Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-02406/USCOURTS-cand-3_05-cv-02406-13/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re DITECH COMMUNICATIONS CORP.

SECURITIES LITIGATION

 

This Document Relates To:

ALL ACTIONS.

 /

No. C 05-02406 JSW

NOTICE OF QUESTIONS

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD, PLEASE TAKE

NOTICE OF THE FOLLOWING QUESTIONS FOR THE HEARING SCHEDULED ON

SEPTEMBER 7, 2007:

The Court has reviewed the parties’ papers and, thus, does not wish to hear the parties

reargue matters addressed in those pleadings. If the parties intend to rely on authorities not

cited in their briefs, they are ORDERED to notify the Court and opposing counsel of these

authorities reasonably in advance of the hearing and to make copies available at the hearing. If

the parties submit such additional authorities, they are ORDERED to submit the citations to the

authorities only, without argument or additional briefing. C.f. N.D. Civil Local Rule 7-3(d). 

The parties will be given the opportunity at oral argument to explain their reliance on such

authority. 

The parties shall each have 25 minutes to address the following questions:

(1) In paragraphs 31, 32, 40, 41, 46, 55, 56, of their Third Amended Class Action Complaint

(“TCAC”), Plaintiffs quote paragraphs from documents but then bold certain portions of

these paragraphs. Exactly what statements do Plaintiffs contend were false or

misleading? 

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For the Northern District of California

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(2) According to Confidential Witness 1, Plaintiffs allege that information regarding the

letter of credit with the largest Asian customer was revealed during quarterly meetings.

(a) On what date did the quarterly meetings alleged in paragraph 48 of the TCAC

occur? 

(b) Specifically what information regarding the letter of credit was provided at each

of these meetings?

(c) Were Confidential Witness 1, Montgomery, and Tamblyn present at each of

these meetings?

(d) Did Confidential Witness 1 obtain information about the letter of credit from any

other source? If so, from what source and what information and when did

Confidential Witness 1 obtain such information? 

(3) What facts support Plaintiffs’ allegation in paragraph 47 of their TCAC that “no dates

had ever been ‘confirmed,’” contrary to Montgomery’s statement made on November 3,

2004?

(4) If the letter of credit had expired and had not yet been renewed when Montgomery said

“the new shipping schedule had been reconfirmed,” assuming Montgomery knew of

such information as of November 3, 2004, on what basis do Defendants contend that

such statement was not false or misleading?

(5) The Supreme Court recently clarified the standard for determining whether a complaint

sufficiently alleges facts that give rise to a strong inference of scienter. See Tellabs, Inc.

v. Makor Issues & Rights, Ltd., 127 S.Ct. 2499, 2510 (2007) (“To determine whether the

plaintiff has alleged facts that give rise to the requisite “strong inference” of scienter, a

court must consider plausible nonculpable explanations for the defendant's conduct, as

well as inferences favoring the plaintiff.”). If the Court determines that Montgomery’s

statement that “the new shipping schedule had been reconfirmed” was false when made

because the letter of credit had expired and had not yet been renewed as of November 3,

2004, what, if any, do Defendants contend are the plausible nonculpable explanations

for such statement?

(6) On what date did Confidential Witness 1 stop working for Ditech?

(7) On what dates did Confidential Witness 7 start and stop working for Ditech? 

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(8) On what dates did Confidential Witness 8 start and stop working for Ditech? Did

Confidential Witness 8 leave for vacation for over a month shortly after starting work? 

If so, on what dates was Confidential Witness 8 away from work and on vacation? 

(9) Based on what authority do Defendants contend that the following statements alleged in

the TCAC are forward looking?

(a) “Ditech ... today announced that it has secured orders to deploy its [VQA] with

two new customers in Asia.” (TAC, ¶ 31.)

(b) “Due to management changes within the largest of these firms, subsequent to our

booking the order, the delivery schedule changed.” (TAC, ¶ 41.)

(c) “The customer has now reconfirmed the new shipping schedule ... .” (TAC, ¶

41.)

(d) “The order however, remains valid ... . (TAC, ¶ 46.)

(10) Assuming arguendo, that Defendants did not make any statements that were false when

made, what authority, if any, supports Plaintiff’s position that Defendants had a duty to

update information provided in light of subsequent events?

(11) Do Plaintiffs have any more facts which they could plead to demonstrate their alleged

statements were false or misleading? If so, do Plaintiffs have good cause for not

alleging such facts earlier?

(12) Do the parties have anything further to add? 

Dated: September 6, 2007 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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