Opinion
05 Civ. 7455 (KMW).
February 28, 2007
OPINION AND ORDER
Defendants American Capital Access Service Corp. and American Capital Access Holdings Ltd. (collectively, "ACA") move to dismiss the fifth cause of action in the Complaint filed herein by Plaintiff John Roulett, which alleges that, in terminating Roulett's employment, ACA violated Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A. For the reasons stated below, ACA's motion is granted. The fifth cause of action in the Complaint is dismissed with prejudice.
BACKGROUND
The following facts alleged in the Complaint are accepted as true for the purpose of this motion to dismiss. See Kirch v. Liberty Media Corp., 449 F.3d 388, 392 (2d Cir. 2006).
ACA provides financial guaranty insurance and credit enhancement services to corporate clients. (Compl. ¶ 3.) Roulett was a director and manager at ACA. (Id. ¶ 19.) During his five years of service, he was a valued and productive employee. (Id. ¶¶ 16, 20-29.) On multiple occasions during that time period, Roulett had informed officers and directors of ACA that he believed the company was engaged in improper activities, but ACA took no corrective steps. (Id. ¶ 55-58, 60.) Roulett was abruptly terminated on January 20, 2004. (Id. ¶ 30.) No ACA employee told him why he was terminated. (Id. ¶¶ 32-34.)
On February 13, 2004, ACA filed a Form S-1 Registration Statement under the Securities Act of 1933, the first step in pursuing an initial public offering. (Id. ¶¶ 62-63.) It was only after learning of the filing that Roulett concluded that his prior whistleblowing activities were the cause of or a contributing factor in his termination. (Id. ¶ 68.)
On May 12, 2004, Roulett filed a complaint with the Occupational Safety and Health Administration ("OSHA"). (Id. ¶ 9.) OSHA dismissed his complaint, and he appealed. (Id. ¶ 10.) On appeal, an administrative law judge granted the defendants' motion to dismiss. (Id. ¶ 12.) Roulett then filed a petition for review of the administrative law judge's order. (Id. ¶ 13.) Having received no final determination of his claims by August 23, 2005, he filed this action. (Id. ¶ 15.)
APPLICABLE LAW
Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 2002 ("the Act"), codified at 18 U.S.C. § 1514A, affords protection to whistleblowing employees of publicly traded companies. The Act provides, in relevant part:
No company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l ), or that is required to file reports under section 15(d) 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 . . . or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee [to report a violation of federal securities laws and regulations].18 U.S.C. § 1514A(a).
An employee who experiences discrimination prohibited by the Act may file a complaint with the Secretary of Labor. Id. § 1514A(b)(1)(A). If the Secretary does not issue a final decision within 180 days of the filing of the complaint, for reasons other than the employee's bad faith, the employee may bring an action in the appropriate United States District Court.Id. § 1514A(b)(1)(B). The Act contains a statute of limitations: the employee must file his initial complaint within 90 days of the violation. Id. § 1514A(b)(2)(D).
DISCUSSION I. Standard for a Motion to Dismiss
A defendant may move to dismiss a claim under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. In weighing a motion to dismiss, the Court must "accept as true the factual allegations in the complaint and draw all inferences in the plaintiff's favor." Allaire Corp. v. Okumus, 433 F.3d 248, 249-50 (2d Cir. 2006). "A complaint may not be dismissed under the Rule unless it appears beyond doubt, even when the complaint is liberally construed, that the plaintiff can prove no set of facts which would entitle him to relief." Id. at 250 (internal quotation marks omitted).
II. Roulett's Cause of Action Must Be Dismissed for Failure to State a Claim Upon Which Relief Can Be Granted
ACA argues that Roulett is not entitled to relief under the Act because ACA is neither "registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l )" nor "required to file reports under Section 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78o(d))." 18 U.S.C. § 1514A(a). Roulett does not directly dispute this claim, but instead makes two arguments in support of his contention that ACA is covered by the Act: (1) ACA commenced but then withdrew an application to register securities; and (2) ACA is a "contractor, subcontractor, or agent" of certain registered companies. Neither of these arguments constitutes a claim upon which relief can be granted.
A. ACA's Withdrawn Application to Register Securities Does Not Bring It Within the Scope of the Act
Roulett states that on February 13, 2004, ACA filed a Form S-1 Registration Statement under the Securities Act of 1933, in preparation for an initial public offering of stock. (Compl. ¶ 63.) Although Roulett acknowledges that ACA "withdrew its registration prematurely and before it completed the registration process" (Pl.'s Mem. of Law in Opp'n 1), he argues that the mere filing of an application for registration brings ACA within the scope of the Act.
The relevant sections of the Securities Exchange Act of 1934 do not support this view. Section 12 of the Securities Exchange Act provides that "[i]f the exchange authorities certify to the Commission that the security has been approved by the exchange for listing and registration, the registration shall become effective thirty days after the receipt of such certification by the Commission or within such shorter period of time as the Commission may determine." 15 U.S.C. § 78l(d). Thus, a corporation does not have a "registered" class of securities for purposes of the Act until (1) exchange authorities certify to the Securities and Exchange Commission that the security has been approved, and (2) thirty days elapse from the date of certification. Neither condition applies to ACA's aborted application for registration.
Section 15(d) of the Securities Exchange Act requires periodic reporting from issuers that have "file[d] a registration statement which has become effective pursuant to the Securities Act of 1933." 15 U.S.C. § 78o(d). ACA never filed a registration statement that became effective.
ACA thus does not meet either of the two standards for coverage by the Act, no matter how liberally its terms are construed. Accordingly, Roulett is not entitled to protection under the Act on the basis of ACA's application for registration.
B. Roulett's Claim That ACA Is a "Contractor, Subcontractor, or Agent" of Publicly Traded Companies Is Time-Barred
CONCLUSION
Although Roulett claims that his complaint was timely because it was submitted within 90 days of ACA's filing of a Form S-1 Registration Statement, this contention has no bearing on the argument that ACA is a "contractor, subcontractor, or agent" of a registered client company. Similarly, Roulett's request that the Court equitably toll the statute of limitations "to the date of ACA's filing of its Registration Statement on February 13, 2004" (Pl.'s Mem. of Law in Opp'n 20) is irrelevant to his argument that ACA was a contractor or agent. Assuming arguendo that ACA was a contractor or agent of other companies, nothing about its status changed between January 20 and February 13, 2004.
SO ORDERED.