Ebix Class Action Lawsuit - Argument For Dismissal 6-19-2013

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION
)
IN RE: EBIX, INC. )
SECURITIES LITIGATION )
)
CIVIL ACTION NO.
1:11-CV-02400-RWS

MOTION FOR 1UDGMENT ON THE PLEADINGS
Todd R. David
Georgia Bar No. 206526
John A. Jordak, Jr.
Todd F. Chatham
ALSTON & BIRD LLP
1201 West Peachtree Street
Atlanta, Georgia 30309
Telephone: (404) 881-7000
Fax: (404) 253-8358
Counsel Ior DeIendants
Case 1:11-cv-02400-RWS Document 62-1 Filed 06/19/13 Page 1 of 29
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TABLE OF CONTENTS
I. INTRODUCTION...........................................................................................1
II. ARGUMENT AND CITATION OF AUTHORITIES ...................................2
A. Fed. R. Civ. P. 12(c) Judgment on the Pleadings Standard ..................2
B. DeIendants are Entitled to Judgment on the Pleadings.........................3
1. The Eleventh Circuit`s Recent Mever v. Greene Decision
Makes Clear that Third-Party Announcements that
Disclose No New Facts and Merely Express the Opinions
oI Others Based on Already Public InIormation Fail as a
Matter oI Law..............................................................................6
a. Background.......................................................................6
b. The Eleventh Circuit`s Decision....................................... 8
2. Under Mever v. Greene, the CopperIield Report and the
Bloomberg Article Are Not Corrective Disclosures. ................13
a. The CopperIield Report ..................................................14
b. The Bloomberg Article ...................................................18
III. CONCLUSION..............................................................................................22
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TABLE OF AUTHORITIES
Page(s)
CASES
Cannon v. Citv of W. Palm Beach,
250 F.3d 1299 (11th Cir. 2001) ............................................................................2
Conner v. Tate,
130 F. Supp. 2d 1370 (N.D. Ga. 2001).................................................................2
Dura Pharms., Inc. v. Brouao,
544 U.S. 336 (2005).....................................................................................passim
FinaWhat Investors Grp. v. FinaWhat.com,
658 F.3d 1282 (11th Cir. 2011) ...................................................................passim
Horslev v. Felat,
304 F.3d 1125 (11th Cir. 2002) ............................................................................3
Hubbara v. BankAtlantic Bancorp, Inc.,
688 F.3d 713 (11th Cir. 2012) ..............................................................................5
In re Merck & Co., Inc. Sec. Litig.,
432 F.3d 261 (3d Cir. 2005) .....................................................................6, 11, 18
In re Omnicom Grp, Inc. Sec. Litig.,
597 F.3d 501 (2d Cir. 2010) .....................................................................6, 11, 18
Mever v. Greene,
710 F.3d 1189 (11th Cir. 2013) ...................................................................passim
Robbins v. Koger Props., Inc.,
116 F.3d 1441 (11th Cir. 1997) ............................................................................4
Scott v. Tavlor,
405 F.3d 1251 (11th Cir. 2005) ............................................................................2
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Stoneriage Inv. Partners, LLC v. Scientific-Atlanta,
552 U.S. 148 (2008)..............................................................................................3
Teachers Ret. Svs. of La. v. Hunter,
477 F.3d 162 (4th Cir. 2007) ..........................................................................6, 11
Thompson v. RelationServe Meaia, Inc.,
610 F.3d 628 (11th Cir. 2010) ..............................................................................3
STATUTES
15 U.S.C. 78j(b) ......................................................................................................3
15 U.S.C. 78t(a) ......................................................................................................3
RULES
Fed. R. Civ. P. 12(c)...................................................................................................2
OTHER AUTHORITIES
17 C.F.R. 240.10b-5................................................................................................3
I. INTRODUCTION
In light oI the recent binding authority issued by the Eleventh Circuit in
Mever v. Greene, 710 F.3d 1189 (11th Cir. 2013), neither oI the two alleged
curative disclosures relied upon in the Consolidated Amended Complaint ('CAC)
(Dkt. No. 22) is suIIicient as a matter oI law Ior the purposes oI loss causation.
