Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-02146/USCOURTS-cand-4_05-cv-02146-4/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 TIBCO SOFTWARE, INC.

SECURITIES LITIGATION

________________________________

This Document Relates To: All Actions

 /

Master File No. C 05-2146 SBA

CLASS ACTION

ORDER

[Docket Nos. 55, 56]

This matter comes before the Court on Defendants' Motion to Dismiss the Second Consolidated

Amended Complaint. Having read and considered the arguments presented by the parties in the papers

submitted to the Court, the Court finds this matter appropriate for resolution without a hearing. The

Court hereby GRANTS the Motion to Dismiss.

BACKGROUND

On March 16, 2006, Plaintiffs filed a Consolidated Amended Complaint, alleging violations

of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated

thereunder. Defendants filed a Motion to Dismiss, which was granted. A detailed discussion of the

facts and procedural history of this case can be found in the Order granting the Motion to Dismiss. 

See In re Tibco Software, Inc., 2006 WL 1469654 (N.D. Cal. May 25, 2006) (hereinafter "Order"). 

The Court gave Plaintiffs leave to amend, and a Second Consolidated Amended Complaint (SAC)

was filed on June 14, 2006. 

DISCUSSION

The legal standards and analysis set out in the Court's previous Order are incorporated by

reference into this Order. See, e.g., In re Read-Rite Corp. Securities Litigation, 115 F. Supp. 2d

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The section of the Complaint entitled "Additional Scienter Allegations" contains a number of

allegations, but nearly all of them were included in the first Complaint. Plaintiffs include new facts in

this section regarding TIBCO's stock repurchase program – or, more accurately, Plaintiffs offer a

scholarly article about stock repurchases. See SAC at ¶ 122. However, the Court does not consider this

an additional scienter allegation. Rather, it is an attempt by Plaintiffs to relitigate an issue previously

decided – namely, that TIBCO's stock repurchase program did not, by itself or in combination with other

facts, give rise to a strong inference of fraudulent intent. Aside from the discussion of the stock

repurchase program, there are only two allegations of scienter that were not included in the previous

Complaint.

Defendants request Judicial Notice of the aforementioned scholarly article, as well as various

other documents. With the exception of the article and an order in another case, In re Applied Signal

Technologies, Inc. Securities Litigation, No. 05-1027, all of the documents included in the Request were

judicially noticed in the Court's previous order. The authenticity of the new documents is not disputed.

Thus, Defendants' request for Judicial Notice is GRANTED.

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1181, 1183 (N.D. Cal. 2000) ("With respect to the current pleading, the analysis set forth in the prior

Order is largely still applicable and will not be repeated here in detail."). See also Old Person v.

Brown, 312 F.3d 1036, 1039 (9th Cir. 2002) (holding that under the "law of the case" doctrine, a

court is "precluded from reexamining an issue previously decided by the same court, or a higher

court, in the same case") (citations omitted). 

Plaintiffs have made three substantive changes to the Complaint. First, Plaintiffs have

provided additional information about their Confidential Witnesses, and have added six new

Confidential Witnesses. SAC at ¶ 27. Second, Plaintiffs have added a new section to the Complaint

entitled "reasons why Defendants' statements were materially false and misleading when made." 

SAC at ¶¶ 86-108. This section contains new allegations based on the statements of the new

Confidential Witnesses, but it also contains many allegations that were included in the first

Complaint. Third, Plaintiffs have added two new allegations of scienter. SAC at ¶¶ 111-112.1

The new information supplied by Plaintiffs is indicative of integration problems after

TIBCO's acquisition of Staffware. The accuracy of certain statements by Defendants regarding the

successful integration of the two companies is dubious. However, Plaintiffs still completely fail to

sufficiently plead scienter. 

Plaintiffs' first new scienter allegation is that, according to Confidential Witness (CW) 3,

Defendants Ranadivé and Mashruwala were responsible for the planning and execution of TIBCO's

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integration of Staffware. According to CW 11, Ranadivé "'ran the show,' and it was clear that he did

and was involved in everything at the Company." Mashruwala's involvement was confirmed by

Ranadivé in a conference call on June 17, 2004, in which he stated that Mashruwala was "basically

overseeing the integration." Plaintiffs allege that "Ranadivé and Mashruwala were admittedly

familiar with all aspects of the Staffware integration." SAC at ¶ 111. Plaintiffs presumably intend

the Court to infer that because Ranadivé and Mashruwala were closely involved in the

TIBCO/Staffware integration, they were aware that the integration was not going well, and

Ranadivé's statements to the contrary were knowingly or recklessly false when made.

