380544 Canada, Inc. et al v. Aspen Technology, Inc. et al
Filing
136
OPINION AND ORDER re: 123 MOTION to Amend/Correct the Complaint filed by 380544 Canada, Inc., Salvador Clave, Wayne Sim. Plaintiffs' motion to amend the complaint [Docket No. 123] is denied. The parties are directed to appear for a sta tus conference on October 19, 2011 at 10:45 a.m. in Courtroom 20-C. ( Status Conference set for 10/19/2011 at 10:45 AM in Courtroom 20C, 500 Pearl Street, New York, NY 10007 before Judge John F. Keenan.) (Signed by Judge John F. Keenan on 9/14/2011) (mro)
Case 1:09-md-02013-PAC Document 57
Filed 09/30/10 Page 1 of 45
USDC SDNY
UNITED STATES DISTRICT COURT
DOCUMENT
SOUTHERN DISTRICT OF NEW YORK
ELECTRONICALLY FILED
-----------------------------------X
DOC #: _________________
380544 CANADA, INC., WAYNE SIM,
:
DATE FILED: 9-14-11
and UNITED STATES DISTRICT COURT
SALVADOR CLAVÉ,
:
SOUTHERN DISTRICT OF NEW YORK
Plaintiffs,
:
-----------------------------------------------------------x
:
In-against-MAE 2008 SECURITIES
re FANNIE
08 Civ. 7831 1204
: :
No. 07 Civ. (PAC) (JFK)
LITIGATION
:
09 MD 2013 and Order
:
Opinion (PAC)
ASPEN TECHNOLOGY, INC., DAVID L.
: :
OPINION & ORDER
MCQUILLIN, LAWRENCE B. EVANS, and : :
LISA-----------------------------------------------------------x
ZAPPALA,
:
Defendants.
:
-----------------------------------X
APPEARANCES:
HONORABLE PAUL A. CROTTY, United States District Judge:
For Plaintiffs:
Eric J. Grannis
1
LAW OFFICES OF ERIC BACKGROUND
J. GRANNIS
For The early yearsAspen decade saw a boom in home financing which was fueled, among
Defendant of this Technology:
Kurt Wm. Hemr
other things, by low interest rates and lax credit conditions. NewLLP
SKADDEN, ARPS, SLATE, MEAGHER & FLOM lending instruments, such as
subprime mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans)
For Defendant David L. McQuillin:
Bruce E. Falby
kept the boom going. Borrowers played a role too; they took on unmanageable risks on the
DLA PIPER LLP
For Defendant Lawrence B. Evans:
assumption that the market would continue to rise and that refinancing options would always be
Nicholas C. Theodorou
available FOLEY HOAG LLP discipline was lacking in the system. Mortgage originators did
in the future. Lending
For these high-risk mortgage loans. Rather than carry the rising risk on their books, the
not holdDefendant Lisa Zappala:
John J. Falvey, Jr.
GOODWIN loans into LLP
originators sold their PROCTERthe secondary mortgage market, often as securitized packages
JOHNknownKEENAN, United securities (“MBSs”). MBS markets grew almost exponentially.
F. as mortgage-backed States District Judge:
Before then the housing bubble burst. Canada, Inc., Wayne Sim, and abruptly
But the Court is 380544 In 2006, the demand for housing dropped
Salvatore Clavé’s (collectively,the changing housing market, banks modified their
and home prices began to fall. In light of the “Plaintiffs”) motion to
amend the practices and became unwilling to refinance home mortgages without refinancing.
lending complaint to include additional facts amplifying
federal securities fraud, common law fraud, and breach of
1
contract otherwise indicated, all references cited as “(¶Defendant Aspen are to the Amended Complaint,
Unless claims against corporate _)” or to the “Complaint” Technology,
dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.
1
1
Inc. (“Aspen Tech”) and three former high-ranking officers of
Aspen Tech, David McQuillin, Lawrence Evans, and Lisa Zappala
(collectively, the “Individual Defendants”).
