`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE SECOND CIRCUIT
`August Term, 2019
`(Argued: December 18, 2019 Decided: August 12, 2020)
`Docket No. 18-3807-cv
`
`
`
`
`METZLER INVESTMENT GMBH, CONSTRUCTION LABORERS PENSION TRUST OF
`GREATER ST. LOUIS,
`Plaintiffs-Appellants,
`
`SUSIE ONG, Individually and On Behalf of All Others Similarly Situated,
`Plaintiff,
`
`v.
`CHIPOTLE MEXICAN GRILL, INC., MONTGOMERY F. MORAN, JOHN R. HARTUNG, M.
`STEVEN ELLS,
`Defendants-Appellees.
`
`
`Before:
`
`POOLER, SACK, AND HALL, Circuit Judges.
`
`
`
`
`
`The United States District Court for the Southern District of New York
`
`(Katherine Polk Failla, Judge) granted the defendants-appellees' motion pursuant
`
`to Federal Rule of Civil Procedure 12(b)(6) to dismiss with prejudice the
`
`plaintiffs-appellants' second amended complaint which alleged violations of the
`
`federal securities laws against the defendants-appellees, and entered judgment
`
`
`
`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`for the defendants-appellees. The plaintiffs-appellants then brought a motion
`
`under Federal Rules of Civil Procedure 59(e) and 60(b) for relief from the
`
`judgment and for leave to file a third amended complaint. The district court
`
`denied the motion on the grounds that the plaintiffs-appellants were not entitled
`
`to relief under those rules and, in the alternative, that amendment would be
`
`futile. The plaintiffs-appellants appealed. We agree that the plaintiffs-appellants
`
`are not entitled to relief under Rules 59(e) and 60(b). The judgment of the district
`
`court is therefore
`
`
`
`AFFIRMED.
`
`DOUGLAS WILENS, Robbins Geller Rudman
`& Dowd LLP, Boca Raton, FL, for Plaintiffs-
`Appellants.
`Samuel H. Rudman, David A. Rosenfeld,
`and Michael G. Capeci, on the brief, Robbins
`Geller Rudman & Dowd LLP, Melville, NY,
`for Plaintiffs-Appellants.
`James M. Hughes, and Christopher F.
`Moriarty, on the brief, Motley Rice LLC,
`Mount Pleasant, SC, for Plaintiffs-Appellants.
`William H. Narwold, and Mathew P.
`Jasinski, on the brief, Motley Rice LLC,
`Hartford, CT, for Plaintiffs-Appellants.
`Louis M. Bogard, on the brief, Motley Rice
`LLC, Washington, DC, for Plaintiffs-
`Appellants.
`2
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`ANDREW B. CLUBOK (Susan E. Engel,
`Matthew J. Peters, and Jessica L. Saba, on
`the brief), Latham & Watkins LLP,
`Washington, DC, for Defendants-Appellees.
`Kendra N. Beckwith, on the brief, Messner
`Reeves LLP, Denver, CO, for Defendants-
`Appellees.
`
`
`SACK, Circuit Judge:
`
`This appeal concerns an amended class-action complaint filed by the
`
`plaintiffs-appellants, Metzler Asset Management GmbH and Construction
`
`Laborers Pension Trust of Greater St. Louis, in the United States District Court
`
`for the Southern District of New York alleging violations of the federal securities
`
`laws by the defendants-appellees, Chipotle Mexican Grill, Inc., M. Steven Ells,
`
`John R. Hartung, and Montgomery F. Moran. On the defendants-appellees'
`
`motion, the district court (Katherine Polk Failla, Judge) dismissed the amended
`
`complaint without prejudice for failure to state a claim.
`
`The plaintiffs-appellants filed a second amended complaint and the
`
`defendants-appellees again moved to dismiss. In their opposition papers, the
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`plaintiffs-appellants requested leave to file a third amended complaint if the
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`court were to grant the defendants-appellees' motion. After the close of briefing,
`
`the court granted the defendants-appellees' motion to dismiss and denied the
`
`
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`3
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`plaintiffs-appellants' request for permission to file a third amended complaint on
`
`the grounds that they had failed to cure deficiencies by amendments previously
`
`allowed, amendment would prejudice the defendants, and amendment would be
`
`futile. Accordingly, the district court dismissed the second amended complaint
`
`with prejudice and entered judgment for the defendants-appellees.
