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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS

In re GROUPON, INC. SECURITIES LITIGATION

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Master File No.: 12 CV 2450 

CLASS ACTION 

This Document Relates To 

 ALL CASES 

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Hon. Charles R. Norgle 

LEAD PLAINTIFF’S RESPONSE IN OPPOSITION TO 

DEFENDANTS’ JOINT MOTION TO BIFURCATE DISCOVERY 

Lead Plaintiff Michael Carter Cohn (“Plaintiff”), by his attorneys, opposes Defendants’ 

Joint Motion to Bifurcate Discovery (Dkt. No. 164) as follows: 

INTRODUCTION 

Defendants have already enjoyed an extraordinary delay of discovery under the Private 

Securities Litigation Reform Act of 1995 (“PSLRA”). Without regard to the strength of a 

complaint, the PSLRA enjoins plaintiffs from conducting discovery during the pendency of a 

motion to dismiss. See 15 U.S.C. § 77z-1(b)(1); 15 U.S.C. § 78u-4(b)(3)(B). Although this rule 

allows even a baseless motion to dismiss to grind proceedings to a halt, staying discovery until 

claims are sustained – but only until claims are sustained – “reflects the balance that Congress 

chose to strike between the rights of defendants and plaintiffs in securities actions.” See In re 

Initial Pub. Offering Sec. Litig., 236 F. Supp. 2d 286, 287 (S.D.N.Y. 2002). Here, Defendants 

have taken full advantage of this statutory balance, successfully enjoining discovery for nearly a 

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year with Rule 12(b)(6) motions, even though Plaintiff’s Consolidated Amended Complaint 

(“Complaint”) easily satisfied all pleading standards.1

 

As a result of this Court’s September 18, 2013 Order denying Defendants’ motions to 

dismiss, the PSLRA stay is lifted and this litigation is moving forward. The parties have 

conducted their Rule 26(f) conference. See Declaration of Louis C. Ludwig (“Ludwig Decl.”) at 

¶ 2. Plaintiff has served an initial set of six (6) targeted document requests upon Defendants 

Groupon, the response to which is due November 1, 2013. See Exhibit (“Ex.”) 1 to Ludwig 

Decl. Plaintiff also served targeted initial discovery on Mason, Child and Del Preto, a document 

subpoena on Groupon’s auditor, Ernst & Young LLP, and two focused interrogatories on 

Groupon. See Ludwig Decl., Exs. 2-9. Plaintiff’s initial discovery goes to both the merits of 

Plaintiff’s claims and the common issues alleged to predominate in the Complaint’s class 

allegations. See Complaint, ¶¶ 130-36; Exs. 1 to 9 to Ludwig Decl. 

No longer able to rely on the PSLRA stay to halt Plaintiff’s discovery of damaging 

evidence, Defendants ask this Court to manufacture another roadblock. Specifically, Defendants 

propose that this Court abandon the default approach under Rule 26(d)(2) and sequence 

discovery in “phases,” under which only purely class discovery would be allowed to proceed 

and all other discovery would be forbidden until class certification is briefed and decided. 

Defendants fail to demonstrate any good cause for the substantial delay they propose. To the 

contrary, as demonstrated below, Defendants’ proposed delay would prolong this litigation, 

 1

 Plaintiff filed his Complaint on October 29, 2012 (Dkt. No. 125). Defendants filed their 

motions to dismiss on January 18, 2013 (Dkt. Nos. 131 and 134). However, because Defendants 

had previously indicated that they might move for dismissal of the Complaint (see, e.g., 

stipulated scheduling order referenced in Dkt. No. 98), they enjoyed a stay of discovery even 

before the motions were filed. See, e.g., Kelleher v. ADVO, Inc., No. 3:06 CV 01422 AVC, 2007 

WL 1232177 (D. Conn. Apr. 24, 2007) (the “automatic stay provision of the Act is triggered by 

the mere indication by [the] defense of its intention to file a motion to dismiss.”) (internal 

quotation omitted). 

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make it more expensive for all parties, force the parties to expend resources on unnecessary 

motion practice, and prejudice Plaintiff and the Class. 