Plaintiffs also
seek to assert a new claim against all Defendants under the
Massachusetts Uniform Securities Act.
For the reasons that
follow, the motion is denied.
I.
Background
Wayne Sim and Salvador Clavé were respectively the Chief
Executive Officer and Chief Operating Officer of a process
engineering software company called Hyprotech.
In 2001,
Defendant Aspen Tech began negotiations to acquire Hyprotech; in
order to finance this acquisition, Aspen Tech recruited
investors, including Sim and Clavé, to purchase approximately
$50 million of stock via a private placement.
On May 9, 2002,
Sim and Clavé entered into a private placement Securities
Purchase Agreement (the “SPA”) for the purchase of approximately
$6.8 million of Aspen Tech shares.
After the execution of the
SPA, both Sim and Clavé took sales management positions at Aspen
Tech – Sim served as the Senior Vice President of Sales, and
Clavé served as the Senior Vice President of Sales Operations.
About three years after Sim and Clavé’s stock purchase, Aspen
Tech revealed that it had improperly accounted for revenue from
numerous software licensing and service agreements and, as a
2
result, the company restated its financials for fiscal years
1999 through 2004.
Plaintiffs filed their initial complaint on February 15,
2007 asserting claims for, among other things, violation of
Section 10(b) and Section 20(a) of the Securities and Exchange
Act of 1934 and common law fraud.
Plaintiffs premised these
claims on allegedly false statements regarding the company’s
revenues and accounting practices that Aspen Tech and the
Individual Defendants made in (1) private meetings with the
Plaintiffs, (2) the SPA itself, (3) press releases, and (4) SEC
filings that reported and commented on Aspen Tech’s financial
results in the thirteen fiscal quarters preceding the execution
of the SPA.
Plaintiffs contend that but for these false
representations, they would not have entered into the SPA.
Defendant Aspen Tech answered the complaint on April 17,
2007.
At the initial conference on May 14, 2007, the Individual
Defendants informed the Court of their intent to file pre-answer
motions to dismiss the complaint and submitted a stipulated
briefing schedule for approval.
These motions to dismiss
triggered a discovery stay under the Private Securities
Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u4(b)(3)(B).
In an Opinion and Order dated March 18, 2008, the
Court granted the Individual Defendants’ motions to dismiss in
part, and directed Plaintiffs “to advise the Court by April 11,
3
2008, as to whether they intend to file an amended complaint.
If so, the parties are directed to meet and confer regarding a
schedule for the filing of an amended complaint and subsequent
motions to dismiss, and submit a stipulated [briefing]
schedule.”
380544 Canada, Inc. v. Aspen Tech., Inc., 544 F.
Supp. 2d 199, 236 (S.D.N.Y. 2008).
In accordance with the terms
of a Stipulation and Order dated April 30, 2008, Plaintiffs
filed an amended complaint on May 2, 2008.
See Stipulation and
Order, 380544 Canada, Inc. v. Aspen Technology, Inc., No. 07
Civ. 1204 (S.D.N.Y. Apr. 30, 2008), ECF No. 77.
Evans moved to dismiss the amended complaint.
Only Defendant
In an Opinion and
Order dated May 5, 2009, the Court again granted the motion to
dismiss in part, and dismissed some claims against Evans with
prejudice.
See 380544 Canada, Inc. v. Aspen Tech., Inc., 633 F.
Supp. 2d 15, 37 (S.D.N.Y. 2009) (“The Court’s opinion dismissing
the initial complaint notified Plaintiffs that they failed to
plead certain claims with the requisite particularity and that
they failed to raise a strong inference of Evans’s scienter.
Despite this notice, in their amended complaint, Plaintiffs
again fail to plead certain claims with the requisite
particularity and again fail to raise a strong inference of
Evans’s scienter . . . .
This demonstrates that permitting
Plaintiffs to replead would be futile.”).
4
At this point the PSLRA stay lifted, and on June 22, 2009,
the Court entered a stipulated scheduling order for discovery.
