Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 1 of 24 PageID #:1738
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF ILLINOIS
`
`EASTERN DIVISION
`
`
`ROEI AZAR, Individually and on Behalf of
`All Others Similarly Situated,
`
`Plaintiff,
`
`Defendants.
`
`vs.
`
`GRUBHUB INC., et al.,
`
`
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`Case No. 1:19-cv-07665
`
`CLASS ACTION
`
`Judge Matthew F. Kennelly
`Magistrate Judge Jeffrey Cole
`
`MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF LEAD PLAINTIFF’S
`UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION
`SETTLEMENT
`
`
`
`
`
`4895-4816-8500.v1
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 2 of 24 PageID #:1739
`
`
`
`I. 
`
`II. 
`
`TABLE OF CONTENTS
`
`Page
`
`INTRODUCTION ...............................................................................................................1 
`
`BACKGROUND .................................................................................................................2 
`
`A. 
`
`B. 
`
`C. 
`
`Procedural History ...................................................................................................2 
`
`The Parties’ Arm’s-Length and Informed Negotiations ..........................................3 
`
`The Terms of the Settlement ....................................................................................3 
`
`III. 
`
`THE PROPOSED SETTLEMENT WARRANTS PRELIMINARY APPROVAL ............4 
`
`A. 
`
`The Settlement Satisfies the Standards for Approval ..............................................5 
`
`1. 
`
`2. 
`
`3. 
`
`4. 
`
`Lead Plaintiff and Lead Counsel Have Adequately Represented the
`Class .............................................................................................................5 
`
`The Proposed Settlement Is the Result of Good Faith Arm’s-
`Length Negotiations .....................................................................................6 
`
`The Proposed Settlement Is Adequate in Light of the Costs and
`Risks of Continued Litigation ......................................................................6 
`
`The Proposed Settlement Satisfies the Remaining Rule 23(e)(2)
`Factors ..........................................................................................................8 
`
`B. 
`
`The Class Satisfies the Standards for Class Certification ........................................9 
`
`1. 
`
`2. 
`
`3. 
`
`4. 
`
`5. 
`
`Rule 23(a)(1) – Numerosity .......................................................................10 
`
`Rule 23(a)(2) – Commonality ....................................................................10 
`
`Rule 23(a)(3) – Typicality .........................................................................11 
`
`Rule 23(a)(4) – Adequacy of Representation ............................................11 
`
`Rule 23(b)(3) – Predominance and Superiority .........................................12 
`
`THE PROPOSED NOTICE PROGRAM IS APPROPRIATE .........................................13 
`
`PROPOSED SCHEDULE OF EVENTS ...........................................................................14 
`
`CONCLUSION ..................................................................................................................15 
`
`IV. 
`
`V. 
`
`VI. 
`
`
`
`4895-4816-8500.v1
`
`- i -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 3 of 24 PageID #:1740
`
`
`
`CASES
`
`TABLE OF AUTHORITIES
`
`Page
`
`Abrams v. Van Kampen Funds, Inc.,
`2002 WL 1989401 (N.D. Ill. Aug. 27, 2002) ..........................................................................10
`
`Am. Int’l Grp., Inc. v. ACE INA Holdings, Inc.,
`2011 WL 3290302 (N.D. Ill. July 26, 2011) ..............................................................................5
`
`Amchem Prods. v. Windsor,
`521 U.S. 591 (1997) .............................................................................................................9, 12
`
`In re Allstate Corp. Sec. Litig.,
`2020 WL 7490280 (N.D. Ill. Dec. 21, 2020) ...........................................................................12
`
`In re Bank One Sec. Litig./First Chicago S’holder Claims,
`2002 WL 989454 (N.D. Ill. May 14, 2002) .................................................................10, 11, 12
`
`In re Groupon, Inc. Sec. Litig.,
`2014 WL 5245387 (N.D. Ill. Sept. 23, 2014) ....................................................................11, 12
`
`In re Groupon, Inc. Sec. Litig.,
`No. 12 C 2450, ECF 359, slip op. (N.D. Ill. Apr. 8, 2016) ......................................................13
`
`In re TikTok, Inc. Consumer Privacy Litig.,
`565 F. Supp. 3d 1076 (N.D. Ill. 2021) .......................................................................................5
`
`Isby v. Bayh,
`75 F.3d 1191 (7th Cir. 1996) .....................................................................................................4
`
`Keele v. Wexler,
`149 F.3d 589 (7th Cir. 1998) ...................................................................................................11
`
`Lowry v. RTI Surgical Holdings, Inc.,
`No. 20 C 01939, ECF 103, slip op. (N.D. Ill. Sept. 22, 2021) .................................................13
`
`Mortimer v. Diplomat Pharmacy, Inc.,
`No. 1:19-cv-01735, ECF 135, slip op. (N.D. Ill. Jan. 27, 2022) ..............................................13
`
`Pension Tr. Fund v. Assisted Living Concepts, Inc.,
