• •. Case 8:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 1 of 32 Page ID #:3
:'..:•i ....
1 ROBSINS GELLER RUDMAN &DOWDLLP
2 RANDALL J. BARON (15 0796) 3 A'.RICK ATWOOD,JR (156529)
DAVID T. WISSEROECKER (243867) EDWARD -M. GERGOSIAN (105679)
5 655 West Broadway, Suite 1900 6 San Diego, CA 92101-8498
Telephone: 619/231-1058 7 619/231-7423 (fax)
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Attorneys for Plaintiff
[Additional counsel appear on signature page.]
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
NANCY DAVIS, Individually and on ) VIA FAX
) Behalf of All Others Similarly SituateA Ci1 3 U Z;IV Plaintiff,
) CLASS ACTION )
VS. ) COMPLAINT FOR VIOLATION OF
HOT TOPIC, INC., 212F HOLDINGS ) FEDERAL SECURITIES LAWS AND LLC, HT MERGER SUB INC.,
) BREACH OF FIDUCIARY DUTIES
SYCAMORE PARTNERS ) MANAGEMENT; L.L.C.,. LISA M. ) HARPER, STEVE BECKER, MATT ) DRAPKIN, EVELYN D'AN, TERRI ) FUNK GRAHAM, SCOTT HEDRICK,) JOHN KYEES, ANDY SCHIJON and ) TOM VELLIOS,
)
Defendants. ) ) DEMAND FOR JURY TRIAL
8:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 2 of 32 Page ID #:4
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Plaintiff, by counsel, alleges as follows:
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JURISDICTION AND VENUE
3
1. This Court has jurisdiction over all claims asserted herein pursuant to §27
4 I of the Securities Exchange Act of 1934 (the "1934 Act") for violations of §§ 14(a) and
5 120(a) of the 1934 Act and U.S. Securities and Exchange Commission ("SEC") Rule
6 11 4-a-9 promulgated thereunder. This Court has supplemental jurisdiction under 28
7 1 U.S.C. §1367.
8
2. This Court has jurisdiction over each defendant because each defendant
9 I is either a corporation that conducts business in and maintains operations in this
10 District, or is an individual who has sufficient minimum contacts with this District so
11 as to render the exercise of jurisdiction by this Court permissible under traditional
12 notions of fair play and substantial justice.
13
3. Venue is proper in this District pursuant to 28 U.S.C. § 1391 because
14 I defendant Hot Topic, Inc.'s headquarters are located at 18305 East San Jose Avenue,
15 City of Industry, California 91748, and defendants include officers and/or directors
16 who reside in California.
17
NATURE OF THE ACTION
18
4. This is a stockholder class action brought on behalf of the holders of Hot
19 I Topic, Inc. ("Hot Topic" or the "Company") common stock against Hot Topic, its
20 Board of Directors (the "Board"), 212F Holdings LLC, a Delaware limited liability
21 company ("2121"'), HT Merger Sub Inc., a California corporation and a wholly owned
22 subsidiary of 212F ("Merger Sub"), and Sycamore Partners Management, L.L.C.,
23 which, through affiliates, beneficially owns 212F and Merger Sub ("Sycamore" and
24 with 212F and Merger Sub, "Sycamore Partners") for breaches of fiduciary duty and
25 aiding and abetting breaches of fiduciary duty under state law in connection with the
26 proposed sale of the Company to Sycamore Partners, pursuant to an unfair process and
27 for an unfair price (the "Proposed Acquisition"), and for violations of the federal
28 securities laws arising out of defendants' dissemination of a false and misleading
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1 I proxy statement in violation of § § 14(a) and 20(a) of the 1934 Act and SEC Rule 14a-9
2 I promulgated thereunder.
3
5. As detailed herein, defendants breached their fiduciary duties under state
4 law, and aided and abetted such breaches, by conducting a flawed sales process
5 designed to deliver the Company to Sycamore Partners and provide material benefits
6 to Company insiders. As a result, the Board failed in its duty to secure the best price
7 possible for the Company's shares, and exacerbated their breaches of fiduciary duty in
8 the sales process by agreeing to lock up the Proposed Acquisition with preclusive deal
9 protection devices and failing to disclose all material information to shareholders.
10
6. In an attempt to secure shareholder support for the unfair Proposed
11 Acquisition, on April 24, 2013, Hot Topic issued a materially false and misleading
12 Preliminary Proxy Statement Pursuant to § 14(a) of the Securities Exchange Act of
13 1934 (the "Proxy"). The Proxy, which recommends that Hot Topic's shareholders
14 vote in favor of the Proposed Acquisition, omits and/or misrepresents material
15 information in contravention of § § 14(a) and 20(a) of the 1934 Act regarding the unfair
16 consideration offered in the Proposed Acquisition, and the actual intrinsic value of the
17 Company.
18
7. As explained herein, the foregoing information is material to the
19 impending decision of Hot Topic's shareholders whether or not to vote in favor of the
20 Proposed Acquisition and/or whether to seek appraisal for their shares. As such,
21 defendants' violations of §14(a) and 20(a) of the 1934 Act and their breaches of
22 fiduciary duty under state law to maximize shareholder value and disclose all material
23 information in connection with a merger transaction threaten shareholders with
24 irreparable harm for which money damages are not an adequate alternate remedy.
25 Thus, plaintiff seeks injunctive relief to ensure that defendants cure their breaches of
26 fiduciary duty and violations of § § 14(a) and 20(a) before Hot Topic shareholders are
27 asked to vote on the Proposed Acquisition and/or seek appraisal, and that defendants
28 are not permitted to seek shareholder support of the Proposed Acquisition without
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1 complying with their duty under state law to maximize shareholder value and the
2 federal securities laws and state law to provide shareholders with all material
3 1 information.
4
PARTIES
5
S. Plaintiff Nancy Davis is and was at all times relevant hereto a
6 shareholder of Hot Topic.
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9. Defendant Hot Topic is a California corporation headquartered in City of
8 Industry, California. Hot Topic is sued herein as an aider and abettor.
9
10. Defendant Sycamore is a Delaware limited liability company
10 headquartered New York New York. Sycamore is sued herein as an aider and abettor.
11
11. Defendant 212F is a Delaware limited liability company. 212F is
12 beneficially owned by affiliates of Sycamore. 212F is sued herein as an aider and
13 abettor.
14
12. Defendant Merger Sub is a California corporation and a wholly owned
15 subsidiary of 212F. Merger Sub is beneficially owned by affiliates of Sycamore.
16 Merger Sub is sued herein as an aider and abettor.
17
13. Defendant Harper is and was at all relevant times the Company's CEO
18 and a director of Hot Topic.
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14. Defendant Becker is and was at all relevant times a director of Hot Topic.
20 Becker is a founder of Becker Drapkin Management LP ("Becker Drapkin").
21
15. Defendant Drapkin is and was at all relevant times a director of Hot
22 Topic. Drapkin is a founder of Becker Drapkin.
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16. Defendant Evelyn D'An is and was at all relevant times a director of Hot
24 Topic.
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17. Defendant Terri Funk Graham is and was at all relevant times a director
26 of Hot Topic.
