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Wigginton v. Advance Auto Parts, Inc.

United States District Court, D. Delaware

November 2, 2018

JEWEL WIGGINTON, Individually and on Behalf of All Others Similarly Situated, Plaintiffs,
v.
ADVANCE AUTO PARTS, INC., THOMAS R. GRECO and THOMAS OKRAY, Defendants.

          Brian E. Farnan, Michael J. Farnan, Farnan LLP, Wilmington, DE; Phillip Kim, The Rosen Law Firm, P.A., New York, NY - Attorneys for Plaintiff Jewel Wigginton

          Peter B. Andrews, Craig J. Springer, David M. Sborz, Andrews & Springer LLC, Wilmington, DE; Ira M. Press, David A. Bishop, Thomas E. Elrod, Kirby Mclnerney LLP, New York, NY -Attorneys for Local 338 RWDSU/UFCW Retirement Fund

          Jeffrey M. Gorris, Christopher P. Quinn, Friedlander & Gorris, P.A., Wilmington, DE; Danielle S. Myers, Robbins, Geller, Rudman & Dowd LLP, San Diego, CA - Attorneys for Teamsters Local 710 Pension Fund

          P. Bradford deLeeuw, Rosenthal, Monhait & Goddess, P.A.; Naumon A. Amjed, Darren J. Check, Ryan T. Degnan, Kessler Topaz Meltzer & Check, LLP, Radnor, PA - Attorneys for The Public Employees' Retirement System of Mississippi

          Samuel A. Nolen, Katharine L. Mowrey, Richards Layton & Finger, P.A.; Douglas P. Baumstein, Susan L. Grace, White & Case LLP, New York, NY - Attorneys for Defendants

          MEMORANDUM OPINION

          NOREIKA, U.S. DISTRICT JUDGE

         Presently before the Court are competing motions by (1) Teamsters Local 710 Pension Fund ("Teamsters 710") (D.I. 12), (2) Local 338 RWDSU/UFCW Retirement Fund ("Local 338") (D.I. 15), and (3) the Public Employees' Retirement System of Mississippi ("Mississippi PERS") (D.I. 16), each seeking an order from the Court appointing the moving party as Lead Plaintiff in the present action, as well as an order approving that party's selection of Lead Counsel.[1] For the reasons set forth below, the Court GRANTS Mississippi PERS's motion (D.I. 16) and DENIES Teamsters 710's motion (D.T. 12) and Local 338's motion (D.T. 15).

         I. BACKGROUND

         On February 6, 2018, Plaintiff Jewel Wigginton ("Plaintiff) filed the present action against Advance Auto Parts, Inc. ("Advance Auto" or "the Company"), its CEO Thomas Greco, and its CFO Thomas Okray (collectively, "Defendants") on behalf of all purchasers of Advance Auto securities between November 14, 2016 and August 15, 2017 ("the Class Period"). (D.I. 1 ¶ 1). The Complaint asserts claims against Defendants arising under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("the Exchange Act") (found at 15 U.S.C. §§ 78j(b) and 78t(a)), as well as under Securities and Exchange Commission ("SEC") Rule 10b-5. (D.I. 1 ¶¶ 7-8).

         Advance Auto provides aftermarket automotive parts in North America. (D.I. 1 ¶ 20). Serving "professional installers, independently-owned operators, and 'do-it-yourself retail customers," Advance Auto sells items such as original equipment manufacturer parts, private label replacement parts, and other accessories and maintenance items for automotive vehicles. (Id.) Plaintiff alleges that she and all other purchasers of Advance Auto securities suffered damages arising out of Defendants' failure to disclose "material adverse facts" about Advance Auto's "financial well-being, business relationships, and prospects" throughout the Class Period. (D.I. 1 ¶ 5). Specifically, Plaintiff alleges that, during the Class Period, Defendants failed to disclose that Advance Auto's acquisition of the Carquest brand, as well as increased competition, were negatively affecting Advance Auto's sales. (Id. ¶ 32). According to Plaintiff, Advance Auto securities traded at artificially inflated prices during the Class Period because of Defendants' misleading statements and withholding of information. (Id. ¶¶ 11, 59). Plaintiff claims that once the allegedly concealed information became public, the price of Advance Auto securities "significantly declined," which caused Plaintiff and other purported class members to suffer economic loss. (Id. ¶ 53).

         On the same day that Plaintiff filed the Complaint, Plaintiffs counsel published notice of this purported class action with Business Wire, which informed potential class members that they could seek appointment as Lead Plaintiff until April 9, 2018. (See, e.g., D.I. 20, Ex. C). On April 9, 2018, Teamsters 710, Local 338, and Mississippi PERS each filed a motion for appointment as Lead Plaintiff in the present action, as well as for approval of their selection of counsel for the class action. (See D.I. 12 (Teamsters 710's motion); D.I. 15 (Local 338's motion); D.I. 16 (Mississippi PERS's motion)). Teamsters 710 is a pension fund that purchased 8, 122 shares of Advance Auto securities during the Class Period. (D.I. 13 at 6). Local 338 is a retirement fund that purchased 10, 435 shares of Advance Auto securities during the Class Period. (D.I. 19 at 5). And Mississippi PERS is a retirement system that purchased 31, 102 shares of Advance Auto securities during the Class Period. (D.I. 20, Ex. B). Each party filed oppositions to the other two competing motions (see D.I. 32-36), as well as a reply (see D.I. 37-41), and all three motions were fully briefed as of April 30, 2018.

         II. LEGAL STANDARDS

         This case arises under the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA provides that, in any private action arising under the Exchange Act brought as a class action, the Court shall consider any motion made by a purported class member and shall appoint as lead plaintiff[2] the member or members determined to be the "most capable of adequately representing the interests of class members" - i.e., the "most adequate plaintiff." See 15 U.S.C. § 78u-4(a)(3)(B)(i). The Court must follow a two-step process for determining the most adequate plaintiff for the class action See OFT Risk Arbitrages v Conner Tire & Rubber Co., 63 F Snpp 3d 394, 399 (D. Del. 2014). First, the Court must identify the person or group of persons entitled to the statutory presumption of most adequate plaintiff. Id. Second, the Court must determine whether that presumption has been rebutted. Id.

         The PSLRA provides that the presumptive lead plaintiff is the person or group that: (1) either filed the complaint or made a timely motion for appointment as lead plaintiff, (2) has the largest financial interest in the relief sought in the class action, and (3) otherwise satisfies the requirements of Federal Rule of Civil Procedure 23. See 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). Once the Court identifies the movant with the largest financial interest, it must independently determine whether the movant satisfies the typicality and adequacy requirements of Rule 23. See In re Cendant Corp. Litig., 264 F.3d 201, 263 (3d Cir. 2001) (the "otherwise satisfies" language refers to the typicality requirements of Rule 23(a)(3) and adequacy requirements of Rule 23(a)(4)). If the Court finds that a movant satisfies these requirements, that person or group is presumptively the most adequate plaintiff to represent the class. This presumption may be rebutted "only upon proof by a purported class member that the plaintiff "will not fairly and adequately protect the interests of the class" or that the plaintiff is "subject to unique defenses that render [it] incapable of adequately representing the class." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa) & (bb).

         Once the Court has determined the most adequate plaintiff to represent the purported class, that plaintiff, now the lead plaintiff, then, subject to the Court's approval, selects and retains counsel to represent the class. See 15 U.S.C. ยง 78u-4(a)(3)(B)(v). The selection of a lead plaintiff and the approval of lead plaintiffs choice of counsel are both committed to ...


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