UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

0 BORIS FELDMAN, State Bar No. DOUGLAS J. CLARK, State Bar No. IGNACIO E. SALCEDA, State Bar No. 0 BETTY CHANG ROWE, State Bar No. 0 WILSON SONSINI GOODRICH & ROSATI Professional Corporation 0 Page Mill Road Palo Alto, CA 0-00 Telephone: (0-00 Facsimile: (0-00 Attorneys for Defendants Rambus Inc., Harold Hughes, Mark Horowitz, P. Michael Farmwald and Kevin Kennedy UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA 0 IN RE RAMBUS INC. SECURITIES LITIGATION This Document Relates To: All Actions. MASTER FILE NO: 0 Civ. 0 (JF DEFENDANTS RAMBUS INC., HAROLD HUGHES, MARK HOROWITZ, P. MICHAEL FARMWALD AND KEVIN KENNEDY S OPPOSITION TO LEAD PLAINTIFF S MOTION TO PARTIALLY LIFT PSLRA AUTOMATIC STAY AND OBTAIN PARTICULARIZED DISCOVERY Date: April, 00 (Special Setting Time: 0:00 a.m. Before: Hon. Jeremy Fogel DISCOVERY MASTER FILE NO. 0 Civ. 0 (JF 0_.DOC

TABLE OF CONTENTS 0 Page INTRODUCTION... BACKGROUND... ARGUMENT... I. PLAINTIFF MUST SATISFY THE REFORM ACT S HEIGHTENED PLEADING STANDARDS BEFORE GAINING ACCESS TO DISCOVERY... A. Discovery Is Not Needed to Preserve Evidence... B. Plaintiff Will Not Suffer Any Undue Prejudice... CONCLUSION... 0 DISCOVERY;MASTER FILE NO. 0 Civ. (JF -i- 0_.DOC

TABLE OF AUTHORITIES Page(s 0 0 DISCOVERY;MASTER FILE NO. 0 Civ. (JF CASES Estate of Pendelton v. Davis, No. :0-CV-, 00 U.S. Dist. LEXIS (E.D. Pa. Oct. 0, 00... Fisher v. Kanas, No. 0-CV-, 00 U.S. Dist. LEXIS (E.D.N.Y. Aug., 00... In re AOL Time Warner, Inc. Sec. Litig., No. 00, 0 Civ., 00 WL (S.D.N.Y. July, 00... In re CFS-Related Sec. Fraud Litig., F. Supp. d 0 (N.D. Okla. 00..., In re Enron Corp. Securities Litigation, No. H-0-0, 00 U.S. Dist. LEXIS (S.D. Tex. Aug., 00... In re Fluor Corp. Sec. Litig., No. SA CV -, WL 0 (C.D. Cal. Jan.,... In re Guidant Corp. Sec. Litig., No. :0-CV--SEB-WTL, slip op. (S.D. Ind. Mar. 0, 00...,, In re LaBranche Sec. Litig., F. Supp. d (S.D.N.Y. 00... In re Lantronix, Inc. Sec. Litig., No. CV 0-0, 00 WL (C.D. Cal. Sept., 00... In re Mirant Corp., B.R. (Bankr. N.D. Tex. June, 00... In re Royal Ahold N.V. Securities & Erisa Litigation, 0 F.R.D. (D. Md. 00... In re Royal Dutch/Shell Transportation Securities Litigation, No. 0-, 00 U.S. Dist. LEXIS (D.N.J. Feb., 00..., In re Vivendi Universal, S.A. Sec. Litig., F. Supp. d (S.D.N.Y. 00... In re WorldCom, Inc. Securities Litigation, F. Supp. d 0 (S.D.N.Y. 00... Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 0 U.S. 0 (... Livid Holdings Ltd. v. Salomon Smith Barney, Inc., F.d 0 (th Cir. 00... Medhekar v. United States District Court, F.d (th Cir....,, Medical Imaging Ctrs. of Am., Inc. v. Lichtenstein, F. Supp. (S.D. Cal.... Melzer v. CNET Networks, Inc., No. C0-0 WHA, 00 WL (N.D. Cal. Dec., 00... -ii- 0_.DOC

