The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge
Plaintiff G-I Holdings ("Holdings") has moved pursuant to Local
Civil Rule 6.3 for reconsideration of this Court's February 25,
2004 opinion denying Holdings' motion for leave to amend its
fourth amended complaint to assert new allegations and an
additional claim against defendants Baron & Budd, Frederick Baron
and Russell Budd (collectively, the "Baron & Budd defendants").
Holdings has also moved to supplement the record nunc pro
tunc. For the reasons set forth below, both motions are denied.
The proceedings in this case as they relate to this motion are
summarized in the opinion denying leave to amend the complaint,
familiarity with which is presumed. See G-I Holdings v. Baron
& Budd, 02 Civ. 0216, 2004 WL 374550 (S.D.N.Y. Feb. 27, 2004).
Holdings timely filed this motion for reconsideration on March
15, 2004. After submission of briefs, the motion was deemed fully
submitted on March 31, 2004.
A motion for reconsideration under Local Civil Rule 6.3 "is
appropriate where a court overlooks `controlling decisions or
factual matters that were put before it on the underlying motion
. . . and which, had they been considered, might have reasonably
altered the result before the court.'" Banco de Seguros Del
Estado v. Mut. Marine Offices, Inc., 230 F. Supp.2d 427, 428
(S.D.N.Y. 2002) (quoting Range Rd. Music, Inc. v. Music Sales
Corp., 90 F. Supp.2d 390, 392 (S.D.N.Y. 2000)). "The standard
for granting . . . a motion [for reconsideration] is strict, and
reconsideration will generally be denied unless the moving party
can point to controlling decisions or data that the court
overlooked matters, in other words, that might reasonably be
expected to alter the conclusion reached by the court." Shrader
v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995).
"Reconsideration may be granted to correct clear error, prevent
manifest injustice or review the court's decision in light of the
availability of new evidence." Melnitzky v. Rose, 305 F. Supp.2d 349,
350 (S.D.N.Y. 2004) (citing Virgin Atlantic Airways,
Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir.
1992)). However, Local Civil Rule 6.3 must be "narrowly construed
and strictly applied so as to avoid repetitive arguments on
issues that have been considered fully by the Court." Dellefave
v. Access Temporaries, Inc., 99 Civ. 6098, 2001 WL 286771, at *1
(S.D.N.Y. Mar. 21, 2001).
Leave to amend the complaint was previously denied because
Holdings had pleaded a critical element of its RICO fraud and
common law fraud claims on information and belief, while failing
to provide "a statement of facts upon which the belief is
founded." G-I Holdings, 2004 WL 374550, at *4 (quoting G-I
Holdings v. Baron & Budd, 238 F. Supp.2d 521, 551 (S.D.N.Y.
2002). The claims pleaded on information and belief concern the
alleged use of the Baron & Budd memorandum in the preparation of
two deponents by a Baron & Budd paralegal to give false product
identification and testimony.
Holdings argues that the new evidence previously overlooked by
the court is the attachment to an affidavit by the former
paralegal specifying the particular clients that may have been
prepared by her using the Baron & Budd memorandum. However,
because Holdings was aware of and in possession of the affidavit
before it moved to amend the complaint, Holdings has combined its
motion for reconsideration with a motion to supplement the record
nunc pro tunc, presumably to the date of its initial motion
for leave to amend the complaint.
Holdings argues that in moving for leave to amend, it had
properly pleaded the facts upon which the belief was founded. It
further argues that the Court improperly required it to submit
the "evidentiary basis" upon which those facts were founded.
While it is true that Holdings made very specific allegations of
what it believed the paralegal to have been doing, it did not
state, in the proposed complaint or in the motion papers, the
facts upon which the belief was founded. Such a statement of
facts need not be supported by evidence; indeed, "a complainant
is not required to plead evidence." In re Blech Securities
Litig., 928 F. Supp. 1279, 1290 (S.D.N.Y. 1996) (citing Schlick
v. Penn-Dixie Cement Corp., 507 F.2d 374, 379 (2d Cir. 1974),
overruled on other grounds by Virginia Bankshares, Inc. v.
Sandberg, 501 U.S. 1083, 1100 n. 9, 1100-06, 111 S.Ct. 2749,
115 L.Ed.2d 929 (1991)). Therefore, the precise facts forming plaintiff's information and
belief need not be pleaded on a point-by-point basis.
