In re Barrick Gold Securities Litigation

Filing 93

MEMORANDUM OPINION AND ORDER re: 80 MOTION to Certify for Interlocutory Appeal re: 76 Memorandum & Opinion,, / Notice of Defendant Sybil E. Veenman's Motion to Certify the April 1, 2015 Order for Appeal Pursuant to 28 U.S.C. 1 292(b). filed by Sybil E. Veenman, 78 MOTION for Reconsideration re; 76 Memorandum & Opinion,, / Notice of Defendants' Motion for Reconsideration of the Opinion and Order dated April 1, 2015. filed by Sybil E. Veenman, I gor Gonzales, Aaron W Regent, Barrick Gold Corporation, Ammar Al-Joundi, Jamie C. Sokalsky, Peter Kinver, George Potter. For the foregoing reasons, defendants' motion for reconsideration is DENIED, and Veenman's motion for certification for interlocutory appeal is DENIED. The Clerk of the Court is directed to close these motions (Docket Nos. 78 and 80). SO ORDERED. (See Order.) (Signed by Judge Shira A. Scheindlin on 6/2/2015) (ajs)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IN RE BARRICK GOLD SECURITIES
LITIGATION

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MEMORANDUM OPINION
AND ORDER
13 Civ. 3851 (SAS)

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SHIRA A. SCHEINDLIN, U.S.D.J.:
I.

INTRODUCTION
This Court issued an Opinion and Order on April 1, 2015 (the "April 1

Order") granting in part and denying in part defendants' motion to dismiss the
plaintiffs' amended complaint. 1 On April 15, 2015, defendants filed a motion for
partial reconsideration on two discrete issues. First, defendants request that the
Court find that every repetition of a particular statement regarding environmental
approvals be dismissed as irrelevant, and therefore dismiss plaintiffs' claims
relating to environmental approvals. Second, defendants request that the Court
dismiss plaintiffs' section 1O(b) claims against defendants Potter, Gonzales, and
Kinver pursuant to Janus Capital Group, Inc. v. First Derivative Traders.
Defendant Veenman also filed a motion to certify the April 1 Order for

See Jn re Barrick Gold Sec. Litig., No. 13 Civ. 3851, 2015 WL
1514597 (S.D.N.Y. Apr. 1, 2015). Familiarity with the facts of the case is
presumed.

interlocutory appeal solely on the issue of the pleading standard for control person
liability under Section 20(a) of the Securities Exchange Act. For the following
reasons, defendants’ motion for reconsideration is DENIED, and Veenman’s
motion for certification is DENIED.
II.

RECONSIDERATION
A.

Legal Standard
The standard for granting a motion for reconsideration is strict.

“Reconsideration will generally be denied unless the moving party can point to
controlling decisions or data that the court overlooked – matters, in other words,
that might reasonably be expected to alter the conclusion reached by the court.”2
“Reconsideration of a court’s previous order is an ‘extraordinary remedy to be
employed sparingly in the interests of finality and conservation of scarce judicial
resources.’”3 Typical grounds for reconsideration include “an intervening change
of controlling law, the availability of new evidence, or the need to correct a clear
error or prevent manifest injustice.”4

2

Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995).

3

Oji v. Yonkers Police Dep’t, No. 12 Civ. 8125, 2013 WL 4935588, at
*1 (S.D.N.Y. Sept. 11, 2013) (quoting Parrish v. Sollecito, 253 F. Supp. 2d 713,
715 (S.D.N.Y. 2003)).
4

Virgin Atl. Airways, Ltd. v. National Mediation Bd., 956 F.2d 1245,
1255 (2d Cir. 1992) (quotation omitted).
2

B.

Statements Regarding Environmental Compliance
In their motion to dismiss, defendants argued that one of the

statements relied on in plaintiffs’ complaint was taken out of context, and referred
only to compliance with a new Argentinian law, and not to compliance with
Chilean environmental requirements. To support that argument, defendants
attached a single Form 6-K, which I held supported their argument. However, as
plaintiffs alleged that the statement was continually repeated throughout the class
period, and defendants had not provided context for the other instances, I could not
conclude that every repetition referred only to compliance with Argentinian law.
Defendants have now included references to the context of each repetition of the
statement to support their argument that the statements referred only to compliance
with the new Argentinian law, and are therefore irrelevant.
Defendants now contend that all claims regarding compliance with
environmental approvals must be dismissed because “[p]laintiffs base their claims
related to environmental approvals almost entirely on a pair of statements —
repeated verbatim numerous time during the class period — that Plaintiffs simply
take out of context . . . .”5 Defendants’ own statement makes it clear that
reconsideration should not be granted — they concede that there is at least one
5

