# Opposition Brief — Blinder, Robinson & Co. v. Securities & Exchange Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0047%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1985 - **Citation:** 471 U.S. 1125 ## Text c T, Uses, F yy ne ». 20543 — WAY 3 i985 ALEXANDER Ls TEV; In the Supreme Court of the Hnited States OCTOBER TERM, 1984 No. 84-1563 BLINDER, ROBINSON & Co. INC. AND MEYER BLINDER, PETITIONERS V. SECURITIES AND EXCHANGE COMMISSION, ET AL. ON PETITION FORA WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT BRIEF FOR THE RESPONDENTS IN OPPOSITION Rex E. Lee Solicitor General Department of Justice Washington, D.C. 20530 (202) 633-2217 DANIEL L. GOELZER General Counsel ROSALIND C. COHEN Assistant General Counsel RutuH E. ElseNnsperG Special Counsel PAMELA T. PARRISH RICHARD A. LEVINE Attorneys Securities and Exchange Commission Washington, D.C. 20549 BEST AVAILABLE COPY QUESTIONS PRESENTED 1. Whether petitioners’ claims for injunctive and declar- atory relief challenging a formal administrative order of investigation became moot when the order was terminated. 2. Whether the district court abused its discretion in denying petitioners’ motion for relief from judgment under Fed. R. Civ. P. 60(b)(6). (I) np A ERE Opinions below Jurisdiction Statement Argument Conclusion TABLE OF CONTENTS TABLE OF AUTHORITIES Cases: Ackermann v. United States, 340 U.S. 193 ... Ashcroft v. Mattis, 431 U.S. 171 ..........: Butz v. Economou, 438 U.S. 478 ........... Haring v. Prosise, 462 U.S. 306 ............ Harlow v. Fitzgerald, 457 U.S. 800 ........ ‘ Link v. Wabash R.R., 370 U.S. 626 ......... Mekdeci v. Merrell National Laboratories, CE I hay pduiva nes Oak waaay oe + a Murphy v.. Hunt,.455-U:S. 478 ........0005- Polk County v. Dodson, 454 U.S. 312 ........ Preiser v. Newkirk, 422 U.S. 395 ...1....5.. Ramirez v. INS, 550 F.2d ee eee SEC vy. Arthur Young & Co., 584 F.2d 1018, cort. dented, 499 U.S. 1071 o.. ae ceca cce SEC v. C.M. Joiner Leasing Corp., LS | BPP Eee Pere EER eT ET Ee (111) oeeoveeevreeeeeeereeseeeereeeeeeeeeeeee SFeeaeenascaeoeeoeceoea se. @oevwsee1eeaeegee seed @ 6 6 6 0.6 6 oeoeeveeeveeseeeeeeeeeeeeveeeeeeeeeeeeeeee IV Page Cases—Continued: SEC v. Jerry T. O’Brien, Inc., No. 83-751 :*; Te SE v0 Cae ndna hehe eee eeeae ss 3, 6,8 SEC y. Sloan, 436 U.S. 103 ©. 6.560208 .e2k cy 7 Sprecher v. Graber, 716 F.2d 968 .............. 6 Steadman v. SEC, 450 U.S.91 .....0.e00ceeee. 9 Wainwright v. Torna, 455 U.S. 586 ............ 9 Watson v. Moss, 619 F.2d 775 beeen eee ee eees 9 Constitution, statutes, regulations and rule: | U.S. Const. : Fh Te ea oe ce a a eae 7 NS ame reer rarar sta nny ere maga 7 WI We oe es eos eee kasanei scans aues 9 Securities Act of 1933, $ 17(a), SP FE iia ne hanes dad een ssnsd ne tans y Securities Exchange Act of 1934, 15 U.S.C. 78a et seq. : § 10(b), 15 U.S.C. 78j(b) ... 2.0... cece eee. 2 §$ 15(b), 15 U.S.C. (& Supp. 1) FRE: esa cceu tease PEC Se aE eee Te ee 6 ek 2 ee: re 2 BING) OF UBS. TOG) ik 6 ican cb ca teawns 6 De Be RG POE 3h ks eed evaanawes es 6 Oe Wes CUE aac teapinsnkaneasaceveac seared 7 V Page Constitution, statutes, regulations and rule—Continued: 17 Supreme Court of the Hnited States OCTOBER TERM, 1984 No. 84-1563 BLINDER, ROBINSON & Co. INC. AND MEYER BLINDER, PETITIONERS Vv. SECURITIES AND EXCHANGE COMMISSION, ET AL. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT BRIEF FOR THE RESPONDENTS IN OPPOSITION OPINIONS BELOW The opinion of the court of appeals (Pet. App. la-1 1a) is reported at 748 F.2d 1415. The opinion of the district court and order granting summary judgment (Pet. App. 12a-18a) are reported at 565 F. Supp. 74. The order of the district , court denying petitioners’ motion under Fed. R. Civ: P. 60(b)(6) (Pet. App. 19a) is unreported. JURISDICTION The judgment of the court of appeals was entered on November 27, 1984. A petition for rehearing was denied on January 2, 1985. The petition for a writ of certiorari was fily’ on April 2, 1985. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). (1) 2 STATEMENT 1. Petitioner Blinder, Robinson & Company (Blinder, Robinson) is a broker-dealer registered with the Securities and Exchange Commission. Petitioner Meyer Blinder is Blinder, Robinson’s president and principal shareholder. Pet. App. 12a-13a. On August 27, 1980, the Commission brought a civil enforcement action in the United States Districi Court for the District of Colorado, charging that petitioners and others had violated antifraud and anti- manipulation provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 and regulations there- under in connection with a $25 million public offering of securities of Ametican Leisure Corporation, a new issuer with no operating history (Pet. App. 2a).! In their answer to the Commission’s complaint, petitioners alleged as an affirmative defense that the Commission’s case resulted from an illegal investigation (id. at 14a n.2). The Commis- sion’s enforcement action was tried in July 1981 (id. at 14a). Petitioners did not seek to introduce any evidence relating to their purported illegality defense, nor did they object to the Commission’s introduction of any evidence derived from its investigation (id. at 3a, 14a). The district court found that petitioners had violated each of the charged provisions and enjoined them from further violations. The court of appeals affirmed in all respects, and this Court denied certiorari. 542 F. Supp. 468. (D. Colo. 1982), aff'd, 748 F.2d 1415 (10th Cir. 1984), cert. denied, No. 84-649 (Jan. 7, 1985). 'The complaint charged violations of the following provisions: Sec- tion 17(a) of the Securities Act of 1933, 15 U.S.C. 77q(a); Sections 10(b), 15(c) of the Securities Exchange Act of 1934, 15 U.S.C. 78)(b), 780(c); and Rules 10b-5, 10b-6, 10b-9, 15c2-4, 17 C.F.R. 240.10b-5, 240.10b-6, 240.10b-9, 240.15¢2-4. 3 2. Twelve days before the Commission brought its enforcement action, Blinder, Robinson filed suit against the Commission in the same district court, challenging the agency’s formal order of investigation that led to the enforcement action. The formal order (Pet. App. 20a-22a) authorized Commission. staff to issue subpoenas during the course of their investigation of petitioners, but the order did not itself compel petitioners to disclose any information or to produce any documents. See generally SEC v. Jerry T. O’Brien, Inc., No. 83-751 (June 18, 1984), slip op. 1-2 n.1. After the enforcement action was initiated, the district court dismissed Blinder, Robinson’s action on the ground that it was moot. See Pet. App. 13a-14a. The court of appeais reversed, concluding that the action was not moot because the order of investigation was still in effect, and remanded to the district court for further proceedings. 692 F.2d 102, 106 (10th Cir. 1982). On remand, Meyer Blinder joined the action, and peti- tioners amended their complaint to seek damages from unnamed officers and agents of the Commission as well as an injunction against the Commission’s use of unconstitu- tional formal orders to investigate petitioners and a declara- tion that the order at issue exceeded the Commission’s constitutional and statutory authority (Pet. App. 14a-15a). The district court granted summary judgment in favor of the Commission (id. at 12a-18a), reasoning that petitioners were collaterally estopped by their failure to pursue their challenge to the legality of the Commission’s investigation in the enforcement action (id. at 17a-18a). Petitioners appealed (C.A. No. 83-2041). 3. While their petition for rehearing in the enforcement action was pending in the court of appeals, petitioners moved in the district court under Fed. R. Civ. P. 60(b)(6) for relief from the judgment in that action entered against them 19 months earlier. The sole basis for their motion was 4 the asserted gross negligence of their counsel in not object- ing to the admission of allegedly tainted-evidence at trial. The district court denied the motion (Pet. App. 19a). Based on the records of the trial of the enforcement proceeding and petitioners’ action against the Commission, the district court conciuded that petitioners “were vigorously repre- sented by competent and experienced lawyers who made a tactical decision which binds.their clients” (ibid.). Petition- ers appealed (C.A. No. 84-1483). 