The CAC attempts to base its theory oI loss causation on two purported corrective
disclosures -- (1) an anonymous blog post by 'CopperIield Research, a nameless
short seller oI Ebix stock, that Iirst appeared on the Seeking Alpha and Scriba
websites on March 22, 2011, and that made unsubstantiated claims about the
Company`s business practices and strategy (the 'CopperIield Report) (attached
hereto as Ex. A) (CAC at 4, 247-250); and, (2) a June 30, 2011, Bloomberg
news article about certain unsubstantiated allegations in a lawsuit Iiled against
Ebix by Iormer shareholders oI a company that Ebix acquired (the Bloomberg
Article) (attached hereto as Ex. B) (CAC at 6, 253). As shown below,
however, the two alleged corrective disclosures at issue here, just like the deIicient
Einhorn Presentation rejected by the Eleventh Circuit in Mever, merely re-
packaged inIormation that was already a matter oI public record. They clearly did
not reveal any new inIormation that was previously unavailable to the market. As
such, the CopperIield Report and the Bloomberg Article are insuIIicient as a matter
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oI law to constitute corrective disclosures Ior purposes oI pleading loss causation.
Accordingly, DeIendants respectIully request that the Court enter judgment in their
Iavor pursuant to Fed. R. Civ. P. 12(c).
II. ARGUMENT AND CITATION OF AUTHORITIES
A. Fed. R. Civ. P. 12(c) 1udgment on the Pleadings Standard
A party may Iile a motion Ior judgment on the pleadings aIter the pleadings
are closed but within such time as not to delay trial. Conner v. Tate, 130 F. Supp.
2d 1370, 1373 (N.D. Ga. 2001). Judgment on the pleadings is appropriate when
there are no material Iacts in dispute and the moving party is entitled to judgment
as a matter oI law. Scott v. Tavlor, 405 F.3d 1251, 1253 (11th Cir. 2005) (citing
Cannon v. Citv of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001)). In
rendering a judgment on the pleadings, a court considers only the substance oI the
pleadings and any judicially noticed Iacts. Conner, 130 F. Supp. 2d at 1373. The
Court should enter judgment when it is apparent Irom the pleadings that a party
can prove no set oI Iacts in support oI |its| claim which would entitle |it| to
relieI. Horslev v. Felat, 304 F.3d 1125, 1131 (11th Cir. 2002).
Here, the pleadings are closed and the standard under Rule 12(c) is easily
met, as shown below.
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B. Defendants are Entitled to 1udgment on the Pleadings.
To prevail under 10(b) oI the Securities Exchange Act ('Exchange Act)
1
and Rule 10b-5 promulgated thereunder,
2
a plaintiII must adequately allege and
prove the Iollowing: (1) a material misrepresentation or omission; (2) scienter (i.e.,
a wrongIul state oI mind); (3) a connection between the misrepresentation and the
purchase or sale oI a security; (4) reliance, oIten reIerred to in cases involving
public securities markets (i.e., Iraud-on-the-market cases) as transaction
causation; (5) economic loss; and (6) 'loss causation (i.e., a causal connection
between the material misrepresentation and the loss).
3
Dura Pharms., Inc. v.
Brouao, 544 U.S. 336, 341-42 (2005). Failure to show even one oI these essential
elements is Iatal to a plaintiII`s 10(b) claim. See e.g., Dura, 544 U.S. at 347-48;
Stoneriage Inv. Partners, LLC v. Scientific-Atlanta, 552 U.S. 148, 166-67 (2008).
With respect to the loss causation element, the Supreme Court has
emphasized that the language oI the Private Securities Litigation ReIorm Act
1
15 U.S.C. 78j(b).
2
17 C.F.R. 240.10b-5.
3
The CAC also attempts to state a claim under 20(a) oI the Exchange Act, 15
U.S.C. 78t(a). Liability under 20(a) is derivative to liability under 10(b),
however, so the analysis oI the 20(a) claim is subsumed by the analysis oI the
10(b) claim. See Thompson v. RelationServe Meaia, Inc., 610 F.3d 628, 635-36
(11th Cir. 2010). In other words, iI the 10(b) claim Iails, the 20(a) claim
necessarily Iails as well. Ia.
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'makes clear Congress` intent to permit private securities || actions Ior recovery
where, but only where, plaintiIIs adequately allege and prove the traditional
elements oI causation and loss. Dura, 544 U.S. 336, 346 (2005). To show loss
causation in a 10(b) claim, there must be a causal connection between the
misrepresentation and the investment`s subsequent decline in value. Robbins v.
Koger Props., Inc., 116 F.3d 1441, 1448 (11th Cir. 1997).
