19-3376-cv Cho et al. v. BlackBerry Ltd. et al.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term, 2020
Argued: October 30, 2020 Decided: March 11, 2021
Docket No. 19-3376-cv
YONG M. CHO, BATUHAN ULUG,
Plaintiffs-Appellants,
MARVIN PEARLSTEIN, individually and on behalf of all others similarly situated, TODD COX, MARY DINZIK,
Plaintiffs, — v. —
BLACKBERRY LIMITED, FKA RESEARCH IN MOTION LIMITED, THORSTEN HEINS, BRIAN BIDULKA, STEVE ZIPPERSTEIN,
Defendants-Appellees.*
* The Clerk of the Court is respectfully directed to amend the caption as set forth above. B e f o r e:
LIVINGSTON, Chief Judge, CABRANES and LYNCH, Circuit Judges.
After failing to be selected as lead plaintiffs to represent a putative class in a consolidated securities fraud class action, Plaintiffs-Appellants Yong M. Cho and Batuhan Ulug were named in the consolidated complaint as individual plaintiffs. Subsequently, the district court dismissed the putative class’s complaint and denied leave to amend. The designated lead plaintiffs appealed on behalf of the class, filing a notice of appeal that did not state that Cho and Ulug were also appealing. On remand from this Court, plaintiffs were granted leave to amend the complaint, and Cho and Ulug were again named in the amended complaint as individual plaintiffs. Defendants-Appellees moved for judgment on the pleadings as to Cho and Ulug, arguing that the earlier dismissal had become final as to them because they did not properly appeal. The district court (Colleen McMahon, C.J.) granted the motion, concluding that under Federal Rule of Appellate Procedure 3, Cho and Ulug had failed to appeal the earlier judgment against them because they did not indicate their intent to appeal in the notice of appeal filed by the lead plaintiffs. Cho and Ulug appeal, arguing that: (1) the district court erred in dismissing their claims, because Rule 3 does not require individual named plaintiffs in a class action to indicate their intention to appeal, so long as the appeal is filed by persons qualified to represent the class; (2) in the alternative, even if the judgment dismissing their earlier claims had become final, res judicata does not bar their new claims against an additional defendant not previously named; and (3) the district court should have granted their motion for reconsideration. We conclude that: (1) Rule 3 requires that individual named plaintiffs in a class action indicate individually their intent to appeal, and the district court’s first dismissal became final as to Cho and Ulug when they failed to do so; (2) Cho and Ulug’s claims against the newly added defendant are barred by res judicata; and (3) the district court did not abuse its discretion in denying reconsideration. Accordingly, the judgment of the district court is AFFIRMED.
2 DAVID A.P. BROWER, Brower Piven, A Professional Corp., New York, NY (Kim E. Miller, J. Ryan Lopatka, Kahn Swick & Foti, New York, NY, on the brief), for Plaintiffs- Appellants.
JOSEPH R. PALMORE, Morrison & Foerster LLP, Washington, DC (Dan Marmalefsky, Morrison & Foerster LLP, Los Angeles, CA, James J. Beha II, Lena H. Hughes, Morrison & Foerster LLP, New York, NY on the brief), for Defendants-Appellees.
GERARD E. LYNCH, Circuit Judge:
Plaintiffs-Appellants Yong M. Cho and Batuhan Ulug, individual named
plaintiffs in a putative securities class action, appeal a judgment of the United
States District Court for the Southern District of New York (Colleen McMahon,
C.J.) granting judgment on the pleadings and dismissing their claims against
Defendants-Appellees BlackBerry Limited, Thorsten Heins, Brian Bidulka, and
Steve Zipperstein, because they failed to join the lead plaintiffs’ appeal of prior
orders of the district court dismissing their complaint and denying
reconsideration and leave to amend.
The appeal requires us to decide what individual named plaintiffs in a
putative class action must do to indicate their intent to appeal from an
3 unfavorable decision. Cho and Ulug argue that Federal Rule of Appellate
Procedure 3 allows named plaintiffs who are also members of a putative class to
rely on the notice of appeal of a “person qualified to bring the appeal as
representative of the class” under Rule 3(c)(3), and that they are not required to
indicate their intent to appeal individually. Consequently, they argue that they
should be permitted to rely on the successful appeal by the lead plaintiffs in this
case, and that the district court erred in granting judgment on the pleadings and
dismissing their claims.
We disagree, and conclude that Rule 3(c)(1)(A) requires individual named
plaintiffs – who, unlike absent class members, have chosen to litigate their claims
personally – to indicate their intent to appeal, and that individual plaintiffs may
not merely rely on a notice of appeal filed by the lead plaintiffs or other persons
qualified to represent the class. Accordingly, we hold that Cho and Ulug’s failure
to appeal the district court’s first dismissal of their claims rendered that decision
final as to them, and that the district court properly dismissed their attempt to
renew their claims after the lead plaintiffs successfully appealed.
We also reject Cho and Ulug’s remaining arguments. Their claims against
Defendant-Appellee Steve Zipperstein, which they argue should be allowed to
4 proceed because Zipperstein was joined as a defendant only after the initial
dismissal and the lead plaintiffs’ successful appeal, are barred by res judicata.
Finally, we conclude, contrary to their remaining contention, that the district
court did not abuse its discretion in denying Cho and Ulug’s motion for
reconsideration. Accordingly, we affirm the judgment of the district court.
BACKGROUND
The following facts are taken from the factual allegations in the second
amended complaint, which we accept as true, Bryan v. Credit Control, LLC, 954
F.3d 576, 580 (2d Cir. 2020), and from the dockets of the relevant courts.