`2013 U.S. Dist. LEXIS 199190 (E.D. Wis. Dec. 19, 2013).......................................................6
`
`Retsky Family Ltd. P’ship v. Price Waterhouse LLP,
`2001 WL 1568856 (N.D. Ill. Dec. 10, 2001) .............................................................................7
`
`Roth v. Aon Corp.,
`238 F.R.D. 603 (N.D. Ill. 2006) .................................................................................................9
`- ii -
`
`4895-4816-8500.v1
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 4 of 24 PageID #:1741
`
`
`
`
`
`Page
`
`
`Schleicher v. Wendt,
`618 F.3d 679 (7th Cir. 2010) ...............................................................................................9, 12
`
`Silverman v. Motorola, Inc.,
`259 F.R.D. 163 (N.D. Ill. 2009) ...............................................................................................11
`
`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) .........................................................................10
`
`Wong v. Accretive Health, Inc.,
`773 F.3d 859 (7th Cir. 2014) .............................................................................................5, 6, 7
`
`STATUTES, RULES AND REGULATIONS
`
`15 U.S.C.
`§78u-4(a)(3)(B) ..........................................................................................................................2
`§78u-4(a)(4) ...............................................................................................................................1
`§78u-4(a)(7) .............................................................................................................................13
`
`Federal Rules of Civil Procedure
`Rule 23 .......................................................................................................................................9
`Rule 23(a).............................................................................................................................9, 12
`Rule 23(a)(1) ............................................................................................................................10
`Rule 23(a)(2) ............................................................................................................................10
`Rule 23(a)(3) ............................................................................................................................11
`Rule 23(a)(4) ............................................................................................................................11
`Rule 23(b) ..................................................................................................................................9
`Rule 23(b)(3) ........................................................................................................................9, 12
`Rule 23(e)...............................................................................................................................4, 5
`Rule 23(e)(1) ............................................................................................................................13
`Rule 23(e)(1)(B) ...............................................................................................................4, 5, 13
`Rule 23(e)(1)(B)(ii) ....................................................................................................................9
`Rule 23(e)(2) ..................................................................................................................4, 5, 8, 9
`Rule 23(e)(2)(A) ....................................................................................................................5, 6
`Rule 23(e)(2)(A)-(D) .................................................................................................................5
`Rule 23(e)(2)(B) .........................................................................................................................6
`Rule 23(e)(2)(C)(i) .....................................................................................................................6
`Rule 23(e)(2)(C)-(D) ..................................................................................................................8
`
`4895-4816-8500.v1
`
`- iii -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 5 of 24 PageID #:1742
`
`
`
`
`
`Page
`
`
`SECONDARY AUTHORITIES
`
`David F. Herr,
`Manual for Complex Litigation, §13.14 (4th ed. 2019) .............................................................4
`
`
`
`4895-4816-8500.v1
`
`- iv -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 6 of 24 PageID #:1743
`
`
`
`I.
`
`INTRODUCTION
`
`Lead Plaintiff City of Pontiac Reestablished General Employees’ Retirement System and
`
`City of Pontiac Police & Fire Retirement System (“Pension Funds” or “Lead Plaintiff”) submits this
`
`memorandum in support of preliminary approval of the proposed settlement of the above-captioned
`
`litigation on the terms set forth in the Stipulation of Settlement, dated October 7, 2022 (the
`
`“Stipulation” or “Settlement Agreement”), filed herewith.1 Following arm’s-length negotiations,
`
`including two mediation sessions before an experienced mediator, the Settling Parties have reached
`
`an agreement to settle Lead Plaintiff’s and the Class’s claims against Defendants. The proposed
`
`Settlement provides for the payment of $42,000,000 for the benefit of the Class.
