SEC v. Harman Wright Group ( 2019 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT June 14, 2019
_________________________________
Elisabeth A. Shumaker
Clerk of Court
SECURITIES AND EXCHANGE
COMMISSION,
Petitioner - Appellee,
v. No. 18-1476
(D.C. No. 1:18-MC-00190-CMA)
HARMAN WRIGHT GROUP, LLC, (D. Colo.)
Respondent,
and
TYTUS W. HARKINS; JASON M.
WHITE,
Respondents - Appellants.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before HOLMES, BACHARACH, and McHUGH, Circuit Judges.
_________________________________
Tytus W. Harkins and Jason M. White (together, Appellants), proceeding
pro se, appeal from the district court’s order compelling them to comply with
*
After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
subpoenas issued by the Securities and Exchange Commission (SEC). The district
court’s order is a final decision that affords us jurisdiction under 28 U.S.C. § 1291.
E.E.O.C. v. Dillon Cos., 310 F.3d 1271, 1272 (10th Cir. 2002). We affirm.
BACKGROUND
Appellants are founding principals and officers of Hartman Wright Group,
LLC (HWG). They, as well as HWG, are the subjects of an SEC investigation.
Appellants failed to comply with testimonial subpoenas issued by the SEC, causing
the SEC to file in the district court an application to compel compliance.1
The district court set a show-cause hearing and directed Appellants to respond
to the SEC’s application within seven days after receiving notice. The order further
stated that “[i]f a response is not filed within the prescribed time, the Court may treat
the Application as conceded.” R., Vol. II at 6. The district court then granted
Appellants’ motion for an extension, setting a November 13, 2018, deadline for the
response. On November 13, Appellants mailed their documents, which the district
court received and filed on November 15. The SEC filed a reply on November 20.
The day after the SEC filed its reply, the district court issued its order
compelling Appellants to comply with the subpoenas. It held that the SEC had
satisfied the four requirements for a court to enforce an administrative agency
1
HWG also was subpoenaed and was named as a respondent to the SEC’s
application to enforce, but it has not appealed. The government states that HWG
produced documents after the district court held it in contempt.
2
investigative subpoena. See R., Vol. II at 215-16 (citing United States v. Powell,
379 U.S. 48, 57-58 (1964)). The district court further stated:
Moreover, in this Court’s order granting the SEC’s application
for an order to show cause, the Court indicated that Respondents were
required to file a timely response to the SEC’s motion. Additionally,
the Court advised that if a response is not filed within the prescribed
time, the Court may treat the Application as conceded. After this Court
granted Respondents an extension of time to respond, Respondents still
failed to enter a timely submission. Respondent[s’] response was due
on 11/13/2018. However, Respondents did not submit any filings until
11/15/2018. Therefore, in light of Respondents’ untimely response and
the evidence submitted by the SEC, this Court finds that Respondents
should be compelled to comply with the administrative subpoenas.
Id. at 217-18 (record citations and internal quotation marks omitted). It later
summarily denied Appellants’ motion for reconsideration.
DISCUSSION
We review for abuse of discretion both the order compelling compliance and
the order denying reconsideration. Walters v. Wal-Mart Stores, Inc., 703 F.3d 1167,
1172 (10th Cir. 2013) (Fed. R. Civ. P. 59(e) and 60(b) motions); Dillon Cos.,
310 F.3d at 1274 (order regarding administrative subpoenas). “An abuse of
discretion occurs when the district court bases its ruling on an erroneous conclusion
of law or relies on clearly erroneous fact findings.” Walters, 703 F.3d at 1172
(internal quotation marks omitted).
Before this court, Appellants do not challenge the requirements for
enforcement that the district court identified or the court’s reasons for determining
that the SEC satisfied those requirements. Instead, they reiterate the arguments they
made in their motion for reconsideration—that the district court erroneously
3
disregarded their response as untimely and issued its order prematurely because they
did not have time to file a sur-reply. Appellants also request an award of costs.
In asserting that their filings were timely, Appellants rely on Fed. R. Civ. P.
6(d), which provides, “[w]hen a party may or must act within a specified time after
being served and service is made under Rule 5(b)(2)(C) (mail), (D) (leaving with the
clerk), or (F) (other means consented to), 3 days are added after the period would
otherwise expire under Rule 6(a).” Appellants were not permitted to use the court’s
electronic filing system and were served by mail. Apparently this caused them to
believe that they had three days beyond the district court’s November 13 deadline to
file their documents.
Appellants are mistaken. When the district court granted their motion for an
extension, it did not direct them to act “within a specified time after being served.”
Rather, it ordered a set date—November 13—as the deadline. In those
circumstances, Rule 6(d) did not apply. Because Appellants’ response was not filed
with the court on or before November 13, it was untimely.
Moreover, regardless of the untimeliness of the response, the district court did
not issue the order solely on the ground of any concession by Appellants. Before
discussing timeliness, it identified the requirements for enforcing an administrative
subpoena and analyzed those requirements, finding each satisfied. And as part of
that discussion, it noted Appellants’ responsive arguments. As stated, Appellants do
not dispute this portion of the district court’s order, which in itself supports the order
compelling compliance.
4
Appellants also complain that the district court ruled before they were able to
finish preparing a sur-reply to the SEC’s reply in support of its application.
Appellants, however, had no right to file a sur-reply. While they cite “FRCP Rule
27(a)(3)(4),” Aplt. Opening Br. at 3, Fed. R. Civ. P. 27 is inapplicable. The language
they quote2 is from Rule 27(a)(4) of the Rules of Appellate Procedure. As an
appellate rule, Rule 27(a)(4) did not control the briefing of the SEC’s motion to
compel compliance, and in any event, the rule provides for a reply, not a sur-reply.
Further, Appellants have failed to present any reason why they should have been
allowed the unusual privilege of filing a sur-reply—particularly, they give no reason
why the arguments they wanted to make in their sur-reply had not been available to
them when they filed their response just a few weeks earlier.
CONCLUSION
Because Appellants fail to show that the district court’s orders compelling
compliance and denying reconsideration were an abuse of discretion, the district
court’s judgment is affirmed. In light of this disposition, Appellants are not entitled
to the award of costs they request. Fed. R. App. P. 39(a)(2).
Entered for the Court
Carolyn B. McHugh
Circuit Judge
2
“Reply to Response. Any reply to a response must be filed within 7 days
after service of the response. A reply must not present matters that do not relate to
the response.” Aplt. Opening Br. at 3 (internal quotation marks omitted).
5