IBEW Local 98 Pension Fund v. Best Buy Co., Inc.

Background

This securities lawsuit arose from Best Buy’s public statements in September and November 2010. Plaintiffs alleged that Best Buy’s statements about earnings, sales, customer demand, and market share were false or misleading and caused the company’s stock to trade at artificially inflated prices during the class period, September 14 through December 13, 2010.

Earlier in the case, the District Court dismissed claims based on Best Buy’s September 14, 2010, 8:00 a.m. press release and statements made during a November 24, 2010 Fox News interview. The court concluded that the September press release was protected by the Private Securities Litigation Reform Act’s safe-harbor provision for certain forward-looking statements and that the Fox News statements were immaterial. Claims concerning a September 14, 2010, 10:00 a.m. conference call remained.

The District Court initially certified a class for the remaining conference-call claims. The Eighth Circuit later reversed that class-certification decision, finding that the conference call had no additional effect on Best Buy’s stock price. The District Court later denied the lead plaintiff’s request to seek class certification again and stated that the remaining claims would have to proceed as an individual action based on traditional proof of reliance.

Motion to Amend

The lead plaintiff sought permission to file a proposed second amended class complaint. He relied on more than 50 internal documents, emails, reports, and spreadsheets produced during discovery. He argued that the proposed complaint identified additional false or misleading statements in the September 14, 2010, 8:00 a.m. press release, supported claims concerning the September 14 conference call, and showed that the November 2010 Black Friday statements were actionable.

Best Buy opposed amendment. It argued that the plaintiff had not shown good cause to modify the scheduling order, had delayed unreasonably, and would prejudice Best Buy. Best Buy also argued that the proposed amendments were futile and that the law-of-the-case doctrine barred the plaintiff from revisiting issues already decided.

Because the motion was filed after the scheduling order’s December 1, 2013 deadline for amending pleadings, the court applied Federal Rule of Civil Procedure 16(b)(4), which requires good cause to change the schedule. The court explained that diligence is the main measure of good cause. It found that the plaintiff possessed the discovery supporting the proposed new allegations by, at the latest, August 29, 2014, and that most of the documents had been produced before March 6, 2014. The plaintiff then waited about 18 months after the case resumed following the Eighth Circuit’s remand before seeking amendment, while pursuing renewed class certification instead.

The court rejected the plaintiff’s arguments that newly discovered facts, changed circumstances, or changed law justified the delay. It distinguished new legal arguments from newly discovered evidence, explaining that the relevant press release had been available from the beginning and that the discovery documents had been available years before the motion. The court also concluded that the cited changes in law did not establish good cause under Rule 16(b)(4).

The court additionally found undue delay and prejudice under Federal Rule of Civil Procedure 15(a)(2). It reasoned that Best Buy had already spent substantial time and resources litigating the dismissed claims and that allowing amendment would effectively revive previously rejected theories in a case that had been litigated for seven years.

The court also applied the law-of-the-case doctrine, which generally requires courts to follow earlier rulings on the same issues in later stages of the same case unless clear error or manifest injustice appears. It held that this doctrine barred the plaintiff from presenting different portions of the same September 14 press release after the District Court had determined that the release was protected by the statutory safe harbor. It likewise held that the earlier determination that the November 24 statement was immaterial remained controlling. The court found no clear error or manifest injustice and denied the motion for leave to amend.

Motion to Compel

The plaintiff’s motion to compel asked Best Buy to remove allegedly improper “Highly Confidential” designations and search for and produce documents from personal email accounts and text messages. The motion had been filed in 2014, before the case was stayed for the class-certification appeal. It had not been fully briefed, argued, or addressed by the parties during later proceedings.

The court concluded that the motion was not ready for decision because it was not fully briefed and had not been set for oral argument. It therefore denied the motion to compel without prejudice, stating that the plaintiff could raise the matter again if necessary.

Disposition

The court denied the lead plaintiff’s motion for leave to file a second amended class action complaint. It denied the motion to compel without prejudice. The court also instructed the parties to file a joint motion concerning continued sealing of certain docket entries within the time required by the District of Minnesota’s local rules.