UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT...

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

___________________________________________

)

SECURITIES AND EXCHANGE COMMISSION, )

)

Applicant, )

)

v. ) Case No. 14 Misc. 00193

)

THE COMMITTEE ON WAYS AND MEANS OF )

THE U.S. HOUSE OF REPRESENTATIVES and )

BRIAN SUTTER, )

)

Respondents. )

)

RESPONDENTS’ REPLY IN SUPPORT OF

MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO TRANSFER

Kerry W. Kircher, General Counsel

William Pittard, Deputy General Counsel

Todd B. Tatelman, Assistant Counsel

Mary Beth Walker, Assistant Counsel

Eleni M. Roumel, Assistant Counsel

Isaac B. Rosenberg, Assistant Counsel

OFFICE OF GENERAL COUNSEL

U.S. HOUSE OF REPRESENTATIVES

219 Cannon House Office Building

Washington, D.C. 20515

Telephone: (202) 225-9700

Counsel for Respondents the Committee on Ways

and Means of the U.S. House of Representatives,

and Brian Sutter

July 25, 2014

Case 1:14-mc-00193-P1 Document 24 Filed 07/25/14 of 30

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ...........................................................................................ii

GLOSSARY ....................................................................................................................vii

INTRODUCTION ...........................................................................................................1

ARGUMENT ...................................................................................................................1

I. Sovereign Immunity Still Bars This Action, and the STOCK Act

Still Provides No Waiver of That Fundamental Protection .....................1

A. The Sovereign Immunity Doctrine Applies Here ........................1

B. The SEC Has Not Identified, and Cannot Identify, Any

Waiver of Sovereign Immunity ...................................................5

II. On Personal Jurisdiction and Venue Grounds, This Court Remains

the Wrong One for This Action ...............................................................6

III. Because the SEC’s Subpoenas Seek Exclusively Legislative

Documents and Testimony, the Speech or Debate Clause Remains

an “Absolute” Bar to Enforcement of Those Subpoenas .........................10

IV. The SEC Still Has Not Demonstrated the Exceptional

Circumstances Required to Depose Mr. Sutter ........................................17

CONCLUSION ................................................................................................................20

CERTIFICATE OF SERVICE


ii

TABLE OF AUTHORITIES

Cases

Adeleke v. United States,

355 F.3d 144 (2d Cir. 2004).................................................................................................3

Alden v. Maine,

527 U.S. 706 (1999) .........................................................................................................1, 2

Bardoff v. United States,

628 A.2d 86 (D.C. 1993) .............................................................................................19, 20

Benford v. Am. Broad. Cos., Inc.,

98 F.R.D. 42 (D. Md. 1983), rev’d on jurisdictional grounds by

In re Guthrie, 733 F.2d 634 (4th Cir. 1984) ......................................................................15

Brown & Williamson Tobacco Corp. v. Williams,

62 F.3d 408 (D.C. Cir. 1995) .................................................................................13, 15, 16

Buono v. City of Newark,

249 F.R.D. 469 (D.N.J. 2008) ............................................................................................19

Burger King Corp. v. Rudzewicz,

471 U.S. 462 (1985) .............................................................................................................9

Citizens for Responsibility & Ethics in Washington v. Cheney,

580 F. Supp. 2d 168 (D.D.C. 2008) ...................................................................................20

Comm. on Oversight and Gov’t Reform v. Holder,

979 F. Supp. 2d 1 (D.D.C. 2013) .........................................................................................4

Comm. on the Judiciary v. Miers,

558 F. Supp. 2d 53 (D.D.C. 2008) .......................................................................................4

Commodity Futures Trading Comm’n v. Worldwide Commodity Corp.,

366 F. Supp. 2d 276 (E.D. Pa. 2005) ...................................................................................8

Def. Supplies Corp. v. U.S. Lines Co.,

148 F.2d 311 (2d Cir. 1945).............................................................................................3, 5

Eastland v. U.S. Servicemen’s Fund,

421 U.S. 491 (1975) ...................................................................................11, 13, 14, 15, 16

Energy Capital Corp. v. United States,

60 Fed. Cl. 315 (Fed. Cl. 2004) .........................................................................................18


iii

E.P.A. v. Gen. Elec. Co.,

197 F.3d 592 (2d Cir. 1999), vacated in irrelevant part, on other grounds,

212 F.3d 689 (2d Cir. 2000).............................................................................................2, 4

F.E.C. v. Comm. to Elect Lyndon LaRouche,

613 F.2d 849 (D.C. Cir. 1979) .............................................................................................9

F.H.F.A. v. First Tenn. Bank Nat’l Ass’n,

856 F. Supp. 2d 186 (D.D.C. 2012) .....................................................................................9

Fitzsimmons v. Barton,

589 F.2d 330 (7th Cir. 1979) ...............................................................................................9

Green v. Baca,

226 F.R.D. 624 (C.D. Cal. 2005) .......................................................................................20

Gov’t of the V.I. v. Lee,

775 F.2d 514 (3d Cir. 1985)...............................................................................................12

Hagans v. Lavine,

415 U.S. 528 (1974) .............................................................................................................3

Humid-Aire Corp. v. J. Levitt, Inc.,

No. 77-cv-1110, 1977 WL 1529 (N.D. Ill. Nov. 14, 1977) .................................................9

In re Guthrie,

733 F.2d 634 (4th Cir. 1984) .............................................................................................15

In re SEC ex rel. Glotzer,

374 F.3d 184 (2d Cir. 2004).................................................................................................4

In re United States (Bernanke),

542 F. App’x 944 (Fed. Cir. 2013) ....................................................................................17

Jewish War Veterans of the U.S. of Am., Inc. v. Gates,

506 F. Supp. 2d 30 (D.D.C. 2007) .....................................................................................13

Larson v. Domestic & Foreign Commerce Corp.,

337 U.S. 682 (1949) .........................................................................................................4, 6

Lederman v. N.Y. City Dep’t of Parks & Rec.,

731 F.3d 199 (2d Cir. 2013)...................................................................................18, 19, 20

Lewis v. Sava,

602 F. Supp. 571 (S.D.N.Y. 1984) ....................................................................................12

Liberation News Serv. v. Eastland,

426 F.2d 1379 (2d Cir. 1970)...............................................................................................7


iv

Mariash v. Morrill,

496 F.2d 1138 (2d Cir. 1974)...............................................................................................9

McGrain v. Daugherty,

273 U.S. 135 (1927) ...........................................................................................................13

McNamee v. Massachusetts,

No. 12-cv-40050, 2012 WL 1665873 (D. Mass. May 10, 2012) ...........................18, 19, 20

MINPECO, S.A. v. Conticommodity Servs., Inc.,

844 F.2d 856 (D.C. Cir. 1988) .....................................................................................13, 17

Montrose Chem. Corp. of Cal. v. Train,

491 F.2d 63 (D.C. Cir. 1974) .............................................................................................18

Pennhurst State Sch. & Hosp. v. Halderman,

465 U.S. 89 (1984) ...............................................................................................................3

Pentagen Techs. Int’l, Ltd. v. Comm. on Appropriations of the U.S. House of Reps.,