`
`The plaintiffs-appellants then moved under Federal Rules of Civil
`
`Procedure 59(e) and 60(b) for relief from the judgment and for leave to file a third
`
`amended complaint. The court denied the motion on the grounds that the
`
`plaintiffs-appellants were not entitled to relief under Rules 59(e) and 60(b) and,
`
`in the alternative, that amendment would be futile. The plaintiffs-appellants
`
`challenge this ruling on appeal. They argue that the district court analyzed their
`
`motion incorrectly under Rules 59(e) and 60(b) and erred in concluding that
`
`amendment would be futile. For the reasons set forth below, we conclude that
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`the district court correctly analyzed the plaintiffs-appellants' motion under Rules
`
`59(e) and 60(b) and acted well within its discretion in denying that motion. As a
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`result, we do not reach the district court's alternative holding or the plaintiffs-
`
`appellants' challenges to it. We therefore affirm the judgment of the district
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`court.
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`4
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`BACKGROUND
`
`I. Factual Background
`
`The following statement of facts is drawn from the allegations in the
`
`plaintiffs-appellants' proposed third amended complaint.
`
`1. The Parties
`
`The plaintiffs-appellants in this class action are Metzler Asset Management
`
`GmbH and Construction Laborers Pension Trust of Greater St. Louis ("Metzler"
`
`and the "Trust" respectively; together the "plaintiffs" or the "plaintiffs-
`
`appellants"). They purchased shares of Chipotle Mexican Grill, Inc. ("Chipotle")
`
`common stock between February 5, 2015 and February 2, 2016 (the "class
`
`period").
`
`The defendants-appellees are Chipotle, M. Steven Ells ("Ells"),
`
`Montgomery F. Moran ("Moran"), and John R. Hartung ("Hartung"). Chipotle is
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`a fast-food restaurant chain. It was founded by defendant Ells in 1993 and by
`
`December 31, 2015 had grown to operate over 1,900 restaurants.
`
`During the class period, which originally ran from February 5, 2015,
`
`through February 2, 2016, before it was shortened to October 21, 2015, through
`
`February 2, 2016, defendants Ells and Moran served as co-chief executive officers
`
`
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`("co-CEOs") of Chipotle while defendant Hartung served as chief financial officer
`
`("CFO"). Defendants Ells and Moran served also on Chipotle's board of directors
`
`(the "board") — Moran as a director and Ells as the chairman. On December 12,
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`2016, Moran resigned both of his positions at the board's request. Ells then
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`served as the sole CEO until he resigned on November 29, 2017. He continued to
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`serve as chairman of the board.
`
`2. Chipotle's Methods of Food Preparation
`
` Chipotle sells ready-to-eat food products that contain produce including
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`tomatoes, lettuce, red onions, jalapeños, and cilantro. Up until late 2014, the
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`company prepared its produce in centralized commissaries. For example,
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`tomatoes would be sliced or diced in such a commissary before being shipped to
`
`individual restaurants.
`
`During 2014 and 2015, FDA regulations required such centralized
`
`commissaries to provide two different types of testing to ensure food safety: raw
`
`material testing and end-product testing.
`
`Raw material testing involves testing raw food items for pathogens upon
`
`their arrival at the commissary. If any products test positive, they would not be
`
`processed.
`
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`End-product — or batch — testing involves testing a sample of processed
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`food at set time intervals, for example, every fifteen minutes. If a sample tests
`
`negative for pathogens, then the batch from which the sample came would be
`
`approved for shipment to the company's individual restaurants. If, however, a
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`sample tests positive for pathogens, then the batch of processed food from which
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`the sample came would be discarded. In addition, the Chipotle commissary
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`would trace through its supply chain to try to identify the source of the
`
`contaminated batch and prevent the company's restaurants from using
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`potentially contaminated produce.
