The original complaint charges Smart Modular and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants falsely represented that Smart Modular was "experiencing accelerating demand" for its memory modules, its strong EPS reflected the "fundamental . . . strength of the markets we address" and Smart Modular's "growth rate will likely accelerate."

A similar lawsuit was filed in the Superior Court of California.

On October 9, 1998, District Court Judge James Ware granted the motion to consolidate several cases and further approved the appointment of lead counsel. On November 30, 1998, the plaintiffs filed a Consolidated Class Action Complaint. The defendants responded by filing a motion to dismiss the Consolidated Class Action Complaint on February 9, 1999. After an order to stay the proceedings and several statements of recent decisions filed by the defendants, Judge Ware dismissed the case by Court Order on January 26, 2001. According to the Order the case is dismissed with prejudice. The Order further states that this order is without prejudice to any parallel state law claims and actions asserting only state law claims and the court finds that rule 11 sanctions are not warranted.