Memorandum of Law in Support of Defendants’ Motion for
Reconsideration at 2 (emphasis added).
3

other statement on which plaintiffs base their claim. As such, discovery on this
issue, burdensome though it may be, must proceed. Plaintiffs identify numerous
statements unrelated to the repeated statements at issue in defendants’ motion. For
example, in December 2011, Barrick issued a press release stating that “the
company has put in place a range of measures to mitigate the potential impact of
dust emissions on glaciers. . . . [T]he Pascua-Lama project will not generate
damaging dust accumulation in areas where glaciers are present.”6 In response,
defendants restate arguments already considered and rejected by this Court in the
April 1 Order. I will not review them a second time. Defendants’ motion for
reconsideration with respect to statements about environmental approvals is
denied.
C.

Claims Against Potter, Gonzales, and Kinver
Defendants argue that the section 10(b) claims against Potter,

Gonzales, and Kinver must be dismissed because they are not alleged to have
personally made any actionable statements that remain in this case after the April 1
Order. Instead, plaintiffs rely on the group pleading doctrine, which, according to
defendants, has been abrogated by the Supreme Court’s decision in Janus.
In Janus, the Court held that, “[f]or the purposes of Rule 10b-5, the

6

Consolidated Amended Class Action Complaint (“Compl.”) ¶ 362.
4

maker of a statement is the person or entity with ultimate authority over the
statement, including its content and whether and how to communicate it.”7 The
Court concluded that a mutual fund investment adviser could not be held liable for
false statements included in its client’s mutual fund prospectuses, because the
investment advisor — a separate corporate entity — did not have ultimate authority
over the statements, even though it was significantly involved in their preparation.
The group pleading doctrine creates a presumption “that ‘grouppublished’ documents such as ‘statements in prospectuses, registration statements,
annual reports, [and] press releases’ are attributable to ‘individuals with direct
involvement in the everyday business of the company,’” who either were or acted
like corporate insiders.8 Defendants do not contest that plaintiffs sufficiently allege
that the statements were made in “group-published documents,” or that Potter,
Kinver, and Gonzales were corporate insiders with direct involvement in the
everyday business of Barrick.9 The only question is whether the group pleading

7

131 S. Ct. 2296, 2302 (2011).

8

DeAngelis v. Corzine, 17 F. Supp. 3d 270, 281 (S.D.N.Y. 2014)
(quoting In re BISYS Sec. Litig., 397 F. Supp. 2d 430, 438 (S.D.N.Y. 2005)).
9

Potter was the Senior Vice President of Technical Services and
Capital Projects, Kinver was Barrick’s Chief Operating Officer and Executive Vice
President until May 2012, and Gonzales was the President of the South America
Region until May 2012, and subsequently the Chief Operating Officer and
Executive Vice President from 2012 to 2013. See Compl. ¶¶ 25–27.
5

doctrine remains viable after Janus. I conclude that it does.10
Janus held that the maker of a statement was the person or entity with
the ultimate authority over that statement. Because the defendant there was a
separate corporate entity, the Court held that it categorically could not be the
“maker” of the statement, as it could not, as a matter of law, have the ultimate
authority over that statement. However, it is still possible, even likely, that within
an organization, more than one person will have ultimate authority over a
statement, especially when those statements appear in “group-published”
documents.11
Here, plaintiffs have pleaded that Potter, Kinver, and Gonzales, as
high-level officers, were corporate insiders involved in the everyday business of
the company, and that the statements were made in group-published documents,
such as press releases and annual reports. For pleading purposes, they have
10

See, e.g., Levy v. Maggiore, 48 F. Supp. 3d 428, 448 n.16 (E.D.N.Y.
2014) (reviewing cases and concluding that the group pleading doctrine survives
Janus).
11

See City of Pontiac Gen. Emps. Ret. Sys. v. Lockheed Martin Corp.,
875 F. Supp. 2d 359, 374 (S.D.N.Y. 2012) (“[Janus] has no bearing on how
corporate officers who work together in the same entity can be held jointly
responsible on a theory of primary liability. It is not inconsistent with Janus
Capital to presume that multiple people in a single corporation have the joint
authority to ‘make’ an SEC filing, such that a misstatement has more than one
‘maker.’”). Accord City of Roseville Emps. Ret. Sys. v. EnergySolutions, Inc., 814
F. Supp. 2d 395, 417 n.9 (S.D.N.Y. 2011).
6

adequately alleged that these defendants were the “makers” of the statements.
Certainly, at trial or summary judgment, plaintiffs will need to provide proof that
the individual defendants did in fact have ultimate authority over the statements in
order to hold them liable.12 At the pleading stage, these facts are entirely within the
control of defendants.13
Therefore, defendants’ motion for reconsideration regarding claims
against Potter, Kinver, and Gonzales is denied.
III.

