Childs v. Zuckerberg et al
Filing
34
OPINION AND ORDER. Based upon the conclusions set forth in this Opinion and Order, the Facebook Defendants' motion to dismiss is granted in part on the grounds of standing and ripeness, and the Derivative Plaintiffs' complaints are dismisse d. Having dismissed the complaints, Plaintiffs' motions to remand are denied as moot. Derivative Plaintiffs are granted leave to replead within twenty days. (Signed by Judge Robert W. Sweet on 2/12/2013). Filed In Associated Cases: 1:12-md-02389-RWS, 1:12-cv-04156-RWS, 1:12-cv-07549-RWS, 1:12-cv-07553-RWS, 1:12-cv-07815-RWS (rjm)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE FACEBOOK, INC., IPO SECURITIES AND
DERIVATIVE LITIGATION,
ON & ORDER
MDL No. 12-2389
Case
12
12
12
12
Relates to:
Civ. 4156
Civ. 7549
Civ. 7553
Civ. 7815
----x
A P PEA RAN C E S:
Attorneys for the Plaintiff Edward Childs
GLANCY BINKOW & GOLDBERG LLP
77 Water Street, 7th Floor
New York, NY 10005
By: Gregory Linkh, Esq.
Michael M. Goldberg, Esq.
MURRAY FRANK LLP
275 Madison Avenue, Suite 801
New York, NY 10016
By: Brian Philip Murray, Esq.
BARRACK, RODOS & BACINE
3300 Two Commerce Square
2001 Market Street
Philadelphia, PA 19103
By: Mark Robert Rosen, Esq.
Stephen R. Basser, Esq.
for the Plaintiff Lidia
SCOTT & SCOTT
405 Lexington Avenue, 40th Floor
New York, NY 10174
By: Joseph P. Gugl lmo, Esq.
Deborah Clark-Weintraub, Esq.
1
LAW OFFICES OF SCOTT D. EGLESTON
12000 Biscayne Boulevard, Suite 220
North Miami Beach, FL 33181
By:
Scott D. Egleston, Esq.
Attorneys for Plaintiffs William Cole and
Hal Hubuschman
ROBBINS ARROYO, LLP
600 B Street, Suite 1900
San Diego, CA 92101
By: Shane Sanders, Esq.
Brian J. Robbins, Esq.
ipe J. Arroyo, Esq.
Gina Stassi, Esq.
Attorneys for the Facebook Defendants
KIRKLAND & ELLIS LLP
601 Lexington Avenue
New York, NY 10022
Andrew B. Clubok, Esq.
Brant Warren Bishop, Esq.
Elizabeth L. Deeley, Esq.
James Francis Basile, Esq.
Susan Elisabeth Engel, Esq.
WILLKIE FARR & GALLAGHER LLP
1875 K Street, N.W.
Washington, DC 20006
By: Richard D. Bernstein, Esq.
Tariq Mundiya, Esq.
Todd G. Cosenza, Esq.
Elizabeth J. Bower, Esq.
2
Sweet, D.J.
iffs William Cole ("Cole")! Hal Hubuschman
("Hubuschman!') and Linda Levy ("Levy")
(collectively! the
moved to remand their shareholder derivative
"Plaintiffs")
actions (the "Removed Actions")
1
to the Superior Court of the
State of California! County of San Mateo (the "California State
Court")! pursuant to 28 U.S.C.
filed their respect
1447(c).
§
Plaintiffs originally
complaints in the California State Court
on behalf of shareholders! charging certain officers and
directors of Facebook! Inc.
("Facebook!! or the "Companyll)
(collectively! the "Facebook
fiduciary duties! waste
enrichment.
SIl)2
with breach of their
corporate assets and unjust
Facebook De
s removed the Removed Actions to
the Southern District of New York and
remand the case back to Cali
aintiffs now move to
State Court.
Facebook Defendants contend
certain threshold
The Derivative Actions include:
, No. 12 cv-7549
(removed 6/28/12);
12-cv-7553 (removed
6/28/12); and Levy v. Zuckerberg, et al., No.
