HARTZMAN v. WELLS FARGO & COMPANY

Filing 35

MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 03/19/2015. Plaintiff has shown a basis to permit (at least in part) his proposed further amendment of his Amended Complaint, but has failed to show any basis for his Motion to Seal or his Motions to Compel. IT IS THEREFORE ORDERED that Plaintiff's Motion for Leave to File an Amended Complaint (Docket Entry 24 ) is GRANTED IN PART AND DENIED IN PART and that, on or before April 1, 2015, Plaintiff s hall file his proposed Amended Complaint (Docket Entry 24 -1) as a Second Amended Complaint, but without the addition of John Stumpf or Robert Steel as Defendants or the inclusion of any causes of action beyond his claim of retaliation related to the Sarbanes-Oxley Act. Plaintiff's filing of a Second Amended Complaint will render moot Defendant's Motion to Dismiss (Docket Entry 19 ). FURTHER that, if Plaintiff timely files his Second Amended Complaint as outlined above, De fendant shall, on or before April 20, 2015, respond to Plaintiff's Second Amended Complaint. FURTHER that the Clerk shall strike the unredacted version of the Sanchez Report (Docket Entry 26 ) and that Plaintiff's Motion to Seal Document (Docket Entry 22 ) is DENIED AS MOOT. FURTHER that Plaintiff's Motions to Compel (Docket Entries 31 , 32 ) are DENIED.(Taylor, Abby)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

GEORGE HARTZMAN,
Plaintiff,
v.
WELLS FARGO & COMPANY,
Defendant.

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1:14CV808

MEMORANDUM OPINION AND ORDER
This case comes before the Court on Plaintiff’s Motion to Seal
Document (Docket Entry 22), Plaintiff’s Motion for Leave to File an
Amended Complaint (Docket Entry 24), and Plaintiff’s Motions to
Compel (Docket Entries 31, 32).

For the reasons that follow, the

Court will deny as moot Plaintiff’s Motion to Seal, will grant in
part and deny in part Plaintiff’s Motion to Amend,1 and will deny
Plaintiff’s Motions to Compel.

1

For reasons stated in Deberry v. Davis, No. 1:08CV582, 2010
WL 1610430, at *7 n.8 (M.D.N.C. Apr. 19, 2010) (unpublished), the
undersigned Magistrate Judge will enter an order, rather than a
recommendation as to Plaintiff’s Motion to Amend. See also Everett
v. Prison Health Servs., 412 F. App’x 604, 605 & n.2 (4th Cir.
2011) (“[The plaintiff] moved for leave to amend her complaint
. . . to add . . . a defendant . . . and to add a state-law claim
of medical malpractice against [that new defendant].
After a
hearing, the magistrate judge denied [that] motion.
[The
plaintiff] timely objected, thereby preserving the issue for review
by the district court. . . . [T]he district court could not modify
or set aside any portion of the magistrate judge’s order unless the
magistrate judge’s decision was ‘clearly erroneous or contrary to
law.’ Fed. R. Civ. P. 72(a); 28 U.S.C.A. § 636(b)(1)(A) (2006 &
Supp. 2010).”).

I.
Plaintiff

commenced

BACKGROUND

this

action

by

filing

a

four-page

Complaint alleging that Defendant, his former employer, retaliated
against

him

for

reporting

Defendant’s

allegedly

fraudulent

practices in violation of a whistleblower provision within the
Sarbanes-Oxley Act, codified at 18 U.S.C. § 1514A(b).
Entry 1 at 1.)

(See Docket

Plaintiff subsequently filed a Supplement to that

Complaint, which includes approximately 50 pages of attachments
containing

additional

correspondence

concerning

administrative proceeding.
attachments.)

Defendant

factual

allegations,

his

related

charts,

Department

of

and
Labor

(See Docket Entry 8 and its various
then

moved

to

dismiss

the

Amended

Complaint (Docket Entry 19), contending that “there are no facts
alleged in the Complaint that, under any interpretation, satisfy
the pleading requirements of Twombly and Iqbal.

