliates Pension Fund 5 (collectively, "Lead Plaintiffs"), individually and on behalf of a class of similarly 6 situated persons and entities, for their Second Amended Class Action Complaint 7 for Violations of the Federal Securities Laws asserting claims against Hewlett- 8 Packard Company ("HP" or the "Company") and the Individual Defendants named 9 herein, allege the following upon personal knowledge as to themselves and their 10 own acts, and upon information and belief as to all other matters. 11 Lead Plaintiffs' information and belief as to allegations concerning matters 12 other than themselves and their own acts is based upon, among other things, (i) 13 review and analysis of press releases, news articles,
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