Read 9720609f1complaint092598.pdf text version

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TOWER C. SNOW, J R . (State Bar No. 58342) PAUL R. BESSETTE (State Bar No. 139675) JAMES A. LICO (State Bar No. 169017) BROBECK, PHLEGER & HARRISON LLP One Market Spear Street Tower San Francisco, CA 94 105 Telephone: (4 15) 442-0900 . Attorneys for Defendants Hambrecht & Quist LLC, UBS Securities, Inc., and Volpe Welty & Co.

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

GARY WENGER, on Behalf of Himself and) All Similarly Others Situated, ) Plaintiff,

V.

Case No. C-97 20609 RMW

REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT [Fed. R. Civ. Proc. [email protected])(6), [email protected]); Private Securities Litigation Reform Act of 19951

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LUMISYS, INC., STEPHEN J. WEISS, CRAIG KLOSTERMAN, JOHN M. BURGESS, LINDEN J. LIVONI, EYSTEIN G. THORDARSON,DOUGLAS G. DeVrVO, .JESSE I. TREU, HELIOS PARTNERS LIMITED PARTNERSHIP, BALA S. MANIAN, HAMBRECHT & QUIST LLC, UBS SECURITIES, INC. and VOLPE WELTY & CO., Defendants.

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Date: September 25, 1998 Time: 1O:OO a.m. Place: Courtroom of the Honorable Ronald M. Whyte

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UNDERWRITER DEFENDANTS' APPENDIX OF AUTHORITY IN SUPPORT OF MOTION TO DISMISS THE FIRST AMENDED COMPLAINT -. No C-9720609 Rh4W

SFRLIBlKAYb10539S

115198

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Pursuant to Federal Rule of Evidence 201, defendants Hambrecht & Quist LLC, UBS Securities, Inc., and Volpe Welty & Co. hereby request that the Court take judicial notice of the following document in support of Defendants' Motion to Dismiss Plaintiff`s First Amended Complaint:

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The OrderGrantingDefendants'MotiontoDismiss

in Berger et. al. v. Ludwick for the Northern District of

et. al., Case No. C-97-0728-CAL, United States District Court

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California, and the Reporter's Transcript of Proceedings of the hearing on the defendants' motion to dismiss the complaint, dated February 6, 1998. A true and correct copy of these documents are attached hereto as Exhibit A.

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Dated: July

6, BROBECK, 1998

PHLEGER & HARRISON LLP

By: Attorneys for Defendants Hambrecht & Quist LLC, UBS Securities, Inc., and Volpe Welty & Co.

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UNDERWRITER DEFENDANTS' =QUEST

2.

FOR JUDICIAL NOTICE IN SUPORT OF MOTION TO DISMISS FIRST AMENDED COMPLAINT -No. C-9720609 RMW

SFRLIB1U102012.02

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6 7 8 9 10 11 12 13 PAUL BERGER, JOHN QUERCI, ROBERT MASON, RONALD AND JUDITH HUGHES, MIN RU, CHRISTOPHER HfhJN, CAL MELAND, BARRY WOLINSKY, JOHN DRAKE, BRADLEY PERNA, JASON MENDENHALL, THOMAS JOHNSTON, KENNETH GRIFFIN, MARC A. TOPAZ, LUIS S A N ANDRES, ALAN TRESKI, DAVID M. KAMMERER, MICHAEL A. INGENITO, KYNA S A H , CHINHI SONG, JONG E. LEE, FONG OU, SUSAN BLACK and ROBERT BORTNER, I , I On Behalf of Themselves and All Others Similarly Situated, Plaintiffs,

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NORTHERN DISTRICT

OF CALIFORNIA

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NO. C-97-0728-CAL CLASS ACTION

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ORDER GRANTING DEFENDANTS' MOTION TO DISMISS AMENDED COMPLAINT

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sFRllBIvxRu051836

vs .

ANDREW K LUDWICK, PAUL J. .

SEVERINO, WILLIAM J. RUEHLE, RONALD V. SCHMIDT, JEFFRY R. ALLEN, GARY J. BOWEN, DOMINIC ORR, R STEPHEN CHEHEYL, and BAY NETWORKS, MC., Defendants.

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On February 6, 1998,defendants' motion to dismiss the amended complaint came on for hearing before the Honorable Charles A. Legge. Kevin P. Muck and Jane Rowen of Brobeck, Phleger & Harrison LLP appeared on behalf of defendants Andrew K. Ludwick, Paul J. Severino, William J. Ruehle, Ronald V. Schmidt, Jeffry R. Allen, Gary J. Bowen, Dominic Om,

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R. Stephen Cheheyl and Bay Networks, Inc. (collectively, "Defendants"). Kevin M. Prongay of

Prongay & Bordemd and Joseph J. Tabacco of B m a n , DeValerio, Pease & Tabacco appeared

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on behalf of plaintiffs. After reading all the papers submitted in support of and in opposition to

the motion to dismiss, and for all the reasons set forth in the transcript of proceedings attached here as Exhibit "A" and incorporated here by reference, the Court dismissed the amended complaint with leave to amend. IT IS SO ORDERED. Dated: April 3 1998 The Honorable Charles A. E e g e United States District Court Judge

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L c-&

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Respectfully submitted by:

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BROBECK, PHLEGER & HARRISON LLP

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Approved as to form: B Y

orneys for Defendants

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BERMAN, DeVALERIO, PEASE & TABACCO

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spRIlB1vXRuOS1836

ORDER ON MOTION To DISMISS AMENDED C P , 0 M N .0 9 7 4 7 2 8 C A t M Ckac o

PAGE IN THE UNITED

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THROUGH

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STATES DISTRICT COURT DISTRICT OF CALIFORNIA

FOR THE NORTHERN

BEFORE THE HONORABLE CHARLES A. LEGGE, JUDGE

PAUL BERGER, ET

AL.,

PLAINTIFF,

vs .