(removed 7/12/12)
which were removed from the Northern District of California; and --::---:----,--,Chi
Zuckerberg, et al., No. 12-cv-4156 (filed 5/24/12), which was filed
s
District.
1
I
The Facebook Defendants include Facebook, Inc.; Mark Zuckerberg
("Zuckerberg"); Sheryl K. Sandberg ("Sandberg"); David A. Ebersman
("Ebersman") i David M. Spillane ("Spillane"); Marc L. Andreessen
("Andreessen") i Erskine B. Bowles ("Bowles"); James B. Breyer (
);
Donald E. Graham ("Graham"); Reed Hastings ("Hastings") ; and Peter A. Thiel
("Thiel") .
2
3
grounds for dismissal should be considered before Plaintiffs'
motions to remand.
Facebook Defendants have accordingly moved
to dismiss Plaintiffs' Removed Actions as well as Plaintiff
Edward Childs'
("Childs," together with the Plaintiffs, the
"Derivative Plaintiffs") derivative action 3 (together with the
Removed Actions, the "Derivative Actions") on the independent
grounds of venue, standing and ripeness, pursuant to Rules
12 (b) (1), 12 (b) (3) and 12 (b) (6) of the Federal Rules of Civil
Procedure, and the standing and demand requirements of Rule 23.1
of the Federal Rules of Civil Procedure.
Upon the facts and conclusions set forth below,
Facebook Defendants' threshold grounds for dismissal will be
resolved first,
and their motion to dismiss is granted on the
basis of standing and ripeness, but denied as to venue.
Having
granted Facebook Defendants' motion to dismiss, the Plaintiffs'
motions to remand are denied as moot.
I.
Prior Proceedings and Facts
The facts and prior proceedings underlying this action
are set out in this Court's May 9, 2012 Opinion, In re Facebook
3 Plaintiff Childs filed his action in the Southern District of New York on
May 24, 2012, basing jurisdiction on diversity pursuant to 28 U.S.C. § 1332
(a) (2) •
4
IPO Secs. & Derivative
., 12 MDL No. 2389,
---------------~----------------~
- - F.R.D.
2012 WL 6061862 (S.D.N.Y. Dec. 6, 2012), familiarity with which
is assumed.
Accordingly, only facts relevant to this action
will be provided below.
The Derivative Actions arise out of events in
tial public offering ("IPO")
connection with the May 18, 2012
of Facebook.
On February 1, 2012, in preparation for its IPO,
Facebook filed a Form S-l Registration Statement with the U.S.
Securities Exchange Commission (the "SEC").
Facebook
subsequently amended the registration statement several times,
including on February 1, and April 23, 2012, before filing their
final Form S l/A on May 16, 2012 (the "Registration Statement")
The Registration Statement expressed caution about revenue
growth due to a rapid shift by users to mobile devices, stating
that,
Based upon our experience in the second quarter of
2012, to date, the trend we saw in the first quarter
of [daily active users] increasing more rapidly than
the increase in number of ads delivered has continued.
We believe this trend is driven in part by increased
usage of Facebook on mobile devices where we have only
All of Facebook's Form S-l Disclosures, including amendments, and the SEC's
declaration of effectiveness are searchable on the SEC's EDGAR search
platform at http://www.sec.gov/edgar/searchedgar/webusers.htm.
4
5
4
recently begun showing an immaterial number of
sponsored stories in News Feed, and in part due to
certain pages having fewer ads per pages as a result
of product decisions.
(Clubok Decl. 11/14/12, Ex. E at 57; see also Childs Compl.
~ 28
t
Levy Compl.
~
On May 15 t
47).
2012, General Motors announced
it was
pulling its advertising business from Facebook, stating that
Facebook ads were less effective
advertising.
(Childs Compl.
~
other forms of
29).
According to the Derivative
Plaintiffs' complaints t despite such negat
final Registration Statement stated that the CompanYt
"in
consultation with the underwriterst,t had increased the IPO price
range from between $28 and $35 to between $34
~
(Cole Compl.
