UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ...securities.stanford.edu/filings-documents/1036/JBL... · President of the Company from 1988 to 1999. 9. Defendant Timothy

MALMAN, MALMAN & ROSENTHAL ♦ JOE DIMAGGIO BUILDING ♦ 4040 SHERIDAN STREET ♦ HOLLYWOOD, FLORIDA 33021 ♦ (954) 322-0065

PALM BEACH ♦ NEW YORK, NEW YORK ♦ WESTFIELD, NEW JERSEY

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UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

EDWARD J. GOODMAN LIFE INCOME TRUST, ON BEHALF OF ITSELF and ALL OTHERS SIMILARLY SITUATED, Plaintiff, v. JABIL CIRCUIT, INC., FORBES I. J. ALEXANDER, SCOTT D. BROWN, LAURENCE S. GRAFSTEIN, MEL S. LAVITT, CHRIS LEWIS, TIMOTHY L. MAIN, MARK T. MONDELLO, WILLIAM D. MOREAN, LAWRENCE J. MURPHY, FRANK A NEWMAN, STEVEN A. RAYMUND, THOMAS A. SANSONE and KATHLEEN A. WALTERS, Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No. FEDERAL SECURITIES CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL

Plaintiff, the Edward J. Goodman Life Income Trust (hereinafter the “Goodman Trust” or

“Plaintiff”), by its attorneys, on behalf of itself and all others similarly situated, alleges the

following based upon the investigation of Plaintiff’s counsel, except as to the allegations

specifically pertaining to Plaintiff, which are based upon personal knowledge. The investigation

of counsel included, among other things, a review of Jabil Circuit, Inc. (“Jabil” or “the

Company”) public filings with the United States Securities and Exchange Commission (“SEC”),

press releases issued by the Company, media and news reports about the Company, and publicly

available trading data relating to the price and volume of Jabil’s securities.

NATURE OF THE ACTION

1. This is a federal class action brought on behalf of a class consisting of all persons

who purchased the publicly traded securities of Jabil between September 19, 2001 and

Case 8:06-cv-01716-SDM-EAJ Document 1 Filed 09/18/2006 Page 1 of 40



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June 21, 2006, inclusive (the “Class Period”). Named as defendants in this action are; Jabil,

Forbes I. J. Alexander, Scott D. Brown, Laurence S. Grafstein, Mel S. Lavitt, Chris Lewis,

Timothy L. Main, Mark T. Mondello, William D. Morean, Lawrence J. Murphy, Frank A.

Newman, Steven A. Raymund, Thomas A. Sansone and Kathleen A. Walters.

JURISDICTION AND VENUE

2. This Court has jurisdiction over the subject matter of this action pursuant to

Section 27 of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §78aa, and

28 U.S.C. §1331. The claims asserted herein arise under Sections 10(b), 14(a), and 20(a) of the

Exchange Act, 15 U.S.C. §§78j(b), 78n(a) and 78t(a), and Rules 10b-5 and 14a-9 promulgated

thereunder by the SEC, 17 C.F.R. §§240.10b-5 and 240.14a-9.

3. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28

U.S.C. §1391(b) and (c). Jabil’s principal executive offices are located in this District, the

defendants transact business in this District and many of the acts and transactions constituting the

violations of law alleged herein, including the preparation, issuance and dissemination of

materially false and misleading statements to the investing public, occurred in this District.

4. In connection with the acts, conduct and other wrongs alleged herein, defendants,

directly and indirectly, used the means and instrumentalities of interstate commerce, including

the United States mails, interstate telephone communications, and national securities markets.

THE PARTIES

The Plaintiff

5. Plaintiff, the Goodman Trust, purchased Jabil’s securities during the Class Period,

as set forth in the certification attached as Exhibit A hereto, and suffered damages, as a result of

the wrongful acts of defendants as alleged herein.




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The Defendants

6. Defendant Jabil is a Delaware corporation with its principal executive offices

located at 10560 Dr. Martin Luther King, Jr. Street North, St. Petersburg, Florida 33716. Jabil is

a provider of worldwide electronic manufacturing services and solutions.

7. Defendant William D. Morean (“Morean”) has served as a director of Jabil since

1978 and currently serves as Chairman of the Board. Morean previously served as Chief

Executive Officer of the Company from 1988 to 2000.

8. Defendant Thomas A. Sansone (“Sansone”) has served as a director of Jabil since

1983 and currently serves as Vice Chairman of the Board. Sansone previously served as

President of the Company from 1988 to 1999.

9. Defendant Timothy L. Main (“Main”) has served as a director of Jabil and as

President of the Company since 1999 and as Chief Executive Officer of the Company since

2000. Main previously served as Jabil’s Senior Vice President, Business Development, from

1996 to 1999.

10. Defendant Mark T. Mondello (“Mondello”) has served as Chief Operating Officer

of the Company since 2002, and previously served as Jabil’s Senior Vice President, Business

Development from 1999 to 2002.

11. Defendant Scott D. Brown (“Brown”) has served as Executive Vice President of

the Company at all times relevant hereto.

12. Defendant Mel S. Lavitt (“Lavitt”) has served as a director of Jabil since 1991.

Lavitt served as a member of the Stock Option Committee of the Board (the “Stock Option

Committee”) from 2002 to 2003 and has served as a member of both the Compensation




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Committee of the Board (the “Compensation Committee”) and the Audit Committee of the

Board (the “Audit Committee”) at all times relevant hereto.

13. Defendant Steven A. Raymund (“Raymund”) has served as a director of Jabil

since 1996. Raymund served as a member of the Stock Option Committee from 1998 to 2003,

and has served as a member of both the Compensation Committee and the Audit Committee at

all times relevant hereto.

14. Defendant Frank A. Newman (“Newman”) has served as a director of Jabil since

1998. Newman served as a member of the Stock Option Committee from 1998 to 2003.

Newman has served as a member of the Compensation Committee at all times relevant hereto

and as a member of the Audit Committee since 2000.

15. Defendant Lawrence J. Murphy (“Murphy”) has served as a director of Jabil since

September, 1989.

16. Defendant Laurence S. Grafstein (“Grafstein”) has served as a director of Jabil

since April, 2002.

17. Defendant Kathleen A. Walters (“Walters”) has served as a director of Jabil since

July, 2005.

18. Defendant Forbes I. J. Alexander (“Alexander”) has been Jabil’s Chief Financial

Officer since September, 2004. Alexander also served as the Company’s Treasurer since

November 1996.

19. Defendant Chris Lewis (“Lewis”) served as Jabil’s Chief Financial Officer from

August 1996 until September 2004.

20. Morean, Sasone, Maine, Mondello, Brown, Lavitt, Raymund, Newman, Murphy,

Grafstein, Walters, Alexander and Lewis are collectively referred to herein as the “Individual




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Defendants.” Because of the Individual Defendants’ positions within the Company, they had

access to adverse undisclosed material information about its business, operations, financial

statements and stock option grants. They were privy to such undisclosed information from

internal corporate documents, communications with other officers and employees of the

Company and attendance at and documents received during management and Board of Directors

meetings.