ARGUMENT 

I. Defendants Do Not Show Good Cause For Bifurcation 

Although courts have broad discretion to order discovery, a party moving for bifurcation 

“has the burden of showing ‘good cause’ for such an order.” New England Carpenters Health & 

Welfare Fund v. Abbott Labs., No. 12 C 1662, 2013 WL 690613, at *3 (N.D. Ill. Feb. 20, 2013) 

(denying bifurcation). In order to establish good cause, “courts have insisted on a particular and 

specific demonstration of fact, as distinguished from stereotyped and conclusory statements.” Id. 

(quoting 8A Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice & 

Procedure § 2035, at 157–58 (3d ed. 2010)). Such showings generally “identify...specific 

discovery requests” that absent bifurcation would “impose an undue burden or expense, taking 

into account the discovery needs for [the] case, the amount in discovery to the issues in the case” 

or other factors that demonstrate that “the burden of responding to any specific requests 

outweighs the likely benefit of the discovery.” Gibson v. Int'l Bus. Machines Corp., No. 1:10-

CV-00330-LJM, 2011 WL 4402599, at *2 (S.D. Ind. Sept. 22, 2011) (denying bifurcation). 

Bifurcation is not typically ordered in securities fraud class actions, in part because 

discovery is stayed altogether in such cases until a complaint is sustained. See, e.g., In re 

Semgroup Energy Partners, L.P., Sec. Litig., No. 08-MD-1989-GKF-FHM, 2010 WL 5376262, 

at *3 (N.D. Okla. Dec. 21, 2010) (denying bifurcation and stating “this case has been pending for 

more than two years, and discovery has already been stayed for most of that period under the 

PSLRA. Bifurcation will almost certainly lead to further delay in the resolution of plaintiffs' 

claims.”). None of the four outlier securities cases cited in Defendants’ brief regarding 

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bifurcation contained any analysis of the issue.2

 However, other non-securities cases have 

accepted bifurcation upon proof of three elements: 

(1) expediency, meaning whether bifurcated discovery will aid the court in making a 

timely determination on the class certification motion; 

(2) economy, meaning the potential impact a grant or denial of certification would have 

upon the pending litigation and whether the definition of the class would help 

determine the limits of discovery on the merits; and 

(3) severability, meaning whether class certification and merits issues are closely 

enmeshed. 

Reid v. Unilever U.S., Inc., No. 12 C 06058, 2013 WL 4050194, at *31 (N.D. Ill. Aug. 7, 2013) 

(quoting Harris v. comScore, Inc., No. 11 CV 5807, 2012 WL 686709, at *3 (N.D. Ill. Mar. 2, 

2012)). As discussed below, each of these factors weighs against artificial reordering of 

discovery in this case. 

A. Delaying Full Discovery Will Not Enable More Expedient Briefing Of Class 

Certification 

The timing of class certification briefing has already been agreed to by the parties and 

entered by the Court. Regardless of whether this Court allows discovery to proceed in the 

normal course, or implements the artificial “phases” urged by Defendants, Plaintiff’s amended 

class certification motion will be due December 6, 2013; Defendants’ opposition will be due on 

 2 See Defendants’ Memorandum in support of motion to bifurcate (“Defs’ Mem.”) (Dkt. No. 

167) at 5-6 (citing In re Northfield Labs. Inc. Sec. Litig., 264 F.R.D. 407, 409 (N.D. Ill. 2009); 

Smith v. Dominion Bridge Corp., No. 96-7580, 2007 WL 1101272, at *1 (E.D. Pa. Apr. 11, 

2007); In re Sonus Networks, Inc. Sec. Litig., 229 F.R.D. 339, 341 (D. Mass. 2005); Lawrence E. 

Jaffe Pension Plan v. Household Int’l, Inc., No. 02 C 5893, 2004 WL 2108410, at *1 (N.D. Ill. 

Sept. 21, 2004)). 

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March 6, 2014; and Plaintiff’s reply brief will be due on April 21, 2014.3

 See Dkt. No. 163. 

Accordingly, the instant motion will have no impact on “the parties’ submission of their briefs” 

on class certification. Compare Reid, 2013 WL 4050194, at *32 (expressing concern that, 

“proceeding with merits discovery may delay the parties’ submission of their briefs on the class 

certification issue”); Harris, 2012 WL 686709, at *3 (same). Because there is already a schedule 

in place ensuring the Court’s ability to determine class certification at “an early practicable 

time,” as contemplated by Federal Rule of Civil Procedure 23, Defendants’ reordering of 

discovery cannot be justified on grounds of “expediency.” 

