Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 1 of 9 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

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1 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 1 of 9 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No Civ-MARRA FILED BY D.C. SECURITIES AND EXCHANGE COMM ISSION, Plaintiff, V. MICHAEL LAUER, Defendant. sef 2 9 2û1i STEVEN M LAnlMoae cuenx u i olst. ct. s.d. og FLk.-w.Re. DEFENDANT LAUER'S NOTICE OF FILING SUPPLEMENTAL AUTHORITY TO HIS REPLY TO RESPONSES RE COLLATEM L ESTOPPEL D efendant M ichael Lauer files this N otice of Filing Supplem ental A uthority to bring to t h e a ttention of the Court the recent decision in Baloco v. D rum mond Co., N o th C ir,., filed September 23, Baloco bears on the Receiver's and the SEC'S argument that judgment against Lauer is not limited to the approximately $43 milion in the judgment but can extend to other funds. They argue that the finding of fraud on the part of Lauer is collateral estoppel and can be extended to additional sums beyond the $43 million. E.g., DE 2919, p (Reply mailed Sept. 22, 2014). The Eleventh Circuit has rejected their argement. Baloco held that the original judglnent operated to foreclose further relief on the same transaction. Lauer attaches pages 1 and of the opinion. The Eleventh Circuit stated (footnotes omitted): A subsequent suit is barred under the doctrine of claim preclusion when the following four elements are present: (1) there is a final judgment on the merits, (2) the decision was rendered by a court of competent jurisdiction; (3) the same cause of action is involved in both cases', and (4) the parties, or those in privity with them, are identical in both suits.... A num ber of circuits, including our own, fo low the so-ca led 'transactional' approach to detennine w hether the case before the court asserts tûthe sam e cause of action as the previously litigated case. U nder that approach, çliqf a case arises out of the same nucleus of operative facts, or based

2 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 2 of 9 fails. upon the sam e factual predicate, as a former action,... the two cases are really the same Sclaim' or çcause of action' for purposes of res judicata.'.... In addition, tres judicata applies to not only to the precise legal theory presented in the prior cases, but to al1 legal theories and claim s arising out of the snm e nucleus of operative facts (which could have been raised in the prior casel.' The SEC'S and Receiver's frivolous '%collateral estopped' claim to expand the judgment Res ectfuly submitted, &' Dated: Septem ber 25, 2014 David M. Dorsen Suite K Street, N.W. W ashington, DC Telephone: E-Mai1: Dorsen3s@ aol.com A ttorney for M ichael Lauer

3 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 3 of 9 Case: Date Fîled: 09/23/2014 Page: 1 of 46 IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT EPUBLISHq N o D.C. D ocket N o. 7:09-cv RD P FREDDY LOCARNO BALOCO; KATHERW EPAOLA LOCARNO BALOCO, through her guardian and representative Y aneth Ester Baloco Tapia; AYLEEN PAOLA ORCASITA ALMARALES; STEFANY LOREN ORCASITA CORDOBA; MARLON ALEXI ORCA SITA A LM A RA LES, through his guardian and representative Elisa A lm arales V iloria; ASHLY PATRICIA ORCASITA ALMARALES, through her guardian and representative Elisa Almarales Viloria; SERGIO ESTEBAN SOLER URREGO; INGRID KARINA SOLER URREGO; GREYSI PAOLA LOCARNO LARIOS; GUSTAVO ALBERTO LOCARNO LARIOS; LINDA TERESA ORCASITA PINEDA; VANESSA KATHERINE ORCASITA PISCCIOTY, Plaintiffs-A ppellants, Verstls DRUMMOND COMPANY, lnc.; DRUMM OND LTD.; AUGUSTO JIMENEZ; JAMES ADKINS; M IKE TRACY, D efendants-appellees.