By ensuring that only losses actually attributable to a
given misrepresentation are cognizable, the loss
causation requirement ensures that the Iederal securities
laws do not becom(e) a system oI investor insurance
that reimburses investors Ior any decline in the value oI
their investments. In this way, loss causation polices the
realm oI 10(b) claims, guarding against their use as
an in terrorem device to Iorce companies to settle claims
simply to avoid the cost and burden oI litigation.
Mever, 710 F.3d at 1196 (quoting Robbins, 116 F.3d at 1447).
In a Iraud-on-the-market case such as that presented here,
4
loss causation
requires the plaintiII to show not only that a Iraudulent material misrepresentation
artiIicially inIlated the security`s value, but also that 'the Iraud-induced inIlation
that was baked into plaintiII`s purchase price was subsequently removed Irom the
stock`s price, thereby causing losses to the plaintiII. FinaWhat Investors Grp. v.
4
The CAC and PlaintiII`s Motion Ior Class CertiIication ('Class Motion) (Dkt.
No. 45) both readily admit that the CAC`s claims are premised upon the Iraud-on-
the-market doctrine. (See CAC at 260-261; Class Motion at 18-24.)
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FinaWhat.com, 658 F.3d 1282, 1311 (11th Cir. 2011); see also Hubbara v.
BankAtlantic Bancorp, Inc., 688 F.3d 713, 725 (11th Cir. 2012).
PlaintiIIs oIten attempt to demonstrate loss causation in a Iraud-on-the-
market case circumstantially, by '(1) identiIying a corrective disclosure` (a release
oI inIormation that reveals to the market the pertinent truth that was previously
concealed or obscured by the company`s Iraud); (2) showing that the stock price
dropped soon aIter the corrective disclosure; and (3) eliminating other possible
explanations Ior this price drop . . . . FinaWhat, 658 F.3d at 1311-12. Thus, the
loss causation analysis in a Iraud-on-the-market case Iocuses on the Iollowing
question -- even iI the plaintiIIs paid an inIlated price Ior the stock as a result oI
the Iraud (i.e., even iI the plaintiIIs relied), did the relevant truth eventually come
out and thereby cause the plaintiIIs to suIIer losses?` Mever, 710 F.3d at 1197
(quoting FinaWhat, 658 F.3d at 1312).
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Decision
Makes Clear that Third-Party Announcements that
Disclose No New Facts and Merely Express the Opinions of
Others Based on Already Public Information Fail as a
Matter of Law.
In Mever v. Greene, the Eleventh Circuit recently joined the decisions oI
other circuits, including the Second,
5
Third,
6
and Fourth,
7
in holding that an analyst
or reporter`s negative characterization oI previously known inIormation about a
company does not constitute a corrective disclosure as a matter oI law and is,
thereIore, insuIIicient to plead loss causation. 710 F.3d at 1197-1200.
a. Backgrouna
In Mever, the operative complaint alleged that the St. Joe Company, a real
estate developer, made material misstatements and omissions in its public Iilings
by overstating the value oI its real estate holdings and Iailing to record impairment
charges on its assets. Ia. at 1192. The complaint alleged three purported
corrective disclosures Ior the purposes oI loss causation.
5
See, e.g., In re Omnicom Grp, Inc. Sec. Litig., 597 F.3d 501, 512-13 (2d Cir.
2010).
6
See, e.g., In re Merck & Co., Inc. Sec. Litig., 432 F.3d 261, 270-71 (3d Cir.
2005).
7
See, e.g., Teachers Ret. Svs. of La. v. Hunter, 477 F.3d 162, 187-88 (4th Cir.
2007).
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First, the complaint claimed that the alleged 'truth about St. Joe`s
overstated real estate holdings began to come to light on October 13, 2010, when
David Einhorn, a short-sale hedge Iund manager, gave a presentation at an investor
conIerence entitled 'Field oI Schemes: II You Build It, They Won`t Come (the
'Einhorn Presentation). Ia. at 1193. During the presentation, Einhorn suggested
that St. Joe`s assets were signiIicantly overvalued and should, thereIore, be written
down. Ia. During the two days oI trading aIter the release oI the Einhorn
Presentation, St. Joe`s stock price declined approximately 20 on unusually high
volume. Ia.
The second purported corrective disclosure alleged in the complaint was on
January 10, 2011, when St. Joe disclosed that the SEC had initiated an inIormal
inquiry into the company`s policies and practices concerning the impairment oI its
real estate assets. Ia. at 1193.
