sec v. mark jackson (motion to dismiss)
TRANSCRIPT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
)
SECURITIES AND EXCHANGE )
COMMISSION, )
)
Plaintiff, ) Case No. 4:12-cv-00563
)
v. )
)
MARK A. JACKSON and )
JAMES J. RUEHLEN, )
)
Defendants. )
)
DEFENDANT MARK A. JACKSON’S MOTION TO DISMISS
THE COMPLAINT UNDER RULE 12(b)(6) FOR FAILURE TO STATE
A CLAIM UPON WHICH RELIEF CAN BE GRANTED
Case 4:12-cv-00563 Document 35 Filed in TXSD on 05/08/12 Page 1 of 31
TABLE OF CONTENTS
STATEMENT OF NATURE AND STAGE OF PROCEEDING ............................................ 1
STATEMENT OF ISSUES TO BE RULED ON....................................................................... 1
SUMMARY OF THE ARGUMENT .......................................................................................... 1
ARGUMENT................................................................................................................................. 2
I. BACKGROUND ............................................................................................................... 2
II. LEGAL STANDARDS ..................................................................................................... 5
A. The Complaint Must State a Plausible Claim to Relief .......................................... 5
B. Conclusory Statements or Legal Conclusions Must Be Disregarded ..................... 6
III. THE CLAIM I BRIBERY ALLEGATION MUST BE DISMISSED.......................... 9
A. The Elements of an FCPA Anti-Bribery Violation................................................. 9
B. The Complaint Fails to Sufficiently Plead Involvement of a Foreign
Official Taking Sought-After Unlawful Actions .................................................. 10
C. The Allegations are Consistent with Jackson Having a Good Faith Belief
that the Payments were Permissible “Facilitating Payments” .............................. 13
1. The SEC Must Plausibly Plead Corrupt Intent......................................... 14
2. The Only Well-Pleaded Facts Show Jackson’s Good Faith Belief in
the Legality of the Payments ..................................................................... 15
D. The Bribery Claim is Barred by the Statute of Limitations .................................. 19
1. The Complaint Does Not Allege that Jackson Approved Bribes During
the Limitations Period............................................................................... 19
2. The Pleadings Fail to Raise Any Basis for Tolling................................... 20
IV. THE DERIVATIVE CLAIMS (CLAIMS II-VII) MUST ALSO BE
DISMISSED..................................................................................................................... 22
A. Claim II – Aiding and Abetting Noble’s Anti-Bribery Violation......................... 22
B. Claims III & IV – Aiding and Abetting Noble’s FCPA Books and Records
Violation, and Directly Violating Internal Controls and Books and
Records Requirements .......................................................................................... 23
C. Claims V and VI – Misleading Auditors and Signing False Certifications.......... 24
D. Claim VII – Control Person Liability ................................................................... 25
CONCLUSION ........................................................................................................................... 25
i
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TABLE OF AUTHORITIES
Cases
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) .......................................................................... passim
Bass v. Stryker Corp., 669 F.3d 501 (5th Cir. 2012) ........................................................ 5, 6, 9, 13
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................. passim
Chavers v. Morrow, No. 08-3286, 2010 U.S. Dist. LEXIS 89432 (S.D. Tex. Aug. 30,
2010) ....................................................................................................................................... 11
Doe v. Covington Cnty. Sch. Dist., No. 09-60406, 2012 U.S. App. LEXIS 6080 (5th Cir.
Mar. 23, 2012) (en banc)....................................................................................................... 1, 5
FCC v. Am. Broad. Co., 347 U.S. 284 (1954) .............................................................................. 12
Gentilello v. Rege, 627 F.3d 540 (5th Cir. 2010).................................................................. 6, 8, 13
Gonzalez v. Kay, 577 F.3d 600 (5th Cir. 2009) .............................................................................. 6
Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787 (5th Cir. 2011) ............................... 14
In re BP p.l.c. Sec. Litig., No. 10-2185, 2012 U.S. Dist. LEXIS 17788 (S.D. Tex. Feb. 13,
2012) ....................................................................................................................................... 25
Johnson v. SEC, 87 F.3d 484 (D.C. Cir. 1996)............................................................................. 19
Jones v. ALCOA, Inc., 339 F.3d 359 (5th Cir. 2003).................................................................... 19
Plotkin v. IP Axess Inc., 407 F.3d 690 (5th Cir. 2005) ................................................................... 6
R2 Invs. LDC v. Phillips, 401 F.3d 638 (5th Cir. 2005) ................................................................. 2
Rothman v. Gregor, 220 F.3d 81 (2d Cir. 2000)............................................................................. 4
SEC v. Apuzzo, 758 F. Supp. 2d 136 (D. Conn. 2010) ................................................................. 23
SEC v. Brown, 740 F. Supp. 2d 148 (D.D.C. 2010) ............................................................... 20, 21
SEC v. Jones, 476 F. Supp. 2d 374 (S.D.N.Y. 2007).................................................................... 21
SEC v. Microtune, Inc., 783 F. Supp. 2d 867 (N.D. Tex. 2011), appeal docketed, No. 11-
10594 (5th Cir. June 21, 2011) ................................................................................... 20, 21, 22
SEC v. Treadway, 430 F. Supp. 2d 293 (S.D.N.Y. 2006)............................................................. 23
Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029 (5th Cir.
2010) ....................................................................................................................................... 17
Solis v. Bruister, No. 10-77, 2012 U.S. Dist. LEXIS 30739 (S.D. Miss. Mar. 8, 2012) .............. 20
Trawinski v. United Techs., 313 F.3d 1295 (11th Cir. 2002) ....................................................... 19
United States v. Blondek, 741 F. Supp. 116 (N.D. Tex. 1990) ..................................................... 10
United States v. Bodmer, 342 F. Supp. 2d 176 (S.D.N.Y. 2004).................................................. 11
United States v. Castle, 925 F.2d 831 (5th Cir. 1991) .................................................................. 10
ii
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iii
United States v. Core Labs., Inc., 759 F.2d 480 (5th Cir. 1985) .................................................. 19
United States v. Kay, 359 F.3d 738 (5th Cir. 2004).......................................................... 11, 12, 18
United States v. Kay, 513 F.3d 432 (5th Cir. 2007).......................................................... 10, 14, 16
United States v. Rutherford Oil Corp., 756 F. Supp. 2d 782 (S.D. Tex. 2010) ............................ 25
Wolcott v. Sebelius, 635 F.3d 757 (5th Cir. 2011).......................................................................... 5
Zacharias v. SEC, 569 F.3d 458 (D.C. Cir. 2009)........................................................................ 19
Statutes
15 U.S.C. § 78dd-1 ................................................................................................................ passim
15 U.S.C. § 78dd-2 ....................................................................................................................... 10
15 U.S.C. § 78ff ............................................................................................................................ 10
15 U.S.C. § 78m...................................................................................................................... 23, 25
15 U.S.C. § 78t.................................................................................................................. 22, 23, 25
28 U.S.C. § 2462..................................................................................................................... 19, 25
Pub. L. No. 95-213, 91 Stat. 1494 ................................................................................................ 18
Other Authorities
Complaint in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4, 2010).............................. 4, 18
Indictment ¶¶ 4, 13, United States v. Esquenazi, No. 09-21010 (S.D. Fla. Dec. 8, 2009) ........... 12
Memorandum from Paul J. McNulty, Deputy Att'y Gen. U.S. Dep't of Justice, Principles
of Federal Prosecution of Business Organizations (December 12, 2006) ............................... 3
Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934
and Commission Statement on the Relationship of Cooperation to Agency
Enforcement Decisions, SEC Release No. 44969, 2001 SEC LEXIS 2210 (Oct. 23,
2001) ......................................................................................................................................... 2
Superseding Indictment ¶ 30(h), United States v. Goncalves, No. 09-335 (D.D.C. Apr. 16,
2010) ....................................................................................................................................... 12
Trial Transcript, United States v. O’Shea, No. 09-629 (S.D. Tex. Jan. 16, 2012)........................ 11
Rules
Fed. R. Civ. P. 12(b)(6).......................................................................................................... passim
Fed. R. Civ. P. 8(a)(2)..................................................................................................................... 6
Fed. R. Civ. P. 9(b) ................................................................................................................. 18, 21
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STATEMENT OF NATURE AND STAGE OF PROCEEDING
Plaintiff Securities and Exchange Commission (“SEC”) filed its Complaint against
Defendants Mark A. Jackson (“Jackson”) and James J. Ruehlen (“Ruehlen”) on February 24,
2012 (Dkt. 1). Jackson waived service of the Complaint on March 9, 2012. Jackson has not
filed a responsive pleading to the Complaint.
