Proposed Order Preliminarily Approving Settlement — In re Peloton Securities Litigation

Record facts

U.S. District Court, Eastern District of New York · No. 1:21-cv-02369-CBA-PK · Doc. 81-1 · 2023-04-17 · Docket on CourtListener

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UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
 
 
IN RE PELOTON INTERACTIVE, INC. 
SECURITIES LITIGATION 
Case No. 1:21-cv-02369-CBA-PK 
 
[PROPOSED] ORDER 
PRELIMINARILY APPROVING 
SETTLEMENT AND PROVIDING 
FOR NOTICE 
 
 
 
 
 
 
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WHEREAS, (a) Richard Neswick (“Lead Plaintiff”) on behalf of himself and members of 
the Settlement Class, on the one hand, and (b) Peloton Interactive, Inc. (“Peloton”), and John 
Foley, Jill Woodworth, Hisao Kushi, and Brad Olson (the “Individual Defendants,” and with 
Peloton, the “Defendants,” and collectively with Plaintiffs, the “Parties”), on the other, have 
entered into the Stipulation of Settlement, dated April 17, 2023 (the “Stipulation”), which is subject 
to review under Rule 23 of the Federal Rules of Civil Procedure and which, together with the 
exhibits annexed thereto, sets forth the terms and conditions for the proposed settlement and 
dismissal of the class action pending before the Court entitled In re Peloton Interactive, Inc. 
Securities Litigation, No. 1:21-cv-02369-CBA-PK (E.D.N.Y.) (the “Action”); and the Court 
having read and considered the Stipulation and the exhibits thereto and submissions made relating 
thereto, and finding that substantial and sufficient grounds exist for entering this Order; and the 
Parties having consented to the entry of this Order; and 
WHEREAS, unless otherwise defined, all terms used herein have the same meaning as set 
forth in the Stipulation; 
NOW, THEREFORE, IT IS HEREBY ORDERED: 
1. 
The Court has reviewed the Stipulation and does hereby preliminarily approve the 
settlement set forth therein, subject to further consideration at the Settlement Hearing described 
below. 
2. 
Pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure, and for 
purposes of this settlement only, the Action is hereby preliminarily certified as a class action on 
behalf of all persons or entities who purchased or otherwise acquired Peloton securities from 
September 11, 2020 to May 5, 2021, inclusive, and were damaged thereby (“Settlement Class” or 
“Settlement Class Member”).  Excluded from the Settlement Class are (i) Defendants; (ii) current 
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and former officers and directors of Peloton; (iii) members of the immediate family of each of the 
Individual Defendants; (iv) all subsidiaries and affiliates of Peloton and the directors and officers 
of Peloton and their respective subsidiaries or affiliates; (v) all persons, firms, trusts, corporations, 
officers, directors, and any other individual or entity in which any Defendant has a controlling 
interest; (vi) the legal representatives, agents, affiliates, heirs, successors-in-interest or assigns of 
all such excluded parties; and (vii) any persons or entities who properly exclude themselves by 
filing a valid and timely request for exclusion. 
3. 
The Court finds, for the purposes of settlement only, that the prerequisites for a 
class action under Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied 
in that: (a) the number of Settlement Class Members is so numerous that joinder of all members is 
impracticable; (b) there are questions of law and fact common to the Settlement Class; (c) the 
claims of Lead Plaintiff are typical of the claims of the Settlement Class he seeks to represent; (d) 
Lead Plaintiff and Lead Counsel have and will continue to fairly and adequately represent the 
interests of the Settlement Class; (e) the questions of law and fact common to the Members of the 
Settlement Class predominate over any questions affecting only individual Settlement Class 
Members; and (f) a class action is superior to other available methods for the fair and efficient 
adjudication of the controversy. 
4. 
Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and for purposes of 
settlement only, Lead Plaintiff is certified as the Class Representative on behalf of the Settlement 
Class, and Lead Counsel is hereby appointed as Class Counsel. 
5. 
A hearing (the “Settlement Hearing”) shall be held before this Court on 
___________ at _______________ a.m./p.m. [a date that is at least 100 days from the date of this 
Order], at the United States District Court for the Eastern District of New York, Theodore 
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Roosevelt United States Courthouse, 225 Cadman Plaza East, Brooklyn, NY 11201, Courtroom 
___, to determine whether the proposed settlement of the Action on the terms and conditions 
provided for in the Stipulation is fair, reasonable, and adequate and should be approved by the 
Court; whether a Judgment as provided in ¶ 35 of the Stipulation should be entered; whether the 
proposed Plan of Allocation is fair, reasonable, and adequate and should be approved; to determine 
the amount of fees and expenses to be awarded to Lead Counsel; and to determine any award to 
Lead Plaintiff pursuant to 15 U.S.C. § 78u-4(a)(4).  The Court may adjourn the Settlement Hearing 
without further notice to the members of the Settlement Class.  
6. 
