Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_01-cv-20418/USCOURTS-cand-5_01-cv-20418-2/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
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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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

Plumbers & Pipefitters Local 572 Pension

fund et al.,

Plaintiff(s),

 v.

Cisco Systems, Inc. et al.,

Defendant(s).

 /

NO. C 01-20418 JW 

ORDER GRANTING DEFENDANTS’

MOTION FOR ENTRY OF ORDER ON

STAGGERED EXPERT DISCLOSURES

I. INTRODUCTION

This is a securities fraud action pursuant to § 10(b) of the Exchange Act, 15 U.S.C. § 78j(b),

and SEC Rule 10b-5 promulgated thereunder. Specifically, Plaintiffs Plumbers & Pipefitters National

Pension Fund, Central States, Southeast and Southwest Area Pension Fund, Carpenters Pension Fund

of Illinois, and Alexander Nehring (collectively “Plaintiffs”) allege that Defendants Cisco and

Chambers violated § 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), and that all the Individual

Defendants violated §20A of the Exchange Act, 15 U.S.C. § 78t-1.

On July 2, 2003, the Court issued an Amended Scheduling Order setting forth pretrial

schedule, including a date for expert disclosures. The parties have jointly submitted a proposed

revised Scheduling Order setting forth their agreement on various modifications to the current case

schedule. (Def. Motion for Entry Order on Staggered Expert Disclosures at 3.) Presently before the

Court is Defendants’ Motion for Entry of Order on Staggered Expert Disclosures. For the reasons

stated below, the Court GRANTS Defendants’ Motion. 

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II. BACKGROUND

Plaintiffs allege that Cisco and its top officers and directors, and its accountants issued a

serious of false and misleading public statements regarding Cisco’s accounting, financial results,

business and prospects, all in violation the federal securities laws. Plaintiffs allege that the false and

misleading statements artificially inflated Cisco’s stock price throughout the Class Period to $82 per

share. Plaintiffs allege that while the stock price was inflated, the Individual Defendants dumped over

$609 million of their personal Cisco stock, which was 73% of their holdings. After the Individual

Defendants sold their stock, on February 6, 2001, Cisco announced its financial results for the fiscal

2001 second quarter, which allegedly caused Cisco’s stock to fall 17% on a volume of 279 million

shares.

Defendants Cisco and Price Waterhouse Coopers move this Court to require Plaintiffs to make

their Rule 26(a)(2)(B) expert disclosures prior to Defendants’ expert disclosures, on the basis that

Plaintiffs have the burden of proof on their claims. Plaintiffs contend that Rule 26(a)(2)(C))

contemplates a simultaneous exchange of expert disclosures as to put all parties on equal footing. In

addition, Plaintiffs argue that although Plaintiffs have the burden of proof as to their claims,

Defendants have the burden of proof as to their affirmative defenses.

III. DISCUSSION

Rule 26(a)(2(c) of the Federal Rule of Civil Procedure dictates the timing of the disclosures: 

These disclosures shall be made at the times and in the sequence directed by the court. In the

absence of other directions from the court or stipulation by the parties, the disclosures shall be

made at least 90 days before the trial date or the date the case is to be ready for trial, or, if the

evidence is intended solely to contradict or rebut evidence on the same subject matter

identified by another party under paragraph (2)(B), within 30 days after the disclosure made

by the other party. The parties shall supplement these disclosures when required under

subdivision (e)(1).

Fed. R. Civ. P 26(a)(2)(C).

Accordingly, Rule 26(a)(2)(C) provides an alternative procedure for the disclosure of experts in the

event a court does not give any guidance on the subject. In this case, the Court issued an Amended

Scheduling Order on July 2, 2003 pursuant to the parties’ jointly filed case management statement. The

Scheduling Order directed the parties to disclose their experts and the anticipated testimony on or

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before July 29, 2005. Pursuant to the agreement between the parties, the July 29 is now moot. 

Because this Court assumed responsibility for setting disclosure dates, Rule 26(a)(2)(C)’s alternative

procedure is not implicated. However, Rule 16(b)(4) of the Federal Rule of Civil Procedure gives

this Court the authority to issue “modifications of the times for disclosures under Rules 26(a) and

26(e)(1) and of the extent of discovery to be permitted.” Fed. R. Civ. P. 16(b)(4). Thus, to the extend

that the Court assumed responsibility for setting disclosure dates in this case, the Court may also

modify its own pretrial schedule upon a showing of good cause. See Fed. R. Civ. P. 16(b)(6).

Plaintiffs contends that the Court’s Scheduling Order required that the parties “simultaneously

exchange their initial reports . . . and simultaneously exchange their rebuttal reports . . . “ (Opp’n at 2.) 

