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Chien v. United States

United States District Court, District of Columbia

September 23, 2019

ANDREW CHIEN, pro se, Plaintiff,
v.
UNITED STATES, et al., Defendants.

          MEMORANDUM OPINION

          COLLEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE

         Presently before this Court is a [38] Motion to Dismiss filed by Defendants The United States of America (the “United States”) and the United States Securities and Exchange Commission (the “SEC”).[1] Defendants move to dismiss pro se Plaintiff’s [29] First Amended Complaint, pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), on grounds that this Court does not have jurisdiction over the causes of action alleged by Plaintiff Andrew Chien (“Plaintiff” or “Mr. Chien”) and further, that Plaintiff has failed to state a claim upon which relief can be granted.

         Also pending before this Court are two motions filed by Plaintiff subsequent to the filing of the Motion to Dismiss: (1) Plaintiff’s [40] Motion which requests: (a) an Injunction Order pursuant Rule 65(a); (b) an adjustment of the time for Defendants to file a reply in support of their Motion to Dismiss; and (c) the filing of an administrative record, and (2) Plaintiff’s [42] Motion for Approv[al] [of a ] Supplemental Pleading to Add Brant Morris as a Defendant Based on Rule 15(d). Pursuant to a November 13, 2018 Minute Order, this Court DENIED Plaintiff’s request for an adjustment of time for Defendants’ reply and DEFERRED ruling on Plaintiff’s motion for an injunction order and the filing of an administrative record and his motion to add Brant Morris as a defendant.

         In the November 13, 2018 Minute Order, this Court noted that while Defendants had replied to Plaintiff’s [40], [42] motions, Plaintiff had not filed a reply in support of either motion, and the time for doing so had passed. Approximately two weeks later, Plaintiff filed a [47] Supplemental Memorandum (reply) in response to his [40] Motion for injunctive relief and filing of an administrative record and a [48] Supplemental Memorandum (reply) in support of his [42] Motion to add Brant Morris as a defendant. At the same time, Plaintiff filed a [46] Supplemental Memorandum (surreply) in support of his [41] Opposition to Defendants’ motion to dismiss.

         Notably, Plaintiff did not seek approval from opposing counsel or leave of court to late file any reply or to file a surreply, and in the normal course, such documents filed by Defendant would be stricken from the docket as untimely and/or unapproved. In the interest of judicial efficiency, however, since this Court is resolving all outstanding motions by means of this Memorandum Opinion and the accompanying Order, and because the Plaintiff in this case is pro se, for purposes of this Memorandum Opinion only, the Court will treat Plaintiff’s [47] Supplemental Memorandum as a reply to his [40] Motion for injunctive relief and filing of an administrative record and his [48] Supplemental Memorandum as a reply to his [42] Motion to add Brant Morris as a defendant. Plaintiff’s [46] Supplemental Memorandum (surreply) in support of his Opposition to the Defendants’ Motion to Dismiss will be considered by this Court only to the extent that it is responsive to the issues involved in this case and addressed in the Defendants’ Motion and/or their Reply. See Pl.’s Surreply, ECF No. 46, at 7-8. The remaining portions of Plaintiff’s Surreply (pages 1-6) are not responsive to the Defendants’ pleadings insofar as Plaintiff attempts to allege claims pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968, which have no bearing on the existing claims against the Defendants in this case. Accordingly, all three Motions are fully briefed and ready for resolution.[2]

         I. Background

         Plaintiff’s [29] First Amended Complaint discusses in detail his business conflicts with a third party, Richard Freer, which are also the subject of a civil action pending before this Court, captioned Chien v. Freer, 18-cv-2050. In that case, pro se Plaintiff Andrew Chien alleges claims for common law tort, securities law violations, RICO and fraud. The Complaint in that case also makes references to certain debt collections against Mr. Chien, which are not an issue in the instant case before this Court. As a preliminary matter, this Court notes that Mr. Chien filed in this case documents entitled [49] “Supplement[ ] to Support Chien’s Pleadings from Fair Debt Collection Practices Act” and [50] “Supplement[ ] (2) to Support Chien’s Pleadings from Fair Debt Collection Practices Act.” Because these documents are unrelated to the claims pending in this matter, the Court orders that these two Supplements, ECF Nos. 49 and 50, shall be STRICKEN from the docket in this case.

         To put in context the origins of Plaintiff’s dispute with the SEC, the Court will briefly review the ongoing disputes between Mr. Chien and Mr. Freer, although many of these disputes pre-date Defendants’ involvement. Mr. Freer was a former officer of Commonwealth Biotechnologies, Inc. (“CBI”), which filed for bankruptcy in January 2011. First Am. Compl., ECF No. 29, ¶¶ 16, 17, 23, 28. Mr. Freer served as an operating director of CBI during bankruptcy, while Mr. Chien was either a CBI shareholder or a representative of Bill Guo, another shareholder and sometime Chairman of CBI’s board. First Am. Compl., ECF No. 29, ¶¶ 15, 21. Mr. Freer made compensation claims from CBI, while Mr. Chien claimed that Mr. Freer was trying to embezzle money from CBI, and both parties sought control of CBI. Id. at ¶¶ 17-18, 20-21.