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18. Defendant Scott Hedrick is and was at all relevant times a director of Hot
28 Topic.
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19. Defendant John Kyees is and was at all relevant times a director of Hot
2 Topic.
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20. Defendant Andy Schuon is and was at all relevant times a director of Hot
4 Topic.
5 21. Defendant Tom Vellios is and was at all relevant times a director of Hot
S Topic.
22. The defendants named above in ¶J13-21 are sometimes collectively
I referred to herein as the "Individual Defendants."
9
CLASS ACTION ALLEGATIONS
10 23. Plaintiff's claims are brought on her own behalf and as a class action
11 pursuant to Federal Rule of Civil Procedure 23 on behalf of all public holders of Hot
12 Topic stock who are being and will be harmed by defendants' actions described below
13 (the "Class"). Excluded from the Class are defendants herein and any person, firm,
14 trust, corporation, or other entity related to or affiliated with any defendants.
15 24. Plaintiff's claims are properly maintainable as a class action under
16 I Federal Rule of Civil Procedure 23.
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25. The Class is so numerous that joinder of all members is impracticable.
18 According to the Company's SEC filings, as of November 15, 2012, there were more
19 than 42 million shares of Hot Topic common stock outstanding.
20 26. There are questions of law and fact which are common to the Class and
21 which predominate over questions affecting any individual Class member. The
22 common questions include, inter alia, the following:
23 (a) whether defendants are breaching their fiduciary duties of
24 undivided loyalty, independence, or due care with respect to plaintiff and the other
25 members of the Class in connection with the Proposed Acquisition, and/or are aiding
26 I and abetting therein;
27 (b) whether defendants are engaging in self-dealing in connection with
28 the Proposed Acquisition, and/or aiding and abetting therein;
4
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1
(c) whether defendants are breaching their fiduciary duty to secure and
2 I obtain the best value reasonable under the circumstances for the benefit of plaintiff
3 I and the other members of the Class in connection with the Proposed Acquisition,
4 I and/or aiding and abetting therein;
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(d) whether defendants are unjustly enriching themselves and other
6 I insiders or affiliates of Sycamore Partners and Hot Topic, and/or aiding and abetting
7 I therein;
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(e) whether defendants are breaching any of their other fiduciary
9 duties to plaintiff and the other members of the Class in connection with the Proposed
10 Acquisition, including the duties of good faith, diligence, candor and fair dealing,
11 I and/or aiding and abetting therein;
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(f) whether defendants, in bad faith and for improper motives, have
13 impeded or erected barriers to discourage other offers for the Company or its assets,
14 I and/or aided and abetted therein;
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(g) whether the Proposed Acquisition compensation payable to
16 plaintiff and the Class for their holdings in the Company is unfair and inadequate;
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(h) whether defendants have disseminated a false and misleading
proxy statement in violation of14(a) and 20(a) of the 1934 Act and SEC Rule 14a-9
vJ I promulgated thereunder; and
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(i) whether plaintiff and the other members of the Class would suffer
21 irreparable injury were the transaction complained of herein consummated.
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27. Plaintiffs claims are typical of the claims of the other members of the
23 I Class and plaintiff does not have any interests adverse to the Class.
24 28. Plaintiff is an adequate representative of the Class, has retained
25 competent counsel experienced in litigation of this nature, and will fairly and
26 adequately protect the interests of the Class.
MA 29. The prosecution of separate actions by individual members of the Class
would create a risk of inconsistent or varying adjudications with respect to individual
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1 I members of the Class which would establish incompatible standards of conduct for the
2 I party opposing the Class.
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30. Plaintiff anticipates that there will be no difficulty in the management of
4 I this litigation. A class action is superior to other available methods for the fair and
5 I efficient adjudication of this controversy.
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31. Defendants have acted on grounds generally applicable to the Class with
7 respect to the matters complained of herein, thereby making appropriate the relief
8 sought herein with respect to the Class as a whole.
9
THE PROPOSED ACQUISITION
10
32. Hot Topic is a mall and web based specialty retailer operating the Hot
11 Topic and Torrid concepts, as well as a new test retail concept, Blackheart. Hot Topic
12 I offers music/pop culture-licensed and music/pop culture-influenced apparel,
13 accessories, music and gift items for young men and women. Torrid retails on-trend
14 fashion apparel, lingerie and accessories inspired by and designed to fit the young,
15 voluptuous woman who wears size 12 and up. Blackheart offers an expanded
16 collection of dark, edgy, sexy lingerie, accessories and beauty products. As of
17 February 2, 2013, the Company operated 618 Hot Topic stores in all 50 states, Puerto
18 Rico and Canada, 190 Torrid stores, five Blackheart stores, and Internet stores
19 hottopic .com, torrid.com and blackheartlingerie .com.
20
33. Sycamore is a private equity firm based in New York specializing in
21 consumer and retail investments. The firm has more than $1 billion in capital under
22 management. The founders of Sycamore have a long history of partnering with
23 management teams to takeover undervalued businesses. They work with companies
24 they believe have significant growth potential, particularly when given the capital and
25 outside expertise they need to succeed.
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34. Despite the Company's bright future, on March 7, 2013, Hot Topic and
27 I Sycamore Partners announced that they had entered into the Merger Agreement
28 whereby Sycamore Partners would acquire all of Hot Topic's outstanding stock for
Case 11 :13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 8 of 32 Page ID #:10
$14.00 per share in cash. Pursuant to the Merger Agreement, when the merger is
complete, Hot Topic will survive as a wholly owned subsidiary of affiliates owned by
Sycamore, and Sycamore Partners will own and control the Company.
35. The press release announcing the Proposed Acquisition states in pertinent
part:
Sycamore Partners to Acquire Hot Topic, Inc.for $14.00 Per Share in Cash Transaction Valued at $600 Million
Hot Topic, Inc. ("Hot Topic" or the "Company") and
Sycamore Partners today announced that they have entered into a
definitive agreement pursuant to which Sycamore Partners will acquire
Hot Topic for $14.00 per share in cash, or a total of approximately $600
million. The agreement, which has been unanimously approved by Hot
Topic's Board of Directors, represents a premium of approximately 30%
over Hot Topic's closing stock price on March 6, 2013.
Lisa Harper, Chief Executive Officer and Chairman of the Board
of Hot Topic, said, "We are pleased that this transaction will allow us to
deliver positive results for our shareholders. In addition, we are very
excited about the future growth for the company and know that
Sycamore Partners will provide great resources and expertise to us as we
operate as a private company."
"We are excited to partner with the Hot Topic management team
and all of its talented and passionate employees," said Stefan Kaluzny,
Managing Director of Sycamore Partners. "We look forward to
supporting the Company's continued growth."
The transaction, which is structured as a one-step merger with Hot
Topic as the surviving corporation, is subject to customary closing
conditions, including receipt of shareholder and regulatory approvals.
The transaction requires the affirmative vote of holders of a majority of
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the Company's outstanding shares, which will be sought at a special
2
meeting of shareholders.
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In connection with the merger agreement, Lisa Harper and Becker
4
Drapkin Management LP, holders of 8.9% of the Company's stock, each
5 signed customary support agreements indicating they would support the
6 proposed transaction.