B. Delaying Full Discovery Would Make This Litigation More Expensive, Not 

Less Expensive 

Defendants’ proposal also fails to reduce the costs of this litigation. All of the discovery 

Defendants seek to defer would be required whether this litigation proceeds on an individual or 

class basis. Thus, no cost savings would be realized. To the contrary, “bifurcation of discovery 

may well-increase litigation expenses by protracting the completion of discovery, coupled with 

endless disputes over what is ‘merit’ versus ‘class’ discovery.” In re Hamilton Bancorp., Inc. 

Sec. Litig., No. 01CV0156, 2002 WL 463314 (S.D. Fla. Jan. 14, 2002). The “continued need for 

supervision and the increased number of disputes would further delay the case proceedings. Such 

prevention of the ‘expeditious resolution of the lawsuit’ would prejudice plaintiffs.” In re Rail 

Freight Fuel Surcharge Antitrust Litig., 258 F.R.D. 167, 174 (D.D.C. 2009). 

Defendants ignore this added expense, and instead argue that if they defeat class 

certification, and if Plaintiff and all other defrauded Groupon investors decide to give up, merits 

 3

 Plaintiff initially proposed a briefing schedule under which class certification briefing would 

be completed by March 14, 2014, and agreed to discuss an even more expedited schedule if 

Defendants desired. At Defendants’ request, the briefing schedule was extended to April 21, 

2014, in order to provide Defendants an additional month. See email stream, attached as Ex. 10 

to Ludwig Decl. 

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discovery might somehow be avoided. Defendants’ assumptions are wholly unfounded. 

“[T]here is a strong public policy favoring class certification in securities fraud litigation.” 

Weiner v. Quaker Oats Co., No. 98 C 3123, 1999 WL 1011381, at *5 (N.D. Ill. Sept. 30, 1999); 

see also Helfand v. Cenco, Inc., 80 F.R.D. 1, 5 (N.D. Ill. 1977) (“recognition must be given to a 

strong policy favoring class actions in securities fraud actions.”). Defendants articulate no 

credible argument against certification, and it is unclear why they would even waste resources 

opposing certification under these circumstances. “It is established law in the Northern District 

of Illinois and the Seventh Circuit that class certifications are the preferred method of dealing 

with securities fraud cases.” Roth v. Aon Corp., 238 F.R.D. 603, 605 (N.D. Ill. 2006); see also In 

re Bank One Sec. Litig./First Chicago S’holder Claims, No. 00 CV 0767, 2002 WL 989454, at 

*2 (N.D. Ill. May 14, 2002) (“The Seventh Circuit ...has liberally construed Rule 23 in 

shareholder suits.”). “In a securities fraud action, ‘any error, if there is one, should be committed 

in favor of allowing a class action.’” In re Gen. Instrument Corp. Sec. Litig., No. 96 C 1129, 

1999 WL 1072507 (N.D. Ill. Nov. 18, 1999) (quoting Eisenberg v. Gagnon, 766 F.2d 770, 785 

(3rd Cir. 1985)). 

Regardless, this litigation will continue even if certification is denied. Plaintiff has 

personally incurred losses exceeding $250,000 (see Dkt. No. 78-4). His claims against 

Defendants have been sustained in their entirety (see Dkt. No. 158). Plaintiff has attested that he 

is dedicated to pursuing this action, preferably on behalf of the entire Class (see Dkt. No. 112-1, 

¶ 5). However, in the unlikely event that a class is not certified, Plaintiff has sufficiently sizable 

claims to proceed on an individual basis.4

 Accordingly, all of the discovery Defendants now 

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 Defendants’ citation to the Complaint in an attempt to support their economic argument is 

inaccurate. Defendants misread a Complaint paragraph indicating that the claims of certain

Class Members are too small to proceed on a non-aggregated basis. See Defs’ Mem at 1-2. 

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seek to delay will be necessary to the litigation going forward, whether on a class or individual 

basis. 

