This was the initial Ebix filing requesting that case be dismissed based on the recent Meyer decision.
No ruling from court as of September 22nd, 2013.
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Ebix Class Action Lawsuit_Argument for Dismissal 6-19-2013
This was the initial Ebix filing requesting that case be dismissed based on the recent Meyer decision.
No ruling from court as of September 22nd, 2013.
Direitos autorais:
Attribution Non-Commercial (BY-NC)
Formatos disponíveis
Baixe no formato PDF, TXT ou leia online no Scribd
This was the initial Ebix filing requesting that case be dismissed based on the recent Meyer decision.
No ruling from court as of September 22nd, 2013.
Direitos autorais:
Attribution Non-Commercial (BY-NC)
Formatos disponíveis
Baixe no formato PDF, TXT ou leia online no Scribd
ATLANTA DIVISION ) IN RE: EBIX, INC. ) SECURITIES LITIGATION ) ) CIVIL ACTION NO. 1:11-CV-02400-RWS
MOTION FOR 1UDGMENT ON THE PLEADINGS Todd R. David Georgia Bar No. 206526 John A. Jordak, Jr. Georgia Bar No. 404250 Todd F. Chatham Georgia Bar No. 196328 ALSTON & BIRD LLP 1201 West Peachtree Street Atlanta, Georgia 30309 Telephone: (404) 881-7000 Fax: (404) 253-8358 Counsel Ior DeIendants Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 1 of 29 - i - TABLE OF CONTENTS I. INTRODUCTION...........................................................................................1 II. ARGUMENT AND CITATION OF AUTHORITIES ...................................2 A. Fed. R. Civ. P. 12(c) Judgment on the Pleadings Standard ..................2 B. DeIendants are Entitled to Judgment on the Pleadings.........................3 1. The Eleventh Circuit`s Recent Mever v. Greene Decision Makes Clear that Third-Party Announcements that Disclose No New Facts and Merely Express the Opinions oI Others Based on Already Public InIormation Fail as a Matter oI Law..............................................................................6 a. Background.......................................................................6 b. The Eleventh Circuit`s Decision....................................... 8 2. Under Mever v. Greene, the CopperIield Report and the Bloomberg Article Are Not Corrective Disclosures. ................13 a. The CopperIield Report ..................................................14 b. The Bloomberg Article ...................................................18 III. CONCLUSION..............................................................................................22 Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 2 of 29 - ii - TABLE OF AUTHORITIES Page(s) CASES Cannon v. Citv of W. Palm Beach, 250 F.3d 1299 (11th Cir. 2001) ............................................................................2 Conner v. Tate, 130 F. Supp. 2d 1370 (N.D. Ga. 2001).................................................................2 Dura Pharms., Inc. v. Brouao, 544 U.S. 336 (2005).....................................................................................passim FinaWhat Investors Grp. v. FinaWhat.com, 658 F.3d 1282 (11th Cir. 2011) ...................................................................passim Horslev v. Felat, 304 F.3d 1125 (11th Cir. 2002) ............................................................................3 Hubbara v. BankAtlantic Bancorp, Inc., 688 F.3d 713 (11th Cir. 2012) ..............................................................................5 In re Merck & Co., Inc. Sec. Litig., 432 F.3d 261 (3d Cir. 2005) .....................................................................6, 11, 18 In re Omnicom Grp, Inc. Sec. Litig., 597 F.3d 501 (2d Cir. 2010) .....................................................................6, 11, 18 Mever v. Greene, 710 F.3d 1189 (11th Cir. 2013) ...................................................................passim Robbins v. Koger Props., Inc., 116 F.3d 1441 (11th Cir. 1997) ............................................................................4 Scott v. Tavlor, 405 F.3d 1251 (11th Cir. 2005) ............................................................................2 Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 3 of 29 - iii - Stoneriage Inv. Partners, LLC v. Scientific-Atlanta, 552 U.S. 148 (2008)..............................................................................................3 Teachers Ret. Svs. of La. v. Hunter, 477 F.3d 162 (4th Cir. 2007) ..........................................................................6, 11 Thompson v. RelationServe Meaia, Inc., 610 F.3d 628 (11th Cir. 2010) ..............................................................................3 STATUTES 15 U.S.C. 78j(b) ......................................................................................................3 