The opinion of the court was delivered by: CHARLES SIRAGUSA, District Judge Page 2
This case is back before the Court on Plaintiff's motion pursuant to
Federal Rule of Civil Procedure 59 to alter or amend the judgment entered
following this Court's dismissal of the first amended complaint. See
Crowley v. Corning, Inc., 234 F. Supp.2d 222 (W.D.N.Y. 2002)
("Crowley I"). For the reasons stated below, the Court denies
The Court included a detailed discussion of the facts in its first
decision, familiarity with which will be assumed. Plaintiff, who is a
resident of Georgia and over the age of 55, is a retiree of Corning,
Incorporated ("Corning"), and a participant in the Corning Investment
Plan ("Plan"). Corning is the sponsor of the Plan. The Plan, by its own
terms, is governed by New York law and by the Employee Retirement Income
Security Act of 1974 ("ERISA"), Pub.L. 93-406, Title I, § 2, Sept. 2,
1974, 88 Stat. 832, codified at 29 U.S.C. § 1001 (1999), et
seq. Jurisdiction in this Court arises under ERISA § 502(e)(1),
29 U.S.C. § 1132(e)(1), and venue is proper in this District since
the Plan is administered here, and since plaintiff alleges that the
breaches of fiduciary duties occurred here. Plaintiff is bringing this
proceeding as a class action pursuant to Federal Rule of Civil Procedure
23, however, the issue of whether this action should be certified as a
class action is not presently before the Court.
Plaintiff is suing Corning and a number of individuals. John Does 1-30
are the individual members of the Plan's Investment Committee
("Committee"). John S. Brown, James B. Flaws, John H. Foster, Gordon
Gund, John M. Hennessy, James R.
Houghton, James J. O'Connor, Catherine A. Rein, Deborah D. Rieman,
H. Onno Ruding, William D. Smithburg, Hansel E. Tookes, II, Peter F.
Volanakis, and Wendell P. Weeks, are, or were, individual members of
Coming's Board of Directors ("Board"), as are Richard Roes 1-30, whose
identities are unknown to plaintiff.
Plaintiff filed a complaint in this Court on April 1, 2002, alleging
four causes of action under ERISA. On May 21, 2002, plaintiff filed his
first amended complaint making typographical corrections, but not
otherwise substantively altering the complaint. On August 6, 2002,
defendants moved to dismiss the first amended complaint for failure to
state a cause of action.
The Court heard oral argument on the motion on December 4, 2002, and on
December 9, 2002, issued a decision granting defendants' motion in its
entirety. During oral argument, plaintiff withdrew the third cause of
action, alleging fraud. Plaintiff, as an exhibit to his motion papers,
filed a proposed second amended complaint ("Complaint") in which the
fraud claim is not reasserted.
Following issuance of the Court's decision and order dismissing the
first amended complaint, plaintiff contacted the Court Clerk and asked
that judgment not be entered. However, judgment had already been entered
in favor of defendants on December 12, 2002, and the case was closed on
the Court's docket.*fn1 Plaintiff filed the
present motion, which he captioned as a motion to open the
judgment, on December 20, 2002, and the Court heard oral argument on the
motion on April 10, 2003. The parties have each submitted numerous
additional authorities supporting their positions, the latest having been
received by the Court on October 6, 2003. Fifth*fn2 Notice of
Supplemental Authority (Oct. 2, 2003).
B. The Court's Prior Decision
The essence of Plaintiff's first amended complaint was that the Plan's
fiduciaries failed either to warn plan participants of Coming's less than
desirable financial condition, despite probably having inside
information, or failed to divest the Plan of Corning stock when that
stock began to fall in price during the "class period," or both. The
class period was alleged to have started on February 28, 2000 and to have
continued through July 25, 2001. During that period, Corning changed its
business strategy and began to concentrate on its telecommunications
component (fiber optic cables and the parts that make them work). It
acquired assets by purchasing companies at prices that plaintiff alleged
were far above their actual value. Subsequently, during the alleged class
period, the bottom fell out of the telecommunications market and, as a
result, Corning was left with obsolete inventory and excess manufacturing
capacity. Corning stock, which had been trading at less than $23 per
share four months prior to commencement of the class period, rose to a
high of $113 per share, then dropped to less than $20 per share.
In its December 9, 2003 decision, the Court found that plaintiff had
failed to state a cause of action against any of the various defendants
sued. First, the Court found that
defendant Corning was not a fiduciary under the Plan, only a
settlor, and consequently that its filings with the Securities Exchange
Commission ("SEC") were not duties undertaken as a fiduciary under ERISA.
Second, the Court found that the first amended complaint did not allege a
violation of the Board defendants' duties under the Plan, which consisted
of appointing, retaining, or removing members of the Committee and the
preparation of SEC filings. As the Court determined, that like defendant
Corning, this preparation of SEC filings was not done by the Board in a
fiduciary capacity under the Plan. Finally, the Court found that the
first amended complaint's conclusory allegations, that Committee members
allegedly failed to disclose or act on inside information, was
insufficient to sustain the cause of action against them.
C. Plaintiff's Proposed Second Amended Complaint
Plaintiff's proposed second amended complaint ("Complaint") repeats the
same causes of action dismissed in the Court's previous decision, but
adds significantly greater detail, as well as statutory citations, and
case law holdings*fn3
in support of plaintiff's position. Although it
does not alter the facts with respect to Corning or the board of director
defendants, it does reorganize the allegations into two claims:
Claim I: The Corning Stock Fund was an Imprudent
Claim II: Defendants Negligently Misrepresented
and Failed to Disclose Material
The first claim alleges that the defendants breached their fiduciary
duties under ERISA by permitting the Plan to invest in the Corning stock
fund when, based on publically
available information, it was imprudent to do so. More
specifically, plaintiff alleges that Corning stock was in a "high flying,
high risk, `new economy' telcom/internet sector of the stock market" and,
therefore, highly imprudent as a Plan asset. Complaint ¶ 3.
The second claim alleges that defendants breached their fiduciary
duties by negligently making misrepresentations and by failing to
disclose material information to the Plan participants, which was
required for them to make informed decisions about their investments.
Plaintiff's motion is brought under Federal Rule of Civil Procedure
59(e) and, although entitled a motion to reopen the judgment, is actually
a motion to alter or amend the judgment. In conjunction with that motion,
plaintiff also moves to amend the first amended complaint with a second
amended complaint pursuant to Federal Rule of Civil Procedure 15(a).
Thus, the Court must look to the standards governing a joint Rule 59(e)
and Rule 15(a) motion.
In Patterson-Stevens, Inc. v. Int'l Union of Operating Eng'rs Local
Union No. 17, 164 F.R.D. 4 (W.D.N.Y. 1995), the Honorable John T.
Curtin of this District, reviewed the Second Circuit case law pertaining
to a joint Rule 59(e) and Rule 15(a) motion. He noted that, generally,
the courts liberally allow amendments to complaints under Rule 15(a), but
that once a judgment had been entered, the interests of finality of
judgment come into play. In that regard, under Rule 59(e), this Court may
set aside the subject judgment for one, or more, of the following three
reasons: (1) an intervening change in controlling law; (2) the
availability of new evidence not previously available; or (3) the
need to correct a clear error of law or prevent manifest injustice.
Id. (quotation marks and citations omitted). Since plaintiff
alleges nothing in his second amended complaint that was not known, or
could not have been known, at the time the fist amended complaint was
filed (April 1, 2002), and since he does not allege any changes ...