Nova Scotia Health Employees' Pension Plan v. BP, PLC et al
Filing
78
MEMORANDUM AND ORDER (Signed by Judge Keith P Ellison) Parties notified.(sloewe, 4)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
In re: BP p.l.c. Securities Litigation
July 08, 2016
David J. Bradley, Clerk
MDL No. 4:10-MD-2185
This document relates to:
Alameda Cnty. Emps.’ Ret. Assoc. et al. v. BP
p.l.c. et al.
No. 4:12-cv-1256 (cons.)
South Yorkshire Pensions Auth. et al. v. BP
p.l.c. et al.
No. 4:12-cv-2362 (cons.)
Mondrian Global Equity Fund, L.P. et al. v.
BP p.l.c. et al.
No. 4:12-cv-3621
Stichting Pensioenfonds Metaal en Techniek et
al. v. BP p.l.c. et al.
No. 4:13-cv-0069
HESTA Super Fund v. BP p.l.c. et al.
No. 4:13-cv-0129
N.Y.C. Emps.’ Ret. Sys. et al. v. BP p.l.c. et al.
No. 4:13-cv-1393
Nova Scotia Health Employees’ Pension Plan
v. BP p.l.c., et al.
No. 4:13-cv-3397
MEMORANDUM AND ORDER
Before the Court is the Motion for Leave to File Amended Complaints filed by the
plaintiffs in the above-captioned actions. The factual background of the respective cases has
been set forth previously and will not be repeated here.
1
I.
PROCEDURAL HISTORY
Since April 20, 2010, BP shareholders have filed more than three dozen law suits alleging
that BP made fraudulent representations to investors regarding both the safety of the Deepwater
Horizon oil rig and the severity of the oil spill that resulted from its collapse. In the interest of
judicial efficiency, the parties and the Court have grouped these cases into different “tranches”
and, when possible, collectively addressed each tranche with consolidated motions and briefing.
The Tranche 1 Plaintiffs1 filed suit in 2012 asserting claims for relief under federal
securities statutes, state securities statutes, and the common law of several states. After seeking
an extension of time to respond to those claims, Defendants filed a consolidated motion to
dismiss the Tranche 1 complaints on December 21, 2012 (the “First Motion to Dismiss”). (See
Mot. to Dismiss, Alameda, Doc. Nos. 46-50.) The briefing process was protracted due to the
breadth and complexity of the issues, and the final supplemental brief was not filed until June 14,
2013.
In the meantime, additional plaintiffs continued filing securities fraud claims, and BP
moved to dismiss those claims in a separate consolidated motion to dismiss (“Second Motion to
Dismiss”) on May 20, 2013. (See, e.g., Mot. to Dismiss, South Yorkshire Pensions Auth. et al. v.
BP p.l.c. et al. (No. 12-cv-2362) (hereinafter “South Yorkshire”), Doc. Nos. 27-31, 39.) The
arguments raised in the Second Motion to Dismiss overlapped considerably with those raised in
the First Motion to Dismiss: Defendants contended that English law governs Plaintiffs’ claims,
1
The “Tranche 1 Plaintiffs” include the plaintiffs in Alameda Cnty. Emps.’ Ret. Assoc. et al.
v. BP p.l.c. et al. (No. 12-cv-1256) (hereinafter “Alameda”) and Connecticut Retirement Plans
and Trust Funds, et al. v. BP p.l.c. et al. (No. 12-cv-1272). For the sake of convenience, the
Court will cite only to the Alameda docket when referencing Tranche 1 filings.
The case of Ohio Public Employees Retirement System et al. v. BP p.l.c. has been grouped in
Tranche 1 in previous motions, but the plaintiffs in that case have not joined the other Tranche 1
plaintiffs in moving to amend their complaint.
2
Plaintiffs failed to state a claim under English law, and the doctrine of forum non conveniens
mandated dismissal in deference to the English courts.
(Compare, e.g., Mot. to Dismiss,
Alameda, Doc. No. 48 with Mot. to Dismiss, South Yorkshire, Doc. No. 28.) In the interest of
judicial economy, the Court halted briefing on the Second Motion to Dismiss in hopes that
resolution of the First Motion to Dismiss would be of assistance to the parties as they completed
briefing the Second Motion. (See Order, South Yorkshire, Doc. No. 41 (hereinafter, the “Halt
Briefing Order”).) On September 25th, the Court entered an order denying in part the First
Motion to Dismiss.2 (Order, Alameda, Doc. No. 88, 91 (hereinafter, the “Tranche 1 Order”).) In
short, the Court ruled that English law governed the Tranche 1 Plaintiffs’ claims, but also held
that the Tranche 1 Plaintiffs had adequately alleged claims for relief under English law. (Id.)
