Free Scheduling Order - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-01006-RPM SPECIAL SITUATIONS FUND III, L.P., SPECIAL SITUATIONS CAYMAN FUND, L.P., SPECIAL SITUATIONS TECHNOLOGY FUND NEW, L.P., and SPECIAL SITUATIONS TECHNOLOGY FUND II, L.P., on behalf of themselves and others similarly situated, Plaintiffs, v. QUOVADX, INC., LORINE R. SWEENEY, GARY T. SCHERPING, JEFFREY M. KRAUSS, FRED L. BROWN, J. ANDREW COWHERD, JAMES B. HOOVER, CHARLES J. ROESSLEIN and JAMES A. GILBERT, Defendants.

AMENDED SCHEDULING ORDER

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INTRODUCTION Lead Plaintiffs Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P., Special Situations Technology Fund New, L.P., and Special Situations Technology Fund II, L.P. (" Lead Plaintiffs" and Defendants Quovadx, Inc. (" ), Quovadx" or the " Company" Jeffrey M. ), Krauss, Fred L. Brown, J. Andrew Cowherd, James B. Hoover, Charles J. Roesslein and James A. Gilbert (the " Quovadx Defendants" and Defendants Lorine R. Sweeney and Gary T. ), Scherping hereby submit this [Proposed] Amended Scheduling Order pursuant to

D.C.COLO.L.Civ.R. 16.2(A) and the Court' prior orders in this action. s I. APPEARANCES OF COUNSEL A. Plaintiffs: Lawrence M. Rolnick, Esq. Gavin J. Rooney, Esq. Marcela A. Kirberger, Esq. Paul W. Horan, Esq. Lowenstein Sandler, P.C. 65 Livingston Avenue Roseland, New Jersey 07068 Telephone: (973) 597-2468 Marc B. Kramer, Esq. 150 John F. Kennedy Parkway, #100 Short Hills, New Jersey 07078 Telephone: (973) 847-5924

B.

Defendant Quovadx, Inc.: Hugh Q. Gottschalk John M. Vaught Michael T. Williams

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Wheeler Trigg Kennedy LLP 1801 California St., Suite 3600 Denver, Colorado 80202-2617 Telephone: (303) 244-1800 Facsimile: (303) 244-1879 C. Defendants Jeffrey M. Krauss, Fred L. Brown, J. Andrew Cowherd, James B. Hoover, Charles J. Roesslein and James A. Gilbert: Nicki F. Locker Wilson Sonsini Goodrich & Rosati, P.C. One Market Street, Spear Tower, Suite 3300 San Francisco, CA 94105 Telephone: (415) 947-2000 D. For Defendants Lorine R. Sweeney and Gary T. Scherping: Frederick J. Baumann Rothgerber Johnson & Lyons LLP One Tabor Center, Suite 3000 1200 Seventeenth Street Denver, CO 80202-5855 Telephone: (303)-628-9542

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II.

STATEMENT OF CLAIMS AND DEFENSES A. Statement of Claims of Lead Plaintiffs

This is a securities class action seeking remedies under Sections 11 and 15 of the Securities Act of 1933 for materially false and misleading statements and omissions in a Form S4 Registration Statement (the " Registration Statement" filed with the United States Securities ) and Exchange Commission (" SEC" for the issuance of securities in connection with an ) exchange offer (the " Exchange Offer" with Rogue Wave Software, Inc. (" ) Rogue Wave" which ), became effective on or about December 19, 2003. The case is brought on behalf of all persons and entities, other than Defendants, who acquired common stock of Quovadx (" Quovadx"or the " Company" in connection with the Exchange Offer. ) Plaintiffs allege that Quovadx' s

Registration Statement on Form S-4 was materially false and misleading and contained misrepresented material facts and omissions, including, among other things, misrepresenting Quovadx' financial results for the third quarter of 2003 and omitting to disclose truthfully about s an alleged historic software, training, maintenance and support agreement with an Indian Conglomerate, InfoTech Network Group (" InfoTech" pursuant to which Quovadx announced it ), would realize gains of $7.6 million (the " InfoTech Contract" ). Quovadx further announced that it had already recognized $4.6 million of the total amount of the InfoTech Contract during the third quarter of 2003 and expected to recognize the remainder over the next four quarters. On the same day, Quovadx announced its " highest

quarterly revenue"in the Company' history. Only a few days later, on November 4, 2003, the s Company announced its intention to acquire Rogue Wave in a cash and stock transaction valued at $71 million. Merger negotiations between Rogue Wave and Quovadx took place between -4-

