Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-00771/USCOURTS-cand-5_07-cv-00771-2/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
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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1

 Former lead plaintiff Joseph Carco withdrew on March 28, 2008. C-06-06699-RMW Doc. 55.

2

 This is the second consolidated shareholder complaint. The Court dismissed the original

complaint and granted leave to amend on January 11, 2008. See In re MIPS Technologies, Inc.

Derivative Litigation, 542 F. Supp. 2d 968 (N.D. Cal. 2008). The amended complaint that is the

subject of this motion was filed February 20, 2008.

ORDER GRANTING NOMINAL DEFENDANT'S MOTION TO DISMISS—06-06699 RMW

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United States District Court

For the Northern District of California

E-FILED on 8/13/2008

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

In re MIPS TECHNOLOGIES, INC.

DERIVATIVE LITIGATION

______________________________________

This Document Relates To:

ALL ACTIONS.

No. C-06-06699 RMW

ORDER GRANTING NOMINAL

DEFENDANT'S MOTION TO DISMISS

[Re Docket No. 56]

Lead plaintiff Timmy Rollins1 ("Rollins") brings the present action as a derivative suit on

behalf of MIPS Technologies, Inc. ("MIPS") against certain current and former directors and

officers of MIPS. Nominal defendant MIPS moves to dismiss the amended consolidated shareholder

derivative complaint2

 ("ACC") for failure to make demand against the company or to plead with

particularity that demand should be excused. Rollins opposes the motion. The court has read the

moving and responding papers and considered the arguments of counsel presented at a hearing on

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 Additional facts not related to this motion can be found in the previous order. See In re MIPS, 542

F.Supp.2d at 970-973.

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July 18, 2008. For the reasons set forth below, the court GRANTS MIPS's motion to dismiss

without leave to amend. 

I. FACTS3

Rollins asserts violations of federal securities and state laws against certain current and

former directors and officers of MIPS arising from stock option backdating. ACC ¶¶ 1, 2. 

Specifically, Rollins alleges that officers and directors of MIPS manipulated the grant dates and

associated documentation of stock options used to compensate MIPS employees and directors. Id.

¶¶ 3, 5. Rollins alleges that the various illegal activities occurred between 1998 and 2006, which is

the "relevant period" for this lawsuit. Id. ¶ 2. Because Rollins must demonstrate that making a

demand on the board of directors would have been futile (a factually-intensive inquiry), the details

of MIPS's corporate structure, history, and transactions follow.

A. Structure of the Board of Directors

MIPS Technologies, Inc. is a Delaware corporation with its principal executive offices in

Mountain View, California. ACC ¶ 7. MIPS develops standardized processor architectures and

cores for use in a variety of electronic applications. Id. Its common stock is listed on the Nasdaq

under the stock symbol MIPS.

The MIPS board has two committees relevant to this motion. The Option Administration

Committee reviewed and approved stock option grants from 1998 until November 2000, when it was

merged with the Compensation Committee. Id. ¶ 67. The Compensation Committee now oversees

option grants, as well as its traditional role of reviewing officer performance and compensation. Id.

¶¶ 68, 69.

At the time this suit was filed, MIPS's board of directors consisted of defendants Anthony B.

Holbrook, John E. Bourgoin, Robert E. Herb, Fred M. Gibbons, Benjamin A. Horowitz, Kenneth L.

Coleman, and William M. Kelly. Id. ¶¶ 32, 181. Holbrook has been a MIPS director since July

1998 and has served as the board's chairman since August 2003. Id. ¶ 40. Bourgoin has been

President of MIPS since September 1996, a director since May 1999, and has served as MIPS's CEO

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4

 Public records, such as SEC filings, are properly the subject of judicial notice, and routinely

considered in deciding a motion to dismiss in a securities case. E.g., In re CNET Networks, Inc., 483 F. Supp. 2d 947, 953-54 (N.D. Cal. 2007); In re Copper Mountain Sec. Litig., 311 F. Supp. 2d

857, 865 (N.D. Cal. 2004); In re Calpine Sec. Litig., 288 F. Supp. 2d 1054, 1076 (N.D. Cal.2003).

