The State of New York Ex Rel Vinod Khurana et al v. Spherion Corp

Filing 128

OPINION & ORDER re: 121 MOTION for Leave to File Second Proposed Third Amended Complaint filed by The State of New York Ex Rel Vinod Khurana, The City of New York Ex Rel Vinod Khurana, Vinod Khurana. For the reasons set forth above, Plaintiff's motion for leave to amend its complaint is DENIED. The Clerk of Court is respectfully directed to terminate the motion docketed at ECF No. 121. (Signed by Judge John F. Keenan on 3/20/2019) (mro)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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THE STATE OF NEW YORK EX REL
VINOD KHURANA and THE CITY OF
NEW YORK EX REL VINOD KHURANA,

:
:
:
:
Plaintiffs,
:
:
- against :
:
SPHERION CORP. (N/K/A SFN GROUP,
:
INC.),
:
Defendant.
:
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APPEARANCES

No. 15 Civ. 6605 (JFK)
OPINION & ORDER

FOR PLAINTIFF/RELATOR VINOD KHURANA:
David E. Kovel, Esq.
David A. Bishop, Esq.
KIRBY MCINERNEY LLP
FOR DEFENDANT SPHERION CORP.:
Christopher F. Robertson
Howard Wexler
Lisa L. Savadjian
SEYFARTH SHAW LLP
JOHN F. KEENAN, United States District Judge:
Plaintiff Vinod Khurana moves the Court for leave to file a
"Second" Proposed Third Amended Complaint (the "Second TAC")
pursuant to Federal Rule of Civil Procedure 15(a).

For the

reasons stated below, Plaintiff's motion is denied.
I.

Background

A. Factual Background
The Court presumes familiarity with the factual background
of this case as laid out extensively in the Court's three
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previous Orders. (See ECF Nos. 70, 86, 96.)

Briefly stated,

Plaintiff is a former employee of Defendant Spherion Corp.
("Spherion"), a company that provided quality assurance services
over the CityTime project, an initiative started by the City of
New York (the "City") and the Office of Payroll Administration
("OPA") in 1998 to automate time-keeping and payroll functions
for approximately 180,000 City employees. (Second Amended
Complaint ¶¶ 9, 13 [hereinafter "SAC"]).
Plaintiff claims that Spherion employed two consultants to
work on the CityTime project, Mark Mazer and Scott Berger, who
"turned the . . . project into their personal bank account" and
"were largely responsible for developing and implementing what
Preet Bharara, the United States Attorney in Manhattan, called
'one of the worst, if not the worst, financial crimes against
the city.'"(Id. ¶ 2.)
Plaintiff alleges that, as a load performance tester on the
CityTime project, he began noticing performance problems with
the CityTime software. (Id. ¶ 29.)

From 2004 to 2005, Plaintiff

alleges that he told individuals at the Financial Information
Services Agency ("FISA") on multiple occasions that the program
would not support the number of users required, and that Mazer
and Berger had told him they knew the project was going to fail.
(Id. ¶ 32.)

Plaintiff claims that "on numerous occasions" he

also told Spherion representatives about "serious problems" with
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CityTime, but Spherion "continued with the project as if those
problems did not exist" and continued billing the City without
taking any action to remove Mazer and Berger. (Id. ¶¶ 34, 36.)
Further, Plaintiff alleges that he "personally witnessed or
developed knowledge of various other examples of suspicious or
outright fraudulent conduct," including billing the CityTime
contract from services that were prohibited, unnecessary, or not
provided. (Id. ¶ 45.)
Plaintiff claims that he was retaliated against and
ultimately terminated in May 2007 for communicating to Spherion
and FISA that performance was poor and the project was failing.
(Id. ¶ 58.)
B. Procedural History
On March 31, 2011, Plaintiff brought this action in New
York State Supreme Court against Spherion.

On July 13, 2015, he

filed a second amended complaint (the "SAC") in which he alleged
that Spherion was liable under New York False Claims Act ("NYS
FCA") and the New York City False Claims Act ("NYC FCA") for the
submission of false claims to the City (the "qui tam claims").
Plaintiff also asserted two claims for retaliation under the NYS
FCA and NYC FCA.

On August 20, 2015, Spherion removed the case

to this Court. (See Notice of Removal (Aug. 20, 2015), ECF No.
1.)