ANDREW LUDWICK, ET

AL.,

DEFENDANTS. AND RELATED CASE REPORTER'S

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NO. C-97-0728 CAL FRIDAY, FEBRUARY 6, 1998 SAN FRANCISCO, CALIFORNIA

C-97-2347 CAL

TRANSCRIPT OF PROCEEDINGS

APPEARANCES :

FOR PLAINTIFF: KEVIN M. PRONGAY, ESQUIRE PRONGAY & BORDERUD 881 ALMA REAL DRIVE, STE. 211 PACIFIC PALISADES, CA 90272 JOSEPH J. TABACCO, J R , ESQUIRE BERMAN, DEVALERIO, PEASE & TABACCO 425 CALIFORNIA ST. STE. 2025 SAN FRANCISCO, CALIFORNIA 94104 FOR DEFENDANT : KEVIN P. MUCK, ESQUIRE JANE ROWEN, ESQUIRE BROBECK, PHLEGER & HARRISON SPEAR STREET TOWER ONE MARKET SAN FRANCISCO, CALIFORNIA 94105 DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC

(APPEARANCES CONTINUED) XEPORTED BY :

_.

DIANE E BKILLMAE3, OFFICIAL COURT REPORTER, USDC .

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FOR PLAINTIFF FLORIDA STATE BOARD OF ADMINISTRATION:

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REESE WEGLEY, ESQUIRE SIEGERMAN AND WEGLEY 100 BUSH STREET, STE. 2000 SAN FRANCISCO, CALIFORNIA 94104

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DIANE E EIKILLMAN, OFFICIAL COURT REPORTER, ,USDC .

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FRIDAY, 1 FEBRUARY

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6 , 1998

9:30 A.M.

THE CLERK: CALLING CIVIL 97-0728 PAUL BERGER ET AL. VERSUS ANDREW LUDWICK ET AL. AND CIVIL 97-2347 FLORIDA

BOARD OF

STATE

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ADMINISTRATION

VERSUS

BAY

NETWORKS

ET

AL.

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M . MUCK: GOOD MORNING, YOUR HONOR, KEVIN MUCK R AND

JANE ROWEN OF BROBECK CASES. PHLEGER & HARRISON ON BEHALF THE OF DEFENDANTS IN BOTH

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M . WEGLEY: GOOD MORNING, YOUR HONOR, REESE WEGLEY R

IN BEHALF OFTHE FLORIDA STATE BOARD OF ADMINISTRATION.

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M . PRONGAY: GOOD MORNING, YOUR HONOR, KEVIN R

?RONGAY FROM PRONGAYBORDERUD 61 APPEARING ON BEHALF OF BERGER 'LAINTIFFS.

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M . TABACCO: GOOD MORNING, YOUR HONOR, JOSEPH R

'ABACCO OF

BERMAN,

DEVALERIO,

PEASE & TABACCO ON BEHALF

OF

THE

IERGER

PLAINTIFFS.

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ALL RIGHT. THERE ARE TWO MATTERS THIS MORNING. ONE

S A

MOTIONTO CONSOLIDATE

THESE

TWO

CASES, I THINK AND

SO

VERYBODY IS'PRETTY MUCH IN AGREEMENT WHAT SHOULD DONE. BE

AM GOING TO GRANT

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THE CONSOLIDATION. GREAT OVERLAP, IF AND AND NOT A A

IT SEEMS TO ME THERE IS A

UBSTANTIAL

IDENTITYIN THE OPERATIVE A

FACTS,

CERTAINLY PERHAPS

DT OF THE WITNESSES,

LOT THE DOCUMENTS OF

--

DIANE E. SKILL=, OFFICIAL

COURT REPORTER,

USDC

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WELL, SHOULDN'T SAY PERHAPS,

INDEED LEAST AT

SOME

OF

THE

APPLICABLE LAW. BUT I THINK IT IS TOO EARLY AT THIS TIME TO DECIDE WHETHER THE CASES SHOULDBE TRIED WILL WE TOGETHER. BE FOR PURPOSES AT A OF

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SO THE CONSOLIDATION

JUST WILL

THE PRETRIAL LATER DATE TRIAL.

PROCEDURES. WHETHER THE TWO

AND

THEN TO DECIDE HAVE

CASES

WILL CONSOLIDATED FOR BE

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NOW THE BIGGER MOTION TO DISMISS. OPPOSING AND IM ' THE PAPERS,

MATTERS,

OF

COURSE,

'THE

DEFENSE

I HAVE BEEN THROUGH ALL OF MOVING AND THE

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AND BRIEF, THE THIS

AND

OF

COURSE COMPLAINT, THE WITHOUT THE ORAL ARGUMENT. DOES

GOING TO RULE HERE

MORNING THAT WITH

REASON

BEING THAT I M CONVINCED ' BUTIT WILL BE

COMPLAINT

HAVE TO BE DISMISSED,

LEAVE AMEND TO

ANDI

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WILL REITERATE IN JUST A

MOMENT WHAT I THINK THE DEFICIENCIES

ARE.

SO THAT BEING

THE

CASE, DON'T THINK I ON

THAT

THERE IS

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MUCH

NEED

FOR ORAL ARGUMENT

--

FOR

ANY

REALLY THE ISSUES OF ARGUMENTS THAT READDRESSED AND

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AT THIS TIME.

HAVE RULED BEEN

WHAT I FORESEE IS A

SIDES WILL

LOTOF THE HAVE BE TO

MADE BOTH ON

UPON THE SECOND AT

ROUND. OUT THE PLAINTIFFS TO ANDTHE WHEN THAT IS

SO W A I AM DOING IS POINTING HT

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W H m

I THINK THEIR COMPLAINT HAS TO BE AMENDED

WITH, AND THEN

STANDARD I THINK IT HAS TO COMPLY DONE TO THE BEST OF PLAINTIFF'S HAVE ANOTHER MOTION DISMISS TO

ABILITY, AND

THEN KNOW WE WILL I SUBSTANTIVE

THEN MORE THE

D I M E E BKILLMAN, OFFICIAL COURT REPORTER, USDC .

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ARGUMENTS THAT HAD BEEN THERE IS NOT MUCH

MADEBACK AND

FORTHI CAN SOME OF

ADDRESS, THE

BUT

POINT ADDRESSING IN

SUBSTANTIVE

ARGUMENTS AT THIS TIME. NOW THE STANDARD COURSE, THE STANDARD THAT HAVE TO APPLY I BECAUSE HEREIs, OF WE ARE DEALING

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RULE (B)(6) AND 12

WITH A FRAUD-TYPE ALLEGATION, THE STANDARD OF 11. WE RULE

ALSO HAVE TO APPLY THE 1995 PRIVATE

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SECURITIES

LITIGATION

REFORM ACT. THAT STANDARD REQUIRES, I THINK'CLEARLY, THAT THE COMPLAINTS HAVE TO, FIRST OF ALL, SPECIFY EACH STATEMENT ALLEGED TO HAVE BEEN MISLEADING, SECOND, IF AN THE REASON OR

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REASON

WHY THE STATEMENT IS MISLEADING, UPON INFORMATION STATE AND

AND

ALLEGATIONMADE IS THE COMPLAINT

BELIEF, IS THIS AS ALL

CASE,

HAS TO

WITH PARTICULARITY

THE

FACTS

UPON THE WHICH

BELIEF IS BASED. IN ADDITION, COURSE IS IN THIS WHERE SCIENTER AN ELEMENT, AS OF IS

CASEUNDER 10(B), THE COMPLAINT MUST, WITH OMISSION, STRONG STATE WITH THAT PARTICULARITY THE THE DEFENDANT

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RESPECT TO EACH ACT OR FACTS ACTED GIVING RISE TO A WITHTHE REQUIRED

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INFERENCE

STATE MIND. OF EASYTO QUOTE, IT IS MUCH A LOT CASES, OF MAKE, AT MORE AT

NOW ALL THAT IS VERY

DIFFICULT TO APPLY'. AND WE HAVE THE DISTRICT APPLICATION. COURT LEVEL,

LEAST

WHICH

ATTEMPT

TO MAKE THE

I MUST SAY THAT FOR FUTURE PLEADINGTHIS IN

WITH JUDGE SMITH'S CONCLUSIONS AND HER OF THE SILICON GRAPHICS DECISION.

CASE, I DO AGREE OPINION IN

THE FIRST

DIANE E SKILLMAN, OFFICIAL COURT REPORTER, USDC m

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NOW

DEALING

THEN

MORE

SPECIFICALLY

WITH THE ISSUES

WE HAVE HERE. FIRST ALL, WITH RESPECT SCIENTER. OF TO

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I DON'T BELIEVE

SUFFICIENT PLEADING OF

THAT

MOTIVE

AND

OPPORTUNITY ARE STATUTE, NOR DO

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SCIENTER

SINCENEW THE

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I THINK THAT JUST SAYING THE DEFENDANTS IS ENOUGH. KNEW

THINK THE PLEADING

THE STANDARD

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HAS MEET THE STANDARDS TO BY JUDGE SMITH IN THE

OF THE PSLRA AND GRAPHICS

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DEFINED

SILICON

CASE.

SO THE ALLEGATIONS

OF SCIENTER WILL V E TO BE AMENDED. m PROBLEMS THAT COMPANY THE

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ON

THE

SUBJECT FUTURE OF

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MAY HAVE REGARDING MANUFACTURING DELAYS AND CHANNEL CONFLICTS

AND

INTEGRATION

PROBLEMS, DO I BASED

NOT

THINK

THAT

THAT

ALLEGATION CASE

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IS ADEQUATE

EITHER

UPON CONVERGENT THE

TECHNOLOGY

AND THE VERIFONE

CASE. ALLEGATIONS SO-CALLED OF SPECIFICITY PLEADING OF SAY THAT AND

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WITH RESPECT TO THE

MISMANAGEMENT, THE REAL ISSUE IS THE

AS

TO HOW THE COMPANY WAS MISMANAGED. THE PLAINTIFFS

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MISMANAGEMENT LED TO IN-FIGHTING, CHANNEL CONFLICTS AND AN

AND

POWER

STRUGGLES

INABILITY TO INTEGRATE THE COMPANY'S

OPERATIONS. HOWEVER, THE PLAINTIFFS ACTUAL STATEMENTS MADE BY THE REALLY DON'T POINT TO ANY DEFENDANTS IN

THAT THAT REGARD

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COULD BE DEEMED TO BE MATERIAL AND MISLEADING.

