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Flynn v. NFS

United States District Court, D. Connecticut

December 15, 2016

JOHN J. FLYNN, Plaintiff,
v.
NFS, et al., Defendants.

          RULING AND ORDER

          Stefan R. Underhill United States District Judge

         Plaintiff John J. Flynn filed this action in Connecticut Superior Court against two Securities and Exchange Commission (SEC) officials; NFS (a/k/a National Financial Services, LLC); Fiserv, Inc.; and Fidelity Brokerage Services, LLC; Connecticut State's Attorney Richard Colangelo; and George Malley. Flynn's claims against all defendants other than the federal officials were dismissed or resolved against him by the Connecticut state court. With respect to the remaining defendants-the SEC officials-Flynn claims that they (i) violated the Racketeer Influenced and Corrupt Organization Act (RICO), 18 U.S.C. § 1961 et seq., by way of a conspiracy to defraud him; (ii) denied his civil and constitutional rights; and (iii) committed various torts against him.

         The United States removed the case to this court, and now moves to dismiss on behalf of the federal defendants pursuant to Federal Rules of Civil Procedure 12(b)(1), (3), (4), (5), and (6).[1] The United States argues that Flynn's complaint must be dismissed for lack of subject matter jurisdiction, improper venue, insufficient process, insufficient service of process, and failure to state a claim upon which relief can be granted. For the following reasons, the motion to dismiss is granted.

         I. Standard of Review

         “A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). The court must “[c]onstrue all ambiguities and draw[] all inferences in [the plaintiff]'s favor, ” and “may refer to evidence outside the pleadings.” Id. “A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Id. (citing Malik v. Meissner, 82 F.3d 560, 562 (2d Cir. 1996)). “When an action is brought against the United States government, compliance with the conditions under which the government has agreed to waive sovereign immunity is necessary for subject matter jurisdiction to exist. Accordingly, the statute of limitations may operate in suits against the United States . . . [to] deprive a court of subject matter jurisdiction over an action that is not timely filed.” Williams v. United States, 947 F.2d 37, 39 (2d Cir. 1991).

         The Second Circuit has encouraged courts to “consider[] jurisdiction . . . questions first” before determining whether a complaint states a claim upon which relief can be granted. See Arrowsmith v. United Press Internat'l, 320 F.2d 219, 221 (2d Cir. 1963). I hold that Rule 12(b)(1) requires dismissal of Flynn's complaint, and therefore do not reach the United States' arguments under Rules 12(b)(3), (4), (5), and (6).

         II. Background

         On December 2, 2014, John Flynn filed a pro se complaint in Connecticut Superior Court against two SEC officials, Al Lapins and Jack Hardy; NFS (a/k/a National Financial Services, LLC); Fiserv, Inc.; Fidelity Brokerage Services, LLC; Connecticut State's Attorney Richard Colangelo; and George Malley. Flynn's claims against all defendants other than the SEC officials were dismissed or resolved against him by the Superior Court.[2] Thereafter, on August 11, 2016, the United States removed Flynn's suit to federal court pursuant to 28 U.S.C. § 1442(a)(1), which permits removal of actions against the “United States or any agency thereof or any officer . . . of the United States or of any agency thereof.” See Notice of Removal, Doc. No. 1. The United States attached to its notice of removal a certification that stated the SEC officials were acting within the scope of their employment at the time of the alleged conduct. See Certification, Doc. No. 1-4. As a result, the United States has been substituted as defendant for the SEC officials by operation of law. See 28 U.S.C. § 2679(d)(2); see also Farmer v. Perrill, 275 F.3d 958, 963 (10th Cir. 2001) (“[A]ny action that charges such an official with wrongdoing while operating in his or her official capacity as a United States agent operates as a claim against the United States.”).

         Flynn's complaint alleges that he lost control of his investment business, Greenwich Global LP (GGLP), and its assets, as a result of the defendants' conduct. Flynn's claims against the United States through its officials are threefold. First, he alleges violations of RICO, 18 U.S.C. § 1961 et seq. See Compl., Doc. No. 10-2, at 2. Flynn states that “[t]he SEC knowingly gave control of GGLP to a criminal enterprise promising to ruin Flynn financially. The SEC encouraged the looting of substantially all GGLP accounts.” Id. at 34. Flynn also asserts that the SEC “allowed the [National Association of Securities Dealers, or] NASD directive, ” id., and “allowed for . . . unauthorized trades, theft, and money laundering.” Id.

         Flynn also makes civil rights and constitutional claims, alleging that the “SEC discriminated against Flynn, ” id. at 10, “den[ied] Flynn basic civil rights to property” and “violated Flynn's due process rights.” Id. at 34. He contends that the SEC failed to answer or “covered up” 220 complaints that Flynn filed, id. at 16, 20, 25, 28; “illegally extended immunity” to private parties that violated his civil rights, id. at 26; and ignored a court order regarding him. Id.

         Finally, Flynn claims that the SEC committed torts, including: misrepresentation, id. at 5 (“SEC examiners falsely claimed to be investigating for 6 years.”), 24 (“Al Lapins false[ly] claimed to be investigating. . . . Jack Hardy . . . falsely claimed to investigate the money laundering”), 34; fraud, id. at 5, (“falsified a complaint”), 6 (“SEC falsified an investigation for more than 10 years”), 9 (“SEC made false statements”), 34; assault, id. at 6 (“security personnel of the SEC threatened the Plaintiff with bodily injury”), 11 (“Plaintiff reported threats were made from a non-working number at the [SEC]”), 34 (threats); and theft, id. at 26 (“Al Lapins robbed GGLP's CRD deposit account.”), 34 (“SEC . . . stole GGLP's assets”).

         III. Discussion

         A. Sovereign Immunity

         The doctrine of sovereign immunity holds that “the United States is immune from suit except to the extent the government has waived its immunity.” Coulthurst v. United States, 214 F.3d 106, 108 (2d Cir. 2000). A waiver of sovereign immunity “must be unequivocally expressed in the ...


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