See Stipulation, 380544 Canada, Inc. v. Aspen Technology, Inc.,
No. 07 Civ. 1204 (S.D.N.Y. June 22, 2009), ECF No. 99.
The
discovery deadline was subsequently extended three times, with
fact discovery ultimately closing on September 1, 2010.
See
Order, 380544 Canada, Inc. v. Aspen Technology, Inc., No. 07
Civ. 1204 (S.D.N.Y. June 8, 2010), ECF No. 119.
On September
13, 2010, Plaintiffs moved for leave to file a second amended
complaint.
Plaintiffs seek to add allegations concerning
representations made during private meetings they attended with
Aspen Tech executives in 2001 and 2002.
Specifically,
Plaintiffs now claim that Aspen Tech represented that revenues
in its Aspen Engineering Suite (“AES”) division had grown
steadily through 2001 and were projected to continue to grow by
20% in 2002, but failed to disclose that the growth in revenue
was attributable to the acquisition of a company called ICARUS
and subsequent accounting manipulation instead of a true
increase in sales.
(Proposed Second Am. Compl. ¶¶ 34-50).
Plaintiffs also propose to add a Massachusetts Uniform
Securities Act claim premised on previously pleaded facts.
¶¶ 349-65).
5
(Id.
II.
Discussion
A.
Legal Standards
Rule 15(a)(2) of the Federal Rules of Civil Procedure
provides that after a party has amended a pleading once as of
right, future amendments may only be permitted on consent or by
leave of court.
Although leave to amend should be freely given
“when justice so requires,” Fed. R. Civ. P. 15(a)(2), the Court
retains the discretion to deny leave “for good reason, including
futility, bad faith, undue delay, or undue prejudice to the
opposing party.”
McCarthy v. Dun & Bradstreet Corp., 482 F.3d
184, 200 (2d Cir. 2007) (citing Foman v. Davis, 371 U.S. 178,
182 (1962)); see Local 802, Associated Musicians of Greater N.Y.
v. Parker Meridien Hotel, 145 F.3d 85, 89 (2d Cir. 1998) (trial
court’s discretion to deny motion to amend is “broad”).
Delay
alone, without an attendant showing of bad faith or prejudice,
may be an insufficient basis for denial of a motion to amend.
See Ruotolo v. City of N.Y., 514 F.3d 184, 191 (2d Cir. 2008).
However, “the longer the period of an unexplained delay, the
less will be required of the nonmoving party in terms of a
showing of prejudice.”
Evans v. Syracuse City Sch. Dist., 704
F.2d 44, 47 (2d Cir. 1983) (quotation omitted).
Prejudice may
result where proposed amendments would: “(i) require the
opponent to expend significant additional resources to conduct
discovery and prepare for trial; (ii) significantly delay the
6
resolution of the dispute; or (iii) prevent the plaintiff from
bringing a timely action in another jurisdiction.”
Monahan v.
N.Y. City Dep’t of Corr., 214 F.3d 275, 284 (2d Cir. 2000)
(citing Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir.
1993); see AEP Energy Servs. Gas Holding Co. v. Bank of Am.,
N.A., 626 F.3d 699, 725–26 (2d Cir. 2010).
However, when a party proposes to amend a pleading after
the deadline for amendment in a scheduling order, the court must
balance Rule 15(a)’s more lenient standard for amendment of
pleadings against Rule 16(b)(4)’s mandate that the scheduling
order “may be modified only for good cause.”
See Grochowski v.
Phoenix Constr., 318 F.3d 80, 86 (2d Cir. 2003); Parker v.
Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000)
(“[D]espite the lenient standard of Rule 15(a), a district court
does not abuse its discretion in denying leave to amend the
pleadings after the deadline set in the scheduling order where
the moving party has failed to establish good cause.”).
This
balancing enables the Court to ensure both that its scheduling
orders have force and that “at some point both the parties and
the pleadings will be fixed and the case will proceed.”
