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Feathers v. Boudreau

United States District Court, N.D. California, San Jose Division

June 21, 2016



          RONALD M WHYTE United States District Judge

         Plaintiff Mark Feathers, proceeding pro se, brings a claim for judicial deception against defendant Roger D. Boudreau, an accountant for the Securities and Exchange Commission. Dkt. No. 1. Defendant moves to dismiss for lack of subject matter jurisdiction and failure to state a claim. Dkt. Nos. 8, 13. Plaintiff opposes the motion. Dkt. No. 11. The court heard oral argument on April 29, 2016. For the reasons set forth below, the court grants defendant’s motion to dismiss.

         I. BACKGROUND

         On June 21, 2012, the SEC filed an enforcement action against plaintiff and certain entities controlled by plaintiff. See SEC v. Small Bus. Capital Corp., Case No. 12-cv-03237-EJD, Dkt. No. 1. On the same day, the SEC moved ex parte for a temporary restraining order seeking, among other relief, to freeze plaintiff's assets and appoint a receiver. Id., Dkt. No. 5. The temporary restraining order was granted, and plaintiff later consented to entry of a preliminary injunction. Id., Dkt. Nos. 16, 29, 34. In support of its ex parte motion, the SEC submitted a declaration from Roger D. Boudreau, a senior accountant in the SEC’s enforcement division and the defendant in this case. Id., Dkt. No. 8.

         Plaintiff challenged the accuracy of defendant’s accounting and moved for sanctions against defendant during the course of the SEC enforcement action. See, e.g., Case No. 12-cv-03237-EJD, Dkt. Nos. 96, 126. Plaintiff’s motions for sanctions against defendant were denied. Id., Dkt. No. 272. The court subsequently granted summary judgment for the SEC and awarded injunctive and monetary relief. Id., Dkt. Nos. 591, 622. The SEC did not rely on Mr. Boudreau’s declaration in its motion for summary judgment or its motion for injunctive relief and monetary remedies. See Id . Dkt. Nos. 477, 602. Plaintiff’s appeals of these orders are pending. Id., Dkt. Nos. 593, 623.

         Plaintiff then challenged the accuracy of defendant’s accounting in a federal action against the United States. See Feathers v. United States, Case No. 5:15-CV-2194-PSG, Dkt. No. 1. Plaintiff’s complaint against the United States sought relief under the Federal Tort Claims Act, the Civil Rights Act, and the Privacy Act. Id. The court dismissed plaintiff’s tort claims, finding that the discretionary function exception of the FTCA deprived the court of subject matter jurisdiction. Id., Dkt. No. 30 at 6-7. The court dismissed plaintiff’s § 1983 claim for lack of subject matter jurisdiction based on sovereign immunity. Id. at 7-8. The court dismissed plaintiff’s Privacy Act claim relating to the release of information by the SEC for failure to state a claim. Id. at 8. Plaintiff amended his complaint to allege new constitutional causes of action against the United States based on “largely the same body of facts, ” but the court dismissed plaintiff’s constitutional claims for lack of subject matter jurisdiction, finding that plaintiff’s constitutional claims could not satisfy the requirements for waiver of sovereign immunity under the Administrative Procedures Act, under the FTCA, or through a Bivens action. Id., Dkt. No. 47 at 3, 5-6. The court denied plaintiff leave to amend, noting that plaintiff had “not suggested that further leave to amend would solve the difficulty of sovereign immunity.” Id. at 6. The court specifically noted that “amending his complaint to name the accountant would not allow Feathers to successfully present a Bivens claim, because the court previously found that Feathers’ injury was caused by the SEC’s decision to bring a civil enforcement action against him, not by the accountant’s alleged error.” Id.

         In this case, plaintiff appears to present a Bivens claim for “judicial deception” naming the SEC accountant.[1] The elements of a judicial deception claim are 1) an officer’s “deliberate falsehood or reckless disregard for the truth, ” and 2) the materiality of the dishonesty such that “but for the dishonesty, the challenged action would not have occurred.” See Butler v. Elle, 281 F.3d 1014, 1024 (9th Cir. 2002).[2]

         Here, plaintiff alleges that defendant was grossly reckless when he departed from accepted accounting practices, specifically by falsely labeling “his accounting charts, tables, and narratives with the public accounting reference of ‘distributions’ in his testimony, ” even though the labeled figures “were not actually distributions at all.” Id. ¶¶ 2-3, 7-8, 11. According to plaintiff, defendant’s accounting made it appear that plaintiff’s “investment funds were distributing more than twice the amount of capital distributions as they actually distributed.” Id. ¶ 14.

         According to plaintiff, defendant provided these false accountings “under oath, ” in his declaration, and the SEC incorporated defendant’s accountings throughout the complaint. Id. ¶¶ 2, 12. Plaintiff further alleges that defendant’s “false material accountings caused a wrongful seizure” of plaintiff’s assets when the court granted the temporary restraining order, thereby depriving plaintiff of “the ability to employ counsel and expert witnesses.” Id. ¶ 4. Plaintiff further alleges that the wrongful seizure resulted in plaintiff giving “uninformed consent” to the entry of the preliminary injunction. Id. ¶ 7. Plaintiff also claims harm to his reputation and loss of revenue, and seeks to represent the class “of all persons similarly situated and who suffered a loss from their investments” the entities controlled by plaintiff, “directly or indirectly.” Id. ¶¶ 32, 33, 26.[3]

         II. ANALYSIS

         Defendant moves to dismiss the complaint on four grounds: 1) the FTCA judgment bar, 2) res judicata, 3) absolute witness immunity, and 4) qualified immunity. Because the court finds that defendant is entitled to absolute witness immunity, the court does not reach the question of qualified immunity.

         A. Federal Tort Claims Act § 2676 Judgment Bar

         The FTCA provides limited waiver of sovereign immunity, permitting plaintiffs to seek damages for certain torts committed by federal employees. See 28 U.S.C. § 1346(b). The statute contains “Exceptions” to the waiver of sovereign immunity for certain categories of claims. See 28 U.S.C. § 2680. The statute also contains a “judgment bar, ” such that any judgment in an FTCA action “shall constitute a complete bar to any action by the claimant, by reason of the same subject matter, against the employee of the government whose act or omission gave rise to the claim.” 28 U.S.C. § 2676. In Feathers v. United States, the court dismissed plaintiff’s tort claims against the United States as barred by the “discretionary function” exception of the FTCA. See Case No. 5:15-CV-2194-PSG, Dkt. No. 30 at 6-7 (“The only plausible reality is that Feathers’ injuries were caused by the SEC’s decision to bring a civil enforcement action against him, not Boudreau’s accounting error. That decision by the SEC satisfies both elements of the discretionary function exception.”).

         Defendant argued in his motion to dismiss that plaintiff’s judicial deception claim is barred by the earlier dismissal of plaintiff’s tort claims. After the hearing on defendant’s motion, however, the Supreme Court held the judgment bar does not apply to suits that are dismissed as falling within one of the statutory “Exceptions” of the FTCA. See Simmons v. Himmelreich, No. 15-109, 2016 WL 3128838, at *5-7 (U.S. June 6, 2016) (concluding that plaintiff’s second suit against individual prison employees should be permitted to go forward where plaintiff’s first suit against the United States was dismissed based on FTCA’s discretionary function exception). Defendant conceded at ...

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