Because the issues raised in the Second Motion to Dismiss were similar to those raised in
the First, Defendants and the Tranche 2 Plaintiffs sought to avoid duplicative briefing by
agreeing upon how the Tranche 1 Order might apply to the Tranche 2 Plaintiffs’ complaints.3
After extensive negotiations, the parties memorialized their agreement in the form of a joint
stipulation and filed it with the Court. (See Stipulation and Order, South Yorkshire, Doc. Nos.
51, 55 (hereinafter, the “First Conforming Stipulation”).) The First Conforming Stipulation
acknowledged that “the Court will most likely deem the [Tranche 1 Order] to be applicable to the
[Tranche 2 Plaintiffs’ complaints],” and therefore stipulated that (i) English law applies to all of
2
Defendants moved for reconsideration, which the court granted. The Court entered a
revised Tranche 1 Order on December 5, 2013.
3
The “Tranche 2 Plaintiffs” include the plaintiffs in the following actions: the Avalon
Holdings action (No. 4:12-cv-3715); the South Yorkshire action (No. 4:12-cv-2362); the
Mondrian action (No. 4:12-cv-3621); the Houston Municipal action (No. 4:12-cv-3714); the
Stichting action (No. 4:13-cv-0069); the HESTA action (No. 4:13-cv-0129); the KBC Asset
Management action (No. 4:13-cv-0517); the Deutsche Asset Management action (No. 4:13-cv0887); the New York City action (No. 4:13-cv-1393); and the Nova Scotia action (No. 4:13-cv
3397).
3
the Tranche 2 Plaintiffs’ claims (except for their federal Exchange Act claims), and (ii) subject to
Court approval—which the Court granted on December 10, 2013—certain claims enumerated in
the First Conforming Stipulation would be dismissed. (See First Conforming Stipulation, 3.) In
effect, the First Conforming Stipulation served as a de facto amendment that narrowed the
breadth of the Tranche 2 Plaintiffs’ complaints, thereby narrowing the issues that the parties
would need to address in the Second Motion to Dismiss.
Defendants filed a revised Second Motion to Dismiss on December 11, 2013. (Mot. to
Dismiss, South Yorkshire, Doc. Nos. 53-54, 59-60.) But rather than narrow the scope of their
motion, Defendants expanded it. For example, Defendants additionally argued that the Tranche
2 Plaintiffs were barred from bringing their claims under English law because, as evidenced by
their coordinated negotiation of the First Conforming Stipulation, the Tranche 2 Plaintiffs’
claims were proceeding as a “single action,” which is barred by the Securities Litigation Uniform
Standards Act of 1998 (“SLUSA”). (Id. at 10-18.) This not only introduced a novel issue for the
parties to brief, but it forced the Tranche 2 Plaintiffs to avoid coordinating their litigation on any
level, lest they be subject to further scrutiny under SLUSA.
Briefing was not completed until the summer of 2014, and the Court issued its “Tranche
2 Orders” on September 30, 2014, holding that the Tranche 2 Plaintiffs’ claims could proceed.
The Court rejected Defendants’ SLUSA argument (see Mem. and Order, No. 4:12-cv-3715, Doc.
No. 93 (the “Tranche 2 Order”)), meaning that Plaintiffs could coordinate among themselves
without risking dismissal. Once able to coordinate, the plaintiffs in Tranches 1, 2, and 34
engaged in joint consultation with an English law expert to understand how the application of
4
The “Tranche 3” actions include each of the fifteen actions filed against BP in this MDL in
2014.
4
English law would affect their cases, and they continued fact development efforts to that end.
(Reply at 5.)
On August 31, 2014, each of the Tranche 3 Plaintiffs filed amended complaints as of
right, asserting securities fraud claims under English law. Shortly thereafter, the Tranche 1 and 2
Plaintiffs filed motions for leave to amend their complaints, attaching proposed amended
complaints to the motions.
According to the Tranche 1, 2, and 3 Plaintiffs, the revised
complaints display significant uniformity in their claims and allegations, contain betterdeveloped facts, and display better-constructed claims thanks to the counsel of an English law
expert. (Reply at 6.) Defendants indicated that they would consider allowing the motion to
proceed unopposed, but first needed to review the proposed amendments. About three months
later, Defendants provided the Tranche 1 and 2 Plaintiffs with a list of objections, and the parties
entered into intensive negotiations in an attempt to resolve their disputes.
