Category Archives: Motion To Dismiss Monitor

MCG Capital Corp. (Nasdaq: MCGC) has announced the dismissal, with prejudice, of the securities class action filed against the company in the E.D. of Va.

Even without the benefit of reading an opinion, the “with prejudice” part of the decision does not seem surprising. The suit was based on alleged misstatements made by MCG Capital regarding the academic background of the company’s chief executive. Last November, the company revealed that its CEO did not, in fact, have an undergraduate degree from Syracuse University. The announcement caused a stock price decline.

The Walt Disney Co. has obtained the dismissal of a securities class action against the company. The case, filed in the C.D. of Cal., alleged that Disney had failed until May 2002 to disclose in its SEC filings the potential damages at stake in a separate legal dispute with Stephen Slesinger Inc., which holds the U.S. merchandising rights for Winnie-the-Pooh.

Reuters reports that Judge Mariana Pfaelzer was critical of the plaintiffs’ arguments, noting that events in a case can suddenly change lawyers’ views of the outcome (leading to Disney’s decision to make its May 2002 disclosure) and that “everybody is on notice that this [the Slesinger suit] could be a big case.” Nevertheless, the plaintiffs were given 30 days to amend their complaint if they want to try again.

Foundry Networks (Nasdaq: FDRY) has obtained a dismissal, with prejudice, of the securities class action against the company in the N.D. of Cal. The case was originally filed in January 2001.

Securities Litigation Watch reports that it was the fifth amended complaint in the case and “the Court found that plaintiffs had, at most, alleged facts giving rise to a ‘reasonable inference’ (rather than the required ‘strong inference’) that defendants knew the challenged statements were false when made.” A copy of the order can be found here.

Infonet Services Corporation (NYSE: IN), a California communication services provider, has announced the dismissal, without prejudice, of the securities class action against the company. The plaintiffs have until October 2, 2003 to refile.

There is little doubt that Judge Pollack’s decision in the Merrill Lynch research class actions is destined to be widely cited by securities litigation defendants — it certainly has caused attorneys to give more consideration to loss causation as a defense. Exhibit A: Qwest Communications International, Inc.

The Rocky Mountain News reported over the weekend that Qwest has filed a motion to dismiss the securities class action against the company citing the Merrill Lynch decision and arguing that plaintiffs have not adequately alleged that the supposed misconduct, rather than a general market decline, caused their losses. Predictably (especially if you regularly read The 10b-5 Daily), plaintiffs have responded that the Merrill Lynch case isn’t relevant, in part, because none of the plaintiffs in that case bought their stock from Merrill Lynch. The Qwest suit is before the U.S. District Court for the District of Colorado.

Quote of note: “In its court brief, Qwest cited the Merrill Lynch decision this summer. The class-action claim was dismissed, Qwest said, because the plaintiffs didn’t adequately prove that the conduct of the analysts, rather than a general market decline, caused their losses. Qwest attorneys argue that Qwest’s stock price too ‘generally rose and fell’ in a pattern corresponding to the broader Nasdaq telecommunications index.”

The Milwaukee Business Journal reports that the securities class action against Alliant Energy, filed in the U.S. District Court for the Western District of Wisconsin, has been dismissed without prejudice. The case was based on Alliant’s alleged misrepresentations concerning its expected financial performance.

The recent unpublished order granting Intel Corp.’s motion to dismiss the securities class action against the company has been posted by The Securities Law Beacon. (The 10b-5 Daily has previously noted the decision.)

Reuters reports that Judge Pollack of the S.D.N.Y. has declined to reconsider his ruling, or allow the plaintiffs to file an amended complaint, in the Merrill Lynch research class actions he recently dismissed. (The 10b-5 Daily has posted extensively about the original decision.)

Quote of note: “Pollack said on Tuesday that the plaintiffs had done ‘nothing to change the unalterable, judicially-noticeable facts relating to the widespread public dissemination, years prior to the filing of the cases at bar, of information regarding analyst conflicts of interest and the service of investment banking business.'”

SuperGen, Inc. (NASDAQ: SUPG) has announced the voluntary dismissal of the securities class action against the pharmaceutical company. The suit, originally filed in April in the U.S. District Court for the Northern District of California, alleged that the company sold shares while failing to disclose material information about one of its drugs.