Jherome Deguzman, derivatively on behalf of Petco Health and Wellness Company, Inc. v. Joel D. Anderson, et al.

• Court: District Court, S.D. California
• Decided: November 17, 2025
• Docket: 3:25-cv-01985
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JHEROME DEGUZMAN, derivatively on Case Nos.: 25-CV-1964 JLS (VET) behalf of PETCO HEALTH AND 25-CV-1985 JLS (VET) 12 WELLNESS COMPANY, INC., 13 Plaintiff, ORDER GRANTING REVISED 14 v. UNOPPOSED MOTION TO 15 CONSOLIDATE RELATED JOEL D. ANDERSON, et al., SHAREHOLDER DERIVATIVE 16 Defendants ACTIONS AND APPOINT CO-LEAD 17 COUNSEL FOR PLAINTIFFS and 18 PETCO HEALTH AND WELLNESS (ECF No. 14) 19 COMPANY, INC., 20 Nominal Defendant. 21

DANIELLE MILLER, derivatively on 22 behalf of PETCO HEALTH AND 23 WELLNESS COMPANY, INC., 24 Plaintiff, 25 26 27 28 1

2 v.

3 JOEL D. ANDERSON, et al., 4 Defendants 5 and 6 PETCO HEALTH AND WELLNESS 7 COMPANY, INC., Nominal Defendant 8 9 10 Presently before the Court is Plaintiffs Jherome Deguzman’s and Danielle Miller’s 11 Revised Unopposed Motion to Consolidate Related Shareholder Derivative Actions and 12 Appoint Co-Lead Counsel for Plaintiffs (“Mot.,” ECF No. 14) in the above-captioned 13 actions (“Related Derivative Actions”). Also before the Court is a Statement of Non- 14 Opposition to Revised Unopposed Motion to Consolidate Related Shareholder Derivative 15 Actions and Appoint Co-Lead Counsel for Plaintiffs (“Non-Opp’n,” ECF No. 15) filed by 16 Defendants Joel D. Anderson, R. Michael Mohan, Ronald V. Coughlin, Jr., Sabrina 17 Simmons, Brian LaRose, Michael Nuzzo, Glenn Murphy, Iris Yen, Cameron Breitner, 18 Gary Briggs, Nishad Chande, David Lubek, Christopher J. Stadler, Mary Sullivan, Christy 19 Lake, Maximilian Biagosch, and Jennifer Pereira, and Nominal Defendant Petco Health 20 and Wellness Company, Inc. (“Petco”) (collectively, “Defendants”). For the reasons stated 21 below, the Court GRANTS Plaintiffs’ Motion (ECF No. 14). 22 BACKGROUND 23 On June 30, 2025, Joshua Spurbeck filed a complaint against Petco, alleging 24 violations of § 10(b), Rule 10b-5, and § 20(a) of the Securities Exchange Act of 1934 25 (“Exchange Act”). See generally Spurbeck v. Petco Health and Wellness Company, Inc. 26 et al., 25-CV-1667 JLS (VET) (“Spurbeck Action”), ECF No. 1 (“Spurbeck Compl.”). 27 Spurbeck’s claims arise from allegedly materially false and misleading statements 28 1 regarding the Petco’s growth around the time of the COVID-19 pandemic, despite its 2 declining financial performance and eventual stock price drops. Id. ¶ 6–21. Spurbeck 3 alleges that because “Petco’s pandemic-related tailwinds were unsustainable,” “the 4 strength of Petco’s differentiated product strategy was overstated” and the named 5 defendants “downplayed the true scope and severity of the foregoing issues, the magnitude 6 of changes needed to rectify those issues, and the likely negative impacts.” Id. ¶ 6. 7 Soon after Spurbeck brought the above-described securities class action against 8 Petco, Plaintiffs Jherome Deguzman and Danielle Miller brought the Related Derivative 9 Actions on behalf of Petco against Defendants, who largely have served on Petco’s Board 10 of Directors. Deguzman filed a complaint on August 1, 2025, alleging violations of § 14(a) 11 of the Exchange Act, 15 U.S.C. § 78n(a), and Rule 14a-9 (17 C.F.R.§240.14a-9), breach 12 of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, waste of 13 corporate assets, and contribution under §§ 10(b) and 21D of the Exchange Act. See 14 generally ECF No. 1 (“Deguzman Compl.”). On the same day, Miller filed a complaint 15 alleging violations of § 14(a) of the Exchange Act, breach of fiduciary duties, unjust 16 enrichment, abuse of control, gross mismanagement, waste of corporate assets, and 17 contribution under §§ 10(b) and 21D of the Exchange Act. See generally Miller v. 18 Anderson et al., 25-CV-1985 JLS (VET), ECF No. 1 (“Miller Compl.”). Although the 19 claims contained therein differ, the Deguzman and Miller Complaints are nearly identical 20 to the Spurbeck Complaint in that they arise out of similar allegedly false and misleading 21 statements in connection with Petco’s performance and subsequent stock price drops 22 between approximately 2021 and 2025. See Deguzman Compl. ¶¶ 67–114; Miller Compl. 