Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 1 of 21

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1 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 1 of 21 IN T H E UNI T E D ST A T ES DIST RI C T C O UR T F O R T H E SO U T H E RN DIST RI C T O F T E X AS, H O UST O N DI V ISI O N K H A L E D ASA DI, Plaintiff v. Civil Action No. 4:12 cv G. E. E N E R G Y (USA), L L C, Defendant. U M IN R ESPO NSE T O O DISM ISS F O R F A I L UR E T O ST A T E A C L A I M Ronald Dupree State Bar No DUPREE LAW FIRM, PLLC 3411 Richmond Avenue, Suite 400 Houston, Texas Telephone Facsimilie Dated March 16,

2 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 2 of 21 T A B L E O F C O N T E N TS TABLE OF AUTHORITIES... 3 INTRODUCTION... 4 FAIR NOTICE STANDARD... 6 SUMMARY OF ARGUMENT... 6 INTERNAL DISCLOSURES PROTECTED UNDER DODD-FRANK... 8 INTERNAL DISCLOSURES PROTECTED UNDER SARBANES-OXLEY... 9 DISCLOURE OF POTENTIAL FCPA VIOLATIONS REQUIRED REASONABLE BELIEF OF FCPA VIOLATION MORRISON OF LIMITED APPLICABILITY G.E. SOLUTIONS

3 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 3 of 21 T A B L E O F A U T H O RI T I ES CASES Allen v. Admin. Review Bd. 514 F.3d 468, (5th Cir. 2008) Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)... 6 Barker v. Riverside Cnty. Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009)... 6 Bell Atl. Corp. v. Twombly, 550 U.S. 544, (2007)... 6,7 Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)... 8 EEOC v. Arabian American Oil Co., 499 U.S. 244, 248 (1991) Egan v. TradingScreen, Inc., No 10 Civ (LBS), 2011 WL (S.D.N.Y. May 4, 2011)... 8,9, 14 Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285 (1949) Fowler v. UPMC Shadyside, 578 F.3d 203, (3d Cir. 2009)... 8 Fraser v. Fiduciary Trust Co. Int'l, 417 F. Supp 2d 310, 322 (S.D.N.Y. 2006) Hemphill v. Celanese Corporation, 2010 U.S. Dist. LEXIS at *11 (N. D. Tex. June 16, 2010)... 10, 12, 14 Lovelace v. Software Spectrum, Inc., 78 F.3d 1015,1018 n.1 (5th Cir. 1996)... 6 Midwestern Teamsters Pension Trust Fund v. Deaton, 2009 U.S. Dist. LEXIS (S.D. Tex. May 7, 2009) Morrison v. National Australia Bank, 130 S. Ct. 2869, 2883 (2010)... 16, 17 3

4 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 4 of 21 Securities and Exchange Commission v. Halliburton Company and KBR Inc., No. 4:09-cv (S.D. Tex. 2009) Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)... 6 Welch v. Chao, 536 F.3d 269, (4th Cir. 2008) STATUTES 15 U.S.C 78u-6 (2010)... 7, 17, U.S.C 78u-6(h)(1)(B)(i)(2010) U.S.C 78u-6(a)(6) (2010) U.S.C. 78o(d) U.S.C. 1514A (2002)... 10, 11, U.S.C.S (LEXIS 2012) U.S.C.S (LEXIS 2012) U.S.C.S. 78j(b) (LEXIS 2012) U.S.C. 78dd-1 (1977) Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.L.No , 124 Stat (2010) RULES FED. R. CIV. P. 12(b)(6)... 6 S.D. Tex. L.R REGULATIONS Exchange Act Release No , SEC Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on Potential Exchange Act Section 10(b) and Section 14(a) Liability (Mar. 1, 2005)

5 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 5 of 21 SEC Litigation Release No and Accounting and Auditing Enforcement Release No (June 27, 2010) Title 9 of the DOJ Criminal Resource Manual 1018 (November 2000)

