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Kent v. Stoelting

United States District Court, E.D. Wisconsin

March 21, 2018

JESSE KENT, Individually and on Behal of All Others Similarly Situated, and Derivatively on Behalf of ROADRUNNER TRANSPORTATION SYSTEMS, INC., Plaintiffs,
v.
CURTIS STOELTING, et al., Defendants. and ROADRUNNER TRANSPORTATION SYSTEMS, INC., a Delaware corporation, Nominal Defendant. CHESTER COUNTY EMPLOYEES RETIREMENT FUND, Individually and on Behalf of All Others Similarly Situated, and Derivatively on Behalf of ROADRUNNER TRANSPORTATION SYSTEMS, INC., Plaintiffs,
v.
CURTIS W. STOELTING, et al., Defendants. and ROADRUNNER TRANSPORTATION SYSTEMS, INC., a Delaware corporation,

         ORDER CONSTRUING AMENDED STIPULATION AS JOINT MOTION FOR CONSOLIDATION OF CASES (DKT. NO. 22), GRANTING THAT MOTION, SETTING DEADLINE FOR PLAINTIFFS TO FILE CONSOLIDATED COMPLAINT, CONSTRUING AMENDED STIPULATION AS THE DEFENDANTS' MOTION TO WITHDRAW THE TWO PENDING MOTIONS TO DISMISS IN KENT, AND GRANTING THAT MOTION

          HON. PAMELA PEPPER UNITED STATES DISTRICT JUDGE

         I. Background

         On June 28, 2017, plaintiff Jesse Kent filed a class and derivative action against the named defendants, alleging four causes of action: (1) violation of Section 14(a) of the Exchange Act; (2) breach of fiduciary duty; (3) waste of corporate assets; and (4) unjust enrichment. The plaintiff also asked the court to compel an annual meeting of stockholders. Kent v. Stoelting, et al. Case No. 17-cv-893, Dkt. No. 1. The court approved a stipulation between the parties, extending the defendants' time to respond to the complaint. Dkt. No. 9. The defendants then filed two motions to dismiss-one on behalf of defendants John G. Kennedy, Brian C. Murray and William S. Urkiel, dkt. no. 11, and one on behalf of the remaining defendants, dkt. no. 13.

         The court granted several extensions of the briefing deadlines for those motions, and on the due date for the defendants' reply briefs-January 22, 2018-the parties filed a “Stipulation RE: (1) Consolidation of Actions; (2) Establishing a Briefing Schedule; and (3) Accepting Service.” Dkt. No. 21. The stipulation revealed that there was another case pending before the court, Chester County Employees Retirement Fund v. Stoelting, et al., Case No. 17-cv-1788, that had been filed on December 22, 2017. In the Chester County case, plaintiff “Chester County Employees Retirement Fund” had alleged four grounds for relief: (1) violations of §14(a) of the Exchange Act; (2) breach of fiduciary duty; (3) waste of corporate assets; and (4) unjust enrichment. Chester County, Case No. 17-1788, dkt. no. 1. The Chester County case named the same defendants as had Kent.

         The parties filed an amended stipulation on February 23, 2018, Kent, dkt. no. 22; while the original stipulation provided that the defendants did not have to respond to the complaints (in Kent, dkt. no. 21 at ¶3), the amended stipulation stated that the defendants “withdrew” their motion to dismiss the Kent complaint, and provided that the defendants did not have to respond to the Chester County complaint, Kent, dkt. no. 22 at ¶3. The amended stipulation states, however, that the withdrawal of the pending motion to dismiss in Kent “is premised on the filing of a consolidated complaint as contemplated in Section II of this Amended Stipulation, ” and that the defendants “reserve the right to renew that motion if no superseding consolidated complaint is filed.” Id. at n.1.

         The amended stipulation contains the following assertion:

“WHEREAS, Kent and Chester County Employees Retirement Fund each assert breach of fiduciary duty and federal securities laws claims on behalf of Roadrunner against certain of its current and former officers and directors that include allegations arising from the same or substantially similar facts, occurrences and transactions;
WHEREAS, the parties have met and conferred and agree that the Kent action and Chester County Employees Retirement Fund action should be consolidated under Fed.R.Civ.P. 42(a), and that consolidation of the Kent and Chester County Employees Retirement Fund actions will promote judicial economy and preserve both public and private resources (hereinafter referred to as the “Consolidated Action”) . . . .

Kent, Dkt. No. 22 at 3. The amended stipulation announces that “the following actions are hereby consolidated before the Honorable Pamela Pepper for all purposes, including pretrial proceedings and trial . . . .” Id.

         The amended stipulation also says that the parties have agreed to a schedule in which the plaintiffs will file a consolidated complaint by March 21, 2018; the defendants will answer or otherwise respond no later than forty-five days from that date; the plaintiffs then will have forty-five days to respond; and the defendants will have thirty days after the plaintiff files a response to reply. Id. at 5. Finally, the amended stipulation states that the defendants “accept service of any papers or documents filed or served by Plaintiffs in the Chester County Employees Retirement Fund action.” Id.

         II. Discussion

         The parties titled their filings “stipulations;” they say they have “met and conferred and agree” that the cases should be consolidated under Federal Rule of Civil Procedure 42(a).

         Rather than filing a stipulation, the parties should have filed a joint motion for consolidation under Rule 42(a). There are two reasons the parties should have followed this procedure. First, a “stipulation” is an agreement between the parties. It is not a request for the court to take any action. If a party wants the court to take action, the way to request that action is by filing a motion. A motion asks the court to take some action. When parties file a motion, the court's electronic docketing system tags that ...


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