Case 1:11-cv-00733-WHP Document 167 Filed 08/28/12 Page 1 of 8
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PENNSYLVANIA PUBLIC SCHOOL
EMPLOYEES' RETIREMENT SYSTEM,
individually and on behalf of all others similarly
ELECTRONI CALLY FILED
I DATE FILED: 8/zY//2
11 Civ. 733 (WHP)
MEMORANDUM & ORDER
BANK OF AMERICA CORPORATION, et ai.,
WILLIAM H. PAULEY III, District Judge:
Lead Plaintiff Pennsylvania Public School Employees' Retirement System
("Plaintiff') brings this putative securities class action lawsuit against Bank of America
Corporation ("BoA"), current and past officers and directors of BoA, twenty-seven underwriters,
and PricewaterhouseCoopers LLP. By Memorandum & Order dated July 11,2012 (the "July
2012 Memorandum & Order"), this Court dismissed all defendants except BoA from this action
and granted Plaintiff leave to replead its claims against the current and past officers and
directors. BoA moves for reconsideration, or, in the alternative, to certify an interlocutory appeal
pursuant to 28 U.S.C. § 1 292(b). For the following reasons, BoA's motion is denied.
This Court's July 2012 Memorandum & Order sets forth the allegations
underlying this action. See Pa. Public Sch. Emps' Ret. Sys. v. Bank of Am. Corp., --- F. Supp.
2d ----, No. 11 Civ. 733 (WHP), 2012 WL 2847732, at *1-4 (S.D.N.Y. July 11,2012). On
Case 1:11-cv-00733-WHP Document 167 Filed 08/28/12 Page 2 of 8
August 13,2012, Plaintiff filed its Amended Consolidated Class Action Complaint ("Amended
Complaint"). By letter dated August 23,2012, BoA requested a pre-motion conference in
contemplation of a motion to dismiss the Amended Complaint. (ECF No. 166).
As a preliminary matter, the parties dispute whether Plaintiffs Amended
Complaint moots BoA's motion for reconsideration. See e.g., Meserole v. Sony Corp. of Am.,
08 Civ. 8987 (RPP), 2009 WL 2001451, at *1 (S.D.N.Y. July 8, 2009); Mintz v. Baron, No. 05
Civ. 4904 (LTS), 2009 WL 735140, at * 1 (S.D.N.Y. Mar. 20, 2009). This Court need not decide
that issue, because even assuming the motion is not moot, it nonetheless fails on its merits.
"A motion for reconsideration under Local Rule 6.3 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." Panchishak v. U.S. Dep't of Homeland Sec., No. 08 Civ. 6448 (WHP), 2010 WL
4780775, at *1 (S.D.N.Y. Nov. 22,2010) (internal quotation marks omitted) (quoting Shrader v.
CSX Transp., Inc., 70 F.3d 255,257 (2d Cir. 1995)), affd, 446 F. App'x 361 (2d Cir. 2011). "It
is implicit in this language that a motion for reconsideration cannot assert new arguments or
claims which were not before the court on the original motion and consequently cannot be said to
have been considered." Koehler v. Bank of Bermuda Ltd., No. M18-302 (CSH), 2005 WL
1119371, at *1 (S.D.N.Y. May 10,2005); see also Panchishak, 2010 WL 4780775, at *1.
"Reconsideration is not an invitation for parties to 'treat the court's initial decision as the
Case 1:11-cv-00733-WHP Document 167 Filed 08/28/12 Page 3 of 8
opening of a dialogue in which that party may then use such a motion to advance new theories or
adduce new evidence in response to the court's rulings.'" Panchishak, 2010 WL 4780775, at * 1
(quoting De Los Santos v. Fingerson, No. 97 Civ. 3972 (MBM), 1998 WL 788781, at *1
(S.D.N.Y. Nov. 12, 1998)). "The standard for reconsideration is strict and the decision is within
the sound discretion of the district court." Robbins v. H.H. Brown Shoe Co., Inc., No. 08 Civ.
6885 (WHP), 2009 WL 2496024, at *1 (S.D.N.Y. July 22.2009) (internal quotation marks
omitted); see also Colodney v. Continuum Health Partners, Inc., No. 03 Civ. 7276 (DLC). 2004
WL 1857568, at *1 (S.D.N.Y. Aug. 18,2004).
BoA argues that the Court mistakenly found that Plaintiff adequately alleged
corporate scienter. To allege that a corporate entity acted with scienter, a plaintiff must plead
facts that "create a strong inference that someone whose intent could be imputed to the
corporation acted with the requisite scienter." Teamsters Local 445 Freight Div. Pension Fund v.