The Complaint is

completely devoid of any allegation that would reasonably inform
[Defendant], or any other reader, of the factual basis for any
claim that [Plaintiff] may be trying to assert” (Docket Entry 20 at
8).
Plaintiff, in an apparent effort to provide such factual
matter, sought leave to amend his pleading a second time.

(Docket

Entry

Amended

24.)

Accordingly,

Plaintiff’s

proposed

Second

Complaint consists of over 140 pages which reflect a jumble of
factual allegations, charts, correspondence, and website links to

-2-

news articles.

(See Docket Entry 24-1 at 1-143.)

Defendant

responded in opposition to amendment, on grounds of futility
(Docket Entry 29), and Plaintiff replied (Docket Entry 30).
In

connection

Plaintiff

also

attachment

to

Defendant’s

with

sought
the

to

Second

contention

confidential.

Plaintiff’s
file

under

Amended
that

instant
seal

Motion
a

Complaint,

said

(Docket Entry 22 at 1-2.)

document
in

document

to

Amend,
as

keeping

should

an

with

remain

In response, the Court

entered a Text Order directing Plaintiff to supplement his Motion
to Seal according to the requirements of Local Rule 5.4.
Order dated Dec. 1, 2014.)

(Text

Plaintiff filed a Supplement (Docket

Entry 23), to which Defendant responded (Docket Entry 25), and
Plaintiff replied (Docket Entry 28).
In

addition,

Motions to Compel.

Plaintiff

submitted

two

(Docket Entries 31, 32.)

documents

entitled

Those Motions seek

the recusal of various individuals - including SEC Chair Mary Jo
White and Attorney General Eric Holder - who have no apparent
involvement in this case.

(See Docket Entry 31 at 1; Docket Entry

32 at 1.) Defendant then responded in opposition (Docket Entry 33)
and Plaintiff replied (Docket Entry 34).
II.
A.

DISCUSSION

Plaintiff’s Motion to Amend
Plaintiff requests leave to amend “to add Defendants and

refine

claims

of

harms

suffered

-3-

from

[D]efendants’

behavior

described

in

the

[C]omplaint.”

(Docket

Entry

24

at

1.)

Specifically, Plaintiff’s First Amended Complaint names only “Wells
Fargo” as a Defendant (Docket Entry 8 at 1), whereas his proposed
Second Amended Complaint seeks to proceed against “Wells Fargo &
Company or one or more of its direct or indirect subsidiaries”
(Docket Entry 24-1 at 1), as well John Gerard Stumpf (current
Chairman and CEO of Defendant Wells Fargo) and Robert King Steel
(former CEO of Wachovia prior to its sale to Defendant Wells Fargo)
(id.

at

8-9).

identifies

21

Plaintiff’s
additional

Second

purported

Amended
claims

Complaint
(not

further

including

his

Sarbanes-Oxley whistleblower claim) against Defendant, ranging from
criminal offenses (such as, bank fraud and perjury), to a provision
concerning fiduciary responsibilities under ERISA (the Employee
Retirement Income Security Act), to an action for deprivation of
rights under 42 U.S.C. § 1983.
Defendant

opposes

amendment

(See Docket Entry 24-1 at 140-42.)
on

grounds

of

futility,

because,

according to Defendant, the Second Amended Complaint fails to state
a claim.

(Docket Entry 29 at 1-7.)2

2

Defendant, in a footnote, asserts that amendment “is also
improper because it is advanced in response to [Defendant’s]
[M]otion to [D]ismiss.” (Docket Entry 29 at 7 n.2.) In support,
Defendant cites this Court’s prior observation that “courts look
disfavorably on motions to amend brought for the purpose of
circumventing dispositive motions,” Googerdy v. North Carolina
Agric. & Technical State Univ., 386 F. Supp. 2d 618, 623 (M.D.N.C.
2005) (Osteen, Sr., J.). (See Docket Entry 29 at 7 n.2.) In that
case, the Court discussed motions to amend brought in bad faith,
often after substantial and unreasonable delay, see id.,
(continued...)
-4-

Given Defendant’s refusal of consent, Plaintiff “may amend its
pleading only with . . . the [C]ourt’s leave.