20 F. Supp. 2d 41 (D.D.C. 1998), aff’d,

194 F.3d 174 (D.C. Cir. 1999) (per curiam) ......................................................................15

Porteous v. Baron,

729 F. Supp. 2d 158 (D.D.C. 2010) ...................................................................................11

S.E.C. v. Morton,

No. 10-cv-1720, 2011 WL 1344259 (S.D.N.Y. Mar. 31, 2011) ..........................................7

S.E.C. v. Obus,

693 F.3d 276 (2d Cir. 2012)...............................................................................................16

S.E.C. v. Softpoint, Inc.,

No. 95-cv-2951, 2001 WL 43611 (S.D.N.Y. Jan. 18, 2001) ...........................................7, 8

S.E.C. v. Straub,

921 F. Supp. 2d 244 (S.D.N.Y. 2013)..............................................................................7, 8

S.E.C. v. Syndicated Food Servs. Int’l, Inc.,

No. 04-cv-1303, 2010 WL 3528406 (E.D.N.Y. Sept. 3, 2010) ...........................................8

Simplex Time Recorder Co. v. Sec’y of Labor,

766 F.2d 575 (D.C. Cir. 1985) ...........................................................................................20

United States v. Bell,

524 F.2d 202 (2d Cir. 1975)...............................................................................................11

United States v. Biaggi,

853 F.2d 89 (2d Cir. 1988).....................................................................................11, 12, 14


v

United States v. Dowdy,

479 F.2d 213 (4th Cir. 1973) .............................................................................................11

United States v. James,

980 F.2d 1314 (9th Cir. 1992) .............................................................................................6

United States v. Johnson,

383 U.S. 169 (1966) ...........................................................................................................16

United States v. Morgan,

313 U.S. 409 (1941) ...........................................................................................................17

United States v. Rayburn House Office Bldg.,

497 F.3d 654 (D.C. Cir. 2007) .......................................................................................4, 12

U.S. Int’l Trade Comm’n v. ASAT, Inc.,

411 F.3d 245 (D.C. Cir. 2005) .............................................................................................8

Walker v. Cheney,

230 F. Supp. 2d 51 (D.D.C. 2002) .......................................................................................4

Warren Bank v. Camp,

396 F.2d 52 (6th Cir. 1968) ...............................................................................................20

Constitutional Provisions, Statutes, and Legislative Authorities

Speech or Debate Clause, U.S. Const. art. I, § 6, cl. 1 ......................................................... 4, 10-17

5 U.S.C. § 702 ..................................................................................................................................6

The Commodity Exchange Act, 7 U.S.C. § 13a-1(e) ......................................................................8

28 U.S.C. § 1404(a) .........................................................................................................................9

The STOCK Act, Pub. L. No. 112-105, 126 Stat. 291 (2012) .....................................................5, 6

17 Cong. Rec. 1295 (1886) ..............................................................................................................4

Other Authorities

William Blackstone, Commentaries ................................................................................................2

The Federalist Papers No. 81 (Alexander Hamilton).......................................................................2


vi

Hearing on Medicare Health Plans, Comm. on Ways & Means (Sept. 21, 2012),

http://waysandmeans.house.gov/news/documentsingle.aspx?

DocumentID=332451 ........................................................................................................16

Michael Herz, United States v. United States: When Can the Federal Government Sue

Itself?, 32 Wm. & Mary L. Rev. 893 (1991) ...................................................................1, 3

Charles Alan Wright et al., Federal Practice & Procedure (3d ed. 2014) ....................................7, 9


vii

GLOSSARY

CMS U.S. Centers for Medicare and Medicaid

Committee Committee on Ways and Means, U.S. House of Representatives

DHHS U.S. Department of Health and Human Services

First Straub Declaration Decl. of Amanda L. Straub in Supp. of [SEC]’s Appl. . . . (June

20, 2014) (ECF No. 3)

House Memorandum Resp’ts’ Consol. [Mem.] (July 4, 2014) (ECF No. 15)

MA Medicare Advantage

SEC U.S. Securities and Exchange Commission

SEC Opening Memorandum Mem. of Law in Supp. of [SEC]’s Appl. . . . (June 20, 2014)

(ECF No. 2)

SEC Opposition Reply Mem. . . . & . . . Opp’n . . . (July 16, 2014) (ECF No. 21)

SGR Medicare’s Sustainable Growth Rate Formula

Wadhwa Declaration Decl. of Sanjay Wadhwa in Opp’n to Resp’ts’ Mot. to Dismiss

(July 16, 2014) (ECF No. 22)


1

INTRODUCTION

The SEC now acknowledges that it simply is investigating, and that it has no allegations

to level against either Respondent (essentially disavowing its prior suggestion otherwise) –

which is as it should be since neither has done anything improper in the least. See Reply Mem.

. . . & . . . Opp’n . . . at 3 (July 16, 2014) (ECF No. 21) (“SEC Opposition”) (“The Commission

has alleged no wrongdoing . . . .”). The SEC has no answer, however, to the question of why it is

pursuing this action where Mr. Sutter, through an attorney proffer, already has informed the

agency that he has no relevant information. But rather than acknowledge the fool’s errand on

which it has embarked, the SEC instead invites this Court to join it by disregarding fundamental

limitations on judicial authority. Respectfully, this Court should do no such thing.

ARGUMENT

I. Sovereign Immunity Still Bars This Action, and the STOCK Act Still Provides No

Waiver of That Fundamental Protection.

A. The Sovereign Immunity Doctrine Applies Here.

1. The SEC persists in its contention that sovereign immunity does not protect one

branch of the federal government from compulsion by another branch, still without citing any

supporting authority. See SEC Opp’n at 3-5 (“[T]he Commission has not located any cases

discussing sovereign immunity in this context . . . .”). What it does cite is (i) Alden v. Maine,

527 U.S. 706 (1999); (ii) a law review article, Michael Herz, U.S. v. U.S.: When Can the Fed.

Gov’t Sue Itself?, 32 Wm. & Mary L. Rev. 893, 910 (1991); and (iii) four cases in which no

party (for good reason) raised the sovereign immunity defense. Not only do none of these

citations assist the SEC, they each suggest the error of its argument.

First, Alden holds only that the federal government lacks the power to abrogate, by

statute, the state sovereign immunity reserved by the Tenth Amendment – a holding, self-

evidently, with no relevance here. See 527 U.S. at 711-14. In the context of so holding, the


2

Court references the historic treatment of “private suits,” but says nothing even suggestive of a

limitation of state, much less federal, sovereign immunity to such suits. Id. at 715. Yet Alden is

instructive in one respect: It cites Blackstone regarding the common law conception of

sovereign immunity (i.e., the conception that underlies federal sovereign immunity):

“And, first, the law ascribes to the king the attribute of sovereignty, or pre-

eminence. . . . Hence it is, that no suit or action can be brought against

the king, even in civil matters, because no court can have jurisdiction over

him. For all jurisdiction implies superiority of power . . . .”

527 U.S. at 715 (quoting 1 Wm. Blackstone, Commentaries *234-35; emphases added here;

ellipses added by Alden). In other words, at common law, sovereign immunity foreclosed

jurisdiction, absent a waiver, except where the party seeking jurisdiction was superior to the

party over whom jurisdiction was sought. Under our tripartite form of government, no branch is

superior to the other, much less is the SEC – a statutory creation of Congress – superior to

Congress. See also Blackstone, supra, *244 (stating, in direct contravention of SEC’s argument,

that sovereign immunity applied between king and parliament: “If . . . the king had a right to

animadvert [pass censure] on either of the houses [of parliament], that branch of the legislature,

so subject to animadversion, would instantly cease to be part of the supreme power . . . .”).1

Second, the law review article the SEC cites does not even mention sovereign immunity,

1 A final point regarding the SEC’s citation to Alden: The SEC’s notation that the Supreme

Court quoted The Federalist Papers No. 81 (Alexander Hamilton), see SEC Opp’n at 4, reveals

much more about the reliability of the SEC’s legal arguments than it does about sovereign

immunity. The SEC plucks from Alden’s lengthy quotation a single sentence, and it then shifts

the actual emphasis in that sentence from the words “without its consent” (the words actually

emphasized in Alden and in The Federalist Papers No. 81, and words that in fact underscore the

frailty of the SEC’s sovereign immunity argument) to “suit of an individual” (a point given no

emphasis, or even consideration, in Alden or its source) – all without acknowledging its deletion

of the original emphasis. In any event, even the SEC has not contended that the sovereign

immunity protection is limited to suits brought by “individuals,” and it is not. See, e.g., E.P.A. v.

Gen. Elec. Co., 197 F.3d 592, 597 (2d Cir. 1999) (sovereign immunity applies in face of claim

by corporate entity), vacated in irrelevant part, on other grounds, 212 F.3d 689 (2d Cir. 2000).


3

much less discuss that doctrine in any manner that might be helpful to the SEC. However, it

does uncover Defense Supplies Corp. v. U.S. Lines Co., 148 F.2d 311, 312 (2d Cir. 1945), a case

in which the plaintiff corporation was suing the United States under rights acquired, by

subrogation, from the United States. See Herz, supra, at 896 n.13. The Second Circuit discusses

sovereign immunity, without using that phrase: “[W]e must follow the rule of strict construction.

This follows from the fact that the United States cannot be sued without [its] consent, and, if

Congress in certain cases gives its consent, the courts are confined to the letter of the statute

which expresses such consent.” 148 F.2d at 312. Applying this principle, the Court concludes

that Congress in fact had not clearly authorized such a suit (i.e., waived sovereign immunity),

and thus that the case was nonjusticiable. See id. (“The Act would appear to contemplate no

such action.”); see also id. at 313 n.5 (confirming that holding rests on finding of no statutory

waiver). Accordingly, Defense Supplies is further controlling authority for Respondents’

position that, absent an applicable waiver, sovereign immunity protects the branches of the

federal government from compulsion at the hands of the other branches.

Third, the SEC’s four cases in which one component or official of the federal government

sued another such component or official, and the defendant declined to assert sovereign

immunity in response, are wholly inapposite. As an initial matter, “‘when questions of

jurisdiction have been passed on in prior decisions sub silentio,’” courts are not bound when a

party in “‘a subsequent case finally [raises] the jurisdictional issue.’” Pennhurst State Sch. &

Hosp. v. Halderman, 465 U.S. 89, 119 (1984) (quoting Hagans v. Lavine, 415 U.S. 528, 533 n.5

(1974)). Indeed, the Second Circuit has so held in the sovereign immunity context itself. See

Adeleke v. U.S., 355 F.3d 144, 149-51 (2d Cir. 2004) (sovereign immunity barred certain claims,

despite acknowledging prior cases that had assumed justiciability of such claims).


4

Moreover, and in any event, sovereign immunity could not properly have been asserted in

at least three of the SEC’s four cases, and it need not have been asserted in the fourth: (i) two

involved the enforcement of congressional subpoenas, the authority for which derives from the

Constitution, thereby displacing the common law doctrine of sovereign immunity, see Comm. v.

Holder, 979 F. Supp. 2d 1 (D.D.C. 2013); Comm. v. Miers, 558 F. Supp. 2d 53 (D.D.C. 2008);

(ii) one involved a constitutional challenge to the execution of a search warrant, see U.S. v.

Rayburn House Office Bldg., 497 F.3d 654 (D.C. Cir. 2007) (holding that execution of warrant

violated Speech or Debate Clause); see also Larson v. Domestic & Foreign Commerce Corp.,

337 U.S. 682, 701-02 (1949) (stating that actions alleging deprivation of constitutional rights lie

outside sovereign immunity protection insofar as they seek declaratory and/or injunctive relief);

and (iii) one involved an action for which the Court held subject matter jurisdiction lacking on

other grounds, see Walker v. Cheney, 230 F. Supp. 2d 51, 74-75 (D.D.C. 2002).2

2. The SEC has no meaningful response to the controlling authority already cited by

Respondents. As to In re SEC ex rel. Glotzer, 374 F.3d 184 (2d Cir. 2004), the SEC responds

only with a footnote parenthetical, noting that a private litigant had obtained the Article III

subpoena at issue there. See SEC Opp’n at 4 n.2. True, but beside the point: The Second

Circuit held in that case, in no uncertain terms, that sovereign immunity, absent a waiver,

protects components of other branches of the federal government (the SEC itself in that case)

from compulsion at the hands of another branch (the Article III branch in that case). See SEC ex

rel. Glotzer, 374 F.3d at 190, 192; accord E.P.A., 197 F.3d at 597 (same re: EPA official and

2 The House’s historic treatment of subpoenas further demonstrates that there is nothing

“novel,” SEC Opp’n at 3, about Respondents’ sovereign immunity argument. See, e.g., 17 Cong.

Rec. 1295 (1886) (resolving: “That by the privilege of this House no evidence of a documentary

character under the control and in possession of the House . . . can by the mandate or process of

the ordinary courts of justice be taken from such control or possession but by its permission.”).


5

Article III subpoena); see also Defense Supplies, 148 F.2d at 312 (absent waiver, sovereign

immunity protects one component of federal government from suit by another).

In sum, the SEC has no response, because there is none, to the fact that its proposed

sovereign immunity limitation would leave it (a statutorily-created agency) immune from Article

III subpoenas, absent a waiver, but Congress (a constitutionally-mandated body) subject to mere

administrative subpoenas. To state that absurdity is to reject it.

B. The SEC Has Not Identified, and Cannot Identify, Any Waiver of Sovereign

Immunity.

The SEC reiterates its previous footnote suggestion that the STOCK Act, Pub. L. No.

112-105, 126 Stat. 291 (2012), waives the Committee and Mr. Sutter’s sovereign immunity as to

this enforcement action. See SEC Opp’n at 5-6. The SEC, however, never so much as

acknowledges the Supreme Court’s oft-repeated requirement that any such waiver must be

“unequivocally expressed” and that even such “unequivocally expressed” waivers themselves

must be construed narrowly. Compare id. (no recognition of applicable standard), with Resp’ts’

Consol. [Mem.] at 13-16 & n.13 (July 4, 2014) (ECF No. 15) (“House Memorandum”)

(discussion of standard, with citation to numerous controlling authorities).