$38 per share.
47).
In early May 2012, Facebook and its underwriters t
including three lead underwriters, Morgan Stanley & Co. LLC
("Morgan Stanley"), J.P. Morgan Securities, LLC ("JP Morgan"),
and Goldman, Sachs & Co.
("Goldman Sachs
ll
)
(collectively, the
"Lead Underwriters"), participated in an IPO roadshow to provide
potential investors with information about Facebook.
On May 18,
2012, the Company filed a Form 424(b) (4) Prospectus (the
"Prospectus
ll
)
with respect to the IPO (together with the
6
Registration Statement, the "Offering Documents").
The
Prospectus warned investors that,
Growth in use of Facebook through our mobile products,
where our ability to monetize is unproven, as a
substitute for use on personal computers may
negatively af
our revenue and financ
results.
We generate a substantial majority of our revenue from
advertising. The loss of advertisers, or reduction in
spending by advertisers with Facebook, could seriously
harm our business.
(Clubok Decl. 12/5/12, Ex. 3; see also Levy Compl. ~~ 48, 49).
On May 18, 2012, the Company offered 421 million
shares of Facebook common stock to the public at $38.00 per
share on the NASDAQ stock exchange, thereby valuing the total
size of the lPO at more than $16 billion.
On May 19{ 2012, the day after the lPO, Reuters
reported that Facebook "altered its guidance for research
earnings last week, during the road show, a rare and disruptive
move.
,,5
On May 21, 2012, The New York Times reported that
5 Nadia Damouni, Morgan Stanley Was A Control-Freak On Facebook IPO -- And It
May Have~QYCt:Lly Screwed Itself, BUSINESS INSIDER, May 19, 2012 I
http://www.businessinsider.com/morgan-stanley-facebook-ipo-2012-5.
7
U[rlivals involved in the Facebook underwriting process say that
Morgan Stanley exerted an enormous amount of control over
important aspects of the process" and Uignored some input about
However, the article also stated that Uothers
c
involved
the underwriting say that Morgan Stanley and other
advisers
thousands of conversations with potential
investors on what was a fair level, and that the $38 price was
justified.,,7
Then, on May 22, 2012, prior to the start of trading,
Reuters reveal
earnings forecasts
the Lead Underwriters had cut their
Company prior to the IPO, but that it
was "unclear whether Morgan Stanley only told its top clients
about the revised view or spread the word more broadly."B
That
day, Facebook stock closed at $31.00 per share, which was 18.42%
below the IPO price.
On May 22, 2012, Facebook's Restated Certification of
Incorporation (the uCertificate") was filed with the Delaware
6 Michael J. De La Merced, Eve
M. Rusli and Susanne
, As Facebook's
Stock Struggles, Fingers Start Pointing, THE NEW YORK TIMES,
http://dealbook.nytimes.com/2012/0S/21/as facebooks-stock struggles fingers
start-pointing/.
7
Id.
Alistair Barr, Insight: Morgan Stanley Cut Facebook Estimates Just Before
IPO, REUTERS, http://www.reuters.com/article/2012/0S/22/us facebook-forecasts
idUSBRE84L06920120S22.
8
8
Secretary of State.
The original certif
ate of incorporation
(the "Original Certificate") had been filed in Delaware under
the corporate name TheFacebook, Inc. on July 29, 2004.
The
Certificate contained some amendments to the Original
Certificate, including Article IX, which contained a "Choice of
Forum" provision, stating:
Unless the corporation consents in writing to the
selection of an alternative forum, the Court of
Chancery of the State of Delaware shall, to the
fullest extent permitted by law, be the sole and
exclusive forum for (1) any derivat
action or
proceeding brought on behalf of the corporation, (2)
any action asserting a claim of breach of a fiduciary
duty owed by, or other wrongdoing by, any director,
ficer, employee or agent of the corporation to the
corporation or the corporation's stockholders, (3) any
action asserting a claim arising pursuant to any
provision of the General Corporation Law or the
corporation's Restated Certificate of Incorporation or
Bylaws, (4) any action to interpret, apply, enforce or
determine the
idity of the corporation's Restated
Certificate of Incorporation or Bylaws or (5) any
action asserting a claim governed by the internal
affairs doctrine,
each such case subject to said
Court of Chancery having personal jurisdiction over
the indispensible parties named as defendants therein.