6 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 6 of 21 Plaintiff Khaled Asadi asks the Court to deny the Defendant's Motion to Dismiss for failure to state a claim. IN T R O DU C T I O N 1. The Plaintiff is Khaled Asadi; Defendant is G.E. Energy (USA), LLC. 2. The Plaintiff filed suit against the Defendant alleging retaliation in violation of The Anti-Whistleblower Retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act seeking damages including lost wages and attorneys fees. 3. The Defendant filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) alleging that the Plaintiff's Complaint failed to state a claim upon which relief could be granted. 4. Plaintiff files this response asking the Court to deny the D 5. The Defendant's motion should be denied because the Plaintiff has pled facts sufficient to show that he was a whistleblower under the Anti-Retaliation provisions of the Dodd- Frank Act. In addition, the Defendant's motion has failed to show that the Plaintiff is unable to prove that "no set of facts in support of his claim would entitle him to relief." F A IR N O T I C E ST A ND A RD In a rule 12(b)(6) motion the court must accept as true a plaintiff's well pleaded factual allegations. FED. R. CIV. P. 12(b)(6). When considering a defendant's motion to dismiss, a court must construe the factual allegations in the complaint in the light most favorable to the plaintiff. Barker v. Riverside Cnty. Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009); see Bell Atl. Corp. v. Twombly, 550 U.S. 544, (2007). If the complaint provides fair notice of the claim and the factual allegations are sufficient to show that the right to relief is See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009); Twombly, 550 U.S. at ; Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). In securities cases, courts may take judicial notice of the contents of public disclosures that the law requires to be filed by government agencies, such as the SEC, and that are actually filed with the agency. Lovelace v. Software Spectrum, Inc., 78 F.3d 6

7 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 7 of ,1018 n.1 (5th Cir. 1996). In Twombly, the Supreme Court held that detailed factual allegations are not required, but the rule does call for sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face." See Twombly, 550 U.S. 544, (2007). Twombly is consistent with the Court's view that when a federal court reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or admissions, it's task is necessarily a limited one. The issue is not whether the plaintiff will ultimately prevail, but whether a plaintiff is entitled to offer evidence to support the claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). SU M M A R Y O F T H E A R G U M E N T The Defendant's motion to dismiss in this case should be denied because Mr. Asadi's Complaint provides the Defendant with fair notice of his claim for whistleblower retaliation. See Brooks, 578 F.3d at 581. In his Complaint, Mr. Asadi has identified plausible factual allegations supporting his claim of retaliation under the Securities Whistleblower Incentives and Protection provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"). 1 Dodd-Frank provides that "no employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower (i) in providing information to the Commission in accordance with this section; (ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or (iii) in 1 15 U.S.C. 78u-6 (2010). 7

8 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 8 of 21 making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002, the Securities Exchange Act of 1934, and any other law, rule or regulation subject to the jurisdiction of the Commission." 2 In support of his claim, Mr. Asadi includes a detailed description of internal disclosures that he made of what he reasonably believed to be violations of the Foreign Corrupt Practices Act ("FCPA"). 3 These disclosures were made both to his immediate supervisor and to the Ombudsperson for G.E. Based on the disclosures identified in the Complaint, Mr. Asadi is a whistleblower under the Anti Whistleblower Retaliation provisions of Dodd-Frank. See e.g. Egan v. TradingScreen, Inc., No 10 Civ (LBS), 2011 WL (S.D.N.Y. May 4, 2011). The Complaint also includes a detailed description of the retaliation that he suffered as a result of these disclosures. Complaint Mr. Asadi has based his claim of retaliation on a series of events following the disclosures that were inconsistent with his career at G.E. up to that point. Complaint In the context of a 12(b)(6) motion, these factual allegations show a right to relief that is plausible on its face and more than mere speculation. 4 IN T E RN A L DISC L OSUR ES PR O T E C T E D UND E R D O DD-F R A N K As a case of first impression in this circuit the court's analysis in Egan v. Trading Screen Inc. is particularly instructive. Egan directly addresses the question of whether a plaintiff is 2 Id. Section 78u-6(h)(1)(B)(i)(2010). 3 The Complaint also identifies the context in which these disclosures were made, including the specific violation and the Iraqi Agency (Ministry) and Sr. Deputy Minister alleged to be involved. Complaint When the factual allegations are assumed to be true, they show a right to relief that is more than mere speculation. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009); Fowler v. UPMC Shadyside, 578 F.3d 203, (3d Cir. 2009); see Iqbal, 129 S. Ct. at 1950; Twombly, 550 U.S. at ; Brooks, 578 F.3d at

9 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 9 of 21 required to report his allegations directly to the SEC in order to seek relief under the Anti- Whistleblower Retaliation provisions of Dodd-Frank. In his analysis of the statute, District Judge Leonard Sand held that "the contradictory provisions of the Dodd-Frank Act are best harmonized by reading 15 U.S.C. 78u-6(h)(A)(iii)'s protection of certain whistleblower disclosures not requiring reporting to the SEC as a narrow exception to 15 U.S.C. 78u- 6(a)(6)'s definition of a whistleblower as one who reports to the SEC. Therefore, [a] Plaintiff must either allege that his information was reported to the SEC, or that his disclosures fell under the four categories of disclosures delineated by 15 U.S.C. 78u-6(h)(1)(A)(iii) that do not require such reporting: those under the Sarbanes-Oxley Act, the Securities Act, 18 U.S.C. 1513(e), or other laws and regulations subject to the jurisdiction of the SEC." See Egan v. TradingScreen, Inc., No 10 Civ (LBS), 2011 WL (S.D.N.Y. May 4, 2011). In this case, Mr. Asadi is a whistleblower under Dodd-Frank since his internal reports fall under the four categories of protected disclosures articulated by the court in Egan. IN T E RN A L DISC L OSUR ES PR O T E C T E D UND E R SA RB A N ES-O X L E Y The Dodd-Frank Anti-Whistleblower Retaliation provisions specifically protect individuals making disclosures under the Whistleblower Protections of the Sarbanes-Oxley Act. 5 Disclosures made under Sarbanes-Oxley do not require that the individual personally report to the SEC. Section 806 of Sarbanes-Oxley provides that "no company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d))...or any officer, employee, contractor, subcontractor, or agent of such company...may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the 5 15 U.S.C. 78u-6(h)(1)(A)(iii) (2010). 9

10 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 10 of 21 employee- (1) to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344 or 1348, any rule or regulation of the Securities and Exchange Commission, or any federal law relating to fraud against shareholders, when the information or assistance is provided to or the investigation is conducted by...(c) a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct.)" 6 A plaintiff wishing to prevail on a claim under Section 806 must prove by a preponderance of the evidence that "(1) [he] engaged in protected activity; (2) the employer knew that [he] engaged in protected activity; (3) he suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action. To qualify as protected activity, an employee's complaint must definitively and specifically relate to an instance of mail fraud, wire fraud, bank fraud, securities fraud, a violation of any rule or regulation of the Securities Exchange Commission, or a violation of any provision of federal law relating to fraud against shareholders. Hemphill v. Celanese Corporation, 2010 U.S. Dist. LEXIS at *11 (N. D. Tex. June 16, 2010). (Citing Allen v. Admin. Review Bd. 514 F.3d 468, (5th Cir. 2008). Section 806 only pertains to an employee's report of conduct that he reasonably believes constitutes a violation of one of the six enumerated categories. However, an employee's reasonable but mistaken belief that an employer engaged in conduct that constitutes a violation of one of the six enumerated categories is protected. Id. at * U.S.C. 1514A (2002). 10