23 ¶¶ 86–157; cf. Spurbeck Compl. ¶¶ 46–109. 24 On August 21, 2025, Plaintiffs filed a Joint Motion to Consolidate Related 25 Shareholder Derivative Actions and Appoint Co-Lead Counsel for Plaintiffs. See ECF 26 No. 5. The Court denied the joint motion without prejudice and ordered Plaintiffs to 27 include a more robust analysis as to their request to appoint co-lead counsel and to address 28 1 whether consolidating the Related Derivative Actions with the Spurbeck Action would 2 serve the interests of judicial economy. ECF No. 6 (“Order”) at 2–3. The Court further 3 ordered Plaintiffs to serve the Order on Plaintiff Joshua Spurbeck and invited Spurbeck to 4 weigh in on consolidation. Id. at 3. 5 In response to the Court’s Order, Plaintiffs filed the instant motion on September 24, 6 2025, seeking to consolidate the Related Derivative Actions, and any later-filed related 7 actions, under Lead Case No. 3:25-cv-01964-JLS-VET and to appoint The Brown Law 8 Firm, P.C. (“The Brown Law Firm”) and Rigrodsky Law, P.A. (“Rigrodsky Law”) as co- 9 lead counsel representing Plaintiffs in the consolidated action. Mot. at 1. Plaintiffs and 10 Defendants request that the Court not consolidate the Related Derivative Actions with the 11 Spurbeck Action. Id.; Non-Opp’n at 1. Spurbeck did not file a response to the Court’s 12 Order. See generally Docket. 13 CONSOLIDATION 14 Federal Rule of Civil Procedure 42(a), permits a district court to consolidate actions 15 “involv[ing] a common question of law or fact[.]” Fed. R. Civ. P. 42(a). “A district court 16 generally has ‘broad’ discretion to consolidate actions.” Pierce v. Cnty. of Orange, 526 17 F.3d 1190, 1203 (9th Cir. 2008). “The purpose of consolidation is to avoid the unnecessary 18 costs or delays that would ensue from proceeding separately with claims or issues sharing 19 common aspects of law or fact.” Mohanty v. BigBand Networks, Inc., No. C 07-5101 SBA, 20 2008 WL 426250, at *2 (N.D. Cal. Feb. 14, 2008) (citing EEOC v. HBE Corp., 135 F.3d 21 543, 550 (8th Cir. 1998)). 22 Here, the Related Derivative Actions are brought against substantially the same 23 Defendants, allege similar claims, and arise out of the same allegedly materially false and 24 misleading statements made by Defendants. See Mot. at 3–4. Consolidation of the Related 25 Derivative Actions is therefore appropriate and serves the purposes of consolidation. See 26 Silva on behalf of Dexcom, Inc. v. Sayer, No. 24-CV-1645-RSH-VET, 2024 WL 5145970, 27 at *2 (S.D. Cal. Dec. 16, 2024) (finding consolidation appropriate where shareholder 28 1 derivative suits were “brought against the same defendants, allege[d] the same or 2 substantially identical violations of law, and involve[d] the same predicate facts”) 3 (collecting cases); Mohanty, 2008 WL 426250, at *2. 4 However, Plaintiffs argue that consolidation of the Related Derivative Actions with 5 the Spurbeck Action is not appropriate. To start, the Spurbeck Action is a securities class 6 action alleging violations against Petco as opposed to on behalf of Petco (as in a 7 shareholder derivative suit), which comes with distinct procedural and heightened pleading 8 requirements under the Private Securities Litigation Reform Act (“PSLRA”). Mot. at 5. 9 Plaintiffs also point to the differing remedies between the two types of actions—recovery 10 from versus for Petco—as well as incomplete overlap in the named defendants. Id. at 5–6. 11 Thus, despite arising from “substantially the same transactions, happenings, or events,” 12 consolidation of the Related Derivative Actions with the Spurbeck Action “risk[s] . . . 13 prejudice and confusion.” Id. at 4. 14 The Court agrees with Plaintiffs. Courts in the Ninth Circuit have declined to 15 consolidate securities class actions with related shareholder derivative actions. See, e.g., 16 Sanders v. VeriFone Sys., Inc., No. 5:13-CV-01038-EJD, 2013 WL 5550435, at *2 (N.D. 17 Cal. Oct. 7, 2013) (holding that consolidation of shareholder derivative action with 18 securities class action “may result in unfair prejudice to the[] additional parties”); Nicolow 19 v. Hewlett Packard Co., 2013 WL 792642, at *1 (N.D. Cal. Mar. 4, 2013) (holding that 20 derivative shareholder suits, non-derivative securities class actions, and ERISA suits 21 shared common facts but legal issues were “sufficiently distinct” such that allowing three 22 separate actions to proceed was appropriate). Here, consolidation with the Spurbeck 23 Action is not appropriate for the reasons raised by Plaintiffs. See Mot. at 4–6. Accordingly, 24 the Court finds consolidation of the Related Derivative Actions appropriate, but does not 25 find consolidation with the Spurbeck Action appropriate. 