KBC Asset Management NV ex rel. Chemed Corp. v. McNamara

78 F. Supp. 3d 599
CourtDistrict Court, D. Delaware
DecidedFebruary 2, 2015
DocketCivil Action No. 13-1854-LPS-CJB, Civil Action No. 14-1209-LPS-CJB
StatusPublished
Cited by4 cases

This text of 78 F. Supp. 3d 599 (KBC Asset Management NV ex rel. Chemed Corp. v. McNamara) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
KBC Asset Management NV ex rel. Chemed Corp. v. McNamara, 78 F. Supp. 3d 599 (D. Del. 2015).

Opinion

MEMORANDUM OPINION

CHRISTOPHER J. BURKE, United States Magistrate Judge

In these related shareholder derivative suits (referred to herein as the “KBC Action” and the “North Action,” respectively), presently pending before the Court are Plaintiff KBC Asset Management NV’s (“KBC”) “Motion to Consolidate and Appoint Lead Plaintiff, Lead Counsel and Liaison Counsel” (“Motion”). (D.I. 30; North Action D.I. 38)1 No party in either action opposes the request for consolidation. However, the Motion is otherwise opposed by Plaintiff Mildred A. North [602]*602(“North”). The individual Defendants (“Individual Defendants”)2 and nominal Defendant Chemed Corporation (“Chemed,” and collectively with the Individual Defendants, “Defendants”) take no position on the remainder of the Motion. For the reasons stated below, the Court GRANTS KBC’s Motion.

1. BACKGROUND

KBC filed its Complaint on November 6, 2013. (D.I.l) In that KBC Action, in lieu of an Answer, Defendants filed a motion seeking dismissal of the Complaint pursuant to Federal Rules of Civil Procedure 12(b) and 23.1. (D.I.12) That motion was fully briefed in May 2014. (D.I.18).

North, in the meantime, had filed her Complaint on November 14, 2013, in the United States District Court for the Southern District of Ohio (“Southern District of Ohio”). (North Action, D.I. 1) North thereafter moved the United States Judicial Panel on Multidistrict Litigation (the “MDL Panel”) to centralize the litigation in the Southern District of Ohio; the MDL Panel later denied that motion. (North Action, D.I. 21) Upon Defendants’ request, the Southern District of Ohio thereafter transferred the North Action to this Court. (North Action, D.I. 28).

In light of the transfer of the North Action, on September 29, 2014, Chief Judge Leonard P. Stark ordered that the pending motion to dismiss in the KBC Action should be denied without prejudice. (D.I. 29; North Action, D.I. 31) Chief Judge Stark then ordered the KBC Action and the North Action be referred to the Court for all purposes, up to and including resolution of case-dispositive motions. (Id.)

On October 15, 2014, KBC filed the instant Motion, (D.I. 30; North Action D.I. 38), which was fully briefed as of November 13, 2014, (D.I. 37; North Action D.I. 46). At KBC’s request, (D.I. 39; North Action D.I. 48), the Court held oral argument on the Motion on January 22,2015.

II. DISCUSSION

As its title indicates, the Motion raises three separate issues: (1) whether the cases should be consolidated; (2) whether KBC should be designated as Lead Plaintiff; and (3) whether KBC’s counsel, Motley Rice LLC (“Motley Rice”) and Rosen-thal, Monhait & Goddess, P.A. (“Rosenthal Monhait”) should be designated Lead Counsel and Liaison Counsel, respectively. The Court will address these issues in turn.

A. Consolidation

“If actions before the court involve a common question of law or fact, the court may ... consolidate the actions[.]” Fed.R.Civ.P. 42(a). The Court has broad authority to consolidate actions for trial involving common questions of law or fact if, in its discretion, it finds that such consolidation would “facilitate the administration of justice.” Ellerman Lines, Ltd. v. Atlantic & Gulf Stevedores, Inc., 339 F.2d 673, 675 (3d Cir.1964); see also Resnik v. Woertz, 774 F.Supp.2d 614, 624-25 (D.Del.2011). Although the existence of common questions of law or fact is a prerequisite to consolidation, their presence does not require consolidation pursuant to Federal [603]*603Rule of Civil Procedure 42(a). Rohm & Haas Co. v. Mobil Oil Corp., 525 F.Supp. 1298, 1309 (D.Del.1981). Instead, in considering such a motion, the Court must balance any savings of time and effort gained through consolidation against any “inconvenience, delay, or expense” that may result. Id.

Here, all parties agree that the two cases should be consolidated, and there is no dispute that both cases involve common questions of law and fact. (D.I. 31 at 8-9; D.I. 33 at 34 & n.1; D.I. 34 at 3, 9; D.I. 36) Both actions were filed by shareholders of Chemed derivatively on behalf of the company, and the respective Defendants in both actions are nearly identical. (D.I. 1; North Action, D.I. 1) Both Complaints allege common (though not identical) facts. (Id.) And both assert that certain officers and members of Chemed’s Board of Directors (“Board”) breached their fiduciary duties to the company by implementing, sanctioning and/or consciously ignoring systematic violations of the False Claims Act, via the submission of improper and ineligible claims to Medicare and Medicaid over a number of years.3 (Id.) For all of these reasons, KBC’s request for consolidation for all purposes, including pre-trial proceedings and trial, shall be granted. See, e.g., Resnik, 774 F.Supp.2d at 625.

B. Designation of Lead Plaintiff

Federal Rule of Civil Procedure 23.1(a) provides that a “derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders ... who are similarly situated in enforcing the rights of the corporation[.]” Fed.R.Civ.P. 23.1(a). Here, there is no question that the competing Plaintiffs will “fairly and adequately” represent the shareholders’ interests. The question instead is whether to appoint a lead plaintiff, and if so, which Plaintiff will best represent shareholder interests.

Although no statutory authority exists for the appointment of a lead plaintiff in shareholder derivative actions like these, courts have the inherent “authority to appoint a lead plaintiff ... in a derivative action in order to create an efficient case-management structure.” N. Miami Beach Gen. Employees Retirement Fund, No. 10 C 6514, 2011 WL 12465137 at *1-2 (N.D.Ill. July 5, 2011) (appointing a lead plaintiff and lead counsel to avoid “the potential for disagreements and ineffici-ences”); see also Horn v. Raines, 227 F.R.D. 1, 3 (D.D.C.2005) (appointing, inter alia, a lead plaintiff in derivative actions, as it was “necessary to provide for an orderly litigation”). Here, the Court finds that although there are only two derivative actions at issue and two competing Plaintiffs, appointing a lead plaintiff (and, relat-edly, lead plaintiffs counsel) would be beneficial. See Berg v. Guthart, Case Nos. 5:14-CV-00515-EJD, 5:14-CV-01307-EJD, 2014 WL 3749780, at *1-2, *7 (N.D.Cal. July 30, 2014) (appointing a lead plaintiff and consolidating two similar shareholder derivative actions); Clark v. Thiry, Civil Action' No. 12-ev-2074-WJM-CBS, Civil Action No. 13-cv-1308-WJM-MJW, 2014 WL 4050057, at *1, *4 (D.Colo. Jan. 7, 2014) (same); Sexton v. Van Stolk, No.

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Bluebook (online)
78 F. Supp. 3d 599, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kbc-asset-management-nv-ex-rel-chemed-corp-v-mcnamara-ded-2015.