## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 08

- 2429 D AVI D F ANN ON an d I R ON W O RKERS OF W ES T ERN P EN NSY LV ANI A P EN S I ON P LA N , Plaintiffs-Appellan ts, v. G U I D A N T C OR P OR AT I ON , eta l. , Defendan ts-Appellees.

Appeal from the United States District Court fo r the S outhernDi stricto f Indian a, Indian apolisDiv isi on. No . 1:05- cv-1658- S EB-WTL

— Sarah EvansBarker, Judg e.
A RG UE D J AN UA RY 16, 2009

— D ECI DE D O CT OB ER 21, 2009

Befo re B AUER, F L A U M a nd W OO D , C ircu it Judges. W OO D , C ircu it Judge. T his case i n volves th e claim s of a pla i nti ffcl ass thatbel i eve s the defendant corp or ati on defr auded them . T h e cl ass as ser ts that the c or pora ti on knew that i t had fl aw ed produ c ts, but i n the f ace ofthat knowle dge m ade f al se orm i sl eadin g pu bl i c st ate m ents ab ou t t h e p r o d u c ts an d ab ou t a p en d in g m er ge r. In a d d itio n, th e p lain tiff s c h ar ge , th e in d ivid u al d efe n d an ts so ld2 N o. 08

- 2429

near l y $ 89 m i l l i on in co m p an y s toc k duri ng the per i od cove red by th e class’s all egation s. T he d istric t c o urt dism i sse d the ca se on the pleadi ngs with prej ud i ce, co nc l udi ngtha t th e cl as s co m plai nt f ai l ed to r ai se the st ro n g in fer en c e o f sc ien te r re q u ire d by t h e P riv at e Se c u riti es Li ti g at i o n Re f o r m A ct ( “P S LRA”) a nd Rul e 9 o fthe Feder alRule s o fCiv il P rocedure. The co urt al so rej ecte d th e plaintiff s’ m otion u n d er F ED . R. C IV . P. 59 ( e) t o r ec o nsid er ba se d on n ew ly d isc ov er ed ev id e n c e , an d th eir related m otion un d er F ED . R. C IV . P . 15(a ) to am en d th eir c om p lain t. On app eal, the pla i nti ff s hav e l i m i te d them sel ves to th ree p rincipa l argu m en ts: fi rst, th at th e d is t r ict cou rt a b u s ed its d isc re tio n by im m ed iat ely d ism iss in g t h eir fi rs t co nsol i dated com pla i nt w ith prej ud i ce (rat h erthan w ith ou t p rej u d ice , so th at th e p lai n tiffs co u ld try ag ain to s ubmi t a l eg al l y s uffi ci en t pl ea di ng ) ; s ec o nd, tha t th e cour t abused i ts dis c reti on wh en i t deni ed thei r m oti on f orl eave to a m en d thei r com pla i nt; and fi nal l y, that i t abused i ts disc re ti on by denyi ng thei r m ot ion under Rul e 59 ( e) t o r ec o ns i deri ts di smi ss al

. Notabl y, the pl ainti ff s hav e no t ur ged us di re ctl y t o re vi ew the dist ri ct c o u r t ’ s a s s e s s me n to fth e l e g a l s u ffi c i e n c y o fth e i r c o mpla i nt, and so we do n ot h ave any i ssue bef or e us that we r ev i ew deno vo an d we n ee d no t ag ain c o ns i derthe s t a nd a r ds fo r p l e a di nga s e c ur i t i e s fr a ud c a s e . Ins t e a d, ea c h of th e ru lin gs be for e u s is on e t h at lies w ith in th e d ist r i ctc o ur t’ s di sc r et i o n, a nd o urr ev i ew i s defer en tial. W ith th at in m ind , w e con clud e tha t the district cou rt did notabuse i ts d isc reti on, and w e there f or e a ffi rm i ts j ud gm ent.N o. 08

