Kim v. Chipotle Mexican Grill, Inc. et al

Filing 40

ORDER. Pursuant to Fed. R. Civ. P. 42(a) and D.C.COLO.LCivR 42.1, Civil Action Nos. 12-cv-02164-PAB-KLM and 12-cv-02193-PAB-KLM shall be consolidated for all purposes. By Judge Philip A. Brimmer on 4/17/13. (mnfsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 12-cv-02164-PAB-KLM
CITY OF DANIA BEACH POLICE & FIREFIGHTERS’ RETIREMENT SYSTEM,
Individually and on Behalf of All Others Similarly Situated,
Plaintiff,
v.
CHIPOTLE MEXICAN GRILL, INC.,
STEVE ELLS,
MONTGOMERY F. MORAN, and
JOHN R. HARTUNG,
Defendants.

ORDER

This matter is before the Court on the Stipulation and [Proposed] Order for
Consolidation and for Appointment of Co-Lead Plaintiffs and Co-Lead Counsel [Docket
No. 42] filed on April 8, 2013 by plaintiffs Inter-Local Pension Fund of the Graphic
Communications Conference of the International Brotherhood of Teamsters (“InterLocal”) and Jean-Marc Daucourt.
Inter-Local is a plaintiff in the instant case, filed on August 16, 2012, in which it
seeks to represent all purchasers of common stock of Chipotle Mexican Grill, Inc.
(“Chipotle”) from February 1, 2012 through July 19, 2012 (“the class period”). Docket
No. 42 at 1-2. Mr. Daucourt is a plaintiff in a different case brought on behalf of the
same putative class. See Kim v. Chipotle Mexican Grill, Inc., No. 12-cv-02193 (D. Colo.
Aug. 17, 2012). Both cases were filed against defendants Chipotle and several of its

officers and directors (Steve Ells, Montgomery F. Moran, and John R. Hartung). Docket
No. 42 at 3, ¶ 1.
Inter-Local alleges that, during the class period, defendants issued materially
false and misleading statements, artificially inflating the value at which its stock traded
and violating the Securities and Exchange Act of 1934. Docket No. 1 at 2-3, 14-15,
¶¶ 3-4, 44-49; see 15 U.S.C. §§ 78j(b), 78t(a); 17 C.F.R. § 240.10b-5. Inter-Local
further alleges that it purchased stock at the elevated price, which it would not have
done had it known that defendants’ misleading statements distorted the market. Docket
No. 1 at 15, ¶ 47. Specifically, it alleges that it purchased 640 shares of Chipotle stock
on July 12, 2012. Docket No. 31-1. Mr. Daucourt alleges that he purchased 250
shares of Chipotle stock on May 4, 2012. Docket No. 23-3.
Inter-Local and Mr. Daucourt stipulate to the consolidation of the two cases, to
their joint appointment as co-lead plaintiffs, and to the appointment of the law firms of
Spector Roseman Kodroff & Willis, P.C. and Glancy, Binkow & Goldberg LLP as colead counsel. Docket No. 42 at 5-6, ¶¶ 7-13. The defendants who have thus far
entered an appearance in these cases do not object to either consolidation or to the
appointment of co-lead plaintiffs.
I. CONSOLIDATION
Rule 42(a) of the Federal Rules of Civil Procedure provides that “[i]f actions
before the court involve a common question of law or fact, the court may . . .
consolidate the actions.” FED . R. CIV. P. 42(a)(2). The decision whether to consolidate
actions involving common questions of law or fact is committed to the sound discretion
of the district court. Shump v. Balka, 574 F.2d 1341, 1344 (10th Cir. 1978). The
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purpose of Rule 42(a) is “to give the court broad discretion to decide how cases on its
docket are to be tried so that the business of the court may be dispatched with
expedition and economy while providing justice to the parties.” Breaux v. American
Family Mut. Ins. Co., 220 F.R.D. 366, 367 (D. Colo. 2004) (quoting 9 C. W RIGHT & A.
MILLER , FEDERAL PRACTICE & PROCEDURE § 2381 at 427 (2nd ed. 1995)). Therefore,
the Court will consider both judicial economy and fairness to the parties in exercising its
discretion under Rule 42(a). See Harris v. Illinois-California Express, Inc., 687 F.2d
1361, 1368 (10th Cir. 1982).
Both of the cases in question were filed against the same four defendants,
concern the same facts, and seek to answer the same question: whether defendants
made materially false and misleading statements regarding Chipotle that caused harm
to plaintiffs. See Docket No. 1 at 2; Kim, No. 12-cv-02193, Docket No. 1. Both plaintiffs
agree that consolidation is appropriate. See Docket No. 19; Docket No. 23 at 5.
Additionally, the cases were filed within one day of each other and the present case is
the lower numbered case. Therefore, because the cases involve common questions of
law and fact, City of Dania Beach Police & Firefighters’ Retirement System v. Chipotle
Mexican Grill, Inc., 12-cv-2164-PAB-KLM, and Kim v. Chipotle Mexican Grill, Inc., 12cv-2193-PAB-KLM, shall be consolidated.
II. APPOINTMENT OF CO-LEAD PLAINTIFFS AND CO-LEAD COUNSEL
The Private Securities Litigation Reform Act (“PSLRA”) creates a rebuttable
presumption that the most adequate plaintiff is the person or group that:
(aa) has either filed the complaint or made a motion in response to a notice
under subparagraph (A)(i);
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(bb) in the determination of the court, has the largest financial interest in the
relief sought by the class; and
(cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of
Civil Procedure.
15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). In deciding a motion to appoint lead plaintiff, courts
generally limit their inquiry under Federal Rule of Civil Procedure 23 to the typicality and
adequacy prongs.1 See In re Ribozyme Pharm., Inc. Sec. Litig., 192 F.R.D. 656, 658
(D. Colo. 2000). “Typicality exists where the injury and the conduct are sufficiently
similar.” Id. (internal citations omitted). “The [Private Securities Litigation Reform Act,
see 15 U.S.C. § 78u-4] directs courts to limit [their] inquiry regarding adequacy to the
existence of any conflicts between the interests of the proposed lead plaintiffs and the
members of the class.” Id. at 659. The presumption established by the PSLRA may be
rebutted by a showing that the presumptively most adequate plaintiff “will not fairly and
adequately protect the interests of the class” or “is subject to unique defenses that
render such plaintiff incapable of adequately representing the class.” 15 U.S.C. § 78u4(a)(3)(B)(iii)(II)(bb).
“The most adequate plaintiff shall, subject to the approval of the court, select and
retain counsel to represent the class.” 15 U.S.C. § 78u-4(a)(3)(B)(v). The Court should
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Federal Rule of Civil Procedure 23 provides that a party may sue as a
representative of a class only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests
of the class.
Fed. R. Civ. P. 23(a).
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only disturb the lead plaintiff’s choice of counsel where necessary to “fairly and
adequately protect the interests of the class.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa).
In this case, there is no dispute that the parties both meet the first condition
under the PSLRA, 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(aa). The second condition is not
relevant since there is no need to decide between the parties. Thus, the Court need
only consider whether the parties satisfy the requirements of Rule 23.
The typicality requirement is met in this instance because both plaintiffs allege
that they have suffered the same injury as the class members they seek to represent,
namely, that they purchased Chipotle common stock at a price inflated by Chipotle’s
false misrepresentations. See In re Ribozyme, 192 F.R.D. at 658. The adequacy
prong is satisfied as there is no indication that either plaintiff has a conflict of interest
with the other class members. See id. at 659. No party has objected to the parties’
appointment as co-lead plaintiffs or sought to rebut the presumption established by the
PSLRA.
Finally, counsel selected by Inter-Local and Mr. Daucourt are “qualified,
experienced and able to vigorously conduct the proposed litigation.” See In re
Ribozyme, 192 F.R.D. at 659. Both firms specialize in private securities litigation and
have represented plaintiffs in similar cases. See Docket No. 21-3; see also Kim, No.
12-cv-2193, Docket No. 22-3 at 2-5.
For the foregoing reasons, it is
ORDERED that, pursuant to Fed. R. Civ. P. 42(a) and D.C.COLO.LCivR 42.1,
Civil Action Nos. 12-cv-02164-PAB-KLM and 12-cv-02193-PAB-KLM shall be

