Practice and History

Schubert Jonckheer Kolbe & Kralowec is AV rated by the Martindale-Hubbell Law Directory. Together with its predecessor firms, the Law Offices of Robert C. Schubert and the Law Offices of Juden Justice Reed, it has been in operation for over twenty-five years. In addition to prosecuting cases in the California federal and state courts, the firm has been actively involved in multi-district securities and other class actions throughout the United States. Schubert & Reed has been Lead Counsel or Co-Lead Counsel in class actions and shareholder derivative cases which have produced monetary recoveries of over $315 million. These have included the following:

Tucker v. Scrushy, et al., No. CV-02-5212 (Alabama Circuit Court, Jefferson County).  Co-Lead Counsel in shareholder derivative action on behalf of HealthSouth Corporation alleging officer and director breaches of fiduciary duty and insider trading arising from a multi-billion dollar restatement of previously reported financial results. Partial summary judgment for unjust enrichment granted against former CEO Richard Scrushy for restitution to HealthSouth of $47.8 million bonuses with interest paid to Scrushy during fiscal years 1997-2002 pursuant to a stated policy requiring that bonuses be paid from net profits.  In fact, following restatement, it was revealed that the Company had never had net profits from which to pay Scrushy bonuses during the fiscal years 1997-2002.  The judgment was affirmed on appeal to the Alabama Supreme Court, Scrushy v. Tucker, --- So.2d ----, 2006 WL 2458818, Ala., August 25, 2006 (1050564.).  Plaintiffs thereafter settled HealthSouth’s claims against additional HealthSouth directors and officers for $100 million. Tucker v. Scrushy, et al., No. CV-02-5212 (Alabama Circuit Court, Jefferson County)(Order dated January 11, 2007). Co-Counsel in a related case, In re HealthSouth Corp. Shareholders Litigation., 845 A.2d 1096 (Del. Ch. 2003), aff’d 847 A.2d 1121 (Del.Supr. 2004), in which the Delaware Chancery Court granted summary judgment for unjust enrichment and equitable fraud against Richard Scrushy arising from his purported repayment with HealthSouth stock of a $25 million loan that Scrushy was obligated to pay in cash. The judgment resulted in an immediate $17.5 million recovery to HealthSouth.  Collectively, we obtained in excess of $165 million in judgments against Scrushy and other HealthSouth fiduciaries for the benefit of HealthSouth and its shareholders.

Bonneville Pacific Corporation Securities Litigation, No. 92-C-181-S (District of Utah). Co-Lead Counsel in securities class action involving fraudulent financial statements by a large power cogeneration company. We obtained settlements totaling $26 million for the class, which recovered 100% of its damages, in one of the largest securities fraud cases in Utah history.  We also obtained a decision from the Utah Supreme Court holding that plaintiffs need not plead or prove reliance to proceed under the Utah Uniform Securities Act.  Gohler v. Wood, 919 P. 2d 561 (Utah 1996).

Qwest Communications International, Inc. Derivative Litigation, No. 02-CV-8188 (Colorado District Court, City and County of Denver). Co-Lead Counsel in shareholder derivative action alleging officer and director breaches of fiduciary duty and insider trading arising out of massive earnings restatement by telecommunications company. Defendants attempted to derail the case, seeking a stay based upon previously filed but inactive Federal derivative action. We defeated the motion, reviewed and analyzed over 7 million pages of documents, and recovered $25 million for the company. The settlement included important corporate governance changes, including the requirement of a lead independent director when the chairman of the board is also the chief executive officer.

Kirschenbaum v. Electronic Arts, Inc., Case No. CIV 440876 (California Superior Court, San Mateo County). Co-Lead Counsel in class action seeking to recover unpaid overtime compensation for computer graphics artists employed in California by Electronic Arts Inc. (“EA”), the world’s largest manufacturer of computer video games. The case was settled after the parties conducted formal and informal discovery, and we reviewed thousands of pages of company records. The settlement totaled $15.6 million, for approximately 618 class members. We believe this is the first class action involving recovery of overtime compensation for computer graphics artists in the electronic game industry.

