1 JILL M. MANNING (California State Bar #) Redwood Blvd., Suite 0 Novato, CA Telephone: (1) -0 Facsimile: (1) -1 IRA M. PRESS MARK A. STRAUSS (California State Bar #1) 0 Third Avenue, th Floor New York, NY 0 Telephone: () 1-00 Facsimile: () 1- LIONEL Z. GLANCY (California State Bar #0) NEAL A. DUBLINSKY (California State Bar #) MICHAEL GOLDBERG (California State Bar #) LAW OFFICES OF LIONEL Z. GLANCY 01 Avenue of the Stars, Suite Los Angeles, CA 00 Telephone: () 1- Facsimile: () 1-0 Attorneys for Proposed Lead Plaintiffs Inter-Power and Michael Jacobi 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BARUCH RAVID, on his own behalf and on behalf of all others similarly situated, Plaintiff, vs. COMMTOUCH SOFTWARE LTD; AND GIDEON MANTEL, Defendants. AND RELATED ACTIONS. CASE NO. C 01-0 (WHA) CLASS ACTION MEMORANDUM OF MICHAEL JACOBI AND INTER-POWER U.S.A., INC. IN OPPOSITION TO THE MOTIONS OF C&C RESOURCES MANAGEMENT, LTD., LUIS DAVIDSOHN, ITZIK ZIDON, AND MIKE NORBY FOR APPOINTMENT AS LEAD PLAINTIFFS DATE: May 0, 01 Time: :00 a.m. Ctrm:, th Fl.
1 1 LUIS DAVIDSOHN, ITZIK ZIDON, AND MIKE NORBY FOR APPOINTMENT AS LEAD PLAINTIFFS A total of four motions were timely filed for appointment of lead plaintiff and approval of selection of lead counsel pursuant to the Private Securities Litigation Reform Act of ( PSLRA ). By order dated April, 01, the Court directed all lead plaintiff candidates to provide, by May, 01, answers to a court questionnaire (which sought information relating to the lead plaintiff candidates background, commitment to this action and their ability to supervise the litigation). The Court also directed all proposed lead plaintiff groups to narrow their moving candidates to one or two investors. 1 Following the narrowing of the moving groups pursuant to the Court s order, the following lead plaintiff candidates remain:! Michael Jacobi moved for appointment of lead plaintiff together with Inter-Power U.S.A., Inc. ( Inter-Power ). The transactional data submitted by Mr. Jacobi and Inter-Power demonstrate that during the class periods asserted in the abovereferenced actions, Mr. Jacobi suffered losses of $, from transactions in Commtouch securities, and Inter-Power suffered losses of $,.! C&C Resources Management, Ltd. (which claims class period losses of $,0) moved together with an investor 1 Two of the four competing motions were filed by groups of more than two investors. Mr. Jacobi s moving papers erroneously listed his damage total as $,0. Attached as Exhibit A to the accompanying declaration of Jill M. Manning ( Manning Decl. ) is a chart showing how the correct damage figure was calculated. In addition, the opening motion papers erroneously referred to Dr. Glezerman, Inter-Power s President, as the movant, rather than Inter- Power itself. The purchaser of the Commtouch securities at issue was, in fact, Inter-Power. Thus, in the certification submitted on Inter-Power s behalf in connection with its moving papers, Dr. Glezerman listed himself as President of Inter-Power, and listed Inter-Power s address. See March 1, 01 Certification annexed as Ex. D to the April, 01 Declaration of Tracy L. Thrower and as Exhibit B to the May, 01 Submission of Lead Plaintiff Candidate Inter-Power, USA, Inc. Pursuant to April, 01 Court Order. LUIS DAVIDSOHN, ITZIK ZIDON, AND MIKE NORBY FOR APPOINTMENT AS LEAD PLAINTIFFS 1