The [C]ourt should

freely give leave when justice so requires.”
15(a)(2).

Fed. R. Civ. P.

Under this standard, the Court has discretion, “but

outright refusal to grant the leave without any justifying reason
appearing for the denial is not an exercise of discretion.”
v. Davis, 371 U.S. 178, 182 (1962).

Foman

Accordingly, “the federal

rules strongly favor granting leave to amend.”

Medigan of Ky.,

Inc. v. Pub. Serv. Comm’n, 985 F.2d 164, 167-68 (4th Cir. 1993).
Furthermore, as the Fourth Circuit has noted, “[t]he law is well
settled ‘that leave to amend a pleading should be denied only when
the amendment would be prejudicial to the opposing party, there has
been bad faith on the part of the moving party, or the amendment
would be futile.’”

Edwards v. City of Goldsboro, 178 F.3d 231, 242

(4th Cir. 1999) (quoting Johnson v. Oroweat Foods Co., 785 F.2d
503, 509 (4th Cir. 1986)) (emphasis in original).
“An amendment would be futile if the amended claim would fail
to survive a motion to dismiss for failure to state a claim
pursuant to Federal Rule of Civil Procedure 12(b)(6).”

Syngenta

Crop Prod., Inc. v. EPA, 222 F.R.D. 271, 278 (M.D.N.C. 2004)

2

(...continued)
circumstances not present here.
In that regard, Defendant’s
argument fails to distinguish motions to amend filed in response to
a motion to dismiss from such motions filed to circumvent a motion
to dismiss. Moreover, under the circumstances presented, the Court
declines to find any bad faith.
-5-

(Tilley, C.J.).

A plaintiff fails to state a claim when the

complaint does not “contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations
omitted) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).

“Where

a

complaint

pleads

facts

that

are

‘merely

consistent with’ a defendant’s liability, it ‘stops short of the
line

between

relief.’”

possibility

and

plausibility

of

‘entitlement

to

Id. (quoting Twombly, 550 U.S. at 557).

This standard “demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.”

Id.

In other words, “the tenet

that a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions.

Threadbare

recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.”

Id.

“Leave to amend,

however, should only be denied on the ground of futility when the
proposed amendment is clearly insufficient or frivolous on its
face.”

Johnson, 785 F.2d at 510 (citing Davis v. Piper Aircraft

Corp., 615 F.2d 606, 613 (4th Cir. 1980)).
As an initial matter, Plaintiff’s proposed Second Amended
Complaint appears to test the limits of the Federal Rules of Civil
Procedure’s requirements that a complaint must contain “a short and
plain statement of the claim showing that the pleader is entitled
to relief,” Fed. R. Civ. P. 8(a)(2), and that “[e]ach allegation

-6-

must be simple, concise, and direct,” Fed. R. Civ. P. 8(d)(1).
“While the Court must bear in mind that Rule 8 does not require
technical forms of pleading or motions and that the pleadings
submitted by parties proceeding pro se are to be viewed especially
liberally, the Court is also mindful that [] [D]efendant must be
provided notice of the claims against [it] so that [it] may prepare
a defense.”

Jenkins v. Trustees of Sandhills Cmty. Coll., Nos.

1:99CV664, 1:00CV166, 2002 WL 31941503, at *5 (M.D.N.C. Dec. 3,
2002) (unpublished) (Tilley, C.J.) (internal citation and quotation
marks omitted).
In this case, Plaintiff first filed a reasonably concise
Complaint (see Docket Entry 1), which then ballooned in size and
complexity as Plaintiff attempted to add sufficient factual support
to survive a motion to dismiss (see Docket Entry 24-1).

In that

regard, Plaintiff appears to have acted in good faith in seeking
amendment.

Although Defendant raises the issue of length and

clarity in response to the instant Motion (see Docket Entry 19 at
5), it does not argue that Rule 8 provides a basis to deny
amendment

(see

id.

at

1-7).

