Case Information
*1 **E-Filed on 5/25/05** NOT FOR CITATION
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
IN RE REDBACK NETWORKS, INC. SECURITIES LITIGATION. Case Number C-03-5642-JF (HRL)
ORDER GRANTING MOTION FOR RECONSIDERATION _________________________________________
THIS DOCUMENT RELATES TO ALL ACTIONS.
On January 21, 2005, the Court issued an order dismissing Plaintiffs’ claims with leave to amend as to certain defendants and without leave to amend as to others (“January 21 Order”). Plaintiffs seek reconsideration of the dismissal without leave to amend as to one defendant, Randall Kruep (“Kruep”), on the ground that newly discovered evidence has revealed facts that could be added to the complaint and that would be sufficient to state a § 10(b) claim against Kruep. Plaintiffs emphasize that they are not requesting reconsideration of Kruep’s dismissal, but rather are requesting reconsideration of the Court’s denial of leave to amend.
The Court dismissed Plaintiffs’ claims against Kruep because there were no allegations that he made any of the allegedly false or misleading statements underpinning Plaintiffs’ fraud on the market theory. January 21 Order at 7-8. In doing so, the Court expressly adopted the reasoning of a factually similar case, In re Homestore.com, Inc. Sec. Litig. , 252 F.Supp.2d 1018 (C.D. Cal. 2003), and quoted the following language from that case: *2 Essentially what plaintiff alleges is a scheme to make a deceptive statement or material omission. Yet the principal “wrong” alleged under the rule is the statement, not the scheme. Therefore, it is appropriate to require defendants in this case to be connected in some material way to the drafting of the statements made to the investing public.
Id. at 1041.
Plaintiffs assert that new evidence indicates that Kruep was materially connected to the drafting of statements made to the investing public, i.e., that Kruep provided and certified false information for publication in Redback’s press releases, financial statements and SEC filings. Defendants assert that the new evidence does not demonstrate that Kruep personally made any of the allegedly false or misleading statements to the public, and that as a result any amendment would be futile. However, based upon the reasoning set forth in Homestore and adopted by this Court, Plaintiffs could make out a viable § 10(b) claim against Kruep if he was sufficiently involved in the drafting of statements released to the public, even if he did not make the statements personally.
Plaintiffs have provided an adequate explanation as to why the evidence in question could not have been discovered earlier in the exercise of due diligence. Accordingly, for good cause shown, the Court GRANTS Plaintiffs’ motion for reconsideration of the January 21 Order insofar as that Order dismisses Kruep without leave to amend. Plaintiffs shall file any amended pleading, setting forth all relevant allegations as to Kruep, within thirty days after service of this Order. The Court’s ruling on Plaintiffs’ motion for reconsideration is without prejudice to Kruep’s filing of a motion to dismiss on the basis of failure to state a claim or other appropriate ground.
IT IS SO ORDERED.
DATED: 5/25/05
/s/ (electronic signature authorized) __________________________________ JEREMY FOGEL United States District Judge *3 This Order has been served upon the following persons:
Eric J. Belfi ebelfi@murrayfrank.com
Luke O Brooks lukeb@mwbhl.com, e_file_sd@lerachlaw.com;e_file_sf@lerachlaw.com Merrill G. Emerick memerick@afelaw.com,
Frederick Sexton Fields ffields@cpdb.com
Marc L. Godino service@braunlawgroup.com
Michael M. Goldberg info@glancylaw.com
Stuart M. Grant sgrant@gelaw.com, cmarks@gelaw.com
Robert S. Green CAND.USCOURTS@CLASSCOUNSEL.COM Cameron Powers Hoffman choffman@wsgr.com,
Robert A. Jigarjian CAND.USCOURTS@CLASSCOUNSEL.COM Betsy C. Manifold manifold@whafh.com
Marlon Quintanilla Paz pazm@sec.gov, marlonpaz@vzavenue.net Rachele R. Rickert rickert@whafh.com
Darren J. Robbins e_file_sd@lerachlaw.com, e_file_sf@lerachlaw.com John P. Stigi , III jstigi@wsgr.com
Lauren E. Wagner lwagner@gelaw.com, sgrant@gelaw.com;jkairis@gelaw.com;cmarks@gelaw.com;kwierzel@gelaw.com;mswift@gela
w.com
LaShann M. DeArcy
Cravath Swaine & Moore LLP 825 Eighth Avenue
New York, NY 10019
Charles H. Dufresne *4 David Garden
Mark C. Gardy
John C. Kairis Grant & Eisenhofer P.A.
Chase Manhattan Centre
1201 North Market Street
Wilmington, DE 19801
Kimberly L. Wierzel
Grant & Eisenhofer P.A.
Chase Mangattan Centre
1201 North Market Street
Wilmington, DE 19801