Flynn v. NFS et al
Filing
31
ORDER granting 10 MOTION to Dismiss; denying 4 MOTION to Reopen; denying 17 MOTION to Consolidate; denying 27 MOTION for Discovery; denying 29 MOTION for Default Judgment; and denying 30 MOTION for Deposition. Signed by Judge Stefan R. Underhill on 12/15/2016. (Jamieson, K)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
JOHN J. FLYNN,
Plaintiff,
No. 3:16-cv-01365 (SRU)
v.
NFS, et al.,
Defendants.
RULING AND ORDER
Plaintiff John J. Flynn filed this action in Connecticut Superior Court against two
Securities and Exchange Commission (SEC) officials; NFS (a/k/a National Financial Services,
LLC); Fiserv, Inc.; and Fidelity Brokerage Services, LLC; Connecticut State’s Attorney Richard
Colangelo; and George Malley. Flynn’s claims against all defendants other than the federal
officials were dismissed or resolved against him by the Connecticut state court. With respect to
the remaining defendants—the SEC officials—Flynn claims that they (i) violated the Racketeer
Influenced and Corrupt Organization Act (RICO), 18 U.S.C. § 1961 et seq., by way of a
conspiracy to defraud him; (ii) denied his civil and constitutional rights; and (iii) committed
various torts against him.
The United States removed the case to this court, and now moves to dismiss on behalf of
the federal defendants pursuant to Federal Rules of Civil Procedure 12(b)(1), (3), (4), (5), and
(6).1 The United States argues that Flynn’s complaint must be dismissed for lack of subject
1
Federal Rule of Civil Procedure 12(b) provides in pertinent part:
[A] party may assert the following defenses by motion:
1) lack of subject matter jurisdiction;
...
3) improper venue;
4) insufficient process;
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matter jurisdiction, improper venue, insufficient process, insufficient service of process, and
failure to state a claim upon which relief can be granted. For the following reasons, the motion to
dismiss is granted.
I.
Standard of Review
“A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1)
when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v.
United States, 201 F.3d 110, 113 (2d Cir. 2000). The court must “[c]onstrue all ambiguities and
draw[] all inferences in [the plaintiff]’s favor,” and “may refer to evidence outside the
pleadings.” Id. “A plaintiff asserting subject matter jurisdiction has the burden of proving by a
preponderance of the evidence that it exists.” Id. (citing Malik v. Meissner, 82 F.3d 560, 562 (2d
Cir. 1996)). “When an action is brought against the United States government, compliance with
the conditions under which the government has agreed to waive sovereign immunity is necessary
for subject matter jurisdiction to exist. Accordingly, the statute of limitations may operate in suits
against the United States . . . [to] deprive a court of subject matter jurisdiction over an action that
is not timely filed.” Williams v. United States, 947 F.2d 37, 39 (2d Cir. 1991).
The Second Circuit has encouraged courts to “consider[] jurisdiction . . . questions first”
before determining whether a complaint states a claim upon which relief can be granted. See
Arrowsmith v. United Press Internat’l, 320 F.2d 219, 221 (2d Cir. 1963). I hold that Rule
12(b)(1) requires dismissal of Flynn’s complaint, and therefore do not reach the United States’
arguments under Rules 12(b)(3), (4), (5), and (6).
5) insufficient service of process; [and]
6) failure to state a claim upon which relief can be granted . . . .
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II.
Background
On December 2, 2014, John Flynn filed a pro se complaint in Connecticut Superior Court
against two SEC officials, Al Lapins and Jack Hardy; NFS (a/k/a National Financial Services,
LLC); Fiserv, Inc.; Fidelity Brokerage Services, LLC; Connecticut State’s Attorney Richard
Colangelo; and George Malley. Flynn’s claims against all defendants other than the SEC
officials were dismissed or resolved against him by the Superior Court.2 Thereafter, on August
11, 2016, the United States removed Flynn’s suit to federal court pursuant to 28 U.S.C. §
1442(a)(1), which permits removal of actions against the “United States or any agency thereof or
any officer . . . of the United States or of any agency thereof.” See Notice of Removal, Doc. No.
