Phyllis MOLCHATSKY, Charles Mederrick, individually and on behalf of all those persons similarly situated, Alan Goldman, The Litwin Foundation, Inc., The Michael and Ruth Slade Foundation, Steven Schneider, M.D., Judith Welling, individually and on behalf of all those persons similarly situated, Blayne Goldman, Allan H. Applestein, as trustee for the Benefit of D.C.A. Grantor Trust, George R. Marks, Robert Mick, individually and on behalf of all those persons similarly situated, George R. Marks, as beneficiary for the Benefit of George R. Marks I.R.A., Harold Schwartz, as trustee for the Benefit of Harold Schwartz 1997 Irrevocable Trust, as beneficiary for the Benefit of Harold Schwartz I.R.A. and as trustee for the Benefit of Harold Schwartz 1998 Living Trust, Rosenman Family, LLC, Robert I. Lappin, as trustee for the Benefit of Shetland Properties Employee Savings and Retirement Plan, Daniel Silna, as trustee for the Benefit of O.D.D. Investments L.P. Profit Sharing Plan, Plaintiffs-Appellants, v. UNITED STATES of America, John Does 1-10, Defendants-Appellees.
Nos. 11-2510-cv(L), 11-2532-cv(con), 11-3142-cv(con), 11-3304-cv(con), 11-3306-cv(con), 11-3310-cv(con), 12-472-cv(con), 12-476-cv(con), 12-502-cv(con), 12-511-cv(con), 12-518-cv(con), 12-533-cv(con)
United States Court of Appeals, Second Circuit
April 10, 2013
713 F.3d 159
What matters here is that there was concrete cause for concern, given that Dapolito was standing by himself at a late hour in an area where there had been recent burglaries, obviously impaired, outside an apartment building where he claimed to live and yet could not access, and unable to give a straight answer on his own name. He may have been preparing to break into the building or the nearby ATM, or perhaps he was lying in wait to mug the next person who tried to enter the apartment building, or maybe he was under the influence of a controlled substance. Then again, he may just have been, as the district court suggested, one of the “many . . . members of the indigent and/or transient population of Portland.” Dapolito, 2012 WL 3612602, at *7. The point is that officers needed to briefly detain Dapolito in order to find out. Even if it was more likely than not that Dapolito was merely a harmless transient, reasonable suspicion “is considerably less than proof of wrongdoing by a preponderance of the evidence [or] probable cause.” United States v. Sokolow, 490 U.S. 1, 7, 109 S.Ct. 1581, 104 L.Ed.2d 1 (1989). The officers had a reasonable suspicion here.
Like the majority, I find that the fact patterns presented in Terry stop cases are so “multifaceted” that “one determination will seldom be a useful precedent for another.” Ornelas, 517 U.S. at 698, 116 S.Ct. 1657 (internal quotation marks omitted). But I feel obligated to cite just a few of our past decisions that presented similar fact patterns, which I believe demonstrate that the bar for reasonable suspicion has been met in this case. In Foley v. Kiely, 602 F.3d 28 (1st Cir.2010), we found that the police had reasonable suspicion to conduct a Terry stop of a man whom they encountered in a park late at night, possibly after the park had closed, in an area where crimes had been reported. Id. at 32. In United States v. Walker, 924 F.2d 1 (1st Cir.1991), we held that a Terry stop was justified when, at 2:30 AM, the officers spotted two people in the dimly lit parking lot of a lumber and construction business, standing near a trailer rig loaded with wood and a detached cab, in an area where there had been burglaries in the past. Id. at 4. Finally, in United States v. Jones, 432 F.3d 34 (1st Cir.2005), we concluded that there was reasonable suspicion for a Terry stop when the police saw two men sprinting down the street at 4:00 AM, wearing hooded sweatshirts and strange white gloves, in a neighborhood where there had been a number of robberies and break-ins, and where a third man was walking ahead of them in the same direction. Id. at 41. The facts of these cases do not perfectly align with the ones at hand, but in my opinion, they support a finding of reasonable suspicion in this case.
I respectfully dissent.
Dr. Gaytri D. Kachroo, Kachroo Legal Services, P.C., Cambridge, MA, for Plaintiff-Appellant Charles Mederrick.
Howard Kleinhendler, Sara Spiegelman, Wachtel Masyr & Missry LLP, New York,
Sarah S. Normand, Assistant United States Attorney (Neil M. Corwin, Assistant United States Attorney, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Defendants-Appellees.
Lawrence R. Velvel, Massachusetts School of Law, Andover, MA; David Bernfeld, Bernfeld, DeMatteo & Bernfeld LLP, New York, NY, for Amicus Curiae Network for Investor Action and Protection.