Raider v. Sunderland, Civil Action No. 19357 NC (Delaware Chancery Court).  Co-Lead Counsel in shareholder class action alleging breach of fiduciary duty by controlling shareholders of large cement company in connection with its acquisition of related company owned by controlling shareholders.  We recovered $15 million ($8 per share) for minority shareholders after obtaining class certification, reviewing approximately 30,000 documents, deposing numerous fact and expert witnesses, and preparing the case for trial.  The recovery exceeded 50% of the damage calculation of plaintiff’s valuation expert.

ADAC Laboratories Derivative Litigation, No. CV 779262 (California Superior Court, Santa Clara County). Co-Lead Counsel in shareholder derivative action alleging officer and director breaches of fiduciary duty and insider trading arising from false financial statements issued by a scientific instruments manufacturer. These financial statements were restated after “side letters” and other improper revenue recognition practices were uncovered.  Defendants sought a stay based upon federal securities class actions arising from the same facts.  We defeated that motion, obtained thousands of documents well ahead of the federal actions, and recovered $12 million for the company, representing the bulk of its insurance coverage.

In Re Savings Investment Service Corporation Loan Commitment Litigation, MDL 718 (Western District of Oklahoma). Co-Lead Counsel in securities class action arising from default of $9.85 million issue of industrial revenue bonds issued to finance a hotel in Westminster, Colorado. After extensive discovery and motion practice we obtained a recovery of approximately $8.0 million for the class.

Emulex Shareholder Derivative Cases, Judicial Coordination Proceeding No. 4194 (California Superior Court, Orange County). Co-Lead Counsel in shareholder derivative actions alleging officer and director breaches of fiduciary and insider trading arising from order delays for optical networking hardware. Although the case was initially stayed, we succeeded in lifting the stay and obtaining over 100,000 pages of company documents, eventually obtaining an $8 million settlement for the company.

Garbini v. Protection One, Inc., Civil Action No. 99-3755 (Central District of California). Lead Counsel in securities class action arising from three successive restatements of three years’ audited and publicly reported financial results by America’s second-largest home security monitoring company. Plaintiffs asserted claims under Section 11 of the Securities Act of 1933 and Section 10 of the Securities Exchange Act of 1934, alleging use of an excessively long period to amortize the cost of acquired customer accounts.  We obtained a settlement of $7.76 million for the class.  In a related appeal, we successfully challenged the dismissal of the company’s auditors, Arthur Andersen.  The ruling clarified plaintiffs’ obligations to allege damages under the Securities Act of 1933. Garbini v. Protection One, Inc., [Current Binder] Fed. Sec. L. Rep.(CCH) ¶92,018 (9^thCir. October 11, 2002).

In Re Providian Financial Corporation Derivative Litigation, Case No. 401954 (California Superior Court, City and County of San Francisco). Co-Lead Counsel in shareholder derivative action alleging breaches of fiduciary duty and insider trading by officers and directors of a large sub-prime credit card lender.  Case arose from company's undisclosed change of accounting for customer bankruptcies and alleged failure to maintain adequate reserves for uncollectible accounts. After extensive document discovery we obtained a settlement of $6.5 million for the company.

In Re Structural Dynamics Research Corporation Derivative Litigation, Case No. C-1-94-650 (Southern District of Ohio). Co-Lead Counsel in shareholder derivative action arising from earnings restatement resulting from accounting fraud in the Far East operations of NASDAQ-listed computer software company. After extensive discovery, we obtained a settlement of $5.0 million for the company. (SDRC)

In Re S3 Derivative Litigation, No. CV-77-0254 (California Superior Court, Santa Clara County).  Co-lead counsel in shareholder derivative litigation involving S3, now known as SonicBLUE Corporation, which was a leading manufacturer of graphics accelerator chips.  Case arose from earnings restatements and alleged insider trading resulting from improper recognition of revenue on sales in Far East.  After discovery, we obtained a cash settlement of $4.65 million for the company, which represented the bulk of insider trading damages. (SBLU)