21. From 1998 to 2002, the Stock Option Committee administered Jabil’s stock

option plans and granted stock options to the Company’s officers and other employees. As

members of the Stock Option Committee, Lavitt, Raymund and Newman participated in

decisions regarding the options grants, including the setting of option grant dates and exercise

prices.

22. The purpose of the Compensation Committee is to assist the Board in fulfilling its

oversight responsibilities relating to Jabil’s compensation policies. The Compensation

Committee determines compensation for all of Jabil’s senior officers and provides guidance to

management on general compensation matters. Since 2003, the Compensation Committee has

administered the Company’s stock option plans and granted stock options to Company’s officers.

As members of the Compensation Committee, Lavitt, Raymund, and Newman participated in

decisions regarding the options grants, including the setting of option grant dates and exercise

prices.

23. The purpose of the Audit Committee is to assist the Board in fulfilling its

oversight responsibilities relating to Jabil’s financial accounting, reporting and controls. As

members of the Audit Committee, Lavitt, Raymund, and Newman knew or should have known




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that Jabil’s financial statements were inaccurate and certain stock option grants were improper,

and thereby permitted or condoned the unlawful practices described herein.

24. The Individual Defendants, as officers and/or directors of the Company, had a

duty to disseminate complete, accurate and truthful information about Jabil’s financial condition,

business operations and executive compensation. The Individual Defendants had a duty to

correct promptly any public statements issued by Jabil that had become false or misleading.

Because of their positions, their ability to exercise power and influence with respect to Jabil’s

course of conduct and their access to material inside information about Jabil, the Individual

Defendants were, at the time of the wrongs alleged herein, controlling persons within the

meaning of Section 20(a) of the Exchange Act.

25. It is appropriate to treat the Individual Defendants as a group for pleadings

purposes and to presume that the false, misleading and/or incomplete information conveyed in

the Company’s public filings, press releases and other publications as alleged herein are the

collective action of the Individual Defendants identified above.

CLASS ACTION ALLEGATIONS

26. Plaintiff brings this action as a class action pursuant to Rule 23(a) and (b)(3) of

the Federal Rules of Civil Procedure on behalf of a class consisting of all persons and entities

who purchased Jabil securities during the Class Period and were damaged thereby (the “Class”).

Excluded from the Class are defendants herein, officers and directors of Jabil, members of their

immediate families, and the heirs, successors or assigns of any of the forgoing.

27. The members of the Class are so numerous that joinder of all members is

impracticable. While the exact number of Class members is unknown to the Plaintiff at this time

and can only be ascertained through appropriate discovery, Plaintiff believes there are, at a

minimum, thousands of members of the Class who purchased Jabil common stock during the




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Class Period. There are over 204,000,000 shares of Jabil common stock outstanding, which

securities traded actively in an open and efficient market on the New York Stock Exchange

(“NYSE”) under the symbol “JBL.”

28. Common questions of law and fact exist as to all members of the Class and

predominate over any questions affecting solely individual members of the Class. Among the

questions of law and fact common to the Class are:

• whether the federal securities laws were violated by defendants’ acts as alleged

herein;

• whether Jabil issued false and misleading financial statements and information

about executive compensation during the Class Period;

• whether the Individual Defendants caused Jabil to issue false and misleading

financial statements and information about executive compensation during the

Class Period;

• whether defendants acted knowingly or recklessly in issuing false and misleading

financial statements and information about executive compensation;

• whether defendants improperly manipulated the terms of the stock options granted

to them and others;

• whether defendants engaged in a scheme to defraud by manipulating the terms of

stock options granted to them and others;

• whether the market prices of Jabil securities during the Class Period were

artificially inflated because of the defendants’ conduct complained of herein; and

• whether the members of the Class have sustained damages and, if so, what is the

proper measure of damages.

29. Plaintiff’s claims are typical of the claims of the members of the Class as plaintiff

and members of the Class sustained damages arising out of Defendants’ wrongful conduct in

violation of federal law as complained of herein.

30. Plaintiff will fairly and adequately protect the interests of the members of the




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Class and has retained counsel competent and experienced in class actions and securities

litigation. Plaintiff has no interests antagonistic to or in conflict with those of the Class.

31. A class action is superior to other available methods for the fair and efficient

adjudication of the controversy since joinder of all members of the Class is impracticable.

Furthermore, because the damages suffered by the individual Class members may be relatively

small, the expense and burden of individual litigation makes it impracticable for the Class

members individually to redress the wrongs done to them. There will be no difficulty in the

management of this action as a class action.

32. Plaintiff will rely, in part, upon the presumption of reliance established by the

fraud-on-the-market doctrine in that:

• defendants made public misrepresentations and omissions during the Class

Period;

• the omissions and misrepresentations were material;

• the securities of the Company traded in an efficient market;

• the Company’s securities traded on the NYSE, an efficient and open exchange;

• the misrepresentations and omissions alleged would tend to induce a reasonable

investor to misjudge the value of the Company’s securities;

• Plaintiff and members of the Class purchased their Jabil securities between the

time the defendants failed to disclose or misrepresented material facts and the

time the true facts were disclosed, without knowledge of the omitted or

misrepresented facts;

• as a regulated issuer, Jabil submitted regular public filings to the SEC, such as on

Forms 10-K and 10-Q; and

• the Company’s stock was followed by numerous financial analysts. Thus, the

Company’s stock reflected the effect of information disseminated in the market.

33. Based upon the foregoing, all purchasers of Jabil securities during the Class

Period suffered similar injury through their purchase of the securities at artificially inflated prices




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and a presumption of reliance applies.

SUBSTANTIVE ALLEGATIONS

Background

34. A stock option granted to a director or officer of a corporation allows the director

or officer to purchase company stock at a specified price (referred to as the “exercise price”) for

a specified period of time. Stock options are granted as part of compensation packages as a

means to create incentives to boost profitability and stock value.

35. When the director or officer exercises the option, he or she purchases the stock

from the company at the exercise price, regardless of the stock’s price at the time the option is

exercised. The lower the exercise price, the more profit directors or officers can potentially

make and the less money the company gets when the stock option is exercised.

Defendants’ Fraudulent Scheme

36. During the Class Period, Jabil embarked on a fraudulent scheme whereby the

Company backdated stock option grants to the Individual Defendants and/or other directors or

executives in order to provide the recipients with a more profitable exercise price.

37. During the Class Period, Jabil issued stock options to its directors and/or officers

pursuant to the following plans: (a) the 1992 Stock Option Plan; and (b) the 2002 Stock Incentive

Plan. During the Class Period, the Company also issued stock options to employees and

consultants pursuant to the 2002 Stock Incentive Plan.

38. In public filings with the Securities and Exchange Commission, including, but not

limited to, the Company’s definitive proxy statements, the Company represented that the

exercise price of all the stock options would be no less than the fair market value of Jabil’s




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common stock, measured by the publicly traded closing price for Jabil stock on the day of the

grant.

