Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 1 of 36 Page ID #:5

ROBINS OBLLER RUJDMAN

& DOWD LLP
DARkEN J. ROBBNS (168593)
DAVID C. WALTON (167268
655 West Broadway Suite 190
San Diego, CA 921
Telephone: 619/231-1058
619/231-7423 (fax)
dauenr@rgrdlaw.com
davewrgrd1aw. corn
- and -
SAMUEL H. RUDMAN
MARIO ALBA JR.
58 S Service Road, Suite 200
Melville, NY 11747
Telephone: 631/367-7100
631/67-1173 (fax)
srudmanrgrdlaw.com
malba@fgrdiaw.com
Attorneys for Plaintiff
KHALIL ZAGHIAN, Individually and
on Behalf of All Others Similarly
Situated,
Plaintiff,
Vs.
THO INC. BRIAN J. FARR:ELL and
PAUL J. PUCINO,
Defendants.
2U;2JLr!!s

28
OLE
Jr
OF CLlF
SANT4
MiA
VIA FA12
- 5227 GAl? (JEM)
No.
CLASS ACTION
COMPLAINT FOR VIOLATION OF
THE FEDERAL SECURITIES LAWS
DEMAND FOR JURY TRIAL.
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[Additional counsel app oar on signature page.]
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 2 of 36 Page ID #:6
1

Plaintiff alleges the following based upon the investigation of plaintiff's

2 counsel, which included a review of United States Securities and Exchange
3 Commission ("SEC") filings by THQ Inc. ("THQ" or the "Company"), as well as
4 regulatory filings and reports, securities analysts' reports and advisories about the
5
Company, press releases and other public statements issued by the Company, and
6 media reports about the Company, and plaintiff believes that substantial additional
7 evidentiary support will exist for the allegations set forth herein after a reasonable
8 opportunity for discovery.

JURISDICTION AND VENUE

10

1.
The claims asserted herein arise under and pursuant to 10(b) and 20(a)
11 of the Securities Exchange Act of 1934 ("Exchange Act")
[15 U.S.C. 78j(b) and
12 78t(a)J and Rule lob-S promulgated thereunder by the SEC [17 C.F.R. 240.10b-5].

13

2.
This Court has jurisdiction over the subject matter of this action pursuant
14 to 28 U.S.C. 1331 and 27 of the Exchange Act.

15

3.
Venue is proper in this District pursuant to 28 U.S.C. 1391(b), because
16 defendants maintain an office in this District and many of the acts and practices
17 complained of herein occurred in substantial part in this District.

18

4.
In connection with the acts alleged in this complaint, defendants, directly
19 or indirectly, used the means and instrumentalities of interstate commerce, including,
20 but not limited to, the mails, interstate telephone communications and the facilities of
21 the national securities markets.

22

NATURE OF THE ACTION

23

5.
This is a federal securities class action on behalf of purchasers of the
24 common stock of THQ between May 3, 2011 and February 3, 2012, inclusive (the
25 "Class Period"), seeking to pursue remedies under the Exchange Act.
26
27
- 1 -
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1

PARTIES
2

6. Plaintiff Khalil Zaghian, as set forth in the accompanying certification

3 and incorporated by reference herein, purchased the common stock of THQ during the
4 Class Period and has been damaged thereby.
5

7. Defendant THQ develops, publishes, and distributes interactive

6
I
entertainment software for various game systems, personal computers ("PC"),
7 wireless devices, and the Internet.
8

8. Defendant Brian J. Farrell ("Farrell") was, at all relevant times, Executive

9 Chairman, Chief Executive Officer and President of THQ.
10

9. Defendant Paul J. Pucino ("Pucino") was, at all relevant times, Chief

11 Financial Officer and Executive Vice President of THQ.
12

10. The defendants referenced above in 8-9 are referred to herein as the
13 I "Individual Defendants."
14

11. During the Class Period, the Individual Defendants, as senior executive
15 officers and/or directors of THQ, were privy to confidential and proprietary
16 information concerning THQ, its operations, finances, financial condition and present
17 and future business prospects. The Individual Defendants also had access to material
18 adverse non-public information concerning THQ, as discussed in detail below.
19 Because of their positions with THQ, the Individual Defendants had access to non-
public information about its business, finances, products, markets and present and
21 future business prospects via internal corporate documents, conversations and
22 connections with other corporate officers and employees, attendance at management
23 and/or board of directors meetings and committees thereof and via reports and other
24 information provided to them in connection therewith. Because of their possession of
25
such information, the Individual Defendants knew or recklessly disregarded that the
26 adverse facts specified herein had not been disclosed to, and were being concealed
27 from, the investing public.
28
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1

12. The Individual Defendants are liable as direct participants in the wrongs
2 complained of herein. In addition, the Individual Defendants, by reason of their status
3 as senior executive officers and/or directors, were "controlling persons" within the
4 meaning of 20(a) of the Exchange Act and had the power and influence to cause the
5 Company to engage in the unlawful conduct complained of herein. Because of their
6 positions of control, the Individual Defendants were able to and did, directly or
7 indirectly, control the conduct of THQ's business.
8

13. The Individual Defendants, because of their positions with the Company,
9
I
controlled and/or possessed the authority to control the contents of its reports, press
10 releases and presentations to securities analysts and through them, to the investing
11 public. The Individual Defendants were provided with copies of the Company's
12 reports and press releases alleged herein to be misleading, prior to or shortly after their
13 issuance and had the ability and opportunity to prevent their issuance or cause them to
14 be corrected. Thus, the Individual Defendants had the opportunity to commit the
'51 fraudulent acts alleged herein.
16

14. As senior executive officers and/or directors and as controlling persons of

'71 a publicly traded company whose common stock was, and is, registered with the SEC
18 pursuant to the Exchange Act, and was, and is, traded on the NASDAQ Stock Market
19 ("NASDAQ") and governed by the federal securities laws, the Individual Defendants
20 had a duty to promptly disseminate accurate and truthful information with respect to
21 THQ's financial condition and performance, growth, operations, financial statements,
22 business, products, markets, management, earnings and present and future business
23 prospects, and to correct any previously issued statements that had become materially
24 misleading or untrue, so that the market price of THQ common stock would be based
25 upon truthful and accurate information. The Individual Defendants'
26 misrepresentations and omissions during the Class Period violated these specific
27 requirements and obligations.
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1

15. The Individual Defendants are liable as participants in a fraudulent

2 scheme and course of conduct that operated as a fraud or deceit on purchasers of THQ
3 common stock by disseminating materially false and misleading statements and/or
4
I
concealing material adverse facts. The scheme: (i) deceived the investing public
5
I
regarding THQ's business, operations and management and the intrinsic value of THQ
common stock; (ii) enabled the Company to enter into a credit facility whereby the
7
I
Company could borrow up to $75 million in capital; and (iii) caused plaintiff and
8
I
members of the Class to purchase THQ common stock at artificially inflated prices.

CLASS ACTION ALLEGATIONS

10

16. Plaintiff brings this action as a class action pursuant to Federal Rule of
11 Civil Procedure 23(a) and (b)(3) on behalf of a class consisting of all persons or
12 entities who purchased the common stock of THQ during the Class Period (the
13 "Class"). Excluded from the Class are defendants and their families, the officers and
14 directors of the Company, at all relevant times, members of their immediate families
15 and their legal representatives, heirs, successors or assigns and any entity in which
16 defendants have or had a controlling interest.

