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					 1 LERACH COUGHLIN STOIA GELLER
     RUDMAN & ROBBINS LLP
 2 LESLEY E. WEAVER (191305)
   ELIZABETH A. ACEVEDO (227347)
 3 100 Pine Street, Suite 2600
   San Francisco, CA 94111
 4 Telephone: 415/288-4545
   415/288-4534 (fax)
 5        – and –
   WILLIAM S. LERACH (68581)
 6 TOR GRONBORG (179109)
   JEFFREY D. LIGHT (159515)
 7 401 B Street, Suite 1600
   San Diego, CA 92101
 8 Telephone: 619/231-1058
   619/231-7423 (fax)
 9
   Lead Counsel for Plaintiffs
10

11                               UNITED STATES DISTRICT COURT

12                          NORTHERN DISTRICT OF CALIFORNIA

13
   In re NASSDA CORPORATION                   )   Master File No. C-04-2942-SI
14 SECURITIES LITIGATION                      )
                                              )   CLASS ACTION
15                                            )
     This Document Relates To:                )   NOTICE OF MOTION AND
16                                            )   MEMORANDUM OF POINTS AND
           ALL ACTIONS.                       )   AUTHORITIES IN SUPPORT OF FINAL
17                                            )   APPROVAL OF SETTLEMENT AND PLAN
                                                  OF ALLOCATION OF SETTLEMENT
18                                                PROCEEDS
19                                                DATE:  June 22, 2005
                                                  TIME:  4:00 p.m.
20                                                COURTROOM: The Honorable Susan Illston

21

22

23

24

25

26

27

28
 1                                                  TABLE OF CONTENTS
 2                                                                                                                                    Page
 3 I.       PRELIMINARY STATEMENT .........................................................................................1
 4 II.      THE STANDARDS FOR JUDICIAL APPROVAL OF CLASS ACTION
            SETTLEMENTS..................................................................................................................3
 5
     III.   THE SETTLEMENT MEETS THE NINTH CIRCUIT STANDARD FOR
 6          APPROVAL ........................................................................................................................5
 7          A.        The Settlement Appropriately Balances the Risks of Litigation and the
                      Benefit to the Class of a Certain Recovery..............................................................5
 8
                      1.         Continued Litigation Posed Substantial Risk in Establishing
 9                               Liability and Damages .................................................................................6
10                    2.         Balancing the Certainty of an Immediate Recovery Against the
                                 Expense and Likely Duration of Trial Favors Settlement ...........................9
11
            B.        The Parties Could Identify the Strengths and Weaknesses of Their Cases ...........10
12
            C.        The Recommendations of Experienced Counsel Heavily Favor Approval
13                    of the Settlement ....................................................................................................11
14 IV.      THE PLAN OF ALLOCATION IS FAIR AND REASONABLE....................................11
15 V.       CONCLUSION..................................................................................................................13
16

17

18

19

20

21

22

23

24

25

26

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28

     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF                                                                            -i-
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI
 1                                                TABLE OF AUTHORITIES
 2                                                                                                                               Page
 3 Backman v. Polaroid Corp.,
         910 F.2d 10 (1st Cir. 1990)..................................................................................................8
 4
   Beecher v. Able,
 5       575 F.2d 1010 (2d Cir. 1978).............................................................................................12
 6 Berkey Photo, Inc. v. Eastman Kodak Co.,
          603 F.2d 263 (2d Cir. 1979).................................................................................................8
 7
   Boyd v. Bechtel Corp.,
 8        485 F. Supp. 610 (N.D. Cal. 1979) ........................................................................4, 5, 9, 10
 9 Bullock v. Administrator of Estate of Kircher,
          84 F.R.D. 1 (D.N.J. 1979)....................................................................................................9
10
   Class Plaintiffs v. Seattle,
11        955 F.2d 1268 (9th Cir. 1992) .......................................................................................4, 12
12 Ellis v. Naval Air Rework Facility,
            87 F.R.D. 15 (N.D. Cal. 1980),
13          aff'd, 661 F.2d 939 (9th Cir. 1981) ..........................................................................4, 10, 11
14 Fisher Bros. v. Cambridge-Lee Indus., Inc.,
          630 F. Supp. 482 (E.D. Pa. 1985) ......................................................................................11
15
   Girsh v. Jepson,
16        521 F.2d 153 (3d Cir. 1975).......................................................................................5, 9, 10
17 Green v. Occidental Petroleum Corp.,
          541 F.2d 1335 (9th Cir. 1976) .............................................................................................7
18
   In re Apple Computer Sec. Litig.,
19        [1991 Transfer Binder] Fed. Sec. L. Rep. (CCH)
          ¶96,252 (N.D. Cal. 1991).....................................................................................................8
20
   In re Chambers Dev. Sec. Litig.,
21        912 F. Supp. 822 (W.D. Pa. 1995).....................................................................................10
22 In re Chicken Antitrust Litig. Am. Poultry,
          669 F.2d 228 (5th Cir. 1982) .............................................................................................12
23
   In re Gulf Oil/Cities Serv. Tender Offer Litig.,
24        142 F.R.D. 588 (S.D.N.Y. 1992) .......................................................................................12
25 In re IKON Office Solutions, Inc.,
           194 F.R.D. 166 (E.D. Pa. 2000).........................................................................................12
26
   In re Mego Fin. Corp. Sec. Litig.,
27         213 F.3d 454 (9th Cir. 2000) .......................................................................................10, 11
28

      NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF                                                                     - ii -
      SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI
 1

 2                                                                                                                               Page
 3 In re Metawave Comm'n Corp. Sec. Litig.,
          298 F. Supp. 2d 1056 (W.D. Wash. 2003)...........................................................................5
 4
   In re Pacific Enters. Sec. Litig.,
 5        47 F.3d 373 (9th Cir. 1995) .................................................................................................3
 6 In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions,
           148 F.3d 283 (3d Cir. 1998)...............................................................................................10
 7
   In re Silicon Graphics Sec. Litig.,
 8         183 F.3d 970 (9th Cir. 1999) ...............................................................................................5
 9 In re Warner Communications Sec. Litig.,
          618 F. Supp. 735 (S.D.N.Y. 1985),
10        aff'd, 798 F.2d 35 (2d Cir. 1986) ...........................................................................5, 7, 9, 10
11 In re Washington Pub. Power Supply Sys. Sec. Litig.,
          720 F. Supp. 1379 (D. Ariz. 1989), aff’d sub nom.
12        Class Plaintiffs v. Seattle, 955 F.2d 1268 (9th Cir. 1992) ...................................................4
13 Lewis v. Newman,
          59 F.R.D. 525 (S.D.N.Y. 1973) ...........................................................................................5
14
   M. Berenson Co. v. Faneuil Hall Marketplace, Inc.,
15        671 F. Supp. 819 (D. Mass. 1987) .......................................................................................4
16 MWS Wire Indus., Inc. v. California Fine Wire Co.,
         797 F.2d 799 (9th Cir. 1986) ...............................................................................................3
17
   Malchman v. Davis,
18       761 F.2d 893 (2d Cir. 1985).................................................................................................5
19 Marshall v. Holiday Magic, Inc.,
         550 F.2d 1173 (9th Cir. 1977) .............................................................................................3
20
   McGonigle v. Combs,
21       968 F.2d 810 (9th Cir. 1992) ...............................................................................................6
22 Milstein v. Huck,
          600 F. Supp. 254 (E.D.N.Y. 1984) ..................................................................................5, 9
23
   Newman v. Stein,
24        464 F.2d 689 (2d Cir. 1972).................................................................................................3
25 Officers for Justice v. Civil Service Comm'n,
          688 F.2d 615 (9th Cir. 1982) .......................................................................................3, 4, 9
26
   Republic Nat'l Life Ins. Co. v. Beasley,
27        73 F.R.D. 658 (S.D.N.Y. 1977) ...........................................................................................5
28
      NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF                                                                    - iii -
      SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI
 1

 2                                                                                                                                         Page
 3 Steinberg v. Carey,
           470 F. Supp. 471 (S.D.N.Y. 1979).......................................................................................3
 4
   Torrisi v. Tucson Elec. Power Co.,
 5         8 F.3d 1370 (9th Cir. 1993) .................................................................................................4
 6 Trans World Airlines, Inc. v. Hughes,
          312 F. Supp. 478 (S.D.N.Y. 1970), modified,
 7        449 F.2d 51 (2d Cir. 1971), rev'd, 409 U.S. 363 (1973)......................................................9
 8 Utility Reform Project v. Bonneville Power Admin.,
           869 F.2d 437 (9th Cir. 1989) ...............................................................................................3
 9
   Van Bronkhorst v. Safeco Corp.,
10         529 F.2d 943 (9th Cir. 1976) ...............................................................................................3
11 Weinberger v. Kendrick,
          698 F.2d 61 (2d Cir. 1982).............................................................................................3, 10
12
   West Virginia v. Chas. Pfizer & Co.,
13        314 F. Supp. 710 (S.D.N.Y. 1970), aff'd, 440 F.2d 1079 (2d Cir. 1971) ............................8
14 White v. NFL,
          822 F. Supp. 1389 (D. Minn. 1993)...................................................................................12
15
   Williams v. First Nat'l Bank,
16        216 U.S. 582, 30 S. Ct. 441, 54 L. Ed. 625 (1910)..............................................................3
17 Young v. Katz,
         447 F.2d 431 (5th Cir. 1971) ...............................................................................................9
18

19 STATUTES, RULES AND REGULATIONS

20 15 U.S.C.
          §78j(b)......................................................................................................................2, 5, 6, 7
21        §78t(a) .............................................................................................................................2, 6
22 Federal Rules of Civil Procedure
          Rule 23       ...................................................................................................................3, 11
23        Rule 23(e).............................................................................................................................3
24 17 C.F.R.
          §240.10b-5 ...........................................................................................................................6
25

