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Case 1:16-cv-02611-RBJ Document 74 Filed 04/16/21 USDC Colorado Page 1 of 19
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` IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`Judge R. Brooke Jackson
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`Civil Action No 16-cv-02611-RBJ
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`PATRICK HOGAN, individually and on behalf of all others similarly situated,
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`
`Plaintiff,
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`v.
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`PILGRIM’S PRIDE CORPORATION,
`WILLIAM W. LOVETTE,
`FABIO SANDRI,
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`Defendants.
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`
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`ORDER ON DEFENDANTS’ MOTION TO DISMISS
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`This matter is before the Court on defendants Pilgrim’s Pride Corporation, William W.
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`Lovette’s, and Fabio Sandri’s motion to dismiss plaintiff’s second amended complaint, ECF No.
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`58. For the foregoing reasons, defendants’ motion is GRANTED.
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`I. FACTUAL AND PROCEDURAL BACKGROUND
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`This is a federal securities class action against Pilgrim’s Pride Corporation (“Pilgrim”), a
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`leading chicken producer; William W. Lovette, Pilgrim’s Chief Executive Officer; and Fabio
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`Sandri, Pilgrim’s Chief Financial Officer (“defendants”). ECF No. 48-1 at 6. George Fuller is
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`the lead plaintiff in this case and asserts claims on behalf of not only himself but also all of those
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`similarly situated, i.e., those who purchased or otherwise acquired Pilgrim securities between
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`February 21, 2014 and November 17, 2016. The following facts are derived from the second
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`amended complaint and are assumed to be true solely for the purposes of this order.
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`Pilgrim is one of the largest producers and sellers of chicken in the United States and
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`accounts for 16.6 percent of the domestic market for chicken products. ECF No. 47 at 14, ¶33.
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`Pilgrim specifically focuses on the production and sale of broilers, which are standard, non-
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`kosher, non-organic chickens under thirteen weeks of age. Id. at 19, ¶34. Broilers comprise at
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`least 98 percent of the chicken sold in the United States. Id. The broiler industry, including
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`Pilgrim, is vertically integrated. This means that companies in the broiler industry “own or
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`tightly control almost all aspects of broiler production from breeding, hatching, rearing, feeding,
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`processing, and selling.” Id. at 16–17, ¶40. The broiler industry is characterized by inelastic
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`demand, meaning that the demand for broilers “does not meaningfully increase or decrease with
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`changes in price; however, a decrease in supply will increase prices.” Id. at 19, ¶35.
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`Traditionally the broiler market followed a boom and bust cycle. When prices for broilers would
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`rise, the chicken producers would ramp up production to capture more revenue, resulting in a
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`boom. However, the resulting oversaturation of the market would cause prices to fall, resulting
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`in a bust. Id. at 15–16, ¶36.
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`Another unique feature of the broiler industry is its “highly concentrated and familial”
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`nature. The number of companies involved in the broiler industry has apparently decreased
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`significantly over the years. Id. at 19, ¶45. Three companies—Pilgrim, Tyson, and Sanderson—
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`occupy 46 percent of the total market share, and the top five companies control over 65 percent
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`of the market. Id. According to plaintiff it is common for executives of a company to leave and
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`begin working for one of its competitors. Additionally, like many industries, the broiler industry
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`has numerous associations and committees that individuals from broiler companies can join.
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`These associations and committees host meetings and retreats that provide industry members
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`opportunities to interact with one another. Id. at ¶49.
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`Although the relevant class period is February 21, 2014 through November 17, 2016,
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`plaintiff alleges that the actions giving rise to this lawsuit date back to 2007. In 2007 and 2008
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`the broiler industry experienced a particularly low “bust,” because rising feed ingredients
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`resulted in significant market pressure. According to plaintiff, Pilgrim declared bankruptcy in
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`December 2008 as a result of this dramatic bust. Id. at 4, ¶9. Pilgrim emerged from bankruptcy
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`following a sale of its majority stake to its parent company, JBS SA (“JBS”). Plaintiff alleges
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`that, in an effort to achieve post-bankruptcy stability, “Pilgrim coordinated with fellow industry
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`participants—together comprising approximately 95 percent of the market—to embark an
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`orchestrated reduction of the broiler supply.” Id. at 8, ¶10. The broiler companies apparently
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`worked together to ensure that each company adhered to the bargain and did not flood the market
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`with chicken. To do this, the conspirators used a “unique, highly detailed data sharing service
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`known as Agri Stats, through which the companies exchanged comprehensive proprietary data
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`concerning each company’s operations, production, inventory, cost and pricing, compiled in
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`nearly real time.” Id. The companies’ tactics for keeping the chicken supply down included
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`reducing eggs, reducing broiler breeder flocks, destroying chicks or eggs, temporarily or
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`permanently shutting down facilities, and exporting eggs and chicks.
