FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE SECURITIES (USA)

LLC; JPMORGAN CHASE & CO., a

Delaware corporation, successor in

interest to Hambrecht & Quist and

Chase Securities Inc.; BANK OF No. 09-35262

AMERICA CORPORATION, a Delaware  D.C. No. 2:07-cv- corporation, successor in interest 01549-JLR to Fleetboston Robertson Stephens,

Inc.; ONVIA INC., a Delaware

corporation formerly known as

Onvia.com Inc.; ROBERTSON

STEPHENS, INC.; J.P. MORGAN

SECURITIES INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19067
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

DEUTSCHE BANK SECURITIES INC.;

FOUNDRY NETWORKS INC., Nominal No. 09-35280

Defendant, a Delaware D.C. Nos. 

corporation; MERRILL LYNCH 2:07-cv-01566-JLR

PIERCE FENNER & SMITH 2:07-cv-01549-JLR

INCORPORATED; J.P. MORGAN

SECURITIES INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MERRILL LYNCH & CO. INC.,

Defendant,

No. 09-35282 and

D.C. Nos. FINISAR CORPORATION, Nominal 

2:07-cv-01567-JLR Defendant, a Delaware

2:07-cv-01549-JLR corporation; MERRILL LYNCH

PIERCE FENNER & SMITH

INCORPORATED; J.P. MORGAN

SECURITIES INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19068 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO., No. 09-35285

INCORPORATED; LEHMAN BROTHERS,

 D.C. Nos. INC.; BANK OF AMERICA 2:07-cv-01568-JLR CORPORATION; ROBERTSON 2:07-cv-01549-JLR STEPHENS, INC.; AVANEX

CORPORATION,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP, a global

bank headquartered in Zurich,

Switzerland formerly known as

Credit Suisse First Boston No. 09-35286

Corporation; BANK OF AMERICA D.C. Nos. CORPORATION, a Delaware 

2:07-cv-01576-JLR corporation, successor in interest 2:07-cv-01549-JLR to BancBoston Robertson

Stephens, Inc.; TIVO INC., Nominal

Defendant, a Delaware

corporation; ROBERTSON STEPHENS,

INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19069
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS & CO., a New

York limited partnership; BANK OF

AMERICA CORPORATION, a Delaware

corporation, successor in interest

No. 09-35288 to FleetBoston Robertson

D.C. Nos. Stephens, Inc.; ROBERTSON  2:07-cv-01569-JLR STEPHENS INC., a Massachusetts

2:07-cv-01549-JLR corporation,

Defendants-Appellees,

and

TURNSTONE SYSTEMS, INC., a

Delaware corporation,

Defendant.

In Re: SECTION 16(b) LITIGATION 

19070 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS & CO., “Goldman

Sachs”; CREDIT SUISSE SECURITIES

(USA) LLC, “Credit Suisse”

formerly known as Credit Suisse No. 09-35289

First Boston Corporation; BANK OF D.C. Nos. 

AMERICA CORPORATION, a Delaware 2:07-cv-01577-JLR

corporation, successor in interest 2:07-cv-01549-JLR

to BancBoston Robertson

Stephens, Inc.; ROBERTSON

STEPHENS, INC.; JUNIPER NETWORKS

INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19071
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO., No. 09-35290

D.C. Nos. INCORPORATED; DEUTSCHE BANK 

SECURITIES, INC.; MERRILL LYNCH, 2:07-cv-01570-JLR

PIERCE, FENNER & SMITH 2:07-cv-01549-JLR

INCORPORATED; ARIBA INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

No. 09-35292

MORGAN STANLEY & CO., D.C. Nos.

INCORPORATED; CITIGROUP GLOBAL  2:07-cv-01571-JLR

MARKETS, INC.; AKAMAI 2:07-cv-01549-JLR

TECHNOLOGIES, INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19072 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS GROUP INC., a

Delaware corporation; JPMORGAN

CHASE & CO., a Delaware

corporation, successor in interest

to Hambrecht & Quist LLC, No. 09-35293

Defendants, D.C. Nos. 

and 2:07-cv-01578-JLR

2:07-cv-01549-JLR KANA SOFTWARE INC., Nominal

Defendant, a Delaware corporation

formerly known as Kana

Communications Inc.; GOLDMAN

SACHS & CO.; J.P. MORGAN

SECURITIES INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19073
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY, a Delaware

corporation, successor in interest

to Morgan Stanley Dean Witter,

Defendant,

and

SILICON LABORATORIES INC., No. 09-35297

Nominal Defendant, a Delaware D.C. Nos.

corporation; MORGAN STANLEY &  2:07-cv-01590-JLR

CO. INCORPORATED; LEHMAN 2:07-cv-01549-JLR

BROTHERS INC.; CITIGROUP GLOBAL

MARKETS, INC.,

Defendants-Appellees,

JAMES W. GIDDENS,

TRUSTEE FOR THE

LIQUIDATION OF THE BUSINESS OF

LEHMAN BROTHERS INC.,

Trustee-Appellee.

In Re: SECTION 16(b) LITIGATION 

19074 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS GROUP INC., a

Delaware corporation,

Defendant,

and

BANK OF AMERICA CORPORATION, a No. 09-35300 Delaware corporation, successor in D.C. Nos. interest to BancBoston Robertson  2:07-cv-01593-JLR Stephens, Inc.; PALM INC., 2:07-cv-01549-JLR Nominal Defendant, a Delaware

corporation; GOLDMAN SACHS &

CO.; MORGAN STANLEY & CO.

INCORPORATED; MERRILL LYNCH

PIERCE FENNER & SMITH

INCORPORATED; ROBERTSON

STEPHENS, INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19075
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS GROUP INC.,

Defendant,

and No. 09-35301

BANK OF AMERICA CORPORATION, a D.C. Nos.  Delaware corporation, successor in 2:07-cv-01594-JLR

interest to BancBoston Robertson 2:07-cv-01549-JLR

Stephens, Inc.; MAXYGEN INC.,

Nominal Defendant, a Delaware

corporation; GOLDMAN SACHS &

CO.; ROBERTSON STEPHENS, INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19076 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP, a global

bank headquartered in Zurich,

Switzerland FKA Credit Suisse

First Boston Corporation; BANK OF No. 09-35302

AMERICA CORPORATION, a Delaware  D.C. No. corporation, successor in interest 2:07-cv-01575-JLR to BancBoston Robertson

Stephens, Inc.; SILICON IMAGE,

INC., Nominal Defendant, a

Delaware corporation; ROBERTSON

STEPHENS, INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19077
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS GROUP INC., a

Delaware corporation, No. 09-35303

Defendant, D.C. Nos. 

and 2:07-cv-01595-JLR

2:07-cv-01549-JLR STREET.COM INC.; GOLDMAN SACHS

& CO.; J.P. MORGAN SECURITIES

INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in

No. 09-35306 interest to BancBoston Robertson

Stephens, Inc.; CRITICAL PATH,  D.C. No.

INC., Nominal Defendant, a 2:07-cv-01582-JLR

California corporation; ROBERTSON

STEPHENS, INC.; J.P. MORGAN

SECURITIES, INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19078 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in No. 09-35307

D.C. Nos. interest to BancBoston Robertson 

Stephens, Inc.; CONCUR 2:07-cv-01585-JLR

TECHNOLOGIES, INC., a Delaware 2:07-cv-01549-JLR

corporation; ROBERTSON STEPHENS,

INC.; J.P. MORGAN SECURITIES, INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP, a global

bank headquartered in Zurich,

Switzerland; SOURCEFORGE, INC.,

Nominal Defendant, a Delaware No. 09-35308

corporation, FKA VA Linux  D.C. No. Systems, Inc.; LEHMAN BROTHERS,

2:07-cv-01583-JLR INC.,

Defendants-Appellees,

JAMES W. GIDDENS, Trustee for the

Liquidation of the Business of

Lehman Brothers, Inc.,

Trustee-Appellee.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19079
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v. No. 09-35309

GOLDMAN D.C. Nos. SACHS & CO.; J.P.  MORGAN SECURITIES, INC.; RED 2:07-cv-01587-JLR

HAT, INC., a Delaware corporation, 2:07-cv-01549-JLR

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP, a global No. 09-35310

bank headquartered in Zurich,  D.C. No. Switzerland; SELECTICA, INC., 2:07-cv-01584-JLR Nominal Defendant, a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19080 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP SECURITIES

(USA) LLC, a Delaware limited

liability company; BANK OF No. 09-35312

AMERICA CORPORATION, a Delaware D.C. Nos.

corporation; ROBERTSON STEPHENS,  2:07-cv-01579-JLR

INC., a Massachusetts corporation, 2:07-cv-01549-JLR

Defendants-Appellees,

and

INTERWOVEN, INC.,

Defendant.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO., No. 09-35313

D.C. Nos. INCORPORATED; J.P. MORGAN 

SECURITIES, INC.; VIGNETTE 2:07-cv-01588-JLR

CORPORATION, a Delaware 2:07-cv-01549-JLR

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19081
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO., No. 09-35314

INCORPORATED; J.P. MORGAN D.C. Nos.

SECURITIES, INC.; LEHMAN  2:07-cv-01589-JLR

BROTHERS, INC.; SYCAMORE 2:07-cv-01549-JLR

NETWORKS, INC., a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP SECURITIES

(USA) LLC, a Delaware limited

liability company; BANK OF

AMERICA CORPORATION, a Delaware No. 09-35315 corporation; ROBERTSON STEPHENS,

INC  D.C. No. .; J.P. MORGAN SECURITIES INC.,

a Delaware corporation, 2:07-cv-01580-JLR

Defendants-Appellees,

and

OPENWAVE SYSTEMS, INC., a

California corporation,

Defendant.

In Re: SECTION 16(b) LITIGATION 

19082 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP SECURITIES

(USA) LLC, a Delaware limited

liability company; BANK OF

A No. 09-35316 MERICA CORPORATION, a Delaware

D.C. Nos. corporation; ROBERTSON STEPHENS,  2:07-cv-01581-JLR INC.,

Defendants-Appellees, 2:07-cv-01549-JLR

and

INFORMATICA CORPORATION, a

Delaware corporation,

Defendant.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19083
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP SECURITIES

(USA) LLC, a Delaware limited

liability company; BANK OF

AMERICA CORPORATION, a Delaware

corporation; ROBERTSON STEPHENS,

INC., a Massachusetts corporation; No. 09-35317

MERRILL LYNCH, PIERCE, FENNER & D.C. Nos.

SMITH INCORPORATED, a Delaware  2:07-cv-01572-JLR

corporation; CITIGROUP GLOBAL 2:07-cv-01549-JLR

MARKETS INC., a New York

corporation,

Defendants-Appellees,

and

INTERSIL CORPORATION, a Delaware

corporation,

Defendant.