The SEC relies solely on one passage from the STOCK Act: “Members of Congress and

employees of Congress are not exempt from the insider trading prohibitions arising under the

securities laws . . . .” STOCK Act § 4(a). However, that language self-evidently provides no

waiver of sovereign immunity as to SEC investigative subpoenas or SEC suits to enforce such

subpoenas. Contrast, for example, the federal statute that this Circuit and others have recognized

as providing the actual sovereign immunity waiver as to federal “agenc[ies]” and “officer[s] or

employee[s] thereof” with respect to subpoenas and subpoena enforcement actions:

An action in a court of the United States seeking relief other than money

damages and stating a claim that an agency or an officer or employee


6

thereof acted or failed to act in an official capacity or under color of legal

authority shall not be dismissed nor relief therein be denied on the ground

that it is against the United States or that the United States is an

indispensable party. The United States may be named as a defendant in

any such action, and a judgment or decree may be entered against the

United States . . . .

5 U.S.C. § 702 (emphases added); see also House Mem. at 15 & n.16 (citing various authorities

recognizing that § 702 provides sovereign immunity waiver relevant to subpoenas).

The STOCK Act contains no language even remotely comparable, and for good reason:

It was meant only to clarify that Legislative Branch officials are subject to substantive liability

under the securities laws to the same extent as everyone else – a fact confirmed, not contradicted,

by the legislative history cited by the SEC, see SEC Opp’n at 5 n.4. See also STOCK Act § 10;

Larson, 337 U.S. at 703-04 (waivers of sovereign immunity for liability do not, absent express

statement otherwise, extend to waivers of that immunity for associated injunctive relief); U.S. v.

James, 980 F.2d 1314, 1319 (9th Cir. 1992) (similar re: subpoenas); House Mem. at 13 & n.13.3

II. On Personal Jurisdiction and Venue Grounds, This Court Remains the Wrong One

for This Action.

No matter whether this Court dismisses this action for lack of personal jurisdiction and/or

improper venue, see House Mem. at 16-22, or instead transfers it to the District of Columbia, see

id. at 22-23, the fact remains that this forum is not the right one for this dispute. The SEC does

not dispute that the federal court in the District of Columbia could exercise personal jurisdiction

over the Committee and Mr. Sutter. Nor does the SEC dispute that the District of Columbia

(where the SEC is headquartered and the subpoenas were returnable) is a proper and convenient

3 The SEC’s complaints about the inconveniences imposed on it by the sovereign immunity

doctrine, see, e.g., SEC Opp’n at 6 (asserting that application of doctrine will leave agency

“preclude[d]” from bringing certain actions), are (i) beside the point, see, e.g., House Mem. at 13

n.13 (2d paragraph), and (ii) demonstrably overwrought in light of the various forms of

information the agency purports to have collected in this very case, see Mem. of Law in Supp. of

[SEC]’s Appl. . . . at 2-3 (June 20, 2014) (ECF No. 2) (“SEC Opening Memorandum”).


7

venue; indeed, the SEC is “carr[ying] on” its investigation in the District of Columbia, and

Respondents operate there. The SEC does not truly engage the multi-factor tests guiding the

personal jurisdiction and venue analyses, opting instead to sidestep the law it finds inconvenient.

1. For example, the SEC says the Court should disregard the “reasonableness” prong of

the personal jurisdiction analysis because that prong is “‘largely academic.’” SEC Opp’n at 7

(quoting S.E.C. v. Softpoint, Inc., No. 95-cv-2951, 2001 WL 43611, at *5 (S.D.N.Y. Jan. 18,

2001)). That is incorrect: “[T]he mere existence of a nationwide service provision in the federal

statute is obviously not sufficient to subject a defendant to personal jurisdiction.” 4 Charles Alan

Wright et al., Fed. Practice & Proc. § 1068.1 (3d ed. 2014) (“Wright & Miller”). “Federal courts

still must engage in a case-and-fact-specific inquiry in each case . . . .” Id.

Thus, even if some courts presumptively accept an agency’s chosen forum as fair because

often certain “federal interests” overcome the “burdens placed on the [ordinary] defendant,”

Softpoint, 2001 WL 43611, at *5, this Court cannot so presume because here the more

compelling federal interests counsel against this Court exercising personal jurisdiction. See, e.g.,

Liberation News Serv. v. Eastland, 426 F.2d 1379, 1384 (2d Cir. 1970) (recognizing “pendency

of actions elsewhere than in Washington” would “disrupt[] . . . the work of Congress”).4

The SEC also misguidedly claims that the Committee and Mr. Sutter “derive[d]” their

five-factor “reasonableness” analysis “from a case that did not involve a federal statute

4 The SEC’s cases are unavailing. This is not a case where the SEC has “no alternative forum

available” (other than this district), or where there is not a “strong federal interest in resolving

this issue [in the District of Columbia].” S.E.C. v. Straub, 921 F. Supp. 2d 244, 259 (S.D.N.Y.

2013) (cited at SEC Opp’n at 9 n.9). Moreover, the Committee and Mr. Sutter were not “served

in this district while . . . here to promote [their] business, which fact alone [would be] sufficient

to allow this court to exercise personal jurisdiction over [them].” S.E.C. v. Morton, No. 10-cv-

1720, 2011 WL 1344259, at *13 (S.D.N.Y. Mar. 31, 2011) (cited at SEC Opp’n at 9 n.9). Nor

have the Committee and Mr. Sutter “retained . . . New York attorney[s] to represent [them] in

this action.” Softpoint, 2001 WL 43611, at *6 (cited at SEC Opp’n at 9).


8

authorizing nationwide service of process,” and further that this analysis is “appropriate (if at

all)” only in “challenge[s] to venue, rather than to jurisdiction.” SEC Opp’n at 7-8. This

obviously is wrong as well. See, e.g., Straub, 921 F. Supp. 2d at 258-29 (cited by SEC; applying

same five-factor test to determine personal jurisdiction); Softpoint, 2001 WL 43611, at *5

(same); see also S.E.C. v. Syndicated Food Servs. Int’l, Inc., No. 04-cv-1303, 2010 WL 3528406,

at *2-3 (E.D.N.Y. Sept. 3, 2010) (same); Commodity Futures Trading Comm’n v. Worldwide

Commodity Corp., 366 F. Supp. 2d 276, 282-83 (E.D. Pa. 2005) (conducting judicial district-

specific “reasonableness” analysis in action under Commodity Exchange Act, which has similar

nationwide service of process provision, 7 U.S.C. § 13a-1(e)).

Finally, the SEC incorrectly suggests that well-established personal jurisdiction/due

process principles do not apply to “summary subpoena enforcement proceeding[s].” SEC Opp’n

at 8. However, even if this matter properly is so characterized – a proposition we dispute – that

characterization still would have no bearing on whether this Court, consistent with the Due

Process Clause, could order the Committee and/or Mr. Sutter (who are outside this judicial

district) to comply with the SEC’s subpoenas. And, for the reasons we previously articulated,

the balance of the reasonableness factors compels the conclusion that this Court’s exercise of

personal jurisdiction here would not be constitutionally reasonable. See House Mem. at 18-21.

