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Who knew jurors in the Northern District of California could be so corporate-friendly? The first securities class action to go to verdict here since 2002 ended with a defense verdict last week � just like the one in 2002. This time, JDS Uniphase Corp. and four of its executives snatched a complete win, ending plaintiffs’ dreams of up to $18 billion in damages. Morrison & Foerster partners James Bennett and Jordan Eth represented the company and three executives, while Heller Ehrman partner Michael Shepard defended former CEO Kevin Kalkhoven. New York-based Labaton Sucharow represented the plaintiff class. While Shepard cautioned that every case must be judged on its own facts, he said jurors here were not swayed by the personal wealth of the defendants. “The question I have as a lawyer for my client is: Will the jury be fair to a really rich guy when investors lose money?” Shepard said. “I take my hat off to the jury, who were able to keep their eyes on the evidence and decide that even rich guys can do the right thing.” Catherine LaMarr, general counsel for the Connecticut state treasurer’s office, said she was “very disappointed” in the verdict, but proud of her trial team. “I certainly hope this case is not going to be touted as yet another opportunity for certain people in corporate America to hide information from investors,” LaMarr said. Investors accused the JDS defendants of misrepresenting the true health of the telecom company in 2000 and 2001, resulting in an artificially inflated stock price. The executives sold off large chunks of their own stock before the stock plummeted. In August 2000, JDS stock traded as high as $125. Two years later, it was trading under $3 a share. The defense aimed to put the JDS stock dive into the context of the overall telecom crash of 2001. Company executives had no idea such a huge market shift was on the horizon when they sold their stock, the defense argued. The other three defendants are former CEO Jozef Strauss, former Chief Financial Officer Anthony Muller and former Chief Operating Officer Charles Abbe. Securities class actions rarely reach trial. But when they do, the Northern District doesn’t seem like such a bad place for defendants, as lawyers for Everex found when they won in 2002. The same is true nationwide: Of 11 securities cases to reach a verdict since 1996 (including JDS), the defense has won seven of them, according to research from RiskMetrics Group. Plaintiffs have won three, and one was a hung jury. Reached after the verdict was read in U.S. District Judge Claudia Wilken’s Oakland courtroom, Shepard said he’d felt confident the entire verdict would go for the defense based on the jury’s answer to the first question on the form: whether the executives made untrue statements to the market. The jurors answered “no.” “That was a very powerful sign from the very first,” Shepard said. MoFo’s Bennett said he thinks the jury got the right impression from his clients when they took the stand � that they are honest businessmen unjustly accused. “It’s more than just credibility. These guys were put on trial for their entire lives,” Bennett said. Orrick, Herrington & Sutcliffe partner Robert Varian, who represented Everex in its win five years ago, said the JDS verdict will have an impact on the small number of cases that survive pretrial motions and get far enough downstream where trial is a possibility. It will be easier to convince defendants that they can win these cases, he said.

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