Backer v. Cooperatieve Rabobank U.A.

• Decision Date: 18 September 2018
• Docket Number: 17 Civ. 9907 (PGG)
• Citation: 338 F.Supp.3d 222
• Parties: Paul BACKER, Plaintiff, v. COOPERATIEVE RABOBANK U.A.; Weibe Draijer; Milbank, Tweed, Hadley & McCloy, Utrecht-America Holdings, Inc., Rabobank Nederland New York Branch, Rabo Securities USA, Inc., Rabobank N.A., Mark Borrecco, David R. Gelfand, Rajiv Singh, Andrew Sherman, and John Does 1-5, Defendants.
• Court: U.S. District Court — Southern District of New York

338 F.Supp.3d 222

Paul BACKER, Plaintiff,

v.COOPERATIEVE RABOBANK U.A.; Weibe Draijer; Milbank, Tweed, Hadley & McCloy, Utrecht-America Holdings, Inc., Rabobank Nederland New York Branch, Rabo Securities USA, Inc., Rabobank N.A., Mark Borrecco, David R. Gelfand, Rajiv Singh, Andrew Sherman, and John Does 1-5, Defendants.

17 Civ. 9907 (PGG)

United States District Court, S.D. New York.

Signed September 18, 2018

Filed September 19, 2018

Paul Backer, New York, NY, pro se.

Mark David Villaverde, Milbank, Tweed, Hadley & McCloy LLP, New York, NY, for Defendants.

ORDER

Paul G. Gardephe, United States District JudgeIn a prior case before this Court – Backer v. USD 30 Billion MTN Programme et al., 16 Civ. 6577 (PGG) – pro se Plaintiff Paul Backer brought fraud and other claims against Defendant Rabobank and sixty-four other Defendants, including other financial institutions allegedly involved in the issuance of Rabobank notes (the "Previous Action"). On September 30, 2017, this Court granted Defendants' motion to dismiss. (Dkt. No. 74, 16 Civ. 6577) In a new case filed in Supreme Court of the State of New York, New York County, that was removed to this Court (the "Current Action"), Plaintiff has sued some of the same entities and their attorneys for alleged misconduct in connection with the Previous Action.

On August 8, 2018, this Court ordered Defendants to show cause why this case should not be remanded to state court for lack of subject matter jurisdiction. (Dkt. No. 52)¹ Defendants filed a response on August 15, 2018. (Dkt. No. 54)

In a September 5, 2018 letter, Plaintiff requests that this Court stay the Current Action pending resolution of his petition to the Second Circuit for a writ of mandamus. (Pltf. Ltr. (Dkt. No. 57))

Because Plaintiff has not shown a likelihood of success on the merits of his mandamus petition, his motion for a stay will be denied. As to remand, because no necessary and substantial issues of federal law are raised in the Current Action, this Court lacks subject matter jurisdiction. Accordingly, the case will be remanded to state court.

BACKGROUND

Because both the Current Action and the Previous Action are relevant to whether this Court has subject matter jurisdiction over the Current Action, the Court describes both actions below.

In the Amended Complaint filed in the Previous Action, Plaintiff alleged that he is a U.S. citizen who transferred funds from a Dutch bank account to an account at Rabobank, relying on Rabobank's false representations that it was in compliance with U.S. law and regulatory requirements. (Am. Cmplt. (Dkt. No. 18) ¶¶ 14, 15, 18, 42, 43, 59, 60, 16 Civ. 6577) Plaintiff claims that Rabobank "redlined" him by preventing him from purchasing a residence with a Rabobank loan (id. ¶ 41); that Rabobank refused to honor Plaintiff's transaction requests and retaliated against him for reporting certain information to regulatory authorities (id. ¶ 96); that Rabobank executives engaged in illegal conduct throughout the world (id. ¶¶ 142-43, 146-53, 156); and that Rabobank issued two notes to avoid certain tax and compliance obligations. (Id. ¶¶ 215-61)

On December 12, 2016, Defendants moved to dismiss (Dkt. Nos. 28-31, 16 Civ. 6657) and for sanctions under Rule 11. (Dkt. Nos. 32-35, 16 Civ. 6657) Plaintiff then moved for leave to file a Second Amended Complaint (Dkt. Nos. 36, 36-1, 36-2, 16 Civ. 6657), which Defendants opposed. (Dkt. Nos. 39-40, 16 Civ. 6657)

On September 30, 2017, this Court granted Defendants' motion to dismiss and denied their motion for sanctions. ( Dkt. No. 74, 16 Civ. 6577) In brief, this Court found that Plaintiff had not alleged an injury traceable to any alleged violation of the Securities Act. (Id. at 6-9)² Plaintiff had also not pleaded a substantial federal issue sufficient to provide a basis for this Court to exercise subject matter jurisdiction. (Id. at 9-12) While the Amended Complaint invoked criminal wire fraud, bank fraud, and money laundering statutes, those statutes do not provide a private right of action. (Id. at 11) Moreover, even if the Amended Complaint were construed to plead a civil fraud claim, such a claim was not pled with the required particularity. (Id. ) Plaintiff's antitrust, RICO, discrimination, redlining, and civil rights claims were likewise not adequately pled. (Id. at 11-12) Finally, because all of Plaintiff's federal claims were dismissed, the exercise of supplemental jurisdiction was not warranted. (Id. at 12-13) In addition to granting Defendants' motion to dismiss, this Court denied Plaintiff leave to amend (id. at 13-17), and denied Defendants' motion for sanctions. (Id. at 17-18)

As to Defendants' sanctions motion, this Court stated:

This Court has granted Defendants' motion to dismiss the Amended Complaint and denied Plaintiff's motion for leave to amend. In doing so, the Court has concluded that Plaintiff's claims are frivolous. Although pro se Plaintiff is apparently a lawyer, the allegations in his complaints are so incoherent as to raise concerns about his mental state. Accordingly, the Court concludes that imposing Rule 11 sanctions would serve no purpose.

