Filed: Oct. 11, 2006
Latest Update: Feb. 21, 2020
Summary: F I L E D United States Court of Appeals Tenth Circuit PU BL ISH October 11, 2006 UNITED STATES COURT O F APPEALS Elisabeth A. Shumaker Clerk of Court TENTH CIRCUIT U N ITED STA TES SEC UR ITIES AND EX CH A NG E C OM M ISSIO N , Plaintiff - Appellee, v. M AXXON, INC.; GIFFORD M . M ABIE, JR., No. 05-5091 Defendants - Appellants, and THOM AS R. COUGHLIN , JR., Defendant. Appeal from the United States District Court for the N orthern District of Oklahom a (D.C. No. 4:02-CV-00975-TCK -SA J) Ronald
Summary: F I L E D United States Court of Appeals Tenth Circuit PU BL ISH October 11, 2006 UNITED STATES COURT O F APPEALS Elisabeth A. Shumaker Clerk of Court TENTH CIRCUIT U N ITED STA TES SEC UR ITIES AND EX CH A NG E C OM M ISSIO N , Plaintiff - Appellee, v. M AXXON, INC.; GIFFORD M . M ABIE, JR., No. 05-5091 Defendants - Appellants, and THOM AS R. COUGHLIN , JR., Defendant. Appeal from the United States District Court for the N orthern District of Oklahom a (D.C. No. 4:02-CV-00975-TCK -SA J) Ronald C..
More
F I L E D
United States Court of Appeals
Tenth Circuit
PU BL ISH
October 11, 2006
UNITED STATES COURT O F APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
U N ITED STA TES SEC UR ITIES AND
EX CH A NG E C OM M ISSIO N ,
Plaintiff - Appellee,
v.
M AXXON, INC.; GIFFORD M .
M ABIE, JR.,
No. 05-5091
Defendants - Appellants,
and
THOM AS R. COUGHLIN , JR.,
Defendant.
Appeal from the United States District Court
for the N orthern District of Oklahom a
(D.C. No. 4:02-CV-00975-TCK -SA J)
Ronald C. Kaufman, Kaufman & Associates, PLLC, Tulsa, OK (Jon B. W allis,
Tulsa, OK, with him on the briefs), for Defendants - Appellants.
Susan S. M cDonald, Senior Litigation Counsel (Giovanni P. Prezioso, General
Counsel, Eric Summergrad, Deputy Solicitor, and Susan Straus, Attorney, with
her on the brief), Securities and Exchange Commission, W ashington, DC, for
Plaintiff - Appellee.
Before L UC ER O, EBEL, and O’BRIEN, Circuit Judges.
EBEL, Circuit Judge.
Defendants-Appellants Gifford M abie, Jr. and M axxon, Inc., the company
which M abie controls, appeal from a jury verdict finding them civilly liable for
violating various securities laws and a court judgment imposing various remedies.
Exercising jurisdiction under 28 U.S.C. § 1291, we AFFIRM . 1
BACKGROUND
M abie founded M axxon and served, at all relevant times, as its chief
executive officer. At the time this lawsuit was filed, he was the company’s sole
officer and director. Like other small companies with which M abie was
1
Although this was a complex case involving a ten-day jury trial and
separate proceedings on remedies, the record on appeal contains few of the
documents and motions filed below and only brief portions of the transcript of the
relevant proceedings. Further, many of M axxon’s and M abie’s arguments consist
of no more than unsupported statements that error occurred without any citation
to pertinent legal authority. W e have endeavored to cull the record and interpret
the arguments in order to address the issues on the merits wherever possible.
However, we remind appellants of their obligation to support their arguments w ith
legal authority, see, e.g., Rios v. Ziglar, 398 F.3d 1201, 1206 n.3 (10th Cir. 2005)
(“To make a sufficient argument on appeal, a party must advance a reasoned
argument . . . and it must support its argument with legal authority.”), and to
provide a record sufficient to allow appellate review, see, e.g., 10th Cir. R. 10;
Scott v. Hern,
216 F.3d 897, 912 (10th Cir. 2000) (“W here the record is
insufficient to permit review we must affirm.”), or risk summary dismissal of
their claims.
-2-
connected, M axxon never paid him a salary but rather compensated him in shares
of stock. M abie often sold this stock to the public for a substantial profit.