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On October 9, 2015, Spherion moved to dismiss the SAC
pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b)
for failure to state a claim and failure to plead fraud with
particularity.

In opposing Spherion's motion to dismiss,

Plaintiff asserted the theory that Spherion was liable for
submitting false claims to the City because it "failed to
provide quality assurance services" as required by its contract
with the OPA (the "QA claim"). (Pl.'s Mem. of Law in Opp. to
Mot. to Dismiss SAC at 11-12 (Dec. 23, 2015), ECF No. 24.)

On

November 10, 2016, the Court granted in part Spherion's motion
to dismiss as to Plaintiff's qui tam claims. (See Op. &
at 50 (Nov. 10, 2016), ECF No. 70.)

Order

It held that Plaintiff

failed to allege a theory of factual falsity or implied false
certification with regard to the QA claim. (Id. at 35-38.)

The

Court denied Spherion's motion to dismiss Plaintiff's
retaliation claims. (Id. at 49.)
On December 12, 2016, Plaintiff moved for leave to file a
Third Amended Complaint (the "TAC"). (Mot. for Leave to File TAC
(Dec. 12, 2016), ECF No. 72.)

Plaintiff contended that the TAC

contained "newly alleged information" from documentary discovery
produced by the City that was unavailable when he filed the SAC.
(Pl.'s Mem. of Law in Supp. of Mot. for Leave to File TAC at 1
(Dec. 12, 2016), ECF No. 73.) Plaintiff argued that the TAC
cured the deficiencies in the QA claim because it contained
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additional allegations that Spherion did not provide any bona
fide QA services but, rather, outsourced its quality assurance
obligations to conflicted parties. (Id. at 6-8.)

On April 21,

2017, the Court denied Plaintiff leave to amend and dismissed
his qui tam claims with prejudice. (See Op. & Order (Apr. 21,
2017), ECF No. 86.)

Regarding the QA claim, the Court held that

although Plaintiff's new allegations raised a plausible theory
of factual falsity, they failed to satisfy Rule 9(b) and,
therefore, did not cure the deficiencies that the Court had
identified in its previous order. (Id. at 26.)
On August 18, 2017, Plaintiff moved pursuant to Rule 54(b)
for entry of the Court's Orders as final judgments and to stay
proceedings on his retaliation claims during the pendency of the
appeal of the Orders. (Mot. for Entry of Judgment under Rule
54(b) (Sept. 20, 2017), ECF No. 91.)

The Court denied the

motion. (See Op. & Order at 16 (June 20, 2018), ECF No. 96.)
On February 8, 2019, Plaintiff moved the Court for leave to
file a Second TAC because "discovery has resulted in new facts
and evidence" that remedy the weaknesses the Court identified
when it dismissed Plaintiff's QA claim with prejudice. (Pl.'s
Mem. of Law in Supp. of Mot. for Leave to File Second Proposed
TAC at 1 (Feb. 8, 2019), ECF No. 122 [hereinafter "Mem."].).
II.

Discussion

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Leave to amend a pleading should be freely granted when
justice so requires. Fed. R. Civ. P. 15(a); Dluhos v. Floating &
Abandoned Vessel, 162 F.3d 63, 69 (2d Cir. 1998).

District

courts, however, "ha[ve] broad discretion in determining whether
to grant leave to amend," Gurary v. Winehouse, 235 F.3d 792, 801
(2d Cir. 2000), and "may properly deny leave to amend in cases
of '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 the allowance of the amendment, futility of amendment,
etc.'" Pasternack v. Lab. Corp. of Am., 892 F. Supp. 2d 540, 549
(S.D.N.Y. 2012) (quoting Ruotolo v. City of New York, 514 F.3d
184, 191 (2d Cir. 2008)).
Courts have treated a party's motion for leave to amend a
claim that has been dismissed with prejudice as a motion for
reconsideration under Rule 54(b). See In re Bisys Sec. Litig.,
496 F. Supp. 2d 384, 386 (S.D.N.Y. 2007) ("Plaintiffs purport to
be making this request under Fed. R. Civ. P. 15(a), relating to
amended pleadings.