Lincoln
v. Potter, 418 F. Supp. 2d 443, 454 (S.D.N.Y. 2006).
“Good cause” to justify untimely amendment of pleadings
“depends on the diligence of the moving party.”
F.3d at 340.
Parker, 204
Courts have found good cause to excuse a movant’s
7
late amendment where new information came to light at such a
time that the movant could not reasonably have complied with the
scheduling order.
See, e.g., Estate of Ratcliffe v. Pradera
Realty Co., No. 05 Civ. 10272, 2007 WL 3084977, at *4 (S.D.N.Y.
Oct. 19, 2007).
On the other hand, where the substance of the
proposed amendment was known to the movant prior to the deadline
for amending pleadings, but the movant nevertheless failed to
act, courts have denied leave to amend under Rule 16.
See
Volunteer Fire Ass’n of Tappan, Inc. v. Cnty. of Rockland, No.
09 Civ. 4622, 2010 WL 4968247, at *4 (S.D.N.Y. Nov. 24, 2010);
Oppenheimer & Co. Inc. v. Metal Mgmt., Inc., No. 08 Civ. 3697,
2009 WL 2432729, at *3-4 (S.D.N.Y. July 31, 2009); Rent-ACenter, Inc. v. 47 Mamaroneck Ave. Corp., 215 F.R.D. 100, 104
(S.D.N.Y. 2003) (holding that “defendants’ failure to comply
with the Court’s Scheduling Order resulted from a lack of
diligence, because the substance of the defendants’ ‘new’ claim
was known when the defendants filed their original amended
answer and added their counterclaim”).
B.
Rule 16(b)
This Court’s general practice is to enter a case management
order during an initial conference.
However, at the initial
conference in this case, the Individual Defendants informed the
Court of the forthcoming pre-answer motions to dismiss.
Since
discovery was immediately stayed under the PSLRA, entry of a case
8
management order setting deadlines for amendment and discovery
proved impractical.
Instead, the Court first allowed motion
practice to proceed in order to define the plausibility of
Plaintiffs’ claims, and subsequently entered stipulated
scheduling orders dated April 30, 2008 and June 22, 2009 to
manage the timing of amendments and discovery.
The Court’s view,
as expressed to counsel in the pre-motion conference, is that
those stipulations act as the Rule 16 scheduling order.
Plaintiffs contend that the April 30, 2008 order only governs the
timing of “an” amendment and does not impose a final deadline for
“any” amended pleadings.
However, the April 30, 2008 order,
particularly when considered in conjunction with the May 5, 2009
opinion denying Plaintiffs further leave to replead, “explicitly
limited the plaintiffs’ ability to amend their complaint” - the
prerequisite for applying Rule 16.
In re Wireless Tel. Servs.
Antitrust Litig., No. 02 Civ. 2637, 2004 WL 2244502, at *5 & n.6
(S.D.N.Y. Oct. 6, 2004) (invoking Rule 16 where scheduling orders
did not specify a deadline for amendment of pleadings but “[t]he
Orders themselves, and the conferences which preceded them, left
no doubt that the Amended Complaint was the final statement of
the plaintiffs’ claims in this consolidated action”); cf. Nairobi
Holdings Ltd. v. Brown Bros. Harriman & Co., No. 02 Civ. 1230,
2006 WL 2242596, at *2 (S.D.N.Y. Aug. 3, 2006) (applying Rule 16
where scheduling order did not set a particular date for amending
9
pleadings but the court’s written opinion granting motion to
dismiss limited the number of times plaintiff could replead
deficient claims).
Thus, Plaintiffs must demonstrate good cause to file a
second amended complaint.
The Court notes that the motion to
amend was filed more than eight years after the alleged
misrepresentations were made, more than three and a half years
after the lawsuit was initiated, two years after the April 30,
2008 scheduling order was entered, and shortly after the close of
fact discovery.
Yet Plaintiffs have offered no compelling or
even genuine explanation for the delay.
