Details Sought in Idealab Lawsuit

A judge has ruled that investors suing to dissolve Pasadena-based technology incubator Idealab Inc. need to provide him with more information on certain allegations in the case.

The civil suit was filed this year by more than 40 shareholders who put more than $700 million into Idealab in early 2000 -- just as the technology bubble was bursting.

The investors -- who include such big names as mutual fund giant T. Rowe Price, Los Angeles venture capital firm Kline Hawkes and a group of former top executives at Microsoft Corp. -- allege that Idealab founder Bill Gross mismanaged the firm and that he arranged sweetheart financial deals for himself.

Los Angeles County Superior Court Judge Ralph Dau on Monday gave the investors 15 days to amend their suit with regard to allegations of fraud, breach of fiduciary duty and breach of contract. He also asked for more information on the investors’ assertion that they have the right to call for the company to be dissolved.

The investors want the company shut down so they can take back at least a portion of the $350 million of liquid assets left in Idealab. They are asking for a jury trial to decide the case.

Gross, 44, has called the investors’ allegations “completely false” and has insisted he won’t close Idealab despite the withered outlook for many sectors of the technology business.

Idealab, which in the 1990s spawned such Internet firms as search engine Overture Services Inc. and defunct toy retailer EToys Inc., is incubating about 10 ventures and employs about 100 people, Gross told The Times in November.

Dau’s ruling “basically is saying he wants more specific facts, which we are happy to provide,” said Skip Miller, partner at Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, which is representing the investors.

He said the plaintiffs will amend their complaint with information recently obtained as part of the ongoing discovery process in the case.

Idealab executives could not be reached for comment.

Besides Idealab and Gross, the defendants in the suit include Gross’ wife, Marcia Goodstein, who is the company’s president; other senior officers; and director Benjamin Rosen, the founder of Compaq Computer Corp. and a longtime investor in many of Gross’ projects.