Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-01238/USCOURTS-cand-5_07-cv-01238-7/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
Cause of Action: 28:1331 Fed. Question: Anti-trust

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28 This disposition is not designated for publication and may not be cited. 1

Case No. C 07-01238 JF 

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC3)

**E-Filed 10/15/2007**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

JAMES M. KELLEY, MIKI W. LARSSON,

and DOUGLAS B. KELLEY

 Plaintiffs,

 v.

RAMBUS, INC., et al.,

 Defendants.

Case Number C 07-01238 JF 

ORDER GRANTING MOTION TO 1

DISMISS WITH LEAVE TO AMEND

[re: docket nos. 99, 102, 105, 108, 109,

113, 118]

Defendants Rambus, Inc. (“Rambus”), Pricewaterhouse Coopers (“PwC”), Wilson

Sonsini Goodrich & Rosati (“WSGR”), John Danforth, Robert Eulau, and Edward Larsen

(collectively “Defendants”) move to dismiss the Consolidated Complaint filed by Plaintiffs,

James M. Kelley, Miki W. Larsson, and Douglas B. Kelley (collectively, “Plaintiffs”). For the

reasons discussed below, the motion will be granted with leave to amend.

I. BACKGROUND

Plaintiffs James M. Kelley and Miki W. Larsson initiated this action on March 1, 2007,

alleging that they are Rambus shareholders who were damaged as a result of fraud on the part of

Defendants. After filing their initial complaint, James M. Kelley and Larsson proceeded to

Case 5:07-cv-01238-JF Document 155 Filed 10/15/07 Page 1 of 7
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Case No. C 07-01238 JF

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC3)

amend their complaint three times without seeking leave of this Court or Defendants’ consent. 

Plaintiff Douglas B. Kelley filed his complaint on May 8, 2007, and amended it as of right on

June 15, 2007. The Court consolidated the two actions on June 25, 2007 and set a filing date for

a consolidated complaint and a briefing schedule for any motion to dismiss. Plaintiffs filed their

Consolidated Complaint on July 24, 2007. Defendants subsequently moved to dismiss the

Consolidated Complaint pursuant to the Private Securities Litigation Reform Act of 1995 (the

“PSLRA”), and Fed. R. Civ. Pro. 8, 9(b) and 12(b)(6) on August 10, 2007. The Court heard oral

argument on September 7, 2007. 

II. LEGAL STANDARD

A complaint may be dismissed for failure to state a claim upon which relief can be

granted for one of two reasons: (1) lack of a cognizable legal theory or (2) insufficient facts

under a cognizable legal theory. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Robertson v.

Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir. 1984). For purposes of a motion to

dismiss, all allegations of material fact in the complaint are taken as true and construed in the

light most favorable to the nonmoving party. Clegg v. Cult Awareness Network, 18 F.3d 752,

754 (9th Cir. 1994). A complaint should not be dismissed “unless it appears beyond doubt the

plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” Clegg,

18 F.3d at 754. However, the Court “is not required to accept legal conclusions cast in the form

of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged.” Id.

at 754-55. Motions to dismiss generally are viewed with disfavor under this liberal standard and

are granted rarely. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997).

III. DISCUSSION

Defendant Rambus moves to dismiss Plaintiffs’ Consolidated Complaint pursuant to the

PSLRA and Fed. R. of Civ. Pro. 8, 9(b) and 12(b)(6). Defendants’ PwC, WSGR, John Danforth,

Robert Eulau, and Edward Larsen join in the motion. 

Federal Rule of Civil Procedure 8 (“Rule 8") requires that claims be set out in short and

plain terms. Plaintiffs’ Consolidated Complaint is 228 pages in length (295 pages with exhibits)

and contains 735 paragraphs. In addition, on August 3, 2007, Plaintiffs filed a request for

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Case No. C 07-01238 JF

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC3)

judicial notice of 842 pages of additional documents in support of their Consolidated Complaint

without explanation as to how these documents support the Consolidated Complaint. Defendants

argue that the Consolidated Complaint violates Rule 8 because it “is a morass of allegations

regarding, inter alia, an alleged ‘scheme of option backdating and spring-loading,’ a ‘submarine

patent scheme,’ various infringement suits and regulatory actions, a bond offering, and alleged

insider trading.” Rambus Motion To Dismiss Consolidated Complaint (“Rambus Motion”),

6:18-21. Defendants also assert that, “[l]oaded with multiple theories of conspiracies and

wrongdoing, the [Consolidated] Complaint requires Rambus Defendants (and the Court) to jump

back and forth to try to piece together the bases of Plaintiffs’ numerous claims.” Id., 6:21-23.

Finally, Defendants argue that, “[i]n their maze-like allegations spanning 13 years, plaintiffs

lump all defendants together without specifying which defendant knew what when, to the point

that some defendants are charged with statements made long before they joined or after they left

Rambus.” Id., 7:9-12. Plaintiffs claim that such length is required to meet the heightened

pleading standard of the PSLRA. Plaintiffs also argue that paragraphs 1 and 2 of the

Consolidated Complaint comply with the requirements of Rule 8. 