Before: WESLEY, DRONEY, Circuit Judges, NATHAN, District Judge.**
PER CURIAM:
Plaintiffs-Appellants Phyllis Molchatsky, et al. (“Plaintiffs“) appeal from an April 19, 2011 Opinion and Order by the United States District Court for the Southern District of New York (Swain, J.) granting Defendant-Appellee the United States’ motion to dismiss Plaintiffs’ complaints against the United States Securities and Exchange Commission (the “SEC“) for lack of subject matter jurisdiction pursuant to
Background
Plaintiffs are investors who lost money they had entrusted to Bernard Madoff (“Madoff“) and his firm, Bernard L. Madoff Investment Securities LLC, after Madoff‘s massive Ponzi scheme exploded in 2008. Plaintiffs’ principal allegation is that the SEC negligently failed to uncover Madoff‘s fraud despite receiving numerous complaints over a sixteen-year period. Relying on an extensive report from the SEC‘s Office of the Inspector General, Plaintiffs allege in detail approximately eight separate complaints the SEC received regarding Madoff and the SEC‘s inadequate and often incompetent response to each. As a result of the SEC‘s repeated failure to alert other branch offices of ongoing investigations, properly review complaints and staff subsequent inquiries, and follow up on disputed facts elicited in interviews, the SEC missed many opportunities to uncover Madoff‘s multi-billion-dollar fraud.
Discussion
Plaintiffs claim that the SEC‘s clear negligence exposes the agency to liability under the Federal Tort Claims Act (“FTCA“). The district court disagreed, as do we. The FTCA provides in relevant part that federal courts
shall have exclusive jurisdiction of civil actions on claims against the United States, for money damages, accruing on and after January 1, 1945, for injury or loss of property, or personal injury or death caused by the negligent or wrong
ful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.
The FTCA is an exception to the rule that the United States is typically immune from suit. The district court determined that the Discretionary Function Exception (“DFE“), an exception to the exception, barred Plaintiffs’ claims. The DFE suspends the FTCA from applying to
[a]ny claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.
The DFE is not about fairness, it “is about power,” National Union Fire Insurance v. United States, 115 F.3d 1415, 1422 (9th Cir.1997); the sovereign “reserve[s] to itself the right to act without liability for misjudgment and carelessness in the formulation of policy,” id. “[T]he DFE bars suit only if two conditions are met: (1) the acts alleged to be negligent must be discretionary, in that they involve an ‘element of judgment or choice’ and are not compelled by statute or regulation and (2) the judgment or choice in question must be grounded in ‘considerations of public policy’ or susceptible to policy analysis.” Coulthurst v. United States, 214 F.3d 106, 109 (2d Cir.2000) (quoting United States v. Gaubert, 499 U.S. 315, 322-23, 111 S.Ct. 1267, 113 L.Ed.2d 335 (1991)). Plaintiffs bear the initial burden to state a claim that is not barred by the DFE. See Gaubert, 499 U.S. at 324-25. Here, Plaintiffs have failed to make the necessary showing.
Plaintiffs’ harm ultimately stems from the SEC‘s failure to investigate Madoff and uncover his Ponzi scheme. As a result, the conduct Plaintiffs seek to challenge is “too intertwined with purely discretionary decisions” made by SEC personnel. Gray v. Bell, 712 F.2d 490, 515 (D.C.Cir.1983); see generally id. at 515-16. Despite our sympathy for Plaintiffs’ predicament (and our antipathy for the SEC‘s conduct), Congress‘s intent to shield regulatory agencies’ discretionary use of specific investigative powers via the DFE is fatal to Plaintiffs’ claims. See Berkovitz by Berkovitz v. United States, 486 U.S. 531, 538 & 538 n. 4, 108 S.Ct. 1954, 100 L.Ed.2d 531 (1988) (quoting H.R.Rep. No. 1287, 79th Cong., 1st Sess., 6 (1945)). In satisfaction of the first prong of the DFE, the SEC retains complete discretion over when, whether and to what extent to investigate and bring an action against an individual or entity. See
We find additionally that the district court did not abuse its discretion in denying Plaintiffs’ Rule 60(b) motion for relief from judgment, or in denying Plaintiffs’ request for jurisdictional discovery. Boule v. Hutton, 328 F.3d 84, 95 (2d Cir.2003) (we review denials of Rule 60(b) motions for abuse of discretion); Best Van Lines, Inc. v. Walker, 490 F.3d 239, 255 (2d Cir.2007) (we review district court‘s refusal to permit jurisdictional discovery for abuse of discretion). We have considered Plaintiffs’ remaining arguments and find them to be without merit.
Conclusion
For the foregoing reasons, the order of the district court is hereby AFFIRMED.
PER CURIAM