Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_01-cv-02661/USCOURTS-cand-3_01-cv-02661-0/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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 The Court notes that the Rueckert Declaration does not refer to Exhibit B, but

instead refers to an “Exhibit A,” a copy of which has not been submitted to the Court. The

Court assumes, for purposes of the instant motion, that Exhibit A referenced in the

Rueckert Declaration is a copy of Exhibit B to the Appendix to the Third Amended

Complaint.

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re EXODUS COMMUNICATIONS, INC.

SECURITIES LITIGATION

This Document Relates To: ALL ACTIONS

 /

Master File No. C 01-2661 MMC

ORDER GRANTING PLAINTIFFS’

MOTION FOR LEAVE TO AMEND

THIRD AMENDED COMPLAINT;

VACATING HEARING

(Docket No. 226)

Before the Court is plaintiffs’ motion, filed March 8, 2005, for leave to amend the

Third Amended Consolidated Class Action Complaint (“Third Amended Complaint” or

“TAC”) by adding one line of text and one exhibit. Plaintiffs propose to amend

paragraph 12 of the Third Amended Complaint to include the following sentence: “The

Declaration of Patrick A. Rueckert, authenticating and explaining Exhibit B and stating that

the information therein was current as of August 9, 2001, is incorporated herein and is

attached to the Appendix as Ex. E.” Additionally, plaintiffs seek to add the abovereferenced Declaration of Patrick A. Rueckert (“Rueckert Declaration”) as Exhibit E to the

Appendix to the Third Amended Complaint. The purpose of the requested amendment,

according to plaintiffs, is to clarify the date Exhibit B to the Appendix to the Third Amended

Complaint was created.1

Defendants Ellen M. Hancock, R. Marshall Case, Dick Stoltz, Herbert A. Dollahite,

Case 3:01-cv-02661-MMC Document 238 Filed 04/18/05 Page 1 of 4
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 The Individual Defendants’ chief concern with respect to prejudice is that they “will

be compelled to go through yet another round of motions to dismiss.” (See Ind. Defs’ Opp.

at 1:10-11.) As discussed infra, however, their current motion to dismiss is deemed

applicable to the new complaint.

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Adam W. Wegner, Beverly Brown, Sam S. Mohamad, and William Yeack (“Individual

Defendants”) have filed opposition to the motion. Defendants Goldman, Sachs & Co.,

Merrill Lynch & Co., Morgan Stanley Dean Witter, and J.P. Morgan (“Underwriter

Defendants”) have filed a “Statement of Qualified Non-Opposition” to the motion, in which

they state they have no opposition to the proposed amendment, provided the Court affords

them leave to file a five-page supplemental memorandum in support of their pending

motion to dismiss the Third Amended Complaint, for the purpose of addressing the effect of

the proposed new amendment. Plaintiffs have filed a reply. Having considered the papers

filed in support of and in response to the motion, the Court finds the motion appropriate for

decision without oral argument and hereby VACATES the April 22, 2005 hearing on the

motion.

Where, as here, the complaint has already been amended, the plaintiff may amend

the complaint “only by leave of court or by written consent of the adverse party; and leave

shall be freely given when justice so requires.” See Fed. R. Civ. P. 15(a). Generally, leave

to amend should be granted with “extreme liberality.” See Eminence Capital, LLC v.

Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003). In deciding whether justice requires

granting leave to amend, factors to be considered include the presence or absence of

undue delay, bad faith or dilatory motive on the part of the moving party, repeated failure to

cure deficiencies by previous amendments, undue prejudice to the opposing party, and

futility of the proposed amendment. See Eminence Capital, 316 F.3d at 1052 (citing

Foman v. Davis, 371 U.S. 178, 182 (1962)). “[T]he consideration of prejudice to the

opposing party carries the greatest weight.” Id. “Absent prejudice, or a strong showing

of any of the remaining Foman factors, there exists a presumption under Rule 15(a) in

favor of granting leave to amend.” Id. (emphasis in original). The Individual Defendants

have not demonstrated they will be prejudiced by the Court’s granting plaintiffs’ motion,2

 nor

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have they demonstrated the remaining factors weigh in favor of disallowing amendment. 

Accordingly, the Court will GRANT plaintiffs’ motion.

The Court notes, however, that the proposed Corrected Third Amended

Consolidated Class Action Complaint (“Corrected Third Amended Complaint” or “CTAC”)

contains additional amendments not addressed in plaintiffs’ motion. There are significant

differences between paragraphs 11 and 12 of the Third Amended Complaint and

paragraphs 11 and 12 of the proposed Corrected Third Amended Complaint, for example. 

(Compare TAC ¶¶ 11-12 with CTAC ¶¶ 11-12.) In addition, the Court notes that the Third

Amended Complaint is 171 pages long, while the proposed Corrected Third Amended

Complaint, which should be only one sentence longer than the Third Amended Complaint,

is 175 pages long. It appears plaintiffs’ Corrected Third Amended Complaint is based on a

different draft of the Third Amended Complaint than the version plaintiffs ultimately filed

with the Court on January 15, 2004. Plaintiff shall not file the proposed Corrected Third

Amended Complaint they have submitted to the Court, but, rather, shall make their

requested amendments to the version of the Third Amended Complaint plaintiffs previously

filed with the Court.

Accordingly, it is hereby ORDERED that:

1. Plaintiffs’ motion for leave to amend their Third Amended Complaint is

GRANTED. Plaintiff shall not file the proposed Corrected Third Amended Complaint they

have submitted to the Court, however. Rather, plaintiffs shall make their requested

amendments to the version of the Third Amended Complaint plaintiffs previously filed with

the Court on January 15, 2004. Plaintiffs shall electronically file their Corrected Third

Amended Complaint no later than April 29, 2005. A paper copy of the Corrected Third

Amended Complaint shall be provided for use in chambers, no later than noon the day after

the complaint is filed, as required by General Order 45 and the Court’s standing orders.

2. The pending motions to dismiss the Third Amended Complaint will be deemed

applicable to the Corrected Third Amended Complaint. No later than May 6, 2005, the

Individual Defendants and the Underwriter Defendants may supplement their respective

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motions to dismiss by filing a memorandum of no longer than five pages that addresses the

impact, if any, of plaintiffs’ amendments to the Third Amended Complaint on such

defendants’ pending motion to dismiss. No later than May 13, 2005, plaintiffs may file

a memorandum of no longer than five pages responding to each such supplemental

memorandum, at which time the motions to dismiss will be taken under submission.

This order terminates Docket No. 226.

IT IS SO ORDERED.

Dated: April 18, 2005 /s/ Maxine M. Chesney 

Maxine M. Chesney

United States District Judge

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