Free Motion to Amend/Correct/Modify - District Court of Colorado - Colorado

Case 1:04-cv-00665-RPM

Document 76

Filed 07/06/2005

Page 1 of 7

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-00665-RPM DAVID HELLER, On Behalf of Himself and All Others Similarly Situated, Plaintiff, v. QUOVADX, INC., LORINE R. SWEENEY and GARY T. SCHERPING, Defendants. LEAD PLAINTIFF'S REQUEST TO AMEND THE SECOND REVISED SCHEDULING ORDER AND SET DECEMBER 5, 2005 TRIAL DATE

Case 1:04-cv-00665-RPM

Document 76

Filed 07/06/2005

Page 2 of 7

Section 9 of the Second Revised Scheduling Order (attached as Ex. A) provides that "[t]he parties agree that the scheduling order may be altered or amended only upon a showing of good cause." Lead plaintiff David Heller hereby requests that the Court modify the Order and set the trial for December 5, 2005, or as soon as the Court is available. In support of this modification, lead plaintiff asserts the following: This case involves events that took place between October 22, 2003 and March 15, 2004 (the "Class Period"). The First Amended Complaint alleges that defendants committed securities fraud by falsifying the financial results of defendant Quovadx, Inc. ("Quovadx" or the "Company") for the third and fourth quarters of 2003. On August 16, 2004 ­ after lead plaintiff filed the First Amended Complaint ­ Quovadx announced that it would restate its financial results for fiscal years ended December 31, 2002 and 2003. Among the motives for the fraud was Quovadx's takeover of Rogue Wave Software in the latter part of 2003. The facts encompass a relatively short period of time and the documentary discovery is nearly completed. Additionally, lead plaintiff anticipates that he will need no more than 15 depositions (barring something in the testimony that requires additional follow-up).1

On June 29, 2005, the Court appointed the Special Situations Funds as lead plaintiff in the related, but not consolidated case, Henderson v. Quovadx, Inc., No. 04-cv-1006-RPM. The Court noted that it had already determined that these two cases "will proceed as separate class actions, although discovery may be coordinated." Order for Appointment of Special Situations Funds as Lead Plaintiff at 2. Counsel for lead plaintiff will, of course, attempt to coordinate depositions and discovery. However, the Heller case is further along in discovery and, if the Court modifies the schedule as requested, it may be the case that depositions in Heller may proceed before the parties are fully ready to take depositions in Henderson.

1

-1-

Case 1:04-cv-00665-RPM

Document 76

Filed 07/06/2005

Page 3 of 7

Under the current schedule, fact discovery will not end until December 12, 2005, with dispositive motions due four months later, on April 12, 2006, and a hearing at least in May or June 2006, making the earliest realistic trial date sometime in July or August 2006. As the trial date gets pushed out further, the likelihood of the Company continuing and/or being able to pay a judgment diminishes. Moreover, witness recollections also tend to fade. The Company's most recent Form 10-Q, filed with the Securities and Exchange Commission ("SEC") on May 5, 2005, notes several risk factors, including a continuing formal SEC investigation that could have a substantial adverse impact on the Company. Indeed, the Company specifically states, "If the SEC finds wrongdoing on our part, a financial or administrative penalty may be imposed which could jeopardize our financial viability." Quovadx's March 31, 2005 Form 10-Q at 19. The Company also notes that "such findings could provide basis for additional lawsuits." Id. The Company also notes several other significant risks related to its continued financial health: Certain former officers, independent directors and the Company have been named defendants in various pending class action and derivative lawsuits. The findings and outcome of the SEC investigations may affect these pending lawsuits. Under Delaware law, our charter and bylaws, we are generally obligated to indemnify our directors and officers who are named defendants in any of these lawsuits and advance legal fees and costs. We are unable to estimate our liability in these matters and we may be required to pay judgments or settlements and incur expenses in aggregate amounts that could have a materially adverse effect on our business, financial condition, results of operations and cash flows. * * *

We failed to timely file our first quarter 2004 Form 10-Q with the SEC and NASDAQ. As a result, the NASDAQ Stock Market initiated delisting procedures. On August 9, 2004, NASDAQ informed us that we had been granted an exception to their continued listing standards. However, our continued listing depends on our ability to timely file all periodic reports for reporting periods ending on or before September 30, 2005, and we will not be able to request an automatic extension to -2-