C. Defendants Propose No Basis For Severing Overlapping Class And Merits 

Discovery 

In their rush to short-circuit Plaintiff’s discovery and prevent him from accessing 

damaging information, Defendants fail to articulate any credible basis for distinguishing between 

overlapping “class” and “merits” discovery. As another court in this District recently explained, 

Courts increasingly find that class certification and merits issues overlap. 

For example, in 2011 the Supreme Court concluded that a class certification 

analysis “will entail some overlap with the merits of the plaintiff's 

underlying claim. That cannot be helped. The class determination generally 

involves considerations that are enmeshed in the factual and legal issues 

comprising the plaintiff's cause of action.” Wal–Mart Stores, Inc. v. Dukes,

––– U.S. ––––, –––– – ––––, 131 S.Ct. 2541, 2551–52, 180 L.Ed.2d 374 

(2011) (citations and footnote omitted). Similarly, the Seventh Circuit has 

acknowledged that to determine whether all the class certification elements 

have been met, a court must frequently make a preliminary inquiry into the 

merits. See, e.g., Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 

811 (7th Cir.2012). 

Abbott Labs, 2013 WL 690613, at * 3. 

Defendants in this case have not stipulated to commonality, predominance or typicality. 

Therefore, these class issues remain disputed and Plaintiff has every right to seek discovery 

related to these issues in support of his motion for class certification. See Semgroup, 2010 WL 

5376262, at *3 (stating in securities fraud class action containing similar alleged common issues 

that “discovery related to class certification is so closely intertwined with merits discovery that 

 

(referencing Complaint at ¶ 135). Claims of investors like Plaintiff with sizable losses will 

proceed either on a class-wide basis or individually. Class Members with smaller losses do not 

have that luxury, and will be prohibited by the costs of litigation from proceeding individually. 

This fact supports class treatment. See, e.g, Bank One, 2002 WL 989454, at *8 (“Class members 

will benefit from class treatment because litigation costs are high and it is, therefore, unlikely 

that shareholders will prosecute individual claims.”) (internal citations omitted). However, it 

does not in any way indicate that large claims like Plaintiff’s will be abandoned in the absence of 

certification. 

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bifurcation would be unworkable. An order restricting discovery to class issues would be 

impracticable because of the closely linked issues, and inefficient because it would be certain to 

require ongoing supervision of discovery.”); see also Abbott Labs, supra. 

Plaintiff’s initial discovery requests relate to the common issues alleged in his class 

allegations as well as the merits of his individual claims. For example, Requests for Production 

(“RFP”) 1 through 3 of Plaintiff’s First RFPs to Groupon seek documents related to the factual 

underpinnings of Groupon’s refund accounting and revenue recognition, the falsification of 

which are the primary common misrepresentations made in the Registration Statement and 

common bases for the class Securities Act claims. Compare Ex. 1 to Ludwig Decl. with 

Complaint class allegation, ¶ 134. RFPs 4 through 6 to Groupon seek documents related to 

Groupon’s knowledge of refund problems, addressing the common proof of scienter as to 

Groupon and its executives. Id. Other discovery served to date similarly overlaps class issues of 

commonality, typicality and predominance, as well as the merits of individual claims. 

Accordingly, Defendants’ attempts to mislabel this discovery as “pertain[ing] only to the merits” 

is simply wrong. See Defs’ Mem. at 4. 

Even the cases cited by Defendants do not support the false dichotomy they ask this 

Court to adopt. For example, Reid involved a class action on behalf of purchasers of specific 

hair care products who allegedly suffered hair loss after application. The Reid court expressly 

held that where “documents...are relevant to both class certification and merits issues, Unilever 

must disclose such documents, despite the overlap.” 2013 WL 4050194, at *33. Consistent with 

this holding, the Reid court did not enjoin discovery requests seeking substantive information 

about the hair care products in question and defendants’ misrepresentations. Compare id. (only 

finding requests 21-25 involving wholly different hair care products and time periods to be 

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overbroad at class discovery phase) with RFPs 1-20 of actual Reid discovery requests (not 

deferred until merits phase even though they broadly sought information relating to the products 

in question and defendants’ misrepresentations), attached as Ex. 11 to Ludwig Decl. 

