What changed in this filing

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Item 3. Legal Proceedings

2024-03-13 compared with 2023-03-02 · 61 added, 53 removed, 119 unchanged (49% of the section changed)

3 unchanged sentences

Beginning in March 2021, multiple putative class actions were filed in the U.S.

District Court for the Southern District of New York by certain of the Company’s stockholders against the Company and certain of the Company’s officers alleging violations of federal securities laws.

The lawsuits were captioned Zawatsky et al.

were captioned Zawatsky et al.

et al., Case No.

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All three of the lawsuits asserted similar claims under Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5.

In each case, the named plaintiff(s) sought to represent a proposed class of all persons who purchased or otherwise acquired the Company’s securities during a period from June 9, 2020 to March 3, 2021 (in the case of Holbrook and Hudda), or November 11, 2020 to March 3, 2021 (in the case of Zawatsky).

In August 2021, the Court consolidated the cases under the new name In re:

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21-cv-2477, appointed a lead plaintiff and lead counsel and ordered a consolidated amended complaint to be filed.

The court-appointed lead plaintiff subsequently filed a consolidated amended complaint that reasserts claims under Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5 against the Company and certain of the Company’s officers, and added new claims under Sections 11, 12 and 15 of the Securities Act against the Company, certain of its officers, certain of its directors, and the underwriters of the Company’s September 2020 secondary offering.

The Company filed a motion to dismiss all claims, and briefing of this motion is complete.

The Company believes this lawsuit is without merit and intends to vigorously contest these claims.

While the outcome of any complex legal proceeding is inherently unpredictable and subject to significant uncertainties, based upon information presently known to management, the Company believes that the potential liability, if any, will not have a material adverse effect on the Company’s financial condition, cash flows, or results of operations.

In August 2021, November 2021, January 2022, and February 2022, various Company stockholders filed purported shareholder derivative lawsuits on behalf of the Company in the U.S.

District Court for the Southern District of New York against certain of the Company’s officers and directors, and nominally against the Company, alleging violations of the federal securities laws and breaches of fiduciary duty to the Company and/or related violations of Delaware law based on the same general course of conduct alleged in In re:

Securities Litigation.

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Shareholder Derivative Litigation, Case No.

21-cv-6933, and the court has approved the parties’

stipulation that the cases would remain stayed pending final resolution of In re:

21-cv-6933, and the court has approved the parties’ stipulation that the cases would remain stayed pending final resolution of In re:

Securities Litigation.

All four derivative suits remain in preliminary stages and there have been no substantive developments in any matter.

In April 2022, one of the Company’s stockholders filed a purported shareholder derivative lawsuit on behalf of the Company in the U.S.

District Court for the District of Delaware against certain of the Company’s officers and directors, and nominally against the Company, alleging violations of the federal securities law and breaches of fiduciary duty to the Company and/or related violations of Delaware law based on the same general course of conduct alleged in In re:

In April 2022, one of the Company’s stockholders filed a purported shareholder derivative lawsuit on behalf of the Company in the U.S.

Securities Litigation.

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Hennessy et al., Case No.

22-cv-569, and the court has approved the parties’

stipulation that the case would remain stayed pending final resolution of In re:

22-cv-569, and the court has approved the parties’ stipulation that the case would remain stayed pending final resolution of In re:

Securities Litigation.

This lawsuit remains in preliminary stages and there have been no substantive developments.

Consumer Protection Act, Texas Business and Commerce Code § 17.41 et seq., based on alleged deficiencies and other issues in the Company’s marketing of used vehicles and fulfilment of customer orders, including the titling and registration of sold vehicles.

In January 2022, the Company received a non-public civil investigative demand from the Federal Trade Commission (“FTC”), seeking the production of information related to certain of the Company's business practices and the Company responded to those information requests.

On February 23, 2024, the FTC notified the Company that it has reason to believe that the Company violated Section 5(a) of the Federal Trade Commission Act, 15 U.S.C.

the FTC's Mail, Internet, or Telephone Order Merchandise Rule, 16 C.F.R.

the FTC’s Used Motor Vehicle Trade Regulation Rule,16 C.F.R.

and the FTC’s Pre-Sale Availability Rule, 16 C.F.R.