- 2429 3 I Because f actualdetai l is so im port ant in PSLRA cas es, w e be gi n w i th an ove rv i ew of the underl yi ng ev ents. W e p re se n t t h e a lleg ed fa c t s in th e ligh t m os t fa vo ra b le to the pu tat i ve cl ass , w i thout vouchi ng f orthem o ther w i se. Gu i dant i s a m ult i nati onalcorp or ati on that deve l ops, m anufa cture s, and m ar ket s m edi caldevi ces. A m ong thos e devi ces ar e i mpl a nt ab l e c a r di o v e r t e rde fib r i l l a t o r s ( “I CD s”) an d pa ce m ak er s th ata r e us ed to moni to r the hear t an d to de l i ve r e l ec tr i ci tyt o t r ea t ca r di acabn o r m ali ti es . The p lain tiffs rep re se n t a p u ta tiv e c las s ( t h at w as n ev er ce rt ifi ed) ofi nvest or s who purchased Guid ant s toc k b etween D ec em b er 1, 20 04 , an d O c to b er 18 , 200 5. B e g i n n i n gi n 1 9 9 4 , G u i d a n tl a u n c h e d th e “ V e n t a k ” l i ne ofI CD s. In Feb ruar y 2 002, Guidant di sco ve re d a desi gn flaw in o n e m o d e l , t h e V en ta k P riz m 2 D R, afte r it re cei ved so m e rep or ts ofdevi ce f ai l ures . By Ap ri l 20 02, i t had address ed thos e fl aw s a nd begun producinga co r r ec te d v er si o n o fthe de vi ce . Buti t d id not r ec al l the defec ti ve pr o duct s. Ins te ad, i t co nt i nue d se l l i ngi ts i nv en to ry of d efe c tiv e u n its w ith ou t d i sc los in g e ith er to p h ys ici ans o r the publ i c the desi gn fl aw o r m al fu n c tio ns that had l ed to devi ce failu res. Guidant was aware ofatl eas t 25 re p o r t s o f d ev ice sh or t-c irc u itin g in th e o ld er u n its in c irc u lat ion
. Two yea r s afte r Gui dan t r ede si g ne d the Pr i zm 2 DR, i n the spri ng and sum m ero f20 04, i t e nter ed i nto nego ti ations w ith John son & John son (“J& J”) for a p ossible m erger. The t wo com pan i es e xe cut ed a co nfi den ti al i tya g r ee m en t as part oftho se e ar ly discuss i ons. On Decem ber1, 20 044 N o. 08

- 2429 ( the fi rs t d ay ofthe cl ass per i od) , Guidant i ssued a press re l eas e co ntai ni ng “hi ghl y pos i ti ve new s” about gr owth pr o spe ct s f o r i ts I CD an d pacem ak erb us i ne ss es . The r el ea se e xpr es se d Gui dan t’ s con fi den ce abo utthe c o nt i nue d w orldw ide grow th of th at m arket an d Gu idan t’s ex pec ted p erf o r m an ce i n i t. Thi s pr es s r el ea se , the pl aint i ff s as s e r t, wa s fa l s e a n d mi s l ea di ng, b ec au se Gui dan t knew at the ti m e that the re were unreso l ved l i abi l i ty i ssues r el ate d to the defects i n i ts devi ces, but the r el eas e was si l en t ab o ut th i s pr o bl em. I n th e we ek f o l l o wi ng th e iss ua nc e o fthe De ce m be r 1 pr es s r el ea se , Gui dan t’ s sh ar e pr i ce r o se mor e th an$ 5, fr o m abo ut$ 65 t o a r o und $7 0. A n ann ouncem ent o fa m er gerag re em ent b etween Gu i dant and J & J f ol l owed soon a fter w ar ds, o n Decem ber 15, 2004. T he secon d release state d th at J& J w as to acq uire Gu i dant f orapproxi m at ely $25 bi l l i on in cash and sto ck; thi s r efl ecte d an i m pu ted pri ce o f$7 6 pershar e for G uid ant’ s st o ck

. The De ce m be r 1 5 r el ea se t o ut ed th e str ength ofthe w or l dw i de m ar ke t forcar dio vasc ula r products. Guidant an d J& J fi l ed that re l eas e with the S ecuri ti es and Ex change C om m i ssi on ( “SEC”), as a Form 8-K
. A ccord ing to the p lai nt iffs, Gu idan t’s sh a re pri ce had j um ped fr om $6 5 t o $75 in a n ticipati on o f th e m erger ann ou nc em en t. T his secon d rel ease, how ever, was a lso sile ntabo utthe l i ab i l i tyr i sk s th atGui dan t f aced fro m i ts defe cti ve products. On thr ee o cc as i o ns

— Decem ber21 , 2004, Januar y 7, 20 05, and Ja nuary 19, 20 05

— Gui d an t fi l ed F o r m 4 25 s wi ththe S E C t o p r o v i d e u p d a t e d i n f o r ma t i o n t o i n v e s t o r s a bo utN o. 08