One subset of the Tranche 1 and 2 Plaintiffs (the “Non-Pomerantz Plaintiffs”) reached an
accord with Defendants: Defendants would allow the Non-Pomerantz Plaintiffs’ motions to
proceed unopposed if the Non-Pomerantz Plaintiffs would stipulate to the effect of the Tranche 2
Order.5 Those parties entered into an additional “conforming” stipulation (see Order, No. 4:10md-2185, Doc. No. 1287 (hereinafter, the “Second Conforming Stipulation”)), and the Court
granted the Non-Pomerantz Plaintiffs’ motions for leave to amend.
The Non-Pomerantz
Plaintiffs filed their amended complaints shortly thereafter.
5
Each of the Tranche 1 and 2 Plaintiffs bringing this motion is represented by Pomerantz
LLP. The Tranche 1 and 2 Plaintiffs who entered into the Second Conforming Stipulation—and,
by its effect, are no longer joining in this motion—are represented by other counsel.
5
The remaining Tranche 1 and 2 Plaintiffs (the “Plaintiffs”) and Defendants were able to
whittle down their list of disputed amendments, but were unable to reach total accord. One
source of contention remains.
Defendants argue that the Tranche 1 Order and the First
Conforming Stipulation provided for the dismissal of the Tranche 1 and 2 Plaintiffs’ “holder
claims,” and that Plaintiffs should not be allowed to reassert those claims here. In response,
Plaintiffs note that the Tranche 1 Order—and, by extension, the First Conforming Stipulation—
merely dismissed the state law holder claims as then pled, but did not prohibit the Plaintiffs from
re-pleading English law holder claims based on newly-discovered facts.
After it became clear that the parties had reached an impasse on this one remaining issue,
Defendants filed their opposition to Plaintiffs’ motion for leave.
II.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 15(a), a district court “should freely give leave [to
amend] when justice so requires.”6 Fed. R. Civ. P. 15(a)(2). The language of this rule evinces a
“bias” or “presumption” in favor of granting leave to amend. Jones v. Robinson Prop. Grp., L.P.,
427 F.3d 987, 994 (5th Cir. 2005); Mayeaux v. Louisiana Health Serv. & Indem. Co., 376 F.3d
420, 425 (5th Cir. 2004). Thus, although leave to amend should not be automatically granted,
“[a] district court must possess a substantial reason to deny a request for leave to amend[.]” Id.
(internal quotation marks omitted). For example, “[d]enial of leave to amend may be warranted
for undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies, undue prejudice to the opposing party, or futility of a proposed amendment.” United
States ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 270 (5th Cir. 2010). “Courts may
6
Plaintiffs correctly note that, “As the deadline to file a motion seeking leave to amend set in
the Court’s December 10, 2013 CMO has not yet passed, Fed. R. Civ. P. 16(b), which governs
modifications to pretrial scheduling orders, is not applicable.” Defendants do not dispute that
this issue is properly analyzed under Rule 15.
6
also consider judicial efficiency and effective case management before granting a motion to
amend.” Jebaco, Inc. v. Harrah’s Operating Co., 587 F.3d 314, 322 (5th Cir. 2009) (internal
citations omitted).
III.
DISCUSSION
Defendants oppose Plaintiffs’ motion for leave on three grounds: that (1) Plaintiffs
unduly delayed amending their complaints; (2) allowing amendment would result in undue
prejudice to Defendants; and (3) allowing amendment would result in judicial inefficiency.
Given the procedural history at issue here, however, none of these grounds constitutes a
“substantial reason” that can overcome Rule 15’s “bias in favor of granting leave to amend.” See
Jones, 427 F.3d at 994.
A.
Undue Delay
In ruling on a motion to amend a pleading, a court may consider “(1) an ‘unexplained
delay’ following an original complaint, and (2) whether the facts underlying the amended
complaint were known to the party when the original complaint was filed.” Matter of Southmark
Corp., 88 F.3d 311, 316 (5th Cir. 1996). Defendants argue that both of these factors weigh
heavily against granting leave here. (Opp. at 7.) The Court disagrees.
Defendants support the first factor by noting that two to three years have passed since the
Plaintiffs filed their operative complaints. But delay by itself, even if substantial, does not
necessarily provide the Court with an adequate basis for denying a motion for leave to amend—
the “delay must be undue.” Mayeaux, 376 F.3d 420, 427 (5th Cir. 2004). And here, unlike in the
precedent cited by Defendants, Plaintiffs’ delay in amending their complaints is explainable.
