throbber
18-3807-cv
`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
`
`
`
`

`

`
`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
`
`plaintiffs-appellants requested leave to file a third amended complaint if the
`
`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
`
`
`
`3
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`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
`
`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
`
`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
`
`court.
`
`
`
`4
`
`

`

`
`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
`
`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
`
`
`
`5
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`("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,
`
`2016, Moran resigned both of his positions at the board's request. Ells then
`
`served as the sole CEO until he resigned on November 29, 2017. He continued to
`
`serve as chairman of the board.
`
`2. Chipotle's Methods of Food Preparation
`
` Chipotle sells ready-to-eat food products that contain produce including
`
`tomatoes, lettuce, red onions, jalapeños, and cilantro. Up until late 2014, the
`
`company prepared its produce in centralized commissaries. For example,
`
`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.
`
`
`
`6
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`End-product — or batch — testing involves testing a sample of processed
`
`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
`
`sample tests positive for pathogens, then the batch of processed food from which
`
`the sample came would be discarded. In addition, the Chipotle commissary
`
`would trace through its supply chain to try to identify the source of the
`
`contaminated batch and prevent the company's restaurants from using
`
`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
`
`
`
`7
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`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
`
`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
`
`"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:
`
`
`
`8
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`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
`
`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
`
`
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`4. Chipotle's Response
`
`Chipotle responded by announcing in September 2015 that it was
`
`"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
`
`a press release on December 4, 2015, stating that it would adopt the consultants'
`
`proposals in their entirety, establishing a new "enhanced food safety program."
`
`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
`
`
`
`10
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`on December 8, 2015, defendant Ells stated that the company had responded to
`
`an outbreak in the Pacific Northwest by implementing "system-wide" changes,
`
`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
`
`romaine lettuce also would be "washed and tested" before being shipped to the
`
`individual restaurants. Id. The announcement — and others2 — revealed
`
`management's conclusion that it was not possible to perform in restaurants the
`
`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.
`
`
`
`11
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`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
`
`
`
`12
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`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
`
`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
`
`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.
`
`
`
`13
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`2. The First Amended Complaint and Motion to Dismiss
`
`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:
`
`
`
`14
`
`

`

`
`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
`
`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
`
`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.
`
`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
`
`
`
`15
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`"ongoing investigation," and that "[t]his additional information further
`
`demonstrates that defendants . . . knew about, or recklessly disregarded,
`
`Chipotle's food-borne illness outbreaks by at least December 2014 and Chipotle's
`
`deficient ingredient traceability program during the Class Period." Plaintiffs'
`
`Letter dated Nov. 1, 2017, 16-cv-141, Dct. No. 96 at 1.
`
`The defendants filed a letter in response, arguing that the court should not
`
`consider the plaintiffs' letter or the additional factual allegations therein. The
`
`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
`
`
`
`16
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`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.
`
`On March 22, 2018, the district court granted the defendants' motion to
`
`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
`
`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
`
`
`
`17
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`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.
`
`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
`
`
`
`18
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`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.
`
`Mem. of Law in Support of Motion, 16-cv-141, Dct. No. 107 at 1. They argued
`
`that the court should grant them leave to file the PTAC because the new
`
`allegations it contained "cure the deficiencies perceived by the Court" in the SAC
`
`and therefore amendment would not be futile. Id. at 2.
`
`On November 20, 2018, the court denied the motion. It concluded that the
`
`plaintiffs were not entitled to relief because the purported newly discovered
`
`evidence — but for a single allegation — was not in fact new for purposes of
`
`Rules 59(e) and 60(b). The court noted that the plaintiffs had received the
`
`information prior to entry of the judgment or otherwise failed to make clear
`
`when they had received it. And "the single new fact identified by Plaintiffs [did]
`
`not move the needle in favor of reopening the Court's prior decision." Opinion
`
`and Order dated Nov. 20, 2018, SPA at 139. The court noted, however, that even
`
`
`
`19
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`if it were to consider the purported new information in the PTAC, the result
`
`would not change because the proposed amendment would be futile.
`
`This appeal followed.
`
`DISCUSSION
`
`On appeal, the plaintiffs-appellants contend only, in sum, that "[i]n
`
`denying [their] post-judgment motion for leave to amend[,] the district court
`
`applied an incorrect legal standard," and that "[t]he district court erroneously
`
`determined that the filing of the PTAC was futile." Appellants' Br. at iii. As to
`
`the former, they argue that the court was obliged to consider only the standard
`
`that governs pre-trial motions for leave to amend a pleading pursuant to Federal
`
`Rule of Civil Procedure 15(a)(2), which states that before trial, "a party may
`
`amend its pleading only with the opposing party's written consent or the court's
`
`leave. The court should freely give leave when justice so requires." Fed. R. Civ.
`
`P. 15(a)(2). We conclude that the argument is without merit and that the district
`
`court applied the correct legal standard. We also conclude that the district court
`
`acted well within its discretion in denying the plaintiffs-appellants' motion. We
`
`therefore affirm the judgment of the district court without addressing its
`
`alternative holding that amendment would be futile.
`
`
`
`20
`
`