STATEMENT OF ISSUES TO BE RULED ON
Jackson moves to dismiss1 the Complaint under Fed. R. Civ. P. 12(b)(6) for failure to
state a claim upon which relief can be granted. “To survive dismissal pursuant to Rule 12(b)(6),
plaintiffs must plead ‘enough facts to state a claim to relief that is plausible on its face.’” Doe v.
Covington Cnty. Sch. Dist., No. 09-60406, 2012 U.S. App. LEXIS 6080, at *8 (5th Cir. Mar. 23,
2012) (en banc) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (attached at
Exhibit 1). The Complaint’s “[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).” Twombly, 550 U.S. at 555.
SUMMARY OF THE ARGUMENT
The Complaint against Jackson must be dismissed under Rule 12(b)(6) because it fails to
state a claim that is plausible on its face. Only factual allegations—not unsupported conclusions
or accusations of legal violations—may sustain a Complaint. But, stripped of its conclusions
about what Jackson “knew,” the Complaint comes up woefully short in pleading several essential
elements of Claim I, a Foreign Corrupt Practices Act (“FCPA”) anti-bribery violation—that
Jackson acted with corrupt intent, and that he knew payments would be made to a foreign official
to obtain sought-after unlawful acts from that foreign official. Instead, the factual allegations in
1 Jackson adopts the arguments made by Ruehlen in his separate Motion to Dismiss the
Complaint.
1
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the Complaint regarding alleged bribes are equally consistent, if not more, with wholly legal
actions under the “facilitating payments” exception to the FCPA. The bribery claim therefore
must be dismissed as implausible under controlling Supreme Court precedent. And because the
other claims in the Complaint are entirely dependent on the existence of illegal bribes, they too
must be dismissed. Finally, because the vast majority of the conduct alleged in the Complaint
took place well over five years before the Complaint was filed, the bribery claim and many of the
derivative claims are barred by the statute of limitations.
ARGUMENT
I. BACKGROUND
In May 2007, executives at Noble Corporation, an international oil drilling company with
operations in Nigeria, announced an investigation into potential violations of the FCPA
involving payments to Nigerian government officials.2 Mark Jackson had only recently been
promoted to CEO of Noble. Within a week, Noble had engaged an outside law firm to conduct
an independent investigation. A month later Noble voluntarily disclosed the matter to the
Department of Justice and the Securities and Exchange Commission pursuant to official policies
of both agencies.3 As a result of Noble’s self-reporting under Jackson’s leadership, the
2 Noble Corporation, Annual Report (Form 10-K), at 22-23 (Feb. 29, 2008) (“Noble 2008
Form 10-K”) (excerpts attached at Exhibit 2); see also id. at 22 (“[O]ur management brought to
the attention of the audit committee a news release issued by another company . . . .”). The court
can consider SEC filings on a motion to dismiss. R2 Invs. LDC v. Phillips, 401 F.3d 638, 640
n.2 (5th Cir. 2005) (“[A] court may also take judicial notice of documents in the public record,
including documents filed with the Securities and Exchange Commission, and may consider such
documents in determining a motion to dismiss.”). 3 Noble 2008 Form 10-K at 23 (Ex. 2); Noble Corporation, Current Report (Form 8-K)
(June 4, 2007) (attached at Exhibit 3) (“The Company has voluntarily contacted the U.S.
Securities and Exchange Commission and the U.S. Department of Justice to advise them that an
independent investigation is under way and that it intends to cooperate fully with both
agencies.”); Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of
1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement
Decisions, SEC Release No. 44969, 2001 SEC LEXIS 2210 (Oct. 23, 2001) (attached at Exhibit
2
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Department of Justice entered into a Non-Prosecution Agreement with Noble.4 And, in the
intervening five years, the Department of Justice has not brought any charges against Jackson or
Ruehlen.5
The SEC’s Complaint is most notable for what it lacks. There are no allegations of secret
payments; as described below, all of the payments at issue in this case were recorded in an
internal account specifically identified for payments to government officials. There is also no
mention or suggestion in the Complaint that any payments were made to induce government
officials to award contracts to companies other than the low bidder, or inspectors to overlook
safety risks. Rather, the payments in this case were made in connection with the issuance of
routine permits to operate drilling rigs in Nigeria (Temporary Import Permits, or “TIPs”).
Indeed, to evaluate the adequacy of the SEC’s Complaint, the structure of the oil drilling
business in Nigeria stands as the backdrop. There are three relevant parties: the Nigerian
government, a major oil company, and a drilling services company. Joint ventures between the
state-owned Nigerian Oil Company and a major oil company contracted with Noble and other oil
drilling companies to extract oil in offshore wells in territorial waters. But while the joint
venture (that is, the Nigerian government) entered into long term drilling contracts, the customs
laws limited the time that a drilling company’s rig could remain in Nigerian waters. The
Nigerian government took advantage of this mismatch, requiring the payment of fees by the
4); Memorandum from Paul J. McNulty, Deputy Att'y Gen. U.S. Dep't of Justice, Principles of
Federal Prosecution of Business Organizations (December 12, 2006) (attached at Exhibit 5). 4 Noble Corporation, Quarterly Report (Form 10-Q), at 28 (Nov. 9, 2010) (excerpts
attached at Exhibit 6) (noting company’s settlement with SEC and Non-Prosecution Agreement
with DOJ). 5 Notwithstanding this, the SEC has now filed the instant lawsuit against Jackson and
Ruehlen, but has taken no action against executives of any of the other drilling companies in
Nigeria. Instead, the SEC has selectively exercised its prosecutorial powers to bring this lawsuit.
3
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drilling companies to maintain their rigs in the country, and to remain on-contract.6 All of the oil
drillers in Nigeria faced this problem and all of them have dealt with it by making similar routine
payments to the Nigerian Customs Service (“NCS”).7
Jackson came to Noble in 2000 as its CFO after over a decade in the oil services
industry.8 He assured that payments being made to the NCS by Noble’s West Africa Division
were appropriately tracked and checked by the company’s internal auditors. As noted, those
payments were placed in an internal account set aside only for so-called “facilitating
payments”—legal payments under the FCPA that allow companies to make payments to
government officials for routine governmental actions, such as obtaining permits. 15 U.S.C. §§
78dd-1(b), (f)(3)(A); see Complaint in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4,
2010), ¶ 22 (attached at Exhibit 8).9 That account was prominently labeled in Noble’s
accounting systems (i.e., its books and records), and it was subject to reviews by internal
auditors, external auditors, internal lawyers, and outside counsel.
