United States District Court, D. Connecticut
MINOHOR SINGH, Individually and On Behalf of All Others Similarly Situated, Plaintiff,
CIGNA CORP., et al., Defendants.
RULING AND ORDER ON MOTION FOR RECONSIDERATION [DKT.
Vanessa L. Bryant, United States District Judge.
the Court is Lead Plaintiff's Motion for Reconsideration
of the Court's Order directing Lead Plaintiff to file a
proposed amended complaint in contemplation of his request
for leave to amend should the Court grant Defendants'
Motion to Dismiss. [Dkt. 74]. This motion is opposed by
Defendants. See [Dkt. 76 (Opp'n on Mot.
Reconsideration)]. For the foregoing reasons, the Court
GRANTS in part and DENIES in part Lead Plaintiff's Motion
Court will briefly review the procedural posture of this
case. Jyotindra Patel filed the initial complaint in this
lawsuit on February 4, 2016. [Dkt. 1 (Compl.)]. The Complaint
raised allegations of violations of sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 (the “Exchange
Act” or “Act”), codified under 15 U.S.C.
§§ 78j(b) and 78t(a) respectively, and Rule 10b-5
promulgated by the Securities Exchange Commission
(“SEC”) under 17 C.F.R. § 240.10b-5, that
occurred during the Class Period. In April 2016, Plaintiff
moved to appoint Minohor Singh as Lead Plaintiff, which the
Court granted. [Dkt. 28 (Mot. Appoint Counsel); Dkt. 34
(Order]. Singh thereafter amended the complaint, raising
substantially more factual allegations. See [Dkt. 40
(Am. Compl.)]. In September 2016, Singh filed a Motion to
Modify Pretrial Deadlines indicating intentions for
requesting leave to amend due to “key
developments” since the previous filing. [Dkt. 50 at
3]. Defendants opposed this objection and argued that Singh
had six months from the filing of the original complaint and
two months from his appointment as Lead Plaintiff to amend
the complaint. [Dkt. 51 (Opp'n Mot. Modify) at 2].
Court held a telephonic conference on October 7, 2016, and
granted Lead Plaintiff a modification of the scheduling order
as well as leave to amend. See [Dkt. 54 (Tr. Tel.
Conf.) at 19-21]. During the hearing, signaling the
insufficiency of the Complaint, the Court specifically asked
Lead Plaintiff's counsel, “[D]o you expect that if
you were to amend you would be able to state with more
particularity the basis of your claims?” Id.
at 15:9-14. Counsel responded in the affirmative. See
Id. 15:15-18. Defense counsel posited that discovery had
been ongoing for several months and that they “were
prepared and have worked hard under [the Court's] order
to prepare a motion to dismiss that [they] were prepared to
file in 10 days. . . .” Id. at 17:24-18:3.
Upon considering the arguments the Court determined Lead
Plaintiff should have “a reasonable opportunity to
complete discovery to the point where they are able to file
an amended complaint that fairly reflects all of the
information that they can reasonably acquire in conducting
thorough due diligence of their allegations.”
Id. at 18:8-16. The Court reasoned, “[W]e want
this matter to be resolved one way or the other on the merits
with full consideration of all of the relevant facts, and if
that takes an additional couple of months to do I think
it's time well spent for everyone involved, including
Defendants.” Id. at 19:14-20. Lead Plaintiff
thereafter filed the 87-page Second Amended Complaint, which
is operative today.
filed the Motion to Dismiss on February 13, 2017, and the
motion is now fully briefed. Lead Plaintiff requests that
should the Court grant Defendants' Motion to Dismiss it
should allow Lead Plaintiff to replead the Second Amended
Complaint. The Court reviewed the Second Amended Complaint in
the context of the Motion to Dismiss and on August 28, 2017,
it ordered Lead Plaintiff to file a proposed Third Amended
Complaint. [Dkt. 72]. Rather than accepting the opportunity
to replead a second time as offered by the Court, Lead
Plaintiff now seeks reconsideration of the offer to replead.
Second Circuit, the standard for granting a motion for
reconsideration “is strict, and 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.”
Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d
Cir. 1995); see D. Conn. L. R. 7(c) (requiring the
movant to file along with the motion for reconsideration
“a memorandum setting forth concisely the controlling
decisions or data the movant believes the Court
overlooked”). There are three grounds for granting a
motion for reconsideration: (1) “intervening change of
controlling law”; (2) “the availability of new
evidence”; or (3) a “need to correct a clear
error or prevent manifest injustice.” Virgin Atl.
Airways Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245,
1255 (2d Cir. 1992) (quoting 18 C. Wright, A. Miller & E.
Cooper, Fed. Practice & Procedure, § 4478
at 790). If the Court “overlooked controlling decisions
or factual matters that were put before it on the underlying
motion, ” reconsideration is appropriate. Eisemann
v. Greene, 204 F.3d 393, 395 (2d Cir. 2000) (per
curium). By like measure, a motion for reconsideration should
be denied when the movant “seeks solely to relitigate
an issue already decided.” Shrader, 70 F.3d at
257; Patterson v. Bannish, No. 3:10-cv-1481 (AWT),
2011 WL 2518749, at *1 (D. Conn. June 23, 2011) (same).
Plaintiff's Motion for Reconsideration does not address
the standard set forth above. Given that Lead Plaintiff does
not raise any “intervening change of controlling
law” or “the availability of new evidence,
” Virgin Atl. Airways, 956 F.2d at 1255, the
Court assumes Lead Plaintiff seeks to “correct a clear
error or prevent manifest injustice.”
Plaintiff requests that the Court grant leave to amend should
it find the Second Amended Complaint fails to state a claim
upon which relief may be granted. Leave to amend is to be
given freely “when justice so requires, ”
Fed.R.Civ.P. 15(a), unless the moving party acted with
“undue delay, bad faith or dilatory motive . . .,
repeated failure to cure deficiencies by amendments
previously allowed, ” or the amendment would create
undue prejudice to the opposing party or be futile. Foman
v. Davis, 371 U.S. 178, 182 (1962). “District
courts typically grant plaintiffs at least one opportunity to
plead fraud with greater specificity when they dismiss under
Rule 9(b).” ATSI Comms., Inc., 493 F.3d 87,
108 (2d Cir. 2007). However, it is well within the
court's discretion to grant leave to amend under
Fed.R.Civ.P. 15(a) “and a district court may therefore
properly deny leave to amend where a plaintiff has already
been given one opportunity to plead fraud with greater
specificity.” Abuhamdan v. Blyth, Inc., 9
F.Supp.3d 175, 212 (D. Conn. 2014) (quoting Endovasc,
Ltd. v. J.P. Turner & Co., LLC, 169 F. App'x.
655, 657-58 (2d Cir.2006)).
78u-4 of the PSLRA contemplates that in general “all
discovery and other proceedings shall be stayed during the
pendency of any motion to dismiss. . . .” 15 U.S.C.
§ 78u-4(b)(3)(B). When, after conducting the telephonic
conference, the Court granted leave to amend the Amended
Complaint and extended the deadline for the motion to
dismiss, there were practical implications enabling Lead
Plaintiff to continue in his pursuit of discovery well past
the period typically allowed. The Court contemplated these
implications and determined it fair and necessary to give the
Lead Plaintiff an opportunity to plead with particularity, in
compliance with Rule 9(b), from the outset. As the Court
directed, Lead Plaintiff was granted a modification of the
scheduling order and leave to amend with the understanding
that he would exercise his due diligence and replead stating
his claims with particularity, alleging specific facts
constituting the elements of the claims asserted.
Second Amended Complaint indeed provides more factual
allegations indicating Lead Plaintiff attempted to cure some
defects with particularity. For example, the Second Amended
Complaint contains a new section documenting that Cigna
received 75 notifications of non-compliance from CMS, with
explicit references to the content of certain notifications.
