Nally v. Reichental et al
Filing
59
MEMORANDUM OPINION AND ORDER CONSOLIDATING CASES AND APPOINTING CO-LEAD PLAINTIFFS AND CO-LEAD COUNSEL. Signed by Honorable Mary Geiger Lewis on 3/27/2017. Associated Cases: 0:15-cv-03756-MGL, 0:16-cv-01016-MGL, 0:16-cv-02810-MGL, 0:16-cv-02995-MGL(cbru, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ROCK HILL DIVISION
JAMES NALLY, derivatively on behalf of )
Case Number 0:15-cv-03756-MGL
3D SYSTEMS CORPORATION,
)
)
Plaintiff,
)
)
v.
)
)
ABRAHAM N. REICHENTAL, DAMON )
J. GREGOIRE, CHARLES W. HULL,
)
DANIEL S. VAN RIPER, G. WALTER
)
LOEWENBAUM, II, JIM D. KEVER,
)
KAREN E. WELKE, KEVIN S. MOORE, )
PETER H. DIAMANDIS, WILLIAM D.
)
HUMES, and WILLIAM E. CURRAN,
)
)
Defendants.
)
)
and
)
)
3D SYSTEMS CORPORATION,
)
)
Nominal Defendant.
)
)
______________________________________________________________________________
MARK FOSTER,
Plaintiff,
v.
ABRAHAM REICHENTAL; DAMON
GREGOIRE; CHARLES HULL;
WILLIAM E. CURRAN; KEVIN S.
)
)
)
)
)
)
)
)
)
Case Number 0:16-cv-01016-MGL
MOORE; DANIEL VAN RIPER;
WALTER G. LOEWENBAUM II; JIM D.
KEVER; KAREN WELKE; PETER
DIAMANDIS; AND WILLIAM HUMES ,
)
)
)
)
)
Defendants.
)
)
and
)
)
3D SYSTEMS CORPORATION,
)
)
Nominal Defendant.
)
)
______________________________________________________________________________
DAVE HOWES, Derivatively on Behalf of )
Case Number 0:16-02810-MGL
3D SYSTEMS CORPORATION,
)
)
Plaintiff,
)
)
v.
)
)
ABRAHAM N. REICHENTAL, DAMON )
J. GREGOIRE, CHARLES W. HULL,
)
THEODORE A. HULL, WILLIAM E.
)
CURRAN, PETER H. DIAMANDIS,
)
WILLIAM D. HUMES, JIM D. KEVER, )
G. WALTER LOEWENBAUM, KEVIN S. )
MOORE, DANIEL S. VAN RIPER, and
)
KAREN E. WELKE,
)
)
Defendants.
)
)
and
)
)
3D SYSTEMS CORPORATION, a
)
Delaware corporation,
)
)
Nominal Defendant.
)
)
______________________________________________________________________________
PHILLIP AMEDURI, Derivatively on
)
Behalf of 3D SYSTEMS CORPORATION, )
)
Plaintiff,
)
)
Case Number 0:16-02995-MGL
v.
)
)
ABRAHAM N. REICHENTAL, DAMON )
J. GREGOIRE, CHARLES W. HULL,
)
THEODORE A. HULL, WILLIAM E.
)
CURRAN, PETER H. DIAMANDIS,
)
WILLIAM D. HUMES, JIM D. KEVER, )
G. WALTER LOEWENBAUM, KEVIN S. )
MOORE, DANIEL S. VAN RIPER, and
)
KAREN E. WELKE,
)
)
Defendants.
)
)
and
)
)
3D SYSTEMS CORPORATION, a
)
Delaware corporation,
)
)
Nominal Defendant.
)
)
MEMORANDUM OPINION AND ORDER CONSOLIDATING CASES
AND APPOINTING CO-LEAD PLAINTIFFS AND CO-LEAD COUNSEL
I.
INTRODUCTION
Plaintiffs filed these related cases as shareholder derivative actions (collectively, Related
Actions) on behalf of Nominal Defendant 3D Systems Corporation (3D Systems) against certain
of its current and former officers and directors. Pending before the Court is Plaintiff James
Nally=s (Nally) motion to consolidate the Related Actions, appoint Nally as Lead Plaintiff, and
approve Nally’s selection of Lead Counsel. Also pending before the Court is Plaintiff Dave
Howes (Howes), Plaintiff Mark Foster (Foster), and Plaintiff Philip Ameduri’s (Ameduri) joint
motion (Howes’s motion) to consolidate the Related Actions, appoint Howes as Lead Plaintiff,
and approve Howes’s selection of Lead Counsel. Having carefully considered the motions, the
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responses, the replies, Nally’s sur-reply, the record, and the applicable law, the Court will grant
the motions in part and deny them in part.
II.
FACTUAL AND PROCEDURAL HISTORY
These Related Actions all stem from the facts underlying a securities class action pending
in this Court, captioned KBC Asset Management NV v. 3D Systems Corp., et al., No. 0:15-cv02393-MGL (the Securities Class Action). In the Securities Class Action, investors allege 3D
Systems and its insiders made false and misleading statements to the market regarding 3D
Systems’ prospects, causing the stock to trade at inflated prices during the period October 29,
2013, through May 5, 2015.