Finally, the third purported corrective disclosure was six months later in July
2011, when St. Joe announced that the SEC had issued an order oI private
investigation regarding the company`s compliance with the antiIraud provisions oI
the Iederal securities laws and stock ownership reporting requirements. Ia. St.
Joe`s stock price declined 7 on the date the inIormal SEC investigation was
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announced in January 2011, and 9 on the date the order oI private investigation
was disclosed in July 2011. Ia. at 1201.
The plaintiIIs Iiled suit against St. Joe and certain oI its current and Iormer
oIIicers Ior alleged violations oI 10(b) and 20(a) oI the Exchange Act. Ia. at
1192. The deIendants moved to dismiss the complaint based on the plaintiIIs`
purported Iailure to allege an actionable misrepresentation, loss causation, and
scienter. The District Court agreed with each oI the deIendants` arguments and
dismissed the complaint with prejudice. Ia.
b. The Eleventh Circuits Decision
On appeal, the Eleventh Circuit aIIirmed the District Court`s decision on the
basis that the complaint Iailed to plead loss causation adequately. Ia. In its
opinion, the Court addressed and rejected in turn each oI the three purported
corrective disclosures upon which plaintiIIs had based their theory oI loss
causation (1) the Einhorn Presentation; (2) the Company`s disclosure oI an
inIormal SEC investigation in January 2011; and (3) the Company`s announcement
in July 2011 that the SEC`s inIormal investigation had ripened into a 'private order
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oI investigation. Ia. at 1197. For purposes oI the present Motion, the Eleventh
Circuit`s analysis oI the Einhorn Presentation is dispositive.
8
The plaintiIIs in Mever argued that the Einhorn Presentation should qualiIy
as a corrective disclosure because it contained in-depth analysis oI inIormation
not readily available to the investing public and revealed to the market that St.
Joe`s real-estate assets needed to be impaired.` Ia. The Eleventh Circuit
unequivocally rejected this argument, holding that the Einhorn Presentation was
not a corrective disclosure suIIicient to establish loss causation Ior the purpose oI
pleading a 10(b) claim because it was based on previously released and publicly
available inIormation. Ia. at 1198. Emphasizing that a corrective disclosure
obviously must disclose new inIormation` to the market, the Court explained --
the Iact that the sources used in the Einhorn Presentation were already public is
Iatal to the |plaintiIIs`| claim oI loss causation. Ia. (emphasis in original)
(quoting FinaWhat, 658 F.3d at 1311, n.28).
8
While the Iocus oI the present Motion is on the Eleventh Circuit`s analysis and
rejection oI the Einhorn Presentation, the Court rejected all three oI the alleged
curative disclosures upon which the complaint relied in its attempt to establish loss
causation. With respect to the January 2011 and July 2011 alleged curative
disclosures, the Eleventh Circuit Iound that St. Joe`s 'disclosures oI the SEC
investigations, without more, |were| insuIIicient as a matter oI law to constitute
corrective disclosures. Ia. at 1202.
- 10 -
The Eleventh Circuit reinIorced its holding by citing the eIIicient market
theory. Mever, 710 F.3d at 1197-1198. As explained in Mever, under the eIIicient
market theory, any inIormation released to the public is immediately digested and
incorporated into the price oI a security. Ia. at 1197. Consistent with this theory,
the Eleventh Circuit held that inIormation already known to the market, including
the inIormation in the Einhorn Presentation, could not as a matter oI law have
caused the plaintiIIs` loss. Ia. at 1198.
That result makes good sense. Having based their claim
oI reliance on the eIIicient market theory, the |plaintiIIs|
must now abide by its consequences. The |plaintiIIs|
speciIically invoked the eIIicient market theory in their
complaint . . . |in order| to avail themselves oI Basic`s
presumption oI reliance . . . . The eIIicient market theory,
however, is a Delphic sword: it cuts both ways. The
|plaintiIIs| cannot contend that the market is eIIicient Ior
purposes oI reliance and then cast that theory aside when
it no longer suits their needs Ior purposes oI loss
causation.
Ia. at 1198-99.