`
`In late 2014, Chipotle transitioned from preparing the produce for its
`
`ready-to-eat food products in centralized commissaries to preparing the produce
`
`in its individual restaurants. "[T]his switch meant that 1,900 individual Chipotle
`
`restaurants were asked overnight to do something they previously had no
`
`training or experience with doing — ensuring the same level of food safety
`
`standards and controls that are in place in established commissaries." Proposed
`
`Third Amended Complaint ("PTAC") ¶ 83. But, according to a former Chipotle
`
`employee and area manager, both before the transition and throughout the class
`
`period, the individual restaurants did not have a procedure in place to test
`
`
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`produce for pathogens. As a result, the "risks to Chipotle's operations,"
`
`specifically that its food products would cause outbreaks of food-borne illness,
`
`"dramatically increased" after the transition. Id. ¶ 84.
`
`Several additional factors contributed to the increased risk: (1) "the number
`
`of workers handling the produce without effective training in food safety," id. ¶
`
`86, (2) the increased "number of surfaces that the produce would come into
`
`contact with by virtue of being prepared in the restaurants," id., and (3) the
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`difficulty or impossibility of performing end-product testing at, and supply chain
`
`tracing from, individual restaurants, which, in the event of a food-borne illness
`
`outbreak, would preclude health regulators from identifying and
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`"extinguish[ing] the source of . . . [the] outbreak with any reasonable degree of
`
`certainty," id. ¶ 95.
`
`3. The Outbreaks
`
`The plaintiffs allege that this increased risk of food-borne illness outbreaks
`
`following the transition was realized. Prior to the transition, from 2008 to
`
`December 2014, there were three outbreaks of food-borne illness from Chipotle
`
`food products. After the transition, from December 2014 through December
`
`2015, there were fourteen outbreaks linked to Chipotle customers or locations:
`
`
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`8
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`five Salmonella outbreaks, six E. coli outbreaks, and three Norovirus outbreaks.
`
`These outbreaks occurred in various parts of the country, affecting at least 23
`
`states and sickening a total of approximately 611 people.
`
`The Center for Disease Control ("CDC"), the Food and Drug
`
`Administration ("FDA"), and state or local public health officials investigated at
`
`least seven of these outbreaks.1 The government entities requested "ingredient
`
`traceback information from Chipotle to identify the source of the outbreak[s]."
`
`PTAC ¶ 117. Chipotle responded with "limited" or "incomplete" information,
`
`which hindered, delayed, or prevented public health officials from identifying
`
`conclusively specific ingredients or suppliers as the source of the outbreaks. Id.
`
`¶¶ 120, 122-23.
`
`Public health officials were able to identify sources they suspected of
`
`causing several outbreaks. They included contaminated produce items such as
`
`cilantro, red onions, jalapeños, tomatoes, and lettuce which caused six outbreaks,
`
`and sick employees reporting to work which caused three outbreaks. They were
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`unable to identify a source or suspected source for five of the outbreaks.
`
`
`1 According to the plaintiffs, Chipotle would have been made aware of several
`outbreaks because a state or local health agency's report "on the Chipotle restaurants
`involved in the outbreak" would have been forwarded to the company. PTAC ¶ 133.
`9
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`4. Chipotle's Response
`
`Chipotle responded by announcing in September 2015 that it was
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`"implementing a comprehensive whole chain traceability program" that would
`
`allow it to trace ingredients "across the supply chain (end to end)." PTAC
`
`¶¶ 400-01. In November 2015, the company further announced that it had
`
`retained two food safety consulting firms to "assess and improve upon its . . .
`
`standards for food safety." Id. ¶ 261. Following this assessment, Chipotle issued
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`a press release on December 4, 2015, stating that it would adopt the consultants'
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`proposals in their entirety, establishing a new "enhanced food safety program."
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`Id. ¶ 262.
`
`According to Chipotle, the new food safety program would include "high-
`
`resolution testing of all fresh produce in which a series of DNA-based tests . . .
`
`ensure the quality and safety of ingredients before they are shipped to
`
`restaurants." Id. It also called for revised "internal training to ensure that all
`
`employees . . . understand the company's . . . standards for food safety and food
`
`handling." Id.
`
`It soon became evident that the new program would also involve a switch
`
`back to processing food in centralized commissaries: At a consumer conference
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`
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`10
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`on December 8, 2015, defendant Ells stated that the company had responded to
`
`an outbreak in the Pacific Northwest by implementing "system-wide" changes,
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`including, for example, "dicing our tomatoes in a commissary, so that they could
`
`go through a sanitizing kill step and then [be] hermetically sealed in containers
`
`and delivered to the restaurants." PTAC ¶ 264. Ells announced that cilantro and
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`romaine lettuce also would be "washed and tested" before being shipped to the
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`individual restaurants. Id. The announcement — and others2 — revealed
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`management's conclusion that it was not possible to perform in restaurants the
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`type of pathogen testing performed in centralized commissaries. Id. ¶¶ 264-266.
`
`
`2 At a conference on January 13, 2016, Ells stated that:
`
`
`
`
`For years . . . we were dicing our tomatoes in a central kitchen.
`It was only for the last couple years that we brought them
`back in-house to dice. But you are not able to do the high-
`resolution testing in the restaurant, so that's why back into the
`central kitchen.
`
`The other item that we think is important to do in the central
`kitchen is lettuce . . . . We'll shred it in the central kitchen and
`wash it; do this high resolution testing. Then dry it and
`package it and off to the restaurant it will go . . .
`
`
`PTAC ¶ 266.
`
`
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`11
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`Four days later, Chipotle announced that, at the board's request, Moran
`
`was resigning as co-CEO and member of the board of directors effective in early
`
`2017.
`
`5. The Effects on Chipotle's Financial Performance
`
`The outbreaks "had an adverse impact on [Chipotle's] financial and
`
`operating results" in the fourth quarter of 2015. PTAC ¶ 263. In its Form 10-K
`
`for the fiscal year ending December 31, 2015, filed on February 5, 2016, Chipotle
`
`stated that "significant publicity regarding a number of food-borne illness
`
`incidents associated with Chipotle restaurants . . . had a severe adverse impact
`
`on our sales and profitability." Id. ¶ 270. Comparable restaurant sales, defined
`
`as the "change in period-over-period sales for restaurants beginning in their 13th
`
`full calendar month of operation," declined 14.6 percent in the fourth quarter of
`
`2015 and approximately 36 percent in January 2016. Id.
`
`The company stated that it planned to "increase marketing and
`
`promotional spending considerably during the first half of 2016 . . . in an effort to
`
`attract customers back to our restaurants and reverse negative sales trends." Id.
`
`Chipotle's efforts, however, were unsuccessful. In its Form 10-K filed for the
`
`fiscal year ending December 31, 2016, the company reported $22.9 million in
`
`
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`12
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`earnings compared to $475.6 million in earnings for the fiscal year ending
`
`December 31, 2015 — a 95.2 percent decline.
`
`II. Procedural History
`
`1. The Complaint
`
`On January 8, 2016, plaintiff Susie Ong, who is not a party to this appeal,
`
`filed this putative securities class action against Chipotle, Ells, Moran, and
`
`Hartung in the United States District Court for the Southern District of New
`
`York. The complaint asserted causes of action under sections 10(b) and 20(a) of
`
`the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, on behalf of
`
`purchasers of Chipotle securities between February 4, 2015, and January 5, 2016.
`
`The complaint alleged that the defendants made materially false and misleading
`
`statements regarding the company's quality controls that artificially inflated
`
`Chipotle's stock price. The putative class allegedly suffered damages when
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`Chipotle's stock price dropped after a series of food-borne illness outbreaks from
`
`August to December 2015 were connected to Chipotle customers and restaurants.
`
`On March 8, 2016, by-then putative class members Metzler and the Trust
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`made a motion asking the court to appoint them as lead plaintiffs and to approve
`
`their counsel as lead counsel. On April 18, 2016, the court granted the motion.
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`2. The First Amended Complaint and Motion to Dismiss
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`Two months later, on June 17, 2016, the plaintiffs filed an amended
`
`complaint that included more detailed and specific allegations than had the
`
`original complaint. Among other things, the amended complaint alleged that the
`
`defendants had violated federal securities laws based on Chipotle's failure to
`
`disclose its decision to switch "from using central commissary kitchens to process
`
`and prepare the produce used in its restaurants to processing produce in each of
`
`the Company's over 1,900 restaurants," and the increased risk of food-borne
`
`illness outbreaks that resulted from that decision. First Amended Complaint ¶ 4.
`
`That increased risk allegedly was realized when there were at least seven food-
`
`borne illness outbreaks from July to December 2015.
`
`On August 18, 2016, the defendants moved to dismiss the amended
`
`complaint. On March 8, 2017, the court granted the motion. It concluded that
`
`the plaintiffs had failed to state a claim because, among other things, the facts
`
`alleged did not support the inference that any defendant was aware of any
`
`heightened risk associated with the move away from central commissary food
`
`preparation. The court determined that the allegations in fact supported the
`
`opposite inference:
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`14
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`Plaintiffs allege that Chipotle transitioned to in-store
`produce production in "late 2014," and have pleaded
`facts indicating that the first outbreak of food-borne
`illness at a Chipotle restaurant occurred in July 2015, at
`least seven months later. For at least seven months,
`therefore, this transition appeared not to heighten
`Chipotle's risk at all.
`
`Opinion and Order of the District Court issued Mar. 8, 2017. The court
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`dismissed the amended complaint without prejudice and granted the plaintiffs'
`
`request for leave to amend their complaint.
`
`3. The Second Amended Complaint and Motion to Dismiss
`
`The plaintiffs filed a second amended complaint (the "SAC") on April 7,
`
`2017. It included new allegations of six additional outbreaks, including several
`
`in late 2014 and early 2015, presumably to rebut the district court's conclusion
`
`that the transition "appeared not to heighten Chipotle's risk at all" for the first
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`half of 2015. Id. The defendants again moved to dismiss. The plaintiffs, in their
`
`opposition papers, included a request for leave to replead if the Court were to
`
`grant any part of the defendants' motion.
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`After briefing on the motion was complete, the plaintiffs filed a letter with
`
`the court to inform it that another outbreak had occurred in late 2014. The letter
`
`stated that the plaintiffs had learned of this outbreak in the course of their
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`"ongoing investigation," and that "[t]his additional information further
`
`demonstrates that defendants . . . knew about, or recklessly disregarded,
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`Chipotle's food-borne illness outbreaks by at least December 2014 and Chipotle's
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`deficient ingredient traceability program during the Class Period." Plaintiffs'
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`Letter dated Nov. 1, 2017, 16-cv-141, Dct. No. 96 at 1.
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`The defendants filed a letter in response, arguing that the court should not
`
`consider the plaintiffs' letter or the additional factual allegations therein. The
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`court agreed. "In the absence of a motion to amend or a motion to convert the
`
`pending motion to dismiss into a motion for summary judgment," it said, it could
`
`not consider the "newly-proffered factual information." Memo Endorsement
`
`filed Nov. 6, 2017, 16-cv-141, Dct. No. 98 at 2.
`
`Two days later, the plaintiffs filed a letter with the court seeking to make
`
`clear that they did "not intend to file a motion to amend" the SAC "at this time."
`
`It stated in relevant part that
`
`[the plaintiffs] believe that amendment is premature
`given the additional evidence Plaintiffs expect to obtain
`over the next several months . . . , but anticipate moving
`to amend, if necessary and/or appropriate, once this
`evidence is received. While we believe that the SAC
`adequately states a claim and that the pending motion to
`dismiss will be denied, in the event that the Court
`dismiss the SAC, Plaintiffs respectfully request that the
`
`
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`information contained in our November 1 letter be
`considered as part of the Court's leave to amend analysis
`and that any dismissal be without prejudice.
