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In re Gildan Activeware

December 8, 2009

IN RE GILDAN ACTIVEWEAR, INC. SECURITIES LITIGATION


The opinion of the court was delivered by: Hon. Harold Baer, Jr., United States District Judge

This Document Relates To:

OPINION & ORDER ALL ACTIONS

Plaintiffs, purchasers of the common stock of Gildan Activewear, Inc. ("Gildan" or the "Company") brought this case on behalf of themselves and all others similarly situated against Gildan and two of its officers and directors (collectively, "Defendants"), alleging violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Defendants moved to dismiss the Consolidated Amended Class Action Complaint (the "Complaint") pursuant to the Private Securities Litigation Reform Act ("PSLRA") and Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure. On July 1, 2009, this Court issued an Opinion and Order granting Defendants' motion and dismissing the case in its entirety. See In re Gildan Activewear, Inc. Sec. Litig., 636 F. Supp. 2d 261 (S.D.N.Y. 2009). Plaintiffs have now moved for reconsideration of the July 1, 2009 Opinion, pursuant to Rules 59(e) and 60(b) of the Federal Rules of Civil Procedure and Local Rule 6.3, solely to the extent that it dismissed the Complaint with prejudice.*fn1 For the reasons set forth below, Plaintiffs' motion is denied.

I. BACKGROUND

The facts underlying this case were discussed at considerable length in the July 1, 2009 Opinion, and familiarity is presumed. See In re Gildan, 636 F. Supp. 2d at 265-68. However, a brief review of the procedural history of this case is necessary to put Plaintiffs' motion in context and to demonstrate Plaintiffs' previous opportunities to amend their complaint, as they implicitly seek leave to do by means of their instant motion.

First, it is significant to note that the Complaint that was the subject of the July 1, 2009 Opinion was a Consolidated Amended Class Action Complaint that was filed pursuant to this Court's September 16, 2008 order consolidating three separately filed but related cases. On October 2, 2008, the Court entered a further order permitting Plaintiffs in the consolidated action to file an amended complaint within thirty days. On November 17, 2008, Plaintiffs filed the 56-page, 165-paragraph Complaint.*fn2

Plaintiffs' second opportunity to amend the Complaint was afforded to them when Defendants filed their motion to dismiss on December 19, 2008. Pursuant to this Court's individual practices, upon service of a motion to dismiss, every plaintiff has the opportunity to amend the complaint as of right. Thus, each plaintiff has the opportunity, having had the benefit of learning from themotion to dismiss what the potential deficiencies of the complaint might be, andto attempt to cure those deficiencies in an amended complaint. However, the rules make explicit that this will be the plaintiff's one and only opportunity to amend, and that if the plaintiff's choice is to fight the motion to dismiss and notamend the complaint, if the motion is granted, it will be with prejudice. Here, Plaintiffs could have responded to the motion by filing an amended complaint, but chose not to do so. Instead, Plaintiffs chose to fight the motion to dismiss, and in footnote 23 on page 35 of their opposition to the motion, simply noted that "[a]lthough Plaintiffs believe that they have more than adequately stated claims against all Defendants, in the event the Court determines the [Complaint] is deficient in any respect, Plaintiffs respectfully request an opportunity to seek leave to replead in accordance with Fed. R. Civ. P. 15(a)." Acknowledging this request, and the general principal that leave to amend is often granted on a motion to dismiss a securities fraud claim, the Court at oral argument asked Plaintiffs' counsel how they might amend their allegations if given the opportunity to replead, to which counsel responded that "it depends on what your Honor was concerned about." See Transcript of May 19, 2009 Oral Argument ("Tr.") at 31:12-16.

Given Plaintiffs' decision to relyon theirComplaint, this Court, after review of the papers and oral argument, concluded that the proper decision was to grant the motion. I concludedthat Plaintiffs' allegations had failed to raise a strong inference of scienter and that Plaintiffs had failed to allege any material misrepresentations or omissions, both of which are required elements under the PSLRA. As noted, Plaintiffs do not seek reconsideration of any of the substantive elements of the July 1, 2009 Opinion. Rather, Plaintiffs seek reconsideration only to the extent the Complaint was dismissed with prejudice and to the extent the Court implicitly denied leave to replead.

II. LEGAL STANDARD

The standards governing motions to alter or amend a judgment under Rule 59(e) and motions for reconsideration or reargument under Local Rule 6.3 are identical. See Henderson v. Metropolitan Bank & Trust Co., 502 F. Supp. 2d 372, 376 (S.D.N.Y. 2007). The Second Circuit has instructed that the standard on 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 . . . that might be expected to alter the conclusion reached by the court." Schrader, 70 F.3d at 257.*fn3

Further, relief under Rule 60(b) is limited, and a court may only vacate or modify an order for reasons enumerated in the rule: mistake, inadvertence, surprise or excusable neglect; newly discovered evidence; fraud, misrepresentation or other misconduct; judgment is void; judgment is satisfied, released or discharged; or any other reason that justifies relief. See Fed. R. Civ. P. 60(b); see also Harris v. United States, 367 F.3d 74, 80 (2d Cir. 2004) (requiring that Rule 60(b) motions be "predicated on one of five narrow and specific grounds or on a sixth ground, which, despite its open wording, has been narrowly cabined by the precedent of this [Circuit]"); see also Miller v. Norton, 04-CV-3223 (CBA), 2008 U.S. Dist. LEXIS 34688, at *3-4 (E.D.N.Y. Apr. 28, 2008). Thus, it is well-settled that Rule 60(b)(6) relief is granted only in cases involving "extraordinary circumstances, or extreme hardship." Harris, 367 F.3d at 81 (internal quotation marks and citation omitted); see also Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986) (finding "final judgments should not be lightly reopened"). The burden of proof on a Rule 60(b) motion is on the party seeking relief from the earlier judgment or order -- in this case, Plaintiffs. United States v. International Bhd. of Teamsters, 247 F.3d 370, 391 (2d Cir. 2001) (citations omitted).

These standards on motions for reconsideration apply "in full force to a motion for reconsideration of a denial of leave to replead." In re Refco Capital Markets, Ltd. Brokerage Customer Sec. Litig., Nos. 06 Civ. 643 (GEL), 07 Civ. 8686 (GEL), 07 Civ. 8688 (GEL), 2008 WL 4962985, at *2 (S.D.N.Y. Nov. 20, 2008); see also National Petrochemical Co. of Iran v. M/T Stolt Sheaf, 930 F.2d 240, 244 (2d Cir. 1991) ("[O]nce judgment is entered the filing of an amended complaint is not permissible until judgment is set aside or vacated pursuant to Fed. R. Civ. P. 59(e) or 60(b)."). The decision whether to grant a motion for reconsideration under Local Rule 6.3 and Federal Rule 59(e) or a motion under Rule 60(b) lies in the sound discretion of the district court. E.g., Bennett v. Watson Wyatt & Co., 156 F. Supp. 2d 270, 272-73 (S.D.N.Y. 2001).

III. DISCUSSION

Plaintiffs' instant motion is premised on their argument that reconsideration of the Court's dismissal with prejudice is warranted so that Plaintiffs can be given the opportunity to amend their Complaint to address the deficiencies the Court identified in the July 1, 2009 Opinion and to plead additional facts that Plaintiffs have discovered through their continuing investigation. More specifically, Plaintiffs' argument on reconsideration is premised on their assertions that (1) the Court overlooked Plaintiffs' previous request ...


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