The Court should dismiss the Complaint because the few actual facts it alleges do not
establish a plausible claim that Jackson knew that payments were being made to a foreign
official in order to induce unlawful actions. To the contrary, the facts are equally consistent with
Jackson’s asserted belief that the payments at issue had been thoroughly reviewed and
determined to be legal “facilitating payments” under the FCPA for routine governmental actions.
6
Cf. Noble 2008 Form 10-K at 23 (Ex. 2) (describing that “[i]f we cannot obtain a new
permit or a further extension necessary to continue operations of any unit, we may need to
terminate the drilling contract of such unit and relocate such unit from Nigerian waters”). 7 Noble 2008 Form 10-K at 22-23 (Ex. 2).
8 Noble Corporation, Annual Report (Form 10-K), at 13 (Mar. 8, 2005) (excerpts attached
at Exhibit 7). 9 The Court can consider the SEC’s own allegations in another case for purposes of the
motion to dismiss. Rothman v. Gregor, 220 F.3d 81, 85 (2d Cir. 2000).
4
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II. LEGAL STANDARDS
A. The Complaint Must State a Plausible Claim to Relief
“To survive dismissal pursuant to Rule 12(b)(6), plaintiffs must plead ‘enough facts to
state a claim to relief that is plausible on its face.’” Covington Cnty. Sch. Dist., 2012 U.S. App.
LEXIS 6080, at *8 (quoting Twombly, 550 U.S. at 570) (Ex. 1). But at bottom, the SEC’s
Complaint is woefully short on actual facts. Under governing Supreme Court precedent, all of
the SEC’s rhetorical flourishes, legal conclusions, and conclusory statements must be
disregarded when the Court considers a motion to dismiss under Rule 12(b)(6). The remaining
“well-pleaded facts” are accepted “as true and view[ed] . . . in the light most favorable to the
plaintiffs.” Id. (internal quotation marks omitted). Viewed through that lens, the Complaint
must be dismissed because the remaining facts fail to plausibly state a claim on which relief may
be granted.
Under Twombly and its progeny, the Court must engage in a two-step inquiry when
judging a motion to dismiss for failure to state a claim. First, all legal conclusions, or legal
conclusions posing as factual allegations, must be discarded. Ashcroft v. Iqbal, 556 U.S. 662,
679 (2009) (“[A] court considering a motion to dismiss can choose to begin by identifying
pleadings that, because they are no more than conclusions, are not entitled to the assumption of
truth.”); see also Wolcott v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (“[W]e are ‘not bound to
accept as true a legal conclusion couched as factual allegation.’”) (quoting Iqbal, 556 U.S. at
678). Second, the Court must examine the remaining factual allegations against the elements of
the claim, and dismiss the claim “when the plaintiff has not alleged enough facts to state a claim
to relief that is plausible on its face or has failed to raise his right to relief above the speculative
level.” Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012); see also Twombly, 550 U.S. at
555 (the Complaint’s “[f]actual allegations must be enough to raise a right to relief above the
5
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speculative level on the assumption that all the allegations in the complaint are true (even if
doubtful in fact)”). “[W]here the well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that
the pleader is entitled to relief’” under Fed. R. Civ. P. 8(a)(2). Gonzalez v. Kay, 577 F.3d 600,
603 (5th Cir. 2009) (quoting Iqbal, 556 U.S. at 679, and Fed. R. Civ. P. 8(a)(2)).
B. Conclusory Statements or Legal Conclusions Must Be Disregarded
Much of the SEC’s Complaint falls into the category of “conclusory allegations,
unwarranted factual inferences, or legal conclusions” which courts “do not accept as true” for the
purpose of a Rule 12(b)(6) motion. Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010)
(quoting Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005)). “It is the conclusory nature
of” the SEC’s “allegations, rather than their extravagantly fanciful nature, that disentitles them to
the presumption of truth.” Iqbal, 556 U.S. at 681. Rather than pleading facts, the SEC relies
primarily on inferences based on undisclosed facts.
For example, allegations that a defendant “knew of” something, “condoned” it, or
“willfully” took some action are the kind of legal conclusions couched as factual allegations that
are not accepted as true when assessing the plausibility of a claim to relief. Iqbal, 556 U.S. at
680. In other words, the plaintiff cannot merely state the conclusion—that the defendant “knew”
something. Instead, a Complaint must set forth the facts giving rise to the conclusion—such as
that the defendant was told something, or learned it from a particular document or transaction.
Similarly, allegations of a defendant being a “principal architect” of, or “instrumental” to, a
policy must be disregarded. Id. Allegations that a product was subject to a particular oversight
or regulatory regime are also “a legal conclusion that the district court was not required to accept
as true.” Stryker Corp., 669 F.3d at 507-08; see also Gentilello, 627 F.3d at 545.
At bottom, most of the SEC’s allegations may not be accepted as true, including:
6
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(1) That Jackson or others10
authorized payments “to influence or induce” Nigerian customs
officials to take an improper action or “to obtain discretionary or unlawful extensions” of
TIPs, or to “retain business.” E.g., Complaint ¶¶ 2, 3, 31, 91, 94, 108, 113, 115, 123,
126, 142-143, 145-146.
As the Supreme Court recognized in Iqbal, allegations that actions were taken for a certain
purpose, or because of something, merely restate the elements of an offense and are not accepted
as true. Iqbal, 556 U.S. at 680-81 (“on account of” or “because of”). The SEC fails to allege the
actual facts showing an improper purpose for actions, and instead simply parrots the FCPA or
other securities laws’ prohibitions of certain purposes.
(2) That Jackson or others “knew,” had “knowledge,” was “aware” of, or “understood” facts
such as the creation or use of certain documents. E.g., Complaint ¶¶ 22, 24, 28-29, 34-
37, 39-41, 48-49, 52-53, 69, 88-89, 91, 94-95, 99, 101, 111-113, 115, 123, 126, 142, 145,
148-149.
Allegations of “knowledge” are merely legal conclusions dressed as factual allegations. Iqbal,
556 U.S. at 680. The SEC has not alleged the actual facts showing Jackson in possession of that
knowledge—what Jackson was told, what a document given to Jackson said, or what Jackson
told someone else.
(3) That Jackson or others acted to “falsely” record “bribes” as legitimate operating
expenses; “caused” Noble’s books to be “false”; or that Noble or Jackson paid “bribes.”
E.g., Complaint ¶¶ 3, 22, 29, 31, 33, 39, 61, 69, 73, 80, 88, 92, 95, 99, 101, 106, 109-113,
115, 119, 135-136, 142, 145-149.
Whether particular payments constitute “bribes,” and whether those payments could not be
recorded as operating expenses without acting “falsely,” are legal conclusions dependent on the
application of the FCPA and other securities laws or regulations. “Causing” books to be “false”
merely restates the elements of that offense.
(4) That Jackson or others used “false” documents with the Nigerian Customs Service or
10
This Motion attempts to identify the conclusory or legal allegations specific to Jackson or
Noble, however any such allegations regarding Ruehlen and others must similarly be discarded
under Iqbal and Twombly.
7
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others, or obtained “false” paperwork or “illicit” TIPs.11
E.g., Complaint ¶¶ 3, 22-23, 27-
29, 32-33, 35-36, 42, 48, 51-53, 68, 70-71, 73-76, 79-84, 86, 89-90, 92, 94, 100-101,
103-110, 112, 116, 123, 126, 131, 134-138, 141-143, 145-147.
Whether documents were “false” or not is a legal conclusion dependent on the application of
various United States and/or Nigerian laws or customs. Similarly, allegations of signing “false”
management representation letters or certifications, or misleading auditors, merely restate the
elements of those offenses. Complaint ¶¶ 4, 145.
