Polycom Lawsuit Must Be Amended

SAN FRANCISCO (CN) – A federal judge Tuesday dismissed without prejudice a shareholders’ derivative lawsuit against Polycom, a San Jose-based telecom.
     Lead plaintiff James Clem claimed the company’s former CEO Andrew Miller falsified expense reports and got reimbursements for “numerous inappropriate personal expenses.” He sued Miller and the company for breach of fiduciary duty, waste of corporate assets and unjust enrichment.
     Clem claimed that when the public learned of Miller’s actions, Polycom’s market capitalization sank by $290 million. Miller was forced to resign but received an “undeserved severance” of $1.5 million from the Polycom board, Clem said. He claimed that the board of directors knew what Miller was doing, and failed to stop it, and that it would have been futile to ask the board to act.
     U.S. District Judge Samuel Conti granted Polycom’s motion to dismiss, finding that “(p)laintiffs have failed to allege demand futility with particularity.”
     He added: “The Court finds that plaintiffs’ allegations, whether considered standing alone or in their totality, do not demonstrate that demand would have been futile.”
     But citing the 9th Circuit’s “liberal policy granting leave to amend,” he gave the shareholder 30 days to file an amended complaint.
     Clem is represented by Nathan Hamler, with Johnson & Weaver in San Diego. Polycom and Miller are represented by Paul Friedman, with Morrison and Foerster in San Francisco.

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