`
`The Settlement is the result of a thorough investigation and well-informed, arm’s-length
`
`negotiations between and among highly experienced counsel. Lead Plaintiff respectfully submits
`
`that the Settlement is fair, reasonable, and adequate, and therefore asks the Court to enter the
`
`accompanying [Proposed] Order Preliminarily Approving Settlement and Providing for Notice
`
`(“Notice Order”). The Notice Order will: (1) preliminarily approve the terms of the Settlement, as
`
`set forth in the Stipulation; (2) preliminarily certify the Class for settlement purposes only; (3)
`
`approve the form and method for providing notice of the Settlement to the Class; and (4) schedule a
`
`settlement hearing (the “Settlement Hearing”) at which the Court will consider the request for
`
`approval of (a) the Settlement, (b) the Plan of Allocation of settlement proceeds among Class
`
`Members, and (c) an award of attorneys’ fees and expenses to Lead Counsel, and an award to Lead
`
`Plaintiff pursuant to 15 U.S.C. §78u-4(a)(4).
`
`
`1
`All capitalized terms that are not defined herein have the same meanings as set forth in the
`Stipulation. Internal citations are omitted and emphasis is added throughout unless otherwise noted.
`
`4895-4816-8500.v1
`
`- 1 -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 7 of 24 PageID #:1744
`
`
`
`II.
`
`BACKGROUND
`A.
`
`Procedural History
`
`On November 20, 2019, the initial complaint was filed in the United States District Court for
`
`the Northern District of Illinois.
`
`On January 30, 2020, Judge Charles R. Norgle Sr. appointed Pontiac General Employees’
`
`Retirement System (“GERS”) and City of Pontiac Police & Fire Retirement System (“City of
`
`Pontiac”) as Lead Plaintiff pursuant to 15 U.S.C. §78u-4(a)(3)(B) of the Securities Exchange Act of
`
`1934 (the “Exchange Act”) as amended by the Private Securities Litigation Reform Act of 1995
`
`(“PSLRA”), and approved Lead Plaintiff’s selection of Robbins Geller Rudman & Dowd LLP as
`
`Lead Counsel. ECF 25. On June 3, 2022, Judge Norgle granted Lead Plaintiff’s unopposed motion
`
`to substitute City of Pontiac Reestablished General Employees’ Retirement System for GERS, to
`
`serve with City of Pontiac as Lead Plaintiff. ECF 73.
`
`Lead Plaintiff filed the operative Complaint for Violations of the Federal Securities Laws
`
`(the “Complaint”) on July 24, 2020. ECF 36. The Complaint alleges violations of §§10(b) and
`
`20(a) of the Exchange Act on behalf of a class of all purchasers of Grubhub, Inc. (“Grubhub” or the
`
`“Company”) common stock between April 25, 2019 and October 28, 2019, inclusive. Among other
`
`things, the Complaint alleges violations of the Exchange Act premised on Defendants’ false and
`
`misleading statements that allegedly concealed from investors that, in expanding into new territories,
`
`Grubhub was failing to build adequate restaurant density necessary to attract high-quality and
`
`profitable diners, the Company was attracting lower-quality and less-profitable diners, and the
`
`Company’s business strategy and enterprise customer contracts were hurting profitability. Lead
`
`Plaintiff alleges that the false and misleading statements and omissions artificially inflated
`
`Grubhub’s stock price and when the truth was eventually disclosed, the price of Grubhub stock
`
`declined, resulting in substantial damages to the Class.
`- 2 -
`
`4895-4816-8500.v1
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 8 of 24 PageID #:1745
`
`
`
`Defendants have denied the allegations. On November 11, 2020, Defendants moved to
`
`dismiss the Complaint. ECF 39. Lead Plaintiff opposed the motion. ECF 41. On September 7,
`
`2021, Judge Norgle denied the motion in full. ECF 45.
`
`B.
`
`The Parties’ Arm’s-Length and Informed Negotiations
`
`In April 2022, the parties commenced mediation efforts presided over by Robert A. Meyer of
`
`JAMS, an experienced and well-respected mediator. In addition, counsel on both sides are highly
`
`experienced in securities class action litigation. See, e.g., Ex. A (Robbins Geller firm resume)
`
`attached hereto. The parties participated in an all-day mediation session with Mr. Meyer on April 6,
`
`2022, but did not reach an agreement. Following further discussions with each other and Mr. Meyer,
`
`on August 23, 2022, the parties participated in another mediation session with Mr. Meyer, but again
`
`did not reach an agreement. On September 9, 2022, Mr. Meyer issued a “mediator’s proposal” to
`
`settle the Litigation for $42 million, which the parties accepted on September 13, 2022.
