15‐2528‐cv Klein v. PetroChina Co. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 21st day of March, two thousand sixteen.

PRESENT: CHESTER J. STRAUB, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges.

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x

JEFFREY KLEIN, SAMUEL AYOUB, Plaintiffs‐Appellants,

PTR GROUP, JOHAN BROUX, individually and on behalf of all others similarly situated, Plaintiffs,

v. 15‐2528‐cv

PETROCHINA COMPANY LIMITED, ZHOU JIPING, YU YIBO, JIANG JIEMIN, ZHOU MINGCHUN, JIEMIN JIANG, HUALIN LI, XINQUAN RAN, Defendants‐Appellees.

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x FOR PLAINTIFFS‐APPELLANTS: PHILLIP KIM, Laurence M. Rosen, The Rosen Law Firm, P.A., New York, New York.

FOR DEFENDANTS‐APPELLEES: A. ROBERT PIETRZAK, Joel M. Mitnick, Eamon P. Joyce, Tom A. Paskowitz, Benjamin F. Burry, Sidley Austin LLP, New York, New York.

Appeal from the United States District Court for the Southern District of

New York (Ramos, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.

Plaintiffs‐appellants Jeffrey Klein and Samuel Ayoub (the ʺInvestorsʺ)

appeal an August 6, 2015 judgment of the United States District Court for the Southern

District of New York entered after it dismissed the Investorsʹ claims pursuant to Federal

Rule of Civil Procedure 12(b)(6). The Investors do not appeal the merits of that Rule

12(b)(6) determination: They contend principally that the district court abused its

discretion in earlier denying their motion for leave to file a supplemental pleading

pursuant to Rule 15(d). We assume the partiesʹ familiarity with the underlying facts,

procedural history of the case, and issues on appeal.

In September 2013, certain investors in defendant‐appellee PetroChina

Company Ltd. (ʺPetroChinaʺ) brought putative class actions against PetroChina and

some of its corporate officers. After the district court consolidated the cases and

appointed the Investors as lead plaintiffs, they filed an amended complaint alleging that

‐ 2 ‐ PetroChina and its officers had engaged in securities fraud by certifying to the Securities

Exchange Commission (the ʺSECʺ) that it had disclosed ʺany fraud, whether or not

material, that involves management or other employees who have a significant role in

[its] internal control over financial reporting,ʺ when in fact it had not disclosed

widespread corruption, bribe‐taking, and improper self‐dealing by PetroChinaʹs top

brass. ECF No. 17, at 12; see

(a)(5)(B) (requiring corporate officers to

disclose such fraud in SEC filings).

On August 5, 2014, PetroChina moved to dismiss the amended complaint.

Five days before their opposition to the motion was due, the Investors responded by

requesting permission to file a second amended complaint. At an October 23, 2014

hearing, the district court granted the Investorsʹ motion for leave to amend their

amended complaint to plead new factual developments concerning ʺadditional

corruption arrests.ʺ App. at 13, 26. The district court did so with the understanding ‐‐

made clear on the record ‐‐ that if the newly amended complaint was to be dismissed,

the dismissal would be ʺwith prejudice.ʺ

. The Investors then filed a second

amended complaint that included allegations that several corporate officers ‐‐ including

former Chairman and CEO Jiang Jiemin ‐‐ had been arrested and were facing criminal

charges in the Peopleʹs Republic of China for bribery and corruption.

Again, PetroChina moved to dismiss. By letter dated March 24, 2015 ‐‐

just three days before their opposition to the motion was due ‐‐ the Investors moved for

‐ 3 ‐ leave to file a supplemental pleading outlining the criminal charges against Jiang and

similar charges or investigations as to other corporate officers. At an April 10, 2015

hearing, the district court denied the motion, and on August 3, 2015, the district court

dismissed the second amended complaint pursuant to Rule 12(b)(6). This appeal

followed.

We review a district courtʹs denial of leave to file a supplemental pleading

for abuse of discretion. See Quaratino v. Tiffany & Co.,

, 65‐66 (2d Cir. 1995).

The district court ʺmay, on just terms, permit a party to serve a supplemental pleading

setting out any transaction, occurrence, or event that happened after the date of the

pleading to be supplemented.ʺ Fed. R. Civ. P. 15(d). As with motions for leave to

amend pleadings, ʺ[a]bsent undue delay, bad faith, dilatory tactics, undue prejudice to

the party to be served with the proposed pleading, or futility, the motion should be

freely granted.ʺ Quaratino,

(citing Foman v. Davis,

(1962)).

The district court acted within its discretion here. The district court

reasoned that the defendants should not have ʺto play whack‐a‐mole with this caseʺ

ʺevery time someone is indictedʺ and that the new allegations appeared to ʺbe

duplicative of whatʹs already in the [second amended] complaint.ʺ App. at 74‐75.

Indeed, the second amended complaint already detailed specific facts about numerous

arrests and criminal charges against PetroChina corporate officers. The fact that yet

another corporate officer was indicted did not meaningfully bolster the Investorsʹ case.

‐ 4 ‐ Moreover, the request to file a supplemental pleading was made some eighteen months

after the suit was commenced, after the Investors had already filed and amended their

pleadings, and after PetroChina had already filed two motions to dismiss. Finally, the

district court granted the Investorsʹ leave to file their second amended complaint with

the understanding that they would not have an opportunity to file yet another pleading.

The district court therefore did not abuse its discretion, especially in light of our general

interest to ʺpromote the economic and speedy disposition of the controversy between

the parties.ʺ Bornholdt v. Brady,

(2d Cir. 1989).

We have reviewed the Investorsʹ remaining arguments and conclude they

are without merit. Accordingly, we AFFIRM the judgment of the district court.

FOR THE COURT: Catherine OʹHagan Wolfe, Clerk

‐ 5 ‐