`
`Plaintiffs' Letter dated Nov. 8, 2017, 16-cv-141, Dct. No. 99. The plaintiffs did not
`
`move to amend thereafter.
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`On March 22, 2018, the district court granted the defendants' motion to
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`dismiss. It concluded, inter alia, that the plaintiffs had failed to allege adequately
`
`that the defendants knew and failed to disclose that transitioning away from
`
`preparing produce in centralized commissaries would result in an increased risk
`
`of food-borne illness outbreaks. The court concluded that the outbreaks,
`
`including those in December 2014 and early 2015, were not "conclusively tied to a
`
`specific ingredient or supplier," or "to any shift away from commissary produce
`
`processing." Opinion and Order issued Mar. 22, 2018, Special App'x ("SPA") at
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`95. Any heightened risk of food-borne illness outbreaks resulting from that shift
`
`therefore was only "potential." Id. (internal quotation marks omitted).
`
`In the same opinion and order, the district court denied the plaintiffs'
`
`request for leave to file a third amended complaint. While leave to amend
`
`should be freely given "when justice so requires," id. at 118 (quoting McCarthy v.
`
`Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007)), the district court noted
`
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`that it may be denied if: (1) amendment would be futile, (2) the plaintiff has had
`
`ample opportunity to state a claim, or (3) the defendant would suffer undue
`
`prejudice as a consequence of further amendment, see id. at 119. The district
`
`court concluded that there were adequate grounds to deny the application under
`
`these principles. First, the court noted that the plaintiffs had had multiple
`
`opportunities to cure deficiencies in the pleadings by amendments previously
`
`allowed. Second, it stated that the plaintiffs could not assuage its concern that
`
`further amendment would be futile because they could not demonstrate that the
`
`fruits of their ongoing investigation would cure the deficiencies in their SAC.
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`Finally, the court said that "extending the pleading stage in this litigation
`
`indefinitely would cause Defendants undue prejudice given their interest in
`
`finality and repose." Id. at 120. The court therefore denied the application for
`
`leave to amend and granted the defendants' motion to dismiss with prejudice.
`
`The following day, the Clerk of Court entered judgment for the defendants and
`
`closed the case.
`
`4. The Plaintiffs' Motion for Relief from the Judgment and for Leave to file a Third
`Amended Complaint
`
`On April 20, 2018, the plaintiffs moved in the district court for relief from
`
`the judgment, pursuant to Federal Rules of Civil Procedure 59(e) and 60(b), and
`
`
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`18
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`for leave to file a proposed third amended complaint ("PTAC"), pursuant to Rule
`
`15(a)(2). They sought "relief from the Judgment . . . based on: (a) information
`
`received (i) since the SAC was filed, from FOIA requests; and (ii) since the Court
`
`dismissed the SAC, from recently unsealed pleadings in related litigation; and (b)
`
`other information not considered by the Court in rendering its decision." Pls.
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`Mem. of Law in Support of Motion, 16-cv-141, Dct. No. 107 at 1. They argued
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`that the court should grant them leave to file the PTAC because the new
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`allegations it contained "cure the deficiencies perceived by the Court" in the SAC
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`and therefore amendment would not be futile. Id. at 2.
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`On November 20, 2018, the court denied the motion. It concluded that the
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`plaintiffs were not entitled to relief because the purported newly discovered
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`evidence — but for a single allegation — was not in fact new for purposes of
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`Rules 59(e) and 60(b). The court noted that the plaintiffs had received the
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`information prior to entry of the judgment or otherwise failed to make clear
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`when they had received it. And "the single new fact identified by Plaintiffs [did]
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`not move the needle in favor of reopening the Court's prior decision." Opinion
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`and Order dated Nov. 20, 2018, SPA at 139. The court noted, however, that even
`
`
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`19
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`
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`if it were to consider the purported new information in the PTAC, the result
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`would not change because the proposed amendment would be futile.
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`This appeal followed.