1. The United States attached to its notice of removal a certification that stated the SEC officials
were acting within the scope of their employment at the time of the alleged conduct. See
Certification, Doc. No. 1-4. As a result, the United States has been substituted as defendant for
the SEC officials by operation of law. See 28 U.S.C. § 2679(d)(2); see also Farmer v. Perrill,
275 F.3d 958, 963 (10th Cir. 2001) (“[A]ny action that charges such an official with wrongdoing
while operating in his or her official capacity as a United States agent operates as a claim against
the United States.”).
Flynn’s complaint alleges that he lost control of his investment business, Greenwich
Global LP (GGLP), and its assets, as a result of the defendants’ conduct. Flynn’s claims against
the United States through its officials are threefold. First, he alleges violations of RICO, 18
U.S.C. § 1961 et seq. See Compl., Doc. No. 10-2, at 2. Flynn states that “[t]he SEC knowingly
gave control of GGLP to a criminal enterprise promising to ruin Flynn financially. The SEC
2
The Superior Court granted a motion to strike by Colangelo on July 31, 2015; a motion for
summary judgment by Malley on December 21, 2015; and a motion to dismiss by NFS, Fiserv,
and Fidelity Brokerage Services on April 11, 2016.
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encouraged the looting of substantially all GGLP accounts.” Id. at 34. Flynn also asserts that the
SEC “allowed the [National Association of Securities Dealers, or] NASD directive,” id., and
“allowed for . . . unauthorized trades, theft, and money laundering.” Id.
Flynn also makes civil rights and constitutional claims, alleging that the “SEC
discriminated against Flynn,” id. at 10, “den[ied] Flynn basic civil rights to property” and
“violated Flynn’s due process rights.” Id. at 34. He contends that the SEC failed to answer or
“covered up” 220 complaints that Flynn filed, id. at 16, 20, 25, 28; “illegally extended
immunity” to private parties that violated his civil rights, id. at 26; and ignored a court order
regarding him. Id.
Finally, Flynn claims that the SEC committed torts, including: misrepresentation, id. at 5
(“SEC examiners falsely claimed to be investigating for 6 years.”), 24 (“Al Lapins false[ly]
claimed to be investigating. . . . Jack Hardy . . . falsely claimed to investigate the money
laundering”), 34; fraud, id. at 5, (“falsified a complaint”), 6 (“SEC falsified an investigation for
more than 10 years”), 9 (“SEC made false statements”), 34; assault, id. at 6 (“security personnel
of the SEC threatened the Plaintiff with bodily injury”), 11 (“Plaintiff reported threats were made
from a non-working number at the [SEC]”), 34 (threats); and theft, id. at 26 (“Al Lapins robbed
GGLP’s CRD deposit account.”), 34 (“SEC . . . stole GGLP’s assets”).
III.
Discussion
A. Sovereign Immunity
The doctrine of sovereign immunity holds that “the United States is immune from suit
except to the extent the government has waived its immunity.” Coulthurst v. United States, 214
F.3d 106, 108 (2d Cir. 2000). A waiver of sovereign immunity “must be unequivocally expressed
in the statutory text . . . and will not be implied.” Lane v. Pena, 518 U.S. 187, 192 (1996).
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RICO does not contain an express waiver of sovereign immunity. See 18 U.S.C. § 1962
et seq. Moreover, the United States has not waived sovereign immunity for damages suits based
on claims that federal employees violated the Constitution. FDIC v. Meyer, 510 U.S. 471, 477–
78, 483–86 (1994). Thus, Flynn’s RICO and constitutional claims are barred by sovereign
immunity. See Kentucky v. Graham, 473 U.S. 159, 167 (1985); McLean v. Obama, No. 15-cv-8,
2015 WL 3966426, at *2 (E.D. La. June 30, 2015) (“[E]very court to address the issue has found
that the Federal Government and its employees are immune from suit under the civil RICO
statute.”). I therefore hold that both Flynn’s RICO and his constitutional claims must be
dismissed for lack of subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1).