[Dkt. 57 ¶¶ 115-18]. The Second Amended Complaint
also raises new allegations that Defendant Appel was required
to report to senior management information about Medicare
compliance. Id. ¶¶ 159-61. These
allegations are clear examples of Lead Plaintiff's
attempt to address the Rule 9(b) particularity requirements.
notwithstanding the Second Amended Complaint is 87 pages, it
is replete with conclusory and irrelevant allegations, and it
still falls short on facts necessary to satisfy the Rule 9(b)
pleading standard. Specifically, the Second Amended Complaint
does not identify the types of notifications issued by CMS to
Defendant Cigna; it does not allege the type of compliance
letter issued by CMS, although there are 4 distinct types of
letters with varying severities and sanctions. It does not
state whether the deficiencies cited in the compliance
letters were resolved and when. It does not allege when the
letters were issued or the factual content of the compliance
letters. The Second Amended Complaint does not include
relevant SEC filings made by Cigna during the relevant period
(with a few exceptions) nor does it include factual
allegations about highly relevant time periods. Furthermore,
the Second Amended Complaint does not allege what Cigna knew
at the time it made the alleged material misstatements and/or
omissions and when it came to know it. Essentially, Lead
Plaintiff has marginally, if at all, pleaded that a duty to
disclose arose, or at what point and under what circumstances
this duty could have arisen. See Stratte-McClure v.
Morgan Stanley, 776 F.3d 94, 101 (2d Cir. 2015) (stating
the duty to disclose instead arises where there is “a
statute or regulation requiring disclosure” or a
“corporate statement that would otherwise be
inaccurate, incomplete, or misleading”). The allegation
that certain compliance letters were issued in certain months
without specifying the nature of the compliance letter and
whether the subject matter of the letter was resolved may be
insufficient to establish the specificity necessary to
adequately plead fraud, given the progressive compliance
regime of the CMS. In addition, Cigna's lack of expertise
as alleged in the Second Amended Complaint together with the
temporal proximity of the escalation in the number of
compliance letters and the suspension without further
specificity as to the nature and the pendency of the
performance deficiencies and compliance letters, combine to
undermine Lead Plaintiff's claims.
Plaintiff has similarly failed to tailor the Second Amended
Complaint's allegations to support a strong
inference of scienter. Tellabs, Inc. v. Makor Issues
& Rights, Ltd., 551 U.S. 308, 322-23 (2007). It is
incumbent upon Lead Plaintiff to provide more specifics than
a broad, roughly two-year time period for which certain
Defendants “suspiciously sold stock.” [Dkt. 40
¶ 180]. Lead Plaintiff must also plead more than
allegations suggesting that the certain Defendants
“must have known their statements to be
untrue.” In re BioScrip, Inc. v. Sec. Litig.,
95 F.Supp.3d 711, 738 (S.D.N.Y. 2015).
extent Lead Plaintiff believes the Motion to Dismiss does not
provide sufficient notice of the Second Amended
Complaint's insufficiencies, the Court notes that the
Motion to Dismiss aptly identifies the issues. See
Endovasc, Ltd. v. J.P. Turner & Co., LLC, 169 F.
App'x 655, 657 (2d Cir. 2006) (observing “the
district court provided [plaintiff] an opportunity to amend
its pleadings in light of defendants' dismissal papers,
thus granting [plaintiff] an ‘opportunity to plead
fraud with greater specificity, '”) (quoting
Luce v. Edelstein, 802 F.2d 49, 56 (2d Cir. 1986));
Abuhamdan v. Blyth, Inc., 9 F.Supp.3d 175, 212 (D.
Conn. 2014) (granting motion to dismiss and denying leave to
amend after giving plaintiff the opportunity to replead prior
to the court's ruling and upon reviewing the
defendants' motion to dismiss).
Plaintiff has already been given a chance to replead with
greater specificity, both after the telephonic conference and
recently with the Court's order. See Abuhamdan,
9 F.Supp.3d at 212-13. Lead Plaintiff believes he should be
given another opportunity “after hearing the
Court's assessments of the merits of the
Complaints.” [Dkt. 68 at 49]; see also [Dkt.
75 (Mot. Reconsideration) at 2]. To avoid any potential for