Case 1:21-cv-03756 Document 1 Filed 04/28/21 Page 1 of 17
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`Civil Action No. 1:21-cv-3756
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`COMPLAINT FOR VIOLATIONS OF
`SECTIONS 14(a) AND 20(a) OF THE
`SECURITIES EXCHANGE ACT OF
`1934
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`JURY TRIAL DEMANDED
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`--------------------------------------------------------
`ELAINE WANG,
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`Plaintiff,
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`v.
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`GRUBHUB INC., BRIAN MCANDREWS,
`DAVID FISHER, LLOYD FRINK, DAVID
`HABIGER, LINDA JOHNSON RICE,
`KATRINA LAKE, GIRISH LAKSHMAN,
`MATT MALONEY, and KEITH RICHMAN,
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`Defendants.
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`Elaine Wang (“Plaintiff”), by and through her attorneys, alleges the following upon
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`information and belief, including investigation of counsel and review of publicly-available
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`information, except as to those allegations pertaining to Plaintiff, which are alleged upon personal
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`knowledge:
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`1.
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`This is an action brought by Plaintiff against Grubhub Financial, Inc. (“Grubhub or
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`the “Company”) and the members Grubhub board of directors (the “Board” or the “Individual
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`Defendants” and collectively with the Company, the “Defendants”) for their violations of Sections
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`14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), in connection with
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`the proposed acquisition of Grubhub by affiliates of Just Eat Takeaway.com N.V. (herein referred
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`to as the “Just Eat”).
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`2.
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`Defendants have violated the above-referenced Sections of the Exchange Act by
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`causing a materially incomplete and misleading Preliminary Proxy Statement on Schedule 14A
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`(the “Proxy Statement”) to be filed on April 27, 2021 with the United States Securities and
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`Case 1:21-cv-03756 Document 1 Filed 04/28/21 Page 2 of 17
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`Exchange Commission (“SEC”) and disseminated to Company stockholders. The Proxy
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`Statement recommends that Company stockholders vote in favor of a proposed transaction
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`whereby Checkers Merger Sub I, Inc. (“Merger Sub I”), a wholly-owned subsidiary of Just Eat,
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`will merge with and into Grubhub with Grubhub surviving the merger in the initial merger, with
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`Checkers Merger Sub II, Inc. (“Merger Sub II”) continuing as the surviving company in the
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`subsequent merger wherein Grubhub will merge with and into Merger Sub II and continuing as
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`Just Eat’s wholly owned subsidiary (the “Proposed Transaction”). Pursuant to the terms of the
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`definitive agreement and plan of merger the companies entered into (the “Merger Agreement”)
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`each Grubhub common share issued and outstanding will be converted into the right to receive (1)
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`New Just Eat Takeaway.com ADSs representing 0.6710 Just Eat Takeaway.com Shares (the
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`“merger consideration”), plus (2) cash in lieu of fractional New Just Eat Takeaway.com ADSs,
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`plus (3) any dividends or other distributions to which such holder is entitled pursuant to the Merger
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`Agreement (the “Merger Consideration”).
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`3.
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`As discussed below, Defendants have asked Grubhub stockholders to support the
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`Proposed Transaction based upon the materially incomplete and misleading representations and
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`information contained in the Proxy Statement, in violation of Sections 14(a) and 20(a) of the
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`Exchange Act. Specifically, the Proxy Statement contains materially incomplete and misleading
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`information concerning the Company’s financial forecasts and financial analyses conducted by the
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`financial advisor of the Company, Evercore Group L.L.C. (“Evercore”) in support of its fairness
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`opinion, and relied upon by the Board in recommending the Company’s stockholders vote in favor
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`of the Proposed Transaction.
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`4.
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`It is imperative that the material information that has been omitted from the Proxy
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`Statement is disclosed to the Company’s stockholders prior to the forthcoming stockholder vote
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`so that they can properly exercise their corporate suffrage rights.
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`5.
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`For these reasons and as set forth in detail herein, Plaintiff seeks to enjoin
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`Defendants from taking any steps to consummate the Proposed Transaction unless and until the
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`material information discussed below is disclosed to Grubhub stockholders or, in the event the
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`Proposed Transaction is consummated, to recover damages resulting from the Defendants’
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`violations of the Exchange Act.