15 U.S.C. 78t(a) ......................................................................................................3 RULES Fed. R. Civ. P. 12(c)...................................................................................................2 OTHER AUTHORITIES 17 C.F.R. 240.10b-5................................................................................................3 Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 4 of 29 I. INTRODUCTION In light oI the recent binding authority issued by the Eleventh Circuit in Mever v. Greene, 710 F.3d 1189 (11th Cir. 2013), neither oI the two alleged curative disclosures relied upon in the Consolidated Amended Complaint ('CAC) (Dkt. No. 22) is suIIicient as a matter oI law Ior the purposes oI loss causation. The CAC attempts to base its theory oI loss causation on two purported corrective disclosures -- (1) an anonymous blog post by 'CopperIield Research, a nameless short seller oI Ebix stock, that Iirst appeared on the Seeking Alpha and Scriba websites on March 22, 2011, and that made unsubstantiated claims about the Company`s business practices and strategy (the 'CopperIield Report) (attached hereto as Ex. A) (CAC at 4, 247-250); and, (2) a June 30, 2011, Bloomberg news article about certain unsubstantiated allegations in a lawsuit Iiled against Ebix by Iormer shareholders oI a company that Ebix acquired (the Bloomberg Article) (attached hereto as Ex. B) (CAC at 6, 253). As shown below, however, the two alleged corrective disclosures at issue here, just like the deIicient Einhorn Presentation rejected by the Eleventh Circuit in Mever, merely re- packaged inIormation that was already a matter oI public record. They clearly did not reveal any new inIormation that was previously unavailable to the market. As such, the CopperIield Report and the Bloomberg Article are insuIIicient as a matter Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 5 of 29 - 2 - oI law to constitute corrective disclosures Ior purposes oI pleading loss causation. Accordingly, DeIendants respectIully request that the Court enter judgment in their Iavor pursuant to Fed. R. Civ. P. 12(c). II. ARGUMENT AND CITATION OF AUTHORITIES A. Fed. R. Civ. P. 12(c) 1udgment on the Pleadings Standard A party may Iile a motion Ior judgment on the pleadings aIter the pleadings are closed but within such time as not to delay trial. Conner v. Tate, 130 F. Supp. 2d 1370, 1373 (N.D. Ga. 2001). Judgment on the pleadings is appropriate when there are no material Iacts in dispute and the moving party is entitled to judgment as a matter oI law. Scott v. Tavlor, 405 F.3d 1251, 1253 (11th Cir. 2005) (citing Cannon v. Citv of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001)). In rendering a judgment on the pleadings, a court considers only the substance oI the pleadings and any judicially noticed Iacts. Conner, 130 F. Supp. 2d at 1373. The Court should enter judgment when it is apparent Irom the pleadings that a party can prove no set oI Iacts in support oI |its| claim which would entitle |it| to relieI. Horslev v. Felat, 304 F.3d 1125, 1131 (11th Cir. 2002). Here, the pleadings are closed and the standard under Rule 12(c) is easily met, as shown below. Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 6 of 29 - 3 - B. Defendants are Entitled to 1udgment on the Pleadings. To prevail under 10(b) oI the Securities Exchange Act ('Exchange Act) 1 and Rule 10b-5 promulgated thereunder, 2 a plaintiII must adequately allege and prove the Iollowing: (1) a material misrepresentation or omission; (2) scienter (i.e., a wrongIul state oI mind); (3) a connection between the misrepresentation and the purchase or sale oI a security; (4) reliance, oIten reIerred to in cases involving public securities markets (i.e., Iraud-on-the-market cases) as transaction causation; (5) economic loss; and (6) 'loss causation (i.e., a causal connection between the material misrepresentation and the loss). 3 Dura Pharms., Inc. v. Brouao, 544 U.S. 336, 341-42 (2005). Failure to show even one oI these essential elements is Iatal to a plaintiII`s 10(b) claim. See e.g., Dura, 544 U.S. at 347-48; Stoneriage Inv. Partners, LLC v. Scientific-Atlanta, 552 U.S. 148, 166-67 (2008). With respect to the loss causation element, the Supreme Court has emphasized that the language oI the Private Securities Litigation ReIorm Act 1 15 U.S.C. 78j(b). 2 17 C.F.R. 240.10b-5. 3 The CAC also attempts to state a claim under 20(a) oI the Exchange Act, 15 U.S.C. 78t(a). Liability under 20(a) is derivative to liability under 10(b), however, so the analysis oI the 20(a) claim is subsumed by the analysis oI the 10(b) claim. See Thompson v. RelationServe Meaia, Inc., 610 F.3d 628, 635-36 (11th Cir. 2010). In other words, iI the 10(b) claim Iails, the 20(a) claim necessarily Iails as well. Ia. Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 7 of 29 - 4 - 'makes clear Congress` intent to permit private securities || actions Ior recovery where, but only where, plaintiIIs adequately allege and prove the traditional elements oI causation and loss. Dura, 544 U.S. 336, 346 (2005). To show loss causation in a 10(b) claim, there must be a causal connection between the misrepresentation and the investment`s subsequent decline in value. Robbins v. Koger Props., Inc., 116 F.3d 1441, 1448 (11th Cir. 1997). By ensuring that only losses actually attributable to a given misrepresentation are cognizable, the loss causation requirement ensures that the Iederal securities laws do not becom(e) a system oI investor insurance that reimburses investors Ior any decline in the value oI their investments. In this way, loss causation polices the realm oI 10(b) claims, guarding against their use as an in terrorem device to Iorce companies to settle claims simply to avoid the cost and burden oI litigation. Mever, 710 F.3d at 1196 (quoting Robbins, 116 F.3d at 1447). In a Iraud-on-the-market case such as that presented here, 4 loss causation requires the plaintiII to show not only that a Iraudulent material misrepresentation artiIicially inIlated the security`s value, but also that 'the Iraud-induced inIlation that was baked into plaintiII`s purchase price was subsequently removed Irom the stock`s price, thereby causing losses to the plaintiII. FinaWhat Investors Grp. v. 4 The CAC and PlaintiII`s Motion Ior Class CertiIication ('Class Motion) (Dkt. No. 45) both readily admit that the CAC`s claims are premised upon the Iraud-on- the-market doctrine. (See CAC at 260-261; Class Motion at 18-24.) Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 8 of 29 - 5 - FinaWhat.com, 658 F.3d 1282, 1311 (11th Cir. 2011); see also Hubbara v. BankAtlantic Bancorp, Inc., 688 F.3d 713, 725 (11th Cir. 2012). PlaintiIIs oIten attempt to demonstrate loss causation in a Iraud-on-the- market case circumstantially, by '(1) identiIying a corrective disclosure` (a release oI inIormation that reveals to the market the pertinent truth that was previously concealed or obscured by the company`s Iraud); (2) showing that the stock price dropped soon aIter the corrective disclosure; and (3) eliminating other possible explanations Ior this price drop . . . . FinaWhat, 658 F.3d at 1311-12. Thus, the loss causation analysis in a Iraud-on-the-market case Iocuses on the Iollowing question -- even iI the plaintiIIs paid an inIlated price Ior the stock as a result oI the Iraud (i.e., even iI the plaintiIIs relied), did the relevant truth eventually come out and thereby cause the plaintiIIs to suIIer losses?` Mever, 710 F.3d at 1197 (quoting FinaWhat, 658 F.3d at 1312). Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 9 of 29 - 6 - Decision Makes Clear that Third-Party Announcements that Disclose No New Facts and Merely Express the Opinions of Others Based on Already Public Information Fail as a Matter of Law. In Mever v. Greene, the Eleventh Circuit recently joined the decisions oI other circuits, including the Second, 5 Third, 6 and Fourth, 7 in holding that an analyst or reporter`s negative characterization oI previously known inIormation about a company does not constitute a corrective disclosure as a matter oI law and is, thereIore, insuIIicient to plead loss causation. 710 F.3d at 1197-1200. a. Backgrouna In Mever, the operative complaint alleged that the St. Joe Company, a real estate developer, made material misstatements and omissions in its public Iilings by overstating the value oI its real estate holdings and Iailing to record impairment charges on its assets. Ia. at 1192. The complaint alleged three purported corrective disclosures Ior the purposes oI loss causation. 5 See, e.g., In re Omnicom Grp, Inc. Sec. Litig., 597 F.3d 501, 512-13 (2d Cir. 2010). 6 See, e.g., In re Merck & Co., Inc. Sec. Litig., 432 F.3d 261, 270-71 (3d Cir. 2005). 7 See, e.g., Teachers Ret. Svs. of La. v. Hunter, 477 F.3d 162, 187-88 (4th Cir. 2007). Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 10 of 29 - 7 - First, the complaint claimed that the alleged 'truth about St. Joe`s overstated real estate holdings began to come to light on October 13, 2010, when David Einhorn, a short-sale hedge Iund manager, gave a presentation at an investor conIerence entitled 'Field oI Schemes: II You Build It, They Won`t Come (the 'Einhorn Presentation). Ia. at 1193. During the presentation, Einhorn suggested that St. Joe`s assets were signiIicantly overvalued and should, thereIore, be written down. Ia. During the two days oI trading aIter the release oI the Einhorn Presentation, St. Joe`s stock price declined approximately 20 on unusually high volume. Ia. The second purported corrective disclosure alleged in the complaint was on January 10, 2011, when St. Joe disclosed that the SEC had initiated an inIormal inquiry into the company`s policies and practices concerning the impairment oI its real estate assets. Ia. at 1193. Finally, the third purported corrective disclosure was six months later in July 2011, when St. Joe announced that the SEC had issued an order oI private investigation regarding the company`s compliance with the antiIraud provisions oI the Iederal securities laws and stock ownership reporting requirements. Ia. St. Joe`s stock price declined 7 on the date the inIormal SEC investigation was Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 11 of 29 - 8 - announced in January 2011, and 9 on the date the order oI private investigation was disclosed in July 2011. Ia. at 1201. The plaintiIIs Iiled suit against St. Joe and certain oI its current and Iormer oIIicers Ior alleged violations oI 10(b) and 20(a) oI the Exchange Act. Ia. at 1192. The deIendants moved to dismiss the complaint based on the plaintiIIs` purported Iailure to allege an actionable misrepresentation, loss causation, and scienter. The District Court agreed with each oI the deIendants` arguments and dismissed the complaint with prejudice. Ia. b. The Eleventh Circuits Decision On appeal, the Eleventh Circuit aIIirmed the District Court`s decision on the basis that the complaint Iailed to plead loss causation adequately. Ia. In its opinion, the Court addressed and rejected in turn each oI the three purported corrective disclosures upon which plaintiIIs had based their theory oI loss causation (1) the Einhorn Presentation; (2) the Company`s disclosure oI an inIormal SEC investigation in January 2011; and (3) the Company`s announcement in July 2011 that the SEC`s inIormal investigation had ripened into a 'private order Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 12 of 29 - 9 - oI investigation. Ia. at 1197. For purposes oI the present Motion, the Eleventh Circuit`s analysis oI the Einhorn Presentation is dispositive. 8 The plaintiIIs in Mever argued that the Einhorn Presentation should qualiIy as a corrective disclosure because it contained in-depth analysis oI inIormation not readily available to the investing public and revealed to the market that St. Joe`s real-estate assets needed to be impaired.` Ia. The Eleventh Circuit unequivocally rejected this argument, holding that the Einhorn Presentation was not a corrective disclosure suIIicient to establish loss causation Ior the purpose oI pleading a 10(b) claim because it was based on previously released and publicly available inIormation. Ia. at 1198. Emphasizing that a corrective disclosure obviously must disclose new inIormation` to the market, the Court explained -- the Iact that the sources used in the Einhorn Presentation were already public is Iatal to the |plaintiIIs`| claim oI loss causation. Ia. (emphasis in original) (quoting FinaWhat, 658 F.3d at 1311, n.28). 8 While the Iocus oI the present Motion is on the Eleventh Circuit`s analysis and rejection oI the Einhorn Presentation, the Court rejected all three oI the alleged curative disclosures upon which the complaint relied in its attempt to establish loss causation. With respect to the January 2011 and July 2011 alleged curative disclosures, the Eleventh Circuit Iound that St. Joe`s 'disclosures oI the SEC investigations, without more, |were| insuIIicient as a matter oI law to constitute corrective disclosures. Ia. at 1202. Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 13 of 29 - 10 - The Eleventh Circuit reinIorced its holding by citing the eIIicient market theory. Mever, 710 F.3d at 1197-1198. As explained in Mever, under the eIIicient market theory, any inIormation released to the public is immediately digested and incorporated into the price oI a security. Ia. at 1197. Consistent with this theory, the Eleventh Circuit held that inIormation already known to the market, including the inIormation in the Einhorn Presentation, could not as a matter oI law have caused the plaintiIIs` loss. Ia. at 1198. That result makes good sense. Having based their claim oI reliance on the eIIicient market theory, the |plaintiIIs| must now abide by its consequences. The |plaintiIIs| speciIically invoked the eIIicient market theory in their complaint . . . |in order| to avail themselves oI Basic`s presumption oI reliance . . . . The eIIicient market theory, however, is a Delphic sword: it cuts both ways. The |plaintiIIs| cannot contend that the market is eIIicient Ior purposes oI reliance and then cast that theory aside when it no longer suits their needs Ior purposes oI