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`The broiler companies allegedly used the Agri Stats data to coordinate two tranches of
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`significant Broiler production cuts. The first major one occurred in 2009-2010, and the second
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`in 2011-2012. In February 2014—the beginning of the class period—broiler prices were
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`expected to increase, and breeder flocks were reduced. The broiler companies also allegedly
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`manipulated the Georgia Dock and Urner Barry, the leading wholesale chicken prices indices.
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`While the rest of the chicken industry dealt with a drastic drop in prices in 2015 and 2016, there
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`was no corresponding decline in broiler prices. In fact, the broiler price on the Georgia Dock
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`barely moved during this time period, and it even increased slightly in 2015. Id. at 10, ¶12.
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`During the class period, Pilgrim reported record-breaking financial results, including profit
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`margins of more than 16 percent, which were nearly three times what other companies had
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`historically achieved on average. Id. By December 2014 Pilgrim’s stock was trading at over
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`thirty-eight dollars per share, when just six years earlier it had been trading at under $0.15 per
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`share.
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`Pilgrim explained their increased profit margins based on their fundamentally
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`transforming their business model and improving better product mix and operational
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`improvements “to achieve a level of unprecedented financial success and stability.” Id. Plaintiff
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`contends that Pilgrim’s growth was instead a result of the price fixing scheme that is the subject
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`of this lawsuit. According to plaintiff, the defendant company and the individual defendants
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`made numerous false statements with regard to Pilgrim’s success.
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`Various sources became aware of the alleged price fixing scheme in the poultry industry.
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`On September 2, 2016 a group of Pilgrim’s wholesale customers and numerous other broiler
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`producers filed a class action in the Northern District of Illinois, alleging that Pilgrim and other
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`broiler companies participated in an illegal anti-competitive scheme in violation of federal
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`antitrust law. Id. at 7-8, ¶17. In November 2016 both the New York Times and the Washington
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`Post published articles discussing the apparent scheme. Id. at ¶18. This alleged scheme has
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`continued to garner national media attention and has resulted in numerous federal lawsuits.
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`The initial complaint in this case was filed on October 20, 2016, and Patrick Hogan was
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`listed as the lead plaintiff on this case. ECF No. 1 The initial complaint alleged two causes of
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`action. The first involved Section 10(b) and Rule 10b-5 violations of the Securities and
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`Exchange Act (“Exchange Act”). The second involved alleged violations of Section 20(a) of the
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`Exchange Act. Id. at 22–25.
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`On May 11, 2017 plaintiff filed his first amended complaint in which George Fuller
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`replaced Patrick Hogan as the lead plaintiff, and the same causes of action were alleged. See
`ECF No. 29. Mr. Fuller purchased 3,859 shares of Pilgrim securities on January 16, 2015 at the
`price of $34.00 per share. On February 19, 2015 plaintiff purchased 3,627 additional Pilgrim
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`shares at $27.95 per share. ECF No. 8-1 at 3. In the first amended complaint—the first
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`complaint in which Mr. Fuller was included as lead plaintiff—the alleged misrepresentations
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`began in fiscal year 2013. ECF No. 29 at 57. Mr. Fuller alleges that the misrepresentations
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`continued through 2016. In addition, Mr. Fuller included “additional support for falsity and
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`scienter” in the form of facts tending to show the following: the broiler industry coordinated
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`production cuts in 2008 and 2009 and again in 2011 and 2012 that led to reductions in broiler
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`breeder flocks. ECF No. 29 at 3.
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`On June 12, 2017 defendants filed a motion to dismiss the first amended class action
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`complaint. ECF No. 34. That motion was granted on March 14, 2018 because the Court found
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`that “plaintiff did not plead the underlying antitrust conspiracy with sufficient particularity.”