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`JURISDICTION AND VENUE
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`6.
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`This Court has subject matter jurisdiction pursuant to Section 27 of the Exchange
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`Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331 (federal question jurisdiction) as Plaintiff alleges
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`violations of Section 14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9.
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`7.
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`Personal jurisdiction exists over each Defendant either because the Defendant
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`conducts business in or maintains operations in this District, or is an individual who is either
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`present in this District for jurisdictional purposes or has sufficient minimum contacts with this
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`District as to render the exercise of jurisdiction over Defendant by this Court permissible under
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`traditional notions of fair play and substantial justice.
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`8.
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`Venue is proper in this District under Section 27 of the Exchange Act, 15 U.S.C. §
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`78aa, as well as under 28 U.S.C. § 1391, because the closing on the Merger will take place in this
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`District, at the offices of Kirkland & Ellis LLP, the Company’s legal advisor. Further, the
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`Company’s stock is traded on the New York Stock Exchange, headquartered in this District; and
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`Just Eats has designated a bank or trust company located in this District for the purpose of
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`exchanging shares of Company common stock in accordance with the Merger Agreement.
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`Importantly, Grubhub maintains a significant presence in this District, including the office of its
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`General Counsel.
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`PARTIES
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`9.
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`Plaintiff is, and has been at all relevant times, the owner of Grubhub common stock
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`and has held such stock since prior to the wrongs complained of herein.
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`10.
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`Individual Defendant Brian McAndrews has served as a member of the Board since
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`October 2011 and is the Chairman of the Board.
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`11.
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`Individual Defendant David Fisher has served as a member of the Board since June
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`2012.
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`12.
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`Individual Defendant Lloyd Frink has served as a member of the Board since
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`December 2013.
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`13.
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`Individual Defendant David Habiger has served as a member of the Board since
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`October 2016.
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`14.
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`Individual Defendant Linda Johnson Rice has served as a member of the Board
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`since October 2016.
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`15.
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`Individual Defendant Katrina Lake has served as a member of the Board since
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`December 2015.
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`16.
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`Individual Defendant Girish Lakshman has served as a member of the Board since
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`March 2015.
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`17.
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`Individual Defendant Matt Maloney has served as a member of the Board nand the
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`Chief Executive Officer of the Company since August 8, 2013.
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`18.
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`Individual Defendant Keith Richman has served as a member of the Board since
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`February 2016.
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`Case 1:21-cv-03756 Document 1 Filed 04/28/21 Page 5 of 17
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`19.
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`Defendant Grubhub is incorporated in Delaware and maintains its principal offices
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`at 111 West Washington Street, Suite 2100, Chicago, IL 60602. The Company’s common stock
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`trades on the New York Stock Exchange under the symbol “GRUB.”
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`20.
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`The defendants identified in paragraphs 10-18 are collectively referred to as the
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`“Individual Defendants” or the “Board.”
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`21.
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`The defendants identified in paragraphs 10-19 are collectively referred to as the
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`“Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`A.
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`The Proposed Transaction
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`22.
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`Grubhub, together with its subsidiaries, provides an online and mobile platform for
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`restaurant pick-up and delivery orders in the United States. The company connects approximately
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`300,000 local restaurants with diners in various cities. It offers mobile applications and mobile
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`Websites; and operates Websites through grubhub.com, seamless.com, and menupages.com. The
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`company also provides corporate program that offers employees with various food and ordering
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`options, including options for individual meals, group ordering, and catering, as well as proprietary
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`tools that consolidate various food ordering into a single online account. In addition, it offers
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`Grubhub for Restaurants, a responsive web application that can be accessed from computers and
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`mobile devices, as well as Grubhub-provided tablets; GH+ subscription program to diners;
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`delivery services to restaurants; point of sale (POS) integration, which allows restaurants to
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`manage Grubhub orders and update their menus directly from their existing POS system; and
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`Website and mobile application design and hosting services for restaurants, as well as technology
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`and fulfillment services, including order transmission and customer relationship management
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`tools. The company was formerly known as GrubHub Seamless Inc. and changed its name to
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`Case 1:21-cv-03756 Document 1 Filed 04/28/21 Page 6 of 17
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`Grubhub Inc. in February 2014. Grubhub Inc. was founded in 1999 and is headquartered in
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`Chicago, Illinois.
