United States District Court, S.D. New York
MICHAEL FOGEL, individually and on behalf of all others similarly situated, Plaintiff,
WAL-MART DE MÉXICO SAB de CV, ERNESTO VEGA, SCOT RANK, and WAL-MART STORES, INC., Defendants.
OPINION AND ORDER
KATHERINE POLK FAILLA, DISTRICT JUDGE:
February 27, 2017, the Court terminated this action when it
dismissed Plaintiff Michael Fogel's Second Amended
Complaint with prejudice, thus denying leave to file a Third
Amended Complaint. The Second Amended Complaint brought
class-action claims for securities fraud against Defendants
Walmart de México SAB de CV (“Wal-Mex”),
its employees Ernesto Vega and Scot Rank, and Wal-Mart
Stores, Inc. (“Wal-Mart”). Plaintiff now moves
under Federal Rule of Civil Procedure 59(e) to amend the
judgment to provide that the dismissal of the Second Amended
Complaint was without prejudice and to allow Plaintiff to
file a Third Amended Complaint. For the reasons that follow,
the Court denies the motion.
Second Amended Complaint
the Court's previous comprehensive discussion of the
facts, allegations, and procedural posture of this case, the
Court mentions here only what is necessary to resolve the
instant motion. See Fogel v. Wal-Mart de México SAB de
CV, No. 13 Civ. 2282 (KPF), 2017 WL 751155, at *2-5 (S.D.N.Y.
Feb. 27, 2017). According to the Second Amended Complaint
(“SAC”), which relies in large part on a 2012 New
York Times article, Wal-Mex employees and executives
participated in a bribery scheme involving payments to
Mexican intermediaries that were designed to expedite the
company's ability to build retail locations and expand
its operations in Mexico. Id. at *3-4. This scheme
was allegedly the subject of an internal investigation by
Wal-Mart in 2005 and 2006. Id. at *3.
claimed that, given their knowledge of these investigations,
Wal-Mex, Wal-Mex executives Ernesto Vega and Scot Rank, and
Wal-Mart made material misrepresentations and omissions
regarding the alleged bribery scheme in Wal-Mart's Annual
Reports for the years 2004 through 2011; Wal-Mex's
website; Wal-Mart's December 8, 2011 Form 10-Q for the
third fiscal quarter of 2012; and press releases and reports
published by its Audit & Corporate Practice Group in
January through April of 2012. See Fogel, 2017 WL 751155, at
*5. Based on these allegations, the SAC included claims under
Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, 15 U.S.C. §§ 78j(b) and 78t(a), and Rule
10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5.
Id. at *1.
Court Dismisses the SAC and Denies Leave to Amend
Court dismissed the SAC on February 27, 2017, citing several
different grounds on which Plaintiff's claims failed. See
Fogel, 2017 WL 751155, at *19. The Court dismissed two groups
of the claims as untimely, based on the five-year statute of
repose or the two-year statute of limitations contained in
the Sarbanes-Oxley Act of 2002, Pub. L. 107-204, 116 Stat.
801 (codified as amended at 28 U.S.C. § 1658). First,
based on the SAC's filing date of April 7, 2016, the
Court held that the Sarbanes-Oxley Act's five-year
statute of repose barred any claims based on statements made
before April 5, 2008, including any statements in the 2004,
2005, or 2006 Annual Reports. Fogel, 2017 WL 751155, at *9.
Second, under Sarbanes-Oxley's two-year statute of
limitations, the Court dismissed all claims raised after
April 24, 2014, which included those against Wal-Mart and
Rank and all claims other than those in Plaintiff's
original complaint (or “OC”) against Wal-Mex and
Vega. Id. at *9-12. The Court reasoned that the
claims against Wal-Mex and Vega that were alleged in the
First Amended Complaint did not relate back to
Plaintiff's timely claims in the OC under Federal Rule of
Civil Procedure 15. Id.
remainder of Plaintiff's timely allegations failed to
state a claim under Sections 10(b) and 20(a) and Rule 10b-5.
See Fogel, 2017 WL 751155, at *13-18. The Court reasoned that
Plaintiff's Section 10 and Rule 10b-5 claims failed to
plead adequately the requisite element of scienter, as
Vega's alleged scienter was premised solely on his status
within the corporation, and no employee acted with scienter
that could be imputed to Wal-Mex. See Id. at *15-16.
In addition, Plaintiff's timely claims failed to plead an
actionable misrepresentation or omission, but rather were
mere “puffery” or were not demonstrably false
under the heightened pleading standard applicable to
securities fraud claims. See Id. at *17. Finally,
the Court dismissed any alleged scheme-liability claim as
either untimely or insufficiently distinct from an alleged
misstatement, and dismissed the Section 20(a) claim for
control-person liability in light of Plaintiff's failure
to allege a primary securities violation. Id. at
Court also denied Plaintiff's request for leave to amend
the SAC and file a Third Amended Complaint
(“TAC”), finding that such amendment would be
futile. Fogel, 2017 WL 751155, at *18-19. In doing so, the
Court specifically noted that Plaintiff had “been
afforded a more-than-ample opportunity to allege his claims,
” and that in granting Plaintiff leave to file the SAC,
“the Court indicated … that it did not
anticipate further amendment requests.” Id. at
*19. The Court also found that despite having three chances
to plead a valid claim, Plaintiff's core allegations
remained the same. Id.
Plaintiff Moves to Amend the Judgment and to File a Third
on March 23, 2017, Plaintiff filed a motion to alter the
judgment to allow Plaintiff to amend the SAC. (Dkt.
#118). The motion includes interrogatory
responses that Wal-Mart had filed in a parallel securities
case involving similar allegations against the company, along
with a proposed TAC. (See Dkt. #120-1, -4). On April 28,
2017, Defendants filed an opposition to the motion (Dkt.
#132), and on May 9, 2017, Plaintiff replied to the
opposition (Dkt. #135). After reviewing these submissions,
the Court struck them from the docket on August 2, 2017,
finding unacceptable both the “tone” and
“formatting” of Plaintiff's brief, as well as
both “parties' formatting stratagems” to
circumvent the Court's page limitations. (Dkt.
#142). The Court thus ordered the parties to file
replacement briefs that eschewed footnotes and other
“formatting shenanigans.” (Id.).
September 4, 2017, Plaintiff filed a replacement motion and
brief in support of the motion. (Dkt. #143). On October 2,
2017, Defendants filed a replacement opposition brief (Dkt.
#145), and on October 16, 2017, Plaintiffs a replacement
brief replying to Defendants' opposition (Dkt. #146).
party seeking to file an amended complaint postjudgment must
first have the judgment vacated or set aside pursuant to
[Federal Rules of Civil Procedure] 59(e) or 60(b).”
Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008)
(citing Nat'l Petrochemical Co. of Iran v. M/T Stolt
Sheaf, 930 F.2d 240, 244-45 (2d Cir. 1991)). Here, Plaintiff
moves under Rule 59(e), which reads in full, “[a]
motion to alter or amend a judgment must be filed no later
than 28 days after the entry of the judgment.” Although
“Rules 59(a)-(d) by their terms apply only to cases
that have been tried, Rule 59(e) is not limited by its
language to judgments entered after trial, ” and where,
as here, a case is “dismissed on motion … ...