Harris v. comScore, another case cited repeatedly by Defendants, also permitted broad 

discovery into areas touching both merits and class issues. Harris involved allegations that the 

corporate defendant inserted unauthorized computer programs in users’ computers. The court, 

though ordering bifurcation, permitted extensive discovery during the class phase into the types 

of programs used (including all relevant source code), the corporate defendants’ policies, and the 

usage and sale of the data gathered by the unauthorized programs. Harris, 2012 WL 686709, at 

*5. Likewise, in Plummer v. Chicago Journeyman Plumbers’ Local Union No. 130, U. A., 77 

F.R.D. 399, 403 (N.D. Ill. 1977), the court held that the overwhelming majority of discovery in 

question involved overlapping class and merits issues, and therefore had to be produced despite 

bifurcation: “[t]he mere fact that some of the interrogatories may be relevant to the merits of the 

case does not mean they should remain unanswered, so long as they relate to the class issues or 

are reasonably calculated to lead to the discovery of information relevant to the class issues.” Id; 

see also 1 McLaughlin on Class Actions § 3:10 (9th ed.) (“Even if a stay of merits discovery is 

granted, the frequent overlap between merits and class certification inquiries may make its 

enforcement fraught with difficult line-drawing disputes.”). 

II. Defendants’ Proposal Would Significantly Delay The Parties’ Ability To Ready 

This Case For Trial 

Although Defendants contend that their proposal to delay merits discovery was not 

brought “for any purposes of delay,” see Defs’ Mem. at 9, that is exactly the effect it would have. 

Defendants do not and cannot dispute that bifurcation would delay the parties’ ability to 

complete discovery, brief dispositive motions, and prepare for trial. In fact, Defendants have 

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already agreed that bifurcation would so profoundly alter those dates that the parties’ Rule 26(f) 

joint report proposing a schedule for those dates should be postponed until after the Court ruled 

on the pending motion. See Stipulation And [Proposed] Order Regarding Submission Of The 

Parties’ Joint Report Pursuant To Federal Rule Of Civil Procedure 26(f), ¶ 5, attached as Ex. 12 

to Ludwig Decl. 

Federal Rule of Civil Procedure 1 mandates that the Rules be applied to ensure the “just, 

speedy, and inexpensive determination of every action.” Here, if all parties participate fully in 

discovery without artificial delays, Plaintiff believes that discovery can be completed by late 

Fall, 2014 and this case can be ready for trial by January 2015. On the other hand, if merits 

discovery is halted until April or May, 2014, then the entire schedule will need to be pushed 

back, and the “just, speedy and inexpensive” determination contemplated by the Federal Rules 

will not be achieved. See Federal Rule of Civil Procedure 1. 

CONCLUSION 

For all of these reasons, Defendants’ motion to bifurcate should be denied. 

Dated: October 17, 2013 

POMERANTZ GROSSMAN HUFFORD 

DAHLSTROM & GROSS LLP 

/s/ Joshua B. Silverman

Patrick V. Dahlstrom 

Joshua B. Silverman 

Louis C. Ludwig 

Ten South LaSalle Street, Suite 3505 

Chicago, Illinois 60603 

Phone: 312-377-1181 

Fax: 312-377-1184 

pdahlstrom@pomlaw.com 

jbsilverman@pomlaw.com 

lcludwig@pomlaw.com 

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POMERANTZ GROSSMAN HUFFORD 

DAHLSTROM & GROSS LLP 

Marc I. Gross 

Jeremy A. Lieberman 

Matthew L. Tuccillo 

600 3rd Avenue, 20th Floor 

New York, New York 10016 

Phone: 212-661-1100 

Fax: 212-661-8665 

CAFFERTY CLOBES MERIWETHER 

& SPRENGEL LLP 

Dom J. Rizzi 

30 North LaSalle Street, Suite 3200 

Chicago, Illinois 60602 

Phone: 734-769-2144 

Fax: 734-769-1207 

BRONSTEIN GEWIRTZ & 

GROSSMAN LLC 

Peretz Bronstein 

Edward N. Gewirtz 

Neil D. Grossman 

60 East 42nd Street, Suite 4600 

New York, New York 10165 

Phone: 212-697-6484 

Fax: 212-697-7296 

Lead Counsel and Proposed Class Counsel

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