0 Rambus Inc. v. Infineon Technologies AG, F. Supp. d (E.D. Va. 00... Rambus Inc. v. Infineon Technologies AG, F.d 0 (Fed.Cir. 00... S.G. Cowen Securities Corp. v. United States District Court, F.d 0 (th Cir....,,,, Soler v. G & U, Inc., F.R.D. (S.D.N.Y. 0... The Winer Family Trust v. Queen, No. CIV.A.0-, 00 WL 0 (E.D. Pa. Feb., 00... Vacold LLC v. Cerami, No. 00-0, 00 U.S. Dist. LEXIS (S.D.N.Y. Feb., 00... STATUTES U.S.C. u-(b((b..., U.S.C. (b... RULES Fed. R. Civ. P. (d... Fed. R. Civ. P.... MISCELLANEOUS H.R. CONF. REP. No. 0-, at (, reprinted in U.S.C.C.A.N. 0,... 0 DISCOVERY;MASTER FILE NO. 0 Civ. (JF -iii- 0_.DOC

0 0 Defendants Rambus Inc. ( Rambus or the Company, Harold Hughes, Mark Horowitz, P. Michael Farmwald and Kevin Kennedy respectfully submit this Opposition to Plaintiff s Motion to Partially Lift PSLRA Automatic Stay and Obtain Particularized Discovery ( Discovery Motion. INTRODUCTION Plaintiff s motion to lift the Reform Act s mandatory discovery stay is notable for what it does not say. First, plaintiff ignores the two Ninth Circuit decisions which make clear that the discovery stay will be strictly enforced. Plaintiff does not bother even to cite Medhekar v. United States District Court, F.d (th Cir., where the Ninth Circuit explained that the purpose of the discovery stay is that complaints should stand or fall without the benefit of discovery. Plaintiff can only summon a passing mention in a footnote to the second Ninth Circuit case, S.G. Cowen Securities Corp. v. United States District Court, F.d 0 (th Cir.. Plaintiff s reticence is not surprising, as S.G. Cowen is on point and mandates the denial of plaintiff s motion. In that case, the Ninth Circuit held that the limited exceptions to the discovery stay would be strictly construed and that a plaintiff could not claim undue prejudice by his inability to state a claim absent discovery. Plaintiff s motion has a second notable absence. Although plaintiff spends most of his motion arguing that Rambus had engaged in supposed spoliation in an unrelated case nearly a decade ago, plaintiff does not claim that any documents relevant to his action have been or will be lost. On the contrary, plaintiff admits that the documents he seeks are being preserved. Thus, for example, he would like to receive a copy of any documents Rambus were to produce to the government but does not even suggest that Rambus would not keep copies of such documents. Similarly, plaintiff claims that his inability to conduct discovery will lead to undue prejudice if he is unable to name additional defendants before the statute of limitations expires. Yet plaintiff cannot dispute that this inevitable delay is not, and cannot, be undue prejudice. Indeed, courts have repeatedly held such a delay is not undue prejudice ; otherwise, the mandatory stay would be effectively eliminated from the statute. DISCOVERY;MASTER FILE NO. 0 Civ. (JF -- 0_.DOC

