UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION. v. CIVIL ACTION NO. 4:12-CV-345

Transcription

1 Case 4:12-cv Document 18 Filed in TXSD on 05/31/12 Page 1 of 7 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION KHALED ASADI, Plaintiff, v. CIVIL ACTION NO. 4:12-CV-345 G.E. ENERGY (USA), LLC, Defendant. GE ENERGY S SUPPLEMENTAL REPLY IN SUPPORT OF MOTION TO DISMISS Plaintiff Khaled Asadi s late-filed response 1 does not even attempt to refute the vast majority of the independently sufficient grounds GE Energy set forth for dismissal of the Amended Complaint. In fact, Asadi takes issue solely with the question whether Dodd-Frank s anti-retaliation provision can apply to extraterritorial conduct like that he alleges in this case. His argument resting entirely on a single , while ignoring Asadi s own admission that the majority of events occurred outside the United States fails to demonstrate a basis on which he can state a claim. For all the reasons stated in GE Energy s briefing, Asadi s Amended Complaint should be dismissed with prejudice. ARGUMENT AND AUTHORITIES I. Asadi Does Not Refute Multiple Grounds for Dismissal of His Claims Asadi s response is more notable for what it does not say than for what it does. 1 The Court ordered Asadi to file any response to GE Energy s supplemental memorandum by May 15, Dkt. No. 12. Asadi, however, did not file his response until May 23, Dkt. No. 17. This response is not Asadi s first filing in contravention of the Court s briefing schedule. See Dkt. No. 8. And once again, he did not seek leave from the Court, or even indicate that he would be filing his response late. GE Energy objects to this untimely filing.

2 Case 4:12-cv Document 18 Filed in TXSD on 05/31/12 Page 2 of 7 GE Energy previously explained that: Courts must give effect to the plain meaning of statutes, particularly when Congress assigns a specific definition to a term. This canon of statutory construction prevents Asadi from evading Dodd-Frank s unambiguous requirement that he cannot recover as a whistleblower under the antiretaliation provision because he did not report any alleged securities law violation to the SEC; 2 Sarbanes-Oxley does not apply to internal reports of alleged FCPA violations. By definition, therefore, Asadi s alleged internal report even if it were true is not a disclosure that was required or protected by Sarbanes-Oxley, which is an essential element of his Dodd-Frank claim; A whistleblower must have a reasonable belief that a securities law has been violated. Asadi s allegation that he heard an unsubstantiated rumor from an unnamed governmental official cannot, as a matter of law, constitute an objectively reasonable basis for believing that GE Energy violated a securities law; Asadi s newly added breach-of-contract claim is subject to a mandatory dispute resolution clause. Moreover, the failure to state a claim under Dodd-Frank eliminates the jurisdictional basis for this Court to hear the contract claim. Asadi alleges no reason why it would be appropriate for the Court to exercise supplemental jurisdiction over this claim in this context. Asadi does not respond to any of these arguments. Each of them is an independently sufficient basis to dismiss Asadi s claims. Thus, the Amended Complaint should be dismissed with prejudice. II. Asadi Cannot Overcome the Supreme Court s Strong Presumption Against Extraterritorial Application of Federal Statutes Asadi s allegations state a claim only if both Dodd-Frank and Sarbanes-Oxley have extraterritorial application. If Sarbanes-Oxley does not apply abroad, Asadi s alleged internal report cannot be protected or required under 15 U.S.C. 2 The New York Court of Appeals recently stated that Dodd-Frank s anti-retaliation provision seems not to apply to conduct like that alleged in [the plaintiff s] complaint; [the plaintiff] does not claim to have blown a whistle i.e., to have told the SEC or anyone else outside [his firm] about... alleged misconduct. Sullivan v. Harnish, N.E.2d, No. 82, 2012 WL (N.Y. May 8, 2012) (slip op.). 2

3 Case 4:12-cv Document 18 Filed in TXSD on 05/31/12 Page 3 of 7 78u-6(h)(1)(A)(iii). If Dodd-Frank s anti-retaliation provision does not apply abroad, he has not alleged a claim cognizable under that statute. Thus, should one or the other not apply abroad, Asadi s claims must be dismissed. In fact, neither statute applies to extraterritorial conduct. First, Asadi s claim rests on the theory that his supposed internal report of an alleged FCPA violation was a disclosure required or protected under Sarbanes-Oxley, which he alleges therefore makes adverse employment action based on such a disclosure prohibited by Dodd-Frank. See 15 U.S.C. 78u-6(h)(1)(A)(iii). But every single event surrounding this alleged internal report occurred in the Middle East. Not a single aspect of this act (if it even occurred) happened in or touched the United States. Thus, Asadi s Dodd-Frank claim turns on whether such overseas reporting is in fact protected by Sarbanes-Oxley. If Sarbanes-Oxley does not have extraterritorial application, then Asadi s alleged reporting activity cannot have been required or protected by Sarbanes- Oxley; in turn, if it is not required or protected by Sarbanes-Oxley, then Asadi has failed to allege an essential element of a claim under Dodd-Frank. Asadi does not defend the extraterritorial application of Sarbanes-Oxley, and for good reason; he has no authority supporting such an interpretation. Indeed, the only authority Asadi cited in his earlier briefing to support extraterritorial application of Sarbanes-Oxley was a dissenting opinion from the Administrative Review Board. See Dkt. No. 8, Amended Response at 13 n.11. But the actual holding of the Administrative Review Board itself is that Sarbanes-Oxley does not apply to conduct abroad like Asadi alleges here. See Villanueva v. Core Labs., 2011 WL (Dep t of Labor Dec. 22, 3

