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Spotlight: Early Discovery Blocked in Shareholder Suit

November 01, 1996

In a decision hailed as a victory for companies battling class-action lawsuits, a federal appeals court in San Francisco blocked early discovery in a shareholder suit against Alliance Semiconductor Corp. of San Jose. The 9th Circuit Court of Appeals ruled that shareholders may not obtain "initial disclosures" from companies they are suing while courts are considering motions to dismiss suits against them. Alliance is being sued by shareholders who claim the computer chip maker defrauded investors by issuing overly optimistic sales forecasts.

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