The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge.
Plaintiffs in this action assert federal securities claims against Citigroup, Inc. and related defendants on behalf of a class of Citigroup employees. The Court previously dismissed with prejudice plaintiffs' first amended complaint and the Clerk of Court thereafter entered judgment dismissing this action. Plaintiffs have now moved to alter or amend the judgment pursuant to Federal Rule of Civil Procedure 59(e) and for leave to amend pursuant to Rule 15(a). For the reasons that follow, the Court vacates the judgment of dismissal and grants in part and denies in part plaintiffs' request for leave to amend.
Plaintiffs allegedly purchased restricted Citigroup stock and stock options from Citigroup as part of an employee incentive plan known as the Voluntary Financial Advisor Capital Accumulation Program ("FA CAP"). (Proposed Second Am. Consolidated Class Action Compl. ("SAC"), Ex. A to Decl. of Mark C. Rifkin dated July 11, 2011, at ¶ 1.) Plaintiffs seek to represent a class of FA CAP participants and to assert federal securities claims against the following defendants: Citigroup Inc.; Citigroup Global Markets, Inc; six Citigroup directors that served on the board's Personnel and Compensation ("P&C") Committee-C. Michael Armstrong, Alain J.P. Belda, Kenneth T. Derr, John M. Deutch, Richard D. Parsons, and Ann Dibble Jordan, collectively the "Individual Defendants"; the P&C Committee itself, which administered the FA CAP; and thirty John Does who allegedly sold FA CAP securities. (Id. ¶¶ 23-33, 38.)
This action began on March 24, 2009, when plaintiff Daniel Brecher and other named plaintiffs filed suit in the United States District Court for the Southern District of California. On August 19, plaintiffs Paul Koch and Mark Oelfke filed a similar action in the same court. The Judicial Panel on Multidistrict Litigation transferred both actions to this Court as related to In re Citigroup Inc. Securities Litigation, No. 07 Civ. 9901. On October 8, 2009, plaintiffs filed a First Amended Consolidated Complaint ("FAC") that effectively consolidated the Brecher and Koch actions. (See Order dated June 1, 2011, Dkt. No. 20.)
In an Opinion & Order dated June 7, 2011, the Court dismissed the FAC with prejudice. See Brecher v. Citigroup Inc., No. 09 Civ. 7359, 2011 WL 2209145, at *17 (S.D.N.Y. June 7, 2011). The Clerk of Court then entered judgment dismissing this action. (Clerk's J., Dkt. No. 22.) The instant motions to alter the judgment and for leave to amend followed. Plaintiffs have submitted a proposed Second Amended Consolidated Class Action Complaint ("SAC") with their motions. Familiarity with this Court's June 7 Opinion, as well as its opinions in related Citigroup actions, is presumed.
Federal Rule of Civil Procedure 15(a)(2) instructs courts to "freely grant leave [to amend] when justice so requires." Yet "[a]s a procedural matter, '[a] party seeking to file an amended complaint postjudgment must first have the judgment vacated or set aside pursuant to [Rules] 59(e) or 60(b).'" Williams v. Citigroup Inc., --- F.3d ---, No. 10-538-cv, 2011 WL 3506099, at *3 (2d Cir. Aug. 11, 2011) (quoting Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008)). Although finality concerns generally limit the scope of Rule 59(e) relief, a court must balance concerns of finality with the liberal amendment policy of Rule 15 when assessing a postjudgment request to replead. Williams, 2011 WL 3506099 at *4. Because finality interests are minimal given the posture of this action, the liberal amendment policy of Rule 15 guides this Court's consideration of the pending motion. See id. at *4-*5.
Pursuant to Rule 15, "[l]eave to amend, though liberally granted, may properly be denied for: 'undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.'" Ruotolo, 514 F.3d at 191 (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). Defendants emphasize plaintiffs' delay in seeking amendment and the futility of their proposed amendment as grounds for denying relief.
Plaintiffs' delay in seeking leave to amend is manifest. The amendments in the proposed SAC reallege substantial swaths of the operative complaints in two separate consolidated class actions before this Court, In re Citigroup Inc. Bond Litigation, No. 08 Civ. 9522,and In re Citigroup Inc. Securities Litigation, No. 07 Civ. 9901. Those consolidated complaints were filed in January 2009 and February 2009, respectively. See In re Citigroup Inc. Bond Litig. ("Bond"), 723 F. Supp. 2d 568, 581 (S.D.N.Y. 2010); In re Citigroup Inc. Sec. Litig. ("Securities"), 753 F. Supp. 2d 206, 212 (S.D.N.Y. 2010). Plaintiffs did not avail themselves of at least three prior opportunities to incorporate allegations from these complaints in their own pleadings as follows: when Brecher and other named plaintiffs filed their first complaint in March 2009; when Koch and Oelfke filed their complaint in August 2009; and when plaintiffs filed an amended consolidated complaint in October 2009. Nor did plaintiffs seek leave to amend after the issuance of opinions-one in July 2010, one in November 2010-that addressed in significant detail the sufficiency of the Bond and Securities allegations. See Bond, 723 F. Supp. 2d at 568-96; Securities, 753 F. Supp. 2d at 206-49. Plaintiffs offer no excuse for now requesting to incorporate amendments they could and should have sought much earlier.
Nonetheless, the Court will not deny plaintiffs leave to amend on account of their dilatory conduct. Delay is not grounds for denying amendment "absent a showing of bad faith or undue prejudice," Ruotolo, 514 F.3d at 191, and defendants have made no such showing.
Defendants contend the proposed SAC should be rejected as entirely futile. An amendment is futile if it would not withstand a Rule 12(b)(6) motion to dismiss. See Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 88 (2d Cir. 2002). Thus plaintiffs' amendments will be disallowed as futile to the extent they do not state a claim to relief that is plausible on its face. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). As on a Rule 12(b)(6) motion to dismiss, the Court will assume the truth of the well pleaded facts of the proposed SAC and may ...