In Re: SECTION 16(b) LITIGATION 

19084 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS GROUP INC.,

Defendant,

and

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in

interest to Fleetboston Robertson

No. 09-35318 Stephens, Inc.; SONUS NETWORKS

D.C. Nos. INC., a Delaware corporation;  2:07-cv-01597-JLR GOLDMAN SACHS & CO.; LEHMAN

2:07-cv-01549-JLR BROTHERS INC.; ROBERTSON

STEPHENS, INC.; J.P. MORGAN

SECURITIES INC.,

Defendants-Appellees,

JAMES W. GIDDENS,

TRUSTEE FOR THE

LIQUIDATION OF THE BUSINESS OF

LEHMAN BROTHERS INC.,

Trustee-Appellee.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19085
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO.,

INCORPORATED; J.P. MORGAN

SECURITIES, INC., a Delaware No. 09-35320 corporation; LEHMAN BROTHERS,

INC  D.C. No. ., a Delaware corporation,

Defendants-Appellees, 2:07-cv-01573-JLR

and

AVICI SYSTEMS, INC., a Delaware

corporation,

Defendant.

In Re: SECTION 16(b) LITIGATION 

19086 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in

interest to BancBoston Robertson No. 09-35321

Stephens, Inc.; PRICELINE.COM D.C. Nos. INC., 

a Delaware corporation; MORGAN 2:07-cv-01598-JLR

STANLEY & CO. INCORPORATED; 2:07-cv-01549-JLR

MERRILL LYNCH PIERCE FENNER &

SMITH INCORPORATED; ROBERTSON

STEPHENS, INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS & CO.; LEHMAN No. 09-35322

BROTHERS D.C. Nos. , INC.; J.P. MORGAN 

SECURITIES, INC.; MARVELL 2:07-cv-01632-JLR

TECHNOLOGY GROUP, LTD., a 2:07-cv-01549-JLR

Bermuda corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19087
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO., No. 09-35323

INCORPORATED; MERRILL LYNCH D.C. Nos.

PIERCE FENNER & SMITH  2:07-cv-01631-JLR

INCORPORATED; PEROT SYSTEMS 2:07-cv-01549-JLR

CORPORATION, a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19088 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP, a global

bank headquartered in Zurich,

Switzerland; DEUTSCHE BANK AG,

a global bank headquartered in

Frankfurt, Germany; LEHMAN

BROTHERS HOLDINGS, INC., a

Delaware corporation; AIRSPAN No. 09-35324 NETWORKS, INC., Nominal

Defendant, a Washington  D.C. No.

corporation; DEUTSCHE BANK 2:07-cv-01638-JLR

SECURITIES, INC.; LEHMAN

BROTHERS, INC.,

Defendants-Appellees,

and

JAMES W. GIDDENS, Trustee for the

Liquidation of the Business of

Lehman Brothers, Inc.,

Trustee-Appellee.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19089
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS & CO.; BANK OF

AMERICA CORPORATION, a Delaware No. 09-35325

corporation, successor in interest D.C. Nos. 

BancBoston Robertson Stephens 2:07-cv-01630-JLR

Inc.; ROBERTSON STEPHENS, INC.; 2:07-cv-01549-JLR

INSWEB CORPORATION, a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO., No. 09-35326

D.C. Nos. INCORPORATED; DEUTSCHE BANK 

SECURITIES, INC.; ASIAINFO 2:07-cv-01633-JLR

HOLDINGS, INC., a Delaware 2:07-cv-01549-JLR

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19090 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in

interest to BancBoston Robertson No. 09-35328

Stephens, Inc. and FleetBoston D.C. Nos. 

Roberton Stephens, Inc.; 2:07-cv-01634-JLR

ROBERTSON STEPHENS, INC.; J.P. 2:07-cv-01549-JLR

MORGAN SECURITIES, INC.; KEYNOTE

SYSTEMS, INC., a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in

No. 09-35327 interest to BancBoston Robertson

Stephens, Inc.; ROBERTSON  D.C. No.

STEPHENS, INC.; J.P. MORGAN 2:07-cv-01652-JLR

SECURITIES INC.; DIGIMARC

CORPORATION, Nominal Defendant,

a Delaware corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19091
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS & CO.; BEAR No. 09-35331

STEARNS D.C. Nos. & CO., INC.; DEUTSCHE 

BANK SECURITIES, INC.; TIBCO 2:07-cv-01635-JLR

SOFTWARE, INC., a Delaware 2:07-cv-11549-JLR

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MARTHA STEWART LIVING No. 09-35333

OMNIMEDIA INC., a Delaware D.C. Nos.

corporation; MORGAN STANLEY &  2:07-cv-01605-JLR

CO. INCORPORATED; MERRILL LYNCH 2:07-cv-01549-JLR

PIERCE FENNER & SMITH

INCORPORATED,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19092 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CREDIT SUISSE GROUP, a global No. 09-35334

bank headquartered in Zurich, D.C. Nos. 

Switzerland; AUDIBLE INC., a 2:07-cv-01623-JLR

Delaware corporation; J.P. 2:07-cv-01549-JLR

MORGAN SECURITIES INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

GOLDMAN SACHS & CO., a New

York limited partnership; MERRILL

LYNCH PIERCE FENNER & SMITH

INCORPORATED, a Delaware

No. 09-35335 corporation; BANK OF AMERICA

D.C. Nos. CORPORATION, a Delaware  2:07-cv-01637-JLR corporation, ROBERTSON STEPHENS,

2:07-cv-01549-JLR INC., a Massachusetts corporation,

Defendants-Appellees,

and

SABA SOFTWARE, INC., a Delaware

corporation,

Defendant.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19093
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO.

INCORPORATED, a Delaware

corporation; DEUTSCHE BANK

SECURITIES INC., a Delaware No. 09-35337

corporation; CITIGROUP GLOBAL D.C. Nos.

MARKETS, INC., a New York  2:07-cv-01636-JLR

corporation, 2:07-cv-01549-JLR

Defendants-Appellees,

and

TRANSMETA CORPORATION, a

Delaware corporation,

Defendant.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

CAPSTONE TURBINE CORPORATION, a No. 09-35339

Delaware corporation; GOLDMAN D.C. Nos.

SACHS & CO.; MERRILL LYNCH  2:07-cv-01624-JLR

PIERCE FENNER & SMITH 2:07-cv-01549-JLR

INCORPORATED; MORGAN STANLEY &

CO. INCORPORATED,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19094 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

No. 09-35344

MORGAN STANLEY & CO. D.C. Nos.

INCORPORATED; BROCADE  2:07-cv-01626-JLR

COMMUNICATIONS SYSTEMS INC., a 2:07-cv-01549-JLR

Delaware corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in No. 09-35345

D.C. Nos. interest to Robertson Stephens, 

Inc.; J.P. MORGAN SECURITIES INC.; 2:07-cv-01667-JLR

ROBERTSON STEPHENS, INC.; OPLINK 2:07-cv-01549-JLR

COMMUNICATIONS, INC., a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19095
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in No. 09-35346

interest to BancBoston Robertson  D.C. No. Stephens, Inc.; ROBERTSON 2:07-cv-01666-JLR STEPHENS, INC.; J.P. MORGAN

SECURITIES INC.; NAVASITE, INC., a

Delaware corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO.

INCORPORATED, a Delaware No. 09-35347

corporation; DEUTSCHE BANK  D.C. No. SECURITIES, INC., a Delaware 2:07-cv-01655-JLR corporation; ASPECT MEDICAL

SYSTEMS, INC., Nominal Defendant,

a Delaware corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19096 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in

No. 09-35348 interest to BancBoston Robertson

Stephens, Inc.; ROBERTSON  D.C. No.

STEPHENS, INC.; BEAR STEARNS & 2:07-cv-01654-JLR

CO., INC.; PACKETEER, INC.,

Nominal Defendant, a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in No. 09-35349

D.C. Nos. interest to Fleetboston Robertson 

Stephens, Inc.; ROBERTSON 2:07-cv-01668-JLR

STEPHENS, INC.; OMNIVISION 2:07-cv-01549-JLR

TECHNOLOGIES, INC., a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19097
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

No. 09-35350

CREDIT SUISSE SECURITIES (USA), D.C. Nos.

LLC; OCCAM NETWORKS, INC., a  2:07-cv-01669-JLR

Delaware corporation, FKA 2:07-cv-01549-JLR

Accelerated Networks, Inc.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

J.P. MORGAN SECURITIES INC.; BEAR

STEARNS & CO., INC.; BANK OF

AMERICA CORPORATION, a Delaware No. 09-35351

corporation, successor in interest D.C. Nos. 

to Bancboston Robertson 2:07-cv-01670-JLR

Stephens, Inc.; ROBERTSON 2:07-cv-01549-JLR

STEPHENS, INC.; IMMERSION

CORPORATION, a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19098 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

MORGAN STANLEY & CO.

INCORPORATED, a Delaware

No. 09-35352 corporation; CREDIT SUISSE

SECURITIES (USA), LLC; J.P.  D.C. No.

MORGAN SECURITIES, INC.; INTERNAP 2:07-cv-01653-JLR

NETWORK SERVICES CORPORATION,

Nominal Defendant, a Delaware

corporation,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v. No. 09-35355

MICROTUNE INC., a Delaware  D.C. No. corporation; GOLDMAN SACHS & 2:07-cv-01627-JLR CO.; J.P. MORGAN SECURITIES INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

SIMMONDS v. CREDIT SUISSE SECURITIES 19099
VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in No. 09-35357

D.C. Nos. interest to BancBoston Robertson 

Stephens, Inc.; MORGAN STANLEY 2:07-cv-01628-JLR

& CO. INCORPORATED; ROBERTSON 2:07-cv-01549-JLR

STEPHENS, INC.; EXTREME NETWORKS

INC.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

VANESSA SIMMONDS, 

Plaintiff-Appellant,

v.

BANK OF AMERICA CORPORATION, a

Delaware corporation, successor in No. 09-35358

interest to Robertson Stephens, D.C. Nos.

Inc.; J.P. MORGAN SECURITIES INC.;  2:07-cv-01629-JLR

ROBERTSON STEPHENS, INC.; COSINE 2:07-cv-01549-JLR

COMMUNICATIONS INC., a Delaware

corporation; GOLDMAN SACHS &

CO.,

Defendants-Appellees.

In Re: SECTION 16(b) LITIGATION 

19100 SIMMONDS v. CREDIT SUISSE SECURITIES
VANESSA SIMMONDS, 

Plaintiff-Appellee,

v.

CREDIT SUISSE SECURITIES (USA)

No. 09-35363 LLC; CREDIT SUISSE SECURITIES

D.C. Nos. (USA) LLC; J.P. MORGAN  2:07-cv-01549-JLR SECURITIES INC.; BANK OF AMERICA

2:07-cv-01549-JLR CORPORATION, a Delaware

corporation, successor in interest OPINION

to Fleetboston Robertson Stephens,

Inc.; ROBERTSON STEPHENS, INC.,

Defendants-Appellants.

