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Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 1 of 33

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
RAMON CIERCO, et al.,
Plaintiffs,
v.

Civil Action No. 15-1641 (JEB)

JACOB LEW, in his official capacity as
Secretary of the Treasury, et al.,
Defendants,
and
BANCA PRIVADA D’ANDORRA S.A., in
receivership,
Nominal Defendant.
REPLY IN SUPPORT OF MOTION TO DISMISS BY DEFENDANTS JACOB LEW,
U.S. DEPARTMENT OF THE TREASURY, JENNIFER SHASKY CALVERY,
AND THE FINANCIAL CRIMES ENFORCEMENT NETWORK

Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 2 of 33

TABLE OF CONTENTS
TABLE OF AUTHORITIES ......................................................................................................... iii
INTRODUCTION ...........................................................................................................................1
DISCUSSION ..................................................................................................................................1
I.

Plaintiffs Lack Standing.......................................................................................................1
A.

Plaintiffs have not established redressability ...........................................................2

B.

Plaintiffs do not have standing to challenge FinCEN’s proposed
rule on behalf of BPA ..............................................................................................6

C.

Plaintiffs’ claims should also be dismissed on ripeness grounds ..........................10

II.

The APA Does Not Permit Plaintiffs’ Challenge to Non-Final
Agency Action ...................................................................................................................11

III.

Plaintiffs Fail to State a Due Process Claim ......................................................................15
A.

Plaintiffs cannot establish a deprivation by the government .................................16

B.

Plaintiffs still lack a sufficiently pled constitutional presence...............................19

C.

Plaintiffs are receiving more than adequate process ..............................................23

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

ii

Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 3 of 33

TABLE OF AUTHORITIES
Cases
Abigail All. for Better Access to Developmental Drugs v. Eschenbach,
469 F.3d 129 (D.C. Cir. 2006)................................................................................................... 5
Action on Smoking and Health v. Dep’t of Labor,
28 F.3d 162 (D.C. Cir. 1994)................................................................................................... 13
*Am. Mfrs. Mut. Ins. Co. v. Sullivan,
526 U.S. 40 (1999) ............................................................................................................ 16, 17
Ams. for Safe Access v. DEA,
706 F.3d 438 (D.C. Cir. 2013)................................................................................................... 3
Bennett v. Donovan,
703 F.3d 582 (D.C. Cir. 2013)................................................................................................... 3
Bennett v. Spear,
520 U.S. 154 (1997) .................................................................................................... 11, 12, 13
Better Gov’t Ass’n v. Dep’t of State,
780 F.2d 86 (D.C. Cir. 1986)................................................................................................... 11
Block v. Meese,
793 F.2d 1303 (D.C. Cir. 1986)................................................................................................. 3
Blum v. Yaretsky,
457 U.S. 991 (1983) ................................................................................................................ 17
Boumediene v. Bush,
552 U.S. 723 (2008) ................................................................................................................. 21
Briscoe v. Costco Wholesale Corp.,
61 F. Supp. 3d 78 (D.D.C. 2014)............................................................................................. 20
Ciba–Geigy Corp. v. EPA,
801 F.2d 430 (D.C. Cir. 1986)................................................................................................. 11
City of Harper Woods Emples. Ret. Sys. v. Olver,
589 F.3d 1292 (D.C. Cir. 2009)............................................................................................. 6, 7
32 Cty. Sovereignty Comm. v. Dep't of State,
292 F.3d 797 (D.C. Cir. 2002)........................................................................................... 20, 22

iii

. of Cal...... United States Treasury Dep’t.S. No..... 5 *In re Murray Energy Corp............. v...... Cir.......................... 13.......................... 2006)..... Alcan Aluminum Ltd....C... 6 FTC v.................. 14.....3d 24 (D.3d 958 (D.............. 415 F...... v....... Dep’t of Justice... 10 Kadi v............ 15 Int’l Union..C......... Servs..... Lew................................................ 3d 1 (D.... Nat.......... Inc.................................................... Servs.......... 18......C................................. 449 U........... Cir................... v.......... 500 U............. 19 FBME Bank Ltd...... 21 Kaempe v.......... Supp....S..... 331 (1990) .. Brock......... 42 F..................... passim In re Fed. & “ERISA” Litig.......... 1986).... 2015) .......3d 330 (D................ Jackson.... Ctr... 503 F.... Nat’l Highway Traffic Safety Admin........................................ 9 iv .... 753 F. Cir.............................C.... 367 F....... Myers...3d 798 (D...S............... Aerospace & Agr........................... 493 U.........C.................. Cir........ 2012)...........2d 237 (D................... Standard Oil Co....................D....S............. 2004).............................. 16 Kamen v............................... 452 F.......... 14 Gail C.................. 68 F.. Sweeney Estate Marital Trust v..............D.................... Cir...................... 2015)........... Laidlaw Envtl.. Cir.............C.............. Supp..2d 1092 (D......... 783 F............... Cir. 2014).............................................. 11.......C................. 2015 WL 5081209 (D...................... 2007).... for Auto Safety v..... 528 U.. 10 General Electric v... 3d 116 (D............... 19 Heartland Reg’l Med........ Supp.... 90 (1991) .......... 610 F....... 167 (2000) ............. Aug....................................................................... Implement Workers of America v.. v............................................3d 110 (D.C... 2010).................. 788 F.................. 2d 9 (D. 1985)............... Mortgage Ass’n Sec.....C.............S.................................................. 232 (1980) ...... 6 Friends of the Earth.......C......D..... 2005)..D.................. Geithner...........Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 4 of 33 *Ctr................. Derivative. (TOC)...............C.. Inc.......... 27... 15-1270......... 12 Doe v............. 10 Franchise Tax Bd.......... 18..... Kemper Fin.................... United Auto.............. U............................ Leavitt..

............ 457 F.... Supp... 3 Nevada v........ 2014)..... 3d 208 (D...... 2005)..S.............. 2008).. Barry... Inc.......3d 192 (D.... 2 McCarthy v............ 18 *Paul v..... Sec’y of Def.. Thomas.........C....... Office of U................D. Dep’t of Energy..............C..... 21 Nat’l Parks Conservation Ass’n v....................... Davis.. 809 F. Cir................... 9 Mosrie v........ Cir............. Safety Comm’n.............................. Trade Representatives...................... 503 U........................ Cir........ 3...........................2d 1151 (D............ Retiree Med.........C................. Consumer Prod. Cir.. HHS........... 1980)...............................S................................................................3d 1 (D.......... 23 Nat’l Council of Resistance of Iran v........................................................... Cir.. 20........3d 726 (D........................... 415 F............ 9 Pub.................... 10 Pirelli Armstrong Tire Corp.....3d 779 (D.............2d 953 (D..S..3d 78 (D.............................. Madigan...........C.......................................... 555 (1992) ...................... 324 F......................... 251 F............. Cir............... 70 F... Cir. v. 424 U........ Manson...................................................................................... 12 *Nat’l Coal Against the Misuse of Pesticides v.... 534 F............ 1983)........ 140 (1992) ............ 2.......... Norton....... 2007)..... Defs..................................... Citizen v............. 2003)......C........... 489 F...........C..................C....................... Cir.......C........ Raines.............. v.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 5 of 33 Lujan v.......... 2006).... Lew... 10 Reliable Automatic Sprinkler Co................. Benefits Trust v...... of Wildlife..... 414 F............... Dep’t of State....... 18............................... 2001)......... 504 U...C......... Inc.......... 12 *Renal Physicians Ass’n v...........3d 1267 (D....................................2d 875 (D................ 18 Nat’l Ass’n of Home Builders v............... 1992).......................................... Cir....S......................... 718 F................... Cir.... 970 F...... 693 (1976) .....C... 4 v ..............3d 8 (D................ 2005)............................................ 19 Perry Capital v..... 1987).........C................ Cir....C..........2d 916 (D.................... 11 Old Dominion Dairy Products............................................ 631 F........

