1. What is the background of this class action?
Brocade manufactures, among other things, products designed to help information technology organizations manage and profit from their data assets. Brocade is incorporated under the laws of Delaware with its principal place of business in San Jose, California. KPMG was Brocade’s external auditor during a portion of the Class Period.
Beginning on May 19, 2005, six putative class actions alleging securities laws violations were filed against Brocade and its officers and directors. These actions were consolidated before the United States District Court for the Northern District of California, San Francisco Division. In January, 2006, the Court appointed the Arkansas Public Employees Retirement System (“APERS” or “Lead Plaintiff”) as Lead Plaintiff and approved APERS’ selection of Nix, Patterson & Roach, LLP and Patton Roberts, PLLC as “Lead Counsel” in the Action.
On April 14, 2006, APERS filed a 105-page Consolidated Class Action Complaint (the “Complaint”) against Brocade, certain officers and directors of Brocade, and KPMG. APERS alleged that Brocade and certain of its officers and directors made false and misleading public statements and omitted material information about Brocade’s finances relating to stock option grants and stock option based compensation in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the Class Period. APERS alleged that KPMG misled investors by falsely stating that Brocade’s financial statements were prepared according to Generally Accepted Accounting Principles and that KPMG had conducted its audits according to Generally Accepted Auditing Standards. Defendants have denied violating any laws and have raised or could raise numerous defenses, including that the statements were not false and misleading, or even if they were, that Defendants were unaware of their falsity. In addition, Defendants have consistently argued that the Class was not damaged as a result of the challenged statements, but rather, that the alleged misstatements were not material and that other market forces caused the value of Brocade Securities to decline during the Class Period.
2. Who is included in the Class?
The Class consists of the following individuals and entities, subject to certain exceptions:
All persons and entities who purchased or otherwise acquired Brocade common stock during the Class Period (Between May 18, 2000 And May 15, 2005, Inclusive ) and who were damaged thereby.
The exceptions to class membership are:
If you are (i) a Defendant; (ii) an officer, director, or partner of any Defendant or of any Defendant’s partnerships, subsidiaries, or affiliates at all relevant times; (iii) a member of the immediate family of any of the foregoing excluded parties; (iv) a legal representative, heir, successor, or assign of any of the foregoing excluded parties; or (v) an entity in which any of the foregoing excluded parties has or had a controlling interest.
Also, you are not a Class Member if you exclude yourself from the Class by submitting a valid and timely request for exclusion in accordance with the requirements set forth in this Notice. The procedure for requesting exclusion from the Class is described below in the Answer to Question No. 13, “How do I get out of the Settlement?”
In addition, you are not a Class Member if you previously settled an actual or threatened lawsuit or arbitration with Defendants and released all of Defendants from further claims concerning the purchase or acquisition of Brocade Securities.
If one of your mutual funds owns shares of Brocade, that alone does not make you a Class Member. You may contact your broker to see whether you have purchased or otherwise acquired Brocade Securities during the Class Period.
3. What are the benefits of the Settlement?
Pursuant to the Brocade Settlement, Brocade deposited $160,000,000.00 into an interest bearing escrow account on December 9, 2008. Pursuant to the KPMG Settlement, KPMG deposited $98,500.00 into the same interest bearing account on November 25, 2008
The Settlement, if approved, will result in the dismissal of the Amended Complaint as against Brocade and the Individual Defendants and the release by all Class Members of all the Settled Claims against the Released Parties, as defined in the Settlement Notice. The Net Settlement Fund will be distributed in accordance with the provisions of the Plan of Allocation to the Class Members who file timely and valid Proof of Claim forms following the procedures set forth in this Notice and on the Proof of Claim form.
4. What if I am still not sure I am included?
If you are not sure whether you are included, you can ask for help, which will be provided to you at no cost. You can call the Claims Administrator at 1-877-507-4370, or write to the following address:
In Re Brocade Securities Litigation Settlement
Claims Administrator
P.O. Box 3266
Portland, OR 97208
Or you can fill out and return the Proof of Claim form to see whether you qualify.
5. How do I submit a claim form?
To qualify for a settlement payment, you
must send in a Proof of Claim form. You also may get a Proof of Claim form on the Internet at www.brocadeclasssettlement.com or by calling the Claims Administrator. Read the instructions carefully, fill out the form, include all the documents the form asks for, sign the form, and mail it postmarked no later than March 30, 2009.
Please note that all Proof of Claim forms must be signed and returned to the Claims Administrator by the above date in order to receive any payment from the Net Settlement Fund.
6. When will I receive payment?
Payment to Class Members is contingent on the Court’s approval of the Settlement and on such approval becoming final and no longer subject to any appeals to any court. If Judge Breyer approves the Settlement, there still might be appeals. Appeals, if any, will take time, perhaps more than a year.
The Net Settlement Fund will be distributed by the Claims Administrator as soon as possible after final approval has been obtained for the Settlement (which includes exhaustion of any appeals). As noted above, the resolution of any appeal of the final approval may take several years. In addition, processing of the Proofs of Claim requires significant time to complete.
Anyone who sends in a Proof of Claim form can receive information about the progress of the Settlement by visiting the website at
www.brocadeclasssettlement.com, or by calling 1-877-507-4370 or writing to: In Re Brocade Securities Litigation Settlement, Claims Administrator, P.O. Box 3266, Portland, Oregon 97208-3266.