The FTC advised the Company that it is authorized to negotiate a stipulated order and the Company intends to work cooperatively with the FTC towards a resolution.

Because the matter is at an early stage and the outcome of any complex legal proceeding is inherently unpredictable and subject to significant uncertainties, the Company cannot determine at present whether any potential liability would have a material adverse effect on the Company’s financial condition, cash flows, or results of operations.

In April 2022, the Attorney General of Texas filed a petition on behalf of the State of Texas in the District Court of Travis County, Texas against the Company, alleging violation of the Texas Deceptive Trade Practices − Consumer Protection Act, Texas Business and Commerce Code § 17.41 et seq., based on alleged deficiencies and other issues in the Company’s marketing of used vehicles and fulfilment of customer orders, including the titling and registration of sold vehicles.

According to the petition, 80% of the customer complaints referenced in the petition were received in the 12 months prior to April 2022.

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D-1-GN-001809.

Vroom Automotive, LLC and the Attorney General of the State of Texas have agreed to a temporary injunction in which Vroom Automotive, LLC agrees to adhere to its existing practice of possessing title for all vehicles it sells or advertises as available for sale on its ecommerce platform.

Vroom continues to work cooperatively with the office of the Attorney General of the State of Texas towards a resolution.

Because the case is at an early stage and the outcome of any complex legal proceeding is inherently unpredictable and subject to significant uncertainties, the Company cannot determine at present whether any potential liability would have a material adverse effect on the Company’s financial condition, cash flows, or results of operations.

In July 2022 and August 2022, respectively, certain plaintiffs filed two putative class action lawsuits in the District Court of Cleveland County, Oklahoma and the New York State Supreme Court, respectively, against Vroom, Inc., and Vroom Automotive LLC as defendants, alleging, among other things, deficiencies in Vroom’s titling and registration of sold vehicles:

In May 2022, Vroom Automotive, LLC the Attorney General of the State of Texas agreed to a temporary injunction in which Vroom Automotive, LLC agreed to adhere to its existing practice of possessing title for all vehicles it sells or advertises as available for sale on its ecommerce platform.

In December 2023, Vroom, Inc., Vroom Automotive,

LLC and the Attorney General of the State of Texas reached a final agreement to resolve all claims in the petition, without any admission of wrongdoing by either Vroom entity.

Under the agreement, the Company will pay a total of $2 million in civil penalties and $1 million in attorneys' fees, with the first half due in September 2024 and the remaining half due in September 2025, and abide permanently by an injunction of certain operational practices that were previously implemented.

The agreement was approved by the District Court of Travis County on December 13, 2023.

Blake Sonne, individually and on behalf of all others similar situated, v.

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CJ-2022-822 and Emely Reyes Martinez, on behalf of all others similarly situated, v.

Vroom Automotive, LLC and Vroom Inc .

Vroom Automotive, LLC and Vroom Inc., No.

The Company removed the cases to the U.S.

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District Court for the Southern District of New York (Case No.

22-cv-7631), respectively, and has filed motions to compel arbitration of all claims in both cases.

Because these cases are at early stages and the outcome of any complex legal proceeding is inherently unpredictable and subject to significant uncertainties, the Company cannot determine at present whether any potential liability would have a material adverse effect on the Company’s financial condition, cash flows, or results of operations

22-cv-7631), respectively, and filed motions to compel arbitration of all claims in both cases.

In September 2023, Vroom’s motions to compel arbitration were granted in both cases, and the court actions stayed pending the outcome of any arbitration proceeding over the respective plaintiffs’ individual claims.

On February 9, 2024, the parties filed a joint stipulation to dismiss the Sonne matter with prejudice.

As previously disclosed, we have been subject to audits, requests for information, investigations and other inquiries from our regulators relating to increased customer complaints concerning the same or similar matters alleged in the State of Texas petition.

These regulatory matters could continue to progress into legal proceedings as well as enforcement actions.

We have incurred fines in certain states and could continue to incur fines, penalties, restitution, or alterations in our business practices, which in turn, could lead to increased business expenses, additional limitations on our business activities and further reputational damage, although to date such expenses have not had a material adverse effect on the Company’s financial condition, cash flows, or results of operations.

