Harry v. KCG Americas LLC et al

Filing 123

ORDER by Judge Haywood S. Gilliam, Jr. STRIKING IMPERMISSIBLE FILINGS; DENYING 102 MOTION TO CONSOLIDATE; DENYING 103 MOTION TO STAY; DENYING 76 MOTION FOR JUDICIAL REVIEW; GRANTING ( 86 , 89 and 90 ) MOTIONS TO DISMISS.(ndrS, COURT STAFF) (Filed on 8/27/2018)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 BRIGHT HARRY, 7 Plaintiff, 8 v. 9 KCG AMERICAS LLC, et al., 10 Defendants. 11 United States District Court Northern District of California Case No.17-cv-02385-HSG ORDER STRIKING IMPERMISSIBLE FILINGS; DENYING MOTION TO CONSOLIDATE; DENYING MOTION TO STAY; DENYING MOTION FOR JUDICIAL REVIEW; GRANTING MOTIONS TO DISMISS Re: Dkt. Nos. 76, 86, 89, 90, 102, 103 12 13 Pending before the Court are a motion to consolidate, a motion to stay, a motion for 14 judicial review, and three motions to dismiss. For the reasons set forth below, the Court DENIES 15 the motion to consolidate, DENIES the motion to stay, DENIES the motion for judicial review, 16 and GRANTS the motions to dismiss. The Court also STRIKES several impermissible filings by 17 Plaintiff Bright Harry.1 18 I. BACKGROUND Plaintiff has named 14 defendants in this action: 19  20 KCG Americas, LLC (“KCG”), Main Street Trading, Inc., and Wedbush Securities, Inc. 21 (“Wedbush”), as well as several of the companies’ individual officers (collectively referred 22 to as “the Wedbush Defendants”);  23 ION Trading, Inc. (“ION”) and several of the company’s individual officers (collectively referred to as “the ION Defendants”); and 24  25 Computer Voice Systems, Inc. (“CVS”) and several of the company’s individual officers (collectively referred to as “the CVS Defendants”). 26 27 1 28 The Court finds this matter appropriate for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). 1 The Court will collectively refer to the Wedbush Defendants, the Ion Defendants, and the CVS 2 Defendants as “Defendants.” 3 A. 4 In 2013, Plaintiff entered a business venture with his business partner, Ronald Draper2, to Factual Allegations trade electronic commodity futures spreads. See Dkt. No. 75 (Second Amended Complaint, or 6 “SAC”) ¶¶ 1, 28. Draper contributed the initial capital in the amount of $275,000, while Plaintiff 7 “provided the operational expenses, skills, knowledge, technology, and carried out the actual 8 trading.” Id. ¶ 29. On November 6, 2013, Main Street Trading, an introducing broker, connected 9 Draper and Plaintiff with KCG, a broker with whom they opened a trading account. See id. ¶¶ 23, 10 34. The account “was opened under Draper’s name only for easier tax filing with the IRS.” Id. ¶ 11 United States District Court Northern District of California 5 34. Plaintiff alleges he was the sole actor involved in actual trading. See id. ¶ 19(c). Later, KCG 12 would be acquired by Wedbush, another broker. Id. ¶ 38. At all relevant times, KCG and 13 Wedbush outsourced the management of their trading platform to two entities: CVS, which 14 handled the front-end, and ION, which ran the back-end. See id. ¶¶ 43-44. 15 Beginning on November 15, 2013, Plaintiff regularly experienced technical issues with the 16 trading platform. See id. ¶ 104. On that day, for example, the platform failed “to route and clear” 17 his trade orders. Id. Issues persisted through April 28, 2015. See id. ¶¶ 105-44.3 Plaintiff alleges 18 that some of these failures resulted in missed trade opportunities. See id. ¶¶ 107 (alleging a “total 19 loss of . . . missed trade opportunities” amounting to $394,400); 115 ($127,600); 135-37 ($5,000). 20 When Plaintiff “closed out all his open trading positions” on April 28, 2015, $6,621.49 of 21 Draper’s initial contribution of $275,000 remained in the account. Id. ¶ 144. Plaintiff avers a total of 10 causes of action in the SAC, including fraudulent concealment, 22 23 fraudulent misrepresentation, breach of fiduciary duty, breach of contract, “aiding and abetting” 24 fraud, violation of several California consumer protection statutes, and “employment of 25 26 27 28 2 Draper is the plaintiff in a separate, related action before this Court. See Draper v. KCG Americas LLC, No. 18-cv-2425-HSG. 3 As he did in his First Amended Complaint, Plaintiff cites—often in conclusory fashion—to exhibits in a “Comprehensive Exhibits File Folder.” He indicates these are on file with the Court. They are not, and so the Court disregards these references. 