On the other hand, the sources of the information and
belief should be sufficiently identified so as to
allow each defendant and the Court to review the
sources and determine, at the pleading stage, whether
an inference of fraud may be fairly drawn from the
information contained therein.
Crystal v. Foy, 80 Civ. 446, 1981 WL 1648, at *3 (S.D.N.Y. June
Numerous district courts in this Circuit have required that the
sources of information for fraud pleadings based on information
and belief be disclosed. See, e.g., International Telecom,
Inc. v. Generadora Electrica del Oriente S.A., 00 Civ. 8695,
2002 WL 465291, at *7 (S.D.N.Y. Mar. 27, 2002) (plaintiff "bases
the misrepresentation on information and belief, yet provides no
sources for its conclusory allegations."); Branch v. Tower Air,
Inc., 94 Civ. 6625, 1995 WL 649935, at *5 (S.D.N.Y. Nov. 3,
1995) (detailed paragraph in complaint pleaded on information and
belief found insufficient where it failed to identify the source
of plaintiff's information); Kershaw v. Nautica S.A. Ltd.,
885 F. Supp. 617, 622 (S.D.N.Y. 1995) (plaintiffs allege facts upon
information and belief but "do not provide the source of this
information"); Three Crown Ltd. Partnership v. Caxton Corp.,
817 F. Supp. 1033, 1040 (S.D.N.Y. 1993) (despite Rule 9(b)'s
requirement, "most all of the allegations in plaintiffs'
complaint as to each defendant's role in the manipulation are
alleged on information and belief without a statement of the
source of information and the reasons upon which the belief is
founded."); Moll v. U.S. Title Ins. Co. of New York, 654 F. Supp. 1012, 1035 (S.D.N.Y. 1987)
("Plaintiffs must adequately specify the sources of their
information and belief under Rule 9(b)."); see also Novak v.
Kasaks, 216 F.3d 300, 313 (2d Cir. 2000) (noting that "[s]ome
district courts in this circuit have on occasion stated that
Rule 9(b) requires plaintiffs in securities fraud cases to allege the
sources that support the alleged specific facts.") (quotations
and citations omitted).
Other circuit courts have similarly required a statement of the
source of plaintiff's information when pleading fraud claims on
information and belief. See, e.g., Weiner v. Quaker Oats
Co., 129 F.3d 310, 319 (3d Cir. 1997) ("to avoid dismissal [when
pleading fraud claims on information and belief], a complaint
must delineate at least the nature and scope of plaintiffs'
effort to obtain, before filing the complaint, the information
needed to plead with particularity.") (quotations omitted);
Parnes v. Gateway 2000, Inc., 122 F.3d 539, 550 (8th Cir. 1997)
(same); Romani v. Shearson Lehman Hutton, 929 F.2d 875, 878
(1st Cir. 1991) (same).
As held in the underlying opinion, Holdings' motion for leave
to amend the complaint was denied because the proposed complaint
failed to provide any facts upon which the belief that the
deponents were prepared using the Baron & Budd memorandum was
based. To correct that failing, Holdings now submits an affidavit
showing that the deponents mentioned in the proposed complaint
were prepared by the paralegal who may have used the memorandum
to prepare clients. However, submission of affidavits is not
permitted "unless directed by the Court." Local Civil Rule 6.3;
see also Payroll Express Corp. v. Pereira, 216 B.R. 713,
716 (S.D.N.Y. 1997) (on motion for reconsideration, "no
affidavits or new material may be submitted, because such a
motion is limited to the record that was before the Court on the
original motion.") (quotation omitted).
In order to avoid the prohibition on affidavits, Holdings made
a separate motion to supplement the record, and then made its
motion for reconsideration subject to the granting of the motion
to supplement the record. If such an approach were to become a
regular practice, it would undermine the prohibition on the
submission of affidavits which, along with the Local Civil
Rule 6.3's other strictures, is designed "to ensure the finality of
decisions and to prevent the practice of a losing party examining
a decision and then plugging the gaps of a lost motion with
additional matters." Melnitzky, 305 F. Supp.2d at 350. It is
particularly inappropriate in this case because the ...