Irell & Manella LLP has an experienced group of approximately 30 attorneys who specialize in litigation of securities law and corporate law claims. Our group has the experience to represent any company or individual in connection with any type of claim in this field, whether asserted by a private litigant, the plaintiffs’ class action bar, a regulatory agency (such as the Securities and Exchange Commission or a state Department of Corporations), United States Attorney’s Office or other prosecuting agency, or any combination thereof. We have represented clients in cases spanning virtually every segment of the United States economy, including semiconductors, telecommunications, high-technology equipment, software, ecommerce, cable television, entertainment, health care, investment banking, financial services, aerospace, government contracting, insurance, home building, automobiles, restaurants, apparel, utilities, gaming and pharmaceuticals. Our practice encompasses private litigation, including class action
lawsuits, arising from federal and state securities laws; shareholder derivative and corporate governance litigation; mergers and acquisitions litigation; representation of companies and individuals in connection with inquiries, subpoenas, and investigations commenced by regulatory agencies or prosecuting authorities; internal corporate investigations and representation of special litigation committees; and advice and counseling in connection with directors and officers insurance issues.
Our depth of experience in this area of the law allows us to tailor our approach to each case to achieve our clients’ objectives in a cost-effective manner. We recognize that every case is different, and we pride ourselves on applying the careful factual and legal analysis that is required to determine the best course of action given the circumstances of a particular situation. The hallmark of our practice in the area, and a source of pride for the firm, has been our ability to deliver creative solutions to these often complex, high-stakes matters. At the same time, because of the depth of our securities litigation practice, we have databases of cases and briefs that allow us to draw on the experiences of the group and thereby enhance the efficiency of our services. And while our expertise allows us to staff matters with a comparatively lean team, in high-stakes, “bet the company” cases – which are common in this field – we have the resources and the know-how to prepare and implement a world-class defense on a nationwide basis.
Representative of recent and ongoing matters we have handled in this field are the following:
Kline Hawkes California SBOC, L.P., et al. v. Bill Gross, et al.. We achieved a complete victory at the pleading stage of all claims against our client, Idealab, in this $725 million precedent-setting action. In early 2000, before the collapse of the high technology sector of the US economy, Idealab, an “incubator” of high technology companies, raised $1 billion from private investors, including Dell USA, L.P., T. Rowe Price Science & Technology Fund, Travelers Insurance Group and the William Morris Agency. Following the market collapse, a group of these investors filed the lawsuit, whose essential claim is that changed circumstances in the high tech industry mean that Idealab should refund its remaining liquid assets to its investors. This case has been closely watched in the venture capital industry where the plaintiffs’ legal theory could have wide-ranging implications. Over the course of several demurrers, we obtained dismissals without leave to amend of all substantive claims against Idealab and our
individual clients, the company’s outside directors. Reporting on the trial court’s decision, the Los Angeles Times said that “a state judge . . . gutted a fraud lawsuit filed by investors who had hoped to dissolve Idealab Inc., a Pasadena firm set up to spawn Internet companies.” A stock repurchase and settlement followed.
In re Broadcom Corp. Securities Litigation. Broadcom is one of the world’s leading providers of integrated circuits that facilitate digital communication. In early 2001, the company was served with a number of securities class action lawsuits asserting that Broadcom had artificially inflated its stock price by issuing warrants to purchase common stock of the company to customers without fully disclosing the details to the market. In the summer of 2004, the plaintiffs provided a damages report claiming damages to the class in excess of $5.6 billion. In the following months Irell & Manella secured a series of pre-trial victories, including the following:
- Partial summary judgment that Broadcom’s financial projections were immunized from liability by the safe-harbor for forward-looking statements established by the Private Securities Litigation Reform Act of 1995;
- Partial summary judgment that Broadcom had no liability for the largest warrant transaction involved in the case;
- A pre-trial ruling that evidence of stock sales by the individual defendants would be excluded from the trial; and
- A first-impression pre-trial ruling – following a contested two-day evidentiary hearing – precluding the plaintiffs’ damages expert from presenting to the jury estimates of the amount of damages suffered by the class in the aggregate.
Following these and other pre-trial victories, the company reached an agreement to settle the case for $150 million, over $40 million of which was covered by insurance. As such, the company’s contribution to the settlement was less than 2% of the damages claimed by the plaintiffs.
Options Dating Investigations. We have represented numerous current and former public company officers and directors in connection with corporate investigations, shareholder lawsuits and government investigations by the Securities and Exchange Commission or the Department of Justice relating to stock option granting practices. In addition, we have represented a number of issuers and Board committees regarding stock option granting practices. As a result of our broad exposure to these matters, we have become recognized as one of the leading law firms with the expertise to address the myriad complex issues, including corporate governance, regulatory and tax, that arise in this area.
In re Metricom Securities Litigation. We represented Vulcan Ventures, Inc. (a venture fund owned by Paul Allen) and one of its representatives who served as a director of Metricom, Inc., a failed wireless telecommunication network operator, in consolidated shareholder class actions and its CEO. The plaintiffs alleged that Metricom issued overly optimistic statements about its prospects, and omitted negative details about certain of its contractual relationships. We successfully moved to dismiss with prejudice all claims against our clients in both cases. After briefing and oral argument, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal on all grounds.
We represented the former chief financial officer of a prominent data storage software developer in a formal investigation by the Securities and Exchange Commission, and in related shareholder class and derivative suits. Following a restatement of several of the company’s periodic financial statements, the SEC charged two senior sales executives with fraud for causing the company to record millions of dollars in revenue on orders that were contingent, as reflected in secret side letters. Our client entered into a consent decree and thereby avoided potential fraud charges, potential disbarment, and potential fines. The class action and the derivative case were settled without any payment by our client.