In Re: SECTION 16(b) LITIGATION 

Appeal from the United States District Court

for the Western District of Washington

James L. Robart, District Judge, Presiding

Argued and Submitted October 5, 2010

Seattle, Washington

Filed December 2, 2010

Before: Sidney R. Thomas and Milan D. Smith, Jr.,

Circuit Judges, and Michael R. Hogan, District Judge.*

Opinion by Judge Milan D. Smith, Jr.;

Concurrence by Judge Milan D. Smith, Jr.

*The Honorable Michael R. Hogan, United States District Judge for the

District of Oregon, sitting by designation. 

SIMMONDS v. CREDIT SUISSE SECURITIES 19101
COUNSEL

Jeffrey I. Tilden and Mark A. Wilner, Gordon Tilden Thomas

& Cordell L.L.P., Seattle, Washington; Ian S. Birk, Keller

Rohrback L.L.P., Seattle, Washington; David M. Simmonds,

Redmond, Washington, for the plaintiff-appellant-crossappellee.

David H. Kistenbroker and Joni S. Jacobsen, Katten Muchin

Rosenman LLP, Chicago, Illinois; Michael L. Charlson,

Hogan & Hartson, Palo Alto, California; John C. Tang,

Latham & Watkins LLP, Menlo Park, California; John V.

Erickson, Collette Erickson Farmer & O’Neill LLP, San Francisco, California; L. Rex Sears, Workman Nydegger, Salt

Lake City, Utah, for the defendants-appellees.

Andrew B. Clubok, Kirkland & Ellis, LLP, Washington,

D.C.; Christopher B. Wells, Lane Powell PC, Seattle, Washington; Gandolfo V. DiBlasi, Sullivan & Cromwell LLP, New

York, New York; Joel M. Mitnick, Sidley Austin LLP, New

York, New York; David W. Ichel, Simpson, Thacher & Bartlett LLP, New York, New York; Andrew J. Frackman,

O’Melveny & Myers LLP, New York, New York; Robert B.

19106 SIMMONDS v. CREDIT SUISSE SECURITIES
McCaw, Wilmer Cutler Pickering Hale and Dorr LLP, New

York, New York, for the defendants-appellees-crossappellants.

OPINION

M. SMITH, Circuit Judge:

Plaintiff-Appellant Vanessa Simmonds appeals the district

court’s dismissal of fifty-four related derivative complaints

brought under Section 16(b) of the Securities Exchange Act

of 1934 (Exchange Act), 15 U.S.C. § 78p(b). Simmonds’s

complaints allege that the Defendant-Appellee investment

banks (collectively, Underwriters) violated Section 16(b) by

engaging in prohibited “short-swing” transactions in connection with the Initial Public Offerings (IPOs) of the fifty-four

Defendant-Appellee corporations (collectively, Issuing Companies) between 1999 and 2000. Simmonds seeks disgorgement of the Underwriters’ alleged short-swing trading profits.

We affirm the district court’s conclusion (rendered in the

thirty cases in which the issue was raised) that Simmonds

failed to present an adequate demand letter to the Issuing

Companies prior to filing her lawsuits, and we remand these

cases to the district court to dismiss the complaints with prejudice. We reverse the district court’s conclusion that the

remaining twenty-four cases are barred by Section 16(b)’s

two-year statute of limitations, and we remand these cases to

the district court so that all defendants, including the Underwriters, have a full opportunity to contest the adequacy of

Simmonds’s demand letters with respect to the remaining

twenty four cases.

FACTUAL AND PROCEDURAL BACKGROUND

In her First Amended Complaints (Complaints), Simmonds

SIMMONDS v. CREDIT SUISSE SECURITIES 19107
alleges that while the Underwriters were acting as lead underwriters on the Issuing Companies’ IPOs, they coordinated

their activities with the Issuing Companies’ officers, directors,

and principal shareholders (collectively, Insiders) in order to

obtain financial benefits from post-IPO increases in the Issuing Companies’ stock prices.1

 Simmonds alleges that the

Insiders entered “lock-up agreements” with the Underwriters

that prevented the Insiders from offering or selling their stock

for 180 days following the IPO. The purpose of the lock-up

agreements was to “collectively hold[ ] . . . and refrain[ ] from

selling” the Insiders’ shares, and the Underwriters and Insiders intended to receive financial benefits by selling these

shares into an inflated market after the lock-up agreements

expired. In order to create this inflated market, the Underwriters and Insiders allegedly agreed to release the IPO to the

general public at a discount to the price that “they knew to be

the likely aftermarket price range . . . based on clear indications of IPO and aftermarket demand.” The Underwriters also

allegedly inflated the post-IPO share prices by engaging in a

practice known as “laddering”—in exchange for giving their

customers access to IPO allocations, the Underwriters

required their customers (including the Issuing Companies’

Insiders) to purchase shares “at progressively higher prices”

following the IPO.2 Finally, Simmonds asserts that the Underwriters engaged in “improper research-related activities that

were designed to inflate the market price” of the shares.3

1The appeals have been stayed as to Defendant Lehman Brothers, Inc.

pending resolution of its bankruptcy proceedings. 

2

“Laddering . . . is a practice that involves requiring IPO purchasers to

commit to purchase additional shares in the after-market. Laddering not

only provides improper consideration for the allocation of IPO shares, but

also creates additional demand in the aftermarket, designed to insure rising

prices once the shares are publicly traded.” 2 Thomas Lee Hazen, Law of

Securities Regulation § 6.0 (6th ed. Supp. 2010) (hereinafter Hazen). 

3Some of the Complaints include specific factual details regarding the

Underwriters’ publication of favorable ratings on the Issuing Companies’

stock. In addition, some of the Complaints describe the Underwriters’ participation in secondary stock offerings. 

19108 SIMMONDS v. CREDIT SUISSE SECURITIES
According to Simmonds, these allegations establish that the

Underwriters and Insiders acted as a group and coordinated

their conduct with respect to acquiring the Issuing Companies’ stock, holding the stock, and disposing of the stock “so

as to share in the profits gained in the aftermarket following

the IPO.”

Simmonds alleges that the Underwriters had three types of

“direct or indirect pecuniary interest[s]” in the Issuing Companies’ stock that allowed the Underwriters to “profit[ ] from

purchases and sales, or sales and purchases” of that stock.

(The Complaints define these transactions as the operative

“Short-Swing Transactions” for purposes of these lawsuits.)

First, the Underwriters “shar[ed] in the profits of customers to

whom they made IPO allocations” of the Issuing Companies’

stock. Second, the Underwriters “allocat[ed] shares of [the

Issuing Companies’] stock to executives and other high-level

insiders of other companies, both private and public, from

which [the Underwriters] expected to receive new or additional investment banking business in return.” Finally, the

Underwriters “creat[ed] the opportunity for other members of

the [g]roup to derive personal financial benefits from the sale

of the [the Issuing Companies’] stock into an inflated market,

in an effort by [the Underwriters] to obtain future investment

banking business from [the Issuing Companies].”

4

In her Complaints, Simmonds seeks to compel the Underwriters to disgorge the profits they received from these

“Short-Swing Transactions.” Simmonds alleges that prior to

filing the Complaints, she submitted demand letters insisting

that the Issuing Companies seek this relief directly (as is their

right under Section 16(b)). When more than sixty days had

4The final two activities are commonly known as “spinning,” which is

“[t]he giving of shares or preferred opportunities to buy shares in an initial

public offering to key investment-banking clients in order to solicit or

retain profitable business in the future.” Black’s Law Dictionary 1531 (9th

ed. 2009). 

SIMMONDS v. CREDIT SUISSE SECURITIES 19109
lapsed after she sent the demand letters, Simmonds filed the

Complaints at issue in this appeal.

The Underwriters jointly filed a motion to dismiss Simmonds’s Complaints under Fed. R. Civ. P. 12(b)(6). The

Underwriters contended that Simmonds’s claims were timebarred, that Simmonds’s Complaints failed to state a cause of

action under Section 16(b), and that the Underwriters are protected by various exemptions from Section 16(b). Thirty of

the Issuing Companies (collectively, Moving Issuers) filed a

separate motion to dismiss under Fed. R. Civ. P. 12(b)(1) and

Fed. R. Civ. P. 12(b)(6).5 The Moving Issuers argued that

Simmonds’s claims were time-barred and that Simmonds

lacked standing because she failed to submit adequate demand

letters to the Issuing Companies prior to filing suit.

The district court granted the Moving Issuers’ Fed. R. Civ.

P. 12(b)(1) motions to dismiss based on the inadequacy of

Simmonds’s demand letters, and granted the Underwriters’

Fed. R. Civ. P. 12(b)(6) motions to dismiss based on the twoyear statute of limitations. In re Section 16(b) Litig., 602 F.

Supp. 2d 1202, 1211-18 (W.D. Wash. 2009). The court did

not address the Underwriters’ remaining arguments regarding

the merits of Simmonds’s allegations and the scope of the

Underwriters’ exemptions from Section 16(b). See id. at 1205,

1219. The court dismissed without prejudice the thirty actions

5The Moving Issuers—all of which are Delaware corporations—are

Akamai Technologies, Inc.; Ariba, Inc.; AsiaInfo Holdings, Inc.; Aspect

Medical Systems, Inc.; Audible, Inc.; Avici Systems, Inc. (now named

Soapstone Networks, Inc.); Capstone Turbine Corporation; Cosine Communications, Inc.; Digimarc Corporation; Finisar Corporation; Digimarc

Corporation; Internap Networks Service Corporation; Intersil Corporation;

Martha Stewart Living Omnimedia, Inc.; Maxygen, Inc.; NaviSite Inc.;

Occam Networks, Inc.; Onvia, Inc.; Openwave Systems Inc.; Oplink Communication, Inc.; Packeteer Inc.; Perot Systems Corporation; Priceline.com, Inc.; RedHat, Inc.; Saba Software, Inc.; Selectica, Inc.; Silicon

Laboratories, Inc.; Sonus Networks, Inc.; Sycamore Networks, Inc.; TheStreet.com, Inc.; TiVo, Inc.; and Vignette Corporation. 

19110 SIMMONDS v. CREDIT SUISSE SECURITIES
resolved by the Moving Issuers’ Fed. R. Civ. P. 12(b)(1)

motions. Id. at 1218. The court dismissed the remaining

twenty-four cases with prejudice in light of its ruling on the

statute of limitations. Id.

Simmonds filed a timely appeal, and the thirty Moving

Issuers filed timely cross-appeals requesting that the district

court’s dismissals of their cases be entered with prejudice

rather than without prejudice. We granted the parties’ joint

motion to consolidate the cases on appeal pursuant to Fed. R.