`
`At the time the Settling Parties agreed to settle, Lead Plaintiff and Lead Counsel were well-
`
`informed about the strengths and weaknesses of the alleged claims, based on (i) a rigorous
`
`investigation involving review and analysis of U.S. Securities and Exchange Commission filings by
`
`Grubhub, media and analyst reports, press releases and earnings calls transcripts, relevant case law
`
`and authorities, and other publicly-available information; (ii) drafting the Complaint; (iii) extensive
`
`briefing on Defendants’ motion to dismiss the Complaint, and careful review of the Court’s order
`
`denying same; (iv) the exchange of mediation briefs that detailed Lead Plaintiff’s and Defendants’
`
`positions on liability and damages; and (v) two mediation sessions and multiple conferences with
`
`defense counsel and/or Mr. Meyer regarding the foregoing information.
`
`C.
`
`The Terms of the Settlement
`
`Following the arm’s-length negotiations, Lead Plaintiff and Defendants agreed to settle the
`
`claims against Defendants for $42,000,000, upon the terms set forth in the Stipulation. Lead
`- 3 -
`
`4895-4816-8500.v1
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 9 of 24 PageID #:1746
`
`
`
`Plaintiff and its counsel concluded, after a thorough investigation of the factual and legal issues in
`
`the action, as well as consideration of the expense and risks of continued litigation, that the certain
`
`monetary recovery for the benefit of the Class is a highly favorable result under the circumstances
`
`and is in the best interests of Members of the Class.
`
`In exchange for the benefits provided under the Stipulation, Class Members will release any
`
`and all claims against Defendants that have been or could have been alleged in this action that are
`
`based on, relate to, or arise out of both: (i) a Class Member’s purchase, acquisition or sale of
`
`Grubhub’s common stock during the Class Period, and (ii) the allegations, acts, transactions, facts,
`
`events, matters, occurrences, disclosures, statements, filings, representations, or omissions that have
`
`been or could have been alleged or asserted in the Litigation. The release does not include any
`
`derivative or ERISA claims or claims to enforce the terms of the Settlement. Stipulation, ¶1.28.
`
`III. THE PROPOSED SETTLEMENT WARRANTS PRELIMINARY
`APPROVAL
`
`As a matter of public policy, settlement is a strongly favored method for resolving class
`
`action litigation. Isby v. Bayh, 75 F.3d 1191, 1196 (7th Cir. 1996) (“Federal courts naturally favor
`
`the settlement of class action litigation.”). Federal Rule of Civil Procedure 23(e) requires judicial
`
`approval of the settlement of class actions. Such approval involves a two-step process: first, a
`
`“preliminary approval” order authorizing notice of the proposed settlement to be provided to the
`
`class; and second, after notice has been provided and a hearing has been held to consider the
`
`fairness, reasonableness, and adequacy of the proposed settlement, a “final approval” order or
`
`judgment. See David F. Herr, Manual for Complex Litigation, at §13.14 (4th ed. 2019).
`
`The question at preliminary approval is whether the Court “will likely be able to: (i) approve
`
`the proposal under Rule 23(e)(2); and (ii) certify the class for purposes of judgment on the proposal.”
`
`Fed. R. Civ. P. 23(e)(1)(B). As discussed below, the Settlement for $42 million in cash satisfies the
`
`4895-4816-8500.v1
`
`- 4 -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 10 of 24 PageID #:1747
`
`
`
`Rule 23(e) standards for approval, and the Class satisfies the standards for class certification. Thus,
`
`the proposed Settlement should be preliminarily approved and notice of the proposed Settlement
`
`should be sent to the Class in advance of a final Settlement Hearing.
`
`A.
`
`The Settlement Satisfies the Standards for Approval
`
`Rule 23(e)(2) provides that a settlement should be approved if it is “fair, reasonable, and
`
`adequate,” considering whether: (1) Lead Plaintiff and Lead Counsel adequately represented the
`
`Class; (2) the Settlement was negotiated at arm’s length; (3) the relief is adequate; and (4) the
`
`Settlement treats Class Members equitably relative to each other.2 Fed. R. Civ. P. 23(e)(2)(A)-(D).
