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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. MARK A. JACKSON and JAMES J. RUEHLEN, Defendants.

) ) ) ) ) Case No. 4:12-cv-00563 ) ) ) ) ) ) ) )

DEFENDANT MARK A. JACKSONS MOTION TO DISMISS THE COMPLAINT UNDER RULE 12(b)(6) FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED

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TABLE OF CONTENTS STATEMENT OF NATURE AND STAGE OF PROCEEDING ............................................ 1 STATEMENT OF ISSUES TO BE RULED ON ....................................................................... 1 SUMMARY OF THE ARGUMENT .......................................................................................... 1 ARGUMENT................................................................................................................................. 2 I. II. BACKGROUND ............................................................................................................... 2 LEGAL STANDARDS ..................................................................................................... 5 A. B. III. A. B. C. The Complaint Must State a Plausible Claim to Relief .......................................... 5 Conclusory Statements or Legal Conclusions Must Be Disregarded ..................... 6 The Elements of an FCPA Anti-Bribery Violation................................................. 9 The Complaint Fails to Sufficiently Plead Involvement of a Foreign Official Taking Sought-After Unlawful Actions .................................................. 10 The Allegations are Consistent with Jackson Having a Good Faith Belief that the Payments were Permissible Facilitating Payments .............................. 13 1. 2. D. The SEC Must Plausibly Plead Corrupt Intent......................................... 14 The Only Well-Pleaded Facts Show Jacksons Good Faith Belief in the Legality of the Payments ..................................................................... 15 The Complaint Does Not Allege that Jackson Approved Bribes During the Limitations Period............................................................................... 19 The Pleadings Fail to Raise Any Basis for Tolling................................... 20

THE CLAIM I BRIBERY ALLEGATION MUST BE DISMISSED.......................... 9

The Bribery Claim is Barred by the Statute of Limitations .................................. 19 1. 2.

IV.

THE DERIVATIVE CLAIMS (CLAIMS II-VII) MUST ALSO BE DISMISSED..................................................................................................................... 22 A. B. Claim II Aiding and Abetting Nobles Anti-Bribery Violation......................... 22 Claims III & IV Aiding and Abetting Nobles FCPA Books and Records Violation, and Directly Violating Internal Controls and Books and Records Requirements .......................................................................................... 23 Claims V and VI Misleading Auditors and Signing False Certifications.......... 24 Claim VII Control Person Liability ................................................................... 25

C. D.

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

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TABLE OF AUTHORITIES Cases Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) .......................................................................... passim Bass v. Stryker Corp., 669 F.3d 501 (5th Cir. 2012) ........................................................ 5, 6, 9, 13 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................. passim Chavers v. Morrow, No. 08-3286, 2010 U.S. Dist. LEXIS 89432 (S.D. Tex. Aug. 30, 2010) ....................................................................................................................................... 11 Doe v. Covington Cnty. Sch. Dist., No. 09-60406, 2012 U.S. App. LEXIS 6080 (5th Cir. Mar. 23, 2012) (en banc)....................................................................................................... 1, 5 FCC v. Am. Broad. Co., 347 U.S. 284 (1954) .............................................................................. 12 Gentilello v. Rege, 627 F.3d 540 (5th Cir. 2010).................................................................. 6, 8, 13 Gonzalez v. Kay, 577 F.3d 600 (5th Cir. 2009) .............................................................................. 6 Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787 (5th Cir. 2011) ............................... 14 In re BP p.l.c. Sec. Litig., No. 10-2185, 2012 U.S. Dist. LEXIS 17788 (S.D. Tex. Feb. 13, 2012) ....................................................................................................................................... 25 Johnson v. SEC, 87 F.3d 484 (D.C. Cir. 1996)............................................................................. 19 Jones v. ALCOA, Inc., 339 F.3d 359 (5th Cir. 2003).................................................................... 19 Plotkin v. IP Axess Inc., 407 F.3d 690 (5th Cir. 2005) ................................................................... 6 R2 Invs. LDC v. Phillips, 401 F.3d 638 (5th Cir. 2005) ................................................................. 2 Rothman v. Gregor, 220 F.3d 81 (2d Cir. 2000)............................................................................. 4 SEC v. Apuzzo, 758 F. Supp. 2d 136 (D. Conn. 2010) ................................................................. 23 SEC v. Brown, 740 F. Supp. 2d 148 (D.D.C. 2010) ............................................................... 20, 21 SEC v. Jones, 476 F. Supp. 2d 374 (S.D.N.Y. 2007).................................................................... 21 SEC v. Microtune, Inc., 783 F. Supp. 2d 867 (N.D. Tex. 2011), appeal docketed, No. 1110594 (5th Cir. June 21, 2011) ................................................................................... 20, 21, 22 SEC v. Treadway, 430 F. Supp. 2d 293 (S.D.N.Y. 2006)............................................................. 23 Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029 (5th Cir. 2010) ....................................................................................................................................... 17 Solis v. Bruister, No. 10-77, 2012 U.S. Dist. LEXIS 30739 (S.D. Miss. Mar. 8, 2012) .............. 20 Trawinski v. United Techs., 313 F.3d 1295 (11th Cir. 2002) ....................................................... 19 United States v. Blondek, 741 F. Supp. 116 (N.D. Tex. 1990) ..................................................... 10 United States v. Bodmer, 342 F. Supp. 2d 176 (S.D.N.Y. 2004).................................................. 11 United States v. Castle, 925 F.2d 831 (5th Cir. 1991) .................................................................. 10

ii

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United States v. Core Labs., Inc., 759 F.2d 480 (5th Cir. 1985) .................................................. 19 United States v. Kay, 359 F.3d 738 (5th Cir. 2004).......................................................... 11, 12, 18 United States v. Kay, 513 F.3d 432 (5th Cir. 2007).......................................................... 10, 14, 16 United States v. Rutherford Oil Corp., 756 F. Supp. 2d 782 (S.D. Tex. 2010) ............................ 25 Wolcott v. Sebelius, 635 F.3d 757 (5th Cir. 2011).......................................................................... 5 Zacharias v. SEC, 569 F.3d 458 (D.C. Cir. 2009)........................................................................ 19 Statutes 15 U.S.C. 78dd-1 ................................................................................................................ passim 15 U.S.C. 78dd-2 ....................................................................................................................... 10 15 U.S.C. 78ff ............................................................................................................................ 10 15 U.S.C. 78m...................................................................................................................... 23, 25 15 U.S.C. 78t.................................................................................................................. 22, 23, 25 28 U.S.C. 2462..................................................................................................................... 19, 25 Pub. L. No. 95-213, 91 Stat. 1494 ................................................................................................ 18 Other Authorities Complaint in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4, 2010).............................. 4, 18 Indictment 4, 13, United States v. Esquenazi, No. 09-21010 (S.D. Fla. Dec. 8, 2009) ........... 12 Memorandum from Paul J. McNulty, Deputy Att'y Gen. U.S. Dep't of Justice, Principles of Federal Prosecution of Business Organizations (December 12, 2006) ............................... 3 Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, SEC Release No. 44969, 2001 SEC LEXIS 2210 (Oct. 23, 2001) ......................................................................................................................................... 2 Superseding Indictment 30(h), United States v. Goncalves, No. 09-335 (D.D.C. Apr. 16, 2010) ....................................................................................................................................... 12 Trial Transcript, United States v. OShea, No. 09-629 (S.D. Tex. Jan. 16, 2012)........................ 11 Rules Fed. R. Civ. P. 12(b)(6).......................................................................................................... passim Fed. R. Civ. P. 8(a)(2)..................................................................................................................... 6 Fed. R. Civ. P. 9(b) ................................................................................................................. 18, 21