2. With respect to venue, the SEC simply has not established, because it cannot establish,

that venue is appropriate here in light of the governing case law. See SEC Opp’n at 9-13.

First, while the SEC contends that venue is proper here because its investigation is being

carried on here, see SEC Opp’n at 9-11, it does not dispute that it also is carrying on its

investigation in the District of Columbia. See, e.g., U.S. Int’l Trade Comm’n v. ASAT, Inc., 411

F.3d 245, 252 (D.C. Cir. 2005) (“[I]t is true that the Commission’s inquiry could be carried on in


9

more than one place . . . .”); F.E.C. v. Comm. to Elect Lyndon LaRouche, 613 F.2d 849, 858 n.9

(D.C. Cir. 1979) (“To say that the Commission’s inquiry was being carried on in the District of

Columbia is not to say that it was not also being carried on in New York.”).

Second, to the extent this Court bypasses the reasonableness component of the personal

jurisdiction analysis (as the SEC advocates), it is particularly obligated to “look to venue and

transfer provisions to protect [Respondents’] interest[s].” Wright & Miller, supra, § 1068.1;

accord Burger King Corp. v. Rudzewicz, 471 U.S. 462, 483-84 (1985) (“And even to the extent

that it is inconvenient for a party who has minimum contacts with a forum to litigate there, such

considerations most frequently can be accommodated through a change of venue.”).5

Third, even if the first two venue transfer considerations – convenience to the parties and

witnesses (tellingly, nowhere in the SEC’s papers does it even suggest that it would be

burdensome for it to litigate this dispute in the District of Columbia, where it is headquartered) –

sometimes carry less weight in subpoena-enforcement proceedings, see SEC Opp’n at 12, the

remaining factors remain in play, must be weighed carefully, and overwhelmingly favor transfer

to the District of Columbia. See House Mem. at 22-23; see also, e.g., F.H.F.A. v. First Tenn.

Bank Nat’l Ass’n, 856 F. Supp. 2d 186, 192-96 (D.D.C. 2012) (granting § 1404(a) motion to

transfer summary proceeding to enforce administrative subpoenas).

The SEC says nothing at all about the third, eighth, and ninth factors – 5 See also, e.g., Mariash v. Morrill, 496 F.2d 1138, 1143-45 (2d Cir. 1974) (after applying

national-contacts test for personal jurisdiction, “turn[ing] next to whether venue is proper in the

Southern District of New York”); Fitzsimmons v. Barton, 589 F.2d 330, 334 (7th Cir. 1979)

(cited at SEC Opp’n at 8) (“Of course on remand to the district court the defendant remains free

to raise any such consideration of fairness in an argument that the case should be transferred

under Section 1404(a).”); Humid-Aire Corp. v. J. Levitt, Inc., No. 77-cv-1110, 1977 WL 1529, at

*2 (N.D. Ill. Nov. 14, 1977) (“If retention of the action in a particular forum is oppressive to the

defendants, the action may be transferred . . . pursuant to 28 U.S.C. § 1404(a). This position

carries particular weight when the statute creating the right authorizes nationwide service of

process.” (emphasis added; citing Mariash, 496 F.2d at 1143)).


10

unsurprisingly, given that its investigation focuses substantially on people, events,

and documents in the District of Columbia. See, e.g., Wadhwa Decl. ¶ 4 (SEC

“has collected documents from Washington, D.C.-based entities and interviewed

witnesses who reside in the District of Columbia”); SEC Opening Mem. at 3

(“[T]he Commission staff opened [this] formal investigation . . . to determine,

among other things, the source(s) of information in the email sent from the GT

Lobbyist to Height [and] the circumstances surrounding the transmittal of that

information . . . .”); First Straub Decl. ¶¶ 7-21.6

As to the fourth factor, the SEC’s assertion that this proceeding has “no ‘operative

facts,’” SEC Opp’n at 13, is belied by the numerous declarations already filed in

this proceeding – three by the SEC alone.

The SEC declares the fifth and sixth factors irrelevant, with no supporting

authority, see id.: In fact, the District of Columbia federal court, because it could

exercise personal jurisdiction here, holds the relevant power (if any) to compel

Respondents’ compliance with the SEC’s subpoenas; and the relative means of

the parties, and of Mr. Sutter in particular, plainly favors transfer.

Finally, as to the seventh factor, the SEC’s assertion that we “suggest[ed] that this

Court is less capable of assessing issues arising under the [Speech or Debate]

Clause than a court in the District of Columbia,” id., is plainly false; we simply

noted that “the District Court for the District of Columbia . . . is more familiar

with the Speech or Debate Clause,” House Mem. at 23, which it is, and which the

SEC does not dispute.

III. Because the SEC’s Subpoenas Seek Exclusively Legislative Documents and

Testimony, the Speech or Debate Clause Remains an “Absolute” Bar to

Enforcement of Those Subpoenas.

1. The SEC begins its Speech or Debate Clause response with a complaint regarding

Respondents’ description of the limited nature of this Court’s role. See SEC Opp’n at 13-18.

But that complaint is misplaced; it is not Respondents but the Constitution, the Supreme Court,

and the Second Circuit that have circumscribed this Court’s role with respect to a congressional 6 The SEC does say that: (i) one of its New York-based lawyers has authorized other New

York-based lawyers to carry on an investigation in this judicial district, (ii) those lawyers in fact

are carrying on that investigation (including by reviewing documents that they have had shipped

to them in New York), and (iii) “the investor clients of Height Securities that traded in the

[pertinent] stocks . . . are mostly located in New York.” SEC Opp’n at 10. But the city from

which an investigation is run says nothing about that investigation’s subject matter. And the fact

that some Height clients who traded downstream on allegedly material nonpublic information are

based somewhere in the state of New York does not diminish the SEC’s seemingly more

pressing interest in determining the source and dissemination of that information.


11

committee’s reliance on the Speech or Debate Clause. See, e.g., Eastland v. U.S. Servicemen’s

Fund, 421 U.S. 491, 506 (1975) (“The courts should not go beyond the narrow confines of

determining that a committee’s inquiry may fairly be deemed within its province.” (emphases

added; quotation marks omitted)); U.S. v. Biaggi, 853 F.2d 89, 103 (2d Cir. 1988) (“[T]he

Speech or Debate Clause forbids not only inquiry into acts that are manifestly legislative but also

inquiry into acts that are purportedly legislative, ‘even to determine if they are legislative in

fact[]’ . . . .” (quoting U.S. v. Dowdy, 479 F.2d 213, 226 (4th Cir. 1973))); see also House Mem.

at 30 & n.22 (citing additional authority); Porteous v. Baron, 729 F. Supp. 2d 158, 166 (D.D.C.

2010) (“The proper focus of this Court’s inquiry under the Speech or Debate Clause is not . . . on

what the defendants did in particular . . . . The focus is on the nature of the defendants’ conduct

more generally. So long as th[at] type of conduct . . . falls legitimately within the scope of

legislative activity, [the nature of the specific conduct is irrelevant].” (emphasis added)).

