In Re Teledyne Defense Contracting Derivative Lit.

MEMORANDUM OPINION ON DEFENDANTS’ MOTIONS TO DISMISS

I. INTRODUCTION

This is a shareholders derivative action brought pursuant to Fed.R.Civ.P. 23.1 by shareholders of Nominal Defendant Tele-dyne, Inc. (the “Corporation”). This action is brought in the name of and for the benefit of the Corporation against its Board of Directors, as well as certain of its present and/or former officers. The Second Amended Complaint (“SAC”) alleges a continuous course of illegal conduct in which all Defendants have participated directly, as part of a conspiracy and/or by aiding and abetting one another.

Specifically, the SAC describes a pattern of criminal and otherwise fraudulent conduct by several of the Corporation’s subsidiaries and units, including: (1) the sale of between 9 and 12 million suspect or defective electromagnetic switches (known as relays) by Tele-dyne Relays to the United States government over a period of years, resulting in various civil and criminal investigations, charges, and complaints, including a False Claims Act lawsuit pending before this Court and a guilty plea (including a $17.5 million fine) by the Corporation to federal criminal charges of 35 counts of making…