Plaintiffs claim they
have long suspected that Aspen Tech’s 2001 and 2002 assurances
regarding AES revenue growth were misleading, but could not
substantiate those beliefs until they received and reviewed
discovery, which occurred after May 2, 2008.
(Pl. Mem. at 3, 7).
But this is not the typical securities fraud case brought by
passive investors who purchased securities on the open market.
Plaintiffs personally attended meetings with Aspen Tech
executives and discussed Aspen Tech’s AES revenues; an Aspen Tech
employee emailed a copy of an allegedly misleading PowerPoint
presentation to Sim on August 9, 2001.
Compl. ¶ 34).
(Proposed Second Am.
Both Plaintiffs went on to hold senior sales
management positions at Aspen Tech following their investment in
the company.
As two of the highest ranking sales professionals
10
at Aspen Tech, Plaintiffs were privy to company-wide sales
information and were in a position to verify the accuracy of AES
revenue growth reported in the PowerPoint and other
presentations, as well as to determine if sales forecasts were on
target, their first day on the job in 2002.
Indeed, counsel
confirms that “[w]hen Plaintiffs joined Aspen [in 2002], Aspen’s
AES division did not perform as had been projected and consistent
with its historical growth.
Plaintiffs therefore believed that
the representations concerning AES revenues that had been made to
them [in pre-SPA meetings] were false.”
(Pl. Mem. at 3).
The
discovery provided by their former employer did not unearth
misrepresentations previously unknown to Plaintiffs.
The
documents may have buttressed Plaintiffs’ allegations of
scienter, but they have had enough information to plead a
securities fraud claim premised on pre-SPA misrepresentations
since 2002, and twice attempted to make such a claim, long before
discovery began.
The Court is unconvinced that Plaintiffs could
not have included the substance of the proposed allegations prior
to the May 2, 2008 deadline for amendment.
See Oppenheimer, 2009
WL 2432729, at *3 (finding no good cause to amend despite the
fact that discovery was ongoing and prejudice to the opposing
party would be minimal where “the documents more recently
produced . . . may further have underscored the potential
viability of [movant’s] waiver argument, [but] the issue was not
11
new”); Trezza v. NRG Energy, Inc., No. 06 Civ. 11509, 2008 WL
540094, at *6 (S.D.N.Y. Feb. 28, 2008) (denying leave to amend
under Rule 16 where “nothing in [plaintiff’s] motion papers or in
any of his other submissions to the Court suggests that he was
unaware of the facts necessary to amend his pleading until after
the deadline had passed”).
The same is true of the Massachusetts Uniform Securities
Act claim.
The availability of discovery had nothing to do with
the belated addition of this claim, as counsel frankly
acknowledges that “[t]o be sure, Plaintiffs’ attorneys could
have asserted this claim earlier had they thought to do so.”
(Pl. Reply Mem. at 24).
The facts underlying the proposed
Massachusetts statutory claim mirror those pleaded in support of
the common law fraud claim, which Plaintiffs previously believed
to be governed by New York law.
See Aspen Tech., 544 F. Supp.
2d at 216; Compl. ¶ 1; Am. Compl. ¶ 1 (asserting claims for
“violations of federal statutory and New York common law”).
Whatever additional research led counsel to realize the
potential for relief under Massachusetts law, that work could
have taken place before the initial complaint was filed.
Although the Court appreciates counsel’s candor, attorney
oversight is no excuse for late amendment.
See Davidowitz v.
Patridge, No. 08 Civ. 6962, 2010 WL 1779279, at *4 (S.D.N.Y.
Apr. 23, 2010); Yurman Design Inc. v. Chaindom Enters., Inc.,
12
No. 99 Civ. 9307, 2001 WL 725291, at *2 (S.D.N.Y. June 27, 2001)
(holding that “the failure of an attorney to recognize a
potential cause of action is not a sufficient justification for
granting leave to amend a complaint” under more stringent Rule
15).
