Court Opinion

ID: 4421018
Source: CourtListenerOpinion
Date Created: 2019-07-29 21:00:28.380462+00
Date Added: 2024-06-11T14:52:53.379786
License: Public Domain

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                           NOT FOR PUBLICATION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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