- 2429 5 the J & J m er ger . Those u p d at es w er e j ust a s s i l ent a s eve ry thi ng el se had been abou t the pr obl em s with Gui dan t’ s I CDs. Be twe enthe e nd o fJ an ua r y 2 00 5 an d M ar ch1 3, 20 05 , Gui dan t i ss ue d othe r s ta te m en ts abo utthe com pany’s perf or m ance and the m er ger . These s tat em ents t o o s a i d n o thingab o utthe l i ab i l i t y r i s k s i tf a c e d. Sadl y, tho se ri sks w er e re al i zed w hen, o n M ar ch 13, 20 05, 21- yea r- ol d Jo shua Ouk ro p d i ed afterhi s Venta k Pr i zm 2 DR shor t- ci rcui ted. Guidant l ear ned ofOukro p’s death th ree d ays later, on M arch 16. I t ackn ow ledge d to Ou krop ’s physi ci an, Dr. Barr y M ar ro n, thatthe I CD had shor tci rcui ted and t h at it knew of25 o thersuch ca ses . I t a l so tol d Dr. M ar ro n that approxi m ate l y 2 4, 000 I CD s s i m i l arto th e one im p lanted i n O u k r op had been sold. W he n D r. M ar ro n ask ed Gu i dant w hethert h e othe r re ci pie nts w oul d be t ol d ofthe defe ct, Guidant s ai d no, i t di d not w an t t o “ ala rm ” a n yo n e. T rue to i ts w ord , w he n G uid an t fi led a p reli m inary p ro x y s ta te m en t w ith th e SE C on M a r c h 2 4, 20 05 , i t s aid nothi ng ab out the f act that on e pati ent had r ecent l y di ed a s a r e s u l to fth e ma l fu n c t i o n o fi t s p r o d u c t
. T h e s a me o m i ss i o ns o cc ur r ed i n o th erSEC fi l i ng s an d Gui dan t pr e s s r e l e a s e s f r o m Ma r c h t o J ul y 2 0 0 5
. On Apr i l 27, 2005 , Guidant’ s s hare hol ders approve d the s al e t o J & J at a p ric e o f $7 6 p er sh ar e. N otu n til M ay 2 3, 20 05 , d id G uid an t d isclos e i n a l etter to p hy sicians th at th ere w ere re port ed probl em s with i ts I CD an d pacem ake r devi ces. That act i on was pro m pted by a n ar ti c le th at the N ew Yo rk Tim es w as about t o pub l i sh, r ev ea l i ngthe ful l s to r y o fthe fl aw s. Guidant’ s M ay 23 l ett eri nfo rm ed the doctor s that6 N o. 08

- 2429 it h ad lea rn ed of th e d efe c ts in 2 0 0 2, h ad fixe d th em in l at er dev i ce s, an d di d no t r ec o m m en d r epl ac ement of the defec ti ve de vices be ca us e o fthe l o w ri sko ff ai l ur e an d the r i sk att endant to ad dit i onalsurger y. O n M ay 25, 20 05, G u id an t is su ed a p re ss rele as e t o th e s am e e ffec t. Th e F o o d a nd Dr ugAdmi ni s t r a t i o n ( “ F DA” ) i s s ue d a nati onalr ecal l f orthe Gu i dant devi ces on J une 17, 20 05. Gu i dant i ssued a physi ci an co m m unica ti on an d a press re l eas e o n the sam e day. That pre ss re l eas e d isclo sed that ther e had be en 15 r epor ts off ai l ure i n the Contak Renew aland Contak Renew al2 defibri l l at ors, o ut o f a p p r o x i ma t e l y 1 6 , 0 0 0 i mpl a n t e d wo r l dwi d e , a n d t wo m emor y e r r o r i nc i den ts a m o ngi ts f o urmode l s o fAVT defibri l l ato rs , o ut o fabo ut 21 , 000 i m pla nted w or l dw i de. A fterthe FDA

- or dered r ecal l, Guidant’ s s hare pri ce dr o p p ed $3

. 36 i m m edi at ely, f al l i ngt o $ 70
. 33
. Tha t al o ne re prese nted a l oss o f$1

. 09 bi l l i on t o Gu i dant in ve sto rs . Further press sta tem ents dow nplay i ng the si gni fi cance of the d efects foll ow e d i n J un e and J uly, w hile Gu idan t’s shar e pr i ce dr opped another $2. 10. In Octobe r 2005 , J& J an nou nc ed that i t w as recon side ring the m erger; thi s a nn o un c e men ta l s o h i tGu i dant’ s s ha r e p r i c e h a r d, dr op ping i t in one day fro m $7 2. 38 to $64. 10. J & J beg an re n eg ot iat in g t h e t e rm s o f th e m er ge r, bu t e ve n tu ally an o th erc o m pan y, Bo st o n S ci en ti fi c, e nt er ed th e bi ddi ng as wel l, a nd the l at te r fi r m ul ti m at ely a g r ee d t o b uy Gu i dant f orabo ut $8 0 p er shar e. That dealwas fi nal i zed on A p ril 21 , 200 6. G u id an t b ec am e a n d st ill is a w h olly own ed subsi diar y o fBost on S ci enti fi c.N o. 08

- 2429 7

T he ind iv id u al d efend an ts w ere v ario u s offi c er s an d d irecto rs, 1 incl ud ing Ro nald W

. D oll ens, G uido J. N eel s, K ei th E. Brauer, Be v e r l y H. L or e l l , Ro g e r Ma r c h e t t i , Ro n a l d N. S p a u l di n g , R. Frederic k M cCoy , J r. , J am es M
. Corneli us, J ohn B. K ing, W il li am F. M c Conne l l , J r. , an d Kath l een Lundber g. Guida ntpoi nt s out thatne i the r the pr opos ed a m en ded c om pl ai ntnor the N ot i c e of A pp eal nam es K ing, M archet ti, M cConn el l, o r Sp aulding. G iven our di s pos i t i on ofthe appe al as a whol e, the i r om i s s i on i s ofno co n se q u en ce . It is re a so n a b le to as su m e, h o w ev er , th a t p la in tiffs ha v e acq u iesced in the d istrict cou rt’ s j u d g m en t in sofar as it a p p lie s to th es e fo u r p eo p le

. II I n the w ake o fthe fl uctuati ons i n Gu i dant’s shar e pr i ce, whi ch, o ver th e c l as s per i o d, wentfr o m a l o w ofabo ut $6 3 up t o the hi g h o f$ 80 p aid by Bo st o n S ci en ti fi c, f o ur cl ass a c tion sui ts w er e fi l ed bet w een J une and A ugust 20 05 i n the S o uthe r n Di st r i cto fIndi an a ( wher e Gui dan t i s hea dq uart er ed) aga i nst Gu i dant and e l eve n ofi ts seni or offi cer s a nd di re cto rs . ( W e r eferto the defe nd ants col l ec- 1 ti ve l y a s G u i d a n t
. ) T h e s e s u i t s a l l a l l e g e d th a tG u i dan t had m ade f al se sta tem ents i n the J & J m er gerdocu m en ts, an d i n other press r el eas es and SEC fi l i ngs. Thi s g ro up o f com pla i nts was vo l untari l y di sm i sse d w i thout prej ud i ce i n Se ptem berand Octobe r 2005
. F r om N ov em b er 3, 20 05 , th ro u gh Jan u ar y 3, 20 06 , a se co nd s eto fs ec ur i ti es c l as s ac ti o ns was fi l ed i n the s a m e d istrict cou rt. On M arch 16, 2006 , the d istri ct cou rt conso l i dated these case s, and o n J une 2, 2006 , l ead counself orthe pla i nti ff s filed a conso l i dated com pla i nt. T he c o ns o l i dat ed co m pl ainta l l eg ed th atdur i ngthe8 N o. 08

- 2429 cl ass per i od, Guidant a nd the in divi du aldefendants had m ad e m at er i al l y f al se a nd mi sl ea di ngs ta te m en ts a nd had om i tte d m at eri ali nfo rm ati on r el ati ng to the safety o fGui dan t’ s defibr i l l at o r s an d pa ce m ak er s an d t o the p roposed J & J m er ger . The pl ai nti ff s a sse rt ed that w hen th e t r u e f a c t s we r e d i s c l o s e d , G u i d a n t ’ s s t o c k p r i c e p l u mm et ed, l o singa ppr oxim atel y $ 3 bi l l i o n in v al ue . Ye t, the p lai nt iffs continu ed , the ind ivi d ua l officers and directors ofGuidant s ol d near l y $ 114 m i l l i on in Gu i dant sto ck du ring the cl ass per i od, and the approvalo fthe J & J m er ger c au se d th eir st oc k op tio n s t o v es t. F i v e da y s a ft e r the c o ns o l i da t e d c o mpl a i ntwa s fi l e d, the di str i ct c ourtal l owed the pla i nti ff s t o s ubsti tute a correct ed version of th e c o m p la int. T he corrections w ere not enti re l y t echni cal ; m os t im port antl y, theypushed backthe sta rto fthe cl ass per i od fro m Decem ber15 , 20 04, to De c e mbe r 1 , 2 0 0 4
. OnJ un e 1 3 , 2 0 0 6 , the p l a i nt i ff s f i l ed su p p lem en tal info r m ation ab ou t G uid an t’s defibril lators that had jus t b eco m e a vai l abl e t o them as a re sul t o f a Texas cour t’ s d eci si on to unsealdocum ents i n a pr oducts l i abi l i ty case co ncer ni ng the sa m e is sues. T hi s s ubm i ssi on w as prese nted i n supp or t o fa m oti on t o l i ft a st ay ofdi sco ver y; the dist ri ct c ourtev entual l y deni ed that m oti on. Then on Au gust 15, 20 06, Guidant fi l ed a m oti on to d ism iss f or f ail ure to state a claim

. Ov er t h e nex t year, w hi l e the co urt had that m ot ion u nd eradvi sem ent, the pl ai nti ff s noti fi ed the cour t that add i ti onali nfo rm ati on re l ating to sci enterhad surf aced i n another products l i abi l i ty case agai nst G uidant that w as pend i ng i n M i nnesot a.N o. 08

- 2429 9 On Febr uary27, 20 08, the dist ri ct c ourtgranted G uid an t’s m otion to d ism iss. A fter setting forth the history ofthe c a s e , the c o ur tturne d i t s a t t e nt i o n t o the p l a i nt i ff s’ m oti on t o str i ke var i ous m ate ri al s that Guidant had subm i tte d. The cour t r efused to st ri ke Gu i dant’s an n ual re portf orfi scalye ar 2005, wh i ch w as re port ed on i ts SE C Form 10-K ; i t also r efuse d to stri ke seven of G uid an t’s S EC F o r m 8