(5) That Jackson or others “controlled,” were “responsible for,” “supervised,” “oversaw,” or
“authorized” acts such as Noble’s compliance with the FCPA. E.g., Complaint ¶¶ 5, 9-
11, 23, 27, 88, 95, 106, 109-112, 115, 123, 135-136, 143, 145, 148.
Such allegations are legal conclusions dependent on the application of corporate governance and
securities laws and principles. See Iqbal, 556 U.S. at 680 (regarding allegations of defendants
condoning certain conduct, or being the conduct’s architect).
(6) That “Nigerian law” requires, permits, or prohibits certain acts, or makes certain acts
discretionary. E.g., Complaint ¶¶ 19-22, 54, 101, 128. That Jackson or others violated
any Nigerian law, or took actions that were “wrong,” “unlawful,” or in violation of
Noble’s policies. E.g., Complaint ¶¶ 22, 42, 49, 82, 87, 89, 91, 96, 101, 104, 107, 116,
118-119, 142, 145-146.
With the exception of identifying Noble’s internal policies, the Complaint fails to specify in any
way what law or regulation is at issue. Assertions of the effect of “Nigerian law” must therefore
be disregarded and may not be accepted as true. See Gentilello, 627 F.3d at 545 (refusing to
consider, as “mere conclusory statements,” assertion in Complaint that a contract “‘was subject
to certain rules and regulations’—which [plaintiff] has not identified—‘that required ‘good
cause’ before his chaired positions could be terminated.’”). The allegations also are dependent
on the application and interpretation of those unidentified laws or regulations—whether conduct
11
While the SEC consistently claims that Noble used “false documents” in support of the
applications for some permits, the SEC omits that the Nigerian government itself dictated the
contents of those documents, belying their supposed falsehood. Nor does the SEC claim that
Jackson prepared, or even reviewed, any false documents.
8
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was “wrong” or “unlawful”—and must be disregarded as legal conclusions. See Stryker Corp.,
669 F.3d at 507-08 (refusing to accept as true the plaintiff’s “allegation [that] asks the court to
make a conclusion as to the legal significance of these tests and the FDA’s subsequent approval
of the Trident system”). The same problem is fatal for the SEC’s allegations interpreting
Noble’s FCPA policies instead of merely recounting what those policies state. Complaint ¶ 42.
(7) That Jackson and others “agreed” on a plan of action. Complaint ¶ 91.
Allegations of “agreement” are legal conclusions. Twombly, 550 U.S. at 557.
III. THE CLAIM I BRIBERY ALLEGATION MUST BE DISMISSED
Once the pervasive legal conclusions and conclusory statements are stripped away, it
becomes apparent that the SEC’s Complaint lacks actual facts to support its claims.
A. The Elements of an FCPA Anti-Bribery Violation
The SEC has alleged in Claim I that Jackson violated the FCPA’s anti-bribery provisions,
as well as a host of other securities laws or regulations addressed below. The FCPA’s civil anti-
bribery provisions prohibit acts that:
(1) “make use of the mails or any means or instrumentality of interstate
commerce;”
(2) “corruptly;”
(3) “in furtherance of an offer, payment, promise to pay, or authorization of the
payment of any money, or offer, gift, promise to give, or authorization of the
giving of anything of value to;”
(4) “any foreign official;”
(5) “for purposes of [either] influencing any act or decision of such foreign
official in his official capacity [or] inducing such foreign official to do or omit to
do any act in violation of the lawful duty of such official [or] securing any
improper advantage;”
(6) “in order to assist such [corporation] in obtaining or retaining business for or
9
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with, or directing business to, any person.”12
United States v. Kay, 513 F.3d 432, 439-40 (5th Cir. 2007) (Kay II) (quoting 15 U.S.C. § 78dd-
2)13
(internal quotation marks omitted, alterations in original).
B. The Complaint Fails to Sufficiently Plead Involvement of a Foreign Official
Taking Sought-After Unlawful Actions
Not every payment to a foreign official is illegal under the FCPA. To constitute a
violation of the anti-bribery provisions, a payment must, among other things, have been directed
to a “foreign official . . . for purposes of [either] influencing any act or decision of such foreign
official . . . in his . . . official capacity, [or] inducing such foreign official . . . to do or omit to do
any act in violation of the lawful duty of such foreign official . . . [or] securing any improper
advantage.” 15 U.S.C. § 78dd-1(a)(3).
There are two “necessary parties” to a violation of the FCPA anti-bribery provisions: “the
U.S. company paying the bribe and the foreign official accepting it.” United States v. Blondek,
741 F. Supp. 116, 117 n.1 (N.D. Tex. 1990), aff’d and adopted by United States v. Castle, 925
F.2d 831 (5th Cir. 1991); see also id. at 120 (the foreign officials are “necessary parties to the
acts constituting a violation of the substantive law”). The FCPA is intended “to deter and punish
certain activities which necessarily involve[] the agreement of at least two people.” Id. at 117.
The “participation” of foreign officials is “required in every case.” Id. at 119.14
Sufficiently
12 The Kay cases involved a criminal violation of the FCPA, and therefore required an
additional element for an anti-bribery violation—that the defendant acted “willfully.” Kay II,
513 F.3d at 439 (quoting 15 U.S.C. § 78ff). The elements of a civil and criminal violation of the
FCPA are otherwise identical.13
15 U.S.C. § 78dd-2, at issue in the Kay cases, prohibits certain bribery conduct by
domestic concerns or their employees. Section 78dd-1, at issue in the SEC’s Complaint against
Jackson, prohibits the same conduct by issuers or their employees. 14
Judge Hughes, for example, recently granted a criminal defendant’s motion for judgment
of acquittal in part because “[w]hile the Government does not have to trace a particular dollar to
a particular pocket of a particular official, it has to connect the payment to a particular official,
that the funds made under his authority to a foreign official, who can be identified in some
10
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alleging an FCPA violation requires “alleging at least minimally sufficient facts that, if proved,
will meet the . . . elements of a violation of the FCPA (such as . . . the identity of the foreign
country and of the officials to whom the suspect payments are made).” United States v. Kay,
359 F.3d 738, 760 (5th Cir. 2004) (Kay I) (emphases added). Simply put, the FCPA requires, as
an element, the involvement of a foreign official who has discretion to misuse.
The SEC fails to plead these essential elements of the bribery violation plausibly because
the Complaint fails to identify any such foreign official, and any specific acts, duties, or
decisions of that foreign official.15
The FCPA bribery count rises or falls on the involvement of
a foreign official, however the Complaint against Jackson does not identify the officials alleged
to have been bribed, by name, or by job title, or position, or job responsibility; the Complaint
does not even indicate whether Jackson is alleged to have bribed one official or many.
The SEC files very few FCPA complaints, and even fewer cases challenge the adequacy
of the SEC’s pleadings. However, the Indictments in recent criminal FCPA enforcement cases
highlight the inadequacy of the SEC’s Complaint against Jackson.16
reasonable way, that is, with no reasonable doubt.” Trial Transcript at 248, United States v.
O’Shea, No. 09-629 (S.D. Tex. Jan. 16, 2012) (emphases added) (attached at Exhibit 9). Judge
Hughes made a similar observation during arguments on that motion, noting that “You can’t
convict a man promising to pay unless you have a particular promise to a particular person for a
particular benefit. If you call up the [intermediary] and say, look, I’m going to send you 50
grand, bribe somebody, that does not meet the statute.” Id. at 227. 15
In an analogous unpublished case, Judge Hoyt dismissed a civil RICO Complaint under
Twombly because bribery as a racketeering activity had been inadequately pled, holding that it
was insufficient to plead only that “various officers of the defendant agencies,” were “bribed,”
including through provision of “barbecue dinners and other benefits.” Chavers v. Morrow, No.