7
Guggenheim Securities is acting as financial advisor to Hot Topic
8
in connection with the transaction. Cooley LLP is acting as Hot Topic's
9
legal advisor. BofA Merrill Lynch is acting as financial advisor to
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Sycamore Partners and Winston & Strawn LLP and the Law Offices of
11
Gary M. Holihan, P.C. are acting as its legal counsel.
12
36. The Proposed Acquisition is the result of an unfair sales process designed
13 Ito ensure that only Sycamore Partners has the opportunity to acquire Hot Topic. The
14 Proposed Acquisition is being driven by Hot Topic's largest stockholder, hedge fund
15 I Becker Drapkin. The firm first revealed it had taken a 5% stake in Hot Topic in
16 September 2010 for between $5 and $6 a share. Becker Drapkin sought out the
17 Proposed Acquisition in order to secure liquidity for its illiquid holdings in the
18 Company. As of December 31, 2012, Becker Drapkin's illiquid Hot Topic holdings
19 represented 25% of the hedge fund's portfolio, limiting its ability to diversify or
20 otherwise make new investments. Becker Drapkin will more than double its initial
21 investment, and stands to receive over $50 million if the Proposed Acquisition closes.
22 Becker Drapkin control two of the Company's Board members, defendants Becker
23 and Drapkin.
24
37. At the time of its investment, Becker Drapkin said that Hot Topic's
25 shares were undervalued and that they were considering nominating board members.
26 Less than three weeks later the fund reached a settlement with Hot Topic. Becker
27 Drapkin's co-founders Becker and Drapkin were added to Hot Topic's Board and
28 within six months the CEO and other top executives had been changed. After
Case :13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 10 of 32 Page ID #:12
1 Sycamore Partners acquired its interest in Hot Topic, it appointed defendant and
2 Board member Harper as Hot Topic's CEO.
3
38. The Proposed Acquisition, pursuant to an equity commitment agreement
4 entered into with Sycamore Partners, provides defendant Harper, Chairman and CEO
5 of the Company, Don Hendricks, COO of the Company, Mark Mizicko, Chief
6 Planning Officer of the Company, and certain other employees of the Company with a
7 special benefit not being made available to any of Hot Topic's other shareholders.
8 Defendant Harper will rollover over 30,000 shares, and other members of
9 management will rollover thousands more shares, of Hot Topic common stock into the
10 newly created private company. Thus, defendant Harper is strongly motivated to
11 facilitate the merger - not because it is the best price for shareholders - but because
12 she will personally profit more than any other shareholder if the merger closes.
13 Defendant Harper has therefore chosen to participate in Hot Topic's future upside as a
14 Company rather than take the $14.00 in cash, indicating that she thinks the cash is not
15 the best deal. In contrast, public shareholders have no such option. Of course
16 defendant Harper has agreed to vote all her Hot Topic shares in favor of the
17 transaction, as she will now be given the "private equity" bonus, rolling over her Hot
18 Topic shares into Sycamore Partners.
19
39. Hot Topic's other officers and directors are similarly conflicted because
20 they will receive millions of dollars in special payments - not being made to ordinary
21 shareholders - for currently unvested stock options, performance units, and restricted
22 shares, all of which shall, upon completion of the transaction, become fully vested
23 and exercisable. Under the terms of the Merger Agreement, the unvested stock
24 options and restricted stock units ("RSUs") held by each of the directors will
25 immediately vest and become exercisable, providing windfall benefits to these
26 insiders. For example, defendant Becker holds 42,437 unvested stock options. Upon
27 the closing of the Proposed Acquisition, defendant Becker alone will receive $594,118
28 for these currently unvested options. The Company's senior management is also
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1 entitled to receive from the Proposed Acquisition millions more in change-of-control
2 payments.
3
40. Moreover, the Company's management appears to be staying on board
4 for the long term after the Proposed Acquisition closes. In fact, as noted above, upon
5 closing of the proposed deal, certain of Hot Topic's executive team will be retained by
6 Sycamore Partners, including defendant Harper, and Hot Topic's COO, Don
7 Hendricks. In essence, the Proposed Acquisition is a management buyout, backed by
8 Sycamore Partners.
9
41. In addition, the Board selected a conflicted financial advisor in the
10 process that led to the Proposed Acquisition. Guggenheim Securities ("Guggenheim")
11 will receive a multi-million dollar fee as Hot Topic's financial advisor that is
12 contingent on the closing of the Proposed Acquisition. Moreover, Guggenheim has
13 provided services for GoldenGate Capital, the former firm of the Principal of
14 Sycamore Partners, Mr. Kaluzny, while he was the Principal and Managing Director
15 there.
16
42. These conflicts tainted the process leading to the Proposed Acquisition.
17 While the Board created a transaction committee "to more efficiently manage" the
18 process, the formation of the committee did nothing to address the conflicts, and in
19 fact furthered those conflicts. The Board appointed to the committee conflicted
20 defendants Drapkin and Harper, who were both strongly motivated to facilitate the
21 Proposed Acquisition and who dominated the transaction committee.
22
43. The Board and its transaction committee catered the sales process
23 exclusively towards Sycamore Partners in order to ensure that Company management
24 secured continuing employment and the opportunity for equity rollover. The
25 transaction committee granted Sycamore Partners defacto exclusivity and refused to
26 give Company A, whose bid matched Sycamore Partners' bid of$ 14.00 per share, the
27 opportunity to continue to participate in the process. The result was a lack of any
28 competitive process, and a failure to maximize shareholder value when, with the
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:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 12 of 32 Page ID #:14
1 knowledge that it was the only bidder the Board was dealing with, Sycamore Partners
2 did not raise their bid over $14.00 per share.
3
44. In order to justify the inadequate consideration, the Board directed that
4 downward-revised financial projections (the "Revised Projections") be prepared just
5 prior to the consummation of the Merger Agreement to be used by Guggenheim in its
6 fairness opinion in place of the long-range projections that were prepared by
7 management in late 2012 (the "LRP Projections"). The Revised Projections, that do
8 not incorporate any growth from the Company's Torrid and Blackheart franchises,
9 were used to justify Guggenheim's opinion that $14.00 per share was "fair" to Hot
10 Topic's shareholders. The Revised Projections will also make it easier for
11 management to meet targets for increased equity compensation in the Company post-
12 close.
13
45. The consideration secured fails to adequately value the Company on an
14 intrinsic value basis. While the Company's shareholders will receive just $14.00 per
15 Hot Topic share, analysts have projected the Company's value is at least $16.40 per
16 share. Moreover, the Company has no debt and has at least $1.40 per share of cash on
17 its books, meaning the purchase price is closer to $12.60 per share. Furthermore, the
18 Company has seen substantial recent growth. Its share price has risen from $5.11 on
19 March 18, 2011 to $11.35 on February 20, 2013. The clothing and apparel chain,
20 found in malls across the U.S. and popular among teens, has performed well over the
21 last year, as same-store sales at locations open more than a year rose 2%. Hot Topic
22 has 618 locations and also runs a plus-size brand, Torrid, with 190 locations, and a
23 lingerie brand, Blackheart, with five locations. Torrid saw a 5.4% increase in same-
24 store sales for locations open more than a year. For Hot Topic, revenue reached $233
25 million in the fourth quarter that ended February 2, an 11% increase in revenue from
26 the same period a year earlier. Hot Topic shares rose 46% last year as quarterly
27 results beat analysts' estimates for four straight quarters, according to data compiled
28 by Bloomberg.
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46. Becker Drapkin, which owns about 8.5% of the Company, has, pursuant
2
to a Support Agreement, agreed to support Sycamore Partners' buyout offer. So has
3
defendant Harper, whose exact ownership stake is undisclosed. The Merger
4
Agreement states the Support Agreements cover 10.36% of the Company's shares,
5
including options. The agreements require Becker Drapkin and Harper to vote for the
6
deal, against any competing bid, and against any other transaction that would impede
7 the merger, like a reorganization, recapitalization, asset sale or anything that
8 endangers its performance under debt documents. The Support Agreements
9 essentially put a competing bidder in a 10% hole.
10
47. The unfair sales process was further designed to ensure that only
11
Sycamore Partners had an opportunity to acquire the Company. To achieve this,
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defendants agreed to preclusive deal protection devices in the Merger Agreement with
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Sycamore Partners that effectively chills the auction process for the Company,
14
including:
15 a "No Shop" provision that precludes the Board from engaging in
16 a fair process to sell the Company by seeking out the best possible
17 price for Hot Topic's shareholders, as their fiduciary duties
18 require;
19 a "Matching Rights" provision that requires Hot Topic to give full
20
Information about competing acquisition proposals to Sycamore
21 Partners and then allows Sycamore Partners to match any
22 competing proposal, thus discouraging competing proposals; and
23 • a "Termination Fee" provision whereby defendants agreed to pay
24 Sycamore Partners $21 million in the event the Board receives a
25
higher offer for the Company and its shareholders, despite the no-
26 shop provision.
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II
THE MATERIALLY MISLEADING PROXY
2
48. In connection with the Proposed Acquisition, defendants filed the
3 materially misleading Proxy. The Proxy, which recommends that Hot Topic's
4 shareholders vote in favor of the Proposed Acquisition, omits and/or misrepresents
5 material information about the intrinsic value of the Company, that makes it more
6 likely that Hot Topic's public shareholders will be coerced and misled into voting in
7 favor of the Proposed Acquisition without that material information regarding the
8 critical decision they face. Specifically the Proxy omits/or misrepresents the material
9 information set forth below in contravention of §14(a) and 20(a) of the 1934 Act
10 and/or defendants' duty of candor and full disclosure under state law:
11
(a) The bases for utlizing the Revised Projections in analyzing the
12 intrisic value of the Company. The Proxy contains two sets of projections, the LRP
13 Projections and the Revised Projections that were put together by Company
14 management towards the end of the process, and were used by Guggenheim when
15 conducting its financial analyses, portions of which are disclosed in the Proxy. The
16 Proxy does not disclose, however, the methodology and rationale employed for
17 making the downward revisions to the LRP Projections. Specifically, the Proxy
18 omits, among other things: (i) the basis for the decrease in Capital Expenditures
19 revised projections which is not commensurate with the decrease in Total Stores
20 and/or Total Revenue from the LRP Projections; and (ii) a description of how the new
21 and very successful Torrid and Blackheart businesses were treated in the preparation
22 of the LRP Projections. This omission renders the portion of the Proxy that sets for
23 the LRP Projections materially misleading, as well as the description in the
24 Background of the Merger section, at page 28, which vaguely describes the revisions
25 as reflective of "a more moderate growth trajectory and achievement of operating
26 margin improvement over a longer period than the LRP Projections." Without
27 disclosure of this material information, shareholders have no abiltity to assess whether
28
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Guggenheim's analyses, which is based on the Revised Projections, sufficiently values
the Company's intrinsic value.
(b) Material line items in the LRP projections. The Proxy sets forth
certain line items for the LRP Projections, but omits critical items for 2013-2018,
including: (i) stock based compensation expense; (ii) working capital; (iii) taxes or
marginal tax rate; (iv) net income; and (v) unlevered free cash flows for years 2013
thru 2018. Without this material information, shareholders cannot conduct their own
assessment of the Company's value based on the LRP Projections, which is critical
under the circumstances because the Proxy does not disclose the basis for the
10 downward revisions made to the LRP Projections, and Guggenheim conducted its
11 analyses on the Revised Projections and not the LRP Projections. This omission
12 renders the information concerning the LRP Projections set forth on pages 34-3 5 of
13 the Proxy materially misleading.
14
(c) The basisfor Guggenheim's selection of an unlevered beta range
15I in the DCF. The Proxy sets forth that Guggenheim selected an unlevered beta range
16 of .950-1.250 for use in its DCF analysis, but does not provide the basis for this
17 selected range. This omission is material because Hot Topic's beta is generally
18 believed to be in the range of 0.9. This omission renders the Proxy's discussion of
19 Guggenheim's DCF analysis materially misleading.
20
(d) Guggenheim's treatment of stock-based compensation in its
21 DCF. The Proxy does not disclose how stock-based compensation was treated in
22 Guggenheim's DCF. This omission renders the Proxy materially misleading because
23 the manner is which stock-based compensation is treated in a DCF analysis, either as a
24 cash or non-cash expense, can have a significant impact on the outcome of this
25 analysis. Without this information, shareholders cannot assess the actual intrinsic
26 value of their shares in the Company, and thus cannot make a fully informed decision
27 whether to vote in favor of the Proposed Acquisition.
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1
(e) The methodology used by Guggenheim to arrive at the "illustrative
2 reference range" of "$9.00415.00" utilized in the "Precedent Merger and
3
Acquisitions Transaction Analysis." The Proxy discloses the range utilized, but does
4 not disclose how that range was derived and what inputs and/or factors were
5 considered in generating that range, nor does the Proxy disclose why Guggenheim
6 utilized a "illustrative reference range" in the Precedent Transaction Analysis, rather
7 than deriving a reference range from the EV/EBITDA and EV/EBIT multiple ranges
8 calculated as part of the analysis. This omission is material because the purpose of a
9 comparative transactions analysis is to provide shareholders with a sense of how the
10 consideration offered in the Proposed Acquisition compares to similar transactions,
11 and without this information shareholders have no ability to assess whether the range
12 selected by Guggenheim bears any relation to the actual outputs generated by the
13 selected transactions, or why an illustrative range was used rather than a range based
14 on the observed multiples.
15
(f) The benchmarking and comparative metrics used by Guggenheim
16 to compare Hot Topic to its peers in the "Peer Group Financial Benchmarking and
17 Trading Valuation Analysis." The Proxy discloses certain multiples observed in
18 comparing Hot Topic to its selected peers, but it does not disclose which
19
benchmarking metrics Guggenheim used in conducting the analysis. This material
20 omission renders the Proxy's discussion of the analysis materially misleading,
21 particularly with respect to the statement "[a]fter reviewing all of the peer group
22 trading multiples and benchmarking analysis, Guggenheim Securities' analysis of the
23 selected peer group companies resulted in an overall reference range of$7.50-$ 12.50
24 per share for purposes of valuing Hot Topic's common stock on a stand-alone public-
25 market trading basis. This reference range implied EV/20 13 EBITDA multiples of
26 3.3x-6.2x and EV/2013 EBIT multiples of 6. lx- 11.4x." This omission is material
27
because without the information, shareholders do not have the ability to understand
28
- 15-
Case :13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 17 of 32 Page ID #:19
1 how Guggenheim arrived at the reference ranges implied by the analysis, and thus
2 how Hot Topic compares to similar companies in its space based on the analysis.