Nally filed the first of the Related Actions on September 18, 2015, Nally v. Reichental et
al., No. 0:15-cv-03756-MGL. Foster filed his lawsuit on April 1, 2016, Foster v. Reichental et
al., No. 0:16-cv-01016-MGL, Howes filed his case on August 11, 2016, Howes v. Reichental et
al., No. 0:16-cv-02810-MGL, and Ameduri filed his claims on September 1, 2016, Ameduri v.
Reichental et al., No. 0:16-cv-02995-MGL. This Court stayed each of the Related Actions until
the earlier of the close of discovery in the Securities Class Action or the deadline for filing an
appeal of the dismissal of the Securities Class Action.
Nally filed an Amended Complaint on January 5, 2017. Then, on February 1, 2017, Nally
filed his motion to consolidate the Related Actions, appoint Nally as Lead Plaintiff, and approve
Nally’s selection of Lifshitz & Miller as Lead Counsel and Duffy & Young, LLC as Liaison
Counsel. Defendants responded in support of the motion to consolidate the Related Actions but
took no position regarding the appointment of Lead Plaintiff and Lead Counsel. Meanwhile,
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Howes, Foster, and Ameduri filed a response in opposition to the portion of Nally’s motion seeking
appointment as Lead Plaintiff and approval of Lead Counsel, to which Nally filed a reply.
On February 15, 2017, Howes, Foster, and Ameduri filed their joint motion to consolidate
the Related Actions, appoint Howes as Lead Plaintiff, and approve Howes’s Counsel Structure.
Howes supports a proposed Executive Committee of Plaintiffs’ counsel, with Schubert Jonckheer
& Kolbe LLP designated as Chair of the Executive Committee, Johnson & Weaver, LLP and
Bottini & Bottini, Inc. both serving as members thereof, and Strom Law Firm, LLC serving as
Liaison Counsel. Nally filed a response in opposition to the portion of Howes’s motion seeking
appointment as Lead Plaintiff and approval of Counsel Structure, to which Howes filed a reply
and Nally filed a sur-reply.
The Court, having been fully briefed on the relevant issues, is now prepared to discuss the
merits of Nally’s and Howes’s motions.
III.
DISCUSSION AND ANALYSIS
A.
Motions to Consolidate
Rule 42(a) of the Federal Rules of Civil Procedure governs consolidation, providing “[i]f
actions before the court involve a common question of law or fact, the court may: (1) join for
hearing or trial any or all matters at issue in the actions; (2) consolidate the actions; or (3) issue
any other orders to avoid unnecessary cost or delay.” Fed. R. Civ. P. 42(a). The power to
consolidate related actions falls within the broad inherent authority of every court “to control the
disposition of the causes on its docket with economy of time and effort for itself, for counsel, and
for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936); see also Arnold v. E. Air Lines,
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Inc., 681 F.2d 186, 193 (4th Cir. 1982) (upholding the district court’s broad discretion under Rule
42(a)).
Consolidation of similar shareholder derivative actions can be particularly beneficial to
courts and parties by expediting pretrial proceedings, avoiding needless duplication, and
minimizing expenditure of time, effort, and money. See MacAlister v. Guterma, 263 F.2d 65, 68
(2d Cir. 1958) (“The purpose of consolidation is to permit trial convenience and economy in
administration.”). Moreover, “when consolidation is appropriate, the Court has the discretion to
order the consolidation of subsequently-filed or transferred cases that allege similar facts as those
alleged in the current shareholder derivative suits.” See, e.g., Horn v. Raines, 227 F.R.D. 1, 2
(D.D.C. 2005).
As observed above, all parties in the Related Actions request the Court consolidate the
Related Actions under Rule 42(a), as the Related Actions involve common questions of law or
fact. Each of the Related Actions alleges claims for breach of fiduciary duty arising out of the
same or similar conduct. Consequently, each case will involve essentially the same motion
practice, discovery, and trial considerations. The Court, in its discretion, holds consolidation of
the Related Actions will be the most efficient use of the Court’s and the parties’ resources, and, in
light of the agreement of the parties on this issue, the Court will therefore grant in part the motions
to the extent they seek consolidation of the Related Actions.
B.
Motions to Appoint Lead Plaintiff
Having granted the parties’ motions to consolidate the Related Actions, the Court now
turns to Nally’s and Howes’s competing motions to appoint a Lead Plaintiff for the nowconsolidated actions. Rule 23.1 of the Federal Rules of Civil Procedure requires a derivative
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plaintiff who leads a shareholder derivative suit to “fairly and adequately represent the interests of
shareholders or members who are similarly situated in enforcing the right of the corporation or
association.” Fed. R. Civ. P. 23.1(a). A shareholder serving as lead plaintiff in such an action
occupies a position “of a fiduciary character,” in which “[t]he interests of all in the redress of the
wrongs are taken into his hands, dependent upon his diligence, wisdom, and integrity.” Cohen v.
