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. 

, 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, 

, 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, 

, 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, 

, 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,

, 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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