In early 2013, BlackBerry released the Z10 smartphone. Intended as
BlackBerry’s answer to the iPhone, it was a commercial flop. That October,
several individuals filed separate putative securities class actions, alleging that
BlackBerry and its then-CEO and CFO (Thorsten Heins and Brian Bidulka,
respectively) made material misrepresentations and omissions related to the
release of the Z10, thereby artificially inflating BlackBerry’s stock price.
The cases were consolidated in the Southern District of New York before
the late Judge Thomas P. Griesa. Several plaintiffs moved to be appointed lead
plaintiff in the consolidated case, pursuant to the Private Securities Reform
5 Litigation Act (“PSLRA”).1 The aspiring lead plaintiffs included Todd Cox and
Mary Dinzik, a couple who jointly owned BlackBerry stock, represented by law
firm Kahn Swick & Foti, and the BlackBerry Limited Investment Group,
represented by law firm Brower Piven and composed of five investors, including
Cho and Ulug. The district court appointed Cox and Dinzik lead plaintiffs, with
Kahn Swick & Foti as lead counsel.
The lead plaintiffs then filed an amended complaint (“FAC”), which Cho
and Ulug joined as individual “additional” plaintiffs. The complaint was signed
by Kahn Swick & Foti as “Lead Counsel for Lead Plaintiffs and the Class,” and by
Brower Piven as “Counsel for Additional Plaintiffs Yong M. Cho and Batuhan
Ulug and the Class.” The amended complaint alleged material
misrepresentations and omissions related to the Z10 smartphone release based on
four documents: BlackBerry’s fiscal year 2013 financial results; an April 12, 2013
press release refuting a negative market report claiming that Z10 return rates
were exceptionally high; BlackBerry’s financial results for the first quarter of
1 The PSLRA requires the appointment of a lead plaintiff prior to certification of a class. See 15 U.S.C. § 78u-4(a)(3)(B)(i) (“Not later than 90 days after the date on which a notice is published . . . [the court] shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members.”).
6 fiscal year 2014; and an August 12, 2013 press release announcing a potential sale
of the company.
Defendants moved to dismiss the amended complaint. On March 13, 2015,
the district court granted the motion, concluding that plaintiffs “failed to
plausibly allege that defendants made misrepresentations or omissions of
material fact, and have failed to show that defendants acted with scienter.”
Pearlstein v. BlackBerry Ltd., 93 F. Supp. 3d 233, 236 (S.D.N.Y. 2015). Plaintiffs then
moved for reconsideration and for leave to amend their complaint. The district
court denied that motion, which was signed by Kahn Swick & Foti, as “Lead
Counsel for Lead Plaintiffs and the Class,” and by Brower Piven, as “Counsel for
Additional Plaintiffs Yong M. Cho and Batuhan Ulug and the Class.” D. Ct. Dkt.
No. 56 at 1-2.
The lead plaintiffs appealed on behalf of the class. The caption on their
notice of appeal reproduced the caption in the district court: “MARVIN
PEARLSTEIN, Individually And On Behalf of All Others Similarly Situated,
Plaintiff, vs. BLACKBERRY LIMITED et al., Defendants.” J.A. 119. The notice
began, “Lead Plaintiffs Todd Cox and Mary Dinzik hereby give notice, on behalf
of themselves and all others similarly situated . . . [,]” id., and was signed by
7 Kahn Swick & Foti as “Lead Counsel for Lead Plaintiffs and the Class.” J.A. 120.
Brower Piven also signed the notice as “Additional Counsel for Lead Plaintiffs
and the Class” (and not “Counsel for Additional Plaintiffs Yong M. Cho and
Batuhan Ulug and the Class,” as it had in all previous submissions). Id. The
notice did not name or otherwise refer to Cho and Ulug.
On August 24, 2016, this Court affirmed the district court’s dismissal of the
complaint, but concluded that the district court had erred in denying leave to
amend without explanation, and remanded on that basis. Cox v. Blackberry Ltd.,
660 F. App’x 23 (2d Cir. 2016).2 Our summary order named Cox and Dinzik in the
body and caption, id. at 23-24, but made no reference to Cho and Ulug.
On remand, the district court granted leave to amend and the lead
plaintiffs filed a second amended complaint (“SAC”). The SAC again named Cho
and Ulug as individual plaintiffs, represented by Brower Piven. It renewed
plaintiffs’ earlier securities fraud claims and added new claims against Steve
2 In remanding the case, we also relied on Omnicare, Inc. v Laborers District Council Construction Industry Pension Fund, 135 S. Ct. 1318 (2015), which altered the standard for determining whether a statement of opinion is misleading for purposes of a securities fraud case. Cox, 660 F. App’x at 25-26.
8 Zipperstein, BlackBerry’s former chief legal officer, arising out of the April 12,
2013 press release cited in the original complaint. J.A. 138, 173-74.
Defendants, including Zipperstein, moved to dismiss the amended
complaint. Chief Judge Colleen McMahon (to whom the case had been assigned
following the death of Judge Griesa) denied the motion. Defendants then
answered the complaint, denying all material allegations of wrongdoing, and
discovery began.
On July 20, 2018, while discovery was ongoing, defendants successfully
moved for leave to amend their answer to assert additional affirmative defenses.
Defendants then filed an amended answer asserting as an affirmative defense
that plaintiffs’ claims were barred in whole or in part by the doctrines of res
judicata, collateral estoppel and/or law-of-the-case. Defendants moved for
judgment on the pleadings under Federal Rule of Civil Procedure 12(c), arguing
that the claims of Cho and Ulug should be dismissed because, unlike the rest of
the class, they failed to appeal the district court’s earlier dismissal of their
complaint, and that as a result the earlier judgment was now final as to them. The
district court referred the motion to Magistrate Judge Katharine H. Parker, who,
after hearing oral argument, issued a Report and Recommendation concluding
9 that Cho and Ulug’s claims should be dismissed. Pearlstein v. BlackBerry Ltd., No.
