Hogan v. Pilgrim's Pride Corporation et al

Filing 84

ORDER denying 76 Motion to Alter or Amend the Amended Final Judgment pursuant to Rule 59(e). by Judge R. Brooke Jackson on 11/29/21.(jdyne, )

Case 1:16-cv-02611-RBJ Document 84 Filed 11/29/21 USDC Colorado Page 1 of 8

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No 16-cv-02611-RBJ
PATRICK HOGAN, individually and on behalf of all others similarly situated,
Plaintiff,
v.
PILGRIM’S PRIDE CORPORATION,
WILLIAM W. LOVETTE,
FABIO SANDRI,
Defendants.

ORDER ON PLAINTIFF’S SECOND MOTION FOR RECONSIDERATION

Plaintiff moves for reconsideration of this Court’s order and judgment dismissing his
second amended complaint. The motion is denied.
BACKGROUND
The Court has described the background of this case in several previous orders. Briefly,
this is a federal securities action against Pilgrim’s Pride Corporation (“Pilgrim”), a leading
producer of broiler chickens; William W. Lovette, Pilgrim’s Chief Executive Officer at times
relevant to the case; and Fabio Sandri, Pilgrim’s Chief Financial Officer at times relevant to the
case (“defendants”). The lead plaintiff, George Fuller, asserts claims on behalf of himself and

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others who purchased Pilgrim securities between February 21, 2014 and November 17, 2016. 1
Mr. Fuller purchased 3,859 shares of Pilgrim stock on January 16, 2015 at the price of $34.00
per share and 3,627 additional at $27.95 per share. ECF No. 8-1 at 3. The gist of his complaint
is that defendants concealed their participation in a price-fixing conspiracy that began as early as
2007 and continued through at least November 2016, instead falsely attributing Pilgrim’s success
to operational improvements, resulting in plaintiff’s purchasing his Pilgrim shares at artificially
inflated prices. See ECF No. 47 at 9-12.
On March 14, 2018 this Court granted defendants’ motion to dismiss what by then was
plaintiff’s first amended complaint. ECF No. 41. The Court found that “plaintiff did not plead
the underlying antitrust conspiracy with sufficient particularity.” Id. at 18. The Court described
plaintiff’s case as “essentially premature but not necessarily hopeless.” Id. at 19. The case was
dismissed without prejudice.
Plaintiff moved for reconsideration, based in part on a Northern District of Illinois case
that he characterized as an intervening change in the law. ECF No. 43. The Court denied the
motion, noting that plaintiff’s arguments about that case and his arguments in general rehashed
arguments that the Court had considered and rejected. ECF No. 46 at 2. The Court did grant
plaintiff’s unopposed request for leave to amend but “emphasize[d] that the Court does not want
to go through the motions process again if there are not genuinely new facts that are materially
different than those that the Court has already found to be insufficient to state a claim.” Id. at 3.

Patrick Hogan was the named plaintiff when this putative class action was filed. There was some early
jockeying for the “lead plaintiff” designation, but George Fuller was ultimately appointed as lead plaintiff
on April 4, 2017. ECF No. 24. However, there has never been a request to change the caption.
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Plaintiff filed a second amended complaint on June 8, 2020, more than two years after the
dismissal of the case without prejudice and one and one-half years after leave to amend was
granted. ECF No. 47. The “genuinely new fact” cited by plaintiff to justify the new complaint
was that on June 3, 2020 a federal grand jury in Colorado indicted certain executives of broiler
chicken-producing companies, including two Pilgrim executives (though not the two named as
defendants in the present case) for their role in a price-fixing and bid rigging conspiracy during
the period 2012 through 2017. Id. at 6-7. 2 Plaintiff asserted three claims.
In his first claim plaintiff alleged that defendants violated Section 10(b) of the Exchange
Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, in that they
•

Employed devices, schemes and artifices to defraud;

•

Made untrue statements of material facts or omitted to state material facts
necessary in order to make statements made, in light of the circumstances
under which they were made, not misleading; or

•

Engaged in acts, practices, and a course of business that operated as a fraud or
deceit upon Lead Plaintiff and others similarly situated in connection with
their purchases of Pilgrim securities during the “Class Period.

