John Hurry v. Finra ( 2019 )

FILED
NOT FOR PUBLICATION
JUL 29 2019
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN J. HURRY et al., No. 18-15748
Plaintiffs-Appellants, D.C. No. 2:14-cv-02490-ROS
v.
MEMORANDUM*
FINANCIAL INDUSTRY
REGULATORY AUTHORITY, INC.
(FINRA), a Delaware corporation; SCOTT
M. ANDERSON,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Arizona
Roslyn O. Silver, District Judge, Presiding
Argued and Submitted July 12, 2019
Portland, Oregon
Before: TASHIMA, GRABER, and OWENS, Circuit Judges.
Plaintiffs John and Justine Hurry and several business entities brought this
action against Defendants Financial Industry Regulatory Authority, Inc.
("FINRA") and Scott Andersen, alleging that Defendants engaged in unlawful
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
behavior arising primarily out of FINRA’s investigation of some of the Hurrys’
businesses. The district court dismissed most of the claims and later granted
summary judgment to Defendants on the remaining claims. Plaintiffs timely
appeal, and we affirm.
1. The district court correctly held that regulatory immunity bars many of
Plaintiffs’ claims, including those claims alleging that Defendants exceeded the
scope of their regulatory and investigatory authority. See Northstar Fin. Advisors,
Inc. v. Schwab Invs., 904 F.3d 821, 828 (9th Cir. 2018) (holding that we review de
novo a dismissal of claims). Defendants are immune for actions taken "under the
aegis of the [Securities Exchange Act of 1934’s] delegated authority." Sparta
Surgical Corp. v. Nat’l Ass’n of Sec. Dealers, Inc., 159 F.3d 1209, 1214 (9th Cir.
1998), overruled in other part by Merrill Lynch, Pierce, Fenner & Smith Inc. v.
Manning, 136 S. Ct. 1562 (2016). That immunity extends to Defendants’
investigatory actions. See P’ship Exch. Sec. Co. v. Nat’l Ass’n of Sec. Dealers,
Inc., 169 F.3d 606, 608 (9th Cir. 1999) ("Sparta admits of no exceptions: if the
action is taken under the ‘aegis of the Exchange Act’s delegated authority,’ the
NASD [the National Association of Securities Dealers, FINRA’s previous name] is
protected by absolute immunity from money damages." (quoting Sparta, 159 F.3d
at 1214)); see also id. at 607 (affirming regulatory immunity to the NASD even
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though the plaintiffs alleged "that the NASD, in its investigatory and
administrative actions, went beyond the scope of its authority and ignored its
disciplinary authority").
2. The district court correctly dismissed Plaintiffs’ claim under the Privacy
Act of 1974, 5 U.S.C. § 552a. The Act applies to records of natural persons only,
and only natural persons may sue under the Act. St. Michael’s Convalescent Hosp.
v. California, 643 F.2d 1369, 1373 (9th Cir. 1981). Before the district court, and
before us, Defendants argued that Plaintiffs alleged disclosure of records of
businesses only. Plaintiffs’ failure to respond to that argument constitutes waiver.
O’Guinn v. Lovelock Corr. Ctr., 502 F.3d 1056, 1063 n.3 (9th Cir. 2007); Smith v.
Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999).
3. The district court correctly granted summary judgment to Defendants on
the leak-related claims. See Buono v. Norton, 371 F.3d 543, 545 (9th Cir. 2004)
(holding that we review de novo a grant of summary judgment). Both state-law
claims require that Plaintiffs prove that Defendants published a statement. Watkins
v. Arpaio, 367 P.3d 72, 77 (Ariz. Ct. App. 2016) (false light); Dube v. Likins, 167
P.3d 93, 104 (Ariz. Ct. App. 2007) (defamation). Viewing the evidence in the light
most favorable to Plaintiffs, Plaintiffs have not done "more than simply show that
there is some metaphysical doubt as to" whether Defendants leaked information to
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the reporter. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986).
Even discrediting the direct evidence that an employee of one of the Hurrys’
businesses was the reporter’s source for nearly all the information, the reporter’s
source is still unknown. No evidence in the record helps a fact-finder decide
whether the source was a FINRA employee, an employee of the Securities and
Exchange Commission, or a third party (such as the reporter himself) who obtained
the information illicitly or by happenstance. Without any additional evidence, all
those options are equally plausible, and only speculation could narrow the source
down to FINRA. "Mere allegation and speculation do not create a factual dispute
for purposes of summary judgment." Loomis v. Cornish, 836 F.3d 991, 997 (9th
Cir. 2016) (alteration omitted) (quoting Nelson v. Pima Cmty. Coll., 83 F.3d 1075,
1081–82 (9th Cir. 1996)). We disagree with Plaintiffs that a reasonable jury could
conclude that FINRA engaged in a cover-up with respect to the leaks alleged in
this case.
4. The district court did not abuse its discretion by denying Plaintiffs’
untimely request for additional discovery. See Martinez v. Aero Caribbean, 764
F.3d 1062, 1066 (9th Cir. 2014) (holding that we review for abuse of discretion a
district court’s discovery rulings). Plaintiffs waited more than five weeks after
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both the original deposition and the expiration of discovery before requesting the
second deposition, even though the district court had presided over a status hearing
in the meantime and had extended the discovery deadline for other purposes.
AFFIRMED.
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