13-CV-07060, 2019 WL 6831554 (S.D.N.Y. Aug. 2, 2019).
On September 24, 2019, the district court accepted the recommendation
over plaintiffs’ objections3 and dismissed Cho and Ulug’s claims. Pearlstein v.
BlackBerry Ltd., No. 13-CV-07060, 2019 WL 4673757 (S.D.N.Y. Sept. 24, 2019). The
district court concluded that Rule 3 required Cho and Ulug to indicate their
individual intent to appeal. The court further rejected their contention that they
should have been permitted to rely on Rule 3(c)(3), which provides that in a class
action, “the notice of appeal is sufficient if it names one person qualified to bring
the appeal as representative of the class,” reasoning that Cho and Ulug had
“cease[d] to be ‘represented’ by the Lead Plaintiffs” when they joined the
complaint as individual named plaintiffs. Id. at *4.
In reaching its conclusion, the district court relied in part on our decision in
Cohen v. UBS Financial Services, Inc., which held that where a named class
representative filed a notice of appeal stating that he was appealing individually
and on behalf of the class, the notice was not sufficient to effect an appeal on
3 Although defendants’ motion to dismiss addressed only Cho and Ulug’s claims, it was opposed by the lead plaintiffs on behalf of the class, as well as Cho and Ulug.
10 behalf of the other named plaintiffs in the case. 799 F.3d 174, 177 n.3 (2d Cir.
2015).
The district court then addressed Cho and Ulug’s claims against
Zipperstein, who had not been named as a defendant in the initial complaint that
had been dismissed by the district court. The court, again adopting Magistrate
Judge Parker’s recommendation, dismissed those claims as well, concluding that
they were barred by res judicata and/or the law of the case doctrine because they
arose from the same transaction or occurrence as the original claims, and could
have been alleged in the prior complaint.
Cho and Ulug moved for reconsideration,4 arguing that the district court
erred in relying on Cohen and citing as “new evidence” material from the oral
argument in that case. The district court denied the motion. Pearlstein v.
BlackBerry Ltd., No. 13-CV-07060, 2019 WL 6977157 (S.D.N.Y. Dec. 19, 2019). This
appeal followed.
4 The body of the motion states that it is brought on behalf of Cho and Ulug alone, although it is signed by Kahn Swick & Foti as “Lead Counsel for Lead Plaintiffs and the Class,” as well as by Brower Piven as “Additional Counsel for Lead Plaintiffs and Counsel for Additional Plaintiffs Yong M. Cho and Batuhan Ulug.” D. Ct. Dkt. No. 409 at 1-2.
11 DISCUSSION
Federal Rule of Appellate Procedure 3 sets forth detailed instructions
explaining how to file an appeal. But despite its apparent clarity, this seemingly
straightforward rule has spawned considerable litigation over time, as parties
seek loopholes in its requirements. This appeal asks us to consider what Rule 3
requires of litigants who are members of a putative class, but have chosen to
proceed in the class litigation as individual named plaintiffs.
Cho and Ulug argue that the district court erred in dismissing their claims
because they were represented in the earlier appeal by the lead plaintiffs under
Rule 3(c)(3), and should not have been required to file a separate notice of appeal
or explicitly join the lead plaintiffs’ notice under Rule 3(c)(1)(A). In the
alternative, Cho and Ulug argue that even if their claims against the original
defendants are barred by their failure to appeal the earlier dismissal, their claims
against newly added defendant Zipperstein should be allowed to proceed, as
those claims were not included in the original complaint that was dismissed.
Finally, Cho and Ulug contend that the district court abused its discretion in
denying their motion for reconsideration.
12 We disagree on all three points. Cho and Ulug’s status as individual
named plaintiffs precluded them from being represented on appeal by the lead
plaintiffs; consequently, they were required either to clearly indicate their intent
to join the lead plaintiffs’ notice in their individual capacity or to file their own
notice. Because they failed to do either, the judgment dismissing their complaint
became final, and res judicata bars Cho and Ulug from bringing new claims
against Zipperstein that they could have pursued in their original action. Finally,
the district court did not abuse its discretion in denying Cho and Ulug’s motion
for reconsideration.
We review de novo the district court’s decision to grant a motion for
judgment on the pleadings under Federal Rule of Civil Procedure 12(c). Bryan,
954 F.3d at 580. The standard of review for a Rule 12(c) motion is the same as for
a Rule 12(b)(6) motion: we must “accept all factual allegations in the complaint as
true and draw all reasonable inferences in plaintiff[s’] favor.” Id. (internal
quotation marks omitted). We also review de novo “the district court’s application
of the principles of res judicata.” EDP Med. Computer Sys., Inc. v. United States, 480
F.3d 621, 624 (2d Cir. 2007). Finally, denial of a motion for reconsideration is
reviewed for abuse of discretion. See RJE Corp. v. Northville Indus. Corp., 329 F.3d
310, 316 (2d Cir. 2003).
13 I. Motion for Judgment on the Pleadings
Rule 3(c) lists the information that a notice of appeal must contain.
Although these notice requirements “should be liberally construed,” Marrero
Pichardo v. Ashcroft, 374 F.3d 46, 55 (2d Cir. 2004), they are “jurisdictional
requirements” that we “may not waive,” Torres v. Oakland Scavenger Co., 487 U.S.
312, 317 (1988).