`
`At this preliminary approval stage, the Court’s task is merely to determine whether the Settlement
`
`will “likely” satisfy the standard for final approval. See Fed. R. Civ. P. 23(e)(1)(B). In other words,
`
`the court need only “‘determine whether the proposed settlement is within the range of possible
`
`approval,’ not to conduct a full-fledged inquiry into whether the settlement meets Rule 23(e)’s
`
`standards.” Am. Int’l Grp., Inc. v. ACE INA Holdings, Inc., 2011 WL 3290302, at *6 (N.D. Ill. July
`
`26, 2011) (Gettleman, J.) (granting approval of class action settlement); accord In re TikTok, Inc.
`
`Consumer Privacy Litig., 565 F. Supp. 3d 1076, 1083 (N.D. Ill. 2021) (Lee, J.) (granting preliminary
`
`approval).
`
`1.
`
`Lead Plaintiff and Lead Counsel Have Adequately
`Represented the Class
`
`Rule 23(e)(2)(A) instructs courts to consider whether “the class representatives and class
`
`counsel have adequately represented the class.” Fed. R. Civ. P. 23(e)(2)(A). As set forth herein,
`
`Lead Counsel is highly experienced in securities class action litigation, and both Lead Plaintiff and
`
`2
`The factors set forth in Rule 23(e)(2), as amended in 2018, overlap with the Seventh Circuit’s
`previously-determined final approval factors: (1) the strength of the case, balanced against the settlement
`amount; (2) the defendant’s ability to pay; (3) the complexity, length and expense of further litigation; (4) the
`amount of opposition to the settlement; (5) the presence of collusion in reaching a settlement; (6) the opinion
`of competent counsel; and (7) the stage of the proceedings. See Wong v. Accretive Health, Inc., 773 F.3d 859,
`863 (7th Cir. 2014).
`
`4895-4816-8500.v1
`
`- 5 -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 11 of 24 PageID #:1748
`
`
`
`Lead Counsel have diligently prosecuted this action and considered the benefits of a negotiated
`
`resolution. Lead Plaintiff and Lead Counsel have, for example, conducted a thorough investigation,
`
`prepared and filed a detailed complaint, prepared an opposition to Defendants’ motion to dismiss
`
`which the Court denied in full, prepared mediation material, participated in two mediation sessions,
`
`and considered potential damages and the costs and risks of ongoing litigation. Lead Plaintiff and
`
`Lead Counsel have carefully considered the benefits of the Settlement and believe it to be fair,
`
`reasonable, and adequate. See Fed. R. Civ. P. 23(e)(2)(A); see also Accretive, 773 F.3d at 863-64
`
`(stating that “‘the opinion of competent counsel’” is a relevant factor for settlement approval and
`
`affirming settlement where counsel – Robbins Geller – was “highly experienced”).
`
`2.
`
`The Proposed Settlement Is the Result of Good Faith Arm’s-
`Length Negotiations
`
`Rule 23(e)(2)(B) requires courts to consider a procedural factor – whether “the proposal was
`
`negotiated at arm’s length.” Fed. R. Civ. P. 23(e)(2)(B). As explained above in §II.B., the proposed
`
`Settlement was achieved only after extensive arm’s-length negotiations among highly-experienced
`
`and informed counsel, two mediation sessions before an experienced and well-respected mediator,
`
`and arm’s-length negotiations surrounding the mediation sessions. This arm’s-length process
`
`supports approval. See Accretive, 773 F.3d at 864 (approving settlement in light of “extensive
`
`arm’s-length negotiations with an experienced third-party mediator”); Pension Tr. Fund v. Assisted
`
`Living Concepts, Inc., 2013 U.S. Dist. LEXIS 199190, at *4 (E.D. Wis. Dec. 19, 2013) (approving
`
`settlement that was “the result of arm’s-length negotiations between experienced counsel
`
`representing the interests of the Settling Parties and is in the best interest of the Class”).
`
`3.