iii

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STATEMENT OF NATURE AND STAGE OF PROCEEDING Plaintiff Securities and Exchange Commission (SEC) filed its Complaint against Defendants Mark A. Jackson (Jackson) and James J. Ruehlen (Ruehlen) on February 24, 2012 (Dkt. 1). Jackson waived service of the Complaint on March 9, 2012. Jackson has not filed a responsive pleading to the Complaint. STATEMENT OF ISSUES TO BE RULED ON Jackson moves to dismiss 1 the Complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. To survive dismissal pursuant to Rule 12(b)(6), plaintiffs must plead enough facts to state a claim to relief that is plausible on its face. Doe v. Covington Cnty. Sch. Dist., No. 09-60406, 2012 U.S. App. LEXIS 6080, at *8 (5th Cir. Mar. 23, 2012) (en banc) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (attached at Exhibit 1). The Complaints [f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact). Twombly, 550 U.S. at 555. SUMMARY OF THE ARGUMENT The Complaint against Jackson must be dismissed under Rule 12(b)(6) because it fails to state a claim that is plausible on its face. Only factual allegationsnot unsupported conclusions or accusations of legal violationsmay sustain a Complaint. But, stripped of its conclusions about what Jackson knew, the Complaint comes up woefully short in pleading several essential elements of Claim I, a Foreign Corrupt Practices Act (FCPA) anti-bribery violationthat Jackson acted with corrupt intent, and that he knew payments would be made to a foreign official to obtain sought-after unlawful acts from that foreign official. Instead, the factual allegations in
1

Jackson adopts the arguments made by Ruehlen in his separate Motion to Dismiss the Complaint.
1

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the Complaint regarding alleged bribes are equally consistent, if not more, with wholly legal actions under the facilitating payments exception to the FCPA. The bribery claim therefore must be dismissed as implausible under controlling Supreme Court precedent. And because the other claims in the Complaint are entirely dependent on the existence of illegal bribes, they too must be dismissed. Finally, because the vast majority of the conduct alleged in the Complaint took place well over five years before the Complaint was filed, the bribery claim and many of the derivative claims are barred by the statute of limitations. ARGUMENT I. BACKGROUND In May 2007, executives at Noble Corporation, an international oil drilling company with operations in Nigeria, announced an investigation into potential violations of the FCPA involving payments to Nigerian government officials.2 Mark Jackson had only recently been promoted to CEO of Noble. Within a week, Noble had engaged an outside law firm to conduct an independent investigation. A month later Noble voluntarily disclosed the matter to the Department of Justice and the Securities and Exchange Commission pursuant to official policies of both agencies. 3 As a result of Nobles self-reporting under Jacksons leadership, the
2

Noble Corporation, Annual Report (Form 10-K), at 22-23 (Feb. 29, 2008) (Noble 2008 Form 10-K) (excerpts attached at Exhibit 2); see also id. at 22 ([O]ur management brought to the attention of the audit committee a news release issued by another company . . . .). The court can consider SEC filings on a motion to dismiss. R2 Invs. LDC v. Phillips, 401 F.3d 638, 640 n.2 (5th Cir. 2005) ([A] court may also take judicial notice of documents in the public record, including documents filed with the Securities and Exchange Commission, and may consider such documents in determining a motion to dismiss.). 3 Noble 2008 Form 10-K at 23 (Ex. 2); Noble Corporation, Current Report (Form 8-K) (June 4, 2007) (attached at Exhibit 3) (The Company has voluntarily contacted the U.S. Securities and Exchange Commission and the U.S. Department of Justice to advise them that an independent investigation is under way and that it intends to cooperate fully with both agencies.); Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, SEC Release No. 44969, 2001 SEC LEXIS 2210 (Oct. 23, 2001) (attached at Exhibit
2

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Department of Justice entered into a Non-Prosecution Agreement with Noble. 4 And, in the intervening five years, the Department of Justice has not brought any charges against Jackson or Ruehlen. 5 The SECs Complaint is most notable for what it lacks. There are no allegations of secret payments; as described below, all of the payments at issue in this case were recorded in an internal account specifically identified for payments to government officials. There is also no mention or suggestion in the Complaint that any payments were made to induce government officials to award contracts to companies other than the low bidder, or inspectors to overlook safety risks. Rather, the payments in this case were made in connection with the issuance of routine permits to operate drilling rigs in Nigeria (Temporary Import Permits, or TIPs). Indeed, to evaluate the adequacy of the SECs Complaint, the structure of the oil drilling business in Nigeria stands as the backdrop. There are three relevant parties: the Nigerian government, a major oil company, and a drilling services company. Joint ventures between the state-owned Nigerian Oil Company and a major oil company contracted with Noble and other oil drilling companies to extract oil in offshore wells in territorial waters. But while the joint venture (that is, the Nigerian government) entered into long term drilling contracts, the customs laws limited the time that a drilling companys rig could remain in Nigerian waters. The Nigerian government took advantage of this mismatch, requiring the payment of fees by the

4); Memorandum from Paul J. McNulty, Deputy Att'y Gen. U.S. Dep't of Justice, Principles of Federal Prosecution of Business Organizations (December 12, 2006) (attached at Exhibit 5). 4 Noble Corporation, Quarterly Report (Form 10-Q), at 28 (Nov. 9, 2010) (excerpts attached at Exhibit 6) (noting companys settlement with SEC and Non-Prosecution Agreement with DOJ). 5 Notwithstanding this, the SEC has now filed the instant lawsuit against Jackson and Ruehlen, but has taken no action against executives of any of the other drilling companies in Nigeria. Instead, the SEC has selectively exercised its prosecutorial powers to bring this lawsuit.
3

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drilling companies to maintain their rigs in the country, and to remain on-contract. 6 All of the oil drillers in Nigeria faced this problem and all of them have dealt with it by making similar routine payments to the Nigerian Customs Service (NCS). 7 Jackson came to Noble in 2000 as its CFO after over a decade in the oil services industry. 8 He assured that payments being made to the NCS by Nobles West Africa Division were appropriately tracked and checked by the companys internal auditors. As noted, those payments were placed in an internal account set aside only for so-called facilitating paymentslegal payments under the FCPA that allow companies to make payments to government officials for routine governmental actions, such as obtaining permits. 15 U.S.C. 78dd-1(b), (f)(3)(A); see Complaint in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4, 2010), 22 (attached at Exhibit 8). 9 That account was prominently labeled in Nobles accounting systems (i.e., its books and records), and it was subject to reviews by internal auditors, external auditors, internal lawyers, and outside counsel. The Court should dismiss the Complaint because the few actual facts it alleges do not establish a plausible claim that Jackson knew that payments were being made to a foreign official in order to induce unlawful actions. To the contrary, the facts are equally consistent with Jacksons asserted belief that the payments at issue had been thoroughly reviewed and determined to be legal facilitating payments under the FCPA for routine governmental actions.