Rule 3(c)(1)(A) describes the party information that must be included in a
notice of appeal:
The notice of appeal must . . . specify the party or parties taking the appeal by naming each one in the caption or body of the notice, but an attorney representing more than one party may describe those parties with such terms as “all plaintiffs,” “the defendants,” “the plaintiffs A, B, et al.,” or “all defendants except X”.
The requirement that the parties appealing clearly identify themselves
serves an important purpose. As we have explained before, it “provide[s] notice
to the court and to the opposing parties of the identity of the appellant or
appellants, permitting the court and the opposition to know, for example, which
parties are bound by the district court’s judgment or which parties may be held
14 liable for costs or sanctions on the appeal.” Baylis v. Marriott Corp., 906 F.2d 874,
877 (2d Cir. 1990); accord Torres, 487 U.S. at 318 (“The purpose of the specificity
requirement of Rule 3(c) is to provide notice both to the opposition and to the
court of the identity of the appellant or appellants.”). Without that notice
requirement, a “party could sit on the fence, await the outcome, and opt to
participate only if it was favorable.” Gonzalez v. Thaler, 565 U.S. 134, 148 (2012).
In this case, the December 2015 notice of appeal stated “Lead Plaintiffs
Todd Cox and Mary Dinzik hereby give notice, on behalf of themselves and all
others similarly situated,” that they appealed the dismissal of the complaint. J.A.
119. And although Brower Piven, counsel for Cho and Ulug, signed the appeal,
counsel signed as “Additional Counsel for Lead Plaintiffs and the Class”; the
firm did not state that it was appearing as counsel for Cho and Ulug, as it had on
previous submissions in the district court. Indeed, Cho and Ulug were not
mentioned anywhere in the notice of appeal. Under a plain reading of Rule
3(c)(1)(A), that fact alone would seem sufficient to defeat Cho and Ulug’s
argument that they successfully appealed.
However, Cho and Ulug turn to Rule 3(c)(3), which applies specifically to
class actions, to save their claims. Rule 3(c)(3) provides:
15 In a class action, whether or not the class has been certified, the notice of appeal is sufficient if it names one person qualified to bring the appeal as representative of the class.
Cho and Ulug argue that Rule 3(c)(3) creates a special rule for class actions that
displaces the more general rule in 3(c)(1)(A) that the notice must “specify the
party or parties taking the appeal by naming each one.” They argue that so long
as a qualified class representative appeals, that appeal covers the entire class,
including other named plaintiffs. Appellants’ Br. 17-18.
Nothing in the text of Rule 3(c)(3), however, displaces 3(c)(1)(A)’s generally
applicable requirement. Rule 3(c)(3) merely states that in a class action, the notice
of appeal can list “one person qualified to bring the appeal as representative of
the class” rather than naming all class members, which would clearly be difficult
or even impossible in some cases, particularly if the class had not yet been
certified. In other words, the provision covers unnamed class members that the
party bringing the appeal is qualified to represent; it does not include individual
named plaintiffs, who have appeared in the case as distinct parties separate from
the class members represented by lead plaintiffs, and who, as in any other case,
must appeal individually.
16 Cho and Ulug attempt to use the history of Rule 3(c)(3) to argue otherwise,
but in fact, the history of the provision belies their interpretation. The class action
provision in subsection (c)(3) was added to Rule 3 – along with other
amendments – after the Supreme Court concluded, in Torres v. Oakland Scavenger
Co., 487 U.S. 312 (1988), that a named plaintiff in a putative class action, who was
not named in the notice of appeal due to a clerical error, had lost his right to
proceed with the case. Rule 3 was amended following Torres to “reduce the
amount of satellite litigation spawned by” the Supreme Court’s decision. Fed. R.
App. P. 3 advisory committee’s note to 1993 amend. The amendment added Rule
3(c)(3), “to alleviate the inadvertent loss of the right to appeal through the use of
terms such as ‘et al.’ or through use of the name of a representative plaintiff in
class actions.” Billino v. Citibank, N.A., 123 F.3d 723, 726 (2d Cir. 1997); see also Fed.
R. App. P. 3 advisory committee’s note to 1993 amend. (“In class actions, naming
each member of a class as an appellant may be extraordinarily burdensome or
even impossible . . . . Therefore, the amendment provides that in class actions,
whether or not the class has been certified, it is sufficient for the notice to name
one person qualified to bring the appeal as a representative of the class.”).
17 However, there is no indication that the amendment, which was intended
to clarify the application of Torres in other situations, was intended to reverse the
outcome in Torres as to individually named plaintiffs. Notably, “the amendment
offers no relief in situations where the party does not file the functional
equivalent of a notice of appeal, or where the party is never named or otherwise
designated, however inartfully.” Billino, 123 F.3d at 726 (internal quotation marks
omitted).
Here, Cho and Ulug qualify as members of a putative PSLRA class for
which lead plaintiffs were named by the district court. Not content to proceed as
mere class members, however, Cho and Ulug chose to join the complaint
individually as “additional” plaintiffs, with their own counsel. As a result,
although the lead plaintiffs are “qualified to bring the appeal as representative[s]
of the class” under Rule 3(c)(3), they are not qualified to appeal Cho and Ulug’s
individual claims, even if those claims are, at this stage, the same claims as those
being pursued by the class. Having failed to appeal themselves, Cho and Ulug
are not permitted to rely on the successful appeal of the lead plaintiffs in order to
proceed with their claims. See Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394,
400 (1981) (plaintiffs may not “be the windfall beneficiaries of an appellate
18 reversal procured by other independent parties”).
