IN RE ADIENT PLC SECURITIES LITIGATION

Background

Lead Plaintiff Bristol County Retirement System and Additional Named Plaintiff Jackson County, Missouri Revised Pension Plan brought a federal securities class action against Adient plc, former Chief Executive Officer R. Bruce McDonald, and Chief Financial Officer Jeffrey M. Stafeil. Plaintiffs alleged securities fraud under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5, based on conduct alleged to have occurred from October 17, 2016, through November 8, 2018.

On April 2, 2020, the Court granted defendants’ motion to dismiss the Second Amended Consolidated Class Action Complaint in its entirety. On April 7, 2020, judgment was entered in favor of defendants. Plaintiffs had not requested leave to amend before the dismissal, and the Clerk of Court was directed to close the case.

Plaintiffs’ Motions

Plaintiffs filed a first motion under Federal Rule of Civil Procedure 60(b)(6), which permits relief from a final judgment for other reasons that justify relief, and sought permission under Rule 15(a) to file a proposed Third Amended Consolidated Class Action Complaint. The proposed complaint primarily added allegations from confidential witness CW-6.

Plaintiffs later filed an amended second motion under Rule 60(b)(2), which permits relief based on newly discovered evidence that could not have been discovered earlier with reasonable diligence. That motion relied on allegations from CW-8, a former senior Adient employee who had been part of the company’s executive management team. Plaintiffs argued that CW-8 provided new information about problems in Adient’s Metals segment, management’s awareness of those problems, and the company’s projected 200-basis-point margin improvement.

Rule 60(b)(6) Analysis

The Court held that plaintiffs had not shown the extraordinary circumstances or extreme and undue hardship required for relief under Rule 60(b)(6). Plaintiffs argued that they would face hardship if they could not amend their complaint after dismissal. The Court rejected that argument, noting that plaintiffs had never requested leave to amend before the Court dismissed the complaint, including in their opposition papers or during oral argument. Plaintiffs also did not request amendment between the Court’s dismissal decision and entry of judgment.

The Court therefore denied plaintiffs’ request for relief under Rule 60(b)(6).

Rule 60(b)(2) Analysis

The Court also denied relief based on newly discovered evidence. To obtain relief under Rule 60(b)(2), plaintiffs had to show, among other things, that they were justifiably unaware of the evidence despite reasonable diligence.

The Court found that plaintiffs knew about CW-8 as early as February 2019, before filing the operative complaint and more than a year before the dismissal judgment. Plaintiffs’ investigator contacted CW-8 in February 2019, but plaintiffs apparently did not contact him again until April 2020, after the Court dismissed the complaint. CW-8 was interviewed in May and June 2020.

The Court concluded that plaintiffs had not explained why they could not have pursued CW-8 earlier, including after any claimed one-year restriction on his disclosures had expired. Because plaintiffs failed to show that they were justifiably unaware of the information despite reasonable diligence, the Court denied the Rule 60(b)(2) motion. The Court did not address the other requirements for newly discovered evidence.

Leave to Amend and Disposition

The Court also denied plaintiffs’ request for leave to amend under Rule 15(a). It explained that, after judgment has been entered, a party must first establish a valid basis for setting aside the judgment before the court may consider amendment. Because plaintiffs had not established a basis for relief under Rule 60(b), the Court denied leave to amend.

Judge Ronnie Abrams concluded that plaintiffs’ motions to set aside the judgment under Rules 60(b)(2) and 60(b)(6), and for leave to amend under Rule 15(a), were denied. The Clerk of Court was directed to terminate the motions pending at Dockets 70, 80, and 83.