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`23.
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`On June 10, 2020, Grubhub and Just Eats jointly announced that they had entered
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`into the Proposed Transaction:
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`Just Eat Takeaway.com N.V. (AMS: TKWY, LSE: JET), (the “Company” or “Just
`Eat Takeaway.com”), and Grubhub Inc. (NYSE: GRUB) (“Grubhub”) have entered
`into a definitive agreement whereby the Company is to acquire 100% of the shares
`of Grubhub in an all-stock transaction (the “Transaction”) to create the world’s
`largest online food delivery company outside of China, measured by Gross
`Merchandise Value (“GMV”) and revenues. The Transaction represents Just Eat
`Takeaway.com’s entry into online food delivery in the United States (“U.S.”) and
`builds on the strategic rationale for its recent merger with Just Eat plc (“Just Eat”).
`A combined Just Eat Takeaway.com and Grubhub (the “Combined Group”) will
`become the world’s largest online food delivery company outside of China1, with
`strong brands connecting restaurant partners with their customers in 25 countries.
`The Combined Group will be built around four of the world’s largest profit pools
`in online food delivery: the U.S., the United Kingdom (“U.K.”), the Netherlands
`and Germany, increasing the Combined Group’s ability to deploy capital and
`resources to strengthen its competitive positions in all its markets. The Combined
`Group has strong leadership positions in almost all countries in which it is present
`and will become a significant player in North America. Just Eat Takeaway.com
`owns the leading Canadian business SkipTheDishes. The Combined Group is one
`of the few profitable players in the space and processed approximately 593 million
`orders in 2019 with more than 70 million combined active customers globally.
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`Key Terms
`• Under the terms of the Transaction, Grubhub shareholders will be entitled to
`receive American depositary receipts (“ADRs”) representing 0.6710 Just Eat
`Takeaway.com ordinary shares in exchange for each Grubhub share, representing
`an implied value of $75.15 for each Grubhub share (based on the undisturbed
`closing price of Just Eat Takeaway.com on 9 June 2020 of €98.602) and implying
`a total equity consideration (on a fully diluted basis) of $7.3 billion.
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` •
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` Immediately following completion of the Transaction, Grubhub shareholders are
`expected to own ADRs representing approximately 30.0% of the Combined Group
`(on a fully diluted basis).
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` •
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` On completion, Matt Maloney, CEO and founder of Grubhub, will join the Just
`Eat Takeaway.com Management Board and will lead the Combined Group’s
`businesses across North America and two current Grubhub Directors will join the
`Just Eat Takeaway.com Supervisory Board. • The Transaction is subject to the
`approval of both Just Eat Takeaway.com’s and Grubhub’s shareholders, as well as
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`Case 1:21-cv-03756 Document 1 Filed 04/28/21 Page 7 of 17
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`other customary completion conditions. Subject to satisfaction of the conditions,
`completion of the Transaction is anticipated to occur in the first quarter of 2021.
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` •
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` The Combined Group will be headquartered and domiciled in Amsterdam, the
`Netherlands, with its North American headquarters in Chicago and a significant
`presence in the U.K. Just Eat Takeaway.com is listed on Euronext Amsterdam and
`the Main Market of the London Stock Exchange and will introduce an ADR listing
`in the U.S.
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`Both the Managing Board and the Supervisory Board of Just Eat Takeaway.com
`and the Board of Directors of Grubhub are recommending the Transaction to their
`respective shareholders. Jitse Groen, CEO and founder of Just Eat Takeaway.com,
`has entered into a voting and support agreement, and subject to and in accordance
`with the terms thereof, has committed to vote in favour of the Transaction at the
`Just Eat Takeaway.com extraordinary general meeting (“EGM”).
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`* * *
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`Transaction Highlights
`• Creates the world’s largest food delivery company, outside of China, measured
`by GMV and revenue.
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` The Company is one of the few profitable players at scale in the space.
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` •
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` •
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` Creates a company built around four of the world’s largest profit pools in food
`delivery: the U.S., the U.K., the Netherlands and Germany. These markets show
`substantial further opportunities for growth, significant penetration upside and
`longer-term profitability improvements.