26 SECONDARY AUTHORITIES

27 Manual for Complex Litigation (3d ed. 1995)
         §30.42...................................................................................................................................4
28
      NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF                                                                              - iv -
      SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI
 1 TO:      ALL PARTIES AND THEIR ATTORNEYS OF RECORD

 2          PLEASE TAKE NOTICE that, pursuant to an Order of the Court filed on April 13, 2005, on

 3 June 22, 2005, at 4:00 p.m., or as soon thereafter as counsel may be heard, at the United States

 4 Courthouse, 450 Golden Gate Avenue, San Francisco, California, before the Honorable Susan

 5 Illston, Lead Plaintiff will and hereby does move for a judgment finally approving the settlement of

 6 this action and dismissing it with prejudice and approval of the Plan of Allocation of settlement

 7 proceeds. Lead Plaintiff’s motion is based on the Memorandum of Points and Authorities in Support

 8 of Final Approval of Settlement and Plan of Allocation of Settlement Proceeds, the declarations of

 9 counsel for the Lead Plaintiff, the Stipulation of Settlement dated as of January 20, 2005, all other

10 pleadings and matters of record, and such additional evidence or argument as may be presented at

11 the hearing.

12                       MEMORANDUM OF POINTS AND AUTHORITIES
13 I.       PRELIMINARY STATEMENT
14          Lead Plaintiff respectfully submits this memorandum of points and authorities in support of

15 its motion for final approval of the settlement of this action for cash consideration of $9,000,000 and

16 approval of the Plan of Allocation of settlement proceeds. The terms of the settlement are set forth

17 in the Stipulation of Settlement dated as of January 20, 2005 (“Stipulation”) which was previously

18 submitted to the Court. The settlement is on behalf of all Persons who purchased Nassda

19 Corporation (“Nassda” or the “Company”) common stock at any time during the period commencing

20 on December 13, 2001 through and including June 11, 2004 (“Settlement Class”).1 The settlement

21 reached is the result of arm’s-length negotiations between counsel with extensive experience and

22 expertise in securities class action litigation. The settlement amount represents approximately 41%

23 of the estimated damages suffered by the Settlement Class and by any measure is an excellent

24

25
   1
           Excluded from the Settlement Class are Defendants, members of the immediate families of
26 the Individual Defendants, any entity in which any Defendant has or had a controlling interest,
   directors and officers of Nassda, and the legal representatives, heirs, successors or assigns of any
27 such excluded person.

28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                -1-
 1 resolution of this Litigation. Settlement Class Members will receive an immediate and substantial

 2 benefit without the considerable delay, risk, uncertainty and expense of continued litigation.

 3          The first of only two lawsuits was filed in this Court on July 20, 2004, asserting that the price

 4 of Nassda common stock was artificially inflated during the period December 13, 2001 through June

 5 11, 2004 (the “Litigation”). The Litigation asserts claims under §§10(b) and 20(a) of the Securities

 6 Exchange Act of 1934. On November 4, 2004, the NECA-IBEW Pension Fund (“NECA”) was

 7 appointed Lead Plaintiff and its choice of counsel, Lerach Coughlin Stoia Geller Rudman & Robbins

 8 LLP was appointed Lead Counsel. Lead Plaintiff alleges that throughout the Class Period,

 9 Defendants allegedly misled investors regarding the potential infringement of trade secrets and

10 patents concerning Nassda’s primary Hierarchical Storage and Isomorphic Matching software

11 products and as a result, Nassda’s financial results were allegedly inflated and its stock price

12 artificially inflated. An overview of the case is set forth in the Declaration of Tor Gronborg in

13 Support of Motion for (1) Final Approval of Settlement and Plan of Allocation of Settlement

14 Proceeds, and (2) Lead Counsel’s Application for an Award of Attorneys’ Fees and Reimbursement

15 of Expenses (“Gronborg Declaration”), submitted herewith. The Court is respectfully referred to the

16 Gronborg Declaration for a detailed discussion of the factual and procedural history of the Litigation,

17 counsel’s efforts on behalf of the Settlement Class and the factors bearing on the reasonableness of

18 the settlement, Plan of Allocation, and counsel’s request for an award of attorneys’ fees and

19 expenses.

20          Lead Counsel who are well respected and experienced in prosecuting securities class actions

21 have concluded that the settlement is an excellent result and clearly in the best interest of the

22 Settlement Class. This conclusion is based on, among other things, the outstanding immediate

23 recovery when weighed against the substantial risks, expense and delay presented in continuing this

24 litigation, a complete analysis of the relevant legal authorities and evidence obtained as a result of

25 counsel’s extensive investigation, the Defendants’ ability to pay any judgment, and past experience

26 in litigating other complex class actions similar to the present action. Thus, Lead Counsel

27 respectfully submit that the settlement is eminently fair, reasonable and adequate and should be

28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                   -2-
 1 approved by this Court. Moreover, the Plan of Allocation of settlement proceeds tracks the theory of