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`ECF No. 41 at 18. The Court further stated that plaintiff’s securities case was “essentially
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`premature but not necessarily hopeless.” Id. at 19. The case was therefore dismissed without
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`prejudice.
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`Plaintiff filed a second amended complaint 576 days following that dismissal. See ECF
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`No. 48-1. The second amended complaint listed the same causes of action as the first two
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`complaints. Specifically, the second amended complaint alleged Section 10(b) violations of the
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`Exchange Act and Rule10 b-5, and 10-b5(a) and (c) against all defendants and Section 20(a)
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`violations against defendants Lovette and Sandri. ECF No. 48-1 at 171. As in the initial
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`amended complaint, the alleged misstatements began in fiscal year 2013 and continued through
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`2016. In the second amended complaint, plaintiff alleged that additional facts had come to light
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`that bolstered his claims so that they were no longer premature.
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`These additional facts are that on June 3, 2020, “a federal grand jury in the U.S. District
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`Court in Denver, Colorado, returned an indictment against four executives for their role in a
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`conspiracy to fix prices and rig bids for broiler chickens.” ECF No. 48-1 at 7. Two of these
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`executives were Pilgrim employees. Id. Based on the indictment, from at least 2012 until at
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`least 2017 various chicken industry executives “conspired to fix prices and rig bids for broiler
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`chickens.” Id. at 2. Plaintiff alleges that the time period covered by the indictment fully
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`overlaps with the class period (February 21, 2014 through November 21, 2016).
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`On July 31, 2020 defendants filed a motion to dismiss the second amended complaint.
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`ECF No. 58. Their primary arguments are that plaintiff’s Section 10(b) claims are time-barred
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`by the five-year statute of repose for securities actions, and that plaintiff lacks standing to bring
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`any remaining claims. Plaintiff filed his response on August 31, 2020. ECF No. 59. Defendants
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`filed a reply on September 20, 2020. ECF No. 60. The matter is ripe for review.
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`II. STANDARD OF REVIEW
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`When “faced with a Rule 12(b)(6) motion to dismiss a § 10(b) action, courts must, as
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`with any motion to dismiss for failure to plead a claim on which relief can be granted, accept all
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`factual allegations in the complaint as true.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551
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`U.S. 308, 322 (2007). “[C]ourts must consider the complaint in its entirety, as well as other
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`sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular,
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`documents incorporated into the complaint by reference, and matters of which a court may take
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`judicial notice.” Id.
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`Complaints in civil actions generally should contain “a short and plain statement of the
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`claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. (8)(a)(2). “A plaintiff suing
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`under Section 10(b), however, bears a heavy burden at the pleading stage.” In re Level 3
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`Commc’ns, Inc. Sec. Litig., 667 F.3d 1331, 1333 (10th Cir. 2012). To state a securities fraud
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`claim, a plaintiff’s complaint must allege that:
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`(1) the defendant made an untrue or misleading statement of material fact, or failed
`to state a material fact necessary to make statements not misleading; (2) the
`statement complained of was made in connection with the purchase or sale of
`securities; (3) the defendant acted with scienter, that is, with intent to defraud or
`recklessness; (4) the plaintiff relied on the misleading statements; and (5) the
`plaintiff suffered damages as a result of his reliance.
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`Id. (citing Adams v. Kinder-Morgan, Inc., 340 F.3d 1083, 1095 (10th Cir. 2003), as amended on
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`denial of reh’g (Aug. 29, 2003)).
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`Prior to the passage of the Private Securities Litigation Reform Act of 1995 (PSLRA),
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`Fed. R. Civ. P. 9(b) governed the pleading requirements for securities fraud actions. City of
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`Philadelphia v. Fleming Companies, Inc., 264 F.3d 1245, 1258 (10th Cir. 2001). Now, however,
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`under the PSLRA, a heightened pleading standard applies to the first and third elements of
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`securities fraud claims, also referred to as falsity and scienter respectively. Id. Thus, with
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`respect to falsity and scienter the PSLRA requires that:
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`(1) [T]he complaint shall specify each statement alleged to have been misleading,
`the reason or reasons why the statement is misleading, and, if an allegation
`regarding the statement or omission is made on information and belief, the
`complaint shall state with particularity all facts on which that belief is formed.