4. The court of appeals consolidated the two appeals and affirmed both judgments (Pet. App. la-1 1a). a. With respect to petitioners’ challenge to the Commis- sion’s investigation, the court held that their claims for declaratory and injunctive relief had become moot because the formal order of investigation was terminated in Sep- tember 1982: “[w]hen the investigatory order terminated, there no longer existed a substantial controversy of suffi- cient immediacy and reality to justify the issuance of a declaratory judgment bécause the SEC could no longer investigate Blinder, Robirson under that order” (Pet. App. 6a). The court determined (ibid. (citation omitted)) that no live controversy exists as to any future investigation of petitioners by the Commission because “ ‘there is no reasonable expectation that the alleged wrongs will be re- peated.’ ”? The court also concluded (id. at 7a) that peti- tioners had not sufficiently stated a claim for damages for alleged constitutional violations by unnamed Commission employees. b. In affirming the denial of petitioners’ Rule 60(b)(6) motion, the court of appeals agreed with the district court ?Contrary to petitioners’ characterization (Pet. 3,10), the formal order has never been adjudicated “illegal”; indeed, when petitioners had ._ the opportunity to seek such an adjudicatior in the enforcement action, they failed to do so. 5 that petitioners were bound by the tactical decision of their competent counsel (Pet. App. lla). Thé court of appeals reasoned that even if trial counsel had been negligent in failing to object to the Commission’s allegedly improper evidence, “this would not constitute a sufficient showing to warrant .2e extraordinary relief” of setting aside the judg- ment (id. at 10a). ARGUMENT The decision of the court of appeals rejecting petitioners’ factbound claims is correct and does not conflict with any decision of this Court or any other court of appeals. Peti- tioners’ contentions, which mischaracterize the law and the facts, do not merit further review. 1. The court of appeals correctly applied settled law to the facts of this case in holding (Pet. App. 5a-62) that petitioners’ claims for injunctive and declaratory relief with respect to the Commission’s formal order of investigation became moot after the order had been terminated.? When the Commission terminated the order in 1982, it was no longer of any effect—the Commission’s staff could no longer issue subpoenas or take other investigatory action pursuant to the order. See generally 17 C.F.R. 200.30- 4(a)(1), 202.5. Accordingly, an injunction or declaration with respect to the order could not now benefit petitioners —in particular, it could not relieve them of the injunction imposed in the enforcement action, where they raised no 3The court of appeals also correctly affirmed (Pet. App. 7a) the dismissal of petitioners’ Bivens claim for their failure to plead specific facts supporting a constitutional claim for damages. Petitioners’ mere reference (Pet. 13 n.15) to the breadth of the formal order hardly suffices to show its unconstitutionality or the other elements of the cause of action. See generally Harlow v. Fitzgerald, 457 U.S. 800, 808 (1982); Butz v. Economou, 438 U.S. 478, 507-508 (1978). Petitioners’ conclusory argument to the contrary raises no issue worthy of further review. 6 objection to the introduction of evidence obtained in the course of the Commission’s investigation. In the absence of an immediate, real controversy in which the parties have an actual, personal interest, petitioners’ action is moot. See, e.g., Murphy v. Hunt, 455 U.S. 478, 481-482 (1982); Ash- croft v. Mattis, 431 U.S. 171, 172 (1977); Preiser v. New- kirk, 422 U.S. 395, 402 (1975).! This case does not fit within the exception to the require- ment of a live controversy for those claims “ ‘capable of repetition, yet evading review’ ” (Murphy v. Hunt, 455 U.S. at 482 (citation omitted)). First, as the court of appeals noted (Pet. App. 5a-6a), any future illegality is unlikely because it is presumed that administrative agencies such as the Commission will