EDS Motion To Dismiss Denied

A court in the E.D. of Tex. has denied the motion to dismiss in the securities class action against Electronic Data Systems Corp. (“EDS”). The suit alleges that EDS misrepresented company earnings and facts related to its multibillion-dollar Navy/Marine Corps Intranet contract. According to an article in Computerworld, the court found that the plaintiffs had established a “strong inference that defendants were extremely reckless in continuing to recognize any revenue on the project when they were allegedly pursuing a tactic of intentionally providing goods that did not meet contract specifications.”

Quote of note: “Lawyers for the shareholders presented a significant number of documents that the court upheld as evidence supporting the allegations against EDS. Among the documents was a May 6, 2002, e-mail from the N/MCI transition manager at the Naval Air Systems Command that outlined various software problems, a failure to provide remote access for 61% of the users that were testing the new intranet, and a lack of secure Web access and help desk support.”

Addition: The opinion is now available on Westlaw – In re Electronic Data Systems Corp. Securities and “ERISA” Litigation, 2004 WL 52088 (E.D. Tex. Jan. 13, 2004).

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