Summary
recognizing Sarbanes Oxley created only two private causes of action: 15 U.S.C. § 7244, "Insider trades during pension fund blackout periods" and 18 U.S.C. § 1514A, whistleblower protection for employees of publically traded companies
Summary of this case from Martucci v. VitaleOpinion
02 Civ. 10140 (JSM)
August 5, 2003
OPINION ORDER
Plaintiffs, who allege that they own certain mineral rights in Indonesia bring this action against the Export-Import Bank, various financial institutions, a law firm, and an accounting firm. The basic allegation is that these parties were involved in transactions in which the mineral rights which Plaintiffs own in Indonesia were pledged to secure loans made to Newmont Mining Corporation and certain of its subsidiaries (hereinafter, collectively referred to as "Newmont"). It is also alleged that one of the Defendants is engaged in selling the minerals which are alleged to have been improperly mined from their property by Newmont.
As filed the Complaint did not name Newmont, which is clearly a necessary party under Fed.R.Civ.P. 19. Plaintiffs are prepared to amend the complaint to add Newmont. However, the Court directed Plaintiffs to withhold seeking leave to amend until the present motions were decided. Since the Complaint is to be dismissed and adding the Newmont parties would not cure the defects in the Complaint, Plaintiffs' application to amend the complaint to add additional parties is denied as moot.
The Court previously denied from the bench Plaintiffs' application for a preliminary injunction, noting that Plaintiffs have not established a likelihood of success on the me?its. Presently before the Court are motions by each of the Defendants to dismiss the Complaint.
While Plaintiffs obviously believe that they have been aggrieved by the conduct of Newmont and the related actions of the Defendants in this case, they fail to appreciate the limited role of the federal courts in our federal system. If the allegations of the complaint are true, it may be that Plaintiffs have a cause of action against Newmont and, perhaps, some of the Defendants here for breach of contract or conversion under state law. However, the complaint fails to allege a federal cause of action and there is no diversity of citizenship alleged, nor could there be, since one of the Plaintiffs and one of the Defendants are considered citizens of the State of New York.
Although the complaint states that jurisdiction is based on the Fourteenth Amendment, Title 18 United States Code § 656 and the Sarbanes-Oxley Act of 2002, none of those provisions supports jurisdiction in this case.
The Fourteenth Amendment is clearly not applicable here since a cause of action under that amendment requires some form of state action and none is alleged. To the extent the actions of the Export-Import Bank might give rise to a due process claim under the Fifth Amendment, the Complaint alleges only that the Bank was induced by fraudulent representations to make limited recourse financing available to certain entities. There are no allegations that would support a claim that the Bank either denied Plaintiffs' due process or denied them the equal protection of the law.
Section 656 of Title 18 is a criminal statute which does not provide a private right of action to the victim of the crime. See Federal Savings Loan Ins. Co. v. Reeves, 816 F.2d 130, 137-38 (4th Cir. 1987). Although Plaintiffs refer generally to the Sarbanes-Oxley Act, they do not point to any specific provision in that Act which provides them with a cause of action here. This is for the very good reason that Sarbanes-Oxley did not create any cause of action that would be relevant here.
Sarbanes-Oxley created only two private causes of action: one that involves recovery of profits from insider trading, 15 U.S.C. § 7244, and one that provides protection for whistle blowers, 18 U.S.C. § 1514A.
Since the Complaint fails to allege any cause of action within the jurisdiction of the federal courts, the Complaint is dismissed. Plaintiffs have now filed two complaints which fail totally to allege a claim within the jurisdiction of the federal courts. In addition, at argument on Plaintiffs' requests for preliminary relief, the Court pointed out to Plaintiffs' counsel the defects in the complaint. Therefore, the Plaintiffs are denied leave to replead and the Complaint is dismissed with prejudice to a further filing in this Court, but without prejudice to whatever right the Plaintiffs may have to pursue their claims in state court or in the courts in Indonesia.