SO, THOSE

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ALLEGATIONS WILL HAVE TO BE AMENDED.

AN

ARGUMENT IS

MADE

ABOUT

WHETHER THE

-- OR

ALLEGATION, I SHOULD

SAY,

ABOUT

WHETHER DEFENDANTS THE

DIANE E SKILLM&H, OFFICIAL COURT REPORTER, USDC .

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REPEATEDLY

REPRESENTED

AND

EVEN

TOUTED THE MERGER THAT

WAS A

SUCCESS. BUT, AGAIN, I THINK THAT PLEADING THOSE ALLEGATIONS FAIL BECAUSE OF THE LACK OF THE REQUIRED SPECIFICITY. WE HAVE SOME STATEMENTS THAT CAN BE CONCLUSARY. THERESOMETHING IS

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THAT COULD,

TRULY MUCH

SOME

THINGS THAT MIGHT FOR PRESENT

ON

FURTHER

PLEADING BE

TOO

FACTUAL, CONCLUSION

BUT

PURPOSES, I THINK IT IS OF THE HERE

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AND THINK ALSO TEEE, SOME I PUTS IN INTO VIEW THE OF

EVIDENCE REALLY ARE SORT

a

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THAT THE PLAINTIFF OF

PLEADING THE THE

COUNTERINDICATIVE

BAY'S REVENUES FACT OF FOURTH QUARTER THE OF

BEING U P THIRTY-FIVE PRIOR THOSE FISCAL

PERCENT

FOR

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YEAR AND THAT INCOME BY FIFTY-SIX PERCENT. SO UP WILL HAVE TO BE AMENDED. OF TECHNICAL HAS TOLD AND MADE AN ABOUT THE

PROVISIONS

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THE ALLEGATIONS OF DISCLOSURE DEVELOPMENTAL ADEQUATE SHIPPING PROBLEMS, THINK I REGARDING THE

HERE THE PLAINTIFF PUBLIC BEING

ALLEGATION

OFTHE PRODUCT, AND

THAT THE 28115 SWITCH, IS ENGINEERING DEFECTS

WITHOUT NECESSITATED VOLUMES

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DISCLOSING THE DESIGN

A RECALL

HAD

ANDIT WASN'T ACTUALLY SHIPPEDIN LATER.

COMMERCIAL

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UNTIL

SUBSTANTIALLY

I THINK

THATIS ADEQUATE, BUTI, AGAIN, TO SHOW

SUGGEST TO HAD

THE PLAINTIFF THAT YOU'VE GOT SOME ACTUAL KNOWLEDGE THE OF

THAT DEFENDANTS THE PROBLEMS,

TECHNICAL

THAT IS THAT MORE

PORTION

OF THE ALLEGATION I THINK

THAT HAS TO

BE PLEADED

SPECIFICALLY. THE ALLEGATIONS WITH RESPECT TO'THE IMPACT OR EFFECT

DIANE E . GKILLELAN, OFFICIAL COURT REPORTER, USDC

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OF

OTHER

COMPETITORS, THINK I THAT THOSE

UNDER KIND

SILICON OF

GRAPHICS

AND NOT

WORLDS OF WONDER ACTIONABLE.

STATEMENTS

ARE

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so THE PLAINTIFF CAN ATTEMPT TO AMEND IF IT

GETTING GRAPHICS AND

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WISHES TO DO SO, BUT YOU'RE GOING TO HAVE A HARD TIME AROUND WHATI THINK IS A RULE OF LAW IN SILICON

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IN WORLDS OF WONDER. NOW ARGUMENT. DEFENDANTS HAVE RAISED THE BESPEAKS CAUTION

I DON'T THINK THAT THE DEFENDANTS'IN THIS CASE,

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PRESENT SHOWINGIS ADEQUATE ON THAT. I THINK MOST OF THEIR CITATIONS TO CAUTIONARY LANGUAGES, CITATIONS, REALLY JUST A BOILERPLATE.

I THINK THAT THE STANDARD ON THIS SET OUT BY IS

SYNTEXT AND WARSHAW AGAINST ZOMA AND FECHT. I AM NOT MAKING ANY FINAL RULING THE ON THAT, I BUT JUST SAYING AM ARE GOING TO SERIOUSLY FOR THE NEXT

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ROUND, IF BESPEAKS

DEFENDANTS

CONTENDTHE

CAUTION

IT DOCTRINE, IS GOING TO HAVE TO BEEF UP ITS

PRESENTATION

QUITE BIT. A MADE THE BY THE

NOW THE MATTER OF THE CHALLENGE DEFENDANT THAT THE ALLEGATIONS DON'T LINK

I THINK

ALLEGED

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3MISSIONS TO THE MISSTATEMENTS. DONE AN ADEQUATE JOB WITH THAT.

