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Dukes v. Pappas

July 20, 2010


The opinion of the court was delivered by: Yohn, J.


Plaintiff, Marcus Dukes, a prisoner proceeding pro se, has filed a second amended civil rights complaint pursuant to Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), and 42 U.S.C. § 1983. Plaintiff sues: (1) Catherine Pappas, Katy Cody, and Amy Greer, attorneys employed by the Securities Exchange Commission ("SEC"); (2) Kevin Delacy, an SEC accountant; and (3) Lucy Cardwell, a Maryland Assistant Attorney General. Plaintiff sues all defendants in their official and individual capacities. Plaintiff's complaint concerns defendants' conduct during and after a civil enforcement action against plaintiff by the SEC and a criminal action against plaintiff by the Department of Justice ("DOJ"), both of which concerned financial fraud. Plaintiff alleges that defendants Pappas, Greer, Cody, and Delacy withheld exculpatory "Brady" material during the course of the investigation leading up to his criminal trial and that, because he lacked access to that material, plaintiff was unable to locate or gain possession of certain corporate assets and suffered heavy financial losses. Plaintiff also alleges that defendants Pappas and Cardwell have made and continue to make false statements about corporations that plaintiff owns and that plaintiff has suffered financial harm as a result of those statements.

Because plaintiff proceeds in forma pauperis, the court has authority under 28 U.S.C. § 1915(e)(2) to dismiss the complaint sua sponte to the extent that it is frivolous or fails to state a claim. Pursuant to § 1915(e)(2), I will dismiss plaintiff's claims that the SEC defendants withheld Brady material from the DOJ, as such claims imply the invalidity of plaintiff's criminal conviction or sentence and are therefore barred by Heck v. Humphrey, 512 U.S. 477 (1994). In addition, some of plaintiff's claims that the SEC defendants suppressed material evidence are time-barred. I will also dismiss plaintiff's claims that Pappas and Cardwell made false statements about plaintiff's corporations because plaintiff has not alleged conduct that amounts to a deprivation of plaintiff's constitutional rights. Because plaintiff has not stated any other cognizable claims and because plaintiff has already twice been permitted to amend his complaint, I will dismiss plaintiff's second amended complaint with prejudice.

I. Background

Plaintiff was convicted of mail fraud and money laundering on June 8, 2005, in connection with his operation of the Financial Warfare Club ("FWC"), Covenant EcoNet, Inc. ("Covenant"), and other related corporations. See United States v. Dukes, Crim. No. PJM-03-0133 (D. Md. Dec. 22, 2005 & Oct. 17, 2007). He is currently incarcerated pursuant to a sentence of 108 months imprisonment. See id. Plaintiff unsuccessfully appealed his conviction. United States v. Dukes, 242 F. App'x 37, 43 (4th Cir. 2007).

Plaintiff sought relief from his conviction and sentence pursuant to 28 U.S.C. § 2255, a request that the District of Maryland denied on November 3, 2009. Dukes v. United States, No. 09-135, 2009 U.S. Dist. LEXIS 102271 (D. Md. Nov. 3, 2009). The District of Maryland declined to issue a certificate of appealability on January 12, 2010. 2010 U.S. Dist. LEXIS 2559 (Jan. 12, 2010). Plaintiff has also requested a certificate of appealability from the Fourth Circuit, a request that was also denied. See United States v. Dukes, No. 09-8158, U.S. App. LEXIS 12991 (4th Cir. June 24, 2010).

In a related civil proceeding in the Eastern District of Pennsylvania, the Securities and Exchange Commission ("SEC") obtained a judgment against plaintiff, a co-conspirator, and four companies controlled by plaintiff and the co-conspirator*fn1 for civil fraud and for failure to comply with the registration requirements of the Securities Act. SEC v. Fin. Warfare Club, Inc., No. 02-7156 (E.D. Pa. Jan. 11, 2008). The SEC filed its civil complaint against plaintiff on September 5, 2002, but the proceedings were stayed after plaintiff's criminal indictment on March 17, 2003.

Id. According to plaintiff, the SEC assisted the DOJ in the criminal proceedings against plaintiff and at least one SEC employee testified at the criminal trial. After plaintiff's conviction, the SEC moved for summary judgment in the civil matter, relying primarily on collateral estoppel from the criminal conviction. The trial court granted the SEC's motion for summary judgment as unopposed. Id. Plaintiff filed an unsuccessful motion pursuant to Federal Rule of Civil Procedure 60(b) for relief from the judgment, but did not appeal. Id. After the judgment became final, plaintiff filed a post-judgment motion to "preserve evidence," a motion that the trial court denied. See id.

On or around July 23, 2009, plaintiff submitted to federal prison authorities a civil rights complaint alleging that his conviction was the result of perjury and fraud by state and federal employees.*fn2 The complaint was filed in the Eastern District of Michigan on July 31, 2009. The matter was transferred to this court because a substantial part of the events giving rise to plaintiff's claims occurred in this district. Plaintiff filed an amended complaint in this court on January 7, 2010, setting forth claims for relief pursuant to Bivens, § 1983, and the FTCA. I dismissed the complaint in part as frivolous pursuant to 28 U.S.C. § 1915(e)(2). Plaintiff's only remaining claim concerned allegedly misleading or threatening statements to FWC members. Because it was unclear which defendants had made those statements and whether those statements were made within the applicable limitations period, I directed plaintiff to file a second amended complaint with a more specific statement of the facts underlying his remaining claim. See Dukes v. Pappas, No. 09-3869, 2010 U.S. Dist. LEXIS 14375 (E.D. Pa. Feb. 17, 2010). Plaintiff filed a second amended complaint on April 22, 2010.

In addition, on March 5, 2010, plaintiff submitted a FOIA request to the SEC seeking release of its records concerning him and the FWC. The SEC initially denied that request under a FOIA provision that protects from disclosure "records compiled for law enforcement purposes, the release of which could reasonably be expected to interfere with enforcement activities." (Pl's 2d Am. Compl. ("SAC") Ex. E.) Plaintiff filed an administrative appeal of the FOIA denial and the SEC remanded the matter to the FOIA officer after determining that the law enforcement exemption no longer applied. (Id. Ex. F.) As of April 22, 2010, plaintiff had not received any documents pursuant to his FOIA request. (Id. ¶ 9.)

II. Standard of Review

The court shall dismiss an action in forma pauperis if, at any time, the court determines that the action is "frivolous or malicious," "fails to state a claim on which relief may be granted," or "seeks monetary relief against a defendant who is immune from such relief." 28 U.S.C. § 1915(e)(2)(B).

The frivolousness prong of § 1915(e)(2)(B)(i) "accords judges not only the authority to dismiss a claim based on an indisputably meritless legal theory, but also the unusual power to pierce the veil of the complaint's factual allegations and dismiss those claims whose factual contentions are clearly baseless." Neitzke v. Williams, 490 U.S. 319, 327 (1989). The remaining prongs of the statute, § 1915(e)(2)(B)(ii) and (iii), require courts to apply the same standard as applied when considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). See Tourscher v. McCullough, 184 F.3d 236, 240 (3d Cir. 1999).

In determining whether the plaintiff has stated a claim for which relief may be granted, the court must "accept as true the factual allegations in the complaint and all reasonable inferences that can be drawn therefrom." Allah v. Seiverling, 229 F.3d 220, 223 (3d Cir. 2000). Nevertheless, the "tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. To avoid dismissal, the "[f]actual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and footnote omitted). A complaint may also be dismissed if it is apparent on the face of the complaint that defendants are entitled to an affirmative defense, such as the statute of ...

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