In Re Netflix, Inc., Securities Litigation

Filing 122

Order by Hon. Samuel Conti denying 117 Motion to Alter Judgment.(sclc2, COURT STAFF) (Filed on 1/17/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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In re NETFLIX, INC., SECURITIES )
LITIGATION
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Case No. 12-00225 SC
ORDER DENYING MOTION TO ALTER
OR AMEND THE JUDGMENT AND
MOTION FOR LEAVE TO FILE
AMENDED COMPLAINT

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I.

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INTRODUCTION
Now before the Court are Plaintiffs Arkansas Teacher

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Retirement System and State-Boston Retirement System's

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("Plaintiffs") motion (1) to alter or amend the Court's September

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2013 judgment and (2) for leave to file their proposed second

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amended complaint.

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briefed, ECF Nos. 119 ("Opp'n"), 120 ("Reply"), and appropriate for

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resolution without oral argument, Civ. L.R. 7-1(b).

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below, the motion is DENIED.

ECF No. 117 ("Mot.").

The motion is fully

As explained

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BACKGROUND

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The parties are familiar with this case's facts.

A brief

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procedural summary follows.

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was filed on January 13, 2012.

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plaintiffs, Plaintiffs filed a new consolidated class action

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The original complaint in this case
After their appointment as lead

It asserted that Defendants 1

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complaint ("CCAC") on June 26, 2012.

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made numerous false and misleading statements concerning: (1)

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Netflix's accounting practices (including Netflix's alleged

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violation of general accepted accounting principles ("GAAP")), (2)

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the "virtuous cycle" of accumulating customers and content, (3)

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streaming's profitability relative to the DVD business, (4)

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Netflix's statements about its pricing changes, and (5) Defendants'

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statements to the SEC.

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13, 2013, finding that Plaintiffs' factual allegations did not

The Court dismissed the CCAC on February

United States District Court

For the Northern District of California

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plausibly support their claim that Defendants made false

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statements.

ECF No. 102 ("Feb. 13 Order").

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Plaintiffs filed their first amended complaint ("FAC") on

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March 22, 2013, which abandoned the GAAP and virtuous cycle claims.

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It focused on Plaintiffs' other theories, adding some detail about

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them as well as the statements of a new confidential witness.

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Court dismissed the FAC with prejudice on August 20, 2013, finding

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again that Plaintiffs failed to plausibly allege a false statement

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and that amendment would be futile.

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Five weeks later, Defendants asked the Court to enter judgment in

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their favor, which the Court did on September 27, 2013.

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116.

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October 25, 2013, Plaintiffs filed the instant motion, asking the

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Court to vacate its judgment per Rule 59 or relieve them of the

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judgment per Rule 60(b), and also to give Plaintiffs leave to file

The

ECF No. 114 ("Aug. 20 Order").

ECF No.

Plaintiffs took no action during the intervening time.

On

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Netflix, Inc. ("Netflix"); Netflix Co-Founder, Chairman of the
Board, and CEO Reed Hastings; current Netflix CFO David Wells; and
Barry McCarthy, Netflix's CFO until December 10, 2010 (collectively
"Defendants").

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their proposed second amended complaint ("PSAC").

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Defendants

oppose the motion.

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LEGAL STANDARDS

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A.

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Rule 59(e) gives district courts "considerable discretion"

Rule 59(e)

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when considering motions to alter or amend judgments.

Turner v.

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Burlington N. Santa Fe R.R., 338 F.3d 1058, 1063 (9th Cir. 2003).

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This is "an extraordinary remedy, to be used sparingly in the

United States District Court

For the Northern District of California

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interests of finality and conservation of judicial resources."

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Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir.

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2000) (internal citations and quotation marks omitted).

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is not properly reopened absent highly unusual circumstances,

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unless the district court is presented with newly discovered

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evidence, committed clear error, or if there is an intervening

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change in the controlling law."

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1236 (9th Cir. 2001) (internal citations and quotation marks

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omitted).

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reasonably have been made earlier in the litigation.

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229 F.3d at 890.

"Judgment

Weeks v. Bayer, 246 F.3d 1231,

Rule 59(e) cannot be used to raise arguments that could
Kona Enters.,

Plaintiffs argue that the Court committed "manifest legal

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error" in its August 20 Order.

Such an error must be "plain and

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indisputable," amounting "to a complete disregard of the

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controlling law or the credible evidence in the record."

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Tiberon Minerals Ltd., No. 07-2732 SC, 2008 WL 686833, at *1 (N.D.

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Cal. Mar. 11, 2008) (citation omitted).

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///

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///

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Moss v.

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B.

Rule 60(b)

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Under Rule 60(b), the Court can "relieve a party or its legal

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representative from a final judgment, order, or proceeding" for one

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of six reasons.

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here, though they do assert that relief is possible "for, among

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other things, 'mistake,' 'newly discovered evidence,' or 'any other

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reason that justifies relief.'"

