Clark v. Thiry et al
ORDER denying without prejudice 95 Plaintiff's Unopposed Motion for Preliminary Approval of Settlement. By Judge William J. Martinez on 12/3/2014.(alowe)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 12-cv-2074-WJM-CBS
IN RE DAVITA HEALTHCARE PARTNERS, INC. DERIVATIVE LITIGATION
ORDER DENYING WITHOUT PREJUDICE
UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT
This matter is before the Court on Lead Plaintiff Haverhill Retirement System’s
Unopposed Motion for Preliminary Approval of Settlement (“Motion”). (ECF No. 95.)
On October 23, 2014, the parties to this action entered into a Stipulation and
Agreement of Settlement (“Stipulation”) that is subject to review under Federal Rule of
Civil Procedure 23.1 and that sets forth the terms and conditions for the proposed
settlement of the claims alleged in this derivative action. (ECF Nos. 95-2, 95-3, 95-4,
95-5, 95-6, 95-7.) The Court has reviewed the Stipulation and finds that it generally
satisfies the requirements for preliminary approval. However, the Court is concerned
with respect to the adequacy of the Stipulation’s provisions for notice to the
Rule 23.1(c) permits a derivative action to be settled “only with the court’s
approval,” and requires that notice of the settlement “be given to shareholders or
members in the manner that the court orders.” Here, among other terms, the
Stipulation provides for notice to be provided to current shareholders and beneficial
owners of the stock of DaVita Healthcare Partners Inc. in three ways: (1) publication of
the “Notice of Proposed Settlement of Derivative Action, Final Settlement Hearing, and
Right to Appear” (the “Notice”) (ECF No. 95-7), attached as Exhibit E to the Stipulation,
on DaVita’s Investor Relations website; (2) publication of the “Summary Notice of
Pendency of Shareholder Derivative Action involving DaVita Healthcare Partners Inc.,
Proposed Settlement of Derivative Action, Settlement Hearing, and Right to Appear”
(the “Summary Notice”) (ECF No. 95-6), attached as Exhibit D to the Stipulation, at
least one time in the national edition of Investor’s Business Daily; and (3) filing the
Notice with the Securities and Exchange Commission (“SEC”). (ECF No. 95 at 18-19.)
However, the Stipulation does not provide for either the Notice nor the Summary
Notice to be disseminated directly to shareholders by mail or otherwise, as the Court
has ordered in other derivative actions. See, e.g., Richey v. Ells, No. 12-cv-01831WJM-MEH (D. Colo. April 18, 2014) (order preliminarily approving settlement, directing
notice to the class, and setting fairness hearing). Instead, the Stipulation appears to
require shareholders themselves to actively review the DaVita Investor Relations
website, Investor’s Business Daily, or SEC documents in order to be notified of the
Settlement. The Court finds that the absence of such affirmative notice to interested
parties fails to provide sufficient due process to comply with Rule 23.1. See Jones v.
Nuclear Pharmacy, Inc., 741 F.2d 322, 325 (10th Cir. 1984) (“The essence of
procedural due process is that the parties be given notice and opportunity for a hearing.
. . . Both the right to be heard from and the right to be told why are integral elements of
this notion of due process.”).
Accordingly, IT IS ORDERED that Lead Plaintiff’s Unopposed Motion for
Preliminary Approval of Settlement (ECF No. 95) is DENIED WITHOUT PREJUDICE to
refiling an amended motion that resolves the deficiencies noted above. The parties’
amended motion may be filed on or before December 12, 2014.
Dated this 3rd day of December, 2014.
BY THE COURT:
William J. Martínez
United States District Judge
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