Wednesday, June 14, 2006

A Little Fishy

It’s one thing to mess with Shrek, but involving poor little Nemo in securities class action litigation? I mean if standing up for the little guy causes you to drag a helpless widowed clownfish into the case, well, I’m not sure how you sleep at night.

Seriously though, that’s just what Judge Mariana R. Pfaelzer (C.D. Cal.) had to deal with in Dreamworks, when she looked at Plaintiffs’ channel-stuffing allegations, concluding that “Plaintiffs allege at different points in the Amended Complaint that Dreamworks initially shipped either 25 million or 30 million copies of the Shrek 2 DVD,” and “according to the Amended Complaint, the Finding Nemo DVD, released a year before Shrek 2, sold 31.35 million units in the first 90 days after its release.” So, “given that Shrek 2, according to Plaintiffs' own sources, had outperformed Finding Nemo at the box office, an initial shipment of 25-30 million units does not appear inconsistent with the trends and expectations set forth in the Prospectus.”

Result? 33 Act claims gone with prejudice. 34 Act claims gone without prejudice. 60 days to amend complaint granted.

You can read In re Dreamworks, issued April 12, 2006, at 2006 U.S. Dist. LEXIS 24456.

Nugget: “Even taking as true the allegation that Defendants were aware of the trend, the documents cited by Plaintiff in the Amended Complaint undermine the contention that Defendants knew or should have known that this trend would have a material impact on the sales of the Shrek 2 DVD.”

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