08-3286, 2010 U.S. Dist. LEXIS 89432, at *12 (S.D. Tex. Aug. 30, 2010) (internal quotation
marks omitted) (attached at Exhibit 10). The allegations “fail to elaborate on what parties were
involved in the alleged bribery.” Id.16
The FCPA serves as a basis for both civil and criminal liability. See United States v.
Bodmer, 342 F. Supp. 2d 176, 187 (S.D.N.Y. 2004). As a criminal statute, the FCPA must be
strictly construed. Strict construction is also required in non-criminal cases for “[t]here cannot
11
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For example, in the 2009 Haiti Teleco prosecutions, the Indictment specifically named
the foreign officials alleged to have been the intended recipients of payments, and in fact charged
several of those officials as defendants on non-FCPA charges. Indictment ¶¶ 4, 13, United States
v. Esquenazi, No. 09-21010 (S.D. Fla. Dec. 8, 2009) (attached at Exhibit 11). The Indictment
then alleged the specific authorization of payment of bribes to the named foreign officials in
order to receive specified business advantages. E.g., id. ¶¶ 4-5. Even the 2010 Indictment of 22
individuals charged in an FBI sting alleged that the defendants agreed to pay a commission to a
third party “believing that half of the ‘commission’ was intended to be paid outside the United
States as a bribe to the Minister of Defense of” a specific country to improperly obtain specific
and identified contracts. Superseding Indictment ¶ 30(h), United States v. Goncalves, No. 09-
335 (D.D.C. Apr. 16, 2010) (emphasis added) (attached at Exhibit 12).
The SEC’s Complaint also fails to identify the actions the unidentified Nigerian official
or officials were asked to take in return for the purported bribes. The FCPA prohibits only
payments to a “foreign official . . . for purposes of [either] influencing any act or decision of
such foreign official . . . in his official capacity, [or] inducing such foreign official . . . to do or
omit to do any act in violation of the lawful duty of such foreign official . . . [or] securing any
improper advantage.” 15 U.S.C. § 78dd-1(a)(3) (emphases added).
Kay I made clear that “the sought-after unlawful actions taken or not taken by the
foreign official in consideration of the bribes)” must also be alleged. Kay I, 359 F.3d at 760
(emphasis added). Yet once the conclusory allegations in the Complaint are stripped out, as they
must be, supra Part II.B, the Complaint never explains what the official(s) at issue were asked to
do regarding the TIPs or extensions. It is a reasonable inference that officials within the
be one construction for [a civil agency] and another for the Department of Justice.” FCC v. Am.
Broad. Co., 347 U.S. 284, 296 (1954).
12
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Nigerian Customs Service had different roles and took different actions as part of their routine
job responsibilities; an intake official would perform very different functions than an ultimate
decision-maker. The Complaint, however, is silent about what action Jackson supposedly sought
with the payments at issue, and how those actions were unwarranted. Did Jackson believe these
officials were the intake officials at the Customs office who took the TIP application and passed
it on to superiors? Were these officials in charge of checking the accuracy of information on
applications? Were these officials in charge of visiting rigs to inspect them before a TIP was
granted? Were these officials the final decision-maker regarding granting TIPs? The SEC’s
Complaint never identifies the actual “sought-after unlawful action taken or not taken,” nor does
it even identify the actual foreign officials involved, or their duties. The Complaint then fails to
link specific unlawful actions to a specific payment in which Jackson allegedly was involved.
Nor does the Complaint identify why or how the “sought-after” action is “unlawful.” All
the Complaint offers are vague references to unspecified rigs needing TIPs or extensions thereof
under unspecified laws and regulations, and bare assertions of “Nigerian law” prohibiting or
permitting something. E.g., Complaint ¶¶ 19-22, 54, 101, 128. As previously noted, the Fifth
Circuit has held that allegations of the applicability of unspecified “rules and regulations” are
mere conclusory statements not entitled to be accepted as true on a motion to dismiss. Gentilello,
627 F.3d at 545. Allegations of the effect of those laws and regulations are legal conclusions.
See Stryker Corp., 669 F.3d at 507-08.
C. The Allegations are Consistent with Jackson Having a Good Faith Belief that
the Payments were Permissible “Facilitating Payments”
Because the numerous conclusory or legal allegations in the Complaint may not be
accepted as true, what remains is a strikingly different factual picture than the SEC claims, a
factual picture that is equally consistent with Jackson’s belief that his actions were legal under
13
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the FCPA. The Complaint therefore fails to plausibly state a claim to relief—since an FCPA
anti-bribery violation requires proof of “corrupt” intent—and Claim I must be dismissed.17
1. The SEC Must Plausibly Plead Corrupt Intent
To sustain its bribery claim, the SEC must plead facts that plausibly show that Jackson
acted “corruptly.” 15 U.S.C. § 78dd-1(a) (“It shall be unlawful . . . to make use of the mails . . .
corruptly in furtherance of an offer, payment . . . .”). The Fifth Circuit has defined “corruptly” to
mean an act “done voluntarily and intentionally, and with a bad purpose or evil motive of
accomplishing either an unlawful end or result, or a lawful end or result by some unlawful
method or means.” Kay II, 513 F.3d at 446, 449 (quoting and approving of jury instruction
given by trial court) (emphasis added).
“A claim for relief is implausible on its face when ‘the well-pleaded facts do not permit
the court to infer more than the mere possibility of misconduct.’” Harold H. Huggins Realty,
Inc. v. FNC, Inc., 634 F.3d 787, 796 (5th Cir. 2011) (quoting Iqbal, 556 U.S. at 679) (emphasis
added). If the well-pleaded facts are also consistent with a legal, alternative explanation, those
facts do not plausibly state a claim to relief.
The Supreme Court in Twombly, for example, upheld the dismissal of a Complaint
alleging antitrust violations against the former subsidiaries of AT&T’s local telephone business
because the factual allegations at most showed parallel conduct without “enough factual matter
(taken as true) to suggest that an agreement was made.” 550 U.S. at 556. The Complaint did
allege an “agreement,” but that was held to be a legal conclusion not accepted as true. The
Complaint lacked factual allegations supporting the conclusion that there was an agreement—in
other words, the Complaint’s fatal flaw was its failure to specify the “specific time, place, or
17 In addition, the FCPA is unconstitutionally vague because it does not adequately define the
scope of the facilitating payments exception. See Ruehlen’s Motion to Dismiss at 17-21.
14
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person involved in the alleged conspiracies.” Id. at 565 n.10. Most importantly for the Court,
the Complaint failed the plausibility test because while the factual allegations involving lack of
competition among the defendants “could very well signify illegal agreement,” there was “an
obvious alternative explanation”: that the defendants had established secure geographic markets
and were naturally disinclined to take the risks associated with potential expansion. Id. at 567
(emphasis added). That “obvious alternative explanation” rendered the claim implausible. See
Iqbal, 556 U.S. at 680 (“Acknowledging that parallel conduct was consistent with an unlawful
agreement, the Court nevertheless concluded that it did not plausibly suggest an illicit accord
because it was not only compatible with, but indeed was more likely explained by, lawful,
unchoreographed free-market behavior.”) (citing Twombly, 550 U.S. at 567).
