Securities and Exchange Commission v. Blackburn et al
ORDER & REASONS denying 74 Defendants' Rule 56 Motion for Summary Judgment. Signed by Judge Carl Barbier on 8/12/15. (sek)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SECURITIES AND EXCHANGE
RONALD L. BLACKBURN, ET AL
ORDER & REASONS
Before the Court is a Rule 56 Motion for Summary Judgment
(Rec. Doc. 74) filed by Defendants Ronald Lee Blackburn, Andrew
V. Reid, Bruce Gwyn, and Michael A. Mulshine (“Defendants”) and
an opposition thereto (Rec. Doc. 82) filed by Plaintiff, the
Securities and Exchange Commission. Having considered the motion
and legal memoranda, the record, and the applicable law, the
Court finds that the motion should be DENIED.
FACTS AND PROCEDURAL BACKGROUND
investors and violate the antifraud, registration, and reporting
Defendant Treaty Energy Corporation, a publicly traded oil and
gas company. According to the SEC, Defendants Blackburn, Reid,
Gwyn, Mulshine, Schlesinger, and Whitley carried out this scheme
director; (2) engaging in a false promotional campaign intended
to artificially inflate Treaty’s stock price, including issuing
a January 2012 press release falsely claiming a major oil strike
Defendants reaped illicit profits of over $4.9 million.
On June 30, 2105, this case was transferred to this Court
from the Eastern District of Texas after Defendants, all but one
of whom reside in the Eastern District of Louisiana, moved to
transfer venue. Defendants filed the instant Rule 56 Motion for
Summary Judgment (Rec. Doc. 74) on July 28, 2015.
In support of their motion for summary judgment, Defendants
Securities Act or the Securities Exchange Act, but rather “[i]t
is about the abuse of the SEC’s investigative functions and the
failure of the SEC to disassociate itself from persons who were
referred to by Defendants as “tdbowkieknife bloggers” or “Treaty
malcontents.” (Rec. Doc. 74-1, p. 1) Although Defendants move
for summary judgment, they spend approximately eight pages of
their memorandum arguing that the Court should strike various
paragraphs and captions in the SEC Complaint pursuant to Federal
impertinent, and scandalous. (Rec. Doc. 74-1, pp. 10-18) The
remainder of Defendants’ memorandum argues that the Complaint
“woefully fails the test for specificity under Rule 9(b),” that
the allegations are nothing more than a “parroting of slander,”
subjected the Defendants to humiliation in violation of Rule of
Evidence 404 as well as “the rules of life.” (Rec. Doc. 74-1, p.
The substance of Defendants’ argument in support of their
motion for summary judgment begins on the last page of their
memorandum, after noting that they “will not belabor the issue.”
Defendants address the SEC’s claims in three paragraphs, each
phrase “That did not happen.” (Rec. Doc. 74-1, p. 25)
creating a genuine issue for trial, the SEC argues in opposition
that Defendants failed to meet their burden as movants because
they merely deny that the alleged violation occurred. (Rec. Doc.
82, p. 4) Furthermore, the SEC asks the Court to “disregard all
supported by a single citation to the evidence.” (Rec. Doc. 82,
Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.
R. Civ. P. 56(c)); Little v. Liquid Air Corp., 37 F.3d 1069,
1075 (5th Cir. 1994). When assessing whether a dispute as to any
material fact exists, the Court considers “all of the evidence
determinations or weighing the evidence.” Delta & Pine Land Co.
v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir.
nonmoving party, but a party cannot defeat summary judgment with
conclusory allegations or unsubstantiated assertions. Little, 37
reasonable jury could not return a verdict for the nonmoving
party.” Delta, 530 F.3d at 399.
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’” Int’l
Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263-64 (5th
defeat the motion by either countering with sufficient evidence
of its own, or “showing that the moving party’s evidence is so
sheer that it may not persuade the reasonable fact-finder to
return a verdict in favor of the moving party.” Id. at 1265.
party will bear the burden of proof at trial, the moving party
must “‘demonstrate the absence of a genuine issue of material
case.” Little, 37 F.3d at 1075 (quoting Celotex, 477 U.S. at
323). “If the moving party fails to meet this initial burden,
response. If the movant does, however, meet this burden, the
nonmovant must go beyond the pleadings and designate specific
facts showing that there is a genuine issue for trial.” Id.
doubt as to the material facts, by conclusory allegations, by
unsubstantiated assertions, or by only a scintilla of evidence.”