`
`The Proposed Settlement Is Adequate in Light of the Costs and
`Risks of Continued Litigation
`
`Rule 23(e)(2)(C)(i) instructs courts to consider the adequacy of a proposed settlement in light
`
`of “the costs, risks, and delay of trial and appeal.” Fed. R. Civ. P. 23(e)(2)(C)(i). Relatedly, the
`- 6 -
`
`4895-4816-8500.v1
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 12 of 24 PageID #:1749
`
`
`
`Seventh Circuit has instructed courts to consider “‘the strength of plaintiff’s case on the merits
`
`balanced against the amount offered in the settlement’” and “‘the complexity, length, and expense of
`
`further litigation.’” Accretive, 773 F.3d at 863-64. Courts have recognized that “[s]ecurities fraud
`
`litigation is long, complex and uncertain.” Retsky Family Ltd. P’ship v. Price Waterhouse LLP,
`
`2001 WL 1568856, at *2 (N.D. Ill. Dec. 10, 2001) (Darrah, J.) (collecting cases); see also Accretive,
`
`773 F.3d at 863 (detailing the significant delays and costs associated with litigating damages alone).
`
`Here, while Lead Plaintiff remains confident in its ability to ultimately prove its claims,
`
`further litigation and trial is always a costly and risky proposition. In their motion to dismiss,
`
`Defendants argued, among other things, that Lead Plaintiff did not show that the challenged
`
`statements were false or misleading when they were made, and that many of the challenged
`
`statements were sincerely held statements of opinion and/or statements of corporate optimism. ECF
`
`39 at 6-11. Defendants also argued that even if Lead Plaintiff had identified actionable statements,
`
`the Complaint does not sufficiently allege that Defendants acted with scienter. Id. at 11-15.
`
`Although Lead Plaintiff is past Defendants’ motion to dismiss, the costs, risks, and delays of
`
`continued litigation only increase as the parties engage in fact discovery, expert discovery, class
`
`certification, summary judgment briefing, pre-trial litigation, trial, and appeal. See Accretive, 773
`
`F.3d at 864 (noting that “[f]urther litigation almost certainly would have involved complex and
`
`lengthy discovery and expert testimony”). Absent settlement, this Litigation would have become a
`
`battle of competing experts and credibility determinations to be decided by a jury.
`
`Thus, the benefits created by the Settlement weigh in favor of granting the motion for
`
`preliminary approval. Considering the risks of continued litigation, and the time and expense that
`
`would be incurred to prosecute the action through trial, the $42 million Settlement is a significant
`
`and certain recovery that is in the best interests of the Class.
`
`4895-4816-8500.v1
`
`- 7 -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 13 of 24 PageID #:1750
`
`
`
`4.
`
`The Proposed Settlement Satisfies the Remaining Rule 23(e)(2)
`Factors
`
`Rule 23(e)(2) further instructs courts to consider: (i) the effectiveness of the proposed method
`
`of distribution to the class; (ii) the terms and timing of any proposed attorney’s fees; (iii) any other
`
`agreements between the parties; and (iv) whether the settlement “treats class members equitably
`
`relative to each other.” Fed. R. Civ. P. 23(e)(2)(C)-(D). Each of these factors further supports
`
`approval of the proposed Settlement.
`
`First, as demonstrated below in §IV, the proposed notice program is effective. The claims
`
`process is also effective and includes a standard claim form that requests the information necessary
`
`to calculate a claimant’s claim amount pursuant to the Plan of Allocation, which will govern how
`
`Class Members’ claims will be calculated and, ultimately, how money will be distributed to
`
`Authorized Claimants. The Plan of Allocation was developed with the assistance of Lead Plaintiff’s
`
`damages consultant and is based on each claimant’s purchases and sales of Grubhub common stock
`
`during the Class Period.
`
`Second, Lead Counsel will request an award of attorneys’ fees not to exceed 30% of the
`
`Settlement Amount, and expenses not to exceed $265,000, plus interest that is incurred, all to be paid
`
`from the Settlement Fund. The application will be made at the time Lead Counsel moves for final
`
`approval of the Settlement, and the awarded fees and expenses shall be paid from the Settlement
`
`Fund, not Defendants, upon entry of the order awarding such fees and expenses.
`
`Third, the Settling Parties have not entered into any other agreements other than a standard
`
`Supplemental Agreement Regarding Requests for Exclusion, which provides that if the number of
`
`shares of Grubhub common stock purchased by Class Members who request exclusion equals or
`
`exceeds a certain amount (the “Termination Threshold”), Defendants have the option to terminate
`
`4895-4816-8500.v1
`
`- 8 -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 14 of 24 PageID #:1751
`
`
`
`the Settlement. See Stipulation, ¶8.4.3 And fourth, the Settlement treats Class Members equitably
`
`because the proposed Plan of Allocation subjects all Members of the Class – including Lead Plaintiff
`
`– to the same formulas for distribution of the Settlement.