App. P. 3(b)(2).

JURISDICTION AND STANDARD OF REVIEW

Ordinarily, “[a] dismissal of a complaint without prejudice

is not a final order.” Martinez v. Gomez, 137 F.3d 1124, 1125

(9th Cir. 1998). However, the district court’s orders in these

cases are final and appealable because “leave to amend was

not specifically allowed and [Simmonds] cannot amend [her]

complaint to defeat the statute of limitations bar” as construed

by the district court. Id. at 1125-26. Accordingly, we have

jurisdiction pursuant to 28 U.S.C. § 1291. 

We review the district court’s dismissal for failure to comply with the demand requirement for abuse of discretion. Potter v. Hughes, 546 F.3d 1051, 1056, 1058 (9th Cir. 2008).6

We review the district court’s dismissal on statute of limita6The Moving Issuers challenged Simmonds’s compliance with the

demand requirement in a motion to dismiss for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1). The demand requirement is an element of prudential statutory standing rather than constitutional Article III

standing. Potter, 546 F.3d at 1055-56. While Article III standing may be

raised in a Fed. R. Civ. P. 12(b)(1) motion, questions of statutory standing

must be raised in a Fed. R. Civ. P. 12(b)(6) motion. Cetacean Cmty. v.

Bush, 386 F.3d 1169, 1174-75 (9th Cir. 2004). We construe the Moving

Issuers’ Fed. R. Civ. P. 12(b)(1) motion as a Fed. R. Civ. P. 12(b)(6)

motion. See, e.g., Supermail Cargo, Inc. v. United States, 68 F.3d 1204,

1206 n.2 (9th Cir. 1995). 

SIMMONDS v. CREDIT SUISSE SECURITIES 19111
tions grounds de novo. Lukovsky v. City & Cnty. of S.F., 535

F.3d 1044, 1047 (9th Cir. 2008). We refrain from reviewing

issues not addressed by the district court. Golden Gate Hotel

Ass’n v. City & Cnty. of S.F., 18 F.3d 1482, 1487 (9th Cir.

1994) (“As a general rule, a federal appellate court does not

consider an issue not passed upon below.” (internal quotation

marks omitted)).

DISCUSSION

[1] “Congress enacted Section 16(b) as part of the

Exchange Act to prevent corporate insiders from exploiting

their access to information not generally available to others.”

Dreiling v. Am. Online Inc., 578 F.3d 995, 1001 (9th Cir.

2009) (internal quotation marks and alterations omitted). Section 16(b) requires corporate insiders to disgorge any trading

profits they obtain in any “short-swing” transaction, which is

defined as “a coupled purchase-and-sale, or sale-and purchase, completed within six months.” Dreiling v. Am. Express

Co., 458 F.3d 942, 947 (9th Cir. 2006) (citing 15 U.S.C.

§ 78p(b)). There are four basic elements of a Section 16(b)

claim: “(1) a purchase and (2) a sale of securities (3) by an

officer or director of the issuer or by a shareholder who owns

more than ten percent of any one class of the issuer’s securities (4) within a six-month period.” Gwozdzinsky v.

Zell/Chilmark Fund, L.P., 156 F.3d 305, 308 (2d Cir. 1998).

The purpose of the rule is not to punish specific instances

of wrongdoing or remedy harms suffered by particular individuals. Rather, the law is “aimed at protecting the public” by

preventing corporate insiders from exploiting inside information at the expense of ordinary investors. Kern County Land

Co. v. Occidental Petroleum Corp., 411 U.S. 582, 592 (1973).

In order to fulfill this purpose, Section 16(b) “is a blunt instrument, at once both over- and under-inclusive.” Dreiling v.

Am. Express, 458 F.3d at 947. It “is over-inclusive in that it

imposes strict liability regardless of motive, including trades

not actually based on inside information,” and “[i]t is under19112 SIMMONDS v. CREDIT SUISSE SECURITIES
inclusive in that there is no liability for trades made on inside

information if more than six months transpire between purchase and sale.” Id. 

This appeal focuses on a pair of procedural prerequisites to

filing a Section 16(b) lawsuit: the demand requirement, and

the statute of limitations. Shareholders may only file a Section

16(b) suit after requesting that the issuing company take

appropriate action against its insiders. If sixty days pass after

a shareholder demand has been made without the issuing

company resolving the matter (either informally or via lawsuit), shareholders may file suit on the issuing company’s

behalf. However, shareholders must file their suit within two

years of the transactions at issue, subject to the tolling rules

described in greater detail infra.

A. Demand Requirement

[2] Section 16(b) provides in relevant part that all insider

short-swing trading profits “shall inure to and be recoverable

by the issuer,” and “[s]uit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction

by the issuer, or by the owner of any security of the issuer in

the name and in behalf of the issuer if the issuer shall fail or

refuse to bring such suit within sixty days after request or

shall fail diligently to prosecute the same thereafter . . . .” 15

U.S.C. § 78p(b). The issuing company’s right to recover the

insider’s trading profits “is simply an application of an old

principle in the law that if you are an agent and you profit by

insider information concerning the affairs of your principal,

your profits go to your principal.” Stock Exchange Regulation: Hearing Before the H. Comm. on Interstate and Foreign

Commerce, 73d Cong. 133 (1934) (statement of Thomas Corcoran, Counsel, Reconstruction Fin. Corp.).7

7Certain courts and commentators have suggested that Section 16(b)

actions are not true derivative actions. E.g., Dottenheim v. Murchison, 227

F.2d 737, 738 (5th Cir. 1956); Schaffer v. CC Investments, LDC, 286 F.

SIMMONDS v. CREDIT SUISSE SECURITIES 19113
[3] Section 16(b) does not set forth any additional details

regarding the nature and scope of this statutory demand

requirement. In light of this Congressional silence, we turn to

state law for guidance. The Supreme Court has explained that

“where a gap in the federal securities laws must be bridged by

a rule that bears on the allocation of governing powers within

the corporation, federal courts should incorporate state law

into federal common law unless the particular state law in

question is inconsistent with the policies underlying the federal statute.” Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90,

108 (1991). Applying this broad principle in the context of the

Investment Company Act of 1940, the Kamen Court held that

“the contours of the demand requirement” (in that case, the

standards governing demand futility) must be determined by

the law of the state of incorporation. Id. at 101. 

[4] Here, the adequacy of Simmonds’s Section 16(b)

demand letters is disputed in the thirty cases involving the

Moving Issuers, all of which are Delaware corporations.8 In

Supp. 2d 279, 281-82 (S.D.N.Y. 2003); 4 Hazen, supra, § 13.2 n.41; Peter

J. Romeo & Alan L. Dye, Section 16 Treatise and Reporting Guide,

§ 9:03[1][a] (3d ed. 2008) (hereinafter Romeo & Dye.) We refrain from

examining this question more closely because it is not relevant to the

issues at hand. We note that derivative and quasi-derivative actions are

generally governed by the procedural requirements of Fed. R. Civ. P. 23.1.

See Daily Income Fund, Inc. v. Fox, 464 U.S. 523, 533-34 (1984). However, two of our sister circuits have suggested that Rule 23.1 does not

apply in Section 16(b) actions. Portnoy v. Kawecki Berylco Indus., Inc.,

607 F.2d 765, 767 n.3 (7th Cir. 1979); Dottenheim, 227 F.2d at 738. We

refrain from deciding this question because it is not relevant to our analysis. 

8Our analysis of Simmonds’s demand letters is limited to the thirty

cases in which the Moving Issuers contested the adequacy of Simmonds’s

demand. Although we have no reason to doubt Simmonds’s assertion that

she submitted “similar demands” to the twenty-four issuing companies

that did not join the Motion to Dismiss, these letters are not currently part

of the record and must be examined by the district court in the first

instance. Accordingly, our analysis does not involve the twenty cases

19114 SIMMONDS v. CREDIT SUISSE SECURITIES
light of the principles articulated in Kamen, these thirty

demand letters must be analyzed in accordance with Delaware

law, unless there is a conflict between Delaware law and federal law that “would frustrate specific objectives” of Section

16 and the Exchange Act. Kamen, 500 U.S. at 98 (citation,

internal quotation marks, and alterations omitted). Our task

under Kamen is the same as in any case decided under state

law after Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). We

must “ ‘approximate state law as closely as possible in order

to make sure that the vindication of the state right is without

discrimination because of the federal forum.’ ” Orkin v. Taylor, 487 F.3d 734, 741 (9th Cir. 2007) (quoting Ticknor v.

Choice Hotels Int’l, Inc., 265 F.3d 931, 939 (9th Cir. 2001)).

Accordingly, we must follow the Delaware Supreme Court’s

pronouncements, or, if the Delaware Supreme Court has not

addressed the question, “we must predict how the Court will

decide the issue, based on decisions of Delaware courts, decisions from other jurisdictions, treatises and restatements.”

Matsuura v. Alston & Bird, 166 F.3d 1006, 1008 n.3 (9th Cir.

1999) (per curiam). In other contexts, we have relied on the

Delaware Court of Chancery’s decisions as accurate statements of Delaware law, id. at 1008, and we note that there are

particularly compelling reasons for following the Delaware

Court of Chancery’s decisions because it is widely recognized

as the nation’s leading authority on corporate law issues, see,

e.g., William H. Rehnquist, The Prominence of the Delaware

Court of Chancery in the State-Federal Joint Venture of Providing Justice, 48 Bus. Law. 351 (1992).

The Delaware Supreme Court has explained that the

demand requirement exists “first to insure that a stockholder

involving Delaware issuers who did not join the Moving Issuers’ Motion

to Dismiss, the two cases involving California issuers (Critical Path, Inc.,

and Openwave Systems, Inc.), or the cases involving a Washington issuer

(Airspan Networks, Inc.) and a Bermuda issuer (Marvell Technology

Group, Ltd.). 

SIMMONDS v. CREDIT SUISSE SECURITIES 19115
exhausts his intracorporate remedies, and then to provide a

safeguard against strike suits.” Aronson v. Lewis, 473 A.2d

805, 811-12 (Del. 1984), overruled en banc on other grounds

by Brehm v. Eisner, 746 A.2d 244, 253 & n.13 (Del. 2000).