39. However, during the Class Period, defendants issued option grants but set the

exercise price to the fair market value of the stock on the day at which the stock price was

particularly low and just before an increase in the stock price.

40. Accordingly, the option grants ensured that the grantees were able to profit off the

fluctuations in the Company stock price with the benefit of hindsight.

41. Therefore, defendants’ representations that the exercise price of all stock options

would be no less than the fair market value of the Company’s common stock measured by the

publicly traded closing price for its stock on the day of the grant were false.

42. In addition, defendants caused the Company to falsify its financial statements by

failing to properly record expenses related to these option grants, which resulted in the

overstatement of the Company’s profits. Specifically, when options are priced below the stock’s

fair market value on the date they are awarded, the recipient receives an instant gain. Under

Generally Accepted Accounting Principles (“GAAP”), this gain represents additional

compensation and must be treated as an expense by the Company. The Company did not

account for the amount by which the market price of its stock exceeded the exercise price of the

options, thereby causing the Company to overstate its profits.

43. On May 3, 2006, Jabil filed a Form 8-K with the SEC announcing that it had been

contacted by the SEC and that the SEC would be requesting certain information regarding past

option grant practices.




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44. On June 21, 2006, Jabil filed a Form 8-K with the SEC announcing that it had

“received a subpoena from the U.S. Attorney’s office for the Southern District of New York

requesting certain stock option related material.”

45. In reaction to a disclosure of this fraudulent conduct, the price of Jabil common

stock plummeted from a closing price of $40.78 per share on May 3, 2006 to a closing price of

$24.79 on June 22, 2006.

Materially False And Misleading Statements Issued During The Class Period

46. Jabil issued materially false and misleading statements during the Class Period in

the following SEC filings:

47. On December 16, 2005, the Company filed a definitive proxy statement (the

“2005 Proxy Statement”). The 2005 Proxy Statement described various stock option plans for

directors and/or officers of the Company:

(a) Members of the Board of Directors who were not employees of the

Company (“Outside Directors”) received benefits under the Company’s 2002 Stock Incentive

Plan. The 2005 Proxy Statement falsely and misleadingly stated that the exercise price for each

option shall be “equal to the fair market value of the common stock on the date of grant.”

(b) The 2005 Proxy Statement also described the “Long-Term Incentives” for

executive officers. The 2005 Proxy Statement falsely and misleadingly stated that “[o]ptions

were granted at an exercise price equal to 100% of the fair market value of [Jabil] common stock

on the date of the grant.” The 2005 Proxy Statement also falsely and misleadingly stated that

“[o]ptions are granted with an exercise price equal to the value of Jabil’s common stock on the

last market trading day prior to the date of determination….” The 2005 Proxy Statement also

falsely and misleadingly stated that “[o]ption…grants are designed to create an incentive to




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increase stockholder value over the long-term since the value of the grants will increase when the

price of the stock increases.”


“2004 Proxy Statement”). The 2004 Proxy Statement described various stock option plans for

the Company’s directors and/or officers of the Company:

(a) The Outside Directors received benefits under the Company’s 2002 Stock

Incentive Plan. The 2004 Proxy Statement falsely and misleadingly stated that the exercise price

per share for each of these option grants is “equal to the fair market value of the common stock

on the date of grant.”

(b) The 2004 Proxy Statement also described the “Long Term Incentives” for


were granted at an exercise price equal to 100% of the fair market value of [Jabil’s] common

stock on the date of grant.” The 2004 Proxy Statement also falsely and misleadingly stated that

the “[o]ptions are granted with an exercise price equal to the fair market value of Jabil’s common

stock on the last market trading day prior to the date of determination….”

49. On December 3, 2003, the Company filed a definitive proxy statement (the “2003

Proxy Statement”). The 2003 Proxy Statement described stock option plans for directors and/or

officers of the Company:

(a) The Outside Directors received benefits under the Company’s 2002

Directors’ Stock Incentive Plan. The 2003 Proxy Statement falsely and misleadingly stated that

“[t]he exercise price of an option must be no less than 100%...of the fair market value of the

common stock on the date the option is granted.”




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(b) The 2003 Proxy Statement also described the “Long Term Incentives for




“[o]ptions are granted with an exercise price equal to the fair market value of Jabil’s common

stock on the last market trading day prior to the date of determination…”


“2002 Proxy Statement.”) The 2002 Proxy Statement described the stock option plans for

directors and/or officers of the Company:

(a) The Outside Directors received benefits under the Company’s 2002 Stock

Incentive Plan and 1992 Stock Option Plan.





“[o]ptions are granted with an exercise price equal to the fair market value of Jabil’s common

stock on the last trading day prior to the date of determination….”

51. On December 7, 2001, the Company filed a definitive proxy statement (the “2001

Proxy Statement”). The 2001 Proxy Statement described stock option plans for directors and/or

officers of the Company:

(a) Outside Directors received benefits under the Company’s 1992 Stock

Option Plan, as amended.




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executive officers. Such “incentives” were provided under the Company’s 1992 Stock Option

Plan. The 2001 Proxy Statement falsely and misleadingly stated that”[o]ptions were granted at

an exercise price equal to 100% of the fair market value of [Jabil] common stock on the date of

grant.” The 2001 Proxy Statement also falsely and misleadingly stated that “[o]ptions are

granted with an exercise price equal to the fair market value of Jabil’s common stock on the last

market trading day prior to the date of determination….” The 2001 Proxy Statement also sought

approval of Jabil’s 2002 Stock Incentive Plan, which was adopted by the Board of Directors in

October 2001 and which was to replace the 1992 Stock Option Plan. The 2001 Proxy Statement

falsely and misleadingly stated that “the exercise price of an option [granted under the 2002

Stock Incentive Plan] must be no less than 100%... of the fair market value of the common stock

on the date the option is granted.”


“2000 Proxy Statement”). The 2000 Proxy Statement described stock option plans for directors

and/or officers of the Company:

(a) Outside Directors received benefits under the Company’s 1992 Stock Option

Plan, as amended.

(b) The 2000 Proxy Statement also described “Long-Term Incentives” for

executives. Such “incentives” were provided under the Company’s 1992 Stock Option Plan.

The 2000 Proxy Statement falsely and misleadingly stated that “[o]ptions were granted at an

exercise price equal to 100% of the fair market value of [Jabil’s] common stock on the date of

grant.” The 2000 Proxy Statement also falsely and misleadingly stated that “[o]ptions are




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granted with an exercise price equal to the fair market value of Jabil’s common stock on the last

market trading day prior to the date of determination….”

53. On April 7, 2006, the Company filed with the SEC its quarterly report on Form

10-Q for the period ending February 28, 2006. For the three month period ending February 28,

2006, the Company reported net income of $69,021,000 ($0.32 per diluted share). For the six

month period ending February 28, 2006, the Company reported net income of $145,911,000

($0.69 per diluted share). By signing the Form 10-Q and certifications pursuant to the Sarbanes-

Oxley Act, Main and Alexander certified that the quarterly report contained no misstatements or

omissions of material fact. Main and Alexander further certified that they had disclosed all

instances of fraud involving management or other employees who had a significant role in the

Company’s internal control over financial reporting.