Given

these

circumstances,

particularly the absence of bad faith on Plaintiff’s part, the
Court concludes that Rule 8 should not bar amendment in this case.
Moreover, Plaintiff’s proposed Second Amended Complaint - as
it concerns Plaintiff’s Sarbanes-Oxley whistleblower claim - does
not

appear

“clearly

insufficient

-7-

or

frivolous

on

its

face,”

Johnson, 785

F.2d

at

510.

In

opposing

amendment,

Defendant

principally contends that the proposed Second Amended Complaint
“simply repeats (at length) the same outlandish and implausible
conspiracy theories of his first two complaints [and] [i]t alleges
no facts indicating that [Plaintiff] had a reasonable and objective
basis for believing that any laws were being or had been violated
to support his alleged ‘whistleblower’ claim.” (Docket Entry 29 at
5.)

Defendant’s Brief, however, does not provide any further

explanation as to the unreasonableness of Plaintiff’s belief that
Defendant’s actions constituted violations of federal law.

(See

id. at 5-6.)
Under

the

Sarbanes-Oxley

Act,

a

plaintiff

asserting

a

whistleblower claim “must first establish a prima facie case by
proving, by a preponderance of the evidence, that: (1) []he engaged
in protected activity; (2) the employer knew that []he engaged in
the protected activity; (3) []he suffered an unfavorable personnel
action; and (4) the protected activity was a contributing factor in
the unfavorable action.” Feldman v. Law Enforcement Assocs. Corp.,
752 F.3d 339, 344 (4th Cir. 2014) (internal footnote and quotation
marks omitted).
to

an

Under this provision, “protected activity” refers

employee’s

“‘report[ing]

[of]

conduct

that

he

or

she

reasonably believes constituted a violation of [designated] federal
law[s].’” Id. at 344 n.5 (emphasis in original) (quoting Sylvester
v. Parexel Int’l LLC, ARB Case No. 07-123, 2011 WL 2165854, at *15

-8-

(Dep’t of Labor May 25, 2011) (unpublished)).

“The first of

th[o]se elements does not require proof that the employer’s conduct
was, in fact, a legally actionable fraud.
only

show

that

[]he

‘had

both

a

The whistleblower need

subjective

belief

and

an

objectively reasonable belief that the conduct’ violated relevant
law.”

Jones v. Southpeak Interactive Corp. of Del., 777 F.3d 658,

668 (4th Cir. 2015) (quoting Welch v. Chao, 536 F.3d 269, 275 (4th
Cir. 2008)).
Plaintiff’s Second Amended Complaint asserts that, in December
2011, Plaintiff filed internal reports as to a series of alleged
violations, including the allegation that Defendant failed to make
public

disclosures

required

under

federal

securities

laws

concerning certain loans it received from the Federal Reserve.
(Docket Entry 24-1 at 50-51.)

The Second Amended Complaint then

alleges that, during that same month, the Securities and Exchange
Commission sent Defendant an inquiry concerning its decision not to
disclose those same loans.

(Id. at 54-55.)

Further, the Second

Amended Complaint alleges that Plaintiff consulted (through a
journalist) with outside experts who provided some support for the
position that Defendant’s conduct may have violated federal law.
(Id. at 120-21.)
whether

Plaintiff

Without deciding the ultimate question as to
sufficiently

has

alleged

factual

matter

establishing that he held an objectively reasonable belief that
Defendant had violated federal securities laws, the Court concludes

-9-

that Plaintiff’s allegations in that regard do not qualify as
“clearly insufficient or frivolous on [their] face,” Johnson, 785
F.2d at 510.

Defendant does not address the remaining elements of

Plaintiff’s whistleblower claim (see Docket Entry 29 at 1-7);
moreover, the record before the Court does not reveal facially
obvious defects in his prima facie case as to that claim.
However, the Court concludes that Plaintiff’s request to add
Wells Fargo Chairman and CEO John Stumpf and former Wachovia CEO
Robert Steel qualifies as clearly insufficient as a matter of law.
Under the Sarbanes-Oxley whistleblower provision,
In order to state a ‘plausible’ claim for relief against
[individual defendants], Plaintiff’s Complaint must
sufficiently set forth facts ‘on its face’ that [the
individuals named] knew that [Plaintiff] had engaged in
protected activity, were involved in the alleged adverse
employment action, and that a causal connection exi[s]ts
between the protected activity and the adverse employment
action taken by the named [d]efendants.
Bury v. Force Protection, Inc., Civ. A. No. 2:09–1708–DCN–BM, 2011
WL 2935916, at *1 (D.S.C. June 27, 2011) (unpublished).