THE PLAINTIFFS HAVE GOT TO PLEAD, NOW, ONES WERE AND I

THEY'VE

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PHINX THEY HAVE, AT LEAST THE 0NES.THATARE

VIABLE WHICH

%ISREPRESENTATIONS USLEADING AND WHAT

OR

OMISSIONS ALLEGING AND INFORMATION

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OMITTED OF

RENDERS IT MISLEADING.

THE QUESTION

WHETHER STATEMENTS THAT ARE THE

ATTACKED ARE ONES OF HISTORICAL FACT, OF COURSE, THE AND,

DIANE E SKILLMAN, OFFICIAL COURT REPORTER, USDC .

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DEFENDANT'S BASIC UNDERLYING PREMISE QUITE IS STATEMENT IS MERELY OR INCOMPLETE OR A HISTORICAL

TRUE,THAT IF

A

FACT, CAN'T BE IT

MISLEADING

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INACCURATE I SHOULDN'T SAY CAN'T BE

--

INCOMPLETE OR INACCURATE, THEY CAN BE. BUT STATEMENTS OF HISTORICAL CONVERGENT FACT THEIR ON TECHNOLOGIES FACE AREN'T ACTIONABLE, AND MC

WN A

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BUT

UNDER

AGAINST

WHEREHOUSE

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ENTERTAINMENT, THAT ISN'T THE WHOLE ANALYSIS. SOME STATEMENTS THROUGH A THEIR CONTEXT, THROUGH FACT THEIR COULD METHOD BECOME OF

PRESENTATION, MISLEADING.

STATEMENT HISTORICAL OF

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SO, AGAIN,

THISIS ONE

WHERETHE DEFENDANT HAS RULING IT ON

RAISED THE YET,

POINT

AND AM NOT I

MAKING ANY FINAL

BUTIT ISN'T JUST ENOUGH FOR THE

DEFENDANTS SAY TO

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HISTORICAL. THE DEFENDANTS' ARGUMENT REGARDING STATEMENTS BEING OPTIMISM REGARD THE OR IS PUFFING, THINK I JUST TOO CAN VAGUE THE TO DEFENDANTS' ARGUMENT THAT IN

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DEAL WITH THE EXTENT THAT NOW. TO ALLEGE THAT THE DEFENDANTS KNEW

PLAINTIFFS

ADEQUATELY

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NEGATIVE MAKING

MATERIAL OPTIMISTIC

INFORMATION STATEMENTS

AND DIDN'T DISCLOSE IT WHILE THAT WERE MISLEADING TOTAL IN THE

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CONTEXT, I THINK

THEY

CAN THAT. DO DEFENDANTS THAT ON THIS ONE, AGAIN LATER,

SO AGAIN, I M TELLING '

IF YOU'RE GOING TO PRESENT THE SAME ARGUMENT YOU'RE GOING TO HAVE TO'BEEF THAT ONE NOW DEFENDANT ALSO ARGUES

UP.

THE SAFE HARBOR

ABOUT

DIANE E SKILLMAN, OFFICIAL COURT REPORTER, USDC .

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PROVISIONS.

THOSE COMEFROM THE ACT SECTION 21E

SO

SMALL(C)(l)(A)(B), QUOTE THEM FOR

YOU KNOW WHAT THEY ARE, I DON'T

NEED TO RULING WITH

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HERE, I M NOT GOING TO MAKE 'BUT OFTHAT SAFE OF HARBOR

ANY

RESPECT TO THE APPLICATION

PRINCIPLE NOW. PLAINTIFF

I THINK IN THE PROCESS

SHOULD TAKE TO HEART THE ARGUMENTS AND OF STRENGTHEN COURSE THEIR

AMENDING, THE THE AS

THAT

HAS DEFENDANT MADE

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ALLEGATION AS MUCH TO, OF BEING

THEY

CAN, AND ACTUAL

a

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TOWARD OBJECTIVE THE

ABLEPLEAD TO

KNOWLEDGE. NOW, AN ATTACK IS MADE, ATTACK MADE, ANDI THINK A JUSTIFIED AND BELIEF NATURE THE OF

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THE INFORMATION ON

PLEADINGS. ALLEGATIONS

THE COMPLAINT SAYS AT THE BEGINNING ALL THAT MADE THIS IN AMENDED COMPLAINT E BASED AR ON

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INFORMATION AND BELIEF. BUT AND BELIEF UNDER THE ACT A COMPLAINT STATE WITH BASED INFORMATION ON ALL THE FACTS ON

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MUST

PARTICULARITY

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WHICH THAT BELIEF IS BASED. AND IT ISN'T SUFFICIENT TO SIMPLY SAY, WELL, WE DON'T KNOW YET UNTIL DISCOVERY. BECAUSE IS IT OBVIOUS THAT ONE OF THE PURPOSES OF THE ACT HURDLE GET OVER TO WAS TO GIVE THE INTO

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PLAINTIFFS A HIGHER THE

BEFORE

THEY GET

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EXPENSIVE AND TIME-CONSUMING UPON THE

BURDENS

IMPOSED

UPON THE

DEFENDANT, AND IMPOSED

COURT, INDEED, IMPOSED AND

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UPON THEMSELVES OF DISCOVERY.