11 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 11 of 21 In this case Mr. Asadi reported to his immediate supervisor that he believed the hiring of a woman closely associated with the Iraqi Sr. Deputy Minister of Electricity in order to curry favor with the Ministry could damage G.E.'s reputation in the region and potentially violate the FCPA. 7 Complaint 12. Mr. Asadi took his complaint a step further and reported his concerns to the Ombudsperson for the region. 8 The Complaint further alleges that as a result of this disclosure, Mr. Asadi received adverse employment action in the form of a negative performance review and pressure to step down from his position. Complaint 14. Finally the Complaint states that the pressure to step down from his position and his abrupt termination were inconsistent with any identified performance issue or the course of his career with G.E. to that point. See Complaint The whistleblower provisions of Section 806 are applicable to G.E. Energy (USA) since its financial information is included in the consolidated financial statements of its parent company, General Electric. General Electric is a publically traded company required to file reports under section 12 of the Securities Exchange Act of See 18 U.S.C. 1514A. Mr. Asadi's report to his direct supervisor and to the Ombudsperson were protected activities under 18 U.S.C. 1514A because they related to one of the six enumerated categories and were based on his reasonable belief that a violation of one of the six categories had occurred. 9 The defendant has indicated that claims under Section 1514A can only relate to 7 The court in Hemphill specifically provided that [a]n employee need not 'cite a code section he believes was violated' in his communications to his employer, but the employee's communication must identify the specific conduct that the employee believes to be illegal. Welch v. Chao, 536 F.3d 269, (4th Cir. 2008) (quoting Fraser v. Fiduciary Trust Co. Int'l, 417 F. Supp 2d 310, 322 (S.D.N.Y. 2006)). 8 In response to the information provided to the Ombudsperson, Mr. Asadi received a follow-up call in which he detailed his concerns about the arrangement. At the conclusion of the call Mr. Asadi was told that there would be follow-up as things progressed. To date, no one from G.E. has contacted Mr. Asadi to follow up on this information. 9 An employee's reasonable belief must be analyzed under a subjective a subjective and objective standard. As such [t]he objective reasonableness of a belief is evaluated based on the knowledge available to a reasonable 11

12 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 12 of 21 fraud. See Motion at footnote 5. The court in Hemphill specifically declined to impose this requirement in its finding that "there is no indication in the statutory text itself that all six enumerated categories must relate to fraud." Hemphill, 2010 U.S. Dist. LEXIS at *18. Mr. Asadi's Complaint also includes facts that indicate that his employer was aware of these disclosures, since he made them both to his supervisor and to the Ombudsperson. See Complaint Finally, Mr. Asadi's Complaint specifically indicates that he suffered unfavorable employment activity and that his protected activity was a contributing factor to the unfavorable employment action. See Complaint Because his internal disclosures fall within the Whistleblower Protection provisions of Sarbanes-Oxley, Mr. Asadi has whistleblower status under 18 U.S.C. 1514A. As a Sarbanes-Oxley whistleblower, Mr. Asadi qualifies as a whistleblower under the Anti- Whistleblower Retaliation provisions of the Dodd-Frank Act since internal disclosures arising under Sarbanes-Oxley were specifically protected under the statute. See 15 U.S.C. 78u-6(h)(1)(A)(i)-(ii) (2010). These factors, when viewed in the light most favorable to the Plaintiff indicate that the Defendant has fair notice of his claim and that his right to relief is plausible on the face of the Complaint. Accordingly, the Defendant's motion to dismiss should be denied. DISC L OSUR E O F F CPA V I O L A T I O NS A R E R E Q UIR E D UND E R SA RB A N ES- O X L E Y, T H E SE C URI T I ES A C T O F 1934 and R E G U L A T I O NS SUBJE C T T O T H E JURISDI C T I O N O F T H E C O M M ISSI O N In addition to the whistleblower protections specifically articulated in 15 U.S.C. 1514A, Sarbanes-Oxley requires publically traded companies to disclose violations of the person in the same factual circumstances with the same training and experience as the aggrieved employee. Allen v. Admin. Review Bd. 514 F.3d 468, (5th Cir. 2008). 12

13 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 13 of 21 FCPA in its quarterly and annual public filings. Section 302 of the Sarbanes-Oxley Act requires a company to disclose an FCPA violation if senior officers are unable to certify the 10 Annual reporting under Section 404 also requires that public companies disclose violations of the FCPA if they occurred as a result of 11 The SEC has specifically indicated that failure to disclose potential violations may lead to enforcement actions for both an underlying FCPA violation and any related false or misleading public disclosures and omissions related to information gathered during a company investigation. 12 In addition, the SEC has stated that improper payments disguised as salaries violate the Anti-Bribery provisions of the FCPA if the payments are made for the purpose of obtaining or retaining business. See SEC Litigation Release No (February 10, 2011). In this case Mr. Asadi reported potential violations of the FCPA to both his immediate U.S.C.S (LEXIS 2012) (a)(4)-(5) the signing officers-(a) are responsible for establishing and maintaining internal controls; (B) have designed such internal controls to ensure that material information relating to the issuer and its consolidated subsidiaries is made known to such officers by others within those entities, particularly during the period in which the periodic reports are being prepared; (C) have evaluated the effectiveness of the issuers internal controls as of a date within 90 days prior to the report; and (D) have presented in the report their conclusions about the effectiveness based on their evaluations as of that date; ( 5) the signing officers have disclosed to the issuers auditors and the audit committee of the board of direc (A) all significant deficiencies in the design or operation of internal controls which could adversely affect the issuers ability to record, process, summarize, and report financial date and have identified for the issuers auditors any material weakness in the internal controls; and (B) any fraud, whether or not material, that involves officers have indicated in the report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses U.S.C.S (LEXIS 2012) (a) Rules required. The Commission shall prescribe rules requiring each annual report required by section 13(a) or 15(d) of the Securities Exchange Act of 1934 to contain an internal control report, which shall (1) state the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and (2) contain an assessment, as of the end of the most recent fiscal year of the issuer, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting. 12 See Exchange Act Release No , SEC Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on Potential Exchange Act Section 10(b) and Section 14(a) Liability (Mar. 1, 2005). 13

14 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 14 of 21 supervisor and to the Ombudsperson for G.E. These potential violations surrounded the hiring of a woman closely associated with the Senior Deputy Minister of Electricity (Iraq) in order to curry favor with the Ministry while in negotiating a lucrative Joint Venture Agreement valued at over $250M. See Complaint footnote 1. As a publically traded company G.E., and companies included in its consolidated reports (including G.E. Energy), is required to disclose potential violations under Section 302 and 404 of the Sarbanes-Oxley Act. Since these disclosures were required, Mr. Asadi is a whistleblower under the Dodd- Frank Anti-Whistleblower Retaliation provisions specifically protecting individuals making disclosures required by the Sarbanes-Oxley Act, the Securities Act of 1934 and a regulation subject to the jurisdiction of the Commission. See Egan v. TradingScreen, Inc., No 10 Civ (LBS), 2011 WL (S.D.N.Y. May 4, 2011). As a whistleblower under the narrow exception to the definition of a whistleblower under 15 U.S.C. 78u-6(a)(6), Mr. Asadi is entitled to seek relief as a private cause of action under the Anti-Whistleblower Retaliation provisions of Dodd-Frank. 13 These factors, when viewed in the light most favorable to the Plaintiff show that Mr. Asadi has stated a claim upon which relief can be granted. Accordingly, the Court should deny the Defendan otion and retain the case on the R E ASO N A B L E B E L I E F O F F CPA V I O L A T I O N In his Complaint, Mr. Asadi has articulated facts supporting his reasonable belief that G.E. had potentially violated the FCPA by hiring a woman closely associated Sr. Deputy Minister of Electricity in order to secure a lucrative contract with the government. See Complaint As the court articulated in Hemphill U.S.C. 78u-6(h)(1)(C) (2010). 14