Any person or entity purchasing or otherwise acquiring
any interest in shares
capital stock of the
corporation shall be deemed to have notice of and
consented to the provisions of this ARTICLE IX.
(Clubok Decl. 11/14/12, Ex. B at Art. IX).
Three out of four of the Derivative Actions were
9
originally filed in the California State Court. 9
According to
the Derivative Plaintiffs' complaints, Facebook's executives
selectively disclosed to the Lead Underwriters that certain
negative trends were causing the Company's revenues to fall
short of earlier estimates for the second quarter of 2012 during
the roadshow.
The Lead Underwriters allegedly, in turn, reduced
their own earnings forecasts for the Company, and conveyed this
information to a select group of potential investors, but not to
the public at large.
The Derivative Plaintiffs maintain that the Facebook
Defendants failed to disclose that the Company was, at the time
of the IPO, experiencing a reduction in revenue growth due to an
increase of users of its Facebook application and website
through mobile devices rather than a traditional personal
computer.
(Cole Compl. , 45, Levy Compl. , 49).
They allege
that the Facebook Defendants, despite knowledge of material,
non-pUblic facts concerning Facebook's reduction
advertising
and declining internal revenue projections, took no action to
stop the IPO from taking place.
Other allegations involve the
9 Plaintiff Hubuschman originally filed his Shareholder Derivative Complaint
for Breach of Fiduciary Duty, Waste of Corporate Assets, and Unjust
Enrichment in the California State Court on May 30, 2012.
plaintiff Cole
originally filed his Shareholder Derivative Complaint for Breach of Fiduciary
Duty, Waste of Corporate Assets, and Unjust Enrichment in the California
State Court on May 31, 2012.
Plaintiff Levy originally filed her Shareholder
Derivative Complaint in the California State Court on June 13, 2012.
10
Offering Documents which allegedly contained improper statements
and projections in violation of applicable federal securities
and state laws.
In addition, according to the PI
ntiffs'
complaints, individually-named Facebook Defendants Zuckerberg,
Breyer and Thiel
(the "Selling Defendants") sold more than $3.9
billion worth
their personally held Facebook stock during the
IPO, with knowledge of the non-public facts concerning the
Company's declining advertising revenues and reduced earnings
forecasts.
On June 28, 2012, Facebook Defendants removed the
Removed Actions to the Northern District of California (the
"California Federal Court"), asserting that the federal court
had original jurisdiction pursuant to 28 U.S.C.
"covered class action" under the Securities
§
1331 and as a
tigation Uniform
Standards Act ("SLUSA").
The following daYt Facebook Defendants and the Lead
Underwriters filed a Second Amended Motion to Transfer and a
Schedule of Actions, which added the Derivative Actions to the
cases they sought to be transferred to the Southern
strict of
New York by the United States Judicial Panel on Multidistrict
Litigation (the "MDL Panel").
The Facebook Defendants also
filed motions to stay the three Removed Actions in California
11
pending the ruling by the MDL Panel on the transfer motion.
Plaintiffs timely filed motions to remand the Removed
Actions to California State Court on August 1, 2012.
On August
3, 2012, Facebook Defendants filed a motion to dismiss the
Removed Actions.
On August 10, 2012, Plaintiffs filed an
administrative motion to extend the briefing schedule and
hearing on Facebook Defendants' motion to dismiss until after
the stay and the remand motions were decided.
The California
Federal Court issued an order granting Plaintiffs' motion on
August 15, 2012.
The parties briefed the stay and remand motions
simultaneously.
On September 11, 2012, the California Federal
Court issued an order granting the stay but declined to hear the
remand motions due to the MDL's pending decision on transferring
the actions.