loss causation. Ia. at 1198-99. The Eleventh Circuit also rejected the Mever plaintiIIs` alternative argument that the Einhorn Presentation should qualiIy as a corrective disclosure because it provided new 'expert analysis oI public inIormation that was previously unavailable to the market. Ia. at 1199. The Eleventh Circuit held that the mere repackaging oI already-public inIormation by an analyst or short-seller is simply Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 14 of 29 - 11 - insuIIicient to constitute a corrective disclosure. Ia. (citing In re Omnicom, 597 F.3d at 512 (A negative . . . characterization oI previously disclosed Iacts does not constitute a corrective disclosure . . . .); Teachers Ret. Svs. of La. v. Hunter, 477 F.3d at 187 (explaining that the attribution oI an improper purpose to Iacts previously disclosed is not a corrective disclosure); In re Merck, 432 F.3d at 270- 71 (holding that the Wall Street Journal`s analysis oI previously available inIormation is not a corrective disclosure)). The Court explained that iI the inIormation relied upon in Iorming an opinion was previously known to the market, the only thing actually disclosed to the market when the opinion is released is the opinion itself, and such an opinion, standing alone, cannot reveal|| to the market the Ialsity` oI a company`s prior Iactual representation. Ia. at 1199 (emphasis in original) (quoting FinaWhat, 658 F.3d at 1131 n.28). According to the Eleventh Circuit, such opinions are exactly the type oI conIounding inIormation, including changed economic circumstances, changed investor expectations, new industry-speciIic or Iirm-speciIic Iacts, conditions or other events, that do not qualiIy as corrective disclosures Ior purposes oI loss causation. II every analyst or short-seller`s opinion based on already public inIormation could Iorm the basis as a corrective disclosure, then every investor who suIIers a loss in the Iinancial markets could sue under 10(b) using an analyst`s negative analysis oI public Iilings as a Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 15 of 29 - 12 - corrective disclosure.
Mever, 710 F.3d at 1199 (emphasis added).
The Eleventh Circuit explained that the allegations in the operative complaint provided a 'prime example oI why it is notand cannotbe the law that third-party announcements, which disclose no new Iacts to the market and that merely express the opinions others have Iormed based upon already public inIormation, qualiIy as corrective disclosures Ior purposes oI establishing loss causation. According to the Court, David Einhorn was not an insider at St. Joe, and the inIormation upon which he relied in making his bearish call had been public Ior months beIore he made the presentation. Moreover, as a short-seller, Einhorn was bound to proIit iI the price oI St. Joe`s shares swooned in reaction to his presentation. Ia. at 1200. The Eleventh Circuit thus concluded that, because the inIormation used in the presentation had already been public Ior some time, the decline in the value oI St. Joe`s shares in the wake oI the Einhorn Presentation was not due to the Iact that the presentation was revelatory oI any Iraud, but was instead due to changed investor expectations` aIter Einhorn voiced his negative opinions about the Company. Ia. (quoting Dura, 544 U.S. at 343.) Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 16 of 29 - 13 - The Eleventh Circuit closed its decision in Mever with the Iollowing important observation regarding the role loss causation should play in actions such as the present one beIore this Court -- In the Iinancial markets, not every bit oI bad news that has a negative eIIect on the price oI a security necessarily has a corrective eIIect Ior purposes oI loss causation. And although we appreciate the importance oI private securities Iraud actions in determining Iraud and promoting conIidence in the marketplace, we are equally mindIul that their purpose is not to provide investors with broad insurance against market losses, but to protect them against those economic losses that misrepresentations actually cause. Our decision today ensures that loss causation remains a key sentinel in striking that delicate balance. Mever, 710 F.3d at 1202 (emphasis in original) (quoting Dura, 544 U.S. at 345). 