403(b) Participants Denied Second Attempt to Sue Georgetown University

The plaintiffs in a previously dismissed lawsuit against Georgetown University alleging excessive fees in two of its retirement plans have been denied their motion for leave to file an amended complaint.

District Judge Rosemary Collyer with the U.S. District Court for the District of Columbia said the motion was filed two days too late under Federal Rules of Civil Procedure.

According to Collyer’s opinion, Federal Rule of Civil Procedure 59(e) requires plaintiffs to file a motion for reconsideration within 28 days of the dismissal. However, the plaintiffs argue that a “final, appealable judgment” was not entered January 8, 2019, or at any time since, so they filed their motion under Federal Rule of Civil Procedure 15(a).

The opinion points out that Rule 15(a)(1) allows parties to amend their pleadings once as a matter of right if they do so within specified timeframes. Rule 15(a)(2) provides that, once the time for amendment as a matter of right has lapsed, “a party may amend its pleading only with the opposing party’s written consent or the court’s leave.” Ordinarily, courts “should freely give leave when justice so requires,” so long as certain factors are not present such as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of [the] amendment.” However, after a final judgment is entered, a district court must first set aside that judgment pursuant to Rule 59(e) or 60(b) before considering a motion to amend under Rule 15(a)(2).

The opinion further explains that a motion under Rule 60(b) may be filed “within a reasonable time,” but may only provide for relief for one of the six reasons cited in the rule, including that the plaintiffs have newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); and the judgment has been satisfied, released or discharged, is based on an earlier judgment that has been reversed or vacated, or applying it prospectively is no longer equitable.

“The preliminary issue is whether the court terminated the case pursuant to its January 8 order,” Collyer wrote. She noted that the order dismissed the complaint and the action, and the docket entry accompanying the order stated: “This case is closed.” Collyer said that while the plaintiffs are correct that the order did not explicitly state “[t]his is a final, appealable order,” the D.C. Circuit has found that the words “final and appealable” are not dispositive of whether a case is closed.

Since the January 8 order terminated the case, the plaintiffs were required to move for reconsideration under Rules 59(e) or 60(b) as either a precursor or an accompaniment to a motion to file an amended complaint under Rule 15(a)(2). Under Rule 59(e) to accomplish this purpose. After dismissal was granted and the case closed on January 8, the plaintiffs had a period of 28 days to ask to alter or amend the judgment under Rule 59(e) and, perhaps contemporaneously, to file a motion and an amended complaint under Rule 15(a). The 28-day period expired on February 5, 2019, but the plaintiffs’ motion to file the proposed First Amended Complaint was filed on February 7.

Considering Rule 60(b), Collyer found that the plaintiffs have not stated that any of the facts in the proposed Amended Complaint were newly discovered or otherwise not known to them previously. As for Rule 60(b)(5), the plaintiffs argue that the January 8 opinion cited a case that was later reversed, in part, on appeal—Sweda v. University of Pennsylvania. But, Collyer said, “Sweda involved a different university and a different retirement plan than those at issue in this case. The Memorandum Opinion cited the district court decision in Sweda only for the proposition that ‘ERISA does not provide a cause of action for underperforming funds.’ Moreover, the Third Circuit’s partial reversal is not binding on this Court. Sweda is not a prior judgment which reversed or vacated this Court’s Memorandum Opinion or that compels the Court to alter or amend its judgment under Rule 60(b)(5).”