On August 12, 2020, the United States Court of Appeals for the Second Circuit affirmed a decision by the United States District Court for the Southern District of New York denying a motion for relief from judgment filed by plaintiffs in a putative class action asserting claims against a restaurant chain and certain of its executives under the Securities Exchange Act of 1934.  Metzler Inv. Gmbh v. Chipotle Mexican Grill, Inc., —F.3d—, 2020 WL 4644799 (2d Cir. 2020).  As discussed in our prior post, the district court dismissed plaintiffs' second amended complaint with prejudice, holding that plaintiffs had not adequately alleged actionable misstatements and denying plaintiffs' request for leave to amend.  Id. at *6.  Following that decision, plaintiffs moved for relief from the judgment and again sought leave to file a third amended complaint.  Id.  The district court denied plaintiffs' post-judgment motion, concluding that plaintiffs had failed to demonstrate newly-discovered facts that would justify vacating the judgment, and that, in any event, further amendment would be futile.  Id.  The Second Circuit affirmed, holding that the district court applied the correct legal standard in adjudicating the post-judgment motion and did not abuse its discretion.  The Second Circuit thus did not need to reach the question of futility.
As a threshold matter, the Second Circuit rejected plaintiffs' argument that, because leave to amend a complaint is generally "freely given" under Rule 15(a)(2) of the Federal Rules of Civil Procedure, the district court employed too stringent a legal standard in evaluating plaintiffs' motion.  Instead, the Court held well-established Second Circuit precedent provides that a post-judgment motion for leave to amend should not be entertained without first meeting the requirements to vacate or set aside a judgment under Rules 59(e) or 60(b) of the Federal Rules of Civil Procedure.  Id. at *7 (citing, e.g., Williams v. Citigroup Inc., 659 F.3d 208, 212 (2d Cir. 2011)).  Otherwise, the "liberal amendment policy of Rule 15(a)" could be employed to frustrate the policy favoring "finality of judgments and the expeditious termination of litigation."  Id.  The Court noted, for example, that Rule 59(e) requires a change of controlling law, new evidence, or the need to correct a clear error or prevent manifest injustice, and Rule 60(b) applies where "extraordinary circumstances" justify relief—none of which would be required if Rule 15(a) alone were sufficient in the post-judgment context.  Id. at *8.
While acknowledging that it can be an abuse of discretion to deny relief under Rule 59(e) if a plaintiff has never been given an opportunity to replead, the Court emphasized that plaintiffs here had already been given three opportunities to attempt to state a claim and had requested a fourth in their opposition to defendants' motion to dismiss, which the district court had already denied.  Id. at *10.  Moreover, in dismissing plaintiffs' first amended complaint, the district court had issued a "thorough opinion that identified defects that a second complaint should cure," but plaintiffs had failed to cure those deficiencies in their second amended complaint.  Id.
With respect to Rule 59(e), the Second Circuit agreed with the district court's conclusion that plaintiffs failed to identify any newly-discovered evidence that would entitle them to post-judgment relief.  Id. at *11.  In particular, the Second Circuit noted that plaintiffs failed to establish with respect to all but one of their allegedly "new" facts that plaintiffs were justifiably ignorant of them despite performing due diligence, and failed to establish that any of the allegedly new facts were of such importance that they would have changed the outcome of the motion to dismiss.  Id. at *12.
Finally, the Court rejected plaintiffs' argument that, under Rule 60(b)(6), the judgment should be vacated "to correct a clear error of law or prevent manifest injustice" or was warranted under a catchall provision that allows vacating a judgment for any "reason that justifies relief."  Id. at *12.  Even assuming that this argument had been preserved for appeal, the Second Circuit found that plaintiffs were not entitled to such relief because they failed to identify any "extraordinary circumstances" justifying relief, and because plaintiffs already had been given three opportunities to state a claim.  The Court observed that the federal rules do not permit "limitless possibility" to plead a case.  Id.
Having determined that the district court did not abuse its discretion in declining to vacate the judgment, the Second Circuit did not need to reach the issue of whether amendment would be futile.

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