2 1 manipulative computer software programs, computer servers, electronic trading facility and 2 manipulative scheme to defraud” him. 3 4 B. Procedural Posture 1. Prior to the Filing of the Second Amended Complaint 5 Plaintiff filed the First Amended Complaint on May 16, 2017. Dkt. No. 11 (“FAC”). The 6 causes of action, as well as the named Defendants, were identical to those in the SAC. On March 7 7, 2018, the Court dismissed Plaintiff’s FAC because he lacked standing to seek the vast majority 8 of his requested relief, as the capital with which he had traded belonged to Draper. See Dkt. No. 9 74 at 5-6. Additionally, the Court found that with respect to the relief for which he might have standing, Plaintiff had failed to state a claim under Federal Rule of Civil Procedure 9(b). See id. at 11 United States District Court Northern District of California 10 6-7. The Court gave him one opportunity to amend. Id. at 7. 12 2. After the Filing of the Second Amended Complaint 13 Plaintiff filed the operative SAC on April 3, 2018. Dkt. No. 75. 14 On April 4, 2018, Plaintiff filed a motion challenging a decision by the Commodity 15 Futures Trading Commission (“CFTC”). Dkt. No. 76 (Motion for Judicial Review, or “MJR”). 16 On April 27, 2018, Defendants filed a joint opposition to Plaintiff’s motion. Dkt. No. 91 (“MJR 17 Opp.”). Plaintiff replied on May 11, 2018. Dkt. No. 96 (“MJR Reply”). For reasons that are not 18 clear, Plaintiff—who is not an attorney—purported to file his reply on behalf of both himself and 19 Draper, whose separate lawsuit would soon be related. On July 5, 2018, the Court requested 20 supplemental briefing in light of the Supreme Court’s recent decision in Lucia v. Securities & 21 Exchange Commission, 138 S. Ct. 2044 (2018). Dkt. No. 114. The parties submitted the 22 requested briefing on July 26, 2018. Dkt. Nos. 117, 118. 23 On April 27, 2018, Defendants filed three motions seeking dismissal of the SAC. See Dkt. 24 Nos. 86, 89, 90. Plaintiff filed a global opposition brief on May 11, 2018. Dkt. No. 95 (“MTD 25 Opp.”). Defendants replied on May 18, 2018. Dkt. Nos. 98, 99, 100. 26 On May 8, 2018, the ION Defendants filed a motion to relate Draper’s case to Plaintiff’s. 27 Dkt. No. 94. The Court granted the motion on May 15, 2018, Dkt. No. 97, and did not consider 28 Plaintiff’s belatedly-filed opposition, see Dkt. No. 101. 3 On June 18, 2018, Plaintiff—again purporting to file on behalf of both himself and 1 2 Draper—moved to consolidate the two cases, Dkt. No. 102 (“Consolidation Mot.”), and to stay 3 certain proceedings, Dkt. No. 103 (“Stay Mot.”). On July 2, 2018, Defendants filed oppositions to 4 both motions. Dkt. Nos. 108, 109, 110, 113. Plaintiff replied on July 9, 2018. Dkt. Nos. 115, 5 116. Also on June 18, Plaintiff—again purporting to file on behalf of both himself and Draper— 6 7 filed a second opposition to Defendants’ motions to dismiss his SAC. Dkt. No. 104. The motion, 8 which styled Draper as a “specially-appearing plaintiff,” also purports to oppose Defendants’ 9 motions to dismiss Draper’s complaint. See id. at 5. The ION Defendants accordingly filed an objection, Dkt. No. 106, to which Plaintiff replied (again, purportedly on his and Draper’s behalf), 11 United States District Court Northern District of California 10 Dkt. No. 112. 12 II. DISCUSSION The Court Strikes Plaintiff’s Impermissible Filings. 