1 1 named Luis Davidsohn (who claims class period losses of $,1)! Mike Norby claims losses of $0,.! Izitzik Zidon (who claims to have suffered class period losses of $1,) The PSLRA expressly provides that when confronted with competing motions for appointment of lead plaintiff, the movant with the largest financial interest in the relief sought by the class presumptively is the most adequate plaintiff, and absent evidence of inadequacy or atypicality, should be appointed lead plaintiff. 1 U.S.C. u-(a)()(b)(iii). Here, there is no question that Inter-Power and Jacobi have the largest financial interest in the relief sought by the class. Inter-Power and Jacobi, combined, suffered losses of $1,0,0; a figure that is materially larger than the $, claimed by the next largest moving group, C&C and Davidsohn (whose claimed losses, as discussed below, are not entirely free from question). In fact, the losses of Inter-Power and Jacobi are larger than that of all other competing movants combined. Moreover, movant Jacobi has by far the largest losses of any single movant. Accordingly, even if the Court does not see fit to appoint any groups (notwithstanding the authorization in its April order for groups of two investors to file motions), movant Jacobi has the largest financial stake. The gap between the financial stake of the Inter-Power/Jacobi movants and the C&C/Davidsohn movants may be even larger than the $, that appears on the face of the movants respective submissions. That is because Davidsohn s losses might be materially lower than In his motion papers, Mr. Norby had erroneously listed his loss as $,000, but as acknowledged in his response to question of the Court questionnaire, the correct number is $0,. Davidsohn claims losses of $,1, which combined with the losses of his co-movant, C&C ($,0), and those of competing movants, Norby ($0,) and Zidon ($1,), total $0,0, over %, less than the losses of $1,0,0 suffered by Inter-Power and Jacobi. LUIS DAVIDSOHN, ITZIK ZIDON, AND MIKE NORBY FOR APPOINTMENT AS LEAD PLAINTIFFS
1 1 the $,1 figure set forth in his papers. Of the $,000 of Commtouch stock that Davidsohn claims to have purchased during the class period, some $1,000 was purchased prior to April, 00 -- the day Commtouch first reported the financial results that it later admitted were materially incorrect. Because the inaccurate financial reporting began on April, seven of the eight class action complaints filed against Commtouch assert class periods that begin on April or, 00, including complaints filed by counsel for Davidsohn and C&C. (See Manning Decl. Exs. B, C, D.) While one of the eight complaints asserts a class period beginning on March, 00, that complaint (Manning Decl. Ex. E) does not even allege that any false or misleading statements were made prior to April. If the pre-april purchases are removed from Davidsohn s loss total, his damages are reduced to $1,0.0, meaning that, not only is Mr. Jacobi the single movant with the largest losses, but his co-movant, Inter-Power, is the individual movant with the second largest financial stake in the litigation. The adequacy of Inter-Power and Jacobi is further evidenced by their answers to the Court s questionnaire. Inter-Power is the only lead plaintiff candidate that has a general counsel (who will take a role in supervising the litigation if Inter-Power is appointed lead plaintiff). Furthermore, Inter-Power and its general counsel have experience with complex commercial litigation, while none of the other candidates claim to have such experience. Similarly, counsel for Davidsohn and C&C posted numerous notices on wire services, advising that the class period begins on April, 00. (Manning Decl. Ex. F.) LUIS DAVIDSOHN, ITZIK ZIDON, AND MIKE NORBY FOR APPOINTMENT AS LEAD PLAINTIFFS
CONCLUSION For the foregoing reasons, it is respectfully submitted that Jacobi and Inter-Power should be appointed lead plaintiffs, and the motions of Norby, Zidon, C&C and Davidsohn should be denied. Dated: May 1, 01 By: Jill M. Manning 1 1 Redwood Blvd., Suite 0 Novato, CA IRA M. PRESS MARK A. STRAUSS 0 Third Avenue, th Floor New York, NY 0 LIONEL Z. GLANCY NEAL A. DUBLINSKY MICHAEL GOLDBERG LAW OFFICES OF LIONEL Z. GLANCY 01 Avenue of the Stars, Suite Los Angeles, CA 00 DEKEL SABO LAW OFFICE SHIRLEY DEKEL-NAVE JACOB SABO Twin Towers, Jabotinsky St. Ramat-Gan 1 Tel Aviv, Israel Attorneys for Movants Inter-Power and Michael Jacobi LUIS DAVIDSOHN, ITZIK ZIDON, AND MIKE NORBY FOR APPOINTMENT AS LEAD PLAINTIFFS