(Id. )

On October 13, 2017, Plaintiff filed a motion for recusal and to vacate the September 30, 2017 Order. (Dkt. No. 77, 15 Civ. 6577) Plaintiff contended that the Court (1) mishandled the litigation in a number of ways (Pltf. Br. (Dkt. No. 76) at 2-6, 16 Civ. 6577); (2) has a prior relationship with Defendant Rabobank's counsel David R. Gelfand – an attorney at Milbank, Tweed, Hadley & McCloy LLP – because both served on the Appellate Division, First Department's Disciplinary Committee ten years ago (id. at 6-7 & Ex. D); (3) presided over another case involving similar facts (id. at 7-9); (4) defamed him (id. at 10-13); (5) acted as a defense advocate (id. at 13-17); and (6) had exhibited bias against him. (Id. at 17-20) In addition to moving for recusal, Plaintiff argued that the September 30, 2017 Order "did not result from due or judicial process" and thus must be vacated under Federal Rule of Civil Procedure 60. (Id. at 20)

On November 30, 2017, Plaintiff filed a complaint in New York Supreme Court, New York County. (Cmplt. (Dkt. No. 1-1) at 43) Defendant Cooperatieve Rabobank filed a Notice of Removal to this District on December 19, 2017. (Notice of Removal (Dkt. No. 1)) In this action – the Current Action – Plaintiff alleges that Defendants abused the legal process in the Previous Action. According to Plaintiff, Defendants took steps in the Previous Action that were intended to punish him for whistleblowing. For example, Plaintiff alleges that Defendants improperly disclosed information regarding certain transactions that he engaged in at Rabobank (Cmplt. (Dkt. No. 1-1) ¶¶ 20a, 67-81); "named and shamed" him as a whistleblower (id. ¶¶ 20c, 55-66); and improperly demanded financial damages and Rule 11 sanctions. (Id. ¶¶ 45, 95-103)³ On January 2, 2018, this Court accepted the Current Action as related to the Previous Action.

In the Current Action, Plaintiff alleges that he was a client of Rabobank, that he "developed original, actionable information on Rabobank fraud and other misconduct," and that he "blew the whistle on [the] bank's ongoing criminal and otherwise illegal conduct for profit." (Id. ¶¶ 51-53) Plaintiff alleges that in the Previous Action, "Defendants demanded financial damages and sanctions" in retaliation for Plaintiff's alleged whistleblowing to European and U.S. financial regulators. (Id. ¶¶ 7, 9) In support of this claim, Plaintiff points to filings in the Previous Action in which Defendants cite communications from Plaintiff in which he threatened or actually filed regulatory or ethics complaints against Rabobank and its affiliates with regulators in Europe and the United States. (Id. ¶¶ 7, 44) Plaintiff further alleges that Defendants used Plaintiff's initiation of regulatory proceedings against Rabobank as grounds to (1) oppose Plaintiff's motion for leave to file a Second Amended Complaint; (2) seek dismissal of the Amended Complaint; and (3) seek Rule 11 sanctions against Plaintiff. (Id. ¶ 8) Plaintiff also alleges that Defendants "abused process by demanding financial damages and sanctions specifically for ‘harassing’ emails from Plaintiff to Milbank Defendants regarding Whistleblowing." (Id. ¶ 45)

Plaintiff further complains that Defendants publicized his whistleblowing during the Previous Action, that this "outing" had "no conceivable connection to the legal issues" in the Previous Action, and that disclosure of his whistleblowing status caused him to lose certain professional opportunities and caused him "permanent, ongoing and irreparable" damage. (Id. ¶¶ 64, 66; see id. ¶¶ 55-66)

Plaintiff also complains that Defendants abused process by disclosing his transactional history at Rabobank. According to Plaintiff, in a December 12, 2016 filing, Defendants disclosed that Plaintiff withdrew a large amount of cash from Rabobank and published his address, email, and phone number. (Id. ¶ 69; see also Sherman Decl. (Dkt. No. 35) ¶ 5, 16 Civ. 6577 (disclosing that on July 26, 2016, Plaintiff transferred $400,000 to a Chase Bank account in New York and $562,463.57 to an account in the Czech Republic)) Plaintiff argues that this transactional information was confidential, that Defendants knew that disclosure of this information was improper (id. ¶¶ 71-72), and that Defendants disclosed this information in their legal filings in order to suppress Plaintiff's whistleblowing and to "damage and terrorize" him. (Id. ¶ 81)

Finally, Plaintiff complains that Defendants "abuse[d] ... motion practice" under the Federal Rules of Civil Procedure in connection with their motion to dismiss and for Rule 11 sanctions. (Id. ¶¶ 95-103) Plaintiff claims that Defendants' primary purpose was to punish Plaintiff for his whistleblowing "and to teach a lesson to anyone considering blowing the whistle on Rabobank illegality." (Id. ¶ 111; see also id. ¶ 121 ("Defendants...