Dickinson Wright Files Writ of Mandamus with the U.S. Fifth Circuit Court of Appeals in Litigation Against the PCAOB
- Frenkel, Jacob S. . Westergard, Brooks T.
- In the News
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In Dickinson Wright’s unprecedented constitutional challenge to the non-transparent investigative process of the Public Company Accounting Oversight Board (“PCAOB”), our team, on November 26, 2024, filed a second Writ of Mandamus Petition with the United States Court of Appeal for the Fifth Circuit (“Fifth Circuit”) on behalf of John Doe Corporation (“Doe Corp.”). In yet another extraordinary development in the case, within 36 hours of the filing of the second Mandamus Petition, the trial court in the Southern District of Texas (“SDTX”) preempted a decision by the Fifth Circuit and issued an Order vacating the original transfer of the case to the District of Columbia (“DDC”). The SDTX trial court wrote that “[t]his court seeks to clarify that it has no intention of transferring the case or otherwise issuing substantive rulings until the parties have fully briefed and presented oral arguments on the venue issue and the motion to dismiss. To make that clear, this case is stayed until those issues are resolved in this court….”
“We are grateful for the trial court’s recognition of the compelling interest of Doe Corp. to have this case be considered fully – particularly on such issues as proper venue and legal sufficiency of the Complaint – in the SDTX,” says Jacob Frenkel, lead counsel and Chair of Dickinson Wright’s Government Investigations & Securities Enforcement Practice. “As I commented previously, Doe Corp. has zero connection with or presence in Washington, DC, the Board’s backyard, where the Board wants this case to move forward. This case anywhere but the federal court in Houston would undermine generations-long principles of fairness and rationality in forum selection. We are pleased that we will be heard and fairly in the SDTX trial court.”
The amended complaint set forth 15 detailed paragraphs setting forth why venue is proper in the SDTX. With the issue of venue pending, as Dickinson Wright pointed out to the Fifth Circuit in the November 26, 2024 Mandamus Petition, the Board’s inspectors conducted an onsite inspection this month – November – on the premises of Doe Corp. in the SDTX.
On October 3, 2024, in response to the SDTX trial court having transferred the case to DDC on August 22, 2024, the Fifth Circuit granted the first Writ of Mandamus that Dickinson Wright had filed. The effect of that Fifth Circuit Order was a directive to the SDTX to request that DDC return the case to the SDTX. The SDTX trial court made the request, and “out of respect for its sister district,” the DDC trial court returned the case. Both the first and second Writ of Mandamus establish that the SDTX, the home of Doe Corp., is the proper forum for litigating this case. Jacob Frenkel added that “the case is where it is supposed to be for the right legal and factual reasons.”
The Amended Complaint is a legal challenge to the PCAOB’s investigative process. Three overriding allegations in the Amended Complaint are the unlawful delegation of legislative power to the Board, compelled production of audit work papers with no opportunity for a CPA firm or its associated persons to seek pre-enforcement judicial review, and complete absence of notice as to potential bases for alleging audit violations where there are no on-point auditing standards or auditing guidance for cryptocurrency, crypto-mining equipment, and crypto-asset issuers. Mr. Frenkel added that “ultimately, I and my team look forward to receiving discovery from the Board, deposing senior Board officials, and demonstrating to a federal Judge at trial how constitutionally defective and lacking in fairness and objectivity are PCAOB investigations. What should be obvious from the Complaint is how the Board is using its unlimited budget to attempt to crush small public accounting firms in an apparent crusade to leave but a few select firms standing.”
Dickinson Wright filed the case (John Doe Corp. v. Public Company Accounting Oversight Board, case number 4:24-cv-01103) in March 2024, using the pseudonym “John Doe Corporation” for the firm’s client because federal law and PCAOB Rules dictate that PCAOB investigations are non-public.
Jacob Frenkel (Member, Washington, D.C.) and Brooks Westergard (Member, Reno), who teamed recently to win complete dismissal of a case against the Securities and Exchange Commission (“SEC”) in the United States Court of Appeals for the First Circuit setting new precedent in relief defendant litigation and obtained an award of attorneys’ fees from the SEC, serve as Lead Counsel to John Doe Corporation, with the New Civil Liberties Alliance as co-counsel.
To read the lawsuit (ECF36) that is the constitutional challenge click here.
To read the first Writ of Mandamus Petition (brief), please click here.
To read the Fifth Circuit’s rare grant of a Mandamus Petition and DW’s win click here.
To read the second Writ of Mandamus Petition (brief), please click here.
To read the SDTX trial court Order, please click here.
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