54. On January 9, 2006, the Company filed with the SEC its quarterly report on Form

10-Q for the period ending November 20, 2005. For the three month period ending November

30, 2004, the Company reported net income of $76,890,000 ($0.37 per diluted share). By

signing the Form 10-Q and certifications pursuant to the Sarbanes-Oxley Act, Main and

Alexander certified that the quarterly report contained no misstatements or omissions of material

fact. Main and Alexander further certified that they had disclosed all instances of fraud

involving management or other employees who had a significant role in the Company’s internal

control over financial reporting.

55. On October 28, 2005, the Company filed with the SEC its annual report on Form

10-K for the period ending August 31, 2005. The Company reported net income of

$231,847,000 ($1.12 per diluted share). By signing the certifications pursuant to the Sarbanes-

Oxley Act, Main and Alexander certified that the annual report contained no misstatements or




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Company’s internal control over financial reporting. The Form 10-K was signed by Morean,

Sansone, Main, Alexander, Grafstein, Lavitt, Murphy, Newman, Raymund and Walters.

56. On July 1, 2005, the Company filed with the SEC its quarterly report on Form 10-

Q for the period ending May 31, 2005. For the three month period ending May 31, 2005, the

Company reported net income of $59,353,000 ($0.29 per diluted share). For the nine month

period ending May 31, 2005, the Company reported net income of $161,315,000 ($0.29 per

diluted share). By signing the Form 10-Q and certifications pursuant to the Sarbanes-Oxley Act,

Main and Alexander certified that the quarterly report contained no misstatements or omissions

of material fact. Main and Alexander further certified that they had disclosed all instances of

fraud involving management or other employees who had a significant role in the Company’s

internal control over financial reporting.



2005 the Company reported net income of $46,047,000 ($0.22 per diluted chare). For the six


($0.49 per diluted share). By signing the Form 10-Q and certifications pursuant to the Sarbanes-

Oxley Act, Main and Alexander certified that the quarterly report contained no misstatements or



Company’s internal control over financial reporting.




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58. On January 7, 2005, the Company filed with the SEC its quarterly report on Form

10-Q for the period ending November 30, 2004. For the three month period ending November

30, 2004, the Company reported net income of $55,915,000 ($0.27 per diluted share). By

signing the Form 10-Q and certifications pursuant to the Sarbanes-Oxley Act, Main and

Alexander certified that the quarterly report contained no misstatements or omissions of material

fact. Main and Alexander further certified that they had disclosed all instances of fraud

involving management or other employees who had a significant role in the Company’s internal


59. On November 5, 2004, the Company filed with the SEC its annual report on Form

10-K for the period ending August 31, 2004. The Company reported net income of

$166,900,000 ($0.81 per diluted share). By signing the certifications pursuant to the Sarbanes-

Oxley Act, Main and Alexander certified that the information contained in the annual report

fairly presented in all material respects Jabil’s financial condition and results. Main and

Alexander further certified that they had disclosed all instances of fraud involving management

or other employees who had a significant role in the Company’s internal control over financial

reporting. The 10-K Form was signed by Morean, Sansone, Main, Alexander, Grafstein, Lavitt,

Murphy, Newman and Raymund.

60. On July 2, 2004, the Company filed with the SEC its quarterly report on Form 10-

Q for the period ending May 31, 2004. For the three month period ending May 31, 2004, the

Company reported net income of $40,131,000 ($0.19 per diluted share). For the nine month


diluted share). By signing the Form 10-Q and certifications, pursuant to the Sarbanes-Oxley Act,

Main and Lewis certified that the quarterly report contained no misstatements or omissions of




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material fact. Main and Lewis further certified that they had disclosed all instances of fraud

involving management of other employees who had a significant role in the Company’s internal




2004, the Company reported net income of $40,015,000 ($0.19 per diluted share). For the six


($0.39 per diluted share). By signing the Form 10-Q and certifications, pursuant to the Sarbanes-

Oxley Act, Main and Lewis certified that the quarterly report contained no misstatements or

omissions of material fact. Main and Lewis further certified that they had disclosed all instances

of fraud involving management of other employees who had a significant role in the Company’s

internal control over financial reporting.

62. On January 14, 2004, the Company filed with the SEC its quarterly report on

Form 10-Q. For the three month period ending November 30, 2003, the Company reported net

income of $42,496,000 ($0.20 per diluted share). By signing the Form 10-Q and certifications,

pursuant to the Sarbanes-Oxley Act, Main and Lewis certified that the quarterly report contained

no misstatements or omissions of material fact. Main and Lewis further certified that they had

disclosed all instances of fraud involving management or other employees who had a significant

role in the Company’s internal control over financial reporting.

63. On November 13, 2003, the Company filed with the SEC its annual report on

Form 10-K for the period ending August 31, 2003. The Company reported income of

$43,007,000 ($.21 per diluted share). By signing the certifications pursuant to the Sarbanes-

Oxley Act, Main and Lewis certified that the annual report contained no misstatements or




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of fraud involving management or other employees who had a significant role in the Company’s

internal control over financial reporting. The Form 10-K was signed by Morean, Sansone, Main,

Alexander, Grafstein, Lavitt, Murphy, Newman and Raymund.

64. On July 14, 2003, the Company filed with the SEC its quarterly report on Form

10-Q for the period ending May 31, 2003. For the three month period ending May 31, 2003, the

Company reported a net income of $4,466,000 (($0.02) per diluted share). For the nine month

period ending May 31, 2003, the Company reported a net income of $ 22,935,000 ($0.11 per

diluted share). By signing the Form 10-Q and certifications, pursuant to the Sarbanes-Oxley Act,

Main and Lewis certified that the information contained in the quarterly report fairly presented in

all material respects Jabil’s financial condition and results. Main and Lewis further certified that

they had disclosed all instances of fraud involving management or other, employees who had a

significant role in the Company’s internal control financial reporting.



2003, the Company reported net income of $ 10,112,000 ($0.05 per diluted share). By signing

the Form 10-Q and certifications, pursuant to the Sarbanes-Oxley Act, Main and Lewis certified

that the quarterly report contained no misstatements or omissions of material fact. Main and

Lewis further certified that they had disclosed all instances of fraud involving management of

other employees who had a significant role in the Company’s internal control over financial

reporting.


Form 10-Q for the period ending November 30, 2002. For the three month period ending




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November 30, 2002, the Company reported net income of $8,357,000 ($0.04 per diluted share).

By signing the Form 10-Q and certifications, pursuant to the Sarbanes-Oxley Act, Main and

Lewis certified that the information contained in the quarterly report fairly presented in all

material respects Jabil’s financial condition and results. Main and Lewis further certified that

they had disclosed all instance of fraud involving management or other employees who had a

significant role in the Company’s internal control financial reporting.


