Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-01161/USCOURTS-cand-3_16-cv-01161-0/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

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

PETE J. MANGER,

Plaintiff,

v.

LEAPFROG ENTERPRISES, INC., et al.,

Defendants.

Case No. 16-cv-01161-WHO 

ORDER DENYING EXPEDITED 

DISCOVERY AND SETTING HEARING 

ON PRELIMINARY INJUNCTION

Re: Dkt. No. 6

Plaintiff Pete J. Manger, a shareholder of defendant LeapFrog Enterprises, Inc., is 

challenging the acquisition of LeapFrog by VTech Holdings Ltd. through a tender offer set to 

expire on April 1, 2016. His 34 page complaint, which was filed on March 9, 2016, states claims, 

inter alia, that fall under the Private Securities Litigation Reform Act of 1995 (PSLRA). Manger 

intends to file a motion for a preliminary injunction to stop the acquisition and wants expedited 

discovery, including three categories of documents and two depositions, prior to March 23, 2016, 

so that the parties can brief the preliminary injunction argument which Manger hopes will be 

heard on March 30, 2016.

Manger’s motion for expedited discovery is DENIED. The PSLRA provides that “all 

discovery and other proceedings shall be stayed during the pendency of any motion to dismiss, 

unless the court finds upon the motion of any party that particularized discovery is necessary to 

preserve evidence or to prevent undue prejudice to that party.” 15 U.S.C. 78u-4(b)(3)(B). Given 

the recent filing of the Complaint, defendants have not moved to dismiss yet, but (as in virtually 

all such cases) they assert that they will. In the Ninth Circuit, the PSLRA discovery stay provision

has been construed to apply until the Court has sustained the legal sufficiency of the complaint. 

See In re JDS Uniphase Corp. Sec. Litig., 238 F. Supp. 2d 1127, 1132-33 (N.D. Cal. 2002). 

Case 3:16-cv-01161-WHO Document 7 Filed 03/16/16 Page 1 of 2
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United States District Court

Northern District of California

There is no necessity shown to preserve evidence here and there is nothing exceptional on 

this record that would warrant expedited discovery. I agree with the reasoning in Desmarais v. 

First Niagra Financial Group, Inc., 2016 WL 768257 (D. Del., Feb. 26, 2016), a very similar 

PSLRA case in which the court denied expedited discovery. Manger may file a motion for a 

preliminary injunction and rely on the legal and factual matter in his complaint, as could the 

plaintiff shareholder in Desmarais. If that fails, he has sought other forms of relief, including 

rescissory damages, and he has not shown that such remedies would be inadequate. He has not 

identified any unique circumstances that would differentiate this case from any other matter where 

a shareholder wants to challenge an acquisition; if expedited discovery was granted here, it could 

be granted in any such PSLRA case. That runs counter to Congressional intent and the discovery 

stay provision in the PSLRA.

I will hear argument on March 30, 2016 at 11 a.m. The parties shall agree upon an 

expedited briefing schedule that is concluded with a filing by 9 a.m., Pacific Standard Time, on 

March 28, 2016. If the parties cannot agree on such a schedule, they should notify my Courtroom 

Deputy by March 17, 2016 and I will set it. 

IT IS SO ORDERED.

Dated: March 16, 2016

______________________________________

WILLIAM H. ORRICK

United States District Judge

Case 3:16-cv-01161-WHO Document 7 Filed 03/16/16 Page 2 of 2