UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

TRENTON VICINAGE

DR. HARSHAD C. PATEL,

Plaintiff, HON. PETER G. SHERIDAN, U.S.D.J.

v.

ALLSTATE NEW JERSEY

INSURANCE COMPANY;

THOMAS J. WILSON;

ENCOMPASS INSURANCE

COMPANY; JOHN JAY HOFFMAN (in

his official capacity as Acting:

Attorney General of the State

of New Jersey); RONALD CHILLEMI:

(in his official capacity as

Commissioner of the New Jersey

Office of Insurance Fraud

Prosecutor); ABC CORPORATIONS

1-10; JOHN DOES 1-10;

Defendants.

Civ. Action No. 3:14-cv-02851(PGS-TJB)

Civil Action

BRIEF OF DEFENDANTS JOHN J. HOFFMAN

AND RONALD CHILLEMI IN SUPPORT OF MOTION FOR

SANCTIONS PURSUANT TO FED. R. CIV. P. 11

JOHN J. HOFFMAN

ACTING ATTORNEY GENERAL OF NEW JERSEY

R.J. Hughes Justice Complex

25 Market Street

P.O. Box 117

Trenton, New Jersey 08625-0117

Attorney for Defendants: John J.

Hoffman, Acting Attorney General of New

Jersey; and Ronald Chillemi, Acting

Insurance Fraud Prosecutor (improperly

pled as Commissioner of the New Jersey

Office of Insurance Fraud Prosecutor)

By: Richard E. Wegryn, Jr., DAG (REW2138)