15 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 15 of 21 must be analyzed under a subjective and objective standard. See Hemphill v. Celanese Corporation, 2010 U.S. Dist. LEXIS at *11 (N. D. Tex. June 16, 2010) (quoting Allen based on the knowledge available to a reasonable person in the same factual circumstances Id. At the time that he made his initial report, Mr. Asadi held the position of Iraq Country Executive, a position included within G.E.'s Senior Professional Career Band. See Complaint 9. On June 27, 2010 G.E. agreed to a $23.4 million dollar settlement with the SEC to resolve claims that arose from a $3.6 million dollar kickback scheme paid under the UN Oil for Food Program. 14 In announcing the settlement, Cheryl J. Scarbaro, head of the.e. failed to maintain adequate internal controls to detect and prevent these illicit payments by its two subsidiaries to win oil for food contracts, and it failed to properly record the true nature of the payments in its In Mr. approximate date of his initial report to his supervisors regarding potential violations of the FCPA. See Complaint 11. This is the ion dollar settlement with G.E. In light of G.E. the FCPA in Iraq, the Court should find that Mr. Asadi was reasonably concerned about additional violations of the FCPA in June of See SEC Litigation Release No and Accounting and Auditing Enforcement Release No (June 27, 2010). 15 The court in Hemphill found that an experienced auditor might reasonably be concerned about violations of the SEC after the company conceded that violations of company policy were discovered after an audit revealed potential violations of the Foreign Corrupt Practices Act. See Hemphill v. Celanese Corporation, 2010 U.S. Dist. LEXIS at *12 (N. D. Tex. June 16, 2010). 15

16 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 16 of 21 MORRISON O F L I M I T E D APPL I C A BI L I T Y The Defendant has stated that Mr. Asadi's case should be dismissed because Anti- Whistleblower Retaliation claims do not apply extraterritorially. The Supreme Court's opinion in Morrison v. National Australia Bank is offered as authority for this position. See Motion pp. 17. A closer reading of Justice Scalia's analysis indicates that Morrison cannot be applied as blindly to this situation as the defense would suggest. In Morrison the Supreme Court held that "there is no affirmative indication in the Exchange Act that Section 10(b) applies extraterritorially." See Morrison v. National Australia Bank, 130 S. Ct. 2869, 2883 (2010). The case directly applied to foreign plaintiffs suing foreign and American defendants for misconduct [fraud] in connection with securities traded on foreign exchanges. (So called 'f-cubed' securities litigation). Key to their analysis was the plain language of the statute which punished deceptive conduct "in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered." 16 Relying on its earlier decision in EEOC v. Arab American Oil Co.(Aramco) 17 the Court held that the 'focus' of congressional concern was most important [in determining extraterritoriality.] 18 The focus of congressional concern in enacting Dodd-Frank was "[t]o promote the financial stability of the United States by improving accountability and transparency in the U.S.C.S. 78j(b) (LEXIS 2012). 17 See EEOC v. Arabian American Oil Co., 499 U.S. 244, 248 (1991) (quoting Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285 (1949)). 18 See Morrison v. National Australia Bank, 130 S.Ct. 2869, 2883 (2010). "In Aramco, for example, the Title VII plaintiff had been hired in Houston, and was an American citizen. The Court concluded, however, that neither that territorial event nor that relationship was the "focus" of congressional concern, but rather domestic employment. Morrison, 130 S. Ct (2010). 16