2. Under , the Copperfield Report and the Article Are Not Corrective Disclosures. The CAC attempts to base its theory oI loss causation on two purported corrective disclosures -- (1) the CopperIield Report; and, (2) the Bloomberg Article. As shown below, however, the two alleged corrective disclosures at issue here, just like the deIicient Einhorn Presentation rejected by the Eleventh Circuit in Mever, clearly did not reveal any new inIormation that was previously unavailable to the market. As such, the CopperIield Report and the Bloomberg Article are insuIIicient as a matter oI law to constitute corrective disclosures Ior purposes oI Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 17 of 29 - 14 - pleading loss causation and the CAC`s claims should, thereIore, be dismissed in their entirety. a. The Copperfiela Report Below is a comprehensive list oI each and every source cited by the anonymous, short-seller author oI the CopperIield Report: i an October 7, 2009, San Gabriel Jallev Tribune news article (see CopperIield Report (attached hereto as Ex. B) at 3 (endnote 1 oI the CopperIield Report)); i Ebix`s Form 10-K Iiled on March 30, 2009 (see ia. at 3 (endnote 2 oI the CopperIield Report)); i Ebix`s Form 8-K Iiled on December 10, 2009 (see ia. at 3 (endnote 3 oI the CopperIield Report)); i Ebix`s Form 10-K Iiled on March 16, 2011 (see ia. at 3 (endnote 4 oI the CopperIield Report)); i an August 30, 2010, Reuters news article (see ia. at 5 (endnote 5 oI the CopperIield Report)); i ADAM, Inc.`s Form 10-Q Iiled on November 10, 2010 (see ia. at 5 (endnote 6 oI the CopperIield Report)); i ADAM, Inc.`s Form 10-K Iiled on March 18, 2010 (see ia. at 6 (endnote 7 oI the CopperIield Report)); i Ebix`s Form 10-K Iiled on March 16, 2010 (see ia. at 7 (endnote 8 oI the CopperIield Report)); i a Wikipeaia entry created on March 28, 2006 (see ia. at 8 (endnote 9 oI the CopperIield Report)); Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 18 of 29 - 15 - i President Obama`s 2011 State oI the Union Address (see ia. at 8 (endnote 10 oI the CopperIield Report)); i a March 17, 2011, Wall Street Journal news article (see ia. at 8 (endnote 11 oI the CopperIield Report)); i a March 4, 2011, Time news article (see ia. at 8 (endnote 12 oI the CopperIield Report)); i the transcript oI Ebix`s November 9, 2010, earnings conIerence call (see ia. at 10 (endnote 13 oI the CopperIield Report)); i Ebix`s Schedule 14A DeIinitive Proxy Statement Iiled on November 17, 2005 (see ia. at 10 (endnote 14 oI the CopperIield Report)); i Ebix`s Form 10-K Iiled on March 30, 2005 (see ia. at 10 (endnote 15 oI the CopperIield Report)); i Ebix`s Form 8-K Iiled on December 18, 2008 (see ia. at 10 (endnote 16 oI the CopperIield Report)); i Ebix`s Schedule 14A DeIinitive Proxy Statement Iiled on October 8, 2010 (see ia. at 10 (endnote 17 oI the CopperIield Report)); i a December 21, 2010, news article published on the website Accounting Web (see ia. at 11 (endnote 18 oI the CopperIield Report)); i 2007 IRS Form 990 Iiled on behalI oI the Robin Raina Foundation (see ia. at 12 (endnote 19 oI the CopperIield Report)); i a link to the Robin Raina Foundation`s YouTube channel (see ia. at 12 (endnote 20 oI the CopperIield Report)); i a press release issued by Ebix on February 8, 2011 (see ia. at 12 (endnote 21 oI the CopperIield Report)); i a March 10, 2011, Seeking Alpha article published by another Ebix investor (see ia. at 12 (endnote 22 oI the CopperIield Report)); Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 19 of 29 - 16 - i 'Company literature Ior Ebix`s private comps like Blue Frog and iPipeline (see ia. at 14 (endnotes 23 & 24 oI the CopperIield Report)); i 'Company Iilings (see ia. Table 1 at pp. 2-3; Table 2 at p. 3; Table 5 at p. 5; Table 8 at p. 6; Table 12 at p. 9; Table 13 at p. 9; Table 14 at p. 10; Table 16 at p. 11; Table 18 at pp. 12-13; Table 19 at p. 13); i 'Estimates based on public disclosures (see ia. Table 4 at p. 4); i 'Reuters and estimates (see ia. Table 6 at p. 5); i '2010 10-K (see ia. Table 9 at p. 7); i '10-K (see ia. Table 10 at pp. 7-8); i 'Company reports (see ia. Table 15 at pp. 10-11); and, i 'IRS Form 990s (see ia. Table 17 at p. 12). Clearly, each and every one oI these sources was previously disclosed and publicly available well beIore the CopperIield Report was Iirst disseminated to the market on March 22, 2011. As such, the CopperIield Report did not disclose any new Iacts that were previously unavailable to the market and, thus, cannot constitute a corrective disclosure under the binding authority established by the Eleventh Circuit in Mever. 710 F.3d at 1198-1200. Furthermore, the anonymous, short-seller author oI the CopperIield Report oIIering his/her speculation and conjecture purportedly based upon this already- public inIormation is inadequate under Mever to qualiIy the CopperIield Report as a corrective disclosure. As the Eleventh Circuit made abundantly clear in Mever, Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 20 of 29 - 17 - the mere repackaging oI already-public inIormation by an analyst or short-seller is simply insuIIicient to constitute a corrective disclosure. 