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July and November of 2003. On November 12, 2003, Quovadx filed a Registration Statement with the SEC on Form S-4 in connection with its offer to exchange the common stock of Rogue Wave. Quovadx incorporated by reference its Form 10-Q for the third quarter, ending on The Company filed two subsequent

September 30, 2003, into the Registration Statement.

amendments to the Registration Statement, the second one on December 10, 2003, which again, included Quovadx' financial results for the third quarter of fiscal year 2003. The acquisition s was completed on December 19, 2003. On March 15, 2004, less than five months after announcing its " highest quarterly revenue"in the history of the Company and its acquisition of Rogue Wave, Quovadx announced it would be restating its previously reported third quarter 2003 financial results and revise its previously announced preliminary 2003 fourth quarter and full year financial results. Quovadx explained that the Company had not been able to collect funds from letters of credit opened by InfoTech, and as a result, it had to remove all revenue from sales to InfoTech from the Company' published financial reports for fiscal year 2003. As a result of the restatement of the s third quarter 2003 financial results, software license revenues were reduced by $4.6 million to $3.2 million and total revenues were reduced from $19.9 million to $15.2 million. The

Company further reported that it would reverse the entire $11 million of reported income it had recognized pursuant to the InfoTech Contract. Following the March 15 announcement, the price of Quovadx stock fell approximately 29%, closing at $3.58 per share on March 16, 2003. After March 15, 2003, as the Company issued frequent press releases updating the investing public on its investigation into the restatement and the extent of the accounting irregularities in connection

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with the InfoTech Contract, the price of Quovadx' stock steadily declined. On May 17, the date s this suit was brought, the price of Quovadx stock was $1.03 per share. Lead Plaintiffs contend that Defendants are liable under Section 11 for having prepared and signed a misleading Registration Statement containing material misstatements and omissions pursuant to which they consummated the Exchange Offer with Rogue Wave. Indeed, Quovadx' s false third quarter 2003 financial results and its announcements about InfoTech artificially inflated the Company' income-- and therefore its stock price-- at the same time the Company s was negotiating the acquisition of Rogue Wave. Because the price of its stock was higher than it should have been had Quovadx properly reported its financial results, the Company was able to acquire Rogue Wave on more favorable terms. Contrary to Defendants'position, Lead Plaintiffs assert that the Registration Statement (i) misrepresented material information, (ii) omitted to state material information about the InfoTech transactions and (iii) omitted to state information needed to make the statements made not misleading.

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B.

Statement of Defenses by the Quovadx Defendants

This suit arises from a Registration Statement that Quovadx filed with the SEC on Form S-4, in connection with its offer to exchange its stock for the common stock of Rogue Wave. Quovadx incorporated by reference its third quarter 2003 financial statements into the Registration Statement, which included $4.6 million in software license revenues relating to transactions between Quovadx and InfoTech. Quovadx subsequently restated its third quarter 2003 financial statements to remove the InfoTech revenue, and Plaintiffs have alleged that Quovadx' Form S-4 Registration Statement was therefore materially false and misleading. s Quovadx does not dispute that the inclusion of the InfoTech revenue rendered the Registration Statement materially false, and has not opposed entry of partial summary judgment on this liability issue. Quovadx does dispute Plaintiffs'recent suggestion that the Registration Statement contained omissions of material facts that were required to be stated to make certain statements not misleading, and does not concede an omissions claim has been properly pled. Assuming that the Court grants Plaintiffs' motion to dismiss the claims against the individual defendants and Plaintiffs' motion for partial summary judgment as to Quovadx' s admitted affirmative misstatements relating to the third quarter 2003 financial statements, the remaining issues to be tried are whether Quovadx' Form S-4 Registration Statement omitted s material facts and whether Lead Plaintiffs and absent class members can individually prove loss causation and damages and in what amounts. The Quovadx Defendants have asserted various affirmative defenses to Plaintiffs' claims relating to causation and damages:

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Third Affirmative Defense: Every act or omission of the Individual Defendants alleged in the Complaint was done or omitted in good faith conformity with the rules and regulations of the SEC and, therefore, pursuant to Section 19(a) of the Securities Act of 1933, the Individual Defendants have no liability for any act or omission so alleged. Fourth Affirmative Defense: The Individual Defendants assert that they had, after

reasonable investigation, reasonable grounds to believe, and did believe, at the time the Registration Statement became effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements not misleading. Fifth Affirmative Defense: All or a portion of the losses and damages alleged by Lead Plaintiffs and members of the class are attributable to causes other than any actions or omissions for which Defendants are responsible. Ninth Affirmative Defense: Lead Plaintiffs and the members of the class are barred from claiming injury or damage, if any, because they failed to make reasonable efforts to mitigate such injury or damage, which would have prevented their injury or damage, if any. Tenth Affirmative Defense: Any recoveries for damages allegedly incurred by Lead Plaintiffs and individual members of the class, if any, are subject to offsets in the amounts of any tax benefits or other benefits received by Lead Plaintiffs or members of the class through their investments. Eleventh Affirmative Defense: Lead Plaintiffs and members of the class do not have standing under Section 11 of the 1933 Act to the extent that they did not acquire their shares pursuant to or traceable to the Registration Statement.

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C.

Statement of Defenses by Defendants Lorine R. Sweeney and Gary T. Scherping

Defendants Lorine R. Sweeney and Gary T. Scherping, the former CEO and CFO, respectively, of Quovadx, join in the Statement of Defenses submitted by the Quovadx Defendants. Sweeney and Scherping deny that they have any liability to Lead Plaintiffs in this action. Assuming that the Court grants Plaintiffs'motion to dismiss the claims against the Individual Defendants, then Sweeny and Scherping will no longer be parties to the case. In the event the Court does not grant Plaintiffs'motion to dismiss the claims against the Individual Defendants, Sweeney and Scherping will mount several defenses to Lead Plaintiffs'claims that the restatement of Quovadx' third quarter 2003 financial statements and the revision of its s preliminary fourth quarter 2003 and full year 2003 results were caused by securities fraud. To the extent that Sweeney and Scherping even participated in decisions to enter into agreements with InfoTech and to recognize revenue on those contracts, they acted at all times in good faith and without knowledge or reason to believe that collection from InfoTech was not probable at the time the revenue was recognized on the sales to InfoTech. Moreover, Sweeney and

Scherping did not attempt to fraudulently inflate Quovadx' financial results or increase its stock s price in order to acquire Rogue Wave on more favorable terms. All the accounting matters alleged to form the basis of Lead Plaintiffs'claims were reviewed and approved by various experts, including inside and outside counsel for Quovadx and their independent auditor, Ernst & Young LLP. Thus, any losses or damages that Lead Plaintiffs suffered could not have been caused by Sweeney' and Scherping' actions or omissions. s s Defendants Sweeney and Scherping have raised the following affirmative defenses to

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Lead Plaintiffs'claims asserted under Sections 11 and 15 of the 1933 Act, 15 U.S.C. §§ 77k and 77o: (1) that the Complaint fails to state a claim on which relief may be granted; (2) that Lead Plaintiffs and the class have failed to plead fraud or its predicate acts with sufficient particularity; (3) that every act or omission alleged in the Complaint was done or omitted in good faith conformity with the rules and regulations of the SEC, and there is no liability for any such act or omission alleged; (4) that Sweeney and Scherping had, after reasonable investigation, reasonable grounds to believe and did believe, at the time the Registration Statement became effective, that the statements therein were true and that there was no material omission required or necessary to make the statements not misleading; (5) that all or a portion of the losses and damages alleged by Lead Plaintiffs and the class are attributable to causes other than any actions or omissions for which Sweeney and Scherping are alleged responsible; (6) that some or all of the matters now claimed by the Complaint to be the subject of misrepresentations and omissions were publicly disclosed or were in the public domain and, accordingly, were available to Lead Plaintiffs and the class and were at all times reflected in the price of Quovadx' common stock; s (7) that, if any false or misleading statement was made or if any material fact required to be stated or necessary to make any statement made not misleading was omitted, which Defendants deny, then Lead Plaintiffs and the class were aware of that alleged misstatement or omission and did not rely upon it in acquiring Quovadx' common stock; (8) that Lead Plaintiffs and the class s were expressly advised in Quovadx' public filings and otherwise regarding the material facts s and risks concerning their investments, and that, therefore, Lead Plaintiffs and the class therefore assumed the risk of any loss and are estopped from recovering any relief; (9) that Lead Plaintiffs and the class are barred from claiming injury or damage, if any, because they failed to make

