Judge rejects bulk of Idealab suit, refiling expected. (Up Front).

The group of Idealab Inc. investors that sued the company in January seeking $1 billion and the technology incubator's dissolution have had the bulk of their claims rejected by a Los Angeles Superior Court judge.

The July 2 ruling by Judge Ralph Dau found in favor of Idealab on all but two counts, ordering the company to turn over its quarterly reports to the shareholders and to have its March 14 shareholder meeting certified correctly.

On all other issues, including the request to dissolve the company and the removal of its board, Dau ruled the investors failed "to state facts sufficient to constitute a cause of action."

Douglas McPherson, general counsel at Idealab, said, "The court's order is consistent with our view of the case. We were pleased to see all the substantive causes of action dismissed."

The investors are likely to, re-file their complaint, which included allegations of breach of fiduciary duty and deceit.

Skip Miller, a partner at Christensen Miller Fink Jacobs Glaser Weil & Shapiro LLP and representing the plaintiffs, would not talk about the ruling. He issued a statement through a spokesman that said, "The judge requested more details regarding specific claims made in the lawsuit filed by Idealab's preferred shareholders... We intend to file an amended complaint with the additional information requested by the court."

Having to re-draft a lawsuit is common in most litigation matters, said Tom Van Wyngarden, a partner at Morgan Lewis & Bockius LLP in L.A.

Among the plaintiffs are Moore Global Investments Ltd., T. Rowe Price Science & Technology Fund and Dell USA LP. The group, which represents 10 percent of Idealab's shareholders, named Chief Executive Bill Gross and other officers of the company in a Jan. 18 complaint alleging the squandering of $500 million of the $1 billion they invested in late 1999 and early 2000.

The investors claimed in court documents that Gross and other executives used shareholder funds to purchase Idealab shares, triple executive salaries and provide collateral on personal bank loans.

The suit claims most of the 26 Internet and technology companies incubated at Pasadena-based Idealab have failed. Idealab now has 15 incubated companies listed on its Web site.

Investors are asking Idealab for $500 million in losses plus $500 million in damages.