Mishkin et al v. Zynex, Inc. et al

Filing 97

AMENDED ORDER PRELIMINARILY APPROVING SETTLEMENT AND PROVIDING FOR NOTICE. The Unopposed Motion for Preliminary Approval of Class Action Settlement 94 filed November 11, 2011 and the Unopposed Motion For An Amended Order Preliminarily Approving Settlement and Providing For Notice 96 filed May 1, 2012, both are GRANTED. The Order Preliminarily Approving Settlement and Providing for Notice 95 filed April 18, 2012, is VACATED and is SUPPLANTED by this Amended Order, by Judge Robert E. Blackburn on 5/3/12.(mjgsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Action No. 09-cv-00780-REB-KLM
(Consolidated with Civil Action Nos. 09-cv-00816-REB-KLM and 09-cv-00829REB-KLM)
MARJORIE MISHKIN, Individually and On Behalf of All Others Similarly
Situated,
Plaintiff,
v.
ZYNEX, INC., f/k/a ZYNEX MEDICAL HOLDINGS, INC.,
THOMAS SANDGAARD and
FRITZ G. ALLISON,
Defendants.
AMENDED ORDER PRELIMINARILY APPROVING
SETTLEMENT AND PROVIDING FOR NOTICE

This matter is before me on the following: 1) the Unopposed Motion for
Preliminary Approval of Class Action Settlement [#94]1 filed November 11, 2011; and 2)
the Unopposed Motion for An Amended Order Preliminarily Approving Settlement
and Providing for Notice [#96] filed May 1, 2012. On April 18, 2012, the court entered an
Order Preliminarily Approving Settlement and Providing for Notice [#95] (“April 18
Order”). In the motion for an amended order [#96], the parties seek the issuance of an
amended order which alters certain deadlines stated in the original order preliminarily
approving settlement [#95]. The motion to amend is granted on the terms stated in this
0rder. The April 18, 2012, order [#95] is vacated.
WHEREAS, a consolidated class action is pending before the Court entitled Mishkin
v. Zynex, Inc., et al., Civil Action No. 1:09-cv-00780-REB-KLM (the “Litigation”);
WHEREAS, the Court has received the Stipulation of Settlement dated as of
November 8, 2011 (the “Stipulation”) and filed on November 11, 2011 [#93], that has been
entered into by the Lead Plaintiffs and Defendants, and the Court has reviewed the
Stipulation and its attached Exhibits;
WHEREAS, the parties having made an application, pursuant to Federal Rule of
Civil Procedure 23(e), for an order preliminarily approving a settlement class and the
settlement of this Litigation, in accordance with the Stipulation which, together with the
Exhibits annexed thereto sets forth the terms and conditions for a proposed settlement of
the Litigation and for dismissal of the Litigation with prejudice upon the terms and

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“[#94] is an example of the convention I use to identify the docket number assigned to a specific
paper by the court’s case management and electronic case filing system (CM/ECF). I use this convention
throughout this order.

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conditions set forth therein; and the Court having read and considered the Stipulation and
the Exhibits annexed thereto; and
WHEREAS, all defined terms contained herein shall have the same meanings as set
forth in the Stipulation;
NOW, THEREFORE, IT IS HEREBY ORDERED:
1.

The Court does hereby preliminarily approve the Stipulation and the

settlement set forth therein, subject to further consideration at the Settlement Hearing
described below.
2.

The Court hereby certifies a Class, for settlement purposes only, defined as:

All Persons who purchased Zynex common stock between May 21, 2008, and March 31,
2009, inclusive. Excluded from the Class are Defendants, members of the immediate
families of the Individual Defendants, any entity in which any Defendant has or had a
controlling interest, current or former directors and officers of Zynex, and the legal
representatives, heirs, successors, or assigns of any such excluded person or entity. Also
excluded from the Class are those Persons who timely and validly request exclusion from
the Class pursuant to the Notice of Pendency and Proposed Settlement of Class Action.
3.