ORDER GRANTING NOMINAL DEFENDANT'S MOTION TO DISMISS—06-06699 RMW

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since February 1998. Id. ¶ 41. Gibbons has been a director since 1998 and sat on the Option

Administration Committee from 1998 to 2000, the Audit Committee from 1999 to 2005, and on the

Compensation Committee from 1999 to the present. Id. ¶ 54. Coleman has been a director since

1998, serving on the Compensation Committee from 1999 until the present. Id. ¶ 56.

The committee membership details are summarized in the following table:

Compensation Committee Option Admin. Committee

FY99 Coleman, Gibbons, Holbrook Gibbons, Holbrook

FY00 Coleman, Gibbons, Holbrook Gibbons, Holbrook

FY01 Coleman, Gibbons, Holbrook merged into Compensation Committee

FY02 Coleman, Gibbons, Holbrook

FY03 Coleman, Gibbons, Horowitz

FY04 Coleman, Gibbons, Horowitz

FY05 Coleman, Gibbons, Horowitz, Herb

See id. ¶ 71. The composition of the Compensation Committee only changed in 2003 when

Horowitz replaced Holbrook and in 2005 when the committee expanded to include Herb. John

Bourgoin, MIPS's CEO, has never been a member of any of the relevant committees.

According to MIPS's certificate of incorporation, MIPS directors are not liable for any

breach of fiduciary duty, except for breaches of the duty of loyalty, actions involving intentional

misconduct or actions taken "not in good faith," and transactions from which they derive an

improper personal benefit. MIPS Techs., Inc., Current Report (Form 8-K), at Ex. 3.1, Art. IX (Nov.

12, 2003) (reproducing MIPS certificate of incorporation); see also 8 Del. C. § 102(b)(7).4

B. MIPS's Investigation Into Backdating, Restatement, and Remedial Action

Concerns about stock option backdating began with the now-famous Wall Street Journal

article of March 18, 2006 reporting academic research suggesting that various companies were

suspiciously lucky in selecting their option grant dates. During a July 26, 2006 earnings call,

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Bourgoin was asked about possible backdating at MIPS. ACC ¶ 105. Bourgoin denied any

backdating, stating "we have done an internal review all the way back to our inception as a public

company back in 1999 and we found no backdating, so you know our audit committee looks at that

stuff very carefully." Id. On August 30, 2006, MIPS announced that it formed a special committee

of independent directors to investigate its option granting practices. Id. ¶ 107. This investigation

delayed the filing of MIPS's Form 10-K for 2006 and jeopardized MIPS's listing on Nasdaq. Id. ¶¶

107-108. On October 25, 2006, MIPS announced that it had uncovered historic option grants with

incorrect dates. Id. ¶ 109. Accordingly, MIPS advised that its past financial statements and earnings

releases could not be relied upon and would need to be restated. Id.

MIPS released further details of its investigation in its delayed Form 10-K for 2006, filed on

July 2, 2007. See MIPS Techs., Inc., Annual Report (Form 10-K), at 26-33 (July 2, 2007). The

special committee examined options grants from July 1, 1998 through June 2006. Id. at 2. The

review encompassed 107 granting actions and 1,849 individual grants. Id. at 26. The special

committee first noted that the Compensation Committee had delegated its option granting authority

to the former Vice President of Human Resources. Id. at 27. Of the grants, the special committee

concluded "hindsight was likely used by the former Vice President of Human Resources ("Lane") in

selecting grant dates for options granted in the period October 1998 through October 2000 and this

person had a lack of knowledge of the accounting rules related to the granting of options." Id. The

special committee found no direct evidence of backdating, but concluded that "20 out of 28 grants

coincided with a weekly or monthly low in our stock price during this period" and that this

circumstantial evidence suggested backdating had occurred from 1998 to 2000. Id. Examining the

individual grants, the special committee concluded that no grants to board members under the MIPS

Directors' stock option plan had been backdated. Id. One option grant to the CEO (who is also a

board member) required adjustment. Id. To be clear, MIPS admitted in its 2006 Form 10-K that

backdating had occurred between October 1998 and October 2000 and formally restated its financial

records.

C. Additional Instances of Alleged Backdating

Rollins alleges that backdating at MIPS under the Long Term Compensation Plan continued

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after October 2000 and "into at least 2002." ACC ¶ 111. Rollins alleges three additional options

grants were backdated. First, Derek Meyer received an option grant on January 5, 2001 that was

granted at the second lowest point of the month. Id. ¶ 111(a). Second, Mervin S. Kato received an

option grant on April 3, 2001, the stock's lowest date of the month and also the lowest date of the

first half. Id. ¶ 111(b). Third, CEO John Bourgoin received an option grant on September 17, 2004,

the second lowest price of the month and lowest price for the remainder of the year. Id. ¶ 111(c). 

Rollins alleges these option grants were backdated because they occurred on "weekly or monthly

low[s]" in the stock price. Id. ¶ 112. The complaint does not allege how many other option grants

occurred in the same time period, so there is no context to determine if these grants reflect anything

more than random probability. Rollins merely alleges that the three grants occurred on low dates in

a month. Rollins has not alleged with specificity any backdating after 2000.

II. ANALYSIS

Rollins did not make a demand to the MIPS board before filing this suit. ACC ¶ 32. 

Nominal defendant MIPS moves to dismiss because Rollins has not adequately alleged that demand

would have been futile. Before reaching the issue of demand futility, the court addresses a

procedural issue. 

A. Rollins's Standing

Delaware law requires a shareholder bringing a derivative suit to have been a shareholder at

the time of the challenged transaction. 8 Del. C. § 327. The Federal Rules of Civil Procedure have

an identical requirement, eliminating any Erie difficulties. Fed. R. Civ. P. 23.1(b)(1). The strict

interpretation of the rule serves to prevent strike suits and to ensure that a derivative plaintiff truly

acts in the corporation's best interest in bringing a claim. Conrad v. Blank, 940 A.2d 28, 41-42 (Del.

Ch. Ct. 2007) (holding that plaintiff lacked standing to challenge stock option grants predating her

ownership of the corporation's stock). The Delaware Chancery Court has repeatedly applied this

rule in stock options backdating cases. See Ryan v. Gifford, 918 A.2d 341, 358-59 (Del. Ch. Ct.

2007) (dismissing claims that predated plaintiff's ownership); Desimone v. Barrows, 924 A.2d 908,

924-27 (Del. Ch. Ct. 2007) (dismissing all claims predating plaintiff's ownership).

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Rollins alleges that he became a MIPS shareholder on March 8, 2000. ACC ¶ 38. 

Nevertheless, Rollins purports to sue for violations throughout the alleged "Relevant Period,"

namely from 1998 to 2006. Id. ¶ 2. Like the prior plaintiff in this case, Rollins lacks standing to sue

for any violations prior to March 2000. However, regardless of whether he has standing to sue,

events occurring before his ownership are relevant to the demand futility analysis. See Melzer v.

CNET Networks, Inc., 934 A.2d 912, 918-20 (Del. Ch. Ct. 2007) (permitting shareholders to

examine books and records predating ownership to search for evidence to support their demand

futility allegation).

B. Demand Futility

Delaware law requires a derivative plaintiff to first make a demand on the board of directors

to address the shareholder's concerns. Ryan, 918 A.2d at 351-52. If the shareholder chooses not to

make a demand, the shareholder must plead with particularity why such a demand is excused. Fed.

R. Civ. P. 23.1(b)(3)(B); see, e.g., CNET Networks, 483 F. Supp. 2d 947.

1. Standards Governing Demand Futility

Delaware law has two standards for excusing demand. Compare Aronson v. Lewis, 473 A.2d

805, 812 (Del. 1984) with Rales v. Blasband, 634 A.2d 927, 933-34 (Del. 1993). "Where the

challenged transaction was not a decision of the board upon which plaintiff must seek demand," the

Rales test applies. E.g., Ryan, 918 A.2d at 353. The Rales test requires the plaintiff to allege

particular facts that "create a reasonable doubt that, as of the time the complaint is filed, the board of

directors could have properly exercised its independent and disinterested business judgment in

responding to a demand." Id. at 353 (quoting Rales, 634 A.2d at 933-34).

The board in place at the time Rollins filed suit did not take any of the actions that Rollins

challenges. Rollins's challenges are to options granted under the 1998 Long Term Compensation

Plan. Accordingly, the court applies the Rales standard to decide whether demand is excused. 

Accord Desimone, 924 A.2d at 927-28 (applying Rales where all parties agreed it applied); Conrad

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5

 Rollins's complaint continues to make arguments based on the "valid business judgment" standard

from Aronson. As previously held by this court, this test is inappropriate and is therefore not

addressed. See In re MIPS, 542 F.Supp.2d at 975-976.

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940 A.2d at 37 (applying Rales where the challenged transaction "was not made by the board, or

even half of its members").5

2. Whether the MIPS Board is Disinterested and Independent

 To successfully plead demand futility, Rollins must demonstrate that there is a reasonable

doubt that a majority of the board of directors are not disinterested and independent. Beam ex rel.

Martha Stewart Living Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1048-49 (Del. 2004). To be

clear, a director is presumed to be faithful to the corporation and able to objectively consider a

demand. Id. at 1048. The plaintiff must show, with particularity, why that presumption is overcome

with respect to a majority of the board. Id. at 1048-49. Accordingly, Rollins must demonstrate that

there is a reasonable doubt that at least four (of seven) MIPS directors were not disinterested and

independent. In determining whether Rollins has pled demand excuse, the court notes that an

inquiry into a board's ability to consider a demand is context-dependent and fact-specific. Id. at

1049-50; see also Desimone, 924 A.2d at 931 (suggesting a "cautious" and "non-generic" approach

to considering challenges to options practices).

Accordingly, to plead demand futility Rollins must specifically allege facts that create a

reasonable doubt that a majority of directors are disinterested and independent. A substantial risk of

personal liability can create a reasonable doubt about a director's disinterestedness. Wood v. Baum,

— A.2d —; 2008 WL 2600981, *2 (Del. 2008). However, when directors are exculpated from

liability for certain conduct, the plaintiff must plead particularized facts alleging a non-exculpated

claim against the directors. Id. at *3. If directors are exculpated except for claims based on

"'fraudulent,' 'illegal' or 'bad faith' conduct," then "a plaintiff must also plead particularized facts that

demonstrate that the directors acted with scienter, i.e., that they had 'actual or constructive

knowledge' that their conduct was legally improper." Id.

In Wood, the Delaware Supreme Court upheld the dismissal of a complaint by the Court of

Chancery for failure to excuse demand. Id. at *4. Municipal Mortgage and Equity is a LLC with a

ten-member board of directors. Id. at *1. The operating agreement exempts directors from any

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liability "except in the case of fraudulent or illegal conduct of such person." Id. The complaint

alleged "many violations of federal securities and tax laws but [did] not plead with particularity the

specific conduct in which each defendant 'knowingly' engaged." Id. at *3. When asked to identify

particularized facts that would establish actual or constructive knowledge, the plaintiff identified

facts falling into "four main categories: (a) the defendants executed MME's annual reports and other

publicly filed financial reports; (b) the defendants authorized certain transactions; (c) five of the

defendants served on MME's Audit Committee; and (d) other 'red flags'." Id. None of the alleged

facts were sufficient to demonstrate actual or constructive knowledge. Id. Specifically, neither the

execution of financial reports by directors nor membership on a committee is sufficient to establish

scienter. Id. at *3-*4. 

Paragraphs 181 to 207 comprise Rollins's allegations regarding demand futility. At the time

suit was filed, Rollins alleges the MIPS board comprised of John E. Bourgoin, Robert E. Herb, Fred

M. Gibbons, Benjamin A. Horowitz, Kenneth L. Coleman, and William M. Kelly. ACC ¶ 158. 

Rollins does not challenge the independence or disinterestedness of Robert E. Herb, Benjamin A.