Deputy Attorney General

Richard.WegrynCdol.lps.state.nj.us

TABLE OF CONTENTSPAGE

PRELIMINARY STATEMENT ..........................................1

PROCEDURAL HISTORY .............................................2

STATEMENT OF FACTS AS ALLEGED IN COMPLAINT .....................4

LEGAL ARGUMENT .................................................7

POINT I

BECAUSE THE COMPLAINT IS NOT BASED UPON A

REASONABLE INQUIRY INTO THE LAW OR THE FACTS, IT

VIOLATES RULE 11 .....................................7

A. The Complaint is Not Well-Grounded in Law. .......8

1. Parallel Proceedings are Inherently Proper ..8

2. The State is Immune from all ~ 1983

Claims Under the Eleventh Amendment .......11

3. The Complaint Fails under the Younger

Abstention Doctrine .......................13

B. The Complaint is Not Well-Grounded in Fact ......15

1. The Allegation of Outsourcing Has No

Basis in Fact .............................15

2. Plaintiff Has Alleged No Injury-In-Fact ....16

(a) Plaintiff has not been deprived of

his right to counsel .................17

(b) Plaintiff has not been deprived of

his right against self-

incrimination ........................17

(c) Plaintiff has not been deprived of

his right to indictment by grand

jury .................................18

POINT II

SANCTIONS SHOULD ISSUE PURSUANT TO RULE 11(C) ......20

CONCLUSION ....................................................22

1

TABLE OF AUTHORITIES

PAGE

FEDERAL CASES CITED

Acevedo v. Donovan High School,

2006 U.S. Dist. LEXIS 64490 (D.N.J. 2006) ......................8

Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40,

119 S.Ct. 977, 143 L.Ed.2d 130 (1999) ........................19

Arthur v. Sterns,

560 F.2d 477 (lst Cir. 1977) ..................................18

Aschcroft v. Iqbal,

556 U.S. 662, 129 S.Ct. 1937, 172 L.Ed.2d 868 (2009) ..........12

Blanciak v. Allegheny Ludlum Corp.,

77 F.3d 690 (3d Cir. 1996) ....................................13

Brandon v. Holt,

469 U.S. 464, 105 S.Ct. 873, 83 L.Ed.2d 878 (1985) ............13

Doering v. Union County Bd. of Chosen Freeholders,

857 F.2d 191 (3d Cir. 1988) ...............................20, 21

Evancho v. Fisher,

423 F.3d 347 (3d Cir. 2005) ...................................12

930 F.2d 277 (3d Cir. 1991) ....................................8

Gaiardo v. Ethyl Corp.,

835 F.2d 479 (3d Cir. 1987) ...............................20, 21

Gittlemacker v. Prasse,

428 F.2d 1 (3d Cir. 1970) .....................................12

In re Prudential Ins. Co. Am. Sales Practice Litig. Actions,

278 F.3d 175 (3d Cir. 2002) ....................................8

Kentucky v. Graham,

473 U.S. 159, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985) ...........13

Langer v. Monarch Life Ins. Co.,

966 F.2d 786 (3d Cir. 1992) ....................................8

ii

Lieb v. Topstone Indus., Inc.,

788 F.2d 151 (3d Cir. 1986) ................................7, 20

Lujan v. Defenders of Wildlife,

504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ..........16

Martin v. Brown,

63 F.3d 1252 (3d Cir. 1995) ....................................8

Mary Ann Pensiero, Inc. v. Lingle,

847 F.2d 90 (3d Cir. 1988) ....................................20

Medimmune, Inc. v. Genentech, Inc.,,

549 U.S. 118, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) ...........17

Middlesex Cnty. Ethics Comm. v. Garden State Bar Ass n,

457 U.S. 423, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1982) ...........13

Miller v. Mitchell,

598 F.3d 139 (3d Cir. 2010) ...................................14

Miranda v. Arizona,

384 U.S. 436, 85 S.Ct. 1602, 16 L.Ed.2d 654 (1966) ............17

Oxfurth v. Siemens, A.G.,

142 F.R.D. 424 (D.N.J. 1991) ..................................20

Pennhurst State School & Hosp. v. Halderman,

465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) ..............13

Railway Mail Ass n v. Corsi,

326 U.S. 88, 65 S.Ct. 1483, 89 L.Ed. 2072 (1945) ..............16

Rode v. Dellarciprete,

845 F.2d 1195 (3d Cir. 1988) ..................................12

Ruffin v. Beal,

468 F.Supp. 482 (E.D. Pa. 1978) ...............................12

Thiokol Chem. Corp. v. Burlington Indus., Inc.,

448 F.2d 1328 (3d Cir. 1971), cert. denied,

404 U.S. 1019, 92 S.Ct. 684, 30 L.Ed.2d 668 (1972) ............15

Toll Bros., Inc. v. Twp. of Readington,

555 F.3d 131 (3d Cir. 2009) ...................................16

iii

United States v. Kordel,397 U.S. 1, 90 S.Ct. 763, 25 L.Ed.2d 1 (1970) ..................8

U.S. Steel Corp. Plan for Emp. Ins. Benefits v. Musisko,

885 F.2d 1170 (3d Cir. 1989) ..................................14

Walsh v. Securities, Inc.. v. Cristo Property Management, Ltd.,

7 F.Supp.2d 523 (D.N.J. 1998) .................................8

Will v. Michigan Dep t of State Police,

491 U.S. 58, 109 S.Ct. 2304, 105 L. Ed.2d 45 (1989) ...........12

Younger v. Harris,

401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971) ......12, 13, 14

STATE CASES CITED

Allstate New Jersey Insurance Co., et al. v.

Gregorio Lajara, et al., UNN-L-4091-08 .......1, 4, 5, 13, 14, 15

Kinsella v. Welch, 362 N.J.Super. 143

(N.J. App. Div. 2003) ........................................19

Merin v. Maglaki,126 N.J. 430 (1992) ...........................................10

State v. Fleishman,

189 N.J. 539 (2007) ...........................................10

State v. Korbin Securities, Inc.,

111 N.J. 307 (1988) ............................................9

State v•. P . Z . ,

152 N.J. 86 (1997) ............................................18

FEDERAL STATUTES CITED

42 U.S.C. ~ 1983 .............................................12

28 U.S.C. § 2283 .............................................14

iv

FEDERAL RULES CITED

Fed. R. Civ. P. 11 .............................................1

Fed. R. Civ. P. 11 (b) .........................................7

Fed. R. Civ. P. 11(c) .................................20, 21, 22

Fed. R. Civ. P. 11(c)(2) .......................................3

STATE STATUTES CITED

N.J.S.A. § 17:33A-1, et seq• ...................................1

N.J.S.A. ~ 17:33A-9 ...........................................16

N.J.S.A. § 17:33A-20 ...........................................9

N.J.S.A. § 2C:21-4.4 ...........................................9

MISCELLANEOUS

Aviva Abramovsky, An Unholy Alliance: Perceptions

of Influence in Insurance Fraud Prosecutions and

the Need for Safeguards, 98 J. CRIM. L. & CRIMINOLOGY

363 (2008) .............................................5, 10, 11

u

PRELIMINARY STATEMENT

Defendants, the Acting Attorney General of New Jersey, John

J. Hoffman ("Hoffman"), and the Acting Insurance Fraud

Prosecutor, Ronald Chillemi ("Chillemi")(collectively, the

"State"), move for the imposition of sanctions pursuant to Fed.