0 0 At its heart, plaintiff s motion is not about preserving documents or avoiding the strictures of the statute of limitations. Rather, plaintiff wants the documents in order to craft a viable complaint. In fact, plaintiff s current complaint itself states that he intends to seek leave to amend or supplement the Complaint after Rambus announces the results of its impending restatement. See Consolidated Amended Complaint ( Complaint or CAC. While plaintiff s desire is understandable given the legal infirmities in the Complaint and the paucity of support for his allegations, Congress and the Ninth Circuit have made clear that the hope of amending a complaint to satify the Reform Act is not grounds to lift the discovery stay. The motion should be denied. BACKGROUND On May 0, 00, Rambus announced that the Audit Committee of its Board of Directors had voluntarily commenced an investigation of the timing of stock option grants and other potentially related issues. The review was conducted with the assistance of experienced independent counsel (Heller Ehrman and forensic accountants (Ernst & Young. See October, 00, Press Release, attached as Exhibit A to the accompanying Declaration of Ignacio E. Salceda. In addition, the Rambus Board of Directors appointed a Special Litigation Committee to evaluate potential claims or other actions arising from the stock option granting activities. Id. Beginning in July 00, several putative class action complaints were filed in this Court against Rambus and certain of its current and former officers and directors alleging violations of Sections 0(b, (a and 0(a of the Securities Exchange Act of. On February, 00, plaintiff filed the Complaint naming Rambus, its independent auditors, and certain of the Company s current and former officers and directors as defendants. Plaintiff alleges that between December, 00 and July, 00, the defendants violated the federal securities laws by backdating stock options, failing to properly account for the option grants, and failing to disclose these practices in Rambus s public filings. See, e.g., CAC,, -. Plaintiff noted in his Complaint that he also intends to seek leave to amend or supplement the Complaint after Rambus announces the results of its impending restatement. Id.. DISCOVERY;MASTER FILE NO. 0 Civ. (JF -- 0_.DOC

0 0 On April, 00, Defendants filed their Motion to Dismiss the Complaint, which is set for hearing on June, 00. As detailed in the Motion to Dismiss, plaintiff does not allege any facts, much less particularized facts, sufficient to state a claim under the Reform Act. Indeed, many of plaintiff s claims are barred as a matter of law due to, among other things, the applicable statute of limitations and the failure to allege loss causation. Plaintiff now seeks leave from this Court to obtain discovery of documents gathered and created during Rambus s internal investigation, claiming that lifting the discovery stay is necessary to prevent the destruction of evidence relevant to his claims and so that he may amend the Complaint to name additional defendants before any unexpired limitations period has run. ARGUMENT I. PLAINTIFF MUST SATISFY THE REFORM ACT S HEIGHTENED PLEADING STANDARDS BEFORE GAINING ACCESS TO DISCOVERY The law of this Circuit is clear plaintiffs are not permitted to seek discovery as a means to uncover facts sufficient to satisfy the Reform Act s heightened pleading requirements. In, Congress passed the Reform Act in response to several perceived abuses in securities litigation, including discovery abuses. S.G. Cowen, F.d at. In addition to raising the pleading standards for securities cases, Congress codified a mandatory stay of discovery during the pendency of a motion to dismiss. Section u-(b((b of the Reform Act provides: In any private action arising under this chapter, all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss, unless the court finds upon the motion of any party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party. U.S.C. u-(b((b. The automatic stay provision was specifically intended to prevent plaintiffs from forcing coercive settlements through the imposition of unnecessary discovery costs before demonstrating the sufficiency of their allegations. For this reason, as noted above, on both occasions that the Ninth Circuit has had the opportunity to address this provision, it has applied the Reform Act strictly in order to effectuate this purpose. S.G. Cowen Sec. Corp. v. United States Dist. Ct., F.d 0 (th Cir. ; Medhekar v. United States Dist. Ct., DISCOVERY;MASTER FILE NO. 0 Civ. (JF -- 0_.DOC