Two years later in Iqbal, the Supreme Court again ordered the dismissal of a Complaint
whose factual allegations could conceivably have supported an inference of illegal conduct, but
did not rise to the level of plausibility: “Taken as true, these allegations are consistent with
petitioners’ purposefully designating detainees ‘of high interest’ because of their race, religion,
or national origin. But given more likely explanations, they do not plausibly establish this
purpose.” 556 U.S. at 681 (emphasis added). The Supreme Court has been clear—after
stripping away legal conclusions posing as facts, a claim must be dismissed as implausible where
the court cannot infer more than the mere possibility of misconduct. Where there are equally
likely, if not more likely, legal explanations for the remaining facts, the claim is indeed
implausible. The mere possibility of illegality is insufficient. Twombly, 550 U.S. at 557.
2. The Only Well-Pleaded Facts Show Jackson’s Good Faith Belief in the
Legality of the Payments
Here, once the SEC’s conclusory rhetoric and legal conclusions are stripped away, there
is an obvious alternative explanation for the remaining facts: Far from acting with “corrupt”
15
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intent, Jackson believed in good faith that the payments of which he was aware were legal
payments under the FCPA’s “facilitating payment” exception. One does not act “corruptly” if
one has a good faith belief in the legality of the payments. Kay II, 513 F.3d at 446 (defining
corruptly as a “bad purpose or evil motive of accomplishing either an unlawful end or result, or a
lawful end or result by some unlawful method or means”). For that reason, as well as the various
pleading failures described above, the anti-bribery claims must be dismissed.
While the FCPA prohibits certain payments when made “corruptly,” the statute contains
an “[e]xception for routine governmental action”—more commonly known as facilitating
payments. The exception states that the prohibition against making corrupt payments to foreign
officials “shall not apply to any facilitating or expediting payment to a foreign official . . . the
purpose of which is to expedite or to secure the performance of a routine governmental action
by a foreign official . . . .” 15 U.S.C. § 78dd-1(b) (emphasis added). “Routine governmental
action,” in turn, is defined as meaning, in part:
[O]nly an action which is ordinarily and commonly performed by a foreign
official in—
(i) obtaining permits, licenses, or other official documents to qualify a
person to do business in a foreign country . . . or
(v) actions of a similar nature.
15 U.S.C. § 78dd-1(f)(3)(A) (emphases added).
As previously described, the SEC’s various assertions of Jackson seeking “illicit” TIPs or
using “false” paperwork must be disregarded as mere legal conclusions or conclusory statements.
Supra Part II.B. What is left regarding Jackson, at bottom, are alleged facts suggesting:
(1) Jackson was informed of payments being made to unidentified Nigerian Customs
Service officials. The payments related in some way to the TIP process, either new TIPs or
extensions of existing TIPs, both of which were ordinary parts of the customs regime in
Nigeria. E.g., Complaint ¶¶ 18, 19, 24, 39, 94.
16
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(2) The payments were recorded in an account for payments made to government
officials. Some TIP-related payments were larger than other payments in the account for
payments made to government officials. E.g., Complaint ¶ 39.
(3) The TIP process was addressed in an audit report presented to Noble’s Audit
Committee. The audit report did not suggest that the payments were an FCPA risk. E.g.,
Complaint ¶¶ 43, 50.
(4) Paperwork from the Nigerian Customs Service and Noble’s customs agent was
presented to individuals other than Jackson, but not to Jackson himself. Some of that
paperwork—which Jackson did not see—reflected rigs moving out of Nigerian waters, even
though the rigs did not move, and Noble’s Audit Committee commented on the use of that
paperwork. E.g., Complaint ¶¶ 43, 50, 51, 53.
(5) After Jackson left the position of CFO, a new CFO asked Jackson about the new
CFO’s qualifications to approve payments related to TIPs; Jackson told the CFO to rely on
the Controller and former head of internal audit for pre-approval. E.g., Complaint ¶¶ 122-23.
(6) Jackson signed representation letters to Noble’s auditors, and securities filing
certifications, stating that he was unaware of any legal violations or fraud, and that Noble’s
internal controls were not materially weak. E.g., Complaint ¶¶ 145-46.
These alleged facts are not consistent with Jackson acting corruptly regarding any
payments made to the unnamed Nigerian customs officials. Even if they arguably could be
consistent with that conclusion, they are equally consistent, if not more so, with the conclusion
that Jackson believed the payments were proper facilitating payments.
At bottom, the SEC rests its conclusion of anti-bribery violations on the fact that
payments were allegedly made to government officials. The mere fact that payments were made
is not sufficient to pass a Rule 12(b)(6) challenge. The essence of a violation of the Foreign
Corrupt Practices Act is the purpose of the payment, and the defendant’s knowledge and intent in
making it. Twombly clearly demonstrates the inadequacy of Claim I. There, the plaintiffs easily
pled parallel conduct. 550 U.S. at 564. Parallel conduct, though, without an illegal agreement,
was insufficient to plausibly make out an antitrust violation. Id. Here, the fact of payments,
without illegal—corrupt—intent, does not make out an anti-bribery violation. Cf. Shandong
Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029, 1034 (5th Cir. 2010) (“Moving
17
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money from one company to another may be consistent with fraud, but it does not create a
reasonable inference that Potter is liable for fraud. Beston could have had legitimate or
illegitimate reasons for transferring money.”) (citing Iqbal and Fed. R. Civ. P. 9(b)).
The alleged facts show that the payments related to permits for rigs to work in Nigeria—a
type of payment clearly included within the facilitating payment exception. 15 U.S.C. § 78dd-
1(f)(3)(A) (“obtaining permits . . . to qualify a person to do business in a foreign country”).
The alleged facts show that Jackson was never told that granting a TIP or TIP extension
was anything other than an act “ordinarily and commonly performed by a foreign official”—that
is, a routine governmental action. Id.18
The only allegations that might permit concluding
otherwise are the SEC’s conclusory allegations that, based on unidentified laws and regulations,
TIP extensions were “discretionary” acts.19
Even if those conclusory allegations could be
considered, there is no allegation that Jackson was ever told that TIPs or TIP extensions were
discretionary based on these laws.
The alleged facts show that the payments were recorded in Noble’s books in a clearly
marked account for payments to government officials. E.g., Complaint ¶ 39; see also Complaint
in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4, 2010), ¶ 22 (Ex. 8). The alleged facts
18
As originally enacted in 1977, the FCPA exempted payments to any foreign official
“whose duties are essentially ministerial or clerical.” Pub. L. No. 95-213, 91 Stat. 1494, § 103(a)
(codified at 15 U.S.C. § 78dd-1) (1977). When the statute was amended in 1988, the facilitation
payments exception was given its own subsection instead of being folded into the definition of
foreign official. Of course, the SEC has not pled facts related to the identities or duties of the
foreign officials, leaving it at least equally likely that Jackson believed the payments were going
to officials “whose duties are essentially ministerial or clerical.” 19
The concept of “discretionary” or “non-discretionary” acts is not addressed in the FCPA,
however it appears that in its Complaint the SEC is equating “discretionary” with an act not
being “routine governmental action.” See also Kay I, 359 F.3d at 751 (describing facilitating
payments as seeking “largely non-discretionary, ministerial activities performed by mid- or low-
level foreign functionaries”). Of course, the SEC has failed to allege anything about the “foreign
functionaries” at issue, or the types of activities they were supposedly asked to carry out.
18
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show that Jackson involved the internal audit department in the decision of whether the payments
were permissible facilitating payments. E.g., Complaint ¶¶ 38, 39, 47, 53, 83, 99, 123. The
reasonable inference is that Jackson, and Noble, acted to assure that the company’s books and
records accurately reflected the nature of the payments, in an auditable and transparent manner.