However, that is not "the most plausible of competing inferences." Gompper v. VISX, Inc.,

298 F.3d 893, 897 (9th Cir. 2002) (quoting Helwig v. Vencor, Inc., 251 F.3d 540, 553 (6th Cir.

2001)). CW 3's statement is not specific enough to support a strong inference of scienter. Rather, it

is a general statement about the duties of high-ranking corporate executives. See In re Read-Rite

Corp. Securities Litigation, 115 F. Supp. 2d 1181, 1183 (N.D. Cal. 2000) (holding that allegations of

scienter are insufficient where they "rest on the assumption that persons with the job titles or duties

of the individual defendants would surely have known the facts in question"). Further, CW 3 does

not have an apparently reliable basis for making statements about Ranadivé and Mashruwala's

responsibilities – CW 3 was several levels down the reporting structure from Ranadivé, and worked

out of New York, not the company's Palo Alto headquarters. It is not clear how CW 3 would have

known how Ranadivé and Mashruwala were spending their time. See Order at *22 ("Plaintiffs do

not allege any facts showing whether CW3 was involved in TIBCO's forecasting or integration

processes or even had contact with the Individual Defendants"). Likewise, CW 11's statement that

Ranadivé "ran the show" and was involved with everything at the company is conclusory and

insufficient to plead scienter. It is simply too general, and fails to explain the basis for CW 11's

knowledge of what Ranadivé knew about the details of the TIBCO/Staffware integration. Further,

as Defendants point out, CW 11 left Staffware soon after the merger, several months before the start

of the class period. CW 11 is thus not in a position to offer reliable information about what

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Ranadivé knew during the relevant time period.

Further, the fact that Ranadivé stated in June 2004 that Mashruwala was overseeing the

integration of Staffware does not support Plaintiffs' bald assertion that "Ranadivé and Mashruwala

were admittedly familiar with all aspects of the Staffware integration." The fact that Mashruwala

was overseeing the integration does not mean he was aware of every problem that arose. Finally, as

discussed in the previous Order, Plaintiffs have not identified any false statements made or ratified

by Mashruwala (and they cannot take advantage of the group pleading doctrine). See Order at *27-

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Plaintiffs' second new allegation of scienter is similarly insufficient. Plaintiffs allege that

Defendants O'Meara and Carey also knew the details of the Staffware integration. According to CW

7 (who reported directly to Carey), Carey was responsible for and directed the financial integration

of the two companies, and O'Meara was strategically involved with the financial integration. CW 7

met with Carey and O'Meara in February 2005 and was informed that they had decided to change

their financial integration strategy. According to CW 7, it was ultimately Carey and O'Meara's

responsibility to implement the accounting treatments of Staffware sales contracts to comply with

GAAP. SAC at ¶ 112. 

Defendants argue that CW 7's statements are not reliable because CW 7 was not located at

TIBCO's headquarters and was not involved in TIBCO's decision-making process. There is some

force to these arguments. Further, CW 7's statement is not specific enough to raise a strong

inference of scienter. CW 7 states that Carey and O'Meara headed up the integration effort, but

he/she does not allege that they were aware of the specific integration problems identified by the

other CWs, including IT difficulties, "culture clash," loss of Staffware personnel, and the alleged

fact that the products did not work together. In fact, CW 7 does not offer any detail about what

Carey knew or did not know, or what information Carey passed along to other TIBCO executives. 

CW 7's statement that Carey and O'Meara had a meeting in February 2005 to discuss changing their

financial integration strategy does not weigh in favor of scienter. Instead, it suggests that Ranadivé's

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statements to the effect that he and other TIBCO executives were not aware of integration problems

until the end of the first quarter of 2005 were true: Carey and O'Meara apparently decided to change

their strategy in response to the emergence of those problems.

The allegations in Plaintiffs' new section entitled "reasons why Defendants' statements were

materially false and misleading when made" likewise fail to state "with particularity facts giving rise

to a strong inference" that Defendants "acted with deliberate or conscious recklessness." 15 U.S.C.

§ 78u-4(b)(2); Nursing Home Pension Fund, Local 144 v. Oracle Corp., 380 F.2d 1226, 1230 (9th

Cir. 2004). Meeting the high burden of pleading scienter is essential to satisfy the PSLRA and

survive the instant Motion to Dismiss. As such, the Motion will be granted.

This Court's previous order made it clear that further leave to amend would not be granted:

"the Court will grant Plaintiffs one final opportunity to amend their complaint if they can do so in

good faith. However, given the fact that this case has been pending for over a year, the information

necessary to amend the complaint should be readily available to Plaintiffs." Order at *29. Plaintiffs

apparently do not have the information necessary to form the basis of a valid Complaint for

securities fraud, and further amendment would be futile. See Desaigoudar v. Meyercord, 223 F.3d

1020, 1026 (9th Cir. 2000). The Complaint is dismissed with prejudice.

CONCLUSION

IT IS HEREBY ORDERED THAT Defendants' Motion to Dismiss is GRANTED

WITHOUT LEAVE TO AMEND. 

IT IS FURTHER ORDERED THAT the Case Management Conference scheduled for

October 3, 2006 at 1:00 p.m. is VACATED.

IT IS SO ORDERED.

 Dated: 9/29/06 SAUNDRA BROWN ARMSTRONG

United States District Judge

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