         Ultimately, Mr. Freer sued Mr. Chien for defamation in a Virginia state court in February 2012, and he obtained a default judgment in the amount of $1, 600, 000.00, plus interest. Id. at ¶¶ 22, 26. Mr. Freer collected on the judgment by initiating a debt collection action in Connecticut in September 2012. Id. at ¶¶ 11-12. Mr. Chien was incarcerated in Virginia twice for contempt of court in relation to Mr. Freer’s defamation action. Id. at ¶¶ 10, 31-32. In February 2014, presumably in partial fulfillment of the default judgment, a Virginia state court ordered delivery of China Bull Management, Inc. (“CHBM”) stocks to Mr. Freer and in September 2014, Island Stock Transfer, Florida issued a stock certificate for shares of CHBM for Mr. Freer. Id. at ¶37. Through voting these shares, Mr. Freer tried to usurp Mr. Chien’s control of CHBM, which Mr. Chien contested. Id. at ¶¶ 38-39. Mr. Freer re-registered CHBM from Nevada to Virginia in December 2016, and Mr. Chien re-registered CHBM from Nevada to Wyoming as of January 2017. Id. at ¶¶ 46-47, 54.

         A. The SEC’s Role

         On December 9, 2016, Mr. Freer attempted to update the EDGAR access codes for CHBM with the SEC, while Mr. Chien apparently was permitted to use the EDGAR access codes to make filings on behalf of CHBM as late as December 2016.[3] First Am. Compl., ECF No. 29, ¶ 45. The SEC’s involvement with Plaintiff followed these competing attempts to access the SEC’s EDGAR system. On February 13, 2017, Mara Ransom (“Ms. Ransom”), an SEC employee in the Division of Corporate Finance, which administers EDGAR codes, sent Mr. Chien a letter from the SEC indicating that “Richard J. Freer had[d] challenged Chien’s representation of CHBM.” Id. at ¶ 3. In that letter, she noted that “[w]hile the information [the SEC] ha[d] considered to date [was] not dispositive, it [did] raise sufficient concerns to justify suspending any company filings made on EDGAR that ha[d] not yet been processed and disseminated, as well as deactivating the company’s CIK number and EDGAR access codes until the question is resolved.” App’x to the Pl’s Compl., ECF 6, at 4 (A1).[4] The letter suggested that Mr. Chien could provide one of two types of documentation to establish who controlled CHBM to support reactivating the company’s CIK number to allow future filings. Id.

         Mr. Chien has acknowledged that Mr. Freer provided the SEC with some forms to support his claim that he should receive EDGAR access, but he alleges that those forms were false, and they did not establish that Mr. Freer as a “control person of CHBM.” First Am. Compl., ECF No. 29, ¶¶ 3-4, 48-55. Mr. Chien does not indicate that he provided any documentation to the SEC, as was requested in the February 13, 2017. On December 14, 2017, the SEC released the EDGAR access codes for CHBM to Mr. Freer. Id. ¶ 4; Pl.’s App’x II, ECF No. 22-2, at 3-4. Mr. Chien contends further that the SEC did not provide him with documentation regarding EDGAR access codes or communications with Mr. Freer in a timely manner, although he did receive this documentation on September 11, 2017, through a FOIA request. Id. ¶ 47.

         B. Plaintiff’s Alleged Causes of Action

         Mr. Chien alleges that the SEC staff withheld from him and eventually provided to Mr. Freer certain access codes that CHBM requires in order to make its filings with the SEC. Mr. Chien and Mr. Freer both claim to be the proper holder of those codes. Count I of Plaintiff’s First Amended Complaint alleges that Ms. Ransom and SEC Commissioner Kara Stein (“Commissioner Stein”) violated 28 U.S.C. §2680 by failing to exercise due care and making misrepresentations in connection with accepting a company registered in Virginia as the legitimate CHBM. First Am. Compl., ECF No. 29, ¶ 63.

         Count 2 alleges that Ms. Ransom and Commissioner Stein violated 28 U.S.C. §2680 by failing to exercise good care and by abusing process because they acted to protect Mr. Freer’s fraud. Id. ¶ 64. Count 3 alleges that Ms. Ransom aided and abetted Mr. Freer in “making false identi[t]y of CHBM.” Id. ¶ 65. Count 4 alleges that Ms. Ransom, in violation of Mr. Chien’s alleged constitutional right to operate a business, damaged his employment and reputation and caused him to suffer economic loss when he could not make filings on behalf of CHBM. Id. ¶ 66. Furthermore, Mr. Chien alleges that through her failure to “judge the environment under which Freer obtained the Stock Certificate, ” Ms. Ransom “supported” Mr. Chien’s alleged false imprisonment. Id. ¶¶ 66-67. Count 5 alleges that Ms. Ransom engaged in a conspiracy to conceal from Mr. Chien the documents submitted by Mr. Freer. Id. ¶ 68. Count 6 alleges that Commissioner Stein was grossly negligent for her failure to monitor or train Mr. Ransom. Id. ¶ 69. In his First Amended Complaint, Mr. Chien seeks only money damages, in the form of punitive damages, and “legal or other” costs. Id. ¶¶ 72-74.

