Case: 1:19-cv-07665 Document #: 69 Filed: 06/01/22 Page 1 of 40 PageID #:705
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF ILLINOIS
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`EASTERN DIVISION
`
`
`ROEI AZAR, Individually and on Behalf of
`All Others Similarly Situated,
`
`vs.
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`GRUBHUB INC., et al.,
`
`Plaintiff,
`
`Defendants.
`
`Case No. 1:19-cv-07665
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`CLASS ACTION
`
`Judge Charles R. Norgle Sr.
`Magistrate Judge Jeffrey Cole
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`MEMORANDUM OF LAW IN SUPPORT OF LEAD PLAINTIFF’S MOTION
`FOR CLASS CERTIFICATION AND APPOINTMENT OF
`CLASS REPRESENTATIVE AND CLASS COUNSEL
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`4879-1818-0638.v6
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`Case: 1:19-cv-07665 Document #: 69 Filed: 06/01/22 Page 2 of 40 PageID #:706
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`
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`I.
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`II.
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ...............................................................................................................1
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`ALLEGATIONS COMMON TO THE CLASS ..................................................................3
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`III.
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`THE PROPOSED CLASS REPRESENTATIVES .............................................................6
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`IV.
`
`THE PROPOSED CLASS SATISFIES THE STANDARDS FOR CLASS
`CERTIFICATION UNDER RULE 23 ................................................................................7
`
`A.
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`B.
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`Legal Standard .........................................................................................................7
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`The Proposed Class Satisfies the Standards for Class Certification Under
`Rule 23(a).................................................................................................................9
`
`1.
`
`2.
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`3.
`
`4.
`
`5.
`
`The Class Is so Numerous that Joinder Is Impracticable .............................9
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`Common Questions of Law and Fact Exist ...............................................10
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`The Proposed Class Representative’s Claims Are Typical of Those
`of the Class .................................................................................................12
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`The Proposed Class Representatives Will Fairly and Adequately
`Protect the Interests of the Class ................................................................13
`
`The Court Should Appoint Plaintiffs’ Choice of Counsel as Class
`Counsel Under Rule 23(g) .........................................................................15
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`C.
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`The Proposed Class Satisfies the Standards for Class Certification Under
`Rule 23(b)(3) ..........................................................................................................16
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`1.
`
`2.
`
`3.
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`Common Questions of Law and Fact Predominate ...................................16
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`Plaintiffs Are Entitled to the Fraud-on–the-Market Presumption of
`Reliance......................................................................................................18
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`Grubhub Common Stock Traded in an Efficient Market During the
`Class Period ...............................................................................................19
`
`a.
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`b.
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`c.
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`Grubhub Common Stock Traded on the NYSE .............................20
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`Cammer Factor 1: High Weekly Trading Volume ........................21
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`Cammer Factor 2: Significant Financial Analysts and
`Media Coverage .............................................................................21
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`Page
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`d.
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`e.
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`f.
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`g.
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`h.
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`i.
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`Cammer Factor 3: Numerous Market Makers and
`Institutional Investors.....................................................................22
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`Cammer Factor 4: Form S-3 Registration Statement
`Eligibility .......................................................................................23
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`Cammer Factor 5: The Cause and Effect Relationship
`Between Unexpected Material Disclosures and Changes in
`the Price of Grubhub Stock ............................................................24
`
`Krogman Factor 1: Large Market Capitalization ...........................25
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`Krogman Factor 2: Small Bid-Ask Spread ....................................26
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`Krogman Factor 3: Publicly-Traded Float .....................................26
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`4.
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`5.
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`Damages May Be Calculated on a Class-Wide Basis Using a
`Common Methodology ..............................................................................27
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`A Class Action Is Superior to Other Available Methods for the Fair
`and Efficient Adjudication of This Controversy ........................................28
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`V.