Horowitz, or William M. Kelly.

a. Kenneth L. Coleman

Kenneth L. Coleman has been a MIPS director since 1998. ACC ¶ 185. During the relevant

period, he served on the Compensation Committee. Id. Rollins alleges that Coleman is not

disinterested because he misled shareholders as to either the backdating of stock options or his role

in reviewing compensation for Bourgoin and other MIPS executives. Rollins relies on a series of

proxy statements to raise a reasonable doubt as to whether Coleman is disinterested and

independent. Id. ¶¶ 85, 87-89, 93-95.

Rollins alleges that Coleman repeatedly misled shareholders by signing proxy statements

filed with the SEC. Each of the three Form14A proxy statements filed in September of 1999, 2000,

and 2001, stated that the Option Administration Committee determined the number of shares based

on multiple criteria, and that all options to date have been granted at not less than the fair market

value. Id. ¶¶ 87-89. Each statement was signed by Coleman, Holbrook, Gibbons, Bourgoin and

Kelly. Id. The 1999 and 2000 statements also clearly stated that the Option Administration

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Committee was responsible for approving option grants. Id. ¶¶ 93-95. Notably, the 2000 proxy

statement referred directly to the grant to Bourgoin which MIPS later confessed was backdated. Id.

¶ 95.

Rollins does not allege that Coleman granted or approved any options. Furthermore, Rollins

does not plead any facts demonstrating knowledge of backdating on the part of Coleman sufficient

to raise doubts that Coleman was knowingly or intentionally deceiving MIPS shareholders. A

director's execution of financial reports, without more, is insufficient to create an inference that he

had actual or constructive notice of any illegality. Wood, 2008 WL 2600981 at *3. The proxy

statements that Coleman (and the rest of the board) signed are insufficient to establish scienter, and

therefore cannot serve to create a "substantial threat" of personal liability that would cause one to

reasonably doubt Coleman's disinterestedness. 

Rollins also contends that, as a member of the Compensation Committee, Coleman was

specifically charged with reviewing the stock incentive compensation of the CEO and other officers. 

Therefore, if he was not misleading the shareholders as to backdating, he was misleading them as to

his execution of his duties. The Delaware Supreme Court, however, has set a high bar for director

oversight liability. Stone ex rel. AmSouth Bancorporation v. Ritter, 911 A.2d 362, 370 (Del. 2006). 

When directors are immunized by a section 102(b)(7) provision in the certificate of incorporation, a

showing of bad faith conduct is essential to establish director oversight liability. Id. Examples of

acting in bad faith include: 

where the fiduciary intentionally acts with a purpose other than that of advancing the

best interests of the corporation, where the fiduciary acts with the intent to violate

applicable positive law, or where the fiduciary intentionally fails to act in the face of

a known duty to act, demonstrating a conscious disregard for his duties.

Id. at 369. This standard for bad faith requires Rollins to allege that Coleman acted with a state of

mind consistent with a conscious decision to breach his duty of care. See Desimone, 924 A.2d at

935. The assertion that membership on a committee is a sufficient basis to infer scienter is contrary

to well-settled Delaware law. See Wood, 2008 WL 2600981 at *4.

Rollins also relies on the statements of confidential witnesses to plead facts sufficient to raise

doubts as to Coleman's disinterestedness. ACC ¶¶ 97-102. While the confidential witnesses appear

to have been in a position to have relevant information, their statements are hopelessly vague or

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general. "According to CW2, the members of the Options Administration and/or Compensation

Committee were 'very aware of what [Lane] was doing' with respect to stock option grants." ACC ¶

101 (emphasis added). "Lane, as well as other executive staff at MIPS participated in meetings, and

were "heavily involved" with, the Option Administration and/or Compensation Committee during

her tenure." Id (emphasis added). Which members of which committee were aware of what facts? 

What members of the executive staff participated to what extent in which meetings and when? What

did Lane do as part of her heavy involvement with one or more committees? The Supreme Court

has made clear that a complaint must rise "above the speculative level" and do more than "merely

create[] a suspicion" in the context of standard notice pleading. Bell Atl. Corp. v. Twombly, 127 S.