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` •
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` Grubhub will be much stronger as part of Just Eat Takeaway.com. The
`combination with Just Eat Takeaway.com’s Canadian business, SkipTheDishes, as
`well as the increased scale and resources of the Combined Group will provide
`greater flexibility to make strategic, long-term investment decisions.
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` •
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` In the U.S., where the market is competitive and fragmented across local regions
`and cities, Grubhub’s differentiated offering provides it with unique advantages
`given its large marketplace business, its Seamless corporate business, its large
`geographic footprint and extensive customer and restaurant relationships.
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` •
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` The enhanced scale and leading positions of the Combined Group provide an
`opportunity to leverage best practices from Just Eat Takeaway.com and Grubhub
`and create the broadest possible offering to both restaurant partners and consumers.
`The Combined Group will have a greater ability to leverage investments, in
`particular in technology, marketing and restaurant delivery services across the
`combined business.
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`Case 1:21-cv-03756 Document 1 Filed 04/28/21 Page 8 of 17
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`• The Combined Group will have a founder-led management team with a proven
`track record of building leading positions in markets of scale. The new management
`team has 55+ years of combined experience in the sector.
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`Integration Planning
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` •
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` Just Eat Takeaway.com highly respects the Grubhub management team and,
`following the completion of the Transaction, Matt Maloney will lead the Combined
`Group’s businesses in North America, including Canada.
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` •
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` •
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` Grubhub will continue to be headquartered in Chicago, U.S.
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` Upon completion of the Transaction, the Combined Group will initiate a
`programme to plan for integration, based on bringing together both companies’
`experience of integrating acquisitions to minimise disruption to restaurants and
`consumers, whilst delivering the expected opportunities and benefits of the
`Transaction for the Combined Group’s stakeholders.
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` •
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` The integration of Just Eat’s business is progressing well and is not expected to
`be affected by the acquisition of Grubhub. As one of the first major milestones, in
`the first week of June 2020, Just Eat’s market leading Swiss business was migrated
`to Just Eat Takeaway.com’s central European IT platform and the teams are
`working through further steps in the broader integration process.
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`Key Terms of the Merger Agreement
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`On 10 June 2020, Just Eat Takeaway.com entered into an Agreement and Plan of
`Merger (the “Merger Agreement”), by and among Just Eat Takeaway.com,
`Grubhub, Checkers Merger Sub I, Inc. (“Merger Sub I”), a Delaware corporation
`and a wholly-owned subsidiary of Just Eat Takeaway.com, and Checkers Merger
`Sub II, Inc. (“Merger Sub II”), a Delaware corporation and a wholly-owned
`subsidiary of Just Eat Takeaway.com, providing for the acquisition by Just Eat
`Takeaway.com of all of the issued and outstanding shares of common stock of
`Grubhub. At the effective time of the Transaction, on the terms and subject to the
`conditions set forth in the Merger Agreement, each share of common stock of
`Grubhub will be converted into the right to receive ADRs representing 0.6710 Just
`Eat Takeaway.com ordinary shares, without interest. Consummation of the
`Transaction is subject to customary closing conditions, including (i) the required
`approval of the Merger Agreement by the shareholders of Just Eat Takeaway.com
`and Grubhub; (ii) completion of any review by U.S. and U.K. antitrust authorities
`and the Committee on Foreign Investment in the United States (CFIUS); (iii) the
`absence of any order prohibiting the Transaction; (iv) the accuracy of the
`representations and warranties of the parties and compliance by the parties with
`their respective obligations under the Merger Agreement (subject to customary
`materiality qualifiers); (v) the absence of any material adverse effect on Just Eat
`Takeaway.com or Grubhub since the date of the Merger Agreement; and (vi)
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`approval of listing of the Just Eat Takeaway.com ADRs to be issued as the merger
`consideration on a U.S. stock exchange. Just Eat Takeaway.com and Grubhub have
`each made customary representations and warranties and covenants in the Merger
`Agreement. Among other things, each of Just Eat Takeaway.com and Grubhub may
`not solicit or participate in discussions with third parties regarding alternative
`acquisition proposals, subject to exceptions that allow each of Just Eat
`Takeaway.com and Grubhub under certain circumstances to provide information to
`and participate in discussions with third parties with respect to unsolicited
`alternative acquisition proposals. In addition, until the termination of the Merger
`Agreement or the effective time of the Transaction, each of Just Eat Takeaway.com
`and Grubhub has agreed to use reasonable best efforts to operate its business in the
`ordinary course of business in all material respects and has agreed to certain other
`negative covenants. The Merger Agreement contains certain termination rights for
`Just Eat Takeaway.com and Grubhub. Upon termination of the Merger Agreement
`under specified circumstances, including if Just Eat Takeaway.com or Grubhub
`terminates the Merger Agreement in order to accept an alternative acquisition
`proposal that constitutes a superior proposal or if the board of one party changes its
`recommendation of the transaction, Just Eat Takeaway.com or Grubhub, as
`applicable, will be required to pay the other party a termination fee of $144 million.