Case 1:04-cv-00665-RPM

Document 76

Filed 07/06/2005

Page 4 of 7

prolong the deadline. If we are late in making any filing during that period, we may be delisted immediately with no right to a hearing or appeal. Additionally, we must continue to meet all other continued listing requirements; our failure to do so may result in a notice of delisting to which we would not be able to request a hearing. Our continued delisting vulnerability may result in potential loss of investor confidence, loss of analyst coverage and depression of our stock price, which could have a material adverse affect on our business and financial prospects. Id. at 19-20. The existence of these Company-described substantial risks makes lead plaintiff believe that waiting for mid-2006 to try this matter provides additional risks to any recovery that the Class might achieve. Given the facts that the documentary discovery is nearly completed and that the number of depositions necessary to prepare the case for trial is relatively small and depositions can be completed in a short period of time, lead plaintiff believes that there is good cause to modify the Second Revised Scheduling Order. Accordingly, lead plaintiff proposes that the trial be set for December 5, 2005, and that fact and expert witness discovery be completed by October 31, 2005. Any dispositive motions should be filed for a hearing during the week of November 14, 2005. While the schedule will necessarily require dispositive motions to be filed before the conclusion of fact discovery, the issues in this case have been joined for nearly a year, thus, such motions should not cause any undue hardship to the parties. Pursuant to D. Colo. Local Civil Rule 7.1.A., lead counsel has conferred with opposing counsel and opposing counsel opposes this request. DATED: July 5, 2005 Respectfully submitted,

s/ Jeffrey W. Lawrence JEFFREY W. LAWRENCE

-3-

Case 1:04-cv-00665-RPM

Document 76

Filed 07/06/2005

Page 5 of 7

JEFFREY W. LAWRENCE DENNIS J. HERMAN EX KANO S. SAMS II LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 100 Pine Street, Suite 2600 San Francisco, CA 94111 Telephone: 415/288-4545 415/288-4534 (fax) Email: [email protected] Email: [email protected] Email: [email protected] Lead Counsel for Plaintiffs
T:\CasesSF\Quovadx\MIS00022428.doc

-4-

Case 1:04-cv-00665-RPM

Document 76

Filed 07/06/2005

Page 6 of 7

DECLARATION OF SERVICE BY MAIL AND FACSIMILE I, the undersigned, declare: 1. That declarant is and was, at all times herein mentioned, a citizen of the United States

and employed in the City and County of San Francisco, over the age of 18 years, and not a party to or interested party in the within action; that declarant's business address is 100 Pine Street, Suite 2600, San Francisco, California 94111. 2. That on July 5, 2005, declarant served the LEAD PLAINTIFF'S REQUEST TO

AMEND THE SECOND REVISED SCHEDULING ORDER AND SET DECEMBER 5, 2005 TRIAL DATE by depositing a true copy thereof in a United States mailbox at San Francisco, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List. Declarant also served the parties by facsimile. 3. That there is a regular communication by mail between the place of mailing and the

places so addressed. I declare under penalty of perjury that the foregoing is true and correct. Executed this 5th day of July, 2005, at San Francisco, California. s/Carolyn Burr CAROLYN BURR

Case 1:04-cv-00665-RPM

Document 76

Filed 07/06/2005

Page 7 of 7

QUOVADX (LEAD) Service List - 7/1/2005 Page 1 of 1

(04-0133)

Counsel For Defendant(s) John A. Hutchings Adam P. Stapen Dill Dill Carr Stonbraker & Hutchings, P.C. 455 Sherman Street, Suite 300 Denver, CO 80203 303/777-3737 303/777-3823(Fax) Frederick J. Baumann Craig R. Welling Rothgerber Johnson & Lyons LLP 1200 17th Street, Suite 3000 Denver, CO 80202-5839 303/623-9000 303/623-9222(Fax)

Charles Davidow Christopher Davies Michael A. Mugmon Wilmer Cutler Pickering Hale and Dorr LLP 2445 M Street, N.W. Washington, DC 20037-1420 202/663-6000 202/663-6363(Fax)

Nina F. Locker John P. Stigi III Kent W. Easter Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304-1050 650/493-9300 650/493-6811(Fax)

Counsel For Plaintiff(s) Jeffrey W. Lawrence Dennis J. Herman Ex Kano S. Sams II Lerach Coughlin Stoia Geller Rudman & Robbins LLP 100 Pine Street, Suite 2600 San Francisco, CA 94111-5238 415/288-4545 415/288-4534(Fax)