Were we to conclude otherwise, the purpose of the notice requirement in
Rule 3(c)(1)(A) would be subverted. Cho and Ulug, as individual plaintiffs, have
options not available to unnamed class members. They could have chosen not to
appeal, or filed an individual appeal and made different arguments than the lead
plaintiffs. Or, if the lead plaintiffs chose not to appeal and thus to abandon the
case, they could have pursued an appeal on their own behalf.5 As a result,
allowing them to proceed as “an unnamed party” in the notice of appeal, as they
argue we should, would “leave[] the notice’s intended recipients – the appellee[s]
and court – unable to determine with certitude whether [Cho and Ulug] should
be bound by an adverse judgment or held liable for costs or sanctions.” Gonzalez,
565 U.S. at 147-48. Cho and Ulug “could sit on the fence, await the outcome, and
5 Those options would not be available to unnamed class members of an uncertified class unless they intervened and sought permission from the court. See Bloom v. F.D.I.C., 738 F.3d 58, 62 (2d Cir. 2013) (discussing requirements for appeal as a non-party in the context of an unnamed class member appealing decertification of the class); see also United Airlines, Inc. v. McDonald, 432 U.S. 385, 394 (1977) (unnamed plaintiff in uncertified class allowed to appeal dismissal only because she intervened promptly and it was clear that named plaintiffs did not intend to appeal).
19 opt to participate only if it was favorable,” just as they seek to do here. Id.6
Our conclusion, which follows clearly from the text of the amended rule
and our subsequent interpretations of that amendment, Billino, 123 F.3d at 726, is
the same one we reached in Cohen v. UBS Financial Services Inc., 799 F.3d 174 (2d
Cir. 2015). In that case, plaintiff Eliot Cohen filed a putative class action against
UBS Financial Services, asserting claims under the Fair Labor Standards Act and
California law. Id. at 175. The district court granted UBS’s motion to compel
arbitration based on an arbitration clause in Cohen’s contract, and Cohen
appealed. Id. On appeal, Cohen argued, inter alia, that California law prohibited
arbitration of his California law claims. Id. at 180. Our court concluded that
6 Cho and Ulug argue that by requiring them to appeal individually, we are acting as though they opted out of the class before it was certified. Not so. It is indisputable that, although class members cannot opt out prior to class certification, “potential class members may leave the putative class at will” by settling their claims or by litigating their claims to final judgment individually. In re Painewebber Ltd. Partnerships Litig., 147 F.3d 132, 138 (2d Cir. 1998). That is precisely what occurred here. Moreover, although it is true that Cho and Ulug, by proceeding individually, are subject to requirements under Rule 3 that are not imposed on unnamed class members, it is also clear that Cho and Ulug benefit from proceeding individually, which, as they explain, allows them “to later seek class representative status, and to protect their rights in the event class certification was denied or, if granted, they chose to opt out of the Class without risking the expiration of the statute of repose for claims under the Exchange Act.” Appellants’ Br. 29-30.
20 Cohen’s own California law claims were time-barred, and although another
named plaintiff had claims that were not time-barred, that named plaintiff had
not indicated his intent to join the notice of appeal. Accordingly, we “reject[ed]
Cohen's assertion that the other named plaintiffs below joined his appeal,” such
that the California law claims were properly before us. Id. at 177 n.3. Cohen’s
notice of appeal, which “state[d] that the appeal was brought by ‘Eliot Cohen,
plaintiff in the above-captioned action . . . , on behalf of himself and all others
similarly situated’ . . . sufficed to give notice that Cohen was appealing
individually and as a class representative, Fed. R. App. P. 3(c)(3), but did not
clearly express any other named plaintiff’s intent to join the appeal.” Id. (emphasis
in original).
Cho and Ulug argue that we faced a different situation in Cohen than we do
here, because Cohen was not qualified to bring California law claims on behalf of
the class, since his own California law claims were time-barred. Therefore, they
argue, he did not meet Rule 3(c)(3)’s requirement of a person “qualified to bring
the appeal as representative of the class.” Here, in contrast, the lead plaintiffs
were qualified to appeal all of the class’s claims.
21 While that is true, it played no role in our decision in Cohen. Our
conclusion there was that Cohen’s appeal, as a class representative, “did not
clearly express any other named plaintiff’s intent to join the appeal.” Id. (emphasis
in original). That conclusion, which we applied to all the named plaintiffs in
Cohen, applies with equal force to Cho and Ulug’s claims as individual plaintiffs
here: although the lead plaintiffs’ notice of appeal was sufficient to appeal the
claims of the class, it was not sufficient as to other named plaintiffs like Cho and
Ulug, who were pursuing their own claims individually.7
Citing Massie v. U.S. Dep’t of Housing & Urban Development, 620 F.3d 340 (3d
Cir. 2010), Cho and Ulug argue that our conclusion is contrary to the law in the
7 Nor can Rule 3(c)(4), which provides that “an appeal may not be dismissed . . . for failure to name a party whose intent to appeal is otherwise clear from the notice,” save Cho and Ulug’s appeal, because their intent to appeal was not “otherwise clear.” Cho and Ulug argue that their intent to appeal was clear, because their counsel, Brower Piven, signed the appeal as “Additional Counsel for Lead Plaintiffs and the Class.” J.A. 119. But in fact, that signature cuts against Cho and Ulug’s argument. On all previous documents in the case filed after the appointment of lead plaintiffs, Brower Piven had signed as “Counsel for Additional Plaintiffs Yong M. Cho and Batuhan Ulug and the Class.” S.A. 32. The fact that Brower Piven changed the description of its representation for the first time in the notice of appeal to omit Cho and Ulug and designate itself as counsel solely for the Lead Plaintiffs and the class suggests, if anything, that Cho and Ulug did not intend to appeal. It certainly does not make their “intent to appeal . . . otherwise clear.” Fed. R. App. P. 3(c)(4).