M axxon was engaged in developing a “safety syringe”— a disposable
syringe with a retractable needle. Despite development attempts in conjunction
with several different partners, M axxon never put a m arketable syringe into
production. Even so, M abie made numerous statements promoting M axxon’s
product. For example, M abie claimed that M axxon’s syringe could be
manufactured for the same price as a standard syringe. Similarly, M abie stated
that the Swedish government was interested in building a facility to manufacture
its syringe. However, although a M axxon representative had met with the
Sw edish government, no statement of interest was made. M abie also stated that
major companies were interested in purchasing M axxon; in fact, those companies
had made clear that they would not be interested until M axxon had produced a
marketable syringe.
Of particular relevance to this appeal, on October 7, 1998, M axxon drafted
a press release stating that the Patterson Group, a health industry marketing firm,
had agreed to help it find a corporate buyer. The release was later issued to the
public, although no final agreement betw een the tw o parties was ever reached. In
addition, M abie stated that it had submitted an application to the FDA seeking
approval to manufacture the syringe. The statement failed to mention that the
-3-
FD A had put its application on hold because M axxon had not provided sufficient
information. M axxon attempted to correct this information in mid-July, 2002.
The SEC brought the present lawsuit against M axxon and M abie, alleging
violations of the securities laws stemming from these statements. 2 The complaint
alleged, inter alia, that M axxon and M abie violated Section 10(b) of the Securities
Exchange Act of 1934; 3 SEC Rule 10b-5; 4 and Section 17(a)(1)-(3) of the
2
Thomas Coughlin, a medical advisor to M axxon, and Rhonda Vincent,
M axxon’s financial reporting manager, were initially parties to the lawsuit as
well. Vincent settled with the SEC, and Coughlin was found not liable by the
jury. Neither are a party to the present appeal.
3
Section 10(b) provides:
It shall be unlawful for any person, directly or indirectly, by the use of
any means or instrumentality of interstate commerce or of the mails, or
of any facility of any national securities exchange . . . [t]o use or
employ, in connection with the purchase or sale of any security
registered on a national securities exchange or any security not so
registered, or any securities-based sw ap agreement (as defined in
section 206B of the Gramm-Leach-Bliley Act), any manipulative or
deceptive device or contrivance in contravention of such rules and
regulations as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of investors.
15 U.S.C. § 78j(b).
4
Rule 10b-5 provides:
It shall be unlawful for any person, directly or indirectly, by the use of
any means or instrumentality of interstate commerce, or of the mails or
of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(continued...)
-4-
Securities Act of 1933. 5
At the outset of trial, M axxon and M abie filed a motion in limine to
exclude the report of W alter Rush, one of the SEC’s expert witnesses. Rush’s
role was to analyze M abie’s stock trades to calculate illegal profits. The motion
was denied, although the court ultimately ruled that Rush’s testimony before the
4
(...continued)
(b) To make any untrue statem ent of a material fact or to omit to state
a material fact necessary in order to make the statem ents m ade, in the
light of the circumstances under which they were made, not misleading,
or
(c) To engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon any person, in connection
with the purchase or sale of any security.
17 C.F.R. § 240.10b-5.
5
Section 17(a), as amended, provides:
It shall be unlawful for any person in the offer or sale of any securities
or any security-based swap agreement (as defined in section 206B of
the Gramm-Leach-Bliley Act) by the use of any means or instruments
of transportation or communication in interstate commerce or by use of
the mails, directly or indirectly
(1) to employ any device, scheme, or artifice to defraud, or
(2) to obtain m oney or property by means of any untrue statement of a
material fact or any omission to state a material fact necessary in order
to make the statements made, in light of the circumstances under which
they were made, not misleading; or
(3) to engage in any transaction, practice, or course of business which
operates or would operate as a fraud or deceit upon the purchaser.
15 U.S.C.A. § 77q(a).
-5-
jury should include only M abie’s personal stock trades and that stock sales by
M abie’s trusts must be excluded. During cross-examination, however, it was
established that the calculations Rush offered on direct examination had included
the trusts; after an objection by M axxon’s and M abie’s counsel, the district court
excluded the portion of R ush’s testimony pertaining to the shares sold. Rush also
played a role in the remedies phase of the trial; the SEC introduced a
supplemental report compiled by Rush for the purpose of determining the amount
of illegal profits gained by M abie through sales of stock for the purposes of
calculating the amount M abie would be required to disgorge.