`
`In sum, the proposed Settlement satisfies each of the Rule 23(e)(2) factors and should be
`
`preliminarily approved so the Notice can be sent to potential Members of the Class.
`
`B.
`
`The Class Satisfies the Standards for Class Certification
`
`The second part of the settlement approval process is to determine whether the action may be
`
`maintained as a class action for settlement purposes under Rule 23. See Fed. R. Civ. P.
`
`23(e)(1)(B)(ii). Rule 23(a) establishes four prerequisites to class certification: (i) “numerosity,” (ii)
`
`“commonality,” (iii) “typicality,” and (iv) “adequacy of representation.” Amchem Prods. v.
`
`Windsor, 521 U.S. 591, 613 (1997). In addition, a class must meet one of the three requirements of
`
`Rule 23(b), namely here, that “questions of law or fact common to class members predominate over
`
`any questions affecting only individual members, and that a class action is superior to other available
`
`methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The
`
`Seventh Circuit has acknowledged that in securities actions such as this, “class certification is
`
`routine.” Schleicher v. Wendt, 618 F.3d 679, 682 (7th Cir. 2010); accord Roth v. Aon Corp., 238
`
`F.R.D. 603, 605 (N.D. Ill. 2006) (Norgle, J.) (“It is established law in the Northern District of Illinois
`
`and the Seventh Circuit that class certifications are the preferred method of dealing with securities
`
`fraud cases.”).
`
`
`3
`As is standard in securities class actions, such agreements are not made public in order to avoid
`incentivizing the formation of a group of opt-outs for the sole purpose of leveraging the Termination
`Threshold to exact an individual settlement. Pursuant to its terms, the Supplemental Agreement may be
`submitted to the Court in camera or under seal.
`
`4895-4816-8500.v1
`
`- 9 -
`
`

`

`Case: 1:19-cv-07665 Document #: 93 Filed: 10/07/22 Page 15 of 24 PageID #:1752
`
`
`
`1.
`
`Rule 23(a)(1) – Numerosity
`
`Rule 23(a)(1) requires that the class be “so numerous that joinder of all members is
`
`impracticable.” Fed. R. Civ. P. 23(a)(1). Here, throughout the Class Period, Grubhub common
`
`stock was actively traded on the New York Stock Exchange and, according to the Company’s 1Q
`
`2019 10-Q, the Company had more than 91 million shares of common stock outstanding as of
`
`August 2, 2019 (see Complaint, ¶146), likely resulting in hundreds or thousands of potential class
`
`members, which is more than sufficient to establish numerosity. See Tatz v. Nanophase Techs.
`
`Corp., 2003 WL 21372471, at *6 (N.D. Ill. June 13, 2003) (Andersen, J.) (certifying class where 13
`
`million company shares were outstanding and “were likely owned by hundreds of persons or entities
`
`throughout the United States”); In re Bank One Sec. Litig./First Chicago S’holder Claims, 2002 WL
`
`989454, at *3 (N.D. Ill. May 14, 2002) (Andersen, J.) (finding numerosity in §11 class and that
`
`courts “have granted class certification to groups smaller than 30”).
`
`2.
`
`Rule 23(a)(2) – Commonality
`
`Rule 23(a)(2) requires that there be “questions of law or fact common to the class.” Fed. R.
`
`Civ. P. 23(a)(2). This commonality requirement “‘is not a demanding requirement,’” as just “‘one
`
`issue of fact or law common to all class members will suffice.’” Abrams v. Van Kampen Funds,
`
`Inc., 2002 WL 1989401, at *3 (N.D. Ill. Aug. 27, 2002) (Hart, J.). In this case, the central questions
`
`– whether Defendants’ public statements during the Class Period misrepresented or omitted material
`
`facts that (i) in expanding into new territories, the Company was failing to build adequate restaurant
`
`density necessary to attract high-quality and profitable diners, (ii) the Company was attracting lower-
`
`quality and less-profitable diners, and (iii) the Company’s business strategy and enterprise customer
`
`contracts were hurting profitability – are the same for all Class Members. Similarly, the issues