The MDL Panel granted the motion to transfer to
this Court on October 4, 2012, holding that "the securities and
derivative actions allege that the Facebook and underwriter
defendants violated federal securities laws by providing
material nonpublic information to certain preferred investors,
causing Facebook's stock price to decline
[and]
[c]ertainly these actions share questions of fact."
Facebook, 2012 WL 4748325, at *2.
12
In re
On November 7, 2012, this Court ordered a hearing to
resolve the outstanding issues pertaining to the Derivative
Actions.
(Dkt. No. 15).
On November 14, 2012, Plaintiffs filed
the instant remand motions and Facebook Defendants filed the
instant motion to dismiss.
Plaintiffs seek to have the Removed
Actions remanded to California State Court.
dismis
of all four Derivat
Facebook Defendants
Actions on the independent
threshold grounds of venue, standing and ripeness.
All motions
were marked fully submitted on December 12, 2012.
I. ubject Matter Jurisdiction and The Threshold Grounds for
S
Dismissal
A "federal court generally may not rule on the merits
of a case without first determining that it has jurisdiction
over the category of claim in suit (subject-matter jurisdiction)
and the parties (personal jurisdiction).H
Ltd. v.
~Malaysia
Int'!~Shipping
Corp"
S. Ct. 1184, 167 L. Ed. 2d 15 (2007).
Sinochem Int'l Co.
549 U.S. 422, 430 31, 127
"[T]he first and
fundamental question is that of jurisdiction .
. This question
the court is bound to ask and answer for itself, even when not
otherwise suggested, and without respect to the relation of the
parties to it."
Steel Co. v. Citizens
a Better Environment,
523 U.S. 83, 94, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998).
13
The Second Circuit has reiterated that
" [j]urisdictional questions.
first instance by the
. should be addressed in the
strict Court."
Central States Se. & Sw.
Health & Welfare
433 F.3d 181 t 203
L.L.C.
(2d Cir. 2005).
context of removal."
"This is equally true in the
Banco De Santander Central Hispano t S.A.
v. Consalvi Inttl Inc. t 425 F. Supp. 2d 421 t 424
2006)
i
(S.D.N.Y.
Bakoss v. Certain Underwriters at Lloyds of London
Issuing Certificate No. 0510135 t No. 10 CV-1455 (DLI) (LB)
WL 4529668 t at *4 (E.D.N.Y. Sept. 27 t 2011)
t
2011
("This obligation
extends to removal cases.").
While Article III courts generally adhere to the
principle "that a federal court may not hypothesize subject
matter jurisdiction for the purposes of deciding the merits t "
the Supreme Court in
AG v. Marathon Oil Co. declined to
prescribe a strict mandatory "sequencing of jurisdictional
issues."
526 U.S. 574 t 577 t 119 S. Ct. 1563 t 143 L. Ed. 2d 760
(1999).
The Supreme Court noted that "[i]t is hardly novel for
a federal court to choose among threshold grounds for denying
audience to a case on the merits."
Id. at 585.
"no underlying jurisdictional hierarchYt
lt
Thus t there is
and a federal court
may adjudicate personal jurisdiction before considering a
14
t
challenge to subject matter jurisdiction.
rd. at 578.
Plaintiffs assert that their remand motions must be
resolved first because this Court lacks subject matter
jurisdiction under 28 U.S.C.
§
Defendants' motion to dismiss.
1331 to decide the Facebook
Plaintiffs contend that "[g]iven
the ease with which the jurisdictional question can be
adjudicated by this Court," "the Court, need not, and should
not, engage in
[the] rigorous, complaint and plaintiff-
specific analyses of the merits of each derivative action"
necessary to resolve the other allegedly threshold issues.
(Hubuschman/ Cole Memo. - Motion to Remand at 10-11).
To
support their argument, Plaintiffs Hubuschman and Cole cite to
Studebaker-Worthington Leasing Corp. v. Michael Rachlin & Co.,
LLC, in which the court addressed a plaintiff's remand motion
before it considered the defendant's motion to transfer venue,
because it "must first decide the threshold question whether it
hard] subject matter jurisdiction over thEe] case."
