Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-03395/USCOURTS-cand-5_05-cv-03395-22/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

Case No. C 05-3395 JF (PVT)

ORDER REMANDING MATTER TO MAGISTRATE JUDGE TRUMBULL

(JFLC2)

**E-Filed 2/27/07**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

IN RE MERCURY INTERACTIVE CORP.

SECURITIES LITIGATION.

Case Number C 05-3395 JF (PVT)

ORDER REMANDING MATTER TO 1

MAGISTRATE JUDGE TRUMBULL

FOR RECONSIDERATION IN LIGHT

OF CHANGED CIRCUMSTANCES

[re: doc. nos. 182, 185, 190]

Defendants have filed objections to Magistrate Judge Trumbull’s Order of December 11,

2006, granting in part Lead Plaintiff’s motion to lift the stay on discovery imposed by the Private

Securities Litigation Reform Act (“PSLRA”). Specifically, Judge Trumbull ordered Defendant

Mercury Interactive Corporation (“Mercury”) to produce to Lead Plaintiff in this action two

boxes of documents previously produced to the individual defendants in the factually-related

state court derivative action, as well as a copy of the special committee report. Briefing on the

objections was completed on February 23, 2007.

Where, as here, the magistrate judge’s ruling addresses a non-dispositive matter, the

district judge will modify or set aside “any portion of the magistrate judge’s order found to be

Case 5:05-cv-03395-JF Document 264 Filed 02/27/07 Page 1 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Case No. C 05-3395 JF (PVT)

ORDER REMANDING MATTER TO MAGISTRATE JUDGE TRUMBULL

(JFLC2)

clearly erroneous or contrary to law.” Fed. R. Civ. P. 72(a); see also 28 U.S.C. § 636(b)(1)(A).

The PSLRA imposes an automatic stay of discovery in securities fraud cases, “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.A. § 78u-4(b)(3)(B). Judge

Trumbull concluded that the limited production required by her order was necessary to put Lead

Plaintiff in this action on a “level playing field” with the individual defendants in the state court

derivative action vis a vis settlement discussions and access to potential insurance proceeds. 

Defendants in the instant action argue that Judge Trumbull’s ruling is clearly erroneous as a

factual matter, because there were no settlement discussions under way in the state court

derivative action at the time she issued her order, and the state court action since has been

dismissed. Defendants also argue that Judge Trumbull’s ruling is contrary to law, because any

potential prejudice to Lead Plaintiff in this action arising out of a lack of access to discovery

materials is insufficient to justify lifting the discovery stay under the PSLRA.

The Ninth Circuit has strictly construed the PSLRA discovery stay. See SG Cowen

Securities Corp. v. U.S. Dist. Court for the Northern Dist. of Calif., 189 F.3d 909, 913 (9th Cir.

1999). It is unclear whether in light of this authority the potential prejudice to Lead Plaintiff in

this action would be sufficient to justify lifting the discovery stay. However, the Court need not

decide this question at this time, because in light of the dismissal of the state court derivative

action, it appears that the circumstances underlying Judge Trumbull’s ruling no longer exist. 

This Court therefore remands the matter to Judge Trumbull for reconsideration as she deems

appropriate.

IT IS SO ORDERED.

DATED: 1/27/07

__________________________________

JEREMY FOGEL

United States District Judge

Case 5:05-cv-03395-JF Document 264 Filed 02/27/07 Page 2 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

Case No. C 05-3395 JF (PVT)

ORDER REMANDING MATTER TO MAGISTRATE JUDGE TRUMBULL

(JFLC2)

Copies of Order served on:

Joel H. Bernstein jbernstein@labaton.com

Asim M. Bhansali amb@kvn.com, efiling@kvn.com; gap@kvn.com; pwm@kvn.com

Peter Arthur Binkow info@glancylaw.com, pbinkow@glancylaw.com

Sara B. Brody sara.brody@hellerehrman.com, terri.newman@hellerehrman.com;

Cecilia.Chan@hellerehrman.com; Gary.Padilla@hellerehrman.com

Howard S. Caro hcaro@hewm.com, gary.padilla@hellerehrman.com;

yvonne.somek@hellerehrman.com; benjamin.diggs@hellerehrman.com; SFDocCal@hewm.com

Michael Cecchini mcecchini@gibsondunn.com, jhess@gibsondunn.com

John D. Cline jcline@jonesday.com, tmdanowski@jonesday.com; pdavids@jonesday.com;

zanderson@jonesday.com; cyip@jonesday.com

Aaron H. Darsky adarsky@schubert-reed.com,

Kirk Andrew Dublin kdublin@jonesday.com, tmdanowski@jonesday.com;

adlangenbach@jonesday.com; arsand@jonesday.com; mlandsborough@jonesday.com

Alan I. Ellman aellman@labaton.com, cchan@labaton.com

Jeffrey S. Facter jfacter@shearman.com, cflood@shearman.com; rcheatham@shearman.com;

jae.ko@shearman.com

Scott A. Fink sfink@gibsondunn.com, bhonniball@gibsondunn.com

Michael M. Goldberg info@glancylaw.com

Alicia G. Huffman alicia.huffman@shearman.com, ron.cheatham@shearman.com;

rcheatham@shearman.com

Benedict Y Hur bhur@kvn.com, efiling@kvn.com; gpeterson@kvn.com

Willem F. Jonckheer wjonckheer@schubert-reed.com

Nicole Acton Jones nicole.jones@hellerehrman.com, harriette.louie@hellerehrman.com

Christopher J. Keller ckeller@labaton.com, cchan@labaton.com

Jan Nielsen Little jnl@kvn.com, efiling@kvn.com; srg@kvn.com

E. Powell Miller epm@millerlawpc.com, asl@millerlawpc.com

Elise Natalie Milstein emilstein@jonesday.com, mcassidy@jonesday.com

Patrick David Robbins probbins@shearman.com

Adam Richard Sand , Esq arsand@JonesDay.com, mlandsborough@jonesday.com

Case 5:05-cv-03395-JF Document 264 Filed 02/27/07 Page 3 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Case No. C 05-3395 JF (PVT)

ORDER REMANDING MATTER TO MAGISTRATE JUDGE TRUMBULL

(JFLC2)

Michael Adam Schwartz , Esq mschwartz@wolfpopper.com

David R. Scott drscott@scott-scott.com

Michael Todd Scott tscott@orrick.com, adevlin@orrick.com

Arthur L. Shingler , III ashingler@scott-scott.com, ssawyer@scott-scott.com

C. Brandon Wisoff bwisoff@fbm.com, mzappas@fbm.com; calendar@fbm.com

Case 5:05-cv-03395-JF Document 264 Filed 02/27/07 Page 4 of 4