In Mandala v. NTT Data, Inc., No. 22-4 (2d Cir. Dec. 8, 2023), a 2-1 panel holds that the district court erred as a matter of law in applying Rule 60(b)(1) for post-judgment relief to a plaintiff’s motion seeking to reopen a case to correct a pleading deficiency, and abused its discretion by not applying the catchall Rule 60(b)(6).
Rule 60 permits relief from a judgment under five enumerated exceptions, including subsection (1), where there has been “mistake, inadvertence, surprise, or excusable neglect”; such a motion must be brought within one year. There is also a sixth, catchall provision for “any other reason that justifies relief” which may be filed within any “reasonable time,” unconstrained by the one-year limitations period.
In this case, plaintiffs brought a Title VII and state law class action against NTT Data. “The gist of the Title VII claim is that NTT’s blanket practice of refusing to employ people with felony convictions disproportionately harms Black applicants because Black people are arrested and incarcerated at higher rates than others.” The district court dismissed the action for failure to state a claim on the ground that it did not plausibly allege disparate impact on Black applicants, because the complaint did not allege “statistical disparity in the numbers of African- Americans arrested and convicted of crimes in proportion to their representative numbers in the pool of qualified applicants for [NTT’s] positions.”
A divided panel of the Second Circuit originally affirmed, Mandala v. NTT Data, Inc. (“Mandala II”), 975 F.3d 202 (2d Cir. 2020), and the full court divided 5-5 on whether to grant rehearing, 988 F.3d 664 (Mem.) (2d Cir. 2021) (“Mandala III”). The panel and en banc decisions elicited multiple concurring and dissenting opinions on the appropriate pleading standards for Title VII disparate impact cases.
“In March 2021, just a few weeks after in banc rehearing was denied, Plaintiffs moved the district court to vacate the judgment dismissing the Complaint under Federal Rule of Civil Procedure 60(b) and for leave to file a first amended complaint under Rule 15. Plaintiffs sought vacatur under Rule 60(b)(6). The district court, however, viewed the motion as being ‘premised on their own mistake, inadvertence, and neglect’—the specific grounds listed in Rule 60(b)(1).” And because the motion was filed more than year after judgment was entered, the district court denied the motion as untimely. “The court further held that, even if considered under Rule 60(b)(6), the motion would fail on the merits.”
The Second Circuit reverses. The panel majority begins by noting that “Rule 60(b)(1) and Rule 60(b)(6) are ‘mutually exclusive,’ such ‘that any conduct which generally falls under the former cannot stand as a ground for relief under the latter.’” Thus, if a motion for relief from judgment is fairly characterized as “mistake, inadvertence, surprise, or excusable neglect,” then it must proceed only under that section subject to the one-year limitations period.
The panel majority holds that the pleading deficiencies in this case did not fall within the Rule 60(b)(1) ambit. “[I]nsufficient pleading is not categorically a ‘mistake,’ and Plaintiffs’ belief that their Complaint satisfied the standards for pleading a disparate impact claim was well-founded, even if ultimately erroneous.” Prior to the contrary Second Circuit decision in Mandala II, “Plaintiffs reasonably could have assumed that they need not allege the persistence of disparate patterns of arrest and conviction among people seeking skilled employment, because even skilled persons are assumed to have lived life before becoming credentialed . . . . Moreover, as far as we can tell, no Second Circuit case decided prior to Plaintiffs’ suit had applied the standard requiring granular statistical comparators at the pleading stage of a Title VII disparate impact suit.”
“The circumstances distinguish this case from the typical Rule 60(b)(1) cases, which characteristically involve mistakes that amount to a fumble . . . . Plaintiffs’ decision to stand by a pleading deemed to be sufficient by several judges of this Court cannot seriously be considered a mistake within the meaning of Rule 60(b)(1) . . . . We therefore conclude that Plaintiffs’ motion to vacate the judgment of dismissal in order to file a first amended complaint cannot fairly be classified as falling within the scope of Rule 60(b)(1) rather than Rule 60(b)(6).”
Then, applying the catchall Rule 60(b)(6) standard of “any other reason that justifies relief,” the panel majority holds that the district court abused its discretion in denying plaintiffs leave to reopen the case and file a complaint that complied with the Second Circuit’s recently-declared pleading standards. “[O]n a post-judgment motion for vacatur and leave to amend [a complaint], ‘due regard’ must be given to both the ‘philosophy favoring finality of judgments and the expeditious termination of litigation,’ and the ‘liberal amendment policy of Rule 15(a).’”
The panel majority holds that the district court gave far too high a priority to finality. “Prior to the filing of the vacatur motion, Plaintiffs had neither requested nor been afforded a first opportunity to replead, and the district court had dismissed their Complaint under Rule 12(b)(6) with prejudice. Rather than weighing this posture as a factor that favors relief from judgment, the district court faulted Plaintiffs for failing to seek such relief earlier . . . . Second Circuit precedent makes clear, however, that the failure to seek leave to amend pre-judgment, standing alone, does not constitute undue delay or otherwise justify denying relief from judgment for a plaintiff seeking to file a first amended complaint.”
Moreover, “Plaintiffs diligently prosecuted their case at all times. Given the wording of the district court’s opinion on the motion to dismiss, Plaintiffs could have reasonably believed that it would have been impossible to cure the pleading deficiencies to the court’s satisfaction without discovery. The district court ruled that ‘general statistics are inadequate to show a relationship between the pool of applicants who are Caucasian versus African American[] and their respective rates of felony convictions,’ and ‘[t]he statistics Plaintiffs cite in the complaint do not indicate whether the individuals in the general population cited shared qualifications that would make them viable candidates for either of the positions offered to Plaintiffs’ . . . . The court gave no indication that this deficiency could be remedied through anything less than data corresponding to the actual characteristics of NTT’s employees—information known only to NTT.” Only after the Second Circuit’s opinions in Mandala II and III did the plaintiffs have sufficient guidance on the pleadings standard to amend their complaint.
Judge Sullivan (who wrote the majority opinion in Mandala II and a concurring opinion in Mandala III) dissents. “I cannot join the majority in holding that the district court abused its discretion in concluding that Plaintiffs’ motion was untimely pursuant to Rule 60(b)(1) and that Plaintiffs otherwise failed to identify extraordinary circumstances warranting relief pursuant to Rule 60(b)(6). More broadly, I fear that the majority’s decision will erode the finality of judgments throughout this Circuit, significantly undermine the important purposes served by Rule 60(b), and increase the workload of busy district court judges who carry the heaviest burden in our system of civil justice.”
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