The Eleventh Circuit also rejected the Mever plaintiIIs` alternative argument
that the Einhorn Presentation should qualiIy as a corrective disclosure because it
provided new 'expert analysis oI public inIormation that was previously
unavailable to the market. Ia. at 1199. The Eleventh Circuit held that the mere
repackaging oI already-public inIormation by an analyst or short-seller is simply
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insuIIicient to constitute a corrective disclosure. Ia. (citing In re Omnicom, 597
F.3d at 512 (A negative . . . characterization oI previously disclosed Iacts does not
constitute a corrective disclosure . . . .); Teachers Ret. Svs. of La. v. Hunter, 477
F.3d at 187 (explaining that the attribution oI an improper purpose to Iacts
previously disclosed is not a corrective disclosure); In re Merck, 432 F.3d at 270-
71 (holding that the Wall Street Journal`s analysis oI previously available
inIormation is not a corrective disclosure)). The Court explained that iI the
inIormation relied upon in Iorming an opinion was previously known to the
market, the only thing actually disclosed to the market when the opinion is released
is the opinion itself, and such an opinion, standing alone, cannot reveal|| to the
market the Ialsity` oI a company`s prior Iactual representation. Ia. at 1199
(emphasis in original) (quoting FinaWhat, 658 F.3d at 1131 n.28). According to
the Eleventh Circuit,
such opinions are exactly the type oI conIounding
inIormation, including changed economic
circumstances, changed investor expectations, new
industry-speciIic or Iirm-speciIic Iacts, conditions or
other events, that do not qualiIy as corrective
disclosures Ior purposes oI loss causation. II every
analyst or short-seller`s opinion based on already public
inIormation could Iorm the basis as a corrective
disclosure, then every investor who suIIers a loss in the
Iinancial markets could sue under 10(b) using an
analyst`s negative analysis oI public Iilings as a
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corrective disclosure.
Mever, 710 F.3d at 1199 (emphasis added).

The Eleventh Circuit explained that the allegations in the operative
complaint provided a 'prime example oI why it is notand cannotbe the law
that third-party announcements, which disclose no new Iacts to the market and that
merely express the opinions others have Iormed based upon already public
inIormation, qualiIy as corrective disclosures Ior purposes oI establishing loss
causation. According to the Court, David Einhorn was not an insider at St. Joe,
and the inIormation upon which he relied in making his bearish call had been
public Ior months beIore he made the presentation. Moreover, as a short-seller,
Einhorn was bound to proIit iI the price oI St. Joe`s shares swooned in reaction to
his presentation. Ia. at 1200. The Eleventh Circuit thus concluded that, because
the inIormation used in the presentation had already been public Ior some time, the
decline in the value oI St. Joe`s shares in the wake oI the Einhorn Presentation was
not due to the Iact that the presentation was revelatory oI any Iraud, but was
instead due to changed investor expectations` aIter Einhorn voiced his negative
opinions about the Company. Ia. (quoting Dura, 544 U.S. at 343.)
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The Eleventh Circuit closed its decision in Mever with the Iollowing
important observation regarding the role loss causation should play in actions such
as the present one beIore this Court --
In the Iinancial markets, not every bit oI bad news that
has a negative eIIect on the price oI a security necessarily
has a corrective eIIect Ior purposes oI loss causation.
And although we appreciate the importance oI private
securities Iraud actions in determining Iraud and
promoting conIidence in the marketplace, we are equally
mindIul that their purpose is not to provide investors
with broad insurance against market losses, but to protect
them against those economic losses that
misrepresentations actually cause. Our decision today
ensures that loss causation remains a key sentinel in
striking that delicate balance.
Mever, 710 F.3d at 1202 (emphasis in original) (quoting Dura, 544 U.S. at 345).
2. Under , the Copperfield Report and the
Article Are Not Corrective Disclosures.
The CAC attempts to base its theory oI loss causation on two purported
corrective disclosures -- (1) the CopperIield Report; and, (2) the Bloomberg
Article. As shown below, however, the two alleged corrective disclosures at issue
here, just like the deIicient Einhorn Presentation rejected by the Eleventh Circuit in
Mever, clearly did not reveal any new inIormation that was previously unavailable
to the market. As such, the CopperIield Report and the Bloomberg Article are
insuIIicient as a matter oI law to constitute corrective disclosures Ior purposes oI
- 14 -
pleading loss causation and the CAC`s claims should, thereIore, be dismissed in
their entirety.
