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Medoff v. CVS Caremark Corp.

United States District Court, D. Rhode Island

February 17, 2016

Richard Medoff
CVS Caremark Corp., et al. Opinion No. 2016 DNH 029

Barry J. Kucinitz, Esq., David A. Rosenfeld, Esq., Deborah R. Gross, Esq., Robert M. Rothman, Esq., William R. Grimm, Esq., David K. Baumgarten, Esq., Katherine M. Turner, Esq., Leslie C. Mahaffey, Esq., Margaret E. Keeley, Esq., Matthew H. Blumenstein, Esq., Mitchell R. Edwards, Esq., Steven M. Farina, Esq., Bailie L. Heikkinen, Esq., Christine M. Fox, Esq., Christopher M. Barrett, Esq., Eric W. Boardman, Esq., Guillaume Buell, Esq., Jonah H. Goldstein, Esq., Jonathan Gardner, Esq., Nicole Zeiss, Esq., Robert J. Robbins, Esq., Serena P. Hallowell, Esq., Theodore J. Pintar, Esq.


In this securities class action, shareholders of CVS Caremark Corporation alleged that CVS Caremark and certain of its officers made fraudulent representations and omissions about the integration of the CVS retail pharmacy business with Caremark’s prescription benefit manager business. After several years of litigation and several weeks of negotiation, the parties agreed to settle this matter on August 24, 2015.[1] They then jointly moved this court for preliminary certification of the class and preliminary approval of the settlement agreement. The court granted that motion, and by order of November 9, 2015[2]: (1) preliminarily approved the settlement as set forth in the Stipulation of Settlement[3]; (2) preliminarily certified the class for settlement purposes only; (3) preliminarily appointed co-lead plaintiffs as representatives of the class and lead counsel Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP as class counsel; (4) approved, as to form and content, the notice of proposed settlement, proof of claim and release form, and summary notice, [4] and ordered that the notice of proposed settlement be distributed to class members; and (5) scheduled a hearing regarding final approval of the settlement, class counsel’s motion for attorneys’ fees and expenses.

The co-lead plaintiffs notified the class of the proposed settlement and the scheduled hearing in accordance with the court’s order and subsequently moved for final approval of the settlement and the plan of allocation.[5] They also requested that the court award attorneys’ fees and expenses to lead counsel.[6]

On January 19, 2016, the court held a final approval hearing. For the reasons discussed more fully below, the court now: (1) grants final certification to the class described infra in Part I, for purposes of settlement only; (2) appoints co-lead plaintiffs as class representatives and lead counsel as class counsel; (3) finally approves the stipulation of settlement and plan of allocation; (4) finds that notice to the class satisfied due process; and (5) grants lead counsel’s request for attorneys’ fees in the sum of 30% of the common pool and expenses in the sum of $857, 631.86.

I. Class certification

In its order of November 9, 2015, [7] the court preliminarily certified the following class of plaintiffs in this action:

All persons and entities who purchased, or otherwise acquired, CVS Caremark common stock between October 30, 2008 and November 4, 2009, inclusive, and were damaged thereby. Excluded from the Class are Defendants; the other officers and directors of CVS Caremark; members of the immediate families of any excluded person; the legal representatives, heirs, successors, or assigns of any excluded person or entity; and any entity controlled by, or in which Defendants have or had a controlling interest. Also excluded from the Class is any Class Member that validly and timely requests exclusion from the Class.

Co-lead plaintiffs now request that the court finalize that certification.

To be certified, a class must satisfy all four requirements of Rule 23(a) and at least one of the criteria outlined in Rule 23(b). Amchem Prods. v. Windsor, 521 U.S. 591, 613-14 (1997). The proponent of the class must affirmatively demonstrate compliance with Rule 23. Makuc v. Am. Honda Motor Co., 835 F.2d 389, 394 (1st Cir. 1987). Actions such as this, brought “on behalf of shareholders alleging violations of federal securities laws[, ] are prime candidates for class action treatment . . . .” Grace v. Perception Tech. Corp., 128 F.R.D. 165, 167 (D. Mass. 1989).

The decision to certify a class is within this court’s broad discretion. See Bowe v. Polymedica Corp., 432 F.3d 1, 4 (1st Cir. 2005). Though the parties here have agreed to the certification of the class, the court must still assure itself that the class meets the requirements set forth in Federal Rule of Civil Procedure 23. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 131 S.Ct. 2541, 2552 (2011) (“certification is proper only if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied”); see also In re Lupron Mktg. & Sales Practices Litig., 228 F.R.D. 75, 88 (D. Mass. 2005) (in assessing a class for settlement purposes, it is “incumbent on the district court to give heightened scrutiny to the requirements of Rule 23 in order to protect absent class members.”) (citing Amchem, 521 U.S. at 620).

A. Rule 23(a)

Before finally certifying the class, the court must satisfy itself that the class meets each of the following requirements, set forth by Rule 23(a) of the Federal Rules of Civil Procedure:

(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.

As detailed briefly below, these requirements are easily satisfied in a case such as this, brought by a class of shareholders seeking to recover from a defendant for losses allegedly caused by the same set of alleged misrepresentations or omissions in statements made by the defendant or its officers.

1. Numerosity

To satisfy the numerosity requirement of Rule 23(a)(1), the class must be “so numerous that joinder of all members is impracticable.” As courts in this circuit have recognized, “joinder is especially impracticable where the class is made up of many shareholders, ” as it is here. In re Sonus Networks, Inc. Sec. Litig., 247 F.R.D. 244, 248 (D. Mass. 2007); see also Grace, 128 F.R.D. at 167 (“Even if the number of persons who bought stock during the class period is unknown, numerosity can be assumed where the number of shares traded is so great that common sense dictates the class is very large.”). Here, where 654, 345 notice packages have been sent to potential class members, see Supp. Walter Decl. (document no. 144) ¶ 6, the court finds that the numerosity requirement is satisfied.

2. Commonality

The commonality prong of the Rule 23(a) analysis requires that “there are questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). A single common factual or legal issue suffices to satisfy this requirement. See Van W. v. Midland Nat’l Life Ins. Co., 199 F.R.D. 448, 452 (D.R.I. 2001). Here, plaintiffs allege that defendants made material misrepresentations and omissions in public communications during the relevant period. The claims of all plaintiffs arise out of that uniform set of facts and implicate defendants’ alleged violation of the Exchange Act thereby. As such, the commonality requirement is met here. See, e.g., Kinney v. Metro Global Media, Inc., No. CIV.A. 99-579 ML, 2002 WL 31015604, at *13 (D.R.I. Aug. ...

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