Marshall v. United States

368 F.Supp.3d 674

John MARSHALL, Petitioner,

v.UNITED STATES of America, Respondent.

17-cv-2951 (AJN)

United States District Court, S.D. New York.

Signed March 12, 2019

Alan S. Lewis, Carter Ledyard & Milburn LLP, New York, NY, for Petitioner.

Tara Marie La Morte, DOJ-USAO, New York, NY, for Respondent.

OPINION & ORDER

ALISON J. NATHAN, United States District JudgePetitioner John Marshall moves pursuant to Fed. R. Civ. P. 59(e) to alter and amend the Court's June 20, 2018 Memorandum Opinion and Order denying his petition for writ of error coram nobis. Dkt. No. 37. For the reasons discussed below, the motion to alter and amend the judgment is denied.

I. BACKGROUND

The Court assumes familiarity with the underlying facts, which were described in detail in the Court's June 20, 2017 Memorandum Opinion and Order ("Order"). Dkt. No. 37. In brief, from 2000 until 2008, Petitioner served as a member of the Board of Directors of the International Securities Exchange ("ISE"), in addition to running his financial consulting firm, Marshall, Tucker & Associates, LLC. Dkt. No. 4, Ex. A at 20:2–5; Dkt. No. 31 ¶¶ 21–22. As an ISE board member, Petitioner learned material, non-public information related to discussions about a potential merger. Dkt. No. 22, Ex. C ¶¶ 3, 7. Petitioner provided this information to his business partner, Alan Tucker, who traded on the basis of the information and "made a significant profit." Id. ¶ 7. The Government filed a complaint against Petitioner, Tucker, and one other defendant on March 13, 2008. Dkt. No. 4, Ex. B. Petitioner pled guilty on September 25, 2008, to a one count Information charging him with conspiracy to commit securities fraud in violation of 18 U.S.C. § 371. Dkt. No. 4, Ex. A. In his plea allocution, Petitioner stated that he "gave hints about [the] merger discussions to a colleague with the knowledge that he would likely trade on that information." Dkt. No. 4, Ex. A at 20:5–10. Petitioner also confirmed that he had an agreement or understanding with Tucker. Id. at 23–24. Following his guilty plea, Petitioner was sentenced to eighteen months' imprisonment, three years of supervised release, and 300 hours of community service, which he has completed. Dkt. No. 5 ¶ 2.

On April 24, 2017, Petitioner filed a petition in this Court for a writ of error coram nobis on the grounds of actual innocence and ineffective assistance of counsel. Dkt. No. 1. Petitioner's primary argument was that he is innocent as a matter of law because "he never received or expected to receive any benefit of any kind in exchange for the informational tip he gave to Alan Tucker." Dkt. No. 1 at 5–6. In addition, the petition argues that Petitioner's trial counsel rendered constitutionally defective representation because he failed to raise the lack of an expected or actual benefit "in connection with plea discussions, the acceptance of the plea agreement or otherwise during counsel's representation of Mr. Marshall." Id. at 1. On June 20, 2017 the Court denied the petition for a writ of error coram nobis on the grounds that there was "sufficient evidence" to support "Petitioner's conviction for conspiracy to commit securities fraud." Dkt. No. 35 at 6. In light of this evidence, the Court rejected Petitioner's actual innocence argument, as well as the argument that Petitioner's counsel was ineffective for "failing to recognize [his] innocence." Id. at 7.

On July 13, 2018, Petitioner filed the instant motion to amend the judgment. See Dkt. No. 37. The Government filed an opposition on July 26, 2018, Dkt. No. 39, and Petitioner filed a reply on August 10, 2018, Dkt. No. 42.

II. DISCUSSION

The standard for granting a motion to amend or alter the judgment pursuant to Fed. R. Civ. P. 59(e) in the Second Circuit is "strict, and reconsideration will generally be denied." In re Health Management Sys. Inc. Secs. Litig. , 113 F.Supp.2d 613, 614 (S.D.N.Y. 2000) (quoting Ursa Minor Ltd. v. Aon Fin. Prods., Inc. , 00 Civ. 2474 (AGS), 2000 WL 1279783, at *1 (S.D.N.Y. Sept. 8, 2000) ). Reconsideration is appropriate where the moving party demonstrates that the Court overlooked "controlling decisions or factual matters that were put before it on the underlying motion ... and which, had they been considered, might have reasonably altered the result before the court." Range Road Music, Inc. v. Music Sales Corp. , 90 F.Supp.2d 390, 392 (S.D.N.Y. 2000) (quoting Yurman Design, Inc. v. Chaindom Enters., Inc. , No. 99 Civ. 9307(JFK), 2000 WL 217480, at *1 (S.D.N.Y. Feb. 22, 2000) ). "Alternatively, the movant must demonstrate the need to correct a clear error or prevent manifest injustice." Herschaft v. New York City Campaign Fin. Bd. , 139 F.Supp.2d 282, 284 (E.D.N.Y) (quoting Griffin Indus., Inc. v. Petrojam, Ltd. , 72 F.Supp.2d 365, 368 (S.D.N.Y. 1999) ) (internal quotation marks omitted).

Petitioner makes two arguments in support of his motion: first, that the Court's analysis of Petitioner's actual innocence claim relied on the Second Circuit's original opinion in United States v. Martoma , 869 F.3d 58 (2d Cir. 2017), which has since been withdrawn and replaced; and second, that the Court failed to consider an affidavit from Petitioner's trial counsel in deciding his ineffective assistance of counsel claim. See Dkt. No. 38. As discussed below, neither the amended Martoma opinion nor the factual allegations in the affidavit might have reasonably altered the result before the court, nor has Petitioner demonstrated "the need to correct a clear error or prevent manifest injustice." Herschaft , 139 F.Supp.2d at 284.

A. The Second Circuit's Amended Opinion in Martoma

Petitioner argues that the Court's Order should be amended because it relies on "the now withdrawn Martoma decision" in determining that the personal benefit element was met. Dkt. No. 38 at 6–7. The Order cited the first Martoma opinion's statement that "a corporate insider personally benefits ‘whenever he disclos[es] inside information as a gift ... with the expectation that [the recipient] would trade’ on the basis of such information." Dkt. No. 35 at 5 (quoting Martoma , 869 F.3d at 69 ) (alterations original). Based in part on this formulation, the Court assessed Petitioner's admission that he provided information to Tucker with the expectation that Tucker would trade on it as evidence that he received a personal benefit. Id. Though the Court cited the then-operative opinion, its reasoning is equally permissible under the amended Martoma opinion, which states that a jury can "often infer that a corporate insider receives a personal benefit ... from deliberately disclosing valuable, confidential information without a corporate purpose and with the expectation that the tippee will trade on it." United States v. Martoma , 894 F.3d 64, 79 (2d Cir. 2017). Although the law as articulated in the amended Martoma opinion does not require a finding that the personal benefit element is met when the tipper expects the tippee will trade, an admission of that expectation is nonetheless relevant evidence.

Importantly, the Court did not rely solely on Petitioner's expectation that Tucker would trade in its determination that there was sufficient evidence to support the personal benefit element of securities fraud. The Court also noted that Petitioner described Tucker as a "colleague," stated that Tucker was a partner at his firm with whom he had spoken "on many, many, many, many, many occasions," and admitted that the two had had a business relationship for at least a decade. Dkt. No. 35 at 56. Taken together, this was sufficient evidence of "a relationship between [Petitioner] and [Tucker] that suggests a quid pro quo from the latter, or an intention to benefit the latter." Martoma , 894 F.3d at 77 (quoting United States v. Newman , 773 F.3d 438, 452 (2d Cir. 2014) ). Petitioner argues that the facts in the record "would not foreclose the possibility of a properly instructed jury acquitting Mr. Marshall." Dkt. No. 38 at 7–8. But to establish actual innocence in a collateral attack, a petitioner must show more than a mere possibility of acquittal. See Fountain v. United States , 357 F.3d 250, 255 (2d Cir. 2004) ("In order to establish actual innocence, petitioner must demonstrate that, in light of all the evidence, it is more likely than not that no reasonable juror would have convicted him.") (quoting Bousley v. United States , 523 U.S. 614, 623, 118 S.Ct. 1604, 140 L.Ed.2d 828 (1998) ). Moreover, in the context of a guilty plea, "actual innocence means factual innocence, not mere legal insufficiency." Bousley , 523 U.S. at 623, 118 S.Ct. 1604. Martoma is therefore unavailing because the controlling amended opinion does not "alter[ ]the result before the court." Range Road Music, Inc. , 90 F.Supp.2d at 392.

In addition, Petitioner contends that the Court failed to address his argument that his plea allocution was insufficient, but he points to no authority for the proposition that insufficiency of a plea allocution alone is a circumstance compelling the extraordinary relief he requests. See Dkt. No. 38 at 6. Indeed, courts routinely look to the totality of the record to determine whether a petitioner seeking a writ of error coram nobis has sufficiently shown actual innocence. See Barnetson v. United States , No. 12 CR 157 (KMW), 2016 WL 3023156, at *3 (S.D.N.Y. May 6, 2016) ("The record on collateral review is not limited to the Petitioner's allocution, but includes materials such as the Information, the plea agreement, and the Presentence Report."). As discussed above, the amendments in Martoma do not alter the Court's conclusion that there is sufficient evidence in the record to support Petitioner's conviction.

B. Ineffective Assistance of Counsel

Petitioner also argues that the Court erred in its ineffective assistance of counsel analysis by overlooking his trial counsel's affidavit, in which Mr. Iason, his former lawyer, admits that he does "not think it is likely that [he] would have...