`The foregoing description of the Merger Agreement and the transactions
`contemplated thereby does not purport to be complete and is subject to, and
`qualified in its entirety by, the full text of the Merger Agreement.
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`* * *
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`The Board has unanimously approved the Proposed Transaction. It is therefore
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`24.
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`
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`imperative that Grubhub’ stockholders are provided with the material information that has been
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`omitted from the Proxy Statement, so that they can meaningfully assess whether or not the
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`Proposed Transaction is in their best interests prior to the forthcoming stockholder vote.
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`B.
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`The Materially Incomplete and Misleading Proxy Statement
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`25.
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`On April 27, 2021, Grubhub filed the Proxy Statement with the SEC in connection
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`with the Proposed Transaction. The Proxy Statement was furnished to the Company’s
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`stockholders and solicits the stockholders to vote in favor of the Proposed Transaction. The
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`Individual Defendants were obligated to carefully review the Proxy Statement before it was filed
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`with the SEC and disseminated to the Company’s stockholders to ensure that it did not contain any
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`material misrepresentations or omissions. However, the Proxy Statement misrepresents and/or
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`omits material information that is necessary for the Company’s stockholders to make an informed
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`decision concerning whether to vote in favor of the Proposed Transaction, in violation of Sections
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`14(a) and 20(a) of the Exchange Act.
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`Omissions and/or Material Misrepresentations Concerning Grubhub and Just Eat Financial
`Projections
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`The Proxy Statement fails to provide material information concerning financial
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`26.
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`projections by Grubhub management and Just Eat management and relied upon by Evercore and
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`the Board in their analysis and deliberation. The Proxy Statement discloses management-prepared
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`financial projections for the Company which are materially misleading. The Proxy Statement
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`indicates that in connection with the rendering of its fairness opinion, that the Company prepared
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`certain non-public financial forecasts (the “Company Projections”) and provided them to the Board
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`and the financial advisors with forming a view about the stand-alone valuation of the Company.
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`Accordingly, the Proxy Statement should have, but fails to provide, certain information in the
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`projections that Grubhub management and Just Eat management provided to the Board and the
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`financial advisors. Courts have uniformly stated that “projections … are probably among the most
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`highly-prized disclosures by investors. Investors can come up with their own estimates of discount
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`rates or [] market multiples. What they cannot hope to do is replicate management’s inside view
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`of the company’s prospects.” In re Netsmart Techs., Inc. S’holders Litig., 924 A.2d 171, 201-203
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`(Del. Ch. 2007).
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`27.
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`For the Company Projections, the Proxy Statement provides values for non-GAAP
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`(Generally Accepted Accounting Principles) financial metrics: Adjusted EBITDA and Levered
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`Free Cash Flow, but fails to provide line items used to calculate these metrics and/or a
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`reconciliation of these non-GAAP metrics to their most comparable GAAP measures, in direct
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`violation of Regulation G and consequently Section 14(a).
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`28.
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`For the Just Eat Projections, the Proxy Statement provides values for non-GAAP
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`(Generally Accepted Accounting Principles) financial metrics: Adjusted Revenue, Adjusted
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`EBITDA, Unlevered Free Cash Flow, but fails to provide line items used to calculate these metrics
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`and/or a reconciliation of these non-GAAP metrics to their most comparable GAAP measures, in
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`direct violation of Regulation G and consequently Section 14(a).
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`29.
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`The Proxy Statement also fails to disclose projected net income information for
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`both companies, despite the reference to this metric in the Projections.