17

17. The members of the Class are so numerous and geographically dispersed
18
I
that joinder of all members is impracticable. THQ stock was actively traded on the
19 NASDAQ. While the exact number of Class members is unknown to plaintiff at this
20 time and can only be ascertained through appropriate discovery, plaintiff believes that
21 there are hundreds of members in the proposed Class. Record owners and other
22 members of the Class may be identified from records maintained by THQ or its
23 transfer agent and may be notified of the pendency of this action by mail, using the
24 form of notice similar to that customarily used in securities class actions.
25 18. Plaintiff's claims are typical of the claims of the members of the Class as
261 all members of the Class are similarly affected by defendants' wrongful conduct in
27 violation of federal law that is complained of herein.
A
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1

19. Plaintiff will fairly and adequately protect the interests of the members of
2 the Class and has retained counsel competent and experienced in class and securities
3 litigation.
4

20. Common questions of law and fact exist as to all members of the Class
5 and predominate over any questions solely affecting individual members of the Class.
6 Among the questions of law and fact common to the Class are:
7

(a) whether the federal securities laws were violated by defendants'

8 acts as alleged herein;
9

(b) whether statements made by defendants to the investing public

10 misrepresented material facts about the business, operations and management of THQ;
11

(c) whether the price of THQ common stock was artificially inflated
12 during the Class Period; and
13

(d) to what extent the members of the Class have sustained damages
14 and the proper measure of damages.
15

21. A class action is superior to all other available methods for the fair and
16 efficient adjudication of this controversy since joinder of all members is
17 impracticable. Furthermore, as the damages suffered by individual Class members
18 may be relatively small, the expense and burden of individual litigation make it
19 impossible for members of the Class to individually redress the wrongs done to them.
20 There will be no difficulty in the management of this action as a class action.
21

SUBSTANTIVE ALLEGATIONS
22

22. Defendant THQ describes itself as a "leading worldwide developer and

23 publisher of interactive entertainment software. The company develops its products
24 for all popular game systems, personal computers and wireless devices."
25

23. THQ develops games for the three major game consoles: Microsoft's
26 Xbox 360, Sony's Playstation 3 ("Playstation 3" or "PS3"), and Nintendo's Wii. Each
27 system generally carries a specific demographic fan base. For example, Xbox 360 and
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1 Playstation 3 attract generally more mature audiences, while the Wii is used by
2 younger children, families, and casual garners.

24. On August 17, 2010, the Company issued a press release announcing that
4 it was launching its
uDrawTM GameTabletTM for the Nintendo WiiTM gaming system
5 during the 2010 holiday season. According to the Company, the device is a "small
6 white handheld tablet with a 4" x 6" drawing space and detachable, pressure-sensitive
7 stylus designed to offer more subtle control and precision than available on the
8 traditional Wii RemoteTM."

25. On November 15, 2010, defendants issued a press release announcing

10 that the uDraw GameTabletTM was available at retailers for the 2010 holiday season.
11 The tablet would be sold at a suggested retail price of $69.99 and would be bundled
12 with the uDraw
StudioTM
video game. Moreover, the Company announced that two
13 additional video games would be available to the public - PictionaryTM and Dood's
14 Big AdventureTM - at a suggested retail price of $29.99 each.

15

26. The Class Period begins on May 3, 2011. On that date, THQ issued a
16 press release announcing its financial results for the fiscal fourth quarter and year-end
17 2011, the period ended March 31, 2011. For the quarter, the Company reported
18 GAAP net sales of $124.2 million and a GAAP net loss of $44.1 million, or a $0.65
19 GAAP diluted loss per share. Moreover, based on the purported success of the uDraw
20 GameTabletTM for the Nintendo
WiiTM,
defendants announced that THQ planned to
21 develop its uDraw GameTabletTM for the Microsoft Xbox 360 and Sony Playstation 3
22 during the 2011 holiday season. Defendant Farrell, commenting on the results, stated,
23 in pertinent part, as follows:

24

"THQ posted strong fourth quarter results primarily driven by the

25

success of Homefront .... We have already shipped 2.6 million units, a

26

solid start for this new franchise, which kicks off the strongest pipeline

27

of AAA core games in our history. We also continued to grow the

28

uDraw franchise with the successful international debut of this

S
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 8 of 36 Page ID #:12

compelling new tablet. Today, I am pleased to announce that we plan

to bring exclusively designed uDraw Game Tablets to Microsoft Xbox

3 60 and Sony PS3 platforms this holiday."

We expect to generate significant growth, profitability and

cash in fiscal 2012, driven by the latest installments of multi-million unit

selling franchises, Saints Row, Red Faction, Warhammer 40,000, MX

vs. ATV, UFC, WWE, and uDraw. We are creating a digital ecosystem

for each of these games that will continue to keep consumers engaged

and generate additional revenue opportunities beyond the initial retail

10

sale. We also continue to aggressively invest in our digital initiatives,

11

including online social and mobile offerings as well as our Warhammer

12

40,000: Dark Millennium Online MMO."

13
With regard to the uDraw GameTablet, the press release stated, in pertinent part, as
14 follows:

15

THQ brought to market the uDraw GameTablet, a first-of-its-kind,

16

innovative new gaming accessory, which hit retail store shelves

17

worldwide in fiscal 2011, gaining instant popularity for its creativity and

18

unique functionality. Today the company announced plans to bring

19

exclusively designed uDraw Game Tablets to Microsoft Xbox 3 60 and

20

Sony PS3 platforms this holiday.

21

27.
Following the issuance of the press release, THQ held a conference call
22
with analysts and investors to discuss the earnings announcement and the Company's
23
operations. With regard to the Company's outlook, defendant Farrell, stated, in
24 pertinent part, as follows:

25

As we conclude fiscal 2011, we have positioned THQ for future growth

26

and profitability, based on the strategy we outlined over two years ago.

27

In fiscal '10, we drove a dramatic turnaround. Fiscal '11 was our

28

investment year as we developed a pipeline of quality products for this

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year and beyond and as Paul will discuss in a few minutes, our guidance

for fiscal '12 demonstrates that we believe the continued execution on

our strategy will return THQ to significant growth, profitability and cash

generation.

* * *

Consistent with the strategy that we've outlined for you over the

last two years, we were expecting significant growth in THQ's fiscal '12

and '13. Our growth will be driven by three focus areas, one, a steady

flow of core game franchises; two, expansion of our casual and lifestyle

10

products like our uDraw Game Tablet; and three, increasing digital

11

revenues. In fiscal '12 we plan to launch the strongest core game lineup

12

in THQ's history. Our lineup includes the latest installment of multi-

13

million unit selling franchises. MX versus ATV Alive slated for May

14

10th, Red Faction Armageddon scheduled for June 7, UFC Personal

15

Trainer set to launch June 14, Warhammer 40,000 Space Marine slated

16

for August, Saint's Row III at holiday, an all new WWE game also for

17

holiday and UFC 3 scheduled to return in the fourth quarter of fiscal '12.

18

* * *

19

In conclusion, with a strong pipeline of games, we are well

20

positioned for fiscal '12 and beyond. I'm most pleased with our growing

21

portfolio of owned AAA franchises which generate high margins and

22

provide a platform for extensive digital revenue opportunities. We plan

23

to sequel and extend these franchises to fuel consistent growth over the

24

long term. This pipeline should drive significant sales and improve

25

margins which will increase profitability and cash generation. And, as

26

we have said in the past, we will continue to look for efficiencies in our

27

operating structure. I want to thank and acknowledge everyone at THQ

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1

for their continued efforts in bringing THQ' s best product pipeline in our
2

history to market.
3
I
With regard to the Company's outlook, defendant Pucino stated, in pertinent part, as
4 I follows:
5

Now, I'd like to share with you our guidance and perspective on
6

our business starting with the fiscal '12 full year. We expect to report
7

fiscal '12 net sales in the range of $925 million to $1 billion which
8

represents a 15% to 25% increase from fiscal '11. We expect to report

9

net income per share in the range of $0.25 to $0.40 versus a loss of $0.24
10

for fiscal '11. The three key drivers of fiscal '12 financial results are,
11

one, the strongest lineup of AAA titles in the history of the Company;
12

two, uDraw for Wii, X-Box 36 and PS3; and three, increasing digital
13

revenues.
14

Now, let's take a moment to review the flow of results throughout

15

the year. Fiscal '12 will be characterized by significant investments in

16

the first half of the year including the timing of capitalization based on
17

where development projects are in their life cycle and heavy investments
18

in product development for digital releases which are not currently

19

capitalized under accounting rules. It also reflects investment in

20

marketing for current period releases and for titles launching in the
21

second half of the year and early fiscal '13. Also, our software
22

amortization will be significantly higher as a percent of net sales in the

23

first half of the year reflecting amortization for titles released late in the
24

fourth quarter of fiscal '11, as well as heavy amortization associated with

25

release of eight key titles in the first half of this year versus two key titles
26

for the prior year first half.

27

Moving on to the first quarter of fiscal '12, we expect to report net

28

sales in the range of $165 million to $180 million compared with $160
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million a year ago. Key titles driving our first quarter results this year

include Red Faction Armageddon, MX versus ATV Alive and UFC

Personal Trainer. We expect to report a net loss per share in the range of

$0.50 to $0.60. This compares with a net loss per share of $0.21 a year

ago. Our share count for the quarter is approximately 69 million. We

expect Q2 revenues to be nearly double last year's $70 million.

Warhammer 40,000 Space Marine and continued revenues from first

quarter releases are the key drivers for the quarter. We expect to report

second quarter operating results moderately better than Q of fiscal '12.

10

As we head into holiday, we anticipate Saint's Row III, WWE and

11

uDraw for three platforms to deliver significantly higher net sales and

12

profitability in our fiscal third quarter than the prior year. Finally, we

13

are expecting a profitable Q4 with the return of the next installment of

14

our UFC franchise.

15

Accordingly, our operating model for fiscal '12 is as follows.

16

Product costs as a percent of net sales, mid-3 0%s; software amortization

17

as a percent of net sales, approximately 20% and, once again, software

18

amortization will be significantly higher as a percent of net sales in the

19

first half of the year than in the second half. License amortization and

20

royalties as a percent of net sales about 5% to 6%. Product development

21

expense of about $80 million for the year with about $45 million of

22

expense in the first half of the year and $35 million in the second half of

23

the year. Selling and marketing expense of approximately 16% to 18%

24

of net sales for the year with significantly higher percentages in the first

25

half of the year. G&A of approximately $50 million. Net interest

26

expense of about $6 million, tax rate of 15% and finally share count of

27

about 71 million.
28
(SE
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1

28. In response to these announcements, on May 4, 2011, the price of THQ

2 stock rose $0.30 per share, or 7%, to close at $4.42 per share, on heavy trading
3 I volume.
4

29. On June 3,2011, the Company issued a press release announcing that its
5 uDraw GameTablet "will come to the Xbox 360 and PlayStation3 consoles" in the
6 fall of 2011. Defendant Farrell, commenting on the launch, stated, in pertinent part, as
7 I follows:
8

"As soon as we introduced uDraw last year, Xbox 360 and PS3 fans
9

began asking when they could experience it, too - and beginning this
10

fall, they can.... The uDraw offers amazing innovation and opens new
11

doors of artistic possibility. There's no console-based artistic tool like

12

it."
13

30. On July 27, 2011, THQ issued a press release announcing its financial
14 results for the fiscal first quarter of 2012, the period ended June 30, 2011. For the
15 quarter, the Company reported net sales of $195.2 million, and a net loss of $38.4
16 million, or $0.56 per diluted share. Defendant Farrell, commenting on the results,
17 stated, in pertinent part, as follows:
18

"We are disappointed in our first quarter financial performance.

19

Sales of Red Faction: Armageddon and our licensed kids titles were
20

below our expectations, and the late release of LTC Personal Trainer
21

also adversely impacted the quarter. ... Despite a light first half, we
22

are looking forward to a strong and profitable second half, including

23

what we expect to be the biggest third quarter, both in revenue and

24

earnings per share, in our company's history, with proven franchises

25

Saints Row, WWE and the uDraw GameTablet, all launching in

26

November."
27
I
With regard to the uDraw GameTablet, the press release stated, in pertinent part, as
28 I follows:
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1

Building on last year's successful launch of the uDraw GameTablet for

2

Wii, THQ unveiled plans to bring

uDrawTM
to Xbox 360 and
3

PlayStation 3 high-definition consoles this fall with new creative

4

functions and touch-screen features. The company is in production of a

5

number of new uDraw titles, including Disney Princess, Marvel Super

6

Hero Squad, and upgraded versions of our uDraw

StudioTM
software and
7

Pictionary.
8

31. Following the press release, THQ held a conference call with analysts
9 and investors to discuss the earnings announcement and the Company's operations.
10 With regard to the Company's outlook, defendant Farrell, stated, in pertinent part, as
11 I follows:
12

We expect to demonstrate positive leverage in the second half of the

13

year, with strong revenues and profitability driven by our robust lineup
14

of proven franchises, including Saints Row, uDraw, and the latest

15

editions from WWE and UFC. In fact, we now expect our fiscal third
16

quarter to be the biggest in terms of both revenue and profitability in

17

the Company's history.

18

* * *
19

Thanks, Paul. Now, I'd like to drill down on how we intend to

20

deliver our strong second half performance. Our confidence comes

21

from our upcoming titles based on four proven franchises; Saints Row
22

the Third, WWE '12, uDraw for high-def consoles and Wii, and UFC
23

Undisputed 3. As we recently announced, Saints Row the Third is

24

scheduled to hit stores on November 15, and based on the positive

25

response we received from our Retail Partners at E3, and strong pre-
26

orders, we feel this title has great potential. This high quality game is
27

uniquely positioned in the holiday window, and we intend to support it

28

with a robust and innovative marketing and PR campaign. Also this

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holiday, we are launching WWE '12. Our signature WWE experience

has been revamped with new technology and positioning, and more

marketing synergy and integration with our long-time licensing partner.

This title is being recognized by the game press as the next generation of

WWE video games, and we're getting very positive fan response to the

upgrades we've made.

We believe uDraw will perform well at holiday. We're gearing

up for the launch in November of a slimmer and sleeker design of this

innovative gaming accessory for the PS3 andX-Box 3 60, along with a

10

new updated version for the Wii. Throughout fiscal '12 we plan to

11

expand the uDraw library of games with the debut of 6 new titles. They

12

include upcoming games based on the popular Disney Princess brand, a

13

Marvel superhero squad title, and upgraded graded versions of our

14

uDraw studio software, and Pictionary. As we discussed at E3, we're

15

also working with Disney to bring the magic of classic Disney characters

16

and animation to the world of uDraw. To round out the year, our fiscal

17

fourth quarter will be anchored by the next major installment of our

18

multi-million unit UFC franchise, UFC Undisputed 3. The new game is

19

being enhanced to include new features, including a new mode based on

20

the edgy pride fighting league, and game play that appeals to both the

21

core and casual gamer. Our confidence in this title is underscored by the

22

fact that the first 2 iterations of UFC have shipped more than 7 million

23

units life-to-date, and this release will be hitting shelves more than 20

24

months after the last one.

25 In response to'a question regarding the uDraw GameTablet sales forecast, defendant
26 Farrell responded, in pertinent part, as follows:

27

[ARVIND BHATIA:] One more question, Brian. On uDraw,

28

when you put it all together with the additional platforms, and the attach
- 13 -
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rate that you expect to get on the Wii, et cetera, how much growth, big

picture, are you expecting on that franchise versus last year? Can you

give us a ballpark?

[FARRELL:] That's a good question. I'm not sure people really

focused on this yet. Let me remind everyone, last year we had the

uDraw on the Wii format only, and only in North America. And in Q3,

the holiday quarter - let me remind everyone that the uDraw is a very

seasonally sensitive product, it's obviously very good for children, gift

giving, family, that kind of thing, so it performed very well in Q3 of last

10

year. As we think about this year, we've actually planned Wii

11

hardware units down, yet with the addition of both 3 60 andPS3 , and a

12

global launch of all three platforms, obviously there's a fairly

13

significant increase in the amount of uDraw hardware we plan in this

14

fiscal third quarter.