Indeed, much of the delay is attributable to factors outside of Plaintiffs’ control. For example, it
was the Court who halted briefing pending resolution of the First Motion to Dismiss; it was
7
Defendants who expanded the scope of their Second Motion to Dismiss by adding a SLUSA
argument (effectively barring a coordinated, more efficient response from the Plaintiffs); and it is
Defendants who have requested numerous extensions of time to respond throughout this
litigation.7
When Plaintiffs were presented with a reasonable opportunity to amend their complaints,
they did so. Following resolution of the Second Motion to Dismiss, the Plaintiffs: (i) engaged an
English law expert to advise them on amending their complaints in light of English securities
laws—a body of law which the operative complaints were not drafted to address, and with which
Plaintiffs’ counsel likely had little familiarity; (ii) further investigated the work of their outside
investment managers; and (iii) coordinated their efforts to draft amended complaints that are
relatively uniform across all three tranches. The fact that it took the Plaintiffs almost a year to
draft these amended complaints is not evidence of undue delay, but rather of an arduous process
that necessarily required a substantial amount of time to complete.
Defendants have pointed to only one specific example of “unexplainable delay,” faulting
the Plaintiffs for failing to amend their complaints following the Tranche 1 Order.8 But, as
Plaintiffs correctly respond, their decision to refrain from amending was reasonable.
The
7
This not to suggest, however, that Defendants’ SLUSA argument or requests for extensions
of time were dilatory or unreasonable. To the contrary, Defendants’ (and Plaintiffs’) efforts to
resolve these matters expeditiously have been commendable—which is precisely the point.
Litigating highly complex MDLs is a remarkably time-intensive process, even when both parties
are acting diligently and in good faith. The fact that Plaintiffs were only recently able to amend
their complaints is certainly lamentable as a general matter, but it is far from “unexplainable.”
8
(Opp. at 9 (citing Lozano v. Ocwen Fed. Bank, FSB, 489 F.3d 636, 644 (5th Cir. 2007)).)
But see U.S. Commodity Futures Trading Comm'n v. Fin. Robotics, Inc., 2013 WL 3280038, at
*2 (S.D. Tex. June 27, 2013) (noting that, while “[a] litigant's failure to assert a claim as soon as
he could have is properly a factor to be considered,” the mere fact that “a claim was not
presented as promptly as possible, however, does not vest the district court with authority to
punish the litigant”).
8
Court’s Halt Briefing Order had laid out a schedule that was exclusively focused on
expeditiously resolving Defendants’ voluminous Tranche 2 motion to dismiss.
(See Halt
Briefing Order, 2.) The order made no mention of amending any of the Tranche 1 and 2
Plaintiffs’ complaints. Indeed, it would have made little sense for the Tranche 2 Plaintiffs to
amend their complaints in the face of Defendants’ imminent motion to dismiss. Consequently,
Plaintiffs’ decision to refrain from amending their complaints at that time was not only
explainable—it was reasonable.
Additionally, Defendants’ argument that Plaintiffs’ amendments are not based on newly
discovered facts misses the mark. According to Defendants, the new allegations in the amended
complaints relate to Plaintiffs’ “own beliefs and actions [as well as] those of their investment
managers,” meaning that all of the newly-alleged facts would have been within Plaintiffs’
knowledge when they filed their initial complaints. (Opp. at 10.) Plaintiffs respond, however,
that many of the investment managers were not retained by Plaintiffs in recent years, and the
newly-alleged facts are the product of Plaintiffs’ ongoing attempts to secure evidence from those
third parties. (Reply at 12.) For example, the New York City Plaintiffs’ initial complaint
included reliance allegations drawn from only two investment managers.
Their proposed
amended complaint, on the other hand, sets forth enhanced allegations regarding those two
investment managers, as well as new allegations regarding an additional five investment
management firms. (Compare No. 4:13-cv-1393, Doc. Nos. 3, 10, at ¶¶ 493-511 with 4:13-cv1393, Doc. Nos. 88, 92, at ¶¶ 545-607.)
B.
Undue Prejudice
“Denial of leave to amend may be required when allowing an amendment would cause
undue prejudice to the opposing party.” Underwriters at Interest on Cover Note
9
JHB92M10582079 v. Nautronix, Ltd., 79 F.3d 480, 484 (5th Cir. 1996). “Courts typically find
prejudice only when the amendment unfairly affects the defendants in terms of preparing their
defense to the amendment.” U.S. Commodity Futures Trading Comm'n v. Fin. Robotics, Inc.,
2013 WL 3280038, at *3 (S.D. Tex. June 27, 2013) (quoting Minter v. Prime Equip. Co., 451
F.3d 1196, 1208 (10th Cir. 2006)).