4 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 4 of 9 Case: Date Filed: 09/23/2014 Page: 33 Of 46 The O rder G ranting Sum m ary Judzm ent as to the O riqinal C hildren's Claim s W e t'urn now to Plaintiffs' argum ent that the district court erred in granting Defendants' motion for summaryjudgment. The stricken declarations wil not be considered in this analysis. W e review the district court's grant of summaryjudgment de novo constnling the evidence in the light m ost favorable to the non-m oving party and draw ing all reasonable inferences in its favor. Eli Lilly & C o. v. A ir Exp. lnt'l USA, Inc., 615 F.3d 1305, 1313 (1 1th Cir. 2010).W e may grant summary judgment only after determining that there is no genuine dispute as to any material fact and (thatj the movant is entitled to judgment as a matter of law.' FED. R. CIV. P. 56(a).An issue is not tgenuine' if it is unsupported by the evidence or is created by evidence that is çtm erely colorable' or 'not significantly probative.' Anderson v. Liberty Lobby, Inc., 477 U.S. 242, , 106 S. Ct. 2505, 2511 (1986).A mere scintilla of evidence in support of the nonmoving party's position is insufficient to defeat a motion for summaryjudgment; there must be evidence from which ajury could reasonably find for the non-moving party. Id. at 252, 106 S. Ct. at t-l-he district court's application of res judicata is a question of 1aw which is reviewed de novo. H ow ever, w hether a party is in privity w ith another for 33

5 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 5 of 9 Case: Date Filed: 09/23/2014 Page: 34 of 46 preclusion purposes is a question of fact that is review ed for clear error.' Griswold v. Cntv. of Hilsborouah, 598 F.3d 1289, 1292 (1 1th Cir. 2010) (internal quotation marks and citation omitted). The O riginal Children's claim s are barred by claim preclusion. Federal courts m ust apply federal com m on 1aw to determ ine the preclusive effect of a plior federal court judgment. Taylor v. Sturgell, 553 U.S. 880, 89 1, 128 S. Ct , 2171 (2008). The preclusive effect of ajudgment is defined by claim preclusion and issue preclusion, w hich are collectively referred to as çtres judicata.' Under the doctrine of claim preclusion, a final judgment forecloses :ésuccessive litigation of the very sam e claim, w hether or not relitigation of the claim raises the sam e issues as the earlier suit.' Issue preclusion, in contrast, bars çsuccessive litigation of an issue of fact or 1aw actually litigated and resolved in a valid court determination essential to the priorjudgment,' even if the issue recurs in the context of a different claim. By çfprecludlingq parties from contesting m atters that they have had a fu l and fair opporttm ity to litigate,' these tw o doctrines protect against éçthe expense and vexation attending multiple lawsuits, conservleq judicial resources, and fostelrj reliance on judicial action by minimizing the possibility of inconsistent decisions.' 1d. at 892, 128 S. Ct. at (intemal citations and footnote omited). A subsequent suit is barred under the doctrine of claim preclusion w hen the following four elements are present: (1) there is a final judgment on the merits, (2) the decision was rendered by a court of competent jurisdiction; (3) the same cause of action is involved in both cases; and (4) the parties, or those in privity 34

6 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 6 of 9 Case: Date Filed: 09/23/2014 Page: 35 of 46 w ith them, are identical in both suits. I.A. D urbins Inc. v. Jefferson N at'l B ank, 793 F.2d 1541, 1549 (11th Cir. 1986).It is undisputed that the tirst two elements are met here. Thus, res judicata operates to preclude the Original Children's claim s here if D rum m ond I and the instant case involve the sam e causes of action, and the O riginal Children w ere parties, or in privity w ith parties, to D rum m ond 1. A num ber of circuits, including our ow n, follow the so-called E% ansactional' approach to determ ine w hether the case before the court asserts the sam e cause of action' as the previously litigated case.23 U nder that approach, tûgilf a case arises out of the same nucleus of operative facts, or is based upon the sam e factual predicate, as a form er action,... the tw o cases are really the sam e tclaim' or tcause of action' for pum oses of res judicata.' Griswold, 598 F.3d at 1293 (internal quotation marks omittedl; see also N.A.A.C.P. v. Hunt, 891 F.2d 1555, 1561 (11th Cir. 1990).In addition, Elrqes judicata applies not only to the precise legal theory presented in the prior case, but to al1 legal theories and claim s arising out of the same nucleus of operative fact gwhich could have been raised in the prior casel.' Hunt, 891 F.2d at Sees e.g.. Petrom anagem ent Com. v. A cm e- Thomas Joint Venture, 835 F.2d 1329, 1335 (10th Cir. 1988) (applying the transactional approach based on a common nucleus of operative facts to justify a res judicata bar of the new actionl; Yankton Sioux Tribe v. U.S. Dep't of Health & Human Servs., 533 F.3d 634, (8th Cir. 2008) (holding that t6a claim is barred by res judicata if it arises out of the same nucleus of operative facts as the prior claim') (internal quotation marks and citations omited). 35