Plaintiffs having failed to demonstrate good cause for the
more than three year delay in pleading pre-SPA
misrepresentations and the Massachusetts statutory claim, the
motion to amend under Rule 16 is denied.
C.
Rule 15(a)
The Court reaches the same result under Rule 15.
“The
burden to explain a delay is on the party that seeks leave to
amend,” MacDraw, Inc. v. The CIT Group Equip. Fin., Inc., 157
F.3d 956, 962 (2d Cir. 1998), a burden, as discussed above, that
Plaintiffs have barely attempted to meet.
Discovery has closed.
Plaintiffs urge that the proposed amendments will require little
to no additional discovery, an argument that is belied by their
own request to the Magistrate Judge for discovery on issues
raised in the Proposed Second Amended Complaint.
See Order,
380544 Canada, Inc. v. Aspen Technology, Inc., No. 07 Civ. 1204
(S.D.N.Y. June 8, 2010), ECF No. 119.
Even if Plaintiffs
believe they do not need extensive discovery, in order to defend
against the Massachusetts statutory claim alone Defendants state
that they would require depositions of additional fact witnesses
who could testify to the care exercised by defendants, document
13
production, and expert testimony on the applicable standard of
care.
As the Proposed Second Amended Complaint raises a new
legal theory of liability, the Court does not see how the
parties could move forward on the amended claims without
reopening discovery, re-deposing any witnesses that have
previously given testimony, and securing additional witnesses.
Should any of the Defendants seek to move to dismiss the amended
claims – a likely scenario given the procedural history of this
case - that additional discovery would be stayed under the
PSLRA.
The Court finds that further amendment would impose on
Defendants the burden of additional discovery and would
significantly delay proceedings which have already consumed four
and a half years, thereby prejudicing Defendants.
Considering
the fact that Plaintiffs have offered no plausible explanation
for the undue delay in seeking to amend the complaint to add
facts and a statutory claim that were available even before the
initial complaint was filed, the prejudice to Defendants
occasioned by further amendment warrants denial of the motion to
amend.
Moreover, with respect to the Individual Defendants and
pre-SPA misrepresentations, the Court previously held, and again
finds, that any further amendment would be futile.
“An
amendment to a pleading will be futile if a proposed claim could
not withstand a motion to dismiss pursuant to Rule 12(b)(6).”
14
Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282
F.3d 83, 88 (2d Cir. 2002) (citing Ricciuti v. N.Y.C. Transit
Auth., 941 F.2d 119, 123 (2d Cir. 1991)).
In other words, a
proposed amendment is futile where it fails to state a claim
that is “plausible on its face.”
550 U.S. 544, 570 (2007).
Bell Atl. Corp. v. Twombly,
Rule 9(b) of the Federal Rules of
Civil Procedure imposes a heightened pleading requirement on
claims of fraud:
“In alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud or
mistake.”
Fed. R. Civ. P. 9(b).
“To state a claim with the
required particularity, a complaint must:
(1) specify the
statements that the plaintiff contends were fraudulent, (2)
identify the speaker, (3) state where and when the statements
were made, and (4) explain why the statements were fraudulent.”
Stevelman v. Alias Research Inc., 174 F.3d 79, 84 (2d Cir. 1999)
(internal quotation marks omitted).
“[I]ndiscriminate defendant
‘clumping’ does not adhere to the particularity standards of
Fed. R. Civ. P. 9(b) and the PSLRA.”
Dresner v. Utility.com,
Inc., 371 F. Supp. 2d 476, 493–94 (S.D.N.Y. 2005).
Fraud claims against the Individual Defendants premised on
pre-SPA statements have twice been dismissed, not for failure to
allege scienter (the apparent aim of the ICARUS allegations),
but for vagueness and failure to identify the speaker of each
allegedly fraudulent statements as required by Rule 9(b).
