Haberman #36897-177 v. Jackson National Life Insurance Company
OPINION; Judgment to issue; signed by Judge Janet T. Neff (Judge Janet T. Neff, clb)
UNITED STATES OF AMERICA
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
LAWRENCE ALAN HABERMAN,
Case No. 1:14-cv-88
Honorable Janet T. Neff
JACKSON NATIONAL LIFE
This is a civil action brought by a federal prisoner. The Court has granted Plaintiff
leave to proceed in forma pauperis. Under the Prison Litigation Reform Act, PUB. L. NO. 104-134,
110 STAT. 1321 (1996), the Court is required to dismiss any prisoner action brought under federal
law if the complaint is frivolous, malicious, fails to state a claim upon which relief can be granted,
or seeks monetary relief from a defendant immune from such relief. 28 U.S.C. § 1915(e)(2). The
Court must read Plaintiff’s pro se complaint indulgently, see Haines v. Kerner, 404 U.S. 519, 520
(1972), and accept Plaintiff’s allegations as true, unless they are clearly irrational or wholly
incredible. Denton v. Hernandez, 504 U.S. 25, 33 (1992). Applying these standards, Plaintiff’s
action will be dismissed for failure to state a claim.
Plaintiff Lawrence Alan Haberman presently is incarcerated at the Federal
Correctional Institute (FCI) in Marianna, Florida. Plaintiff sues Jackson National Life Insurance
Company, a Michigan corporation, for breach of fiduciary duty. The basis for jurisdiction in this
Court is diversity of citizenship under 28 U.S.C. § 1332.
Plaintiff alleges that on February 8, 2000 he contracted with Defendant to open an
annuity account. On November 15, 2007, Defendant received a grand jury subpoena issued by the
clerk of the United States District Court for the Northern District of Texas. The subpoena was sent
by an Assistant United States Attorney from the Northern District of Texas. The subpoena sought
production of “the contract history, purged diary, correspondence, and telephone recordings”
pertaining to Plaintiff’s annuity account. (Compl., docket #1, Page ID#4.) On December 6, 2007,
Defendant responded to the grand jury subpoena and produced the aforementioned records to a
member of the Drug Enforcement Administration (DEA).
Sometime later, Defendant received, via facsimile, a seizure warrant from the DEA
which demanded the full monetary value of Plaintiff’s annuity account. On December 3, 2007,
Defendant responded to the seizure warrant and sent the DEA a check in the amount of $87,100.77,
the full value of Plaintiff’s annuity at that time.
Plaintiff alleges that Defendant violated various sections of Title 15, Chapter 2D
regarding investment companies and advisers by responding to and relinquishing funds in
connection with an unlawful subpoena and seizure warrant. Plaintiff contends that Defendant should
not have complied with the subpoena because it was not legally valid as it originated in Texas, but
was served in Michigan via facsimile. Likewise, Plaintiff contends that Defendant should not have
complied with the seizure warrant because it was transmitted by facsimile. Finally, Plaintiff
contends that Defendant should not have complied with either the subpoena or the seizure warrant
because at the time Defendant complied, Plaintiff had not been charged with, or convicted of, a
crime but was merely in police detention.
Failure to state a claim
A complaint may be dismissed for failure to state a claim if it fails “‘to give the
defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While
a complaint need not contain detailed factual allegations, a plaintiff’s allegations must include more
than labels and conclusions. Twombly, 550 U.S. at 555; Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,
do not suffice.”). The court must determine whether the complaint contains “enough facts to state
a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 679. Although
the plausibility standard is not equivalent to a “‘probability requirement,’ . . . it asks for more than
a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 556). “[W]here the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged – but it has not ‘show[n]’ – that the
pleader is entitled to relief.” Iqbal, 556 U.S. at 679 (quoting FED. R. CIV. P. 8(a)(2)); see also Hill
v. Lappin, 630 F.3d 468, 470-71 (6th Cir. 2010) (holding that the Twombly/Iqbal plausibility
standard applies to dismissals of prisoner cases on initial review under 28 U.S.C. §§ 1915A(b)(1)
The basis of Plaintiff’s claim is that the subpoena that Defendant responded to
violated FED. R. CIV. P. 45(b)(2), thus making the subpoena invalid. Plaintiff contends that because
Defendant is in Lansing, Michigan, the subpoena issued by the Northern District of Texas, could
only lawfully be served within the state of Texas or within 100 miles of the place specified for the
production of documents, which was Fort Worth, Texas. Plaintiff then reasons that without valid
lawful justification, Defendant released “the contract history, purged diary, correspondence, and
telephone recordings” pertaining to Plaintiff’s annuity account in violation of 15 U.S.C. § 80b-4a1
which provides that:
Every investment adviser subject to section 80b-4 of this title shall establish,
maintain, and enforce written policies and procedures reasonably designed,
taking into consideration the nature of such investment adviser’s business,
to prevent the misuse in violation of this chapter or the Securities Exchange
Act of 1934 [15 U.S.C.A. § 78a et seq], or the rules or regulations
thereunder, of material, nonpublic information by such investment adviser or
any person associated with such investment adviser. The Commission, as it
deems necessary or appropriate in the public interest or for the protection of
investors, shall adopt rules or regulations to require specific policies or
procedures reasonably designed to prevent misuse in violation of this chapter
or the Securities Exchange Act of 1934 [15 U.S.C.A. § 78a et seq.], (or the
rules or regulations thereunder) of material, nonpublic information.