Astoundingly, the SEC ignores Eastland, the controlling Supreme Court authority

regarding the applicability of the Speech or Debate Clause to investigative activity, and

particularly to committee investigative activity. See SEC Opp’n at 17 (SEC’s only citation to

Eastland – an acknowledgement of an out-of-circuit case’s citation to it).

And, as to the controlling Second Circuit authority, Biaggi, the SEC recognizes it only in

a footnote, where it characterizes as “dictum” the Court’s statement of the nature of judicial

review of assertions of the Speech or Debate Clause. SEC Opp’n at 17 n.13. Biaggi is not so

easily set aside. First, it is controlling authority, to which this Court is bound, whether “dictum”

or not – particularly where, as here, it is in line with controlling Supreme Court authority, not to

mention the authority of other circuits. See, e.g., U.S. v. Bell, 524 F.2d 202, 206 (2d Cir. 1975)

(even though part of opinion “is dictum, it does not at all follow that we can cavalierly disregard


12

it”); Lewis v. Sava, 602 F. Supp. 571, 573 (S.D.N.Y. 1984) (“This court need not decide whether

the statement in [a particular Supreme Court case] is dicta. Even if it is, in the absence of any

clear authority to the contrary, the court is obliged to follow it.”). Second, Biaggi’s statement in

fact is not dictum. In that case, the Second Circuit reviewed an assertion of rights under the

Speech or Debate Clause, thereby directly relying on its statement of the relevant standard of

review. In fact, in conducting that review, the Court concluded, in part: “[The] legislative

factfinding activity conducted by Biaggi during his Florida trips was protected.” 853 F.2d at 103.

Rather than recognize and apply this controlling authority, the SEC resists it by reference

to out-of-circuit cases involving individual legislators (each of whom necessarily and admittedly

held some legislative and some non-legislative documents), rather than congressional

committees. See, e.g., SEC Opp’n at 16-18. In Government of the Virgin Islands v. Lee, 775

F.2d 514, 522 (3d Cir. 1985), for example, the Third Circuit expressly contrasted its case

(involving a territorial legislator charged with improperly claiming 75% reimbursement for

travel that allegedly was less than 75% official) with cases involving committee conduct in

which the activity was obviously legislative. Even so, the Third Circuit held that the district

court should inquire, as to the individual legislator at issue, only whether his conduct involved “a

significant legislative component”; if so, “legislative immunity attaches.” 775 F.2d at 525; see

also id. (“[A] meeting or trip may be deemed immune even though some personal exchanges

transpired.”). Here, as noted below, there can be no question that the Committee and Mr.

Sutter’s conduct contained a “significant legislative component,” thereby satisfying even the

Third Circuit’s more intrusive inquiry.7

7 The SEC’s other out-of-circuit, individual-legislator cases likewise do not assist it. See

Rayburn, 497 F.3d at 664-66 (ordering particularized assertion of Speech or Debate Clause by

individual Member in peculiar circumstance in which (i) documents already improperly in

(Continued . . . .)


13

2. This Court’s limited role in reviewing a Speech or Debate Clause assertion, and

particularly one by a congressional committee, follows from the limited nature of the relevant

inquiry, again as stated by the controlling Supreme Court authority: Committee investigative

activity is within the “legitimate legislative sphere,” and thus “absolute[ly]” protected by the

Speech or Debate Clause, whenever that activity is (i) within the jurisdiction of the relevant

committee, and (ii) “concern[s] a subject on which ‘legislation could be had.’” Eastland, 421

U.S. at 503-06 (emphasis added; quoting McGrain v. Daugherty, 273 U.S. 135, 177 (1927)); see

also, e.g., Brown & Williamson Tobacco Corp. v. Williams (“B&W”), 62 F.3d 408 (D.C. Cir.

1995) (applying Eastland; quashing subpoena for committee documents acquired through

informal information-gathering); MINPECO, S.A. v. Conticommodity Servs., Inc., 844 F.2d 856

(D.C. Cir. 1988) (same). Here, there can be no question – indeed, the SEC does not contest –

that the Committee was engaged in an inquiry, within its jurisdiction, on which legislation could

be had. See, e.g., House Mem. at 2-7 (describing Committee legislative activity, still ongoing,

with respect to DHHS, CMS, Medicare, MA, the SGR, and MA reimbursement rates).

The SEC nonetheless posits that the Speech or Debate Clause applies to committee

information-gathering only where that activity leads to a particular, additional legislative act:

e.g., the introduction of particular legislation. See SEC Opp’n at 16, 22. But the Supreme Court,

in Eastland itself, has held just the opposite: Information-gathering is, in and of itself, protected

legislative activity, no matter what may, or may not, come later. See, e.g., Eastland, 421 U.S. at

504 (“The power to investigate . . . plainly falls within that definition [of legitimate legislative

possession of Executive Branch, and (ii) Member asserted protection would apply only as to

subset of those documents); Jewish War Veterans of the U.S. of Am., Inc. v. Gates, 506 F. Supp.

2d 30, 38, 62 (D.D.C. 2007) (motion to vacate pending) (considering Speech or Debate assertion

by individual legislators over “some” documents; while holding open possibility of ultimately

inquiring regarding privileged nature of demanded documents, “entrust[ing] the Members with

the initial – and perhaps the ultimate – responsibility” for making those determinations).


14

activity].”); accord Biaggi, 853 F.2d at 102-03 (“‘[T]he power to investigate is inherent in the

power to make laws because a legislative body cannot legislate wisely or effectively in the

absence of information respecting the conditions which the legislation is intended to affect or

change.’” (quoting Eastland, 421 U.S. at 504; quotation marks and brackets omitted)).

[And] the legitimacy of a congressional inquiry [is not] defined by what it

produces. The very nature of the investigative function – like any research

– is that it takes the searchers up some ‘blind alleys’ and into

nonproductive enterprises. To be a valid legislative inquiry there need be

no predictable end result.

Eastland, 421 U.S. at 509. There is no room – none – for the SEC to argue that Respondents’

information-gathering is not itself legislative, and thus Speech or Debate protected.

In any event, the Committee here actually did engage (and remains engaged) in extensive

additional legislative activity regarding the subject matters at issue, including actually

developing, introducing, marking-up, and reporting legislation – legislation that subsequently

passed the House. See, e.g., House Mem. at 4-7. While none of that was necessary to trigger the

applicability of the Speech or Debate Clause, it is illustrative of the seriousness with which the

Committee has conducted its relevant, and necessarily legislative, business.8

Accordingly, the Committee and Mr. Sutter do not ask this Court to engage in any

“conjecture” about the legislative nature of the demanded documents. SEC Opp’n at 19.

3. The clear applicability of the Speech or Debate Clause here leaves no room for the

SEC’s suggestion that Respondents provide a privilege log, or that this Court review documents

in camera. See SEC Opp’n at 14, 18, 20. The Court already has the information necessary to

8 The SEC’s suggestion that the applicability of the Speech or Debate Clause to investigative

activity should depend on whether some legislation ultimately is forthcoming is also logically

flawed in that it would leave courts (other than in a case like this one, where the Committee in

fact already has taken such action) forever in limbo, waiting indefinitely to learn whether such

additional legislation would be introduced.