With respect to the Settlement Class, this Court finds that: (a) the Members of

the Settlement Class are so numerous that joinder of all Settlement Class Members in the
action is impracticable; (b) there are questions of law and fact common to the Settlement
Class that predominate over any individual questions; (c) the claims of the Plaintiffs are
typical of the claims of the Settlement Class; (d) Plaintiffs and their counsel have fairly and
adequately represented and protected the interests of the Settlement Class Members; and
(e) a class action is superior to other available methods for the fair and efficient
adjudication of the controversy, considering: (i) the interests of the Members of the
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Settlement Class in individually controlling the prosecution of the separate actions; (ii) the
extent and nature of any litigation concerning the controversy already commenced by
Members of the Settlement Class; (iii) the desirability or undesirability of concentrating the
litigation of these claims in this particular forum; and (iv) the difficulties likely to be
encountered in the management of the action.
4.

A hearing (the “Settlement Hearing”) shall be held before this Court on

September 14, 2012, at 9:00 a.m., at the Alfred A. Arraj United States Courthouse, 901
19th Street, Denver, Colorado, to determine whether the proposed settlement of the
Litigation on the terms and conditions provided for in the Stipulation is fair, reasonable and
adequate to the Class and should be approved by the Court; whether a Judgment as
provided in ¶1.13 of the Stipulation should be entered herein; whether the proposed Plan of
Allocation should be approved; and to determine the amount of fees and expenses that
should be awarded to Lead Counsel or Lead Plaintiffs. The Court may adjourn the
Settlement Hearing without further notice to Members of the Class.
5.

The Court approves, as to form and content, the Notice of Pendency and

Proposed Settlement of Class Action (the “Notice”), the Proof of Claim and Release form
(the “Proof of Claim”), and Summary Notice for publication annexed to the Stipulation as
Exhibits A-1, A-2, and A-3 and filed on November 11, 2011 [#93-2, #93-3, #93-4] , and
finds that the mailing and distribution of the Notice and publishing of the Summary Notice
substantially in the manner and form set forth in ¶6 of this Order meet the requirements of
Federal Rule of Civil Procedure 23 and due process, and is the best notice practicable
under the circumstances and shall constitute due and sufficient notice to all Persons
entitled thereto.

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6.

Pursuant to Rule 53(c) of the Federal Rules of Civil Procedure, the Court

appoints Class Action Administration, Inc. (“Claims Administrator”) to supervise and
administer the notice procedure as well as the processing of claims as more fully set forth
below:
(a)

Not later than twenty (20) business days after the date of this Order

(the “Notice Date”), Lead Counsel shall cause a copy of the Notice and the Proof of Claim,
substantially in the forms annexed as Exhibits A-1 and A-2 to the Stipulation, to be mailed
by first class mail to all Class Members who can be identified with reasonable effort;
(b)

Not later than thirty (30) business days after the date of this Order,

Lead Counsel shall cause the Summary Notice to be published once in Investor’s Business
Daily; and
(c)

At least seven (7) calendar days prior to the Settlement Hearing, Lead

Counsel shall cause to be served on Defendants’ counsel and filed with the Court proof, by
affidavit or declaration, of such mailing and publishing.
7.

Nominees who held Zynex common stock purchased between May 21, 2008,

and March 31, 2009, inclusive, for the benefit of another shall send the Notice and the
Proof of Claim to all beneficial owners of such Zynex common stock within ten (10) days
after receipt thereof, or send a list of the names and addresses of such beneficial owners to
the Claims Administrator within ten (10) days of receipt thereof, in which event the Claims
Administrator shall promptly mail the Notice and Proof of Claim to such beneficial owners.
Lead Counsel shall, if requested, reimburse banks, brokerage houses or other nominees
solely for their reasonable out-of-pocket expenses incurred in providing notice to beneficial
owners who are Class Members out of the Class Notice and Administration Fund, which

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expenses would not have been incurred except for the sending of such notice, subject to
further order of this Court with respect to any dispute concerning such compensation.
8.

