sec v. mark jackson (motion to dismiss)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

)

SECURITIES AND EXCHANGE )

COMMISSION, )

)

Plaintiff, ) Case No. 4:12-cv-00563

)

v. )

)

MARK A. JACKSON and )

JAMES J. RUEHLEN, )

)

Defendants. )

)

DEFENDANT MARK A. JACKSON’S MOTION TO DISMISS

THE COMPLAINT UNDER RULE 12(b)(6) FOR FAILURE TO STATE

A CLAIM UPON WHICH RELIEF CAN BE GRANTED

Case 4:12-cv-00563 Document 35 Filed in TXSD on 05/08/12 of 31

TABLE OF CONTENTS

STATEMENT OF NATURE AND STAGE OF PROCEEDING ............................................ 1

STATEMENT OF ISSUES TO BE RULED ON....................................................................... 1

SUMMARY OF THE ARGUMENT .......................................................................................... 1

ARGUMENT................................................................................................................................. 2

I. BACKGROUND ............................................................................................................... 2

II. LEGAL STANDARDS ..................................................................................................... 5

A. The Complaint Must State a Plausible Claim to Relief .......................................... 5

B. Conclusory Statements or Legal Conclusions Must Be Disregarded ..................... 6

III. THE CLAIM I BRIBERY ALLEGATION MUST BE DISMISSED.......................... 9

A. The Elements of an FCPA Anti-Bribery Violation................................................. 9

B. The Complaint Fails to Sufficiently Plead Involvement of a Foreign

Official Taking Sought-After Unlawful Actions .................................................. 10

C. The Allegations are Consistent with Jackson Having a Good Faith Belief

that the Payments were Permissible “Facilitating Payments” .............................. 13

1. The SEC Must Plausibly Plead Corrupt Intent......................................... 14

2. The Only Well-Pleaded Facts Show Jackson’s Good Faith Belief in

the Legality of the Payments ..................................................................... 15

D. The Bribery Claim is Barred by the Statute of Limitations .................................. 19

1. The Complaint Does Not Allege that Jackson Approved Bribes During

the Limitations Period............................................................................... 19

2. The Pleadings Fail to Raise Any Basis for Tolling................................... 20

IV. THE DERIVATIVE CLAIMS (CLAIMS II-VII) MUST ALSO BE

DISMISSED..................................................................................................................... 22

A. Claim II – Aiding and Abetting Noble’s Anti-Bribery Violation......................... 22

B. Claims III & IV – Aiding and Abetting Noble’s FCPA Books and Records

Violation, and Directly Violating Internal Controls and Books and

Records Requirements .......................................................................................... 23

C. Claims V and VI – Misleading Auditors and Signing False Certifications.......... 24

D. Claim VII – Control Person Liability ................................................................... 25

CONCLUSION ........................................................................................................................... 25

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TABLE OF AUTHORITIES

Cases

Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) .......................................................................... passim

Bass v. Stryker Corp., 669 F.3d 501 (5th Cir. 2012) ........................................................ 5, 6, 9, 13

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................. passim

Chavers v. Morrow, No. 08-3286, 2010 U.S. Dist. LEXIS 89432 (S.D. Tex. Aug. 30,

2010) ....................................................................................................................................... 11

Doe v. Covington Cnty. Sch. Dist., No. 09-60406, 2012 U.S. App. LEXIS 6080 (5th Cir.

Mar. 23, 2012) (en banc)....................................................................................................... 1, 5

FCC v. Am. Broad. Co., 347 U.S. 284 (1954) .............................................................................. 12

Gentilello v. Rege, 627 F.3d 540 (5th Cir. 2010).................................................................. 6, 8, 13

Gonzalez v. Kay, 577 F.3d 600 (5th Cir. 2009) .............................................................................. 6

Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787 (5th Cir. 2011) ............................... 14

In re BP p.l.c. Sec. Litig., No. 10-2185, 2012 U.S. Dist. LEXIS 17788 (S.D. Tex. Feb. 13,

2012) ....................................................................................................................................... 25

Johnson v. SEC, 87 F.3d 484 (D.C. Cir. 1996)............................................................................. 19

Jones v. ALCOA, Inc., 339 F.3d 359 (5th Cir. 2003).................................................................... 19

Plotkin v. IP Axess Inc., 407 F.3d 690 (5th Cir. 2005) ................................................................... 6

R2 Invs. LDC v. Phillips, 401 F.3d 638 (5th Cir. 2005) ................................................................. 2

Rothman v. Gregor, 220 F.3d 81 (2d Cir. 2000)............................................................................. 4

SEC v. Apuzzo, 758 F. Supp. 2d 136 (D. Conn. 2010) ................................................................. 23

SEC v. Brown, 740 F. Supp. 2d 148 (D.D.C. 2010) ............................................................... 20, 21

SEC v. Jones, 476 F. Supp. 2d 374 (S.D.N.Y. 2007).................................................................... 21

SEC v. Microtune, Inc., 783 F. Supp. 2d 867 (N.D. Tex. 2011), appeal docketed, No. 11-

10594 (5th Cir. June 21, 2011) ................................................................................... 20, 21, 22

SEC v. Treadway, 430 F. Supp. 2d 293 (S.D.N.Y. 2006)............................................................. 23

Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029 (5th Cir.

2010) ....................................................................................................................................... 17

Solis v. Bruister, No. 10-77, 2012 U.S. Dist. LEXIS 30739 (S.D. Miss. Mar. 8, 2012) .............. 20

Trawinski v. United Techs., 313 F.3d 1295 (11th Cir. 2002) ....................................................... 19

United States v. Blondek, 741 F. Supp. 116 (N.D. Tex. 1990) ..................................................... 10

United States v. Bodmer, 342 F. Supp. 2d 176 (S.D.N.Y. 2004).................................................. 11

United States v. Castle, 925 F.2d 831 (5th Cir. 1991) .................................................................. 10

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iii

United States v. Core Labs., Inc., 759 F.2d 480 (5th Cir. 1985) .................................................. 19

United States v. Kay, 359 F.3d 738 (5th Cir. 2004).......................................................... 11, 12, 18

United States v. Kay, 513 F.3d 432 (5th Cir. 2007).......................................................... 10, 14, 16

United States v. Rutherford Oil Corp., 756 F. Supp. 2d 782 (S.D. Tex. 2010) ............................ 25

Wolcott v. Sebelius, 635 F.3d 757 (5th Cir. 2011).......................................................................... 5

Zacharias v. SEC, 569 F.3d 458 (D.C. Cir. 2009)........................................................................ 19

Statutes

15 U.S.C. § 78dd-1 ................................................................................................................ passim

15 U.S.C. § 78dd-2 ....................................................................................................................... 10

15 U.S.C. § 78ff ............................................................................................................................ 10

15 U.S.C. § 78m...................................................................................................................... 23, 25

15 U.S.C. § 78t.................................................................................................................. 22, 23, 25

28 U.S.C. § 2462..................................................................................................................... 19, 25

Pub. L. No. 95-213, 91 Stat. 1494 ................................................................................................ 18

Other Authorities

Complaint in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4, 2010).............................. 4, 18

Indictment ¶¶ 4, 13, United States v. Esquenazi, No. 09-21010 (S.D. Fla. Dec. 8, 2009) ........... 12

Memorandum from Paul J. McNulty, Deputy Att'y Gen. U.S. Dep't of Justice, Principles

of Federal Prosecution of Business Organizations (December 12, 2006) ............................... 3

Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934

and Commission Statement on the Relationship of Cooperation to Agency

Enforcement Decisions, SEC Release No. 44969, 2001 SEC LEXIS 2210 (Oct. 23,

2001) ......................................................................................................................................... 2

Superseding Indictment ¶ 30(h), United States v. Goncalves, No. 09-335 (D.D.C. Apr. 16,

2010) ....................................................................................................................................... 12

Trial Transcript, United States v. O’Shea, No. 09-629 (S.D. Tex. Jan. 16, 2012)........................ 11

Rules

Fed. R. Civ. P. 12(b)(6).......................................................................................................... passim

Fed. R. Civ. P. 8(a)(2)..................................................................................................................... 6

Fed. R. Civ. P. 9(b) ................................................................................................................. 18, 21


STATEMENT OF NATURE AND STAGE OF PROCEEDING

Plaintiff Securities and Exchange Commission (“SEC”) filed its Complaint against

Defendants Mark A. Jackson (“Jackson”) and James J. Ruehlen (“Ruehlen”) on February 24,

2012 (Dkt. 1). Jackson waived service of the Complaint on March 9, 2012. Jackson has not

filed a responsive pleading to the Complaint.

STATEMENT OF ISSUES TO BE RULED ON

Jackson moves to dismiss1 the Complaint under Fed. R. Civ. P. 12(b)(6) for failure to

state a claim upon which relief can be granted. “To survive dismissal pursuant to Rule 12(b)(6),

plaintiffs must plead ‘enough facts to state a claim to relief that is plausible on its face.’” Doe v.

Covington Cnty. Sch. Dist., No. 09-60406, 2012 U.S. App. LEXIS 6080, at *8 (5th Cir. Mar. 23,

2012) (en banc) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (attached at

Exhibit 1). The Complaint’s “[f]actual allegations must be enough to raise a right to relief above

the speculative level on the assumption that all the allegations in the complaint are true (even if

doubtful in fact).” Twombly, 550 U.S. at 555.

SUMMARY OF THE ARGUMENT

The Complaint against Jackson must be dismissed under Rule 12(b)(6) because it fails to

state a claim that is plausible on its face. Only factual allegations—not unsupported conclusions

or accusations of legal violations—may sustain a Complaint. But, stripped of its conclusions

about what Jackson “knew,” the Complaint comes up woefully short in pleading several essential

elements of Claim I, a Foreign Corrupt Practices Act (“FCPA”) anti-bribery violation—that

Jackson acted with corrupt intent, and that he knew payments would be made to a foreign official

to obtain sought-after unlawful acts from that foreign official. Instead, the factual allegations in

1 Jackson adopts the arguments made by Ruehlen in his separate Motion to Dismiss the

Complaint.

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the Complaint regarding alleged bribes are equally consistent, if not more, with wholly legal

actions under the “facilitating payments” exception to the FCPA. The bribery claim therefore

must be dismissed as implausible under controlling Supreme Court precedent. And because the

other claims in the Complaint are entirely dependent on the existence of illegal bribes, they too

must be dismissed. Finally, because the vast majority of the conduct alleged in the Complaint

took place well over five years before the Complaint was filed, the bribery claim and many of the

derivative claims are barred by the statute of limitations.

ARGUMENT

I. BACKGROUND

In May 2007, executives at Noble Corporation, an international oil drilling company with

operations in Nigeria, announced an investigation into potential violations of the FCPA

involving payments to Nigerian government officials.2 Mark Jackson had only recently been

promoted to CEO of Noble. Within a week, Noble had engaged an outside law firm to conduct

an independent investigation. A month later Noble voluntarily disclosed the matter to the

Department of Justice and the Securities and Exchange Commission pursuant to official policies

of both agencies.3 As a result of Noble’s self-reporting under Jackson’s leadership, the

2 Noble Corporation, Annual Report (Form 10-K), at 22-23 (Feb. 29, 2008) (“Noble 2008

Form 10-K”) (excerpts attached at Exhibit 2); see also id. at 22 (“[O]ur management brought to

the attention of the audit committee a news release issued by another company . . . .”). The court

can consider SEC filings on a motion to dismiss. R2 Invs. LDC v. Phillips, 401 F.3d 638, 640

n.2 (5th Cir. 2005) (“[A] court may also take judicial notice of documents in the public record,

including documents filed with the Securities and Exchange Commission, and may consider such

documents in determining a motion to dismiss.”). 3 Noble 2008 Form 10-K at 23 (Ex. 2); Noble Corporation, Current Report (Form 8-K)

(June 4, 2007) (attached at Exhibit 3) (“The Company has voluntarily contacted the U.S.

Securities and Exchange Commission and the U.S. Department of Justice to advise them that an

independent investigation is under way and that it intends to cooperate fully with both

agencies.”); Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of

1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement

Decisions, SEC Release No. 44969, 2001 SEC LEXIS 2210 (Oct. 23, 2001) (attached at Exhibit

2


Department of Justice entered into a Non-Prosecution Agreement with Noble.4 And, in the

intervening five years, the Department of Justice has not brought any charges against Jackson or

Ruehlen.5

The SEC’s Complaint is most notable for what it lacks. There are no allegations of secret

payments; as described below, all of the payments at issue in this case were recorded in an

internal account specifically identified for payments to government officials. There is also no

mention or suggestion in the Complaint that any payments were made to induce government

officials to award contracts to companies other than the low bidder, or inspectors to overlook

safety risks. Rather, the payments in this case were made in connection with the issuance of

routine permits to operate drilling rigs in Nigeria (Temporary Import Permits, or “TIPs”).

Indeed, to evaluate the adequacy of the SEC’s Complaint, the structure of the oil drilling

business in Nigeria stands as the backdrop. There are three relevant parties: the Nigerian

government, a major oil company, and a drilling services company. Joint ventures between the

state-owned Nigerian Oil Company and a major oil company contracted with Noble and other oil

drilling companies to extract oil in offshore wells in territorial waters. But while the joint

venture (that is, the Nigerian government) entered into long term drilling contracts, the customs

laws limited the time that a drilling company’s rig could remain in Nigerian waters. The

Nigerian government took advantage of this mismatch, requiring the payment of fees by the

4); Memorandum from Paul J. McNulty, Deputy Att'y Gen. U.S. Dep't of Justice, Principles of

Federal Prosecution of Business Organizations (December 12, 2006) (attached at Exhibit 5). 4 Noble Corporation, Quarterly Report (Form 10-Q), at 28 (Nov. 9, 2010) (excerpts

attached at Exhibit 6) (noting company’s settlement with SEC and Non-Prosecution Agreement

with DOJ). 5 Notwithstanding this, the SEC has now filed the instant lawsuit against Jackson and

Ruehlen, but has taken no action against executives of any of the other drilling companies in

Nigeria. Instead, the SEC has selectively exercised its prosecutorial powers to bring this lawsuit.

3


drilling companies to maintain their rigs in the country, and to remain on-contract.6 All of the oil

drillers in Nigeria faced this problem and all of them have dealt with it by making similar routine

payments to the Nigerian Customs Service (“NCS”).7

Jackson came to Noble in 2000 as its CFO after over a decade in the oil services

industry.8 He assured that payments being made to the NCS by Noble’s West Africa Division

were appropriately tracked and checked by the company’s internal auditors. As noted, those

payments were placed in an internal account set aside only for so-called “facilitating

payments”—legal payments under the FCPA that allow companies to make payments to

government officials for routine governmental actions, such as obtaining permits. 15 U.S.C. §§

78dd-1(b), (f)(3)(A); see Complaint in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4,

2010), ¶ 22 (attached at Exhibit 8).9 That account was prominently labeled in Noble’s

accounting systems (i.e., its books and records), and it was subject to reviews by internal

auditors, external auditors, internal lawyers, and outside counsel.

The Court should dismiss the Complaint because the few actual facts it alleges do not

establish a plausible claim that Jackson knew that payments were being made to a foreign

official in order to induce unlawful actions. To the contrary, the facts are equally consistent with

Jackson’s asserted belief that the payments at issue had been thoroughly reviewed and

determined to be legal “facilitating payments” under the FCPA for routine governmental actions.

6

Cf. Noble 2008 Form 10-K at 23 (Ex. 2) (describing that “[i]f we cannot obtain a new

permit or a further extension necessary to continue operations of any unit, we may need to

terminate the drilling contract of such unit and relocate such unit from Nigerian waters”). 7 Noble 2008 Form 10-K at 22-23 (Ex. 2).

8 Noble Corporation, Annual Report (Form 10-K), at 13 (Mar. 8, 2005) (excerpts attached

at Exhibit 7). 9 The Court can consider the SEC’s own allegations in another case for purposes of the

motion to dismiss. Rothman v. Gregor, 220 F.3d 81, 85 (2d Cir. 2000).

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II. LEGAL STANDARDS

A. The Complaint Must State a Plausible Claim to Relief

“To survive dismissal pursuant to Rule 12(b)(6), plaintiffs must plead ‘enough facts to

state a claim to relief that is plausible on its face.’” Covington Cnty. Sch. Dist., 2012 U.S. App.

LEXIS 6080, at *8 (quoting Twombly, 550 U.S. at 570) (Ex. 1). But at bottom, the SEC’s

Complaint is woefully short on actual facts. Under governing Supreme Court precedent, all of

the SEC’s rhetorical flourishes, legal conclusions, and conclusory statements must be

disregarded when the Court considers a motion to dismiss under Rule 12(b)(6). The remaining

“well-pleaded facts” are accepted “as true and view[ed] . . . in the light most favorable to the

plaintiffs.” Id. (internal quotation marks omitted). Viewed through that lens, the Complaint

must be dismissed because the remaining facts fail to plausibly state a claim on which relief may

be granted.

Under Twombly and its progeny, the Court must engage in a two-step inquiry when

judging a motion to dismiss for failure to state a claim. First, all legal conclusions, or legal

conclusions posing as factual allegations, must be discarded. Ashcroft v. Iqbal, 556 U.S. 662,

679 (2009) (“[A] court considering a motion to dismiss can choose to begin by identifying

pleadings that, because they are no more than conclusions, are not entitled to the assumption of

truth.”); see also Wolcott v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (“[W]e are ‘not bound to

accept as true a legal conclusion couched as factual allegation.’”) (quoting Iqbal, 556 U.S. at

678). Second, the Court must examine the remaining factual allegations against the elements of

the claim, and dismiss the claim “when the plaintiff has not alleged enough facts to state a claim

to relief that is plausible on its face or has failed to raise his right to relief above the speculative

level.” Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012); see also Twombly, 550 U.S. at

555 (the Complaint’s “[f]actual allegations must be enough to raise a right to relief above the

5


speculative level on the assumption that all the allegations in the complaint are true (even if

doubtful in fact)”). “[W]here the well-pleaded facts do not permit the court to infer more than

the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that

the pleader is entitled to relief’” under Fed. R. Civ. P. 8(a)(2). Gonzalez v. Kay, 577 F.3d 600,

603 (5th Cir. 2009) (quoting Iqbal, 556 U.S. at 679, and Fed. R. Civ. P. 8(a)(2)).

B. Conclusory Statements or Legal Conclusions Must Be Disregarded

Much of the SEC’s Complaint falls into the category of “conclusory allegations,

unwarranted factual inferences, or legal conclusions” which courts “do not accept as true” for the

purpose of a Rule 12(b)(6) motion. Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010)

(quoting Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005)). “It is the conclusory nature

of” the SEC’s “allegations, rather than their extravagantly fanciful nature, that disentitles them to

the presumption of truth.” Iqbal, 556 U.S. at 681. Rather than pleading facts, the SEC relies

primarily on inferences based on undisclosed facts.

For example, allegations that a defendant “knew of” something, “condoned” it, or

“willfully” took some action are the kind of legal conclusions couched as factual allegations that

are not accepted as true when assessing the plausibility of a claim to relief. Iqbal, 556 U.S. at

680. In other words, the plaintiff cannot merely state the conclusion—that the defendant “knew”

something. Instead, a Complaint must set forth the facts giving rise to the conclusion—such as

that the defendant was told something, or learned it from a particular document or transaction.

Similarly, allegations of a defendant being a “principal architect” of, or “instrumental” to, a

policy must be disregarded. Id. Allegations that a product was subject to a particular oversight

or regulatory regime are also “a legal conclusion that the district court was not required to accept

as true.” Stryker Corp., 669 F.3d at 507-08; see also Gentilello, 627 F.3d at 545.

At bottom, most of the SEC’s allegations may not be accepted as true, including:

6


(1) That Jackson or others10

authorized payments “to influence or induce” Nigerian customs

officials to take an improper action or “to obtain discretionary or unlawful extensions” of

TIPs, or to “retain business.” E.g., Complaint ¶¶ 2, 3, 31, 91, 94, 108, 113, 115, 123,

126, 142-143, 145-146.

As the Supreme Court recognized in Iqbal, allegations that actions were taken for a certain

purpose, or because of something, merely restate the elements of an offense and are not accepted

as true. Iqbal, 556 U.S. at 680-81 (“on account of” or “because of”). The SEC fails to allege the

actual facts showing an improper purpose for actions, and instead simply parrots the FCPA or

other securities laws’ prohibitions of certain purposes.

(2) That Jackson or others “knew,” had “knowledge,” was “aware” of, or “understood” facts

such as the creation or use of certain documents. E.g., Complaint ¶¶ 22, 24, 28-29, 34-

37, 39-41, 48-49, 52-53, 69, 88-89, 91, 94-95, 99, 101, 111-113, 115, 123, 126, 142, 145,

148-149.

Allegations of “knowledge” are merely legal conclusions dressed as factual allegations. Iqbal,

556 U.S. at 680. The SEC has not alleged the actual facts showing Jackson in possession of that

knowledge—what Jackson was told, what a document given to Jackson said, or what Jackson

told someone else.

(3) That Jackson or others acted to “falsely” record “bribes” as legitimate operating

expenses; “caused” Noble’s books to be “false”; or that Noble or Jackson paid “bribes.”

E.g., Complaint ¶¶ 3, 22, 29, 31, 33, 39, 61, 69, 73, 80, 88, 92, 95, 99, 101, 106, 109-113,

115, 119, 135-136, 142, 145-149.

Whether particular payments constitute “bribes,” and whether those payments could not be

recorded as operating expenses without acting “falsely,” are legal conclusions dependent on the

application of the FCPA and other securities laws or regulations. “Causing” books to be “false”

merely restates the elements of that offense.

(4) That Jackson or others used “false” documents with the Nigerian Customs Service or

10

This Motion attempts to identify the conclusory or legal allegations specific to Jackson or

Noble, however any such allegations regarding Ruehlen and others must similarly be discarded

under Iqbal and Twombly.

7


others, or obtained “false” paperwork or “illicit” TIPs.11

E.g., Complaint ¶¶ 3, 22-23, 27-

29, 32-33, 35-36, 42, 48, 51-53, 68, 70-71, 73-76, 79-84, 86, 89-90, 92, 94, 100-101,

103-110, 112, 116, 123, 126, 131, 134-138, 141-143, 145-147.

Whether documents were “false” or not is a legal conclusion dependent on the application of

various United States and/or Nigerian laws or customs. Similarly, allegations of signing “false”

management representation letters or certifications, or misleading auditors, merely restate the

elements of those offenses. Complaint ¶¶ 4, 145.

(5) That Jackson or others “controlled,” were “responsible for,” “supervised,” “oversaw,” or

“authorized” acts such as Noble’s compliance with the FCPA. E.g., Complaint ¶¶ 5, 9-

11, 23, 27, 88, 95, 106, 109-112, 115, 123, 135-136, 143, 145, 148.

Such allegations are legal conclusions dependent on the application of corporate governance and

securities laws and principles. See Iqbal, 556 U.S. at 680 (regarding allegations of defendants

condoning certain conduct, or being the conduct’s architect).

(6) That “Nigerian law” requires, permits, or prohibits certain acts, or makes certain acts

discretionary. E.g., Complaint ¶¶ 19-22, 54, 101, 128. That Jackson or others violated

any Nigerian law, or took actions that were “wrong,” “unlawful,” or in violation of

Noble’s policies. E.g., Complaint ¶¶ 22, 42, 49, 82, 87, 89, 91, 96, 101, 104, 107, 116,

118-119, 142, 145-146.

With the exception of identifying Noble’s internal policies, the Complaint fails to specify in any

way what law or regulation is at issue. Assertions of the effect of “Nigerian law” must therefore

be disregarded and may not be accepted as true. See Gentilello, 627 F.3d at 545 (refusing to

consider, as “mere conclusory statements,” assertion in Complaint that a contract “‘was subject

to certain rules and regulations’—which [plaintiff] has not identified—‘that required ‘good

cause’ before his chaired positions could be terminated.’”). The allegations also are dependent

on the application and interpretation of those unidentified laws or regulations—whether conduct

11

While the SEC consistently claims that Noble used “false documents” in support of the

applications for some permits, the SEC omits that the Nigerian government itself dictated the

contents of those documents, belying their supposed falsehood. Nor does the SEC claim that

Jackson prepared, or even reviewed, any false documents.

8


was “wrong” or “unlawful”—and must be disregarded as legal conclusions. See Stryker Corp.,

669 F.3d at 507-08 (refusing to accept as true the plaintiff’s “allegation [that] asks the court to

make a conclusion as to the legal significance of these tests and the FDA’s subsequent approval

of the Trident system”). The same problem is fatal for the SEC’s allegations interpreting

Noble’s FCPA policies instead of merely recounting what those policies state. Complaint ¶ 42.

(7) That Jackson and others “agreed” on a plan of action. Complaint ¶ 91.

Allegations of “agreement” are legal conclusions. Twombly, 550 U.S. at 557.

III. THE CLAIM I BRIBERY ALLEGATION MUST BE DISMISSED

Once the pervasive legal conclusions and conclusory statements are stripped away, it

becomes apparent that the SEC’s Complaint lacks actual facts to support its claims.

A. The Elements of an FCPA Anti-Bribery Violation

The SEC has alleged in Claim I that Jackson violated the FCPA’s anti-bribery provisions,

as well as a host of other securities laws or regulations addressed below. The FCPA’s civil anti-

bribery provisions prohibit acts that:

(1) “make use of the mails or any means or instrumentality of interstate

commerce;”

(2) “corruptly;”

(3) “in furtherance of an offer, payment, promise to pay, or authorization of the

payment of any money, or offer, gift, promise to give, or authorization of the

giving of anything of value to;”

(4) “any foreign official;”

(5) “for purposes of [either] influencing any act or decision of such foreign

official in his official capacity [or] inducing such foreign official to do or omit to

do any act in violation of the lawful duty of such official [or] securing any

improper advantage;”

(6) “in order to assist such [corporation] in obtaining or retaining business for or

9


with, or directing business to, any person.”12

United States v. Kay, 513 F.3d 432, 439-40 (5th Cir. 2007) (Kay II) (quoting 15 U.S.C. § 78dd-

2)13

(internal quotation marks omitted, alterations in original).

B. The Complaint Fails to Sufficiently Plead Involvement of a Foreign Official

Taking Sought-After Unlawful Actions

Not every payment to a foreign official is illegal under the FCPA. To constitute a

violation of the anti-bribery provisions, a payment must, among other things, have been directed

to a “foreign official . . . for purposes of [either] influencing any act or decision of such foreign

official . . . in his . . . official capacity, [or] inducing such foreign official . . . to do or omit to do

any act in violation of the lawful duty of such foreign official . . . [or] securing any improper

advantage.” 15 U.S.C. § 78dd-1(a)(3).

There are two “necessary parties” to a violation of the FCPA anti-bribery provisions: “the

U.S. company paying the bribe and the foreign official accepting it.” United States v. Blondek,

741 F. Supp. 116, 117 n.1 (N.D. Tex. 1990), aff’d and adopted by United States v. Castle, 925

F.2d 831 (5th Cir. 1991); see also id. at 120 (the foreign officials are “necessary parties to the

acts constituting a violation of the substantive law”). The FCPA is intended “to deter and punish

certain activities which necessarily involve[] the agreement of at least two people.” Id. at 117.

The “participation” of foreign officials is “required in every case.” Id. at 119.14

Sufficiently

12 The Kay cases involved a criminal violation of the FCPA, and therefore required an

additional element for an anti-bribery violation—that the defendant acted “willfully.” Kay II,

513 F.3d at 439 (quoting 15 U.S.C. § 78ff). The elements of a civil and criminal violation of the

FCPA are otherwise identical.13

15 U.S.C. § 78dd-2, at issue in the Kay cases, prohibits certain bribery conduct by

domestic concerns or their employees. Section 78dd-1, at issue in the SEC’s Complaint against

Jackson, prohibits the same conduct by issuers or their employees. 14

Judge Hughes, for example, recently granted a criminal defendant’s motion for judgment

of acquittal in part because “[w]hile the Government does not have to trace a particular dollar to

a particular pocket of a particular official, it has to connect the payment to a particular official,

that the funds made under his authority to a foreign official, who can be identified in some

10


alleging an FCPA violation requires “alleging at least minimally sufficient facts that, if proved,

will meet the . . . elements of a violation of the FCPA (such as . . . the identity of the foreign

country and of the officials to whom the suspect payments are made).” United States v. Kay,

359 F.3d 738, 760 (5th Cir. 2004) (Kay I) (emphases added). Simply put, the FCPA requires, as

an element, the involvement of a foreign official who has discretion to misuse.

The SEC fails to plead these essential elements of the bribery violation plausibly because

the Complaint fails to identify any such foreign official, and any specific acts, duties, or

decisions of that foreign official.15

The FCPA bribery count rises or falls on the involvement of

a foreign official, however the Complaint against Jackson does not identify the officials alleged

to have been bribed, by name, or by job title, or position, or job responsibility; the Complaint

does not even indicate whether Jackson is alleged to have bribed one official or many.

The SEC files very few FCPA complaints, and even fewer cases challenge the adequacy

of the SEC’s pleadings. However, the Indictments in recent criminal FCPA enforcement cases

highlight the inadequacy of the SEC’s Complaint against Jackson.16

reasonable way, that is, with no reasonable doubt.” Trial Transcript at 248, United States v.

O’Shea, No. 09-629 (S.D. Tex. Jan. 16, 2012) (emphases added) (attached at Exhibit 9). Judge

Hughes made a similar observation during arguments on that motion, noting that “You can’t

convict a man promising to pay unless you have a particular promise to a particular person for a

particular benefit. If you call up the [intermediary] and say, look, I’m going to send you 50

grand, bribe somebody, that does not meet the statute.” Id. at 227. 15

In an analogous unpublished case, Judge Hoyt dismissed a civil RICO Complaint under

Twombly because bribery as a racketeering activity had been inadequately pled, holding that it

was insufficient to plead only that “various officers of the defendant agencies,” were “bribed,”

including through provision of “barbecue dinners and other benefits.” Chavers v. Morrow, No.

08-3286, 2010 U.S. Dist. LEXIS 89432, at *12 (S.D. Tex. Aug. 30, 2010) (internal quotation

marks omitted) (attached at Exhibit 10). The allegations “fail to elaborate on what parties were

involved in the alleged bribery.” Id.16

The FCPA serves as a basis for both civil and criminal liability. See United States v.

Bodmer, 342 F. Supp. 2d 176, 187 (S.D.N.Y. 2004). As a criminal statute, the FCPA must be

strictly construed. Strict construction is also required in non-criminal cases for “[t]here cannot

11


For example, in the 2009 Haiti Teleco prosecutions, the Indictment specifically named

the foreign officials alleged to have been the intended recipients of payments, and in fact charged

several of those officials as defendants on non-FCPA charges. Indictment ¶¶ 4, 13, United States

v. Esquenazi, No. 09-21010 (S.D. Fla. Dec. 8, 2009) (attached at Exhibit 11). The Indictment

then alleged the specific authorization of payment of bribes to the named foreign officials in

order to receive specified business advantages. E.g., id. ¶¶ 4-5. Even the 2010 Indictment of 22

individuals charged in an FBI sting alleged that the defendants agreed to pay a commission to a

third party “believing that half of the ‘commission’ was intended to be paid outside the United

States as a bribe to the Minister of Defense of” a specific country to improperly obtain specific

and identified contracts. Superseding Indictment ¶ 30(h), United States v. Goncalves, No. 09-

335 (D.D.C. Apr. 16, 2010) (emphasis added) (attached at Exhibit 12).

The SEC’s Complaint also fails to identify the actions the unidentified Nigerian official

or officials were asked to take in return for the purported bribes. The FCPA prohibits only

payments to a “foreign official . . . for purposes of [either] influencing any act or decision of

such foreign official . . . in his official capacity, [or] inducing such foreign official . . . to do or

omit to do any act in violation of the lawful duty of such foreign official . . . [or] securing any

improper advantage.” 15 U.S.C. § 78dd-1(a)(3) (emphases added).

Kay I made clear that “the sought-after unlawful actions taken or not taken by the

foreign official in consideration of the bribes)” must also be alleged. Kay I, 359 F.3d at 760

(emphasis added). Yet once the conclusory allegations in the Complaint are stripped out, as they

must be, supra Part II.B, the Complaint never explains what the official(s) at issue were asked to

do regarding the TIPs or extensions. It is a reasonable inference that officials within the

be one construction for [a civil agency] and another for the Department of Justice.” FCC v. Am.

Broad. Co., 347 U.S. 284, 296 (1954).

12


Nigerian Customs Service had different roles and took different actions as part of their routine

job responsibilities; an intake official would perform very different functions than an ultimate

decision-maker. The Complaint, however, is silent about what action Jackson supposedly sought

with the payments at issue, and how those actions were unwarranted. Did Jackson believe these

officials were the intake officials at the Customs office who took the TIP application and passed

it on to superiors? Were these officials in charge of checking the accuracy of information on

applications? Were these officials in charge of visiting rigs to inspect them before a TIP was

granted? Were these officials the final decision-maker regarding granting TIPs? The SEC’s

Complaint never identifies the actual “sought-after unlawful action taken or not taken,” nor does

it even identify the actual foreign officials involved, or their duties. The Complaint then fails to

link specific unlawful actions to a specific payment in which Jackson allegedly was involved.

Nor does the Complaint identify why or how the “sought-after” action is “unlawful.” All

the Complaint offers are vague references to unspecified rigs needing TIPs or extensions thereof

under unspecified laws and regulations, and bare assertions of “Nigerian law” prohibiting or

permitting something. E.g., Complaint ¶¶ 19-22, 54, 101, 128. As previously noted, the Fifth

Circuit has held that allegations of the applicability of unspecified “rules and regulations” are

mere conclusory statements not entitled to be accepted as true on a motion to dismiss. Gentilello,

627 F.3d at 545. Allegations of the effect of those laws and regulations are legal conclusions.

See Stryker Corp., 669 F.3d at 507-08.

C. The Allegations are Consistent with Jackson Having a Good Faith Belief that

the Payments were Permissible “Facilitating Payments”

Because the numerous conclusory or legal allegations in the Complaint may not be

accepted as true, what remains is a strikingly different factual picture than the SEC claims, a

factual picture that is equally consistent with Jackson’s belief that his actions were legal under

13


the FCPA. The Complaint therefore fails to plausibly state a claim to relief—since an FCPA

anti-bribery violation requires proof of “corrupt” intent—and Claim I must be dismissed.17

1. The SEC Must Plausibly Plead Corrupt Intent

To sustain its bribery claim, the SEC must plead facts that plausibly show that Jackson

acted “corruptly.” 15 U.S.C. § 78dd-1(a) (“It shall be unlawful . . . to make use of the mails . . .

corruptly in furtherance of an offer, payment . . . .”). The Fifth Circuit has defined “corruptly” to

mean an act “done voluntarily and intentionally, and with a bad purpose or evil motive of

accomplishing either an unlawful end or result, or a lawful end or result by some unlawful

method or means.” Kay II, 513 F.3d at 446, 449 (quoting and approving of jury instruction

given by trial court) (emphasis added).

“A claim for relief is implausible on its face when ‘the well-pleaded facts do not permit

the court to infer more than the mere possibility of misconduct.’” Harold H. Huggins Realty,

Inc. v. FNC, Inc., 634 F.3d 787, 796 (5th Cir. 2011) (quoting Iqbal, 556 U.S. at 679) (emphasis

added). If the well-pleaded facts are also consistent with a legal, alternative explanation, those

facts do not plausibly state a claim to relief.

The Supreme Court in Twombly, for example, upheld the dismissal of a Complaint

alleging antitrust violations against the former subsidiaries of AT&T’s local telephone business

because the factual allegations at most showed parallel conduct without “enough factual matter

(taken as true) to suggest that an agreement was made.” 550 U.S. at 556. The Complaint did

allege an “agreement,” but that was held to be a legal conclusion not accepted as true. The

Complaint lacked factual allegations supporting the conclusion that there was an agreement—in

other words, the Complaint’s fatal flaw was its failure to specify the “specific time, place, or

17 In addition, the FCPA is unconstitutionally vague because it does not adequately define the

scope of the facilitating payments exception. See Ruehlen’s Motion to Dismiss at 17-21.

14


person involved in the alleged conspiracies.” Id. at 565 n.10. Most importantly for the Court,

the Complaint failed the plausibility test because while the factual allegations involving lack of

competition among the defendants “could very well signify illegal agreement,” there was “an

obvious alternative explanation”: that the defendants had established secure geographic markets

and were naturally disinclined to take the risks associated with potential expansion. Id. at 567

(emphasis added). That “obvious alternative explanation” rendered the claim implausible. See

Iqbal, 556 U.S. at 680 (“Acknowledging that parallel conduct was consistent with an unlawful

agreement, the Court nevertheless concluded that it did not plausibly suggest an illicit accord

because it was not only compatible with, but indeed was more likely explained by, lawful,

unchoreographed free-market behavior.”) (citing Twombly, 550 U.S. at 567).

Two years later in Iqbal, the Supreme Court again ordered the dismissal of a Complaint

whose factual allegations could conceivably have supported an inference of illegal conduct, but

did not rise to the level of plausibility: “Taken as true, these allegations are consistent with

petitioners’ purposefully designating detainees ‘of high interest’ because of their race, religion,

or national origin. But given more likely explanations, they do not plausibly establish this

purpose.” 556 U.S. at 681 (emphasis added). The Supreme Court has been clear—after

stripping away legal conclusions posing as facts, a claim must be dismissed as implausible where

the court cannot infer more than the mere possibility of misconduct. Where there are equally

likely, if not more likely, legal explanations for the remaining facts, the claim is indeed

implausible. The mere possibility of illegality is insufficient. Twombly, 550 U.S. at 557.

2. The Only Well-Pleaded Facts Show Jackson’s Good Faith Belief in the

Legality of the Payments

Here, once the SEC’s conclusory rhetoric and legal conclusions are stripped away, there

is an obvious alternative explanation for the remaining facts: Far from acting with “corrupt”

15


intent, Jackson believed in good faith that the payments of which he was aware were legal

payments under the FCPA’s “facilitating payment” exception. One does not act “corruptly” if

one has a good faith belief in the legality of the payments. Kay II, 513 F.3d at 446 (defining

corruptly as a “bad purpose or evil motive of accomplishing either an unlawful end or result, or a

lawful end or result by some unlawful method or means”). For that reason, as well as the various

pleading failures described above, the anti-bribery claims must be dismissed.

While the FCPA prohibits certain payments when made “corruptly,” the statute contains

an “[e]xception for routine governmental action”—more commonly known as facilitating

payments. The exception states that the prohibition against making corrupt payments to foreign

officials “shall not apply to any facilitating or expediting payment to a foreign official . . . the

purpose of which is to expedite or to secure the performance of a routine governmental action

by a foreign official . . . .” 15 U.S.C. § 78dd-1(b) (emphasis added). “Routine governmental

action,” in turn, is defined as meaning, in part:

[O]nly an action which is ordinarily and commonly performed by a foreign

official in—

(i) obtaining permits, licenses, or other official documents to qualify a

person to do business in a foreign country . . . or

(v) actions of a similar nature.

15 U.S.C. § 78dd-1(f)(3)(A) (emphases added).

As previously described, the SEC’s various assertions of Jackson seeking “illicit” TIPs or

using “false” paperwork must be disregarded as mere legal conclusions or conclusory statements.

Supra Part II.B. What is left regarding Jackson, at bottom, are alleged facts suggesting:

(1) Jackson was informed of payments being made to unidentified Nigerian Customs

Service officials. The payments related in some way to the TIP process, either new TIPs or

extensions of existing TIPs, both of which were ordinary parts of the customs regime in

Nigeria. E.g., Complaint ¶¶ 18, 19, 24, 39, 94.

16


(2) The payments were recorded in an account for payments made to government

officials. Some TIP-related payments were larger than other payments in the account for

payments made to government officials. E.g., Complaint ¶ 39.

(3) The TIP process was addressed in an audit report presented to Noble’s Audit

Committee. The audit report did not suggest that the payments were an FCPA risk. E.g.,

Complaint ¶¶ 43, 50.

(4) Paperwork from the Nigerian Customs Service and Noble’s customs agent was

presented to individuals other than Jackson, but not to Jackson himself. Some of that

paperwork—which Jackson did not see—reflected rigs moving out of Nigerian waters, even

though the rigs did not move, and Noble’s Audit Committee commented on the use of that

paperwork. E.g., Complaint ¶¶ 43, 50, 51, 53.

(5) After Jackson left the position of CFO, a new CFO asked Jackson about the new

CFO’s qualifications to approve payments related to TIPs; Jackson told the CFO to rely on

the Controller and former head of internal audit for pre-approval. E.g., Complaint ¶¶ 122-23.

(6) Jackson signed representation letters to Noble’s auditors, and securities filing

certifications, stating that he was unaware of any legal violations or fraud, and that Noble’s

internal controls were not materially weak. E.g., Complaint ¶¶ 145-46.

These alleged facts are not consistent with Jackson acting corruptly regarding any

payments made to the unnamed Nigerian customs officials. Even if they arguably could be

consistent with that conclusion, they are equally consistent, if not more so, with the conclusion

that Jackson believed the payments were proper facilitating payments.

At bottom, the SEC rests its conclusion of anti-bribery violations on the fact that

payments were allegedly made to government officials. The mere fact that payments were made

is not sufficient to pass a Rule 12(b)(6) challenge. The essence of a violation of the Foreign

Corrupt Practices Act is the purpose of the payment, and the defendant’s knowledge and intent in

making it. Twombly clearly demonstrates the inadequacy of Claim I. There, the plaintiffs easily

pled parallel conduct. 550 U.S. at 564. Parallel conduct, though, without an illegal agreement,

was insufficient to plausibly make out an antitrust violation. Id. Here, the fact of payments,

without illegal—corrupt—intent, does not make out an anti-bribery violation. Cf. Shandong

Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029, 1034 (5th Cir. 2010) (“Moving

17


money from one company to another may be consistent with fraud, but it does not create a

reasonable inference that Potter is liable for fraud. Beston could have had legitimate or

illegitimate reasons for transferring money.”) (citing Iqbal and Fed. R. Civ. P. 9(b)).

The alleged facts show that the payments related to permits for rigs to work in Nigeria—a

type of payment clearly included within the facilitating payment exception. 15 U.S.C. § 78dd-

1(f)(3)(A) (“obtaining permits . . . to qualify a person to do business in a foreign country”).

The alleged facts show that Jackson was never told that granting a TIP or TIP extension

was anything other than an act “ordinarily and commonly performed by a foreign official”—that

is, a routine governmental action. Id.18

The only allegations that might permit concluding

otherwise are the SEC’s conclusory allegations that, based on unidentified laws and regulations,

TIP extensions were “discretionary” acts.19

Even if those conclusory allegations could be

considered, there is no allegation that Jackson was ever told that TIPs or TIP extensions were

discretionary based on these laws.

The alleged facts show that the payments were recorded in Noble’s books in a clearly

marked account for payments to government officials. E.g., Complaint ¶ 39; see also Complaint

in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4, 2010), ¶ 22 (Ex. 8). The alleged facts

18

As originally enacted in 1977, the FCPA exempted payments to any foreign official

“whose duties are essentially ministerial or clerical.” Pub. L. No. 95-213, 91 Stat. 1494, § 103(a)

(codified at 15 U.S.C. § 78dd-1) (1977). When the statute was amended in 1988, the facilitation

payments exception was given its own subsection instead of being folded into the definition of

foreign official. Of course, the SEC has not pled facts related to the identities or duties of the

foreign officials, leaving it at least equally likely that Jackson believed the payments were going

to officials “whose duties are essentially ministerial or clerical.” 19

The concept of “discretionary” or “non-discretionary” acts is not addressed in the FCPA,

however it appears that in its Complaint the SEC is equating “discretionary” with an act not

being “routine governmental action.” See also Kay I, 359 F.3d at 751 (describing facilitating

payments as seeking “largely non-discretionary, ministerial activities performed by mid- or low-

level foreign functionaries”). Of course, the SEC has failed to allege anything about the “foreign

functionaries” at issue, or the types of activities they were supposedly asked to carry out.

18


show that Jackson involved the internal audit department in the decision of whether the payments

were permissible facilitating payments. E.g., Complaint ¶¶ 38, 39, 47, 53, 83, 99, 123. The

reasonable inference is that Jackson, and Noble, acted to assure that the company’s books and

records accurately reflected the nature of the payments, in an auditable and transparent manner.

Because the remaining facts in the Complaint are equally, if not more, consistent with Jackson’s

belief the payments were legal, Claim I must be dismissed as implausible.

D. The Bribery Claim is Barred by the Statute of Limitations

The SEC’s claim for civil monetary penalties is subject to the general five year statute of

limitations set forth in 28 U.S.C. § 2462. See Zacharias v. SEC, 569 F.3d 458, 471 (D.C. Cir.

2009).20

A Rule 12(b)(6) motion based on the expiration of the statute of limitations should be

granted “where it is evident from the plaintiff’s pleadings that the action is barred and the

pleadings fail to raise some basis for tolling or the like.” Jones v. ALCOA, Inc., 339 F.3d 359,

366 (5th Cir. 2003). Accordingly, the SEC’s claims must be dismissed to the extent they accrued

more than five years prior to the date this lawsuit was filed, which was February 24, 2012.

For purposes of § 2462, claims accrue at the time of the violation. United States v. Core

Labs., Inc., 759 F.2d 480, 482-83 (5th Cir. 1985); Trawinski v. United Techs., 313 F.3d 1295,

1298 (11th Cir. 2002) (holding that the limitations period in § 2462 “begins with the violation

itself – it is upon violation, and not upon discovery of harm, that the claim is complete and the

clock is ticking”). Thus, the SEC must allege violations that took place after February 24, 2007.

1. The Complaint Does Not Allege that Jackson Approved Bribes During

the Limitations Period

20 The SEC’s claim for injunctive relief is also subject to § 2462 to the extent that such

relief would be punitive rather than remedial. Johnson v. SEC, 87 F.3d 484, 488 (D.C. Cir.

1996). The SEC’s Complaint misstates or omits the facts demonstrating that injunctive relief

against Mr. Jackson would be punitive. Thus, Mr. Jackson does not seek dismissal of the

injunctive claim on limitations grounds at this time, but he will do so at a later stage of the

proceedings if the case survives.

19


The vast majority of the purported bribes alleged in the Complaint occurred well before

February 24, 2007. The SEC devotes page after page to recounting events that took place in

2003-2006, well outside the limitations period. See Complaint ¶¶ 33-124. Events taking place in

2007 are recounted in Paragraphs 125-137, but Jackson is not mentioned at all in this portion of

the Complaint. Thus, there is no allegation that Jackson approved bribe payments during the

limitations period. In fact, the Complaint affirmatively establishes that he was not in a position

to do so. According to the Complaint, Noble required payments to government officials “to be

pre-approved in writing by the CFO,” a position Jackson left by November 2006. Id. ¶¶ 8, 24.21

Accordingly, Jackson’s alleged violations of the anti-bribery provisions were outside the

limitations period, and, absent a basis for tolling, cannot give rise to penalties.

2. The Pleadings Fail to Raise Any Basis for Tolling

The Complaint does not allege any facts that would give rise to tolling based on the

doctrine of fraudulent concealment.22

Fraudulent concealment requires the plaintiff to establish:

1) [T]he defendant’s wrongdoing was concealed from the plaintiff, either through

active concealment by the defendant or because the nature of the wrongdoing was

such that it was self-concealing; 2) the plaintiff acted diligently once he had

inquiry notice, i.e., once he knew of or should have known of the facts giving rise

to his claim, and 3) the plaintiff did not have inquiry notice within the limitations

period.

SEC v. Microtune, Inc., 783 F. Supp. 2d 867, 874 (N.D. Tex. 2011), appeal docketed, No. 11-

10594 (5th Cir. June 21, 2011); see also SEC v. Brown, 740 F. Supp. 2d 148, 158 (D.D.C. 2010);

21 In an apparent attempt to bridge the gap, the SEC alleges that from “about May 2005

through early 2007, Jackson directly supervised Ruehlen, oversaw Noble-Nigeria’s operations,

and regularly communicated with Ruehlen about the status of drilling rigs in Nigeria and other

issues facing Noble-Nigeria.” Complaint ¶ 10. But these vague allegations, which

conspicuously fail to allege Jackson’s involvement in any bribe payments, do not plausibly

suggest that Jackson violated the FCPA after February 24, 2007. 22

The parties did have one or more tolling agreements, but the SEC did not include them in

its Complaint. Therefore, their existence cannot be considered for purposes of this motion to

dismiss. Solis v. Bruister, No. 10-77, 2012 U.S. Dist. LEXIS 30739, at *8-9 (S.D. Miss. Mar. 8,

2012) (attached at Exhibit 13).

20


SEC v. Jones, 476 F. Supp. 2d 374, 382 (S.D.N.Y. 2007). The facts giving rise to fraudulent

concealment must be pled with particularity pursuant to Fed. R. Civ. P. 9(b). Brown, 740 F.

Supp. 2d at 158.

Here, the SEC fails to satisfy any of the requirements for fraudulent concealment. First,

there are no allegations in the Complaint that Jackson did anything to conceal the payments,

altered or destroyed documents in Noble’s files or took any steps to prevent any other person

from reporting the payments at issue, which were known to many individuals within the

company. Complaint ¶¶ 71, 75, 102, 113. To the contrary, the Complaint affirmatively alleges

that the supposed bribe payments were “clearly delineate[d]” as payments on invoices prepared

by Noble’s Nigerian agent, and were subsequently treated as legitimate expenses by Noble and

recorded on its books accordingly. Id. ¶¶ 40, 149.23

All that the SEC alleges is that Jackson

failed to disclose the purported bribes, but mere silence cannot establish concealment.

Microtune, 783 F. Supp. 2d at 877 (“Concealment by silence or the simple fact that a fraud was

unknown to the plaintiff is not enough to establish that a fraud itself is self-concealing. Rather

. . . the fraud must be incapable of being known even in the exercise of diligence by the

plaintiffs.”); Jones, 476 F. Supp. 2d at 382-83 (rejecting fraudulent concealment tolling because

“while Defendants’ allegedly fraudulent acts of misrepresentation may not have been

affirmatively disclosed to the Commission, the record does not support a finding that they were

incapable of being known”).

Second, Noble (with Jackson as CEO) disclosed its internal investigation relating to the

payments to the SEC in June 2007, nearly five years before this lawsuit was filed. The SEC

pleads no facts that would explain why it waited nearly five years to initiate the action. Thus, it

23 In other words, the Complaint alleges that it was improper to record the payments as

legitimate, not that the payments were concealed.

21


cannot establish that it acted with the required diligence. Microtune, 783 F. Supp. 2d at 878

(“[T]he SEC must have acted diligently in filing its complaint in a timely manner once it had

inquiry notice. . . . [E]quity would not be served by allowing the SEC to wait a full five years to

file its case after being apprised of Microtune’s practices, if the SEC did not act diligently during

this five-year period.”) (footnote and citation omitted).

Finally, Noble’s June 2007 voluntary disclosure means that the SEC was aware of the

alleged violations long before the expiration of the statute of limitations. The fact that it had

ample time to file a timely complaint is another reason why tolling is unwarranted. Microtune,

783 F. Supp. 2d at 882 (“[I]f a plaintiff discovers his claims within the limitations period,

especially if he still has two years or more remaining in which to file his complaint (as is this

case here), there is obviously a lesser need, if any, to toll his claims.”).

IV. THE DERIVATIVE CLAIMS (CLAIMS II-VII) MUST ALSO BE DISMISSED

Claims II through VII (the “Derivative Claims”) of the SEC’s Complaint against Jackson

are merely derivative of Claim I, Jackson’s alleged anti-bribery violation. Because Claim I must

be dismissed, so too must the remaining claims against Jackson. In addition, Claims II-VII fall

on statute of limitations grounds.

A. Claim II – Aiding and Abetting Noble’s Anti-Bribery Violation

The Complaint alleges that Jackson aided and abetted Noble’s violation of the anti-

bribery portion of the FCPA. Complaint ¶¶ 153-56 (violation of 15 U.S.C. § 78t(e) by aiding

and abetting violations of 15 U.S.C. §§ 78dd-1). In addition to a primary violation, aiding and

abetting requires Jackson to have “knowingly or recklessly provide[d] substantial assistance” to

the primary violator. 15 U.S.C. § 78t(e). The substantial assistance must be a proximate cause

of the primary violation, and “mere awareness and approval of the primary violation is

insufficient to make out a claim for substantial assistance.” SEC v. Treadway, 430 F. Supp. 2d

22


293, 339 (S.D.N.Y. 2006) (citations omitted).

As shown above, once conclusory and legal allegations are stripped from the Complaint,

there is no plausible claim that any primary violation was committed. Nor are there any facts

plausibly stating a claim that Jackson substantially assisted any primary violation—the SEC’s

Complaint merely alleges that Jackson was in the position of “mere awareness and approval” of

any primary violation by Noble, which is “insufficient to make out a claim for substantial

assistance.” SEC v. Apuzzo, 758 F. Supp. 2d 136, 150 (D. Conn. 2010). And because the SEC

cannot plausibly claim Jackson acted “corruptly,” as described above, the aiding and abetting

claim—which also requires scienter—must also fail.

In addition, Jackson’s lack of involvement in any alleged bribe payments during the

limitations period, supra Part III.D, means that he could not have provided “substantial

assistance” to Noble with regard to its alleged violations of the bribery provisions during the

limitations period.

B. Claims III & IV – Aiding and Abetting Noble’s FCPA Books and Records

Violation, and Directly Violating Internal Controls and Books and Records

Requirements

The Complaint alleges that Noble’s books and records were inaccurate, and an adequate

system of internal controls was not maintained, because bribes were recorded as legitimate

operating expenses; it is further alleged that Jackson substantially assisted that violation,

Complaint ¶¶ 157-63 (violation of 15 U.S.C. § 78t(e) by aiding and abetting violations of 15

U.S.C. §§ 78m(b)(2)(A), (B)). The Complaint also alleges that Jackson knowingly circumvented

Noble’s internal controls or knowingly failed to implement internal controls, and/or falsified

Noble’s books and records. Complaint ¶¶ 164-67 (violation of 15 U.S.C. § 78m(b)(5) and 17

C.F.R. § 240.13b2-1). As shown above, the Complaint lacks factual support for the notion that

Jackson believed that Noble’s books and records were actually false. Indeed, the facts alleged

23


support the conclusion that Jackson believed that legal facilitating payments were being properly

accounted for in the specific account designated for facilitating payments. Supra Part III.C.

In addition, the facts alleged in the Complaint indicate that it is highly unlikely that

Jackson was involved with the recording of any payments on Noble’s books and records within

the limitations period. Jackson became CEO in October 2006 and ceased serving as Acting CFO

the following month. Complaint ¶ 8. The limitations period did not start until several months

later, in February 2007. The Complaint contains no specific allegations about Jackson’s role in

recording the payments in Noble’s books and records, and common sense and experience instruct

that the CEO of a company like Noble would not be involved in recording individual

transactions in the accounting records. Iqbal, 556 U.S. at 679 (2009) (“Determining whether a

complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-

specific task that requires the reviewing court to draw on its judicial experience and common

sense.”). Thus, there is no plausible basis to believe that Jackson committed any violations

relating to Noble’s internal controls or its books and records during the limitations period.

C. Claims V and VI – Misleading Auditors and Signing False Certifications

The Complaint alleges that Jackson made materially false or misleading statements to an

accountant, Complaint ¶¶ 168-70 (violation of 17 C.F.R. § 240.13b2-2), and that he signed false

personal certifications used in Noble’s public securities filings, Complaint ¶¶ 171-73 (violation

of 17 C.F.R. § 240.13a-14). The claim for misleading an accountant appears to be premised on

the allegation that Jackson signed management representation letters to Noble’s independent

auditors stating that he was unaware of FCPA violations or other legal violations or fraud, and

that he had maintained effective internal controls with no material weaknesses. Complaint ¶ 145.

The false certifications claim appears to be premised on the allegation that Jackson signed

personal certifications as CFO and CEO that stated that he had disclosed all significant

24


deficiencies and material weakness in the internal controls, and any fraud. Complaint ¶ 146.

Both of these claims must fail because the Complaint fails to plausibly plead Jackson’s

involvement in any FCPA violations (which is the only basis for the suggestion that Noble failed

to maintain effective internal controls). In addition, many of the alleged false representations

and certifications were, according to the Complaint, made outside the limitations period.

Complaint ¶¶ 145-46. Those representations and certifications cannot give rise to liability. See,

e.g., United States v. Rutherford Oil Corp., 756 F. Supp. 2d 782, 793 (S.D. Tex. 2010) (granting

a motion for summary judgment based on § 2462 “insofar as it seeks protection from civil

penalties for actions completed more than five years before the government brought this action”).

D. Claim VII – Control Person Liability

The Complaint charges Jackson with controlling the legal violations of Noble, Ruehlen,

and unspecified “others,” and inducing those illegal actions while not acting in good faith.

Complaint ¶¶ 174-77 (violation of 15 U.S.C. § 78t(a), giving rise to liability under 15 U.S.C. §§

78dd-1, 78m(b)(2)(A), (B)). Controlling person liability requires that the defendant have

“induced or participated in the alleged violation.” In re BP p.l.c. Sec. Litig., No. 10-2185, 2012

U.S. Dist. LEXIS 17788, at *217 (S.D. Tex. Feb. 13, 2012) (attached at Exhibit 14). Yet, as

described, the Complaint’s facts are equally consistent with Jackson’s good faith belief that the

payments at issue were lawful facilitating payments that were accounted for properly. The facts

therefore do not plausibly state a claim that Jackson acted in bad faith, or that he “induced or

participated in” any primary violations. Moreover, to the extent the violations by anyone else

took place prior to the limitations period, they cannot give rise to liability for Jackson.

CONCLUSION

For the foregoing reasons, Jackson respectfully requests that the Court dismiss the

Complaint against him for failure to state a claim upon which relief can be granted.

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Dated: May 8, 2012 Respectfully submitted by,

__/s/______________________

David S. Krakoff, Esq.

Attorney-in-Charge

D.C. Bar No. 229641

BuckleySandler LLP

1250 24th Street NW, Ste. 700

Washington, D.C. 20037

Telephone: (202) 349-7950

Facsimile: (202) 349-8080

[email protected]

Of Counsel:

James T. Parkinson, Esq.

Adam Miller, Esq.

Lauren R. Randell, Esq.

Paige Ammons, Esq.

BuckleySandler LLP

1250 24th Street NW, Ste. 700

Washington, D.C. 20037


CERTIFICATE OF SERVICE

I certify that on May 8, 2012, I caused to be electronically filed with the Clerk of Court

using the CM/ECF system, which will send notification of such filing to the counsel of record in

this matter who are registered on the CM/ECF system, the foregoing Defendant Mark A.

Jackson’s Motion to Dismiss the Complaint Under Rule 12(b)(6) for Failure to State a

Claim Upon Which Relief Can Be Granted.

/s/ _______________

Adam B. Miller


sec v. mark jackson (motion to dismiss)

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