Supp. 2d 529, 533
(E.D.N.Y. 2004).
357 F.
Plaintiffs urge that their
remand motions should similarly be addressed first.
Facebook Defendants, on the other hand, contend that
this Court should "address the threshold grounds for dismissal
that Facebook raised its Dismissal Motion before it addresses
15
Plaintiffs' Remand Motions, because the dismissal issues are
logically antecedent to subject matter jurisdiction and because
it is most efficient and convenient to do SO."
Motion to Remand at 5).
(Def. Opp.
The threshold grounds for dismissal
advanced by the Facebook Defendants include:
(1) improper venue
in violation of an exclusive Delaware forum selection provisioni
(2) lack of standing both for
ilure to make a demand on
Facebook's board of directors (the "Board") and because
Plaintiffs cannot allege or demonstrate that they owned Facebook
shares at the time of the alleged wrongdoingi and (3) lack of
ripeness because Plaintiffs' claims are expressly predicated on
speculative, future harm, i.e., that Facebook will lose the
civil Securities Act cases filed against it.
According to the
Facebook Defendants, "[alII of these issues can and should be
heard before Plaintiffs' Remand Motions.
II
(Id. ) .
As an initial matter, Studebaker and the other cases
on which Plaintiffs rely for the proposition that remand must be
decided first, pre-date Sinochem.
Motion to Remand at 6 11).
(See Hubuschman/ Cole Memo.
In Sinochem, the Supreme Court noted
that "[b]oth Steel Co. and Ruhrgas recognized that a federal
court has leeway to choose among threshold grounds for denying
audience to a case on the merits."
Sinochem, 549 U.S. at 431.
Such threshold non-merits grounds for dismissing a claim,
16
include determinations as to whether abstention is proper,
Spargo v. New York State Com'n on Judicial Conduct, 351 F.3d 65,
74 (2d Cir. 2003), whether a foreign tribunal is a more suitable
arbiter under the forum non conveniens doctrine, Sinochem, 549
U.S. at 434-35, or the resolution of "justiciability issues
before deciding whether jurisdiction is proper."
10
Freund v .
. of France, 592 F. Supp. 2d 540, 551 (S.D.N.Y. 2008).
In Can v. United States, for example, the Second
rcuit noted that "justiciability is also a 'threshold
question,'" which a court may cons
jurisdiction.
before subject matter
14 F.3d 160, 162 n.1 (2d Cir. 1994).
stated that "where, as appears to be true here,
may be a less knotty question than j
The Court
justi
ability
sdiction, we think it not
inappropriate to begin by examining that question."
Id.
(citing
to Bi v. Union Carbide Chemicals and Plastics Co., 984 F.2d 582
(2d Cir. 1993))
(rejecting an appeal on consideration of
standing, in advance of consideration of subject matter
jurisdiction)
i
(2d Cir. 2009)
see also Pettus v. Morgenthau, 554 F.3d 293, 298
(finding that "standing.
is intended to be a
threshold issue at least tentatively decided at the outset of
"Justiciability . . . is an umbrella-like term which finds beneath its
cover the various doctrines that shape and define our authority to act in
particular cases: ripeness, standing, mootness, advisory opinion, and
political question." Jones v. Deutsch, 715 F. Supp. 1237, 1242 (S.D.N.Y.
10
1989) .
17
the litigation.").
In addition to justiciability, courts have found
improper venue to be a non-merits-based determination.
See
Crotona 1967 Corp. v. Vidu Bro. Corp., No. 09-Civ-10627 (NRB) ,
2010 WL 5299866, at *1 n.1
(S.D.N.Y. Dec. 21, 2010)
(finding
that "[i]mproper venue is not the type of merits-based dismissal
which the Supreme Court has cautioned cannot take place before a
court has assured itself of subject matter jurisdiction.")
i
see
also Shay v. Sight & Sound Sys., Inc., 668 F. Supp. 2d 80, 82
(D.D.C. 2009)
(stating that "a court may decide questions of
venue before addressing issues of personal or subject matter
jurisdiction."); Fed. R. Civ. P. 41 (b)
(listing improper venue
among non-merits-based dismissals) .