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`30. When a company discloses non-GAAP financial measures in a Proxy Statement
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`that were relied on by a board of directors to recommend that stockholders exercise their corporate
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`suffrage rights in a particular manner, the company must, pursuant to SEC regulatory mandates,
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`also disclose all projections and information necessary to make the non-GAAP measures not
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`misleading, and must provide a reconciliation (by schedule or other clearly understandable
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`method) of the differences between the non-GAAP financial measure disclosed or released with
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`the most comparable financial measure or measures calculated and presented in accordance with
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`GAAP. 17 C.F.R. § 244.100.
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`31.
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`The SEC has noted that:
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`companies should be aware that this measure does not have a
`uniform definition and its title does not describe how it is calculated.
`Accordingly, a clear description of how this measure is calculated,
`as well as the necessary reconciliation, should accompany the
`measure where
`it
`is used. Companies should also avoid
`inappropriate or potentially misleading
`inferences about
`its
`usefulness. For example, "free cash flow" should not be used in a
`manner that inappropriately implies that the measure represents the
`residual cash flow available for discretionary expenditures, since
`many companies have mandatory debt service requirements or other
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`non-discretionary expenditures that are not deducted from the
`measure.1
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`Thus, to cure the Proxy Statement and the materially misleading nature of the
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`32.
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`forecasts under SEC Rule 14a-9 as a result of the omitted information in the Proxy Statement,
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`Defendants must provide a reconciliation table of the non-GAAP measure to the most comparable
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`GAAP measure to make the non-GAAP metrics included in the Proxy Statement not misleading.
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`Omissions and/or Material Misrepresentations Concerning Evercore’s Financial Analysis
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`33. With respect to Evercore’s Discounted Cash Flow Analysis for Grubhub, the Proxy
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`Statement also fails to disclose: (i) the terminal values for the Company; (ii) the inputs and
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`assumptions underlying the use of terminal year multiples ranging from 16.0x to 20.0x; (iii) the
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`inputs and assumptions underlying the range of perpetuity growth rates from 6.8% to 9.2%; (iv)
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`the inputs and assumptions underlying the range of discount rates from 9.0% to 11.0%; (v) the
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`Company’s weighted cost of capital; (vi) the ranges of present values for the cash flows and
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`terminal values and the estimated present value as of March 31, 2020 of the tax savings of the
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`Company attributed to its net operating losses; and (vii) the Company’s net debt as of March 31,
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`2020; (viii) the number of fully diluted outstanding Grubhub shares.
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`34. With respect to Evercore’s Discounted Cash Flow Analysis for Just Eat, the Proxy
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`Statement also fails to disclose: (i) the terminal values for Just Eat; (ii) the inputs and assumptions
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`underlying the use of terminal year multiples ranging from 12.0x to 14.0x; (iii) the inputs and
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`assumptions underlying the range of perpetuity growth rates from 2.6% to 5.3%; (iv) the inputs
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`and assumptions underlying the range of discount rates from 9.0% to 11.0%; (v) Just Eat’s
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`weighted cost of capital; (vi) the ranges of present values for the cash flows and terminal values
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`1 U.S. Securities and Exchange Commission, Non-GAAP Financial Measures, last updated April
`4, 2018, available at: https://www.sec.gov/divisions/corpfin/guidance/nongaapinterp.htm
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`and the estimated present value as of March 31, 2020 of the tax savings of Just Eat attributed to its
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`net operating losses; and (vii) Just Eat’s estimated net debt as of March 31, 2020; (viii) Just Eat’s
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`unconsolidated assets; and (ix) the number of fully diluted outstanding Just Eat shares.
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`35. With respect to Evercore’s Premia Paid Analysis, the Proxy Statement also fails to
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`disclose the premiums paid and the acquisitions observed by Evercore in the analysis.
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`36.
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`In sum, the omission of the above-referenced information renders statements in the
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`Proxy Statement materially incomplete and misleading in contravention of the Exchange Act.
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`Absent disclosure of the foregoing material information prior to the special stockholder meeting
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`to vote on the Proposed Transaction, Plaintiff will be unable to make a fully-informed decision
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`regarding whether to vote in favor of the Proposed Transaction, and she is thus threatened with
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`irreparable harm, warranting the injunctive relief sought herein.