Form 10-K for the period ending August 31, 2002. The Company reported net income of

$34,715,000 ($0.17 per diluted share). By signing the certification pursuant to the Sarbanes-

Oxley Act, Main and Lewis certified that the annual report contained no misstatements or


of fraud involving management or other employees who had a significant role in the Company’s

internal control over financial reporting. The Form 10-K was signed by Morean, Sansone, Main,

Lewis, Murphy, Lavitt, Raymund, Newman and Grafstein.

68. On July 12, 2002, the Company filed with the SEC its quarterly report on Form

10-Q for the period ending May 31, 2002. For the three month period ending May 31, 2002, the

Company reported a net income of $ 20,806,000 ($0.10 per diluted share). For the nine month


diluted share). The Form 10-Q was signed by Main and Lewis.



2002 the Company reported net income of $3,702,000 ($0.02 per diluted share). For the six




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month period ending February 28, 2002, the Company reported a net income of $12,077,000

($0.06 per diluted share). The Form 10-Q was signed by Main and Lewis.


Form 10-Q for the period ending November 30, 2001. For the three month period ending

November 30, 2001, the Company reported net income of $8,375,000 ($0.04 per diluted share).

The Form 10-Q was signed by Main and Lewis.


Form 10-K for the period ending August 31, 2001. The Company reported net income of

$118,517,000 ($0.59 per diluted share). The Form 10-K was signed by Morean, Sansone, Main,

Lewis, Murphy and Lavitt.

72. On July 16, 2001, the Company filed with the SEC its Form 10-Q for the period

ending May 31, 2001. For the three month period ending May 31, 2001, the Company reported

net income of $18,808,000 ($0.09 per diluted share). For the nine month period ending May 31,

2001, the Company reported net income of $107,276,000 ($0.54 per diluted share). The Form

10-Q was signed by Main and Lewis.

73. The statements referenced above in paragraph 38 and paragraphs 47 to 72, were

each materially false and misleading when made as they misrepresented and/or omitted the

following adverse facts which then existed and disclosure of which was necessary to make the

statements made not false and/or misleading including:

(a) Contrary to statements made by the Company, the option grants were not

made at the fair market value or the closing price on the NYSE on the date of the grant;

(b) Jabil improperly understated its expenses and overstated its earnings as a

result of improper option back-dating; and




22

(c) Jabil’s financial statements were not prepared in accordance with GAAP.

74. Jabil’s 10-K’s, 10-Q’s and proxy statements during the Class Period were false

and misleading as a result of defendants having either knowingly, or with deliberate

recklessness, manipulated the grant dates on stock options in order to enrich the Individual

Defendants by receiving favorable backdated exercise prices on the options. Defendants’ actions

caused the Company’s financial statements to under-report compensation expenses, which in

turn inflated the Company’s net income during the Class Period. In addition, the Company’s

financial statements were not in compliance with GAAP because of the understatement of

expenses and overstatement of net income and they were the result of deficient and defective

controls.

The Truth Begins To Emerge

75. The 2000-2005 Proxy Statements concealed Defendants’ option backdating

scheme. Thus, the Company’s shareholders remained unaware of Defendants’ wrongdoing when

voting on proxy proposals between 2001 and 2006. In fact, it was not until the investigations of

the SEC and United States Department of Justice were announced that shareholders learned that

the Proxy Statements which they had relied upon for nearly a decade were false and misleading.

Defendants have been unjustly enriched at the expense of Jabil, which has received and will

receive less money from the Defendants when they exercise their options at prices substantially

lower than they would have if the options had not been backdated. Each dollar diverted to

Defendants via the option backdating scheme has come at the expense of the Company.

Additional Allegations of Scienter

76. As alleged herein, defendants acted with scienter in that defendants: (a) had

access to all internal data concerning the Company’s stock option plans; (b) directed and/or




23

participated in establishing the terms of the option grants, including the choice of grant dates and

exercise price; (c) knew, or with deliberate recklessness disregarded, that the public documents

and statements issued or disseminated in the name of the Company were materially false,

incomplete or misleading; (d) knowingly, or with deliberate recklessness, participated or

acquiesced in the issuance or dissemination of such statements or documents as primary

violations of the federal securities laws.

77. As CFO’s Alexander and Lewis were responsible for the preparation of the

Company’s financial statements and for ensuring that the periodic reports filed with the SEC

containing such financial statements complied fully with the disclosure requirements of the

federal securities laws. The Individual Defendants signed and/or reviewed the Company’s SEC

filings containing the financial results, as alleged herein. Because the under-reporting of

compensation expense and over reporting of net income is a departure from GAAP, the

Individual Defendants were responsible for such departures. Additionally, since the departures

related to the Company’s stock option program, which the Individual Defendants themselves

manipulated, they knew or were deliberately reckless in approving the financial statements and

issuing the false and misleading statements set forth herein.

78. Defendants had the motive and opportunity to perpetrate the fraudulent scheme

described herein because the Individual Defendants were the most senior officers of Jabil, issued

statements and press releases on behalf of Jabil and had the opportunity to commit the fraud

alleged herein. Individual Defendants and others also received manipulated stock options.

79. Due to their positions within the Company, each of the Individual Defendants had

specific knowledge of the Company’s option granting practices.

Loss Causation

80. During the Class Period, as detailed herein, defendants engaged in a scheme to

deceive the market and a course of conduct that artificially inflated Jabil’s price and operated as

a fraud or deceit on Class Period purchasers of Jabil’s traded securities by misrepresenting the

Company’s operating condition, executive compensation and the integrity of its management.




24

81. The Company’s ultimate destiny is dependent on the integrity of management. In

this particular case, the backdating of stock option grants to increase the profitability of the

options is a classic example of loss of confidence on the part of investors since management is

effectively taking from the shareholders in order to line their own pockets. This loss of

confidence resulted in the precipitous decline in the price of Jabil’s stock.

82. Once the truth of defendants’ scheme “leaked” into the market, Jabil’s common

stock price plummeted evidencing that its stock has been negatively affected by the growing

stock option backdating controversy. On May 3, 2006, the common stock closed at $40.78 per

share. After the filing of the Form 8-K that disclosed that the SEC would be requesting certain

information regarding Jabil’s option granting practices, the common stock price fell to close at

$40.50 per share on May 4, 2006, $40.15 per share on May 5, 2006 and plummeted to a close of

$34.00 per share by May 23, 2006.

83. On June 20, 2006, just prior to the June 21, 2006 date Jabil filed the Form 8-K

with the SEC disclosing that it had received a subpoena from the office of the United States

Attorney for the Southern District of New York, Jabil’s stock closed at $26.23 per share.

Following this news, Jabil’s stock fell to close at $25.48 per share on June 21, 2006 and to a

close of $24.79 per share on June 22, 2006. By July 27, 2006, the stock closed at $22.55 per

share.

