United States District Court, D. Columbia.
STEPHEN M. SILBERSTEIN, Plaintiff,
U.S. SECURITIES AND EXCHANGE COMMISSION, Defendants
STEPHEN SILBERSTEIN, Plaintiff: Anne L. Weismann, CAMPAIGN
FOR ACOUNTABILITY, Washington, DC.
U.S. SECURITIES AND EXCHANGE COMMISSION, Defendant: Paul G.
Alvarez, Thomas Jeffrey Karr, LEAD ATTORNEYS, SECURITIES &
EXCHANGE COMMISSION, Washington, DC; William K. Shirey, LEAD
ATTORNEY, SECURITIES AND EXCHANGE COMMISSION, General
Counsel's Office, Washington, DC.
M. COLLYER, United States District Judge.
M. Silberstein strongly believes that the Securities and
Exchange Commission (SEC) should adopt a rule requiring
publicly traded corporations to disclose to shareholders and
the public their use of corporate funds for political
activities. On May 8, 2014, Mr. Silberstein and Citizens for
Responsibility and Ethics in Washington (CREW) submitted a
petition for rulemaking to the SEC. Since the SEC has not
responded to this petition, Mr. Silberstein sued the SEC
under the Administrative Procedure Act to challenge the
agency's inaction as arbitrary, capricious, and contrary
to law, as well as to compel the SEC to act on his petition.
The SEC moves to dismiss the Complaint in its entirety.
See Mot. to Dismiss [Dkt. 8] (MTD). Mr. Silberstein
filed a timely opposition to the motion, to which the SEC
replied. For the reasons that follow, the Court will grant
the motion to dismiss.
Silberstein, a shareholder in Aetna, Inc., " has a
longstanding interest in issues pertaining to corporate
governance and responsibility," particularly the
promotion of greater oversight and transparency concerning
the political contributions of Aetna and other publicly
traded companies. Am. Compl. [Dkt. 7] ¶ 4. Mr.
Silberstein claims that without regulation to require "
greater transparency in the political contributions of Aetna
and other publicly traded companies in which [he] owns
stock," he cannot properly fulfill " his
shareholder duties, as he cannot determine whether those
contributions are in the best interests of the
companies." Id. ¶ 5.
2013, the SEC's Division of Corporation Finance announced
that it would consider " whether to recommend that the
Commission issue a proposed rule" on this matter.
Id. ¶ 4. No proposal was ever issued.
Therefore, on May 8, 2014, Mr. Silberstein and CREW submitted
an amended petition for rulemaking requesting SEC to create a
rule establishing a disclosure requirement. Despite the
petition, " the SEC's Agency Rule List for the Fall
of 2014, issued on November 21, 2014, continued to omit any
reference to such [a] rule." Id. ¶ 34.
13, 2015, Mr. Silberstein filed a one-count complaint under
the Administrative Procedure Act (APA), 5 U.S.C. § 500
et seq., alleging that SEC'S failure to respond
to Mr. Silberstein's petition was arbitrary, capricious,
and contrary to law. First Compl. [Dkt. 1] ¶ ¶
39-41. On July 13, 2015, SEC moved to dismiss the complaint
for failure to state a claim and Mr. Silberstein, in turn,
filed a two-count amended complaint on July 16, 2015. Count I
incorporates the allegations and the single count of the
First Complaint. Am. Compl. ¶ 40. Count II alleges that
the SEC's inaction constitutes an " effective
denial" of the rulemaking petition that was arbitrary,
capricious, and contrary to law. Id. ¶ ¶
Mr. Silberstein is seeking declaratory relief that the
SEC's failure to respond to the petition (Count I) and
failure to grant the petition (Count II) violated §
§ 553 and 555 of the APA. He also seeks injunctive
relief under § 706(1) to compel the SEC to respond
immediately to the petition (Count I) and to initiate a
rulemaking proceeding (Count II). Id. ¶
¶ 42-43, 49-50. SEC now moves to dismiss the Amended
Complaint under Rules 12(b)(1) and 12(b)(6) of the Federal
Rules of Civil Procedure.
Motion to Dismiss Under Rule 12(b)(1)
to Federal Rule of Civil Procedure 12(b)(1), a defendant may
move to dismiss a complaint, or any portion thereof, for lack
of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). No
action of the parties can confer subject matter jurisdiction
on a federal court because subject matter jurisdiction is
both a statutory requirement and an Article III requirement.
Akinseye v. District of Columbia, 339 F.3d
970, 971, 358 U.S.App.D.C. 56 (D.C. Cir. 2003). The party
claiming subject matter jurisdiction bears the burden of
demonstrating that such jurisdiction exists. Khadr v.
United States, 529 F.3d 1112, 1115, 381 U.S.App.D.C. 408
(D.C. Cir. 2008); see Kokkonen v. Guardian Life
Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128
L.Ed.2d 391 (1994) (noting that federal courts are courts of
limited jurisdiction and " [i]t is to be presumed that a
cause lies outside this limited jurisdiction, and the burden
of establishing the contrary rests upon the party asserting
jurisdiction" ) (internal citations omitted).
reviewing a motion to dismiss for lack of jurisdiction under
Rule 12(b)(1), a court should " assume the truth of all
material factual allegations in the complaint and
'construe the complaint liberally, granting the plaintiff
the benefit of all inferences that can be derived from the
facts alleged.'" Am. Nat'l Ins. Co. v.
FDIC, 642 F.3d 1137, 1139, 395 U.S.App.D.C. 316 (D.C.
Cir. 2011) (quoting Thomas v. Principi, 394 F.3d
970, 972, 364 U.S.App.D.C. 326 (D.C. Cir. 2005)).
Nevertheless, " the court need not accept factual
inferences drawn by plaintiffs if those inferences are not
supported by facts alleged in the complaint, nor must the
Court accept plaintiff's legal conclusions."
Speelman v. United States, 461 F.Supp.2d 71, 73
Motion to Dismiss ...