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`CONCLUSION ..................................................................................................................29
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`
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`CASES
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`TABLE OF AUTHORITIES
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`Page
`
`Amchem Prods., Inc. v. Windsor,
`521 U.S. 591 (1997) .................................................................................................................17
`
`Amgen Inc. v. Conn. Ret. Plans & Tr. Funds,
`568 U.S. 455 (2013) ......................................................................................................... passim
`
`Basic Inc. v. Levinson,
`485 U.S. 224 (1988) .............................................................................................................2, 18
`
`Cammer v. Bloom,
`711 F. Supp. 1264 (D.N.J. 1989) ..................................................................................... passim
`
`Carpenters Pension Tr. Fund of St. Louis v. Barclays PLC,
`310 F.R.D. 69 (S.D.N.Y. 2015) ...............................................................................................22
`
`Comcast Corp. v. Behrend,
`569 U.S. 27 (2013) ...................................................................................................................28
`
`Erica P. John Fund, Inc. v. Halliburton Co.,
`563 U.S. 804 (2011) .................................................................................................................17
`
`Halliburton Co. v. Erica P. John Fund, Inc.,
`573 U.S. 258 (2014) .................................................................................................2, 17, 18, 19
`
`Haw. Structural Ironworkers Pension Tr. Fund, Inc. v. AMC Ent. Holdings, Inc.,
`338 F.R.D. 205 (S.D.N.Y. 2021) .............................................................................................14
`
`Holwill v. AbbVie Inc.,
`2021 WL 7366274 (N.D. Ill. Sept. 23, 2021) ....................................................................1, 2, 8
`
`In re Allstate Corp. Sec. Litig.,
`966 F.3d 595 (7th Cir. 2020)
`on remand 2020 WL 7490280 (N.D. Ill. Dec. 21, 2020) .........................................................17
`
`In re Alstom SA Sec. Litig.,
`253 F.R.D. 266 (S.D.N.Y. 2008) .............................................................................................23
`
`In re Banc of Cal. Sec. Litig.,
`326 F.R.D. 640 (C.D. Cal. 2018) .............................................................................................15
`
`In re Groupon, Inc. Sec. Litig.,
`2014 WL 5245387 (N.D. Ill. Sept. 23, 2014) .................................................................. passim
`
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`Page
`
`In re Groupon, Inc. Sec. Litig.,
`2015 WL 1043321 (N.D. Ill. Mar. 5, 2015),
`objections overruled, 2015 WL 13628131
`(N.D. Ill. May 12, 2015) .................................................................................................. passim
`
`In re Nature’s Sunshine Prod. Inc. Sec. Litig.,
`251 F.R.D. 656 (D. Utah 2008) .........................................................................................21, 22
`
`In re NeoPharm, Inc. Sec. Litig.,
`225 F.R.D. 563 (N.D. Ill. 2004) .........................................................................................11, 29
`
`In re NetBank, Inc. Sec. Litig.,
`259 F.R.D. 656 (N.D. Ga. 2009) ........................................................................................26, 27
`
`In re Sandridge Energy, Inc. Sec. Litig.,
`2019 WL 4752268 (W.D. Okla. Sept. 30, 2019) .....................................................................16
`
`In re Stericycle, Inc.,
`2017 WL 635142 (N.D. Ill. Feb. 16, 2017) .............................................................................13
`
`In re Sys. Software Assocs., Inc. Sec. Litig.,
`2000 WL 1810085 (N.D. Ill. Dec. 8, 2000) ...............................................................................9
`
`Jaffe v. Household Int’l, Inc.,
`No. 02-C-05893 (N.D. Ill. Oct. 20, 2016)................................................................................16
`
`Karinski v. Stamps.com,
`2020 WL 6572660 (C.D. Cal. Nov. 9, 2020) ...........................................................................16
`
`Keele v. Wexler,
`149 F.3d 589 (7th Cir. 1998) .............................................................................................10, 11
`
`Krogman v. Sterritt,
`202 F.R.D. 467 (N.D. Tex. 2001) ................................................................................20, 25, 26
`
`La. Firefighters’ Ret. Sys. v. N. Tr. Invs., N.A.,
`312 F.R.D. 501 (N.D. Ill. 2015) ...............................................................................................12
`
`Levitan v. McCoy,
`2003 WL 1720047 (N.D. Ill. Mar. 31, 2003) .............................................................................8
`
`Makor Issues & Rts., Ltd. v. Tellabs, Inc.,
`256 F.R.D. 586 (N.D. Ill. 2009) ...............................................................................................13
`
`Matrixx Initiatives, Inc. v. Siracusano,
`563 U.S. 27 (2011) ...................................................................................................................17
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`Page
