Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ARMOUR v. NETWORK ASSOCIATES

June 5, 2001

ILENE ARMOUR, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED PLAINTIFF,
V.
NETWORK ASSOCIATES, INC., WILLIAM L. LARSON AND PRABHAT K. GOYAL, DEFENDANTS.



The opinion of the court was delivered by: Jenkins, District Judge.

ORDER APPOINTING LOUISIANA TEACHERS' RETIREMENT SYSTEM OF LOUISIANA LEAD PLAINTIFF AND APPROVING ITS CHOICE OF COUNSEL

Before the Court are three competing motions regarding the appointment of lead plaintiff and approval of lead counsel in this securities fraud class action lawsuit brought against Network Associates, Inc. ("Network Associates") and two of its corporate officers. The members of the purported class that seek to be appointed lead plaintiff and to have the Court approve their choice of lead counsel are (1) the Louisiana Teachers' Retirement System of Louisiana ("Louisiana Teachers"), (2) the Iowa Bakers Local 433 Pension Fund and Twin Cities Bakery Drivers Local 289 Pension Fund (the "Bakers Pension Funds"), and (3) Raymond E. Morales ("Morales"). Having considered the papers submitted by the parties and the arguments of counsel at the May 8, 2001 hearing on this matter, and for the reasons set forth below, the Court hereby appoints Louisiana Teachers' as lead plaintiff in this action and approves Louisiana Teachers' choice of counsel.

I. Factual Background

This matter involves eleven related class actions that have been consolidated for resolution in this Court.*fn1 The purported class in each case consists of all persons, except the defendants, who purchased Network Associates securities during the period from July 19, 2000 to December 26, 2000 (the "Class Period"). The complaints in these actions generally allege that the defendants violated the federal securities laws by disseminating false and misleading statements concerning Network Associates' current operations and its future prospects. In particular, the plaintiffs claim that although distributors of Network Associates' products were not accepting new shipments and were returning tens of millions of dollars of Network Associates' products, the defendants continued to make positive but false statements about Network Associates' current business and future prospects throughout the second half of 2000. On December 26, 2000, Network Associates announced significant losses for the fourth quarter 2000, a change in the way it accounted for sales to distributors, the replacement of its Chairman and Chief Executive Officer, and the resignations of its Chief Financial Officer and President. The day after these disclosures, Network Associates' stock significantly declined, closing at $4.50 per share on December 27, 2000. The stock had traded as high as $27.00 per share during the Class Period.

II. The Proposed Lead Plaintiffs

A. Louisiana Teachers' Retirement System of Louisiana

Louisiana Teachers is a public pension fund with over $10 billion in assets under management. It claims losses of $1,043,205.16 from purchases of 184,500 shares of Network Associates common stock during the Class Period. These stock purchases occurred from December 6, 2000 through December 21, 2000. Through declarations signed by its General Counsel, William T. Reeves, Jr. ("Reeves"), Louisiana Teachers expresses its willingness and ability to serve as lead counsel in this action. See Exh. C to Decl. of Alan Schulman in Support of Louisiana Teachers' Motion to be Appointed Lead Plaintiff; Supp. Decl. of William T. Reeves attached as Exh. A to Decl. of Blair A. Nicholas in Support of Louisiana Teachers' Reply Memorandum. Reeves states that he has experience monitoring outside litigation matters for the Louisiana Teachers' pension fund and supervising outside litigation counsel. Further, he maintains that Louisiana Teachers possesses the sophistication, expertise, and resources to supervise this litigation and its counsel effectively. He also explains his familiarity with the provisions of the Private Securities Litigation Reform Act ("PSLRA") and Louisiana Teachers' intention to fulfill its fiduciary duties to provide adequate representation to all class members, as is required by the PSLRA. Louisiana Teachers has selected Bernstein Litowitz Berger & Grossman LLP ("Bernstein Litowitz") to serve as its counsel in this action. According to Reeves, Bernstein Litowitz was selected based on its preeminence in representing public pension funds in securities class action litigation, successful track record, expertise and resources to serve as lead counsel, and discussions with the firm regarding the details of this particular case. Preliminary discussions have resulted in Bernstein Litowitz agreeing to serve as lead counsel based on a percentage of recovery method at percentages which Reeves claims are significantly below those typically awarded in a case of this type.

B. Iowa Bakers Local 433 Pension Fund and Twin Cities Bakery Drivers Local 289 Pension Fund

The Bakers Pension Funds are "Taft-Hartley" employee benefit funds that are responsible for the retirement investments of members of the Bakers Local 433 and Drivers Local 289 unions. Each fund is separately controlled by a Board of Trustees comprised of management and union representatives. Together, the funds currently have approximately $100 million invested in securities on behalf of 1000 pensioners. The Bakers Pension Funds claim to have suffered over $90,000 in losses from purchases of 4000 shares of Network Associates securities during the Class Period. The Bakers Pension Funds move to be appointed the only lead plaintiff in this action. However, they alternatively contend that if the Court finds Louisiana Teachers to be equally qualified to serve as lead plaintiff, then Bakers Pension Funds and Louisiana Teachers should be appointed co-lead plaintiffs in this case.

C. Raymond E. Morales

Morales is an individual investor who purchased 20 shares of Network Associates securities during the Class Period. His losses are estimated to be $371.00. Morales claims to have negotiated a fee arrangement with two law firms — Farrow, Bramson, Baskin & Plutzik and Beattie and Osborn LLP — that he claims will save the class millions of dollars in legal fees by allowing the class to retain a greater percentage of any recovery in this case.

III. The Private Securities Litigation Reform Act

The legislative history of the PSLRA reveals that the above provisions were motivated by Congressional concerns about the prevalence of "lawyer-driven" securities class actions. See Statement of Managers — The "Private Securities Reform Act of 1995," H.R. Conf. Report No. 104-369, 104th Cong., 1st Sess. (1995), reprinted in 1995 U.S.C.C.A.N. 730. By creating the PSLRA's lead plaintiff presumption, Congress sought to encourage the involvement of institutional investors in securities class actions, and thereby "increase the likelihood that parties with significant holdings in issuers, whose interests are more strongly aligned with the class of shareholders, will participate in the litigation and exercise control over the selection and actions of plaintiffs counsel." Id.; see also In re Network Associates, Inc. Sec. Litig., 76 F. Supp.2d 1017, 1020 (N.D.Cal. 1999) ("Network Associates I"); Gluck v. CellStar Corp., 976 F. Supp. 542, 548 (N.D.Tex. 1997) ("through the PSLRA, Congress has unequivocally expressed its preference for securities fraud litigation to be directed by large institutional investors"). The underlying assumption of the PSLRA's lead plaintiff provisions is that the greater resources and litigation experience possessed by institutional investors makes them better equipped to serve as lead plaintiffs in securities class actions. See, e.g., H.R. Conf. Report No. 104-369, 104th Cong., 1st ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.