13 A. 14 As a preliminary matter, Plaintiff filed a second opposition brief in response to 15 Defendants’ motion to dismiss. Dkt. No. 104. When the ION Defendants objected, Dkt. No. 106, 16 Plaintiff filed another reply, Dkt. No. 112. Even setting aside the impropriety of Plaintiff, a non- 17 attorney, purporting to represent Draper, both filings violate the local rules because Plaintiff did 18 not seek or obtain the Court’s leave to file them. See Civ. L.R. 7-3(d) (stating that “[o]nce a reply 19 is filed, no additional memoranda, papers or letters may be filed without Court approval,” subject 20 to exceptions not relevant here). Accordingly, the Court strikes Docket Numbers 104 and 112. 21 B. 22 Plaintiff seeks (1) consolidation of his action with Draper’s, and (2) a stay pending 23 resolution of certain underlying administrative proceedings, Plaintiff’s motion for judicial review, 24 and consolidation of his and Draper’s actions. The Court denies both motions. 25 26 The Court Denies the Motions to Stay and Consolidate. 1. Motion to Consolidate Plaintiff contends that absent consolidation of his action with Draper’s, the cases will be 27 “unadjudicatable” because they are so complex. See Consolidation Mot. at 4. Plaintiff further 28 argues that the actions “seek to represent substantially the same Plaintiffs Harry and Draper, for 4 1 essentially the same claims based on similar allegations,” against the same Defendants. Id. at 5. 2 Upon consolidation, Plaintiff seeks permission to file a consolidated complaint. See id. 3 Defendants uniformly oppose the motion. 4 Under Federal Rule of Civil Procedure 42(a), a court may consolidate actions if they 5 “involve a common question of law or fact.” The district court enjoys “broad discretion under this 6 rule to consolidate cases pending in the same district.” Investors Research Co. v. U.S. Dist. Court 7 for Cent. Dist. of Cal., 877 F.2d 777, 777 (9th Cir. 1989); see also Snyder v. Nationstar Mortg. 8 LLC, No. 15-cv-03049-JSC, 2016 WL 3519181, at *2 (N.D. Cal. June 28, 2016) (same). In 9 exercising this “broad discretion,” the district court “weighs the saving of time and effort consolidation would produce against any inconvenience, delay, or expense that it would cause.” 11 United States District Court Northern District of California 10 Huene v. U.S., 743 F.2d 703, 704 (9th Cir. 1984), on reh’g, 753 F.2d 1081 (9th Cir. 1984); see 12 also Snyder, 2016 WL 3519181, at *2 (same). 13 While these cases are largely identical with respect to the relevant questions of law and 14 fact, the conduct of Plaintiff and Draper thus far demonstrates that consolidation would likely 15 result in further inconvenience to the Court and Defendants, not to mention additional expense to 16 the latter. There are strong indications that Plaintiff, who is not an attorney, has improperly been 17 acting in a representative capacity on behalf of Draper, given the joint filings submitted by both 18 and the similar language of their complaints. See Johns v. Cnty. of San Diego, 114 F.3d 874, 877 19 (9th Cir. 1997) (“[A] non-lawyer has no authority to appear as an attorney for others than 20 himself.”) (citation and internal quotation marks omitted). Consolidating the cases, particularly 21 given the pro se status of the plaintiffs in both, would only blur the lines even more and make it 22 more difficult to ensure that Plaintiff and Draper are representing only themselves. Moreover, the 23 Court has already related the cases, which suffices in terms of preserving judicial economy under 24 these circumstances. 25 26 Accordingly, the Court exercises its broad discretion and denies Plaintiff’s motion to consolidate. 27 28 5 1 2 2. Motion to Stay Next, Plaintiff seeks a stay of this action pending the resolution of certain underlying 3 administrative proceedings before the CFTC, his MJR, and the consolidation of the two actions. 4 Stay Mot. at 3. As noted in this order, the Court denies the motions to consolidate and for judicial 5 review, so the only remaining argument is that the Court should stay this action pending the CFTC 6 proceedings. Defendants uniformly oppose the motion. 