The Court approves, as to form and content, the Notice of (I) Pendency of Class 
Action and Proposed Settlement; (II) Settlement Hearing; and (III) Motion for Attorneys’ Fees and 
Litigation Expenses of Pendency and Proposed Settlement of Class Action (the “Notice”), the 
Postcard Notice of (I) Pendency of Class Action and Proposed Settlement; (II) Settlement Hearing; 
and (III) Motion for Attorneys’ Fees and Litigation Expenses (the “Postcard Notice”), and the 
Proof of Claim and Release form (the “Claim Form”) annexed hereto as Exhibits A-1, A-2, and 
A-3, respectively, and finds that the mailing and distribution of the Postcard Notice and Notice 
substantially in the manner and form set forth in ¶¶ 11-12 of this Order meet the requirements of 
Federal Rule of Civil Procedure 23, the Private Securities Litigation Reform Act of 1995, and due 
process, and is the best notice practicable under the circumstances and shall constitute due and 
sufficient notice to all Persons entitled hereto. 
7. 
The firm of Epiq Systems, Inc. (“Claims Administrator”) is hereby appointed to 
supervise and administer the notice program as well as the processing of claims as more fully set 
forth below. 
8. 
The Court approves the appointment of Huntington National Bank as the Escrow 
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Agent to manage and administer the Settlement Fund for the benefit of the Settlement Class. 
9. 
Not later than five (5) business days after the Court signs and enters this Order, 
Peloton shall provide and/or cause its transfer agent to provide to Lead Counsel transfer records in 
electronic searchable form, such as an Excel spreadsheet, containing the names and addresses of 
Persons who may have purchased or acquired Peloton securities during the Class Period, to the 
extent that information is available from Peloton’s transfer agent.  This information shall be kept 
confidential and shall not be used for any purpose other than to provide the notice contemplated 
by this Order. 
10. 
Not later than twenty-one (21) calendar days after entry of this Preliminary 
Approval Order (the “Notice Date”), the Claims Administrator, shall mail, by first-class mail, 
postage prepaid, the Postcard Notice to the list of record holders of Peloton securities, and shall 
post to its website at www.PelotonSecuritiesSettlement.com the Stipulation and its exhibits, this 
Order, and a copy of the Notice and Claim Form. 
11. 
The Claims Administrator shall use reasonable efforts to give notice to nominee 
purchasers such as brokerage firms and other persons and entities that purchased or acquired 
Peloton securities during the Class Period as record owners but not as beneficial owners.  Such 
nominees SHALL EITHER: (a) WITHIN TEN (10) CALENDAR DAYS of receipt of the Postcard 
Notice, request from the Claims Administrator sufficient copies of the Postcard Notice to forward 
to all such beneficial owners and WITHIN TEN (10) CALENDAR DAYS after receipt thereof 
forward them to all such beneficial owners; or (b) WITHIN TEN (10) CALENDAR DAYS of 
receipt of the Postcard Notice, provide a list of the names, addresses, and email addresses (to the 
extent known) to the Claims Administrator and the Claims Administrator is ordered to send the 
Postcard Notice promptly to such beneficial owners. The Claims Administrator shall, if requested, 
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reimburse nominees or custodians out of the Settlement Fund solely for their reasonable out-of-
pocket expenses incurred in providing notice to beneficial owners, up to $0.70 per unit if the 
nominee or custodian elects to undertake the mailing of the Postcard Notice or up to $0.10 per 
name if the nominee or custodian provides the names and addresses to the Claims Administrator, 
which expenses would not have been incurred except for the sending of such notice, and subject 
to further order of this Court with respect to any dispute concerning such reimbursement. 
12. 
The Court approves the form of the Summary Notice of (I) Pendency of Class 
Action and Proposed Settlement; (II) Settlement Hearing; and (III) Motion for Attorneys’ Fees and 
Litigation Expenses (the “Summary Notice”) substantially in the form annexed hereto as Exhibit 
A-4, and directs that the Claims Administrator shall cause the Summary Notice to be published in 
Investor’s Business Daily and transmitted over GlobeNewswire within fourteen (14) calendar days 
after the Notice Date. 
13. 
Lead Counsel shall, at least seven (7) calendar days prior to the Settlement Hearing, 
file with the Court proof of mailing of the Postcard Notice and proof of publishing of the Summary 
Notice. 
14. 
The form and content of the notice program described herein, and the methods set 
forth herein of notifying the Settlement Class of the Settlement and its terms and conditions, meet 
the requirements of Rule 23 of the Federal Rules of Civil Procedure, the Private Securities 
Litigation Reform Act of 1995, 15 U.S.C. § 78u-4(a)(7), and due process, constitute the best notice 
practicable under the circumstances, and shall constitute due and sufficient notice to all Persons 
entitled thereto. 
15. 
In order to be eligible to receive a distribution from the Net Settlement Fund, in the 
event the Settlement is effected in accordance with the terms and conditions set forth in the 