15

32. In reaction to the announcement, on July 28, 2011, the price of THQ
16 stock fell $0.48 per share, or 15%, to close at $2.72 per share, on heavy trading
17 volume. However, defendants continued to conceal the true scope of the problems at
18 the Company.

19

33. On September 28, 2011, the Company issued a press release announcing
20 that it had "entered into a four-year, asset-based credit facility with Wells Fargo
21 Capital Finance, LLC. The credit facility provides for borrowings up to $50 million
22 for working capital requirements, letters of credit and other general corporate
23 purposes, and increases to $75 million during the upcoming peak sales period."
24 Defendant Pucino, commenting on the new credit facility, stated, in pertinent part, as
25 I follows:

26

"We are pleased to establish this new, larger credit facility with

27

Wells Fargo.... This new line, along with THQ's capacity to generate
28
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strong cash flows, provide the company with substantial financial
flexibility as it executes on plans for growth in the coming years."
34. On November 2, 2011, THQ issued a press release announcing its
financial results for the fiscal second quarter of 2012, the period ended September 30,
5
2011. For the quarter, the Company reported net sales of $146.0 million, and a net
6 loss of $92.4 million, or $1.35
per diluted share. Defendant Farrell, commenting on
7 the results, stated, in pertinent part, as follows:

"We are encouraged that our second quarter performance

exceeded our expectations, particularly in a quarter with a light release

10

schedule.... Our two biggest quarters of the year remain ahead of us,
11

and we are focused on execution. In Q3 we are planning for the largest

12

quarter in our history, in terms of sales and earnings, driven by

Saints

13

Row: The Third, the uDraw GameTablet, and WWE '12. With UFC

14

Undisputed 3
launching in the fourth quarter, we are well-positioned to

15

deliver a strong second half of fiscal 2012."

16

35. Following the press release, THQ held a conference call with analysts
17
I
and investors to discuss the earnings announcement and the Company's operations.
18
I
With regard to the Company's outlook, defendant Farrell, stated, in pertinent part, as
19 1 follows:

20

We are executing on our plan, and are excited about our near term

21

slate of games, starting with the launch of Saints Row on November 15.

22

Retail and consumer reaction has been very positive, and pre-orders are

23

tracking more than 4 times those of Saints Row 2 at 2 weeks before

24

launch. In addition to Saints Row, we are introducing uDraw for the HD

25

consoles, as well as new version for the Wii, and a new WWE fighting

26

game, featuring upgraded technology and a new look and feel. In the

27

fiscal fourth quarter, we intend to launch the newly enhanced and more

28

approachable UFC Undisputed 3.

- 15 -
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 17 of 36 Page ID #:21
1
I
Defendant Pucino, commenting on the Company's guidance for the third quarter,
2 stated, in pertinent part, as follows:

Now I would like to share with you our guidance for the balance

of year. Starting with the third quarter of fiscal 2012, which we expect

to be the largest quarter for sales and earnings in the Company's history.

We expect to report net sales in the range of $510 million to $550

million, compared with $323 million a year ago. Key titles driving our

results in the quarter include Saints Row The Third, uDraw and WWE

'12. We expect to report third quarter earnings per share in the range of

10

$1.20 to $1.50.
This compares with earnings per share of $0.42 one year

11

ago.
12 With regard to the sales forecast for the uDraw GameTablet, defendant Farrell stated,
13 in pertinent part, as follows:

14

November 15 is also the date of the expansion of our successful

15

uDraw game tablet, across all three gaming platforms in North America,

16

Europe and Asia-Pacific. uDraw will come bundled with brand new

17

instant artist software, and will be merchandised with 6 other titles,

18

providing our consumer with a wide choice for this innovative game

19

tablet. uDraw was recently named to Toy Insiders Hot 20 list of the

20

most anticipated toys of this holiday season. And again, we're looking

21

forward to uDraw being a popular gift item. Like last year, we expect

22

sales of uDraw to ramp up from release through the holidays. Here's

23

how we're thinking about uDraw. You will recall that last year, we

24

introduced uDraw only on the Wii and only in North America, and while

25

supply constrained, we shipped 1.3 million units in our third quarter.

26

For the third quarter offiscal '12, we expect to ship less than double

27

that amount across all 3 consoles, and across our 3 major geographic

28

territories.
-16-
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 18 of 36 Page ID #:22
36. In reaction to these announcements, on November 3, 2011, the price of
THQ stock rose $0.26 per share, or 12%, to close at $2.39 per share, on heavy trading
I volume.
37.
The statements referenced above in 26-27,29-31 and 34-3 5 were each
5
materially false and misleading when made because they misrepresented and failed to
6 disclose the following adverse facts, which were known to defendants or recklessly
7 disregarded by them:
8

(a) that demand for the Company's uDrawTMGameTabletTM was well

9 below internal expectations and the Company would have to take back, or provide
10 price protection, on hundreds of thousands of uDraw units that it had sold;
11

(b) that the uDrawTMGameTabletTM for the Microsoft Xbox 360 and
12 Sony PlayStation 3 was a failure and not being purchased by owners of those
13 gaming systems; and
14

(c)
as a result of the foregoing, defendants lacked a reasonable basis
15 for their positive statements about the Company and its prospects.
16

38. On December 7, 2011, THQ issued a press release updating its outlook
17 for the fiscal third quarter, the period ending December 31, 2011. For the quarter, the
18 Company expected to report net sales of approximately 25% below its previously
19 announced guidance of $510 million to $550
million, due to "weaker-than-expected
20 initial sales of its uDraw GameTablet for Xbox 360@ and PlayStation 3."
21 Defendant Farrell, commenting on the reduced outlook, stated, in pertinent part, as
22 1 follows:
23

"Despite uDraw's strong success on the Wii in fiscal 2011 and

24

market research indicating strong demand for uDraw on Xbox 360 and
25

PlayStation 3, initial sales of our uDraw tablet and software on these

26

high-definition platforms have been weaker than expected.... WWE

27

'120 and Saints Row: The ThirdTM are expected to perform at or

28

better than the levels we discussed on our fiscal 2012 second quarter
-17-
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 19 of 36 Page ID #:23

earnings call. As we continue to move through the third quarter, we are

focused on driving sales of our key holiday titles and maximizing

profitability."

39. In reaction to the announcement, on December 8, 2011, the price of THQ

5

I
stock fell $0.56
per share, or 38%, to close at $0.90 per share, on extremely heavy
6

trading volume. However, defendants continued to conceal the true scope of the
7

I
problems at the Company.

40. On January 25, 2012, the Company issued a press release announcing its
9

I
updated business strategy whereby the Company would exit traditional kids' licensed
10

I
video games and focus on its core video game franchises and digital initiatives for the
11

I
future. In that regard, defendant Farrell stated, in pertinent part, as follows:

12

"THQ will be a more streamlined organization focused only on

13

our strongest franchises.... The success of Saints Row: The Thi

rdTM

14

is an example of what our revised strategy and focus can achieve. We

15

have now shipped 3.8 million units globally and are currently expecting

16

to ship between five and six million units lifetime on this title.

17

Additionally, our robust digital content offerings for this game have

18

resulted in the highest digital revenue of any console title in our history."