M axxon and M abie objected strenuously to the portion of the jury verdict
form regarding alleged violations of Section 10(b) and Rule 10b-5. The final
form asked the jury to find whether M axxon and M abie, respectively, had violated
Section 10(b) and Rule 10b-5 “by knowingly or recklessly making false or
misleading statements or omissions of material fact with respect to any one of the
follow ing,” and then listed ten categories of alleged misrepresentations. 6 The
6
The ten alleged misrepresentations involved:
(a) the cost of producing the M axxon syringe;
(b) OSHA requirements for safety syringes;
(c) whether the M axxon syringe complied w ith O SHA requirements;
(d) whether M axxon had received Orders for its syringe;
(e) whether M axxon had begun manufacturing its syringe;
(f) whether M axxon was engaged in negotiations with the Swedish
Government;
(g) whether major healthcare companies had determ ined that M axxon
(continued...)
-6-
form asked the jury to answer “yes” or “no” only once, thus requiring the jury to
find that a violation had been committed but not to specify which one (or more)
of the ten categories formed the basis for the jury’s finding. The verdict form
also included a space for the jury to indicate, if a violation was found, the earliest
date on which a false or misleading statement was made. M axxon and M abie
argued for a form that required (1) a “yes” or “no” answer as to each category and
(2) a start and end date for any violations. The district court denied these
requests. The jury returned a verdict finding M axxon and M abie had each
violated Section 10(b) and Rule 10b-5 and that the earliest date of this violation
was October 7, 1998. 7
Following a hearing on the SEC’s motion for remedies, the district court
entered a final judgment against M axxon and M abie. After reciting its findings of
fact and conclusions of law , the district court imposed the following remedies: it
(1) permanently enjoined M axxon and M abie from violating Sections 10(b) and
17(a)(2)-(3) and Rule 10b-5; (2) prohibited M abie from serving as an officer or
6
(...continued)
had the best syringe design in the world;
(h) whether major healthcare companies wanted to acquire M axxon;
(i) whether the Patterson Group had signed an agreement to assist
M axxon; or
(j) the status of M axxon’s application for FDA approval.
7
The jury also found that M axxon and M abie had violated Section 17(a)(2)-
(3). M axxon and M abie do not appeal this finding.
-7-
director of any issuer of a certain class of securities for five years; (3)
permanently barred M abie from participating in any offering of “penny stock”;
(4) ordered M abie to disgorge the $433,228.52 in ill-gotten profits resulting from
the securities violations (plus pre-judgment interest); 8 and (5) fined M abie a civil
penalty equal to the amount disgorged.
M axxon and M abie then filed a motion for a new trial. The district court
denied the motion on the ground that it was untimely; the final judgment had been
entered on M arch 11, 2005, and the motion was not filed until M arch 26,
2005— one day after Fed. R. Civ. P. 52(b)’s and 59(a)’s jurisdictional ten-day
filing period ended. Following this ruling, M axxon and M abie appealed.
D ISC USSIO N
M axxon and M abie raise five issues on appeal: (1) the jury should have
been required to determine an end-date to the Section 10(b)/Rule 10b-5
violations; (2) the jury’s finding that the O ctober 7, 1998 draft press release
constituted a violation of the securities laws is erroneous; (3) the findings of fact
recited in the district court’s final judgment are contrary to the jury’s verdict; (4)
8
The district court noted that an “appropriate calculation” of the amount
M abie should disgorge was over $600,000, which represented the “entire
proceeds” of his stock gain between October 7, 1998 and July 15, 2002, the date
that had been determined to be the relevant “end date” because that is when
M axxon and M abie sought to correct some of the misleading statements.
However, the SEC only sought disgorgement of $433,288.52, which was the total
amount minus $0.28 per share, the market price of M axxon stock on July 15,
2002, when the market re-valued the company based on the corrected information.
-8-
the district court erred in accepting Rush’s supplemental report in determining
remedies; and (5) the district court erred in denying M axxon’s and M abie’s
motion for a new trial as untimely. Based in part on the limited record before us,
we reject all of these contentions.
I.
The verdict form asked the jury to determine, inter alia, (1) whether
statements made by M axxon and M abie relating to various topics were false or
misleading in violation of Section 10b and Rule 10b-5, and (2) if so, the earliest
date on which such a statement was made. M axxon and M abie contend that these
instructions w ere erroneous because the jury should have been required to
“provide both a start date and a cut-off date for each violation.”