Accordingly, precedent indicates that, in appropriate
circumstances, a federal court has the discretion and leeway to
dismiss a case based on certain threshold issues prior to
addressing subject matter jurisdiction.
See Sinochem, 549 U.S.
at 431; Ruhrgas, 526 U.S. at 584-85; Can, 14 F.3d at 162 n.1.
In particular, the issues of venue, derivative standing and
ripeness are "the sort of 'threshold question[s] '" that "may be
resolved before addressing jurisdiction."
Tenet v. Doe, 544
U.S. 1, 6 n.4, 125 S. Ct. 1230, 161 L. Ed. 2d 82
18
(2005)
(citing
cases).
The fact that these threshold issues "may [ ] involve a
brush with factual and legal issues of the underlying dispute"
does not transform them into merits issues.
Sinochem, 549 U.S.
at 433.
In addition, procedural convenience, efficiency and
judicial economy warrant consideration of the threshold
dismissal issues first.
As the Honorable Maxine M. Chesney of
the Northern District of California ruled, the three Removed
Actions and Childs "give rise to a number of common issues"
including "whether the cases are improperly venued in any court
other than a state court in Delaware, whether the cases are ripe
to the extent they are based on a theory that Facebook, Inc. has
suffered any injury by reason of defendants' alleged violation
of federal securities laws, and whether plaintiffs lack standing
to seek relief on behalf of Facebook, Inc."
Hubuschman v.
Zuckerberg, No. C-12-3366(MMC), 2012 WL 3985509, at *2
(N.D.
Cal. Sept. 11, 2012).
Courts involved in multidistrict litigation have been
cognizant of the numerous potential problems that may arise when
such common issues are addressed.
See e.g., See In re
Integrated Resources, Inc., MDL No. 897, 1995 WL 234975, at *4
(S.D.N.Y. Apr. 21, 1995)
("It is a fundamental assumption of the
19
multidistrict system that having only one court sort out the
facts of complex and multi faced transactions and occurrences
which have given rise to many competing legal claims well serves
the goal of judicial economy. ")
Shareholders Lit
Ch. Mar. 29, 2011)
i
In re Allion Healthcare Inc.
., No. 5022-CC, 2011 WL 1135016, at *4 (Del.
(identifying certain problems that may arise
in a multi forum litigation including that "[d) efense counsel is
forced to litigate the same case - often identical claims - in
multiple courts.
Judicial resources are wasted as judges in two
or more jurisdictions review the same documents and at times are
asked to decide the exact same motions.
Worse still, if a case
does not settle or consolidate in one forum, there is the
possibility that two judges would apply the law differently or
otherwise reach different outcomes, which would then leave the
law in a confused state and pose full faith and credit problems
for all involved. ") .
These concerns are implicated in the instant case
because even if the removed cases were remanded, the forum
selection, standing and ripeness issues in the related case
Childs would still require adjudication.
Adjudicating one case
while remanding others with "common issues" would be duplicative
and beget potentially conflicting rulings by this Court and the
California State Court.
Avoiding this inefficiency and
20
inconsistency further warrants the consideration of the
justiciability issues before the removal issues.
XAC, LLC, No., 2007 WL 1308356, at *2
(W.D. Ky. May 2, 2007)
(stating that "since this court's consideration of venue is
inevitable, and
s determination of personal jurisdiction is
not, judicial economy favors deciding the motion to trans
before the motion to dismiss this action for lack
j
sdiction.")
personal
Inc. v. Global Const. Co.
i
LLC., No. 3:07-CV-570, 2007 WL 3468997, at *1 2 (E.D. Va. Nov.
14, 2007)
{citing Sinochem as authority for transferring case to
another federal district without considering whether it had
jurisdiction over the parties)i R
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