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reasonable efforts to mitigate such injury or damage, which would have prevented their injury or damages, if any; (10) that any recovery for damages allegedly incurred by Lead Plaintiffs and the class, if any, is subject to offset in the amount of any tax benefits or other benefits received by plaintiffs and the class through their investments; (11) that Sweeney and Scherping acted in good faith and had no knowledge of or reasonable grounds to believe in the existence of the facts by reason of which their liability is alleged to exist, and therefore, pursuant to Section 15 of the 1933 Act, Sweeney and Scherping have no liability for any act or omission so alleged; (12) Lead Plaintiffs and the class do not have standing under Section 11 of the 1933 Act to the extent that they did not acquire their shares pursuant to or traceable to the Registration Statement; and (13) Lead Plaintiffs and the class do not have standing under Section 11 of the 1933 Act because they acquired their shares of Quovadx stock without any investment decision caused by or in reliance upon any statement or omission in the Registration Statement. III. UNDISPUTED FACTS The following facts are undisputed: · · · · · · Quovadx is a global platform software and vertical solutions company. The Company' software and services help healthcare, insurance, and other s companies integrate their technology systems and business processes. This Court has jurisdiction over the claims asserted in this case, and venue is proper because Defendants conducted business in this District. Sweeney was President, CEO, and a director of Quovadx. Scherping was Executive Vice President of Finance and CFO of Quovadx. Scherping assisted in the preparation of the Company' financial statements. s On November 11, 2003, Quovadx filed its quarterly report on Form 10-Q with the SEC for the quarter ending September 30, 2003, which included $4.6 million in

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revenue from the third quarter 2003 sale to InfoTech and deferred the remaining $3 million, expecting to recognize it over the next four quarters. · On November 12, 2003, Quovadx filed the S-4 Registration Statement with the SEC for the issuance of Quovadx stock that would be provided to Rogue Wave shareholders in connection with the acquisition. The Registration Statement incorporated by reference Quovadx' Form 10-Q for s third quarter 2003. The Registration Statement became effective on December 10, 2003. On February 11, 2004, Quovadx publicly announced its preliminary results for 2003 and fourth quarter 2003, which included revenue from the fourth quarter 2003 sale to InfoTech. On March 15, 2004, Quovadx announced that it was restating its third quarter 2003 financial results and revising its previously announced preliminary fourth quarter 2003 and 2003 full year financial results to remove all revenue associated with sales to InfoTech. This action was filed on May 17, 2004.

· · ·

·

·

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IV.

COMPUTATION OF DAMAGES A. Plaintiffs

For a detailed statement of Lead Plaintiffs' computation of statutory damages, see Plaintiffs' Statement of Damages, attached as Exhibit A to the parties'proposed Scheduling Order submitted February 21, 2006. Defendants have made the assertion that members of the class are in the best position to provide information regarding their disposition of Quovadx stock, and that each individual class member should be required to provide that information at the outset of this class action proceeding. This assertion turns class action principles on their head. There are well-established methodologies for calculating class-wide damages based on expert testimony. The purpose of a class action is to allow for economies and efficiencies in the litigation of class claims and to avoid discovery of individual class members. That is why a class representative must

demonstrate in conjunction with class certification, typicality, and that the lead plaintiff adequately represents the class. It is well established that by proving its own claim, the lead plaintiff presumptively proves the claim of all class members. See 2-14A James Wm. Moore, et al., Moore' Manual-Federal Practice and Procedure § 14A.23[5)[f] (2004). What Quovadx s suggests undermines the whole purpose of class actions by conducting individualized discovery in violation of class action principles. That is also why the proofs of individualized class

members are always handled through the use of post-judgment claims handling administration procedures.

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However, in order to calculate damages on a class-wide basis, Plaintiffs intend to conduct limited discovery to determine the extent to which class members may have sold prior to the allegedly " curative" disclosures. This will include obtaining a list of all shareholders who

obtained shares in the exchange offer and the issuance of subpoenas to the largest retail broker dealers for relevant trading records. With this information, damages will be calculated on a class-wide basis. Whether such a methodology is sufficiently reliable can be tested under

Daubert at the appropriate juncture. With respect to the " depreciation in value" of the Quovadx stock between the Registration Statement' effective date and the date on which this action was filed, the Lead s Plaintiffs contend that this was caused by the misstatements and omissions in the Company' s Registration Statement relating to the InfoTech transaction, and the Defendants bear the burden of demonstrating, as an affirmative defense, that the losses were wholly unrelated to the misstatements and omissions at issue. B. Defendants1 1. Proof of Damages

Lead Plaintiffs have submitted their proposed damages calculation in Exhibit A, which simply calculates the difference between the price of the Quovadx stock on the date of the Rogue Wave transaction and the date this lawsuit was filed. Lead Plaintiffs'methodology is directly in conflict with the measurement of damages clearly established by statute in Section 11 cases.