Beneficial Indus. Loan Corp., 337 U.S. 541, 549 (1949). Where multiple shareholder derivative
actions are filed, courts have considered the following factors to determine the plaintiff who would
best represent the interests of the shareholders: “(1) whether the plaintiff held shares during the
relevant time period; (2) whether the plaintiff is represented by capable counsel; and (3) whether
the plaintiff is subject to unique defenses that would make appointment problematic.” See Horn,
227 F.R.D. at 3.
Both Nally and Howes equally satisfy the factors outlined above, and the Court holds both
Plaintiffs are capable of fairly and adequately representing the interests of the shareholders.
Accordingly, the Court will appoint Nally and Howes as Co-Lead Plaintiffs in these consolidated
actions. Therefore, the Court will deny in part Nally’s and Howes’s motions to the extent they
seek exclusive appointment as Lead Plaintiff but otherwise grant their requests.
C.
Motions to Appoint Lead Counsel
Having consolidated the Related Actions and appointed Nally and Howes as Co-Lead
Plaintiffs, the Court will now consider the parties’ arguments regarding Lead Counsel. It is wellestablished a court having consolidated actions before it may, in its discretion, appoint Lead
Counsel to direct, manage, and prosecute the consolidated actions. See Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure § 2385 (2d ed. 1987); In re Showa Denko K.K.
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L-Tryptophan Prod. Liab. Litig.-II, 953 F.2d 162, 165 (4th Cir. 1992) (“The multiplicity of suits
requires that the district court be allowed to combine procedures, appoint lead counsel, recognize
steering committees of lawyers, limit and manage discovery, etc. to minimize expense to all
litigants and to provide judicial efficiency.”).
In selecting Lead Counsel, the guiding principle is who will “best serve the interest of the
plaintiffs.”
See, e.g., Horn, 227 F.R.D. at 3.
The criteria courts consider in making this
determination include counsel’s “experience and prior success record, the number, size, and extent
of involvement of represented litigations, the advanced stage of proceedings in a particular suit,
and the nature of the causes of action alleged.” See 3 Herbert B. Newberg & Alba Conte, Newberg
on Class Actions § 9.35 at 388 (4th ed. 2002). Additionally, “courts have considered the quality
of the pleadings, the economic interest of the plaintiffs, and the vigor with which the plaintiffs
have prosecuted their lawsuits.” See, e.g., Horn, 227 F.R.D. at 3.
The Court holds Nally’s and Howes’s proposed counsel possess extensive experience and
impressive records of success in cases similar to the Related Actions. The firms represent
Plaintiffs with significant financial interests in the outcome of the litigation and have prosecuted
the litigation with well-pled and thorough pleadings. The combined experience of these firms
will provide Plaintiffs with counsel who will effectively represent their interests. Consequently,
the Court appoints Lifshitz & Miller, Schubert Jonckheer & Kolbe, Johnson & Weaver, and Bottini
& Bottini as Co-Lead Counsel, and Duffy & Young and Strom Law Firm as Co-Liaison Counsel.
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IV.
CONCLUSION
Wherefore, based on the foregoing discussion and analysis, it is the judgment of this Court
the portions of Nally’s and Howes’s motions seeking to consolidate the Related Actions are
GRANTED, Howes’s motion for appointment as Lead Plaintiff and approval of his counsel
structure is GRANTED IN PART AND DENIED IN PART, and Nally’s motion for appointment
as Lead Plaintiff and approval of Lead Counsel is GRANTED IN PART AND DENIED IN
PART. Consequently, it is hereby ORDERED the Related Actions are consolidated for all
purposes, and Nally and Howes are appointed as Co-Lead Plaintiffs.
Moreover:
1.
All further proceedings in these cases shall proceed simultaneously as if they were
one action.
2.
All future filings in these consolidated cases shall comply with the instructions
contained in the forthcoming Notice Regarding Consolidated Cases.
3.
All past filings in each of the consolidated cases will be deemed to have been filed
in all cases.
4.
The Court hereby appoints Lifshitz & Miller, Schubert Jonckheer & Kolbe,
Johnson & Weaver, and Bottini & Bottini as Co-Lead Counsel, and Duffy & Young
and Strom Law Firm as Co-Liaison Counsel.
5.
As per Defendants’ request, Co-Lead Plaintiffs and Co-Lead Counsel are hereby
directed, to the extent possible, to involve the other three similar derivative actions
pending outside this Court (In re 3D Systems Corp. Shareholder Derivative
Litigation, Booth, and Gee) and any others that have been or may be filed in any
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future efforts to coordinate or otherwise direct the derivative litigation on behalf of
3D Systems.
IT IS SO ORDERED.
Signed this 27th day of March, 2017, in Columbia, South Carolina.
s/ Mary Geiger Lewis
MARY GEIGER LEWIS
UNITED STATES DISTRICT JUDGE
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