The judges of this court previously have dismissed securities class-action complaints for

violations of Rule 8. See In re LeapFrog Enters., Inc. Sec. Litig., No. C-03-05421, 2006 WL

2192116 (N.D. Cal., Aug. 1, 2006); In re Cornerston Propane Partners, L.P., 335 F. Supp. 2d

1069, 1081(N.D.Cal. 2005); In re Splah Tech. Holdings, Inc. Sec. Litig., 160 F. Supp. 2d 1059,

1075 (N.D. Cal. 2001); In re Autodesk, Inc. Sec. Litig., 132 F. Supp. 2d 833, 842 (N.D. Cal.,

2000); Cooperstone v. TCSI Corp., No. C 97-3495, 1999 WL 33295869 (N.D. Cal. Jan. 19,

1999). In In re Leapfrong Enters., Inc., Sec. Litig., 2006 WL 2192116 at *1, the court expressed

“concern that the manner which the 147-page consolidated amended complaint is arranged makes

it difficult, if not impossible, to evaluate the pleadings and determine whether the requirements

of the [PSLRA] are met.” This Court shares the same concern in the instant case. The

heightened pleading standard is not an invitation to adopt a “kitchen-sink” approach to a

pleading. Indeed, in another context requiring heightened pleading, the Ninth Circuit has noted

that “[a] heightened pleading standard is not an invitation to disregard’s Rule 8's requirement of

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 As Defendants note in their papers, because the Consolidated Complaint violates Rule 2

8, it is difficult if not impossible to discern what facts support Plaintiffs’ allegations and thus

which of Defendants’ arguments have merit. However, the Court advises Plaintiffs to consider

the arguments made by Defendants pursuant to Fed. R. Civ. Pro. 12(b)(6) in carefully drafting

any future amended complaint. 

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Case No. C 07-01238 JF

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC3)

simplicity, directness, and clarity.” McHenry v. Renne, 84 F.3d 1172, 1178 (9th Cir. 1996). 

Further, the Court agrees with the Defendants that the Consolidated Complaint does not

clearly define which allegations are asserted against whom. See In re Cornerstone Partners,

L.P., 335 F. Supp. 2d at 1081 (“[F]ormat provides no clear sense of time line of defendants’

alleged knowledge, nor particularized allegations as to the reasons for any given statement’s

alleged falsity.”). For example, paragraph 1 of the Consolidated Complaint states that

Defendants Rambus, PwC, and WSGR “colluded with one another in violation of their duties”

and then provides a laundry list of alleged fraudulent activity without any indication of which

party participated in the activity or how they colluded. Paragraph 2 of the Consolidated

Complaint states that Defendants Dunlevie, Davidow, Geschke, Tate, and Mooring participated

in an “ambush patent scheme.” The remainder of the Consolidated Complaint appears to discuss

these allegations, but it does not address how individual participants are tied into the allegations. 

Viewed as a whole, the Consolidated Complaint requires both Defendants and the Court

to guess as to which parties were involved in which allegedly fraudulent activity. In essence, the

Consolidated Complaint appears to be a statement that wrongdoing occurred, that all Defendants

somehow were involved, and that Plaintiffs therefore are entitled to damages. However, as the

Supreme Court recently held, “a plaintiff’s obligation to provide the grounds of his entitle[ment]

to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a

cause of action will not do . . . Factual allegations must be enough to raise a right to relief above

the speculative level.” Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1964-5 (2007). Because

the Consolidated Complaint falls well short of this standard, it violates Rule 8. 2

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Case No. C 07-01238 JF

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC3)

IV. ORDER

Good cause therefor appearing, IT IS HEREBY ORDERED that Defendants’ motion to

dismiss the Consolidated Complaint is GRANTED. Because this is the first motion to dismiss

decided by the Court and because Plaintiffs are acting pro se, the Court will grant Plaintiffs leave

to amend. Any amended complaint shall not exceed fifty (50) pages in length (exclusive of

exhibits). Plaintiffs’ request for judicial notice of 842 pages of additional documents filed by

Plaintiffs without explanation is DENIED. Any amended complaint shall be filed within thirty

(30) days of the date of this Order. 

DATED: October 15, 2007.

 

JEREMY FOGEL

United States District Judge

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Case No. C 07-01238 JF

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC3)

This Order has been served upon the following persons:

James M Kelley 

14390 Douglass Lane 

Saratoga, CA 95070 

Miki W. Larsson 

14390 Douglass Lane 

Saratoga, CA 95070 

Douglas B. Kelley 

1887 Saint Andrews Place

San Jose, CA 95132 

Ignacio Evaristo Salceda isalceda@wsgr.com 

Anthony I. Fenwick anthony.fenwick@dpw.com

David Siegel dsiegel@irell.com 

Donald P. Gagliardi dgagliardi@be-law.com 

Justin S. Chang jchang@shearman.com 

Steve Shea Kaufhold skaufhold@akingump.com 

Felix Shih-Young Lee flee@fenwick.com 

Darryl Paul Rains drains@mofo.com 

Jonathan R. Bass EfilingJRB@cpdb.com 

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Case No. C 07-01238 JF

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC3)

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