B. Statute of Limitations and Failure to Exhaust
As for Flynn’s common law tort claims, the United States has waived sovereign
immunity for some tort suits under the Federal Tort Claims Act (FTCA), see 28 U.S.C. § 1346,
but the FTCA bars lawsuits “unless the claimant shall have first presented the claim to the
appropriate Federal agency and his claim shall have been finally denied by the agency in writing
and sent by certified or registered mail,” 28 U.S.C. § 2675(a). This “administrative exhaustion
requirement is jurisdictional.” Rosario v. Brennan, No. 3:15CV1440 (JBA), 2016 WL 3525340,
at *5 (D. Conn. June 22, 2016); see also McNeil v. United States, 508 U.S. 106, 113 (1993)
(holding that exhaustion requirement contained in Section 2675(a) is jurisdictional). Flynn does
not allege that he presented his tort claims to the SEC for administrative relief, and thus, I lack
jurisdiction to hear his case under the FTCA.
Even if Flynn had exhausted, the FTCA provides a statutory bar for claims of intentional
mistreatment. The FTCA expressly precludes recovery on any claim arising out of “assault,
battery, . . . malicious prosecution, abuse of process, . . . misrepresentation, deceit, or
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interference with contract rights.” 28 U.S.C. § 2680(h). “Through that exception, the United
States retained sovereign immunity with respect to said intentional torts regarding economic or
financial interests,” as well as intentional torts regarding assault, battery, malicious prosecution,
and abuse of process. See Gonzalez v. United States, No. 3:13-cv-650 (CSH), 2014 WL 3738179,
at *5 (D. Conn. July 29, 2014) (dismissing pro se complaint). Flynn’s claims fall squarely within
the excepted categories, and are statutorily barred by the FTCA.
Finally, even if Flynn had exhausted and the statutory bar did not apply, I would dismiss
Flynn’s claims as falling outside the statute of limitations. Flynn asserts injuries by the federal
officials based on conduct that began more than a decade ago, and occurred primarily if not
exclusively in Washington, D.C. See Compl., Doc. No. 10-2, at 2–3, 8. The statute of limitations
in both Connecticut and Washington, D.C. for tort actions is three years. Conn. Gen. Stat. § 52577; D.C. Code § 12-301(8). Flynn alleges that he knew of, and reported, fraudulent transaction
and assets stolen from his securities firm as early as 2000. See Compl., Doc. No. 10-2, at 9, 12.
This injury to his business is when the statute of limitations began to run. Because Flynn’s
claims therefore are barred by the three-year state statutes of limitations applicable to common
law tort actions, I lack subject matter jurisdiction and dismiss Flynn’s complaint pursuant to Rule
12(b)(1). See Williams, 947 F.2d at 39 (“[T]he statute of limitations may operate in suits against
the United States . . . [to] deprive a court of subject matter jurisdiction over an action that is not
timely filed.”).3
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The statute of limitations for civil RICO claims is four years, a period that “begins to run when
the plaintiff discovers or should have discovered the RICO injury.” Agency Holding Corp. v.
Malley-Duff & Assocs., 483 U.S. 143, 156 (1987); In re Merrill Lynch Ltd. P’ships Litig., 154
F.3d 56, 58 (2d Cir. 1998) (per curiam). Thus, Flynn’s RICO claims could also be dismissed for
lack of subject matter jurisdiction on the basis of the statute of limitations.
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IV.
Conclusion
For the above reasons, the United States’ motion to dismiss for lack of subject matter
jurisdiction [Doc. No. 10] is GRANTED. Flynn’s motion to reopen [Doc. No. 4], motion to
consolidate [Doc. No. 17], motion for discovery [Doc. No. 27], motion for default judgment
[Doc. No. 29], and motion for deposition [Doc. No. 30] are DENIED. The Clerk is directed to
enter judgment for the defendants and close the case.
So ordered.
Dated at Bridgeport, Connecticut, this 15th day of December 2016.
/s/ STEFAN R. UNDERHILL
Stefan R. Underhill
United States District Judge
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