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`McIntire v. China MediaExpress Holdings, Inc.,
`38 F. Supp. 3d 415 (S.D.N.Y. 2014)..................................................................................26, 27
`
`Messner v. Northshore Univ. HealthSystem,
`669 F.3d 802 (7th Cir. 2012) ...............................................................................................8, 17
`
`Pub. Emps.’ Ret. Sys. of Miss. v. TreeHouse Foods, Inc.,
`2020 WL 919249 (N.D. Ill. Feb. 26, 2020) ..................................................................... passim
`
`Roth v. Aon Corp.,
`238 F.R.D. 603 (N.D. Ill. 2006) (Norgle, J.) ................................................................... passim
`
`Schleicher v. Wendt,
`2009 WL 761157 (S.D. Ind. Mar. 20, 2009),
`aff’d, 618 F. 3d 679 (7th Cir. 2010) .........................................................................................20
`
`Schleicher v. Wendt,
`618 F.3d 679 (7th Cir. 2010) ...........................................................................................1, 8, 19
`
`Silverman v. Motorola, Inc.,
`259 F.R.D. 163 (N.D. Ill. 2009) ....................................................................................... passim
`
`Suchanek v. Sturm Foods, Inc.,
`764 F.3d 750 (7th Cir. 2014) ...................................................................................................10
`
`Tatz v. Nanophase Techs. Corp.,
`2003 WL 21372471 (N.D. Ill. June 13, 2003) ................................................................. passim
`
`Villella v. Chem. & Mining Co. of Chile, Inc.,
`333 F.R.D. 39 (S.D.N.Y. 2019) ...............................................................................................16
`
`Washtenaw Cnty. Emps.’ Ret. Sys. v. Walgreen Co.,
`2018 WL 1535156 (N.D. Ill. Mar. 29, 2018) .................................................................8, 27, 29
`
`STATUTES, RULES AND REGULATIONS
`
`17 C.F.R.
`§239.13.....................................................................................................................................23
`
`Rule 23 of the Federal Rules of Civil Procedure ................................................................... passim
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`Case: 1:19-cv-07665 Document #: 69 Filed: 06/01/22 Page 7 of 40 PageID #:711
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`I.
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`INTRODUCTION
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`City of Pontiac Reestablished General Employees’ Retirement System (“Retirement
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`System”) and City of Pontiac Police & Fire Retirement System (“Police & Fire”) (collectively,
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`“Plaintiffs”),1 respectfully submit this memorandum of law in support of the motion for class
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`certification requesting that, pursuant to Federal Rules of Civil Procedure 23(a), (b)(3), and (g),
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`the Court: (i) certify a class consisting of: All persons and entities that, during the period between
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`April 26, 2019 and October 28, 2019, inclusive, purchased or otherwise acquired shares of the
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`publicly traded common stock of Grubhub, Inc. (“Grubhub” or “Company”) and were damaged
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`thereby;2 (ii) appoint Plaintiffs as Class Representatives; and (iii) designate Lead Counsel Robbins
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`Geller Rudman & Dowd LLP (“Robbins Geller”) as Class Counsel.
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`The Seventh Circuit and this Court have made clear that “[w]hen a large, public company
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`makes statements that are said to be false, securities-fraud litigation regularly proceeds as a class
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`action” and “class certification is routine.” Schleicher v. Wendt, 618 F.3d 679, 681-82 (7th Cir.
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`2010); Holwill v. AbbVie Inc., 2021 WL 7366274, at *2-*3 (N.D. Ill. Sept. 23, 2021) (Norgle, J.)
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`(stating that a securities fraud class action initiated “against a large, public company for alleged
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`misrepresentations affecting the company’s stock price . . . generally meets the standards for
`
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`1 On January 20, 2020, City of Pontiac General Employees Retirement System (“GERS”) and Police &
`Fire were appointed Lead Plaintiff in this action. ECF 25. As set forth in Lead Plaintiff’s Unopposed
`Motion to Substitute Lead Plaintiff, filed concurrently herewith, GERS has been replaced by the Retirement
`System.
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`2 Excluded from the Class are Defendants, Grubhub’s subsidiaries and affiliates, any person who is or
`was an officer or director of the Company or any of the Company’s subsidiaries and affiliates and members
`of their immediate families, any entity in which such excluded persons have or had a controlling interest;
`and the legal representatives, heirs, successors, and assigns of any such excluded person or entity.