SO,

I REALLY THINX

.THAT PLAINTIFFS' THE AND BELIEF TYPE OF PLEADING

JUSTIFICATION FOR THE INFORMATION

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DIANE E SKILLMAN, OFFICIAL COURT REPORTER, USDC .

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JUST SIMPLY DOES NOT SURVIVE THE PASSAGE OF THE ACT. THINK

I JUST

THAT THE LANGUAGE ITSELF IS SO CLEAR ON ITS FACE ARE GOING BE TO MADEON INFORMATION

THATIF

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THE ALLEGATIONS BELIEF, TO, THEY

AND

HAVE CONTAIN TO

THOSE

REFERENCES JUST REFERRED I ALL FACTS WHICH THE ON

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THAT IS, STATE WITH

PARTICULARITY

BELIEF IS FORMED. NOW, THE ALLEGED DEFENDANTS.

O LIABILITY F THE

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INDIVIDUAL

I THINK FOR PURPOSES OF ( B ) ( 6 ' ) , THAT THIS GROUP 12

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PLEADING IS ENOUGH. AND I THINK THE PLAINTIFFS' PRESENT ALLEGATIONS OF GROUP PLEADINGFOR 12(B)(6) AND THAT THE SORTING OUT WITH PURPOSES IS ENOUGH,

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RESPECT THIS IS SOMETHING TO FOR SUMMARY

THAT THE DEFENDANTS

JUDGMENT.

I FEEL

WILL

HAVE DO.BY MOTIONS TO

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THE SAME PERSON

WAY

WITH

RESPECT THE ALLEGATIONS TO OF SECTION 20(A) LIABILITY.

OF THE

CONTROLLING NECESSARY

FOR

PURPOSES

ALLEGATION TO BE THAT THE HAS TO CONTROL OR WERE

INDIVIDUAL INFLUENCE THE COMPANY CULPABLE PARTICIPANTS

DEFENDANT

HAD THE POWER

AND THAT THE INDIVIDUAL IN

DEFENDANTS

THECOMPANY'S ALLEGED ILLEGAL ACTIVITY. I THINK HERETHE ENOUGH THAT JUDGMENT MY TO FOR2 (B) ( 6 ) PURPOSES 1 IS GOINGBE TO AGAIN, WHEN

PLAINTIFF HAS ALLEGED

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THAT IS NOT TO SAY THAT

ENOUGH AND IF

WE GET TO THE SUMMARY

SO, THOSE ARE

CHALLENGES. AND OBSERVATIONS ON WHAT

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COMMENTS

THE

IS PLAINTIFF GOING

HAVE BEEF UP AND WHAT THE TO SOME

DEFENDANT IS GOING TO HAVE TO DO IF IT IS GOING TO RAISE

DIANE E SKILLMAN, OFFICIAL COURT REPORTER, USDC .

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OF THESE

SAME

ARGUMENTS

AGAIN

WE GET TO THE SECOND ROUND WHEN

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OF THE PLEADINGS.

SO, WHEN

--

HOW

LONG

DOES

THE

PLAINTIFFS

TO WANT

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AMEND?

M . TABACCO: FORTY-FIVE DAYS, YOUR HONOR. R

THE COURT:

OKAY.

THAT TAKES US TO MARCH 20.

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ALL RIGHT. MARCH 20 FOR THE AMENDMENT. NOW, YOU'VE ALREADY DONE MOST OF YOUR WORK. GOING TO TAKE YOU GET TO YOUR HOW LONGDO'YOU MOTION TO OPPOSE? IN THINK IS IT

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MR. MUCK:

I WOULD THINK THIRTY DAYS WOULD BE

SUFFICIENT, YOUR HONOR. THE COURT: OKAY. FILE DEFENDANTS, MOTION THE MAY. BY MAY

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20

--

IM '

SORRY, APRIL 20TH. AND WE'LL HAVE THE HEARING IN

M. GIVE US A DAY, R SANTOS, AROUNDTHE MIDDLEOF MAY.

THE CLERK: MAY 22ND?

M . TABACCO: JUDGE, R

CAN WE

HAVE THE SAME AMOUNT OF

TIME AS THEY HAVE THE BRIEFING? THEY HAVE A MONTH. ON WE WOULD LIKE A MONTH AS WELL. THEY MAY NOT TO REPLY, NEED WE WANT ONE. THE COURT:

ANY TIME, AM I .

BUT

WELL, YOU'RE RIGHT.

I AM NOT GIVING YOU

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ALL RIGHT. PLAINTIFF REPLY AND THAT SHOULD BY BE

MAY 20TH. AND THEN THE HEARING THE IN FIRST FRIDAY JUNE, IN

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M. R

SANTOS?

M . MUCK: R

YOUR HONOR, WE WOULD ALSO LIKE

SOME

TIME

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..

1

2

3

FOR

REPLY. THE COURT: COME ON. YOU'VE GONE THROUGH IT ONCE.

I HAVE

GONE YOU

THROUGH IT. YOU ARE GOING STATE YOUR POSITION. TO HAVE SAY, YOU CAN SAY WITHIN A WEEK. THERE TO IS WITH THAT.