R. Civ. P. 11 against Carl A. Salisbury, Esquire for the filing

of the Complaint (Doc. No. 1) on behalf of his client, Harshad

C. Patel ("Plaintiff" or "Patel").

Plaintiff has not been charged with a crime by the Office

of the Insurance Fraud Prosecutor ("OIFP") Notwithstanding, he

alleges unspecified damages against the State based upon the

possibility that he may be charged at some unspecified point in

time in the future, and requests that this court enjoin numerous

pending state court civil "parallel" proceedings filed by

private insurance companies and the New Jersey Department of

Banking and Insurance under the New Jersey Insurance Fraud

Prevention Act, N.J.S.A. ~ 17:33A-1 et seq• ("IFPA") including

the pending action in the Superior Court of New Jersey in which

he is a Defendant, Allstate New Jersey Insurance Co., et al. v.

Gregorio Lajara, et al., UNN-L-4091-08 (the "Lajara Action").

Indeed, no court or treatise has found the existence of a

cause of action such as is alleged in the Complaint. Plaintiff

has failed to allege a single fact in support of his reckless

charge that the OIFP somehow "outsources" its criminal

1

investigation to private insurance companies. Moreover, the

authority cited by Plaintiff himself supports the structure and

constitutionality of the IFPA. The Complaint is simply not based

on a reasonable investigation of the facts and the law. This

court should assess sanctions in order to deter the filing of

such frivolous allegations which are objectively unreasonable

and intended to harass or threaten the State.

PROCEDURAL HISTORY

The Complaint (Doc. No. 1) was filed on May 5, 2014, and a

Summons was issued on May 6, 2014 (Doc. No. 2).

On June 10, 2014, the Honorable Tonianne J. Bongiovanni,

U.S.M.J. entered the Consent Order Extending Time for the State

Defendants to Answer, Move or Otherwise Reply until September

15, 2014. (Document No. 6).

On August 7, 2014, Magistrate Judge Bongiovanni entered the

Consent Order Extending Time for the Allstate Defendants to

Answer, Move or Otherwise Reply until September 15, 2014. (Doc.

No. 11).

On August 25, 2014 the State served counsel for Plaintiff,

Carl A. Salisbury, with a letter stating that the Complaint is

frivolous and demanding that it be withdrawn. Pursuant to Fed.

R. Civ. P. 11(c)(2), a draft Motion for Sanctions was attached

to the demand. The Allstate Defendants have joined-in the

State's demand to withdraw the Complaint. Plaintiff's counsel

has made no response.

The deadline for all Defendants to answer, move, or

otherwise reply is September 15, 2014.

3

STATEMENT OF FACTS AS ALLEGED IN COMPLAINT

Patel is the owner of A. P. Diagnostic Imaging, Inc.,

("APDI") Complaint, ¶3. In 2008, Allstate filed a Complaint in

the Superior Court of New Jersey against Patel and AP Diagnostic

seeking statutory damages under the IFPA in the Lajara Action.

In 2011, the Commissioner of Banking and Insurance intervened in

the Lajara Action and asserted additional statutory IFPA civil

penalty claims against Patel and APDI. See Complaint, ¶16. The

Lajara Action is pending and the claims under the IFPA asserted

against Patel and APDI have not yet been finally adjudicated.

However, no criminal charges have been filed against Patel or

APDI.

Although no criminal charges have been filed, Plaintiff

alleges that the State has "outsourced" a criminal investigation

against him to Allstate's Special Investigation Unit ("SIU") to

be conducted as part of the Lajara Action. Complaint at ¶¶13,

16. The Complaint alleges that the investigation has been

conducted "with the result and intent" of avoiding

constitutional strictures placed on such investigations, in

order to circumvent "the protections afforded by the United

States and New Jersey Constitutions in connection with self-

incrimination, the right to counsel, the requirement under New

Jersey law to provide notice to a target of a criminal

investigation, and the requirement to convene a grand jury." Id.

at ~¶18, 24.

Plaintiff alleges that Allstate improperly commandeered the

Edison Police Department in order to interrupt a wedding

ceremony for his son in an attempt to serve a subpoena in the

Lajara Action. Id. at ¶25. Patel further alleges that Allstate

has harassed him and his immediate family members, including his

wife and two sons, with threats of future civil and criminal

action. Id. at ¶18.

The Complaint alleges that referrals from insurance company

SIUs are the sole source of information from which the OIFP

selects cases to prosecute criminally and asserts that the State

routinely outsources criminal investigation under the IFPA. Id.

at ¶¶9, 11-13. It is further alleged that the use of SIUs and

parallel civil litigation under the IFPA to conduct criminal

investigations tramples on the constitutional rights of the

targets of the criminal investigations. Id. at ¶¶14-15 (citing

Aviva Abramovsky, An Unholy Alliance: Perceptions of Influence

in Insurance Fraud Prosecutions and the Need for Safeguards, 98

J. CRIM. L. & CRIMINOLOGY 363 (2008)).

Plaintiff asserts that because they place defendants in the

position of choosing between losing a civil litigation that may

have no merit and waiving their Fifth Amendment protection for a

later criminal prosecution, insurance company SIUs act as an arm

5

of the OIFP and the Attorney General. Complaint at X21.

