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Ind. Pub. Ret. Sys. v. SAIC, Inc. - 818 F.3d 85 (2d Cir. 2016)

Rule:

A party seeking to file an amended complaint post judgment must first have the judgment vacated or set aside pursuant to Fed. R. Civ. P. 59(e) or 60(b). Rule 60(b)(6) authorizes a court to grant relief from a final judgment for any reason that justifies relief. Fed. R. Civ. P. 60(b)(6). In view of the provision in Fed. R. Civ. P. 15(a) that leave to amend shall be freely given when justice so requires, it might be appropriate in a proper case to take into account the nature of the proposed amendment in deciding whether to vacate the previously entered judgment.

Facts:

Plaintiffs, Indiana Public Retirement System, on behalf of themselves and a class of other similarly situated investors, SAIC, Inc., Walter P. Havenstein, Mark W. Sopp, and others, brought a securities fraud suit pursuant to the Securities Exchange Act of 1934 against respondents, alleging material misstatements and omissions in SAIC's public filings regarding its exposure to liability for employee fraud in connection with SAIC's contract work for New York City's City Time project. The district court ruled against the plaintiffs, and they filed an appeal following the denial of their motion to vacate judgment and amend their complaint.

Issue:

Is there a reasonable ground to grant the plaintiffs’ motion to amend the complaint?

Answer:

Yes.

Conclusion:

The Court held that the investors' proposed amended complaint adequately alleged that a corporation violated GAAP by failing to disclose a loss contingency in its March 2011 10-K. The investors alleged that the corporation was aware at the time of not only its employees' wrongdoing in connection with a city contract, but also the corporation's own potential liability to the city. The investors adequately pleaded a violation of Item 303 because the complaint sufficiently alleged that the corporation actually knew before filing its 10-K about the alleged fraud and that it could be implicated.

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