What was the case name after the consolidation of the shareholder matters, and how does this consolidated case relate to Zoomin Groomin?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
tockholder Litigation (see below).
On December 27, 2017, the two above referenced shareholder matters were consolidated with the caption In Re: Liberty Tax, Inc. Stockholder Litigation, (Case No. 2017-0883). The Complaint asserted claims for breach of fiduciary duty and breach of fiduciary duty by violation of the nominating committee charter. A mediation took place on November 12, 2018 but did not result in a resolution. On March 15, 2019, the parties entered into a stipulation of settlement of which the material terms of the settlement are as follows: (i) Liberty Tax agreed to implement an antiharassment policy; (ii) Liberty Tax will conduct yearly code of conduct training; (iii) Liberty Tax will terminate for cause any employee who violates the anti-harassment policy that has been substantiated as such; (iv) Liberty Tax will revise its audit committee charter to reflect that SEC filings must be pre-approved by the Audit Committee; (v) Liberty Tax will take reasonable steps to be listed on NASDAQ or NYSE; (vi) Hewitt agrees not to solicit company employees; and (vii) No party admits any liability. On June 28, 2019, the Court of Chancery approved a Derivative and Class Action Settlement. All issues have been resolved and the Delaware derivative actions were dismissed with prejudice in 2019 without any finding of liability on the part of the Defendants.
RSL Senior Partners, LLC, derivatively and on behalf of Liberty Tax, Inc. v Brunot et al, (Case No. 2:18-cv-00127-HCM-DEM), filed on March 7, 2018, in the United States District Court for the Eastern District of Virginia. This purported shareholder derivative action was filed on behalf of LT Inc. seeking to address the alleged wrongs of LT Inc.'s directors and officers.
Source: Item 3 — LITIGATION (FDD pages 11–16)
What This Means (2025 FDD)
According to the 2025 FDD, after the consolidation of shareholder matters, the case was captioned In Re: Liberty Tax, Inc. Stockholder Litigation, (Case No. 2017-0883). This case involved claims for breach of fiduciary duty and breach of fiduciary duty by violation of the nominating committee charter. A mediation occurred on November 12, 2018, but did not result in a resolution.
On March 15, 2019, the parties reached a settlement where Liberty Tax agreed to implement an anti-harassment policy, conduct yearly code of conduct training, terminate employees for cause who violate the anti-harassment policy, revise its audit committee charter to require SEC filings to be pre-approved by the Audit Committee, and take reasonable steps to be listed on NASDAQ or NYSE. Hewitt agreed not to solicit company employees, and no party admitted any liability. The Court of Chancery approved the settlement on June 28, 2019, and the Delaware derivative actions were dismissed with prejudice in 2019 without any finding of liability on the part of the Defendants.
While the case itself does not directly involve Zoomin Groomin, it is disclosed because John Hewitt, Chief Executive Officer and Chairman of Loyalty, has been named in the litigation. The FDD states that John T. Hewitt agreed that he is required to disclose the Final Order in Item 3 of any Franchise Disclosure Document filed by any present or future Franchisor where John T. Hewitt is a director, trustee, general partner, principal officer, or maintains management responsibility relating to the sale or operation of the respective Franchisor, along with disclosure of this governmental action. This disclosure is included in Zoomin Groomin's FDD due to Hewitt's role within the company's leadership.