Ct. 1955, 1965 (2007) (quotations omitted). Where, as here, the pleading rules require even more,

i.e., particularized facts, these witness statements are too vague and general to be sufficient. 

Demand excuse requires particularized facts, not stray inferences.

 Rollins has not alleged any facts demonstrating that Coleman knew he was certifying false

proxy statements while on the Compensation Committee. Without facts establishing scienter,

Rollins cannot raise a reasonable doubt as to Coleman's disinterestedness. Consequently, he cannot

show that a majority of the directors are not disinterested or independent and so the complaint must

be dismissed. 

b. Fred M. Gibbons and Anthony B. Holbrook

Fred M. Gibbons and Anthony B. Holbrook have been MIPS directors since 1998. ACC ¶¶ 

183-84. Rollins alleges that Gibbons and Holbrook are not disinterested because they served on the

Option Administration Committee during the relevant period and as such "bore the ultimate

responsibility for ensuring that stock options were granted at fair market value on the date of the

grant." Id. Additionally, Rollins alleges that Gibbons and Holbrook "approved MIPS' falsified

financial statements." Id. In support of these allegations, Rollins points to the form 14A proxy

statements filed in 1999, 2000 and 2001. 

As with Coleman, issuing financial statements and mere membership on a committee are

insufficient to demonstrate actual or constructive knowledge on the parts of Gibbons or Holbrook. 

Rollins does allege, however, that Gibbons and Holbrook approved the backdated grants. MIPS's

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internal investigation states that options-granting authority was delegated to the Vice President of

Human Resources, but the proxy statements signed by Gibbons and Holbrook clearly state that the

Option Administration Committee "approved" grants under the 1998 Long-Term Incentive Plan. 

"Delaware law on this point is clear: board approval of a transaction, even one that later

proves to be improper, without more, is an insufficient basis to infer culpable knowledge or bad faith

on the part of individual directors." Wood, 2008 WL 2600981 at *3. In a hypothetical, ViceChancellor Strine presented a scenario in which directors could approve backdated grants without

knowledge of the wrongdoing:

[T]he compensation committee, although not acting with reasonable diligence,

approves the option grants without realizing that the grants violate the terms of the

stock option plan and without realizing that the corporation is accounting for them

improperly. In fact, they are advised by the corporation's general counsel, HR

director, and CFO that the grants were appropriate under the plan. The committee

knew who was getting them, the incentives for performance they were intended to

create, and the economic terms of the options, but it did not dig into the details, such

as the actual date of the grants or the stock's trading price on those dates, after

receiving reports from the key officers.

Desimone, 924 A.2d at 932. Vice-Chancellor Strine concluded that this would be insufficient to find

liability. Id. at 933.

The internal investigation by the special committee found that no directors had been involved

in the backdating, and the former Vice President of Human Resources had been responsible. See

MIPS Techs., Inc., Annual Report (Form 10-K), at 26-33 (July 2, 2007). The approval of option

grants, including the backdated grant to Bourgoin, is analogous to the situation described in

Desimone. Consequently, these facts are insufficient to establish scienter for Gibbons or Holbrook,

and therefore insufficient to disqualify them from considering a demand.

c. John E. Bourgoin

This court has previously held that Bourgoin should be disqualified from considering a

demand on the board regarding backdating because he may still stand to benefit from the backdating. 

In re MIPS, 542 F. Supp. 2d at 977. 

C. Leave to Amend

Rollins has not pleaded facts sufficient to show that a majority of the board in place when the

action was commenced are not disinterested or independent and so has not excused his demand

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failure. Rollins has failed to allege with particularity any facts from which it could be inferred that

particular directors knew or should have known of accounting improprieties and any facts

suggesting that the board knowingly allowed or participated in a violation of law. See Wood, 2008

WL 2600981 at *4. Specifically, "what the. . . board did, when they did it, what they discussed,

what conclusions they reached, and why the board did or did not do anything." Desimone, 924 A.2d

at 951; see also In re Atmel Corp., 2007 WL 2070299, *6 (N.D. Cal. 2007) (even when backdating

is "almost certain," the complaint must be dismissed unless it provides adequate detail regarding the

knowledge and roles of the defendants).