 2 damages asserted and is necessarily fair, reasonable and adequate.2

 3 II.       THE STANDARDS FOR JUDICIAL APPROVAL OF CLASS ACTION
             SETTLEMENTS
 4
             It is well established in the Ninth Circuit that “voluntary conciliation and settlement are the
 5
     preferred means of dispute resolution.” Officers for Justice v. Civil Service Comm’n, 688 F.2d 615,
 6
     625 (9th Cir. 1982). Class action suits readily lend themselves to compromise because of the
 7
     difficulties of proof, the uncertainties of the outcome and the typical length of the litigation.
 8
     “[T]here is an overriding public interest in settling and quieting litigation,” and this is “particularly
 9
     true in class action suits.” Van Bronkhorst v. Safeco Corp., 529 F.2d 943, 950 (9th Cir. 1976);
10
     Utility Reform Project v. Bonneville Power Admin., 869 F.2d 437, 443 (9th Cir. 1989).3
11
             In approving a proposed settlement of a class action under Federal Rule of Civil Procedure
12
     23(e), the Court must find that the proposed settlement is “‘fair, adequate and reasonable.’”4 The
13
     Ninth Circuit has provided factors which may be considered in evaluating the fairness of a class
14
     action settlement:
15
             Although Rule 23(e) is silent respecting the standard by which a proposed settlement
16           is to be evaluated, the universally applied standard is whether the settlement is
             fundamentally fair, adequate and reasonable. The district court’s ultimate
17           determination will necessarily involve a balancing of several factors which may
             include, among others, some or all of the following: the strength of plaintiffs’ case;
18           the risk, expense, complexity, and likely duration of further litigation; the risk of
             maintaining class action status throughout the trial; the amount offered in settlement;
19           the extent of discovery completed, and the stage of the proceedings; the experience

20

21   2
           In reviewing this settlement under Rule 23, the Court is not required to substitute its business
   judgment for that of these counsel, Steinberg v. Carey, 470 F. Supp. 471 (S.D.N.Y. 1979); the
22 settlement should be approved if it is within a “range of reasonableness,” Newman v. Stein, 464 F.2d

23 689, 693 (2d Cir. 1972).
   3
24 U.S. 582, 595, 30 S. Ct. favors the compromise of disputed claims, Williams v. First Nat’l Bank, 216
           The law always
                            441, 54 L. Ed. 625 (1910); In re Pacific Enters. Sec. Litig., 47 F.3d 373, 378
   (9th Cir. 1995); MWS Wire Indus., Inc. v. California Fine Wire Co., 797 F.2d 799, 802 (9th Cir.
25 1986); including those asserted in stockholder class actions, Weinberger v. Kendrick, 698 F.2d 61,

26 73 (2d Cir. 1982).
   4
27 Marshall v. Holiday Magic,F.3d at 377 (citation omitted); Officers for Justice, 688 F.2d at 625;
         Pacific Enters., 47
                              Inc., 550 F.2d 1173, 1178 (9th Cir. 1977).
28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                    -3-
 1          and views of counsel; the presence of a governmental participant; and the reaction of
            the class members to the proposed settlement.
 2
     Officers for Justice, 688 F.2d at 625 (citations omitted). Accord Torrisi v. Tucson Elec. Power Co.,
 3
     8 F.3d 1370, 1375 (9th Cir. 1993); In re Washington Pub. Power Supply Sys. Sec. Litig., 720 F.
 4
     Supp. 1379 (D. Ariz. 1989), aff’d sub nom. Class Plaintiffs v. Seattle, 955 F.2d 1268 (9th Cir. 1992).
 5
            The district court must exercise sound discretion in approving a settlement. Torrisi, 8 F.3d at
 6
     1375; Ellis v. Naval Air Rework Facility, 87 F.R.D. 15, 18 (N.D. Cal. 1980), aff’d, 661 F.2d 939 (9th
 7
     Cir. 1981). In exercising its discretion, “the court’s intrusion upon what is otherwise a private
 8
     consensual agreement negotiated between the parties to a lawsuit must be limited to the extent
 9
     necessary to reach a reasoned judgment that the agreement is not the product of fraud or
10
     overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a
11
     whole, is fair, reasonable and adequate to all concerned.” Officers for Justice, 688 F.2d at 625. The
12
     Ninth Circuit defines the limits of the inquiry to be made by the Court in the following manner:
13
            Therefore, the settlement or fairness hearing is not to be turned into a trial or
14          rehearsal for trial on the merits. Neither the trial court nor this court is to reach any
            ultimate conclusions on the contested issues of fact and law which underlie the
15          merits of the dispute, for it is the very uncertainty of outcome in litigation and
            avoidance of wasteful and expensive litigation that induce consensual settlements.
16          The proposed settlement is not to be judged against a hypothetical or speculative
            measure of what might have been achieved by the negotiators.
17
     Id. (emphasis in original). As explained below and in the Gronborg Declaration, application of these
18
     criteria shows that this settlement warrants the Court’s approval.
19
            Moreover, “[t]he recommendations of plaintiffs’ counsel should be given a presumption of
20
     reasonableness.” Boyd v. Bechtel Corp., 485 F. Supp. 610, 622 (N.D. Cal. 1979). The presumption
21
     of reasonableness in this action is fully warranted because the settlement is the product of arm’s-
22
     length negotiations and was conducted by capable counsel who are well experienced in securities
23
     law litigation. M. Berenson Co. v. Faneuil Hall Marketplace, Inc., 671 F. Supp. 819, 822 (D. Mass.
24
     1987); Ellis, 87 F.R.D. at 18 (“the fact that experienced counsel involved in the case approved the
25
     settlement after hard-fought negotiations is entitled to considerable weight”); Manual for Complex
26

27

28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                   -4-
 1 Litigation §30.42 (3d ed. 1995).5 Here, it is the considered judgment of experienced counsel – after

 2 extensive investigation and settlement negotiations – that this settlement for $9 million in cash is an

 3 excellent result for the Settlement Class.