0 0 F.d (th Cir.. As the Ninth Circuit explained in Medhekar Congress clearly intended that complaints in these securities actions should stand or fall based on the actual knowledge of the plaintiffs rather than information produced by the defendants after the action has been filed. F.d at. The exceptions to the stay of discovery are exceedingly narrow and the Ninth Circuit has made clear that they should not be expanded by judicial fiat. Only two exceptional circumstances justify lifting the discovery stay before a ruling on a motion to dismiss where particularized discovery is necessary to preserve evidence or to prevent undue prejudice to a party. See U.S.C. u-(b((b; SG Cowen, F.d at -. As explained in the Conference Committee Report, courts must stay all discovery pending a ruling on a motion to dismiss, unless exceptional circumstances exist where particularized discovery is necessary to preserve evidence or to prevent undue prejudice to a party. For example, the terminal illness of an important witness might require the deposition of the witness prior to the ruling on the motion to dismiss. H.R. CONF. REP. No. 0-, at (, reprinted in U.S.C.C.A.N. 0, (emphasis added. Congress thus imposed a severe restriction on the phrase undue prejudice by limiting it to the realm of exceptional circumstances such as the imminent death of a witness. Because plaintiff has not identified any such exceptional circumstances, this Court should deny plaintiff s motion. A. Discovery Is Not Needed to Preserve Evidence Plaintiff attempts to fall within the limited exception to the discovery stay for the preservation of evidence by claiming that Rambus would engage in spoliation of evidence because of such supposed conduct in an unrelated matter nearly a decade ago. Apart from plaintiff s mischaracterization of that situation, plaintiff s argument is wholly unsupported. For example, plaintiff quotes extensively from a decision in Rambus Inc. v. Infineon Technologies AG, F. Supp. d (E.D. Va. 00. See Discovery Motion -. Notably, however, nowhere does plaintiff mention that the decision was reversed in part and vacated on appeal by the Federal Circuit. Rambus Inc. v. Infineon Technologies AG, F.d 0 (Fed.Cir. 00. DISCOVERY;MASTER FILE NO. 0 Civ. (JF -- 0_.DOC

0 0 Plaintiff does not and cannot argue that any potentially relevant evidence is being lost in this case. Courts have repeatedly held that bare speculation that evidence may be lost or destroyed is not sufficient to justify lifting the stay. See In re Fluor Corp. Sec. Litig., No. SA CV -, WL 0, at * (C.D. Cal. Jan., (denying motion to lift stay where plaintiff failed to make any credible showing that discovery was necessary to preserve evidence beyond allegations of possible loss or destruction ; The Winer Family Trust v. Queen, No. CIV.A.0-, 00 WL 0, at * (E.D. Pa. Feb., 00 (denying motion to lift stay where plaintiff did not make specific showing that the loss of evidence is imminent as opposed to merely speculative (internal citation omitted. Here, plaintiff has not even bothered to explain how any potentially relevant evidence may be lost. That is not surprising given that, as plaintiff s own motion admits, Rambus s Audit Committee, composed of independent directors who are not named as defendants in this suit, conducted a thorough independent investigation with the assistance of experienced independent counsel (Heller Ehrman and forensic accountants (Ernst & Young. Discovery Motion at, -. See also Rambus Press Release dated October, 00 (attached as Salceda Decl. Ex. A. The [Audit Committee s] review encompassed over. million emails and other documents, and over 0 interviews with executive officers, directors, employees and advisors. Ex. A. Plaintiff does not even attempt to suggest that any of these documents have been or will be lost. On the contrary, plaintiff claims that many of these documents will be shared with others as Rambus works through the restatement of its financial results and cooperates with government inquiries. Discovery Motion at -. In other words, plaintiff admits that these documents will not be lost. Indeed, even a cursory examination of the categories of documents plaintiff purportedly seeks refute any suggestion that such documents would be destroyed. Thus, for example, plaintiff would like to have copies of the documents Rambus has produced to the government in connection with any options inquiry. Does plaintiff actually believe that Rambus or its counsel would not retain copies of any documents produced to the government? Clearly not. In the absence of any basis for a conclusion that documents will be lost, courts have had little difficulty DISCOVERY;MASTER FILE NO. 0 Civ. (JF -- 0_.DOC