In Re VISX Securities Litigation. Master File No. C94-2-649-RPA (Northern District of California). Co-Lead Counsel in securities class action arising from misrepresentations as to status of clinical trials by a NASDAQ-listed laser vision correction company. We obtained a  settlement of $4.0 million for the class. (VISX)

Isaac v. Falcon Classic Cable Income Properties, L.P., et al., No. BC-177205 (California Superior Court, Los Angeles County). Lead Counsel in class action arising from general partner’s purchase of the assets of a cable television limited partnership at allegedly inadequate price. We obtained a recovery of $2.8 million for the limited partners.

Bilunka v. Sanders, [1994-95 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶98,314 (N.D. Cal. 1994).  Co-lead counsel in shareholder derivative action arising from misrepresentations by officers and directors of Advanced Micro Devices, a leading microchip manufacturer, regarding a purportedly “clean” clone of a microchip developed by Intel Corporation.  The opinion by Judge Ware of the Northern District of California established two key principles for California derivative cases:  (1) California’s insider trading statute, Corporations Code §25502.5, applies to California based corporations incorporated in Delaware, and (2) where the board of directors is evenly divided between interested and disinterested members, a shareholder demand upon the board is futile and therefore excused.  We ultimately obtained a recovery of $2.25 million for the company.

In re IDB Communications Group, Inc. Securities Litigation, Master File No. CV-94-3618-RG (JGX) (Central District of California). Co-Lead Counsel in shareholder derivative action arising from misleading financial statements issued by NASDAQ-listed telecommunications company. We obtained a settlement of $2.0 million for the company.

In re Atchison Casting Corporation Securities Litigation, Master File No. 01-2013-JWL(District of Kansas).  Lead Counsel in a securities class action arising from the restatement of four years’ of audited financial results by this Kansas-headquartered operator of 20 ferrous casting facilities, following revelation of accounting improprieties at the company’s Pennsylvania Foundry Group.  We obtained a settlement of $1.8 million for the class.

In Re Bexar County Health Facilities Development Corporation Securities Litigation, MDL 768 (Eastern District of Pennsylvania). Co-Lead Counsel in securities class action arising from default of industrial revenue bonds issued to finance a retirement facility in San Antonio, Texas. We obtained a settlement of $1.5 million for the class.

Eleanor Gorsey, et al. v. I.M. Simon & Co., Inc., et al., 121 F.R.D.135 (D. Mass 1988). Co-Lead Counsel in securities class action litigation arising from default of industrial revenue bonds issued to finance a retirement facility in South Bend, Indiana. We obtained a settlement of $1.2 million for the class.

Sheehan v. Little Switzerland, 136 F. Supp. 2d 301 (D. Del 2001).  Lead counsel in securities class action arising from failed merger between Little Switzerland, Inc., a duty-free retailer, and Destination Retail Holdings Corporation, a Bahamian retailer.  The court upheld plaintiff’s claim that the company’s disclosures regarding the financing for the merger were false and misleading, and that plaintiff’s allegations of wrongful intent satisfied the strict pleading standards of the Private Securities Litigation Reform Act of 1995.  We obtained a recovery of $1.05 million for the class, representing approximately 75% of estimated damages. (LSVI)

Veterinary Centers of America Securities Litigation, Case No. BC 178 615 (California Superior Court, Los Angeles County). Lead Counsel in shareholder derivative action arising from misrepresentations and insider trading by officers and directors of publicly traded chain of veterinary hospitals. We obtained a recovery of $1.0 million for the company. (VCAI)

Cirrus Logic Securities Litigation, Master File No. C-95-3978-EAI (Northern District of California). Lead Counsel in shareholder derivative action resulting from overstated financial statements and other violations of generally accepted accounting principles by large manufacturer of multimedia products. We obtained a settlement of $1.0 million for the company. (CRUS)