Plaintiff also claims that because insurance companies have a

financial interest in the criminal conviction of Defendants

investigated by SIUs, there is an appearance of prosecutorial

partiality. Id. at ¶23. Finally, the Complaint alleges that

Defendants Hoffman and Chillemi are liable because they "have

been deliberately indifferent to the constitutional and legal

infirmities inherent in the routine practice of outsourcing

criminal investigations under the IFPA." Id. at ¶31.

Count One of the Complaint seeks a Declaratory Judgment

that, "the practice of outsourcing criminal investigations by

the OIFP and the Attorney General to insurance company SIUs

violates the U.S. and New Jersey Constitutional protections."

Id. at ¶33.

Count Two of the Complaint seeks injunctive relief

"enjoining the defendants from continuing to participate and

engage in the outsourcing of criminal investigations to

insurance company SIUs." Id. at ¶35.

Count Three of the Complaint seeks monetary damages "on

account of [Plaintiff] having to defend against assertions of

criminal conduct and having (sic) been placed in jeopardy of

facing criminal prosecution without being afforded the

protections afforded to them by the Constitution and the laws of

the State of New Jersey." Id. at ¶37.

LEGAL ARGUMENT

POINT I

BECAUSE THE COMPLAINT IS NOT BASED UPON A REASONABLEINQUIRY INTO THE LAW OR THE FACTS, IT VIOLATES RULE 11.

Pursuant to Fed. R. Civ. P. 11(b), whenever an attorney

files a pleading with the court, he or she is certifying to the

best of his or her knowledge, information, and belief, formed

after reasonable inquiry under the circumstances, that:

(1) it is not being presented for any improper purpose,such as to harass or to cause unnecessary or needlessincrease in the cost of litigation;

(2) the claims, defenses and other legal contentionstherein are warranted by existing law or by a non-frivolousargument for the extension, modification, or reversal ofexisting law or the establishment of new law;

(3) the allegations and other factual contentions haveevidentiary support after a reasonable opportunity forfurther investigation or discovery; and

(4) the denials of factual contentions are warranted on theevidence, or if specifically so identified, are reasonablybased on a lack of information or belief.

This rule can be judicially viewed as "impos[ing] on

counsel a duty to look before leaping" or as a "litigation

version of the familiar railroad crossing admonition to 'stop,

look, and listen.' " Lieb v. Topstone Indus., Inc., 788 F.2d

151, 157 (3d Cir. 1986). Stated differently, Rule 11 requires

that an attorney who files a complaint certifies that there is a

reasonable basis in fact and law for the claims.

To comply with the mandates of the rule, counsel is

7

required to conduct a "reasonable inquiry into both the facts

and law supporting a particular pleading." In re Prudential Ins.

Co. Am. Sales Practice Litig. Actions, 278 F.3d 175, 187 n. 7

(3d Cir. 2002). "The legal standard to be applied when

evaluating conduct allegedly violative of Rule 11 is

reasonableness under the circumstances." Ford Motor Co. v.

Summit Motor Prod., Inc., 930 F.2d 277, 289 (3d Cir. 1991).

"Reasonableness" in the context of Rule 11 has been defined as

"an objective knowledge or belief at the time of the filing of a

challenged paper that the claim was well-grounded in law and

fact." Id. at 289 (citations omitted).

Significantly, the moving party is not required to make a

showing of bad faith. Martin v. Brown, 63 F.3d 1252, 1264 (3d

Cir. 1995). An "empty head, pure heart" excuse cannot be used by

the accused party as justification for filing a frivolous

motion. Acevedo v. Donovan High School, 2006 U.S. Dist. LEXIS

64490 (D.N.J. 2006) at *5-6 (citations omitted); see also Langer

v. Monarch Life Ins. Co., 966 F.2d 786, 810 (3d Cir. 1992).