710 F.3d at 1199. Because all oI the inIormation purportedly relied upon in Iorming the opinions expressed by the author oI the CopperIield Report was previously known to the market, the only thing actually disclosed to the market when the CopperIield Report was released were the opinion|s themselves|, and such || opinion|s|, standing alone, cannot reveal( ) to the market the Ialsity` oI a company`s prior Iactual representation. Mever, 710 F.3d at 1199 (quoting FinaWhat, 658 F.3d at 1311 n.28). Put another way, because all oI the inIormation used in the CopperIield Report had already been public Ior some time, the decline in the value oI Ebix`s shares in the wake oI the CopperIield Report was not because the Report was revelatory oI any past Iraud, but was instead due to changed investor expectations aIter an anonymous investor voiced his/her negative opinions about the Company. See Dura, 544 U.S. at 342-43; see also Mever 710 F.3d at 1200. In light oI the recent clariIying authority issued by the Eleventh Circuit in Mever, it is now clear that such expressions oI opinion are exactly the type oI conIounding inIormation . . . that do not qualiIy as corrective disclosures Ior purposes oI loss causation. 710 F.3d at 1199 (citing Dura 544 U.S. at 343). Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 21 of 29 - 18 - b. The Bloomberg Article The Bloomberg Article did nothing more than repeat and/or recharacterize allegations Irom a lawsuit by Iormer shareholders oI a company that Ebix had acquired. Indeed, this is something PlaintiII readily admits. (See Class Motion |Dkt. No. 45| at 4.) That lawsuit by the Iormer shareholders oI Peak PerIormance Solutions, however, was old news by the time the Bloomberg Article was published. It was a matter oI public record and, thus, disseminated to the market weeks beIore the Bloomberg Article was published, when the initial complaint was Iiled in United States District Court Ior the Southern District oI Ohio on May 24, 2011 ('Peak Complaint) (attached hereto as Ex. C) and, thereaIter, made publicly available on that court`s electronic document Iiling system. 9 As such, the Bloomberg Article did not disclose any new Iacts to the market and, thus, cannot qualiIy as a corrective disclosure. Mever, 710 F.3d at 1198-99; see also In re Omnicom, 597 F.3d at 512 (A negative journalistic characterization oI previously disclosed Iacts does not constitute a corrective disclosure oI anything but the journalists` opinions.); In re Merck, 432 F.3d at 270-71. 9 Isaac, et al. v. Ebix, Inc., No. 2:2011-cv-00450 (S.D. Ohio, complaint Iiled on May 24, 2011). Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 22 of 29 - 19 - A plain reading oI the actual contents oI the Bloomberg Article (attached hereto as Ex. B), as compared to the already public Peak Complaint (attached hereto as Ex. C) and the already public complaint Iiled by the Iormer shareholders oI ConIirmNet Corporation in the one other Ebix lawsuit mentioned in the Bloomberg Article 10 ('ConIirmNet Complaint) (attached hereto as Ex. D), makes clear that the Bloomberg Article revealed no new Iacts. As shown in the table below, each and every piece oI inIormation about Ebix`s business in the Bloomberg Article was either directly liIted Irom previously disclosed and publicly available documents (namely, the Peak Complaint and the ConIirmNet Complaint) or was nothing more than a mere recharacterization oI the already public inIormation taken Irom those documents. Ebix Information Appearing in the Article on 1une 30, 2011 Previously Disclosed Source of Information 'Billing Irregularities The Peak airectors claimea that, after Ebix acquirea their companv, it firea five of their emplovees incluaing the person responsible for billing Peaks clients. Ebix then took over its billing operations.` Peak Complaint (see 26-27, 47) 10 Craig A. Irving v. Ebix, Inc., et al., No. 10-cv-0762 (S.D. Cal., complaint Iiled on April 12, 2010). Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 23 of 29 - 20 - Ebix Information Appearing in the Article on 1une 30, 2011 Previously Disclosed Source of Information 'Fired Employees Ebix was consistentlv unable to tie customer pavments to specific invoices, ana so Ebix was unable to aetermine which customers haa maae pavment for which profects, the airectors saia in court papers. Ebix aoes not have sufficient internal accounting controls to allow their books ana recoras to be reliea on.` Peak Complaint (quoting 35 & 44) 'Peak Directors` Suit The Peak airectors suea after Ebix management refusea to pav an earn-out, or incentive tiea to the sale, of $1.5 million this vear. The aenial was maae on the grounas that Peak aiant meet its target of $6.5 million in revenue for 2010 to trigger the pavment, accoraing to court papers.