Cf. Noble 2008 Form 10-K at 23 (Ex. 2) (describing that [i]f we cannot obtain a new permit or a further extension necessary to continue operations of any unit, we may need to terminate the drilling contract of such unit and relocate such unit from Nigerian waters). 7 Noble 2008 Form 10-K at 22-23 (Ex. 2). 8 Noble Corporation, Annual Report (Form 10-K), at 13 (Mar. 8, 2005) (excerpts attached at Exhibit 7). 9 The Court can consider the SECs own allegations in another case for purposes of the motion to dismiss. Rothman v. Gregor, 220 F.3d 81, 85 (2d Cir. 2000).
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II.

LEGAL STANDARDS A. The Complaint Must State a Plausible Claim to Relief

To survive dismissal pursuant to Rule 12(b)(6), plaintiffs must plead enough facts to state a claim to relief that is plausible on its face. Covington Cnty. Sch. Dist., 2012 U.S. App. LEXIS 6080, at *8 (quoting Twombly, 550 U.S. at 570) (Ex. 1). But at bottom, the SECs Complaint is woefully short on actual facts. Under governing Supreme Court precedent, all of the SECs rhetorical flourishes, legal conclusions, and conclusory statements must be disregarded when the Court considers a motion to dismiss under Rule 12(b)(6). The remaining well-pleaded facts are accepted as true and view[ed] . . . in the light most favorable to the plaintiffs. Id. (internal quotation marks omitted). Viewed through that lens, the Complaint must be dismissed because the remaining facts fail to plausibly state a claim on which relief may be granted. Under Twombly and its progeny, the Court must engage in a two-step inquiry when judging a motion to dismiss for failure to state a claim. First, all legal conclusions, or legal conclusions posing as factual allegations, must be discarded. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) ([A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.); see also Wolcott v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) ([W]e are not bound to accept as true a legal conclusion couched as factual allegation.) (quoting Iqbal, 556 U.S. at 678). Second, the Court must examine the remaining factual allegations against the elements of the claim, and dismiss the claim when the plaintiff has not alleged enough facts to state a claim to relief that is plausible on its face or has failed to raise his right to relief above the speculative level. Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012); see also Twombly, 550 U.S. at 555 (the Complaints [f]actual allegations must be enough to raise a right to relief above the
5

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speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)). [W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has allegedbut it has not show[n]that the pleader is entitled to relief under Fed. R. Civ. P. 8(a)(2). Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Iqbal, 556 U.S. at 679, and Fed. R. Civ. P. 8(a)(2)). B. Conclusory Statements or Legal Conclusions Must Be Disregarded

Much of the SECs Complaint falls into the category of conclusory allegations, unwarranted factual inferences, or legal conclusions which courts do not accept as true for the purpose of a Rule 12(b)(6) motion. Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010) (quoting Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005)). It is the conclusory nature of the SECs allegations, rather than their extravagantly fanciful nature, that disentitles them to the presumption of truth. Iqbal, 556 U.S. at 681. Rather than pleading facts, the SEC relies primarily on inferences based on undisclosed facts. For example, allegations that a defendant knew of something, condoned it, or willfully took some action are the kind of legal conclusions couched as factual allegations that are not accepted as true when assessing the plausibility of a claim to relief. Iqbal, 556 U.S. at 680. In other words, the plaintiff cannot merely state the conclusionthat the defendant knew something. Instead, a Complaint must set forth the facts giving rise to the conclusionsuch as that the defendant was told something, or learned it from a particular document or transaction. Similarly, allegations of a defendant being a principal architect of, or instrumental to, a policy must be disregarded. Id. Allegations that a product was subject to a particular oversight or regulatory regime are also a legal conclusion that the district court was not required to accept as true. Stryker Corp., 669 F.3d at 507-08; see also Gentilello, 627 F.3d at 545. At bottom, most of the SECs allegations may not be accepted as true, including:
6

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(1) That Jackson or others 10 authorized payments to influence or induce Nigerian customs officials to take an improper action or to obtain discretionary or unlawful extensions of TIPs, or to retain business. E.g., Complaint 2, 3, 31, 91, 94, 108, 113, 115, 123, 126, 142-143, 145-146. As the Supreme Court recognized in Iqbal, allegations that actions were taken for a certain purpose, or because of something, merely restate the elements of an offense and are not accepted as true. Iqbal, 556 U.S. at 680-81 (on account of or because of). The SEC fails to allege the actual facts showing an improper purpose for actions, and instead simply parrots the FCPA or other securities laws prohibitions of certain purposes. (2) That Jackson or others knew, had knowledge, was aware of, or understood facts such as the creation or use of certain documents. E.g., Complaint 22, 24, 28-29, 3437, 39-41, 48-49, 52-53, 69, 88-89, 91, 94-95, 99, 101, 111-113, 115, 123, 126, 142, 145, 148-149. Allegations of knowledge are merely legal conclusions dressed as factual allegations. Iqbal, 556 U.S. at 680. The SEC has not alleged the actual facts showing Jackson in possession of that knowledgewhat Jackson was told, what a document given to Jackson said, or what Jackson told someone else. (3) That Jackson or others acted to falsely record bribes as legitimate operating expenses; caused Nobles books to be false; or that Noble or Jackson paid bribes. E.g., Complaint 3, 22, 29, 31, 33, 39, 61, 69, 73, 80, 88, 92, 95, 99, 101, 106, 109-113, 115, 119, 135-136, 142, 145-149. Whether particular payments constitute bribes, and whether those payments could not be recorded as operating expenses without acting falsely, are legal conclusions dependent on the application of the FCPA and other securities laws or regulations. Causing books to be false merely restates the elements of that offense. (4) That Jackson or others used false documents with the Nigerian Customs Service or
10