7 “[T]he power to stay proceedings is incidental to the power inherent in every court to 8 control the disposition of the causes on its docket with economy of time and effort for itself, for 9 counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). In order to issue a stay, courts consider: (1) “the possible damage which may result from the granting of a stay,” (2) 11 United States District Court Northern District of California 10 “the hardship or inequity which a party may suffer in being required to go forward,” and (3) “the 12 orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and 13 questions of law which could be expected to result from a stay.” CMAX, Inc. v. Hall, 300 F.2d 14 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254-55). Whether to stay an action is a matter 15 entrusted to the discretion of the district court. See Landis, 299 U.S. at 254 (“How this can best be 16 done calls for the exercise of judgment, which must weigh competing interests and maintain an 17 even balance.”). “A trial court may, with propriety, find it is efficient for its own docket and the 18 fairest course for the parties to enter a stay of an action before it, pending resolution of 19 independent proceedings which bear upon the case.” Leyva v. Certified Grocers of Cal., Ltd., 593 20 F.2d 857, 863 (9th Cir. 1979). But Landis also “cautions that if there is even a fair possibility that 21 the stay . . . will work damage to [someone] else, the stay may be inappropriate absent a showing 22 by the moving party of hardship or inequity.” Dependable Highway Express, Inc. v. Navigators 23 Ins. Co, 498 F.3d 1059, 1066 (9th Cir. 2007) (citing Landis, 299 U.S. at 255) (internal quotation 24 marks omitted). 25 Based on Plaintiff’s litigation conduct thus far, the Court finds that a stay would “work 26 damage” to Defendants, rendering it inappropriate. It may be true that Draper’s proceedings 27 before the CFTC are ongoing—but since Plaintiff by his own admission does not have standing to 28 participate in those proceedings, see Stay Mot. at 4, it is unclear how they would affect his case. 6 1 Critically, there is more than a “fair possibility” that a stay would prolong Defendants’ litigation 2 with Plaintiff—a litigant who has demonstrated an unwillingness to, for example, abide by the 3 local rules—and further complicate this action. Given the insufficiency of Plaintiff’s showing of 4 “hardship or inequity,” a stay is not warranted. 5 Accordingly, the Court exercises its discretion and denies Plaintiff’s motion to stay. 6 C. 7 Upon filing his SAC, Plaintiff filed a motion for judicial review (“MJR”), challenging the The Court Denies Plaintiff’s Motion for Judicial Review. 8 appointment of the judgment officer who heard his case at the CFTC. He purports to file the 9 motion on behalf of Draper as well, which he cannot do as a non-attorney. Accordingly, the Court 10 United States District Court Northern District of California 11 considers the motion only as it pertains to Plaintiff, and denies the motion. In sum, Plaintiff seeks vacatur of the underlying CFTC decision on the ground that the 12 judgment officer who presided over the agency proceeding was improperly appointed under 13 Article II, section 2, clause 2 of the Constitution (“the Appointments Clause”). See MJR at 5, 11. 14 Although the Court subsequently directed supplemental briefing on whether the recent Supreme 15 Court decision in Lucia v. Securities Exchange Commission affects the analysis of Plaintiff’s 16 Appointments Clause argument, see Dkt. No. 114, the Court has determined that it need not reach 17 that issue in order to deny the motion for lack of jurisdiction. 18 Under the Commodity Exchange Act, 7 U.S.C. §§ 1 et seq. (“CEA”), a “person 19 complaining of a violation” of the statute may file a petition for a “reparation proceeding” before a 20 CFTC judgment officer. 