Securities – Scienter – Confidential witnesses

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Where (1) a securities fraud complaint was dismissed with prejudice, (2) the dismissal was affirmed on appeal, and (3) the lead plaintiff has filed a motion to vacate, claiming that newly discovered evidence cures the deficiencies that warranted dismissal, the motion was untimely and lacks merit, so it must be denied.

“Here, after the First Circuit affirmed the Court’s dismissal of this action with prejudice, … lead plaintiff Julian Quinones (‘Quinones’) now moves pursuant to Rules 60(b)(2) and 60(b)(6) of the Federal Rules of Civil Procedure that this Court to vacate the dismissal of this action because he asserts newly discovered evidence cures the deficiencies that warranted dismissal. …

“First, Quinones has not met his burden to demonstrate that he exercised reasonable diligence to obtain the newly discovered evidence from two new confidential witnesses. …

“… Simply put, Quinones bears the heavy burden of production and persuasion to obtain extraordinary relief under Rule 60(b)(2). He has not done so here. For example, there is an absence of any detail on the investigation protocols, what actions were undertaken, what public information was available and what was surveyed. This failure to present a ‘cogent reason’ dooms the motion. …

“Even if Quinones could establish reasonable diligence, the purported newly discovered confidential witnesses’ statements, while providing additional factual allegations, on the whole do not present a strong inference of scienter…. Indeed, Quinones ‘cannot amalgamate a series of sketchy brushstrokes and call it a van Gogh.’ … Accordingly, relief under Rule 60(b) is not warranted and the motion under Rule 60(b)(2) must be denied.

“… There are no extraordinary circumstances present here. The newly discovered evidence and its untimely presentation to this Court is merely repackaged as extraordinary circumstances. Quinones’s playing fast and loose with the Rules of Civil Procedure, and blaming the Court and the Clerk for Quinones’s procedural missteps, is not extraordinary circumstances justifying relief.”

Quinones v. Frequency Therapeutics, Inc., et al. (Lawyers Weekly No. 02-517-24) (13 pages) (Young, J.) (Civil Action No. 21-10933-WGY) (Nov. 1, 2024).

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