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In re Big Lots, Inc. Shareholder Litigation

United States District Court, S.D. Ohio, Eastern Division

May 19, 2017

IN RE BIG LOTS, INC. SHAREHOLDER LITIGATION

          Michael H. Watson Judge.

          OPINION AND ORDER

          KIMBERLY A. JOLSON UNITED STATES MAGISTRATE JUDGE.

         This matter is before the Court on a proposed scheduling order dispute concerning whether merits discovery should proceed and the extent of discovery that should be allowed regarding the Special Litigation Committee's Motion to Dismiss (Doc. 100).

         I. BACKGROUND

         Between May 21, 2012, and July 2, 2012, Plaintiffs commenced stockholder derivative actions in this Court alleging breaches of fiduciary duty, unjust enrichment, and other violations of law by certain current and former officers and directors of Big Lots, Inc. (“Big Lots”). (See Doc. 1; Case No. 12-cv-447, Doc. 1; Case No. 12-cv-590, Doc. 1).

         Four years later, on October 20, 2016, Nominal Defendant Big Lots filed a Motion to Stay all proceedings in this case until the company's Special Litigation Committee (“SLC”), formed on August 1, 2016, had sufficient time to evaluate the merits of the remaining claim and prepare a report of its findings (hereinafter, “SLC Report” or “Report”). (Doc. 76 at 1; see also Doc. 98 at 5). After full briefing and a status conference on the issue, the Court granted a short stay on December 15, 2016, to allow the SLC to perform an unencumbered investigation. (Doc. 81). In that same Order, the Court noted Big Lots representation that the SLC's review would be conducted in a timely fashion and the parties' representations that “while depositions remain, all document discovery [was] complete.” (Id. at 1). The Court concluded this posture allowed for a short stay without unduly prejudicing Plaintiffs. (Id.).

         The SLC completed its review of over 293, 000 documents and submitted its 140-page report (which concludes that it is in the best interests of the company that this litigation be dismissed) to the undersigned for in camera review on April 14, 2017. (See Doc. 89, PAGEID #: 1509). On April 21, 2017, the Court allowed the SLC to file its Report under seal (Doc. 88), and the SLC distributed its Report and appendices to all parties. In its April 21, 2017 Order, the Court directed the parties to meet and confer regarding what discovery was still outstanding, what discovery was needed based on the SLC Report, and a proposed case schedule moving forward. (Doc. 88). The Court also directed the parties to file a joint status report with the result of those discussions. (Id.). Although the parties submitted a “joint” status report on May 1, 2017, it was anything but mutual. (Doc. 94). According to the status report, despite discussions on two separate occasions, the parties were unable to agree on whether merits discovery should proceed or how discovery related to the SLC Report should move forward. (See id.). Instead, the parties submitted two vastly different proposed schedules. (Id.).

         In brief, the SLC argues that merits discovery is not appropriate and the litigation should not proceed while the SLC's Motion to Dismiss (Doc. 100) pends. (Id. at 1). Put another way, the SLC believes that any scheduling order should limit briefing and discovery to only that which is related to the Motion to Dismiss. (Id.). Further, the SLC seeks to limit the type of discovery Plaintiffs may conduct in conjunction with opposing the SLC's Motion to Dismiss.

         Accordingly, the SLC proposes the following schedule:

         Proposed Schedule on the SLC's Motion to Dismiss

• The SLC shall file its motion to dismiss within 5 business day after a ruling is issued on the pending motion to enlarge the page limit to 30 pages;
• Any party supporting the SLC's motion to dismiss shall file its or their memorandum in support within 14 days after the motion to dismiss is filed;
• Plaintiffs shall file their memorandum in opposition to the motion to dismiss within 60 days after the motion to dismiss is filed;
• The SLC shall file its reply memorandum within 14 days after the opposition is filed; Proposed Discovery Schedule on SLC Report/Motion to Dismiss Only:
• Plaintiffs shall file their initial written discovery requests and a request for any depositions on or before May 12, 2017. Such requests shall be limited to discovery necessary to respond to the motion to dismiss;
• The SLC shall respond to the initial written discovery requests and any request for depositions on or before May 19, 2017;
• In the event the parties are not able to resolve any differences between them regarding the written discovery and deposition requests, Plaintiffs shall promptly file a motion to compel discovery. The SLC and any other party opposing the motion shall file a memorandum in opposition to the motion to compel within 10 business days. Upon the filing of a motion to compel, the parties shall advise the Court that a motion has been filed and seek the scheduling of a status conference for the purpose of promptly resolving the motion so proceedings on the motion to dismiss can move forward expeditiously.

(Doc. 94 at 3-4).

         In contrast, Plaintiffs assert that merits discovery should proceed immediately, including expert depositions, summary judgment motions, and trial, as well as discovery on the SLC's Motion to Dismiss. (Id.). Their proposed schedule is as follows:

         Proposed Schedule on the SLC's Motion to Dismiss

• Plaintiffs shall serve written discovery requests on or before May 12, 2017;
• The SLC shall identify the documents it reviewed and/or cited in the SLC Report that it will not produce by May 12, 2017;
• The SLC (and/or Big Lots) will produce the documents it reviewed and/or cited in the SLC Report that it has agreed ...

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