....................................C............................................................................................................................. v. 519 (1978) ....................... Ill............. Supp................................... R.. Ill...C....... Reg. 757 F....... § 704 ........................... § 5311 ................................................. Gilley..........S............................ Civ......................................... 5 80 Fed.....S.......................................C. § 706(2) ....... Commercial St....................................................... 16..... 14 United States v....Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 6 of 33 Siegert v.........S..S....S..........................S.... Union Bank For Sav.....S.. Chicago........................... 17 Statutes 5 U....................... 226 (1991) ...C..................................... 457 F........... Supp..................... 259 (1990) ....................................................... 2003)......464 ..............................1 .............. 22 United States v...................... Verdugo-Urquidez. 2001)........................ 13 Fed.......... Urban Title Servs..................... Reg... § 5318A(a)(2)(C) ................C..................S...................... & Inv..................3d 301 (D................... 1990) .....3d 8 (1st Cir....... 45. 18 Sloan v.......S........... of Bensenville v.... v............ 435 U.............................................D. § 5318A ........................................... 3 Trifax Corp......... 2.............................. § 5318A(a)(1) .... Natural Resources Defense Council........................... 494 U......... 689 F................................ (Jordan)....................................................................... 14 31 U...................................................... Cir.C................ 13.........C.. 9 vi ......................057 ....................... FAA..... Inc.............. 271 F......................................... 500 U....3d 641 (D...... 20 Vermont Yankee Nuclear Power Corp...... 14..................................................................................C................... Reg.... 23................................... 23 Vill... 15 Regulations and Rules 80 Fed...... 2010)....C........................C....................................................... § 881 ..... 2006)..... HHS......... P................................ 13.... 2d 94 (D................. 8848 S.......... 13............. 18 United States v....... 15 31 U................................................. 2007) .......................... 5 21 U............................ 24 31 U.. 11 5 U............................... Cir.......... 20 Tozzi v.................................................................................. 314 F.......... 487 F... 871 (N................ District of Columbia............................... 13 31 U............................................. 17 80 Fed........................................S................. 14 31 U...................................S............... Cir...............................C..............D.....C..........304 .........3d 52 (D. 6..... § 5318A(a)(2) ................. 5....................................................

..... (Nov....... Int’l L...... J.............S........ L’AREB informa que ha finalitzat la primera fase del procés de venda de Vall Banc...... Why do Shareholder Derivative Suits Remain Rare in Continental Europe?.............. Conf... Anti-Money Laundering Efforts......................................... 7 Martin Gelter.. 4 vii ..A................. 2014) .. 11.............. 12 Int’l Business Publications................ 5.... 5........... published as amended in 19 Butlletí Oficial del Principat d’Andorra 1062 (Mar........ 22 Miscellaneous Government Accountability Office... Rep.U.......... 2008) ............................. 108-381 .......... 2015) ....... GAO-08-1058 ........................ del 18 d’octubre.. 7 Llei 20/2007.... de societats anònimes i de responsabilitat limitada............. S............................... 843 ...........R.............. Andorra: Business Law Handbook 11 (6th ed..... 7 Press Release................. USA PATRIOT Act: Better Interagency Coordination and Implementing Guidance for Section 311 Could Improve U. 37 Brook............Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 7 of 33 Legislative Materials H...............................................

substantial connections with the United States entitling them to due process protections. but from the independent actions of a foreign sovereign—injuries that are neither fairly traceable to the agency nor redressable by this Court. plaintiffs fail to state a due process claim. FinCEN violated not only the Administrative Procedure Act (“APA”) but also the Constitution.”). but with the fact that the agency began that process at all.’ Mem. Finally. Even if plaintiffs’ complaint had identified any specific. ECF No. the public rulemaking process that Congress prescribed has given them notice and opportunity to be heard on the proposed action. and this case should be dismissed in its entirety. See Pls. See Defs. under D. to Dism. Essentially.’ Mem. Plaintiffs Lack Standing Plaintiffs do not seriously contest that. Their standing argument instead hinges on the notion that the publication of the Notice of Finding (“NOF”) and Notice of Proposed Rulemaking (“NPRM”) has inflicted downstream injuries. of Mot. plaintiffs’ alleged injuries stem not from the agency’s proposed actions. and by merely proposing the imposition of the fifth special measure. 29-1 (“FinCEN Mem. in Supp. of Law in 1 . The agency has done no such thing. Due process requires no more. their real quarrel with the challenged notice of finding and proposed rule is not with the process that the Financial Crimes Enforcement Network (“FinCEN”) used. Plaintiffs challenge non-final action.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 8 of 33 INTRODUCTION As plaintiffs’ opposition makes clear. at 12-14. and they set forth no reason for this Court to abandon the well-established case law in this Circuit limiting challenges to agency action to those that are final.C. Moreover. Circuit precedent. DISCUSSION I. a federal agency does not inflict an Article III injury when it proposes a regulation. plaintiffs contend that by following the statutory mandate that Congress laid out.

standing is not precluded. . 504 U. which allegedly injured the plaintiffs as shareholders. the Agència Estatal de Resolució d’Entitats Bancàries (“AREB”) approved a resolution plan for BPA. 2 . banks to end their business relationships with Banca Privada d’Andorra (“BPA”). Compl. at 22-27. HHS. ECF No.C. This led the Institut Nacional Andorrà de Finances (“INAF”) to place BPA in administration. . discretion the courts cannot presume either to control or to predict. 562 (1992) (emphasis added). and the Andorran parliament to enact a law creating a new agency for the restructuring and resolution of banks. 27. 504 U. Finally. . 24. Id. 1274 (D. Defs.S. Plaintiffs’ claims depend upon the following chain of inferences: FinCEN’s publication of the NOF and NPRM prompted U. Plaintiffs have not established redressability Where redressability “depends on the unfettered choices made by independent actors not before the courts and whose . Redressability therefore depends upon the actions of two kinds of third parties— U. an agency of a sovereign foreign government—whose independent choices the Court “cannot presume either to control or to predict. id.”). It is insufficient to create standing. to Dism. which ended their business relationships with BPA despite being under no legal requirement to do so. and foreign governments. id.” Lujan. 43.S. But that contention conflates proposed agency action with legal compulsion on regulated parties. 31 (“Opp. ¶¶ 22. A. but it is ordinarily substantially more difficult to establish. . 45. ¶ 27. of Wildlife. and fails to respect crucial distinctions between the U. see also Renal Physicians Ass’n v. banks.S. Cir. .S. the new agency.S. So it is here. 489 F.’ Mot. and AREB.” Lujan v.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 9 of 33 Opp’n to Defs.3d 1267. ¶¶ 27.”). 555. 2007) (“[S]tanding to challenge a government policy cannot be founded merely on speculation as to what third parties will do in response to a favorable ruling. ¶¶ 2.