22 Third Circuit. Of course, Third Circuit law does not bind us. But more
importantly, we disagree with Cho and Ulug’s characterization of Massie. In
Massie, the certified class, which included several other named plaintiffs in
addition to Massie, filed a notice of appeal that listed only one party, “Jean
Massie,” as the party appealing. 620 F.3d at 347. But notably, in that case, the
notice was captioned “Jean Massie, et al. v. U.S. Department of Housing and
Urban Development, et al.,” id. at 347-48 (emphasis added), and the plaintiffs
subsequently filed another (untimely) notice of appeal which listed all five
named plaintiffs as the parties appealing. Id. at 348. Under those circumstances,
the court concluded that the other named plaintiffs had adequately appealed
based on the inclusion of “et al.” after the first named plaintiff in the original,
timely notice. Id. at 348-49.
Unlike in Massie, in this case the notice of appeal was captioned,
“MARVIN PEARLSTEIN, Individually And On Behalf of All Others Similarly
Situated, Plaintiff, vs. BLACKBERRY LIMITED et al., Defendants.” J.A. 119. In
other words, it did not include an “et al.” that could conceivably encompass
other individual named plaintiffs, as Massie did, and which Rule 3(c)(1)(A)
specifies can be used to indicate which parties are appealing. See Fed. R. App. P.
23 3(c)(1)(A) (“[A]n attorney representing more than one party may describe those
parties with such terms as . . . ‘the plaintiffs A, B, et al.’ . . . .”). And the body of
the notice in this case, as previously discussed, stated only that it was on behalf
of “Lead Plaintiffs Todd Cox and Mary Dinzik . . . and all others similarly
situated . . . .” J.A. 119. The phrase “and all others similarly situated,” though
seemingly inclusive of all class members, is commonly used and understood to
refer to the unnamed class members, not other named plaintiffs. Consequently,
the notice did not give any indication, either in the caption or in the body, that
Cho and Ulug were appealing, as Rule 3 requires. Accordingly, we see no conflict
between the outcome in Massie and the conclusion we reach here.8
8 We note that the caption in the notice of appeal in Cohen also included the phrase “et al.” 799 F.3d. at 177 n.3. However, despite the inclusion of “et al.” in that notice, we concluded that it was not sufficient to indicate that the other named plaintiffs were appealing because, taking into consideration the rest of the notice, it was not clear that they intended to appeal. In Cohen, the body of the notice did not mention the other named plaintiffs and stated only that “Eliot Cohen, plaintiff in the above-captioned action . . . , on behalf of himself and all others similarly situated, . . . hereby appeals.” See Notice of Appeal at 1, Cohen, 799 F.3d 174 (No. 14-781). Accordingly, we concluded that the notice “did not clearly express any other named plaintiff’s intent to join the appeal.“ Cohen, 799 F.3d. at 177 n.3 (emphasis in original). We relied on an earlier case, Gusler v. City of Long Beach, 700 F.3d 646 (2d Cir. 2012), which explains that in our Circuit: “[T]he notice of appeal is sufficient even if the party taking the appeal is named nowhere but in the caption if – and only if – it is manifest from the notice as a whole that the party wishes to appeal. The notice of appeal then meets the
24 Finally, to the extent that Cho and Ulug argue that Rule 3(c)(1)(A) imposes
too great a burden on individual plaintiffs in a putative class action and is
unduly “onerous” in light of the Supreme Court’s decision in California Public
Employees’ Retirement System v. ANZ Securities, Inc., 137 S. Ct. 2042, 2054 (2017),
we disagree. In ANZ, the Supreme Court concluded that equitable tolling during
the pendency of a class action does not apply to statutes of repose, and that the
plaintiff’s claims, filed after the plaintiff had opted out of a class action that
settled those same claims, were properly dismissed as untimely. Id. at 2052. In
that context, the Court noted that plaintiffs can easily preserve their claims
during the pendency of a class action, and that “[a] simple motion to intervene or
request to be included as a named plaintiff in the class-action complaint may well
suffice.” Id. at 2054. Cho and Ulug argue that we are adding to the “simple”
burden referenced by the Court by requiring plaintiffs who choose to proceed as
requisite of specifying the party or parties taking the appeal.” Id. at 649 (internal quotation marks omitted). In other words, although the inclusion of “et al.” in the caption may be sufficient in some circumstances to indicate that all named plaintiffs are joining the appeal, it will not be sufficient in circumstances, like Cohen, where the notice as a whole casts doubt on whether the other named plaintiffs intended to join the appeal. We express no view on whether Cohen is consistent with Massie; for present purposes it suffices to say that our conclusion here is inconsistent with neither.
25 named plaintiffs and litigate their claims to indicate their intent to appeal any
adverse decisions. But that is hardly the burden that Cho and Ulug assert it is;
named plaintiffs are merely required to indicate their intent to appeal in a notice
of appeal.
The burden in this case was indeed negligible, since Cho and Ulug were
represented by counsel, Brower Piven, and if they had intended to join the
appeal, their attorneys in the district court, who actually signed the notice of appeal,
needed only to state that they signed on behalf of their individual clients, or to
indicate in any way that those clients wished to appeal.9 Although we recognize,
as the Supreme Court did in Torres, that our “implacable” interpretation of “Rule
3(c) . . . leads to a harsh result in this case,” we are similarly “convinced that the
harshness of our construction is imposed by the legislature and not by the
judicial process.” 487 U.S. at 318 (1988) (internal quotation marks omitted).
9 We note that a purpose of the PSLRA was “to empower investors so that they – not their lawyers – exercise primary control over private securities litigation.” S. Rep. No. 104-98, at 4 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 683. This may have been a situation in which that purpose was not achieved. Indeed, we note that Cho and Ulug have testified that they were not even aware of the appeal that Brower Piven argues to us that they joined. See Appellees’ Br. 9 n.1.