“The purpose of pre-suit demand is to assure that the stockholder affords the corporation the opportunity to address an

alleged wrong without litigation, to decide whether to invest

the resources of the corporation in litigation, and to control

any litigation which does occur.” Spiegel v. Buntrock, 571

A.2d 767, 773 (Del. 1990).9 These justifications are not

unique to Delaware. The Supreme Court has repeatedly highlighted these points, Kamen, 500 U.S. at 101; Daily Income

Fund, 464 U.S. at 533, as have our sister circuits,10 and leading commentators have approved.11 As we have previously

stated, the demand rule “is not merely a technical or unimportant requirement.” Potter, 546 F.3d at 1058. Rather, it flows

from “the general rule of American law . . . that the board of

9Another justification for the demand requirement is that the demand

allows the corporation to exercise its business judgment and decide not to

pursue the claim. See Aronson, 473 A.2d at 812 (noting that business judgment rule permits “independent disinterested directors to dismiss the

action as inimical to the corporation’s best interests”). This justification is

inapplicable in Section 16(b) litigation because “[a]ny stockholder has a

right to institute suit if the corporation fails to do so, regardless of the

good faith or reasonable business judgment of the board of directors.” Pellegrino v. Nesbit, 203 F.2d 463, 467 (9th Cir. 1953). 

10E.g., Grossman v. Johnson, 674 F.2d 115, 125 (1st Cir. 1982); Lewis

v. Graves, 701 F.2d 245, 247-48 (2d Cir. 1983); Shaev v. Saper, 320 F.3d

373, 377 (3d Cir. 2003); Hoffman v. Kramer, 362 F.3d 308, 317 n.4 (5th

Cir. 2004); In re Ferro Corp. Derivative Litig., 511 F.3d 611, 618 (6th Cir.

2008); Boland v. Engle, 113 F.3d 706, 712 (7th Cir. 1997); Allright Missouri, Inc. v. Billeter, 829 F.2d 631, 638 (8th Cir. 1987); Stepak v. Addison, 20 F.3d 398, 402 (11th Cir. 1994); Gaubert v. Fed. Home Loan Bank

Bd., 863 F.2d 59, 65 (D.C. Cir. 1988). 

1113 William Meade Fletcher, Fletcher Cyclopedia of the Law of Corporations § 5963 (Supp. 2010); American Law Institute, Principles of

Corporate Governance § 7:03 cmt. c. (1992 & Supp. 2010); Daniel R. Fischel, Comment, The Demand and Standing Requirements in Stockholder

Derivative Actions, 44 U. Chi. L. Rev. 168, 171-72 (1976). 

19116 SIMMONDS v. CREDIT SUISSE SECURITIES
directors controls a corporation.” Id. Indeed, the policies animating shareholder demands are particularly relevant in the

Section 16(b) context. “Anecdotal evidence suggests that well

over 90 percent of all Section 16(b) claims are settled privately, without any lawsuit being filed.” Romeo & Dye,

supra, § 9.01[7][c] (footnote omitted). This figure would

almost certainty be lower if Section 16(b) did not contain a

demand requirement, as shareholder demands allow boards to

investigate the allegations and resolve matters without resorting to costly and burdensome litigation. 

[5] To give effect to these general policies, the Delaware

Chancery has required that demand letters “specifically state:

(i) the identity of the alleged wrongdoers, (ii) the wrongdoing

they allegedly perpetrated and the resultant injury to the corporation, and (iii) the legal action the shareholder wants the

board to take on the corporation’s behalf.” Yaw v. Talley, Civ.

A. No. 12882, 1994 WL 89019, at *7 (Del. Ch. Mar. 2, 1994)

(unpublished opinion), reprinted in 20 Del. J. Corp. L. 454.12

Furthermore, “the party asserting that a demand was made . . .

bear[s] the burden of proof . . . .” Id. These requirements flow

directly from the underlying justifications for the demand

requirement: “[i]t is essential that the communication contain

these three elements to enable the board to perform its duty

to make a good faith investigation of claims of alleged wrongdoing, and, where appropriate, to rectify the misconduct.” Id.

We believe that this is a correct statement of Delaware law as

it would be decided by the Delaware Supreme Court. This

standard was announced by a vice chancellor who was later

elevated to the state supreme court, see Gatz v. Ponsoldt, No.

Civ. A. 174-N, 2004 WL 3029868, at *5 (Del. Ch. Nov. 5,

2004) (unpublished opinion), and, more importantly, this standard has been uniformly followed in subsequent Chancery deci12Delaware rules of court allow citation to unpublished chancery decisions. 1 David A. Drexler, et al., Delaware Corporation Law and Practice

§ 2.05 (2009). 

SIMMONDS v. CREDIT SUISSE SECURITIES 19117
sions.13 Accordingly, under Kamen and our general Erie

jurisprudence, we apply this legal standard (and the Delaware

courts’ applications of it) except where it “frustrate[s] specific

objectives” of Simmonds’s federal cause of action. See

Kamen, 500 U.S. at 98.14

Here, the thirty demand letters at issue in the Moving Issuers’ motion (all of which were identical in all material

respects) stated the following pertinent facts.15 “[T]he Company’s IPO underwriters, in addition to certain of its officers,

directors and principal shareholders, as identified in the IPO

13FLI Deep Marine LLC v. McKim, No. Civ. A. 4138-VCN, 2009 WL

1204363, at *1 n.6 (Del. Ch. Apr. 21, 2009) (unpublished opinion);

Khanna v. McMinn, No. Civ. A. 20545-NC, 2006 WL 1388744, at *13

(Del. Ch. May 9, 2006) (unpublished opinion); Gatz, 2004 WL 3029868,

at *5. 

14The federal district court in Delaware has articulated a similar standard regarding the demand requirement: “At a minimum, a demand must

identify the alleged wrongdoers, describe the factual basis of the wrongful

acts and the harm caused to the corporation, and request remedial relief.

In most instances, the shareholder need not specify his legal theory, every

fact in support of that theory, or the precise quantum of damages.” Allison

v. Gen. Motors Corp., 604 F. Supp. 1106, 1117 (D. Del.), aff’d mem., 782

F.2d 1026 (3d Cir. 1985). Many federal courts, including the district court

in this case, have relied on Allison or its federal progeny when addressing

the adequacy of a demand under Delaware law. See, e.g., Richelson v.

Yost, __ F. Supp. 2d __, No. 10-1342, 2010 WL 3563108, at *8 (E.D. Pa.

Sept. 9, 2010); Dreiling v. Am. Express Co., 351 F. Supp. 2d 1077, 1085

(W.D. Wash. 2004), rev’d on other grounds, 458 F.3d 942 (9th Cir. 2006);

Levner v. Saud, 903 F. Supp. 452, 456 (S.D.N.Y. 1994), aff’d sub nom.

Levner v. Prince Alwaleed, 61 F.3d 8, 9 (2d Cir. 1995); Rubin v. Posner,

701 F. Supp. 1041, 1045 (D. Del. 1988). We believe, however, that the

better approach is to rely on Delaware state courts to the greatest extent

possible. Under Kamen, we give preference to the state courts’ approach.

15The demand letters were identified in the Complaints, and the thirty

letters sent to the Moving Issuers were submitted to the district court as

part of their Motion to Dismiss. Because the parties did not dispute the

authenticity of these documents, we may consider them without converting the motion to dismiss into a motion for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). 

19118 SIMMONDS v. CREDIT SUISSE SECURITIES
prospectus . . . coordinated their efforts for the purpose of

acquiring, holding, and/or disposing of securities of the Company,” obtained beneficial ownership of shares amounting to

more than 10% of the company’s outstanding common stock

in the year following the IPO, “engaged in purchases and

sales of Company within periods of less than six months during” that year, and failed to report those transactions as

required by Section 16(a). Simmonds “demand[ed] that the

board of directors prosecute a claim against” those persons

“for violations of § 16(b) of the Securities Exchange Act of

1934,” in order to “compel[ ] [them] to disgorge the profits

they made through purchases and sales of Company stock.”

In response to twenty-five of the thirty Moving Issuers’

requests for additional information, Simmonds explained that

“the challenged transactions involved the activities of the lead

underwriters, the other IPO underwriters, and the officers,

directors and principal shareholders of the Company . . .

related to improper IPO allocation (so-called ‘laddering’ and

‘spinning’) and research and stock rating activities during the

Relevant Period. As you are aware, information regarding

these activities is readily available at court, law firm and SEC

websites.”

16

16These follow-up letters were not mentioned in the Complaints or submitted by any of the Defendants in connection with the various motions

to dismiss. Rather, they were submitted by Simmonds in opposition to the

Moving Issuers’ Motion to Dismiss. Ordinarily such extrinsic evidence

may not be considered at this stage of the litigation. See Knievel, 393 F.3d

at 1076. The district court determined, however, that these documents

could be considered as part of the defendants’ challenge to subject matter

jurisdiction under Fed. R. Civ. P. 12(b)(1). See In re Section 16(b) Litig.,

602 F. Supp. 2d 1202, 1210 (W.D. Wash. 2009) (“A jurisdictional challenge under [Rule 12(b)(1)] may be made on the face of the pleadings or

by presenting extrinsic evidence.” (citing Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003)). Because we are proceeding under Fed. R. Civ. P. 12(b)(6) rather than Fed. R. Civ. P. 12(b)(1), we

do not have the benefit of going beyond the pleadings as the district court

did. However, we may consider Simmonds’s follow-up letters to support

our conclusion that Simmonds’s thirty Complaints involving the Moving

Issuers must be dismissed with prejudice. See Broam v. Bogan, 320 F.3d

1023, 1026 n.2 (9th Cir. 2003). 

SIMMONDS v. CREDIT SUISSE SECURITIES 19119
[6] Simmonds’s initial demand letters satisfied the first

part of the Delaware test for demand adequacy, which

requires the shareholder to state “the identity of the alleged

wrongdoers.” Yaw, 1994 WL 89019, at *7. In FLI Deep

Marine v. McKim, the plaintiff’s demand letter stated that

“ ‘certain employees, officers and directors of [the company]

and others’ ” had diverted and misappropriated the company’s

assets. FLI Deep Marine, 2009 WL 1204363, at *1 (quoting

demand letter). The Court of Chancery stated that this letter

was sufficient to satisfy the first prong of Yaw. Id. at *1 n.6.

Simmonds’s demand letters identify the alleged wrongdoers

with a similar level of precision as in the FLI Deep Marine

plaintiff’s demand letter. Specifically, Simmonds’s letters

identified “the Company’s IPO underwriters, in addition to

certain of its officers, directors and principal shareholders, as

identified in the IPO prospectus.” Although the Moving Issuers contend that their respective prospectuses listed between

eleven and fifty-one underwriters, officers, and directors, and

we acknowledge that this is a close question, we follow the

Court of Chancery’s approach in FLI Deep Marine.

17 Because

Simmonds’s demand letters identified a closed set of alleged

wrongdoers, we agree with the district court that “the demand

letters in this case sufficiently identify the alleged wrongdoers.” In re Section 16(b) Litig., 602 F. Supp. 2d at 1212.

[7] Simmonds’s letters failed, however, to satisfy the second and third prongs of the Delaware test for demand adequacy, which require the shareholder to identify the

“wrongdoing . . . allegedly perpetrated” and “the legal action

the shareholder wants the board to take on the corporation’s

behalf.” Yaw, 1994 WL 89019, at *7.18 Simply put, Sim17The Court of Chancery’s approach is in tension with the Third Circuit’s holding in Shlensky v. Dorsey, 574 F.2d 131, 140-41 (3d Cir. 1978),

in which the court held that demand letters were inadequate where they

alleged that the “responsible individuals” should be held accountable. 