A. The Complaint is Not Well-Grounded in Law.

1. Parallel Proceedings are Inherently Proper.

The Complaint is grounded on the incorrect legal assumption

that it is constitutionally improper for the State to conduct

parallel civil and criminal proceedings. To the contrary, the

propriety of parallel proceedings is a bed-rock principle of

both federal and New Jersey law. See United States v. Kordel,

397 U.S. 1, 11, 90 S.Ct. 763, 25 L.Ed.2d 1 (1970)("it would

stultify enforcement of federal law to require a governmental

agency [to] choose to either forgo recommendation of a criminal

prosecution once it seeks civil relief, or to defer civil

proceedings pending the ultimate outcome of criminal trial");

Walsh v. Securities, Inc. v. Cristo Property Management, Ltd., 7

F.Supp.2d 523, 526 (D.N.J. 1998)(a stay of civil proceedings

when there is parallel criminal proceedings is not

constitutionally required); see also State v. Korbin Securities

Inc., 111 N.J. 307 (1988)(same under New Jersey law).

Building on this body of precedent, the IFPA specifically

requires the New Jersey Department of Banking and Insurance,

Bureau of Fraud Deterrence and the OIFP to develop a statewide

anti-fraud enforcement policy for all state and local agencies,

including criminal law enforcement agencies and civil

enforcement agencies, and to recommend regulatory and statutory

changes to fulfill the purposes of the IFPA. See N.J.S.A. §

17:33A-20 and -24b; see also N.J.S.A. § 2C:21-4.4(public policy

is to pursue appropriate administrative, civil, and criminal

actions to achieve the most effective resolution of insurance

fraud cases).

The IFPA was enacted in 1983 at which time the Department

of Banking and Insurance was charged with bringing civil penalty

D

actions against individuals who commit insurance fraud. The OIFP

was established in 1998 and was given both criminal and civil

authority to combat insurance fraud. In 2010, the civil

investigatory and penalty authority was transferred back to the

Department of Banking and Insurance through the creation of the

Bureau of Fraud Deterrence.

No court has found the comprehensive civil and criminal

provisions enacted by the New Jersey Department of Banking and

Insurance, Bureau of Fraud Deterrence and the OIFP to violate

the constitutional rights of defendants. To the contrary, the

New Jersey Supreme Court has praised the IFPA as an outstanding

weapon to combat the massive problem of insurance fraud in New

Jersey. See e.g. Merin v. Maglaki, 126 N.J. 430, 436

(1992)(upholding the IFPA upon a finding that the

"Commissioner's interpretation of the Act reasonably and

substantially effectuates the legislative intent to combat

insurance fraud aggressively"); State v. Fleishman, 189 N.J. 539

(2007)(upholding the addition of criminal sanctions in addition

to existing civil sanctions under the IFPA).

In lieu of citing case law, the Complaint cites a law

review article, Abramovsky, supra, 98 J. CRIM. L. & CRIMINOLOGY

363, as support for the proposition that "the use of SIUs and

parallel civil litigation under the IFPA to conduct criminal

investigations tramples on the constitutional rights of the

targets of criminal investigations." Complaint at ¶15.

Far from offering support for the Complaint, Professor

Abramovsky does not even discuss the type of action alleged by

Patel, a non-attorney, arising from potential parallel criminal

proceedings. In addition, the article specifically recognizes

that the vast majority of states have a system for the civil and

criminal prosecution of insurance fraud similar to that of the

IFPA, yet no court has found the structure to be

"constitutionally defective." Id. at 378, 415.1

2. The State is Immune from all ~ 1983 Claims Alleged Under

the Eleventh Amendment.

The Complaint names Hoffman and Chillemi in their

respective official capacities as Acting Attorney General and

Acting Insurance Fraud Prosecutor. No facts are alleged which

would place either Defendant outside of his official capacity.

1Professor Abramovsky refers to New Jersey as a "majority

model" state:Currently, there are forty-seven "majority model" fraud

bureaus in thirty-nine states. In these jurisdictions,

[t]he insurance companies refer suspected cases of

insurance fraud to state insurance fraud bureaus, which in

turn investigate the cases and refer a percentage to state

prosecutorial authorities. Since these fraud bureaus

typically function under the auspices of some state agency,

they are often imbued with law enforcement powers and their

agents may execute search warrants and carry weapons. In

2003, over 125,000 cases were referred by insurers to these

various state bureaus for the investigation of potential

insurance fraud. Id., 98 J. GRIM. L. & CRIMINOLOGY at 378-

379.

11

As such, any claim for damages brought against them in the

Complaint under 42 U.S.C. §1983 is barred in its entirety under

the Eleventh Amendment.

