Monday, March 27, 2006

Try Try Again

Defendants can score a victory for themselves in the Invision Technologies securities class action, with Judge Martin J. Jenkins (N.D. Cal.) granting their motions to dismiss the 1934 Act claims. It seems the case centers around Invision's March 15, 2004 “press release announcing that it was being acquired by General Electric Company.” You see, it seems a few months after this announcement, “InVision issued another press release, this time saying that the DOJ and the SEC were investigating several transactions involving InVision employees located abroad, in which employees allegedly made payments to foreign officials in violation of the FCPA.”

In rejecting Plaintiffs’ complaint, Judge Jenkins said that “the language cited by Plaintiffs contains broad assertions about Defendants' duty to disclose that are vague in nature," "are not specifically directed to the March 15 Announcement," and "do not explain why that statement in particular was false or misleading.” He also commented that “obviously, Plaintiffs' factual allegations must be based upon what Defendants actually said, not upon Plaintiffs' desired interpretation of what Defendants said. Here Plaintiffs' factual allegations, even viewed in the light most favorable to Plaintiffs, do not in any way illuminate the truth or falsity of Defendants' actual Certification statements. Therefore, Plaintiffs have failed to meet their PLSRA burden in this respect.”

But all may not be lost. Judge Jenkins is going to allow Plaintiffs to submit another amended complaint, but warned that “vague assertions and allegations, scattered throughout Plaintiffs' Complaint will not serve to meet their PLSRA burden.”

You can read In re Invision, issued January 24, 2006, at 2006 U.S. Dist. LEXIS 12166.

Nugget: “In order for the Court to construe the allegations, as plead, as actually alleging the falsity of Defendants' Certification statements, the Court would have to interpret Defendants' statements well beyond their plain meaning. The Court declines to do so.”

Note: A quick check of the docket reveals that Plaintiffs have already filed an amended complaint, and that Judge Jenkins has set the oral argument on the next round of motions for June 6, 2006 at 9:30 A.M. So don't change that dial.

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