18Although the Delaware courts require the demand to describe “the

resultant injury to the corporation,” Yaw, 1994 WL 89019, at *7, this

19120 SIMMONDS v. CREDIT SUISSE SECURITIES
monds’s demand letters presented factual theories that vary

significantly from the facts alleged in the Complaints. Her

demand letters claimed that the Underwriters directly bought

and sold the Issuing Companies’ shares, and accordingly

requested that the Issuing Companies seek disgorgement of

the Underwriters’ trading profits. In contrast, her Complaints

do not allege that the Underwriters directly participated in

buying and selling the Issuing Companies’ stock, and instead

seek disgorgement of the profits the Underwriters received

through their investment banking operations.19

[8] According to the Complaints, the Underwriters violated

Section 16(b) when they profited indirectly through their customers’ purchases and sales of the Issuing Companies’ shares.

Specifically, the Complaints allege that the Underwriters

engaged in “Short-Swing Transactions” when (1) their existing customers purchased and sold the issuing company’s

stock, (2) they obtained new banking customers in exchange

for giving other companies’ insiders favorable consideration

requirement “frustrate[s] specific objectives” of Section 16(b) by adding

an additional element to the Section 16(b) cause of action. See Kamen, 500

U.S. at 98. Section 16(b) exists to remedy harms suffered by the general

investing public, not harms suffered by issuing corporations. See Kern

County, 411 U.S. at 591-92; Champion Home Builders Co. v. Jeffress, 490

F.2d 611, 619 (6th Cir. 1974) (“the absence of corporate damage is not a

factor in assessing § 16(b) liability”). Accordingly, a shareholder’s

demand letter need not identify any corporate injury in order to satisfy the

demand requirement of Section 16(b). 

19In Simmonds v. Morgan Stanley & Co., Inc., No. 09-35352, Simmonds alleges that Morgan Stanley and J.P. Morgan (the successor-ininterest to Hambrecht & Quist LLC) respectively sold $46.5 million and

$34.6 million in shares of Internap Network Services Corporation as part

of a secondary offering. Although Simmonds identified these transactions

in her Complaint, she failed to allege that these transactions violated Section 16(b) and she failed to seek disgorgement of any profits obtained

from these transactions. Accordingly, her demand letter to Internap Network Services Corporation (which is one of the Moving Issuers), was

defective for the same reasons as in the other cases. 

SIMMONDS v. CREDIT SUISSE SECURITIES 19121
in the issuing company’s IPO, and (3) they obtained additional banking business from the issuing company in

exchange for helping the issuing company’s insiders profit

from their own company’s IPO. The Complaints assert that

these “Short-Swing Transactions” violated Section 16(b), and

request disgorgement of profits obtained through these

“Short-Swing Transactions.” None of these alleged transactions is referenced in any way in the original demand letters

submitted to the Moving Issuers. The garden-variety Section

16(b) claim made out in these demand letters bears no resemblance to the elaborate scheme described in Simmonds’s

Complaints.

[9] Even if we consider Simmonds’s follow-up letters to

twenty-five of the Moving Issuers, she failed to identify the

wrongful acts “clearly and specifically.” Yaw, 1994 WL

89019, at *8. The follow-up letters noted that the “challenged

transactions . . . [are] related to improper IPO allocation (socalled ‘laddering’ and ‘spinning’) and research and stock rating activities.” Simmonds’s conclusory references to “laddering,” “spinning,” and “research and stock rating,” were vague

and ambiguous, as was her open ended reference to “court,

law firm and SEC websites,” and completely failed to provide

sufficiently detailed information to permit the boards to conduct a good faith inquiry into the alleged wrongdoing. 

[10] Moreover, because the demand letters and the Complaints contain distinct factual assertions, the demand letters

also failed to set forth “the legal action the shareholder wants

the board to take on the corporation’s behalf.” Yaw, 1994 WL

89019, at *7. The demand letters requested that the Moving

Issuers “compel[ ]” the Underwriters and other group members to “disgorge the profits they made through purchases and

sales of [the issuing company’s] stock.” The Complaints, on

the other hand, do not mention the Underwriters’ direct trading profits, and instead seek disgorgement of the profits the

Underwriters received through their investment banking operations.

19122 SIMMONDS v. CREDIT SUISSE SECURITIES
[11] The Court of Chancery has noted that demand letters

must be sufficiently specific to “enable the board to perform

its duty to make a good faith investigation of claims of

alleged wrongdoing[ ] and . . . to rectify the misconduct” at

issue in a subsequent lawsuit. Yaw, 1994 WL 89019, at *7.

The court further noted that “to require a board to investigate

claims asserted ambiguously . . . would not be an efficient use

of corporate resources, because the board would lack the

information necessary to make a good faith inquiry.” Id. Simmonds’s demand letters were particularly inadequate because

they described a different course of conduct than the one she

described in her Complaints. And clearly, Simmonds’s

demand letters could have led directors to investigate facts

(the Underwriters’ purchases and sales of Issuing Company

stock) that were only marginally related to the issues ultimately raised in the Complaints (the Underwriters’ customers’ purchases and sales of Issuing Company stock, and

associated profit-sharing agreements between the Underwriters and their customers).

We are not persuaded by Simmonds’s argument that the

Moving Issuers subjectively understood what she meant in her

demand letters. Delaware case law sets forth an objective

standard for assessing the adequacy of a demand and does not

inquire whether the board of directors had independent

knowledge of relevant information. To the extent that Simmonds’s argument has been addressed by any courts, it has

been soundly rejected. For example, the Third Circuit has

rejected a shareholder’s argument that a conclusory demand

was adequate because “the directors were in a better position

than the shareholders to make the investigation necessary to

uncover wrongdoers.” Shlensky, 574 F.2d at 141. In the

related context of demand refusal, the Delaware Supreme

Court rejected the argument that “[t]he board has better access

to the relevant facts” and plaintiffs should therefore be

relieved of their burden to show that the board’s refusal was

improper. Levine v. Smith, 591 A.2d 194, 209 (Del. 1991)

SIMMONDS v. CREDIT SUISSE SECURITIES 19123
(internal quotation marks omitted), overruled en banc on other

grounds by Brehm, 746 A.2d at 253 & n.13. 

Simmonds’s argument is an end-run around Delaware’s

requirement that shareholders make reasonably specific

demands, and were we to adopt Simmonds’s proposed

approach, Delaware’s demand standard would be eviscerated.

Plaintiffs in derivative actions often seek relief for a corporate

insider’s wrongdoing. If the demand requirements were

relaxed on account of insiders’ subjective knowledge, then

shareholders would never have to “clearly and specifically”

describe their assertions in a demand letter. See Yaw, 1994

WL 89019, at *8. To the extent that Simmonds believed that

relevant information was “readily available at court, law firm

and SEC websites” as she claimed in her follow-up letters, it

was her burden under Delaware law to distill the relevant

facts and present them to the board. If Simmonds lacked

access to necessary information that was exclusively within

the corporation’s possession, Delaware law specifically

allows a shareholder to examine “[t]he corporation’s stock

ledger, a list of its stockholders, and its other books and

records,” Del. Code Ann. tit. 8, § 220(b)(1), and Delaware

courts have strongly encouraged shareholders to avail themselves of such investigative tools, see King v. VeriFone Holdings, Inc., 994 A.2d 354, 356 & nn.2-3 (Del. Ch. 2010)

(collecting cases). In short, Delaware law does not allow

shareholders to forego pre-suit investigations in an attempt to

shift information-gathering costs onto the corporation. 

Simmonds also argues in part that these Delaware rules are

incompatible with Section 16. She alleges that she was unable

to obtain necessary information because the group members

failed to file Section 16(a) reports as required by federal law.

We disagree with Simmonds’s contention that Delaware’s

demand-specificity requirement is incompatible with Section

16(b). Delaware law expressly permits shareholders to inspect

the corporation’s “stock ledger,” which “is a compilation of

the transfers by and to each individual shareholder, with each

19124 SIMMONDS v. CREDIT SUISSE SECURITIES
transaction separately posted to separately maintained shareholder accounts.” Crown EMAK Partners, LLC v. Kurz, 992

A.2d 377, 393 (Del. 2010) (en banc) (internal quotation marks

omitted). In most Section 16(b) cases, a request to inspect the

issuing company’s books and records (including the stock ledger) would likely allow shareholders to gather enough information to submit an adequate demand to the issuing company.

Simmonds does not appear to have made any effort to obtain

such information prior to submitting her demand letters and

filing her lawsuits. Accordingly, we hold that Delaware’s

state law demand requirement is compatible with Section 16.

As an alternative to her argument that her demand letters

were adequate, Simmonds contends that the demand requirement should be excused as futile. However, Delaware courts

have repeatedly held that a shareholder concedes that a

demand is not futile by submitting a demand to the board.

“Delaware law could hardly be clearer” in holding that shareholders may not invoke the futility exception after submitting

a demand to the board. FLI Deep Marine, 2009 WL 1204363,

at *3; see also id. at *3 n.17 (collecting cases).

[12] We hold that the thirty demand letters in the record

fail to satisfy the demand requirement under Delaware law.

Accordingly, we affirm the district court’s order granting the

Moving Issuers’ motions to dismiss the thirty cases to which

they are parties.

B. Statute of Limitations

[13] The district court dismissed the cases involving the

remaining twenty-four issuers (that is, the Issuing Companies

that did not join the Moving Issuers’ Motion to Dismiss) on

account of the statute of limitations. Section 16(b) provides

that “ no . . . suit shall be brought more than two years after

the date such profit was realized” from the alleged shortswing transactions. 15 U.S.C. § 78p(b). We have previously

issued a thorough decision interpreting this provision, WhittaSIMMONDS v. CREDIT SUISSE SECURITIES 19125
ker v. Whittaker Corp., 639 F.2d 516 (9th Cir. 1981), and we

are bound by our prior holding.

In Whittaker, a corporate insider engaged in prohibited

short-swing transactions between December 1965 and

December 1970. The corporation sought disgorgement in January 1971 without filing a lawsuit. The insider paid the full

amount requested, but later filed suit against the corporation

seeking to recover some of the money he had paid. Id. at

518-19. In the lawsuit, he argued that Section 16(b)’s statute

of limitations barred the corporation from retaining any

amounts that he had obtained from short-swing transactions

prior to January 1969 (that is, two years prior to the time that

the corporation requested that he disgorge his profits). Id. at

519. The district court agreed with the insider, and “found that

various corporate officers had information which put the Corporation on notice throughout the relevant trading period”

between 1965 and 1970. Id. at 527. Based on this factual finding, the district court allowed the corporation to recover the

insider’s profits only for the two years prior to the disgorgement request. Id. at 519, 527; see also Whittaker v. Whittaker

Corp., No. 75-2546, 1977 WL 1006, at *9-10 (C.D. Cal. Mar.