- Ks; fi na l l y, i t r ul ed th ats i x e xhibi ts r efl ec ting physi ci an co m m u n icati ons and press r el eas es w er e no t admi ss ibl e f o r the i r t r uth, b utwere adm i ss ibl e f o r the l i mi t e d p ur po se o fs ho wi ngwh a ts t a t e men t s we r e ma de b y G u i d a n tt o th e p u b l i c . T h e p l a i n t i ff s ha v e n o tc o mp lain ed ab ou t a n y of t h es e ru lin gs on ap p ea l. T urn ing to the m erits ofGu idan t’s m o tion, th e cou rt no te d tha t th e co m pl aint r ai se d c l ai m s unde r s ec ti o ns 10(b) and 20( a) o fthe Se curi ti es E x c h an ge A ct o f19 34, 15 U
. S. C. §§ 78j ( b) an d 78 t( a) , as wellas S EC Rule 10 b- 5, 17C. F
. R
. § 2 40. 10 b- 5. Thi s m ea nt, the c o ur t he l d, tha t th e PSLRA ’ s pl eadi ng st andards ap pli ed to the com pla i nt. S ee 15 U. S
. C. § 7 8u

- 4(b)

. I t ac kn ow le dge d tha t th e PS LRA im p o s e s a heigh ten ed plead ing stan d ard f or plaintiff s (l ike these) w ho are allegi ng secu ritie s fraud

. A fter a car e fula na l y s i s o fe a c h s t a t e men ti n the c o ns o l i dat ed com pla i nt, the cour t co ncl ud ed thatthe com pla i nt f ai l ed to p lead w ith th e requ isi te p articu lari ty th at G uid an t’s st at ement s wer e m i sl ea di ng, and i t f ai l ed to pl ea d pa r ti cul ar i zed f acts gi vi ng ri se to the necess ar y str on g i nfe re nce ofsci enter
. In additi on, the cour t e xpresse d str ong doubt ab o u tth e l e a d p l a i n t i f f s ’ s t a n d i n gt o a l l e g e § 1 0 ( b ) c l a i ms base d o n al l ege d m i sst ate m ents or om i ssi ons that occur re d afterthei r fin al purchas es ofGuidant s toc k10 N o. 08

- 2429 ( w hi ch to ok pla ce o n Decem ber17, 20 04)
. But the cour t was w i l l in g t o a ss u m e t h at th e p lain tiffs co u ld am en d to j oin ana ddi ti o na l l at er - pur ch as i ngna m ed r epr es en ta ti ve , a nd so i t di d no t r ely o n thi s as a g r o und fo r i ts de ci si o n. The cour t’ s j ud gm ent, w hi ch w as docket ed on F ebr uary27, 2008 , di sm i sse d the ca se w i th prej ud i ce. On M ar ch 13, 20 08, the pla i nti ff s fi l ed a m ot i on under F ED . R. C IV . P. 59(e), in w hich th ey asked the d istri ct cou rt to setas i de the j ud gm ent a nd to per m i t them to fi l e a n am ended com pla i nt. ( I ni ti al l y there was so m e co n fu si on abou t the tim eli ne ss of this m otion, bu t the dis t r ic t cou rt ult i m ate l y r ec og n ized thati t was ti m el y. ) The pro posed amendmentmade m o r e spe ci fi c al l eg at i o ns abo utthe par ti cul ars ta te m en ts tha t wer e m isl eadi nga nd abo ut sci enter, and i t add ed al l ega ti ons base d on the new m ate
ri alfro m the M i nnesot a l i ti gat i on. On M ay 9, 20 08, th e di st r i ctc o ur t den i ed th e m o ti o n, ho l di ngtha t th e pl aint i ff s ha d no t be endi l i g en t i n obt aini nga nd pr es en ting f acts bas ed on the M i nnesot a m ate ri al s. The co urt did not offerany anal ysi s o fthe adeq uacy o fthe propos ed am en d ed com pla i nt, nordi d i t a dd re ss the c ri ter i a o f R u le 1 5(a ) for g ra n tin g lea ve to am en d

.
III T h o s e r u l i n g s s e tth e s t ag e f o r th i s a p p e a l

. As we note d ear l i er, the pla i nti ff s do not ass er t th at the dis tr i ct c ou rt ’s a s s es sm en t o f th e c on so lid at ed co m p lain t w as in er ro r. W e ther ef or e have no need to del ve i nto the ni ceti es o fp l e a di nga s e c ur i t i e s fr a ud c a s e . S e e g e nera l l y Tella bs, Inc
. v. M a k o r Issues & R igh t s , L td., 551 U
. S. 308, 321 (2007 ).N o. 08