Because the remaining facts in the Complaint are equally, if not more, consistent with Jackson’s
belief the payments were legal, Claim I must be dismissed as implausible.
D. The Bribery Claim is Barred by the Statute of Limitations
The SEC’s claim for civil monetary penalties is subject to the general five year statute of
limitations set forth in 28 U.S.C. § 2462. See Zacharias v. SEC, 569 F.3d 458, 471 (D.C. Cir.
2009).20
A Rule 12(b)(6) motion based on the expiration of the statute of limitations should be
granted “where it is evident from the plaintiff’s pleadings that the action is barred and the
pleadings fail to raise some basis for tolling or the like.” Jones v. ALCOA, Inc., 339 F.3d 359,
366 (5th Cir. 2003). Accordingly, the SEC’s claims must be dismissed to the extent they accrued
more than five years prior to the date this lawsuit was filed, which was February 24, 2012.
For purposes of § 2462, claims accrue at the time of the violation. United States v. Core
Labs., Inc., 759 F.2d 480, 482-83 (5th Cir. 1985); Trawinski v. United Techs., 313 F.3d 1295,
1298 (11th Cir. 2002) (holding that the limitations period in § 2462 “begins with the violation
itself – it is upon violation, and not upon discovery of harm, that the claim is complete and the
clock is ticking”). Thus, the SEC must allege violations that took place after February 24, 2007.
1. The Complaint Does Not Allege that Jackson Approved Bribes During
the Limitations Period
20 The SEC’s claim for injunctive relief is also subject to § 2462 to the extent that such
relief would be punitive rather than remedial. Johnson v. SEC, 87 F.3d 484, 488 (D.C. Cir.
1996). The SEC’s Complaint misstates or omits the facts demonstrating that injunctive relief
against Mr. Jackson would be punitive. Thus, Mr. Jackson does not seek dismissal of the
injunctive claim on limitations grounds at this time, but he will do so at a later stage of the
proceedings if the case survives.
19
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The vast majority of the purported bribes alleged in the Complaint occurred well before
February 24, 2007. The SEC devotes page after page to recounting events that took place in
2003-2006, well outside the limitations period. See Complaint ¶¶ 33-124. Events taking place in
2007 are recounted in Paragraphs 125-137, but Jackson is not mentioned at all in this portion of
the Complaint. Thus, there is no allegation that Jackson approved bribe payments during the
limitations period. In fact, the Complaint affirmatively establishes that he was not in a position
to do so. According to the Complaint, Noble required payments to government officials “to be
pre-approved in writing by the CFO,” a position Jackson left by November 2006. Id. ¶¶ 8, 24.21
Accordingly, Jackson’s alleged violations of the anti-bribery provisions were outside the
limitations period, and, absent a basis for tolling, cannot give rise to penalties.
2. The Pleadings Fail to Raise Any Basis for Tolling
The Complaint does not allege any facts that would give rise to tolling based on the
doctrine of fraudulent concealment.22
Fraudulent concealment requires the plaintiff to establish:
1) [T]he defendant’s wrongdoing was concealed from the plaintiff, either through
active concealment by the defendant or because the nature of the wrongdoing was
such that it was self-concealing; 2) the plaintiff acted diligently once he had
inquiry notice, i.e., once he knew of or should have known of the facts giving rise
to his claim, and 3) the plaintiff did not have inquiry notice within the limitations
period.
SEC v. Microtune, Inc., 783 F. Supp. 2d 867, 874 (N.D. Tex. 2011), appeal docketed, No. 11-
10594 (5th Cir. June 21, 2011); see also SEC v. Brown, 740 F. Supp. 2d 148, 158 (D.D.C. 2010);
21 In an apparent attempt to bridge the gap, the SEC alleges that from “about May 2005
through early 2007, Jackson directly supervised Ruehlen, oversaw Noble-Nigeria’s operations,
and regularly communicated with Ruehlen about the status of drilling rigs in Nigeria and other
issues facing Noble-Nigeria.” Complaint ¶ 10. But these vague allegations, which
conspicuously fail to allege Jackson’s involvement in any bribe payments, do not plausibly
suggest that Jackson violated the FCPA after February 24, 2007. 22
The parties did have one or more tolling agreements, but the SEC did not include them in
its Complaint. Therefore, their existence cannot be considered for purposes of this motion to
dismiss. Solis v. Bruister, No. 10-77, 2012 U.S. Dist. LEXIS 30739, at *8-9 (S.D. Miss. Mar. 8,
2012) (attached at Exhibit 13).
20
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SEC v. Jones, 476 F. Supp. 2d 374, 382 (S.D.N.Y. 2007). The facts giving rise to fraudulent
concealment must be pled with particularity pursuant to Fed. R. Civ. P. 9(b). Brown, 740 F.
Supp. 2d at 158.
Here, the SEC fails to satisfy any of the requirements for fraudulent concealment. First,
there are no allegations in the Complaint that Jackson did anything to conceal the payments,
altered or destroyed documents in Noble’s files or took any steps to prevent any other person
from reporting the payments at issue, which were known to many individuals within the
company. Complaint ¶¶ 71, 75, 102, 113. To the contrary, the Complaint affirmatively alleges
that the supposed bribe payments were “clearly delineate[d]” as payments on invoices prepared
by Noble’s Nigerian agent, and were subsequently treated as legitimate expenses by Noble and
recorded on its books accordingly. Id. ¶¶ 40, 149.23
All that the SEC alleges is that Jackson
failed to disclose the purported bribes, but mere silence cannot establish concealment.
Microtune, 783 F. Supp. 2d at 877 (“Concealment by silence or the simple fact that a fraud was
unknown to the plaintiff is not enough to establish that a fraud itself is self-concealing. Rather
. . . the fraud must be incapable of being known even in the exercise of diligence by the
plaintiffs.”); Jones, 476 F. Supp. 2d at 382-83 (rejecting fraudulent concealment tolling because
“while Defendants’ allegedly fraudulent acts of misrepresentation may not have been
affirmatively disclosed to the Commission, the record does not support a finding that they were
incapable of being known”).
Second, Noble (with Jackson as CEO) disclosed its internal investigation relating to the
payments to the SEC in June 2007, nearly five years before this lawsuit was filed. The SEC
pleads no facts that would explain why it waited nearly five years to initiate the action. Thus, it
23 In other words, the Complaint alleges that it was improper to record the payments as
legitimate, not that the payments were concealed.
21
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cannot establish that it acted with the required diligence. Microtune, 783 F. Supp. 2d at 878
(“[T]he SEC must have acted diligently in filing its complaint in a timely manner once it had
inquiry notice. . . . [E]quity would not be served by allowing the SEC to wait a full five years to
file its case after being apprised of Microtune’s practices, if the SEC did not act diligently during
this five-year period.”) (footnote and citation omitted).
Finally, Noble’s June 2007 voluntary disclosure means that the SEC was aware of the
alleged violations long before the expiration of the statute of limitations. The fact that it had
ample time to file a timely complaint is another reason why tolling is unwarranted. Microtune,
783 F. Supp. 2d at 882 (“[I]f a plaintiff discovers his claims within the limitations period,
especially if he still has two years or more remaining in which to file his complaint (as is this
case here), there is obviously a lesser need, if any, to toll his claims.”).
IV. THE DERIVATIVE CLAIMS (CLAIMS II-VII) MUST ALSO BE DISMISSED
Claims II through VII (the “Derivative Claims”) of the SEC’s Complaint against Jackson
are merely derivative of Claim I, Jackson’s alleged anti-bribery violation. Because Claim I must
be dismissed, so too must the remaining claims against Jackson. In addition, Claims II-VII fall
on statute of limitations grounds.