3
49. There is no more material information to shareholders in a merger than
4 the information underlying or supporting the purported "fair value" of their shares.
5 Shareholders are entitled to the information necessary to inform a decision as to the
6 adequacy of the merger consideration, which includes the underlying data (including
7 management's projections) the investment bankers relied upon, the key assumptions
8 that the financial advisors used in performing valuation analyses, and the range of
9 values that resulted from those analyses. Here the analyses of the three financial
10 advisors incorporated certain critical assumptions that significantly affect the output
11 (valuation) of the analyses. Without this material information, shareholders have no
12 basis on which to judge the adequacy of Sycamore Partners' offer.
13
50. Without full and fair disclosure of the material information set forth
14 above, shareholders should not be asked to vote to approve the Proposed Acquisition.
15
51. In sum, and as described in further detail herein, by agreeing to the
16 Proposed Acquisition, each of the defendants breached their fiduciary duties of
17 loyalty, due care, independence, candor, good faith and fair dealing, and/or has aided
18 and abetted such breaches. Rather than acting in the best interests of the Company's
19 shareholders, defendants spent substantial effort tailoring the structural terms of the
20 Proposed Acquisition to aggrandize their own personal interests and to meet the
21 specific needs of Sycamore Partners, which efforts will eliminate the equity interest of
22 Hot Topic's public shareholders.
23
52. In essence, the Proposed Acquisition is the product of a flawed process
24 that is designed to ensure the merger of Hot Topic with Sycamore Partners, on terms
25 preferential to Sycamore Partners and defendants, and detrimental to plaintiff and Hot
26 Topic's shareholders. Plaintiff seeks to enjoin the Proposed Acquisition.
27
28
- 16-
Case 8
:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 18 of 32 Page ID #:20
1
DEFENDANTS' FIDUCIARY DUTIES
2
53. In any situation where the directors of a publicly traded corporation
3 undertake a transaction that will result in either (i) a change in corporate control or (ii)
4 a break-up of the corporation's assets, the directors have an affirmative fiduciary
5 obligation to obtain the highest value reasonably available for the corporation's
6 shareholders, and if such transaction will result in a change of corporate control, the
7 shareholders are entitled to receive a significant premium. To diligently comply with
8 these duties, the directors may not take any action that:
9
(a) adversely affects the value provided to the corporation's
10 shareholders;
11
(b) discourages or inhibits alternative offers to purchase control of the
12 corporation or its assets;
13
(c) contractually prohibits them from complying with their fiduciary
14 duties;
15 (d) otherwise adversely affects their duty to search and secure the best
16 value reasonably available under the circumstances for the corporation's shareholders;
17 and/or
18
(e) provides the directors with preferential treatment at the expense of,
19 or separate from, the public shareholders.
20
54. In accordance with their duties of loyalty and good faith, the Individual
21 Defendants, as directors and/or officers of Hot Topic, are obligated to refrain from:
22
(a) participating in any transaction where the directors' or officers'
23 loyalties were divided;
24
(b) participating in any transaction where the directors or officers
25 received a personal financial benefit not equally shared by the public shareholders of
26 the corporation; and/or
27
(c) unjustly enriching themselves at the expense or to the detriment of
28 the public shareholders.
- 17-
Case :13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 19 of 32 Page ID #:21
55. Plaintiff alleges herein that defendants, separately and together, in
connection with the Proposed Acquisition, are breaching and/or aiding and abetting in
the breaches of fiduciary duties owed to plaintiff and the other public shareholders of
Hot Topic, including the duties of loyalty, good faith, candor, due care and
independence. As a result of these breaches of fiduciary duties and the aiding and
abetting therein, neither plaintiff nor the Class will receive adequate or fair value for
their Hot Topic common stock in the Proposed Acquisition.
56. Because defendants are breaching their duties of due care, loyalty and
good faith in connection with the Proposed Acquisition, and/or are aiding and abetting
therein, the burden of proving the inherent or entire fairness of the Proposed
Acquisition, including all aspects of its negotiation, structure, price and terms, is
placed upon defendants as a matter of law.
COUNT I
Against Defendants for Violations of §14(a) of the 1934 Act and SEC Rule 14a-9 Promulgated Thereunder
57. Plaintiff repeats and realleges each and every allegation contained above
as if fully set forth herein.
58. During the relevant period, defendants disseminated the false and
misleading Proxy specified above, which failed to disclose material facts necessary in
order to make the statements made, in light of the circumstances under which they
were made, not misleading.
59. The Proxy was prepared, reviewed and/or disseminated by defendants. It
misrepresented and/or omitted material facts, including material information about the
unfair consideration offered in the Proposed Acquisition, and the actual intrinsic value
of the Company.
60. In so doing, defendants made untrue statements of material facts and
omitted to state material facts necessary to make the statements that were made not
misleading in violation of14(a) of the 1934 Act and SEC Rule 14a-9 promulgated
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Case 8
:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 20 of 32 Page ID #:22
1 thereunder. By virtue of their positions within the Company and/or roles in the
2 process and in the preparation of the Proxy, defendants were aware of this information
3 and of their duty to disclose this information in the Proxy.
4
61. Defendants were at least negligent in filing the Proxy with these
5 materially false and misleading statements.
6
62. The omissions and false and misleading statements in the Proxy are
7 material in that a reasonable shareholder would consider them important in deciding
8 how to vote on the Proposed Acquisition. In addition, a reasonable investor would
9 view a full and accurate disclosure as significantly altering the "total mix" of
10 information made available in the Proxy and in other information reasonably available
11 to shareholders.
12
63. By reason of the foregoing, defendants have violated § 14(a) of the 1934
13 Act and SEC Rule 14a-9(a) promulgated thereunder.
14
64. Because of the false and misleading statements in the Proxy, plaintiff and
15 the Class are threatened with irreparable harm, rendering money damages inadequate.
16 Therefore, injunctive relief is appropriate to ensure defendants' misconduct is
17 corrected.
18
COUNT II
19
Against Defendants for Violation of §20(a) of the 1934 Act
20
65. Plaintiff repeats and realleges each and every allegation contained above
21 as if fully set forth herein.
22
66. Defendants acted as controlling persons of Hot Topic within the meaning
23 of §20(a) of the 1934 Act as alleged herein. By virtue of their positions as officers
24 and/or directors and/or controlling shareholders and/or advisors of Hot Topic, and/or
25 their participation in and/or awareness of the Company's operations and/or intimate
26 knowledge of the false statements contained in the Proxy filed with the SEC, they had
27 the power to influence and control and did influence and control, directly or indirectly,
28
-19-
Case 8
:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 21 of 32 Page ID #:23
1 the decision-making of the Company, including the content and dissemination of the
2 various statements which plaintiff contends are false and misleading.
3
67. Each of the defendants was provided with or had unlimited access to
4 copies of the Proxy and other statements alleged by plaintiff to be misleading prior to
5 and/or shortly after these statements were issued and had the ability to prevent the
6 issuance of the statements or cause the statements to be corrected.