As

Defendant has argued (see Docket Entry 29 at 5-6), no plausible
factual basis exists to join Mr. Stumpf or Mr. Steele to this
action.

Although Plaintiff’s Second Amended Complaint contains

extensive factual matter concerning alleged wrongdoing by these
individuals (see, e.g., Docket Entry 24-1 at 1, 8, 15-16, 35, 108),
none of those factual allegations describe any retaliatory acts
committed by them against Plaintiff (see id. at 1-143).

-10-

That Mr. Stumpf and Mr. Steel reportedly carried out the
alleged violations of federal law which formed the basis for
Plaintiff’s reports does not render them liable to Plaintiff,
absent allegations concerning their personal involvement in the
alleged retaliation against Plaintiff. See, e.g., Jordan v. Sprint
Nextel Corp., 3 F. Supp. 3d 917, 931 & n.48 (D. Kan. 2014)
(“Plaintiff

fails

to

state

a

claim

against

[an

individual

defendant] because there are no allegations that [the individual
defendant] personally undertook any actions against Plaintiff.”);
Bury, 2011 WL 2935916, at *2 (“Plaintiff does assert some specific
factual allegations against these [individuals] . . . . However,
nowhere

in

his

one

hundred

forty

(140)

page

Complaint

does

Plaintiff set forth any factual allegations to show that [the
individuals named] [were] in any way involved in the decisions not
to promote or fire him . . . .”).

Accordingly, the Court will deny

Plaintiff’s instant Motion as to its request to add individual
defendants because such request qualifies as futile.
Finally, as to the issue of additional causes of action beyond
Plaintiff’s Sarbanes-Oxley whistleblower claim, the Court construes
the proposed Second Amended Complaint as plausibly asserting only
that whistleblower claim.

As discussed by Defendant’s Motion to

Dismiss (see Docket Entry 20 at 11-16), Plaintiff made passing and frequently unintelligible - references to various other claims
in both his Complaint and Supplement (see Docket Entry 1 at 1-4;

-11-

Docket Entry 8 at 1-2).

Now, Plaintiff’s proposed second Amended

Complaint includes a list consisting of 21 additional claims (see
Docket Entry 24-1 at 140-141), none of which survives review under
the frivolous-on-its-face standard, see Johnson, 785 F.2d at 510.
First, Plaintiff’s list of claims includes several criminal
statutes (see Docket Entry 24-1 at 140-41 (citing 18 U.S.C. §§ 1343
(wire fraud), 1344 (bank fraud), 1346 (honest services theory of
fraud), 1348 (securities fraud), 1621 (perjury)), which do not
provide for any private right of action, see, e.g., Lopez v.
Robinson, 914 F.2d 486, 494 (4th Cir. 1990) (“No citizen has an
enforceable right to institute a criminal prosecution.”). Although
the Racketeer Influenced and Corrupt Organizations Act (RICO),
listed by Plaintiff (Docket Entry 24-1 at 140 (citing 18 U.S.C. §
1962)), does include a civil remedy, see 18 U.S.C. § 1964(c),
Plaintiff’s proposed Second Amended Complaint contains no other
discussion of or factual allegations to plausibly support such a
claim (see Docket Entry 24-1 at 1-143).
Second, Plaintiff’s list further includes several criminal and
civil securities provisions (see Docket Entry 24-1 at 140-41
(citing 15 U.S.C. §§ 77q (Securities Act of 1933), 80a-35, 80a-47
(Investment

Company

Act

of

1940),

7243,

7245

(corporate

responsibility provisions of Sarbanes-Oxley)), which similarly
preclude private rights of action, see, e.g., Cohen v. Viray, 622
F.3d 188, 194 (2d. Cir. 2010) (“We therefore join our sister