To the extent that M axxon and M abie claim the jury was improperly
instructed on the elements of a Section 10b/Rule 10b-5 claim (i.e., that those
claims require a finding of a cut-off date), we disagree. To establish a Section
10(b) and/or Rule 10b-5 violation, the SEC must prove the following: “(1) a
material misrepresentation, (2) in connection with the purchase or sale of a
security, (3) scienter, and (4) use of the jurisdictional means.” Geman v. S.E.C.,
334 F.3d 1183, 1192 (10th Cir. 2003) (Rule 10b-5) (quotation, alteration omitted);
see also In re PolyM edica Corp. Sec. Litig.,
432 F.3d 1, 6 (1st Cir. 2005) (noting
that the elements of a Section 10(b) claim and a Rule 10b-5 claim are the same).
The date on which a violation ends is simply not a necessary element of proving a
-9-
violation. 9
M axxon and M abie also argue that, without a jury finding as to the end-
date of the violation, the district court could not properly calculate disgorgement.
Disgorgement being remedial rather than punitive, see S.E.C. v. Cavanagh, 445
9
Further, the jury instructions properly conveyed the elements of a Section
10(b)/R ule 10b-5 claim. See G race United M ethodist Church v. City Of
Cheyenne, 451 F.3d 643, 660 (10th Cir. 2006) (“W e review de novo w hether, as a
whole, the district court’s jury instructions correctly stated the governing law and
provided the jury with an ample understanding of the issues and applicable
standards.”). The jury was instructed that:
In order to prevail on the claim of a violation of Section 10(b) and
Rule 10b-5, Plaintiff must establish each of the following elements
by a preponderance of the evidence:
1. Defendants used an instrumentality of interstate commerce, or the
mails, or a facility of national securities exchange, in connection
with the sale of securities;
2. In connection with such purchase or sale, Defendants either:
a. employed a device, scheme, or artifice to defraud, or
b. made any untrue statement of a material fact, or omitted to state a
material fact necessary to in order to [sic] make the statements that
were made, in light of the circumstances under w hich they were
made, not misleading, or
c. engaged in an act, practice, or course of business that operated as a
fraud or deceit on any person in connection with the purchase or sale
of a security; and
3. Defendants acted w ith scienter or either knowing or reckless
behavior.
- 10 -
F.3d 105, 116 & n.25 (2d Cir. 2006), some end-date determination is certainly
necessary so that the defendant is not required to disgorge profits not “causally
connected to the violation.” Arnold S. Jacobs, Disclosures & Remedies Under the
Securities Laws § 20:109 (footnote omitted); cf. S.E.C. v. M acDonald, 699 F.2d
47, 52-55 (1st Cir. 1983) (en banc) (holding that disgorgement was appropriate
only as to the profits made prior to the time insider information was made public).
However, here, the district court did determine an end-date— July 15, 2002, the
date on which it found M axxon and M abie “first sought to correct some of their
misleading statements.” “Disgorgement is by nature an equitable remedy as to
which a trial court is vested with broad discretionary powers.”
Jacobs, supra, at
§ 20:109 (footnotes omitted). So long as the end date chosen results in a
“reasonable approximation” of illegal profits,
id., there is nothing wrong with the
court itself determining that date. See, e.g., SEC v. First Jersey Sec., Inc.,
101
F.3d 1450, 1474-75 (2d Cir. 1996) (“The district court has broad discretion not
only in determining whether or not to order disgorgement but also in calculating
the amount to be disgorged.”). 10
II.
As noted, the jury found that the earliest date of a Section 10(b)/Rule 10b-5
violation was O ctober 7, 1998. M axxon and M abie contend that the only
10
Although not clearly raised in this appeal, there is nothing in the record
before us to establish that the end date selected by the court for purposes of
calculating the disgorgement amount w as inconsistent w ith the jury findings.
- 11 -
“statement” made on that date was the draft of a press release announcing that the
Patterson Group had agreed to help M axxon find a corporate buyer, and that this
statement could not constitute a “material misrepresentation.” Thus, M axxon and
M abie argue, the district court should have granted their motion for judgment as a
matter of law and/or a new trial, as the jury’s verdict was in error.