7 U.S.C. § 18(a)(1); see also 17 C.F.R. § 12.26. That person may then 21 appeal that “initial decision” to the CFTC itself. See 17 C.F.R. § 12.401(a). Following issuance 22 of the CFTC’s “final decision,” see 17 C.F.R. § 12.406(a), that order “shall be reviewable on 23 petition of any party aggrieved thereby, by the United States Court of Appeals for any circuit in 24 which a hearing was held, or if no hearing was held, any circuit in which the appellee is located,” 25 7 U.S.C. § 18(e); see also 17 C.F.R. § 12.406(c). “Such appeal shall not be effective unless within 26 30 days from and after the date of the reparation order the appellant also files with the clerk of the 27 court a bond[.]” 7 U.S.C. § 18(e). 28 The CEA, in other words, is unambiguous: any challenge to a final order of the CFTC 7 1 must be brought in the appropriate Circuit Court of Appeals, in accordance with section 18(e)— 2 not the district court. Plaintiff provides no meaningful basis for his decision to file the MJR in this 3 Court, contending only that he is “under no legal obligation to [a]ppeal to any CFTC Tribunal or 4 the Ninth Circuit because CFTC never sued any of the 14 Defendants in this Court, at the CFTC 5 Tribunal, on behalf of [Plaintiff].” MJR Reply at 11. But Plaintiff misapprehends the import of 6 the agency’s determination that he had no standing to participate in the underlying reparation 7 proceeding. See Dkt. No. 92 (Wedbush Defendants’ Request for Judicial Notice), Exs. 3, 7. That 8 determination in itself is the decision for which he would have sought review as described in the 9 CEA—first by the CFTC, then by the appropriate Court of Appeals. Accordingly, the Court denies Plaintiff’s MJR. The CEA makes plain that the appropriate 10 United States District Court Northern District of California 11 venue for judicial review of final decisions by the CFTC is the Court of Appeal, not the district 12 court.4 The Court Grants Defendants’ Motions to Dismiss. 13 D. 14 In its order dismissing the FAC, the Court found that Plaintiff lacked standing to recover 15 any alleged losses stemming from Draper’s $275,000 investment in their joint venture. See Dkt. 16 No. 74 at 5-6. The Court did, however, grant Plaintiff one opportunity to amend the FAC to allege 17 additional facts regarding his alleged loss of $4,527.25, which he claimed to have paid to 18 Defendants for the trading platform. See id. at 6-7. The Court further noted that Plaintiff would 19 be required to plead in accordance with the heightened pleading requirements of Federal Rule of 20 Civil Procedure 9(b). Id. Plaintiff represents that the only amendments he made to the FAC are 21 his arguments on standing on pages 4 to 13 of the SAC. See MTD Opp. at 14. Defendants renew their arguments from the previous round of litigation and claim that 22 23 Plaintiff has again failed to allege facts showing that he has standing to sue. See Dkt. No. 86 at 6- 24 9; Dkt. No. 89 at 3; Dkt. No. 90 at 6-9. The Court limits its standing analysis to Plaintiff’s federal 25 claims under the CEA, considers the additional allegations in the SAC, and grants Defendants’ 26 4 27 28 Furthermore, Plaintiff appears to concede in his supplemental briefing regarding Lucia that his MJR is moot. See Dkt. No. 118 at 2 (“Thus, the methodology of appointing [the judgment officer] through the Appointments Clause is no longer relevant.”). In the alternative, the Court therefore also denies the MJR on the ground that it is moot. 8 1 motions with prejudice. 2 1. Legal Standard Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss based on the 3 4 court’s lack of subject matter jurisdiction. “A Rule 12(b)(1) jurisdictional attack may be facial or 5 factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004) (citing White v. 6 Lee, 227 F.3d 1214, 1242 (9th Cir. 2000)). A facial attack “asserts that the allegations contained 7 in a complaint are insufficient on their face to invoke federal jurisdiction.” Id. A factual attack 8 “disputes the truth of the allegations that, by themselves, would otherwise invoke federal 9 jurisdiction.” Id. “A suit brought by a plaintiff without Article III