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Nally v. Reichental

United States District Court, D. South Carolina, Rock Hill Division

March 27, 2017

JAMES NALLY, derivatively on behalf of 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. 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 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,
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

          MARY GEIGER LEWIS UNITED STATES DISTRICT JUDGE

         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 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-cv-02393-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, 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, 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 ...


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