In that the Complaint has sued both Defendant Hoffman and

Defendant Chillemi in their "official capacity," it fails to

allege specific facts which would establish a plausible claim

for relief based upon their personal involvement in the alleged

constitutional violations. In order to maintain a cause of

action under 42 U.S.C. § 1983 a plaintiff must allege actual

specific conduct by a defendant which violates plaintiff's

clearly established constitutional rights. Aschcroft v. Iqbal,

556 U.S. 662, 675-676, 129 S.Ct. 1937, 172 L.Ed.2d 868 (2009)("a

plaintiff must plead that each Government-official defendant,

through the official's own individual actions, has violated the

Constitution"); see also Ruffin v. Beal, 468 F. Supp. 482, 490

(E.D. Pa. 1978)(citing Gittlemacker v. Prasse, 428 F.2d 1, 3 (3d

Cir. 1970) (same)). Because there is no respondeat superior

liability under 42 U.S.C. ~ 1983, claims against individual

public officials must fail in the absence of their personal

involvement in the alleged constitutional violation. Evancho v.

Fisher, 423 F.3d 347, 353 (3d Cir. 2005)(quoting Rode v.

Dellarciprete, 845 F.2d 1195, 1207 (3d Cir. 1988)).

The Eleventh Amendment is a jurisdictional bar which

deprives federal courts of subject matter jurisdiction over

12

actions against a state. Blanciak v. Allegheny Ludlum Corp., 77

F.3d 690, 693 n.2 (3d Cir. 1996) (citing Pennhurst State School

& Hosp. v. Halderman, 465 U.S. 89, 98-100, 104 S.Ct. 900, 79

L.Ed.2d 67 (1984)). "The state's sovereign immunity, moreover,

is preserved under Section 1983; "a suit against a state

official in his or her official capacity is not a suit against

the official but rather is a suit against the official's

office." Will v. Michigan Dep t of State Police, 491 U.S. 58,

71, 109 S.Ct. 2304, 105 L. Ed.2d 45 (1989)(citing Brandon v.

Holt, 469 U.S. 464, 471, 105 S.Ct. 873, 83 L.Ed.2d 878

(1985)(emphasis added)). Such a suit is thus no different from a

suit against the state itself. Id. (citing Kentucky v. Graham,

473 U.S. 159, 165-166, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985)).

Accordingly, Hoffman and Chillemi are immune from any claims

asserted in the Complaint.

3. The Complaint Fails under the Younger Abstention

Doctrine.

Because the Complaint in essence requests injunctive relief

enjoining or interfering with the Lajara Action, it is barred

under the abstention doctrine set forth in Younger v. Harris,

401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). Younger

"espouse [s] a strong federal policy against federal-court

interference with state judicial proceedings absent

extraordinary circumstances." Middlesex Cnty. Ethics Comm. v.

13

Garden State Bar Ass n, 457 U.S. 423, 431, 102 S.Ct. 2515, 73

L.Ed.2d 116 (1982); see also Miller v. Mitchell, 598 F.3d 139,

145-146 (3d Cir. 2010)("Under Younger federal courts must

abstain in certain circumstances from exercising jurisdiction

over a claim where resolution of that claim would interfere with

an ongoing state proceeding.")

No exception to the Younger abstention doctrine applies, or

is even alleged here. To the contrary, Plaintiff has had and

still has every opportunity to litigate any claims raised here

in the pending Lajara Action. The Complaint's assertion that the

this court should enjoin the State from "continuing to use

parallel civil litigation" to conduct "criminal investigations"

amounts to an improper request to enjoin the Lajara Action in

state court and, as such, is squarely barred by the Younger

abstention doctrine.

Alternatively, the declaratory and injunctive prayers for

relief in Counts I and II of the Complaint are barred by the

Anti-Injunction Act, 28 U.S.C. § 2283, which provides that "[a]

court of the United States may not grant an injunction to stay

proceedings in a State court except as expressly authorized by

Act of Congress, or where necessary in aid of its jurisdiction,

or to protect or effectuate its judgments." When "declaratory

relief would produce the same effect as an injunction, a

declaratory judgment is barred if section 2283 would have

14

prohibited an injunction." U.S. Steel Corp. Plan for Emp. Ins.

Benefits v. Musisko, 885 F.2d 1170, 1175 (3d Cir. 1989)(citing

Thiokol Chem. Corp. v. Burlington Indus., Inc., 448 F.2d 1328,

1332 (3d Cir. 1971), cert. denied, 404 U.S. 1019, 92 S. Ct. 684,

30 L.Ed.2d 668 (1972)). Here, under both the Younger abstention

doctrine and the Anti-Injunction Act, the declaratory and

injunctive claims in the Complaint are baseless and frivolous.

B. The Complaint is Not Well-Grounded in Fact.

Factually, the Complaint fails to allege a plausible claim

for relief. Plaintiff has not been criminally charged and has

been represented by counsel throughout the Lajara Action.