Schubert Jonckheer Kolbe & Kralowec has also participated as counsel in class action or derivative cases involving the following companies:

3M Corporation (MMM)
aaiPharma Inc.  (AAII)
ABM Industries Incorporated (ABM)
Abbott Laboratories, Inc. (ABT)
Adaptec, Inc. (ADPT)
Adobe Systems Incorporated (ADBE)
Adelphia Communications Corporation (ADLA)
Advanced Micro-Circuits Corporation (AMCC)
Alcatel Alsthom (ALA)
Amazon.com, Inc. (AMZN)
America First Financial (AFFFZ)
America Online, Inc. (AOL)
American Bank Note Holographics, Inc. (ABH)
American Income Life Insurance Company
Archer-Daniels-Midland Company (ADM)
Ariba, Inc. (ARBA)
Ash Grove Cement Company (ASHG.PK)
Aspec Technology, Inc. (ASPC)
Assisted Living Concepts, Inc. (ALF)
Atchison Casting Corp. (FDY)
Aurora Foods, Inc. (AOR)
Bay Area Cellular Telephone Co. (BACTC)
Blockbuster Video (BBI)
Borders Group, Inc.
Boston Scientific Corporation (BSX)
Bre-X Corporation (BXMN)
Broadcom Corporation (BRCM)
California Amplifier, Inc. (CAMP)
Callidus Software Inc. (CALD)
Candies, Inc. (CAND)
Caremark, Inc. (CMX)
Caremark International Inc.
Caribbean Cigar Co. (CIGRD, CIGRW)
Centennial Technologies, Inc. (CENL)
The Chalone Wine Group Limited (CHLN)
Charles Allmon Trust
Chiron Corporation (CHIR)
Cisco Systems, Inc. (CSCO)
Citizen Utilities Company (CZN)
CNF, Inc. (CNF)
Complete Management, Inc. (CPMI)
CompuMed, Inc. (CMPD)
Coram Healthcare Corporation (CRH)
Corrpro Cos. Inc. (CO)
Creative Technology Ltd. (CREAF)
Critical Path, Inc. (CPTH)
Cyberguard Corporation (CYBG)
Cylink Corporation (CYLK)
Del Global Technologies Corporation (DGTC)
Digital Equipment Corp. (DEC pa)
Digital Lightwave, Inc. (DIGL)
Ditech Communications Corp. (DITC)
DoubleClick, Inc. (DCLK)
eBay, Inc. (EBAY)
Electronic Arts, Inc. (ERTS)
Employee Solutions, Inc. (ESOL)
Emulex Corporation (EMLX)
Enron Corporation
Fen-Phen Diet Pill Litigation
Fine Host Corp. (FINE)
First Merchants Acceptance Corp. (FMAC)
First Virtual Communications, Inc. (FVC)
Flat Glass Antitrust Litigation
FLIR Systems Inc. (FLIR)
Ford Motor Company (F)
Formula One Administration, Ltd.
FPA Medical Management, Inc. (FPAM)
Frederick’s of Hollywood
Fujitsu Computer Products of America
FVC.COM, Inc. (FVCC)
Gateway, Inc. (GTW)
Gencor Industries, Inc. (GCRX)
Genzyme Corporation (GENZ)
Greyhound Lines, Inc. (BUS)
Guidant Corporation (GDT)
Hanover Compressor Company (HC)
HealthSouth Corporation (HLSH )
Herbalife International, Inc. (HERBA)
Hewlett-Packard Corporation (HPQ)
Home Depot, Inc. (HD)
Honda Motor Company (HMC)
HPL Technologies, Inc. (HPLA)
Indianapolis Motor Speedway Corp.
Informix Corporation (IFMX)
Inso Corporation (INSO)
Intel Corporation (INTC)
Intershop Communications AG (ISHP)
Interspeed, Inc. (ISPD)