Id. at 166, ⁋395.
Thus, the bullet points in the first claim alleged that defendants violated the requirements
of Rule 10b-5(a), (b) and (c), even though none of the three subsections was expressly mentioned
in the claim.

I take judicial notice that the jury trial of that case, No. 1:20-cr-00152-PAB, began on October 25, 2021
and is expected to last through approximately December 21, 2021.

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In his second claim plaintiff asserted violations of Section 10(b) of the Exchange Act and
Rules 10b-5(a) and (c). Id. at 166. In support of the claim plaintiff repeated the substance,
though not in the bullet point format, of the allegations of the first claim. See id. at 167, ⁋⁋399402.
In his third claim plaintiff alleged in that individual defendants Lovett and Sandri
violated Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), by using their control to cause
Pilgrim to issue materially false and misleading information in violation of Section 10(b) and
Rule 10b-5. Id. at 168.
On July 31, 2020 defendants filed a motion to dismiss the second amended complaint.
ECF No. 58. Their primary arguments were that plaintiff’s Section 10(b) claims were timebarred by the five-year statute of repose for securities actions found at 28 U.S.C. § 1658(b)(2),
and that plaintiff lacked standing to bring any remaining claims. Following briefing the Court
granted the motion to dismiss. ECF No. 74. The Court agreed that Mr. Fuller’s claims were
barred by the statute of repose in that the second amended complaint, filed June 8, 2020, had
been filed more than five years after Mr. Fuller’s purchases of Pilgrim stock in January and
February 2015. Id. at 8-12. I disagreed with plaintiff’s arguments that either the “continuing
fraud exception” or “relation back” under Rule 15(c) rendered Mr. Fuller’s complaint timely. Id.
at 12-16. I also found that Mr. Fuller lacked standing because he did not purchase or sell but
merely held his stock within the five-year repose period. Id. at 16-19. 3