-12-

circuits in holding that § 304 [codified at 15 U.S.C. § 7243] does
not create a private cause of action.”); Newcome v. Esrey, 862 F.2d
1099, 1100 (4th Cir. 1988) (“[W]e hold that no private right of
action is available under section 17(a) [codified at 15 U.S.C. §
77q(a)]”); In re Merrill Lynch Inv. Mgmt. Funds. Sec. Litig., 434
F. Supp. 2d 233, 239 (S.D.N.Y. 2006) (“[C]laims under Sections
. . . 36(a)[] and 48(a) [codified at 15 U.S.C. §§ 80a-35, 80a-47]
of the ICA fail, because there is no private right of action under
these provisions.”).

Likewise, 15 U.S.C. § 78t (§ 20(a) of the

Securities Exchange Act of 1940) provides for supervisory liability
for other violations of that Act, Janus Capital Grp. v. First
Derivative Traders, __ U.S. __, __, 131 S. Ct. 2296, 2304 (2011);
however, Plaintiff has not identified the underlying violation
which gives rise to such liability (see Docket Entry 24-1 at 14041).
Moreover,

even

if

Plaintiff’s

proposed

Second

Amended

Complaint had identified an appropriate cause of action for a
securities

violation,

such

“claims

must

be

stated

with

particularity [pursuant to Federal Rule of Civil Procedure 9(b)’s
special pleading requirements for fraud] . . . [and] Plaintiff[]
must establish the who, what, when, where, and how of the alleged
fraud that underlies [his] claims,” Plymouth Cnty. Retirement Ass’n
v. Primo Water Corp., 966 F. Supp. 2d 525, 539 (M.D.N.C. 2013)
(Schroeder, J.).

Plaintiff’s proposed Second Amended Complaint

-13-

simply fails to meet that burden as to any securities fraud
allegations.

(See Docket Entry 24-1 at 1-143.)3

Third, to the extent Plaintiff seeks to state a claim under
particular provisions of ERISA (see Docket Entry 24-1 at 140-41
(citing 19 U.S.C. §§ 1103(c)(1), 1104)), such claim would also
qualify as futile.

Similar to several of the provisions discussed

above, §§ 1103 and 1104 impose requirements (here, on managers of
employee retirement plans) but do not themselves create private
causes of action, see 19 U.S.C. §§ 1103, 1104(c)(1).

Instead, a

participant or beneficiary who wishes to maintain a private action
under ERISA must look to § 1132(a), which provides remedies to
private plaintiffs in limited circumstances. See LaRue v. DeWolff,
Boberg,

&

Assocs.,

Inc.,

450

F.3d

570,

573

(4th

Cir.

2006)

(“Section 1132(a) stops short of providing ERISA complainants with
a full arsenal of relief.
detailed

statute

that

ERISA is an enormously complex and

resolves

innumerable

disputes

between

powerful competing interests - not all in favor of potential
plaintiffs.”

(internal

quotation

marks

and

vacated on other grounds, 552 U.S. 248 (2008).

bracket omitted)),
Given the lack of

factual matter alleged by Plaintiff as to the nature of any
possible ERISA claim (see Docket Entry 24-1 at 1-143), the Court

3

For this reason, Plaintiff’s citation - without explanation
- to various regulations promulgated under the Securities Exchange
Act of 1934 (see Docket Entry 24-1 at 140-41 (citing 17 C.F.R. §§
240.4a-9, 240.10b-3, 240.10b-5, 240.12b-20, 240.13b2-2)) similarly
qualifies as insufficient on its face.
-14-

cannot identify a plausible theory of recovery under that statute.
Furthermore, as noted by Defendant in its Motion to Dismiss, the
applicable three-year statute of limitations would likely bar any
claim under ERISA.

(See Docket Entry 20 at 12 (citing Cherochak v.

Unum Life Ins. Co. of Am., 586 F. Supp. 2d 522, 530 (4th Cir.
2008).)
Finally, Plaintiff’s proposed Second Amended Complaint appears
to assert a cause of action under 42 U.S.C. § 1983 (see Docket
Entry

24-1

at

141),

which

provides

a

civil

remedy

for

the

deprivation of constitutional or statutory rights by state actors,
see generally DeBauche v. Tani, 191 F.3d 499, 506-07 (4th Cir.
1999).