19

41. Then, on February 2, 2012, THQ issued a press release announcing its
20

financial results for the fiscal third quarter of 2012, the period ended December 31,
21

2011. For the quarter, the Company reported net sales of $404.4 million, and a net
22

loss of $55.9
million, or $0.82 per diluted share. Moreover, the Company announced
23

that it took a $30.3 million impairment charge on "kids movie-based licenses."
24

Defendant Farrell, commenting on the third quarter results and new business strategy,
25

stated, in pertinent part, as follows:

26

"Saints Row* The

Third'M
and 1VWE '12 demonstrate the

27

strengths of THQ's core gaming capabilities. These titles performed at

28

or better than the expectations we shared during our last investor

Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 20 of 36 Page ID #:24
1

conference call, driven by favorable critical reviews, community

2

engagement and outstanding marketing efforts. ... Sales of the uDraw

3

GameTablet and related software, and other titles in the kids, family and
4

casual category were far weaker than anticipated, substantially reducing

5

our financial results for the quarter."

6

"We have since concluded an extensive review of our operations

7

to realign our business, focusing on our key franchises with the most
8

potential.... We are implementing a plan to bring costs in line with our

9

lower anticipated level of revenue. With our focused product plan,

10

leaner cost structure, cash balance, and existing credit facility, we

11

believe the company has adequate resources to execute on our plan and
12

deliver on our strong multi-year pipeline of games."

13

With regard to the Company's business realignment, the press release stated, in
14

I
pertinent part, as follows:
15

THQ announced recently that it is exiting development of

16

traditional kids' licensed console games. The company has concluded

17

negotiations with two licensors and is negotiating arrangements with two

18

others. The company is also substantially eliminating its ongoing

19

financial commitment with developers as it exits this business.

20

Additionally, THQ has no future commitments or plans to manufacture

21

uDraw hardware. THQ's strategy is to focus on its premium core and

22

fighting franchises and to expand its digital revenues.

23

As part of this business realignment, the company is implementing

24

initiatives to streamline its organization and cost structure. The company

25

currently expects these actions will result in a reduction in its annualized

26

run rate of selling, general and administrative expenses of approximately

27

$60 million, and a reduction of its annualized product development

28
_19-
Case 2

:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 21 of 36 Page ID #:25
1

expenditures of approximately $100 million, primarily due to its exit

2

from the kids' licensed console games category.

3

Total charges related to these actions are estimated at

4

approximately $11.0 million, of which $2.5 million are non-cash. The

5

majority of these charges are expected to be recorded by the end of the

6

2012 fiscal year and will be excluded from the company's non-GAAP
7

results.
8

42. Following the press release, THQ held a conference call with analysts
9 and investors to discuss the earnings announcement and the Company's operations.
10 With regard to the Company's third quarter results, defendant Farrell, stated, in
11 pertinent part, as follows:
12

On our last call we told you we anticipated that our third quarter would
13

be the largest in our Company's history. Unfortunately, we were

14

wrong. The disappointing performance of uDraw this holiday and

15

continued weakness in the kids' licensed category overshadowed the

16

very successful releases of Saints Row The Third and WWE 12. UDraw
17

hardware and software sales were approximately $100 million below

18

our plan and our other casual titles were approximate[lyJ $25 million
19

below plan substantially reducing our revenue and profit for the
20

quarter. We are confident that uDraw would resonate again this holiday
21

given last year's robust sell through and two independent studies
22

indicating we were addressing a sizable market on the HD platforms.

23

Our confidence was misplaced. What we had viewed to be a product

24

that would generate revenues and profits while we continued to build our
25

portfolio of core gaming franchises has instead created a catalyst for us

26

to evaluate our business from top to bottom.

27

Here's what we've done to address these issues. First, we have

28

ceased production of uDraw hardware and have developed a plan to

-20-
Case 2

:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 22 of 36 Page ID #:26

move remaining inventory through the channel. We have no other

remaining commitments with respect to uDraw. Second, last week we

announced the refinement of our strategy to focus exclusively on high

quality core games and connected experiences for our key franchises and

are in the process of exiting the traditional kids' video game business.

As part of our exit we have reached agreement with two of our licensors

and are in ongoing discussions with two others. Additionally, we have

substantially eliminated our development expenditures for this category.

These two actions have significantly reduced our financial commitments

10

as we exit this business.

11 With regard to uDraw GameTablet sales, defendant Pucino stated, in pertinent part, as
12 I follows:

13

Moving onto Q3 results, for the three months ended December 31,

14

2011, we reported net sales of $404 million. A 25% increase versus the

15

prior year Q3. In line with our revised guidance. Our Q3 sales [were]

16

driven primarily by our new releases, Saints Row The Third and WWE

17

12. Net sales [were] higher than the year ago quarter primarily due to

18

sales of Saints Row The Third because there was no comparable core

19

title in the year ago quarter. UDraw's under performance in the quarter

20

had the single biggest impact on our financial results. As Brian

21

mentioned, net sales of the tablet and related software were

22

approximately $100 million below our expectations. We shipped

23

approximately 1 million tablets in the quarter and sell through was

24

poor. Resulting in higher levels ofprice protection, inventory reserves

25

and retail concessions. To give you context, our quarterly earnings

26

would have more than doubled without uDraw. We believe we are

27

sufficiently reserved for units we have in inventory and we're working

28

with our retail partners to move remaining units into the channel.
-21-
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 23 of 36 Page ID #:27
1

43. In reaction to these announcements, on February 3, 2012, the price of

2

1
THQ stock fell $0.23 per share, or 30%, to close at $0.53 per share, on extremely
3

heavy trading volume.
4

44. The market for THQ common stock was open, well-developed and
5

efficient at all relevant times. As a result of these materially false and misleading
6

statements and failures to disclose, THQ common stock traded at artificially inflated
7

prices during the Class Period. Plaintiff and other members of the Class purchased or
8

otherwise acquired THQ common stock relying upon the integrity of the market price
9

of THQ common stock and market information relating to THQ, and have been
10

damaged thereby.
11

45. During the Class Period, defendants materially misled the investing
12

public, thereby inflating the price of THQ common stock, by publicly issuing false
13

and misleading statements and omitting to disclose material facts necessary to make
14

defendants' statements, as set forth herein, not false and misleading. Said statements
15

and omissions were materially false and misleading in that they failed to disclose
16

material adverse information and misrepresented the truth about the Company, its
17

business and operations, as alleged herein.
18

46. At all relevant times, the material misrepresentations and omissions

19

particularized in this complaint directly or proximately caused, or were a substantial
20

contributing cause of, the damages sustained by plaintiff and other members of the
21

Class. As described herein, during the Class Period, defendants made or caused to be
22

made a series of materially false or misleading statements about THQ's business,
23

prospects and operations. These material misstatements and omissions had the cause
24

and effect of creating in the market an unrealistically positive assessment of THQ and
25

its business, prospects and operations, thus causing the Company's common stock to
26

be overvalued and artificially inflated at all relevant times. Defendants' materially
27

false and misleading statements during the Class Period resulted in plaintiff and other
28
-22-
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 24 of 36 Page ID #:28
1

members of the Class purchasing the Company's common stock at artificially inflated
2

I
prices, thus causing the damages complained of herein.

ADDITIONAL SCIENTER ALLEGATIONS

47. As alleged herein, defendants acted with scienter in that defendants knew
5

that the public documents and statements issued or disseminated in the name of the
6

Company were materially false and misleading; knew that such statements or
7

documents would be issued or disseminated to the investing public; and knowingly
8

and substantially participated or acquiesced in the issuance or dissemination of such
9

statements or documents as primary violations of the federal securities laws. As set
10

forth elsewhere herein in detail, defendants, by virtue of their receipt of information
11

reflecting the true facts regarding THQ, their control over, and/or receipt and/or
12

modification of THQ's allegedly materially misleading misstatements and/or their
13

associations with the Company, which made them privy to confidential proprietary
14

information concerning THQ, participated in the fraudulent scheme alleged herein.

15

48. Defendants were further motivated to engage in this course of conduct in

16

order to enable the Company to enter into a credit facility whereby the Company
17

could borrow up to $75 million in capital.