JDS Uniphase Corporation (JDSU)
JWP, Inc.
Ketema
Kidder Peabody & Co.
Knoll, Inc.(KNL)
Koger Properties
Legato Systems, Inc. (LGTO)
Lernout & Hauspie Speech Products, N.V. (LHSP)
Littlefield, Adams & Company (FUNW)
Logitech, Inc.
Louisiana-Pacific Corporation (LPX)
Macromedia, Inc. (MACR)
Marsh & McLennan Companies, Inc. (MMC)
Martha Stewart Living Omnimedia, Inc. (MSO)
Maxxam, Inc. (MXM)
McKesson HBOC, Inc. (HBOC)
Medaphis Corporation (MEDA)
Media Vision
Med/Waste, Inc. (MWDSE)
Mercury Finance Company (MFNNQ)
Micron Technology, Inc. (MU)
Mirant Corporation (MIR)
Mitek Systems, Inc. (MITK)
Molina Healthcare, Inc. (MOH)
Motorcar Parts & Accessories, Inc. (MPAA)
NetManage, Inc. (NETM)
Netopia, Inc. (NTPA)
Network Computing Devices, Inc. (NCDI)
Network Solutions, Inc. (NSOL)
New Century Financial Corporation (NCEN)
Networks Associates, Inc. (NETA)
North Face Inc. (TNFI)
Network Solutions, Inc.
Novartis AG (NVS)
OCA, Inc. (OCA)
Orbital Sciences Corporation (ORB)
Pacific Gateway Enterprises
Pacific Telephone Company
Palm, Inc. (PSRC)
PalmOne, Inc. (PLMO)
PennCorp Financial Group, Inc. (PFG)
PeopleSoft, Inc. (PSFT)
Peregrine Systems, Inc. (PRGN)
PerkinElmer, Inc. (PKI)
Philip Services Corporation
Phycor, Inc. (PHYC)
Presstek Inc. (PRST)
Protection One, Inc. (US:POIX)
Providian Financial Corporation (PVN)
Quaker State Corporation (KSF)
Qwest Communications International Inc. (Q)
Quantum Corporation (DSS)
Quintus Corporation (QNTS)
Quovadx, Inc. (QVDX)
Rambus, Inc. (RMBS)
Riverstone Networks, Inc. (RSTN)
Roberds, Inc. (RBDS)
Saf T Lok, Inc. (LOCK)
Safeskin Corporation (SFSK)
Safety-Kleen Corporation (SKLN)
Salomon Bros.
Schlotzsky's Inc. (BUNZ)
Seagate Technology Inc. (SEG)
Secure Computing Corporation (SCUR)
Shiva Corporation (SHVA)
Silicon Graphics, Inc. (SGI)
Silicon Image, Inc. (SIMG)
Silicon Storage Technology, Inc. (SSTI)
Sipex Corporation (SIPX)
Sirena Apparel Group,Inc. (SIRN)
SmarTalk Teleservice, Inc. (SMTK)
Sonus Networks, Inc. (SONS)
Sony Computer Entertainment America, Inc.
Spanlink Communications, Inc. (SPLK)
Spectrum Information Technologies, Inc. (SITI)
Sprint Spectrum L.P. (FON)
Star Gas Partners, L.P. (SGU)
Sumitomo Metal Industries, Ltd. (SMMLY)
Summit Technology, Inc. (SMCT)
SupportSoft, Inc. (SPRT)
Sybase, Inc. (SYBS)
Syncronys Softcorp (SYCR)
T2
Telebit Corporation
Telxon Corporation (TLXN)
Tenera, Inc. (TNR)
Terayon Communication Systems, Inc. (TERN)
Tibco Software, Inc. (TIBX)
Toys R Us, Inc. (TOY)
Tut Systems, Inc. (TUTS)
TwinLab Corporation (TWLB)
Unify Corporation (UNFY)
U.S. Trust Corporation
U.S. West, Inc. (USW)
U.S. Wireless Corporation
Ventro Corporation
Verisign, Inc. (VRSN)
Versata, Inc. (VATA)
Websecure, Inc. (WEBS)
Worldcom, Inc. (WCOEQ) 
Xicor, Inc.