26 Accordingly, we conclude that the district court did not err in dismissing
Cho and Ulug’s claims against the original three defendants.10
B. Claims Against Zipperstein
Cho and Ulug contend that even if their claims against the original
defendants are barred by their failure to appeal, their claims against defendant
Zipperstein, which were added to the SAC after the lead plaintiffs’ successful
appeal, should be allowed to proceed. We agree with the district court that Cho
and Ulug’s claims against Zipperstein are barred by res judicata.11
10 Because we conclude that Cho and Ulug are barred from proceeding with their claims against the three original defendants because they failed to appeal, we do not reach Appellees’ other arguments as to why Cho and Ulug’s claims against those defendants cannot proceed. 11 The district court also relied on the doctrine of law of the case in deciding whether the claims against Zipperstein could proceed, but that doctrine does not apply here. Because the district court’s earlier dismissal of Cho and Ulug’s claims was a final judgment on the merits that was not appealed, any subsequent claims brought by Cho and Ulug would be part of a second proceeding. In those circumstances, res judicata, not law of the case, applies. See 18 Charles A. Wright & Arthur R. Miller, Fed. Prac. & Proc. Juris. § 4404 (3d ed. 2018) (“Res judicata applies as between separate actions, not within the confines of a single action on trial or appeal. Within a single action, consistency and efficiency are achieved by a separate doctrine known as law of the case.”); see also L-Tec Elecs. Corp. v. Cougar Elec. Org., Inc., 198 F.3d 85, 87-88 (2d Cir. 1999) (applying doctrine of res judicata to dismiss new claims against previous defendants who had already been dismissed from the case in a final judgment on the merits).
27 The doctrine of res judicata provides that “a final judgment on the merits
of an action precludes the parties or their privies from relitigating issues that
were or could have been raised in that action.” EDP Med. Computer Sys., Inc., 480
F.3d at 624 (internal quotation marks omitted). The doctrine bars later litigation if
“an earlier decision was (1) a final judgment on the merits, (2) by a court of
competent jurisdiction, (3) in a case involving the same parties or their privies,
and (4) involving the same cause of action.” Id. We have concluded above that
Cho and Ulug’s failure to appeal the district court’s original dismissal of their
claims renders that dismissal a final judgment on the merits by a court of
competent jurisdiction. Therefore, whether Cho and Ulug’s claims against
Zipperstein are barred turns on whether they involve the same cause of action as
the claims in the original complaint, and whether Zipperstein is in privity with
the three original defendants.
As to whether the claims against Zipperstein involve the same cause of
action as those asserted in the original complaint, the answer is clearly yes. “Even
claims based upon different legal theories are barred [by res judicata] provided
they arise from the same transaction or occurrence.” L-Tec Elecs. Corp. v. Cougar
Elec. Org., Inc., 198 F.3d 85, 88 (2d Cir. 1999). Moreover, as noted above, res
28 judicata applies to issues that were not raised in the prior action, if they “could
have been raised in that action,” EDP Med. Computer Sys., Inc., 480 F.3d at 624,
and “applies even where new claims are based on newly discovered evidence,
unless the evidence was either fraudulently concealed or it could not have been
discovered with due diligence.” L-Tec Elecs. Corp., 198 F.3d at 88 (internal
quotation marks omitted).
The SAC asserts claims against Zipperstein based on the same allegedly
misleading April 12, 2013 statement that was relied upon in the original
complaint. Compare J.A. 65-66 with J.A. 173. In other words, the claims against
Zipperstein clearly arise from the same transaction or occurrence as the original
complaint.
Cho and Ulug argue that because the claims against Zipperstein are based
on newly discovered evidence showing that the April 12, 2013 statement was a
misrepresentation, they are not barred by res judicata. But, as we have just noted,
even claims based on newly discovered evidence do not escape the bar of res
judicata “unless the evidence was either fraudulently concealed or it could not
have been discovered with due diligence.” L-Tec Elecs. Corp., 198 F.3d at 88
(internal quotation marks omitted). Cho and Ulug argue that because the district
29 court granted them leave to amend their complaint upon remand from this
Court, the district court necessarily found that the claims against Zipperstein
“could not have been raised” in the FAC, and therefore cannot be barred by res
judicata now. Appellants’ Reply Br. 21. But that simply does not follow; in
granting leave to amend, the district court concluded only that there was not
“bad faith or undue prejudice,” the inquiry that governs amendment. See J.A.
129-130; Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993) (“Mere delay,
however, absent a showing of bad faith or undue prejudice, does not provide a
basis for a district court to deny the right to amend.”) (internal quotation marks
omitted).12 The inquiry governing leave to amend is not the same as that
governing whether res judicata bars subsequent claims, and the district court did
not address, nor did it necessarily implicitly conclude, that the claims against
Zipperstein could not have been brought in their original complaint. Indeed, that
12 Cho and Ulug’s reliance on the earlier decision of this Court remanding for the district court to reconsider its denial of leave to amend is similarly inappropriate. See Appellants’ Br. 44. In that decision, we merely noted that “Plaintiffs contend that, after the district court dismissed the Complaint, they discovered through review of the criminal complaint and accompanying affidavit in United States v. Dunham, No. 15–7051 (D. Mass. filed Feb. 24, 2015) . . . new evidence.” Cox, 660 F. App’x at 26 (emphasis added). That statement is certainly not consonant with a finding by this Court that evidence relating to Zipperstein was newly discovered evidence that could not have been discovered earlier.