M axxon and M abie’s argument is, essentially, that (1) the October 7 draft
press release was not made public and so cannot be deemed a material
misrepresentation, (2) Patterson agreed to participate in finding a corporate buyer
for M axxon on October 9, and thus (3) the statement made in the draft release
(i.e., the Patterson/M axxon agreement) was accurate when the statement was
“made” (e.g., when the press release was distributed) on October 14, 1998. The
SEC contends that the October 9 comm unication from Patterson was not an
agreement (as Patterson conditioned any agreement on receiving additional
information and a $50,000 retainer from M axxon), suggesting that the October 14
public release was, in fact, false. 11
Neither the October 7 draft release, nor the October 9 comm unication, nor
the October 14 release, nor the trial testimony concerning these releases is
included in the record. W ithout these documents, we cannot evaluate this claim
11
Further, the SEC claims that Patterson’s president testified that, when he
saw the October 14 release, he immediately contacted M axxon and demanded a
retraction.
- 12 -
and therefore must affirm. 12 Scott, 216 F.3d at 912.
III.
M axxon and M abie also argue that the findings of fact made in the district
court’s final judgment order “directly contradict” the jury’s findings, as the
findings include events and statements that occurred before October 7, 1998— the
date that the jury found the Section 10(b)/Rule 10b-5 violations began. W e
review the district court’s findings of fact for clear error. Flying J Inc. v.
Comdata N etwork, Inc., 405 F.3d 821, 829 (10th Cir. 2005).
M axxon and M abie do not claim that the district court took these pre-
October 7, 1998 statements into consideration when fashioning remedies; they
contend only that “[i]f the Jury found the Earliest Date of a misrepresentation to
be October 7, 1998, it is clear error for the court to list eight statements made
prior to October 7th.” (Emphasis added.) The jury’s verdict does not suggest that
the pre-O ctober 7 statements were not made, only that they were not violations.
The findings of fact begin by stating that “M axxon and M abie m ade public
statements promoting M axxon to the public, some of which were found by the
12
The fact that the October 7 draft was not actually released to the public
would not compel us to grant M axxon and M abie relief. In that case, the
evidence, taken in the light most favorable to the SEC, would show that the
October 14 press release was a material misrepresentation in that it announced an
agreement that had not, in fact, been finalized. The jury could have concluded
that M axxon and M abie hatched the scheme to make this false announcement on
October 7, when they drafted the press release.
- 13 -
jury to have violated Section 10(b) and Rule 10b-5, as well as Sections 17a(2) and
(3).” (Emphasis added.) This finding, and the subsequent recitation of pre-
October 7 statements, do not conflict w ith the jury’s verdict. 13
In addition, the jury found that M axxon and M abie violated both Section
10(b)/Rule 10b-5 and Section 17(a)(2)-(3). The jury’s Section 17(a) finding
included no start date. Thus, even assuming the findings of fact were reciting the
pre-October 7 statements as statements violating the “securities laws,” such a
finding would not be inconsistent with the jury’s verdict on Section 17(a).
IV.
M axxon and M abie raise two basic arguments concerning the district
court’s acceptance of the supplemental report of the SEC’s expert witness, W alter
Rush: (1) the report was based on facts not in evidence; and (2) the district
court’s acceptance of the report violated M axxon’s and M abie’s due process
rights. “W e review a trial court’s admission of expert testimony for abuse of
discretion, and we will reverse only when that decision is manifestly erroneous.”
United States v. Dazey, 403 F.3d 1147, 1171 (10th Cir. 2005) (quotations
omitted).
13
The district court did state that “[d]efendants’ actions were not isolated
incidents” and that “[m]isleading statements regarding the safety syringe w ere
made over a period of years.” However, without a sufficient record, we cannot
determine whether (and will not assume that) these references were to pre-
October 7, 1998 actions and statements, nor could we determine the materiality of
these statements.
- 14 -
A.
The SEC submitted Rush’s supplemental report after the liability phase of
the proceedings and in anticipation of the remedies phase. According to the
parties, this report calculated the disgorgement am ount that was subsequently
relied on by the district court. M axxon and M abie contend this was error, as the
district court struck Rush’s testimony and his original report at trial and, thus, the
supplemental report was based on “unsupported” calculations— that is, facts not
in evidence. 14
The district court’s docket indicates that before trial, M axxon and M abie
moved to exclude Rush’s original report and testimony. The motion was denied.
At trial, Rush’s original report was admitted and Rush testified to the number of
shares of M axxon stock sold by M abie. On cross-examination, Rush admitted
that this calculation was based on shares sold by M abie and M abie’s trusts.
