BKNS MANAGEMENT LLC v. REEVES

Background

BKNS Management LLC brought derivative claims—claims asserted on behalf of Abbson LLC—under the Racketeer Influenced and Corrupt Organizations Act and common law. Abbson had separately filed a Utah lawsuit asserting racketeering claims on its own behalf against some of the defendants. The Utah lawsuit was dismissed with prejudice on May 6, 2025.

On July 18, 2025, this Court dismissed BKNS Management’s case under Federal Rules of Civil Procedure 12(b)(6) and 23.1. The court held that BKNS Management could not satisfy the requirements for bringing a derivative action because Abbson had agreed to pursue claims on its own behalf and had actually filed the Utah lawsuit.

Motion to Alter or Amend

BKNS Management moved under Rule 59(e) to alter the judgment. It argued that the Utah court’s dismissal should change this Court’s conclusion. The court rejected that argument because the Utah lawsuit and its dismissal had already been central to the Court’s earlier analysis. The Utah dismissal therefore was not new evidence or a new controlling decision that the Court had overlooked.

BKNS Management also argued, in its reply brief, that reconsideration was needed to prevent manifest injustice. The court found that BKNS Management had not identified a direct and obvious error. The court further held that BKNS Management could not rely on its new argument that the Utah lawsuit was invalid because it involved fictitious defendants and a fictitious racketeering enterprise. BKNS Management had not raised that argument when opposing the earlier dismissal motion.

The court added that, even if the argument had been raised earlier, Rule 23.1 did not require Abbson’s lawsuit to succeed. Abbson’s litigation decisions were protected by the business judgment rule unless BKNS Management showed that Abbson acted in bad faith or otherwise violated that rule. The court found that BKNS Management had made no such showing.

Motion for Relief from Judgment

In the alternative, BKNS Management sought relief under Rule 60(b)(2) and Rule 60(b)(6). Rule 60(b)(2) concerns newly discovered evidence that could not reasonably have been discovered in time for a timely new-trial motion. Rule 60(b)(6) permits relief for another reason that justifies it, but only in exceptional circumstances.

The court found that BKNS Management had not presented new evidence or a controlling decision that the Court had overlooked. It also found no exceptional circumstances warranting relief and stated that Rule 60 could not be used as a substitute for an appeal.

Disposition

Judge Jeannette A. Vargas denied BKNS Management’s Motion to Alter or Amend Judgment. The Clerk was directed to terminate the motion, identified as ECF No. 42.