Dell obtains dismissal of securities litigation
Client(s) Dell Inc.
Jones Day represented Dell Inc., the individual defendants and present and former directors of Dell's Board in securities litigation, derivative cases, and ERISA class actions filed in the Western District of Texas, Travis County state court and Delaware Chancery court.
On October 7, 2008, the U.S. District Court for the Western District of Texas dismissed the consolidated securities class action complaint against Dell Inc. (the "Company"), certain of its current and former directors and officers, and its independent auditor. In re Dell Inc. Sec. Litig., No. A-06-CA-726-SS, 2008 U.S. Dist. Lexis 86054 (W.D. Tex. Oct. 7, 2008). In the consolidated amended complaint, the plaintiff had alleged that the Company engaged in improper accounting practices and made false and misleading statements and asserted claims under Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 arising out of the Company's disclosures in 2006 regarding an Audit Committee investigation into certain accounting and financial matters and the Company's subsequent restatement of its financial statements in October 2007. The plaintiff asserted that the price of Dell stock had dropped $21.00 during the class period resulting in a loss of $40 billion to Dell's market cap.
Jones Day moved to dismiss the consolidated amended complaint on the grounds that the plaintiff failed to adequately plead scienter or loss causation. Judge Sam Sparks, in a 49-page opinion, agreed with these arguments, holding that none of the plaintiff's allegations was sufficient to raise a strong inference of scienter against the defendants and that the plaintiff had failed to allege a sufficient connection between the alleged misrepresentations/omissions and a decline in the Company's stock price. The Court also found that permitting the plaintiff an opportunity to amend would be futile, and Judge Sparks therefore dismissed the claims with prejudice. The plaintiff appealed the dismissal and the parties agreed to settle the case while the appeal was pending. The district court preliminarily approved the settlement on December 22, 2009 and entered final approval of the settlement on June 11, 2010.
In re Dell Inc. Securities Lit, No. 1:06-CV-726-SS (W.D. Tex., Austin Div.)