Sherman v. CVS Health Corporation et al

Filing 9

MEMORANDUM AND ORDER granting (6) Motion to Consolidate Cases in case 1:17-cv-00378-WES-LDA; granting (6) Motion to Consolidate Cases in case 1:17-cv-00399-WES-PAS; granting (6) Motion to Consolidate Cases in case 1:17-cv-00425-WES-PAS. So Ordered by Chief Judge William E. Smith on 12/6/2017. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
ALISON SHERMAN, Derivatively on
behalf of CVS HEALTH CORPORATION,

)
)
)
Plaintiff,
)
)
v.
)
)
LARRY J. MERLO, DAVID M. DENTON,
)
DAVID W. DORMAN, RICHARD J.
)
SWIFT, C. DAVID BROWN II, JEAN)
PIERRE MILLON, ANNE M. FINUCANE,
)
TONY L. WHITE, WILLIAM C. WELDON, )
NANCY-ANN M. DEPARLE, RICHARD M.
)
BRACKEN, and ALECIA A. DECOUDREAUX,)
)
Defendants,
)
)
and
)
)
CVS HEALTH CORPORATION, a
)
Delaware corporation,
)
)
Nominal Defendant.
)
)
___________________________________)
)
)
ELIE FEGHALI, Derivatively on
)
behalf of CVS HEALTH CORPORATION, )
)
Plaintiff,
)
)
v.
)
)
LARRY J. MERLO, DAVID M. DENTON,
)
DAVID W. DORMAN, RICHARD J.
)
SWIFT, C. DAVID BROWN II, JEAN)
PIERRE MILLON, ANNE M. FINUCANE,
)
TONY L. WHITE, WILLIAM C. WELDON, )
NANCY-ANN M. DEPARLE, RICHARD M.
)
BRACKEN, and ALECIA A. DECOUDREAUX,)
)
Defendants,
)
)

C.A. No. 17-378 WES

C.A. No. 17-399 WES

and

)
)
CVS HEALTH CORPORATION, a
)
Delaware corporation,
)
)
Nominal Defendant.
)
)
___________________________________)
)
ALAN BANCHALTER, Derivatively on
)
behalf of CVS HEALTH CORPORATION, )
)
Plaintiff,
)
)
v.
)
)
LARRY J. MERLO, DAVID M. DENTON,
)
DAVID W. DORMAN, RICHARD J.
)
SWIFT, C. DAVID BROWN II, JEAN)
PIERRE MILLON, ANNE M. FINUCANE,
)
TONY L. WHITE, WILLIAM C. WELDON, )
NANCY-ANN M. DEPARLE, RICHARD M.
)
BRACKEN, and ALECIA A. DECOUDREAUX,)
)
Defendants,
)
)
and
)
)
CVS HEALTH CORPORATION, a
)
Delaware corporation,
)
)
Nominal Defendant.
)
___________________________________)

C.A. No. 17-425 WES

MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
This matter is before the Court on a joint motion (ECF No. 6)
filed

by

Plaintiffs

Alison

Sherman,

Elie

Feghali,

and

Alan

Banchalter (collectively, "Plaintiffs"); and Defendants Larry J.
Merlo, David M. Denton, David W. Dorman, Richard J. Swift, C. David
Brown II, Jean-Pierre Millon, Anne M. Finucane, Tony L. White,
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William C. Weldon, Nancy-Ann M. DeParle, Richard M. Bracken, Alecia
A. DeCoudreaux (collectively, “Defendants"); and nominal defendant
CVS Health Corporation ("CVS Health" or the "Company"). The joint
motion asks the Court to consolidate, appoint lead counsel and
liaison counsel, and stay the above-captioned actions pending the
resolution of related actions. For the reasons cited therein, the
Court

hereby

GRANTS

the

parties’

joint

motion

and

ORDERS

as

follows:

1.

The following actions shall be consolidated before this

Court for all purposes, including pre-trial proceedings and trial
(the "Consolidated Derivative Action"):
•

Sherman v. Merlo, C.A. No. 17-378 WES

•

Feghali v. Merlo, C.A. No. 17-399 WES

•

Banchalter v. Merlo, C.A. No. 17-425 WES
2.

Every

pleading

filed

in

the

Consolidated

Derivative

Action, or any separate action included herein, must bear the
following caption:
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
IN RE CVS HEALTH CORPORATION
DERIVATIVE LITIGATION

)
)
)
______________________________)
)
This Document Relates To:
)
)
ALL ACTIONS.
)
______________________________)

Lead C.A. No. 17-378 WES
(Consolidated with C.A. Nos.
17-399 WES and 17-425 WES)
(Derivative Action)

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3.