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6'

WHATEVER NO

PROBLEM

M . MUCK: THAT'S FINE. R

THE COURT: YOU CAN FILE ONE, AM NOT PRECLUDING I YOU MONTH FROM DOING BUT IT, WE ARE NOT GOING TO MAKE EVERYTHINGA

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HERE. THE COURT: HEARING IN THE FIRST FRIDAY IN JUNE. THE CLERK: THAT WOULD BE JUNE5 AT 9:30. THE COURT: OKAY. NOW, NO DISCOVERY THE MEAN TIME. I MUST SAY, AND IN

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I DON'T WANT TO BE DROPPING

WHETHER TOUGH THE THEREIS GOING TO BE AND YOU HAVE MAY

ONE A A

SHOE SECOND HARD

HERE

BECAUSE I DON'T

KNOW

ONE NOT, THIS IS OR TIME, PARTICULARLY WITH

16

STUFF, SCIENTER

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19

20

ALLEGATIONS. KNOW WHETHER ARE GOING TO HAVE A WE

CASE

SO, I DON'T

HERE OR NOT. UNTIL WE

SO, I DON'T WANT YOU TO SPEND MONEY ON DISCOVERY

KNOW

THAT. GOING ON IN THE FLORIDA CASE? IS THERE

2'1.

22 23

NOW, WHAT'S

A MOTION IN THAT CASE?

M. R

THE SAME RATHER THAN

MUCK:

YOUR HONOR, WE HAVE MOVEDTO DISMISS ON

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25

....

GROUNDS

AND

THE

PLAINTIFFS HAD AMENDED AND HAVE WE BEEN

VOLUNTARILY DISCUSSING

OPPOSE MOTION, THE

DIANE E BRILLMAN, OFFICIAL COURT REPORTER, USDC .

J

14

1

2

3

4

WITH

MR.

WEGLEY,

DEFERRINGANY WORK IN THAT CASE

PENDINGYOUR

HONOR'S DISPOSITION ON THE MOTION TO DISMISS ACTION.

ONTHE BERGER

THE COURT: HOW ABOUT IN THE FLORIDA CASEIF THE PLAINTIFF FILES A FURTHER AMENDMENT BY THE DATE, SAME THAT IS

5

6

MARCH 20TH; IS THAT RIGHT?

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8

M . WEGLEY: R

I WOULD PREFER TO HAVE A LITTLE BIT

ADDITIONAL TIME, YOUR HONOR. THE MOTION TO 'DISMISS OUR CASE WASN'T PENDING TODAY.

I KNOW IT WASN'T. YOU'VE

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16

THE COURT:

HEARD WHAT BECAUSEMOTION THE YOU ON THE SAME

I

--

I DIDN'T

IN

EVEN

READ

YOUR

COMPLAINT

WASN'T

FRONT

OF ME.

I WOULD LIKE TO GET

SCHEDULE.

M . WEGLEY: OKAY. R

THE COURT:

SO AMEND BY MARCH2 0 .

NOW IF YOU CAN'T TO THE TABLE

DO IT, I REALIZE YOU'RE COMING A LITTLE LATE HERE. IF YOUCAN'T

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DO IT, I L EXTEND YOUR TIME OUT, BUT 'L I

WOULD LIKE TO GET

YOU ALL ON

THE SAME SCHEDULE.

M. R

YOUR

MUCK:

THE BRIEFING SCHEDULE WILL THE SAME, BE ACTIONS?

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25

HONOR,IN BOTH

THE COURT: YES.

M. R

HONOR'S VERY

TABACCO: WITH

JUDGE, AT THE

EXTREME RISK OF YOUR

DIRECTIVE

REGARD ORAL ARGUMENT, IT MIGHT BE TO STAGE HAVE TWO MINUTES OF YOUR TO

HELPFUL US AT THIS TO

TIME TO FOCUS ONTHE SILICON GRA'PHICS ISSUE. OBVIOUSLY YOU

~~

DIANE E SKSLLMAN, OFFICIAZ COURT REPORTER, USDC .

I

2

3

HAVE CONSIDEREDTHE CASES WE'VE ARE CASES ON BOTH

SUBMITTED. AS YOU KNOW THERE

SIDES OF THE ISSUE.

THE COURT:

I KNOW THAT.

SO WE HAVE

4 5

6

M . TABACCO: AND JUST R

ORDERS HERE, RECKLESSNESS IS NOT SUFFICIENT.

SOME MARCHING

WHAT UNDERSTAND THE COURT IS SAYING IS THAT I

7 8 9 10 11 12 13 14 15 16. 17 18 19 20 21 22 23 24 25

PUT

THE COURT: THAT'S RIGHT.

M . TABACCO: WE HAVE TO ALLEGE ACTUAL KNOWLEDGE. R

THE COURT: YOU CAN TAKE JUDGE SMITH'S OPINION AND

IT DOWN

ASIF I SAID IT HERE, THERE ARE

BECAUSEI AGREE CASES ON BOTH

WITHIT. SIDES,HAVE I AND

I REALIZE

AD CASES. THIS ISN'T THE ONLY CASEI HAVE GOT, SO USE SILICON GRAPHICSI AS YOUR STANDARD.

M . TABACCO: SHALL WE CONTINUE TO GIVE YOU UPDATES R

L TO OTHER COURT'S S

-CASE ON UP APPEAL?