18

LOSS CAUSATION/ECONOMIC LOSS

19

49. During the Class Period, as detailed herein, defendants engaged in a

20

scheme to deceive the market and a course of conduct that artificially inflated the
21

price of THQ common stock and operated as a fraud or deceit on Class Period
22

purchasers of THQ common stock by failing to disclose and misrepresenting the
23

adverse facts detailed herein. When defendants' prior misrepresentations and
24

fraudulent conduct were disclosed and became apparent to the market, the price of
25

THQ common stock fell precipitously as the prior artificial inflation came out of the
26

stock price. As a result of their purchases of THQ common stock during the Class
27

Period, plaintiff and the other Class members suffered economic loss, i.e., damages,
28

under the federal securities laws.
-23-
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 25 of 36 Page ID #:29
1

50. By failing to disclose to investors the adverse facts detailed herein,
defendants presented a misleading picture of THQ's business and prospects.
Defendants' false and misleading statements had the intended effect and caused THQ
common stock to trade at artificially inflated levels throughout the Class Period,
reaching as high as $4.59 per share on May 10, 2011.
51. As a direct result of defendants' disclosures on December 7, 2011 and
February 2, 2012, the price of THQ common stock fell precipitously, falling from its
closing price of$ 1.46 per share on December 7, 2011 to $0.53 per share on February
9 3, 2012 - a loss of $0.93 per share, or 64%. These drops removed the inflation from
10 the price of THQ common stock, causing real economic loss to investors who had
11 purchased THQ common stock during the Class Period.
12

52. The 64% decline was a direct result of the nature and extent of
13 defendants' fraud finally being revealed to investors and the market. The timing and
14 magnitude of the price decline in THQ common stock negates any inference that the
15
loss suffered by plaintiff and the other Class members was caused by changed market
16
I
conditions, macroeconomic or industry factors or Company-specific facts unrelated to
17 defendants' fraudulent conduct. The economic loss, i.e., damages, suffered by
18 plaintiff and the other Class members was a direct result of defendants' fraudulent
19
I
scheme to artificially inflate the prices of THQ common stock and the subsequent
20
I
significant decline in the value of THQ common stock when defendants' prior
21
I
misrepresentations and other fraudulent conduct were revealed.
22

APPLICABILITY OF PRESUMPTION OF RELIANCE:

FRAUD ON THE MARKET DOCTRINE
23

53. At all relevant times, the market for THQ common stock was an efficient
24
market for the following reasons, among others:
25
(a) THQ common stock met the requirements for listing, and was
26
I
listed and actively traded on the NASDAQ, a highly efficient and automated market;
27
28
-24-
Case 12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 26 of 36 Page ID #:30
1

(b) as a regulated issuer, THQ filed periodic public reports with the
2

SEC and the NASDAQ;
3

(c) THQ regularly communicated with public investors via established

4

market communication mechanisms, including regular disseminations of press
5

releases on the national circuits of major newswire services and other wide-ranging
6

public disclosures, such as communications with the financial press and other similar
7

reporting services; and
8

(d) THQ was followed by several securities analysts employed by

9

major brokerage firms who wrote reports which were distributed to the sales force and
10

certain customers of their respective brokerage firms. Each of these reports was
11

publicly available and entered the public marketplace.
12

54. As a result of the foregoing, the market for THQ common stock promptly
13

digested current information regarding THQ from all publicly available sources and
14

reflected such information in the prices of the stock. Under these circumstances, all
15

purchasers of THQ common stock during the Class Period suffered similar injury
16

through their purchase of THQ common stock at artificially inflated prices and a
17

presumption of reliance applies.
18

NO SAFE HARBOR
19

55. The statutory safe harbor provided for forward-looking statements under
20

certain circumstances does not apply to any of the allegedly false statements pleaded
21

in this complaint. Many of the specific statements pleaded herein were not identified
22

as "forward-looking statements" when made. To the extent there were any forward-
23

looking statements, there were no meaningful cautionary statements identifying
24

important factors that could cause actual results to differ materially from those in the
25

purportedly forward-looking statements. Alternatively, to the extent that the statutory
26

safe harbor does apply to any forward-looking statements pleaded herein, defendants
27

are liable for those false forward-looking statements because at the time each of those
28

forward-looking statements were made, the particular speaker knew that the particular
- 25 -
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 27 of 36 Page ID #:31
I
forward-looking statement was false, and/or the forward-looking statement was
authorized and/or approved by an executive officer of THQ who knew that those
1 statements were false when made.
COUNT!
Violation of Section 10(b) of
the Exchange Act and Rule 10b-5
Promulgated Thereunder Against All Defendants
56. Plaintiff repeats and realleges each and every allegation contained above
as if fully set forth herein.
57. During the Class Period, defendants disseminated or approved the
materially false and misleading statements specified above, which they knew or
deliberately disregarded were misleading in that they contained misrepresentations
and failed to disclose material facts necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
58. Defendants: (a) employed devices, schemes, and artifices to defraud; (b)
1 made untrue statements of material fact and/or omitted to state material facts
I
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 common stock during the Class Period.
59. Plaintiff and the Class have suffered damages in that, in reliance on the
integrity of the market, they paid artificially inflated prices for THQ common stock.
Plaintiff and the Class would not have purchased THQ common stock at the prices
they paid, or at all, if they had been aware that the market prices had been artificially
and falsely inflated by defendants' misleading statements.
60. As a direct and proximate result of defendants' wrongful conduct,
plaintiff and the other members of the Class suffered damages in connection with their
purchases of THQ common stock during the Class Period.
-26-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Case 2 :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 28 of 36 Page ID #:32
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
COUNTII
Violation of Section 20(a) of
the Exchange Act Against All Defendants
61. Plaintiff repeats and realleges each and every allegation contained above
as if fully set forth herein.
62. The Individual Defendants acted as controlling persons of THQ within
the meaning of 20(a) of the Exchange Act as alleged herein. By reason of their
positions as officers and/or directors of THQ, and their ownership of THQ stock, the
Individual Defendants had the power and authority to cause THQ to engage in the
wrongful conduct complained of herein. THQ controlled the Individual Defendants
and all of its other employees. By reason of such conduct, defendants are liable
pursuant to 20(a) of the Exchange Act.
PRAYER FOR RELIEF
WHEREFORE, plaintiff prays for relief and judgment, as follows:
A. Determining that this action is a proper class action and certifying
plaintiff as a class representative under Rule 23 of the Federal Rules of Civil
Procedure;
B. Awarding compensatory damages in favor of plaintiff and the other Class
members against all defendants, jointly and severally, for all damages sustained as a
result of defendants' wrongdoing, in an amount to be proven at trial, including interest
thereon;
C. Awarding plaintiff and the Class their reasonable costs and expenses
incurred in this action, including counsel fees and expert fees; and
D. Such equitable/injunctive or other relief as deemed appropriate by the
I Court.
-27-
Case 2 :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 29 of 36 Page ID #:33
1
2
3
4
JURY DEMAND
Plaintiff hereby demands a trial by jury.
DATED: June 15, 2012 ROBBINS GELLERRUDMAN
& DOWD LLP
DARREN J. ROBBINS
DAVID C. WALTON
5
6
7
8
9
1 0
1 1
12
13
14
1 5
1 6
17
1 8
1 9
20
21
22
23
24
2 5
26
27
28
I
S:\CptDraft\Securities\Cpt THQ 12.doc
( 2 , ~ J
/7
DAVID C. WALTON
655 West Broadway, Suite 1900
San Diego, CA 92101
T e l e p h o n e : 6 1 9 / 2 3 1 - 1 0 5 8
6 1 9 / 2 3 1 - 7 4 2 3 ( f a x )
ROBBINS GELLER RUDMAN
& DOWD LLP
SAMUEL H. RUDMAN
MARIO ALBA JR.
58 South Service Road, Suite 200
Melville, NY 11747
Telephone: 631/367-7100
631/367-1173 (fax)
DYER & BERENS LLP
JEFFREY A. BERENS
303 East 17th Avenue, Suite 300
Denver, CO 80203
Telephone: 303/861-1764
303/395-0393 (fax)
HOLZER, HOLZER & FISTEL, LLC
MICHAEL I. FISTEL, JR.
MARSHALL DEES
200 Ashford Center North, Suite 300
Atlanta, GA 30338
Telephone: 770/392-0090
770/392-0029 (fax)
Attorneys for Plaintiff
:
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 30 of 36 Page ID #:34
CERTIFICATION OF NAMED PLAINTIFF
PURSUANT TO FEDERAL SECURITIES LAWS
The undersigned declares, as to the claims asserted under the federal securities laws, that:
Plaintiff has reviewed the complaint and authorized its filing.
Plaintiff did not purchase and/or acquire the security that is the subject of this action at
the direction of Plaintiffs counsel or in order to participate in any private action under the federal
securities laws.
Plaintiff is willing to serve as a representative party on behalf of the class, including
providing testimony at deposition and trial, if necessary. I understand that this is not a claim
form, and that my ability to share in any recovery as a member of the class is not dependent upon
execution of this Plaintiff Certification.
Plaintiffs transactions in the security that is the subject of this action during the Class
Period are as follows:
Purchases:
Name of Company Date(s) Purchased