we required more than a bald allegation.11 (citing Pls. as a federal agency.3d 582. 2001).3d 301 (D. Meese. and Block v. Ams. 703 F. Nat’l Parks Conservation Ass’n v. Thus.3d at 1275. Ex. the D. 3 . Summ. DEA. 793 F.” Renal Physicians Ass’n. for Safe Access v. 271 F.3d 1. Cir. 2013) (VA. 6 (D. Circuit found that a manufacturer had standing to challenge the classification of dioxin as a carcinogen. it does not establish that. First. 2 The other cases cited by plaintiffs are similarly concerned with the behavior of directly regulated entities or other federal agencies.C. Donovan. Opp.3d 438. 586-88 (D. particularly given the unknowable future actions of AREB.C. In Block. Plaintiffs’ reliance on a March 2015 press release issued by INAF cannot salvage their redressability argument.C.” because the distributor submitted declarations and affidavits detailing specific instances in which potential customers declined to exhibit a particular film due to the classification. Cir.C. 793 F. is misplaced. 489 F.C. at 22 & n. Cir.C.3d at 310. 414 F.1 Neither case changes the basic rule where redressability depends upon the actions of third parties: “[T]o establish redressability at the pleading stage. plaintiffs’ reliance on the D. because “[s]tate and local governments would be less likely to regulate dioxin. 271 F. having taken control of BPA and conducted its own extensive investigation of the bank’s activities. Circuit’s decisions in Tozzi v. that press release was not issued by AREB. which was “virtually dispositive of the state permitting decision”). and healthcare companies would in turn be less likely to stop using PVC plastic. second.’ Mot. was “surely inclined to subscribe to” fellow federal agency DEA’s listing of marijuana as a Schedule I substance). the Court of Appeals found that a film distributor had standing to challenge the classification of certain films as “political propaganda. 18). J. See Bennett v.” if dioxin were ordered reclassified. 449 (D.2d 1303 (D. HHS. 1986). we required that the facts alleged be sufficient to demonstrate a substantial likelihood that the third party directly injuring the plaintiff would cease doing so as a result of the relief the plaintiff sought. Manson. the Andorran agency that is now responsible for the resolution of BPA. AREB is even considering abandoning the bridge 1 In Tozzi. Cir. Cir. 2013) (HUD and private entities it “heavily regulated”).C.2d at 1308.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 10 of 33 at 562 (citations omitted). 706 F. 2005) (state authority acted pursuant to federal agency’s impact letter.2 And neither case demonstrates that redressability could be satisfied under the circumstances presented here.

or has control over Andorra’s own criminal investigation of money laundering at BPA. Redressability does not exist where. 2015) (“AREB wishes to communicate the finalization of the first phase” “of the sale process of Vall Banc. as here. the new entity created by the resolution process. AREB. which pleads no specific facts regarding the scope or scale of cooperation. available at http://areb.” Id.U.3d at 1278. Further. S. 797 F.3d 11. Circuit has recognized that. “causation does not inevitably imply redressability. AREB is engaged in its own resolution process of BPA pursuant to Andorran law.” Renal Physicians Ass’n. “the new status quo is held in place by other forces. Nor can plaintiffs establish that. the bare allegation that the Andorran government has “adopted a policy to cooperate with FinCEN.ad/images/areb/comunicats/ 11112015_AREB_ENG. a statement that FinCEN is capable of influencing the course or outcome of the resolution proceedings. 2015) (“we may reject as overly speculative those links which are predictions of future events (especially future actions to be taken by third parties)”). L’AREB informa que ha finalitzat la primera fase del procés de venda de Vall Banc.” Compl. U. ¶ 27. 19 (D. financial institutions would choose to re3 Press Release. does not establish that FinCEN controls the outcome or direction of the resolution proceedings. it does not establish that AREB would be likely to take that course of action were the NPRM set aside. 11.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 11 of 33 bank it has created and reconstituting BPA in its prior form.. and third. indeed. has created a bridge bank for the sale of BPA’s “good” assets. (Nov.3 The D. and has eight bidders participating in a process for acquiring Vall Banc. see also Arpaio v. 4 . or. Cir.pdf.S.A. 489 F.C. even if AREB were to decide to abandon its resolution of BPA and reconstitute the bank in its prior form.C. INAF’s statement that it wished to conduct its own investigation in order to “clarify the facts” motivating FinCEN’s publication of the NOF and NPRM falls well short of a statement that AREB’s actions are dependent on the actions of FinCEN. Obama.”). even assuming arguendo some degree of causation.

See Notice of Finding. Eschenbach.465 (Mar. v. relief obtained in this action will not grant BPA permanent immunity from the imposition of a special measure. Leavitt. U. FinCEN’s brief was simply noting that. 13. § 706(2). plaintiffs can only speculate that U.C.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 12 of 33 open the bank’s correspondent accounts. but the Court need not blind itself to how those companies have actually behaved in the past.C. Reg.464. Thus. financial institutions have ample incentives to maintain robust anti-money laundering controls based on their own review of activity in that account. Courts can presume that companies will act in their “pecuniary interests. at 10-11. 2005). financial institutions. 13. at 26. and yet.S. 135 (D. 2015). Opp. 13. the other category of third parties upon whom redressability depends.S. 469 F. Cir. See FinCEN Mem. 415 F. see 5 U. Further.” Abigail All. chose to terminate their relationships with BPA despite the lack of binding legal action. with or without vacatur. 80 Fed. Indeed.3d 129.3d 24.S. In arguing otherwise. “[T]he usual rule is that. financial institutions were and are under no present legal obligation to terminate any correspondent accounts with BPA as a result of the NOF and NPRM. while the APA provides the courts with the authority to “set aside” agency action found to be arbitrary and capricious. an agency that cures a problem identified by a court is free to reinstate the original result on remand. and take advantage of future business opportunities. But this is just misplaced indignation. 2006). for Better Access to Developmental Drugs v. one domestic financial institution terminated its relationship with BPA prior to the publication of the NOF and NPRM based on its own review of alleged money laundering activity.C. Ctr. Cir. plaintiffs cite a supposedly “astonishing” statement found on page 11 of FinCEN’s opening brief. or indeed based on law enforcement 5 . given that U.S. would re-open their correspondent accounts with BPA if this matter were remanded to FinCEN.” Heartland Reg’l Med. or to the existence of other disincentives to action. 29-30 (D.

. Laidlaw Envtl. as opposed to merely speculative. Plaintiffs do not have standing to challenge FinCEN’s proposed rule on behalf of BPA Plaintiffs also fail to establish standing to challenge the proposed rule on BPA’s behalf. City of Harper Woods Emps. Ret. which is a distinct legal entity. plaintiffs simply cannot establish that it is “likely.S. FinCEN’s NOF and NPRM are thus not the only reason why U. Alcan Aluminum Ltd. 493 U. that decision would address only one specific proposed imposition of a special measure under section 5318A. U. Even if plaintiffs were to obtain relief from this Court on the merits.. Friends of the Earth. financial institutions would be wary of transacting business with BPA. B. See Government Accountability Office.” that a favorable order from this Court would redress the third-party injuries that motivated their complaint. of Cal.S. Inc. Olver. FinCEN Mem. inter alia. at 14-15 (citing. Andorra). 589 F. See FinCEN Mem. USA PATRIOT Act: Better Interagency Coordination and Implementing Guidance for Section 311 Could Improve U. Inc. Anti-Money Laundering Efforts. v. v. and thus that a shareholder ordinarily lacks prudential standing to raise it.S. at 5. even assuming that AREB abandoned the liquidation proceeding. Indeed. GAO-08-1058. at 22 (“GAO Report”) (“Moreover. 6 . at 16-17 (citing Franchise Tax Bd. They do not dispute that a claim of harm to a corporation belongs to the corporation itself. Nor do they dispute that whether a shareholder may bring a derivative suit on behalf of a corporation depends on the law in the place of incorporation (here. Sys. 331.3d 1292. In light of this.S. financial institutions must take publicly available information into account when implementing their anti-money laundering programs and assessing risks”). v. 528 U. Servs. Id. (TOC).Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 13 of 33 activity by foreign governments. 336 (1990)). 187 (2000).S. 167. the GAO Report on which plaintiffs place such heavy reliance noted this same point. But law enforcement authorities in Andorra are conducting their own criminal investigation of individuals affiliated with BPA.

has not accepted compulsory ICJ jurisdiction. Yet plaintiffs do not claim that Andorra’s own corporate statute. and is not supported by the business law “handbook” that plaintiffs cite. And they do not dispute that it is “plaintiffs [who] bear the burden of establishing standing to bring a derivative suit.pdf. Int’l L. 2008) (cited in Opp. Martin Gelter.com/books?id=vDylDllW1L8C&q =french#v=snippet&q=french&f=false. Plaintiffs instead invite the Court to invent a derivative action under Andorran law.” Gelter. But in both of those countries. Opp. at 14-15 (quoting Harper Woods.3d at 1299).19). available at https://books. 37 Brook.46.cat/files/documentacion/7201_0_BOPA-DecretSLiSA5-3-14. at 875. they point to no Andorran law or case recognizing the existence of a shareholder derivative action. “derivative 4 See Llei 20/2007. those “actions are limited in scope” as “compared to the United States. derivative actions are specifically authorized by statute—in France’s 1867 Loi sur les Sociétés and in Spain’s 1989 Ley de Sociedades Anónimas. 2009)). J.google. published in 19 Butlletí Oficial del Principat d’Andorra 1062 (Mar. 7 . noting that such actions exist in France and Spain.C. in France and Spain. del 18 d’octubre. even if plaintiffs were correct that Andorran courts sometimes “look to French and Spanish law” to fill “gaps in [their] jurisprudence”—an utterly unsupported assertion5—this sequence suggests a deliberate choice by the Andorran parliament.4 Thus. 50 (2012) (cited in Opp. at 30-31). the 2007 Llei de Societats Anònimes i de Responsabilitat Limitada—which was enacted well after the statutes adopted in France and Spain—authorizes derivative claims. Regardless. 854-55 & nn. 5. available at http://www. supra. That failure dooms their derivative claims.apttcb. which states only: “Legal system: based on French and Spanish civil codes. Indeed. 2014).” Id. 843. no judicial review of legislative acts. 5 This assertion is absent from the declaration that plaintiffs submit.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 14 of 33 1299 (D. de societats anònimes i de responsabilitat limitada. 589 F. Cir. Andorra: Business Law Handbook 11 (6th ed. Why do Shareholder Derivative Suits Remain Rare in Continental Europe?. even in European countries where derivative suits are permitted. at 30 n. Nevertheless. at 30-31.” Int’l Business Publications. not a “gap” in need of filling.

Opp. Because plaintiffs fail to show that a shareholder derivative action exists under Andorran law at all. in France. as plaintiffs must to meet their burden. Gelter. the declarant speaks of a potential action only for “damages. a shareholder must also demonstrate a “management mistake” as a prerequisite to suit. Cf. Gelter. the Court need not address the separate. Should 6 These are not the only limitations on foreign derivative suits left unexplored in plaintiffs’ brief.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 15 of 33 suits are only available for claims to damages . found in a section of the respective corporate law governing directors’ liability. threshold questions concerning whether plaintiffs have satisfied any prerequisites for bringing such a claim. to say that no law “forbids” the “filing” of a claim is not to say that the law “authorizes” such a claim. against the damages that may be caused to a company of which they are a shareholder.”). Even if it were clear that the declarant were addressing “derivative” actions—a word he does not use—this declaration would fall well short of the mark. 1 ¶ 4. Regardless. . that the declarant is unable to cite any Andorran law or case recognizing a shareholder derivative action—despite his “33 years of experience as an attorney in Andorra. For example. 8 .6 Plaintiffs’ declaration cannot rescue their derivative claims. such as (1) whether they were required to demand that BPA’s administrator bring suit against Defendants before doing so themselves. supra.” id. at 871. Ex. . Ex. supra. First. it states only that: There is no law in the Principality of Andorra that forbids a shareholder from filing a legal action in defense of their interests. 1 ¶ 1—is convincing evidence that such actions do not exist there.” Opp. As relevant here. at 876 (“In all of the countries surveyed here. and are not available for injunctions. at 876—the only form of relief that plaintiffs seek here. Second. and (2) whether any such demand requirement should be excused as futile. the legal basis for derivative suits is.” not for the sort of injunctive relief that plaintiffs seek here. in all cases.

” Fed. In the United States. . Gelter. 500 U.S. . See Kamen. See Pirelli Armstrong Tire Corp. Civ. which controls the relationship between a corporation and its shareholders. P. at 875. . . Benefits Trust v. Here. Kemper Fin.1(b).. the board’s decision to do the . . courts of equity established demand requirements to “prevent abuse” of the shareholder derivative suit and “to protect the directors’ prerogative to take over the litigation or to oppose it. let alone elsewhere in Europe. at 32 (citing. See Opp. latter is subject only to the deferential ‘business judgment rule’ standard of review. As Defendants have 9 . but also to give that action more generous contours than are generally available even in the United States. Madigan.” Kamen v. Retiree Med. R. at 101 (citations omitted). to obtain the desired action from the directors or other authority” and “the reasons for not obtaining the action or not making the effort. not corporate demands—are inapposite.” Id.1 facilitates this review. 500 U.3d 779.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 16 of 33 the Court nevertheless decide to reach these issues.C. . it should find as a matter of equity that demand was required and cannot be excused here. “In most jurisdictions.S. 23. Servs. 140. supra. requiring a plaintiff to “state with particularity . 503 U.S. Federal Rule of Civil Procedure 23. requiring demand is consistent with these principles. Raines. 791 (D. Indeed. a contrary ruling would permit plaintiffs to not only create a derivative action under Andorran law. 534 F. “the business judgment rule protects decisions unless ‘no reasonable business person’ would have made the decision”). particularly since any decision not to expend corporate funds challenging a proposed rule with no legal effect would easily satisfy the business judgment rule. Plaintiffs make no attempt to establish that demand may be excused as futile under Andorran law. McCarthy v. 95-96. any effort . at 101-02. 2008) (under Delaware law. Cf. inter alia. Cir. 90. 148 (1992)). 101 (1991). And the few futility cases they do cite—which deal with gardenvariety administrative exhaustion.

503 F. Plaintiffs’ claims should also be dismissed on ripeness grounds Finally. Even assuming that the issues in a case are purely legal. 2007) (citations omitted)).C. Brock. . Accordingly. at 18 (citing In re Fed.C. 3d 208 (D. United Automobile. and thus that there is no need to wait for final agency action before commencing review. Office of U. 68 F. In any event. Cir. 70 F.C. that would not obviate the need for finality itself.7 C.2d 237 (D. . plaintiffs’ challenge to a non-final agency action should be dismissed as unripe. 970 F. 3d 116. the Court need not address it.. demand futility is not established simply by alleging that the Administrator would be unlikely to file suit if asked. at 23133.” Pub.D.” Id. 1992). International Union. Aerospace & Agricultural Implement Workers of America v. Supp. at 250. Derivative & “ERISA” Litig. Nat. in the case that they cite in support of this argument. 1986). the D. Circuit determined that review was appropriate only after concluding that “the challenged interpretation qualifies as sufficiently ‘final.. see also Gail C. a shareholder cannot circumvent a demand requirement simply by claiming that the receiver has a “conflict of interest. FinCEN Mem. 10 .D. 2014).” Opp.C.D.’” Id. plaintiffs have no answer.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 17 of 33 explained. Their derivative claims should be dismissed for lack of standing. Even if only purely legal issues remained . it must be met.C.C. Supp. plaintiffs must point to some personal financial benefit for the Administrator. 2014). 921 (D.S.C. U. Cir. at 17.11 (D. when the control of a corporation is vested in a receiver. While plaintiffs insist that the issues presented in this case are “purely legal. To that. Lew.S.2d 916. Supp. 17 (D. Mortgage Ass’n Sec. 7 Because plaintiffs do not attempt to invoke a “conflict of interest” exception to the demand requirement. plaintiffs misunderstand the relevance of Perry Capital v. rather. the D. which is generally not true when a plaintiff challenges agency decisionmaking as arbitrary and capricious. Treasury Dep’t. Sweeney Estate Marital Trust v. or some material detriment experienced by the Administrator but not other stockholders. Trade Representative. Citizen v. Perry illustrates the principle that. in cases challenging agency action. 783 F. 125 & n. “[w]here finality is an independent jurisdictional requirement (as here). 2d 9.

1770-78 (1997) (citation omitted). as the Court of Appeals has squarely held.” Ctr.C. Final agency action must “mark the consummation of the agency’s decisionmaking process. at 15-21. A proposed rule is. 2006) (alterations and citations omitted). and neither qualifies as “final agency action. Plaintiffs appear to suggest that the Court discard the finality requirements announced in Bennett and adopt a “flexible” approach based on the consequences of the challenged agency action. § 704. Spear. at 20-26. Nat’l Highway Traffic Safety Admin. Opp. fixes no obligations. Plaintiffs construct 8 To the extent that plaintiffs believe an end-run around Bennett can be justified by relying on the “flexible and pragmatic approach to finality. by definition. 457 F.” Nevada v.C.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 18 of 33 Circuit has consistently held that “final agency action pursuant to the Administrative Procedure Act is a crucial prerequisite to ripeness. Dep’t of Energy. 452 F..3d at 811.” Ctr.2d 86.C. and a notice of finding is not the “consummation” of any agency decisionmaking process. or from which legal consequences will flow. 452 F. for Auto Safety. 520 U. “is that the ‘consequences’ to which they allude are practical. 780 F.” and must “be one by which rights or obligations have been determined. 1986) (same). 11 .8 “The flaw” in this argument. for Auto Safety v. Dep’t of State. 801 F.2d 430 (D. The APA Does Not Permit Plaintiffs’ Challenge to Non-Final Agency Action The APA limits judicial review to “[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court. EPA. and it creates no rights.” 5 U. as endorsed in decisions such as Ciba-Geigy Corp. see also Better Gov’t Ass’n v.C.S. 88 (D. No statute provides for review of FinCEN’s publication of an NOF and NPRM. Cir.3d 798. 85 (D.S.” See FinCEN Mem. 811 (D.3d 78.” Id. 1986).” Bennett v. II. Cir. 2006).C. Circuit has held that circuit decisions such as Ciba-Geigy “cannot obviate the holding of Bennett. it bears noting that the D.C. tentative and has no legal effect. Cir. and has no legal force. v. 154. not legal. Cir. The Court should not chart a different course here.

to the extent that they actually prescribe anything. the agency’s guidelines have been voluntarily followed by automakers and have become a de facto industry standard for how to conduct regional recalls. for Auto Safety. But this does not demonstrate that the guidelines have had legal consequences. and never claimed that an NPRM was binding. 20 (citing GAO Report). 2005) (“[I]f the practical effect of the agency action is not a certain change in the legal obligations of a party. 6.3d 726. As the D.” GAO Report at 21 (emphasis added). 5.”). v. Nat’l Ass’n of Home Builders v. banks “implement it voluntarily. Circuit held just last year. 2003) (“No legal consequences flow from the agency’s conduct to date. “[p]roposed rules meet neither of the two 12 . 324 F.C.”). D. 732 (D. . the action is non-final for the purpose of judicial review. . Consumer Prod. Reliable Automatic Sprinkler Co. [T]he request for voluntary compliance clearly has no legally binding effect.” Bennett.”). 415 F. .3d 8. Safety Comm’n. Cir. See Opp. 520 U. 452 F.C. at 177-78 (emphasis added).3d at 811 (“It may be that. Neither the NPRM nor the NOF imposes legal consequences or fixes rights and obligations. for there has been no order compelling Reliable to do anything. Cir. See Ctr.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 19 of 33 their argument upon financial institutions’ voluntary compliance with proposed rules announced by FinCEN. at 4. Voluntary compliance with a proposed rule does not convert it to final agency action.S. But that report noted that when an NPRM is published.C. 15 (D. Norton. Circuit precedent interpreting Bennett has rejected the argument that voluntary compliance with a non-binding proposal can constitute de facto final agency action.C. repeatedly citing a Government Accountability Office report published eight years ago. which noted that domestic financial institutions often take action on their own with respect to suspected money laundering institutions after FinCEN announces proposed special measures. Final agency action must determine “rights or obligations.” or fix “legal consequences.

§ 5318A(a)(1) (emphasis added). e. Plaintiffs brush past the test for finality by claiming that the NOF marks the consummation of FinCEN’s decisionmaking process and announced “a finding which would not be revisited. at 17. Additionally. Reg.S. imposes no legal consequences and fixes no rights or obligations. plaintiffs address only half 13 . 28 F.. at 177-78). 45. 1994) (“Agency action is final when it imposes an obligation.C.”) (citation omitted). Under section 5318A.” 31 U. and the fifth special measure—which was proposed in the NPRM at issue here—may be imposed only by following the informal rulemaking process.”).3d 330.” and an agency’s “proposed rulemaking generates no such consequences. An NOF may be updated or amended during a rulemaking proceeding based on comments from interested parties. or fixes some legal relationship. an NOF is not the “consummation” of a decisionmaking process because it merely begins the process of determining whether a special measure should be imposed.059 (July 29.C. Special measures. 788 F.g.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 20 of 33 requirements for final agency action: (i) They are not the ‘consummation of the agency’s decisionmaking process. Dep’t of Labor. Id. Imposition of Special Measure Against FBME Bank Ltd. § 5318A(a)(2). 2015) (quoting Bennett.S. 80 Fed. to amend the NOF based on these comments. 45. see also Action on Smoking and Health v.” Opp.C. 165 (D. cannot be imposed without further procedural requirements.’” In re Murray Energy Corp. denies a right.. the sole consequence of the publication of a NOF is that FinCEN “may require domestic financial institutions and domestic financial agencies to take 1 or more of the special measures. See.C. 520 U. .3d 162.’ or impose ‘legal consequences. The NOF. at 22. See 31 U.’ and (ii) they do not determine ‘rights or obligations. That assertion is incorrect.S. § 5318A(a)(1). Cir. . 2015) (“FinCEN believes that it is appropriate .057. 334 (D. similarly. See FinCEN Mem.. however. Cir. Even setting aside that fault.

§ 5318A(a)(1). a showing based on “reasonable grounds” “must be grounded in more than mere suspicion.” United States v. Ill. in other contexts. Ill. 21 U. § 881).3d at 336 (“Moreover.S. even if the agency will not reconsider the statement itself. In re Murray Energy Corp..S.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 21 of 33 of the relevant test. 8848 S. 1 or more financial institutions operating outside of the United States . Further. is no substitute for a valid legal basis for seeking review of the NOF and NPRM.” despite being “substantial.S. and any legal consequences for violating those obligations or prohibitions will be imposed. . only after EPA finalizes a rule. .” Opp.” because “it is different in kind and legal effect from the burdens . FinCEN is 9 Indeed. even if EPA’s position on its legal authority is set in stone. 788 F..D.” 31 U. See FTC v.. Any such legal obligations or prohibitions will be established. A notice of finding—issued based on “reasonable grounds”—does not require or imply that a final rule imposing a special measure will follow. . at 21. 232. but need not rise to the level of prima facie proof. Standard Oil Co.”). is of primary money laundering concern.9 It is thus analogous to the filing of a complaint or the commencement of an enforcement proceeding—a classically non-final agency action. 871. Statements or findings made in support of a proposed special measure are not themselves final agency action because they lack legal effect. 449 U. . 242 (1980) (burden imposed on plaintiff by the initiation of enforcement proceedings not sufficient to establish “final agency action. . plaintiffs’ characterization of FinCEN as “a savvy dodger of review.C. Chi. the agency’s statements about its legal authority—unconnected to any final rule or other final agency action—do not impose any legal obligations or prohibitions on petitioners. Cf. considered to be final agency action”). 1990) (construing a civil forfeiture statute. Finally.. Commercial St. . 879 (N. plaintiffs’ argument that an NOF is final agency action confuses the legal standard for issuing such a notice.C. 757 F. Section 5318A calls for the publication of an NOF if “reasonable grounds exist for concluding that .. 14 . Supp.

“that reality has never been a justification for allowing courts to review proposed agency rules. Plaintiffs Fail to State a Due Process Claim Plaintiffs’ opposition brief does not salvage their due process claim. their tenuous connections to the United States do not entitle them to due process protections. LEXIS 113687 (D.” Opp. v.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 22 of 33 following the process set forth in section 5318A. Obviously. plaintiffs are incorrect in claiming that special measures imposed under section 5318A are otherwise unreviewable.C. particularly where the alleged injury is a downstream consequence imposed by third parties rather than the agency. Dist.3d at 335. last summer’s decision in FBME Bank Ltd. Even if they had. Plaintiffs have not suffered a cognizable deprivation as the result of government action. the plaintiffs’ APA claims seeking review of non-final agency action should be dismissed.S. which requires the agency to use rulemaking procedures when imposing the fifth special measure.D.” In re Murray Energy Corp. plaintiffs are not complaining of precisely the same injury as the petitioners in Murray Energy. As in Murray Energy.S. And. See 31 U. as here. but that hardly suffices to distinguish the case. Circuit’s most recent precedent on this issue by stating that they “are not seeking to recover or avoid their costs in preparing for a final rule. Aug.8. III. No. demonstrates that judicial review can take place in the context of a final rule.C. in any event. plaintiffs have been afforded ample process through FinCEN’s statutorily prescribed 15 . the petitioners complained that “the Court will not be able to fully remedy [their] injury if we do not hear the case at this time. Lew. 788 F. Further.. But even if proposed rules have immediate practical consequences. In Murray Energy. § 5318A(a)(2)(C). 15-1270. as the APA requires. 2015 U. shrugging off the D. And the APA has never entitled a plaintiff to review of every alleged injury from administrative action.C. at 21 & n.” Id. Plaintiffs relegate their discussion of Murray Energy to a footnote. 2015). 27.

government. 16 . Co. either overt or covert” by the U. The NOF itself does not suggest that third parties take any 10 Contrary to plaintiffs’ assertions. “that the choice must in law be deemed to be that of the State.S. 2004) (public records are subject to judicial notice on a motion to dismiss). For each of these independent reasons. the cited “encourage[ment]” was directed only to “other countries. plaintiffs fail to state a due process claim.305. 52 (1999) (citation omitted).S. 40. Despite attempting to conflate the independent actions of U. 2015). Myers. 13. making clear that imposition of the fifth special measure was a “proposal” for the future.S. banks and the Andorran government with those of FinCEN. Indeed. The Court need not credit plaintiffs’ mischaracterization of the NPRM in its allegations at the motion to dismiss stage. (citation omitted).C.307 (Mar. . Reg. 526 U. Even if BPA’s alleged deprivations could be imputed to plaintiffs. . 367 F. Plaintiffs’ assertion that the NPRM and the NOF alone coerced domestic banks and the Andorran government to act is implausible on its face. ¶ 1). v. Cir. banks to take any action with regard to plaintiffs’ correspondent accounts. Ins. there is no “sufficiently close nexus between the State and the challenged action. Mut.S. Neither the NOF nor the NPRM required or provided an incentive for any specific action by a third party. Reg. Rather. at 38 (citing Compl. 80 Fed. 13. 965 (D. such significant encouragement. not a current requirement.” 80 Fed. the NPRM did not “advise[]” U.3d 958. Sullivan. the only action suggested by the NPRM as to domestic actors was an invitation to submit comments on the proposed rule.304.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 23 of 33 rulemaking proceedings. Plaintiffs cannot establish a deprivation by the government Plaintiffs are unable to overcome the core defect of their due process claim—that there has been no government action causing a deprivation. Mfrs. See Kaempe v. plaintiffs cannot establish that such actions were the result of “coercive power or .10 See Imposition of Special Measure Against Banca Privada d’Andorra as a Financial Institution of Primary Money Laundering Concern. at 13.” Am.” Id. 13. Opp. A.

government. See Opp. v. If it were even possible to make such an attribution.S. See Vill. cannot therefore be treated as the result of coercion or instigation.3d 52.S. while perhaps consistent with the findings in the NOF and recommendation in the NPRM. plaintiffs have not articulated why they have a protectable property interest in having access to the U. See supra at 5. standing alone. Sullivan. both U.S. 17 .305.S. Nor have plaintiffs identified any case where a foreign country’s actions were imputed to the United States for the purpose of state-actor analysis. Yaretsky. of Bensenville v. Ins. 526 U. the level of coercion must rise far above the limited “encourage[ment]” alleged here. a sovereign country is no typical third-party actor. Decisions made by domestic banks. banks and the Andorran government have their own independent reasons for acting to deter and detect money-laundering activity. This invitation. is insufficient to establish that the agency coerced the Andorran government to initiate the resolution of BPA. 457 F.’”) (quoting Blum v. 1004 (1982)). Reg. financial system. This argument fails because plaintiffs cannot meet 11 Even if the domestic banks’ actions could be imputed to the U. Mfrs.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 24 of 33 particular action. Cir. as defendants pointed out in their opening brief. 2006) (“‘Mere approval of or acquiescence in the initiatives of a private party is not sufficient to justify holding the State responsible for those initiatives. Mut.12 Plaintiffs also argue that the NOF directly caused a reputational harm and thereby injured their liberty interest in engaging in business. FAA. at 31. 457 U. Am. Co. 80 Fed. 991. 64 (D.C. at 52. 12 As set forth in more detail above.11 That FinCEN “encourage[d] other countries to take similar action” in the NPRM. Yet even if it were. is not the type of “significant encouragement” necessary to treat a typical third-party actor as an arm of the United States.S. at 13. To inquire into whether the Andorran government was essentially acting as a puppet of the United States would be contrary to the act of state doctrine. a distinction plaintiffs ignore.

Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 25 of 33 the requirements for such a deprivation under D. This sudden loss of Government work effectively put Old Dominion out 18 . Cir. brand.C.3d 110 (D. Cir. see Mosrie v.”) (emphasis added). 424 U. v. see also Siegert v. While the D. the plaintiff must establish two things: “First. that line of authority is limited to cases involving lost government employment or government contracting opportunities. the argument is premature. District of Columbia. Cir. Sec’y of Def. damage flows from injury caused by the defendant to a plaintiffs reputation. Davis requirement of loss of a government position or change in legal status. and the market. In General Electric v. Trifax Corp. 610 F. 314 F.3d 641. 226. Jackson. 1983) (“The harms suffered by appellant in this case do not meet the Paul v. 1108-09 (D. in turn. 1161 (D.C. Barry. and credit rating. the resulting ‘stigma’ must involve some tangible change of status vis-a-vis the government.S. 631 F.” plaintiff has not stated a constitutional injury). 500 U. Second.2d 953. Inc. Id. 2010). the government must be the source of the defamatory allegations.C.S. even if they could. Old Dominion Dairy Products. 1985).2d 1151.” Doe v.” General Electric. Davis.C. Cir.C.S. 718 F. Circuit case law and.” and thus constituted a due process violation. 963 (D. 2003) (“Trifax claims to have suffered ‘broad preclusion’ from government contracting”).C. 610 F.. Cir.2d 1092. 693 (1976)). 234 (1991) (“[S]o long as . devalues its stock. the Court of Appeals held that a plaintiff’s claim that a particular government action “harms the [plaintiff’s] reputation. To state a reputational due process claim under Paul. v. Circuit has recognized that a procedural due process claim may lie where a government action “broadly precludes plaintiffs from pursuing a chosen trade or business.3d at 121 (citation omitted). A procedural due process claim cannot hinge on a reputational injury whose only practical consequences are inflicted by third parties. 1980) (plaintiff “lost two substantial contracts which it otherwise would have received. was “foreclosed” by Supreme Court precedent. . Gilley. Dep’t of Justice. 643 (D. at 121 (citing Paul v.C. 753 F. . U.

without showing a “tangible change of status vis-a-vis the government. Davis.e. 753 F. 19 . See Paul.C. Indeed. ¶ 46. banks do not cut off BPA’s international business. Plaintiffs still lack a sufficiently pled constitutional presence Plaintiffs attempt to establish the “substantial connections” to the United States necessary to invoke constitutional due process protections via (1) their own alleged real property 13 The complaint does not allege whether BPA was also unable to establish new correspondent banking relationships with other U.3d at 121.S. their reputational harm argument is premature. The D. banks with whom it had correspondent banking relationships.S. . Such a holding would be in direct conflict with both General Electric and Paul v.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 26 of 33 of business. at most the NOF affected BPA’s reputation. ¶ 39. Plaintiffs have sued while the government is in the midst of an ongoing process.S. Moreover. banks. See Compl.S.” Doe. as with plaintiffs’ claims generally.S. B.13 The actions by the U. General Electric. . Nothing in the proposed rule precludes them from doing so. banks remain free to establish correspondent accounts with BPA. Plaintiffs therefore cannot establish that the NOF had the effect of largely precluding BPA from pursuing banking as a business.”). Even if the argument were not premature.”). U.. was sufficient to invoke the guarantees of procedural due process absent an accompanying loss of government employment. the result of which may end in a final rule or otherwise. and thereby its relationships. with the four U. plaintiffs claim that portions of BPA’s business operations are still viable. at 706 (“But the Court has never held that the mere defamation of an individual . 424 U. 610 F. Id.2d at 1109. Circuit has never held that a plaintiff can proceed under the “broad preclusion” portion of its “stigma-plus” test based entirely on the consequential effects of thirdparty action—i. and the reputational harms are alleged to result from a notice of finding that is subject to being withdrawn or revised during the rulemaking process.

689 F. Plaintiffs have identified no case where such a vague allegation was sufficient to establish “substantial connections” with the United States for the purpose of due process analysis.C. Compl. 292 F. regulatory requirements in maintaining its correspondent accounts. this information is not properly before the Court. 32 Cty. 14 Plaintiffs overstate the holding from 32 County Sovereignty Committee.D. the complaint does not plead sufficient details regarding plaintiffs’ “significant real property assets” to permit them to claim the protection of the Due Process Clause. 2d 94.S. 2002). 20 . v.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 27 of 33 interests.C.S. it is unlikely that owning unrelated property would entitle the owner to due process protections in all respects. 90 (D. Neither is sufficient. itself would have been blocked had the plaintiffs been designed as “foreign terrorist organizations” and thereby was sufficient to support the plaintiffs’ due process claim. 799 (D. an unidentified United States bank account.” Briscoe v. 494 U. Inc. as defendants pointed out in their opening brief. 259. as a general matter. Cir. how ‘substantial’ an alien’s connections with this country must be to merit the protections of the Due Process Clause”).. ¶ 41. Sovereignty Comm. 2010)).C. 3d 78. in which the court declined to find any entitlement to due process because those plaintiffs had failed to demonstrate that they possessed any controlling interest in property in the United States. Supp. Supp. 2014) (citing Sloan v. at 202 (“we are not undertaking to determine. 61 F. Costco Wholesale Corp. Dep't of State. at 34 n.3d 797.D. The court did not opine on what type of property would be sufficient to confer due process rights nor did it discuss what would comprise sufficient allegations as to that property. While plaintiffs need not catalogue every domestic property interest.20. the alleged property at issue in National Council of Resistance of Iran. because as discussed below.. 251 F.14 Although plaintiffs now identify beneficial real property holdings in Florida. Similarly. See also id. The case does not stand for the proposition that any “colorable allegation” of United States property would be sufficient to support a due process claim as to unrelated property. As to plaintiffs’ own real property interests. Urban Title Servs. Nat’l Council of Resistance of Iran.3d at 204.. “[I]t is axiomatic that a plaintiff may not amend the complaint through facts first alleged in an opposition brief. their allegations should make clear whether the identified property is related to the complained of deprivation. United States v. and (2) BPA’s correspondent banking relationship and compliance with U. 114 (D. Verdugo-Urquidez. 270 (1990). see Opp.

they do not establish the “substantial connection” necessary to entitle plaintiffs to constitutional protections. See Boumediene v.C. Circuit has not explicitly addressed what criteria this Court should apply in considering whether a foreign national residing outside the United States can satisfy the ‘substantial connection’ test to raise rights under the U. Geithner is misplaced. 2001) (“a foreign organization that acquires or holds property in this country may invoke the protections of the Constitution when that property is placed in jeopardy by government intervention”) (emphasis added). And plaintiffs’ view would lead to absurd results. Plaintiffs do not attempt to explain why this unrelated property interest would meet the “functional approach” required. With respect to BPA’s correspondent accounts. plaintiffs lack standing to raise claims on BPA’s behalf. Cir. See Nat’l Council of Resistance of Iran v. BPA.D. Geithner. Bush. Kadi v. 552 U. such as a branch or office. Even the cases on which they rely make clear that the Florida real estate does not entitle plaintiffs to due process rights writ large. They have identified no case reaching the expansive conclusion they seek. 764 (2008). 3d 1. 2012). 2528 (D.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 28 of 33 Even if the Court were to credit these additional facts.S.3d 192.15 Plaintiffs also claim the right to seek constitutional protections via the nominal party. operations.C.S. The court in Kadi stated that “[t]he D.C. Even if BPA’s operations could be imputed to plaintiffs. Supp. 251 F. Dep’t of State. 21 . the Florida real estate is not a sufficient “substantial connection” to give them due process rights with regard to the completely unrelated alleged deprivations to BPA’s U. ownership of the funds in those accounts cannot automatically be attributed to BPA. as foreign nationals could obtain expansive constitutional protections simply by procuring an unrelated asset in the United States. however. given that the funds in such accounts are generally presumed to belong to 15 Plaintiffs’ reliance on Kadi v. Constitution related to the blocking or freezing of his assets” and ultimately declined to determine whether the plaintiff had met the substantial connection test because the matter could be resolved on other grounds. As set forth above. 204 (D. 723. There are no allegations that BPA has a physical presence in the United States.S. 42 F.