7 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 7 of 9 Case: Date Filed: 09/23/2014 Page: 36 Of 46 The trem endous sim ilarity of the detailed factual averm ents of the Third Amended Complaint in Drummond 1 and the First Amended Complaint in Dnlmmond 11 shows that res judicata applies under the transactional test. Furtherm ore, both com plaints assert causes of action for violation of the 1aw of nations under the ATS, for extrajudicial killings under the TVPA, and for wrongful death under the 1aw of Colum bia. Thus, claim preclusion operates to bar the O riginal Children's claim s. Because the nucleus of operative facts and the causes of action are the sam e in Drummond I and Drummond 11, the crux of the claim preclusion issue as to the O riginal Children's claim s hinges on whether they were parties to or in privity with a party in Drummond 1. The district court, while com m enting on Gthe ocean of evidence that the children in this case were in fact the children represented in Dnzmmond 1,' analyzed the res judicata issue based on a stated assumption (not a finding) that the O riginal Children w ere not parties, but rather privies of their m others and the decedents. A ssum ing that the children were not parties in D rum m ond I w e agree w ith the district court's analysis based on the stated assum ption. H ow ever, based on the uncontroverted evidence in the record, it is clear to us that the O riginal Children w ere parties in Drum m ond 1. The contents of the Third A m ended 36

8 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 8 of 9 Case: D ate Filed: 09/23/2014 Page: 37 of 46 Com plaint, the N otice of ldentities, the 2003 declarations and depositions of the M others of the O riginal Children, and counsel's closing argum ent at trial all point to the Original Children's status as parties bound by the judgment.z4 Thus, the doctrine of claim preclusion bars the Original Children from bringing the sam e claim s again. The Order Dismissing the New Children's Claims W e review # novo the district court's dismissal under Rule 12(b)(6) for failure to state a claim, çaccepting the allegations in the com plaint as tl'ue and construing them in the light m ost favorable to the plaintiff.' H ill v. W hite, 321 F.3d 1334, 1335 (1 1th Cir. 2003) (citation omitted). W e conclude that the N ew Children's claim s are barred by claim preclusion. The TV PA claim is also barred by issue preclusion. A s w e determ ined in the interim appeal, the TVPA'S statem ent that claim s for dam ages m ay be asserted by a legal representative of the decedent or by 'any 24 N onnally the identity and representative capacity of a plaintiff. is clearly stated in the style of a case. Unfortunately, this did not occur here. Instead, the plaintiffs were refcrred to in the body of the Third Am ended Com plaint as anonym ous Doe Plaintiffs. Each Jane Doe Plaintiff included a w ife or perm anent com panion of one of the decedents and one or m ore of their children. The body of the Third Am ended Com plaint alleged that the D oe Plaintiffs are heirs of the decedents and that they are çthe repository of these decedents' rights.' This term inology, chosen by Plaintiffs' counsel, has legal significance regardless of w hat was in the m inds of the wives and perm anent com panions concem ing their role in the case. The opinion of Pedro R. Lafont Pianetta, Plaintiffs' expel't witness, is that the children's dam ages of the iure hereditatis variety must be split equally among the heirs (meaning only the children of the decedent). 37

9 Case 9:03-cv KAM Document 2931 Entered on FLSD Docket 09/30/2014 Page 9 of 9 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 25th day of September, 2014, a true and correct copy of the foregoing has been sent by U SPC, first-class m ail, to: Christopher M artin, Esq. Securities & Exchange Com m ission 801 Brickell Avenue Suite 1800 Miami, FL rd Juan C. Enjamio, Esq. D avid Bane, Esq. Hunton & Williams 1 l 1 1 Brickell A venue Suite 2500 Miami, FL &. 5$ ' /. David M. Dorsen A ttorney for M ichael Lauer