Additionally, Plaintiff alleges that Defendant’s allegedly unlawful release of his
annuity information violated 15 U.S.C. § 80b-6, which provides that:
Plaintiff alleges that Title 15, Chapter 2D regarding investment companies and advisers applies in this case
because Defendant qualifies as an investment company pursuant to 15 U.S.C. § 80a-3. The Court will assume, without
deciding, that Defendant is a covered investment company.
It shall be unlawful for any investment adviser, by use of the mails or any
means or instrumentality of interstate commerce, directly or indirectly-(1) to employ any device, scheme, or artifice to defraud any client or
(2) to engage in any transaction, practice, or course of business which
operates as a fraud or deceit upon any client or prospective client;
(3) acting as principal for his own account, knowingly to sell any security
to or purchase any security from a client, or acting as broker for a person
other than such client, knowingly to effect any sale or purchase of any
security for the account of such client, without disclosing to such client in
writing before the completion of such transaction the capacity in which he
is acting and obtaining the consent of the client to such transaction. The
prohibitions of this paragraph shall not apply to any transaction with a
customer of a broker or dealer if such broker or dealer is not acting as an
investment adviser in relation to such transaction; or
(4) to engage in any act, practice, or course of business which is fraudulent,
deceptive, or manipulative. The Commission shall, for the purposes of this
paragraph (4) by rules and regulations define, and prescribe means
reasonably designed to prevent, such acts, practices, and courses of business
as are fraudulent, deceptive, or manipulative.
Further, Plaintiff alleges that Defendant’s release of his annuity information violated
15 U.S.C. § 80b-18b, which states:
An investment adviser registered under this subchapter shall take such steps
to safeguard client assets over which such adviser has custody, including,
without limitation, verification of such assets by an independent public
accountant, as the Commission may, by rule, prescribe.
Lastly, Plaintiff alleges that Defendant’s release of his annuity information violated
15 U.S.C. § 6801, which states:
(a) Privacy obligation policy
It is the policy of the Congress that each financial institution has an
affirmative and continuing obligation to respect the privacy of its customers
and to protect the security and confidentiality of those customers’ nonpublic
(b) Financial institutions safeguards
In furtherance of the policy in subsection (a) of this section, each agency or
authority described in section 6805(a) of this title, other than the Bureau of
Consumer Financial Protection, shall establish appropriate standards for the
financial institutions subject to their jurisdiction relating to administrative,
technical, and physical safeguards-(1) to insure the security and confidentiality of customer records and
(2) to protect against any anticipated threats or hazards to the security
or integrity of such records; and
(3) to protect against unauthorized access to or use of such records or
information which could result in substantial harm or inconvenience
to any customer.
Plaintiff’s claims fail because none of the statutes that he alleges Defendant violated
allow for a private right of action for money damages.
The United States Supreme Court long ago held that “there exists a limited private
remedy under the Investment Advisers Act of 1940 [15 U.S.C. §80b-1 et seq.] to void an investment
advisers contract, but that the Act confers no other private causes of action, legal or equitable.
Transamerica Mortg. Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11, 24 (1979).
