Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_01-cv-02661/USCOURTS-cand-3_01-cv-02661-21/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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 It is unclear to whom the movants’ use of the word “plaintiffs” refers. No named

plaintiffs remained in the action as of August 31, 2006 and neither of the proposed

intervenors has ever been a party to the action. Accordingly, the Court construes the

movants to be the Fund and Brodsky.

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In Re EXODUS COMMUNICATIONS, INC.

SECURITIES LITIGATION

 

This Document Relates to: ALL ACTIONS

 /

No. C-01-2661 MMC

ORDER DENYING MOTION TO VACATE

JUDGMENT; VACATING HEARING

(Docket No. 367)

Before the Court is the motion, filed August 31, 2006 by “plaintiffs” and proposed

intervenors Boilermaker-Blacksmith National Pension Fund (“Fund”) and Ellen Brodsky

(“Brodsky”) (collectively, “proposed intervenors”),1

 to vacate the judgment pursuant to

Rules 59(e) and 60(b)(1) of the Federal Rules of Civil Procedure. Defendant Ellen

Hancock (“Hancock”) has filed opposition to the motion. Defendants Goldman, Sachs, &

Co., Merrill Lynch & Co., Morgan Stanley Dean Witter, and J.P. Morgan (collectively,

“Underwriter Defendants”) have filed a separate opposition. Proposed intervenors have

filed a single reply. Having reviewed the papers filed in support of and in opposition to the

motion, the Court finds the matter appropriate for decision without oral argument, see Civil

Case 3:01-cv-02661-MMC Document 375 Filed 10/26/06 Page 1 of 6
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L.R. 7-1(b), hereby VACATES the October 27, 2006 hearing, and rules as follows.

BACKGROUND

In an order filed August 14, 2006, the Court granted Hancock’s motion to dismiss the

instant action, in which the Underwriter Defendants joined, and denied the motions to

intervene filed respectively by Brodsky and the Fund. (See Order Granting Defendants’

Motion to Dismiss; Denying Ellen Brodsky’s Motion to Intervene; Denying BoilermakerBlacksmith National Pension Fund’s Motion to Intervene, filed August 14, 2006 (“August 14

Order”), at 3.) As the parties are familiar with the relatively lengthy procedural and factual

background of the subject action, the instant order omits a recapitulation of those events.

DISCUSSION

A. Rule 59(e)

Rule 59(e) provides: “Any motion to alter or amend a judgment shall be filed no later

than 10 days after entry of the judgment.” See Fed. R. Civ. P. 59(e). “Amendment or

alteration is appropriate under Rule 59(e) if (1) the district court is presented with newly

discovered evidence, (2) the district court committed clear error or made an initial decision

that was manifestly unjust, or (3) there is an intervening change in controlling law.” 

Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th Cir. 2001). Here, proposed

intervenors rely solely on the second prong of the above-referenced test.

In particular, proposed intervenors argue that the Court erred as a matter of law by

holding they had the burden of demonstrating Fox had standing. In its August 14, 2006

order, the Court addressed in detail the reasons why the proposed intervenors bore the

burden of proof, (see August 14 Order at 2-3); proposed intervenors have cited no authority

suggesting such analysis was erroneous. 

Proposed intervenors next argue that the Court committed clear error by

“overlook[ing] uncontroverted evidence,” (see Motion at 3:23-24), of Fox’s standing,

specifically, the certification filed by Fox September 9, 2003, pursuant to 15 U.S.C.

§ 78u-4(a)(2), and referenced in the Fund’s reply in support of its motion to intervene. (See

Fund Reply, filed June 30, 2006, at 5:7-8.) In the certification, Fox attests that he

Case 3:01-cv-02661-MMC Document 375 Filed 10/26/06 Page 2 of 6
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 Additionally, Fox’s certification was signed July 18, 2001, nearly a year before a

§ 11 claim was first asserted in the instant action, and the initial complaints in the instant

action did not allege misrepresentations in connection with the February 2001 offering. 

(See August 19, 2003 Order at 3:5-8 (noting First Amended Consolidated Class Action

Complaint, filed July 11, 2002, expanded “the class period from 11 weeks (March 30, 2001

to June 20, 2001) to 73 weeks (April 20, 2000 to September 25, 2001)”). Under such

circumstances, aside from its conclusory nature and any other ambiguity inherent therein,

Fox’s statement that he purchased “securities that are the subject of this action,” (see

Grant Decl. Ex. A ¶ 4), cannot be interpreted as a statement that the securities Fox

purchased were issued in or traceable to the February 2001 offering that is the subject of

the later-asserted § 11 claim.

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purchased unspecified securities on February 6, 2001, February 13, 2001, and June 11,

2001. (See Grant Decl. Ex. A ¶ 4 and Schedule A.) Contrary to proposed intervenors’

assertion, the Court considered and wholly discounted the certification because, as

defendants point out, the certification does not demonstrate the securities Fox purchased

were issued in or are traceable to Exodus’s February 2001 offering, as required to bring a §

11 claim.2 Consequently, as the Court concluded, proposed intervenors failed to

demonstrate Fox had standing to assert a § 11 claim.

Accordingly, to the extent proposed intervenors seek relief pursuant to Rule 59(e),

their motion will be denied.

B. Rule 60(b)(1)

In the alternative, proposed intervenors seek relief from the judgment, pursuant to

Rule 60(b)(1), on the ground that any failure on their part to submit evidence of Fox’s

standing was due to mistake, inadvertence, or excusable neglect. 

Rule 60(b)(1) authorizes the Court to “relieve a party . . . from a final judgment” on

the basis of “mistake, inadvertence, surprise, or excusable neglect.” See Fed. R. Civ. P.