A. Claim II – Aiding and Abetting Noble’s Anti-Bribery Violation
The Complaint alleges that Jackson aided and abetted Noble’s violation of the anti-
bribery portion of the FCPA. Complaint ¶¶ 153-56 (violation of 15 U.S.C. § 78t(e) by aiding
and abetting violations of 15 U.S.C. §§ 78dd-1). In addition to a primary violation, aiding and
abetting requires Jackson to have “knowingly or recklessly provide[d] substantial assistance” to
the primary violator. 15 U.S.C. § 78t(e). The substantial assistance must be a proximate cause
of the primary violation, and “mere awareness and approval of the primary violation is
insufficient to make out a claim for substantial assistance.” SEC v. Treadway, 430 F. Supp. 2d
22
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293, 339 (S.D.N.Y. 2006) (citations omitted).
As shown above, once conclusory and legal allegations are stripped from the Complaint,
there is no plausible claim that any primary violation was committed. Nor are there any facts
plausibly stating a claim that Jackson substantially assisted any primary violation—the SEC’s
Complaint merely alleges that Jackson was in the position of “mere awareness and approval” of
any primary violation by Noble, which is “insufficient to make out a claim for substantial
assistance.” SEC v. Apuzzo, 758 F. Supp. 2d 136, 150 (D. Conn. 2010). And because the SEC
cannot plausibly claim Jackson acted “corruptly,” as described above, the aiding and abetting
claim—which also requires scienter—must also fail.
In addition, Jackson’s lack of involvement in any alleged bribe payments during the
limitations period, supra Part III.D, means that he could not have provided “substantial
assistance” to Noble with regard to its alleged violations of the bribery provisions during the
limitations period.
B. Claims III & IV – Aiding and Abetting Noble’s FCPA Books and Records
Violation, and Directly Violating Internal Controls and Books and Records
Requirements
The Complaint alleges that Noble’s books and records were inaccurate, and an adequate
system of internal controls was not maintained, because bribes were recorded as legitimate
operating expenses; it is further alleged that Jackson substantially assisted that violation,
Complaint ¶¶ 157-63 (violation of 15 U.S.C. § 78t(e) by aiding and abetting violations of 15
U.S.C. §§ 78m(b)(2)(A), (B)). The Complaint also alleges that Jackson knowingly circumvented
Noble’s internal controls or knowingly failed to implement internal controls, and/or falsified
Noble’s books and records. Complaint ¶¶ 164-67 (violation of 15 U.S.C. § 78m(b)(5) and 17
C.F.R. § 240.13b2-1). As shown above, the Complaint lacks factual support for the notion that
Jackson believed that Noble’s books and records were actually false. Indeed, the facts alleged
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support the conclusion that Jackson believed that legal facilitating payments were being properly
accounted for in the specific account designated for facilitating payments. Supra Part III.C.
In addition, the facts alleged in the Complaint indicate that it is highly unlikely that
Jackson was involved with the recording of any payments on Noble’s books and records within
the limitations period. Jackson became CEO in October 2006 and ceased serving as Acting CFO
the following month. Complaint ¶ 8. The limitations period did not start until several months
later, in February 2007. The Complaint contains no specific allegations about Jackson’s role in
recording the payments in Noble’s books and records, and common sense and experience instruct
that the CEO of a company like Noble would not be involved in recording individual
transactions in the accounting records. Iqbal, 556 U.S. at 679 (2009) (“Determining whether a
complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-
specific task that requires the reviewing court to draw on its judicial experience and common
sense.”). Thus, there is no plausible basis to believe that Jackson committed any violations
relating to Noble’s internal controls or its books and records during the limitations period.
C. Claims V and VI – Misleading Auditors and Signing False Certifications
The Complaint alleges that Jackson made materially false or misleading statements to an
accountant, Complaint ¶¶ 168-70 (violation of 17 C.F.R. § 240.13b2-2), and that he signed false
personal certifications used in Noble’s public securities filings, Complaint ¶¶ 171-73 (violation
of 17 C.F.R. § 240.13a-14). The claim for misleading an accountant appears to be premised on
the allegation that Jackson signed management representation letters to Noble’s independent
auditors stating that he was unaware of FCPA violations or other legal violations or fraud, and
that he had maintained effective internal controls with no material weaknesses. Complaint ¶ 145.
The false certifications claim appears to be premised on the allegation that Jackson signed
personal certifications as CFO and CEO that stated that he had disclosed all significant
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deficiencies and material weakness in the internal controls, and any fraud. Complaint ¶ 146.
Both of these claims must fail because the Complaint fails to plausibly plead Jackson’s
involvement in any FCPA violations (which is the only basis for the suggestion that Noble failed
to maintain effective internal controls). In addition, many of the alleged false representations
and certifications were, according to the Complaint, made outside the limitations period.
Complaint ¶¶ 145-46. Those representations and certifications cannot give rise to liability. See,
e.g., United States v. Rutherford Oil Corp., 756 F. Supp. 2d 782, 793 (S.D. Tex. 2010) (granting
a motion for summary judgment based on § 2462 “insofar as it seeks protection from civil
penalties for actions completed more than five years before the government brought this action”).
D. Claim VII – Control Person Liability
The Complaint charges Jackson with controlling the legal violations of Noble, Ruehlen,
and unspecified “others,” and inducing those illegal actions while not acting in good faith.
Complaint ¶¶ 174-77 (violation of 15 U.S.C. § 78t(a), giving rise to liability under 15 U.S.C. §§
78dd-1, 78m(b)(2)(A), (B)). Controlling person liability requires that the defendant have
“induced or participated in the alleged violation.” In re BP p.l.c. Sec. Litig., No. 10-2185, 2012
U.S. Dist. LEXIS 17788, at *217 (S.D. Tex. Feb. 13, 2012) (attached at Exhibit 14). Yet, as
described, the Complaint’s facts are equally consistent with Jackson’s good faith belief that the
payments at issue were lawful facilitating payments that were accounted for properly. The facts
therefore do not plausibly state a claim that Jackson acted in bad faith, or that he “induced or
participated in” any primary violations. Moreover, to the extent the violations by anyone else
took place prior to the limitations period, they cannot give rise to liability for Jackson.
CONCLUSION
For the foregoing reasons, Jackson respectfully requests that the Court dismiss the
Complaint against him for failure to state a claim upon which relief can be granted.
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26
Dated: May 8, 2012 Respectfully submitted by,
__/s/______________________
David S. Krakoff, Esq.
Attorney-in-Charge
D.C. Bar No. 229641
BuckleySandler LLP
1250 24th Street NW, Ste. 700
Washington, D.C. 20037
Telephone: (202) 349-7950
Facsimile: (202) 349-8080
Of Counsel:
James T. Parkinson, Esq.
Adam Miller, Esq.
Lauren R. Randell, Esq.
Paige Ammons, Esq.
BuckleySandler LLP
1250 24th Street NW, Ste. 700
Washington, D.C. 20037
Case 4:12-cv-00563 Document 35 Filed in TXSD on 05/08/12 Page 30 of 31
CERTIFICATE OF SERVICE
I certify that on May 8, 2012, I caused to be electronically filed with the Clerk of Court
using the CM/ECF system, which will send notification of such filing to the counsel of record in
this matter who are registered on the CM/ECF system, the foregoing Defendant Mark A.
Jackson’s Motion to Dismiss the Complaint Under Rule 12(b)(6) for Failure to State a
Claim Upon Which Relief Can Be Granted.
/s/ _______________
Adam B. Miller
Case 4:12-cv-00563 Document 35 Filed in TXSD on 05/08/12 Page 31 of 31