According to the docket, on May 25, 2004, the plaintiffs filed a notice of appeal from the April 29, 2004 Order and Judgment dismissing the case. On June 28, 2006, the Court entered the Judgment from the Ninth Circuit U.S. Court of Appeals affirming the judgment of the District Court.
Previously, on September 13, 2002, the plaintiffs filed a Corrected First Amended Consolidated Class Action Complaint, and the defendants responded by filing motions to dismiss the complaint. On June 4, 2003, the Court entered the Order by U.S. District Judge Phyllis J. Hamilton granting the defendants’ motions to dismiss with leave to amend the complaint. On July 29, 2003, the plaintiffs filed a Second Amended Consolidated Class Action Complaint, and the defendants responded by filing motions to dismiss the complaint. On January 22, 2004, the plaintiffs filed a Corrected Second Amended Consolidated Class Action Complaint.
On May 4, 2004, the Court entered the Order granting the motions to dismiss the second amended complaint with prejudice.
The original complaint was filed alleging that defendants violated Sections 11, 12, and 15 and the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between June 21, 1999 and July 2, 2001, thereby artificially inflating the price of Metricom common stock. Specifically, the complaint alleges that certain defendants, beginning in June 1999, issued statements concerning Metricom business, financial results and operations which failed to disclose or only partially disclosed three material agreements with MCI WorldCom, Inc. ("WorldCom"). These material transactions were: (i) a Reseller Agreement, executed June 20, 1999 (initially disclosed to the public on November 5, 1999); (ii) a Global Services Agreement, executed October 3, 2000, which required Metricom to pay to WorldCom substantial "termination" fees, and (iii) an Agreement whereby WorldCom was to supply selected telecommunications equipment, office equipment, and related office product to Metricom. Neither of the last two material agreements nor the creation of substantial contingent liability were ever disclosed to the public. On February 7, 2000, Metricom closed a secondary public offering 5 million shares of its common stock at a price to the public of $87 per share. Many of the material terms of the operant Worldcom agreement were not revealed to investors prior to the Offering. Nor were corrective disclosures made as new information relating to the agreements with Worldcom became known. Additionally, although the Company's business plan and marketing strategy were known to be flawed, certain defendants failed to disclose that material fact to the public. Additionally, certain defendants disseminated materially false and misleading statements which manipulated and artificially inflated Metricom's common stock price. These knowingly false and misleading statements drove Metricom stock from $11.06 per share near the beginning of the Class Period to as high as $109.50 per share on January 28, 2000 just prior to the Offering. After dissipating substantially all of Metricom's cash and making a series of shocking negative disclosures in the first half of the year, on July 2, 2001, Metricom and its affiliates filed voluntary petitions for bankruptcy relief. Only then did it become apparent that the Company's entire business model and marketing strategy had been flawed from the start. In the bankruptcy filings, it was disclosed that contingent claims approached almost $700 million with total debts exceeding $1 billion. Metricom's last pre-bankruptcy trade per share was for $1.82, a decline exceeding 93% over the prior 12 months.
NOTE: Metricom is not named as a defendant solely because it filed a voluntary petition for bankruptcy under Chapter 11 of the United States Code, 11 U.S.C. ''101 et seq. on July 2, 2001.