`Defendants are Grubhub, its former Chief Executive Officer (“CEO”) Matthew Maloney (“Maloney”), and
`its former Chief Financial Officer (“CFO”) and current CEO Adam DeWitt (“DeWitt”) (Maloney and
`DeWitt are the “Individual Defendants”).
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`certifying a class action”).3 This case is no exception. Just as in AbbVie and other securities cases
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`in this District, this action is perfectly suited for class certification because it alleges securities law
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`violations against a large, public company and its executives for making false and misleading
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`statements that affected the price of Grubhub stock, which trades on the New York Stock Exchange
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`(“NYSE”), a large and efficient market.
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`This action readily meets the requirements of Rule 23(a) – numerosity, commonality,
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`typicality, and adequacy. First, the proposed Class likely consists of thousands of injured investors
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`dispersed throughout the country. Second, Class members’ claims arise from a common course
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`of misconduct by Defendants. Third, Plaintiffs’ claims are typical of the Class because they were
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`similarly injured by purchasing Grubhub stock during the Class Period at prices artificially inflated
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`by Defendants’ false and misleading statements, and suffered losses when the truth was revealed
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`and the artificial inflation was removed. And fourth, Plaintiffs and Class Counsel have and will
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`continue to adequately represent the Class, as reflected by their active and zealous representation
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`of the interests of the Class to date, including defeating Defendants’ motion to dismiss.
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`In addition, this action meets Rule 23(b)(3)’s predominance requirement because
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`numerous common issues of fact and law are subject to common proof and plainly predominate
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`over any individual issues. For example, because the market for Grubhub stock was efficient
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`during the Class Period, as confirmed by the accompanying expert report by Chad Coffman
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`(“Coffman Report”), all Class members are entitled to the fraud-on-the-market presumption of
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`reliance under Basic Inc. v. Levinson, 485 U.S. 224 (1988) and reaffirmed in Halliburton Co. v.
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`Erica P. John Fund, Inc., 573 U.S. 258, 279 (2014) (“Halliburton II”). As further evidence of
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`predominance, the Coffman Report also explains that damages may be calculated based on a class-
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`3 Unless indicated otherwise, internal citations and quotations are omitted, and emphasis is added.
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`wide methodology that is consistent with Plaintiffs’ theory of liability. And finally, as required by
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`Rule 23(b)(3), proceeding as a class action is superior to other available methods for fairly and
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`efficiently adjudicating Class members’ claims.
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`II.
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`ALLEGATIONS COMMON TO THE CLASS
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`As set forth in Lead Plaintiff’s Complaint for Violations of the Federal Securities Laws
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`(ECF 36) (the “Complaint”), Grubhub was an early entrant in the online food ordering and delivery
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`business. ¶¶2, 24.4 More specifically, Grubhub maintains an online platform of listed restaurants,
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`and its customers (diners) can search the platform, place an order through Grubhub, and the food
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`will be delivered. Id. Historically, Grubhub relied on a “partnered” business model, meaning the
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`Company would enter into agreements with restaurants before placing their menus on the Grubhub
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`platform. ¶25. Grubhub would then receive commission payments on orders from the partnered
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`restaurants, along with fees received directly from diners. ¶28. By contrast, Grubhub’s
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`competitors used a “non-partnered” model, which allowed them to add any area restaurant menu
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`to their platforms without formal agreements. ¶40. In doing so, the Company’s competitors earned
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`no commission, but earned the fees charged to the diner. Id. Historically, Defendants refused to
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`add non-partnered restaurants to Grubhub’s platform and criticized the strategy as “the wrong
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`long-term answer for diners, restaurants and shareholders,” “expensive for everyone,” “rife with
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`operational challenges,” and “unsustainable.” ¶¶41, 60, 114-115.
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`Leading up to 2018, Grubhub began to lose market share to competitors in its existing
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`markets, and decided to engage in rapid expansion to more than 200 new markets. ¶¶44-52.
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`Whereas Grubhub’s competitors could rapidly add restaurants to their platforms in new markets,
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`Grubhub needed to negotiate partner contracts with all the restaurants it added, delaying Grubhub’s
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`4 Unless otherwise noted, all “¶__” and “¶¶__” citations refer to paragraphs of the Complaint.