All Members of the Class shall be bound by all determinations and judgments

in the Litigation concerning the settlement, whether favorable or unfavorable to the Class.
9.

Class Members who wish to participate in the settlement shall complete and

submit Proof of Claim forms in accordance with the instructions contained therein. Unless
the Court orders otherwise, all Proof of Claim forms must be submitted no later than one
hundred twenty (120) days from the Notice date. Any Class Member who does not timely
submit a Proof of Claim within the time provided for shall be barred from sharing in the
distribution of the proceeds of the Net Settlement Fund, unless otherwise ordered by the
Court. Notwithstanding the foregoing, Lead Counsel may accept late submitted claims for
processing so long as the distribution of the Net Settlement Fund to other Authorized
Claimants is not materially delayed thereby.
10.

Any Member of the Class may enter an appearance in the Litigation, at their

own expense, individually or through counsel of their own choice. If they do not enter an
appearance, they will be represented by Lead Counsel.
11.

Any Person falling within the definition of the Settlement Class may, upon

request, be excluded from the Settlement Class. Any such Person must submit to the
Claims Administrator a request for exclusion (“Request for Exclusion”), postmarked no later
than twenty-eight (28) days prior to the Settlement Hearing. A Request for Exclusion
must state: (1) the name, address, and telephone number of the Person requesting
exclusion; (2) each of the Person’s purchases and sales of Zynex publicly traded equity
securities made during the Settlement Class Period, including the dates of purchase or
sale, the number of shares purchased and/or sold, and the price paid or received per share
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for each such purchase or sale; (3) that the Person wishes to be excluded from the
Settlement Class; and (4) the signature of the Settlement Class Member, or his, her, or its
authorized designee. If the Request for Exclusion is sought on behalf of a third-party (such
as a trust or estate), evidence of authorization to act as his, her, or its authorized designee
must be enclosed. All Persons who submit valid and timely Requests for Exclusion in the
manner set forth in this paragraph shall have no rights under the Stipulation, shall not share
in the distribution of the Net Settlement Fund, and shall not be bound by the Stipulation or
the Judgment entered in the Litigation.
12.

All papers in support of the settlement, the Plan of Allocation, and the

application by Lead Counsel for attorneys’ fees or expenses or by Lead Plaintiffs for
expenses shall be filed and served sixty (60) calendar days before the Settlement
Hearing, or by July 16, 2012, whichever is later. Any papers in response to any Class
member objections, as set forth in paragraph 13 below, and in further support of the
Settlement, the Plan of Allocation and the application for attorneys’ fees or expenses shall
be filed and served no later than ten (10) days prior to the Settlement Hearing.
13.

Any Member of the Class may appear and show cause, if he, she or it has

any reason, why the proposed settlement of the Litigation should or should not be approved
as fair, reasonable and adequate, why a judgment should or should not be entered thereon,
why the Plan of Allocation should or should not be approved, or why attorneys’ fees and
expenses should or should not be awarded to Lead Counsel, or why the Lead Plaintiffs’
expenses should or should not be reimbursed; provided, however, that no Class Member or
any other Person shall be heard or entitled to contest the approval of the terms and
conditions of the proposed settlement, or, if approved, the Judgment to be entered thereon
approving the same, or the order approving the Plan of Allocation, the attorneys’ fees and
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expenses to be awarded to Lead Counsel or the expenses to be reimbursed to Lead
Plaintiffs, unless that Person has filed with the Clerk of the United States District Court for
the District of Colorado, on or before twenty-eight (28) days prior to the Settlement
Hearing: (i) a statement submitted under penalty of perjury of the number of shares of
Zynex common stock that Person purchased and sold during the Class Period, including
the date(s) of acquisition or disposition of any such stock with proof thereof; (ii) a statement
of that Person’s specific objections to the settlement and the judgment to be entered
thereon, and/or the award of attorneys’ fees and expenses to Plaintiffs’ counsel; and (iii) all
other documents, writing and other evidence that the Person desires the Court to consider.
That Person must also must deliver these documents by hand no later than twenty-five
(25) days prior to the Settlement Hearing, or send them by first class mail so that the
documents arrive no later than twenty-five (25) days prior to the Settlement Hearing, to
each of the following counsel of record: The Shuman Law Firm, Kip B. Shuman, 885
Arapahoe Avenue, Boulder, Colorado 80302; and Fulbright & Jaworski L.L.P., William J.
Leone, 370 17th Street, Suite 2150, Denver, Colorado 80202. The statement regarding the
number of shares of Zynex common stock the Person purchased and sold during the Class
Period does not need to be notarized, and the following sentence at the end of the
statement and before the signature shall be sufficient to satisfy the certification
requirement: “I declare under the penalty of perjury that the foregoing is true and correct.”
Any Member of the Class who does not make his, her or its objection in the manner
provided shall be deemed to have waived such objection and shall forever be foreclosed
from making any objection to the fairness or adequacy of the proposed settlement as set
forth in the Stipulation, to the Plan of Allocation, to the award of attorneys’ fees and