15
See
Aspen Tech., 633 F. Supp. 2d at 28 (dismissing claims premised
on pre-SPA statements against Defendant Evans with prejudice
because Plaintiff impermissibly “clumped” the Individual
Defendants instead of identifying the speaker); Aspen Tech., 544
F. Supp. 2d at 218 (“Because the Complaint merely alleges,
without any specificity, that the Individual Defendants, acting
as a unit, made false statements during several meetings leading
up to the SPA, Plaintiffs have failed adequately to attribute
statements made during those meetings to any of the Individual
Defendants.”).
Despite the fact that Plaintiffs personally attended the
pre-SPA meetings and should be able to pinpoint who gave the
allegedly misleading presentations, the proposed amendments yet
again fall short of the particularity requirement of Rule 9(b).
The Proposed Second Amended Complaint does not allege that
Defendant Zappala attended any of the pre-SPA meetings or made
any representations whatsoever to Plaintiffs prior to the
execution of the SPA.
Plaintiffs’ counsel conceded at oral
argument that Defendant Zappala could have no liability for preSPA misstatements, making any amendment as to Zappala futile.
(Sept. 22, 2010 Oral Arg. Tr. at 29:7-12).
With respect to
Defendant McQullin, Plaintiffs wish to add claims that in an
April 8, 2002 meeting “McQuillin and Evans met Sim in Boston and
misrepresented the performance of Aspen” and in a May 2, 2002
16
meeting “[an Aspen Tech employee not named as a defendant] and
McQuillin met with Sim in Boston and assured Sim that Aspen’s
revenues were doing well and that the company was healthy,”
despite the fact that McQuillin purportedly orchestrated the
scheme to acquire ICARUS and knew that Aspen Tech’s revenues
were inflated.
(Proposed Second Am. Compl. ¶¶ 41, 47-48).
The
proposed amendments with respect to McQuillin suffer from the
same defects as the previous iterations of the complaint – they
are “too vague to give . . . fair notice of the factual basis
for Plaintiffs’ claims,” and they fail “to link each individual
defendant to a specific fraudulent statement in any meaningful
way.”
Aspen Tech., 633 F. Supp. 2d at 28 (rejecting nearly
identical allegation that “McQuillin and Evans confirmed again
the misrepresentations that McQuillin made at the March 14
meeting”).
Thus, the proposed amendments as to McQuillin would
fall under Rule 9(b).
Finally, with respect to Defendant Evans,
the Court dismissed claims premised on pre-SPA meetings with
prejudice.
See id. at 37.
Plaintiffs contend that their
failure to include allegations regarding an August 29, 2001
meeting attended by Evans and Plaintiffs in either of the prior
complaints exempts those allegations from the ruling of
dismissal with prejudice.
There can be no doubt that the Court
granted Plaintiffs leave to file an amended complaint to allow
them to add the precise allegations now at issue.
17
Plaintiffs
cannot now use deficiencies in their own pleadings as a get out
of jail free card.
The May 5, 2009 opinion dismissed with
prejudice any and all fraud claims against Defendant Evans based
on misrepresentations in pre-SPA meetings; thus, the proposed
amendments as to Evans would be futile.
The corporate Defendant has made numerous additional
arguments as to why each of the proposed amendments would be
futile.
Aspen Tech’s opposition to the motion to amend raises a
host of issues - choice of law in particular - that should have
been brought in a motion to dismiss the initial or amended
complaint.
Aspen Tech has chosen to answer both the initial and
amended complaints, and the Court will not allow it to make a
backdoor motion to dismiss – after answering and completing
discovery - under the guise of Rule 15.
The Court also declines
to rule on arguments that will have law of the case implications
until they are more fully briefed in the inevitable summary
judgment motion to come.
The Court’s concern with this motion
is and always has been Plaintiffs’ delay, and that is the
primary basis for denial.
18
III.
Conclusion
Plaintiffs' motion to amend the complaint
The
is deni
[Docket No. 123]
ies are directed to appear for a status
conference on October 19, 2011 at 10:45 a.m. in Courtroom 20-C.
SO ORDERED.
Dated:
New York, New York
September 14, 2011
John F. Keenan
United States District Judge
19
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