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`ability to expand into new markets. ¶40.
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`To try to gain restaurant density in the new markets, while adhering to its partnered
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`strategy, Grubhub began partnering with large “enterprise” restaurants in 2018 – such as Taco Bell
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`and KFC – to use as “anchor” tenants in new markets, around which Grubhub would then try to
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`build restaurant inventory. ¶¶50-56. However, expansion was only profitable if it resulted in the
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`acquisition of “high quality” diners. ¶¶57-61. As Maloney explained, “high-quality” diners are
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`“diners that . . . order[] more frequently.” ¶33. The largest determinant of diner quality is the
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`number of restaurants on the platform for a given area (or “restaurant density”), as diners are not
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`likely to return to the platform if their desired restaurants are unavailable. ¶39.
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`When Grubhub expanded to the new markets in 2018, it could not build sufficient
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`restaurant density, and the new diners that came to Grubhub for promotional discounts or the
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`inexpensive enterprise restaurants ordered less frequently and were not nearly as profitable or loyal
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`as Grubhub’s historical diners. ¶¶33, 62-63, 83-88. The quality of new diners was a central focus
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`of investors and was discussed regularly during earnings calls. See ¶¶100-108. Defendants were
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`aware of the negative trends in diner quality because, throughout the Class Period, Defendants
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`meticulously “observe[d]” and “test[ed]” diner behavior and frequency to determine diner quality.
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`¶¶34-35, 47, 52, 62-63, 88, 102-107. Seeing the negative trends of lower-quality diners in the new
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`markets, Defendants internally abandoned Grubhub’s longstanding partnered model of 15 years in
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`favor of the long-maligned non-partnered model in a desperate attempt to ramp up restaurant
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`density, reverse negative trends, and stem losses. ¶¶117-119. Defendants began adding non-
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`partnered restaurants in early 2019 and refinanced Grubhub’s debt in June 2019 to free up cash to
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`engage in the non-partnered strategy. ¶¶87, 117-119. If not for the existence of negative diner-
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`quality trends, Grubhub had no reason to change its business model to add non-partnered
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`restaurants or to refinance its debt. Id.
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`Nevertheless, during the Class Period, Defendants concealed the change in strategy and the
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`negative trends that caused it, by claiming Grubhub’s expansion into new markets was a success.
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`For example, they claimed the new diners were “high quality” and even that “diner quality was
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`improving.” ¶¶65-67. Defendants emphasized that the partnered model continued to be “very
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`profitable” and “sustainab[le]” thanks to Grubhub’s “breadth of restaurants” and “better restaurant
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`choices.” ¶¶69, 74(k), 78. When reported metrics declined, Defendants blamed factors other than
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`diner quality, such as the “timing of the Easter Holiday.” ¶74(a). As a result of Defendants’ false
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`or misleading statements, Grubhub stock traded at artificially inflated prices, up to $79 per share.
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`¶132.
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`Then, after the market closed on October 28, 2019, after reporting two consecutive quarters
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`of declining DAG growth, Defendants belatedly admitted that the declines were a result of negative
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`trends in new diner ordering frequency.5 ¶¶80-84. Defendants disclosed that “the value of our
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`new diners is not as high as it has been in the past due to . . . lower [ordering] frequencies.” ¶83.
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`They explained that the lower frequencies were “more pronounced” for diners in the new markets,
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`i.e., those acquired “at the end of 2018 and the first half of 2019.” Id. Defendants admitted
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`Grubhub’s non-partnered competitors had superior restaurant density where “new potential diners
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`find more restaurants.” ¶84. Defendants also disclosed for the first time that Grubhub had been
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`“putting non-partnered restaurants on the platform.” ¶85. The next morning, Maloney admitted
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`that Grubhub had “been piloting this [non-partnered strategy] for months” and had “tens of
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`thousands of non-partnered restaurants already listed.” ¶87. Maloney admitted that the lower-
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`quality new diners acquired in the new markets “were stolen diners, who had a history of ordering
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`5 Daily Average Grubs or “DAGs” is the number of orders placed on the Grubhub platform divided by
`the number of days in the quarter or year. DAGs was a primary metric the Company and analysts used to
`track and assess Grubhub’s growth. ¶32(b).
