Feathers v. U.S. Securities and Exchange Commission

Background

Mark Feathers, appearing without a lawyer, sued the U.S. Securities and Exchange Commission (SEC) for damages and declaratory relief. He alleged that the SEC violated his constitutional rights through litigation and enforcement proceedings relating to his securities activities. He also alleged that a securities permit issued by a California agency exempted him and his companies from SEC regulation.

The SEC moved to dismiss, arguing that Feathers’s claims were moot, barred by sovereign immunity, inadequately pleaded, and barred by the effect of earlier litigation. Feathers opposed the motion. The court also considered, and denied, Feathers’s request for judicial notice because most of the requested items were arguments about what the SEC’s motion did not contain, rather than facts eligible for judicial notice.

Rulings

The court rejected the SEC’s argument that the earlier dismissal of Feathers’s prior case automatically required dismissal here on mootness grounds. It ruled, however, that Feathers’s request for declaratory relief was moot because the SEC administrative proceeding had ended and Feathers did not claim that the SEC would reopen it. That claim was dismissed as moot.

The court ruled that Feathers’s damages claim was not moot, but dismissed it for lack of subject-matter jurisdiction based on sovereign immunity. Sovereign immunity generally prevents suits against the federal government and its agencies unless the government has clearly waived that protection. The court concluded that Feathers had not identified an applicable waiver under the Administrative Procedure Act, the Federal Tort Claims Act, or a constitutional damages action against an individual federal agent. The court also noted that Feathers had sued the SEC, not individual SEC employees.

The court separately ruled that the complaint failed to state a claim. It found that Feathers’s allegations of Fourth Amendment, Takings Clause, due process, and equal protection violations were conclusory and did not provide facts showing a plausible constitutional violation. It also found that the complaint did not support Feathers’s premise that the California agency had exclusive authority to regulate him. The court stated that damages are not available against a federal agency for constitutional violations.

Disposition

The court concluded that amendment would be futile because of the extensive litigation history, Feathers’s earlier unsuccessful amendment, and his failure to identify additional facts that would cure the stated defects. Judge Susan Van Keulen granted the SEC’s motion to dismiss, dismissed the declaratory-relief claim as moot, dismissed the damages claim, and dismissed the complaint without leave to amend.