a. The Copperfiela Report
Below is a comprehensive list oI each and every source cited by the
anonymous, short-seller author oI the CopperIield Report:
i an October 7, 2009, San Gabriel Jallev Tribune news article (see
CopperIield Report (attached hereto as Ex. B) at 3 (endnote 1 oI the
CopperIield Report));
i Ebix`s Form 10-K Iiled on March 30, 2009 (see ia. at 3 (endnote 2 oI the
i Ebix`s Form 8-K Iiled on December 10, 2009 (see ia. at 3 (endnote 3 oI
the CopperIield Report));
i an August 30, 2010, Reuters news article (see ia. at 5 (endnote 5 oI the
i ADAM, Inc.`s Form 10-Q Iiled on November 10, 2010 (see ia. at 5
(endnote 6 oI the CopperIield Report));
i ADAM, Inc.`s Form 10-K Iiled on March 18, 2010 (see ia. at 6 (endnote
7 oI the CopperIield Report));
i a Wikipeaia entry created on March 28, 2006 (see ia. at 8 (endnote 9 oI
- 15 -
i President Obama`s 2011 State oI the Union Address (see ia. at 8 (endnote
i a March 17, 2011, Wall Street Journal news article (see ia. at 8 (endnote
i a March 4, 2011, Time news article (see ia. at 8 (endnote 12 oI the
i the transcript oI Ebix`s November 9, 2010, earnings conIerence call (see
ia. at 10 (endnote 13 oI the CopperIield Report));
i Ebix`s Schedule 14A DeIinitive Proxy Statement Iiled on November 17,
2005 (see ia. at 10 (endnote 14 oI the CopperIield Report));
i Ebix`s Form 10-K Iiled on March 30, 2005 (see ia. at 10 (endnote 15 oI
i Ebix`s Form 8-K Iiled on December 18, 2008 (see ia. at 10 (endnote 16
oI the CopperIield Report));
i Ebix`s Schedule 14A DeIinitive Proxy Statement Iiled on October 8,
2010 (see ia. at 10 (endnote 17 oI the CopperIield Report));
i a December 21, 2010, news article published on the website Accounting
Web (see ia. at 11 (endnote 18 oI the CopperIield Report));
i 2007 IRS Form 990 Iiled on behalI oI the Robin Raina Foundation (see
ia. at 12 (endnote 19 oI the CopperIield Report));
i a link to the Robin Raina Foundation`s YouTube channel (see ia. at 12
(endnote 20 oI the CopperIield Report));
i a press release issued by Ebix on February 8, 2011 (see ia. at 12 (endnote
i a March 10, 2011, Seeking Alpha article published by another Ebix
investor (see ia. at 12 (endnote 22 oI the CopperIield Report));
- 16 -
i 'Company literature Ior Ebix`s private comps like Blue Frog and
iPipeline (see ia. at 14 (endnotes 23 & 24 oI the CopperIield Report));
i 'Company Iilings (see ia. Table 1 at pp. 2-3; Table 2 at p. 3; Table 5
at p. 5; Table 8 at p. 6; Table 12 at p. 9; Table 13 at p. 9; Table 14 at p.
10; Table 16 at p. 11; Table 18 at pp. 12-13; Table 19 at p. 13);
i 'Estimates based on public disclosures (see ia. Table 4 at p. 4);
i 'Reuters and estimates (see ia. Table 6 at p. 5);
i '2010 10-K (see ia. Table 9 at p. 7);
i '10-K (see ia. Table 10 at pp. 7-8);
i 'Company reports (see ia. Table 15 at pp. 10-11); and,
i 'IRS Form 990s (see ia. Table 17 at p. 12).
Clearly, each and every one oI these sources was previously disclosed and publicly
available well beIore the CopperIield Report was Iirst disseminated to the market
on March 22, 2011. As such, the CopperIield Report did not disclose any new
Iacts that were previously unavailable to the market and, thus, cannot constitute a
corrective disclosure under the binding authority established by the Eleventh
Circuit in Mever. 710 F.3d at 1198-1200.
Furthermore, the anonymous, short-seller author oI the CopperIield Report
oIIering his/her speculation and conjecture purportedly based upon this already-
public inIormation is inadequate under Mever to qualiIy the CopperIield Report as
a corrective disclosure. As the Eleventh Circuit made abundantly clear in Mever,
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the mere repackaging oI already-public inIormation by an analyst or short-seller is
simply insuIIicient to constitute a corrective disclosure. 710 F.3d at 1199.