0 0 denying requests to lift the discovery stay. See In re Lantronix, Inc. Sec. Litig., No. CV 0-0, 00 WL, at * (C.D. Cal. Sept., 00 (denying plaintiff s motion to lift the discovery stay for documents produced to governmental entities; In re Guidant Corp. Sec. Litig., No. :0-CV--SEB-WTL, slip op. at - (S.D. Ind. Mar. 0, 00 (Salceda Ex. B (rejecting speculative concerns that documents may be lost and noting that even plaintiffs recognized that there will be little risk of loss with respect to discovery produced to government entities. Similarly, plaintiff would like a copy of any Audit Committee or future Special Litigation Committee report concerning this matter. Again, plaintiff cannot bring himself to claim that any such documents would go missing. On the contrary, plaintiff (apparently confident in the prospects of his Complaint surviving a motion to dismiss claims that a production of all these documents will inevitably be made (Discovery Motion at. He simply wants to get them now, before this Court hears Rambus motion to dismiss. As Congress and the Ninth Circuit have made clear, that is not sufficient grounds to lift the discovery stay. Because plaintiff has not made any showing, much less the required showing of exceptional circumstances, his motion should be denied. B. Plaintiff Will Not Suffer Any Undue Prejudice Unable to point to any loss of potentially relevant documents, plaintiff seeks refuge in the limited exception for undue prejudice. In sum, plaintiff claims that any delay in getting access to relevant documents will prejudice him because of a purported inability to name additional defendants before the relevant statute of limitations runs. Plaintiff s argument is squarely Other courts have similarly refused to read an exception into the stay provision for cases in which the requested discovery has already been produced to the government or other third parties. See, e.g., Melzer v. CNET Networks, Inc., No. C0-0 WHA, 00 WL, at *, * (N.D. Cal. Dec., 00; In re Vivendi Universal, S.A. Sec. Litig., F. Supp. d (S.D.N.Y. 00 (refusing to lift stay even where documents were already produced to government agencies; In re AOL Time Warner, Inc. Sec. Litig., No. 00, 0 Civ., 00 WL, at * (S.D.N.Y. July, 00 (denying discovery where Lead Plaintiff has not demonstrated that exceptional circumstances are present in this case requiring production of documents previously produced to various government agencies. DISCOVERY;MASTER FILE NO. 0 Civ. (JF -- 0_.DOC

0 0 contrary to the language and purpose of the Reform Act. Indeed, plaintiff seeks to do precisely what the discovery stay was intended to prohibit obtain premature discovery in order to satisfy the Reform Act s heightened pleading requirements that he otherwise cannot meet. See SG Cowen, F.d at -. The Ninth Circuit has explicitly rejected the very argument plaintiff makes here that failing to allow the requested discovery would shield the defendants from liability, causing them the undue prejudice. Id. at. The two decisions plaintiff cites to the contrary do not square with the authority of this Circuit, and perhaps more importantly, neither court lifted the stay for this reason. Discovery Motion at -0; see, e.g., Medical Imaging Ctrs. of Am., Inc. v. Lichtenstein, F. Supp. (S.D. Cal. (finding that PSLRA automatic discovery stay should not be lifted where plaintiff could not show undue prejudice; Fisher v. Kanas, No. 0- CV-, 00 U.S. Dist. LEXIS (E.D.N.Y. Aug., 00 (denying plaintiff s request to lift stay when plaintiff would suffer no undue prejudice by waiting. The other cases plaintiff relies upon do not interpret the Reform Act s automatic stay. As the Ninth Circuit made clear in S.G. Cowen, plaintiff has a heavy burden to demonstrate undue prejudice and plaintiff has failed to meet it. Plaintiff s perceived harm is common to all securities plaintiffs, namely that the stay delays his ability to obtain discovery. This is insufficient grounds to lift the stay. As one Court recently noted in denying a similar motion to lift the discovery stay, prejudice caused by the delay inherent in the PSLRA s discovery stay cannot be undue prejudice because it is prejudice which is neither improper nor unfair. Rather it is prejudice which has been mandated by Congress after a lancing of the various policy interests at stake in securities litigation. Guidant, slip op. at (quoting In re CFS- Discovery Motion at ; see, e.g., Estate of Pendelton v. Davis, No. :0-CV-, 00 U.S. Dist. LEXIS, at *- (E.D. Pa. Oct. 0, 00 (exercising discretion under Fed. R. Civ. P. (d to allow plaintiffs expedited discovery to determine identities of John Doe defendants; In re Mirant Corp., B.R. (Bankr. N.D. Tex. June, 00 (granting motion for expedited discovery under Fed. R. Bankr. P. 00; Soler v. G & U, Inc., F.R.D. (S.D.N.Y. 0 (exercising discretion under Fed. R. Civ. P. and to expedite discovery in suit under Fair Labor Standards Act. DISCOVERY;MASTER FILE NO. 0 Civ. (JF -- 0_.DOC

