Hale and Dorr recently won a motion to dismiss on behalf of individual defendants who were officers and/or directors of the now-dissolved Triton Network Systems, Inc. (“Triton”). The plaintiffs had brought securities fraud claims against the individual defendants based on purported flaws with Triton’s products and related revenue recognition issues.

The court was persuaded by the individual defendants’ argument that the plaintiffs’ claims were barred by the one-year statute of limitations (now expanded to two years under the Sarbanes-Oxley amendments). The court agreed that a press release issued by Triton one and a half years prior to the filing of the complaint was sufficient to put the plaintiffs on inquiry notice. The court also found it significant that virtually all of the plaintiffs’ sources were identified in the complaint as either former Triton employees who had left the company more than a year before the complaint was filed, or as former employees of the key customer identified in the critical press release. On behalf of the individual defendants, Hale and Dorr successfully argued that since plaintiffs were on inquiry notice based on the press release, and since they were free to contact the majority of their sources and conduct their investigation more than one per year prior to the filing of the complaint, all of their claims were time-barred.

 

Jeffrey B. Rudman argued the motion before Judge Wittemore of the United States District Court for the Middle District of Florida. Dan Halston, Peter Spaeth, Christine Trowbridge, Jennifer Carpenter, Saklaine Hedaraly and Clark Petschek provided assistance.