Dynex Capital Inc., 531 F.3d 190, 195 (2d Cir. 2008). "[T]he most straightforward way to raise
such an inference for a corporate defendant will be to plead it for an individual defendant."
Dynex, 531 F.3d at 195. "But it is possible to raise the required inference with regard to a
corporate defendant without doing so with regard to a specific individual defendant." Dynex,
531 F.3d at 195. This Court concluded that Plaintiff alleged sufficient facts to plead that BoA
acted with scienter, although Plaintiff failed to allege scienter as to any specific individual
defendant. Dynex, 531 F.3d at 195. BoA claims that in coming to this conclusion, this Court
overlooked Dynex and Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296
(2011). Specifically, BoA contends that Dynex and Janus impose an additional requirement that
the Court ignored: that an individual whose scienter is imputed to BoA must also be the "maker"
Case 1:11-cv-00733-WHP Document 167 Filed 08/28/12 Page 4 of 8
of the false or misleading statement at issue. According to BoA, this Court erred because
Plaintiff fails to allege that anyone whose scienter is imputed to BoA also made misstatements or
This Court relied on Dynex in its July 2012 Memorandum & Order and did not
overlook it. See Pa. Pub. Sch. Emps.' Ret. Sys., 2012 WL 2847732, at *8-9. To the extent that
BoA argues that this Court misconstrued Dynex, BoA advances new arguments that "cannot be
said to have been considered." Koehler, 2005 WL 1119371, at *1. Indeed, BoA acknowledges
that it did not previously address the corporate scienter issue. But BoA cannot use this motion as
a vehicle to advance new theories, and its argument concerning Dynex is unavailing. See
Panchishak, 2010 WL 4780775, at *1; see also Koehler, 2005 WL 1119371, at *1.
Moreover, BoA's cramped reading of Dynex eviscerates that holding, which does
not require a plaintiff to identify a specific individual within a corporation who acted with
scienter. Dynex, 531 F.3d at 195 ("It is possible to draw a strong inference of corporate scienter
without being able to name the individuals who concocted and disseminated the fraud." (internal
alterations and quotation marks omitted)).
BoA's contention that this Court overlooked the effect of Janus on Dynex also
fails. BoA claims that Janus reinforces its reading of Dynex that Plaintiff must plead that the
individual whose knowledge is imputed to BoA also made the statements at issue. But Janus
does not concern corporate scienter. Rather, Janus addresses what it means to "make" a
statement for purposes section lO(b) of the Securities Exchange Act of 1934 and Rule IOb-5
promulgated thereunder. See Janus, 131 S. Ct. at 2306. And there is no dispute that BoA,
through its various public filings, "made" the statements and omissions at issue in this action. In
Case 1:11-cv-00733-WHP Document 167 Filed 08/28/12 Page 5 of 8
any event, BoA's attempt to spin Janus into controlling authority also represents a new argument
that is inappropriate to support its motion for reconsideration.
Finally, BoA attacks three factual bases that the Court relied on in finding that
Plaintiffs had alleged scienter: (1) that a BoA vice president and assistant vice president robo
signed affidavits and other documents (Consolidated Class Action Complaint ("Compl.") ~ 83);
(2) that senior managers knew of significant discrepancies between computer generated and hand
calCulated amortization schedules (Compl. ~ 120); and (3) counsel for BoA sent a letter to the
FCIC discussing a great decline in the value of subprime mortgages (the "FCIC letter") (Compl.
~ 101). As to the first two factual bases, BoA relies on its revised interpretation of Dynex and
Janus. Specifically, BoA asserts that Plaintiff did not plead that the vice president, assistant vice
president, and senior managers made any material misstatements or omissions. Because the
legal arguments undergirding this criticism are new, BoA's motion for reconsideration on those
grounds is denied in this regard.
As for BoA's critique of this Court's reliance on the FCIC letter, BoA notes that
this Court stated incorrectly that BoA's "general counsel" sent the letter, when in fact BoA's
outside counsel sent it. However, that misstatement is inconsequential because it is reasonable to
infer that someone in BoA's management authorized the FCIC letter. See Grandon v. Merrill
Lynch & Co., 147 F.3d 184, 188 (2d Cir. 1998) (drawing all inferences in favor of plaintiff on
motion to dismiss). Moreover, all "of the facts alleged, taken collectively, give rise to a strong
inference of scienter" on the part of BoA. Tellabs Inc. v. Makor Issues & Rights, Ltd., 551 U.S.
