IN RE BED BATH & BEYOND INC. SECTION 16 LITIGATION

Background

Todd Augenbaum and Judith Cohen brought separate lawsuits under Section 16(b) of the Securities Exchange Act of 1934. They alleged that RC Ventures LLC and related defendants engaged in unlawful “short-swing” transactions—purchases and sales of Bed Bath & Beyond Inc. common stock for a profit within a six-month period while allegedly owning at least 10% of the company’s stock.

The two cases arose from overlapping events involving RC Ventures’ ownership disclosures, its cooperation agreement with Bed Bath & Beyond, and its later sale of its stock and call options. Augenbaum named RC Ventures and Bed Bath & Beyond as defendants and alleged that RC Ventures was a Bed Bath & Beyond director. Cohen named Ryan Cohen and RC Ventures as defendants, with Bed Bath & Beyond as a nominal defendant. Both plaintiffs alleged that Bed Bath & Beyond’s board rejected their demands to pursue the claims.

Consolidation

The court granted consolidation under Federal Rule of Civil Procedure 42(a), which permits consolidation of actions involving common questions of law or fact. The court found that the two lawsuits involved the same alleged Section 16(b) wrongdoing and overlapping factual and legal issues. All parties supported consolidation.

The consolidated matter was designated In re Bed Bath & Beyond Inc. Section 16(b) Litigation, No. 22 Civ. 9327 (PGG). Unless otherwise ordered, future filings in the consolidated litigation must be filed under that docket number. The court also directed counsel to alert the Clerk of Court about any later Section 16(b) action that might properly be consolidated with this litigation. The court clarified that consolidation alone does not make a person or entity a party to an action in which that person or entity has not been named, served, or added under the Federal Rules of Civil Procedure.

Lead Plaintiff and Lead Counsel

Todd Augenbaum and Judith Cohen each submitted a pre-motion letter seeking appointment as lead plaintiff and selection of lead counsel. The court directed both plaintiffs to submit supplemental letters addressing the source of the court’s authority to make those appointments, whether appointment is required or discretionary, why appointment would be appropriate, and what standards govern the selection of lead plaintiff and lead counsel in a Section 16(b) case. Responses were permitted by the date set in the order.

Other Pending Requests

The court did not decide the pre-motion letters concerning proposed motions to dismiss or motions for summary judgment. It stated that those matters would be addressed after the lead-plaintiff and lead-counsel issue was resolved.

Disposition

The court consolidated the two actions, directed supplemental submissions concerning lead plaintiff and lead counsel, and deferred consideration of the proposed dismissal and summary-judgment motions. The order did not decide whether the alleged Section 16(b) violations occurred or whether any party was liable.