United States District Court, D. Delaware
ALVIN JANKLOW, Derivatively on Behalf of STERICYCLE, INC., Plaintiff,
CHARLES A. ALUTTO, DANIEL V. GINNETTI, JOSEPH B. ARNOLD, RICHARD T. KOGLER, FRANK J.M. TEN BRINK, MARK C. MILLER, JACK W. SCHULER, JOHN PATIENCE, LYNN DORSEY BLEIL, MIKE S. ZAFIROVSKI, RODNEY F. DAMMEYER, THOMAS D. BROWN, THOMAS F. CHEN, WILLIAM K. HALL, JONATHAN T. LORD, and RONALD G. SPAETH, Defendants. and, STERICYCLE, INC., a Delaware Corporation Nominal Defendant.
A. Bennett, COOCH AND TAYLOR, P.A., Wilmington, Delaware;
Ashley R. Rifkin, ROBBINS ARROYO LLP, San Diego, California
Counsel for Plaintiff.
A. Schmidt, Kelly E. Farnan, RICHARDS, LAYTON and FINGER,
P.A., Wilmington, Delaware Counsel for Defendants.
CONNOLLY, UNITED STATES DISTRICT JUDGE.
Wilmington this 11th day of December, 2018, having reviewed
Defendants' Motion to Temporarily Stay Litigation and the
papers filed in connection therewith;
ORDERED that said motion (D.I. 26) is
GRANTED, for these reasons:
Defendant Stericycle, Inc. ("Stericycle") is a
company that specializes in the collection, processing, and
disposal of regulated waste. D.I. 27 at 3. In 2010, a
Stericycle employee filed a qui tam action against
Stericycle, accusing Stericycle of improperly overcharging
customers by implementing automated price increases
("APIs") in excess of the flat rates Stericycle
agreed to charge its customers. D.I. 31 at 3-4. Stericycle
settled the qui tam action for over $29 million, and
Stericycle's customers began to pursue litigation across
the country, with approximately twenty separate actions filed
against Stericycle. Id. at 4. The various actions
were consolidated by the Panel on Multidistrict Litigation
before the United States District Court for the Northern
District of Illinois, which approved a settlement in March
2018 for $295 million. See In re Stericycle, Inc.
Steri-safe Contract Litig, MDL No. 2455, ECF No. 382
(N.D. Ill. Mar. 8, 2018).
addition to the customer class action, Stericycle's
shareholders filed various derivative and direct claims
arising out of the allegations that Stericycle was improperly
overcharging customers and failed to disclose such
overcharging to shareholders. The action furthest along is a
federal securities class action against Stericycle filed in
the Northern District of Illinois. See St. Lucie Cty.
Fire Dist. Firefighters' Pension Tr. Fund v. Stericycle,
Inc., No. 1:16-cv-07145 (N.D. Ill. filed July 11, 2016)
(the "Securities Class Action"). The Securities
Class Action alleges violations of Sections 11, 12(a), and 15
of the Securities Act of 1933 and Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 by Stericycle, current
and former officers and directors, and Stericycle's
underwriters. Securities Class Action, D.I. 84. The
defendants in the Securities Class Action have filed a motion
to dismiss, which has been fully briefed as of July 13, 2018.
Securities Class Action, D.I. 91, 95.
addition to the Securities Class Action, there are two state
court derivative actions pending in the Circuit Court of Cook
County, Illinois, Chancery Division, see Weinstein v.
Alutto, No. 2017-CH-03062 (Ill. Cir. Ct, Cook Cty. filed
Mar. 1, 2017); Shah v. Alutto, No. 2016-CH-11636
(Ill. Cir. Ct, Cook Cty. filed Sept. 1, 2016), as well as a
state court derivative action pending in the Delaware
Chancery Court. See Sui v. Miller, No. 2018-0273
(Del. Ch. filed Apr. 12, 2018). All three of these state
court derivative actions have been stayed pending the
resolution of defendants' motion to dismiss in the
Securities Class Action. See D.I. 28, Ex. 1; Sui
v. Miller, No. 2018-0273-JTL (Del. Ch. May 24, 2018)
(granting joint motion to stay).
March 26, 2018 Plaintiff Alvin Janklow, derivatively on
behalf of Stericycle, Inc. ("Plaintiff), initiated this
action with the filing of his Verified Shareholder Derivative
Complaint alleging violations of Section 10(b) and 14(a) of
the Securities Exchange Act of 1934 and common law claims for
breach of fiduciary duty, waste of corporate assets, and
unjust enrichment by Charles A. Alutto, Daniel V. Ginnetti,
Joseph B. Arnold, Richard T. Kogler, Frank J.M. Ten Brink,
Mark C. Miller, Jack W. Schuler, John Patience, Lynn Dorsey
Bleil, Mike S. Zafirovski, Rodney F. Dammeyer, Thomas D.
Brown, Thomas F. Chen, William K. Hall, Jonathan T. lord, and
Ronald G. Speath (collectively, the "Individual
Defendants") and Stericycle (collectively, with the
Individual Defendants, "Defendants"). D.I. 2. On
April 18, 2018, Defendants filed the present motion to stay
temporarily this litigation pending the resolution of the
motion to dismiss in the Securities Class Action. D.I. 26.
Standard of Review.
has discretionary authority to grant a motion to stay.
See Cost Bros., Inc. v. Travelers Indem. Co., 760
F.2d 58, 60 (3d Cir. 1985). Courts should consider three
factors in determining whether to grant a motion to stay:
"(1) whether a stay will unduly prejudice or present a
clear tactical disadvantage to the non-moving party, i.e.,
the balance of harms; (2) whether a stay will simplify the
issues in question and trial of the case; and (3) whether a
stay will promote judicial economy, e.g., how close to trial
has the litigation advanced." Husqvarna AB v. Toro
Co., 2016 WL 5213904, at *1 (D. Del. Sept. 20, 2016)
(citing Cheyney State Coll. Faculty v. Hufstedler,
703 F.2d 732, 737-38 (3d Cir. 1983)).
respect to the first factor, the balance of harms, the Court
finds that a stay will not unduly prejudice Plaintiff.
Plaintiff argues that the length of the requested stay is
"indefinite," and that Plaintiffs derivative action
is not contingent on the Securities Class Action. D.I. 31 at
8-11. Although Plaintiff is correct that stays of indefinite
duration are disfavored, see Structural Grp., Inc. v.
Liberty Mut. Ins. Co., 2008 WL 4616843, at * 5 (M.D. Pa.
July 13, 2009), Defendants only seek to stay temporarily the
present action until the United States District Court for the
Northern District of Illinois resolves their motion to
dismiss in the Securities Class Action. D.I. 26. In contrast,
Defendants are likely to suffer prejudice if the present
litigation is not stayed because Defendants may be forced to
take inconsistent positions if required to litigate
simultaneously the Securities Class Action and the present