308,323 (2007). Accordingly, BoA's motion for reconsideration on this ground is denied as
Case 1:11-cv-00733-WHP Document 167 Filed 08/28/12 Page 6 of 8
II. Interlocutory Appeal
A court may certify an order for interlocutory appeal when "such order
involves a controlling question oflawas to which there is substantial ground for difference of
opinion and that an immediate appeal from the order may materially advance the ultimate
termination of the litigation." 28 U.S.C. § 1292(b). "[T]he mere presence of a disputed issue
that is a question of fIrst impression, standing alone, is insuffIcient to demonstrate a substantial
ground for difference of opinion." In re Flor, 79 F Jd 281, 284 (2d Cir. 1996). "Such an appeal
is limited to extraordinary cases where appellate review might avoid protracted and expensive
litigation, and is not intended as a vehicle to provide early review of difficult rulings in hard
cases." Mills v. Everest Reins. Co., 771 F. Supp. 2d 270,272 (S.D.N.Y. 2009) (internal
quotation marks omitted). "The decision whether to grant an interlocutory appeal from a district
court order lies within the district court's discretion." Mills, 771 F. Supp. 2d at 272.
BoA's motion to certify an interlocutory appeal is denied because there is no
substantial ground for a difference of opinion. None of the cases on which BoA relies impose
the requirement that BoA urges this Court to adopt-that an individual whose knowledge is
imputed to the corporation must also "make" the material misstatement or omission at issue. See
~, In re PXRE Om. Ltd. Sec. Litig., 600 F. Supp. 2d 510,529 n.22, 537 (S.D.N.Y. 2009)
(declining to impute knowledge of corporation's actuary to corporation); Defer LP v. Raymon
James Fin. Inc., 654 F. Supp. 2d 204, 212·13 (S.D.N.Y. 2009) (dismissing complaint when
plaintiff could not attribute false statements to any defendant). For example, in In re MBIA, Inc.,
Securities Litigation, 700 F. Supp. 2d 566,591·92 (S.D.N.Y. 2010), it so happened that the
Case 1:11-cv-00733-WHP Document 167 Filed 08/28/12 Page 7 of 8
officers whose knowledge was imputed to the corporation also made material misstatements.
However, Judge Karas does not assert that this relationship is necessary to establish scienter.
Moreover, courts in this jurisdiction consistently interpret Dynex in the same
manner as this Court. See Solow v. Citigroup, Inc., 827 F. Supp. 2d 280,291 (S.D.N.Y. 2011)
(noting that plaintiff "need not identify specifically the individuals at Citigroup who acted with
scienter in order to plead scienter with respect to Citigroup"); Defer, 654 F. Supp. 2d at 212
(where corporate scienter is concerned, there is no requirement "that the same individual who
made an alleged misstatement on behalf of a corporation personally possess the requisite
scienter"); In re Moody's Corp. Sec. Litig., 599 F. Supp. 2d 493,516 (S.D.N.Y. 2009) (when
imputing misstatements and scienter to a corporation, "the individual making an alleged
misstatement and the one with scienter do not have to be one and the same"). Accordingly,
BoA's motion to certify the July 2012 Memorandum & Order for an interlocutory appeal is
I Plaintiff requests that if this Court certifies an interlocutory appeal on the issue of corporate
scienter, that it also certify an interlocutory appeal of its dismissal of Plaintiffs claims under
Section 11 and Section 15 of the Securities Act of 1933. Plaintiff asserts this request only in its
papers opposing BoA's motion. This Court denies Plaintiffs application for failure to comply
with its Individual Practices.
Case 1:11-cv-00733-WHP Document 167 Filed 08/28/12 Page 8 of 8
For the foregoing reasons, Defendant Bank of America's motion for
reconsideration is denied. Defendant Bank of America's motion to certify an interlocutory
appeal is also denied. The Clerk of the Court is directed to terminate the motion pending at ECF
Dated: August 28, 2012
New York, New York
WILLIAM H. PAULEYIIIr
Mark Robert Rosen
Barrack, Rodos & Bacine
3300 Two Commerce Square, 2001 Market Street
Philadelphia, PA 19103
Lead Counsel for Plaintiff
Jay B. Kasner
Skadden, Arps, Slate, Meagher & Flom LLP (NYC)
Four Times Square
New York, NY 10036
Counsel for Bank ofAmerica