`(2) [T]he complaint shall, with respect to each act or omission alleged to violate
`this chapter, state with particularity facts giving rise to a strong inference that the
`defendant acted with the required state of mind.
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`15 U.S.C. § 78u-4(b)(1)–(2).
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`III. ANALYSIS
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`Defendants argue that plaintiff’s claims must be dismissed for two reasons. First, they
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`argue that any claims based on misrepresentations that occurred prior to June 8, 2015 are
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`untimely and were brought outside of the five-year statute of repose. Second, they argue
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`plaintiff lacks standing to bring any remaining claims on behalf of a class of individuals. I first
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`consider whether the claims are time-barred.
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`A. Whether plaintiff’s claims are time barred
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`Statutes of limitations and statutes of repose “both are mechanisms used to limit the
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`temporal extent or duration of liability for tortious acts.” California Pub. Employees’ Ret. Sys. v.
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`ANZ Sec., Inc., 137 S. Ct. 2042, 2049 (2017) (internal quotations omitted). Although the two
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`concepts are related, they each have a distinct purpose. Id. A statute of limitations is designed to
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`“encourage plaintiffs to pursue diligent prosecution of known claims,” while a statute of repose
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`is a statute in which there is a “legislative judgment that a defendant should be free from liability
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`after the legislatively determined period of time.” Id. Statutes of repose thus give “more explicit
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`and certain protection to defendants” than statutes of limitation. Id.
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`Congress has defined time limitations on the commencement of proceedings that arise out
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`of congressional acts. Specifically, Congress has imposed a statute of repose for securities
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`claims. 28 U.S.C. § 1658 states
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`(a) Except as otherwise provided by law, a civil action arising under an Act of Congress
`enacted after the date of the enactment of this section may not be commenced later than
`four years after the cause of action accrues.
`(b) Notwithstanding subsection (a), a private right of action that involves a claim of
`fraud, deceit, manipulation, or contrivance in contravention of a regulatory requirement
`concerning the securities laws . . . may be brought not later than the earlier of –
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`(1) two years after the discovery of the facts constituting the violation; or
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`(2) five years after such violation.
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`The parties agree that this case is subject to the five-year statute of repose outlined in §
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`1658(b)(2).
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`To better contextualize the parties’ arguments, it is worth repeating certain aspects of this
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`case’s procedural history. Plaintiff initially filed this action on October 20, 2016 for
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`misrepresentations that allegedly began in 2013. ECF No. 48-1 at 58. The initial complaint was
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`thus well within the five-year statute of repose for all misstatements, including the earliest
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`alleged misstatements that occurred in fiscal year 2013. However, on March 14, 2018 the Court
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`dismissed plaintiff’s first amended complaint without prejudice and stated that “plaintiff’s
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`securities case is essentially premature but not necessarily hopeless.” ECF No. 48-1 at 6. On
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`June 8, 2020—576 days after this Court’s dismissal—plaintiff filed a second amended
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`complaint. Due to this delay, defendants argue that many of plaintiff’s claims are time-barred
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`pursuant to 28 U.S.C. § 1658(b)(2). ECF No. 58 at 4. Plaintiff claims that defendants’
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`untimeliness argument fails for three reasons. First, plaintiff argues that the date of the amended
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`complaint is irrelevant for repose purposes because the initial complaint was timely. Second,
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`plaintiff claims that even if the repose period applies to the second amended complaint, his
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`claims are timely under the continuing fraud exception for securities claims. Third, plaintiff
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`argues that his claims are not time-barred because they are saved by the relation-back doctrine. I
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`address each of plaintiff’s contentions in turn.
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`1. Whether the second amended complaint is timely by virtue of the initial
` complaint’s timeliness
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`There is no dispute that a five-year repose period applies to securities claims like those
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`alleged here, nor is there a dispute over whether the initial complaint was timely. Instead,
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`defendants argue that the date of the second amended complaint controls, and that several claims
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`in that complaint are predicated on acts that occurred outside of the repose period. Mr. Hogan
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`argues in response that he is well within the repose period because he filed suit on October 20,
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`2016, three years after the initial misrepresentations that form the basis of his claims, and
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`because the second amended complaint is part of the same suit as the initial, timely complaint.
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`To support his position, plaintiff cites numerous cases that define dismissals without prejudice as
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`“non-final decisions.” See ECF No. 59 at 12–13. While I agree that a dismissal without
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`prejudice is not a final decision for appellate purposes in most circumstances, I disagree that this
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`Court’s decision to dismiss the first amended complaint relates to a subsequent complaint’s
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`timeliness.
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`A dismissal without prejudice does not toll a statute of limitations. Brown v. Hartshorne
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`Pub. Sch. Dist. No. 1, 926 F.2d 959, 962 (10th Cir. 1991) (“In the absence of a statute to the
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`contrary, the limitations period is not tolled during the pendency of a dismissed action.”). This
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`concept is so well known that Black’s Law Dictionary defines a dismissal without prejudice as
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`“[a] dismissal that does not bar the plaintiff from refiling the lawsuit within the limitations
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`period.” DISMISSAL, Black's Law Dictionary (11th ed. 2019) (emphasis added). Thus, when a
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`case is dismissed without prejudice it may be refiled so long as the refiling occurs within the
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`limitations period. Although neither Brown nor the Black’s Law Dictionary definition mention a
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`statute of repose, the Court notes that there are certain differences between statutes of repose and
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`limitations that make repose periods more definite and certain than limitations periods.
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`California Pub. Employees' Retirement Sys., 137 S. Ct. at 2049 (explaining that “statutes of
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`repose are enacted to give more explicit and certain protections to defendants.”). For instance,
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`unlike a statute of limitation, a statute of repose cannot be equitably tolled. The Supreme Court
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`explains,
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`The purpose and effect of repose, by contrast, is to override customary tolling rules
`arising from the equitable powers of courts. By establishing a fixed limit, a statute of
`repose implements a legislative decision that as a matter of policy there should be a
`specific time beyond which a defendant should no longer be subjected to protracted
`liability.
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`Id. (emphasis added); see also CTS Corp. v. Waldburger, 573 U.S. 1 (2014) (“Statutes of repose .
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`. . generally may not be tolled, even in cases of extraordinary circumstances beyond a plaintiff’s
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`control.”). Additionally, while statutes of limitations are frequently not triggered until the
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`plaintiff discovers the cause of action, statutes of repose are triggered the moment the violation
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`occurs of plaintiff’s discovery. CTS Corp., 573 U.S. 1. Statutes of repose therefore put an outer
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`and “fixed limit” on a plaintiff’s right to bring a civil action. Thus, based on a repose period’s
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`rigidity, it follows that a case dismissed without prejudice must be filed within the repose period,
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`as well as within the limitations period.
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`Plaintiff’s position—that the date of the second amended complaint has no bearing on the
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`issue of timeliness—subverts the very purpose of statutes of repose, i.e. to provide certain,
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`explicit protections. If the Court were to adopt plaintiff’s position, a plaintiff could file a case,
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`have it dismissed without prejudice, and then file an amended complaint at any time irrespective
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`of any repose period. Nothing is fixed or certain in such a scenario. I therefore find that plaintiff
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`is not immune from the repose period merely because his initial filing of this case was timely. A
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`timely initial filing does not excuse his nearly two-year delay in refiling this case. Accordingly,
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`the Court finds that the second amended complaint is subject to 28 U.S.C. § 1658(b)(2)’s five-
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`year statute of repose.
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`2. Whether the continuing fraud exception applies
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`The parties next disagree on when the repose period began to run. A repose period is
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`typically triggered on the date of defendants’ misstatement or violation. Plaintiff, however,
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`urges this Court to find that the continuing fraud exception applies, and that plaintiff’s second
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`amended complaint was timely. Under that exception defendants’ misstatements are considered
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`to be part of a single, continuous fraudulent scheme, and the repose period does not begin to run
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`until the date of defendants’ last act within that scheme. Defendants reject the continuing fraud
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`exception and instead argue that each alleged misrepresentation independently triggers the five-
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`year repose period. Thus, according to defendants, because the second amended complaint was
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`filed on June 8, 2020, all of the alleged misrepresentations on which the claims are based must
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`have occurred after June 8, 2015. ECF No. 58 at 4.
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`Courts disagree as to whether the continuing fraud exception applies to securities fraud
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`cases, and the Tenth Circuit has not yet decided the issue. Several courts, including this district,
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`have held that the continuing fraud exception is inconsistent with statutes of repose because the
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`exception’s legal effect is to toll the repose period. I agree. As mentioned above, statutes of
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`repose are not subject to equitable tolling in the same way that limitations periods are. See Fed.
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`Prac. & Proc. Civ. § 1056 (4th ed.), 240 (3d ed. 2002) (“A period of repose is inconsistent with
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`tolling.”).
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`Most recently, this district declined to adopt the continuing fraud exception to extend the
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`statute of repose outlined in 28 U.S.C. § 1658(b)(2). The court held that “[t]his securities claim
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`is subject to a three-year [sic] statute of limitations and five-year statute of repose . . . . the statute
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`of repose is not subject to equitable tolling . . . nor to any continuing fraud exception.” Wu v.
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`Colorado Reg’l Ctr. Project Solaris LLLP, No. 19-CV-02443-RM-STV, 2021 WL 795831 at
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`*11 (D. Colo. Mar. 2, 2021). The Wu court relied on several other districts’ decisions, all of
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`which focused heavily on the continuing fraud exception’s relationship to equitable tolling.
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`In Carlucci v. Han, the Eastern District of Virginia held that a statute of repose has an
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`“unqualified nature,” and that the continuing fraud exception is “akin to a continuing violation or
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`fraudulent concealment theory premised on equitable tolling.” 886 F. Supp. 2d 497, 515 (E.D.
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`Va. 2012) (italics added). In Althaus v. Broderick¸ the court reached a similar conclusion, and
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`noted that at oral argument counsel could not differentiate the continuing fraud exception from
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`general tolling principles. Althaus v. Broderick, No. 1:15-CV-001640-JNP 2016 WL 3976639,
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`at *3 (D. Utah, 2016). The court therefore held that the continuing fraud exception was
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`inconsistent with the statute of repose. Id. Similarly, in Wolfe v. Bellos, a Northern District of
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`Texas case, the court likened the continuous fraud exception to equitable tolling and stated that
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`“statute[s] of repose, however, are not subject to equitable tolling.” No. 3:11-CV-02015-L, 2012
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`WL 652090, at *6 (N.D. Tex. Feb. 28, 2012).
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`While not many courts have considered this precise issue, the Court agrees with the Wu,
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`Carlucci, Althaus, and Wolfe courts and declines to adopt the continuing fraud exception because
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`it effectively tolls the repose period, and “a period of repose is inconsistent with tolling.” 4 Fed.
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`Prac. & Proc. Civ. § 1056.
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`3. Whether plaintiff’s second amended complaint relates back to the date of the initial
` complaint
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`Plaintiff next contends that even if the statute of repose applies, the second amended
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`complaint relates back to the initial complaint pursuant to Fed. R. Civ. P. 15(c). Fed. R. Civ. P.
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`15(c) permits certain amended pleadings to relate back to the date of an initial filing. The Rule
`
`states, in pertinent part,
`
`(1) An Amendment to a pleading relates back to the date of the original pleading when:
`
`
`
`(B) the amendment asserts a claim or defense that arose out of conduct,
`transaction, or occurrence set out – or attempted be set out – in the original
`pleading. . . .
`
`
`Fed. R. Civ. P. 15(c). Plaintiff contends that his second amended complaint is timely because it
`
`relates back to the date of the initial complaint under Rule 15. Defendants argue that such an
`
`interpretation violates the Rules Enabling Act because it would abridge defendants’ substantive
`
`rights to be free from liability after the fixed repose period.
`
`
`
`The Supreme Court has the power “to prescribe general rules of practice and procedure . .
`
`. for cases in the United States district courts and courts of appeals.” 20 U.S.C.A. §2072(a).
`
`However, pursuant to the Rules Enabling Act such rules “shall not abridge, enlarge, or modify
`
`any substantive right.” 28 U.S.C.A. § 2072(b). The Tenth Circuit has recognized that unlike a
`
`statute of limitations, a statute of repose “creates a substantive right in those protected to be free
`
`from liability after a legislatively-determined period of time.” Amoco Prod. Co. v. Newton Sheep
`
`Co., 85 F.3d 1464, 1472 (10th Cir. 1996) (citing Webb v. United States, 66 F.3d 691, 700–01
`
`
`
`14
`
`

`

`Case 1:16-cv-02611-RBJ Document 74 Filed 04/16/21 USDC Colorado Page 15 of 19
`
`(4th Cir. 1995)). Thus, because a statute of repose creates a substantive right in defendants’
`
`freedom from liability, Rule 15(c) cannot be interpreted in a way to expand or abridge that right.
