TREATS INTERN. ENTERPRISES, INC. v. SEC
Decision Date | 17 August 1993 |
Docket Number | No. 93 Civ. 2031 LLS.,93 Civ. 2031 LLS. |
Citation | 828 F. Supp. 16 |
Parties | TREATS INTERNATIONAL ENTERPRISES, INC., Plaintiff, v. SECURITIES AND EXCHANGE COMMISSION, Defendant. |
Court | U.S. District Court — Southern District of New York |
Gerald D. Fischer, New York City, for plaintiff.
Richard M. Humes, Associate Gen. Counsel, S.E.C., Washington, DC, for defendant.
Because the SEC has voluntarily terminated its examination (and permitted withdrawal) of Treats' most recent post-effective amendment, the only remaining issue is whether the SEC's continuing investigation of Treats should be enjoined.
The United States, as sovereign, is immune from suit save as it consents to be sued. Lehman v. Nakshian, 453 U.S. 156, 160, 101 S.Ct. 2698, 2701, 69 L.Ed.2d 548 (1981). Treats brings this action under the Administrative Procedure Act, 5 U.S.C. § 501 et seq. ("APA"), of which section 702 waives immunity from suits against administrative agencies by providing that any person "adversely affected or aggrieved by agency action ... is entitled to judicial review thereof."
However, section 701(a) renders the waiver inapplicable where "(1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law." The Court of Appeals for the Second Circuit in Sprecher v. Graber, 716 F.2d 968, 974-75 (2d Cir.1983), discussed that provision in the context of a similar action seeking to enjoin an SEC investigation:
The point was ruled on explicitly and directly in Sprecher v. Von Stein, 772 F.2d 16 (2d Cir.1985), a later action by the same appellant:
772 F.2d at 18 (citations omitted).
The same result follows if one employs the analysis set forth in Heckler v. Chaney, 470 U.S. 821, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985), where the Supreme Court addressed the apparent "tension between a literal reading of § a(2) which exempts from judicial review those actions committed to agency `discretion,' and the primary scope of review prescribed by § 706(2)(A)—whether the agency's action was `arbitrary, capricious, or an abuse of discretion.'" 470 U.S. at 829, 105 S.Ct. at 1654 (emphasis in original). The Court determined that the § 701(a)(2) exception applies 470 U.S. at 830, 105 S.Ct. at 1655. Thus, the APA precludes judicial review of those discretionary agency actions for which "no judicially manageable standards are available for judging how and when an agency should exercise its discretion." Ibid.
Under that analysis, the issue is whether the legislative materials respecting the agency supply judicially manageable standards for judging how and when the SEC should exercise its discretion to investigate possible securities violations.
In determining whether a "meaningful standard" exists for review of agency action, courts have considered the statutory language and structure, the statutory history, the nature of the agency action, and the regulations promulgated under the statute. See, Dina v. Attorney General of the United States, 793 F.2d 473 (2d Cir.1986); Singh v. Moyer, 867 F.2d 1035 (7th Cir.1989); Chong v. Director, U.S. Information Agency, 821 F.2d 171 (3d Cir.1987).
In this case, section 21(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78u(a), provides that the SEC "may, in its discretion, make such investigations as it deems necessary to determine whether any person has violated, is violating or is about to violate any provisions" of the act or rules regulating securities exchanges.
The statute itself suggests no standards by which the SEC's discretion...
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