26 / / / 27 / / / 28 1 APPOINTMENT OF LEAD COUNSEL 2 “District courts regularly (but are not required to) appoint lead counsel in complex 3 consolidated suits.” Nicolow, 2013 WL 792642, at *6 (first citing Vincent v. Hughes Air 4 West, Inc., 557 F.2d 759, 774 (9th Cir. 1979); and then citing 9A Wright & Miller, Federal 5 Practice & Procedure § 2385 (3d ed. 2008)). “The appointment of lead counsel is designed 6 to eliminate ‘duplication and repetition’ by creating ‘a coordinator of diffuse plaintiffs 7 through whom motions and discovery proceedings will be channeled.’” Silva on behalf of 8 Dexcom, Inc., 2024 WL 5145970, at *2 (quoting Vincent, 557 F.2d at 774). 9 Here, Plaintiffs request that the Court appoint The Brown Law Firm and Rigrodsky 10 Law as co-lead counsel. Mot. at 1. Plaintiffs submit that The Brown Law Firm and 11 Rigrodsky Law are “are both well capitalized and fully capable and prepared to staff and 12 finance this derivative litigation and have extensive experience in handling complex 13 shareholder derivative litigation, having served as lead or co-lead counsel in numerous 14 derivative cases around the country, and have demonstrated a high level of professionalism 15 in securing a number of significant recoveries.” Mot. at 8. 16 Having reviewed the law firms’ resumes and considered each firm’s experience with 17 shareholder derivative suits, the Court finds each law firm independently qualified to serve 18 as lead counsel in this litigation. See ECF Nos. 14-2, 14-3; Mot. at 8–12. Additionally, 19 other courts in the Ninth Circuit have appointed co-lead counsel in shareholder derivative 20 actions. See, e.g., Lee ex rel Coherent, Inc., 2007 WL 1558565, at *2; Hacker v. 21 Peterschmidt, 2006 WL 2925683, at *5 (N.D. Cal. Oct. 12, 2006). Accordingly, the Court 22 23 24 1 Unlike in a securities class action subject to the PSLRA, there is no requirement to appoint a lead plaintiff in a shareholder derivative action before appointing lead counsel. See, e.g., Lee ex rel Coherent, Inc. v. 25 Ambroseo, No. C 07-0955JFHRL, 2007 WL 1558565, at *2 (N.D. Cal. May 29, 2007) (noting that neither Federal Rule of Civil Procedures 23.1 nor 42(a) “requires that a court appoint a lead plaintiff in a 26 consolidated shareholder derivative action” and that “[n]o Ninth Circuit precedent suggests that appointment of a lead plaintiff is required or even appropriate when that issue is contested in a shareholder 27 derivative action”); Sparano v. Lief, No. 10CV2079 BTM BLM, 2011 WL 830109, at *2 (S.D. Cal. Mar. 28 3, 2011). The Court will thus not do so in this case, nor do Plaintiffs request that the Court do so. 1 || finds it appropriate to appoint The Brown Law Firm and Rigrodsky Law as co-lead counsel 2 || to represent Plaintiffs in this action. 3 CONCLUSION 4 In light of the foregoing, the Court GRANTS Plaintiffs’ Unopposed Motion to 5 || Consolidate Related Shareholder Derivative Actions and Appoint Co-Lead Counsel for 6 || Plaintiffs (ECF No. 14) and ORDERS as follows: 7 1. Deguzman y. Anderson et al., 25-CV-1964 JLS (VET) and Miller v. Anderson 8 al., 25-CV-1985 JLS (VET) are CONSOLIDATED under Lead Case No. 25-CV-1964 9 ||JLS (VET). 10 2. All future filings SHALL bear the caption: “/n re Petco Health and Wellness 11 || Company, Inc. Derivative Litigation.” The Clerk of the Court SHALL rename this action 12 || accordingly. 13 2. The Brown Law Firm and Rigrodsky Law are APPOINTED as co-lead 14 counsel to represent Plaintiffs in this action. 15 3. Plaintiffs SHALL file a consolidated complaint within thirty (30) days of 16 |/ entry of this Order. 17 IT IS SO ORDERED. 18 || Dated: November 17, 2025 , tt

19 pen Janis L. Sammartino United States District Judge 21 22 23 24 25 26 27 28 25-CV-1964 JLS (VET)