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`DISCUSSION
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`On appeal, the plaintiffs-appellants contend only, in sum, that "[i]n
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`denying [their] post-judgment motion for leave to amend[,] the district court
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`applied an incorrect legal standard," and that "[t]he district court erroneously
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`determined that the filing of the PTAC was futile." Appellants' Br. at iii. As to
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`the former, they argue that the court was obliged to consider only the standard
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`that governs pre-trial motions for leave to amend a pleading pursuant to Federal
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`Rule of Civil Procedure 15(a)(2), which states that before trial, "a party may
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`amend its pleading only with the opposing party's written consent or the court's
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`leave. The court should freely give leave when justice so requires." Fed. R. Civ.
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`P. 15(a)(2). We conclude that the argument is without merit and that the district
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`court applied the correct legal standard. We also conclude that the district court
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`acted well within its discretion in denying the plaintiffs-appellants' motion. We
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`therefore affirm the judgment of the district court without addressing its
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`alternative holding that amendment would be futile.
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`
`
`20
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`
`
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`I. Legal Standard
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`1. Rules 59(e), 60(b), and 15(a)(2)
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`"We review the district court's denial of a post-judgment motion for leave
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`to replead for abuse of discretion." Williams v. Citigroup Inc., 659 F.3d 208, 212 (2d
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`Cir. 2011) (citations omitted). "A district court abuses its discretion when it
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`'bases its ruling on an incorrect legal standard or a clearly erroneous assessment
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`of the facts.'" City of New York v. Group Health Inc., 649 F.3d 151, 156 (2d Cir. 2011)
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`(quoting Bronx Household of Faith v. Bd. of Educ., 331 F.3d 342, 348 (2d Cir. 2003)).
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`On appeal, the plaintiffs-appellants argue that the district court applied the
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`wrong legal standard to their post-judgment motion for relief from the judgment
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`and for leave to file an amended complaint. They contend that the correct
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`standard is that applicable to pre-trial motions for leave to amend a pleading
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`pursuant to Rule 15(a)(2), which requires leave to be freely given unless there is
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`"any apparent or declared reason—such as undue delay, bad faith or dilatory
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`motive on the part of the movant, repeated failure to cure deficiencies by
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`amendments previously allowed, undue prejudice to the opposing party by
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`virtue of allowance of the amendment, futility of amendment, etc." Appellants'
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`Br. at 32 (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
`
`
`
`21
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`
`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`We disagree. It is well established that "[a] party seeking to file an
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`amended complaint post[-]judgment must first have the judgment vacated or set
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`aside pursuant to Fed. R. Civ. P. 59(e) or 60(b)." Ruotolo v. City of New York, 514
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`F.3d 184, 191 (2d Cir. 2008). "[I]t would be contradictory to entertain a motion to
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`amend the complaint" without "a valid basis to vacate the previously entered
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`judgment." Nat'l Petrochemical Co. of Iran v. M/T Stolt Sheaf, 930 F.2d 240, 245 (2d
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`Cir. 1991). "To hold otherwise would enable the liberal amendment policy of
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`Rule 15(a) to be employed in a way that is contrary to the philosophy favoring
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`finality of judgments and the expeditious termination of litigation." Williams, 659
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`F.3d at 213 (brackets and internal quotation marks omitted) (quoting Nat'l
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`Petrochemical, 930 F.2d at 245).
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`Rule 59(e) provides that a "motion to alter or amend a judgment must be
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`filed no later than 28 days after the entry of the judgment." Fed. R. Civ. P. 59(e).
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`A court may grant a Rule 59(e) motion "only when the [movant] identifies 'an
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`intervening change of controlling law, the availability of new evidence, or the
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`need to correct a clear error or prevent manifest injustice.'" See Kolel Beth Yechiel
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`Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 729 F.3d 99, 104 (2d Cir. 2013)
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`(quoting Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d
`
`
`
`22
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`
`
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`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
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`Cir. 1992)); see also Hollander v. Members of the Bd. of Regents of the Univ. of N.Y.,
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`524 F. App'x 727, 729 (2d Cir. 2013) (summary order).
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`Rule 60(b) provides that a court may relieve a party from a final judgment
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`for the following reasons:
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`(1) mistake, inadvertence