7
68. In particular, each of the Individual Defendants had direct and
8 supervisory involvement in the day-to-day operations of the Company, and, therefore,
9 is presumed to have had the power to control or influence the particular transactions
10 giving rise to the securities violations as alleged herein, and exercised the same. The
11 Proxy at issue contains the unanimous recommendation of each of the Individual
12 Defendants to approve the Proposed Acquisition. They were thus directly involved in
13 the making of this document.
14
69. Hot Topic and Sycamore Partners also had direct supervisory control
15 over composition of the Proxy and the information disclosed therein, as well as the
16 information that was omitted and/or misrepresented in the Proxy.
17
70. In addition, as the Proxy sets forth at length, and as described herein,
18 defendants were each involved in negotiating, reviewing and approving the Proposed
19 Acquisition. The Proxy purports to describe the various issues and information that
20 they reviewed and considered, descriptions which had input from all defendants.
21
71. By virtue of the foregoing, defendants have violated §20(a) of the 1934
22 Act.
23
72
As set forth above, defendants had the ability to exercise control over and
24 did control a person or persons who have each violated § 14(a) of the 1934 Act and
25 SEC Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their
26 positions as controlling persons, these defendants are liable pursuant to §20(a) of the
27 1934 Act. As a direct and proximate result of defendants' conduct, plaintiff and the
28 Class will be irreparably harmed.
-20-
Case 8
:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 22 of 32 Page ID #:24
1
COUNT III
2
Breach of Fiduciary Duties Against the Individual Defendants
3
73. Plaintiff incorporates by reference and realleges each and every
4 allegation contained above as though fully set forth herein.
5
74. The Individual Defendants have violated the fiduciary duties of care,
6 loyalty, good faith and independence owed to the public shareholders of Hot Topic
7 and have acted to put their personal interests ahead of the interests of Hot Topic's
8 shareholders.
9
75. By the acts, transactions, and courses of conduct alleged herein,
10 defendants, individually and acting as a part of a common plan, are attempting to
11 unfairly deprive plaintiff and other members of the Class of the true value inherent in
12 and arising from Hot Topic.
13
76. The Individual Defendants have violated their fiduciary duties by
14 entering Hot Topic into the Proposed Acquisition without regard to the effect of the
15 Proposed Acquisition on Hot Topic's shareholders.
16
77. As demonstrated by the allegations above, the Individual Defendants
17 failed to exercise the care required, and breached their duties of loyalty, good faith,
18 and independence owed to the shareholders of Hot Topic because, among other
19 reasons:
20
(a) they failed to take steps to maximize the value of Hot Topic to its
21 minority shareholders;
22
(b) they failed to properly value Hot Topic and its various assets and
23 operations; and
24
(c) they ignored or did not protect against the numerous conflicts of
25 interest resulting from defendants' own interrelationships or connection with the
26 Proposed Acquisition.
27
78. Because the Individual Defendants and dominate and control the business
28 and corporate affairs of Hot Topic, have access to private corporate information
- 21 -
Case 8
:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 23 of 32 Page ID #:25
1 concerning Hot Topic's assets, business and future prospects, there exists an
2 imbalance and disparity of knowledge and economic power between them and the
3 minority shareholders of Hot Topic which makes it inherently unfair for them to
4 pursue and recommend any proposed transaction wherein they will reap
5 disproportionate benefits to the exclusion of maximizing minority shareholder value.
6
79. By reason of the foregoing acts, practices, and course of conduct, the
7 Individual Defendants have failed to exercise ordinary care and diligence in the
8 exercise of their fiduciary obligations toward plaintiff and the other members of the
9 Class.
10
80. The Individual Defendants are engaging in self-dealing, are not acting in
11 good faith toward plaintiff and the other members of the Class, and have breached and
12 are breaching their fiduciary duties to the members of the Class.
13
81. As a result of the Individual Defendants' unlawful actions, plaintiff and
14 the other members of the Class will be irreparably harmed in that they will not receive
15 their fair portion of the value of Hot Topic's assets and operations. Unless the
16 Proposed Acquisition is enjoined by the Court, the Individual Defendants will
17 continue to breach their fiduciary duties owed to plaintiff and the members of the
18 Class, will not engage in arm's-length negotiations on the Merger Agreement's terms,
19 and may consummate the Proposed Acquisition, all to the irreparable harm of the
20 members of the Class.
21
82. Plaintiff and the members of the Class have no adequate remedy at law.
22 Only through the exercise of this Court's equitable powers can plaintiff and the Class
23 be fully protected from the immediate and irreparable injury which defendants'
24 actions threaten to inflict.
25
26
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28
-22-
Case 8
:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 24 of 32 Page ID #:26
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COUNT IV
For Aiding and Abetting Breach of Fiduciary Duty Against Hot Topic, Sycamore, 212F and Merger Sub
83. Plaintiff incorporates by reference and realleges each and every
allegation contained above as though fully set forth herein.
84. The Individual Defendants owed to plaintiff and the members of the
Class certain fiduciary duties as fully set out herein.
85. By committing the acts alleged herein, the Individual Defendants
breached their fiduciary duties owed to plaintiff and the members of the Class.
86. Hot Topic, Sycamore, 212F and Merger Sub colluded in or aided and
abetted the Individual Defendants' breaches of fiduciary duties, and each was an
active and knowing participant in the Individual Defendants' breaches of fiduciary
duties owed to plaintiff and the members of the Class.
87. Plaintiff and the members of the Class shall be irreparably injured as a
direct and proximate result of the aforementioned acts.
PRAYER FOR RELIEF
WHEREFORE, plaintiff demands relief, in plaintiff's favor against defendants,
as follows:
A. Declaring that plaintiff's fiduciary duty claims are properly maintainable
as a class action;
B. Enjoining defendants, their agents, counsel, employees and all persons
acting in concert with them from consummating the Proposed Acquisition, unless and
until they comply with their fiduciary duties under state law of loyalty, good faith,
care and candor to maximize shareholder value and fully and disclose all material
information in their possession, and their duties under §§ 14(a) and 20(a) of the 1934
Act to provide shareholders with all material information about the unfair sales
process for the Company, the conflicts of interest suffered by defendants in
Case 8
:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 25 of 32 Page ID #:27
connection with the Proposed Acquisition, the unfair consideration offered in the
Proposed Acquisition, and the actual intrinsic value of the Company;
C. Rescinding, to the extent already implemented, the Proposed Acquisition
or any of the terms thereof;
D. Awarding plaintiff the costs and disbursements of this action, including
reasonable attorneys' and experts' fees; and
B. Granting such other and further equitable relief as this Court may deem
just and proper.
JURY DEMAND
Plaintiff hereby demands a trial by jury on all issues so triable.