60(b)(1). Here, proposed intervenors argue that to the extent they were required to submit

evidence of Fox’s standing, “the failure to do so was, at worst, inadvertence or excusable

neglect, particularly where, as occurred here, defendant Ellen Hancock’s own motion to

dismiss did not argue that none of the initial § 11 plaintiffs lacked standing and plaintiffs

reasonably believed that such evidence was already before the Court in the form of Fox’s

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 On August 19, 2003, the Court denied defendants’ motions to dismiss and held,

inter alia, plaintiffs had “adequately pled” standing to assert a § 11 claim. (See August 19,

2003 Order at 28:8-9 (emphasis added).) The Court did not find any plaintiff had submitted

evidence sufficient to prove standing.

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 See, e.g., Brodsky’s Reply in Support of Motion to Intervene, filed May 26, 2006, at

1:14; Hancock’s Surreply to Motion to Intervene, filed June 2, 2006, at 3:2-4; Motion to

Dismiss, filed June 9, 2006, at 3:7-8; Hancock’s Opp. to Fund’s Motion to Intervene, filed

June 23, 2006, at 2:13-15; Fund’s Reply in Support of Motion to Intervene, filed June 30,

2006, at 5:7-11.

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certification and the Court’s [August 19, 2003] ruling” on defendants’ motions to dismiss.3

(See Motion at 6:19-22.) The Court disagrees with proposed intervenors’ characterization

of the record.

The motions to intervene and the motion to dismiss were scheduled for hearing

together, and the briefing thereon collectively addressed the same key issue: whether

Brodsky and the Fund could intervene in the action after all the claims of the named

plaintiffs had been dismissed or resolved on summary judgment. In the course of the

briefing on those motions, as defendants point out, proposed intervenors’ attention was

repeatedly directed to their need to address the issue of standing and proposed intervenors

did, in fact, respond to that issue, but chose not to submit evidence in support of their

position that Fox had standing.4

“Rule 60(b)(1) is not intended to remedy the effects of a litigation decision that a

party later comes to regret[.]” See Latshaw v. Trainer Wortham & Co., Inc., 452 F.3d 1097,

1101 (9th Cir. 2006) (affirming denial of Rule 60(b)(1) motion where moving party argued

she accepted Rule 68 offer only because of erroneous legal advice from her counsel); see

also Yapp v. Excel Corp., 186 F.3d 1222, 1231 (10th Cir. 1999) (affirming denial of Rule

60(b)(1) motion to set aside stipulation of dismissal; noting “a party who simply

misunderstands or fails to predict the legal consequences of his deliberate acts cannot

later, once the lesson is learned, turn back the clock to undo those mistakes”). As the

Ninth Circuit has explained, “[f]or purposes of subsection (b)(1), parties should be bound by

and accountable for the deliberate actions of themselves and their chosen counsel.” See

Latshaw, 452 F.3d at 1101. 

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Moreover, in cases in which relief under Rule 60(b)(1) has been found to be

available or potentially available, the moving party typically has failed to meet a filing

deadline, thus losing all opportunity to be heard. See, e.g., Pioneer Investment Services

Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380 (1993) (failure to file timely proof of

claim in bankruptcy proceeding); Pincay v. Andrews, 389 F.3d 853 (9th Cir. 2004) (en

banc) (failure to file timely notice of appeal); Bateman v. United States Postal Service, 231

F.3d 1220, 1223-24 (9th Cir. 2000) (failure to file opposition to motion for summary

judgment); Briones v. Riviera Hotel & Casino, 116 F.3d 379, 381-82 (9th Cir. 1997) (failure

to file timely opposition to motion to dismiss). Here, by contrast, proposed intervenors did

not miss a deadline or lose the opportunity to be heard; rather, they timely filed memoranda

in support of their motions to intervene and in opposition to the motion to dismiss, and

addressed the issue of Fox’s standing, albeit inadequately. There is no argument that

proposed intervenors, at the time they filed their briefing in support of the motions to

intervene and in opposition to the motion to dismiss, were unaware of the evidence they

now wish to submit, let alone that it was unavailable. Proposed intervenors cite no case in

which a party who filed an inadequate memorandum has been granted a “second bite of

the apple” under Rule 60(b)(1) to submit additional argument or evidence that was

available at the time of the original filing.

Finally, even if this Court were to consider the “new” evidence offered in connection

with the instant motion, proposed intervenors still fail to demonstrate Fox purchased

securities in or traceable to Exodus’s February 2001 offering. Proposed intervenors now

submit Fox’s brokerage account statement for the period May 26, 2001 through June 29,

2001, which shows Fox purchased Exodus securities on June 11, 2001, (see Grant Decl.

Ex. B), as well as a declaration from Fox, in which Fox attests that, in addition to the

securities purchased on June 11, 2001, he purchased Exodus 5-1/4% Convertible

Subordinated Notes on February 6, 2001, February 13, 2001, and August 22, 2001. (See

Fox Decl. at 1.) Proposed intervenors fail to present any argument, however, with respect

to how such evidence demonstrates Fox purchased any of such securities in Exodus’s

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 Indeed, Fox’s declaration, which was filed the day after the motion to vacate was

filed, is not mentioned in the motion or even in the reply.

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February 2001 offering or that such purchases are traceable to said offering.5

Accordingly, to the extent proposed intervenors seek to vacate the judgment

pursuant to Rule 60(b)(1), their motion will be denied.

CONCLUSION

For the reasons set forth above, the motion to vacate judgment is hereby DENIED.

This order terminates Docket No. 367.

IT IS SO ORDERED.

Dated: October 26, 2006 

MAXINE M. CHESNEY

United States District Judge

Case 3:01-cv-02661-MMC Document 375 Filed 10/26/06 Page 6 of 6