Defendants argue that they would be unduly prejudiced because they have already gone
through the expense of moving to dismiss and answering the Plaintiffs’ original complaints;
allowing those plaintiffs to amend their complaints would require Defendants to repeat the
process. (Opp. at 11-12 (citing In re Enron Corp. Sec., Derivative & ERISA Litig., 2007 WL
207028, at *4 (S.D. Tex. Jan. 23, 2007).)
But this position fails to account for the
unconventional procedural backdrop of this MDL. Defendants have already indicated that they
plan to file a consolidated motion to dismiss the complaints of the Tranche 3 Plaintiffs—
complaints which are very similar to the proposed amended complaints filed by the Tranche 1
and 2 Plaintiffs. For example, the amended complaints in Tranche 3 contain the same newlyadded English law “holder claims” as Plaintiffs’ proposed amended complaints. Indeed, the
holder claims in some of the complaints include the same factual allegations drawn from the
same set of investment managers.9 In other words, Defendants are going to respond to the same
“holder claims” in the Tranche 3 complaints regardless of whether the Court grants the Plaintiffs’
9
Defendants correctly argue in a footnote that some of the specific factual allegations
underpinning the Tranche 3 Plaintiffs’ reliance arguments differ from those in the Tranche 1 and
2 Plaintiffs’ complaints to some degree. (See Opp. at 13 n. 10.) But, while true that this may
require Defendants to address slightly varied sets of factual allegations, Defendants have not
shown that these variances are sufficient to justify departing from the presumption in favor of
granting parties leave to amend. Mayeaux v. Louisiana Health Serv. & Indem. Co., 376 F.3d
420, 427 (5th Cir. 2004); see also Fin. Robotics, 2013 WL 3280038, at *3 (“The party opposing
amendment has the burden of proving prejudice.”). Put differently, even assuming that granting
Plaintiffs’ motion would prejudice Defendants to some degree, Defendants have not shown that
such prejudice is necessarily “substantial” or “undue.” Id.
10
motion for leave to amend. As a result, granting the motion would not result in undue prejudice
to the Defendants. See Fin. Robotics, 2013 WL 3280038, at *3 (finding a lack of undue
prejudice where “[s]ome of the issues raised by the proposed amendments overlap with those
already present in this litigation” and the issues were “likely to be a central and disputed issue in
[the] litigation regardless of whether the CFTC's motion is granted”).
C.
Judicial Economy
Finally, Defendants argue that Plaintiffs’ proposed amendments would require the Court
and the parties to “scrap” the First Conforming Stipulation and begin a new round of motion
practice, resulting in judicial inefficiency. But this argument again neglects the broader context
in which it is made. After the Tranche 1 and 2 Plaintiffs filed their motions for leave to amend,
the parties spent months negotiating a Second Conforming Stipulation that not only stipulates to
the effect of the Court’s Tranche 1 Order (as did the First Conforming Stipulation), but further
stipulates to the effect of the Court’s Tranche 2 Orders. The Non-Pomerantz Plaintiffs entered
into the Second Conforming Stipulation, and the Plaintiffs have represented that they will enter
into almost identical stipulations if their motion for leave is granted.10 (Reply at 14.) Thus,
Plaintiffs are not seeking to disregard the First Conforming Stipulation. To the contrary, they
have agreed to expand on it by stipulating to the effects of the Tranche 2 Order.
10
The lone difference would be that the Plaintiffs would not stipulate to the dismissal of their
recently-strengthened English law holder claims. But even this would not require the Court to
re-consider issues that have already been decided. As Plaintiffs correctly argue, the Tranche 1
Order specifically noted that the Tranche 1 Plaintiffs’ allegations of “reliance [are], at present,
insufficiently pled under Rule 9(b).” (Reply at 9 (citing Revised Alameda Order, No. 4:10-md2185, Doc. No. 706, at 67).) In other words, the text of the opinion implicitly contemplates the
prospect of the Plaintiffs adding additional allegations in the future, which is precisely what
Plaintiffs are seeking to do here.
11
IV.
CONCLUSION
After considering the parties’ filings, all responses and replies thereto, and the applicable
law, the Court holds that Plaintiffs’ Motion for Leave to File Amended Complaints is
GRANTED in its entirety.
IT IS SO ORDERED.
Signed this 8th day of July 2016.
Hon. Keith P. Ellison
United States District Judge
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