In Re Synchronoss Securities Litigation.
| Decision Date | 07 April 2010 |
| Docket Number | Civil Action No. 08-4437 (GEB). |
| Citation | 705 F.Supp.2d 367 |
| Parties | In re SYNCHRONOSS SECURITIES LITIGATION. |
| Court | U.S. District Court — District of New Jersey |
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Gardy & Notis, LLP, James S. Notis, Esq., Charles A. Germershausen, Esq., Englewood Cliffs, NJ, Milberg LLP, Ariana J. Tadler, Esq., Todd L. Kammerman, Esq., New York, NY, The Rosen Law Firm, P.A., Laurence M. Rosen, Esq., South Orange, NJ, for Plaintiffs Herman Braude, Richard Kerwick, Barry Schutsky, Theodore E. Beaton and all others similarly situated.1
Gibbons P.C., Brian J. McMahon, Esq., Joshua R. Elias, Esq., Newark, NJ, Bingham McCutchen LLP, Jordan D. Hershman, Esq.; Jason D. Frank, Esq. James P. Lucking, Esq.; William R. Harb, Esq., Boston, MA, for Defendants Synchronoss, Inc., Stephen G. Waldis and Lawrence R. Irving.
I. INTRODUCTION
This matter is before the Court upon Defendants' motion (“Dismissal Motion”) see Docket Entry No. 24, seeking dismissal of Plaintiffs' Consolidated Class Action Complaint (“Complaint”). See Docket Entry No. 22. Plaintiffs filed their opposition to the Dismissal Motion (“Dismissal Opposition”) see Docket Entry No. 25, to which Defendants filed a reply (“Dismissal Reply”). See Docket Entry No. 30. The foregoing submissions appear to be intertwined with Plaintiffs' later filed motion (“Strike Motion”) requesting the Court to strike certain Defendants' arguments raised in the Dismissal Motion. See Docket Entry No. 27. Defendants filed their opposition to the Strike Motion (“Strike Opposition”) see Docket Entry No. 31, to which Plaintiffs filed a reply (“Strike Reply”). See Docket Entry No. 32.
For the reasons detailed below, Plaintiffs' Strike Motion will be denied, without prejudice, as premature. Defendants' Dismissal Motion will be granted on grounds unrelated to Plaintiffs' Strike Motion, and the Consolidated Class Action Complaint will be dismissed. Such dismissal, however, will be without prejudice, and Plaintiffs will be granted leave to cure the deficiencies of their pleadings.
II. BACKGROUND
Plaintiffs brought this action on behalf of a putative class consisting of all persons and entities that purchased or otherwise acquired securities (seemingly, common shares only) issued by Synchronoss during a slightly more than four month period, from February 4, 2008 to June 9, 2008, both dates inclusive (“Class Period”). See Compl. ¶ 2.
According to the Complaint, Defendant Compl. ¶ 12. While the technical endeavors in which Synchronoss is involved are complex and multiple, it can be said that Synchronoss is, generally, in the business of creating and licensing software used by other business entities, which are involved in providing wireless services; one of the functions that Synchronoss' software can perform is activation of wireless devices from remote locations, e.g., remote (meaning, online/off-site) activation of iPhones (mobile/cell phones produced by Apple Inc. (“Apple”)).3 See id. ¶¶ 26-27.
Apple is a corporation that designs and manufactures consumer electronics and computer software; Apple's most well-known hardware products include MacIntosh computers, the iPod, the iPhone, etc. Steven “Steve” Paul Jobs is the co-founder and chief executive officer of Apple.
The history of the iPhone began with a conclusion reached by Steve Jobs in 2003 that the high-tech future belonged to mobile phones that could also operate as devices enabling access to portable information. By that time, Jobs had Apple put its energies into the iPod, a portable media player, and the corresponding iTunes software, a digital media player application used for purchasing and downloading digital music and video files. In September 2006, Apple released a new version of iTunes that included references to a then-yet-unknown mobile phone which was announced four months later as the “iPhone”; the iPhone was actually introduced into the market on June 29, 2007.4
The iPhone is an excellent example of what is commonly known as a “smartphone,” meaning that it is a mobile telephone offering computer-like capabilities, i.e., it is an advanced cell phone (allowing such features as text messaging, visual voicemail, audio conferencing, call holding, call merging, caller ID, etc.) that also functions as a camera and a portable media player equivalent to a video iPod, allows the user a Wi-Fi connection with complete access to the Internet (including email, full web browsing, etc.) and, in addition, performs many other functions.
When the original version of iPhone was introduced to the purchasing public in 2007, TIME Magazine named it the Invention of the Year. The second generation of the iPhone, popularly known as the “iPhone 3G,” is an even more advanced device capable of receiving and processing data faster than the original iPhone; it also performs additional and more complex functions than the original iPhone and, in addition, ensures that the user-even if (s)he is located in an area suffering from a poor cell phone connection-could nonetheless access the transmission frequency securing due reception.5
Apple tightly controls most aspects of the iPhone; for instance, the iPhone's operating system is designed to only run software that has an Apple-approved “cryptographic signature,” i.e., the code protecting against alterations or corruptions.
All iPhones must-theoretically-be “activated,” meaning that they have to be assigned a telephone number and carrier before the user could obtain assess to iPhone features. For the purposes of the United States market, all iPhones are “locked,” in the sense that the creators of the iPhone tried (and keep aggressively trying) to ensure that the iPhone could be used only with one particular authorized carrier, namely, AT & T, which is Apple's partner network.6
However, various “hackers,” who are unwilling to switch from their carriers to AT & T either out of customer loyalty or because they are planning to use different service providers when traveling to Europe/ Asia (in order to avoid the roaming fees charged by AT & T on overseas calls), or because they simply dislike AT & T's subscription terms or AT & T as a business entity, found methods to “unlock”-meaning, to “activate”-their iPhones in order to use them with unauthorized carriers (that is, carriers other than the AT & T) after such “unlocking.” 7 In sum, it can be said that “unlocking” is the process by which a cell phone (or any mobile device) is made compatible with telephone network(s) it was not specifically licensed...
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