Smith v. Heaf et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Edward Smith, derivatively on
behalf of Bath & Body Works, Inc.,
Plaintiff,
V.
Daniel Heaf, etal.,
Defendants.
and
Bath & Body Works, Inc.,
Nominal Defendant.
CaseNo. 2:26-cv-112
Judge Michael H. Watson
Magistrate Judge Deavers
Jyothiswaroop Jayaprakash,
derivatively on behalf of
Bath & Body Works, Inc.,
Plaintiff,
V.
Daniel Heaf, et al;
Defendants.
and
Bath & Body Works, Inc.,
Nominal Defendant.
Case No. 2:26-cv-245
Judge Michael H. Watson
Magistrate Judge Deavers
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OPINION AND ORDER
This matter is before the Court on the joint motion to consolidate and
appoint co-lead and co-liaison counsel, ECF No. 6, 1 filed by Edward Smith and
Jyothiswaroop Jayaprakash (together, "Plaintiffs"); Daniel Heaf, Alessandro
Bogliolo, Lucy Brady, Francis Hondal, Danielle Lee, Sarah Nash, Juan Rajlin,
Stephen Steinour, J. K. Symancyk, Steven Voskuil, Patricia Bellinger. Michael
Morris, Eva Boratto, and Gina Boswell (collectively, "Individual Defendants"); and
Bath & Body Works, Inc. ("Nominal Defendant").
For the reasons below, the motion is GRANTED in part and DENIED
WITHOUT PREJUDICE in part.
A. Consolidation
Federal Rule of Civil Procedure 42 allows (but does not require) a court to
consolidate actions if the party seeking consolidation demonstrates that the
actions "involve a common question of law or fact. " Fed. R. Civ. P. 42(a)(2).
There need not be a "complete identity of legal and factual issues posed in the
cases which are the subject of the request. " J4 Promotions, Inc. v. Splash Dogs,
LLC, Nos. 2:09-cv-136, 2:10-cv-432, 2010 WL 3063217, at *1 (S. D. Ohio Aug. 3,
2010). Rather, consolidation may be found "when some common questions of
1 The parties filed their joint motion only in the Smith matter, Case No. 2:26-cv-112.
Accordingly, citations to docket entries correspond with the Smith docket unless
otherwise indicated. Additionally, the parties initially filed their joint motion, ECF No. 5,
but then amended it shortly thereafter, ECF No. 6. So, the Court evaluates the
amended motion. The Court observes, however, that the Certificate of Service at the
end of the amended motion is not complete and is unsigned.
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fact and analysis of the complaints indicate that the legal issues are almost
identical. " Bishop v. Coulter Ventures, LLC, No. 19-CV-5050, 2021 WL 184810,
at*2(S. D. OhioJan. 19, 2021).
Once this threshold commonality requirement is met, the decision to
consolidate rests in the court's sound discretion. Stemler v. Burke, 344 F. 2d 393,
396 (6th Cir. 1965); see a/so Cantrell v. GAF Corp., 999 F. 2d 1007, 1011 (6th
Cir. 1993) ("Whether cases involving the same factual and legal questions should
be consolidated for trial is a matter within the discretion of the trial court[. ]"). In
determining whether to grant consolidation, courts must consider:
[W]hether the specific risks of prejudice and possible confusion [are]
overborne by the risk of inconsistent adjudications of common factual
and legal issues, the burden on parties, witnesses and available
judicial resources posed by multiple lawsuits, the length of time
required to conclude multiple suits as against a single one, and the
relative expense to all concerned of the single-trial, multiple-trial
alternatives.
Cantrell, 999 F. 2d at 1011 (quoting Hendrix v. Raybestos-Manhattan, Inc., 776
F. 2d 1492, 1495 (11th Cir. 1985)).
hlere, the parties jointly seek to consolidate two shareholder derivative
actions: (1) Smith v. Heaf, et a/., Case No. 2:26-cv-112 (S. D. Ohio) (the "Smith
Action"); and (2) Jayaprakash v. Heaf, et at., Case No. 2:26-cv-245 (S. D. Ohio)
(the "JayaprakashAction"). ECF No. 6 at PAGEID # 92. The Court agrees that
there is significant overlap in law and fact between these two actions, which
strongly supports consolidation. Both cases challenge substantially similar
alleged conduct by many of the same company directors and executive officers.
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Compare ECF No. 1 w/Y/7 EOF No. 1, Case No. 2:26-cv-245. And both cases
allege nearly identical causes of action against Individual Defendants, including,
inter alia, those for violations of the Securities Exchange Act of 1934, breach of
fiduciary duties, unjust enrichment, gross mismanagement, and waste of assets.
ECF No. 6 at PAGEID # 96.
As a result, consolidation of the Smith Action and the Jayaprakash Action
will be the most efficient method of adjudicating the issues, and conducting
discovery in a single case will facilitate expediency. This is especially true
considering that the same counsel seek to represent Plaintiffs in both cases, and
the same counsel seek to represent Individual Defendants and Nominal
Defendant in both cases. See ECF No. 6.
Nor will consolidation delay the final disposition of these matters or
otherwise hinder judicial economy. Both cases were filed within a month of each
other, and a case schedule has yet to be entered in either action, so discovery
has yet to begin. The joint nature of the motion to consolidate further negates
any prejudice against the parties.
Accordingly, the Court GRANTS the request to consolidate the Smith
Action and the Jayaprakash Action (together, the "Consolidated Action"), ECF
No. 6. The Smith Action is hereby DESIGNATED as the Lead Case. In all future
filings in the Consolidated Action, the parties are ORDERED to include the
following case caption:
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IN THE UNITED STATES DISTRICT COURT
SOUTHERNDISTRICTOFOHIO
EASTERN DIVISION
LeadCase No. 2;26-cv-00112-MHW-EPt *	IN RE BATH & BODY WORKS. INC.
DERIVATIVE LITIGATION
This Document Relates to:
ALLACTIONS
The parties need only file documents electronically in the Smith Action, Case No.
2:26-cv-112, and, when prompted, indicate that the document should also be
distributed to the Jayaprakash Action, Case No 2:26-cv-245.
B. Appointment of Counsel
Plaintiffs also request that the Court appoint them co-lead and co-liaison
counsel for the Consolidated Action. ECF No. 6. Specifically, Plaintiffs ask that
(1) Rowley Law PLLC ("Rowley Law") and The Brown Law Firm, P. C. ("Brown
Law") be designated as co-lead counsel; and (2) Markovits, Stock & Demarco,
LLC ("MSD Law") and Bronstein, Gewirtz & Grossman, LLC ("BGG Law") be
designated as co-liaison counsel. 2 Id. at PAGEID # 97. The Individual
Defendants and Nominal Defendant do not take a position regarding the
appointment of counsel for Plaintiffs. Id.
2 The parties indicate that co-lead counsel will have "the sole authority" to speak for
Plaintiffs in "all matters regarding pre-trial procedure, trial, and settlement negotiations"
and will be "responsible for coordinating all activities and appearances on behalf of
[P]laintiffs" and filing "motion[s], request[s] for discovery, or other pre-trial or trial
proceedings!. ]" ECF No. 6 at PAGEID # 99. Co-liaison counsel, on the other hand, will
be "responsible for communications to and from this Court. " Id. at PAGEID ## 99-100.
This arrangement causes the Court some hesitation, in that it would seem to run afoul
of S. D. Ohio Civ. R. 83. 4 and could result in the Court having no communication with
the attorneys who file motions or appear before it on Plaintiffs' behalf.
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A court has the inherent power to "designate a lead counsel to manage
complex proceedings. " Graham v. Peltz (In re Wend/s Co. S'holder Derivative
Action), 44 F. 4th 527, 532 (6th Cir. 2022) (citation omitted); see a/so In re
Bendectin Litig., 857 F. 2d 290, 297 (6th Cir. 1988). In a shareholder derivative
suit, "the court should select the counsel who will best honor the interests of the
plaintiffs litigating on behalf of the corporation. " Graham, 44 F. 4th at 533 (citation
omitted). Courts should consider factors such as the lead counsel's
"qualifications and experience .. . [and] ability to work cooperatively with
opposing counsel and the court, the nature of the causes of action alleged, the
quality of the pleadings, and any prior agreements amongst the parties. " Id.
(citation omitted); see a/so, e. g., Bushanskyv. German, No. 1:23-CV-02257-
PAB, 2024 WL 837192, at *2 (N. D. Ohio Feb. 28, 2024).
Here, the Court does not disagree that Rowley Law, Brown Law, MSD
Law, and BGG Law have the qualifications and experience to represent Plaintiffs
litigating on behalf of Nominal Defendant. Nevertheless, the parties' request for
such designation of counsel is premature. As it stands, there are only two active
shareholder derivative cases3 arising from the Individual Defendants' conduct-
the Smith Action and the Jayaprakash Action-such that the Court is not
3 A third related action is also pending before the Court, captioned Lingam v. Bath &
Body Works, Inc., etal., Case No. 2:26-cv-39 (S. D. Ohio). However, this third action is
a securities class action, while the Smith Action and the JayaprakashAction are
shareholder derivative suits.
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convinced that lead or liaison counsel is necessary to efficiently litigate these
proceedings.
Therefore, insofar as they seek appointment of co-lead and co-liaison
counsel, the parties' joint motion, EOF No. 6, is DENIED WITHOUT
PREJUDICE. If, in the future, additional related shareholder derivative suits are
filed, the parties may renew their appointment request accordingly.
C. Future Cases
In their joint motion, the parties provide a proposed order granting
consolidation, which "shall apply to each shareholder derivative action arising out
of the same, or substantially the same, transactions or events as these cases,
which is subsequently filed in, removed to, reassigned to, or transferred to this
Court. " ECF No. 6 at PAGEID # 100; see a/so ECF No. 6-3 (proposed order).
The parties also state that "[u]nless otherwise ordered, the terms of all orders,
rulings, and decisions in the [Consolidated Action] shall apply to all later
shareholder derivative actions filed in this Court that involve substantially similar
alleged conduct and questions of law and fact as the [Consolidated Action], and
such shareholder derivative actions shall be consolidated" with the Consolidated
Action. ECF No. 6 at PAGEID # 100; see a/so ECF No. 6-3.
The Court will not approve these statements and requirements. Should
any such similar shareholder derivative action be filed, removed, or transferred in
or to the Southern District of Ohio, any party seeking its consolidation with the
Consolidated Action shall file an appropriate motion asking that the Court do so.
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To be clear, the subsequent action will not be consolidated automatically by
reason of this Opinion and Order.
D. Conclusion
For the foregoing reasons, the parties' joint motion to consolidate and
appoint co-lead and co-liaison counsel, ECF No. 6, is GRANTED in part and
DENIED WITHOUT PREJUDICE in part. The Clerk shall terminate ECF No. 6
as a pending motion.
The parties SHALL submit, within FOURTEEN DAYS of the date of this
Opinion and Order, a joint notice that includes (1) the date by which Plaintiffs
must file a consolidated complaint (or designate an operative complaint); and
(2) the date by which Defendants must answer or otherwise respond to the
consolidated or designated operative complaint.
IT ISSOORDERED. . /
I AEL H. WATSON, JUDGE
UNITED STATES DISTRICT COURT
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