DATED: May 17, 2013 ROBB1NS GELLER RUDMAN & DOWD LLP
RANDALL J. BARON A. RICK ATWOOD, JR. DAVID T. WISSBROECKER ED WARDI Mi GERGO SIAN
DAVID T. WISSBROECKER
655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 619/231-7423 (fax)
DEANS & LYONS LLP HAMILTON P. LINDLEY 325 N. Saint Paul Street, Suite 1500 Dallas, TX 75201 Telephone: 214/736-7861 214/965-8505 (fax)
Attorneys for Plaintiff
S:\CptDraft\Deal\CPT Hot Topic_fed.docx
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Case 8:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 26 of 32 Page ID #:28
CERTIFICATION OF NAMED PLAINTIFF PURSUANT TO FEDERAL SECURITIES LAWS
Nancy .1 Davis ("Plaintiff') declares
I Plaintiff has reviewed a complaint and authorized its filing
2 Plaintiff did not acquire the security that is the subject of this action at
the direction of plaintiff's counsel or in order to participate in this private action or
any other litigation under the federal securities laws
3.. Plaintiff is willing to serve as a representative party on behalf of the
class, including providing testimony at deposition and trial, if necessary.
4 Plaintiff has made the following transaction(s) during the Class Period
in the securities that are the subject of this action:
Acquisitions, Number of Shares Acquisition Puce Per Date Acquired Acquired Share
12/12/2003 50 $28.53
3/08/2004 4 $28.64
12/03/2004 300 $1605
06/30/2005 60 $14.61
7/01/2005 89 $12.11
06/30/2006 103 $9.78
12/31/2006 104 $9.78
Sales
Number of Shares Selling Price Per Date Sold Sold Share
None Sold
5 Plaintiff has not sought to serve or served as a representative party in
a class action that was filed under the federal securities laws within the three-year
period prior to the date of this Certification except as detailed below
HOT TOPIC
Case 8:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 27 of 32 Page ID #:29
6 The Plaintiff will not accept any payment for serving as a
representative party on behalf of the class beyond the Plaintiffs pro rata share of
any recovery, except such reasonable costs and expenses (including lost wages)
directly relating to the representation of the class as ordered or approved by the
court
I declare under penalty of perjury that the foregoing is true and correct
Executed this 6th day of May , 2013
-2- HOT TOPIC
Case 8:13-cv-00787-JST-AN Document 1Filed 05/17/13 Page 28 of 32 Page ID #:30
Ono Address
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
on Others Similarly Situated,
PLAMMS
HOT TOPIC, INC., 212F HOLDINGS LLC, NT tERGER SUB INC.,
(See ATTACHMENT A) DEFENDANT(S).
CASE NUMB 1?R
CVI3.•QygZ
SUMMONS
TO: DEFENDANT(S):
A lawsuit has been filed against you.
Within 21 days after service of this summons on you (not counting the day you received it), you must serve on the plaintiff an answer to the attached Cdcomplaint. C] -amended complaint
O counterclaim 0 cross-claim or a motion under Rule 12 of the Federal Rules of Civil Procedure, The answer or thotkthMugtbe served on the plaintiff's attorney, David T; Wlssbrecice? , whose address is Robbins .GelIer,.et al, 655 W. Broadway, #1900, an Diego, EA-1-2101 619/231-1058 . If you fail to do so, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or, motion with the court
Clerk US. District Court
Dated: MAY 1 72013
By: iULIEPRftOO Deputy Clerk
(Seal of the Court)
(Use 60 days if the defendant is the United States or a United Slates agency, or is an officer or employee of the United Stales. Alftwed 60 days by Rule 12(a)(3)J.
(10111 SUMMONS
Case 8:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 29 of 32 Page ID #:31
ATTACHMENT A
Defendants (cont.):
SYCAMORE PARTNERS MANAGEMENT, L.L.C., LISA M. HARPER, STEVE BECKER, MATT DRAPK[N, EVELYN D'AN, TERRI FUNK GRAHAM, SCOTT HEDRICK, JOHN KYEES, ANDY SCHUON and TOM VELLIOS,
Case 8:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 30 of 32 Page ID #:32
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
NOTICE OF ASSIGNMENT TO UNITED STATES MAGISTRATE JUDGE FOR DISCOVERY
This case has been assigned to District Judge Josephine Tucker and the assigned discovery Magistrate Judge is Arthur Nakazato.
The case number on all documents filed with the Court should read as follows:
SACV13- 787 t7ST (ANx)
Pursuant to General Order 05-07 of the United States District Court for the Central District of California, the Magistrate Judge has been designated to hear discovery related motions.
All discovery related motions should be noticed on the calendar of the Magistrate Judge
NOTICE TO COUNSEL
A copy of this notice must be served with The summons and complaint on all defendants (If a removal action is Ned, a copy of this notice must be served on all plaintiffs).
Subsequent documents must be flied at the following location:
U Western Division 4outhern Division Eastern Division 312 N. Spring St., Rm. G-8 411 West Fourth St., Rm. 1-053 3470 Twelfth St, Rm. 134 Los Angeles, CA 90012 Santa Ana, CA 927014516 Riverside, CA 92501
Failure to file at the proper location will reault In your documents being returned to you.
CV-1 8(03/06) NOTICE OF ASSIGNMENT TO UNITED STATES MAGISTRATE JUDGE FOR DISCOVERY
II. BASIS OF PW DEF 0404
(Place an X In one box fo PTF
n of This State 0 1
in of Another State 0 2
in or Subject of a gnCountry 0
00
0606
PP.). PARTIES-For Diversity cases c )lalntlff and one for defendant)
DEF Incorporated or Principal Place otBusiness In this State
02 Incorporated and Principal Place of Business In Another Stile
03 foreign Nation
an X in one
o I. U.S. Government . 3. Federal Question (U.S.
Plaintiff' .....Government Not a Party)
2. U.S. Government. ri 4. DiversIty (Indicate Citizenship Defendant ..
' of Parties In Item Ill)
Case 8:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 31 of 32 Page ID #:33
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA f .. . . . . .. CIVIL COVER SHEET
.l. (a) PLAINTIFFS (Check box Wyou are representing yourself 0) DEFENDANTS (Check box If you are representing yourself 0) NANCY DAVIS, Individually and ofl .BbhelFof Mi Otior Simiarly Situated HOT TOPIC, INC.. 212F HOLDINGS LLC,, HI MERGER SUB INC SYCAMORE PARTNERS
MANAGEMENT, L,LC...LISA M. HARPER, STEVE BECICER, MATT DRAPKIN, EVELYN &AN,TERRI FUNK GRAHAM, SCOTT HEDRICK, JOHN KYPES, ANDY SCHUON and TOM
are David T.Wisabroecker(2438671. Robbln5GellerRudman & DbWd L1P.. . 655 West Broadway, Suite 1900: San DIèYO,CA9.2101.......•• .•.
