Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 1 of 15 PageID 2284
`
`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF TEXAS
`FORT WORTH DIVISION
`
`
`OKLAHOMA FIREFIGHTERS PENSION
`AND RETIREMENT SYSTEM,
`
`
`
`
`No. 4:20-cv-0201-P
`
`
`
`Plaintiff,
`
`
`v.
`
`SIX FLAGS ENTERTAINMENT
`CORPORATION ET AL.,
`
`
`Defendants.
`
`OPINION AND ORDER
`Before the Court are Plaintiff’s Motion for Leave to File its Amended
`Complaint (ECF No. 101), Defendants’ Motion for Judgment on the
`Pleadings (ECF No. 102), and Key West Police & Fire Pension Fund’s
`Motion to Intervene (ECF No. 108). For the reasons below, the Court
`DENIES Plaintiff’s Motion (ECF No. 101), GRANTS Defendants’
`Motion (ECF No. 102), and DENIES Movant’s Motion (ECF No. 108).
`BACKGROUND
`This case arises from Defendants’ failed attempt to expand their
`amusement parks into China. See ECF No. 50. Throughout 2018,
`Defendant Executives repeatedly maintained that their development
`and earnings schedule remained on-track. Id. But the projected park
`opening schedule was allegedly “in serious jeopardy” as early as May
`2018. Id. at 8. Movant began purchasing shares of Defendants’ stock in
`July 2018. ECF No. 109 at 126. Throughout the rest of the year,
`Riverside began defaulting on its licensing payments, and “construction
`in China came to a standstill” by 2019. ECF No. 50 at 8–9.
`Beginning in February 2019, Defendants began announcing negative
`revenue adjustments due to the delays. ECF No. 50 at 10. On an October
`23, 2019, earnings call, Defendants announced a “very high likelihood
`going forward that [Defendants would] see changes in the timing of park
`
`
`
`
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 2 of 15 PageID 2285
`
`openings,” Id.; ECF No. 103 at 8–9, and that it was “unrealistic” to think
`the original timelines would hold. Id. Days after, Plaintiff began
`purchasing shares of Defendants’ stock. ECF No. 28-2 at 12.
`By February 2020, Defendants disclosed that they had terminated
`its development agreements with Riverside and that Six Flags would
`not recognize any revenue from the planned China expansion. ECF No.
`103 at 8–9.
`Plaintiff then sued, alleging violations of sections 10(b) and 20(a) of
`the Securities Exchange Act for false and misleading statements made
`to investors from 2018 to 2020 about the progress, timeline for opening,
`and accounting for various Six Flags parks in China. ECF No. 50.
`Pursuant to Plaintiff’s request, the Court appointed Oklahoma
`Firefighters as a Co-Lead Plaintiff for a potential future putative class.
`ECF No. 26. Oklahoma filed its Amended Complaint, which Defendants
`moved to dismiss. ECF Nos. 50, 51, The Court then granted Defendants’
`Motion. ECF No. 69.
`Oklahoma Firefighters appealed. ECF No. 77. In January 2023, the
`Fifth Circuit reversed and remanded this Court’s decision, holding that
`Plaintiff pled sufficient facts to support a claim for securities fraud to
`survive a motion to dismiss. ECF Nos. 82, 83. But the Fifth Circuit also
`held that “statements before October, 2019 satisfy the pleading
`standard, but, because Defendants had adequately tempered their
`optimistic language by October, the later allegations do not.” Oklahoma
`Firefighters Pension and Ret. Sys. v. Six Flags Ent. Corp., 58 F.4th 195,
`218 (5th Cir. 2023).
`As a result, Plaintiff moved to amend its complaint, ECF No. 101,
`and seeks to add Movant Key West and substitute them as Lead
`Plaintiff. Id. In response, Defendant moved for judgment on the
`pleadings, arguing that Plaintiff lacks standing based on the Fifth
`Circuit’s holding. ECF Nos. 102, 103.
`Key West then moved to intervene. ECF No. 108. Movant argues that
`they should be added to the suit because its injuries are nearly
`“identical” to Plaintiff’s—except that it bought stock over a year earlier.
`Id.
`
`
`
`2
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 3 of 15 PageID 2286
`
`LEGAL STANDARD
`Federal Rule of Civil Procedure 12(c) provides that a party may move
`for judgment on the pleadings “[a]fter the pleadings are closed[,] but
`early enough not to delay trial.” FED. R. CIV. P. 12(c). In considering such
`a motion, “[t]he central issue is whether, in the light most favorable to
`the plaintiff, the complaint states a valid claim for relief.” Brittan
`Commc’ns Int’l Corp. v. Sw. Bell. Tel. Co., 313 F.3d 899, 904 (5th Cir.
`2002). (quoting Hughes v. The Tobacco Inst., Inc., 278 F.3d 417, 420 (5th
`Cir. 2001)). Therefore, the nonmovant “must plead ‘enough facts to state
`a claim to relief that is plausible on its face.’” Doe. v. MySpace, Inc., 528
`F.3d 413, 418 (5th Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550
`U.S. 544, 570 (2007)). “Pleadings should be construed liberally, and
`judgment on the pleadings is appropriate only if there are no genuine
`issues of material fact and only questions of law remain.” Brittan
`Commc’ns Int’l Corp. v. Sw. Bell. Tel. Co., 313 F.3d 899, 904 (5th Cir.
`2002).
`
`ANALYSIS
`Article III Standing
`I.
`Standing contains three requirements. Lujan v. Def. of Wildlife, 504
`U.S. 555, 560 (1992). First, there must be a concrete injury in fact that
`is not conjectural or hypothetical. Whitmore v. Arkansas, 495 U.S. 149,
`149 (1990). Second, there must be causation—a fairly traceable
`connection between a plaintiff’s injury and the complained-of conduct of
`the defendant. Simon v. E. Ky. Welfare Rts. Org., 426 U.S. 26, 41–42
`(1976). Third, there must be redressability—a likelihood that the
`requested relief will redress the alleged injury. See Lujan, 504 U.S. at
`562. These three requirements constitute the core of Article III’s case-
`or-controversy requirement. See FW/PBS, Inc. v. Dallas, 493 U.S. 215,
`231 (1990); Lewis v. Knutson, 699 F.2d 230, 236 (5th Cir. 1983) (“The
`constitutional limits on standing eliminate claims in which the plaintiff
`had failed to make out a case or controversy.”).
`“[A party’s] lack of standing can be raised at any time.” Sommers
`Drug Stores Co. Emp. Profit Sharing Tr. v. Corrigan 883 F.2d 345, 348
`(5th Cir. 1989). And a party’s purported standing may be revoked by the
`
`
`
`3
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 4 of 15 PageID 2287
`
`intervening opinion of a higher court. See Summit Off. Park, Inc. v. U.S.
`Steel Corp., 639 F.2d 1278 (5th Cir. 1981).
`Defendant argues that Plaintiff lacks standing to pursue a claim for
`securities fraud because the Fifth Circuit determined that there was a
`full corrective disclosure by the time Plaintiff purchased stock. ECF No.
`103 at 1. As a result, Plaintiff could not have suffered an injury in fact.
`Id.
`Plaintiff responds that—to have standing—it only needed to buy
`stock when the price was still artificially inflated—i.e., before all
`artificial inflation was removed from the stock price. ECF No. 110 at 15.
`Plaintiff also contends that “the full truth” about Defendant’s fraud was
`not known to investors until the disclosures made in early 2020 marked
`the end of the purported class period. Id. Plaintiff lastly asserts that the
`Fifth Circuit’s holding regarding “statements” made after October 2019
`applies only to one category of statements—those made about the
`timeline of the parks’ opening. Id. at 10–15. And because Plaintiff
`purchased within the broader inflationary period in reliance on other
`statements before the 2020 disclosures, they have asserted an injury in
`fact. Id.
`The Court therefore addresses whether Plaintiff has suffered an
`injury in fact.
`a. Injury in Fact and Securities Fraud
`To state a claim for securities fraud, a plaintiff must allege: “(1) a
`material misrepresentation or omission; (2) scienter (a ‘wrongful state
`of mind’); (3) a connection with the purchase or sale of a security; (4)
`reliance; (5) economic loss; and (6) a ‘causal connection between the
`material misrepresentation and the loss.’” Oklahoma Firefighters
`Pension and Ret. Sys. v. Six Flags Ent. Corp., 58 F.4th 195, 206 (5th Cir.
`2023) (quoting Mun. Emps.’ Ret. Sys. of Mich. v. Pier 1 Imports, Inc., 935
`F.3d 424, 429 (5th Cir. 2019).
`Here, the “injury in fact” issue turns on the fourth element—whether
`Plaintiff can sufficiently allege that it reasonably relied on certain
`“statements” exempt from the Fifth Circuit’s holding when it purchased
`Defendants’ stock after the October 2019 disclosure.
`4
`
`
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 5 of 15 PageID 2288
`
`i. Reliance
`The reliance element requires that a “requisite causal connection
`between a defendant’s misrepresentation and a plaintiff’s injury exists.”
`See Affco Inv. 2001, LLC v. Proskauer Rose, LLP, 625 F.3d 185, 193 (5th
`Cir. 2010). An individual plaintiff must directly rely on a defendant’s
`misrepresentation to connect the defendant’s misrepresentation to the
`plaintiff’s decision to buy. See Basic v. Levinson, 485 U.S. 224, 225
`(1988). A plaintiff who buys stock after a corrective disclosure cannot
`suffer an injury in fact because any “reliance” on the earlier
`misrepresentation would not be reasonable given the disclosed
`information; and so a lack of reasonable reliance is a lack of standing
`under the PSLRA. Basic, Inc., 485 U.S. 221, 246–47 (1988).
`Plaintiff interprets the Fifth Circuit’s holding in a way that parses
`Defendants’ various “statements” by subject matter. ECF No. 111 at 16.
`Plaintiff claims it relied on Defendants’ misrepresentation of its October
`2019
`financial condition
`(and other categories of continuing
`misrepresentations) in deciding to buy and that the Fifth Circuit’s
`holding only applies to Defendants’ representations on the timeline for
`park openings. Id.
`Defendants contend that the Fifth Circuit’s use of the term
`“statements” applies
`to all
`the alleged misrepresentations
`indiscriminately, and Plaintiff therefore bought stock too late to pursue
`a claim. ECF No. 112 at 13–18. Thus, the dispositive issue before the
`Court is defining and applying the term “statements.”
`B. The 5th Circuit’s Opinion
`The Parties’ animosity now revolves around the following holding in
`the Fifth Circuit’s Opinion:
`By late 2019, however, Defendants’ language had
`changed. According to the Complaint, during the October
`2019 earnings call, “Defendant Barber denied that there
`was ‘any material change in the time line of China over the
`last 90 days.’” But in the full exchange on that call,
`Defendant Reid-Anderson admitted there was a ‘very high
`likelihood going forward that we will see changes in the
`
`
`
`5
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 6 of 15 PageID 2289
`
`timing of the park openings’ and that it was ‘unrealistic’ to
`think the timelines would hold.
`Therefore, we hold that the statements before October
`2019 satisfy
`the pleading standard, but, because
`Defendants had adequately tempered their optimistic
`language by October, the later allegations do not.
`Oklahoma Firefighters, 58 F.4th at 218.
`Defendants’ claim that, in an effort to revive this case, the Fifth
`Circuit’s decision drafting1 combined with the litigious creativity of the
`Parties has dealt Plaintiff an iatrogenic2 blow.
`“We [should] not [travel], in our search for the meaning of the
`lawmakers, beyond the borders of [the Fifth Circuit’s Opinion].” United
`States v. Great N. Ry., 287 U.S. 144, 154 (1932). “[T]he language of an
`opinion is not always to be parsed as though we were dealing with
`language of a statute.” Reiter v. Sonotone Corp., 442 U.S. 330, 341
`(1979). But the opinions of appellate courts dispose of discreet cases and
`must be read with a careful eye toward context. See Cohens v. Virginia,
`6 Wheat. 264, 399–400 (1821) (Marshall, C.J.). So this Court must take
`the Fifth Circuit’s Opinion at its word and by its “plain meaning.” See
`Reiter, 442 U.S. 330; Cohens, 6 Wheat. 264; ECF Nos. 110 at 15–16; 112
`at 6.
` The Court must examine the “very words of [the opinion]” for their
`ordinary meaning. ANTONIN SCALIA & BRYAN A. GARNER, READING LAW:
`THE INTERPRETATION OF LEGAL TEXTS 56 (1st ed. 2012) “The ordinary-
`meaning rule is the most fundamental semantic rule of interpretation .
`. . [o]ne should assume the contextually appropriate ordinary meaning
`unless there is reason to think otherwise . . . which ordinarily comes
`from context.” Id. at 69–70. And “a word or phrase is presumed to have
`
`1 Where Man’s original sin was his persistent desire to be like God, so the Judiciary’s
`was its desire to write with the opaqueness of a legislature. It is not often that the
`Court must apply the canons of statutory construction to decipher the “guidance” set
`forth by its own Circuit. But it is necessary where the resolution of its ambiguity is
`determinative.
`2 “Iatrogenic” or “Iatrogenesis” refers to a consequence, often an injury or illness,
`induced by a physician or surgeon through medical treatment or diagnostic procedures.
`Iatrogenic, WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY (1981). In laymen’s
`terms, it may refer to situation where, in an attempt to render aid or diagnosis, one
`actually inflicts more harm than benefit.
`
`
`
`6
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 7 of 15 PageID 2290
`
`the same meaning throughout a text,” unless there is a “material
`variation” in terms or usage. Id. at 170.
`As it appears in this excerpt, “statements” appears to refer to the
`preceding paragraph, which only addresses the topic of the park opening
`timeline. But to stop the analysis there would be to sell short the term’s
`“contextually appropriate ordinary meaning.” SCALIA & GARNER at 69–
`70. Evaluating the appearance of “statements” within the context of its
`entire subsection and the Opinion as a whole, it is clear the “statements”
`to which the holding applies are all statements of every subject matter.
`First, the Fifth Circuit initially outlines that it “will analyze the
`arguments about the sufficiency of this complaint principally by
`grouping the allegations into two time periods, 2018 and 2019, in which
`the supposed material misstatements were made. For each section, we
`consider as relevant (1) whether the statements were forward-looking
`and protected
`.
`.
`. (2) whether the statements were material
`misstatements or omissions; and (3) if scienter was properly alleged.” 58
`F.4th at 207 (emphasis added). This shows the court’s intent to deal with
`the allegations at issue temporally rather than by subject matter. Thus,
`the court’s analysis addresses whether the statements collectively meet
`the pleading standard based on when in the class period allegations may
`arise, not which statements do or do not remain actionable throughout
`the “purported Class Period” as it is pled by Plaintiff.
`Second, the use of “statements” in the quoted excerpt at issue is
`consistent with the opinion’s structure in its entirety. Here, consistent
`with the Fifth Circuit’s declared intent, the opinion first divides the
`statements into “2018 statements” and “2019 statements” and then by
`dividing each of those categories into subcategories labeled “Forward-
`looking statements,” “Material misrepresentations or omissions,” and
`“Scienter.” The section at issue concludes that “the question, then, is
`whether Plaintiff has pled with particularity that the 2019 statements
`(1) were materially misleading . . . and (2) give rise to a strong inference
`of scienter.” Oklahoma Firefighters, 58 F.4th at 217 (emphasis added).
`But within the analysis of each subsection, the opinion addresses a mix
`of issues. For example, “statements about Riverside . . . that the
`‘financing is in place’ . . . [and] statements about the new park
`7
`
`
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 8 of 15 PageID 2291
`
`deadlines.” Id. at 216–17. This example of the general structure of the
`Fifth Circuit’s analysis remains consistent throughout the opinion.
`Thus, a structural evaluation of the opinion must conclude that
`“statements” would refer to statements of every subject matter within
`the requisite category as labelled by its headings and subheadings,
`rather than only those statements on a specific issue—e.g., only the park
`opening timeline.
`Third, the structure and content of the specific subsection in which
`the excerpt at issue supports the same conclusion. Following the same
`literary architecture of its preceding sections, this portion of the opinion
`continues to address the materiality and falsity of various types of
`“statements” without dividing them by subject matter. This subsection
`begins with a discussion regarding “the February 2019 statements about
`Riverside’s financial health,” then moves to Defendants’ alleged
`omissions regarding Riverside’s assets, continuing ability to pay, and
`Defendants’ financing for the parks. 58 F.4th at 217. Following that, the
`discussion transitions into recounting Defendants’ February, April, and
`July earnings call statements about the construction progress of the
`parks. Id. at 217–18. And the paragraph preceding the excerpt begins:
`“[t]he question, though, is whether Plaintiff has pled with particularity
`that the statements were misleading as a matter of law.” 58 F.4th at 218.
`The Fifth Circuit states that “[they] cannot read Defendants’
`construction-progress statements in isolation,” but rather “in the
`context of investors’ expectations about the meaning of that progress.”
`Id. The paragraph concludes that “the alleged misstatements from
`February, April, and July 2019” are actionable—but no longer by
`October. Id. Thus, the Fifth Circuit chose to address issue-specific
`statements together to determine whether they collectively met the
`requisite pleading standard
`for Plaintiff
`to allege
`“material
`misrepresentations or omissions.”
` To read the opinion according to Plaintiff’s interpretation of
`“statements” would take the term out of context and interrupt a
`coherent line of reason. Plaintiff’s reading of the Opinion requires the
`Court to miss the whole herd for a single head. While the question may
`remain whether the Fifth Circuit’s recounting of this case was artful or
`
`
`
`8
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 9 of 15 PageID 2292
`
`correct,3 an unrefined presentation of its reasoning does not strip the
`Opinion’s terms of their “contextually appropriate ordinary meaning.”
`And where the Opinion contains no “material change” in the term
`“statements” or its use throughout, the Court must presume no
`transformation in its meaning.
`Based on the plain meaning of the Fifth Circuit Opinion, this Court
`concludes that its holding applies to all the alleged misrepresentations
`or omissions on or before the October 23, 2019, earnings call, closing the
`purported class period. See 1 McLaughlin on Class Actions § 4:3 (19th
`ed. 2022) (explaining that class periods may be limited by courts because
`“liability for misrepresentations or omissions . . . terminates when
`curative information is publicly announced or otherwise effectively
`disseminated.”).
`Application on Remand
`ii.
`If a plaintiff purchases stock after an alleged corrective disclosure,
`his or her “reliance” on a prior misrepresentation cannot be reasonably
`justified given the new information. See Dura Pharms., Inc. v. Broudo,
`544 U.S. 336, 341–46 (2005).
`Without Movant’s intervention, Plaintiff remains an individual
`claimant who must
`show
`direct
`reliance
`on
`actionable
`misrepresentations by purchasing stock before “new information”
`surfaces that would cast doubt on Defendants’ prior fraudulent
`optimism. Regents of Univ. of Calif. v. Credit Suisse First Boston (USA),
`Inc., 482 F.3d 372, 383 (5th Cir. 2007). Here, Plaintiff purchased stock
`after the Fifth Circuit held that Defendants’ alleged misrepresentations
`or omissions had been depleted of actionability to plead a claim for
`securities fraud. See ECF No. 28-2 at 12.
`
`
`3 In these complex cases in which the interrelation of various statements, their subject
`matter, and their specificity can become dispositive legal issues, this Court generally
`abides by the practice of breaking down each statement and its application to the most
`granular level possible to remove doubt as to the Court’s intent and conclusions
`deduced from it. See e.g. Genesee Cnty Emps.’ Ret. Sys. v. FirstCash Holdings, Inc., No.
`4:23-cv-0033-P, 2023 WL 2752846 (N.D. Tex. March 31, 2023) (Pittman, J.).
`
`
`
`
`9
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 10 of 15 PageID 2293
`
`Plaintiff primarily points to Martone v. Robb, 902 F.3d 519 (5th Cir.
`2018) to argue it has proven reliance because it purchased stock and
`held it until the “full truth” of the state of the China expansion emerged
`in early 2020. ECF No. 111 at 16; see, e.g., In re Vivendi, S.A. Sec. Litig.,
`838 F.3d 223 (2d Cir. 2016). In Martone, the Fifth Circuit upheld
`standing for a plaintiff who bought stock during its broader “inflationary
`period” and held it until “the full truth was revealed” and “all artificial
`inflation [of the stock price was] removed from the market.” ECF No.
`111 at 15; Martone, 902 F.3d at 524. But Martone is distinguishable from
`these facts. In Martone, the principal—if not the only—corrective
`disclosure that “revealed the truth” and “removed all artificial inflation”
`from the stock price did not occur until Whole Foods filed its Form 8-k
`and its executives formally apologized. Martone, 902 F.3d at 521–23.
`Thus, the “inflationary period” in Martone was not tempered, even with
`headlines regarding investigatory fines, until the truth was revealed for
`the first time at the end of the class period in 2015. According to
`Plaintiff, Defendants made partial disclosures as early as February
`2019, ECF No. 110 at 16, and according to the Fifth Circuit, had
`gradually “tempered their optimism” by October. 58 F.4th at 218.
`Therefore, Plaintiff cannot rely on Martone.
`Defendants’ partial disclosures “sever the link between the alleged
`misrepresentation[s] and [Plaintiff’s] decision to trade at a fair market
`price.” Basic Inc., 485 U.S., at 248. Here, Plaintiff cannot have
`“reasonably relied” upon prior misrepresentations when it purchased
`stock days after the earnings call which the Fifth Circuit held was the
`point after which Defendants’ disclosures closed the class period. See 1
`McLaughlin on Class Actions § 4:3. Therefore, Plaintiff lacks standing.
`II. Curing Jurisdictional Defects
`“[S]tanding is essential to the exercise of jurisdiction.” Sommers
`Drug Stores Co., 883 F.2d at 348. “[W]here a Plaintiff [does not have]
`standing to assert a claim against [a defendant], it does not have
`standing to amend the complaint and control the litigation by
`substituting new plaintiffs [or] a new class.” Summit Off. Park, Inc. v.
`U.S. Steel Corp., 639 F.2d 1278, 1282 (5th Cir. 1981). And because a lack
`of standing is a “jurisdictional defect,” “neither Rule 15 nor any other
`10
`
`
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 11 of 15 PageID 2294
`
`rule of civil procedure permit[s] [Plaintiff] to cure [it] by including or
`substituting [another plaintiff].” Fed. Recovery Servs., Inc. v. United
`States, 72 F.3d 447, 453 (5th Cir. 1995); see also Aetna Cas. & Sur. Co.
`v. Hillman, 796 F.2d 770 (5th Cir. 1986) (holding that Rule 15 does not
`permit a plaintiff to amend its complaint to substitute a new plaintiff to
`cure a lack of subject matter jurisdiction).
`Under this binding precedent, a plaintiff in line at this Court without
`standing is too short to ride. Because Plaintiff lacks of standing, the
`Fifth Circuit declared the unavailability of “Rule 15 [or] any other rule
`of civil procedure” at Plaintiff’s disposal to cure this Court’s resulting
`lack of jurisdiction. Fed. Recovery Servs., 72 F.3d at 453. As the party
`“invoking the jurisdiction of the federal courts,” Plaintiff must establish
`its standing to sue; otherwise, “[t]he constitutional limits on standing
`eliminate [its claim].” Lewis, 699 F.2d at 236. Plaintiff’s attempt to
`establish standing necessarily fails, and there is no “case” or
`“controversy” before the Court.
`III. Movant Key West’s Intervention
`Despite Plaintiff’s lack of standing, Movant Key West contends it
`should still be allowed to intervene and substitute itself as the lead
`plaintiff of this nascent “class.” ECF No. 113. On top of its recitation of
`Plaintiff’s “same old song and [injury in fact],” Movant argues that—as
`a Class Member, regardless of their absence as a named plaintiff—it is
`either (1) the ideal candidate to intervene under Rule 24, or (2) that its
`status as a Class Member entitles it to an opportunity to intervene or
`amend the Complaint to protect its interests and the interests of the rest
`of the Class. Id. at 6, 12–13; see Lynch v. Baxley, 651 F.2d 387 (5th Cir.
`1981); Silva v. Vowell, 621 F.2d 640, 650 (5th Cir. 1980); Duhaime v.
`John Hancock Mut. Life Ins. Co., 183 F.3d 1, 3 (1st Cir. 1999); In re Nat’l
`Australia Bank Sec. Litig., 2006 WL 3844463, at *3 (S.D.N.Y. Nov. 8,
`2006).
`Movant cannot deploy Federal Rule 24 when there is no “case” or
`“controversy” in which it may intervene. Fed. Recovery Servs., Inc., 72
`F.3d at 453; see also FED. R. CIV. P. 82 (‘rules shall not be construed to
`extend . . . the [subject matter] jurisdiction of the United States district
`
`
`
`11
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 12 of 15 PageID 2295
`
`courts”). Thus, the Court will focus its analysis on whether Movant’s
`alleged status as a “Class Member” may afford it any redemption.
`Federal Rule of Civil Procedure 23 provides that “[a]t an early
`practicable time after a person sues or is sued as a class representative,
`the court must determine by order whether to certify the action as a
`class action.” FED. R. CIV. P. 23(c)(1)(A). And “Rule 23’s requirements
`must be interpreted in keeping with Article III constraints, and with the
`Rules Enabling Act, which instructs that rules of procedure ‘shall not
`abridge, enlarge, or modify any substantive right.’” Amchem Prods., Inc.
`v. Windsor, 521 U.S. 591, 612–13 (1997), quoting 28 U.S.C. § 2072(b).
`Rule 23 does more than set forth a mere pleading standard; plaintiffs
`seeking class certification must “affirmatively demonstrate [their]
`compliance with the Rule . . . and [ ] certification is proper only if ‘the
`trial court is satisfied . . . that the prerequisites of Rule 23(a) have been
`satisfied.’” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011)
`(quoting Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 161 (1982)).
`Without certification of a Class by order of the Court, there is no “class
`action.” See FED. R. CIV. P. 23(c)(1)(A).
`A ruling on class certification may be instigated by a party’s motion
`or the Court sua sponte. See McGowan v. Faulkner Concrete Pipe Co.,
`659 F.2d 554 (5th Cir. 1981). But “a fraud class action cannot be certified
`when individual reliance will be an issue.” Regents of Univ. of Calif., 482
`F.3d at 383. Even without a hearing on class certification, it may
`properly consider the fact that “[Plaintiff’s] counsel [has not moved] for
`certification during the [three] years the suit [has been] pending.” Id. at
`559. And while Rule 23 does not require that the case be brought by the
`best possible plaintiff in the potential class, it does require such a
`plaintiff who will “adequately protect the interests of the class.” Id.; FED.
`R. CIV. P. 23(a)(4).
`Plaintiff has consistently labeled its Complaint as a “Consolidated
`Class Action Complaint,” see ECF No. 50, but merely pleading an action
`as a “class action” does not make it so. See FED. R. CIV. P. 23(c)(1)(A);
`Wal-Mart Stores, Inc., 564 U.S. at 350–51. A plaintiff must demonstrate
`its adequacy to represent the interests of the class. It is difficult for this
`Court to imagine a more inadequate Plaintiff to represent a class of
`12
`
`
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 13 of 15 PageID 2296
`
`persons than one without standing, since a lack of standing amounts to
`a failure to invoke this Court’s jurisdiction. Sommers Drug Stores Co.,
`883 F.2d at 348. Without an adequate representative or jurisdiction, this
`Court cannot certify a class.4 To allow Movant—an unnamed,
`independent third party—to assert its “class membership” now to keep
`this case alive would be like allowing Plaintiff and Movant to “amend
`the complaint and control the litigation by substituting new plaintiffs, a
`new class, and a new cause of action.” Summit Off. Park, Inc., 639 F.2d
`at 1282. This Court heavily weighs the fact that Plaintiff’s counsel has
`never accompanied any prior original or amended Complaint with a
`Motion for Class Certification. And because of this case’s procedural
`posture, such a motion is too little, too late.
`Without an order certifying a class, this case cannot be treated as a
`“class action.” Without a class action, there can be no “Class.” And
`Movant Key West metaphysically cannot be a “Member”—absent or
`not—of a “Class” that does not exist—at least not in this Court’s reality.
`As Rule 23 must be read in light of “Article III constraints” and cannot
`be interpreted to “enlarge [or] modify any substantive right,” this Court
`cannot allow Movant to insert itself into this litigation to effectively
`manufacture Article III jurisdiction by calling itself something it is not.
`The Court is therefore, merely left with an independent third party
`seeking to join the ride after this “Runaway Mine Train”5 has left the
`station.
`Although this jurisdictional issue is dispositive, the Court will note
`for the sake of its respected colleagues on the Fifth Circuit that it
`concludes that Plaintiff’s cited authorities here are distinguishable
`because they only apply to cases with other named plaintiffs, Silva v.
`Vowell, 621 F.2d 640 (5th Cir. 1980), other absent class members,
`Duhaime v. John Hancock Mut. Life Ins. Co., 183 F.3d 1 (1st Cir. 1999)
`and members of an original class with live claims. Lynch v. Baxley, 651
`F.2d 387 (5th Cir. 1981).
`
`
`4 A district court’s decision whether to certify a class is reviewed for abuse of discretion.
`McGowan, 659 F.2d at 559.
`5 Built in 1966, the “Runaway Mine Train” is the oldest roller coaster at Six Flags Over
`Texas, and consistently a crowd favorite.
`13
`
`
`
`

`

`Case 4:20-cv-00201-P Document 114 Filed 06/02/23 Page 14 of 15 PageID 2297
`
`Therefore, Movant’s only applicable authority on this issue is In re
`Nat’l Australia Bank Sec. Litig., 2006 WL 3844463 (S.D.N.Y. Nov. 8,
`2006). There, the district court recognized that the defendants’ motion
`to dismiss after filing an answer rendered a motion to certify the class
`“premature.” Nat’l Australia Bank Sec. Litig., 2006 WL 3844463, at *2–
`3. Thus, the plaintiff lacked any “reasonable opportunity” to seek class
`certification. Id. The district court ultimately relied on this “reasonable
`opportunity” exception to the mootness doctrine to allow the
`substitution of a new lead plaintiff. Id. But this Court hesitates to adopt
`such a jurisdictionally creative doctrine based on a single unreported
`decision of a district court at risk of being overruled, see China Agritech,
`Inc. v. Resh, 138 S.Ct. 1800 (2018), particularly where the district court’s
`cited precedent was a Third Circuit decision later abrogated by the
`United States Supreme Court. Nat’l Australia Bank Sec. Litig., 2006 WL
`3844463, at *2–3, citing Weiss v. Regal Collections, 385 F.3d 337, 345
`(3rd Cir. 2004) (abrogated by Campbell-Ewald Co. v. Gomez, 577 U.S.
`153 (2016)).
`Thus, Movant cannot be made a party to this action without the
`availability to intervene under Rule 24 or a “class membership” status
`with which to continue this litigation.
`CONCLUSION
`Accepting all Plaintiff’s allegations as true and viewing its pleadings
`in the light most favorable to it does not alter the date it purchased
`Defendants’ stock. Since the Fifth Circuit held as a matter of law that
`the October 2019 earnings call depleted Defendants’ statements of any
`further actionability, Plaintiff cannot assert any “reasonable reliance”
`on prior misrepresentations in its “decision to purchase.” So, Plaintiff
`lacks standing, and this Court lacks the power to manufacture
`jurisdiction sua sponte. Thus, Plaintiff no longer has a plausible claim
`for relief.
`Because Plaintiff lacks standing to sue, the Court concludes that
`Defendants’ Motion for Judgment on the Pleadings (ECF No. 102) is
`GRANTED, Plaintiff’s Motion to File its Amended Complaint (ECF No.
`
`
`