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`on other platforms, and we didn’t have the same restaurant network in many of these
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`communities . . . so the fact that they’re performing a little bit less, I think, is pretty logical.” ¶88.
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`After these disclosures, the price of Grubhub stock crashed by 43%, from $58 per share to
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`$33 per share. ¶90. Reflecting the view that Defendants had not been candid, analysts said
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`“management will face a steep climb in an effort to regain Street credibility” and that the strategy
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`change was “clearly an about-face from the arrows shot at competitor strategies on prior
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`conference calls.” ¶91(a), (d).
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`III. THE PROPOSED CLASS REPRESENTATIVES
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`The proposed Class Representatives, the Retirement System and Police & Fire, already
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`expended substantial time and effort in informing themselves about this case, working with
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`counsel to vigorously prosecute this action on behalf of the Class, and participating in discovery.
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`Plaintiffs have represented the Class by overseeing the litigation, communicating with Lead
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`Counsel, and responding to Defendants’ discovery requests. Plaintiffs have worked, and will
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`continue to work, aggressively to obtain critical evidence supporting the Class’ claims.
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`The Retirement System and Police & Fire are large institutional investors. The Retirement
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`System is a defined benefit municipal retirement plan with hundreds of millions of dollars in assets
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`under management providing benefits to plan participants and beneficiaries. See Declaration of
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`Sheldon Albritton on behalf of Lead Plaintiff in Support of Lead Plaintiff’s Motion for Class
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`Certification (“Albritton Decl.”), ¶2, attached as Exhibit 1 to the Declaration of Robert J. Robbins
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`in Support of Lead Plaintiff’s Motion for Class Certification and Appointment of Class
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`Representative and Class Counsel (“Robbins Decl.”). Police & Fire is also a defined benefit plan,
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`with more than $200 million in assets under management providing benefits to plan participants
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`and beneficiaries. See Declaration of Craig Storum on behalf of Lead Plaintiff in Support of Lead
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`Plaintiff’s Motion for Class Certification (“Storum Decl.”), ¶2, attached as Exhibit 2 to the Robbins
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`
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`Decl.
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`Although GERS was appointed Lead Plaintiff along with Police & Fire, GERS has since
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`been formally re-established as the Retirement System. ECF 25; Albritton Decl., 1 n.1. As
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`explained in the accompanying Unopposed Motion to Substitute Lead Plaintiff, the alleged losses
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`suffered by GERS in this action have been assumed by the Retirement System, and the Retirement
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`System will continue to zealously represent the interests of the Class. The Retirement System –
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`both as currently reestablished and while operating as GERS – and Police & Fire have worked
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`diligently and collaboratively to prosecute this Action, and will continue to do so. See ECF 18-4,
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`20 at 5; Albritton Decl., ¶¶4-6; Storum Decl., ¶¶4-6.
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`IV.
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`THE PROPOSED CLASS SATISFIES THE STANDARDS FOR CLASS
`CERTIFICATION UNDER RULE 23
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`A.
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`Legal Standard
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`Rule 23(a) permits class treatment where: “(1) the class is so numerous that joinder of all
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`members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims
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`or defenses of the representative parties are typical of the claims or defenses of the class; and (4)
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`the representative parties will fairly and adequately protect the interests of the class.” Fed. R. Civ.
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`P. 23(a). In addition, a proposed class action must satisfy at least one of the three conditions
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`imposed by Rule 23(b). Here, Plaintiffs move for class certification under Rule 23(b)(3), which
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`permits certification where: (1) “the questions of law or fact common to class members
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`predominate over any questions affecting only individual members”; and (2) a “class action is
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`superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.
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`R. Civ. P. 23(b)(3).
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`In determining whether class certification is appropriate, courts focus on the narrow
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`question of whether the requirements of Rule 23 are satisfied. See Amgen Inc. v. Conn. Ret. Plans
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`Case: 1:19-cv-07665 Document #: 69 Filed: 06/01/22 Page 14 of 40 PageID #:718
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`& Tr. Funds, 568 U.S. 455, 465-66 (2013). Indeed, while the Court’s analysis should be
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`“rigorous,” Rule 23 does not grant courts “license to engage in free-ranging merits inquiries at the
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`class certification stage.” Id. at 460, 465-66 (“the office of a Rule 23(b)(3) certification ruling is
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`not to adjudicate the case”). The question is not whether Plaintiffs have stated a cause of action
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`or will prevail on the merits, but rather whether the requirements of Rule 23 are met. See In re
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`Groupon, Inc. Sec. Litig., 2014 WL 5245387, at *2 (N.D. Ill. Sept. 23, 2014) (Norgle, J.)