However, Plaintiff’s proposed Second Amended Complaint

contains no allegations to support that Defendant qualifies as a
state actor under that statute.

(See Docket Entry 24-1 at 1-143.)

In sum, given the obvious defects of these claims, the Court
construes

Plaintiff’s

proposed

Second

Amended

Complaint

as

plausibly alleging only a cause of action under the Sarbanes-Oxley
whistleblower provision.4

The Court will thus grant Plaintiff

leave to file his proposed Second Amended Complaint, except as to

4

Furthermore, Defendant’s proposed Second Amended Complaint
includes a list of “Requested Relief” which asks, inter alia, for
the Court to “issue an order directing the Defendants to disgorge
all ill-gotten gains” and requests various forms of injunctive
relief. (Docket Entry 24-1 at 142.)
Given that the Court has
declined to grant amendment as to any additional claims, it will
construe the proposed Second Amended Complaint as seeking only
relief available under the Sarbanes-Oxley whistleblower statute,
see 18 U.S.C. § 1514A(c) (listing available remedies).
-15-

his requests to add John Stumpf and Robert Steele as Defendants and
to assert any additional claims.5
B.

Plaintiff’s Motion to Seal Document
“The operations of the courts and the judicial conduct of

judges are matters of utmost public concern.”

Landmark Comm’cns,

Inc. v. Virginia, 435 U.S. 829, 839 (1978).

As a result, “the

courts of this country recognize a general right to inspect and
copy . . . judicial records and documents.”
Comm’cns, Inc., 435 U.S. 589, 597 (1978).

Nixon v. Warner
Accordingly, this

Court’s Local Rules impose certain procedural requirements upon a
litigant

who

seeks

to

file

a

document

under

seal.

See

generally M.D.N.C. R. 5.4. Of particular relevance here, that Rule
requires the
relevant

to

filing
a

unnecessarily.”

party

matter

to

before

“[s]tate
the

why

Court,

the
and

documents are
are

not

filed

M.D.N.C. R. 5.4(c)(2) (emphasis added).

Plaintiff seeks to file a report (the “Sanchez Report”)
prepared

for

Defendant

by

an

outside

consulting

firm,

which

evaluates the alleged violations Plaintiff reported while employed

5

The Court additionally notes that the filing of Plaintiff’s
Second Amended Complaint will render Defendant’s Motion to Dismiss
for Failure to State a Claim (Docket Entry 19) moot. See, e.g.,
Sennot v. Adams, Civ. No. 6:13CV02813–GRA, 2014 WL 2434745, at *3
(D.S.C. May 29, 2014) (unpublished) (“‘As a general rule, an
amended pleading ordinarily supersedes the original and renders it
of no legal effect.’
Thus, a defendant’s previous motion to
dismiss is rendered moot when a plaintiff files an amended
complaint.” (quoting Young v. City of Mount Ranier, 238 F.3d 567,
573 (4th Cir. 2001))).
-16-

by Defendant.
see

also

(See Docket Entry 22 at 1-2; Docket Entry 23 at 1;

Docket

Entry

26

(the

Sanchez

Report).)

Plaintiff

consulted with Defendant prior to filing and Defendant requested
sealing of the Sanchez Report.

(Docket Entry 22 at 2.)

After the

Court ordered Plaintiff to supplement his Motion to Seal and state,
inter alia, “why the document(s) in question are relevant to the
matter before the Court, as mandated by Local Rule 5.4(c)” (Text
Order dated Dec. 1, 2014), Plaintiff filed a one-sentence response:
“Plaintiff is preparing an Amended Complaint, to be filed by
Friday, December 5, 2014, in which the Sanchez [R]eport provides
factual evidence of adverse acts committed against Plaintiff by
Defendant, which are violations of Sarbanes Oxley whistleblower
statutes” (Docket Entry 23 at 1).
Plaintiff’s

conclusory

statement

that

the

Sanchez

Report

supports his Second Amended Complaint does not satisfy Local Rule
5.4(c)(2), requiring that the filing party state why the document
in question does not constitute an unnecessary filing, M.D.N.C. R.
5.4(c)(2).

