Hogan v. Pilgrim’s Pride Corp.
No. 21-1445. 7/13/2023. D.Colo. Judge Hartz. Securities Fraud—Class Action—Amended Pleadings—Relation Back—Fed. R. Civ. P. 15(c)—Statute of Repose.
July 13, 2023
Hogan brought a putative federal securities fraud class action against poultry producer Pilgrim’s Pride Corp. (Pilgrim’s); Pilgrim’s former chief executive officer and president, Lovette; and Pilgrim’s then-chief financial officer, Sandri (collectively, defendants). Hogan alleged that defendants committed securities fraud violations under the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b–5 by participating in a conspiracy to artificially fix, raise, and maintain high prices on broiler chicken and by failing to disclose the conspiracy. Defendants moved to dismiss Hogan’s first amended complaint (FAC) under Fed. R. Civ. P. 12(b)(6) for failure to plead sufficient facts to establish the elements of falsity, scienter, and loss causation. The district court granted the motion but, without setting a deadline, allowed Hogan to pursue his claims in the future if he obtained sufficient additional evidence (Hogan I). Hogan moved for reconsideration, and the court denied the motion (Hogan II). About 19 months later, Hogan filed a second amended complaint (SAC). The district court dismissed with prejudice all claims barred by the applicable statute of repose, 28 USC § 1658(b)(2), as brought more than five years after many of the fraudulent statements alleged in that pleading, and further held that any remaining claims not barred by the statute of repose were barred because Hogan had not been a purchaser or seller of securities within the relevant five-year period (Hogan III). Hogan moved for reconsideration of Hogan III, and the district court denied this motion, rejecting the argument that the SAC related back to the date of the original pleading under Fed. R. Civ. P. 15(c) (Hogan IV).
Plaintiff appealed Hogan I, Hogan II, Hogan III, and Hogan IV. First, because the SAC superseded the FAC, the sufficiency of the FAC is moot. Statutes of repose protect defendants by barring the right to bring an action after a specified period lapses, and entitlement to repose depends on whether the dismissal was a final judgment. Under 28 USC § 1658(b)(2), a private right of action that involves certain claims of securities laws violations must be brought not later than five years after such violation. The Tenth Circuit thus considered whether filing the SAC constituted “bringing” a private right of action. Fed. R. Civ. P. 15(c)(1)(B) states that a pleading amendment relates back to the date of the original pleading when that amendment asserts a claim or defense arising out of the conduct or occurrence set out in the original pleading. Accordingly, amendments that amplify or restate the original pleading or set forth facts with greater specificity should relate back. Here, the SAC added factual allegations to support Hogan’s existing claims but did not add new parties or causes of action nor identify additional statements by defendants that were allegedly false or misleading. And the district court did not discuss or decide whether the SAC sufficed to state a claim nor enter a final judgment. Because the SAC did not raise new claims or add defendants, and the district court did not enter a final order after Hogan I and Hogan II, the SAC was not barred by the statute of repose. Therefore, the district court erred in dismissing the SAC, which is now the operative complaint.
The challenges to the orders in Hogan I, Hogan II, and Hogan IV were dismissed as moot. The Hogan III order was reversed and the case was remanded for further proceedings.