84. The decline in Jabil’s stock price was a direct result of the defendants’ fraudulent

conduct alleged herein finally being revealed to Jabil’s investors and the market.

85. The resulting decline in Jabil’s stock price was foreseeable at the time of the

defendants’ misrepresentations. Despite being aware of the consequences of their fraudulent

conduct, defendants nevertheless knowingly backdated options, which, when the truth emerged,

caused the stock price to decline.

86. The totality of the circumstances around Jabil’s stock price drop combine to

negate any inference that the economic loss suffered by Plaintiff and other Class members was

caused by changed market conditions, macroeconomic or industry factors or Jabil-specific facts




25

unrelated to defendants’ fraudulent conduct.

87. The economic loss sustained by Plaintiff and the other members of the Class was

the direct and proximate result of defendants’ fraudulent scheme and course of business to

artificially inflate Jabil’s stock price and the ensuing substantial decline in the value of Jabil’s

stock when defendants’ materially false and misleading statements, omissions of material fact

and devices, schemes, or artifices to defraud were revealed. Jabil’s investors and the market did

not learn the truth until Jabil’s fraudulent scheme became known.

Fraud-On-The-Market Doctrine

88. At all relevant times, the market for Jabil’s publicly traded securities was an

efficient market for the following reasons, among others:

(a) The Company’s Common Stock met the requirements for public listing

and was listed and actively traded on NYSE, a highly efficient market;

(b) As a regulated issuer, the Company filed reports with SEC;

(c) The Company regularly issued press releases which were carried by

national news wires. Each of these releases was publicly available and entered the public

marketplace; and

(d) The Company’s stock was followed by numerous analysts.

89. As a result, the market for the Company’s publicly traded securities promptly

digested current information with respect to Jabil from all publicly available sources and

reflected such information in the price of the Company’s securities. Under these circumstances,

all purchasers of the Company’s publicly traded securities during the Class Period suffered

similar injury through their purchase of the publicly traded securities of Jabil at artificially traded

prices and a presumption of reliance applies.

No Safe Harbor

90. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this complaint.

Many of the specific statements pleaded herein were not identified as “forward-looking




26

statements” when made. To the extent there were any forward-looking statements, there were no

meaningful cautionary statements identifying important factors that could cause actual results to

differ materially from those in the purportedly forward-looking statements. Alternatively, to the

extent that the statutory safe harbor does apply to any forward-looking statements, these

statements are actionable because, at the time each of those forward-looking statements was

made, the particular speaker knew that the particular forward-looking statement was false and/or

the forward-thinking statement was authorized and/or approved by an executive officer of Jabil

who knew that those statements were false when made.

Claims For Relief

COUNT I

(Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants)

91. Plaintiff repeats and restates each and every allegation contained above as if fully

set forth herein.

92. During the Class Period, defendants carried out a plan, scheme and course of

conduct which was intended to and, throughout the Class Period, did: (a) deceive the investing

public, including plaintiff and other members of the Class, as alleged herein; (b) artificially

inflate and maintain the market price of Jabil’s securities; and (c) cause plaintiff and other

members of the Class to purchase Jabil’s securities at artificially inflated prices. In furtherance

of this unlawful scheme, plan and course of conduct, defendants took the actions set forth herein.

93. Defendants: (a) employed devices, schemes, and artifices to defraud; (b) made

untrue statements of material fact and/or omitted to state material facts necessary to make the

statements made not misleading; and (c) engaged in acts, practices, and a course of business

which operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort

to maintain artificially high market prices for Jabil’s securities in violation of Section 10(b) of

the Exchange Act and Rule 10b-5.

94. In addition to the duties of full disclosure imposed on defendants as a result of




27

their making affirmative statements and reports to the investing public, defendants had a duty to

promptly disseminate truthful information that would be material to investors in compliance with

the integrated disclosure provisions of the SEC as embodied in SEC Regulation S-X (17 C.F.R.

Sections 210.01 et seq.) and Regulation S-K (17 C.F.R. Sections 229.10 et seq.) and other SEC

regulations, including accurate and truthful information with respect to the Company’s financial

condition, earnings and expenses, executive compensation and management integrity so that the

market price of the Company’s securities would be based on truthful, complete and accurate

information.

95. Defendants, directly and indirectly, by the use, means or instrumentalities of

interstate commerce and/or of the mails, engaged and participated in a continuous course of

conduct to misrepresent and to not disclose adverse material information about Jabil’s financial

condition, stock options, executive compensation and management integrity as specified herein.

96. Defendants employed devices, schemes and artifices to defraud, while in

possession of material adverse non-public information, and engaged in acts, practices and a

course of conduct as alleged herein in an effort to assure investors of Jabil’s value and

performance, executive compensation and management integrity. Said schemes, devices, acts

and artifices included: (a) the making of, or participation in the making of, untrue statements

about Jabil and its financial condition, stock options, executive compensation and management

integrity; (b) the omitting of materials facts necessary in order to make the statements made, in

light of the circumstances under which they were made, not misleading, as set forth more

particularly herein; and (c) engaging in transactions, practices and a course of business which

operated as a fraud and deceit upon the purchasers of Jabil’s securities during the Class Period.

97. Defendants’ material misrepresentations and/or omissions were done knowingly

or with deliberate recklessness and for the purpose and effect of: (a) misrepresenting Jabil’s

financial condition, stock options, executive compensation and management integrity to the

investing public; (b) supporting the artificially inflated price of its securities; and (c) concealing

the fact that senior officers had taken compensation from the Company to which they were not




28

entitled by manipulating the terms of their option grants.

98. As a result of the dissemination of the materially false and misleading information

and failure to disclose material facts, as set forth above, the market price of Jabil’s securities was

artificially inflated during the Class Period. In ignorance of the fact that market prices of Jabil’s

publicly traded securities were artificially inflated, and relying, directly or indirectly, on the false

and misleading statements made by defendants, or upon the integrity of the market in which the

securities traded, and/or on the absence of material adverse information that was known or with

deliberate recklessness, disregarded, by defendants but not disclosed in public statements by

defendants during the Class Period, plaintiff and the other members of the Class acquired Jabil

securities during the Class Period at artificially high prices and were damaged thereby.

99. At the time of said misrepresentations and omissions, plaintiff and other members

of the Class were ignorant of their falsity and believed them to be true. Had plaintiff and the

other members of the Class and the marketplace known of the true financial condition of the

Company and its stock option, executive compensation and management integrity issues which

were not disclosed by defendants, plaintiff and other members of the Class would not have

purchased or otherwise acquired the Jabil securities or, if they had acquired such securities

during the Class Period, they would not have done so at the artificially inflated prices which they

paid.

100. By virtue of the foregoing, defendants have violated Section 10(b) of the

Exchange Act, and Rule 10b-5 promulgated thereunder.

101. As a direct and proximate result of defendants’ wrongful conduct, plaintiff and

the other members of the Class suffered damages in connection with their respective purchases

and sale of the Company’s securities during the Class Period.

