I was still coming off the rant the other day when I was reading the Reply memoranda of Mark Jackson and James Ruehlen in the Noble follow-on actions. Mistake. It’s a little like going into the grocery store when you’re hungry; you end up over-spending.
And to a certain extend, Jackson’s and Ruehlen’s arguments are sympathetic. As Jackson says:
The SEC spent years investigating these matters before filing its Complaint. If the SEC is still unable to provide well-pleaded facts as to all the elements of an FCPA violation, the remedy is dismissal.
And the Complaint is, to be honest, light on facts and heavy on conclusions. But there are facts, and I’m sympathetic to the SEC’s “sympathy plea” about how establishing facts in foreign bribery allegations is difficult. I’m also sympathetic to Jackson & Ruehlen’s disdain for that argument. Whether there are sufficient facts pleaded in the Complaint is not what I’m going to write about. I don’t often write about the ultimate issue, and I’m not going to here. What I am going to write about are two arguments that Jackson and Ruehlen made that I think cross the line into just plain wrong. One of them seems worse than that.
The first argument, well, let’s just say that I think it’s probably a hard concept to get across. What it seems like is that Jackson is saying that he didn’t know that bribing Nigerian officials was wrong.
These assumptions are legal conclusions based on assumptions about the laws of another nation, unsupported by citation to any indication that Jackson knew the acts sought or methods used were actually illegal, and are therefore insufficient to establish Jackson’s state of mind. (emphasis in original)
The motion continues a page or two later:
The SEC next gives the back of its hand to Jackson’s argument that the Complaint must be dismissed because the few well-pleaded facts in the Complaint are equally consistent with a legal alternative explanation, that Jackson believed any payments were lawful facilitating payments.
First, can I just say that “gives the back of its hand” is such a colorful phrase, and masterfully used here. This is just good legal writing, in my opinion.
If only the underlying legal premise were accurate. Bribery is wrong. Bribes are wrong. Do we really need the FCPA to teach us this? Can we really say “well, it’s legal under the FCPA, so I didn’t know it was wrong?” Okay, how about US domestic bribery statutes? How about every country in the world’s domestic bribery statutes?
Which makes me pause for a second. Maybe I’m wrong. Maybe its actually an interesting legal question, to which I don’t actually have an answer. Corrupt intent means that you have to understand that what you’re doing is wrong. If something is legal under US law, but illegal in the country in which you’re operating, can you say “US law says I’m fine, therefore I had no corrupt intent?” I think it’s a stretch to say that. More than a stretch, an overreach. I’ve asked the DOJ what they think of this legal question. I’m going to go out on a limb and say they’re not going to comment.
The second argument…well, let’s just say I’m hoping that there’s more to the story than what’s in the dry motion papers filed by both sides.
Because if a defense attorney did to me what these attorneys did to the SEC enforcement lawyers, I’d be pissed.
Here’s how it looks. The defense attorneys agreed to toll the statute of limitations. Those tolling agreements were signed by the defense. Then, they claim a statute of limitations defense because the SEC didn’t attach the agreements to the Complaint. The SEC’s response is dead on:
While the defendants are certainly correct that the SEC did not allege the existence of the tolling agreements, this was on the assumption that defense counsel would make only good faith arguments in their motion to dismiss. That assumption proved inaccurate, and, thus, if the Court deems it necessary, the SEC requests leave to amend the Complaint to add that allegation….
That was in the original opposition brief. In Jackson’s reply brief, the defense doubles down on failure.
As a preliminary matter, the tolling agreements cannot be considered on this motion because the SEC chose not to allege them in the Complaint. The omission cannot be cured by attaching the documents to the SEC’s response brief. (citations omitted)
If it were me…denied.
Seriously? While the defendants admit the existence of tolling agreements, they do so in a footnote, and say “nyah, nyah, you didn’t attach the tolling agreements to the complaint.”
I’m with the SEC on this one, fully. Here’s the way this works: if you sign tolling agreements, your statute of limitations argument only works if the acts were 5 years ago plus the time you agreed to toll.
I don’t know whether there is sufficient evidence in the complaint, but neither of these two arguments makes me sympathetic to Jackson or Ruehlen.