22, 1977) (setting forth factual findings in greater detail).

On appeal, we explained that there were three competing

approaches to Section 16(b)’s statute of limitations: (1) a

“strict” approach under which the statute is treated as a statute

of repose—that is, a firm bar that is not subject to tolling; (2)

a “notice” or “discovery” approach like the one that had been

applied by the district court, “under which the time period is

tolled until the Corporation had sufficient information to put

it on notice of its potential § 16(b) claim”; and (3) a “disclosure” approach “under which the time period is tolled until the

insider discloses the transactions at issue in his mandatory

§ 16(a) reports.” Whittaker, 639 F.2d at 527. After thoroughly

analyzing the merits of the competing interpretations, id. at

527-30, we held unequivocally that “the disclosure interpretation is the correct construction of § 16.” Id. at 527. Under this

19126 SIMMONDS v. CREDIT SUISSE SECURITIES
approach, “an insider’s failure to disclose covered transactions in the required § 16(a) reports tolls the two year limitations period for suits under § 16(b) to recover profits

connected with such a non-disclosed transaction. The twoyear period for § 16(b) begins to run when the transactions are

disclosed in the insider’s § 16(a) report.” Id. at 530. Accordingly, we reversed the district court’s use of the “notice”

approach and held that the corporation could recover all of the

insider’s short-swing profits, even those obtained long after

the corporation was on notice of the insider’s trading. Id.

[14] In this case, the Defendants advance various arguments in an attempt to distinguish Whittaker. All of these

arguments are variations on a single theme—Simmonds knew

or should have known of the alleged wrongful conduct many

years before she filed her Complaints. But despite the Defendants’ arguments, the central holding of our opinion in

Whittaker—both in our legal analysis and our application of

the law to the facts of that case—is that the Section 16(b) statute of limitations is tolled until the insider discloses his transactions in a Section 16(a) filing, regardless of whether the

plaintiff knew or should have known of the conduct at issue.

We recently restated this holding in Roth v. Reyes, 567 F.3d

1077 (9th Cir. 2009), in which we concluded that the statute

of limitations begins to run when the insider files a Section

16(a) report even if the contents of the filing inaccurately

claim an exemption that does not actually apply. Id. at 1083.

We explained that the basic act of filing a Section 16(a) report

satisfies Whittaker’s disclosure requirement and “supports the

goals of disclosure and transparency” underlying Section 16.

Id. at 1083. 

The Defendants advance four specific points in support of

their general theory that Whittaker can be distinguished. First,

they argue that Whittaker does not apply because Simmonds

knew or should have known of the relevant facts sometime

around 2001. By that time, much of the information described

in the Complaints had been publicly disclosed in court filings,

SIMMONDS v. CREDIT SUISSE SECURITIES 19127
news reports, and the Issuing Companies’ IPO registration filings. The Defendants contend that “[w]hen a party is aware

of the necessary facts to bring a claim, there is no excuse for

any delay beyond the statute of limitations period, let alone a

delay of six years.” However, this theory was plainly rejected

in Whittaker. Our Whittaker decision reversed the district

court’s conclusion that the statute of limitations began to run

at the time that “various corporate officers had information

which put the Corporation on notice” of the insider’s shortswing trades. Whittaker, 639 F.2d at 527. The Defendants’

“notice” argument is an unpersuasive attempt to revive a theory that we considered and rejected nearly thirty years ago.

Second, the Defendants argue that the Section 16(b) limitations period should not be tolled indefinitely unless the defendant actively “conceal[s] the facts necessary to trigger a

Section 16(b) lawsuit.”

20 This theory overlooks the footnote in

Whittaker in which we explained that “[t]he failure to disclose

in § 16(a) reports, whether intentional or inadvertent, is

deemed concealment, thus triggering the traditional equitable

tolling doctrine of fraudulent concealment.” Id. at 527 n.9.

That conclusion was further bolstered by our emphasis on creating a rule that can be “mechanically calculated from objective facts,” id. at 529, which would be undermined if courts

were required to conduct case-specific inquiries into the insiders’ state of mind about their failure to file Section 16(a)

reports. 

Third, the Defendants contend that Whittaker does not

apply in this case because the Underwriters are exempt from

Section 16(a) reporting requirements under the SEC’s underwriting and market-making exemptions. However, this argu20This approach was advocated by Judge Jacobs of the Second Circuit

in Litzler v. CC Investments, L.D.C., 362 F.3d 203, 208 n.5 (2d Cir. 2004)

(Jacobs, J., concurring) (“The author of this opinion . . . would have preferred to say that the statute of limitations in Section 16(b) is equitably

tolled only when the failure to file is intentional or unreasonable.”). 

19128 SIMMONDS v. CREDIT SUISSE SECURITIES
ment finds no support in Whittaker’s bright-line rule. See

Whittaker, 639 F.2d at 527 & n.9, 530. In any event, were we

to follow the Defendants down this line of argument, we

would soon find ourselves deciding the substantive merits of

the parties’ dispute. The question of whether or not the

Underwriters are exempt from filing Section 16(a) reports is

identical to the question of whether they may be held liable

under Section 16(b). We refrain from adopting an approach

that “would merge the tolling doctrine with the substantive

wrong . . . .” Santa Maria v. Pac. Bell, 202 F.3d 1170, 1177

(9th Cir. 2000).

Finally, the Defendants argue that Whittaker does not apply

because it involved a corporation that was seeking disgorgement, rather than an outside shareholder as in the instant case.

They assert that we should adopt different lines of analysis

depending on whether the plaintiff is an issuing company or

is an outside shareholder such as Simmonds. However, our

decision in Whittaker created a blanket rule that applies in all

Section 16(b) actions. A key component of our reasoning was

that Section 16(a) notices allow the company’s shareholders

—who “are likely to be outsiders, minority holders”—to

obtain the information necessary to bring a Section 16(b)

action. Whittaker, 639 F.2d at 528. Nothing in Whittaker’s

logic or reasoning would allow us to distinguish between issuing companies and outside shareholders, and we refrain from

adopting such a strained interpretation of our precedent.

[15] In short, the fundamental holding of Whittaker is that

Section 16(b)’s two-year statute of limitations begins to run

from the time that the defendant files a Section 16(a) disclosure statement. Because Simmonds alleges that the Defendants did not file any Section 16(a) reports, we conclude that

Simmonds’s claims are not time-barred. Accordingly, the district court’s decision on this ground is reversed.

C. Cross-Appeal 

In their cross-appeal, the Underwriters contend that the district court erred by dismissing the thirty cases involving the

SIMMONDS v. CREDIT SUISSE SECURITIES 19129
Moving Issuers without prejudice on account of Simmonds’s

inadequate demand. They argue that these dismissals should

have been with prejudice because Simmonds’s claims are

time-barred. Although we disagree that Simmonds’s claims

are time-barred, we agree that the district court should have

dismissed the thirty Complaints against the Moving Issuers

with prejudice on account of her failure to satisfy the Section

16(b) demand requirement in those cases.

[16] We have previously held that a complaint may be dismissed with prejudice on account of the plaintiff’s failure to

satisfy the demand requirement, In re Silicon Graphics Inc.

Sec. Litig., 183 F.3d 970, 990-91 (9th Cir. 1999), abrogated

on other grounds, Tellabs, Inc. v. Makor Issues & Rights, 551

U.S. 308, 322-24 (2007), and various other circuits have

reached the same conclusion.21 Although the district court dismissed Simmonds’s thirty Complaints against the Moving

Issuers “without prejudice,” our decision to convert the dismissal is not unprecedented. In a derivative action in which

the shareholder failed to show demand futility, the First Circuit sua sponte converted the district court’s dismissal from

“without prejudice” to “with prejudice.” In re Kauffman Mut.

Fund Actions, 479 F.2d 257, 267 (1st Cir. 1973). The court

explained that the plaintiff was barred from relitigating the

issues decided in that action, and accordingly the dismissal

should have been entered with prejudice rather than without.

Id.

[17] We agree with the First Circuit’s approach in Kauffman. Simmonds is barred from relitigating issues relating to

21E.g., Kanter v. Barella, 489 F.3d 170, 175 (3d Cir. 2007) (dismissal

with prejudice and without leave to amend); Starrels v. First Nat’l Bank

of Chicago, 870 F.2d 1168, 1169, 1172 (7th Cir. 1989) (dismissal with

prejudice and without leave to amend); Gaubert v. Fed. Home Loan Bank

Bd., 863 F.2d 59, 62, 69 (D.C. Cir. 1988) (dismissal with prejudice and

without leave to amend); Shlensky, 574 F.2d at 141-42 (dismissal without

leave to amend); In re Kauffman Mut. Fund Actions, 479 F.2d 257, 267

(1st Cir. 1973) (dismissal with prejudice). 

19130 SIMMONDS v. CREDIT SUISSE SECURITIES
the adequacy of the demand letters she sent to the thirty Moving Issuers and the follow-up letters she sent to twenty-five of

the Moving Issuers. As with any issue litigated fully on merits, shareholders may not endlessly relitigate the adequacy of

their pre-suit demand. Accordingly, we vacate the district

court’s order dismissing without prejudice the thirty cases

involving the Moving Issuers, and the district court is

instructed to dismiss these thirty cases with prejudice.

[18] In the twenty-four cases that were improperly dismissed as time-barred and in which the Issuing Companies

did not join the Moving Issuers’ Motion to Dismiss, the district court is directed to permit the Underwriters and Issuing

Companies to seek dismissal on account of Simmonds’s failure to comply with the demand requirement.22 We note that

22Contrary to the district court’s suggestion, see In re Section 16(b)

Litig., 602 F. Supp. 2d at 1211, the Underwriters should be permitted to

file motions challenging Simmonds’s compliance with the demand

requirement. See Shlensky v. Dorsey, 574 F.2d 131, 142 (3d Cir. 1978) (“it

is well settled . . . that defendants other than the corporation whose rights

the shareholder plaintiffs are seeking to vindicate may successfully raise

the defense of failure to comply with Rule 23.1” and the demand requirement); accord Hawes v. City of Oakland, 104 U.S. 451, 461-62 (1881)

(complaint dismissed on motion by third party defendant); Brody v. Chem.

Bank, 517 F.2d 932, 933 (2d Cir. 1975) (per curiam) (complaint dismissed

sua sponte). 