Mine Safety Disclosures

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Chairperson of the Board

O’Shaughnessy

Chief Executive Officer, Director

O’Shaughnessy

Chief Executive Officer, Director, and President and Chief Executive Officer of UACC

Chief Financial Officer

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Chief People and Culture Officer

has served as a member of our board of directors since September 2015.

has served as a member of our Board of Directors since September 2015 and Independent Executive Chair of the Board since May 2022.

Mylod is the Managing Partner of Annox Capital Management, a private investment firm that he founded in 2013.

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He currently serves as the Chair of the board of directors and a member of the compensation committee of Booking Holdings, Inc.

Mylod also currently serves as a member of the board of directors and of the audit committee of Redfin Corporation, an online real estate company.

He is also a member of the board of directors of several private companies.

Mylod is also a member of the board of directors of several private companies.

Mylod holds a Bachelor of Arts in English from the University of Michigan and a Master of Business Administration from the University of Chicago Booth School.

We believe that Mr.

Mylod’s experience as a venture capital investor and a senior finance executive, including having served as the chief financial officer and vice chairman of a large publicly traded online services provider, qualifies him to serve on our board of directors.

Crow has served on our Board of Directors since October 2022.

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Crow served as Senior Vice President, Human Resources of Kmart Corporation, a leading general merchandise retailer, from May 1999 through May 2002.

Crow previously served as a director of Milacron Holdings, Corp., a global leader in the plastic technology and processing industry, where he chaired its Leadership Development and Compensation Committee, and currently serves on a director of a number of private companies.

Crow earned a Bachelor of Arts degree from California State University at Northridge.

We believe that Mr.

Crow’s extensive leadership experience, human capital management expertise, and investment experience qualifies him to serve on our board of directors.

Michael Farello has served on our Board of Directors since July 2015.

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We believe Mr.

Farello’s experience in

private equity investments and expertise in the consumer sector, along with his service as a director at numerous companies, qualifies him to serve on our Board of Directors.

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Lang was Chief Executive Officer of Digitas Inc., a marketing and technology agency and unit of Publicis Groupe S.A.

In addition, she headed the company’s pure-play digital agencies, including Razorfish, Big Fuel, Denuo and Phonevalley.

Lang currently serves as a member of the board of directors and the talent and compensation and finance committees of V.

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We believe Ms.

Lang’s extensive leadership experience, digital and media expertise and service on the board of directors of other public companies qualifies her to serve on our board of directors.

O’Shaughnessy has served on our board of directors since May 2020.

O'Shaughnessy is currently the Chief Marketing Officer and Co-Founder of Picnic Group, a data-driven consumer packaged goods company where she oversees the scaling of founder-created consumer packaged goods brands.

O’Shaughnessy is a strategic growth and operations consultant for a number of direct to consumer brands.

Previously she was the Chief Executive Officer of SocialCode, LLC, a technology company that manages digital and social advertising for leading consumer brands, which she co-founded in 2009.

In addition, Ms.

O’Shaughnessy oversaw business development and product strategy for the Slate Group, an online publisher, where she specialized in advertising product development and strategic partnerships.

O’Shaughnessy currently serves as a member of the board of directors and of the audit committee and governance committee of Acuity Brands, and on the board of directors of a nonprofit in Washington, D.C.

O’Shaughnessy holds a Bachelor of Arts in Economics from the University of Chicago and a Master of Business Administration from the MIT Sloan School of Management.

Lang’s extensive leadership experience, digital and media expertise and service on the board of directors of other public companies qualifies her to serve on our Board of Directors.

O’Shaughnessy has served on our Board of Directors since May 2020.

Since December 2022, Ms.

O'Shaughnessy has served as the Chief Marketing Officer and Co-Founder of Picnic Group, a data-driven consumer packaged goods company where she oversees the scaling of founder-created consumer packaged food brands.

Prior to The Picnic Group, Ms.

O’Shaughnessy was a strategic growth and operations consultant for a number of direct to consumer brands.

Previously she was the Chief Executive Officer of SocialCode, LLC (now named Code3), a technology company that manages digital and social advertising for leading consumer brands, which she co-founded in 2009 and led until August 2020.