Id. (citations omitted) (internal quotation marks omitted).
summary judgment does not immediately compel the party opposing
the motion to come forward with evidence demonstrating material
issues of fact as to every element of its case. Russ v. Int'l
Paper Co., 943 F.2d 589, 591 (5th Cir. 1991). “Celotex makes
clear that before the nonmoving party is required to produce
first satisfy its obligation of demonstrating that there are no
factual issues warranting trial.” Russ, 943 F.2d at 592.
Of course, a party seeking summary judgment always
bears the initial responsibility of informing the
district court of the basis for its motion, and
admissions on file, together with the affidavits, if
any,” which it believes demonstrate the absence of a
genuine issue of material fact.
remains with the moving party even when the issue involved is
one on which the non-movant will bear the burden of proof at
trial. Id. Thus, “the movant must discharge the burden the Rules
place upon him: It is not enough to move for summary judgment
without supporting the motion in any way or with a conclusory
assertion that the plaintiff has no evidence to prove his case.”
Celotex, 477 U.S. at 328 (White, J., concurring); see also Ashe
v. Corley, 992 F.2d 540, 543 (5th Cir. 1993).
Rule 56(c) sets out the procedures for supporting factual
positions in a motion for summary judgment. A party asserting
assertion by: (A) citing to particular parts of materials in the
establish the . . . presence of a genuine dispute, or that an
adverse party cannot produce admissible evidence to support the
fact.” Fed. R. Civ. P. 56(c). Although the court may consider
other materials in the record, it need only consider the cited
attached to their motion for summary judgment: a petition for
damages filed in St. Tammany Parish against Blackburn, Treaty,
between an SEC staff attorney and two Immigration and Customs
Enforcement agents (Rec. Doc. 74-4); various comments posted on
an online blog referred to as InvestorHUB (Rec. Docs. 74-5, 746, 74-7); and an email chain between the Defendants’ attorney
and the SEC staff attorney (Rec. Doc. 74-8). Defendants also
quote multiple paragraphs of the SEC Complaint, mainly seeking
to have these portions stricken. (Rec. Doc. 74-1, pp. 10-18)
(Rec. Doc. 74-2)
Steel Corp., a Western District of Pennsylvania case vacated by
the United States Court of Appeals for the Third Circuit, for
the proposition that “the [SEC] owes a duty to the public . . .
to disassociate itself from persons who are knowingly abusing
process improperly. Id. at 566. On appeal, the Third Circuit
remanded the case because it was unclear from the district court
opinion whether it focused on the motives of the SEC, which is
the proper focus in a challenge to an administrative subpoena,
or whether the motives of third parties were relied upon. SEC v.
vacated opinion in Wheeling-Pittsburgh is misplaced; it provides
no support for the assertion that there is no genuine issue as
to any material fact and that the movant is entitled to judgment
as a matter of law.
Defendant’s devote a substantial portion of their brief to a
detailed discussion of “the need to purge the complaint,” in
which Defendants ask the Court to strike certain allegations
under Rule 12(f). A motion for summary judgment is the entirely
improper vehicle in which to raise this issue. Accordingly, the
Court will not consider this argument.
It is apparent that Defendants totally failed to satisfy
the movant’s burden as set out in Rule 56, Celotex, and Russ.
The Defendants’ motion for summary judgment failed to point out
an absence of proof on any factual issue. Similar to the motion
before the court in Ashe v. Corley, “the motion failed to raise
any factual issues at all, other than in the most conclusory
terms.” 992 F.2d at 544. A mere conclusory statement that the
allegations in the Complaint “did not happen” does not satisfy
the movant’s burden. As a result, the burden never shifted to
creating a genuine issue for trial, 1 and the Court must deny the
It should be noted, however, that the SEC “truly walked the razor's edge with
their response to the [Defendants’] motion.” Ashe, 992 F.2d at 544 n.5. If
the Defendants’ had satisfied their burden with respect to any essential
element of the SEC’s claims, the SEC’s response would have been completely
inadequate to prevent summary judgment. See id.
IT IS HEREBY ORDERED that Defendants’ Rule 56 Motion for
Summary Judgment (Rec. Doc. 74) is DENIED.
New Orleans, Louisiana this 12th day of August, 2015.
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
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