COUNT II

(Violations of Section 20(a) of the Exchange Act Against the Individual Defendants)




29

102. Plaintiff repeats and realleges each and every allegation contained in the

foregoing paragraphs as if fully set forth herein.

103. (a) During the Class Period, Morean participated in the operation and

management of the Company and conducted and participated, directly and indirectly, in the

conduct of the Company’s business affairs. Because of Morean’s senior positions, he knew the

adverse non-public information about the Company’s financial condition, stock options,

executive compensation, management integrity and false statements.

(b) As a director of a publicly traded company, Morean had a duty to

disseminate accurate and truthful information with respect to the Company’s financial condition

and business operations, stock options and executive compensation, and to promptly correct any

public statements issued by the Company which had become materially false or misleading.

(c) Because of his position of control and authority as a director and senior

officer of the Company, Morean was able to, and did, control the contents of press releases

which the Company disseminated in the marketplace during the Class Period concerning the

Company’s financial condition. Throughout the Class Period, Morean exercised his power and

authority to cause the company to engage in the wrongful acts complained of herein. Morean,

therefore, was a “controlling person” of the Company within the meaning of section 20(a) of the

Exchange Act. In this capacity, he participated in the unlawful conduct alleged which artificially

inflated the market price of the Company’s securities.

104. (a) During the Class Period, Sansone participated in the operation and

management of the Company and conducted and participated directly and indirectly, in the

conduct of the Company’s business affairs. Because of Sansone’s senior positions, he knew the

adverse non-public information about the Company’s, financial condition, stock options,


(b) As a director of a publicly traded company, Sansone had a duty to


and business operations, stock options and executive compensation and to promptly correct any




30


(c) Because of his position of control and authority as a director of the

Company, Sansone was able to, and did, control the contents of press releases which the

Company disseminated in the marketplace during the Class Period concerning the Company’s

financial condition. Throughout the Class Period, Sansone exercised his power and authority to

cause the Company to engage in the wrongful acts complained of herein. Sansone, therefore, was

a “controlling person” of the Company within the meaning of Section 20(a) of the Exchange Act.

In this capacity, he participated in the unlawful conduct alleged which artificially inflated the

market price of the Company’s securities.

105. (a) During the Class Period, defendant Main participated in the operation and


conduct of the Company’s business affairs. Because of Main’s senior positions, he knew the



(b) As a director and senior officer of a publicly traded company, Main had a

duty to disseminate accurate and truthful information with respect to the Company’s financial

condition and business operations, stock options, executive compensation, and to promptly

correct any public statements issued by the Company which had become materially false or

misleading.

(c) Because of his position of control and authority as a director and senior

officer of the of the Company, Main was able to, and did, control the contents of SEC filings,

including proxy statements, which publicly, and consistently, albeit falsely, represented

throughout the Class Period that the exercise price of al stock options would be no less than the

fair market value of Jabil’s common stock on the date of the grant of the option. Throughout the

Class Period, Main exercised his power and authority to cause the Company to engage in the

wrongful acts complained of herein. Main, therefore, was a “controlling person” of the

Company within the meaning of Section 20(a) of the Exchange Act. In this capacity, he




31

participated in the unlawful conduct alleged which artificially inflated the market price of the

Company’s securities.

106. (a) During the Class Period, Mondello participated in the operation and


conduct of the Company’s business affairs. Because of Mondello’s senior positions, he knew the



(b) As a senior officer of a publicly traded company, Mondello had a duty to

disseminate accurate and truthful information with respect to the Company’s financial condition,

stock options and executive compensation and to promptly correct any public statements issued

by the Company which had become materially false or misleading.

(c) Because of his position of control and authority as a senior officer of the

Company, Mondello was able to, and did, control the contents of press releases which the


financial condition. Throughout the Class Period, Mondello exercised his power and authority to

cause the company to engage in the wrongful acts complained of herein. Mondello, therefore,

was a “controlling person” of the Company within the meaning of Section 20(a) of the Exchange

Act. In this capacity, he participated in the unlawful conduct alleged which artificially inflated

the market price of the Company’s securities.

107. (a) During the Class Period, Brown participated in the operation and


conduct of the Company’s business affairs. Because of Brown’s senior position, he knew the



(b) As a senior officer of a publicly traded company, Brown had a duty to


stock options, and executive compensation, and to promptly correct any public statements issued




32



Company, Brown was able to, and did, control the contents of press releases which the Company

disseminated in the marketplace during the Class Period concerning the Company’s financial

condition. Throughout the Class Period, Brown exercised his power and authority to cause the

Company to engage in the wrongful acts complained of herein. Brown, therefore, was a

“controlling person” of the Company within the meaning of Section 20(a) of the Exchange Act.



108. (a) During the Class Period, Lavitt participated in the operation and


conduct of the Company’s business affairs. Because of Lavitt’s senior positions, he knew the



(b) As a director of a publicly traded company, Lavitt had a duty to


stock options and executive compensation, and to promptly correct any public statements issued



Company, Lavitt was able to, and did, control the contents of press releases which the Company


condition. Throughout the Class Period, Lavitt exercised his power and authority to cause the

company to engage in the wrongful acts complained of herein. Lavitt, therefore, was a




109. (a) During the Class Period, Raymund participated in the operation and




33


conduct of the Company’s business affairs. Because of Raymund’s senior positions, he knew the

adverse non-public information about the Company’s financial conditions, stock options,


(b) As a director of a publicly traded company, Raymund had a duty to


stock options and executive compensation, and to promptly correct any public statements issued



Company, Raymund was able to, and did, control the contents of press releases which the


stock options, executive compensation and financial condition. Throughout the Class Period,

Raymund exercised his power and authority to cause the Company to engage in the wrongful

acts complained of herein. Raymund, therefore, was a “controlling person” of the Company

within the meaning of Section 20(a) of the Exchange Act. In this capacity, he participated in the

unlawful conduct alleged which artificially inflated the market price of the Company’s securities.

110. (a) During the Class Period, Newman participated in the operation and


conduct of the Company’s business affairs. Because of Newman’s senior positions, he knew the



(b) As a director of a publicly traded company, Newman had a duty to


stock options and executive compensation and to promptly correct any public statements issued



Company, Newman was able to, and did, control the contents of press releases which the




34


financial condition. Throughout the Class Period, Newman exercised his power and authority to

cause the company to engage in the wrongful acts complained of herein. Newman, therefore, was




111. (a) During the Class Period, Murphy participated in the operation and


conduct of the Company’s business affairs. Because of Murphy’s senior positions, he knew the



(b) As a director of a publicly traded company, Murphy had a duty to





Company, Murphy was able to, and did, control the contents of press releases which the


financial condition. Throughout the Class Period, Murphy exercised his power and authority to

cause the Company to engage in the wrongful acts complained of herein. Murphy, therefore,




112. (a) During the Class Period, Grafstein participated in the operation and


conduct of the Company’s business affairs. Because of Grafstein’s senior positions, he knew the