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Stipulation, each claimant shall take the following actions and be subject to the following 
conditions: 
(a) 
A properly executed Claim Form, substantially in the form annexed hereto 
as Exhibit A-3, must be submitted to the Claims Administrator, electronically or at the address 
indicated in the Notice, postmarked or submitted electronically no later than ________ __, 2023 
[a date that is at least ninety (90) calendar days from the Notice Date].  Such deadline may be 
further extended by Court order.  Each Claim Form shall be deemed to have been submitted when 
postmarked (if properly addressed and mailed by first-class or overnight mail, postage prepaid), 
or when received if submitted electronically.  Any Settlement Class Member who does not timely 
submit a Claim Form within the time provided for, shall be barred from sharing in the distribution 
of the Net Settlement Fund, unless otherwise ordered by the Court, but shall remain bound by all 
determinations and judgments in this Action concerning the Settlement, as provided in paragraph 
17 of this order.  Notwithstanding the foregoing, Lead Counsel may, in its discretion, accept late-
submitted claims for processing by the Claims Administrator so long as distribution of the Net 
Settlement Fund to Authorized Claimants is not materially delayed thereby. No Person shall have 
any claim against Lead Plaintiff, Lead Counsel, or the Claims Administrator by reason of the 
decision to exercise such discretion whether to accept late-submitted claims. 
(b) 
The Claim Form submitted by each claimant must satisfy the following 
conditions, unless otherwise allowed pursuant to the Stipulation: (i) it must be properly completed, 
signed and submitted in a timely manner in accordance with the provisions of the preceding 
subparagraph; (ii) it must be accompanied by adequate supporting documentation for the 
transactions reported therein, in the form of broker confirmation slips, broker account statements, 
or such other documentation as is deemed adequate by the Claims Administrator and/or Lead 
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Counsel; (iii) if the person executing the Claim Form is acting in a representative capacity, a 
certification of his or her current authority to act on behalf of the claimant must be included in the 
Claim Form; and (iv) the Claim Form must be complete and contain no material deletions or 
modifications of any of the printed matter contained therein and must be signed under penalty of 
perjury. 
(c) 
As part of the Claim Form, each claimant shall submit to the jurisdiction of 
the Court with respect to the claim submitted. 
16. 
Any Settlement Class Member may enter an appearance in this Action at his, her, 
or its own expense, individually or through counsel of his, her, or its choice.  If any Settlement 
Class Member does not enter an appearance, he, she, or it will be represented by Lead Counsel. 
17. 
Settlement Class Members shall be bound by all orders, determinations, and 
judgments in this Action concerning the Settlement, whether favorable or unfavorable, unless such 
Persons request exclusion from the Settlement Class in a timely and proper manner, as hereinafter 
provided.  A Settlement Class Member wishing to make such request shall mail the request in 
written form by first-class mail to the address designated in the Notice for such exclusions, such 
that it is received, not simply postmarked, on or before _________ __, 2023 [a date that is at least 
twenty-one (21) calendar days prior to the Settlement Hearing].  Such request for exclusion must 
state the name, address and telephone number of the Person seeking exclusion, must state that the 
sender requests to be “excluded from the Class and does not wish to participate in the settlement 
in In re Peloton Interactive, Inc. Securities Litigation, No. 2:21-cv-02369-CBA-PK (E.D.N.Y.),” 
and must be signed by such Person.  Such Persons requesting exclusion are also directed to state 
the transaction information requested in the Notice, and provide copies of broker confirmations or 
other documentation of those transactions.  The request for exclusion shall not be effective unless 
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it provides the required information and is made within the time stated above, or the exclusion is 
otherwise accepted by the Court. 
18. 
Putative Settlement Class Members who timely (as determined by the Court) and 
validly request exclusion from the Settlement Class shall not be eligible to receive any payment 
out of the Net Settlement Fund as described in the Stipulation and Notice. 
19. 
The Court will consider any Settlement Class Member’s objection to the 
Settlement, the Plan of Allocation, the application for an award of attorneys’ fees, expenses, and/or 
an award to Lead Plaintiff only if such Settlement Class Member has served by hand or by mail 
his, her, or its written objection and supporting papers, such that they are received on or before 
twenty-one (21) calendar days before the Settlement Hearing, by the Clerk of Court, Lead Counsel, 
and Defendants’ Counsel at the addresses set forth below: 
Clerk’s Office 
Clerk of the Court 
United States District Court 
Eastern District of New York 
Theodore Roosevelt Courthouse 
225 Cadman Plaza East 
Brooklyn, NY 11201 
 