In reviewing my order of dismissal for purposes of addressing the pending motion for reconsideration I noticed
that near the end of the standing discussion I inadvertently referred to the plaintiff as Mr. Hogan rather than Mr.
Fuller at times. See id. at 18.
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Mr. Fuller now seeks reconsideration of the second order of dismissal. ECF No. 76.
Specifically, he seeks an order altering or amending the Amended Final Judgment pursuant to
Fed. R. Civ. P. 59(e). The motion has been fully briefed. No party has requested oral argument.
STANDARD OF REVIEW
Litigants subject to an adverse final judgment and who seek reconsideration of that
judgment may make a motion to alter or amend that judgment within 28 days of entry of
judgment. Fed. R. Civ. P. 59(e). However, Rule 59(e) is not a vehicle to revisit issues already
decided by the Court or to raise issues that could have been raised previously. Alpenglow
Botanicals, LLC v. United States, 894 F.3d 1187, 1203 (10th Cir. 2018). Grounds for granting a
Rule 59(e) motion include “(1) an intervening change in the controlling law, (2) new evidence
previously unavailable, and (3) the need to correct clear error or prevent manifest injustice.” Id.
(quoting Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000)).
ANALYSIS AND CONCLUSIONS
Plaintiff argues that the Court committed “clear error” (1) by focusing on plaintiff’s first
claim but ignoring plaintiff’s second claim which asserted “scheme liability” under Rules 10b5(a) and (c); and (2) by holding that his amended complaint did not relate back to the date of the
filing of the original complaint by Patrick Hogan. ECF No. 76 at 1-2. Taking the latter
argument first, plaintiff’s points regarding relation back are essentially a rehashing of points that
he made or could have made in his opposition to the motion to dismiss. I decline to revisit my
analysis of his argument. That is not the purpose of a Rule 59(e) motion.
As for the argument that the Court ignored his second claim for relief, not only is it an
entirely new argument that was not made in response to defendants’ motion to dismiss, but in my
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view, it doesn’t fit this case. Generally speaking, “scheme liability” claims under Rule 10b-5(a)
or (c) are distinct from Rule 10b-5(b) claims “because they are based on deceptive conduct rather
than deceptive statements.” See, e.g., West Virginia Pipe Trades Health & Welfare Fund v.
Medtronic, Inc., 357 F. Supp.3d 950, 977 (D. Minn. 2014). Plaintiff now argues that his scheme
case is based on conduct (the alleged price-fixing conspiracy), not on deceptive statements or
omissions; and that the five-year statute of repose applicable to a scheme claim runs from the
date of the last act in furtherance of the scheme. ECF No. 76 at 5. He suggests that the last act
in furtherance of the price-fixing scheme took place no earlier than November 17, 2017, the date
on which The Washington Post published an article about manipulation of the Georgia Dock
chicken price index. See ECF No. 76 at 5; ECF No. 47 at ⁋277. Thus, according to plaintiff, the
five year period of repose had not run when he filed his second amended complaint on June 8,
2020.
One must remember, however, that plaintiff’s first and second claims as pled were
substantively the same other than their headings. Both claims were based on defendants’
concealment of the alleged price-fixing conspiracy. Indeed, Mr. Fuller acknowledged in his brief
opposing defendants’ motion to dismiss that the crux of his complaint was that “defendants made
untrue or misleading public statements by failing to disclose the price-fixing conspiracy and
instead touting legitimate causes for Pilgrim’s success.” ECF No. 59 at 6.
Defendants’ motion to dismiss did not single out any of plaintiff’s three claims. Rather,
defendants argued that the case should be dismissed under the statute of repose applicable to
defendants’ alleged misrepresentations and omissions, embedded in each of the three claims, and
also for lack of standing. Plaintiff’s response to the motion did not single out any subsection
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either. It did not mention the scheme claims or suggest that a different statute of repose applied
to his second claim. The Court ruled on what the parties presented. Only after the Court granted
the motion did plaintiff suggest that the Court erred by ignoring his second claim. In that context
I am not persuaded that the Court committed “clear error.”
Plaintiff argues that his failure to make a “scheme claim” argument in response to
defendants’ motion was not a waiver because he was not required to respond to an argument that
defendants did not make. See In re Alphabet, Inc. Securities Litigation, 1 F.4th 687, 709 (9th
Cir. 2021). However, as I have said, in this case defendants moved to dismiss all three of
plaintiff’s claims, effectively treating them all as grounded in deceptive statements. Even if
defendants had only addressed plaintiff’s first claim, as plaintiff now asserts, that claim
encompassed the substance of all three subsections of Rule 10b-5. Plaintiff could and should
have argued at that time that a “scheme claim” is governed by a different period of repose. A
59(e) motion is not a vehicle to raise issues that could have been raised previously. Alpenglow
Botanicals, 894 F.3d 1203. See also U.S. ex. Rel. Noyes v. Kimberly Constr., Inc., 43 F. App’x
283, 287 (10th Cir. 2002) (unpublished) (a Rule 59(e) motion “cannot be used to expand a
judgment to encompass new issues which could have been raised prior to issuance of the
judgment.”)).
Nor am I persuaded even now by plaintiff’s repose argument. I find that the statute of
repose began to run on the date Mr. Fuller purchased his stock because the scheme claim as
alleged in this case was, in reality, a concealment claim. I thus agree with the court in In re Teva
Securities Litigation, Nos. 3:17-cv-558 (SRU), 2021 WL 1197805 (D. Conn. March 30, 2021)
which rejected an effort to extend the five-year repose period by transforming misrepresentation
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claims into a scheme claim. The Teva court stated, “[a]though, in a way, these cases concern
Teva’s anti-competitive conduct, [plaintiffs] allege that the [defendants] violated the federal
securities laws by lying about the sources of their revenue and the competitiveness of the generic
drug manufacturing market.” Id. at *3.
Plaintiff’s assertion that the last fraudulent act in furtherance of the scheme occurred on
the date of a newspaper article is arbitrary at best. Even today we do not know when (if ever) the
last act by defendants in furtherance of a price-fixing conspiracy took place. The notion that the
statute of repose didn’t begin to run until the newspaper article essentially is a repetition of the
continuing fraud theory that I rejected.
ORDER
Because I do not find that there was clear error, plaintiff’s motion to alter or amend the
Amended Final Judgment pursuant to Rule 59(e), ECF No. 76, is DENIED.
DATED this 29th day of November, 2021.
BY THE COURT:

___________________________________
R. Brooke Jackson
United States District Judge

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