 4 III.      THE SETTLEMENT MEETS THE NINTH CIRCUIT STANDARD FOR
             APPROVAL
 5
             A.     The Settlement Appropriately Balances the Risks of Litigation and
 6                  the Benefit to the Class of a Certain Recovery
 7           To determine whether the proposed settlement is fair, reasonable and adequate, the Court

 8 must balance the continuing risks of litigation against the benefits afforded to members of the class

 9 and the immediacy and certainty of a substantial recovery. Girsh v. Jepson, 521 F.2d 153, 157 (3d

10 Cir. 1975); Boyd, 485 F. Supp. at 616-17; In re Warner Communications Sec. Litig., 618 F. Supp.

11 735, 741 (S.D.N.Y. 1985), aff’d, 798 F.2d 35 (2d Cir. 1986). In the context of approving class

12 action settlements, courts attempting to balance these factors have recognized “that stockholder

13 litigation is notably difficult and notoriously uncertain.” Lewis v. Newman, 59 F.R.D. 525, 528

14 (S.D.N.Y. 1973); see also Republic Nat’l Life Ins. Co. v. Beasley, 73 F.R.D. 658 (S.D.N.Y. 1977).

15           A balance of these factors in this Litigation supports approval of the settlement, particularly

16 in light of the risks presented by the Private Securities Litigation Reform Act of 1995 (“PSLRA”)

17 and the Ninth Circuit’s decisions in In re Silicon Graphics Sec. Litig., 183 F.3d 970 (9th Cir. 1999)

18 and its progeny. The Ninth Circuit’s decisions in Silicon Graphics and its progeny interpreted the

19 PSLRA’s heightened pleading standards in a very expansive manner and established what is

20 commonly accepted to be the most stringent standards of any Circuit to pleading a §10(b) claim.

21           While Lead Plaintiff believes that allegations in an amended complaint would be sufficiently

22 detailed, there was a real risk that the plaintiffs’ allegations would be dismissed at the pleading stage

23 because of the heightened pleading standards in the Ninth Circuit that make it very difficult to meet

24 the “strong inference of scienter” standard. See, e.g., In re Metawave Comm’n Corp. Sec. Litig., 298

25 F. Supp. 2d 1056 (W.D. Wash. 2003) (court dismissed with prejudice case involving allegations of

26
   5
27 254, 262 (E.D.N.Y. 1984).v. Davis, 761 F.2d 893, 903 (2d Cir. 1985); Milstein v. Huck, 600 F. Supp.
          Accord Malchman

28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                  -5-
 1 significant accounting manipulations and restatements supported by information from confidential

 2 witnesses).

 3          As discussed herein and in the Gronborg Declaration, the risks of continued litigation when

 4 weighed against the substantial and certain recovery for the Settlement Class confirms the

 5 reasonableness of the settlement. The settlement is unquestionably better than another distinct

 6 possibility – no or little recovery for the Settlement Class.

 7                  1.      Continued Litigation Posed Substantial Risk in Establishing
                            Liability and Damages
 8
            Even if Lead Plaintiff got past the pleading stage, which was by no means guaranteed, as in
 9
     every complex case of this kind, it would have faced formidable obstacles to recovery, both with
10
     respect to liability and damages. The principal claims asserted in the Litigation on behalf of the
11
     class were based on §§10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
12
     promulgated thereunder. To prevail on its §10(b) claims Lead Plaintiff would bear the burden of
13
     establishing (1) a misstatement or omission, (2) of material fact, (3) made with scienter, (4) on which
14
     plaintiff relied, and (5) that causes loss. McGonigle v. Combs, 968 F.2d 810, 817 (9th Cir. 1992).
15
     Thus, Lead Plaintiff would have to prove that Defendants were responsible for material
16
     misstatements or omissions of fact in connection with Nassda common stock, that the Settlement
17
     Class justifiably relied upon Defendants’ misconduct, that Defendants acted with the requisite
18
     scienter and that the Settlement Class suffered damages as a result of Defendants’ conduct.
19
            Here, Lead Plaintiff alleged that the value of Nassda common stock was artificially inflated
20
     during the Class Period because of Defendants’ failure to disclose Nassda’s alleged illegal use of
21
     another company’s patents and trade secrets. Throughout the course of the litigation and settlement
22
     talks, Defendants asserted that they possessed credible defenses to the claims asserted, denied all
23
     allegations and insisted there was no basis for liability. Moreover, at the time the initial action was
24
     filed through the commencement of settlement negotiations, Lead Plaintiff and Lead Counsel were
25
     aware that a possible adverse judgment in the patent and trade secret litigation filed against Nassda
26
     would potentially cripple the Company, affecting its ability to continue selling and collecting
27
     revenues from its main products and requiring payout of potentially significant damages.
28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                  -6-
 1          The Litigation entailed a number of complex issues including the misappropriation of patents

 2 and trade secrets. Assuming Lead Plaintiff survived Defendants’ motions to dismiss and summary

 3 judgment, presenting these complex issues to a jury posed a particular risk to Lead Plaintiff’s hope

 4 for success at trial. Lead Plaintiff could not be certain that the jury would be able to understand

 5 these matters well enough to reach a factual determination in the class’s favor.

 6          The risks of establishing liability posed by the complexity of the issues would be exacerbated

 7 by risks inherent in all shareholder litigation, including the unpredictability of a lengthy and complex

 8 jury trial, the risk that the jury would react to evidence in unforeseen ways, the risk that a jury would

 9 find that some or all of the alleged misrepresentations were not material and the risk that the jury

10 would find that Defendants reasonably believed in the appropriateness of their actions and that Lead

11 Plaintiff failed to prove that Defendants acted with scienter. Thus, assuming that Lead Plaintiff

12 survived Defendants’ anticipated motions to dismiss and summary judgment, it nevertheless faced

13 the significant risk that Defendants’ arguments might have found favor with a jury and resulted in

14 the class losing at trial.

15          Even if Lead Plaintiff was to overcome the significant risks of proving liability, it would still

16 face the risks of proving damages. The traditional measure of damages for a defrauded investor

17 under §10(b) is the difference between the price paid for the securities and the “fair value” of the

18 investment in the absence of fraud at the time of the purchase, the difference being the artificial

19 inflation caused by the defendants’ misstatements and/or omissions. See Green v. Occidental

20 Petroleum Corp., 541 F.2d 1335, 1344 (9th Cir. 1976).

21          While Lead Plaintiff believes that it would be able to establish that the Settlement Class

22 suffered damages in the amount of approximately $22 million, the determination of damages is a

23 complicated and uncertain process involving conflicting expert testimony. Defendants’ experts

24 would likely contend that much of the loss experienced by Settlement Class Members was due to

25 other factors completely unrelated to any actionable conduct of Defendants, thereby limiting

26 plaintiffs’ potential recovery. See Warner Communications, 618 F. Supp. at 744-45 (approving

27 settlement where “it is virtually impossible to predict with any certainty which testimony would be

28 credited, and ultimately, which damages would be found to have been caused by actionable, rather
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                   -7-
 1 than the myriad of nonactionable factors such as general market conditions”). Expert testimony

 2 could rest on many subjective assumptions, any of which could be rejected by a jury as speculative

 3 or unreliable. At trial, the damage assessments of Lead Plaintiff’s and Defendants’ experts were sure

 4 to vary substantially, and in the end, this crucial element at trial would be reduced to a “battle of

 5 experts.” The reaction of a jury to such expert testimony is highly unpredictable and in such a battle,

 6 Lead Plaintiff’s counsel recognize the possibility that a jury could be swayed by convincing experts

 7 for the Defendants, and find that there were no damages or only a fraction of the amount of damages

 8 Lead Plaintiff contended.

 9          While it is likely the aggregate class damages that could have been established at trial would

10 have exceeded the amount of the proposed settlement, such result assumes that all significant

11 liability and damage issues would have been resolved in Lead Plaintiff’s favor. Therefore, the

12 amount of damages the Settlement Class would recover if successful at trial is uncertain at best.

13          In summary, although Lead Plaintiff believes that its case is meritorious and that it would

14 ultimately prevail in establishing liability and damages, success at the motion to dismiss or summary

15 judgment stage or trial is never certain, and because Defendants would have mounted on aggressive

16 defense, the settlement eliminates the significant risks of continued litigation, and the potential for

17 lengthy, costly and uncertain litigation and appeals. Moreover, even if Lead Plaintiff was to prevail

18 at trial, risks to the class would remain. For example, in In re Apple Computer Sec. Litig., [1991

19 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶96,252 (N.D. Cal. 1991), a case litigated and tried in this

20 District, the jury rendered a verdict for plaintiffs after an extended trial. Based upon the jury’s

21 findings, recoverable damages could have exceeded $100 million. However, weeks later, Judge

22 Ware overturned the verdict, entering judgment n.o.v. for the individual defendants, and ordered a

23 new trial with respect to the corporate defendant. In another case, the class won a jury verdict and a

24 motion for j.n.o.v. was denied, but on appeal the judgment was reversed and the case dismissed.

