Commercial Litigation and Arbitration

Summary Judgment on State of Mind (Scienter) Affirmed — Assertion of Fifth Amendment Precludes Reliance on Accompanying Testimony

From Securites and Exchange Commission v. Ficken, 2008 U.S. App. LEXIS 21830 (1st Cir. Oct. 20, 2008):

Although it is unusual to grant summary judgment on scienter, summary judgment on this issue is sometimes appropriate. "Even in cases where elusive concepts such as motive or intent are at issue, summary judgment may be appropriate if the nonmoving party rests merely upon conclusory allegations, improbable inferences, and unsupported speculation." Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990). See also Vives v. Fajardo, 472 F.3d 19, 21 (1st Cir. 2007) (citing Benoit v. Tech. Mfg. Corp., 331 F.3d 166, 173 (1st Cir. 2003)); Ayala-Gerena v. Bristol Myers-Squibb Co., 95 F.3d 86, 95 (1st Cir. 1996).


To be sure, Ficken's testimony in the SEC proceeding might raise a genuine issue as to scienter with respect to the FA numbers. But Ficken cannot now rely on that testimony. Under both federal Rule 56(e) and local Rule 56.1, a party opposing summary judgment must refer to specific parts of the record to raise a genuine issue of material fact. In opposing the SEC's motion for summary judgment in the present proceeding, Ficken did not refer to specific testimony from the SEC proceeding in order to raise a genuine issue of material fact. ***

[Footnote 5:] Because Ficken did not rely on his testimony in the SEC proceeding in opposing the SEC's summary judgment motion, we have no occasion to determine whether Ficken's invocation of the Fifth Amendment privilege in this proceeding barred his reliance on his SEC testimony. This approach appears to turn on whether the SEC proceeding was a "separate proceeding." See United States v. Johnson, 488 F.2d 1206, 1210 (1st Cir. 1973) (holding that a former co-defendant's guilty plea in a Rule 11 hearing did not waive his Fifth Amendment privilege as a witness in defendant's later separate trial); see also United States v. Parcels of Land, 903 F.2d 36, 43 (1st Cir. 1990) (noting that if the defendant had testified in one proceeding and then invoked his Fifth Amendment privilege during a deposition in a separate proceeding, "neither would have affected the treatment of the other").

Ficken also cannot rely on his NASD testimony to raise a genuine issue as to the FA numbers. In the NASD proceeding, Ficken invoked the Fifth Amendment or otherwise refused to answer questions about blocked account numbers, a topic pertinent to scienter. Ficken's refusal to answer pertinent questions in the NASD proceeding bars his reliance on that testimony in opposing summary judgment.

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