O’Shaughnessy currently serves as a member of the board of directors and of the audit committee and governance committee of Acuity Brands, and on the boards of directors of two nonprofits in Washington, D.C.

O’Shaughnessy holds a Bachelor of Arts in Economics from the University of Chicago and a Master of Business Administration from the MIT Sloan School of Management.

We believe Ms.

O’Shaughnessy’s leadership experience, including serving in a chief executive officer role, and digital and technology expertise, qualifies her to serve on our board of directors.

O’Shaughnessy’s extensive leadership experience, including serving in a chief executive officer role, and digital and technology expertise, qualifies her to serve on our Board of Directors .

Pretlow has served on our Board of Directors since April 2021.

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Prior to joining The Capital Group, she worked for Montgomery Asset Management and Blackrock (formerly Barclays Global Investors).

She is a member of the board of directors and is the audit and finance committee chair of Williams-Sonoma, Inc.

She is also a member of the board of directors of Bitwise Industries and a member of the board of directors of Greenlight Financial Technology, Inc., where she serves on the audit committee.

In addition, she currently serves as a member of the Board of Trustees of The Kresge Foundation, The Harry and Jeannette Weinberg Foundation and Northwestern University.

Pretlow holds a Bachelor of Arts in Political Science and a Master of Business Administration, both from Northwestern University, and is a 2017 Fellow of Stanford’s Distinguished Careers Institute.

She is a member of the board of directors and serves on the audit and finance committee of Williams-Sonoma, Inc.

She is also a member of the board of directors of Greenlight Financial Technology, Inc., where she serves on the audit committee.

In addition, she currently serves as chair of the board of The Harry and Jeanette Weinberg Foundation, is a member of the board of trustees of The Kresge Foundation, and she is a charter board trustee of Northwestern University.

Pretlow holds a Bachelor of Arts in Political Science and a Master of Business Administration, both from Northwestern University, and is a 2017 Fellow of Stanford’s Distinguished Careers Institute.

We believe Ms.

Pretlow’s leadership experience, including roles in finance and business development, along with her experience as a director, qualify her to serve on our board of directors.

Pretlow’s extensive leadership experience, including roles in finance and business development, along with her experience as a director, qualify her to serve on our Board of Directors.

Shortt has served as the Company's Chief Executive Officer since May 2022 and previously served as the Company's Chief Operating Officer from January 2022.

Since March 1, 2024, Mr.

Shortt has also served as President and Chief Executive Officer of UACC.

Prior to joining Vroom, Mr.

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and Office Depot, Inc.

Shortt holds a Bachelor’s degree in Accounting from the University of Akron.

Shortt holds a Bachelor’s degree in Accounting from the University of Akron and is a graduate of the Harvard Business School Advanced Management Program.

We believe that Mr.

Shortt’s expertise in supply chain, logistics, data analytics and change management qualifies him to serve on our Board of Directors.

Shortt’s service as our chief executive officer and his expertise in supply chain, logistics, data analytics and change management qualifies him to serve on our Board of Directors.

Krakowiak has served as Chief Financial Officer and Treasurer of Vroom since September, 2021.

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Prior to joining Stoneridge, Mr.

Krakowiak served as Vice President, Treasurer

and Investor Relations at Visteon Corporation from 2012 until August 2016.

Krakowiak served as Vice President, Treasurer and Investor Relations at Visteon Corporation from 2012 until August 2016.

Prior to that, Mr.

Krakowiak held various financial positions at Owens Corning from 2005 to 2012.

Krakowiak holds Bachelor of Science and Master of Science degrees in Electrical Engineering from the University of Michigan and a Master of Business Administration from the University of Chicago Booth School of Business.

Krakowiak holds Bachelor of Science and Master of Science degrees in Electrical Engineering from the University of Michigan and an M.B.A.

from the University of Chicago Booth School of Business.

Patricia Moran has served as our Chief Legal Officer and Secretary since January 2019.

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Stott was Senior Vice President of Human Resources at Undertone, a digital advertising company, from May 2013 to October 2016.

Stott’s tenure at Undertone included leading the human resources function through multiple transformations including acquisitions and the eventual sale to a public company.

From February 2010 until she joined Undertone, Ms.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings