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Sathianathan v. Smith Barney

February 21, 2007


The opinion of the court was delivered by: Deborah A. Batts, United States District Judge


This matter is before the Court upon the February 24, 2006 Report and Recommendation ("Report") of United States Magistrate Judge Frank Maas. The Report recommends that Plaintiff's First Amended Complaint be dismissed in its entirety with no leave to amend. The Report further recommends that an anti-suit injunction be ordered against Plaintiff.

Pursuant to 28 U.S.C. § 636(b)(1)(C), "[w]ithin ten days after being served with a copy, any party may serve and file written objections to such proposed findings and recommendations." 28 U.S.C. § 636(b)(1)(C); see also Fed. R. Civ. P. Rule 72(b) (stating that "[w]ithin 10 days after being served with a copy of the recommended disposition, a party may serve and file specific, written objections to the proposed findings and recommendations"). Where no timely objection has been made, "a district court need only satisfy itself there is no clear error on the face of the record." Nelson v. Smith, 618 F. Supp. 1186, 1189 (S.D.N.Y. 1985). After conducting the appropriate level of review, the Court may then accept, reject, or modify, in whole or in part, the findings or recommendations made by the Magistrate. 28 U.S.C. § 636(b)(1)(C); see also Local Civil Rule 72.1(d). For the reasons contained herein, the Report and Recommendation shall be ADOPTED as modified by the Court. See p. 21, infra.

Also before this Court are Plaintiff's Motion for a Stay, Plaintiff's Motion for Rule 11 Sanctions, and a Motion for Terminating Sanctions Against Plaintiff brought by Defendants Smith Barney, Edward Turan, Jeffrey Friedman, Thomas Mierswa, Keesal, Young & Logan, Samuel Keesal, Robert Ericson, and Michele Fron. For the reasons contained herein, each of these Motions shall be DENIED.


A. Plaintiff's Objections to the Report and Recommendation

At the outset of his Objections, Plaintiff asserts that he "object[s] to all statements made by the Magistrate in his lengthy 79 page Magistrate's Report and Recommendation". (Pl.'s Obj. at 2.) Where a party only raises general objections, a district court need only review the Magistrate's Report for clear error. Brown v. Peters, 1886 WL 5999355, 1997 U.S. Dist. LEXIS 14718, at *7 (N.D.N.Y. Sept. 22, 1997); see also Nelson v. Smith, 618 F. Supp. 1186, 1189 (S.D.N.Y. 1985) (where only general objections are filed to report and recommendation, a court need only review for clear error). Indeed, "objections that are merely perfunctory responses argued in an attempt to engage the district court in a rehashing of the same arguments set forth in the original [papers] will not suffice to invoke de novo review . . . ." Vega v. Artuz, No. 97 Civ. 3775, 2002 WL 31174466, at *1 (S.D.N.Y. Sept. 30, 2002). Such objections "would reduce the magistrate's work to something akin to a meaningless dress rehearsal." Id. (citations and internal quotations marks omitted). See also Kiggins v. Barnhart, 2004 WL 1124169, at *1 (S.D.N.Y. May 20, 2004) (reviewing the report and recommendation for clear error where objections were essentially reiterations of arguments made in earlier submissions and conclusory accusations).

After his generalized objection to all statements in the Magistrate's Report, Plaintiff sets forth numerous more specific objections, albeit objections that are difficult to isolate from one another. However, pro se plaintiffs merit more leniency under the pleading standards than do plaintiffs represented by counsel. Legal documents submitted by pro se plaintiffs are held to "less stringent standards than formal pleadings drafted by lawyers." Hughes v. Rowe, 449 U.S. 5, 9, 101 S.Ct. 173 (1980). The Court must "'interpret [pro se documents] to raise the strongest argument that [they] suggest[].'" Soto v. Walker, 44 F.3d 169, 173 (2d Cir. 1995) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994)). Therefore, the Court will discern and address, to the extent that it is possible, Plaintiff's challenges to the Magistrate's Report in the order they appear in his Objections.

Objection No. 1.

Plaintiff asserts that: "Even if there is no RICO conspiracy, there is the regular non-RICO civil conspiracy . . . ." (Pl.'s Obj. at 1-2.) With this statement, Plaintiff suggests that his non-RICO conspiracy claims were not given due consideration by the Magistrate. To the contrary, the Magistrate properly found that Plaintiff made no showing of any tort that could serve as the underlying act for the alleged conspiracy. (Report at 59-60.) See Sokol v. Addison, 742 N.Y.S.2d 311, 312 (2d Dep't 2002) ("New York does not recognize civil conspiracy to commit a tort as an independent cause of action."); Hoag v. Chancellor, Inc., 677 N.Y.S.2d 531, 535 (1st Dep't 1998) (allegations of conspiracy are permissible only when they "connect a defendant to an otherwise actionable tort"). Plaintiff does not point to allegations that were before the Magistrate which indicate that the Magistrate's finding was improper, and therefore Plaintiff's first objection fails.

Objection No. 2.

Plaintiff asserts that he should be granted leave to amend his causes of action against Defendant Morgan Stanley because his First Amended Complaint "had not focused on [his] claims against Morgan Stanley." (Pl.'s Obj. at 3.) The reason he gives for not having fully addressed his claims against Defendant Morgan Stanley was that he filed this action "to consolidate and toll [his] claims against new individual-employee parties while [he] pursued appeals against Smith Barney and [Bressler, Amery & Ross]." (Id.)

Plaintiff incorrectly assumes that a complaint need not notify the defendants of the complainant's grievances against them. To the contrary, "[t]he purpose of a complaint is to give the defendant fair notice of the claim against him." Griffin v. Griffin, 327 U.S. 220, 250 (1946); see also Greenidge v. Allstate Ins. Co., 446 F.3d 356, 361 (2d Cir. 2006); In re Natural Gas Commodity Litigation, 337 F. Supp. 2d 498, 508 (S.D.N.Y. 2004) ("[T]he purpose of a complaint is merely to fairly apprise defendants of the claims they are summoned to contest."). See also Fed. R. Civ. P. 8(a) ("A pleading which sets forth a claim for relief . . . shall contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief . . . .").

As the Magistrate correctly found, Plaintiff's Complaint did not sufficiently apprise Defendant Morgan Stanley of his claims against it. Plaintiff's stated purpose for filing the First Amended Complaint -- that he sought to consolidate and toll his claims against other parties, and not that he sought to assert a sufficient claim against the Morgan Stanley defendants -- is not a sufficient basis for granting him leave to amend his Complaint. Countenancing Plaintiff's justification would flout not only judicial economy, but also the purposes of filing a complaint. Accordingly, Plaintiff's second objection to the Report is without merit.

Objection No. 3.

Plaintiff contends that he should be granted leave to amend the First Amended Complaint to include, inter alia, a claim against Defendant Morgan Stanley for breach of their agreement to tender him a $450,000 signing bonus. (Pl.'s Obj. at 3.) Plaintiff asserts:

I have never been granted leave to amend the [First Amended Complaint] in order to add into this SDNY case my claims in my NASD-administered arbitration against Morgan Stanley after Morgan Stanley forced the suspension of the NASD administered arbitration against Morgan Stanley until the resolution of this SDNY case with the knowledge that my Morgan Stanley arbitration . . . would, as a result of the suspension in the arbitration, now be subject to res judicata and collateral estoppel from this SDNY case. (Pl.'s Obj. at 3.) But Plaintiff is the party who initiated the NASD arbitration in the first instance. (Report at 16.) He shall not be permitted to pursue duplicative proceedings for the same claims. See Woodlawn Cemetery v. Local 365, 930 F. 154, 156 (2d Cir. 1991) (recognizing "the burden and wastefulness of duplicative proceedings"). Moreover, arbitrating these claims comports with the strong judicial policy in favor of arbitration. See Brener v. Becker-Paribas, 628 F. Supp. 442, 445-46 (S.D.N.Y. 1985) (arbitration is "designed to avoid the expense and delays involved in litigation"). Accordingly, Plaintiff's third objection to the Report fails.

