Derby Capital, LLC et al v. Trinity HR Services, LLC et al

Filing 40

MEMORANDUM OPINION & ORDER granting 30 Motion to Dismiss, Securities & Exchange Commission is dismissed as a defendant. Signed by Senior Judge Thomas B. Russell on 5/10/2013. cc:counsel (KJA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:12-CV-00850
DERBY CITY CAPITAL, LLC, et al.

Plaintiffs

v.
TRINITY HR SERVICES, et al.

Defendants

MEMORANDUM OPINION AND ORDER
This matter is before the Court upon the United States’ motion, on behalf of its
agency the Securities and Exchange Commission (SEC), to dismiss the complaint of
Plaintiffs Derby City Capital, LLC, and Derby Capital JOB, LLC, as to the SEC.
(Docket No. 30.) Plaintiffs have responded, (Docket No. 34), and the United States has
replied, (Docket No. 38). This matter is now ripe for adjudication. For the reasons that
follow, the United States’ Motion to Dismiss, (Docket No. 30), will be GRANTED.
BACKGROUND
Plaintiffs initially filed his action on December 21, 2012, (see Docket No. 1),
and thereafter filed an Amended Complaint on February 12, 2012, (see Docket No. 26).
Among the dozen named Defendants in Plaintiffs’ Amended Complaint is the SEC.
Plaintiffs lay out the role of the SEC in paragraph 12 of their Amended Complaint and
in the subparagraphs that follow state:
a. The Plaintiffs have included the SEC as a ‘nominal party’ in this
case for the purposes of enabling this federal agency to be
properly, promptly and formally advised regarding its enforcement
responsibilities as set forth by the facts, hereinafter.
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b. The Plaintiffs deem this inclusion as important and necessary in
order for the SEC to be fully aware of the nefarious activities that
have taken place during the operative events that are the subject of
this First Amended and Verified Complaint and have been
orchestrated by the various Defendants during the series of
transactions hereinafter set forth.
(Docket No. 26, at 14.) The SEC is not otherwise mentioned in Plaintiffs’ Amended
Complaint, either in the numbered counts or in the prayer for relief. (See Docket No.
26, at 46-66.) The United States now moves, pursuant to Fed. R. Civ. P. 12(b)(1), to
dismiss Plaintiffs’ complaint as to the SEC for lack of subject-matter jurisdiction.
STANDARD
Federal Rule of Civil Procedure 12(b)(1) provides that a party may file a motion
to dismiss for lack of subject-matter jurisdiction. “Subject matter jurisdiction is always
a threshold determination,” Am. Telecom Co. v. Republic of Lebanon, 501 F.3d 534, 537
(6th Cir. 2007) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998)),
and “may be raised at any stage in the proceedings,” Shultz v. Gen. R.V. Ctr., 512 F.3d
754, 756 (6th Cir. 2008). Where subject matter jurisdiction is challenged pursuant to
Rule 12(b)(1), the plaintiff bears the burden of proving jurisdiction in order to survive
the motion. Moir v. Greater Cleveland Reg’l Transit Auth., 895 F.2d 266, 269 (6th Cir.
1990) (citing Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir. 1986)); see also
DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir. 2004). “If the court determines at
any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”
Fed. R. Civ. P. 12(h)(3); see also Bauer v. RBX Indus. Inc., 368 F.3d 569 (6th Cir. 2004).

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DISCUSSION
The United States argues that the Court lacks subject matter jurisdiction to
entertain Plaintiffs’ complaint relative to the SEC because the United States and, by the
extension, the SEC are immune from suit under the doctrine of sovereign immunity. 1
(Docket No. 30-1, at 2-3.) The Court agrees.
Generally, the United States is immune from suit unless it consents to be sued,
“and the terms of its consent to be sued in any court define that court’s jurisdiction to
entertain suit.” United States v. Mitchell, 445 U.S. 535, 538 (1980) (quoting United
States v. Sherwood, 312 U.S. 584, 586 (1941)). The Sixth Circuit, in the context of
sovereign immunity, holds to a narrow view of consent: “The United States can be sued
only when it has expressly given its consent to be sued. The waiver must be express,
clear and unequivocal. Further, the language of any waiver of sovereign immunity is
strictly construed in favor of the United States.” Reed v. Reno, 146 F.3d 392, 398 (6th
Cir. 1998) (internal quotation marks and citations omitted). Absent such a waiver, the
sovereign immunity enjoyed by the United States extends to agencies of the federal
government—such as the SEC—and thereby shields those agencies from suit. F.D.I.C.
v. Meyer, 510 U.S. 471, 475 (1994); Whittle v. United States, 7 F.3d 1259, 1262 (6th Cir.
1993). As with the burden of establishing subject-matter jurisdiction, it is a plaintiff’s
burden to: “identify a waiver of sovereign immunity in order to proceed against the
1

The United States further contends that “[t]he SEC was not served with a copy of the amended
complaint” as required by Fed. R. Civ. P. 4(i). (Docket No. 30-1, at 1.) To this end, the United States
urges that this action should be dismissed under Rule 4(m) because “more than 120 days have passed
since the filing of this action [and] it is clear from plaintiffs’ response that they have no intention of
effecting proper service under the Rule.” (Docket No. 38, at 4.) Because the Court finds the issue of
subject-matter jurisdiction dispositive, it need not address further the United States’ position in this
regard.

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United States.

If [it] cannot identify a waiver, the claim must be dismissed on

jurisdictional grounds.” Reetz v. United States, 224 F.3d 794, 795 (6th Cir. 2000) (citing
Dalehite v. United States, 346 U.S. 15, 30 (1953)).
Plaintiffs state in their Response that “Plaintiffs believe that the SEC has a
mandatory and statutory duty to be a party to litigation (public or private) where there
is a Verified Complaint attesting to violations of the federal statutes the S.E.C. is
mandated to enforce.”

(Docket No. 34, at 6 (emphases in original).)

however, cite no authority for this proposition.

Plaintiffs,

Moreover, despite surveying an

assortment of topics, Plaintiffs’ Response in no way addresses the United States’
challenge to subject-matter jurisdiction.

Plaintiffs make no argument whatsoever

relative to any waiver of sovereign immunity and, thus, make no argument why this
Court may exercise subject-matter jurisdiction over the SEC. 2 Accordingly, Plaintiffs
have not met their burden of identifying a waiver of sovereign immunity, see Reetz, 224
F.3d at 795, and therefore have not met their burden of proving jurisdiction in order to
survive the United States’ Rule 12(b)(1) motion, see Moir, 895 F.2d at 269. For these
reasons, the Court finds that it lacks subject-matter jurisdiction over the SEC and that
Plaintiffs’ complaint as to the SEC must be dismissed.

2

In fact, neither the terms “waiver” nor “subject-matter jurisdiction” nor “immunity” appear
anywhere in Plaintiffs’ Response. (See Docket No. 34.)

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CONCLUSION
Having considered the parties’ respective arguments, and being otherwise
sufficiently advised, for the reasons set forth above;
IT IS HEREBY ORDERED that the United States’ Motion to Dismiss,
(Docket No. 30), is GRANTED, and Plaintiffs’ complaint is DISMISSED with
prejudice as to the SEC.
IT IS SO ORDERED.
Date:

cc:

May 10, 2013

Counsel
AUSA

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