Rollins (like Carco before him) had access to tools unavailable to the traditional plaintiff as a

shareholder, specifically the ability to inspect corporate books and records. 8 Del. C. § 220. Despite

this access, Rollins failed to plead specific facts about the circumstances of backdating after multiple

complaints. Rollins also failed to provide detailed statements from his confidential witnesses. 

These witness statements shed no light on the actions of the MIPS directors. 

At the hearing the Court made clear that the complaint was largely unchanged except for the

witness allegations that "were really vague." Hr'g Tr. 2:15-3:3 (July 18, 2008). The court stated that

"[w]hether leave is granted really depends on whether the plaintiffs feel that they can add more

specifics to show the interest of the board members other than [Bourgoin]." Id. at 3:6-10. In

response, Rollins's counsel identified the proxy statements concerning the Option Administration

Committee, the fact that Coleman was the chairman of the Compensation Committee and the fact

that the company changed its option granting procedures in November 2000. Id. at 4:11-8:2. The

arguments concerning committee membership or proxy statements are unchanged from the

complaint and are of the type rejected by the Delaware Supreme Court in Wood. Rollins's counsel

did not acknowledge the confidential witnesses or suggest that they could provide more complete or

specific statements. He did not set forth any new facts that could be added.

"Dismissal without leave to amend is improper unless it is clear that the complaint could not

be saved by any amendment." Polich v. Burlington Northern, Inc., 942 F.2d 1467, 1472 (9th Cir.

1991). Where the plaintiff fails to set forth any additional facts that could save the complaint,

however, dismissal with prejudice is appropriate. In re Silicon Graphics, Inc., 183 F.3d 970, 991

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(9th Cir. 1999); accord In re VeriFone, 11 F.3d 865, 872 (9th Cir. 1993). In Silicon Graphics, the

court upheld the dismissal with prejudice of a derivative shareholder suit for failure to excuse

demand when the plaintiff failed to set forth any facts he could add to the complaint. In re Silicon

Graphics, Inc., 183 F.3d at 991. Similarly, Rollins has failed to set forth additional facts he could

plead in either his briefing or at argument. Consequently, dismissal without leave to amend is

appropriate. See also In re Hansen Natural Corp., 527 F. Supp. 2d 1142 (C.D. Cal. 2007)

(dismissing without leave to amend the first complaint where the plaintiff failed to offer any

additional facts that could be alleged in an amended complaint).

III. ORDER

For the foregoing reasons, the court GRANTS MIPS's motion to dismiss without leave to

amend.

DATED: 8/12/2008

RONALD M. WHYTE

United States District Judge

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Notice of this document has been electronically sent to:

Counsel for Plaintiffs:

Robert Bramson rbramson@bramsonplutzik.com

Bradley A. Dirks bdirks@sbtklaw.com

Travis E. Downs , III travisd@csgrr.com

Lawrence Timothy Fisher ltfisher@bramsonplutzik.com

John K. Grant johnkg@csgrr.com

Tara Puhua Kao tkao@sbtklaw.com

Alan R Plutzik aplutzik@bramsonplutzik.com

Kathryn Anne Schofield kschofield@bramsonplutzik.com

Michael C. Wagner mwagner@sbtklaw.com

Shawn A. Williams shawnw@csgrr.com

Eric L. Zagar ezagar@sbtklaw.com

Counsel for Defendants:

Kalama M. Lui-Kwan klui-kwan@fenwick.com

Gaurav Mathur gmathur@fenwick.com

Kevin Peter Muck kmuck@fenwick.com

Susan Samuels Muck smuck@fenwick.com

Felix Shih-Young Lee flee@fenwick.com

Jay L. Pomerantz jpomerantz@fenwick.com

Christopher James Steskal csteskal@fenwick.com

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 8/13/2008 TSF

Chambers of Judge Whyte

Case 5:07-cv-00771-RMW Document 10 Filed 08/13/08 Page 14 of 14