Plaintiffs’ use of the word “simultaneous” is disingenuous because the Court did not use the word in

its Scheduling Order. The Scheduling Order states:

3. Any party wishing to present expert witness testimony with respect to a claim or a defense

shall lodge with the Court and serve on all other parties the name, address, qualifications,

resume and a written report which complies with Fed.R.Civ.P. 26(a)(2)(B) on or before July

29, 2005.

. . .

7. If the testimony of the expert is intended solely to contradict or rebut opinion testimony on

the same matter identified by another party, the party proffering a rebuttal expert shall make the

disclosures required by Fed.R.Civ.P. 26(a)(2)(B), no later than August 8, 2003.

(Scheduling Order, July 2, 2003 at 2.)

It is clear that neither the disclosure or rebuttal of expert witnesses sections used the word

“simultaneous”. In a complex securities fraud case with multiple types of allegations such as this one,

Plaintiffs clearly have the burden to prove all the elements of their claims. For example, Plaintiffs

experts may advance a number of theories with respect to the measure of damages. Thus, to respond

to these theories, Defendants expert must know of them in advance. Accordingly, requiring Plaintiffs

to make their Rule 26(a)(2) disclosures in advance of Defendants is more consistent with the parties’

burdens in this case.

Furthermore, Plaintiffs would not be prejudiced by disclosing their expert reports first. Since

Plaintiffs have the burden of proof, Plaintiffs have the burden of presenting the evidence first. 

Plaintiffs will have an opportunity to respond to Defendants’ expert reports in their rebuttal reports,

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including theories relied upon by Defendants experts with respect to their affirmative defenses. The

Court finds that in this case, simultaneously disclosure would in fact prejudice the Defendants. 

Hypothetically, if the Court is to adopt Plaintiffs’ expert disclosures, Defendants would have to

respond to all of Plaintiffs’ possible theories of liability rather than focus on theories relied upon by

Plaintiffs’ experts. This would result in needless waste of resources. Plaintiff argues that staggering

expert disclosures would give the Defendants “two bites at the apple” in that after reading Plaintiffs’

initial reports, Defendants would be able to respond to those reports in both their initial reports and

rebuttal reports. (Opp’n at 2.) This argument is moot in light of the Court’s adoption of Defendants’

proposed disclosure schedule. Defendants are not seeking to have rebuttal reports following

Plaintiffs’ rebuttal. Considering that Defendants will file their initial report after Plaintiffs, their

report is equivalent of a rebuttal, thus eliminating a need to file additional ones.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS Defendants’ Motion for Entry of Order on

Staggered Expert Disclosures. The Court hereby adopts the following dates as part of the disclosure

schedule:

Plaintiff’s Expert Reports Due October 10, 2005

Defendants’ Expert Reports Due November 16, 2005

Plaintiffs’ Rebuttal Reports Due November 30, 2005

None of the dates set in this Order may be changed without an order of the Court made after a

motion is duly filed and made pursuant to the Local Rules of this Court.

Dated: June 20, 2005 /s/ James Ware 

JAMES WARE

United States District Judge

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THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Alice L. Jensen ajensen@fenwick.com

Brian J. Robbins robbins@ruflaw.com

Bruce C. Gibney bgibney@hewm.com

Connie Cheung conniec@milberg.com

Daniel C. Girard girardgibbs@girardgibbs.com

Daniel S. Drosman DanD@lerachlaw.com

Daniel T. Rockey drockey@hewm.com

Darren J. Robbins e_file_sd@lerachlaw.com

Dean S. Kristy dkristy@fenwick.com

Eric J. Belfi ebelfi@murrayfrank.com

Ethan Richard York eyork@winston.com

Felix Lee flee@fenwick.com

George E. Barrett gbarrett@barrettjohnston.com

George H. Brown gbrown@hewm.com

James G. Stranch jgs@branstetterlaw.com

Kevin P. Muck kmuck@fenwick.com

Lesley E. Weaver lesleyw@milberg.com

Lionel Z. Glancy info@glancylaw.com

Matthew Paul Montgomery mattm@lerachlaw.com

Michael L. Rugen mrugen@hewm.com

Norman J. Blears nblears@hewm.com

Patrice L. Bishop service@ssbla.com

Robert A. Jigarjian CAND.USCOURTS@CLASSCOUNSEL.COM

Ruth Marian Bond Rbond@hewm.com

Spencer A. Burkholz SpenceB@lerachlaw.com

Stuart L. Berman sberman@sbclasslaw.com

Willem F. Jonckheer wjonckheer@schubert-reed.com

William S. Lerach billl@lerachlaw.com

Dated: June 20, 2005 Richard W. Wieking, Clerk

By: /s/ JW Chambers 

Ronald L. Davis

Courtroom Deputy

Case 5:01-cv-20418-JW Document 389 Filed 06/21/05 Page 5 of 5