17 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 17 of 21 financial system." 19 Of the many securities violations contemplated by Dodd-Frank are the Anti-Bribery and Books and Records provisions of the FCPA. 20 The Anti-Bribery provisions have clear extraterritorial application to American companies and their subsidiaries abroad. 21 Since the prosecution of these violations extraterritorially is well supported in the law the protection for whistleblowers who report these violations should follow. 22 Like the Court's observation in Morrison the focus is not on the place where the corruption originated, but rather on improving accountability and transparency in the financial system. The Dodd- Frank Act specifically prohibited retaliation against whistleblowers in an effort to improve accountability and transparency in the financial system. 23 In Morrison, Justice Scalia added "we do not say [that] the presumption against extraterritoriality is a "clear statement rule", if by that is meant a requirement that a statute say 'this law applies abroad.' Assuredly context can be consulted as well." See Id. at The context that should be consulted in this case is the convergence of the Anti- Whistleblower Retaliation provisions of Dodd-Frank with the Anti-Bribery provisions of the FCPA. Application of Morison as the defense suggests would open the door to retaliation against whistleblowers who assist in the prosecution of FCPA bribery cases outside of the United States. This result would be contrary to the clear congressional intent of enhancing protections for individuals who provide information regarding potential violations of 19 The full preamble reads "To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.L.No , 124 Stat (2010) U.S.C. 78dd-1 (1977). 21 Title 9 of the DOJ Criminal Resource Manual 1018 (November 2000). 22 See Midwestern Teamsters Pension Trust Fund v. Deaton, 2009 U.S. Dist. LEXIS (S.D. Tex. May 7, 2009);Litigation Release Number 20897A and Securities and Exchange Commission v. Halliburton Company and KBR Inc., No. 4:09-cv (S.D. TEX. 2009) U.S.C. 78u-6 (2010). 17

18 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 18 of 21 securities law. 24 G.E. SO L U T I O NS The Defendant has asked the Court to dismiss Mr. Asadi's complaint because he has not participated in G.E.'s dispute resolution plan (Solutions) prior to filing this lawsuit. See Motion pp. 18. Clearly the Court has the authority to require the parties to attend mediation. 25 However, the Court should not allow G.E. to manipulate the Court's authority into a draconian sanction greatly disproportionate to the alleged offense. The Anti-Whistleblower Retaliation provisions of the Dodd-Frank Act specifically provide that "an individual who alleges discharge in violation of [subparagraph A] may bring an action in the appropriate district court of the United States." 26 The Court should not allow a private "voluntary" agreement to frustrate clear congressional intent. Considering the Court's authority to order the parties to engage in alternative dispute resolution, Mr. Asadi could be required to participate in a minimum of two mediation sessions before he would receive a trial on the merits of his case. In the interest of judicial economy, the Court should deny the Defendant's Motion to Dismiss but instead direct the parties to conduct mediation in its Scheduling Order for this case. C O N C L USI O N The Plaintiff's Original Complaint provides the Defendant with fair notice of the claim and a plausible right to relief. See Brooks, 578 F.3d at 581. Because the Plaintiff has stated a claim on which relief can be granted, the Court should deny otion and 24 Id. 25 See S.D. Tex. L.R U.S.C. 78u-6(h)(1)(B)(i) (2010). 18

19 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 19 of 21 retain the In the alternative, should the Court reach the conclusion that further explanation of the charges against the Defendant is required the Plaintiff asks that he be granted leave to Amend his Complaint. DATED MARCH 16, 2012 Houston, Texas Respectfully submitted, By: /s/ Ronald E. Dupree Ronald E. Dupree Texas State Bar No Richmond Avenue, Suite 400 Houston, Texas Ronald@dupreelawfirm.com Tel Fax ATTORNEY IN CHARGE FOR PLAINTIFF, KHALED ASADI 19

20 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 20 of 21 C E R T I F I C A T E O F SE R V I C E Dismiss for Failure to State a Claim was March 16, /s/ Ronald E. Dupree Ronald E. Dupree 20

21 Case 4:12-cv Document 6 Filed in TXSD on 03/16/12 Page 21 of 21 IN T H E UNI T E D ST A T ES DIST RI C T C O UR T F O R T H E SO U T H E RN DIST RI C T O F T E X AS, H O UST O N DI V ISI O N K H A L E D ASA DI, Plaintiff, v. Civil Action No. 4:12 cv G. E. E N E R G Y (USA), L L C, Defendant. M O T I O N T O DISM ISS F O R PL A IN T I F T O ST A T E A C L A I M After considering defendant G.E. Energy (USA failure to state a claim and the response, the Court SIGNED on, 20. APPROVED & ENTRY REQUESTED: U.S. DISTRICT JUDGE Ronald E. Dupree 21