The Delaware Supreme Court has thoroughly and persuasively

explained why third parties have standing to raise defenses based on the

shareholder’s failure to comply with demand requirement. Kaplan v. Peat,

Marwick, Mitchell & Co., 540 A.2d 726, 730 (Del. 1988). “The standing

of a third party to assert demand related defenses must be determined, not

on the basis of whether such status benefits the interests of the third party,

but whether according such status furthers the nature and purpose of the

demand requirement.” Id. The court explained (as we discussed supra)

that “[t]he purpose of pre-suit demand is to assure that the stockholder

affords the corporation the opportunity to address an alleged wrong without litigation and to control any litigation which does occur.” Id. Accordingly, the court concluded that third party defendants may challenge the

sufficiency of a shareholder’s demand. Id. 

SIMMONDS v. CREDIT SUISSE SECURITIES 19131
our discussion in this opinion will almost certainly resolve the

twenty remaining cases involving issuers incorporated in Delaware. (We express no opinion regarding the four cases

involving non-Delaware issuers.) However, as Simmonds’

demands letters to those companies are not in the record, we

leave it to the district court to address those cases in the first

instance.23 We note that four of the cases involve issuers

We agree with the reasoning of the Delaware Supreme Court in Kaplan,

and disagree with the district courts that have held that this result is at

odds with the purposes of Section 16(b). See In re Section 16(b) Litig., 602

F. Supp. 2d at 1211 (collecting cases). In light of our general discussion

of the demand requirement, we conclude that the Section 16(b) demand

requirement—like the demand requirement in all derivative actions—

exists for the purpose of allowing corporations to investigate their insiders’ wrongdoing, resolve disputes without resorting to litigation, and control any litigation that may take place. See Kaplan, 540 A.2d at 730. In

addition, we note that the demand requirement of Section 16(b) is a

required statutory precondition to a shareholder’s lawsuit. See 15 U.S.C.

§ 78p(b). As the Delaware Supreme Court explained in Kaplan, third parties are permitted to raise demand-related defenses because a shareholder’s “right to bring a derivative action does not come into existence until

the plaintiff shareholder has made a demand on the corporation to institute

such an action.” Id. We see no reason why such reasoning does not apply

in the Section 16(b) context. 

Accordingly, in the twenty-four cases being remanded, the district court

should follow the general rule under both Delaware law and federal law:

any defendant in a Section 16(b) action may challenge the adequacy of the

shareholder’s pre-suit demand. 

23Because consolidated appeals “do not merge into one” for all purposes, Fed. R. App. P. 3 advisory committee’s note (1998 amend.), the

district court should be careful about invoking the “law of the case” doctrine in the remanded cases involving the twenty issuers incorporated in

Delaware that did not join the Moving Issuers’ Motion to Dismiss, see

generally, Joan Steinman, Law of the Case: A Judicial Puzzle in Consolidated and Transferred Cases and in Multidistrict Ligitation, 135 U. Pa. L.

Rev. 595, 623-25 (1987) (hereinafter Steinman); cf. State HMO Management, Inc. v. Tingley Systems, Inc., 181 F.3d 174, 180 (1st Cir. 1999)

(treating consolidated cases “as a single action for res judicata purposes”).

However, if Simmonds’s demand letters to those twenty Delaware19132 SIMMONDS v. CREDIT SUISSE SECURITIES
incorporated in jurisdictions other than Delaware (two issuers

are incorporated in California, one in Washington, and one in

Bermuda). We direct the district court to analyze the adequacy of those demand letters in accordance with the choiceof-law principles articulated in Kamen—namely, the court

should apply the demand requirements of California, Washington, and Bermuda law, unless those requirements “would

frustrate specific objectives” of Section 16 and the Exchange

Act. Kamen, 500 U.S. at 98 (citation, internal quotation

marks, and alterations omitted).

CONCLUSION

We AFFIRM the district court’s conclusion that Simmonds’s demand letters to the thirty Moving Issuers were

inadequate under Delaware law, REVERSE the district

court’s conclusion that all of Simmonds’s claims are timebarred, and VACATE the district court’s dismissal orders as

to the thirty Moving Issuers with instructions that the district

court dismiss these thirty cases with prejudice on account of

Simmonds’s failure to satisfy Delaware’s demand requirement. We REMAND the remaining twenty-four cases (that is,

the cases involving the twenty-four Issuing Companies that

did not join the Moving Issuers’ Motion to Dismiss) with

instructions for the district court to allow the Underwriters

and Issuing Companies to file an appropriate motion to challenge the adequacy of Simmonds’s demand letters under Delaware, California, Washington, and Bermuda law, unless that

law conflicts with Section 16(b). Costs are awarded to the

Appellees.

incorporated issuers are substantially similar to the thirty demand letters

examined in this opinion, the district court is bound by stare decisis to

apply our holding that demand letters such as the thirty letters we have

examined are inadequate as a matter of Delaware law. See Steinman,

supra, at 624-25. 

SIMMONDS v. CREDIT SUISSE SECURITIES 19133
AFFIRMED IN PART, REVERSED IN PART,

VACATED IN PART, AND REMANDED IN PART.

M. SMITH, Circuit Judge, specially concurring:

The statutory text of Section 16(b) provides that “no such

suit shall be brought more than two years after the date such

profit was realized.” 15 U.S.C. § 78p(b). In my view, “no

suit” means no suit, and “two years after the date such profit

was realized” means two years after the insider’s final profitable transaction, regardless of when—or even if—a Section

16(a) report is filed. The text of the statute sets a firm bar

against Section 16(b) suits filed more than two years after the

transaction is completed. Accordingly, I agree with the

Supreme Court’s dictum that Section 16(b) “sets a 2-year . . .

period of repose.” Lampf, Pleva, Lipkind, Prupis & Petigrow

v. Gilbertson, 501 U.S. 350, 360 n.5 (1991). 

This straightforward textual reading is further confirmed by

comparing the language of Section 16(b) with the language of

the other statutes of limitations in our securities laws. See

Lampf, 501 U.S. at 360-61 & nn.5-7. The Court in Lampf

explained that language such as Section 16(b)’s “no such suit

shall be brought” creates periods of repose that are not subject

to tolling. Id. at 360-61, 363. In addition, the general securities fraud statute of limitations added by the Sarbanes-Oxley

Act of 2002, 116 Stat. 801, provides that securities fraud suits

“may be brought not later than . . . 5 years after such violation.” 28 U.S.C. § 1658(b)(2). The Supreme Court recently

noted that this provision “giv[es] defendants total repose after

five years.” Merck & Co., Inc. v. Reynolds, 130 S. Ct. 1784,

1797 (2010) (emphasis added). There is little meaningful distinction between the language of 28 U.S.C. § 1658(b)(2) and

Section 16(b)—one provides that suits “may be brought not

later than . . . 5 years after such violation,” and the other provides that “no such suit shall be brought more than two years

19134 SIMMONDS v. CREDIT SUISSE SECURITIES
after the date such profit was realized.” To me, this nearly

identical language should “giv[e] defendants total repose”

under both statutes. See Merck, 130 S. Ct. at 1797.

There are numerous reasons why Congress would elect to

create a firm two-year period of repose for Section 16(b)

actions. Although there is no direct evidence of Congress’s

intent, the legislative history has left behind an intriguing

clue. When the Senate and House of Representatives passed

their respective bills that later became the Exchange Act, the

House of Representatives’s verison did not even provide for

a private right of action under Section 16(b), whereas the Senate’s version provided a right of action but omitted a statute

of limitations. Romeo & Dye, supra, § 1.02[3][b][vi]. It is

reasonable to infer that the House negotiators, in reaching a

compromise with the Senate over the inclusion of a private

right of action, might have bargained to include a stringent

statute of limitations to circumscribe that right of recovery. 

Admittedly, the legislative history is inconclusive, but a

restrictive statute of limitations is eminently logical. Section

16(b) imposes an inflexible penalty on corporate insiders even

if they are not at fault and third parties are unharmed. As Section 16(b)’s critics have noted, its disgorgement provision “is

little more than a trap for the unwary.” Id. § 9.01[11][a]. It

makes no sense to allow individuals to be hauled into court

years—or even decades—after they unintentionally violate

Section 16. Our holding in Whittaker creates the possibility

that “a claim that affects long-settled transactions might hang

forever over honest persons.” Litzler v. CC Investments,

L.D.C., 362 F.3d 203, 208 n.5 (2d Cir. 2004) (Jacobs, J., concurring). Whittaker could lead to the anomalous situation in

which a corporate officer who mistakenly calculates the sixmonth short-swing period can be compelled to disgorge his

trading profits decades after the fact, whereas a culpable officer who engages in fraudulent insider trading becomes

immune from civil suit after five years as long as his trades

were spaced more than six months apart. I fail to see the logic

SIMMONDS v. CREDIT SUISSE SECURITIES 19135
behind such a result, and I fear that Whittaker failed to foresee

such anomalies. 

I note that Whittaker was motivated by the well-intentioned

concern that corporate insiders could avoid Section 16(b) liability if they flout Section 16(a)’s reporting requirements.

However, I do not believe that this concern warrants the creation of never-ending liability for corporate directors, officers,

and shareholders. The Exchange Act is a comprehensive statute that was designed to address various types of wrongdoing.

It is inappropriate for us to use Section 16(b), which prohibits

certain types of insider trading, to enforce the policies of Section 16(a), which requires disclosure of insider trading. The

Exchange Act creates more than adequate enforcement mechanisms for enforcing Section 16(a)’s disclosure requirements.

If the insiders do not file their reports, they may be held professionally, civilly, or criminally liable for failing to do so.

See, e.g., 15 U.S.C. § 78ff(a) (criminal penalties); In re Gold,

Exchange Act Release No. 34-51585, 85 S.E.C. Docket 724

(Apr. 20, 2005) (professional and civil penalties). And if the

insiders withhold their Section 16(a) reports in order to profit

from inside information, they may be subjected to Rule 10b5 securities fraud actions. See, e.g., In re Daou Sys., Inc., 411

F.3d 1006, 1022-24 (9th Cir. 2005).

Ultimately, I believe that Whittaker’s cure is worse than the

disease it intended to address. I would have preferred to adopt

any one of the three alternatives to Whittaker: the statute of

repose approach, Lampf, 501 U.S. at 360 n.5, the actual notice

approach, Litzler, 362 F.3d at 208, or the hybrid approach that

tolls the statute in cases of “fraud or concealment,” id. at 208

n.5 (Jacobs, J., concurring). Of these three approaches, the

statutory text and statutory structure clearly point toward the

repose approach. Were it not for Whittaker, I would hold that

Section 16(b) suits may not be brought more than two years

after the short-swing trades take place.

19136 SIMMONDS v. CREDIT SUISSE SECURITIES
Despite these concerns, I am compelled to follow Whittaker. See Miller v. Gammie, 335 F.3d 889, 899 (9th Cir. 2003)

(en banc). Accordingly, I concur with the panel’s decision.

SIMMONDS v. CREDIT SUISSE SECURITIES 19137