1

This section is submitted solely on behalf of Quovadx in light of the Court' statements at s the conference held on February 24, 2006, that the Court intends to grant Plaintiffs'motion to dismiss the claims against the Individual Defendants, in which case Quovadx will be the only remaining defendant in this action. - 14 -

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As in any Section 11 case, Lead Plaintiffs here must prove that their damages were caused by the misstatements in the Registration Statement, and Section 11(e) of the 1933 Act establishes three measures of damage, depending on when and if the purchaser sold the security:

(1) the difference between the value of the security at the time it was purchased, and the value at the time the lawsuit was brought, or (2) the difference between the value of the security at the time it was purchased, and the price at which it was sold prior to the filing of the lawsuit, or (3) the difference between the value of the security at the time it was purchased, and the price at which it was sold after the filing of the lawsuit but before judgment, if the price of the security increased from the date of filing, thereby reducing the damages as measured from the date of the filing of the lawsuit. 15 U.S.C. § 77k(e). In short, a critical component of Lead Plaintiffs'damage case will be to prove when Lead Plaintiffs'and the absent class members'securities were sold and the prices at which these securities were sold. Lead Plaintiffs suggest that the class members'individualized questions of loss causation and damages can be answered simply by allowing Lead Plaintiffs to present to the Court speculative expert testimony utilizing trading models to estimate the timing and amount of stock sales by the class members. Such a process, however, is not proof of damages. See e.g. Biben v. Card, 789 F. Supp. 1001, 1004 (W.D. Mo. 1992) (requiring individual proofs of claim from absent class members); cf. Mangone v. First USA Bank, 206 F.R.D. 222, 234-35 (S.D. Ill. 2001) (the law requires class members to bear the burden of proving liability and damages, and " a class action statutes does not alter this basic principle" Moreover, several federal courts have ). concluded that such expert testimony is not admissible. E.g., In re Broadcom Corp. Secs. Litig.,

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No. SACV01275GLTMLGX, 2005 WL 1403756, at *3 (C.D. Cal. June 3, 2005); Bell v. Fore Sys., Inc., No. Civ. A. 97-1265, 2002 WL 32097540, at *4 (W.D. Pa. Aug. 2, 2002). The only actual damages which can be awarded at trial will be those incurred by the Lead Plaintiffs based on evidence submitted regarding the date of the sale of their shares and the actual amount of their loss. With respect to the absent class members, the Court will be required to make a per-share damage calculation based on whether shares have been sold since the class members acquisitions, and the dates on which the shares were sold. Each absent class member will then be required to submit proofs-of-claim to establish its total loss based on the Court' s per-share determination.2 2. Loss Causation

Section 11(e) also provides that a defendant is not liable for any damages, which were caused by factors other than false statements in the Registration Statement: [I] the defendant proves that any portion or all of such damages represents other than the depreciation in value of such security resulting from such part of the registration statement, with respect to which his liability is asserted, not being true or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading, such portion of or all such damages shall not be recoverable. . . . 15 U.S.C. § 77k(e).
2

Quovadx requested the Court to commence the proof-of-claim process promptly in connection with the class certification notice that will be distributed to class members in the next several weeks. At the Scheduling Conference, the Court indicated that it would not conduct the proof-of-claim process at this time. The Court stated that, although the class members will be asked to provide information regarding their dates of purchase and sales of Quovadx securities, the information requests will be voluntary, and failure to provide this information to the Court will not preclude class members from submitting proofs-of-claim after the trial. - 16 -

