Dichter-Mad Family Partners v. United States

Plaintiffs must overcome a strong presumption that the United States is immune from prosecution for the actions of its agents under the ’discretionary function’ exception to the United States’ waiver of sovereign immunity in the Federal Tort Claims Act. 28 U.S.C. § 2680(a).

The investment partnership of Dichter-Mad lost money in the Bernard Madoff Ponzi scheme, and brought suit against the Securities and Exchange Commission (SEC) and the United States under the Federal Tort Claims Act (FTCA) seeking the value of their lost investments in damages. The district court dismissed the SEC as a party because agencies of the United States government cannot be sued under the FTCA. Dichter-Mad’s complaint against the United States was dismissed under the discretionary function exception where there is a strong presumption that the United States and its agents are immune from civil claims against them. Plaintiffs also asked for further discovery, which was permissible because of a question of jurisdiction, but the district court dismissed the plaintiff’s request for further discovery because it was clear that “further discovery would not demonstrate facts sufficient to constitute a basis for jurisdiction.” Defendant’s motion to dismiss for lack of subject matter jurisdiction was granted. Dichter-Mad appealed and the Ninth Circuit concluded that it lacked subject matter jurisdiction to hear appellants’ complaint under the “’discretionary function’ exception to the United States’ waiver of sovereign immunity” in the FTCA. The Court dismissed with prejudice the appellants’ amended complaint because all of the theories were insufficient to overcome the United States’ discretionary function exception. The Court also held that the district court did not abuse its discretion in denying further discovery, because plaintiffs did not provide sufficient facts to the district court that the information sought in discovery existed. AFFIRMED.