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`CLAIMS FOR RELIEF
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`COUNT I
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`On Behalf of Plaintiff Against All Defendants for Violations of
`Section 14(a) of the Exchange Act and Rule 14a-9 and 17 C.F.R. § 244.100
`
`37.
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`Plaintiff incorporates each and every allegation set forth above as if fully set forth
`
`
`
`herein.
`
`38.
`
`Rule 14a-9, promulgated by the SEC pursuant to Section 14(a) of the Exchange
`
`Act, provides that proxy communications with stockholders shall not contain “any statement
`
`which, at the time and in the light of the circumstances under which it is made, is false or
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`misleading with respect to any material fact, or which omits to state any material fact necessary in
`
`order to make the statements therein not false or misleading.” 17 C.F.R. § 240.14a-9.
`
`39.
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`Defendants have issued the Proxy Statement with the intention of soliciting
`
`stockholder support for the Proposed Transaction. Each of the Defendants reviewed and
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`Case 1:21-cv-03756 Document 1 Filed 04/28/21 Page 14 of 17
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`authorized the dissemination of the Proxy Statement and the use of their name in the Proxy
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`Statement, which fails to provide critical information regarding, among other things, financial
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`analysis that were prepared by Evercore and relied upon by the Board in recommending the
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`Company’s stockholders vote in favor of the Proposed Transaction.
`
`40.
`
`In so doing, Defendants made untrue statements of fact and/or omitted material
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`facts necessary to make the statements made not misleading. Each of the Individual Defendants,
`
`by virtue of their roles as officers and/or directors, were aware of the omitted information but failed
`
`to disclose such information, in violation of Section 14(a). The Individual Defendants were
`
`therefore negligent, as they had reasonable grounds to believe material facts existed that were
`
`misstated or omitted from the Proxy Statement, but nonetheless failed to obtain and disclose such
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`information to stockholders although they could have done so without extraordinary effort.
`
`41.
`
`Defendants were, at the very least, negligent in preparing and reviewing the Proxy
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`Statement. The preparation of a Proxy Statement by corporate insiders containing materially false
`
`or misleading statements or omitting a material fact constitutes negligence. Defendants were
`
`negligent in choosing to omit material information from the Proxy Statement or failing to notice
`
`the material omissions in the Proxy Statement upon reviewing it, which they were required to do
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`carefully. Indeed, Defendants were intricately involved in the process leading up to the signing of
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`the Merger Agreement and the preparation and review of strategic alternatives and the Company’s
`
`financial projections.
`
`42.
`
`The misrepresentations and omissions in the Proxy Statement are material to
`
`Plaintiff, who will be deprived of her right to cast an informed vote if such misrepresentations and
`
`omissions are not corrected prior to the vote on the Proposed Transaction. Plaintiff has no adequate
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`Case 1:21-cv-03756 Document 1 Filed 04/28/21 Page 15 of 17
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`remedy at law. Only through the exercise of this Court’s equitable powers can Plaintiff be fully
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`protected from the immediate and irreparable injury that Defendants’ actions threaten to inflict.
`
`COUNT II
`
`On Behalf of Plaintiff Against the Individual Defendants for Violations of Section 20(a) of
`the Exchange Act
`
`Plaintiff incorporates each and every allegation set forth above as if fully set forth
`
`43.
`
`herein.
`
`44.
`
`The Individual Defendants acted as controlling persons of Grubhub within the
`
`meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their positions as
`
`directors of Grubhub, and participation in and/or awareness of the Company’s operations and/or
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`intimate knowledge of the incomplete and misleading statements contained in the Proxy Statement
`
`filed with the SEC, they had the power to influence and control and did influence and control,
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`directly or indirectly, the decision making of Grubhub, including the content and dissemination of
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`the various statements that Plaintiff contends are materially incomplete and misleading.
`
`45.
`
`Each of the Individual Defendants was provided with or had unlimited access to
`
`copies of the Proxy Statement and other statements alleged by Plaintiff to be misleading prior to
`
`and/or shortly after these statements were issued and had the ability to prevent the issuance of the
`
`statements or cause the statements to be corrected.
`
`46.
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`In particular, each of the Individual Defendants had direct and supervisory
`
`involvement in the day-to-day operations of Grubhub, and, therefore, is presumed to have had the
`
`power to control or influence the particular transactions giving rise to the Exchange Act violation