The Transamerica Mortgage Court considered whether a client could sue his
investment adviser for violating §§ 206 and 215 of the Investment Advisers
Act of 1940 (15 U.S.C. § 80b-1 et seq.). Section 206 of that Act proscribes
fraudulent conduct with a client (15 U.S.C. § 80b-6), and § 215 provides that
contracts made in violation of the Act are void. 15 U.S.C. § 80b-15. The
Court agreed with the plaintiff that these sections established a ‘federal
fiduciary standard’ governing the conduct of investment advisers and was
intended to benefit the advisers’ clients. Transamerica Mortgage, supra, 444
U.S. at 17, 100 S. Ct. at 246. The Act and its legislative history, however,
shed no light on the subject of private rights of action. The Court then
proceeded to analyze the two sections separately. As to § 215, which voids
fraudulent contracts, the Court observed that there must of necessity be a
forum to litigate the voidness issue; therefore, the section implicitly created
a private right of action for rescission, injunction, or restitution. Id. at 19, 100
S. Ct. at 247.
Section 206, proscribing the employment of ‘any device, scheme or artifice
to defraud,’ was a different matter. The Court observed that ‘it is an
elemental canon of statutory construction that where a statute expressly
provides a particular remedy or remedies, a court must be chary of reading
others into it.’ Id. Congress had provided several means of enforcing § 206,
including § 217 (criminal prosecution for violating § 206), § 209 (SEC
compliance action), and § 203 (SEC administrative sanctions). From these
remedies, the Court drew the inference that no private remedy had been
intended for violations of § 206: ‘In view of these express provisions, it is
highly improbable that ‘Congress absent-mindedly forgot to mention an
intended private action.’ ‘ Transamerica Mortgage, supra, 444 U.S. at 20,
100 S. Ct. at 247, quoting Cannon, supra, 441 U.S. at 742, 99 S. Ct. at 1981
(Powell, J. dissenting). Accord Touche Ross, supra, 442 U.S. at 574, 99 S. Ct.
at 2488 (where Congress has provided an explicit remedy, the Court is
reluctant to imply a ‘significantly broader’ remedy).
In re Fortune Sys. Sec. Litig., 604 F. Supp. 150, 154-55 (N.D. Cal. 1984).
With respect to 15 U.S.C. § 6801, courts considering the issue of whether § 6801
authorizes a private right of action have consistently held that it does not. See e.g., Wood v.
Greenberry Fin. Servs., Inc., 907 F. Supp. 2d 1165, 1186 (D. Haw. 2012) (holding that the GrammLeach-Biley Act (GLBA) 15 U.S.C. §§ 6801 et seq., does not provide for a private right of action);
Abdelfattah v. U.S. Dept. of Homeland Sec., 893 F. Supp. 2d 75, 83 (D.D.C. 2012) (noting that no
private right of action existed for an alleged violation of GLBA prohibiting financial institutions
from disclosing nonpublic personal information).
Accordingly, because Plaintiff cannot bring a private right of action for money
damages in connection with any of the provisions of Title 15 upon which he sues, Plaintiff’s claims
must be dismissed.2
It bears noting that contrary to Plaintiff’s assertion, Fed. R. Crim. P. 17 is not “substantially the same as Federal
Rule [sic] Civil Procedure Rule 45 which states that witnesses can only be subpoened [sic] who are located within 100
miles of the requested hearing for the requested relevant purpose of the court matter.” (Compl., docket #1, Page ID#11.)
Fed. R. Crim. P. 17 provides that grand a jury subpoena can be served “any place within the United States.”
Having conducted the review required by the Prison Litigation Reform Act, the Court
determines that Plaintiff’s action will be dismissed for failure to state a claim pursuant to 28 U.S.C.
The Court must next decide whether an appeal of this action would be in good faith
within the meaning of 28 U.S.C. § 1915(a)(3). See McGore v. Wrigglesworth, 114 F.3d 601, 611
(6th Cir. 1997). For the same reasons that the Court dismisses the action, the Court discerns no
good-faith basis for an appeal. Should Plaintiff appeal this decision, the Court will assess the
$505.00 appellate filing fee pursuant to § 1915(b)(1), see McGore, 114 F.3d at 610-11, unless
Plaintiff is barred from proceeding in forma pauperis, e.g., by the “three-strikes” rule of § 1915(g).
If he is barred, he will be required to pay the $505.00 appellate filing fee in one lump sum.
This is a dismissal as described by 28 U.S.C. § 1915(g).
A Judgment consistent with this Opinion will be entered.
Dated: May 5, 2014
/s/ Janet T. Neff
Janet T. Neff
United States District Judge
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