4 Case 4:12-cv Document 18 Filed in TXSD on 05/31/12 Page 4 of ). 3 The First Circuit has likewise held that Sarbanes-Oxley lacks extraterritorial effect. Carnero v. Boston Scientific Corp., 433 F.3d 1 (1st Cir. 2006). As a result, Asadi s claim fails as a matter of law. Second, even if Sarbanes-Oxley applied extraterritorially, Asadi must overcome the additional hurdle of establishing that Dodd-Frank also applies extraterritorially to state a claim here. In other words, even if Asadi alleged activity that could properly be interpreted as required or protected by Sarbanes-Oxley, he still must establish that a federal claim for retaliation as a result of that activity is permissible under the Supreme Court s extraterritoriality jurisprudence. And Asadi cannot do so because Dodd-Frank s anti-retaliation provision gives no indication that it applies extraterritorially. When a statute gives no clear indication of an extraterritorial application, it has none. Morrison v. Nat l Australia Bank Ltd., 130 S. Ct. 2869, 2878 (2010) (internal quotation marks and citations omitted). Asadi argues that the Court must consider context in making the extraterritoriality determination, but that does not help him here. After all, the relevant context of the anti-retaliation provision is found in the various other Dodd-Frank provisions where Congress added statements of extraterritorial effect to comport with Morrison. See Dkt. No. 13 (detailing the legislative history of these provisions); see also 15 U.S.C. 77v (allowing extraterritorial jurisdiction over suits brought by the government under 15 U.S.C. 77q in certain instances); id. at 78aa (allowing extraterritorial jurisdiction over suits brought by the government under the antifraud 3 That case, Villanueva v. U.S. Dep t of Labor, No (5th Cir.), is currently on appeal to the Fifth Circuit. A briefing order was issued on May 10, 2012, and the petitioner s brief is due on June 19,

5 Case 4:12-cv Document 18 Filed in TXSD on 05/31/12 Page 5 of 7 provisions of the Securities Exchange Act of 1934 in certain instances); id. at 80b-14 (allowing extraterritorial jurisdiction over suits brought by the government under 15 U.S.C. 80b-6 in certain instances). In this context, the omission of similar language from the anti-retaliation provision demonstrates that Congress quite plainly did not intend to extend this private cause of action as far as Asadi hopes to stretch it. Asadi is left, therefore, to argue that the facts he alleges as the basis for his antiretaliation claim do not actually implicate extraterritorial conduct. But the allegations in the complaint simply do not support such a characterization. The only domestic contact that Asadi has alleged is one , sent to Asadi while he was in Jordan, related to his employment in Jordan, which says a letter will be sent to Asadi s current home in Jordan, that characterizes the termination of his employment as allowed under U.S. law. That one reference to the United States is insufficient to remove this case from the extraterritoriality analysis. Asadi himself characterized it succinctly, stating that this is a case in which the majority of events giving rise to the suit occurred in a foreign country. Dkt. No. 14, Am. Compl. 6 (emphasis added). Court held: In fact, the Supreme Court dismissed a similar argument in Morrison itself. The [I]t is a rare case of prohibited extraterritorial application that lacks all contact with the territory of the United States. But the presumption against extraterritorial application would be a craven watchdog indeed if it retreated to its kennel whenever some domestic activity is involved in the case. Id. at The mere fact that the administrative function of terminating his employment came from the United States and referenced U.S. law, when every other relevant event 5

6 Case 4:12-cv Document 18 Filed in TXSD on 05/31/12 Page 6 of 7 that Asadi alleges occurred by and between employees located overseas, cannot be grounds for circumventing Morrison. III. Asadi s Attempt to Mislead the Court About His Conviction in Jordan Should Be Rejected Finally, GE Energy must correct the misleading statements made by Asadi concerning his conviction in Jordan. Asadi was convicted in absentia in Amman, Jordan, as the attached judgment and certified translation show. Ex. 4. This is a matter of public record in Amman. The exhibit attached to Asadi s response purports to be a certificate of non-conviction, but it was issued from a different court, in Irbid, Jordan, which is approximately an hour and a half to the north of Amman. The court in Amman found, however, that on the day he was terminated, Asadi downloaded nearly 8,000 GE files to his own personal storage device, and sent more than 150 s that included classified and secret information to individuals outside his work scope which led to a financial and moral damages to [GE]. As a result, he was found guilty of abuse of trust and inflicting damage to the property of others, for which he was sentenced to two years imprisonment. Notably, Asadi has never contested that he in fact stole the files that are the basis of his conviction. CONCLUSION GE Energy asks that the Court dismiss the amended complaint with prejudice. 6

7 Case 4:12-cv Document 18 Filed in TXSD on 05/31/12 Page 7 of 7 DATED: May 31, 2012 Houston, Texas. Respectfully submitted, FULBRIGHT & JAWORSKI L.L.P. Linda Addison Fed. I.D. No Texas Bar No Darryl Anderson Fed. I.D. No Texas Bar No Eliot F. Turner Fed. I.D. No Texas Bar No McKinney Fulbright Tower Houston, Texas Telephone: Facsimile: CERTIFICATE OF FILING AND SERVICE I certify that on May 31, 2012, I electronically transmitted this document to the Clerk of Court using the ECF System for filing. Based on the records currently on file, the Clerk of Court will transmit a Notice of Electronic Filing to plaintiff s counsel of record. /s/ Eliot F. Turner Eliot F. Turner 7