- 2429 11 I nstea d, w e m ust a dd re ss thre e m or e l i m i ted questi ons: fi rs t, wh etherthe dist ri ct c ourtabuse d i ts disc re tion by dism i ssing t h e co nsol i dated com pla i nt with prej ud i ce; se co nd, whethe r the c o ur t ab us ed i ts di sc r et i o n i n de ny i ng th e pl aint i ff s’ mot i o n t o v ac at e th e j udg m en t pur su an t to R u le 59 ( e) ; and fi nal l y, wh etheri t abused i ts disc re ti on w hen i t deni ed the pla i nt iffs’ m oti on t o fi l e a n am ended c om p lain t. A I fo ne wer e to r ea d the plaintiff s’ b r i efi n i so l at i o n, she would be l eft with the i m press i on that the di str i ct c ou rtlook ed a t o n ly on e c om p lain t a n d p er em p to rily dism issed i t without a ny furthertho ught. S up er fi ci al l y, perhaps that i s cl ose t o th e t ruth ( al though e ven that overlooks th e im m ed iate correct ion th at t h e plaintiff s m ad e t o t h e c o n so lid at ed co m p lain t a few d ay s a fte r it w as filed ). B u t, as G u id an t p oin ts ou t, t h e fu l l st or y is m o r e co m pl ex . Be f o r e th e ca se s wer e co ns o l i dat ed, nine i ndi vi d ua l c o m pl aint s ha d b ee n fi l ed ba se d o n the i den ti ca l unde r l y i nge ve nt s. T he di st r i ctc o ur t, fr o m the ti m e th e fi r stc o m pl aintwas fi l ed, g av e th e pl aint i ff s ab o ut a y ea r to rev iew an d inv es tig at e t h e c as e, a n d t h en to file a con soli d ated com p lai nt
. Th at is w ha t the y d id. Th e cou rt also al low ed the correc ted fil in g . L ater, w hile Gu idan t’s m otion to d ism iss w as u nd er ad visem e nt, the p lai nt iffs tw i ce no ti fi ed the courtabout add i ti onalinf or m ati on they ha d a cqui r ed ( f r o m the Texa s an d M i nne so ta c as es ) , b ut the y di d n o ta tth e s a me t i me p r o ffe r a n a me n d e d c o mpla i nt. T hus, even di sr ega rdi ng the f act that the ind i vi du al s u i t s o v e r th e s e i s su es b e g a n a s e a r l y a s J u n e 2 0 0 5 , we12 N o. 08

- 2429 know that the co nsol i dated com pla i nt was fi l ed on J une 2, 2006 , and that the di str i ct c ourt ’ s o rdero fd ism issa l w as en te re d on Fe b ru ar y 2 7, 20 08
. W e s ee no way in w hi ch thatse quence co uld be br anded as a n abus e o fthe di st r i ctc o ur t’ s di screti o n. I t i s true that ther e a re so m e ca ses i n w hi ch co urts o fappeal s ha ve f ound that i t i s be st to use a di sm i ssa l witho ut prej ud i ce f ora PSLRA co m pla i nt, gi ven the dem andin g nature of P SL R A p lea d in g s ta n d ar d s. Se e, e . g. , Bel izan v. He rs hon , 43 4 F. 3d 579, 58 3 ( D.C. Ci r. 20 06) (a PSLRA “co m pla i nt that om i t s c e r t a i n e s s e nt i a l f a c t s a nd thu s f a i l s t o s t ate a cl ai m warra nts dism i ssa l pursuant to Rule 12(b) ( 6) but not d ism iss al w ith p rej u d ice ”); Em i ne nc eCapi t al, LL C v. As pe on, Inc ., 31 6 F.3 d 1048, 10 52 ( 9th Ci r. 20 02) ( dism i ssa l with p rej u d ice in P SL R A su it is a p p ro p ria te on ly w h er e “ it is cl ea r o n deno vo r evi ew thatthe com pla i nt c ou l d not be save d by am en d m en t”). Bu t by th e sam e tok e n , t he re are othe r case s in w hi ch co urts ofappeal s hav e uphel d dism i ssa l s with prej ud i ce o fse curi ti es com pla i nts a t a r el ati vel y e ar l y s tag e. S ee, e . g. , P ug h v . Tribun e C o ., 521 F. 3d 686, 6 9 8 ( 7 th C i r . 20 0 8 ) ( d i s mi s s a l o fs e c o n d a me n d e d c o mp lain t); In re P E CS o lutio ns, In c. Sec. Litig ., 418 F. 3d 379, 39 0- 91 (4t h C ir. 20 05 ); In re A lph a rm a, Inc . S e c . L itig ., 37 2 F
. 3d 137, 15 3- 54 ( 3d Cir

. 20 04) ( i ni ti ali nd i vi du alco m plai nts f ol ded i nto one conso l i dated com pla i nt, wh i ch w as then dism i sse d w i th prejud i ce without a n opportunity t o am en d ). This tel l s us th at e ac h case m ust be ev al uated on i ts o wn m er i t, i n l i g hto fi ts ow n pr o ce dur alhi st o r y . The d ist ric t c ou rtw as en tit led to vie w t h i s ca se as on e inN o. 08