15

perform the “narrow” inquiry required. Eastland, 421 U.S. at 506; see also supra.

In fact, in the Speech or Debate Clause context generally, courts rarely require a privilege

log regarding, or themselves review, documents asserted to be legislative, precisely because

doing so would be inconsistent with the purposes that underlie the Clause, one of which it to

“prevent . . . accountability before a possibly hostile judiciary.” Eastland, 421 U.S. at 502

(quotation marks omitted). Rather, courts largely have confined themselves to determining

whether specific categories of documents reflect “legislative activities,” as defined by the

Supreme Court, on the basis of the subpoena language or the representations of Legislative

Branch officials about the categories of documents they contend are privileged, representations

to which the courts have seen fit to defer. See, e.g., B&W, 62 F.3d at 417 (“We think it is fair to

assume on the record before us that documents in question were . . . privileged[].”); Pentagen

Techs. Int’l, Ltd. v. Comm., 20 F. Supp. 2d 41, 44-45 (D.D.C. 1998) (accepting legislators’

representations regarding documents sought), aff’d, 194 F.3d 174 (D.C. Cir. 1999) (per curiam).9

In addition to these constitutional impediments, privilege logs and in camera review are

not practical in the Speech or Debate Clause context because it frequently is impossible to tell

from the face of a particular document, or a brief description thereof, whether the document is

legislative in nature. To make that document-by-document determination, a court would be

required to consider substantial in-and-of-itself privileged information (which detail it would not

have during an in camera review, and which, if provided via a privilege log, only would

9 Indeed, we are not aware of any instance, save one, in which any court has demanded a

privilege log in support of a Speech or Debate Clause assertion over committee documents,

much less conducted an in camera review. The one exception: In Benford v. Am. Broad. Cos.,

Inc., 98 F.R.D. 42 (D. Md. 1983), a case relied on by the SEC (without acknowledging its

subsequent history), see SEC Opp’n at 18, the district court demanded detail regarding

committee documents. The Fourth Circuit reversed, holding the district court without

jurisdiction in the first instance. See In re Guthrie, 733 F.2d 634, 636-37 (4th Cir. 1984).


16

compound the Speech or Debate Clause infringement).10

4. Finally, the SEC gains nothing by its trumpeting of an email exchange by which

lobbyist Mark Hayes alerted Mr. Sutter to a real-world problem encountered by one of Mr.

Hayes’s health insurance clients with respect to a CMS “star-rating” system. See SEC Opp’n at

23-24, 25. According to the SEC, the exchange demonstrates that Respondents possess

responsive “communication[s] that [they] cannot . . . defend as [Speech or Debate Clause]

protected.” Id. at 25. In fact, the exchange demonstrates no such thing. Whatever Mr. Hayes’s

motivation in contacting Mr. Sutter, the email exchange evidences the Committee’s legislative

activity: Mr. Sutter gathering information “on which legislation could be had.” Eastland, 421

U.S. at 506 (quotation marks omitted). Indeed, the Committee has considered, and continues to

consider, legislation in exactly this area. See, e.g., Hr’g on Medicare Health Plans, Comm. on

Ways & Means (Sept. 21, 2012), http://waysandmeans.house.gov/news/documentsingle.aspx?

DocumentID=332451 (discussion during hearing of Committee’s Subcommittee on Health re:

merits of CMS’s star-rating system). In any event, an email-by-email analysis of Committee

documents is exactly the approach rejected by the Supreme Court and the Second Circuit. See

supra. In the end, the Hayes email exchange may be most telling for what it reveals about the

overbreadth of the SEC’s demands: On its face, the agency can have no legitimate interest in the

10

Furthermore, while the SEC disclaims any interest in Respondents’ “purposes” or “motives”

(apparently recognizing their protected status), SEC Opp’n at 14 n.12, in fact Respondents’

“purposes” and “motives” in collecting certain information are exactly what the SEC seeks to

question, and have this Court question, by its references to a privilege log and in camera review.

That it, and this Court, cannot do. See, e.g., U.S. v. Johnson, 383 U.S. 169, 180 (1966)

(motivation for legislative-type activity “precisely what the Speech or Debate Clause generally

forecloses from executive and judicial inquiry” (emphasis added)); B&W, 62 F.3d at 420

(“[I]ndications as to what Congress is looking at provide clues as to what Congress is

doing, or might be about to do – and this is true whether or not the documents are sought for the

purpose of inquiring into (or frustrating) legislative conduct or to advance some other

goals . . . .”); see also S.E.C. v. Obus, 693 F.3d 276, 286 (2d Cir. 2012) (“Liability for securities

fraud requires proof of scienter . . . .”).


17

referenced exchange because it has nothing to do with the rate announcement the SEC purports

to be investigating. Cf., e.g., MINPECO, 844 F.2d at 862-63 (“[E]ven though the language of the

subpoenas is broad enough to encompass documents that do not relate to the [subpoenaing

party’s] stated [improper] objective, the effect of their literal enforcement would be to authorize

a fishing expedition into congressional files. For a court to authorize such open-ended discovery

. . . would appear inconsistent with the comity that should exist among the separate branches

. . . . [and] would also be inconsistent with Supreme Court decisions . . . .”).11

IV. The SEC Still Has Not Demonstrated the Exceptional Circumstances Required to

Depose Mr. Sutter.

1. The SEC attempts to sidestep the “exceptional circumstances” doctrine by

(i) repeatedly characterizing it as the “Morgan” doctrine, and (ii) observing that U.S. v. Morgan,

313 U.S. 409 (1941), happened to involve a demand for testimony regarding an official’s

deliberations. SEC Opp’n at 27-29. These are straw men.

The SEC begins this diversion by suggesting that In re U.S. (Bernanke), 542 F. App’x

944 (Fed. Cir. 2013), supports its limited reading of Morgan; it does not. In Bernanke, the

Federal Circuit applied the exceptional circumstances doctrine to reject a demand for testimony

related to “the Federal Reserve’s decision-making process” in connection with its extension of

credit to a particular company, 542 F. App’x at 946 – in other words the Federal Circuit in

Bernanke, like the Supreme Court in Morgan, had no reason to consider the applicability of the

exceptional circumstances doctrine beyond agency deliberations. In so ruling, the Federal

11

The SEC also characterizes a letter that Chairman Camp sent to CMS, see House Mem., Ex.

A, as “exhort[ing]” and “cajoling,” SEC Opp’n at 25-26. While the letter does ask that CMS

“consider” five issues, it does so only in the context of requesting relevant information, as Re-

spondents already have noted. See House Mem. at 5-6, Ex. A (“Please provides us with . . . .”;

“Additionally, we ask that you provide . . . .”; “We urge you to carefully consider the above

issues and to provide a written response to our questions by March 15, 2013.”). The Speech or

Debate Clause absolutely protects the Committee’s work with respect to these issues. See supra.


18

Circuit noted that Morgan stands for the “general proposition” that high-ranking government

officials “should rarely be compelled to testify regarding the deliberative process used to arrive

at a decision within the scope of their government duties.” Id. at 947.