# Shares Purchased Cost

See Attached Schedule A.
Sales:
Name of Company Date(s) Sold

# Shares Sold Proceeds

See Attached Schedule A.
During the three (3) years prior to the date of this certification, Plaintiff has not sought to
serve or served as a class representative in an action filed under the federal securities laws except
for the following (if any):
1
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 31 of 36 Page ID #:35
Plaintiff will not accept any payment for serving as a representative party on behalf of the
class beyond Plaintiffs pro rata share of any recovery, except such reasonable costs and expenses
(including lost wages) directly relating to the representation of the class as ordered or approved
by the court.
I declare under penalty of perjury that the foregoing is true and correct.
Executed this
13
day of
June
2012 in North Hollywood
CA
City State
(Signature)
(Print Name) Khalil Zaghian
2
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 32 of 36 Page ID #:36
SCHEDULE A
CLASS PERIOD PURCHASES
Date
2/3/2012
1/31/2012
1/19/2012
1/12/2012
12/20/2011
12/14/2011
12/13/2011
12/8/2011
12/7/2011
12/6/2011
12/1/2011
11/30/2011
11/29/2011
11/22/2011
11/16/2011
8/16/2011
8/9/2011
8/2/2011
7/28/2011
7/28/2011
7/28/2011
7/21/2011
6/24/2011
6/16/2011
6/13/2011
6/8/2011
5/19/2011
5/17/2011
Shares
2000
750
250
10000
1000
1350
150
5000
500
1000
400
300
100
100
100
895
1000
105
800
800
1200
200
100
400
500
1000
250
250
Price/Share
$0.58
$0.66
$0.69
$0.71
$0.82
$0.76
$0.81
$0.96
$1.44
$1.65
$1.61
$1.65
1.I.)
$1.97
$2.27
$1.84
$2.08
$2.42
$2.49
$2.52
$2.46
$3.17
$3. 43
$3.36
$3.54
$4.08
d
'I
A
. I
1
)
Cost
$1,160.00
$495.00
$172.50
$7,100.00
$820.00
$1,026.00
$121.50
$4,800.00
$720.00
$1,650.00
$644.00
$495.00
$173.00
$197.00
$227.00
$1,646.80
$2,080.00
$254.10
$1,992.00
$2,016.00
$2,952.00
$634.00
$343.00
$1,344.00
$1,770.00
$3,610.00
$1,020.00
$1,032.50
CLASS PERIOD SALES

Date

Shares

Price/Share

Proceeds

5/10/2011

500

$4.52

$2,260.00
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 33 of 36 Page ID #:37
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
NOTICE OF ASSIGNMENT To UNITED STATES MAGISTRATE JUDGE FOR DISCOVERY
This ease has been assigned to District Judge Gary A. Feess and the assigned discovery
Magistrate Judge is John E. Mcflennott.
The case number on all documents filed with the Court should read as follows:
CV12- 5227 GAP (JEMx)
Pursuant to General Order 05-07 of the United States District Court for the Central
District of California, the Magistrate Judge has been desited to hear discovery related
motions.
All discovery related motions should be noticed on the calendar of the Magistrate Judge
NOTICE TO COUNSEL
A copy of this notice must be served with the summons and complaint on all defendants (if a removal action is
filed, a copy of this notice must be served on all plaintiffs).
Subsequent documents must be filed at the following location;
pq Western Division
u
Southern Division
LI
Eastern Division
312N. Spring St., Rm. 0-8 411West Fourth St., Rm. 1-053 3410 Twelfth St., Rm. 134
Los Angeles, CA 9001 2 Santa Ma, CA 92701 -451 5 Riverside, CA 92501
Failure to file at the properlocation will result in your documents being returned to you
CV-18 (03/06)NOTICE OF ASSIGNMENT TO UNITED STATES MAGISTRATE JUDGE FOR DISCOVERY
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 34 of 36 Page ID #:38
Name & Address;
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
ZAGHIAN,

on Jietlaitot I
CASE NUMBEA
All Others Similarly Situated,

CV12- 5227
GAF (JTEMx)
PLAINTIFF(S)
V.
THQ INC., 131iAN J. FARRELL and PAUL J.
PUCINO,
SUMMONS
DEFENDANT(S).
TO: DEFENDANT(S):
A lawsuit has been filed against you.
Within. 21 - days after service of this summons on you (not counting the day you received it), you
must serve on the plaintiff an answer to the attached I'oomplaint 0 amended complaint
El counterclaim El cross-claim or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer
or motion must be served on the plaintiffs attorney, David C. Walton
. whose address is
Robbins Geller, et al., 655 W. Broadway, Ste. 1900, San Diego, CA 92101 619/231-1058. If you fill to do
80,
judgment by default will be entered against you for the relief demanded in the complaint. You also must file
your answer or motion with the court.
Clerk. U.S. District Court
Dated:

!UN 1' B

By:
DOME U61
Deputy Clerk
(Seal of the Court)
fUie 60 days the defendant lithe United Slates or a United Slates agency, or is an offlce' or employee of the UnUedStae.s. Allowed
60 diyi by Thde 12('a)(3)].
CV-01A(10/11 SUMMONS
0310 Airplane
0315 A44 Product
Liability
0 320 A5s5s4t Libel &
Slander
0330 Fed. Employers'
Liability
O 340 Ma
034$ Marine Product
Liability
0350 Motor Vehicle
cl 553 Motor Veiicl.
Product Liability
0360 OtherPersocil
Injury
13362 Personal Injury-
Mod Malpractice
3365 Personal Injury-
Product Liability
0368 Asbestos Personal
Injury Product
Naturalization
Application
463 Habeas Corpus-
Alian DelaipCC
465 Other Immigration
Actions
?R.OPE3trY
370 Other Fraud
371 Truth in Lending
380 Other Peronal
Property I)ainago
38$ Property Damage
422 Appeal 28 US(
158
423 Withdrawal 28
441 Voting
442 Employment
443 HousingfAcco-
mmodatioris
444 Welfare
445 American with
Disabilities -
Employment
446 American with
Disabilities -
Other
440 Other Civil
Rights
510 Motions to
Vacate Sentence
habeas Corpus
530 GenetsI
535 Death Penalty
540 Mandamus/
Other
$50 Civil Rights
555 Prison Condition
610 AgricuLture
620 Other Food &
Drug
625 Drug Related
Seizure of
Property 21 USC
gal
630 Li400rLaws
640 R.R. & 'truck
50 Airline Rags
660 Occupational
SafCry/Health
690 Other
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 35 of 36 Page ID #:39
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
CIVIL COVER SHEET
1(a) PLAINTIFFS (Check bov, iyiu are representing yoursc1t DEFENI)ANTS
KHAL.IL ZAO}UAN, Individually and on Behalf of All Others Similarly ThQ INC.. BRXkN l. FARRELL and PAUL 3. PUCINO
Situated
(b) Attorneys (Finn Name. Address and Telephone J1umbei. If you arc representing
yourself provide saint.)
David C. Walton (167261)
Robbins Geller Rodman & Doid EL?
655 West Broadway. Suite 1900. San Diego, CA 92101 6191231-1058
Attorneys (If Known)
IL BASIS OF JUIUSJ)ICTION (Place an X in one box only.) ILL CI'tIZSHTP OP PII1NC2PAL PARTIES - For Diversity Cases Only
(Place an X in one box for plaintiff and one for defendant.)
D i U,S, Government Plaintiff 813 Federal Question (U.S.