         II. Legal Standard

         A. Subject Matter Jurisdiction under Rule 12(b)(1)

         A court must dismiss a case pursuant to Federal Rule 12(b)(1) when it lacks subject matter jurisdiction. In determining whether there is jurisdiction, the Court may “consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts.” Coalition for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003) (citations omitted); see also Jerome Stevens Pharm., Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253 (D.C. Cir. 2005) (“[T]he district court may consider materials outside the pleadings in deciding whether to grant a motion to dismiss for lack of jurisdiction.”)

         In reviewing a motion to dismiss pursuant to Rule 12(b)(1), courts must accept as true all factual allegations in the complaint and construe the complaint liberally, granting plaintiff the benefit of all inferences that can be drawn from the facts alleged. See Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993); Settles v. U.S. Parole Comm’n, 429 F.3d 1098, 1106 (D.C. Cir. 2005) (“At the motion to dismiss stage, counseled complaints as well as pro se complaints, are to be construed with sufficient liberality to afford all possible inferences favorable to the pleader on allegations of fact.”); Koutny v. Martin, 530 F.Supp.2d 84, 87 (D.D.C. 2007) (“[A] court accepts as true all of the factual allegations contained in the complaint and may also consider ‘undisputed facts evidenced in the record’”) (internal citations omitted). Despite the favorable inferences that a plaintiff receives on a motion to dismiss, it remains the plaintiff’s burden to prove subject matter jurisdiction by a preponderance of the evidence. Am. Farm Bureau v. United States Envtl. Prot. Agency, 121 F.Supp.2d 84, 90 (D.D.C. 2000). “Although a court must accept as true all factual allegations contained in the complaint when reviewing a motion to dismiss pursuant to Rule 12(b)(1), [a] plaintiff[‘s] factual allegations in the complaint. . . will bear closer scrutiny in resolving a 12(b)(1) motion than in resolving a 12(b)(6) motion for failure to state a claim.” Wright v. Foreign Serv. Grievance Bd., 503 F.Supp.2d 163, 170 (D.D.C. 2007) (internal citations and quotation marks omitted), aff’d., 2008 WL 4068606 (D.C. Cir. Mar. 17, 2008). A court need not accept as true “a legal conclusion couched as a factual allegation” or an inference “unsupported by the facts set out in the complaint.” Trudeau v. Fed. Trade Comm’n, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasam v. Allain, 478 U.S. 265, 286 (1986)).

         B. Failure to State a Claim under Rule 12(b)(6)

         Pursuant to Rule 12(b)(6), a party may move to dismiss a complaint on grounds that it “fail[s] to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A complaint is not sufficient if it “tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient factual allegations that, if accepted as true, “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 678. “In evaluating a motion to dismiss, the Court must accept the factual allegations in the complaint as true and draw all reasonable inferences in favor of plaintiff.” Nat’l Postal Prof’l Nurses v. U.S. Postal Serv., 461 F.Supp.2d 24, 27 (D.D.C. 2006).

         When considering a Rule 12(b)(6) motion, courts may consider “the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint” or “documents upon which the plaintiff’s complaint necessarily relies even if the document is produced not by the plaintiff in the complaint but by the defendant in a motion to dismiss.” Ward v. District of Columbia Dep’t of Youth Rehab. Servs., 768 F.Supp.2d 117, 119 (D.D.C. 2011) (internal quotation marks and citations omitted). The court may also consider documents in the public record of which the court may take judicial notice. Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007).

         III. Legal Analysis of the Motion to Dismiss

         A. Individual Defendants

         1. Substitution of the United States

         Pursuant to The Federal Employees Liability Reform and Tort Compensation Act of 1988, 28 U.S.C. § 2679 (the “Westfall Act”), “federal employees [are permitted] absolute immunity from common-law tort claims arising out of acts they undertake in the course of their official duties.” Osborn v. Haley, 549 U.S. 225, 229 (2007). This relieves such employees from “the cost and effort of defending [a] lawsuit, and [ ] plac[es] those burdens of the Government’s shoulders.” Wuterich v. Murtha, 562 F.3d 375, 380 (D.C. Cir. 2009) (quotation omitted). In the event that a federal employee is sued for wrongful or negligent conduct, the Attorney General may certify that such employee “was acting within the scope of his office or employment at the time of the incident out of which the claim arose.” Osborn, 549 U.S. at ...


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