Moreover, there are no plausible facts alleged to support the

bald allegation that the civil penalty action brought by the

Commissioner of Banking and Insurance is, in any way, tied to a

potential criminal investigation. Since he has not been

criminally charged, Plaintiff could not possibly have been

deprived of any constitutional rights. Therefore, the Complaint

amounts to a veiled threat intended to deter the State from

considering the future filing of criminal charges, or to be used

as leverage in the Lajara Action. Such litigation tactics are

clearly improper and subject to sanctions.

1. The Allegation of Outsourcing Has No Basis in Fact.

The Complaint alleges that the OIFP "outsources" its

criminal investigations based on nothing other than "information

15

and belief" and the existence of statutory referrals from

insurance company SIUs to the OIFP. See N.J.S.A. § 17:33A-9.

Compliance with the statutory scheme, however, is not evidence

of "outsourcing." Plaintiff's attempt to allege a violation of

his constitutional rights based solely on the number of private

party referrals to the OIFP is baseless.

2. Plaintiff Has Alleged No Injury-In-Fact.

Also fatal to Plaintiff's claim is the fact that he has not

been injured. Because Patel has not been charged with any crime,

he has not -- and cannot -- allege a constitutional violation of

his rights. The Complaint does not allege a particularized

"injury-in-fact" and is subject to immediate dismissal under the

"case or controversy" requirement of Article III of the United

States Constitution. See Lujan v. Defenders of Wildlife, 504

U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)("[T]he

`injury-in-fact test requires more than an injury to a

cognizable interest. It requires that the party seeking review

be himself among the injured." (citations omitted)); Toll Bros.,

Inc. v. Twp. of Readington, 555 F.3d 131, 138 (3d Cir. 2009).

Plaintiff cannot simply bring a claim on behalf of unidentified

persons based entirely on hypothetical or abstract harms not yet

suffered. Railway Mail Ass n v. Corsi, 326 U.S. 88, 93, 65 S.Ct.

1483, 89 L.Ed. 2072 (1945). To do so is to request that this

court issue an advisory opinion, which is disallowed. See

16

Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126-27, 127

S.Ct. 764, 166 L.Ed.2d 604 (2007).

(a) Plaintiff has not been deprived of his right to

counsel.

The Complaint asserts, in hypothetical fashion, that the

alleged "outsourcing" of criminal investigations deprives

defendants of the constitutional right to counsel. Complaint at

¶¶18, 24. This claim has no basis in law or fact particularly as

to Patel, who has been represented by counsel throughout the

Lajara Action. Moreover, Plaintiff has not cited to a single

fact to support his reckless claim that OIFP has outsourced any

criminal investigation to an insurance company. Accordingly,

this claim is subject to sanctions under the Rule.

(b) Plaintiff has not been deprived of his right

against self-incrimination.

The Complaint also alleges that Plaintiff has been deprived

of his right against self-incrimination. Precisely because he

has been represented by counsel throughout the Lajara Action,

Patel has had every opportunity to assert his Fifth Amendment

privilege. Moreover, as a general rule, the state has no

obligation to notify the Defendant of the Fifth Amendment

privilege against self-incrimination unless there is a custodial

interrogation. See generally Miranda v. Arizona, 384 U.S. 436,

85 S.Ct. 1602, 16 L.Ed.2d 654 (1966). Further, the privilege is

not violated as a matter of law if the only consequence to an

17

assertion of the Fifth Amendment is that the trier of fact in a

civil proceeding may draw an adverse inference. State v. P.Z.,

152 N.J. 86, 107-108 (1997); Arthur v. Sterns, 560 F.2d 477, 478

(lst Cir. 1977). Here, Plaintiff has not alleged a custodial

interrogation by either the State or Allstate. Further, he has

not been charged with a crime. Finally, he has not actually pled

the Fifth Amendment in the Lajara Action. Accordingly, this

claim has no basis in law of fact as to Patel. Moreover,

Plaintiff's irresponsible assertion that private actors, such as

Allstate, must read a person his constitutional rights during a

claims investigation warrants the imposition of sanctions.

(c) Plaintiff has not been deprived of his right to

indictment by grand jury.

Finally, the Complaint alleges that Plaintiff has been

deprived of his right under New Jersey law that he be provided

with notice that he is the target of a criminal investigation

and the requirement to convene a grand jury. Complaint, at ¶¶18,

24. There is no such notice requirement. In addition, precisely

because he has not been charged with a crime, Plaintiff has no

grand jury rights under the Federal or State Constitutions. A

request for this court to issue an injunction or assess damages

in regard to this hypothetical right of indictment by grand jury

is speculative and frivolous.