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In this case, Quovadx will demonstrate that much of the " depreciation in value" of the Quovadx stock between the effective date of the Registration Statement and the date on which this action was filed resulted from matters other than the falsity of the Company' third quarter s 2003 financial statements. Indeed, a significant percentage of the depreciation in value of Quovadx stock resulted from the revision of the Company' fourth quarter 2003 financial results, s the threatened delisting of the Company' stock from Nasdaq in April 2004, and a drop in the s Company' cash position in April 2004, all of which occurred after the effective date of the s Registration Statement, Although Lead Plaintiffs'Complaint and Motion for Partial Summary Judgment focus exclusively on the falsity of the S-4 Registration Statement because of the improperly booked InfoTech Revenue in the third quarter 2003 financial statements, Lead Plaintiffs have recently suggested that the Registration Statement may also contain unspecified material omissions that, if true, allegedly would have the effect of expanding the scope of recoverable damages by allowing the class to recover for the " depreciation in value"caused by events unrelated to the restatement of the third quarter 2003 financial statements. Defendants believe that Lead

Plaintiffs'omissions theory is not legally or factually supportable and that it will have no effect on the damages that can be recovered by class members in this case.

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V.

REPORT OF PRECONFERENCE DISCOVERY AND MEETING UNDER FED. R. CIV. P. 26(F) The Defendants have shared with Lead Plaintiffs in this action Quovadx' entire s

production of documents in response to document requests in Heller, which satisfies the Defendants'obligations, in connection with both actions, pursuant to Fed. R. Civ. P. 26(a)(1)(B).

VI.

CASE PLAN AND SCHEDULE3 The Parties are in agreement regarding the following case schedule: A. Deadline for Joinder of Parties and Amendment of Pleadings

The deadline for motions for leave to amend pursuant to Fed. R. Civ. P. 15 expired on March 28, 2006.

B.

Notice to Members of the Plaintiff Class

The Court has instructed the parties to provide notice to all class members of (1) the Class Certification Order, (2) the of the prospective order dismissing without prejudice the claims against the Individual Defendants, (3) the prospective trial on damages and omissions liability, and (4) if partial summary judgment is entered on misrepresentation liability, the fact
3

This section is submitted solely on behalf of Plaintiffs and Quovadx in light of the Court' s statements at the conference held on February 24, 2006 that the Court intends to grant Plaintiffs' motion to dismiss the claims against the Individual Defendants. In the event that the Court does not grant that motion, then Plaintiffs and the Individual Defendants will propose a schedule for discovery and other pretrial activities that reflects the continuing involvement of the Individual Defendants - 18 -

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that misrepresentation liability has been established. The Court also authorized the parties to include with the class notice a questionnaire that requests from the class members information regarding their individual damage claims. The Parties have prepared, and contemporaneously filed with this Amended Scheduling Order, a proposed class notice, a proposed damages questionnaire, and a proposed order authoring the parties to disseminate the notice and questionnaire to the class. The parties filed their notice plan on May 22, 2006. If the Court approves the parties'proposed notice plan without amendment on or before June 2, 2006, the parties anticipate that they would be able complete the notice mailings by June 30, 2006. The parties will propose to the Court that the class members'responses must be returned by firstclass U.S. Mail and postmarked no later than 60 days after the notice mailing date. Thus, if the notice mailing date is June 30, 2006, the notice shall inform members of the Class that they must send their responses postmarked no later than August 29, 2006.

C.

Fact Discovery Cut-off Date

The parties will complete all fact discovery by June 30, 2006, with the exception of the class damages questionnaires. If the Heller action proceeds, the parties here shall attempt in

good faith to coordinate discovery proceedings with the Heller parties to avoid or minimize duplication and unnecessary expense.

D.

Dispositive Motion Schedule

All dispositive motions will be filed no later than July 31, 2006.

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E.

Expert Witness Disclosures

Initial Disclosures by the party having the burden of proof on an issue ­September 22, 2006. Rebuttal Disclosures ­October 23, 2006. Expert witness depositions shall be completed by November 10, 2006. Notwithstanding the provisions of Fed. R. Civ. P. 26(a)(2)(B), no exception to the requirements of the Rule will be allowed unless approved by this Court.

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F.

Anticipated Fields of Expert Testimony

Lead Plaintiffs anticipate that expert discovery will be needed in connection with: (i) Defendant Quovadx, Inc.' assertion of a " s negative causation defense," i.e., its assertion that some portion of the drop in Quovadx, Inc.' stock price was attributable to factors other than the s misstatements and omissions in its Registration Statement. To the extent Lead Plaintiffs seek an aggregate damage award and the Court permits such testimony, the parties may utilize the experts in connection with the calculation of damages.

G.

Proposed Limitations on Use or Number of Expert Witnesses

Each separately represented party may designate up to three experts.

H.