Lead Counsel 
James M. Wilson, Jr. 
FARUQI & FARUQI, LLP 
685 Third Avenue, 26th Floor 
New York, NY 10017 
 
Defendants’ Counsel 
Andrew B. Clubok 
LATHAM & WATKINS, LLP 
555 Eleventh Street, NW, Suite 1000 
Washington, DC 20004 
 
Any Settlement Class Member who does not make his, her, or its objection in the manner 
provided for in the Notice shall be deemed to have waived such objection and shall forever be 
foreclosed from making any objection to any aspect of the Settlement, to the Plan of Allocation, 
or to the requests for attorneys’ fees, expenses, or Lead Plaintiff’s award, unless otherwise ordered 
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by the Court, but shall otherwise be bound by the Judgment to be entered and the releases to be 
given.  Attendance at the hearing is not necessary, however, persons wishing to be heard orally in 
opposition to the approval of the Settlement, the Plan of Allocation, and/or the application for an 
award of attorneys’ fees, expenses, and an award to the Lead Plaintiff are required to indicate in 
their written objection their intention to appear at the hearing.  Persons who intend to object to 
Settlement, the Plan of Allocation, and/or the application for an award of attorneys’ fees, expenses, 
and an award to Lead Plaintiff and desire to present evidence at the Settlement Hearing must 
include in their written objections the identity of any witnesses they may call to testify and exhibits 
they intend to introduce into evidence at the Settlement Hearing. 
20. 
Settlement Class Members do not need to appear at the hearing or take any other 
action to indicate their approval. 
21. 
Pending final determination of whether the Settlement should be approved, Lead 
Plaintiff, all Settlement Class Members, and each of them, and anyone who acts or purports to act 
on their behalf, shall not institute, commence, or prosecute any action which asserts Released 
Claims against Defendants Releasees. 
22. 
As provided in the Stipulation, the Escrow Agent may advance at the direction of 
Lead Counsel up to $655,000 from the Settlement Fund prior to the Effective Date to pay Notice 
and Administration Expenses.  For any additional Notice and Administration Expenses above 
$655,000, Lead Counsel shall obtain Court approval for payments out of the Escrow Account. 
23. 
All papers in support of the settlement, Plan of Allocation, and any application by 
Lead Counsel for attorneys’ fees and expenses or by Lead Plaintiff for his costs and expenses shall 
be filed and served on or before ________ __, 2023 [a date that is at least fifty-six (56) calendar 
days prior to the date set herein for the Settlement Hearing].  If reply papers are necessary, they 
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are to be filed and served by ________ __, 2023 [a date that is at least seven (7) calendar days 
prior to the Settlement Hearing]. 
24. 
All funds held by the Escrow Agent shall be deemed and considered to be in 
custodia legis of the Court, and shall remain subject to the jurisdiction of the Court until such time 
as such funds shall be disbursed pursuant to the Stipulation and/or further order(s) of the Court. 
25. 
Neither Defendants nor their counsel shall have any responsibility for the Plan of 
Allocation or any application for fees, expenses, or costs submitted by Lead Counsel or Lead 
Plaintiff, and such matters will be considered separately from the fairness, reasonableness, and 
adequacy of the settlement. 
26. 
If the Settlement fails to become effective as defined in the Stipulation or is 
terminated, then:  (i) both the Stipulation, including any amendment(s) thereof, except as expressly 
provided in the Stipulation, and this Preliminary Approval Order shall be null and void, of no 
further force or effect, and without prejudice to any Party, and may not be introduced as evidence 
or used in any actions or proceedings by any Person against the Parties, and the Parties shall be 
deemed to have reverted to their respective litigation positions in the Action as of December 14, 
2022; and (ii) the Parties shall jointly apply to the Court to reinstate Defendants’ motion to dismiss 
and the Parties’ motion-to-dismiss briefing and, if not reinstated by the Court, then Defendants 
shall be entitled to refile a motion to dismiss. 
27. 
All reasonable expenses incurred in identifying and notifying Class Members, as 
well as administering the Settlement Fund, shall be paid as set forth in the Stipulation. In the event 
the settlement is not approved by the Court, or otherwise fails to become effective, neither Lead 
Plaintiff nor Lead Counsel shall have any obligation to repay any amounts incurred or disbursed 
pursuant to ¶¶ 12 or 17 of the Stipulation. 
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IT IS SO ORDERED. 
DATED: _____________ 
 
 
_______________________________________ 
 
 
 
 
 
 
 
THE HONORABLE CAROL BAGLEY AMON 
 
 
 
 
 
 
UNITED STATES DISTRICT JUDGE 
 
 
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