Defense counsel objected to this testimony as contrary to the court’s earlier ruling
that the testimony should include only shares sold by M abie. After discussion
between the court and counsel, the court told the jury:
Ladies and gentlem en, as a result of our efforts, we have identified
some errors in the calculations of those shares that pertain to the stock
14
M axxon and M abie also argue that the supplemental report contained
“new calculations,” implying that the calculations w ere based on evidence not in
the initial report, and also that the supplemental report included calculations “that
once again included the trusts which the Court had earlier ruled inadmissible.”
As neither the original nor the supplemental report are in the record, we decline to
consider this argument. See 10th Cir. R. 10.3(B).
- 15 -
sold by M r. M abie. A nd with respect to those shares, you are to
disregard the testimony that has been given to date.
(Emphasis added.)
Contrary to M axxon’s and M abie’s argument, then, there is no indication
that Rush’s report, or any of the data underlying it, was excluded by the district
court at trial. Indeed, the district court itself stated that the report and underlying
exhibits were not excluded at trial. In making findings of facts in its final
judgment order (issued after the remedies stage of the proceedings), the court
noted:
The [supplemental] report clearly does not constitute new evidence.
R ather, it represents argument based upon the evidence actually
admitted at trial, namely, specifically identified exhibits and the expert
report of W alter K . Rush.
Further, the only evidence in the record provided to us indicates that Rush’s
supplemental report was merely a “ministerial” recalculation of the data accepted
into evidence at trial. 15 Thus, we cannot conclude that Rush’s supplemental
15
During the remedies, the following exchange occurred between the court
and the SEC:
THE COURT: But [SEC exhibits] 369, 370, and 371, which I don’t
have in front of me, but as I understand it, you are representing that a
review of those exhibits will reflect all of [M abie’s stock] transactions
. . . and the proceeds from those transactions. And all that M r. Rush did
[in his supplem ental report] was to use the start date of October 7th,
and using that start date, was able to perform the simple, alm ost
ministerial task of calculating what all of those transactions were from
these three exhibits?
(continued...)
- 16 -
report was unsupported.
B.
M axxon and M abie also argue that the acceptance by the district court of
Rush’s supplemental report during the remedies phase of the proceeding violated
their due process rights because the district court accepted Rush’s supplemental
report without giving them an opportunity to cross-examine him. Assuming there
exists a due process right to cross-examine a witness who presents information
used in imposing civil remedies against a party, see Goldberg v. Kelly, 397 U.S.
254, 269 (1970) (“In almost every setting where important decisions turn on
questions of fact, due process requires an opportunity to confront and
cross-examine adverse witnesses.”), we cannot grant M axxon and M abie relief on
that ground in this case.
M axxon and M abie concede that they were given the opportunity to cross-
examine Rush during the jury trial. As noted above, the only evidence in the
record before us indicates that Rush’s supplemental report was, as the district
court described, a “ministerial” re-calculation of data in the trial record. W e thus
see no reason why additional cross-examination during the remedies phase would
be necessary to satisfy basic requirements of due process. As the record is
15
(...continued)
M R. TIBBETTS [counsel for the SEC]: That’s correct . . . .
(Emphasis added).
- 17 -
insufficient to conclude that the supplemental report contained any information
that might trigger some right to cross-examine the report’s author, we reject
M axxon and M abie’s due process argument. Scott, 216 F.3d at 912. 16
M axxon and M abie further argue that they were not allowed to present
evidence concerning the amount of disgorgement. W ithout the relevant portions
of the transcript of the remedies hearing, we are unable to review this claim. W e
note, however, that the district court’s final judgement expressly states that
M axxon and M abie “offered an alternative calculation for determining the value
of Defendant M abie’s ill-gotten gains.” This suggests that M axxon and M abie
were, in fact, afforded some opportunity to present rebuttal evidence. 17
V.
Finally, M axxon and M abie argue that the district court erred in finding
16
M axxon and M abie cite to a recent decision by the Eleventh Circuit to
argue that due process requires a hearing before remedies are imposed. See
S.E.C. v. Smyth, 420 F.3d 1225, 1232 (11th Cir. 2005). However, in Smyth, the
district court imposed remedies for securities violations without affording the
defendant any hearing at all.
Id. at 1229-30. In contrast, the record in this case
plainly indicates that the district court did hold a hearing on remedies. M axxon
and M abie seem to be arguing that this hearing was inadequate to meet the basic
requirements of due process. However, without the full transcript of the hearing,
we cannot entertain this claim.