PTP DEF FTF DAY

Government Not a ?arty) Citizen of This State

01 01 Incorporated or Principal Place 94 (34

of Business in this State
02 (iS. Government Defendant 04 Diversity (Indicate Citizenship Citizen of Another Stem 02 02 lncorporaiedaiviPrincipslPlace 05 05

o! Pasties in Item 111)

of Bun Incas in Another State

CivizenorSobjectofaForeignCc,wstcy 03 03 Forei gn Nation -. 06 D
1' V. OItIGTN (Place an X in one box only.)
"1 Original 02 Removed ftom 93 Remiiatided from 04 Raiss* at.d or OS Transferred from another district (specify): 06 Multi- 07 Appeal to District
Proceeding State Court Appellate Court Reopened Distinct Judge from
Litigation Magistrate Judge
V. RZQXMSTM IN COMPLAINT: JURY MA?Th 'Yca 0 No (Chock 'Yea' only if demanded to complaint.)
CLASS ACIION wrde F.P..C, 29 No 9 MONEY DEMANDED IN COMPLAINT S____________________
VI. CAUSE OF ACTION (Cite tha US. Civil Statute under whichyou are filing and write a brief Statotoent of cause. Do nor cite jurisdictional statutes unless diversity.)
COMPLAINT FOR VIOLATION OF THE PDRAL SECUR1TIS LAWS 15 U.&( 78j(e) and 78t(a)
VIL NATURE OF SUrF (' ince am In one box only.)
D 400 Stare Reapportionment
0410 Antitrust
0430 Banks and Banking
o 450 CominerceflCC
Ratea/etc,
9460 Deportation
0470 Racketeer Influenced
and Cormpt
Organizations
C 40 Consumer Credit
0490 Cable/Sat TV
V
10 Selective Service
50 Securitics/ConunodUes
Exchange
o 575 Customer Chaflenge 12
USC 3410
9890 Other Statutory Actions
0891 Agricultural Act
0892 Economic Stabilization
Act
13853 Environmental Matters
C] 894 Energy A41ocaticum Act
0895 Freedom of Ink. Act
09(x) Appeal of Fee Determi-
nation Under Equal
Access to Justice
0950 Constitutionality of
Slate Statutes
110 Insurance
120 Marine
130 Miller Act
140 Negotiable Instrument
150 Recoreryof
Overpayment &
Enforcement of
Judgment
151 Medicare Act
152 Recovery of Defaulted
Student Loan (Excl.
Veterans)
153 Recovery of
Overpayment f
Veteran's Benefits
160 Stockholders' Suits
190 Other COIWSCt
195 Contract Product
Liability
210 Land Condemnation
220 Foreclosure
230 Rent Lease& Ejectment
240 Torts to Land
245 Tort Product Liability
290 All Other Reel Property
710 Faji Labor Standards
Act
720 Lnbar/Mg,nt.
Relations
730 Lalmor/Mgmt
Reporting &
Disclosure Act
740 Railway Labor Act
790 Other Labor
Litigation
791 EmpL Ret. Inc.
820 Copyrights
130 Patent
3 26 HIA(1395ff)
1962 Black Lung (923)
3863 DIWC1DIYA5I
(405(g))
3864 SSID Title XVI
3890 Taxes (U.S. Plaintiff
or Defendant)
3871 IRS-Third Paxty26
USC 7609
CV12- 5227 GAF (JEMx)
FOR OFFICE USE ONLY: Case Number . ..
AFTER COPLETINC TAR FRONT SifIEOF FORM CV.II, COMPLETE THE INFORMATION REQUESTED BELOW.
CV-71 (05108) . CIViL COYRE SHEET Pagel of 2
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 36 of 36 Page ID #:40
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
CIVIL COVER SHEET
VIH(a). IDENTICAL CASES: Has this action been previously filed in this court and dismissed, remanded or closed? E"No U Yes
If yes, list case number(s):
VHI(b). RELATED CASES:
Have any cases been previously filed in this court that are related to the present case? MNo U Yes
If yes, list case number(s):
Civil cases are deemed related if a previously filed case and the present case:
(Check all boxes that apply) U A. Arise from the same or closely related transactions, happenings, or events; or
U B. Call for determination of the same or substantially related or similar questions of law and fact; or
U C. For other reasons would entail substantial duplication of labor if heard by different judges; or
U D. Involve the same patent, trademark or copyright, and one of the factors identified above in a, b or c also is present.
IX. VENUE: (When completing the following information, use an additional sheet if necessary.)
(a)
List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH named plaintiff resides.
U Check here if the government, its agencies or employees is a named plaintiff. If this box is checked, go to item (b).
County in this District:*

California County outside of this District; State, if other than California; or Foreign Country
Angeles
(b)
List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH named defendant resides.
U Check here if the government, its agencies or employees is a named defendant. If this box is checked, go to item (c).
County in this District:*

California County outside of this District; State, if other than California; or Foreign Country
Los Angeles
(c)
List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH claim arose.
Note:
In land condemnation cases, use the location of the tract of land involved.
County in this Di
strict:*

California County outside of this District; State, if other than California; or Foreign Country
Angeles
*Los Angeles, Orange, San Bernardino, Riverside, Ventura, Santa Barbara, or San Luis Obispo Counties
X. SIGNATURE OF ATTORNEY (OR PRO PER):

Date
June 15, 2012
Notice to Counsel/Parties:
The CV-71 (JS-44) Civil Cover Sheet and the information contained herein neither replace nor supplement the filing and service of pleadings
or other papers as required bylaw. This form, approved by the Judicial Conference of the United States in September 1974, is required pursuant to Local Rule 3-I is not filed
but is used by the Clerk of the Court for the purpose of statistics, venue and initiating the civil docket sheet. (For more detailed instructions, see separate instructions sheet.)
Key to Statistical codes relating to Social Security Cases:
Nature of Suit Code Abbreviation Substantive Statement of Cause of Action
HIA
BL
DIWC
DIWW
SSID
RSI
861
862
863
863
864
865
CV-71 (05/08)
All claims for health insurance benefits (Medicare) under Title 18, Part A, of the Social Security Act, as amended.
Also, include claims by hospitals, skilled nursing facilities, etc., for certification as providers of services under the
program. (42 U.S.C. 1935FF(b))
All claims for "Black Lung" benefits under Title 4, Part B, of the Federal Coal Mine Health and Safety Act of 1969.
(30 U.S.C. 923)
All claims filed by insured workers for disability insurance benefits under Title 2 of the Social Security Act, as
amended; plus all claims filed for child's insurance benefits based on disability. (42 U.S.C. 405(g))
All claims filed for widows or widowers insurance benefits based on disability under Title 2 of the Social Security
Act, as amended. (42 U.S.C. 405(g))
All claims for supplemental security income payments based upon disability filed under Title 16 of the Social Security
Act, as amended.
All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act, as amended. (42
U.S.C. (g))
CIVIL COVER SHEET

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