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consolidated for all purposes. It is further
ORDERED that, as of the date of this Order, all future pleadings and other filings
shall be filed in this case only and shall be captioned as shown below:

Civil Action No. 12-cv-02164-PAB-KLM
(Consolidated with Civil Action No. 12-cv-02193-PAB-KLM)

Civil Action No. 12-cv-02164-PAB-KLM
CITY OF DANIA BEACH POLICE & FIREFIGHTERS’ RETIREMENT SYSTEM,
individually and on behalf of all others similarly situated,
Plaintiff,
v.
CHIPOTLE MEXICAN GRILL, INC.,
STEVE ELLS,
MONTGOMERY F. MORAN, and
JOHN R. HARTUNG,
Defendants.

Civil Action No. 12-cv-02193-PAB-KLM
SONIA Y. KIM, individually and on behalf of all others similarly situated,
Plaintiff,
v.
CHIPOTLE MEXICAN GRILL, INC.,
STEVE ELLS,
MONTGOMERY F. MORAN, and
JOHN R. HARTUNG,
Defendants.

It is further

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ORDERED that the Stipulation and [Proposed] Order for Consolidation and for
Appointment of Co-Lead Plaintiffs and Co-Lead Counsel [Docket No. 42] is
ACCEPTED. It is further
ORDERED that plaintiffs Inter-Local Pension Fund of the Graphic
Communications Conference of the International Brotherhood of Teamsters and JeanMarc Daucourt are appointed Co-Lead Plaintiffs. It is further
ORDERED that the law firms of Spector Roseman Kodroff & Willis, P.C. and
Glancy Binkow & Goldberg LLP are appointed Co-Lead Counsel. It is further
ORDERED that the Motion of Inter-Local Pension Fund of the Graphic
Communications Conference of the International Brotherhood of Teamsters for
Consolidation, Appointment as Lead Plaintiff and Approval of Choice of Lead Counsel
[Docket No. 19] is DENIED as moot.
ORDERED that the Motion of Jean-Marc Daucourt for Consolidation of Related
Actions, Appointment as Lead Plaintiff and Approval of Lead Plaintiff’s Selection of
Lead Counsel and Liaison Counsel [Docket No. 23] is DENIED as moot.

DATED April 17, 2013.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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