The files of the Consolidated Derivative Action will be

maintained in one file under Lead C.A. No. 17-378 WES. This order
granting consolidation applies to each case arising out of the
same, or substantially the same, transactions or events as the
Consolidated Derivative Action, which is subsequently filed in,
removed to, or transferred to this Court.
4.

Defendants are not required to respond to the complaints

in these actions or to the complaint in any action consolidated
into this action, other than a final consolidated complaint or a
complaint designated as the operative complaint, in which case
Defendants shall have 30 days from the filing of such final or
operative complaint to move against or answer that complaint. In
the event that this stay terminates before the filing of a final
consolidated complaint or a complaint designated as the operative
complaint, and unless otherwise ordered by the Court or agreed
among the Parties, Defendants shall move against or answer the
complaints in these actions within 30 days of the termination of
the stay.
5.

Pursuant to Rule 5(b)(2)(E)-(F) of the Federal Rules of

Civil Procedure, service by e-mail transmission shall be permitted
in

addition

participants,

to

service

service

via

shall

ECF
be

transmission.

4

notification.
deemed

For

effective

non-CM/ECF

upon

e-mail

6.
serve

as

Robbins Arroyo LLP and Gainey McKenna & Egleston shall
co-lead

counsel

for

Plaintiffs

in

the

Consolidated

Derivative Action. Co-lead counsel shall have authority to speak
for Plaintiffs in matters regarding pre-trial and trial procedure
and settlement negotiations, and shall make all work assignments
in such a manner as to facilitate the orderly and efficient
prosecution of the Consolidated Derivative Action, and to avoid
duplicative or unproductive efforts. Moore, Virgadamo & Lynch,
Ltd., and Motley Rice, LLC, shall serve as co-liaison counsel in
the Consolidated Derivative Action.
7.

The

Consolidated

Derivative

Action

and

any

and

all

deadlines in that Action shall be stayed pending the resolution of
Texas ex rel. Winkelman v. CVS Health Corp., No. D-1-GV-14000388
(Tex. Dist. Ct. - Travis Cty., filed April 7, 2014; unsealed Jan.
5, 2017) and Corcoran v. CVS Health Corp., No. 15-cv-03504 (N.D.
Cal., filed July 30, 2015) – including the exhaustion of any and
all appeals in those actions – and consistent with the paragraphs
below.
8.

With regard to the Sherman, Feghali, and Banchalter

complaints, and with regard to any amendment or supplement to the
complaints (including any consolidated complaint) that elaborates
upon facts or claims relating to acts or transactions alleged in
the original complaints, or that asserts new legal theories of
recovery based upon the acts or transactions that formed the
5

substance

of

the

original

Sherman,

Feghali,

and

Banchalter

complaints, any challenge to Plaintiffs' standing to maintain the
derivative actions (or Consolidated Derivative Action) on the
ground that Plaintiffs have failed to plead facts sufficient to
raise a reasonable doubt that a pre-litigation demand on the
Company's Board of Directors ("Board") would have been futile shall
be determined based on the membership of the Company’s Board on
the date Plaintiffs filed their original complaints (August 16,
2017, August 28, 2017, and September 12, 2017, respectively).
9.

In

the

event

that

Plaintiffs

amend

their

complaint

(including in a consolidated complaint) to include materially
different facts and/or claims, any such challenge to those new or
materially

amended

membership

of

the

claims
Board

shall
as

of

be
the

determined
date

of

based

the

on

the

amended

(or

consolidated) complaint.
10.

Defendants agree to provide Plaintiffs with reasonable

notice of the filing during the pendency of the stay of any lawsuit
asserting derivative claims on behalf of CVS Health that are
similar to the claims asserted in the complaints.
11.

Should a lawsuit asserting similar derivative claims on

behalf of CVS Health be filed during the pendency of the stay, and
should the plaintiff in any such action refuse to stay that laterfiled lawsuit, any Party may lift the stay in this Consolidated

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Derivative Action by providing 10 days' written notice to all
Parties and to the Court.
12.

The fact that the Parties have entered into this stay

shall not be used in any way to prejudice any of the Parties in
this Consolidated Derivative Action.
13.

Within 14 days of the date that any lifting of the stay

takes effect, the Parties shall meet and confer to reach an
agreement regarding a schedule for filing and responding to any
amended or consolidated complaint. In no event shall Defendants'
response to any complaint be due sooner than the later of 30 days
after the Motion is decided or 30 days after the stay is lifted.
14.

Unless the Court instructs otherwise, the Parties will

file with the Court a status update regarding this case every 120
days.
IT IS SO ORDERED:

William E. Smith
Chief Judge
Date: December 6, 2017

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