17
In addition, M axxon and M abie claim that acceptance of Rush’s
supplemental report violated Fed. R. Civ. P. 26(e), which requires disclosure of
“any additions or other changes” to an expert’s testimony “at least 30 days before
trial” “[u]nless otherw ise directed by the court.” Fed. R. Civ. P. 26(a)(3), (e)(1).
W e decline to consider this argument, as the record is insufficient to determine
whether it was raised below. See, e.g., Robbins v. W ilkie, 433 F.3d 755, 772
(10th Cir. 2006) (“[W ]e generally do not consider issues not raised below .”).
- 18 -
their motion for a new trial untimely. According to M axxon and M abie, counsel
attempted to file the motion electronically before the midnight filing deadline on
M arch 25, 2005. 18 See Fed. R. Civ. P. 59(b) (allowing ten days from the entry of
judgment for a motion for a new trial to be filed). However, due to technical
problems, 19 the motion was not submitted until after the deadline. The district
court ruled that Rule 59’s time limits are jurisdictional, and thus it could not
entertain the motion.
The district court’s electronic filing system contains the following
safeguards for late filings due to technical failures:
18
The relevant order w as entered by the district court on M arch 11.
19
According to M axxon and M abie,
[counsel] had the filings complete and first attempted to file
electronically at approximately nine pm Friday night M arch 25, 2005.
There were technical difficulties first using the software to format the
documents, than [sic] after an hour of effort around ten pm , the
documents were correctly formatted. [Counsel] than [sic] attempt [sic]
to transmit file the documents electronically from [counsel’s] office,
after over an hour of unsuccessful effort at approximately eleven pm
[counsel] traveled to K inkos with the filings on computer disc to
attempt to use a different computer to electronically file the motions set
forth above. The internet connections at Kinkos were first dow n, then
operating painfully slow. At approximately 11:45pm [counsel]
abandoned the Kinko’s effort and woke up an attorney friend met her
at her office were [sic] [counsel] was finally able to electronically file
the motions at her office thirty eight m inutes after midnight, which is
technically Saturday morning.
- 19 -
CO UR T’S ECF SYSTEM
A technical failure exists when the ECF System is unable to accept
filings continuously or intermittently over the course of any period of
tim e greater than two (2) hours after 12:00 p.m. that day. Check the
Court’s website for postings regarding any other ECF System outages
or downtimes. Should a filing be made untimely as the result of a
technical failure of the Court’s ECF System, the filer may seek
appropriate relief from the assigned judge.
FILER’S SYSTEM
Problems on the filer’s end, such as phone line problems, problems w ith
the filer’s Internet Service Provider (ISP), or hardw are or software
problems, will not constitute a technical failure under these procedures
or excuse an untimely filing. Upon a showing of good cause, the
assigned judge may grant appropriate relief for an untimely filing.
CM /ECF Instruction M anual, 2. Technical Information/Support/Hardware-
Software, available at http://www.oknd.uscourts.gov/okndpublic/cminstex.nsf/
e1df95432b8fe773862567ca00573ae3/8eaa0533de15e99186256e6e00537c58?Ope
nDocument (last visited A ug. 2, 2006.).
M axxon and M abie do not claim (nor does the record suggest) that they
sought any such relief. W ithout some attempt to ameliorate their late filing, the
district court did not err in ruling the motions untimely. 20
20
Although the SEC seems to concede that the district court erred in
denying the motion as untimely, “concession of a point on appeal . . . is by no
means dispositive of a legal issue.” Roberts v. Galen of Va., Inc., 525 U.S. 249,
253 (1999). In any event, M axxon and M abie’s only argument on appeal is that,
if we deem the motion timely filed, we should “rule on the m erits.” H owever,
they do not include the motion in the record, thus we cannot determine what “the
merits” are. Further, “[i]t is insufficient merely to state in one’s brief that one is
appealing an adverse ruling below without advancing reasoned argument as to the
grounds for the appeal.” Am. Airlines v. Christensen,
967 F.2d 410, 415 n.8
(10th Cir. 1992). This passing request to “rule on the merits” would not suffice to
(continued...)
- 20 -
C ON CLU SIO N
For the foregoing reasons, we AFFIRM .
20
(...continued)
present whatever arguments may be contained in the motion to this court on
appeal.
- 21 -