act within the law. Moreover, as the court also stated (id. at 6a), petitioners have alleged no facts supporting their bare allegation that the Commission will violate their rights in the future. Finally, and most funda- mentally, the issue, if it arises in the future, will not evade review. Because the Commission’s subpoenas are not self- enforcing (Jerry T. O’Brien, Inc., slip op. 5), petitioners may obtain judicial review by refusing, for good cause, to comply with any subpoena directed to them, thereby forc- ing the Commission to bring a subpoena enforcement action (see 15 U.S.C. 78u(c)). In such an action, petitioners could challenge the legality of the subpoena and underlying investigation. See generally Sprecher v. Graber, 716 F.2d 968, 975 (2d Cir. 1983) (subpoena enforcement proceeding is exclusive avenue for testing validity of Commission ‘Petititioners recently have sought to challenge the terminated formal order in a Commission administrative proceeding brought pursuant to 15 U.S.C. (& Supp. I) 780(b) based on the injunction entered by. the _ district court in the enforcement action and on the underlying facts (Pet. — App. 23a-37a). As the court of appeals noted (id. at 11a), petitioners may seek judicial review of any final adverse decision in the administra- tive proceeding. See 15 U.S.C. 78y(a). : 7 subpoena). Indeed, petitioners could have adopted this approach in connection with this very investigation when the Commission issued subpoenas to them. Having failed to \. assert their claims when there was a live controversy,° they “have no right to do so now when the issue has been mooted by termination of the challenged order.® This Court’s decision in Haring v. Prosise, 462 U.S. 306 (1983), relied on heavily by petitioners (Pet. i, 11-13), is completely inapposite. In Haring, the Court held that a criminal defendant’s plea of guilty (and consequent failure to challenge the legality of a search) did not collaterally estop. him from mainteining a subsequent action for dam- ages under 42 U.S.C. 1983 based on the alleged unconstitu- tionality of the search under the Fourth Amendment. Har- ing has nothing to do with mootness, and surely does not stand for the proposition that Fourth Amendment chal- lenges are somehow exempt from the Article III require- ment of a live controversy.’ 5The conflict among the circuits noted by petitioners (Pet. 15-16) with respect to whether compliance with a subpoena renders moot a chal- lenge to the subpoena is irrelevant to the instant case, where petitioners failed to challenge any Commission subpoena. Petitioners’ reliance (Pet. 15) on SEC v. Sloan, 436 U.S. 103 (1978), is decidedly misplaced. In that case, the Commission had “tacked” consecutive ten-day suspension orders, thus continuously suspending trading in acompany’s stock. Although at the time of review no suspen- - gion order was in effect, the Court held that the challenge was not moot because each order’s duration was too short to alle w full judicial review and because there was a reasonable expectation that the same party would be subject to the same action in the future (id. at 109). Neither factor is present here. 7In any event, petitioners’ constitutional claim (see Pet. 17-20) is meritless. Petitioners erroneously equate the Commission’s formal order with a search or with a warrant or subpoena that itself compels disclosure of information or production of documents. In fact, a formal order merely authorizes the Commission staff to issue subpoenas dur- ing an investigation; these subpoenas, much less formal orders, cannot compel a person to do anything because they are not self-enforcing 8 2. Petitioners’ argument (Pet. 20-24) that the district court abused its discretion in denying their Rule 60(b)(6) motion is without merit. The gravamen of that motion was, that petitioners’ trial counsel! had been grossly negligent in not objecting to the admission of “tainted evidence” at the trial of the Commission’s enforcement action. The conclu- sion of both courts below that the failure to object was a calculated tactical choice is supported by petitioner Blind- er’s own affidavit in support of the Rule 60(b)(6) motion, which averred (paras. 9, 19) that the failure to challenge evidence at trial was a considered decision resulting from counsel’s conclusion as to the proper means for challenging the investigation. Petitioners’ claim that they are entitled to the extraordinary remedy of relief from judgment—a judgment whose merits this Court has already declined to review (see page 2, supra)—obviously does not warrant further attention. | _ Petitioners’ belated and unsupported claim of a conflict of interest on the part of their counsel fails to demonstrate any error in the denial of their Rule 60(b)(6) motion. Peti- tioners assert (Pet. 24 & n.50) that the conflict surfaced when one of their trial counsel joined another brokerage firm more than two years after the trial at which the “tainted evidence” was introduced. Petitioners failed to raise this conflict claim in the district court in their Rule 60(b)(6) motion or in their opening brief on appeal, mentioning it for the first time only in a footnote in their reply brief on appeal (Jerry T. O’Brien, Inc., slip op. 1-2 nn.1, 5). Inasubpoena enforcement action, the subpoenaed party may object on any appropriate ground. See generally SEC v. Arthur Young & Co., 584 F.2d 1018 (D.C. Cir. 1978), cert. denied, 439 U.S. 1071 (1979). Thus, contrary to petitioners’ ill-founded claim (Pet. 19-20), a formal order does not give the Com- mission “carte blanche to subpoena documents and coerce testimony.” ‘The subpoena enforcement procedure guarantees that the Commis- sion’s requests for documents and testimony are subject to judicial review and to full constitutional protections. 9 filed on August 30, 1984. No evidence has ever been pre- sented below in support of their argument, which was not made until-one year after their former counsel’s change in position. During that year, petitioners filed five submis- sions attacking the injunction, not one of which referred to the asserted conflict. Moreover, contrary to petitioners’ suggestion (Pet. 11), the attorney in question did not pre- sent oral argument on behalf of petitioners on their appeal from the injunction. There is no basis for further review of petitioners’ latest effort at avoiding the consequences of their wrongdoing. As the Court stated in Ackermann v. United States, 340 U.S. 193, 198 (1950), “[t]here must be an end to litigation someday.”® Petitioners’ attempt to endow their claim with a constitutional aura is, in any event, utterly without foundation. Petitioners had no Sixth Amendment right to effective assistance of counsel because the Com- mission’s enforcement action was civil, not criminal. See, e.g., SEC v. C.M. Joiner Leasing Corp., 320 U.S. 344, 355 (1943); L. Loss, Funda- mentals of Securities Regulation 801 & n.7 (1983); see also Steadman v. SEC, 450 U.S. 91 (1981). See generally Mekdeci v. Merrell National Laboratories, 711 F.2d 1510, 1522-1523 (11th Cir. 1983); Watson v. Moss, 619 F.2d 775, 776 (8th Cir. 1980); Ramirez v. INS, 550 F.2d 560, 563 (9th Cir. 1977). Nor does the adequacy of petitioners’ privately retained counsel impiicate due process concerns, for their attorney’s conduct cannot be laid at the door of the government.See Wainwright v. Torna, 455 U.S. 586, 588 n.4 (1982) (deprivation was caused by counsel, not by the state); cf. Polk County v. Dodson, 454 U.S. 312, 317-325 (1981) (public defender whose salary is paid by the state does not act “under color of state law”). The Constitution obviously does not require that civil judgments be subject to attack on grounds of inade- quacy of representation by privately retained counsel. See generally Link v. Wabash R.R., 370 U.S. 626, 633-634 (1962). - 10 CONCLUSION The petition for a writ of certiorar should be denied. Respectfully submitted. Rex E. LEE Solicitor General — DANIEL L. GOELZER General Counsel ROSALIND C. COHEN Assistant General Counsel RUTH E. EISENBERG Special Counsel PAMELA T. PARRISH RICHARD A. LEVINE Attorneys | Securities and Exchange Commission May 1985 DOJ-1985-05 - --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0047%3A2. Public record. Not legal advice.