7. How do I request exclusion from the Settlement?
To get out of the Settlement, you must exclude yourself from the Class. To exclude yourself from the Class, you must send a letter by mail to the Claims Administrator saying that you want to be excluded from the Class in In re Brocade Securities Litigation. If you wish to exclude yourself, be sure to include in your letter your name, address, telephone number, and signature, and mail your exclusion request postmarked no later than January 9, 2009 to:
In Re Brocade Securities Litigation Settlement
Exclusions
P.O. Box 3266
Portland, Oregon 97208-326
Requests for exclusion must also list the amount of Brocade common stock purchased, otherwise acquired, or sold during the Class Period, the prices paid or received, the date of each transaction and the amount or number of Brocade Securities held as of the beginning of the Class Period on May 18, 2000.
You cannot exclude yourself on the website, by telephone or by e-mail.
If you do not follow these procedures – including meeting the date for exclusion set out above – you will not be excluded from the Class, and you will be bound by all of the orders and judgments entered by the Court regarding the Settlement.
If you ask to be excluded, you will not receive a Settlement payment, and you cannot object to the Settlement. You will not be legally bound by anything that happens in this lawsuit. You will also not participate in any distribution of the Net Settlement Fund.
8. If I exclude myself, can I get money from the proposed settlement?
No. If you exclude yourself, do not send in a Proof of Claim form to ask for money in connection with the Action. If you exclude yourself from the Class, you may be able to sue, continue to sue, or be part of a different lawsuit or arbitration against the Released Parties.
9. If I do not exclude myself, can I sue the Defendants and the other Released Parties for the same thing later?
No. Unless you exclude yourself from the Class in connection with the Action, you give up any right to sue any or all of the Released Parties for any Settled Claims. If you have a pending lawsuit or arbitration against Brocade or any of its officers and directors or any other Released Parties, speak to the lawyer representing you in that case immediately. You must exclude yourself from this Class to continue your own lawsuit or arbitration against any of the Released Parties.
Remember, your request for exclusion must be postmarked no later than January 9, 2009.
10. How do I object to the Settlement?
If you are a Class Member and you do not exclude yourself, you can object to the Settlement if you do not like any part of it. You can give reasons why you think the Court should not approve the Settlement, Plan of Allocation, request for attorneys’ fees and reimbursement of expenses, or request for reimbursement of the reasonable costs and expenses of Class Representatives relating to their representation of the Class.
To object, you must send a letter or other filing saying that you object to the proposed Settlement in
In re Brocade Communications Systems, Inc. Securities Litigation, Consolidated Case No. 3:05-CV-02042-CRB. You must include your name, address, telephone number, signature, and the reasons you object. You must also list the amount of Brocade common stock purchased, otherwise acquired, or sold during the Class Period, the prices paid or received, the date of each transaction and the amount or number of shares of Brocade common stock held as of the beginning of the Class Period on May 18, 2000. Your written objection must be served on one of the Class Counsel and each Defendants’ Counsel listed below and
must be received by them no later than January 9, 2009:
Class Counsel
Jeffrey J. Angelovich, Esq.
Bradley E. Beckworth, Esq.
Nix, Patterson & Roach, LLP
205 Linda Drive
Daingerfield, TX 75638
Defendants' Counsel
Counsel for Brocade Communications Systems, Inc.:
John C. Dwyer
Cooley Godward Kronish LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Counsel for Gregory Reyes:
Richard Marmaro
Skadden Arps Slate Meagher & Flom L.L.P.
300 S. Grand Ave., Ste. 3400
Los Angeles, CA 90071
Counsel for Larry W. Sonsini:
Evan R. Chesler
Crayath Swaine & Moore, L.L.P.
825 8th Ave.
Worldwide Plaza
New York, NY 10019
Counsel for Antonio Canova:
Norman J. Blears
Hogan & Hartson LLP
525 University Avenue, 2nd Floor
Palo Alto, CA 94301
Counsel for Seth D. Neiman:
Jeffrey Rudman
Wilmer Cutler Pickering Hale & Dorr, L.L.P.
60 State St.
Boston, MA 02109
Counsel for Neal Dempsey:
Richard M. Phillips
Kirkpatrick & Lockhart Preston Gates Ellis, L.L.P.
55 Second St., Ste. 1700
San Francisco, CA 94105
Counsel for KPMG LLP:
Michael C. Kelley
Sidley Austin LLP
555 West Fifth Street
Los Angeles, California 90013
(213) 896-6000
You must also file your objection with the Clerk of the United States District Court for the Northern District of California, San Francisco Division. The address is: Clerk of the U.S. District Court for the Northern District of California, San Francisco Division, United States Courthouse, 450 Golden Gate Avenue, 16th Floor, San Francisco, CA 94102. The Clerk must receive your objection no later than January 9, 2009.
11. What is the difference between objecting and excluding?
Objecting is simply telling the Court that you do not like something about the Settlement. You can object only if you are a Class Member. Excluding yourself is telling the Court that you do not want to be part of the Class. If you exclude yourself from the Class, you have no basis to object, because the Settlement no longer affects you. If you do not exclude yourself from the Class, you will remain a member of the Class and will be bound by the terms of the Brocade Stipulation and the KPMG Stipulation (including the releases contained therein) and all orders and judgments entered by the Court regarding the Settlement regardless of whether the Court accepts or denies your objection.
12. When and Where is the Settlement Hearing?
The Court will hold a Fairness Hearing on January 23, 2009 at the United States District Court for the Northern District of California, San Francisco Division, 450 Golden Gate Avenue, 19th Floor, Courtroom 8, San Francisco, CA 94102 At this hearing, the Court will consider whether the Settlement is fair, reasonable and adequate. If there are objections, the Court will consider them. After the Fairness Hearing, the Court will decide whether to approve the Settlement and the Plan of Allocation. The Court will also rule on the request for attorneys’ fees and expenses and request for reimbursement of the reasonable costs and expenses of Class Representatives relating to their representation of the Class. We do not know how long these decisions will take.