THE COURT: OF COURSE, PARTICULARLY NINTH CIRCUIT. IS THAT

M . MUCK: YES, YOUR HONOR. R

THE COURT:

I THOUGHT IT WAS.

IT IS, YOUR HONOR.

M . MUCK: R

THE COURT: ALL RIGHT. THANK YOU.

M . MUCK: R

THANK YOU, YOUR HONOR.

M . PRONGAY: THANK YOU, YOUR HONOR. R

(PROCEEDINGS ADJOURNED.)

i

DIANE E SKILLMAN, OFFICIAL COURT REPORTER, USDC .

7

~. 1

1

1

2

CERTIFICATE

OF

REPORTER

3

I, DIANE E. SKIIJLMAN, OFFICIAL COURT REPORTER FOR

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5

6

THE UNITED

STATES

DISTRICT GATE

COURT,

NORTHERN

DISTRICT

OF

CALIFORNIA, 4 5 0 GOLDEN

94102, DO HEREBY

AVENUE, FRANCISCO,. CALIFORNIA SAN TRANSCRIPT, PAGES

CERTIFY

THAT THE FOREGOING

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NUMBERED 1 THROUGH 15, CONSTITUTES A TRUE, FULL AND CORRECT TRANSCRIPT REPORTER OF SHORTHAND MY NOTES TAKEN AS SUCH OFFICIAL AND COURT

OF THE PROCEEDINGS

HEREINBEFORE

ENTITLED,

REDUCED

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11

ro TYPEWRITING

TO THE BEST OF MY ABILITY.

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P

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OFFICIAL COURT REPORTER, USDC

18

19

20

.1 SKILLMAN, CSR P

6gkd:

#4909

.-

--

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DIANE E SKILLMAN, OFFICIAL COURT REPORTER, USDC .

1

PROOF OF SERVICE

2

3

4

I

I am employed in the City and County of San Francisco, State of California. I am over the age of 18 years and not a party to the within action. My business address is Brobeck, Phleger & Harrison LLP, Spear Street Tower, One Market, San Francisco, California 94 105.

On May 19, 1998, I served the attached

e

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NOTICE OF ENTRY OF ORDER on the parties in this action by placing a true copy thereof in sealed envelopes, addressed as follows:

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3

1( 1

13

I

SEE ATTACHED SERVICE LIST

I placed each such sealed envelope, with postage thereon fully prepaid for first-class mail, for collection and mailing at Brobeck, Phleger & Harrison LLP, San s Francisco, California, following ordinary business practices or a otherwise indicated. I am readily familiar with Brobeck, Phleger & Harrison LLP's practice for collecting and processing of correspondence, said practice being that in the ordinary course of business, correspondence (with postage thereon fully prepaid) is deposited in the United States Postal Service the same day as it is placed for collection, or via handdelivery as indicated. This service is in compliance with Rule 23-2(c). I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct, and that this declaration was executed on May 19, 1998, at San Francisco, California.

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SFRLIBlUXRWl89440.01

PROOF OF SERVICE CASE NO. C-97-2347CAL

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CONSOLIDATED SERVICE LIST Florida State Board of Administration v. Bay Networks, Inc., et al. NO. C-97-2347-CAL Berger, et al. v. Ludwick, et al. NO. C-97-0728-CAL I. WALTON BADER BENEDICT BADER BADER and BADER 65 Court Street White Plains, NY 10601 (914) 682-0072 HORACE SCHOW II General Counsel STATE BOARD OF ADMINISTRATION OF FLORIDA 1801 Hermitage Boulevard Tallahassee, FL 32308 (904) 488-4406 JON SIGERMAN SIGERMAN and WEGLEY 100 Bush Street, Suite 2000 San Francisco, CA 94104 (415) 989-07 15 JOSEPH J. TABACCO, JR. CHISTOPHER T. HEFFELFINGER JENNIFER S. ABRAMS BERMAN DeVALERIO PEASE & TABACCO 425 California Street, Suite 2025 San Francisco, CA 941 04 (4 15) 433-3200 KEVIN M. PRONGAY JON W. BORDERUD MICHAEL E. O'KEEFE, Of Counsel PRONGAY & BORDERUD 88 1 Alma Real Drive, Suite 21 1 Pacific Palisades, CA 90272 Tel. (310) 573-3600 Fax (310) 573-7288 ROBERT S. SCHACHTER JEFFREY C. ZWERLMG JOSEPH LIPOFSKY OREN GISKAN ZWERLING, SCHACHTER & ZWERLING LLP 767 Third Avenue New York, NY 10017 Tel. (212) 223-3900 Fax (212) 371-5969

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PROOF OF SERVICE cAse NO. c - 9 7 - 2 ~ 7 ~ ~ ~

SFRLIDlWXRU089440.01

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I

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JOSEPH COHEN

WEISS & YOURMAN 5515TH Avenue, Suite 1600 New York, NY 10176 Tel. (212) 682-3025 Fax (212) 682-3010

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KEVIN J. YOURMAN WEISS & YOURMAN 10940 Wilshire Boulevard, 24th Floor Los Angela, CA 90024 Tel. (310) 208-2800 Fa (310) 209-2348

Securities Class Action Clearinghouse STANFORD LAW SCHOOL Crown Quadrangle Stanford, CA 94305-8610 [email protected]

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PROOF OF SERVICE CASE NO. C-97-2347CAL

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