A requirement that a state civil investigator or private

insurance company investigator must advise a suspect that he is

under criminal investigation would have no basis in law, and

would impose a duty on a civil investigation that does not exist

in a criminal investigation itself. Plaintiff's constitutional

claims must be summarily rejected because it is firmly

established that the protections of the United States and New

Jersey Constitutions are directed only at "state action." Am.

Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 49-50, 119 S.Ct.

977, 143 L.Ed.2d 130 (1999)(no constitutional violation because

action taken by insurance company with mere approval or

acquiescence of the state is not "state action"); see also

Kinsella v. Welch, 362 N.J.Super. 143, 156 (N.J. App. Div.

2003)(complaint fails to allege a prima facie state

constitutional claim against the New York Times and its

employees who are private actors).

Plaintiff fails to state a prima facie constitutional claim

even if he could establish that the alleged violations were the

result of "state action." Where, as here, the constitutional

violations are allegedly committed by the Allstate SIU, a

private actor, the claims fail on multiple counts and should be

summarily dismissed as frivolous. In addition, Plaintiff's

irresponsible assertion that a private party such as Allstate

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must read a person constitutional rights during a claims

investigation warrants the imposition of sanctions.

nnTwTm

TT

SANCTIONS SHOULD ISSUE PURSUANT TO RULE 11(C).

Given that it fails to allege a viable, recognized cause of

action or good faith extension of existing law, the only

objective purpose of the Complaint is to harass or threaten the

State. Therefore, this court should assess sanctions.

The purpose of Rule 11 is deterrence. Doering v. Union

County Bd. of Chosen Freeholders, 857 F.2d 191, 194 (3d Cir.

1988). The intended goal and purpose of Rule 11 is

accountability. Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90,

94 (3d Cir. 1988). "The rule imposes on counsel a duty to look

before leaping and may be seen as a litigation version of the

familiar railroad crossing admonition to 'stop, look, and

listen."' Oxfurth v. Siemens, A.G., 142 F.R.D. 424, 427 (D.N.J.

1991)(quoting Lieb, supra, 788 F.2d at 157). Rule 11 does not

permit the use of the "pure heart and empty head" defense.

Gaiardo v. Ethyl Corp., 835 F.2d 479, 482 (3d Cir.

1987)(citations omitted).

In determining compliance with the rule, the court must

apply an objective standard of reasonableness under the

circumstances. Lieb, su ra, 788 F.2d at 157. Courts should apply

Rule 11 sanctions only in "exceptional circumstances," Gaiardo,

20

F.2d at 483, and sanctions are "'appropriate when it is the

minimum that will serve to adequately deter the undesirable

behavior."'2 Doering, 857 F.2d at 194 (citations omitted).

Here, there is no objective reasonable basis in law or fact

to support the allegations in the Complaint. This filing has

clearly been made for an improper purpose which is either a

veiled threat intended to deter the State from the filing of

criminal charges, or to be used as leverage in the Lajara

Action. Plaintiff's counsel was placed on notice as to the

frivolous nature of the Complaint through a letter served by the

State with a draft copy of this brief on August 25, 2014.

Plaintiff's counsel has not responded in any way. In sum, this

is an exceptional case and circumstance which this court should

not let go unpunished and undeterred. This court should assess

sanctions as necessary and appropriate to deter such conduct in

the future.

2 Fed. R. Civ. P. 11(c) states in relevant part: 4) Nature of a

Sanction. A sanction imposed under this rule must be limited to

what suffices to deter repetition of the conduct or comparable

conduct by others similarly situated. The sanction may include

nonmonetary directives; an order to pay a penalty into court;

or, if imposed on motion and warranted for effective deterrence,

an order directing payment to the movant of part or all of the

reasonable attorney's fees and other expenses directly resulting

from the violation.

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CONCLUSION

For all the foregoing reasons, the Complaint is not based

upon an objectively reasonable inquiry into the law and the

facts. Indeed, it does not allege a cause of action that has

been recognized by any court, anywhere. The Complaint requests

this court to issue an advisory opinion on hypothetical claims

relative to which the State clearly has immunity and to which

this court should abstain from entertaining under well-

established doctrine. As such, the filing amounts to an improper

attempt to threaten or harass the State. Accordingly, this court

should impose sanctions under Fed. R. Civ. P. 11(c).

DATED: September 15, 2014

JOHN J. HOFFMAN

ACTING ATTORNEY GENERAL OF NEW JERSEY

By:/s/ Richard E. Wegryn, Jr.

Richard E. Wegryn, Jr.

Deputy Attorney General

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