This Motion attempts to identify the conclusory or legal allegations specific to Jackson or Noble, however any such allegations regarding Ruehlen and others must similarly be discarded under Iqbal and Twombly.
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others, or obtained false paperwork or illicit TIPs. 11 E.g., Complaint 3, 22-23, 2729, 32-33, 35-36, 42, 48, 51-53, 68, 70-71, 73-76, 79-84, 86, 89-90, 92, 94, 100-101, 103-110, 112, 116, 123, 126, 131, 134-138, 141-143, 145-147. Whether documents were false or not is a legal conclusion dependent on the application of various United States and/or Nigerian laws or customs. Similarly, allegations of signing false management representation letters or certifications, or misleading auditors, merely restate the elements of those offenses. Complaint 4, 145. (5) That Jackson or others controlled, were responsible for, supervised, oversaw, or authorized acts such as Nobles compliance with the FCPA. E.g., Complaint 5, 911, 23, 27, 88, 95, 106, 109-112, 115, 123, 135-136, 143, 145, 148. Such allegations are legal conclusions dependent on the application of corporate governance and securities laws and principles. See Iqbal, 556 U.S. at 680 (regarding allegations of defendants condoning certain conduct, or being the conducts architect). (6) That Nigerian law requires, permits, or prohibits certain acts, or makes certain acts discretionary. E.g., Complaint 19-22, 54, 101, 128. That Jackson or others violated any Nigerian law, or took actions that were wrong, unlawful, or in violation of Nobles policies. E.g., Complaint 22, 42, 49, 82, 87, 89, 91, 96, 101, 104, 107, 116, 118-119, 142, 145-146. With the exception of identifying Nobles internal policies, the Complaint fails to specify in any way what law or regulation is at issue. Assertions of the effect of Nigerian law must therefore be disregarded and may not be accepted as true. See Gentilello, 627 F.3d at 545 (refusing to consider, as mere conclusory statements, assertion in Complaint that a contract was subject to certain rules and regulationswhich [plaintiff] has not identifiedthat required good cause before his chaired positions could be terminated.). The allegations also are dependent on the application and interpretation of those unidentified laws or regulationswhether conduct
11

While the SEC consistently claims that Noble used false documents in support of the applications for some permits, the SEC omits that the Nigerian government itself dictated the contents of those documents, belying their supposed falsehood. Nor does the SEC claim that Jackson prepared, or even reviewed, any false documents.
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was wrong or unlawfuland must be disregarded as legal conclusions. See Stryker Corp., 669 F.3d at 507-08 (refusing to accept as true the plaintiffs allegation [that] asks the court to make a conclusion as to the legal significance of these tests and the FDAs subsequent approval of the Trident system). The same problem is fatal for the SECs allegations interpreting Nobles FCPA policies instead of merely recounting what those policies state. Complaint 42. (7) That Jackson and others agreed on a plan of action. Complaint 91. Allegations of agreement are legal conclusions. Twombly, 550 U.S. at 557. III. THE CLAIM I BRIBERY ALLEGATION MUST BE DISMISSED Once the pervasive legal conclusions and conclusory statements are stripped away, it becomes apparent that the SECs Complaint lacks actual facts to support its claims. A. The Elements of an FCPA Anti-Bribery Violation

The SEC has alleged in Claim I that Jackson violated the FCPAs anti-bribery provisions, as well as a host of other securities laws or regulations addressed below. The FCPAs civil antibribery provisions prohibit acts that: (1) make use of the mails or any means or instrumentality of interstate commerce; (2) corruptly; (3) in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to; (4) any foreign official; (5) for purposes of [either] influencing any act or decision of such foreign official in his official capacity [or] inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official [or] securing any improper advantage; (6) in order to assist such [corporation] in obtaining or retaining business for or

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with, or directing business to, any person. 12 United States v. Kay, 513 F.3d 432, 439-40 (5th Cir. 2007) (Kay II) (quoting 15 U.S.C. 78dd2) 13 (internal quotation marks omitted, alterations in original). B. The Complaint Fails to Sufficiently Plead Involvement of a Foreign Official Taking Sought-After Unlawful Actions

Not every payment to a foreign official is illegal under the FCPA. To constitute a violation of the anti-bribery provisions, a payment must, among other things, have been directed to a foreign official . . . for purposes of [either] influencing any act or decision of such foreign official . . . in his . . . official capacity, [or] inducing such foreign official . . . to do or omit to do any act in violation of the lawful duty of such foreign official . . . [or] securing any improper advantage. 15 U.S.C. 78dd-1(a)(3). There are two necessary parties to a violation of the FCPA anti-bribery provisions: the U.S. company paying the bribe and the foreign official accepting it. United States v. Blondek, 741 F. Supp. 116, 117 n.1 (N.D. Tex. 1990), affd and adopted by United States v. Castle, 925 F.2d 831 (5th Cir. 1991); see also id. at 120 (the foreign officials are necessary parties to the acts constituting a violation of the substantive law). The FCPA is intended to deter and punish certain activities which necessarily involve[] the agreement of at least two people. Id. at 117. The participation of foreign officials is required in every case. Id. at 119. 14 Sufficiently The Kay cases involved a criminal violation of the FCPA, and therefore required an additional element for an anti-bribery violationthat the defendant acted willfully. Kay II, 513 F.3d at 439 (quoting 15 U.S.C. 78ff). The elements of a civil and criminal violation of the FCPA are otherwise identical. 13 15 U.S.C. 78dd-2, at issue in the Kay cases, prohibits certain bribery conduct by domestic concerns or their employees. Section 78dd-1, at issue in the SECs Complaint against Jackson, prohibits the same conduct by issuers or their employees. 14 Judge Hughes, for example, recently granted a criminal defendants motion for judgment of acquittal in part because [w]hile the Government does not have to trace a particular dollar to a particular pocket of a particular official, it has to connect the payment to a particular official, that the funds made under his authority to a foreign official, who can be identified in some
10
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alleging an FCPA violation requires alleging at least minimally sufficient facts that, if proved, will meet the . . . elements of a violation of the FCPA (such as . . . the identity of the foreign country and of the officials to whom the suspect payments are made). United States v. Kay, 359 F.3d 738, 760 (5th Cir. 2004) (Kay I) (emphases added). Simply put, the FCPA requires, as an element, the involvement of a foreign official who has discretion to misuse. The SEC fails to plead these essential elements of the bribery violation plausibly because the Complaint fails to identify any such foreign official, and any specific acts, duties, or decisions of that foreign official. 15 The FCPA bribery count rises or falls on the involvement of a foreign official, however the Complaint against Jackson does not identify the officials alleged to have been bribed, by name, or by job title, or position, or job responsibility; the Complaint does not even indicate whether Jackson is alleged to have bribed one official or many. The SEC files very few FCPA complaints, and even fewer cases challenge the adequacy of the SECs pleadings. However, the Indictments in recent criminal FCPA enforcement cases highlight the inadequacy of the SECs Complaint against Jackson. 16

reasonable way, that is, with no reasonable doubt. Trial Transcript at 248, United States v. OShea, No. 09-629 (S.D. Tex. Jan. 16, 2012) (emphases added) (attached at Exhibit 9). Judge Hughes made a similar observation during arguments on that motion, noting that You cant convict a man promising to pay unless you have a particular promise to a particular person for a particular benefit. If you call up the [intermediary] and say, look, Im going to send you 50 grand, bribe somebody, that does not meet the statute. Id. at 227. 15 In an analogous unpublished case, Judge Hoyt dismissed a civil RICO Complaint under Twombly because bribery as a racketeering activity had been inadequately pled, holding that it was insufficient to plead only that various officers of the defendant agencies, were bribed, including through provision of barbecue dinners and other benefits. Chavers v. Morrow, No. 08-3286, 2010 U.S. Dist. LEXIS 89432, at *12 (S.D. Tex. Aug. 30, 2010) (internal quotation marks omitted) (attached at Exhibit 10). The allegations fail to elaborate on what parties were involved in the alleged bribery. Id. 16 The FCPA serves as a basis for both civil and criminal liability. See United States v. Bodmer, 342 F. Supp. 2d 176, 187 (S.D.N.Y. 2004). As a criminal statute, the FCPA must be strictly construed. Strict construction is also required in non-criminal cases for [t]here cannot
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For example, in the 2009 Haiti Teleco prosecutions, the Indictment specifically named the foreign officials alleged to have been the intended recipients of payments, and in fact charged several of those officials as defendants on non-FCPA charges. Indictment 4, 13, United States v. Esquenazi, No. 09-21010 (S.D. Fla. Dec. 8, 2009) (attached at Exhibit 11). The Indictment then alleged the specific authorization of payment of bribes to the named foreign officials in order to receive specified business advantages. E.g., id. 4-5. Even the 2010 Indictment of 22 individuals charged in an FBI sting alleged that the defendants agreed to pay a commission to a third party believing that half of the commission was intended to be paid outside the United States as a bribe to the Minister of Defense of a specific country to improperly obtain specific and identified contracts. Superseding Indictment 30(h), United States v. Goncalves, No. 09335 (D.D.C. Apr. 16, 2010) (emphasis added) (attached at Exhibit 12). The SECs Complaint also fails to identify the actions the unidentified Nigerian official or officials were asked to take in return for the purported bribes. The FCPA prohibits only payments to a foreign official . . . for purposes of [either] influencing any act or decision of such foreign official . . . in his official capacity, [or] inducing such foreign official . . . to do or omit to do any act in violation of the lawful duty of such foreign official . . . [or] securing any improper advantage. 15 U.S.C. 78dd-1(a)(3) (emphases added). Kay I made clear that the sought-after unlawful actions taken or not taken by the foreign official in consideration of the bribes) must also be alleged. Kay I, 359 F.3d at 760 (emphasis added). Yet once the conclusory allegations in the Complaint are stripped out, as they must be, supra Part II.B, the Complaint never explains what the official(s) at issue were asked to do regarding the TIPs or extensions. It is a reasonable inference that officials within the be one construction for [a civil agency] and another for the Department of Justice. FCC v. Am. Broad. Co., 347 U.S. 284, 296 (1954).
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Nigerian Customs Service had different roles and took different actions as part of their routine job responsibilities; an intake official would perform very different functions than an ultimate decision-maker. The Complaint, however, is silent about what action Jackson supposedly sought with the payments at issue, and how those actions were unwarranted. Did Jackson believe these officials were the intake officials at the Customs office who took the TIP application and passed it on to superiors? Were these officials in charge of checking the accuracy of information on applications? Were these officials in charge of visiting rigs to inspect them before a TIP was granted? Were these officials the final decision-maker regarding granting TIPs? The SECs Complaint never identifies the actual sought-after unlawful action taken or not taken, nor does it even identify the actual foreign officials involved, or their duties. The Complaint then fails to link specific unlawful actions to a specific payment in which Jackson allegedly was involved. Nor does the Complaint identify why or how the sought-after action is unlawful. All the Complaint offers are vague references to unspecified rigs needing TIPs or extensions thereof under unspecified laws and regulations, and bare assertions of Nigerian law prohibiting or permitting something. E.g., Complaint 19-22, 54, 101, 128. As previously noted, the Fifth Circuit has held that allegations of the applicability of unspecified rules and regulations are mere conclusory statements not entitled to be accepted as true on a motion to dismiss. Gentilello, 627 F.3d at 545. Allegations of the effect of those laws and regulations are legal conclusions. See Stryker Corp., 669 F.3d at 507-08. C. The Allegations are Consistent with Jackson Having a Good Faith Belief that the Payments were Permissible Facilitating Payments

Because the numerous conclusory or legal allegations in the Complaint may not be accepted as true, what remains is a strikingly different factual picture than the SEC claims, a factual picture that is equally consistent with Jacksons belief that his actions were legal under

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the FCPA. The Complaint therefore fails to plausibly state a claim to reliefsince an FCPA anti-bribery violation requires proof of corrupt intentand Claim I must be dismissed. 17 1. The SEC Must Plausibly Plead Corrupt Intent

To sustain its bribery claim, the SEC must plead facts that plausibly show that Jackson acted corruptly. 15 U.S.C. 78dd-1(a) (It shall be unlawful . . . to make use of the mails . . . corruptly in furtherance of an offer, payment . . . .). The Fifth Circuit has defined corruptly to mean an act done voluntarily and intentionally, and with a bad purpose or evil motive of accomplishing either an unlawful end or result, or a lawful end or result by some unlawful method or means. Kay II, 513 F.3d at 446, 449 (quoting and approving of jury instruction given by trial court) (emphasis added). A claim for relief is implausible on its face when the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct. Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 796 (5th Cir. 2011) (quoting Iqbal, 556 U.S. at 679) (emphasis added). If the well-pleaded facts are also consistent with a legal, alternative explanation, those facts do not plausibly state a claim to relief. The Supreme Court in Twombly, for example, upheld the dismissal of a Complaint alleging antitrust violations against the former subsidiaries of AT&Ts local telephone business because the factual allegations at most showed parallel conduct without enough factual matter (taken as true) to suggest that an agreement was made. 550 U.S. at 556. The Complaint did allege an agreement, but that was held to be a legal conclusion not accepted as true. The Complaint lacked factual allegations supporting the conclusion that there was an agreementin other words, the Complaints fatal flaw was its failure to specify the specific time, place, or In addition, the FCPA is unconstitutionally vague because it does not adequately define the scope of the facilitating payments exception. See Ruehlens Motion to Dismiss at 17-21.
14
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person involved in the alleged conspiracies. Id. at 565 n.10. Most importantly for the Court, the Complaint failed the plausibility test because while the factual allegations involving lack of competition among the defendants could very well signify illegal agreement, there was an obvious alternative explanation: that the defendants had established secure geographic markets and were naturally disinclined to take the risks associated with potential expansion. Id. at 567 (emphasis added). That obvious alternative explanation rendered the claim implausible. See Iqbal, 556 U.S. at 680 (Acknowledging that parallel conduct was consistent with an unlawful agreement, the Court nevertheless concluded that it did not plausibly suggest an illicit accord because it was not only compatible with, but indeed was more likely explained by, lawful, unchoreographed free-market behavior.) (citing Twombly, 550 U.S. at 567). Two years later in Iqbal, the Supreme Court again ordered the dismissal of a Complaint whose factual allegations could conceivably have supported an inference of illegal conduct, but did not rise to the level of plausibility: Taken as true, these allegations are consistent with petitioners purposefully designating detainees of high interest because of their race, religion, or national origin. But given more likely explanations, they do not plausibly establish this purpose. 556 U.S. at 681 (emphasis added). The Supreme Court has been clearafter stripping away legal conclusions posing as facts, a claim must be dismissed as implausible where the court cannot infer more than the mere possibility of misconduct. Where there are equally likely, if not more likely, legal explanations for the remaining facts, the claim is indeed implausible. The mere possibility of illegality is insufficient. Twombly, 550 U.S. at 557. 2. The Only Well-Pleaded Facts Show Jacksons Good Faith Belief in the Legality of the Payments

Here, once the SECs conclusory rhetoric and legal conclusions are stripped away, there is an obvious alternative explanation for the remaining facts: Far from acting with corrupt

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intent, Jackson believed in good faith that the payments of which he was aware were legal payments under the FCPAs facilitating payment exception. One does not act corruptly if one has a good faith belief in the legality of the payments. Kay II, 513 F.3d at 446 (defining corruptly as a bad purpose or evil motive of accomplishing either an unlawful end or result, or a lawful end or result by some unlawful method or means). For that reason, as well as the various pleading failures described above, the anti-bribery claims must be dismissed. While the FCPA prohibits certain payments when made corruptly, the statute contains an [e]xception for routine governmental actionmore commonly known as facilitating payments. The exception states that the prohibition against making corrupt payments to foreign officials shall not apply to any facilitating or expediting payment to a foreign official . . . the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official . . . . 15 U.S.C. 78dd-1(b) (emphasis added). Routine governmental action, in turn, is defined as meaning, in part: [O]nly an action which is ordinarily and commonly performed by a foreign official in (i) obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign country . . . or (v) actions of a similar nature. 15 U.S.C. 78dd-1(f)(3)(A) (emphases added). As previously described, the SECs various assertions of Jackson seeking illicit TIPs or using false paperwork must be disregarded as mere legal conclusions or conclusory statements. Supra Part II.B. What is left regarding Jackson, at bottom, are alleged facts suggesting: (1) Jackson was informed of payments being made to unidentified Nigerian Customs Service officials. The payments related in some way to the TIP process, either new TIPs or extensions of existing TIPs, both of which were ordinary parts of the customs regime in Nigeria. E.g., Complaint 18, 19, 24, 39, 94.

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(2) The payments were recorded in an account for payments made to government officials. Some TIP-related payments were larger than other payments in the account for payments made to government officials. E.g., Complaint 39. (3) The TIP process was addressed in an audit report presented to Nobles Audit Committee. The audit report did not suggest that the payments were an FCPA risk. E.g., Complaint 43, 50. (4) Paperwork from the Nigerian Customs Service and Nobles customs agent was presented to individuals other than Jackson, but not to Jackson himself. Some of that paperworkwhich Jackson did not seereflected rigs moving out of Nigerian waters, even though the rigs did not move, and Nobles Audit Committee commented on the use of that paperwork. E.g., Complaint 43, 50, 51, 53. (5) After Jackson left the position of CFO, a new CFO asked Jackson about the new CFOs qualifications to approve payments related to TIPs; Jackson told the CFO to rely on the Controller and former head of internal audit for pre-approval. E.g., Complaint 122-23. (6) Jackson signed representation letters to Nobles auditors, and securities filing certifications, stating that he was unaware of any legal violations or fraud, and that Nobles internal controls were not materially weak. E.g., Complaint 145-46. These alleged facts are not consistent with Jackson acting corruptly regarding any payments made to the unnamed Nigerian customs officials. Even if they arguably could be consistent with that conclusion, they are equally consistent, if not more so, with the conclusion that Jackson believed the payments were proper facilitating payments. At bottom, the SEC rests its conclusion of anti-bribery violations on the fact that payments were allegedly made to government officials. The mere fact that payments were made is not sufficient to pass a Rule 12(b)(6) challenge. The essence of a violation of the Foreign Corrupt Practices Act is the purpose of the payment, and the defendants knowledge and intent in making it. Twombly clearly demonstrates the inadequacy of Claim I. There, the plaintiffs easily pled parallel conduct. 550 U.S. at 564. Parallel conduct, though, without an illegal agreement, was insufficient to plausibly make out an antitrust violation. Id. Here, the fact of payments, without illegalcorruptintent, does not make out an anti-bribery violation. Cf. Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029, 1034 (5th Cir. 2010) (Moving

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money from one company to another may be consistent with fraud, but it does not create a reasonable inference that Potter is liable for fraud. Beston could have had legitimate or illegitimate reasons for transferring money.) (citing Iqbal and Fed. R. Civ. P. 9(b)). The alleged facts show that the payments related to permits for rigs to work in Nigeriaa type of payment clearly included within the facilitating payment exception. 15 U.S.C. 78dd1(f)(3)(A) (obtaining permits . . . to qualify a person to do business in a foreign country). The alleged facts show that Jackson was never told that granting a TIP or TIP extension was anything other than an act ordinarily and commonly performed by a foreign officialthat is, a routine governmental action. Id. 18 The only allegations that might permit concluding otherwise are the SECs conclusory allegations that, based on unidentified laws and regulations, TIP extensions were discretionary acts. 19 Even if those conclusory allegations could be considered, there is no allegation that Jackson was ever told that TIPs or TIP extensions were discretionary based on these laws. The alleged facts show that the payments were recorded in Nobles books in a clearly marked account for payments to government officials. E.g., Complaint 39; see also Complaint in SEC v. Noble Corp., No. 10-4336 (S.D. Tex. Nov. 4, 2010), 22 (Ex. 8). The alleged facts

As originally enacted in 1977, the FCPA exempted payments to any foreign official whose duties are essentially ministerial or clerical. Pub. L. No. 95-213, 91 Stat. 1494, 103(a) (codified at 15 U.S.C. 78dd-1) (1977). When the statute was amended in 1988, the facilitation payments exception was given its own subsection instead of being folded into the definition of foreign official. Of course, the SEC has not pled facts related to the identities or duties of the foreign officials, leaving it at least equally likely that Jackson believed the payments were going to officials whose duties are essentially ministerial or clerical. 19 The concept of discretionary or non-discretionary acts is not addressed in the FCPA, however it appears that in its Complaint the SEC is equating discretionary with an act not being routine governmental action. See also Kay I, 359 F.3d at 751 (describing facilitating payments as seeking largely non-discretionary, ministerial activities performed by mid- or lowlevel foreign functionaries). Of course, the SEC has failed to allege anything about the foreign functionaries at issue, or the types of activities they were supposedly asked to carry out.
18

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show that Jackson involved the internal audit department in the decision of whether the payments were permissible facilitating payments. E.g., Complaint 38, 39, 47, 53, 83, 99, 123. The reasonable inference is that Jackson, and Noble, acted to assure that the companys books and records accurately reflected the nature of the payments, in an auditable and transparent manner. Because the remaining facts in the Complaint are equally, if not more, consistent with Jacksons belief the payments were legal, Claim I must be dismissed as implausible. D. The Bribery Claim is Barred by the Statute of Limitations

The SECs claim for civil monetary penalties is subject to the general five year statute of limitations set forth in 28 U.S.C. 2462. See Zacharias v. SEC, 569 F.3d 458, 471 (D.C. Cir. 2009). 20 A Rule 12(b)(6) motion based on the expiration of the statute of limitations should be granted where it is evident from the plaintiffs pleadings that the action is barred and the pleadings fail to raise some basis for tolling or the like. Jones v. ALCOA, Inc., 339 F.3d 359, 366 (5th Cir. 2003). Accordingly, the SECs claims must be dismissed to the extent they accrued more than five years prior to the date this lawsuit was filed, which was February 24, 2012. For purposes of 2462, claims accrue at the time of the violation. United States v. Core Labs., Inc., 759 F.2d 480, 482-83 (5th Cir. 1985); Trawinski v. United Techs., 313 F.3d 1295, 1298 (11th Cir. 2002) (holding that the limitations period in 2462 begins with the violation itself it is upon violation, and not upon discovery of harm, that the claim is complete and the clock is ticking). Thus, the SEC must allege violations that took place after February 24, 2007. 1.
20

The Complaint Does Not Allege that Jackson Approved Bribes During the Limitations Period

The SECs claim for injunctive relief is also subject to 2462 to the extent that such relief would be punitive rather than remedial. Johnson v. SEC, 87 F.3d 484, 488 (D.C. Cir. 1996). The SECs Complaint misstates or omits the facts demonstrating that injunctive relief against Mr. Jackson would be punitive. Thus, Mr. Jackson does not seek dismissal of the injunctive claim on limitations grounds at this time, but he will do so at a later stage of the proceedings if the case survives.
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The vast majority of the purported bribes alleged in the Complaint occurred well before February 24, 2007. The SEC devotes page after page to recounting events that took place in 2003-2006, well outside the limitations period. See Complaint 33-124. Events taking place in 2007 are recounted in Paragraphs 125-137, but Jackson is not mentioned at all in this portion of the Complaint. Thus, there is no allegation that Jackson approved bribe payments during the limitations period. In fact, the Complaint affirmatively establishes that he was not in a position to do so. According to the Complaint, Noble required payments to government officials to be pre-approved in writing by the CFO, a position Jackson left by November 2006. Id. 8, 24. 21 Accordingly, Jacksons alleged violations of the anti-bribery provisions were outside the limitations period, and, absent a basis for tolling, cannot give rise to penalties. 2. The Pleadings Fail to Raise Any Basis for Tolling

The Complaint does not allege any facts that would give rise to tolling based on the doctrine of fraudulent concealment. 22 Fraudulent concealment requires the plaintiff to establish: 1) [T]he defendants wrongdoing was concealed from the plaintiff, either through active concealment by the defendant or because the nature of the wrongdoing was such that it was self-concealing; 2) the plaintiff acted diligently once he had inquiry notice, i.e., once he knew of or should have known of the facts giving rise to his claim, and 3) the plaintiff did not have inquiry notice within the limitations period. SEC v. Microtune, Inc., 783 F. Supp. 2d 867, 874 (N.D. Tex. 2011), appeal docketed, No. 1110594 (5th Cir. June 21, 2011); see also SEC v. Brown, 740 F. Supp. 2d 148, 158 (D.D.C. 2010); In an apparent attempt to bridge the gap, the SEC alleges that from about May 2005 through early 2007, Jackson directly supervised Ruehlen, oversaw Noble-Nigerias operations, and regularly communicated with Ruehlen about the status of drilling rigs in Nigeria and other issues facing Noble-Nigeria. Complaint 10. But these vague allegations, which conspicuously fail to allege Jacksons involvement in any bribe payments, do not plausibly suggest that Jackson violated the FCPA after February 24, 2007. 22 The parties did have one or more tolling agreements, but the SEC did not include them in its Complaint. Therefore, their existence cannot be considered for purposes of this motion to dismiss. Solis v. Bruister, No. 10-77, 2012 U.S. Dist. LEXIS 30739, at *8-9 (S.D. Miss. Mar. 8, 2012) (attached at Exhibit 13).
20
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SEC v. Jones, 476 F. Supp. 2d 374, 382 (S.D.N.Y. 2007). The facts giving rise to fraudulent concealment must be pled with particularity pursuant to Fed. R. Civ. P. 9(b). Brown, 740 F. Supp. 2d at 158. Here, the SEC fails to satisfy any of the requirements for fraudulent concealment. First, there are no allegations in the Complaint that Jackson did anything to conceal the payments, altered or destroyed documents in Nobles files or took any steps to prevent any other person from reporting the payments at issue, which were known to many individuals within the company. Complaint 71, 75, 102, 113. To the contrary, the Complaint affirmatively alleges that the supposed bribe payments were clearly delineate[d] as payments on invoices prepared by Nobles Nigerian agent, and were subsequently treated as legitimate expenses by Noble and recorded on its books accordingly. Id. 40, 149. 23 All that the SEC alleges is that Jackson failed to disclose the purported bribes, but mere silence cannot establish concealment. Microtune, 783 F. Supp. 2d at 877 (Concealment by silence or the simple fact that a fraud was unknown to the plaintiff is not enough to establish that a fraud itself is self-concealing. Rather . . . the fraud must be incapable of being known even in the exercise of diligence by the plaintiffs.); Jones, 476 F. Supp. 2d at 382-83 (rejecting fraudulent concealment tolling because while Defendants allegedly fraudulent acts of misrepresentation may not have been affirmatively disclosed to the Commission, the record does not support a finding that they were incapable of being known). Second, Noble (with Jackson as CEO) disclosed its internal investigation relating to the payments to the SEC in June 2007, nearly five years before this lawsuit was filed. The SEC pleads no facts that would explain why it waited nearly five years to initiate the action. Thus, it In other words, the Complaint alleges that it was improper to record the payments as legitimate, not that the payments were concealed.
21
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cannot establish that it acted with the required diligence. Microtune, 783 F. Supp. 2d at 878 ([T]he SEC must have acted diligently in filing its complaint in a timely manner once it had inquiry notice. . . . [E]quity would not be served by allowing the SEC to wait a full five years to file its case after being apprised of Microtunes practices, if the SEC did not act diligently during this five-year period.) (footnote and citation omitted). Finally, Nobles June 2007 voluntary disclosure means that the SEC was aware of the alleged violations long before the expiration of the statute of limitations. The fact that it had ample time to file a timely complaint is another reason why tolling is unwarranted. Microtune, 783 F. Supp. 2d at 882 ([I]f a plaintiff discovers his claims within the limitations period, especially if he still has two years or more remaining in which to file his complaint (as is this case here), there is obviously a lesser need, if any, to toll his claims.). IV. THE DERIVATIVE CLAIMS (CLAIMS II-VII) MUST ALSO BE DISMISSED Claims II through VII (the Derivative Claims) of the SECs Complaint against Jackson are merely derivative of Claim I, Jacksons alleged anti-bribery violation. Because Claim I must be dismissed, so too must the remaining claims against Jackson. In addition, Claims II-VII fall on statute of limitations grounds. A. Claim II Aiding and Abetting Nobles Anti-Bribery Violation

The Complaint alleges that Jackson aided and abetted Nobles violation of the antibribery portion of the FCPA. Complaint 153-56 (violation of 15 U.S.C. 78t(e) by aiding and abetting violations of 15 U.S.C. 78dd-1). In addition to a primary violation, aiding and abetting requires Jackson to have knowingly or recklessly provide[d] substantial assistance to the primary violator. 15 U.S.C. 78t(e). The substantial assistance must be a proximate cause of the primary violation, and mere awareness and approval of the primary violation is insufficient to make out a claim for substantial assistance. SEC v. Treadway, 430 F. Supp. 2d
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293, 339 (S.D.N.Y. 2006) (citations omitted). As shown above, once conclusory and legal allegations are stripped from the Complaint, there is no plausible claim that any primary violation was committed. Nor are there any facts plausibly stating a claim that Jackson substantially assisted any primary violationthe SECs Complaint merely alleges that Jackson was in the position of mere awareness and approval of any primary violation by Noble, which is insufficient to make out a claim for substantial assistance. SEC v. Apuzzo, 758 F. Supp. 2d 136, 150 (D. Conn. 2010). And because the SEC cannot plausibly claim Jackson acted corruptly, as described above, the aiding and abetting claimwhich also requires scientermust also fail. In addition, Jacksons lack of involvement in any alleged bribe payments during the limitations period, supra Part III.D, means that he could not have provided substantial assistance to Noble with regard to its alleged violations of the bribery provisions during the limitations period. B. Claims III & IV Aiding and Abetting Nobles FCPA Books and Records Violation, and Directly Violating Internal Controls and Books and Records Requirements

The Complaint alleges that Nobles books and records were inaccurate, and an adequate system of internal controls was not maintained, because bribes were recorded as legitimate operating expenses; it is further alleged that Jackson substantially assisted that violation, Complaint 157-63 (violation of 15 U.S.C. 78t(e) by aiding and abetting violations of 15 U.S.C. 78m(b)(2)(A), (B)). The Complaint also alleges that Jackson knowingly circumvented Nobles internal controls or knowingly failed to implement internal controls, and/or falsified Nobles books and records. Complaint 164-67 (violation of 15 U.S.C. 78m(b)(5) and 17 C.F.R. 240.13b2-1). As shown above, the Complaint lacks factual support for the notion that Jackson believed that Nobles books and records were actually false. Indeed, the facts alleged
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support the conclusion that Jackson believed that legal facilitating payments were being properly accounted for in the specific account designated for facilitating payments. Supra Part III.C. In addition, the facts alleged in the Complaint indicate that it is highly unlikely that Jackson was involved with the recording of any payments on Nobles books and records within the limitations period. Jackson became CEO in October 2006 and ceased serving as Acting CFO the following month. Complaint 8. The limitations period did not start until several months later, in February 2007. The Complaint contains no specific allegations about Jacksons role in recording the payments in Nobles books and records, and common sense and experience instruct that the CEO of a company like Noble would not be involved in recording individual transactions in the accounting records. Iqbal, 556 U.S. at 679 (2009) (Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a contextspecific task that requires the reviewing court to draw on its judicial experience and common sense.). Thus, there is no plausible basis to believe that Jackson committed any violations relating to Nobles internal controls or its books and records during the limitations period. C. Claims V and VI Misleading Auditors and Signing False Certifications

The Complaint alleges that Jackson made materially false or misleading statements to an accountant, Complaint 168-70 (violation of 17 C.F.R. 240.13b2-2), and that he signed false personal certifications used in Nobles public securities filings, Complaint 171-73 (violation of 17 C.F.R. 240.13a-14). The claim for misleading an accountant appears to be premised on the allegation that Jackson signed management representation letters to Nobles independent auditors stating that he was unaware of FCPA violations or other legal violations or fraud, and that he had maintained effective internal controls with no material weaknesses. Complaint 145. The false certifications claim appears to be premised on the allegation that Jackson signed personal certifications as CFO and CEO that stated that he had disclosed all significant
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deficiencies and material weakness in the internal controls, and any fraud. Complaint 146. Both of these claims must fail because the Complaint fails to plausibly plead Jacksons involvement in any FCPA violations (which is the only basis for the suggestion that Noble failed to maintain effective internal controls). In addition, many of the alleged false representations and certifications were, according to the Complaint, made outside the limitations period. Complaint 145-46. Those representations and certifications cannot give rise to liability. See, e.g., United States v. Rutherford Oil Corp., 756 F. Supp. 2d 782, 793 (S.D. Tex. 2010) (granting a motion for summary judgment based on 2462 insofar as it seeks protection from civil penalties for actions completed more than five years before the government brought this action). D. Claim VII Control Person Liability

The Complaint charges Jackson with controlling the legal violations of Noble, Ruehlen, and unspecified others, and inducing those illegal actions while not acting in good faith. Complaint 174-77 (violation of 15 U.S.C. 78t(a), giving rise to liability under 15 U.S.C. 78dd-1, 78m(b)(2)(A), (B)). Controlling person liability requires that the defendant have induced or participated in the alleged violation. In re BP p.l.c. Sec. Litig., No. 10-2185, 2012 U.S. Dist. LEXIS 17788, at *217 (S.D. Tex. Feb. 13, 2012) (attached at Exhibit 14). Yet, as described, the Complaints facts are equally consistent with Jacksons good faith belief that the payments at issue were lawful facilitating payments that were accounted for properly. The facts therefore do not plausibly state a claim that Jackson acted in bad faith, or that he induced or participated in any primary violations. Moreover, to the extent the violations by anyone else took place prior to the limitations period, they cannot give rise to liability for Jackson. CONCLUSION For the foregoing reasons, Jackson respectfully requests that the Court dismiss the Complaint against him for failure to state a claim upon which relief can be granted.
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Dated: May 8, 2012

Respectfully submitted by,

__/s/______________________ David S. Krakoff, Esq. Attorney-in-Charge D.C. Bar No. 229641 BuckleySandler LLP 1250 24th Street NW, Ste. 700 Washington, D.C. 20037 Telephone: (202) 349-7950 Facsimile: (202) 349-8080 dkrakoff@buckleysandler.com Of Counsel: James T. Parkinson, Esq. Adam Miller, Esq. Lauren R. Randell, Esq. Paige Ammons, Esq. BuckleySandler LLP 1250 24th Street NW, Ste. 700 Washington, D.C. 20037

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Case 4:12-cv-00563 Document 35

Filed in TXSD on 05/08/12 Page 31 of 31

CERTIFICATE OF SERVICE I certify that on May 8, 2012, I caused to be electronically filed with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the counsel of record in this matter who are registered on the CM/ECF system, the foregoing Defendant Mark A. Jacksons Motion to Dismiss the Complaint Under Rule 12(b)(6) for Failure to State a Claim Upon Which Relief Can Be Granted.

/s/ _______________ Adam B. Miller