Since, however . . . , the claims against

PwC were previously dismissed with prejudice, the Court will
construe plaintiffs' request as a motion under Fed. R. Civ. P.
54(b), seeking revision of the dismissal with prejudice prior to
final judgment being entered."); see also Microbanc, LLC v.
InspireMD, Inc., No. 16 CV 3860-LTS, 2018 WL 522335, at *3
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(S.D.N.Y. Jan. 22, 2018) ("Because the Court dismissed
Plaintiff's unjust enrichment, quantum meruit, and fraud claims
with prejudice, the Court construes Plaintiff's motion for leave
to amend with respect to those claims as a motion for
reconsideration of the February Opinion . . . .").
A party moving for reconsideration "must do so within the
strictures of the law of the case doctrine," see Virgin Atl.
Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255
(2d Cir. 1992), and thus "subject to the caveat that 'where
litigants have once battled for the court's decision, they
should neither be required, nor without good reason permitted,
to battle for it again.'" See Official Comm. of the Unsecured
Creditors of Color Tile, Inc. v. Coopers & Lybrand, 322 F.3d
147, 167 (2d Cir. 2003) (quoting Zdanok v. Glidden Co., 327 F.2d
944, 953 (2d Cir. 1964)).

Where, as here, the qui tam claims

against Spherion were dismissed with prejudice, such decision
may not be changed "unless there is 'an intervening change of
controlling law, the availability of new evidence, or the need
to correct a clear error or prevent a manifest injustice.'" Id.
(quoting Virgin Atl. Airways, Ltd., 956 F.2d at 1255).

"Even if

any of these factors is present, moreover, it must be weighed
against the prejudice that reopening will cause to the dismissed
party." In re Bisys Sec. Litig., 496 F. Supp. at 386.

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Plaintiff argues that the Court should reconsider its prior
decisions dismissing Plaintiff's qui tam claims with prejudice
because "discovery has resulted in new facts and evidence" that
were not available when Plaintiff previously amended the SAC.
(Mem. at 2.)

Specifically, he has incorporated in the Second

TAC (1) "an actual invoice sent by Defendant Spherion to New
York City for CityTime QA services purportedly performed by
Spherion consultants, for which New York City never received the
benefit" and (2) deposition testimony further elaborating on the
quality assurance services Spherion was supposed to, but did
not, provide. (Id.)

Plaintiff concedes that, at this juncture,

a motion to reconsider would be untimely pursuant to Local Civil
Rule 6.3, which specifies that a motion to reconsider must be
made within fourteen days of entry of the order in question.
(Id.); see Local Civil R. 6.3.

He argues that a late-filed

motion to reconsider, however, is reviewable by a court "when
the motion . . . is based upon newly discovered evidence." (Mem.
at 4.)
The Court declines to reconsider its prior decisions
dismissing Plaintiff's qui tam claims.

First, the invoice

Plaintiff incorporates in the Second TAC is not new evidence -it was produced to Plaintiff in the spring of 2016, in advance
of (1) his December 12, 2016 motion for leave to amend his

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complaint, and (2) his September 20, 2017 motion for entry of
final judgment.
Second, the deposition testimony's added weight to
Plaintiff's qui tam claims, if any, does not overcome the
prejudice Spherion would incur if this Court were to grant
Plaintiff's motion.

In determining what constitutes

"prejudice," courts "consider whether the assertion of the new
claim would: '(i) require the opponent to expend significant
additional resources to conduct discovery and prepare for trial;
(ii) significantly delay the resolution of the dispute; or (iii)
prevent the plaintiff from bringing a timely action in another
jurisdiction.'" Ferring B.V. v. Serenity Pharm., LLC, No. 17
CIV. 9922, 2019 WL 117316, at *2 (S.D.N.Y. Jan. 7, 2019)
(quoting Block v. First Blood Assocs., 988 F.2d 344, 350 (2d
Cir. 1993)).

Here, if the Court were to grant Plaintiff's

motion, it would have to reopen discovery and Spherion would
have to spend significant resources conducting additional fact
discovery on qui tam claims that were dismissed on April 21,
2017, almost two years ago.

Moreover, having to reopen

discovery would significantly delay the resolution of this
dispute, which has been pending for over three years.

Thus, the

Court declines to allow Plaintiff another bite at the apple, and
his motion for leave to file the Second TAC is denied.
III. Attorneys' Fees
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