`

`
`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
`
`1. Rules 59(e), 60(b), and 15(a)(2)
`
`"We review the district court's denial of a post-judgment motion for leave
`
`to replead for abuse of discretion." Williams v. Citigroup Inc., 659 F.3d 208, 212 (2d
`
`Cir. 2011) (citations omitted). "A district court abuses its discretion when it
`
`'bases its ruling on an incorrect legal standard or a clearly erroneous assessment
`
`of the facts.'" City of New York v. Group Health Inc., 649 F.3d 151, 156 (2d Cir. 2011)
`
`(quoting Bronx Household of Faith v. Bd. of Educ., 331 F.3d 342, 348 (2d Cir. 2003)).
`
`On appeal, the plaintiffs-appellants argue that the district court applied the
`
`wrong legal standard to their post-judgment motion for relief from the judgment
`
`and for leave to file an amended complaint. They contend that the correct
`
`standard is that applicable to pre-trial motions for leave to amend a pleading
`
`pursuant to Rule 15(a)(2), which requires leave to be freely given unless there is
`
`"any apparent or declared reason—such as undue delay, bad faith or dilatory
`
`motive on the part of the movant, repeated failure to cure deficiencies by
`
`amendments previously allowed, undue prejudice to the opposing party by
`
`virtue of allowance of the amendment, futility of amendment, etc." Appellants'
`
`Br. at 32 (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
`
`
`
`21
`
`

`

`
`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
`
`amended complaint post[-]judgment must first have the judgment vacated or set
`
`aside pursuant to Fed. R. Civ. P. 59(e) or 60(b)." Ruotolo v. City of New York, 514
`
`F.3d 184, 191 (2d Cir. 2008). "[I]t would be contradictory to entertain a motion to
`
`amend the complaint" without "a valid basis to vacate the previously entered
`
`judgment." Nat'l Petrochemical Co. of Iran v. M/T Stolt Sheaf, 930 F.2d 240, 245 (2d
`
`Cir. 1991). "To hold otherwise would enable the liberal amendment policy of
`
`Rule 15(a) to be employed in a way that is contrary to the philosophy favoring
`
`finality of judgments and the expeditious termination of litigation." Williams, 659
`
`F.3d at 213 (brackets and internal quotation marks omitted) (quoting Nat'l
`
`Petrochemical, 930 F.2d at 245).
`
`Rule 59(e) provides that a "motion to alter or amend a judgment must be
`
`filed no later than 28 days after the entry of the judgment." Fed. R. Civ. P. 59(e).
`
`A court may grant a Rule 59(e) motion "only when the [movant] identifies 'an
`
`intervening change of controlling law, the availability of new evidence, or the
`
`need to correct a clear error or prevent manifest injustice.'" See Kolel Beth Yechiel
`
`Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 729 F.3d 99, 104 (2d Cir. 2013)
`
`(quoting Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d
`
`
`
`22
`
`

`

`
`18-3807-cv
`Metzler Investment GmbH and Construction Laborers Pension Trust of Greater St. Louis v. Chipotle Mexican Grill, Inc., et al.
`
`Cir. 1992)); see also Hollander v. Members of the Bd. of Regents of the Univ. of N.Y.,
`
`524 F. App'x 727, 729 (2d Cir. 2013) (summary order).
`
`Rule 60(b) provides that a court may relieve a party from a final judgment
`
`for the following reasons:
`
`(1) mistake, inadvertence

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket