In re Turquoise Hill Resources Ltd. Securities Litigation
- Lewis Liman
- 1:20-cv-08585
- U.S. District Court · Southern District of New York
- 17
In Turquoise Hill Securities Litigation, Judge Liman granted in part and denied in part reconsideration, barring three amendment categories but allowing new securities-fraud allegations against Soirat.
The ruling affects the Plaintiffs’ ability to amend their securities-fraud complaint and the Defendants’ scope of potential allegations and discovery. Plaintiffs may add the new Section 10(b) and scienter allegations against Soirat, but may not add the allegations concerning Rio Tinto’s responsibility for Turquoise Hill statements, Soirat’s November 2018 television interview, or Rio Tinto’s alleged failure to record an impairment charge.
What happened
In In re Turquoise Hill Resources Ltd. Securities Litigation, Defendants asked Judge Liman to reconsider an earlier order allowing Plaintiffs to file a Third Amended Complaint. They argued that the earlier ruling was made before they could respond and that the proposed allegations were too late and would prejudice them.
The court reconsidered the earlier order. It denied Plaintiffs permission to add allegations holding Rio Tinto responsible for Turquoise Hill statements, allegations about Soirat’s November 2018 television interview, and allegations that Rio Tinto failed to record an impairment charge. The court found that Plaintiffs had not shown good cause for adding those allegations after the amendment deadline.
Judge Liman allowed Plaintiffs to add the new securities-fraud allegations against Soirat because they were based on information first disclosed in discovery and would not cause undue delay or prejudice. The court therefore granted in part and denied in part the motion for reconsideration and directed Plaintiffs to file the amended complaint by February 28, 2024.
The detailed version
- In re Turquoise Hill Resources Ltd. Securities Litigation · No. 1:20-cv-08585
- Lewis Liman
- Feb. 21, 2024
Background
Defendants Rio Tinto plc, Rio Tinto Limited, Jean-Sébastien Jacques, and Arnaud Soirat moved under Local Civil Rule 6.3 for reconsideration of the part of the Court’s January 8, 2024 order that allowed Plaintiffs to file a Third Amended Complaint. The January 8 order had granted Plaintiffs’ motion for leave to amend under Federal Rule of Civil Procedure 15(a)(2).
Defendants argued that the January 8 ruling was entered before they submitted their opposition, even though a prior stipulation allowed them until January 17, 2024, to oppose the amendment motion. They also argued that the Court had overlooked controlling law, made a clear error, and caused manifest injustice.
The proposed Third Amended Complaint included several groups of allegations: new Section 10(b) securities-fraud allegations against Jacques based on information about delays at the Oyu Tolgoi project; allegations concerning statements made by Soirat during a November 2018 television interview; allegations seeking to hold Rio Tinto responsible for statements attributed to Turquoise Hill; and allegations that Rio Tinto violated international financial-reporting standards by failing to record an impairment charge.
Legal standards
Reconsideration is an extraordinary remedy generally available only for an intervening change in controlling law, newly available evidence, or the need to correct clear error or prevent manifest injustice. The court explained that when an opposing party previously lacked an opportunity to respond, the court may consider the reconsideration motion and supporting briefs as the opposition to the underlying motion in the ordinary course.
Under Rule 15(a)(2), courts generally allow amendments when justice requires, but may deny them for undue delay, bad faith, undue prejudice, or futility. When a party seeks to amend after the deadline in a scheduling order, Rule 16(b) applies, and the party must show good cause. Good cause generally requires diligence and a showing that the deadline could not reasonably have been met despite the party’s efforts.
Court’s analysis
The Court granted reconsideration and denied leave to add three groups of allegations: (1) allegations seeking to hold Rio Tinto liable for Turquoise Hill’s statements; (2) allegations concerning Soirat’s November 2018 television interview; and (3) allegations that Rio Tinto failed to take a needed impairment charge.
The Court found that Plaintiffs had not shown good cause for waiting until December 15, 2023—ten months after the February 22, 2023 amendment deadline—to seek those amendments. The relevant public statements and the information underlying the impairment allegations had been available before the deadline. The Court also found undue delay under Rule 15(a)(2).
The Court further stated that allowing those allegations at that stage would prejudice Defendants and delay the case. The alleged misstatements define the issues to be tested at the motion-to-dismiss stage, frame discovery, affect expert analysis of loss causation and damages, and matter to class certification. Discovery had been ongoing for many months, document discovery was substantially complete, and the proposed additions could require significant additional domestic and international discovery.
The Court denied reconsideration as to the new scienter and Section 10(b) allegations against Soirat, allowing Plaintiffs to include them in the Third Amended Complaint. The Court accepted that the allegations were based on information disclosed for the first time in discovery, establishing good cause for not proposing them earlier. It rejected a categorical rule barring amendments based on discovery obtained after the pleading stage.
The Court also found no undue prejudice or undue delay from the Soirat amendments. Soirat was already a defendant, had participated in discovery, and had not yet been deposed. The allegations concerned the central subject of the lawsuit and were not expected to appreciably expand document discovery or require reopening deposition discovery.
Disposition
The motion for reconsideration was GRANTED IN PART and DENIED IN PART. Plaintiffs were directed to file the amended complaint by February 28, 2024. The Clerk of Court was directed to close Docket No. 320.
Read the full 17-page opinion on CourtListener, the free public archive maintained by the Free Law Project.