0 0 Related Sec. Fraud Litig., F. Supp. d 0, (N.D. Okla. 00. Here, plaintiff is unable to explain how the statute of limitations creates the kind of undue prejudice Congress had in mind. Indeed, it cannot be that Congress was ignorant of the statute of limitations for securities claims was when it passed the Reform Act. See Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 0 U.S. 0 ( (finding that statute of limitations for Rule 0b- claims was the earlier of one year from discovery or three years from the alleged violation. Unable to distinguish Ninth Circuit authority, plaintiff relies on the decisions of courts outside of the Ninth Circuit which apply a more permissive standard and have allowed discovery in a handful of cases, with circumstances not relevant here. For example, in In re WorldCom, Inc. Securities Litigation, F. Supp. d 0, 0-0 (S.D.N.Y. 00, the court, applying a standard far more liberal than that employed in the Ninth Circuit, lifted the stay after the defendant had filed for bankruptcy so that the plaintiffs could engage in discovery prior to courtordered settlement discussions. Similarly, in In re Enron Corp. Securities Litigation, No. H-0-0, 00 U.S. Dist. LEXIS, at * (S.D. Tex. Aug., 00, the court permitted limited discovery against the bankrupt defendant when documents had already been produced to numerous governmental agencies and other third parties. Likewise, in In re Royal Ahold N.V. Securities & Erisa Litigation, 0 F.R.D., (D. Md. 00, the court lifted the discovery stay, noting that the court had urged parties to quickly proceed to settlement because the company s aggressive divestitures of key subsidiaries that were central participants in the admitted wrongdoing create[d] a risk that delay may limit recovery or hinder production of evidence. In addition, a year after Royal Dutch/Shell Group agreed to pay a total of $0 million in fines to settle claims with American and British regulators regarding the same allegations, the court in In re Royal Dutch/Shell Transportation Securities Litigation, No. 0- Today, following the passage of the Sarbanes-Oxley Act of 00, the statute of limitations for Rule 0b- claims is the earlier of two years after discovery of the violation or five years from the alleged violation. U.S.C. (b; Livid Holdings Ltd. v. Salomon Smith Barney, Inc., F.d 0, 0 (th Cir. 00. The fact that the statute of limitations was even shorter when Congress passed the Reform Act shows that the possibility of losing claims cannot constitute undue prejudice. DISCOVERY;MASTER FILE NO. 0 Civ. (JF -- 0_.DOC

0, 00 U.S. Dist. LEXIS, at * (D.N.J. Feb., 00, permitted limited discovery because of similar concerns. Discovery Motion at 0-; see also In re LaBranche Sec. Litig., F. Supp. d (S.D.N.Y. 00 (lifting stay because otherwise class action plaintiffs would be the only interested party without access to documents and defendants had already agreed to pay more than $. million to settle regulator s claims; Vacold LLC v. Cerami, No. 00-0, 00 U.S. Dist. LEXIS, at * (S.D.N.Y. Feb., 00 (permitting discovery on limited issue because plaintiffs request did not implicate a concern that plaintiffs are seeking discovery to coerce a settlement or to support a claim not alleged in the Complaint. These cases are all distinguishable but, more importantly, none apply the Ninth Circuit s unequivocal standard. CONCLUSION For the foregoing reasons, the Court should deny plaintiff s Motion to Partially Lift PSLRA Automatic Stay and Obtain Particularized Discovery. 0 Dated: April, 00 DISCOVERY;MASTER FILE NO. 0 Civ. (JF WILSON SONSINI GOODRICH & ROSATI Professional Corporation By: /s/ Ignacio E. Salceda Ignacio E. Salceda Attorneys for Defendants Rambus Inc., Harold Hughes, Mark Horowitz, P. Michael Farmwald and Kevin Kennedy -- 0_.DOC