30 is clearly not the case, given that the “new evidence” they relied on to bring their
claims against Zipperstein was publicly available prior to the dismissal of their
FAC. See Appellees’ Br. 49. The “new evidence” thus was not “fraudulently
concealed” or impossible to “discover[] with due diligence,” L-Tec Elecs. Corp.,
198 F.3d at 88, and accordingly, it cannot prevent the application of res judicata.
Finally, we turn to whether Zipperstein is in privity with the three original
defendants. Once again, the answer is yes. Privity “bars relitigation of the same
cause of action against a new defendant known by a plaintiff at the time of the
first suit where the new defendant has a sufficiently close relationship to the
original defendant to justify preclusion,” Cent. Hudson Gas & Elec. Corp. v.
Empresa Naviera Santa S.A., 56 F.3d 359, 367–68 (2d Cir. 1995), such as where
the new defendant is the old defendant’s “proxy, agent, or designated
representative,” Sacerdote v. Cammack Larhette Advisors, LLC, 939 F.3d 489, 506 (2d
Cir. 2019). The doctrine of privity is a “functional inquiry,” not a “formalistic”
one, Chase Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343, 346 (2d Cir. 1995),
and must be applied “with flexibility,” Amalgamated Sugar Co. v. NL Indus., Inc.,
825 F.2d 634, 640 (2d Cir. 1987).
31 Cho and Ulug argue that Zipperstein was not in privity with the earlier
defendants because he is being sued in his individual capacity under a “primary
violator” theory of liability, which is different than the “control person” liability
asserted against the original defendants. But the privity inquiry is a “functional”
one, and “[r]es judicata may bar non-parties to earlier litigation . . . when the
interests involved in the prior litigation are virtually identical to those in later
litigation.” Chase Manhattan Bank, N.A., 56 F.3d at 345-46 (emphasis omitted).
Zipperstein, who was BlackBerry’s chief legal officer when he made the
statements giving rise to the claims against him, and who was speaking on behalf
of the company, had a “sufficiently close relationship to the original defendant[s]
to justify preclusion,” Cent. Hudson Gas & Elec. Corp., 56 F.3d at 368, as their
“agent,” Sacerdote, 939 F.3d at 506. See also John St. Leasehold, LLC v. Cap. Mgmt.
Res., L.P., 283 F.3d 73, 75 (2d Cir. 2002) (FDIC employees acting within the scope
of their agency were in privity with employer FDIC for purposes of res judicata).
As such, he has “virtually identical” legal interests to theirs, which justify the
application of res judicata. Chase Manhattan Bank, N.A., 56 F.3d at 345. Proceeding
under a different legal theory cannot defeat the conclusion that Zipperstein was
in privity with the original defendants; as noted above, “claims based upon
32 different legal theories are barred provided they arise from the same transaction
or occurrence.” L-Tec Elecs. Corp., 198 F.3d at 88.
We conclude that the district court properly dismissed Cho and Ulug’s
claims against Zipperstein, as well as those brought against the original
defendants.
II. Motion for Reconsideration
Finally, Cho and Ulug argue that the district court abused its discretion in
denying their motion for reconsideration. “[A] party may move for
reconsideration and obtain relief only when the [party] identifies an intervening
change of controlling law, the availability of new evidence, or the need to correct
a clear error or prevent manifest injustice.” Kolel Beth Yechiel Mechil of Tartikov,
Inc. v. YLL Irrevocable Tr., 729 F.3d 99, 108 (2d Cir. 2013) (internal quotation marks
omitted). “The standard for granting such a motion 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.” Van Buskirk
v. United Grp. of Cos., Inc., 935 F.3d 49, 54 (2d Cir. 2019) (internal quotation marks
33 Cho and Ulug argue that the district court should have granted
reconsideration because they presented “new evidence,” with their motion, most
significantly, the audio recording of the oral argument in Cohen. That argument
fails to persuade for a number of reasons.
First, it is not clear that an audio recording of the argument in a case that
was thoroughly discussed in the district court’s original decision constitutes
“evidence” at all. Moreover, the recording here can hardly be considered “new
evidence,” given that the recording was readily available at the time of the earlier
briefing. Cf. Garraway v. Newcomb, 154 F. App’x 258, 260 (2d Cir. 2005) (district
court did not abuse its discretion in denying a motion for reconsideration where
the movant “sought to introduce some new evidence. . . [which] was available to
him at the time of the original summary judgment motion”).13
Second, and more importantly, we agree with the district court that the
recording “provides no grounds for reconsideration.” S.A. 44. Nothing in the oral
13 Cho and Ulug’s “far-reaching investigation” into Cohen appears to have consisted mainly of requesting the audio of the oral argument in Cohen from the Clerk of our Court. See Appellants’ Reply Br. 23-24. There is no indication that the audio would not have been theirs for the asking earlier in the proceedings, for example, after Magistrate Judge Parker issued her report and recommendation making it clear that Cohen was relevant to the disposition of defendants’ motion.
34 argument alters our understanding of what occurred in Cohen, or suggests, as
Cho and Ulug argue, that we did not mean exactly what we said in that case: that
nothing in the notice of appeal there, as here, “clearly express[ed] any other
named plaintiff’s intent to join” Cohen’s appeal, and accordingly, the appeals of
other named plaintiffs could not proceed. Cohen, 799 F.3d at 177 n.3.
Third and finally, as the district court correctly pointed out, Cho and
Ulug’s interpretation of Cohen cannot alter the outcome in this case, because
neither we nor the district court depend solely on Cohen in interpreting Rule 3.
For the same reasons, we reject Cho and Ulug’s argument that reconsideration
was warranted to prevent a manifest injustice.
CONCLUSION
For the reasons stated above, the judgment of the district court is
AFFIRMED.