Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_02-cv-03383/USCOURTS-cand-3_02-cv-03383-1/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
Cause of Action: 15:77 Securities Fraud

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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 VAN WAGONER FUNDS, INC.

SECURITIES LITIGATION

 /

No. C 02-03383 JSW

CLASS ACTION

NOTICE OF TENTATIVE

RULING AND QUESTIONS

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD, PLEASE TAKE

NOTICE OF THE FOLLOWING TENTATIVE RULING AND QUESTIONS FOR THE

HEARING SCHEDULED ON MAY 6, 2005:

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. See 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.

Case 3:02-cv-03383-JSW Document 204 Filed 05/05/05 Page 1 of 2
United States District Court

For the Northern District of California

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The Court tentatively GRANTS Ernst & Young’s motion to dismiss without leave to

amend.

The parties will each have 15 minutes to address the following questions:

1. Plaintiffs concede that their Section 11 claim “arises from a factual predicate

similar to its earlier complaint.” (Opposition at 17.) This Court held that the

more heightened pleading standard of Federal Rule of Civil Procedure 9(b)

applies to Plaintiffs’ Section 11 claim. (July 27, 2004 Order at 4-5.) The Ninth

Circuit has recently held that Rule 9(b) may apply to claims under Section 11

sounding in fraud. See In re Daou Systems, Inc. Securities Litigation, 397 F.3d

704, 723-24 (9th Cir. 2005). On what basis do Plaintiffs maintain that their

Section 11 claim is not subject to the heightened pleading standard of Rule 9(b)?

2. How does Plaintiffs’ Second Amended Consolidated Complaint address this

Court’s previous finding that “[w]ith the financial statement disclosure that the

restricted securities were valued at ‘cost’ and the information regarding the

restricted securities’ issuers already public, there can be no misstatement”? (July

27, 2004 Order at 7.) 

3. How does Plaintiffs’ Second Amended Consolidated Complaint address this

Court’s previous finding that there was no decline in value of the investments as a

result of alleged misrepresentations by Ernst & Young (not by the Van Wagoner

Defendants) and therefore that loss causation was not adequately pled? (July 27,

2004 Order at 8.) How do Plaintiffs reconcile their contention of sustaining loss

with the recent Supreme Court decision in Dura Pharmaceuticals, Inc. v. Broudo, 125 S.Ct. 1627, 1633 (April 19, 2005)?

4. If the Court determines that Ernst & Young’s arguments regarding materiality are

not premature, how can the allegations in the Second Amended Consolidated

Complaint amount to a sufficient loss to qualify as material?

5. Are there any other issues the parties wish to address?

IT IS SO ORDERED.

Dated: May 5, 2005 /s/ Jeffrey S. White 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

Case 3:02-cv-03383-JSW Document 204 Filed 05/05/05 Page 2 of 2