An unopposed motion for settlement filed late last week by the institutional investor suing Grubhub LLC over alleged misrepresentations it made about the vitality of its business has settled the class action for $42 million. The decision came as class certification briefing was underway.
As previously reported, the 2019 securities fraud suit contends that Grubhub made false and misleading statements concealing from investors that, “in expanding into new territories, Grubhub was failing to build adequate restaurant density necessary to attract high-quality and profitable diners, the Company was attracting lower-quality and less-profitable diners, and the Company’s business strategy and enterprise customer contracts were hurting profitability.”
The suit asserts that those statements and omissions artificially buoyed Grubhub’s stock price and that when the truth came to light, the price declined, damaging the class.
In November 2021, the court denied the motion to dismiss in full. Reportedly, the parties began mediation in April 2022, reaching resolution in September via the mediator’s proposal.
Last week’s motion pressed the court to adopt the settlement as a “significant and certain recovery.” The filing pointed out that litigating further would present the parties with unknown risks and costs. “[T]he benefits created by the Settlement weigh in favor of granting the motion for preliminary approval,” the motion said.
The proposal added that the settlement was achieved after “extensive arm’s-length negotiations” in two sessions before an experienced mediator. As for costs, the motion explained that lead counsel expects that expenses will not exceed $265,000, plus interest, and an attorneys’ fee award of no greater than 30% of the settlement.
Robbins Geller Rudman & Dowd LLP is lead counsel and AsherKelley additional counsel. Grubhub is represented by Kirkland & Ellis LLP.