Nor is the need to file the entire Report apparent on

its face, particularly given that Plaintiff’s proposed Second
Amended Complaint references the aspects of the Report which
Plaintiff has deemed relevant to his case (see Docket Entry 24-1 at
102-06).

Moreover, as alleged by Plaintiff’s proposed Second

Amended Complaint, the Report apparently absolves Defendant of all
wrongdoing

(see

id.

at

102-05),

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casting

further

doubt

as

to

Plaintiff’s need to file the Sanchez Report as an attachment to his
Second Amended Complaint.
Under these circumstances, the Court concludes that Plaintiff
has failed to show why the Report’s filing at this moment does not
qualify as unnecessary. Therefore, the Court will direct the Clerk
to strike the unredacted version of the Sanchez Report (Docket
Entry 26) and will deny Plaintiff’s Motion to Seal as moot.
C.

Plaintiff’s Motions to Compel
Plaintiff filed two documents styled as motions to compel;

however, said motions to not concern discovery.
Entries 31, 32.)

(See Docket

Instead, the first of those Motions “request[s]

the Court to compel the SEC and FINRA to obtain and verify the
recusal of SEC Chair Mary Jo White, and other SEC and FINRA
employees with conflicts of interest in Civil Action No. 14CV808.”
(Docket Entry 31 at 1.)

The second Motion similarly “request[s]

the Court to compel the Department of Justice and FBI to obtain and
verify the recusal of Attorney General Eric Holder, and Other DOJ
and FBI employees with conflicts of interest in Civil Action No.
14CV808.”

(Docket Entry 32 at 1.)

The term “recusal” refers to the “[r]emoval of oneself as
judge or policy-maker in particular matter, esp[ecially] because of
a conflict of interest.”

Black’s Law Dictionary (10th ed. 2014).

Although these Motions do not clearly state the nature of the
relief sought by Plaintiff, the Court presumes that Plaintiff seeks

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to prevent the future intervention of those individuals as Parties.
Nonetheless, the record before the Court reflects no efforts to
intervene - or any other involvement - in this case by the SEC
Chair, the Attorney General, or any SEC, FINRA, DOJ, or FBI
employees.

(See Docket Entries dated Sept. 22, 2014, to present.)

Plaintiff has not provided any relevant authority (see Docket Entry
31 at 1-9; Docket Entry 32 at 1-9), and the Court knows of none,
that

would

authorize

any

relief

directed

at

the

non-parties

identified in these Motions. Given these considerations, the Court
will deny Plaintiff’s Motions to Compel.
III. CONCLUSION
Plaintiff has shown a basis to permit (at least in part) his
proposed further amendment of his Amended Complaint, but has failed
to show any basis for his Motion to Seal or his Motions to Compel.
IT IS THEREFORE ORDERED that Plaintiff’s Motion for Leave to
File an Amended Complaint (Docket Entry 24) is GRANTED IN PART AND
DENIED IN PART and that, on or before April 1, 2015, Plaintiff
shall file his proposed Amended Complaint (Docket Entry 24-1) as a
Second Amended Complaint, but without the addition of John Stumpf
or Robert Steel as Defendants or the inclusion of any causes of
action beyond his claim of retaliation related to the SarbanesOxley Act.

Plaintiff’s filing of a Second Amended Complaint will

render moot Defendant’s Motion to Dismiss (Docket Entry 19).

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IT IS FURTHER ORDERED that, if Plaintiff timely files his
Second Amended Complaint as outlined above, Defendant shall, on or
before April 20, 2015, respond to Plaintiff’s Second Amended
Complaint.
IT

IS

FURTHER

ORDERED

that

the

Clerk

shall

strike

the

unredacted version of the Sanchez Report (Docket Entry 26) and that
Plaintiff’s Motion to Seal Document (Docket Entry 22) is DENIED AS
MOOT.
IT IS FURTHER ORDERED that Plaintiff’s Motions to Compel
(Docket Entries 31, 32) are DENIED.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
March 19, 2015

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