`
`Although neither the Tenth Circuit nor this district have considered whether an untimely
`
`complaint filed outside of the repose period can be saved by the relation back doctrine, several
`
`other courts have. The Southern District of New York declined to apply the relation-back
`
`doctrine to a complaint filed outside the repose period. There, the court held that allowing a
`
`plaintiff to bring claims extinguished by the statute of repose “would necessarily enlarge or
`
`modify a substantive right and violate the Rules Enabling Act.” Fed. Deposit Ins. Corp. for
`
`Colonial Bank v. First Horizon Asset Sec. Inc., 291 F. Supp. 3d 364, 372 (S.D.N.Y. 2018)
`
`(internal quotations omitted); see also Barilli v. Sky Solar Holdings, Ltd., 389 F. Supp. 3d 232,
`
`263–64 (S.D.N.Y. 2019) (“allow[ing] a plaintiff to utilize Rule 15(c) to avoid the statute of
`
`repose would significantly abridge the substantive, statutory rights of [d]efendants in violation of
`
`the Rules Enabling Act.”).
`
`
`
`Similarly, the District of New Jersey held that a complaint filed outside of the repose
`
`period could “not be saved by the doctrines of equitable tolling or relation back.” DeVito v.
`
`Liquid Holdings Group, Inc., 2-19 WL 6891832 (D.N.J. 2018). The DeVito court reasoned that
`
`“relation-back is in tension with the principle that a statute of repose is a rigid and essential
`
`limitation on the scope of the cause of action itself—an ‘absolute bar on defendant’s temporal
`
`liability.’” Id. at *24 (quoting California Pub. Employees' Retirement Sys., 137 S. Ct. at 2050).
`
`Similarly, in Resolution Trust Corp. v. Olson the District of Arizona explained,
`
`Relation back under Rule 15 does not apply when the statute at issue defines substantive
`rights rather than merely limiting procedural remedies. . . . A statute of limitations is
`procedural in nature while a statute of repose is substantive in that it defines a right rather
`than merely limits its enforcement.
`
`
`
`15
`
`

`

`Case 1:16-cv-02611-RBJ Document 74 Filed 04/16/21 USDC Colorado Page 16 of 19
`
`
`768 F. Supp. 283, 285 (D. Ariz. 1991).
`
`
`
`As these cases illustrate, because statutes of repose create substantive rights in
`
`defendants, courts often refuse to save untimely complaints with the relation back doctrine. See
`
`also In re Lehman Bros. Sec. & Erisa Litig., 800 F. Supp. 2d 477, 483 (S.D.N.Y. 2011)
`
`(explaining that because the statute of repose is substantive in nature, “the Rule 15(c) relation
`
`back doctrine does not apply to the statute of repose.”); Harris v. OSI Fin. Servs., Inc., 595 F.
`
`Supp. 2d 885, 898 (N.D. Ill. 2009) (holding that because the statute in question was a statute of
`
`repose, “[p]laintiffs may not rely on the relation back doctrine or on any other equitable
`
`extensions.”). This Court therefore will not—and cannot—permit plaintiff to use the relation-
`
`back doctrine to save his untimely complaint because doing so would be improper under the
`
`Rules Enabling Act.
`
`
`
`In summary, the Court finds that (1) the second amended complaint is subject to the five-
`
`year statute of repose; (2) the continuing fraud exception does not apply; and (3) the second
`
`amended complaint does not relate back to date of the initial complaint. Thus, any claims that
`
`are predicated on misstatements occurring prior to June 8, 2015 are time-barred and must be
`
`dismissed.
`
`B. Whether plaintiff has Article III standing
`
`
`
`Defendants next contend that any claims that are not time-barred should be dismissed
`
`because plaintiff lacks Article III standing to bring them. ECF No. 58 at 5. According to
`
`defendant, to have standing in a Section 10(b) case a plaintiff must have purc

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