INTERLOCUTORY APPEAL
A.

Applicable Law
1.

Section 20(a)

Section 20(a) of the Exchange Act creates a cause of action against

12

Plaintiffs also argue that “a non-speaking defendant can be liable
under § 10(b) when, as here, his conduct goes to ‘the very heart of the fraudulent
scheme’ in question.” Memorandum of Law in Opposition to Defendants’ Motion
for Reconsideration at 8 (quoting In re Bristol Myers Squibb Co. Sec. Litig., 586 F.
Supp. 2d 148, 169–70 (S.D.N.Y. 2008)). That claim is plainly incorrect in light of
Janus, which concluded that only defendants with the ultimate authority over the
statement can be held liable.
13

See In re BISYS Sec. Litig., 397 F. Supp. 2d at 438 (noting that the
group pleading doctrine developed because “plaintiffs charging fraud with respect
to corporate utterances seldom have access, prior to the commencement of
discovery, to information permitting identification of the particular officers,
directors and employees who bear personal responsibility for the utterances in
question . . . .”).
7

“control persons” of the primary violator.14 “To establish a prima facie case of
control person liability, a plaintiff must show (1) a primary violation by the
controlled person, (2) control of the primary violator by the defendant, and (3) that
the defendant was, in some meaningful sense, a culpable participant in the
controlled person’s fraud.”15 It remains unsettled in this District whether control
person liability is premised on fraud, and thus whether culpable participation
requires proof of scienter.16 These issues in turn impact whether Rule 8, Rule 9(b),
and/or the heightened pleading requirements of the Private Securities Litigations
Reform Act of 1995 (“PSLRA”) apply. In the April 1 Order, I held, as I have
previously, that scienter is not an essential element of a Section 20(a) claim and
that neither Rule 9(b) nor the PSLRA apply.
2.

Interlocutory Appeals

Interlocutory appeals of district court decisions are governed by
28 U.S.C. § 1292(b). For an interlocutory appeal to be appropriate, the underlying
order must “(1) involve a controlling question of law (2) over which there is

14

See 15 U.S.C. § 78t(a).

15

ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir.

2007).
16

See generally Special Situations Fund III QP, L.P. v. Deloitte Touche
Tohmatsu CPA, Ltd., 33 F. Supp. 3d 401, 437–38 (S.D.N.Y. 2014).
8

substantial ground for difference of opinion,” and the moving party must also show
that “(3) an immediate appeal would materially advance the ultimate termination of
the litigation.”17
Interlocutory appeals are presumptively disfavored. Leave to appeal
is warranted only when the moving party can point to “exceptional
circumstances”18 sufficient to “justify a departure from the basic policy of
postponing appellate review until after the entry of a final judgment.”19
Interlocutory appeal “is not intended . . . to provide early review of difficult rulings
in hard cases.”20 Rather, it is appropriate only in “extraordinary cases where
appellate review might avoid protracted and expensive litigation,” and where it
poses no threat of “piecemeal litigation.”21 Whether an interlocutory appeal is

17

28 U.S.C. § 1292(b).

18

Williston v. Eggleston, 410 F. Supp. 2d 274, 276 (S.D.N.Y. 2006).

19

In re Madoff, No. 08 Civ. 1789, 2010 WL 3260074, at *3 (S.D.N.Y.
Aug. 6, 2010) (citing In re Flor, 79 F.3d 281, 284 (2d Cir. 1996) (quotation marks
and citations omitted)).
20

In re Levine, No. 03 Civ. 7146, 2004 WL 764709, at *2 (S.D.N.Y.
Apr. 9, 2004).
21

In re AroChem Corp., 176 F.3d 610, 619 (2d Cir. 1999). Accord Ted
Lapidus, S.A. v. Vann, 112 F.3d 91, 95 (2d Cir. 1997).
9

warranted lies squarely within the discretion of the district court.22 Indeed, even
when the elements of section 1292(b) are satisfied, the district court retains
“unfettered discretion” to deny certification.23
B.