S. . v.’”). 108-381. 2007) (“[A]bsent an exception.16 Notably. Indeed. 22 . . Compl. at 55. regulatory requirements establish BPA’s presence. The quoted section describes Congress’s view of how a court should treat “a moving party” where classified information has been submitted as part of this regulatory scheme. plaintiffs’ citation to legislative history borders on the absurd. FBME Bank Ltd. (Jordan). & Inv. regulatory requirements. 2002) (“[a] foreign entity without property or presence in this country has no constitutional rights”). section 981(k)(4)(B)(i)(I) places ownership in the hands of the ‘owner . United States v. Dist. It refers only to potential due process issues related to any classified information should FinCEN issue a final rule which is then challenged. the FBME court recently declined to determine whether a plaintiff bank in a similar position as BPA was entitled to due process because the “record” was “unclear” whether it had “sufficient presence or property in the United States” to establish that foreign bank’s entitlement to constitutional protections.. its actions in complying with regulatory requirements were minimal—the submission of names and addresses of BPA’s owners to its correspondent banks and the identity of an agent in the United States designated to receive process. Plaintiffs assert that business transactions and compliance with U. of the funds that were deposited into [the foreign bank] at the time such funds were deposited. to the extent that plaintiffs are relying on this passage to assert that Congress considered the due process implications of this statutory scheme. There was no significant engagement with U. See 32 County Sovereignty Comm. where plaintiffs are challenging a proposed rule (and also lack standing to do so). Cir. in that 16 Indeed. 799 (D.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 29 of 33 the depositor.3d 8. Union Bank For Sav.S. 2015 U. at *16. Rep. H. 17 (1st Cir. 292 F. 487 F. and the report is not relevant in this matter. The cited report cannot reasonably be read to afford any new due process protections to parties who would not otherwise be entitled to them.C. ¶ 40.S. Dep’t of State. Conf. but that argument is contrary to the law of this Circuit. Finally.3d 797. LEXIS 113687. which requires actual presence or property.R.

as defendants have set forth. or even a rulemaking. 519 (1978). Plaintiffs are receiving more than adequate process Even if plaintiffs are entitled to due process protections. see also Vermont Yankee Nuclear Power Corp. Thomas. C. NPRM. and their claim should fail. defendants explained that the process afforded plaintiffs. On the contrary. 881 n.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 30 of 33 case their argument must be interpreted to mean that Congress concluded that the NOF. in advance of an NPRM.4 (D.2d 875. Rather than permit this proceeding to run its course. Their argument rests largely on the misapprehension that they have already been subject to a deprivation without a prior opportunity to be heard. 809 F. exceeds that found sufficient in similar contexts. Yet in making this argument they do not attempt to distinguish the long-standing rule that “due process imposes no constraints on informal rulemaking beyond those imposed by statute. 435 U. 1987). and subsequent rulemaking process afforded interested parties sufficient process. in and of themselves. Natural Resources Defense Council. including Treasury Department designations of individuals and 23 . See Opp. create a deprivation by the government. Neither.” Nat’l Coal Against the Misuse of Pesticides v. In their opening brief. plaintiffs now prematurely seek additional protections.C. v. the rulemaking proceeding authorized by Congress provides more than adequate process. Plaintiffs insist that they are constitutionally entitled to notice. including the amount of notice provided by the NOF and opportunity to comment. Nor have they identified a case where individual notice in advance of an NPRM was constitutionally required. and even if they could identify a cognizable government deprivation. the NOF and the NPRM are initial steps in a process designed to provide notice and an opportunity to be heard prior to the promulgation of a final rule. at 33 (collecting cases). FinCEN Mem.S. Cir. at 42 (stating that the NPRM was not subject to a rulemaking procedure).

C.” 31 U. it is premature. This analysis informed its decision that the 17 Plaintiffs argue that the national security concerns that underlie SDGT designations under IEEPA are not present here.S. plaintiffs cannot seriously argue that the process available to them compares unfavorably to either IEEPA or FTO designations. Although plaintiffs assert that BPA’s actions are unrelated to such serious concerns. such an argument is appropriate for a substantive review of any final rule that is issued.16. Specifically. FBME Bank Ltd. in enacting Section 311. the court was reviewing a final rule. which is not the case here.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 31 of 33 organizations deemed to present threats to national security under IEEPA and AEDPA. § 5311 (note).17 Plaintiffs’ claims that the current process is insufficient are thus unavailing. Yet the statutory scheme that sets forth the process that plaintiffs have been afforded addresses extremely serious concerns. Id. at *22-24. As noted. the FBME court carefully reviewed the unclassified documents upon which FinCEN “relied” and identified particular relevant factual information omitted from the NOF. but when properly viewed as the initial events in a notice and comment process.S. See FinCEN Mem. at 33 n. Plaintiffs rely on the recent decision in FBME to assert that they were entitled to the unclassified administrative record before the NPRM comment period expired.. Moreover. at *28 (“it is almost certainly true that FBME received substantially more process than any organization that is designated an FTO under AEDPA”). To the extent that plaintiffs’ argument concerns their lack of access to the non-classified record on which the NOF and NPRM were based. plaintiffs’ response mistakenly treats the issuance of the NOF and NPRM as causing the deprivation. 24 . First. Congress noted that money laundering “provides the financial fuel that permits transnational criminal enterprises to conduct and expand their operations” and that it is “critical to the financing of global terrorism and the provision of funds for terrorist attacks. Cf. and thus the administrative record is not yet required. There has been no final agency action. Dist. it does not affect the adequacy of the process available under Section 311. with its accompanying deprivations. LEXIS 113687. in FBME. 2015 U. Yet a careful reading of the FBME decision makes clear that such a conclusion would be premature in this matter.

the Court should dismiss the complaint and deny plaintiffs’ motion for partial summary judgment as moot. it is premature and not ripe for resolution. CONCLUSION For the foregoing reasons. ZIMPLEMAN ROBIN THURSTON 25 . whether this constitutes a procedural violation is premature in advance of a final rule. PHILLIPS United States Attorney DIANE KELLEHER Assistant Director /s/ Eric Beckenhauer ERIC B. Plaintiffs’ due process claim should therefore be dismissed. the court noted that “FinCEN considered comments submitted by FBME after the deadline. at 28. Dated: February 18.” Id. . at 28. Should FinCEN issue the unclassified record and subsequently consider any comments provided by plaintiffs in advance of a final rule.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 32 of 33 plaintiffs there had not had a meaningful opportunity to comment. In FBME. Even if such a procedural claim could exist in the future. 2016 Respectfully submitted. It would be premature and unsubstantiated to reach such a conclusion here because the unclassified record is not before the Court. BENJAMIN C. Further. BECKENHAUER THOMAS D. although plaintiffs complain that the comment period has closed without an opportunity to comment based on the unclassified record. for example. Id. and there is no basis to determine whether it contains additional factual details that were not made available to plaintiffs in the NOF. plaintiffs would no longer be able to mount this procedural claim. MIZER Principal Deputy Assistant Attorney General CHANNING D.

gov Counsel for Defendants 26 .Beckenhauer@usdoj. DC 20530 Tel: (202) 514-8095 Fax: (202) 616-8470 E-mail: Eric. NW Washington. Federal Programs Branch 20 Massachusetts Ave.S.Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 33 of 33 Trial Attorneys U. Department of Justice Civil Division.