Because all oI the inIormation purportedly relied upon in Iorming the opinions
expressed by the author oI the CopperIield Report was previously known to the
market, the only thing actually disclosed to the market when the CopperIield
Report was released were the opinion|s themselves|, and such || opinion|s|,
standing alone, cannot reveal( ) to the market the Ialsity` oI a company`s prior
Iactual representation. Mever, 710 F.3d at 1199 (quoting FinaWhat, 658 F.3d at
1311 n.28). Put another way, because all oI the inIormation used in the
CopperIield Report had already been public Ior some time, the decline in the value
oI Ebix`s shares in the wake oI the CopperIield Report was not because the Report
was revelatory oI any past Iraud, but was instead due to changed investor
expectations aIter an anonymous investor voiced his/her negative opinions about
the Company. See Dura, 544 U.S. at 342-43; see also Mever 710 F.3d at 1200. In
light oI the recent clariIying authority issued by the Eleventh Circuit in Mever, it is
now clear that such expressions oI opinion are exactly the type oI conIounding
inIormation . . . that do not qualiIy as corrective disclosures Ior purposes oI loss
causation. 710 F.3d at 1199 (citing Dura 544 U.S. at 343).
- 18 -
b. The Bloomberg Article
The Bloomberg Article did nothing more than repeat and/or recharacterize
allegations Irom a lawsuit by Iormer shareholders oI a company that Ebix had
acquired. Indeed, this is something PlaintiII readily admits. (See Class Motion
|Dkt. No. 45| at 4.) That lawsuit by the Iormer shareholders oI Peak PerIormance
Solutions, however, was old news by the time the Bloomberg Article was
published. It was a matter oI public record and, thus, disseminated to the market
weeks beIore the Bloomberg Article was published, when the initial complaint was
Iiled in United States District Court Ior the Southern District oI Ohio on May 24,
2011 ('Peak Complaint) (attached hereto as Ex. C) and, thereaIter, made publicly
available on that court`s electronic document Iiling system.
9
As such, the
Bloomberg Article did not disclose any new Iacts to the market and, thus, cannot
qualiIy as a corrective disclosure. Mever, 710 F.3d at 1198-99; see also In re
Omnicom, 597 F.3d at 512 (A negative journalistic characterization oI previously
disclosed Iacts does not constitute a corrective disclosure oI anything but the
journalists` opinions.); In re Merck, 432 F.3d at 270-71.
9
Isaac, et al. v. Ebix, Inc., No. 2:2011-cv-00450 (S.D. Ohio, complaint Iiled on
May 24, 2011).
- 19 -
A plain reading oI the actual contents oI the Bloomberg Article (attached
hereto as Ex. B), as compared to the already public Peak Complaint (attached
hereto as Ex. C) and the already public complaint Iiled by the Iormer shareholders
oI ConIirmNet Corporation in the one other Ebix lawsuit mentioned in the
Bloomberg Article
10
('ConIirmNet Complaint) (attached hereto as Ex. D), makes
clear that the Bloomberg Article revealed no new Iacts. As shown in the table
below, each and every piece oI inIormation about Ebix`s business in the
Bloomberg Article was either directly liIted Irom previously disclosed and publicly
available documents (namely, the Peak Complaint and the ConIirmNet Complaint)
or was nothing more than a mere recharacterization oI the already public
inIormation taken Irom those documents.
Ebix Information Appearing in the
Article on 1une 30, 2011
Previously Disclosed
Source of Information
'Billing Irregularities
The Peak airectors claimea that, after Ebix acquirea
their companv, it firea five of their emplovees incluaing
the person responsible for billing Peaks clients. Ebix
then took over its billing operations.`
Peak Complaint
(see 26-27, 47)
10
Craig A. Irving v. Ebix, Inc., et al., No. 10-cv-0762 (S.D. Cal., complaint Iiled
on April 12, 2010).
- 20 -
'Fired Employees
Ebix was consistentlv unable to tie customer pavments
to specific invoices, ana so Ebix was unable to aetermine
which customers haa maae pavment for which profects,
the airectors saia in court papers. Ebix aoes not have
sufficient internal accounting controls to allow their
books ana recoras to be reliea on.`
Peak Complaint
(quoting 35 & 44)
'Peak Directors` Suit
The Peak airectors suea after Ebix management refusea
to pav an earn-out, or incentive tiea to the sale, of $1.5
million this vear. The aenial was maae on the grounas
that Peak aiant meet its target of $6.5 million in revenue
for 2010 to trigger the pavment, accoraing to court
papers.`
The Peak founaers claimea thev met the target. As an
example of what thev aescribea as the confusea state of
Ebixs billing operations, thev saia Robert Kerris, Ebixs
chief financial officer, proaucea an unauaitea
spreaasheet in April putting their 2010 revenue at $5.9
million, while Sean Donaghv, the companvs controller,
gave them numbers which aaaea up to $6.5 million for
the vear.`
Peak Complaint
(see 11-23)
Peak Complaint
(see 37, 38)
'A DiIIerence
Isaac ana his co-founaers saia Ebix generatea $6.7
million in bills for Peaks clients auring 2010, creating
an $800,000 aifference between Peaks accounts
receivable balance for the vear, ana the $5.9 million that
Ebixs finance chief tola them haa been appliea towara
their earn-out.`
Peak Complaint
(see 39-40)
- 21 -
'The airectors also claimea other oaaities in Ebixs
billing practices, such as negative revenue from various
Peak customers auring 2010, ana an allegea failure bv
Ebix to pav unemplovment compensation premiums in
the state of West Jirginia. That lapse cost Peak $65,000
in revenue because it wasnt allowea to operate in the
state until the matter was resolvea, thev saia in the
complaint.`
Peak Complaint
(see 37, 67)
'Similar Suit
'The Peak airectors allegations that Ebix mishanalea
the accounts receivable balances of an acquirea
companv arent unique. A lawsuit filea in San Diego
feaeral court in April 2010 bv shareholaers of
ConfirmNet, a San Diego-basea companv acquirea bv
Ebix in November 2008, featurea a similar claim.`
'Those investors allegea that $92,280 of ConfirmNets
legacv accounts-receivable balances in 2008 were never
collectea bv Ebix ana were never written off in 2009 or
in earlv 2010, when the lawsuit was filea.`
The ConfirmNet investors also saia Ebix triea to aeauct
$213,393 from its 2009 earn-out pavment on the grounas
that the companv haa overstatea its 2008 revenue bv
more than $100,000.`
ConIirmNet Complaint
(see 14,18)
(see 17)
It is beyond dispute, thereIore, that the Bloomberg Article Iailed to disclose
any new Iacts that were previously unavailable to the market. As such, under the
binding authority established by the Eleventh Circuit in Mever, the Bloomberg
- 22 -
Article does not constitute a corrective disclosure as a matter oI law and is,
thereIore, insuIIicient to plead loss causation. 710 F.3d at 1198-1200.
III. CONCLUSION
In sum, neither the CopperIield Report nor the Bloomberg Article disclosed
any new Iacts to the market. Instead, they merely repeated or repackaged
previously disclosed public inIormation that was already known to the market and
that, under the eIIicient market theory upon which PlaintiII`s entire claim oI
reliance is based, was already Iully incorporated into Ebix`s share price. Under the
clear, binding authority recently issued by the Eleventh Circuit in Mever, this is
Iatal to PlaintiII`s theory oI loss causation. Accordingly, PlaintiII can prove no set
oI Iacts in support oI his claim that would entitle him to relieI and judgment on the
pleadings should be entered in Iavor oI the DeIendants.
RespectIully submitted, this 19th day oI June, 2013.
ALSTON & BIRD LLP
/s/ John A. Jordak, Jr.
Todd R. David
John A. Jordak, Jr.
Todd F. Chatham
1201 West Peachtree Street
Atlanta, Georgia 30309
T: (404) 881-7000
- 23 -
F: (404) 253-8358
Counsel Ior DeIendants
CERTIFICATE OF COMPLIANCE
The undersigned does hereby certiIy that the within and Ioregoing has been
prepared with one oI the Iont and point selections approved by the court in LR 5.1,
N.D. Ga.
/s/ Todd F. Chatham
TODD F. CHATHAM
CERTIFICATE OF SERVICE
I hereby certiIy that on June 19th, 2013, the Ioregoing DEFENDANTS`
MOTION FOR JUDGMENT ON THE PLEADINGS and MEMORANDUM OF
LAW IN SUPPORT OF DEFENDANTS` MOTION FOR JUDGMENT ON THE
PLEADINGS were Iiled electronically with the Clerk oI Court using the CM/ECF
system, which will automatically send an e-mail notiIication oI such Iiling to all
attorneys oI record in the above-reIerenced action.
/s/ Todd F. Chatham
TODD F. CHATHAM

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Mever, 710 F.3d at 1199 (emphasis added).

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