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`(“Groupon I”) (“‘[T]he court should not turn the class certification proceedings into a dress
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`rehearsal for the trial on the merits.’”) (quoting Messner v. Northshore Univ. HealthSystem, 669
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`F.3d 802, 811 (7th Cir. 2012)).
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`Courts in this Circuit routinely find securities law claims, such as those here, to be uniquely
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`appropriate for class treatment. See Roth v. Aon Corp., 238 F.R.D. 603, 605-06 (N.D. Ill. 2006)
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`(Norgle, J.) (recognizing that in the Seventh Circuit, there is a “strong policy favoring class
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`certification” in securities actions, and Rule 23 is therefore “liberally construe[d]”); see also
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`Washtenaw Cnty. Emps.’ Ret. Sys. v. Walgreen Co., 2018 WL 1535156, at *2 (N.D. Ill. Mar. 29,
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`2018) (Rule 23’s requirements are to be “liberally construed in favor of maintaining securities
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`fraud class actions”); Tatz v. Nanophase Techs. Corp., 2003 WL 21372471, at *3 (N.D. Ill. June
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`13, 2003) (“The Seventh Circuit Court . . . has liberally construed Rule 23 in shareholder suits.”).
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`This policy is rooted in the fact that “securities fraud cases are uniquely situated to class
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`action treatment since the claims of individual investors are often too small to merit separate
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`lawsuits. The class action is thus a useful device in which to litigate similar claims as well as an
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`efficient deterrent against corporate wrongdoing.” Levitan v. McCoy, 2003 WL 1720047, at *2
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`(N.D. Ill. Mar. 31, 2003). As the Seventh Circuit succinctly put it, “[w]hen a large public company
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`makes statements that are said to be false, securities-fraud litigation regularly proceeds as a class
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`action.” Schleicher, 618 F.3d at 681-82; see also AbbVie, 2021 WL 7366274, at *2.
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`Case: 1:19-cv-07665 Document #: 69 Filed: 06/01/22 Page 15 of 40 PageID #:719
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`As set forth below, all of the requirements of Rule 23 are met and Plaintiffs’ motion should
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`be granted in its entirety.6
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`B.
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`The Proposed Class Satisfies the Standards for Class Certification
`Under Rule 23(a)
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`1.
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`The Class Is so Numerous that Joinder Is Impracticable
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`Rule 23(a)(1) requires that the class “is so numerous that joinder of all members is
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`impracticable.” See Fed. R. Civ. P. 23(a)(1). A plaintiff need not identify the exact number of
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`class members, but rather may rely on reasonable inferences drawn from available facts to estimate
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`the size of the proposed class. See Tatz, 2003 WL 21372471, at *6 (inferring hundreds of class
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`members based on 13 million shares traded over the entire relevant time period). While there is
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`no bright line test, courts have found that classes with “as few as 10 to 40 members” satisfy
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`numerosity. Id. at *5. In securities fraud actions involving “nationally traded securities,
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`numerosity may be assumed.” In re Sys. Software Assocs., Inc. Sec. Litig., 2000 WL 1810085, at
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`*1-*2 (N.D. Ill. Dec. 8, 2000); see also Groupon I, 2014 WL 5245387, at *1 (putative class was
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`sufficiently numerous when 40.25 million shares of stock were outstanding).
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`Numerosity is clear here. The Class in this case easily exceeds 40 members, as Grubhub
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`had between 91.1 million and 91.4 million shares of common stock outstanding during the Class
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`Period. See Coffman Report, attached as Exhibit 3 to the Robbins Decl., ¶73; see also Defendants’
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`Responses And Objections To Lead Plaintiff’s First Set Of Requests For Admission To All
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`Defendants, Nos. 53, 54, attached as Exhibit 4 to the Robbins Decl. (“Defs’ RFAs Response”)
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`(admitting, subject to objections, that “as of August 2, 2019, Grubhub had 91,353,172 shares of
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