` The Peak founaers claimea thev met the target. As an example of what thev aescribea as the confusea state of Ebixs billing operations, thev saia Robert Kerris, Ebixs chief financial officer, proaucea an unauaitea spreaasheet in April putting their 2010 revenue at $5.9 million, while Sean Donaghv, the companvs controller, gave them numbers which aaaea up to $6.5 million for the vear.` Peak Complaint (see 11-23) Peak Complaint (see 37, 38) 'A DiIIerence Isaac ana his co-founaers saia Ebix generatea $6.7 million in bills for Peaks clients auring 2010, creating an $800,000 aifference between Peaks accounts receivable balance for the vear, ana the $5.9 million that Ebixs finance chief tola them haa been appliea towara their earn-out.` Peak Complaint (see 39-40) Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 24 of 29 - 21 - Ebix Information Appearing in the Article on 1une 30, 2011 Previously Disclosed Source of Information 'The airectors also claimea other oaaities in Ebixs billing practices, such as negative revenue from various Peak customers auring 2010, ana an allegea failure bv Ebix to pav unemplovment compensation premiums in the state of West Jirginia. That lapse cost Peak $65,000 in revenue because it wasnt allowea to operate in the state until the matter was resolvea, thev saia in the complaint.` Peak Complaint (see 37, 67) 'Similar Suit 'The Peak airectors allegations that Ebix mishanalea the accounts receivable balances of an acquirea companv arent unique. A lawsuit filea in San Diego feaeral court in April 2010 bv shareholaers of ConfirmNet, a San Diego-basea companv acquirea bv Ebix in November 2008, featurea a similar claim.` 'Those investors allegea that $92,280 of ConfirmNets legacv accounts-receivable balances in 2008 were never collectea bv Ebix ana were never written off in 2009 or in earlv 2010, when the lawsuit was filea.` The ConfirmNet investors also saia Ebix triea to aeauct $213,393 from its 2009 earn-out pavment on the grounas that the companv haa overstatea its 2008 revenue bv more than $100,000.` ConIirmNet Complaint ConIirmNet Complaint (see 14,18) ConIirmNet Complaint (see 17) It is beyond dispute, thereIore, that the Bloomberg Article Iailed to disclose any new Iacts that were previously unavailable to the market. As such, under the binding authority established by the Eleventh Circuit in Mever, the Bloomberg Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 25 of 29 - 22 - Article does not constitute a corrective disclosure as a matter oI law and is, thereIore, insuIIicient to plead loss causation. 710 F.3d at 1198-1200. III. CONCLUSION In sum, neither the CopperIield Report nor the Bloomberg Article disclosed any new Iacts to the market. Instead, they merely repeated or repackaged previously disclosed public inIormation that was already known to the market and that, under the eIIicient market theory upon which PlaintiII`s entire claim oI reliance is based, was already Iully incorporated into Ebix`s share price. Under the clear, binding authority recently issued by the Eleventh Circuit in Mever, this is Iatal to PlaintiII`s theory oI loss causation. Accordingly, PlaintiII can prove no set oI Iacts in support oI his claim that would entitle him to relieI and judgment on the pleadings should be entered in Iavor oI the DeIendants. RespectIully submitted, this 19th day oI June, 2013. ALSTON & BIRD LLP /s/ John A. Jordak, Jr. Todd R. David Georgia Bar No. 206526 John A. Jordak, Jr. Georgia Bar No. 404250 Todd F. Chatham Georgia Bar No. 196328 1201 West Peachtree Street Atlanta, Georgia 30309 T: (404) 881-7000 Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 26 of 29 - 23 - F: (404) 253-8358 Counsel Ior DeIendants Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 27 of 29 CERTIFICATE OF COMPLIANCE The undersigned does hereby certiIy that the within and Ioregoing has been prepared with one oI the Iont and point selections approved by the court in LR 5.1, N.D. Ga. /s/ Todd F. Chatham TODD F. CHATHAM Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 28 of 29 CERTIFICATE OF SERVICE I hereby certiIy that on June 19th, 2013, the Ioregoing DEFENDANTS` MOTION FOR JUDGMENT ON THE PLEADINGS and MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS` MOTION FOR JUDGMENT ON THE PLEADINGS were Iiled electronically with the Clerk oI Court using the CM/ECF system, which will automatically send an e-mail notiIication oI such Iiling to all attorneys oI record in the above-reIerenced action. /s/ Todd F. Chatham TODD F. CHATHAM Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 29 of 29
Washington Mutual (WMI) - Omnibus Reply of The Equity Committee For Certification of Direct Appeal To The United States Court of Appeals For The Third Circuit