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expenses to Lead Counsel or to the reimbursement of Lead Plaintiffs’ expenses, unless
otherwise ordered by the Court.
14.

All funds held by the Escrow Agent shall be deemed and considered to be in

custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until
such time as such funds shall be distributed pursuant to the Stipulation and/or further
order(s) of the Court.
15.

Neither Defendants nor their Related Parties shall have any responsibility for

or liability with respect to the Plan of Allocation or any application for attorneys’ fees or
expenses submitted by Lead Counsel or Lead Plaintiffs, and such matters will be
considered separately from the fairness, reasonableness and adequacy of the settlement.
16.

At or after the Settlement Hearing, the Court shall determine whether the Plan

of Allocation proposed by Lead Counsel, and any application for attorneys’ fees or
expenses shall be approved.
17.

All reasonable expenses incurred in identifying and notifying Class Members,

as well as administering the Settlement Fund, shall be paid as set forth in the Stipulation.
In the event the settlement is not approved by the Court, or otherwise fails to become
effective, neither the Lead Plaintiffs nor Lead Counsel shall have any obligation to repay
any amounts actually and properly disbursed from the Class Notice and Administration
Fund.
18.

Neither the Stipulation, nor any of its terms or provisions, nor any of the

negotiations or proceedings connected with it, shall be construed as an admission or
concession by Defendants or their Related Parties of the truth of any of the allegations in
the Litigation, or of any liability, fault, or wrongdoing of any kind.

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19.

The Court reserves the right to adjourn the date of the Settlement Hearing

without further notice to the Members of the Class, and retains jurisdiction to consider all
further applications arising out of or connected with the proposed settlement. The Court
may approve the settlement, with such modifications as may be agreed to by the Settling
Parties, if appropriate, without further notice to the Class.
20.

The Unopposed Motion for Preliminary Approval of Class Action

Settlement [#94] filed November 11, 2011 and the Unopposed Motion For An Amended
Order Preliminarily Approving Settlement and Providing For Notice [#96] filed May 1,
2012, both are GRANTED on the terms stated in this amended order.
21.

Lead counsel shall ensure that the Notice (Exhibit A-1), Proof of Claim

(Exhibit A-2), and Summary Notice (Exhibit A-3) all contain accurate statements of the
deadlines stated in this order, accurate mailing addresses for the claims administrator and
for counsel named in the notice, and, in paragraph seven (7), an accurate phone number
for the claims administrator.
22.

The Order Preliminarily Approving Settlement and Providing for Notice

[#95] filed April 18, 2012, is VACATED and is SUPPLANTED by this Amended Order
Preliminarily Approving Settlement and Providing for Notice.
IT IS SO ORDERED.
Dated May 3, 2012, at Denver, Colorado.
BY THE COURT:
s/ Robert E. Blackburn
__________________________
United States District Judge

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