- 2429 13

w hi ch the pla i nti ff s had, as a pract i calm att er, a num bero f opportunit i es to cra ft a co m pla i nt thatco m plied with the s tandards o fthe PSLRA
. I t was the re f or e e nti tl ed to br i ngthi s l i ti g at i o n t o a c l o se wi tha di smi ss alwi thpr ej ud ice
. B W e con si derne xtthe pl aint i ff s’ a r g um en t th atthe d ist ric t c ou rtab u se d i t s d isc re tio n w h en it d en ied th eir m otion f o r recons iderat ion un d er F ED . R. C IV . P. 59(e). W e do so b ec au se we ha ve he l d tha t, o nc e a fi na l j udg m en t has be en ent er ed, the nor m alr i ght t o a m en d o nce as a m atter of course un d er F ED . R. C IV . P. 15( a) i s ex tingui shed. S ee Fos t e rv. D e Luc a, 545 F.3d 582 , 584 (7th C ir. 20 08 ); Pagani s v. B lo nst e i n, 3 F. 3d 1067, 1072-73 (7th C ir. 1993 )
. W hat th e aggr i eve d partym ust do, i nstea d, i s t o fi l e a m o ti o n un derRul e 59 ( e) s ee k i ngr el i effr o m the j ud gm en t, an d , i f it bel ieves tha t th e d efi cienc ies the cou rt h a s i d e n t i fi e d c a n b e c u r e d th r o u g h a n a me n d e d c o mp lain t, it m u s t p ro ffer th at d oc u m en t t o th e c ou rtin su p p or t o fi ts m oti on. S ee Heck er v. D eere & C o ., 55 6 F
. 3d 57 5, 5 9 0 -91 (7t h C ir. 20 09 ). E ve n if th e p ar ty d oe s t h is, it has a har d ro w to hoe , bec ause n orm al l y Rul e 5 9( e) m oti ons ma y n o tb e u s e d t o c ur e de fe c t s tha tc o ul d h a ve been add re sse d ear l i er . T he par ty m ust instea d poi nt ei ther to an er ro r ofl aw o r to new l y di sco ver ed e vidence. S ee Sigs worth v
. Ci ty of

Aurora, 487 F.3d 506 , 511-12 (7th C ir. 20 07 ). T h e p l a i n t i ff s h e r e a s s e r t th a t th e i n f o r ma t i o n th a tc a me i nt o the i r h a nd s a ft e r the r e c o r ds i n Te xa s a nd Mi nnesot a w er e unsea l ed qual i fi es as new l y di sco ver ed evi dence,14 N o. 08

- 2429 and thus thatthe dist ri c t c ou rtabuse d i ts disc re ti on w hen i t r efused to r eopen the j ud gm ent. They urge that they acte d dil i gently to o b tain thos e f acts , but that they w er e s tym i ed, i n part beca use the d i str i ct c ourtr efused to l i ft a st ay ofdi sco ver y that i t had i m posed pu rs u an t to the PSLRA
. Once the docum ents w er e re l eas ed, it to ok th e p lai nti ff s four m onths to re vi ew them and then t o am end thei r conso l i dated com pla i nt. In the pla i nti ff s’ vi ew , “[ w ] hi l e perhaps l ess than perfect, thi s del ay w as not such a w ant o fdi l i gence thati t s h ou ld perm anentl y b ar a bi l l i on- dol l arse curi ti es case . ” W e are not p rep ared to say tha t the d istrict cou rt’s deci si on o n thi s m att erwas com pel l ed i n one dir ecti on o r the o ther

—by w hich w e m e a n t h a t had the d istri ct cou rt chose n to gr ant the Rul e 5 9( e) m oti on, i t i s l i kel y that s uch a r uling would al so h av e fal l en withi n the sco pe of the c ourt ’ s di scr eti on . B ut bythe sam e t oke n, we cannot fi nd thatthe cour t’ s deci si on t o deny th e m oti on was abusi ve. In asse ssing the im port ance ofthe new ev i dence, the c ourtnece ssa ri l y t oo k a peek a t ho w the propos ed am ended com pla i nt wo ul d h a v e a ddr e sse d the defi ci enci es it had i d e n t if ied. A nd , after taki ng this l ook, th e cou rt w as st ill of th e o p in ion th at it co u ld n o t t ell “p re c ise ly w hat f acts were al l ege dlyo m i tte d fr om [ Gu i dant’s ] disc l osur es that

— i n Pl ai nti ff s’ as ses sm ent

— would have m or e fu l l y a n d tru th fu lly in for m ed th e in ve st in g p u b lic about Gu i dant product defe cts. ” The cour t al so continued to be liev e t h e pla in tiffs h ad fallen sh or t o f th eir res p on sib ili tyt o pl ea d s cie nt era nd tha t th eyha d no t ci te d “ an y i nter nal docum ents, c onfi denti alwitnes ses , o r othe r sour ces to supp or t thei r al l ega ti ons . . . . ”N o. 08

- 2429 15 T he plaintiff s argu e, how ever, that t he district cou rt’s appr o ac h to the Rul e 59 ( e) mot i o n was i nc o ns i st en t w ith tw o re c en t d ec isio n s fro m th is c ou rt, Chaudhry v . N uc orSt e e l

- Indi ana, 5 4 6 F
. 3 d 8 3 2 ( 7 th Ci r . 2 0 0 8 ) , a nd Fo ster, 54 5 F. 3d 582
. We fi nd C ha ud hry t o b e r e a d i l y d i s t i n g ui sh

abl e, bec ause i t invol ved a si tuati on in w hi ch the dist ri ct cour t re fused to const rue a m oti on und er Rule 15(a) as a m oti on under Rul e 5 9( e) o r Rule 60. Thi s co urt f ound that th e di st r i ctc o ur t was being“ hy per - te ch ni ca l ” wi ththe l abelo n the top o fthe pa ge a n d inst ructe d the co urt to ev alu at e t h e m ot ion on th e m er its
. C ha ud hry, 5 46 F. 3d at 83 9. T h is c as e s u ffer s fro m n o s u c h p ro b lem