That Morgan stands for the “general proposition” stated in Bernanke is unremarkable;

importantly here, it does so through the creation of two separate doctrines that shield government

officials from undue scrutiny. The first is the “exceptional circumstances” doctrine at issue here.

Lederman v. N.Y. City Dep’t of Parks & Rec., 731 F.3d 199, 203-04 (2d Cir. 2013) (no limitation

of holding to agency deliberations: “We now hold that, to depose a high-ranking government

official, a party must demonstrate exceptional circumstances justifying the deposition . . . .”);

Energy Capital Corp. v. U.S., 60 Fed. Cl. 315, 318 (Fed. Cl. 2004) (“Morgan has come to stand

for the idea that current high-ranking government officials may only be deposed and otherwise

personally involved in a civil suit if ‘exceptional circumstances’ exist that require their personal

testimony.”); see generally House Mem. at 39-45. The second is the “deliberative process”

privilege, which is not at issue here. See, e.g., Montrose Chem. Corp. of Cal. v. Train, 491 F.2d

63, 69 (D.C. Cir. 1974). The SEC focuses only the latter doctrine, ignoring the first.

The SEC further compounds its error by misstating the law already cited by the

Committee and Mr. Sutter. It contends that “[t]he cases that Respondents cite are inapposite

because, in each, a party sought to question a high-ranking official regarding the reasons for

taking official action,” and “Respondents do not cite a single case applying Morgan in which the

party seeking to interview a government official sought answers to purely factual questions

within that official’s knowledge as opposed to the reason why the government acted . . . .” SEC

Opp’n at 28-29 (emphases added; quotation marks omitted). That is wrong.

In McNamee v. Mass., cited on pages 40, 42, and 43-44 of the House Memorandum, for


19

example, a plaintiff in a workers’ compensation action demanded, from a former chief of staff

for an individual Congressman, testimony regarding “information [the Congressman] may have

learned in assisting plaintiff to obtain employment.” No. 12-cv-40050, 2012 WL 1665873, at *1

(D. Mass. May 10, 2012). There was nothing remotely “deliberative” about the demanded

testimony, yet the district court properly applied “the Morgan doctrine” to quash the testimony

demand. Id. at *1-2.

Similarly, in Bardoff v. U.S., cited on page 42 of the House Memorandum, two criminal

defendants demanded the testimony of a committee staff-person as a “fact witness[]” because his

“position . . . on the dais [of the relevant committee room] would have placed [him] in a position

to observe, and therefore to testify [about],” the nature and effect of the defendants’ alleged

conduct. 628 A.2d 86, 90 (D.C. 1993). The Bardoff court nonetheless applied the exceptional

circumstances doctrine, quashing the relevant subpoena where the defendants failed “to

demonstrate satisfactorily how the subpoenaed testimony would be more than cumulative of

other evidence, or why others in the hearing room that day, who did not hold such high office as

those subpoenaed, could not testify to the same events.” Id. at 92-93.

And, as a final example: Buono v. City of Newark, cited on pages 40, 43, and 44 of the

House Memorandum, cites to Morgan in declining to compel a mayor to testify regarding “facts

about [the plaintiff’s] retaliation [claim],” and his “role in the [mayor’s] campaign” – decidedly

non-deliberative matters. 249 F.R.D. 469, 470-72 & nn.1-2 (D.N.J. 2008).

2. The SEC also briefly reprises its contention that Mr. Sutter is not sufficiently senior to

benefit from the exceptional circumstances doctrine. See SEC Opp’n at 29. The case law says

otherwise. For example, the Second Circuit recently applied the doctrine to a mayor and a

former deputy mayor. See Lederman, 731 F.3d at 203-04 (affirming grant of protective order


20

precluding depositions); see also House Mem. at 39-45 (citing, among other cases, Bardoff, 628

A.2d 86 (House committee staff-person); McNamee, 2012 WL 1665873 (former chief of staff for

individual Member); Simplex Time Recorder Co. v. Sec’y of Labor, 766 F.2d 575 (D.C. Cir.

1985) (agency regional administrator and area director); and Warren Bank v. Camp, 396 F.2d 52

(6th Cir. 1968) (two agency “administrative aides”)).

Accordingly, the SEC’s further observation that we have not cited a case applying the

exceptional circumstances doctrine in the precise context of a “Staff Director of a congressional

subcommittee,” SEC Opp’n at 29, is beside the point. What we have done is cite various cases

in which courts applied the doctrine to similarly-situated, or lower-ranking, officials. See supra.12

3. With respect to the actual application of the exceptional circumstances doctrine here,

the SEC only addresses one of the relevant factors (unique knowledge) – and, even on that

factor, it plainly fails. Mr. Sutter necessarily has no unique knowledge about his

communications with CMS or Greenberg Traurig (the topics on which the SEC demands his

testimony) because the SEC may speak directly to the relevant individuals within those

organizations. See, e.g., Lederman, 731 F.3d at 203 (deposition foreclosed where inquiring party

cannot demonstrate that “necessary information cannot be obtained through other, less

burdensome or intrusive means”); see also House Mem. at 42-43.

CONCLUSION

For all the stated reasons, this Court should dismiss (or transfer) this action.

12

While the SEC asserts that the exceptional circumstances test has been “rejected” for officials

at “even higher levels than that [of Mr.] Sutter,” SEC Opp’n at 29 & n.21, it fails to cite any such

instance. What it does cite, instead, is Citizens for Responsibility v. Cheney, 580 F. Supp. 2d

168, 179-80 (D.D.C. 2008) (exceptional circumstances doctrine not applicable for library

official; as to Vice-President’s chief of staff, he must testify where he “uniquely” situated to do

so, given inability of others to provide relevant information), and Green v. Baca, 226 F.R.D. 624,

649-50 (C.D. Cal. 2005) (doubting applicability of doctrine with respect to county sheriff).


Respectfully submitted,

Kerry W. Kircher, General Counsel

/s/ William Pittard

William Pittard, Deputy General Counsel

Todd B. Tatelman, Assistant Counsel

Mary Beth Walker, Assistant Counsel

Eleni M. Roumel, Assistant Counsel

Isaac B. Rosenberg, Assistant Counsel

OFFICE OF GENERAL COUNSEL

U.S. HOUSE OF REPRESENTATIVES

219 Cannon House Office Building

Washington, D.C. 20515

Telephone: (202) 225-9700

Facsimile: (202) 226-1360

[email protected]

Counsel for the Committee on Ways and Means

of the U.S. House of Representatives, and Brian

Sutter

July 25, 2014


CERTIFICATE OF SERVICE

I certify that on July 25, 2014, I filed via the Court’s CM/ECF system the foregoing

Respondents’ Reply in Support of Motion to Dismiss or, in the Alternative, to Transfer

(“Reply”), which I understand caused service of the Reply on all registered users, including those

identified below:

Sanjay Wadhwa, Esq.

Richard G. Primoff, Esq.

Michael David Birnbaum, Esq.

Amanda L. Straub, Esq.

New York Regional Office

SECURITIES AND EXCHANGE COMMISSION

Three World Financial Center

New York City, NY 10281

/s/ William Pittard

William Pittard


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