Objection No. 4.

Plaintiff objects to the Magistrate's determination that civil RICO claims require personal reliance where the alleged predicate act or acts are mail or wire fraud. (Pl.'s Obj. at 5.) The only alleged acts of fraud for which Plaintiff suggests the Magistrate made this improper determination are the alleged misrepresentations that Defendants made to Judge Armstrong in Sathianathan v. Smith Barney, Inc., No. C 04-2130 (SBA) (N.D. Cal. Jun. 2, 2006) (see Pl.'s Obj. At 5), and Defendant Morgan Stanley's statements made in 2005 during the course of an NASD proceeding (see Pl.'s Obj. at 15).

To state a civil RICO claim where the underlying racketeering acts are fraud, Plaintiff must allege a pattern of at least two predicate acts of fraud within a ten-year period.

18 U.S.C. § 1961(5). In rare cases, a pattern of fraud may be wielded against a single victim. State Wide Photocopy Corp. v. Total Financial Services, Inc., 909 F. Supp. 137, 140 (S.D.N.Y. 1995) For a single-victim RICO claim to survive, however, a plaintiff must allege a pattern of separate economic injuries. See State Wide Photocopy, 909 F. Supp. at 140 (S.D.N.Y. 1995) (defendants who tried to lure multiple clients away from a single entity committed a pattern of racketeering activity, where each act of luring constituted a separate economic injury); see also LaSalle Bank Lake View v. Seguban, 937 F. Supp. 1309, 1321 (N.D. Ill. 1996) ("Courts may find a pattern where there is only a single victim and a single scheme where there are repeated economic injuries."). Cf. Jerome M. Sobel & Co. v. Fleck, No. 03 Civ. 1041, 2003 WL 22839799, at * 12 (S.D.N.Y. Dec. 1, 2003), adopted by 2004 WL 48877 (S.D.N.Y. Jan. 8, 2004) (Gorenstein, M.J.) ("[T]he lack of variety among the predicate acts, the presence of only one scheme with a narrow goal, the small number of participants and the presence of only one victim . . . far outweigh the duration of the fraudulent conduct."). The alleged acts of fraud committed against Plaintiff himself all relate to the same employment termination grievance against Defendants, and therefore cannot have resulted in separate economic injuries, nor can they suggest the variety of conduct that survivable RICO claims typically present.

Plaintiff also refers to predicate acts against other victims, contending that those acts create a pattern of racketeering activity. For example, Plaintiff suggests that the Mian case constitutes a second predicate act of fraud. However, the latest incident of alleged fraud in the Mian case occurred in April of 1994. (See First Am. Compl. at ¶ 665.) See generally Mian v. Donaldson, Lufkin, Jenrette Securities Corp., 1994 WL 494902 (S.D.N.Y. Sep 9, 1994). This predates the alleged misrepresentations made to Judge Armstrong and to the NASD arbitration panel by more than ten years, (see Compl. ¶ 162 (stating that Plaintiff initiated the California matter on May 28, 2004), and therefore does not sufficiently create a ten-year pattern of racketeering activity. Plaintiff also suggests that two proceedings in Florida create a pattern of predicate acts of fraud, but he offers no specific allegations about those proceedings. (See Report at 50-51.)

Because Plaintiff's civil RICO claims fail for these reasons, his objection to the Magistrate's finding on personal reliance is inapposite. Accordingly, Plaintiff's fourth objection fails.

Objection No. 5.

As a corollary to the previous objection, Plaintiff objects to the Magistrate's denying him leave to amend his Complaint to allege the Florida cases with particularity. (Pl.'s Obj. at 6.) Not only does Plaintiff fail to provide the Court with a proposed amended pleading, but his objections also lack any proposed allegations about predicate acts of fraud in Florida. What is more, Plaintiff chose to file a voluminous First Amended Complaint and RICO Statement, ...

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