. Fo sterw ou ld prese nt a m or e di ffi cul t pr obl em if th is c ase , l i ke Fo ster, w as a s im p le o ne i n w hi ch the fi rs t a cti on o fthe dist ri ct cour t was to gr ant a m oti on t o d ism iss o n the ple ading s wi thpr ej udi ce , wi th o uta ny de te r m i na ti o n abo utthe suffi ci ency of a proffer ed am ended com pla i nt. S ee Fo ster, 54 5 F
. 3 d a t5 8 4

- 8 5
. Bu t, a s we h a v e e xp l a i ne d, thi s i s not a s i m ple cas e o fa si ngl e co m pla i nt thatis t ossed out of c ou rtw ith ou t e x p lan at ion
. The di stri ct cour t was a l so e nt i tl ed to t ak e i nt o a cc o unt th e fa c t t h at th e p lain tiffs h er e a p p ar en tly m ad e a st ra te gic d ecision no t to pu t the ir ne w eviden ce into th e record b e f o r e th e c o u r tr u l e d o n Gu i d a n t ’ s mo t i o n t o d i s mi s s . As we no te d i n Sigs worth, “i t i s wel l

- set tl ed that a Rul e 5 9( e) m oti on i s no t pr operly uti l i zed to advance ar gum ents or th eories th a t cou ld an d shou ld h ave be en m ad e before the di str i ct c ourtr endered a j ud gm ent .
. . . ” 487 F. 3d at 512 ( i nter nalquotat i on m arks om i tte d). Fo r al l thes e r eas ons, we fi nd no abus e o fdi sc r et i o n in the di st r i ctc o ur t’s dec i si o n t o de ny the pl aint i ff s’ Rul e 59 ( e) mot i o n.16 N o. 08

- 2429 C Ou r disc ussi on o fthe Rule 59( e) m oti on r eso lves, f or the m ost par t, the pla i nti ff s’ ar gum ent with re spect to thei r m oti on t o am end. A lthough the pl ai nti ff s ur ge that the di str i ct c ourtsho uld have ev al uated t h eirm oti on t o re op en th e j u d gm en t un d er th e sta n d ar d s ou tlin ed in R u le 15( a) ( that i s, the cour t s h oul d have a ssum ed that they had a r i ght t o am end as a m att ero fc ou rs e) , r atherthan und erthe Rule 59( e) st anda rd s, that posi ti on does not refl ect th e prop er rel ation bet w een th o s e t w o rules. I nt eresti ng l y, tha t po si ti o n i s al so i nc o ns i st en t wi thwhatthe p l a i n t i ff s th e ms e l v e s s a i d b e f o r e th e d i s t r i c tc o ur t. As G u id an t p oin ts ou t, th er e t h e p lain tiffs st re ss ed th at th e ir in itia l req u es t w as to am en d th e jud gm en t u n d er R u le 59( e) to m ake it one w i thout prej ud i ce, and theyr efer re d to R u l e 1 5 ( a ) o n l y a ft e r a s s e r t i n g th a t th e y h a d m ett he re quir em ents ofR ule 59( e)
. Ci ti ng Ta uben feld v. A o n C o rp., 415 F. 3d 597, 59 9 ( 7th Cir
. 2005 ) , Gu i dant tak es the pos i ti on th atthe pl aint i ff s ha ve th er efo r e wai ve d a ny a r g um en t that Rule 15( a) st andards so m ehow take pre cedence. W e p re fer n otto co n c er n ou rs elv es w ith w aiv er , as it m ake s no di ffer ence to the o utcom e. The entry of a fi nal j udg m en t unde r Rul e 5 8 is a wat er sh ed po i nti n a ny l i ti gat i on. Rule 15 ( a) i s s i l ent about any per i od after fi nal j ud gm en t. B ut there are tw o rules of civilproc ed ure th ate xpr es sly ad d ress thi s pha se o fthe s ui t: Rul e 59 a nd Rul e 60
. Tho se r ul es l o g i ca l l y a ffec t al l the r es t o fthe r ul es di r ec te d t o pr o ce eding s i n the di st r i ctc o ur ts
. The di st r i ctc o ur t co r r ec tly a ss es se d whethe r the pl aint if fs w er e e nti tl ed und erthe st andards o fRule 59 ( e) to haveN o. 08

- 2429 17 th e j udg m en t al te r ed o r a m en d ed

. As we s ai d i n Heck er, “[ o] nce j ud gm ent has been entere d, ther e i s a pre sum pti on that the c ase i s finis h ed , and the burden i s o n the party w ho w an ts to up set that j ud gm en t to show the cou rt tha tthe r e i s g o o d r e a s o n t o s e ti ta s i de

. ” 5 5 6 F
. 3 d a t59 1. The pl aint i ff s he r e di d no t m ee t th atb ur den

. * * * W e A F F I RM the j ud gm ent o fthe dist ri ct c ourt
.

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