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argument is that the Court made a mistake in failing to consider

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Plaintiffs' argument in opposition to Defendants' motion to dismiss

Plaintiffs do not specify which reason might apply

Mot. at 5.

Plaintiffs' main

United States District Court

For the Northern District of California

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Plaintiffs' FAC.

In such cases, Plaintiffs have to "set forth

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facts or law of a strongly convincing nature to induce the court to

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reverse its prior decision."

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N.A., Nos. C-09-5272 MEJ, C-09-5560 MEJ, 2010 WL 4010116, at *5

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(N.D. Cal. Oct. 13, 2010) (internal citations omitted).

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discovered evidence is at issue here, so that section of the rule

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does not apply.

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Plaintiffs cite -- the catch-all applying when the reason for

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granting relief is not covered by Rule 60's other provisions -- is

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a rarely-applied equitable remedy, to be used only when some

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hardship or extraordinary circumstance demands that the Court

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prevent or correct an erroneous judgment.

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Gordon, 475 F.3d 1039, 1044 (9th Cir. 2007); Fantasyland Video,

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Inc. v. Cnty. of San Diego, 505 F.3d 996, 1005 (9th Cir. 2007).

Benson v. J.P. Morgan Chase Bank,

Cf. Fed. R. Civ. P. 60(b).

No newly

The final section

See, e.g., Delay v.

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DISCUSSION

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Plaintiffs claim that the Court conflated falsity with

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scienter, overlooked false statements pled in the FAC,

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misinterpreted false statements from the FAC, failed to

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holistically consider the facts supporting scienter, and failed to

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draw reasonable inferences in plaintiffs' favor.

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5-15; Reply at 3-10.

See Pls. Mot. at

Having carefully reviewed the parties' briefs and its prior

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orders, the Court does not find that it erred in holding

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Plaintiffs' allegations insufficient to support their claims.

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Plaintiffs' arguments in this motion rehash those the Court found

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wanting.

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Plaintiffs' pleadings were deficient; the Court did not need to

The Court declines to revisit them in this context.

United States District Court

For the Northern District of California

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address scienter because it found that Plaintiffs failed to allege

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a false statement; and the Court made proper inferences per Rule

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12(b)(6) motions.

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trigger Rule 60(b)'s catch-all provision.

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motion is DENIED.

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motion is DENIED.

Further, Plaintiffs cite nothing that would
Plaintiffs' Rule 59(e)

For the same reasons, Plaintiffs' Rule 60(b)

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As to Plaintiffs' motion for leave to file their proposed

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second amended complaint, the Court recognizes that it is the Ninth

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Circuit's policy to grant such motions liberally.

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Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001).

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Court does not find that Plaintiffs have proceeded with bad faith

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or dilatory motives, but they have repeatedly failed to cure

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deficiencies in their pleadings, and the Court previously found

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that amendment would be futile.

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responded to the Court's dismissal orders in this case by adjusting

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their complaints, see Reply at 11-12 & PSAC ¶¶ 19, 56-59, 60-94),

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but this amounts to removal of certain dismissed allegations and

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merely revisiting other failed contentions.

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///

So it is here.

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Owens v. Kaiser
The

Plaintiffs

The Court has no doubt that Plaintiffs have endeavored in good

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faith to meet the heightened pleading requirements and to comply

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with the Court's guidance, but their arguments simply failed then

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and would, even on de novo review of an amended complaint, fail

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again.

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52 (9th Cir. 2003) (holding that leave to amend is often proper

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except when it is clear that, on de novo review, amendment would be

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futile, and noting that alleging and re-alleging the same failed

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theories generally leads to failure).

United States District Court

For the Northern District of California

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Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-

Plaintiffs' motion for leave

to file their proposed second amended complaint is DENIED.
Finally, Defendants ask the Court to review Plaintiffs'

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filings in this case for violations of Rule 11(b).

Opp'n at 17-18.

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Here they cite the following language from the Private Securities

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Litigation Reform Act of 1995 ("PSLRA"), 15 U.S.C. § 78u-4: "In any

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private action arising under this chapter, upon final adjudication

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of the action, the court shall include in the record specific

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findings regarding compliance by each party and each attorney

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representing any party with each requirement of Rule 11(b) of the

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Federal Rules of Civil Procedure as to any complaint, responsive

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pleading, or dispositive motion."

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Circuit has recently held such a review to be mandatory for lower

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courts.

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754, 757 (7th Cir. 2010) (remanding a PSLRA case for Rule 11(b)

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review).

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suggest that either party breached Rule 11.

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Defendants note that the Seventh

City of Livonia Emps.' Ret. Sys. v. Boeing Co., 711 F.3d

A review of each party's filings in this case does not

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V.

CONCLUSION
As explained above, Plaintiffs Arkansas Teacher Retirement

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System and State-Boston Retirement System's motion to alter or

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amend the judgment and for leave to file a proposed second amended

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complaint is DENIED.

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IT IS SO ORDERED.

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United States District Court

For the Northern District of California

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Dated: January 17, 2014
UNITED STATES DISTRICT JUDGE

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