Plymouth County Retirement System v. Patterson Companies, Inc.

Background

The case is a securities-fraud class action brought by Plymouth County Retirement System individually and on behalf of similarly situated purchasers. The defendants are Patterson Companies, Inc. and Scott P. Anderson. On September 28, 2020, the court certified a class of persons and entities that purchased or otherwise acquired Patterson common stock between June 26, 2013, and February 28, 2018, subject to stated exclusions.

The defendants filed a petition under Federal Rule of Civil Procedure 23(f), which allows a court of appeals to permit immediate review of a class-certification order. They asked the district court to stay, meaning pause, all proceedings while the Eighth Circuit considered the petition and any resulting appeal. Alternatively, they asked the court to stay the distribution of class notice.

Legal Standard

Rule 23(f) provides that an appeal does not automatically pause district-court proceedings. The court applied four factors for deciding whether to issue a stay pending appeal: whether the defendants showed a strong likelihood of success, whether they faced irreparable harm without a stay, whether a stay would substantially injure other interested parties, and where the public interest lay.

Court’s Analysis

The court found that the defendants had not shown a sufficient likelihood of success. It explained that the defendants had to show both a reasonable chance of obtaining permission for a Rule 23(f) appeal and a likelihood of showing reversible error in the class-certification decision. The court concluded that the defendants were largely repeating arguments they had already made during class certification. It stated that, although the Eighth Circuit could disagree with the court’s conclusions, that possibility alone did not establish a likelihood of success.

The court also found no irreparable harm. The defendants relied on ongoing discovery and litigation expenses, but fact discovery was substantially complete. The defendants did not identify discovery or expenses that would be avoided if the class-certification decision were reversed and the case proceeded only on an individual basis. The court determined that the remaining discovery and litigation work would be useful regardless of the Eighth Circuit’s decision.

The court concluded that a stay could harm the plaintiffs and the class because the case had already been pending for two and a half years, the events at issue were more than seven years old, and witnesses’ memories were fading. Further delay could make relevant witnesses or testimony harder to locate or obtain. The court also found that the public interest weighed against a stay because private securities-fraud actions can deter fraud, protect investors from losses caused by misrepresentations, and promote confidence in the marketplace.

The court rejected the alternative request to stay class notice as premature. The plaintiffs had not submitted a proposed notice, the court had not approved a notice form, and no schedule had been set for a notice-approval motion. The court stated that it could consider delaying notice later if the Rule 23(f) petition or an appeal were still pending.

Disposition

The court ordered that the defendants’ Motion for Stay Pending Rule 23(f) Petition and Appeal was DENIED. The order addressed whether to pause the proceedings; it did not decide the underlying securities-fraud claims.