Acticon AG v. China North East Petroleum Holdings, Ltd.

16-2351-cv
Acticon AG v. China North East Petroleum Holdings, Ltd.
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 COURT=S
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 “SUMMARY ORDER”). A PARTY
CITING TO 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 12th day of April, two thousand seventeen.
Present:
PETER W. HALL,
GERARD E. LYNCH,
CHRISTOPHER F. DRONEY,
Circuit Judges.
__________________________________________
ACTICON AG,
Plaintiff-Appellant,
RICARDO ROSADO, Individually and on
Behalf of All Others Similarly Situated,
STEVEN WEISSMAN, Individually and on
Behalf of All Others Similarly Situated,
TONY MOORE, Individually and on Behalf
of All Others Similarly Situated,
Plaintiffs,
v. 16-2351-cv
CHINA NORTH EAST PETROLEUM HOLDINGS
LIMITED, WANG HONG JUN, JU GUIZHI,
Defendants-Appellees,
RALPH E. DAVIS, LI JING FU, EDWARD M. RULE,
ZHANG YANG, YU LI GUO, RALPH E. DAVIS
ASSOCIATES, INC., ROBERT C. BRUCE,
Defendants.
__________________________________________
FOR PLAINTIFF-APPELLANT: TAMAR WEINRIB, Pomerantz Haudek
Grossman & Gross LLP, New York, NY.
FOR DEFENDANTS-APPELLEES: No appearance.
Appeal from a judgment of the United States District Court for the Southern
District of New York (Forrest, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
AFFIRMED in part and VACATED and REMANDED in part.
Appellant Acticon AG (“Acticon”) appeals from the district court’s denial of its
motion for a default judgment on the issue of damages in this action alleging
securities fraud. The district court granted default judgment to Acticon as to liability,
but denied it as to damages because it determined that Acticon had failed to submit
evidence of its individual damages and had submitted evidence only in connection
with a class certification motion as to class damages. The court also denied Acticon’s
motion for class certification as moot because it did not file its motion prior to the
entry of default judgment. We assume the parties’ familiarity with the underlying
facts, the procedural history of the case, and the issues on appeal.
We review rulings on class certification motions for abuse of discretion.
Central States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed
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Care, L.L.C. 504 F.3d 229, 244 (2d Cir. 2007). We also review a district court's
rulings on a motion for default judgment for abuse of discretion. D.H. Blair & Co. v.
Gottdiener, 462 F.3d 95, 107 (2d Cir. 2006). “A district court has abused its discretion
if it based its ruling on an erroneous view of the law or on a clearly erroneous
assessment of the evidence, or rendered a decision that cannot be located within the
range of permissible decisions.” Sims v. Blot, 534 F.3d 117, 132 (2d Cir. 2008)
(internal quotation marks, citations, and alterations omitted).
Upon review, we conclude that the district court abused its discretion by
denying as moot Acticon’s motion for class certification. The district court denied the
motion because it was filed too late, after the entry of default judgment. That was
error. As Acticon correctly notes, no default judgment had been entered prior to its
motion for class certification. Rather Acticon had requested and obtained a certificate
of default from the clerk of the court, but that was only the first step on the way to
obtaining a default judgment. See Fed. R. Civ. P. 55(a); Meehan v. Snow, 652 F.2d
274, 276 (2d Cir. 1981). A certificate of default is not the same as a default judgment,
which, in this case, was entered only after Acticon’s May 2016 motion.1
Nor can we affirm on the alternate ground suggested by the district court that
the defendants were prejudiced by the late motion. The district court reasoned that
1 To the extent that the district court’s opinion could be read to have misread Acticon’s February 8,
2016 request for entry of default under Federal Rule of Civil Procedure 55(a) as a motion for default
judgment under Rule 55(b) (and the Clerk’s subsequent issuing a certificate of default as a grant of
default judgment), rather than as misunderstanding the certificate of default as entering a default
judgment, we would still conclude that the district court erred in denying the class certification
motion. On that reading of the record, the district court’s denial of the class certification motion would
still have been based on a clearly erroneous premise (that plaintiff had unreasonably filed its class
certification long after moving for default judgment and receiving a “grant” of default judgment) and
thus constitute an abuse of discretion.
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the defendants lacked notice of a class action and were aware of a default only as to
the individual plaintiffs, not a certified class. That too was error. A motion for class
certification should “be denied [as untimely] only when the late timing of the
determination may cause prejudice or unduly complicate the case.” 7AA Wright &
Miller, Fed. Prac. & P. § 1785.3 (3d ed.); see Siskind v. Sperry Ret. Program, Unisys,
47 F.3d 498, 503 (2d Cir. 1995) (“[F]undamental fairness requires that a defendant
named in a suit be told promptly the number of parties to whom it may ultimately be
liable for money damages.”). As Acticon correctly argues, the defendants had ample
notice that the action was a putative class action because the caption and prayer for
relief in Acticon’s prior complaints indicated its intent to seek class status and
Acticon had filed two previous motions for class certification. Although the class was
never certified on the first two motions, neither motion was denied on the merits. The
first motion was denied as premature. The second motion was never decided by the
district court. The defendants, therefore, had sufficient notice that Acticon would
likely seek certification again following a second remand by this Court, and the
practice of filing a motion for class certification at that time was not so unexpected as
to prejudice the defendants.
We necessarily vacate the denial of damages as an abuse of discretion as well.
The district court denied Acticon damages because it had not submitted any evidence
of individual damages, and the court would not rely on the class damages because it
would “not entertain a belated class certification motion.” As discussed, however, the
district court erred when it denied the class certification motion. Because the district
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court denied individual damages in reliance on its refusal to consider the class
certification motion, we vacate its judgment as to the damages. On remand, the
district court should determine whether a class may be certified and, if so, what
damages are appropriate based on Acticon’s submissions.
Accordingly, we AFFIRM in part as to the district court’s determination of
liability and VACATE and REMAND in part as to the denial of Acticon’s class
certification motion on mootness grounds and as to the refusal to determine of
damages.
FOR THE COURT:
Catherine O=Hagan Wolfe, Clerk
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