Attorneys (Firm Name, representing yourself,
Number. If you
IV. ORIGIN (Place an X In one box only.) D 5,Trl iAnothe 6.MuItr
DIstrIct District (S)• £ Removed from 3. Remanded from 4. Reinstated or
' ' 0 Litigation
LSi Proceeding State Court Appellate Court Reopened
V REQUESTED IN COMPLAINT:.JURY DEMAND Yes 0 No (Check Yes only If demanded In complaint)
CLASS ACTION under F R.Cv P 23., [RYes No ]
MONEY DEMANDED IN COMPLAINT $
Vi; CAUSE OF ACTION (CIte the US. CMI Statute under which you are fIling and write a brief statement of cause. Do not citeJurlsdlctlon&.statutes unless diversity,) • COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS AND BREACH OF FIDUCIARY DU11RS 115 U.S.0 §78n and 78t1
VII. NATURE OF SUIT (Place an K In one box only).
0110 Insurance [J 240 TortS to LSfld o 462 NaturalIzatIon . rsuoeaaorpue:
0 245 Tort Product Application 9 463 Allen Detainee
0 12DManIfle Liability 465 other Slo Motions toVacate
O 130 Miller Act 290 All Other Real immigration Actions Sentence
14ONe9ottabie 0 Property TORTS D 530Gerrerai
Instrument TOUTS I PERSONAL PROPERTY 0 535 Death Penalty
150 Recovery of PER QNAL1P&J(1II1_ 13 370 Other Fraud Othei'l 540 Mandamus/Other
o Enloscmnen 0 3iOAlrpIane
tof 315 Airplane. 9 371 Truth in Lending 13 550 CMI.Rlghu • Judgment Product Liability 380 Other Personal
O 151 MedicareAct 320AssauLlbei& 0 Property Damage ri 0 PilsonConditlon
Slander 560C1I1 Detainee 152 Recovery of 330 Fed. Employers'
385 Property Damagi 9 cnuo of Product LiabIlity 13 Defaulted Student 0 LIabilIty
Loan (Ead. Vet) UP _____________ BANKRTCY O 340Merine
Recovery of O overpayment or
.345 Marine Product 492 Appeal 28 153
Vet8ene8ts 0 Liability 423 thdrawal 28
151 o 'l6oStockholders' 0 35oMotorVehlcte
USC
Sultt 355 Motor. Vehicle . CM4 I1IGHTS o Product Liability 13 440 Other Civil Rlgl
l900ther 3680therPersonal 13 441 Voting Contract 0 InJury. 195 Contract 362 Personal Injury- 0 442 Employment
L.1 Product Liability Mod Maipratice o 365 Personal Injury, Lj 443 Houskn/
0 196 Franchise Product Liability Accomodations
899 Admin. Procedures _I1EAL PROPERTY 367 Health Caret 44 American with
13 Act/RevIeW of Appeal ofIt-i 210 Land Pharmaceutical 9 DISCbIIltleS
AgencyDetislofl I_2 Condemnation 0 Personal Injury Employment
. . 220 Foreclosure Product Uablitty o 446Amedcan with
Costft 230 Rent Lease& 368 Asbestos Djsabllldec-Qther
0 stateStatUtes ID EIp.theant 13 PersonallnJtiiy 0 446Educatlon O..,.1. .-.-1 1,.kIII..,
O 820 Copyrights
o 830 Patent
o
o 861 HIA (239511)
o 862 Black Lung (923)
13 863 DIWC/DIWW (405(g))
o 364 SSIDTkia
o 86SRSI(405(g))
O 375 FalseClaims Act
D 400 State Reapportionment
13 410 Antitrust
O 430 Banks and Banldng
450 Commerce/iCC Rates/Etc.
o 460 Deportation
D 470 Racketeer Influ-enced &Corrupt Org.
O 480 consumer Credit
o 0 Cable/Sat TV
850 SecuritIes/Coin-'' maditles/Eachange
fl 690 Other Statutory Actions
13 891 Agricultural Acts
E 893'E nvironrrrenUl Matters
D 895 Freedom of Info. Act
o 896 Arbitration
625 Drug Related U Seizure of Property 21
USC 881
690 Other
O 710 Fair Labor Standard Act
o 720 Labor/Mgmt. Relations
o l4G Hallway i.abne Act
O 751 Family and Medical Leave Act
1379* Other Labor Litigation
,-i 791 Employee Ret. Inc.
870 Taxes (U.S. Plaintiff or 0 Defendant)
O871 IRS-ThIrdParty 26 USC
S A CV 13 -0 7 8.
• .......... AFTER COMPLETING PAGE 'I OF FORM 01-71, COMPLETE THE INFORMATION REQUESTED ON PAGE 2.
CMV 71 (027111) , CMLCOVER SHEET Page 1 of 7
Case 8:13-cv-00787-JST-AN Document 1 Filed 05/17/13 Page 32 of 32 Page ID #:34
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA CIVIL COVER SHEET
VIII(a). IDENTICAL CASES: Has this action been previously filed in this court and dismissed, remanded or closed?j NO J YES
If yes, list case number(s):
VIII(b). RELATED CASES: Have any cases been previously filed in this court that are related to the present case?
If yes, list case number(s): 1 3-cv-02939-SJO-JC; 1 3-cv-02941 -PSG-AGR
Civil cases are deemed related if a previously filed case and the present case:
(Check all boxes that apply) A. Arise from the same or closely related transactions, happenings, or events; or
fl NO YES
B. Call for determination of the same or substantially related or similar questions of law and fact; or
C. For other reasons would entail substantial duplication of labor if heard by different judges; or
D. Involve the same patent, trademark or copyright,antone of the factors identified above in a, b or c also is present.
IX. VENUE: (When completing the following information, use an additional sheet if necessary.)
(a) List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH named
plaintiff resides.
fl Check here if the government, its agencies or employees is a named plaintiff. If this box is checked, go to item (b).
County in this District:* California County outside of this District; State, if other than California; or Foreign Country
Orange
(b) List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH named
defendant resides.
Check here if the government, its agencies or employees is a named defendant. If this box is checked, go to item (C).
County in this District:* California County outside of this District; State, if other than California; or Foreign Country
Los Angeles
(C) List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH claim arose. NOTE: In land condemnation cases, use the location of the tract of land involved.
County in this District:* County outside of this District; State, if other than California; or Foreign
Los Angeles
Los Angeles, Orange, San ntura, banta varoara, or
Obispo Counties
Note: Inland condemnatioi
the tract of land involved
X. SIGNATURE OF ATTORNEY (OR SELF-REPRESENTED LITIGANT): /DATE: May 17,2013
Notice to Counsel/Parties: The 01-71 (JS-44) Civil Cover Sheet and the informatrbn contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law. This form, approved by the Judicial Conference of the United States in September 1974, is required pursuant to Local Rule 3-1 is not filed but is used by the Clerk of the Court for the purpose of statistics, venue and initiating the civil docket sheet. (For more detailed instructions, see separate instructions sheet).
Key to Statistical codes relating to Social Security Cases: Nature of Suit Code Abbreviation Substantive Statement of Cause of Action
All claims for health insurance benefits (Medicare) under Title 18, Part A, of the Social Security Act, as amended. Also, 861 HIA include claims by hospitals, skilled nursing facilities, etc., for certification as providers of services under the program.
(42 U.S.C. 1 93SFF(b))
862 BL
863
DIWC
863
DRAW
864
SSID
865
RSI
CV-71 (02/13)
All claims for "Black Lung" benefits under Title 4, Part B, of the Federal Coal Mine Health and Safety Act of 1969. (30 U.S.C. 923)
All claims filed by insured workers for disability insurance benefits under Title 2 of the Social Security Act, as amended; plus all claims filed for child's insurance benefits based on disability. (42 U.S.C. 405 (g))
All claims filed for widows or widowers insurance benefits based on disability underTitle 2 of the Social Security Act, as amended. (42 U.S.C. 405 (g))
All claims for supplemental security income payments based upon disability filed under Title 16 of the Social Security Act, as amended.
All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act, as amended. (42 U.S.C. 405 (g)
CIVIL COVER SHEET
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