Discussion
I need not address the first and second elements of section 1292(b),

because Veenman fails to meet the third element — immediate appeal will not
materially advance the ultimate termination of the litigation. Veenman argues that
a successful appeal would terminate the litigation for Veenman, but there are
numerous other individual defendants, as well as the company itself, for whom an
appeal will have absolutely no effect. “An immediate appeal is considered to
advance the ultimate termination of the litigation if that appeal promises to advance
the time for trial or to shorten the time required for trial.”24 But “if other claims
‘will continue regardless of the disposition of this issue, certification would not

22

See, e.g., Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 47 (1995)
(“[D]istrict courts [have] first line discretion to allow interlocutory appeals.”); In re
Kassover, 343 F.3d 91, 94 (2d Cir. 2003); DM Rothman Co. v. Cohen Mktg. Int’l,
Inc., No. 98 Civ. 7905, 2006 WL 2128064, at *1 (S.D.N.Y. July 27, 2006).
23

National Asbestos Workers Med. Fund v. Philip Morris, Inc., 71 F.
Supp. 2d 139, 162–63 (E.D.N.Y. 1999) (assuming the statutory criteria were met
but nonetheless denying certification).
24

In re Oxford Health Plans, Inc., 182 F.R.D. 51, 54 (S.D.N.Y. 1998).
10

materially advance the termination of this litigation.’”25 Here, even if the section
20(a) claim was dismissed for Veenman, section 10(b) claims would still need to
be litigated against the six remaining individual defendants as well as against
Barrick. Discovery would continue on all factual issues, and a resolution of the
pleading standard under section 20(a) would not narrow any issues for discovery or
trial. Because the litigation will continue in almost the same form whether or not
there is a successful appeal of this limited issue, Veenman fails to meet the third
element of the section 1292(b) test. Therefore, Veenman’s motion for certification
is denied.
IV.

CONCLUSION
For the foregoing reasons, defendants’ motion for reconsideration is

DENIED, and Veenman’s motion for certification for interlocutory appeal is
DENIED. The Clerk of the Court is directed to close these motions (Docket Nos.
78 and 80).

25

Bishop v. Best Buy, Co. Inc., No. 08 Civ. 8427, 2011 WL 4011449, at
*15 (S.D.N.Y. Sept. 8, 2011) (quoting In re Payroll Exp. Corp., 921 F. Supp.
1121, 1126 (S.D.N.Y. 1996)).
11

SO ORDERED:

Dated:

New York, New York
June 2, 2015

12

- Appearances New York, NY 10005
[phone]

For Plaintiffs:
Christopher F. Moriarty, Esq.
David P. Abel, Esq.
James M. Hughes, Esq.
Motley Rice LLC
28 Bridgeside Blvd.
Mt. Pleasant, SC 29464
[phone]

Lionel Z. Glancy, Esq.
Michael Goldber, Esq.
Robert V. Prongay, Esq.
Glancy Binkow & Goldberg LLP
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
[phone]

William H. Narwold, Esq.
Motley Rice LLC
One Corporate Center
20 Church Street, 17th Floor
Hartford, CT 06103
[phone]

Ira M. Press, Esq.
Kirby McInerney LLP
825 Third Avenue, 16th Floor
New York, NY 10022
[phone]

Jonathan M. Plasse, Esq.
Serena Pia Hallowell, Esq.
Christopher J. Keller, Esq.
Joel H. Bernstein, Esq.
Jonathan Gardner, Esq.
Labaton Sucharow
140 Broadway
New York, NY 10005
[phone]

Jeffrey A. Barrack, Esq.
Barrack, Rodos & Bacine
Two Commerce Square
2001 Market Street, Suite 3300
Philadelphia, PA 19103
[phone]
For Defendants:

Brian P. Murray, Esq.
Glancy Binkow & Goldberg LLP
122 East 42nd Street, Suite 2920
New York, NY 10168
[phone]

Ada Fernandez Johnson, Esq.
Jonathan Rosser Tuttle, Esq.
Debevoise & Plimpon LLP
555 13th Street, N.W.
Washington, DC 20004
[phone]

Gregory B. Linkh, Esq.
Glancy Binkow & Goldberg LLP
77 Water Street, 7th Floor

Bruce E. Yannett, Esq.
Elliot Greenfield, Esq.
Debevoise & Plimpton LLP
13

919 Third Avenue, 31st Floor
New York, NY 10022
[phone]

14