35


(b) As a director of a publicly traded company, Grafstein had a duty to





Company, Grafstein was able to, and did, control the contents of press releases which the


financial condition. Throughout the Class Period, Grafstein exercised his power and authority to

cause the company to engage in the wrongful acts complained of herein. Grafstein, therefore,




113. (a) During the Class Period, Walters participated in the operation and


conduct of the Company’s business affairs. Because of Walters’s senior positions, she knew the



(b) As a director of a publicly traded company, Walters had a duty to




(c) Because of her position of control and authority as a director of the

Company, Walters was able to, and did, control the contents of press releases which the


financial condition. Throughout the Class Period, Walters exercised her power and authority to

cause the Company to engage in the wrongful acts complained of herein. Walters, therefore was




36


In this capacity, she participated in the unlawful conduct alleged which artificially inflated the


114. (a) During the Class Period, Alexander participated in the operation and


conduct of the Company’s business affairs. Because of Alexander’s senior positions, he knew

the adverse non-public information about the Company’s financial condition, stock options,


(b) As a senior officer of a publicly traded company, Alexander had a duty to





Company, Alexander was able to, and did, control the contents of press releases which the


financial condition. Throughout the Class Period, Alexander exercised his power and authority

to cause the company to engage in the wrongful acts complained of herein. Alexander, therefore




115. (a) During the Class Period, Lewis participated in the operation and


conduct of the Company’s business affairs. Because of Lewis’s senior positions, he knew the



(b) As a senior officer of a publicly traded company, Lewis had a duty to





37




Company, Lewis was able to, and did, control the contents of press releases which the Company


condition. Throughout the Class Period, Lewis exercised his power and authority to cause the

company to engage in the wrongful acts complained of herein. Lewis, therefore was a




116. In particular, each of these defendants had direct and supervisory involvement in

the day-to-day operations of the Company and, therefore, is presumed to have had the power to

control or influence the particular transactions giving rise to the securities violations as alleged

herein, and exercised the same.

117. As set forth above, Jabil and the Individual Defendants each violated Section

10(b) and Rule 10b-5 by their acts and omissions as alleged in this complaint. By virtue of their

positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of

the Exchange Act.

118. As a direct and proximate result of the Individual Defendants’ wrongful conduct,

plaintiff and other members of the Class suffered damages in connection with their purchases of

the Company’s securities during the Class Period.

COUNT III

(Violations of Section 14(a) of the Exchange Act and Rule 14 a-9 Promulgated Thereunder Against All Defendants)

119. Plaintiff repeats and restates each and every allegation contained above as if fully

set forth herein, except allegations that Defendants made untrue statements of material facts and




38

omissions intentionally or with deliberate recklessness. For the purposes of this claim, Plaintiff

asserts only strict liability and negligence claims and expressly disclaims any claim of fraud or

intentional misconduct.

120. Jabil’s proxy statements were required to disclose the Company’s executive

officers’ and directors’ direct and indirect compensation, including a description of stock options

granted to these individuals by the Company.

121. While Jabil’s proxy statements during the Class Period did provide information

about executive officers’ and directors’ compensation and the grant of stock options, the proxy

statements misrepresented that the stock options’ exercise prices would be the Company’s

market price on the date of the granting of the options, when in fact the options were backdated

to a date when the Company’s stock price was lower than on the actual grant date. The

backdating of the option grants meant that, when exercised, the Company received less for the

stock, and the difference between the Company’s stock price on the actual date of the option

grants and the lower, backdated price, should have been disclosed as additional compensation to

the Individual Defendants. Thus, the amounts of the Individual Defendants’ compensation were

materially understated.

122. Defendants solicited proxies from shareholders for the election of directors each

year during the Class Period. Because the proxy statements omitted to set forth the material

information that option grants were being and had been backdated, the proxy statements

misrepresented material information about the exercise price of the stock options granted to the

Company’s executive officers and directors and their executive compensation.

123. Defendants negligently omitted the material facts about option grant backdating

and negligently misrepresented the terms of the Individual Defendants’ compensation and

management integrity. These facts would have been material to a reasonable investor or

shareholder in considering how to vote.

124. In reliance on the false and misleading proxy statements, plaintiff and other

members of the Class voted for the Individual Defendants as directors, which allowed the




39

Individual Defendants to cash in their backdated options, to the detriment of the Company and its

shareholders.

125. The materially false and misleading proxy statements caused the election of the

Individual Defendants and allowed them to cash in their backdated options at prices lower than

they should have been.

126. At the time of the materially false and misleading proxy statements regarding

stock options and executive compensation, plaintiff and other members of the Class were

ignorant of the true facts. Had plaintiff and the other members of the Class known the facts

about backdated option grants and executive compensation that were not disclosed by

defendants, plaintiff and other members of the Class would not have voted for the Individual

Defendants as directors.

127. By virtue of the foregoing, defendants have violated Section 14(a) of the

Exchange Act, and Rule 14 a-9 promulgated thereunder.

128. As a direct and proximate result of defendants’ wrongful conduct, plaintiff and

the other members of the Class suffered injury in connection with their proxy voting during the

Class Period.

Prayer For Relief

WHEREFORE, plaintiff prays for relief and judgment, as follows:

A. Determining that this action is a proper class action, designating plaintiff as Lead

Plaintiff and certifying plaintiff as Class Representative under Rule 23 of the Federal Rules of

Civil Procedure and plaintiff’s counsel as Lead Counsel;

B. Awarding compensatory damages in favor of plaintiff and the other class

members against the defendants for all damages sustained as a result of defendants’ wrongdoing,

in an amount to be proven at trial, including prejudgment and post-judgment interest thereon;

C. Awarding plaintiff and the Class their reasonable costs and expenses incurred in

this action, including counsel fees and expert fees; and




40

D. Such other and further relief as the Court may deem just and proper.

Demand For Trial By Jury

Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, plaintiff hereby demands

trial by jury of all issues that may be so tried.

Dated: September 15th, 2006 MALMAN, MALMAN & ROSENTHAL 4040 Sheridan Street Hollywood, Florida 33021-3536 Tel. 954-322-0065 Fax. 954-322-0064 By: s/ Jonathan H, Rosenthal Jonathan H. Rosenthal Florida Bar No. 126764 Email: [email protected] By: s/ Myles H. Malman Myles H. Malman Florida Bar No. 776084 Email: [email protected] KOHN, SWIFT, & GRAF, P.C. One South Broad Street Suite 2100 Philadelphia, PA 19107 Tel. 215-238-1700 Fax. 215-238-1968 By: s/ Denis F. Sheils Denis F. Sheils (pro hac vice application pending) Trial Counsel Joseph C. Kohn (pro hac vice application pending) Trial Counsel William B. Hoese (pro hac vice application pending) Trial Counsel Attorneys for Plaintiff The Edward J. Goodman Life Income Trust


mailto:[email protected]

mailto:[email protected]

Documents

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ...securities.stanford.edu/filings-documents/1036/JBL... · President of the Company from 1988 to 1999. 9. Defendant Timothy