Proposed Deposition Schedule

The parties will meet and confer regarding the deposition schedule, and will attempt in good faith to coordinate discovery proceedings with the plaintiff in the Heller action to avoid or minimize duplication and unnecessary expense. I. Schedule for Requests for Production of Documents, Interrogatories, and Requests for Admissions

All interrogatories, requests for production of documents, and requests for admissions shall be served no later than May 26, 2006. The presumptive limits on written discovery as set by the Federal Rules of Civil Procedure also shall apply.

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J.

Discovery Limitations

Lead Plaintiffs shall be limited to two depositions (in addition to the depositions of parties and designated experts) and Defendants shall collectively be limited to two depositions (in addition to the depositions of parties and designated experts). The presumptive limits on the time allotted for each deposition as set by the Federal Rules of Civil Procedure should apply, subject to a showing of good cause for additional time.

VII.

COMPLIANCE WITH FED. R. CIV. P. 26(F) The parties participated in a mediation on December 13-14, 2005. The parties have not

discussed settlement further and do not currently anticipate reaching a settlement in this action.

VIII. OTHER SCHEDULING ISSUES In the event the Court grants Lead Plaintiffs'motion to dismiss the claims against the Individual Defendants, Defendants anticipate a five-day trial. two-day trial is necessary. Lead Plaintiffs believe only a

The parties have discussed but have not reached an agreement

regarding the waiver of a jury trial in this case.

IX.

AMENDMENTS TO SCHEDULING ORDER This scheduling order may be altered or amended only upon a showing of good cause.

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DATED this 30th day of May, 2006. BY THE COURT:

S/RICHARD P. MATSCH

HON. RICHARD MATSCH UNITED STATES DISTRICT JUDGE

Dated: May 22, 2006

Submitted by,

s/ Lawrence M. Rolnick (by consent) Lawrence M. Rolnick, Esq. Paul W. Horan, Esq. Lowenstein Sandler 65 Livingston Avenue Roseland, NJ 07068-1791 Tel. 973.597.2450 Fax. 973.597.2451 E-mail: [email protected]; [email protected] Lead Plaintiffs'Counsel

s/ Michael T. Williams Hugh Q. Gottschalk John M. Vaught Michael T. Williams Wheeler Trigg Kennedy 1801 California St., Suite 3600 Denver, Colorado 80202-2617 Telephone: (303) 244-1800 Facsimile: (303) 244-1879 E-mail: [email protected]; [email protected]

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Counsel for Defendant Quovadx, Inc.

s/ Nicki F. Locker (by consent) Nicki F. Locker Kent W. Easter Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 493-9300 Facsimile: (650) 493-6811 E-mail: [email protected] Counsel for Jeffrey M. Krauss, Fred L. Brown, J. Andrew Cowherd, James B. Hoover, Charles J. Roesslein, and James A. Gilbert s/ Frederick J. Baumann (by consent) Frederick J. Baumann Rothgerber Johnson & Lyons LLP One Tabor Center, Suite 3000 1200 Seventeenth Street Denver, CO 80202-5855 Telephone: (303) 628-9542 Facsimile: (303) 623-9222 E-mail: [email protected] WILMER CUTLER PICKERING HALE & DORR LLP Charles E. Davidow Christopher Davies Michael Mugmon 2445 M Street, N.W. Washington, DC 20037 Telephone: (202) 663-6000 Counsel for Defendants Lorine R. Sweeney and Gary T. Scherping

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Case 1:04-cv-01006-RPM

Document 176

Filed 05/30/2006

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on May 22, 2006, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses: · Frederick J. Baumann [email protected] [email protected]
·

Solomon Benjamin Cera [email protected] [email protected] Hugh Q. Gottschalk [email protected] [email protected] [email protected] John Alonzo Hutchings [email protected] [email protected] Marcela A. Kirberger [email protected] Marc Bradley Kramer [email protected] [email protected] Evan S. Lipstein [email protected] [email protected] Nina Locker [email protected] Lawrence M. Rolnick [email protected] Gavin J. Rooney [email protected] [email protected] Adam Philip Stapen [email protected] [email protected] John Mark Vaught [email protected] [email protected] Craig Richard Welling [email protected] [email protected] Michael T. Williams [email protected] [email protected]

·

·

·

·

·

· · ·

·

·

·

·

·

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Case 1:04-cv-01006-RPM

Document 176

Filed 05/30/2006

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s/Michael T. Williams (by Elizabeth Anadale) Michael T. Williams

414782v2

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