25 Backman v. Polaroid Corp., 910 F.2d 10 (1st Cir. 1990). See also West Virginia v. Chas. Pfizer &

26 Co., 314 F. Supp. 710, 743-44 (S.D.N.Y. 1970) (“[i]t is known from past experience that no matter

27 how confident one may be of the outcome of litigation, such confidence is often misplaced”), aff’d,

28 440 F.2d 1079 (2d Cir. 1971); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir.
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                -8-
 1 1979) (reversing $87 million judgment after trial); Trans World Airlines, Inc. v. Hughes, 312 F.

 2 Supp. 478 (S.D.N.Y. 1970), modified, 449 F.2d 51 (2d Cir. 1971), rev’d, 409 U.S. 363 (1973)

 3 (overturning $145 million judgment after years of appeals). Therefore, careful consideration of the

 4 above risks supports approval of the settlement as fair, adequate and reasonable.

 5                   2.      Balancing the Certainty of an Immediate Recovery Against the
                             Expense and Likely Duration of Trial Favors Settlement
 6
             The immediacy and certainty of a recovery is a factor for the Court to balance in determining
 7
     whether the proposed settlement is fair, adequate and reasonable. E.g., Girsh, 521 F.2d at 157.
 8
     Courts consistently have held that “[t]he expense and possible duration of the litigation are major
 9
     factors to be considered in evaluating the reasonableness of [a] settlement.” Milstein, 600 F. Supp.
10
     at 267; Officers for Justice, 688 F.2d at 626; Boyd, 485 F. Supp. at 616-17; Bullock v. Administrator
11
     of Estate of Kircher, 84 F.R.D. 1, 10 (D.N.J. 1979). Therefore, the present settlement must also be
12
     balanced against the expense of achieving a more favorable result at trial. Young v. Katz, 447 F.2d
13
     431, 433 (5th Cir. 1971).
14
             Approval of the settlement will mean a present recovery of approximately 41% of Lead
15
     Plaintiff’s estimate of the damages suffered by Settlement Class Members. If not for this settlement,
16
     the case would have continued through Defendants’ motion to dismiss, summary judgment and trial.
17
     While Lead Counsel believe they would ultimately prevail on the merits, the incursion of additional
18
     and very substantial expense to litigate up to trial would severely deplete any eventual recovery.
19
     Moreover, a judgment at trial favorable to the plaintiffs would unquestionably be the subject of post-
20
     trial motions and further appeals, which could prolong the case for several more years. See, e.g.,
21
     Warner Communications, 618 F. Supp. at 745 (delay from appeals is a factor to be considered).
22
     Therefore, delay, not just at the trial stage, but through post-trial motions and the appellate process as
23
     well, could force Members of the Settlement Class to wait many more years for any recovery, further
24
     reducing its value. Moreover, as discussed above and in the Gronborg Declaration, there was a
25
     substantial risk that the Settlement Class would not be able to recover on any judgment in their
26
     favor. As Judge Lee has noted, “[a] very large bird in the hand in this litigation is surely worth more
27

28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                     -9-
 1 than whatever birds are lurking in the bushes.” In re Chambers Dev. Sec. Litig., 912 F. Supp. 822,

 2 838 (W.D. Pa. 1995).

 3          Even if the Settlement Class were to recover a larger judgment after trial and Defendants

 4 were able to pay, the additional delay, through the trial, post-trial motions and the appellate process,

 5 would deny the Settlement Class recovery for years. Given the time value of money and the

 6 enormous expense of continued litigation, a future recovery, even one in excess of the settlement,

 7 may be less valuable to the Settlement Class than receiving the benefits of the settlement now.

 8 These risks and delays are taken into account when appraising the fairness of the proposed

 9 settlement. In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 318 (3d

10 Cir. 1998) (settlement was favored where “the trial of this class action would be a long, arduous

11 process requiring great expenditures of time and money on behalf of both the parties and the court”).

12          The settlement provides an immediate, certain and substantial benefit to the Settlement Class

13 and avoids years of delay, added expense and uncertainty. A prolonged period of pretrial

14 proceedings and a lengthy trial would not serve the interests of the Settlement Class, especially in

15 light of the substantial immediate recovery provided for by the settlement. Thus, the prospect of

16 continued protracted expensive and uncertain litigation against Defendants militates strongly in favor

17 of approving the proposed settlement as in the best interest of the Settlement Class.

18          B.      The Parties Could Identify the Strengths and Weaknesses of Their
                    Cases
19
            “‘[T]he stage of the proceedings and the amount of discovery completed’” is another factor
20
     which the courts consider in determining the fairness, reasonableness and adequacy of a settlement.
21
     Warner Communications, 618 F. Supp. at 741 (citation omitted); see also Girsh, 521 F.2d at 157;
22
     Weinberger, 698 F.2d at 74; Ellis, 87 F.R.D. at 18; Boyd, 485 F. Supp. at 616-17. The Ninth Circuit
23
     recently held that ‘“[i]n the context of class action settlements, “formal discovery is not a necessary
24
     ticket to the bargaining table” where the parties have sufficient information to make an informed
25
     decision about settlement.”’ In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 459 (9th Cir. 2000)
26
     (citations omitted).
27

28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                 - 10 -
 1          The settlement comes at a relatively early stage of the litigation, foreclosing the extraordinary

 2 expense of protracted motion practice, discovery and trial preparation. Notwithstanding the

 3 relatively early stage in the proceedings, both the knowledge of Lead Counsel and the proceedings

 4 themselves have reached a stage where an intelligent evaluation of the Litigation and the propriety of

 5 the settlement can be made. Although a formal discovery stay was in effect, as set forth in the

 6 Gronborg Declaration, Lead Counsel conducted an exceptionally thorough investigation of the

 7 factual allegations. Moreover, the strengths and weaknesses of the parties’ respective claims and

 8 defenses were fully explored during settlement negotiations. As a result in this case, sufficient

 9 information was before the parties to allow them to consider the strengths and weaknesses of their

10 respective cases and the propriety of settlement. See Mego Fin., 213 F.3d at 459. Having sufficient

11 information to properly evaluate the case, Lead Plaintiff and Lead Counsel have managed to settle

12 this Litigation on terms very favorable to the Settlement Class without the substantial expense, risk,

13 and delay of continued litigation.

14          C.      The Recommendations of Experienced Counsel Heavily Favor
                    Approval of the Settlement
15
            Here, experienced and highly capable Lead Counsel after arm’s length settlement
16
     negotiations have concluded that the settlement is an excellent result and clearly in the best interest
17
     of the Settlement Class. As described herein and in the Gronborg Declaration, this conclusion was
18
     reached after Lead Counsel acquired a thorough understanding of the strengths and weaknesses of
19
     Lead Plaintiff’s claims through an extensive independent investigation, the proceedings in the
20
     Litigation and the settlement negotiations. As courts have stated, the view of the attorneys actively
21
     conducting the litigation, while not conclusive, “is entitled to significant weight.” Fisher Bros. v.
22
     Cambridge-Lee Indus., Inc., 630 F. Supp. 482, 488 (E.D. Pa. 1985); Ellis, 87 F.R.D. at 18 (“the fact
23
     that experienced counsel involved in the case approved the settlement after hard-fought negotiations
24
     is entitled to considerable weight”).
25
     IV.    THE PLAN OF ALLOCATION IS FAIR AND REASONABLE
26
            Assessment of a plan of allocation of settlement proceeds in a class action under Rule 23 of
27
     the Federal Rules of Civil Procedure is governed by the same standards of review applicable to the
28
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                  - 11 -
 1 settlement as a whole – the plan must be fair, reasonable and adequate. See In re IKON Office

 2 Solutions, Inc., 194 F.R.D. 166, 184 (E.D. Pa. 2000); Class Plaintiffs v. Seattle, 955 F.2d 1268, 1284

 3 (9th Cir. 1992). District courts enjoy “broad supervisory powers over the administration of class-

 4 action settlements to allocate the proceeds among the claiming class members . . . equitably.”

 5 Beecher v. Able, 575 F.2d 1010, 1016 (2d Cir. 1978); accord In re Chicken Antitrust Litig. Am.

 6 Poultry, 669 F.2d 228, 238 (5th Cir. 1982). An allocation formula need only have a reasonable,

 7 rational basis, particularly if recommended by “experienced and competent” class counsel. White v.

 8 NFL, 822 F. Supp. 1389, 1420 (D. Minn. 1993); In re Gulf Oil/Cities Serv. Tender Offer Litig., 142

 9 F.R.D. 588, 596 (S.D.N.Y. 1992).

10           The objective of a plan of allocation is to provide an equitable basis upon which to distribute

11 the settlement fund among eligible class members. Here, the Plan of Allocation was developed by

12 Lead Counsel with the assistance of their damage experts and reflects an assessment of the damages

13 that could have been recovered as well as an assessment of the individual Settlement Class

14 Members’ damages, based on when they bought and sold their stock and will result in a fair

15 distribution of the available proceeds among those Settlement Class Members who submit valid

16 claims. The decisions cited above recognize that the goal of an equitable plan is fairness to the class

17 as a whole, taking into account the strengths of the claims based on available facts and evidence.

18 The plan in this case is based on such principles and therefore falls within the mainstream of

19 allocation plans routinely approved. A claim will be calculated as follows:

20           1.      For shares of Nassda common stock that were purchased any time during the time

21 period beginning December 13, 2001 through January 9, 2003, and

22                   (a)     sold prior to January 10, 2003, the claim per share is $0;

23                   (b)     sold from January 10, 2003 through June 11, 2004, the claim per share is the

24 lesser of: (i) the purchase price less the sales price, (ii) the purchase price less $4.12, or (iii) $3.96;

25                   (c)     retained at the end of trading on June 11, 2004, the claim per share is the

26 lesser of: (i) the purchase price less $4.12, or (ii) $5.01.

27           2.      For shares of Nassda common stock that were purchased at any time during the time

28 period January 10, 2003 through June 11, 2004, and
     NOTICE OF MOTION AND POINTS & AUTHORITIES IN SUPPORT OF
     SETTLEMENT AND PLAN OF ALLOCATION - C-04-2942-SI                                                   - 12 -

				
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