standing is not a ‘case or controversy,’ 10 United States District Court Northern District of California 11 and an Article III federal court therefore lacks subject matter jurisdiction over the suit.” Cetacean 12 Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004). Because a plaintiff’s standing is a 13 prerequisite to a federal court’s exercising subject matter jurisdiction over his cause of action, a 14 defendant may challenge standing via a Rule 12(b)(1) motion. See, e.g., Chandler v. State Farm 15 Mut. Auto. Ins. Co., 598 F.3d 1115, 1123 (9th Cir. 2010) (affirming district court’s grant of Rule 16 12(b)(1) motion asserting that plaintiff lacked standing).5 Consistent with Article III, “the 17 ‘irreducible constitutional minimum’ of standing consists of three elements.” Spokeo, Inc. v. 18 Robins, 136 S. Ct. 1540, 1547 (2016) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 19 (1992)). “The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the 20 challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial 21 decision.” Id. (citing Lujan, 504 U.S. at 560-61). Injury in fact is “the first and foremost of 22 standing’s three elements,” and requires a showing that a plaintiff “suffered an invasion of a 23 legally protected interest that is concrete and particularized and actual or imminent, not conjectural 24 or hypothetical.” Id. at 1547-48 (citations, internal quotation marks, and brackets omitted). To be 25 concrete, an injury “must actually exist.” Id. at 1548. To be particularized, “the injury must affect 26 5 27 28 Although only one of the three motions before the Court expressly raises and applies the standard under Rule 12(b)(1), the Court is nonetheless “obligated to consider sua sponte whether [it has] subject matter jurisdiction.” Jasper v. Maxim Integrated Prods., Inc., 108 F. Supp. 3d 757, 764 (N.D. Cal. 2015) (quoting Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir. 2004)). 9 1 2 the plaintiff in a personal and individual way.” Lujan, 504 U.S. at 560 n.1. “Pleadings must be construed so as to do justice.” Fed. R. Civ. P. 8(e). For that reason, “a 3 pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal 4 pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citations and internal 5 quotations marks omitted). If dismissal is still appropriate, a court “should grant leave to amend 6 even if no request to amend the pleading was made, unless it determines that the pleading could 7 not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th 8 Cir. 2000) (citation and internal quotation marks omitted). 9 2. Discussion The allegations in the SAC regarding Plaintiff’s injury-in-fact for purposes of standing go 11 United States District Court Northern District of California 10 to one of three theories. The Court has already rejected two of these theories, and all of them fail. 12 a. Plaintiff’s Standing Arguments Repeated from the FAC 13 First, Plaintiff repeats his allegations from the FAC that he suffered a direct loss of 14 $287,462.50 and “consequential” losses of $45 million. See, e.g., SAC ¶ 6. As the Court found in 15 its previous order, this amounts to an attempt “to recover losses to the initial $275,000 contributed 16 to the trading account by Draper”—i.e., “to vindicate the invasion of a legally protected interest 17 . . . that is indisputably not his.” Dkt. No. 74 at 5. 18 Second, Plaintiff again asserts standing based on the “time, energy, resources and money” 19 required “to analyze and monitor Draper and [Plaintiff’s] electronic trades 24/6 . . . during the 17 20 month Trading Period.” See SAC ¶ 7. He contends that “[i]t costs at least $10,000 per month to 21 trade a $275,000 Commodity Futures Trading Account,” and accordingly seeks $170,000 (i.e., 22 $10,000 per month for the relevant 17-month period). Id. But Plaintiff provides no basis for the 23 $10,000 figure, except to claim that he “could have taken a job as a Commodity Futures Trader 24 and made more than $10,000 per month.” Id. As the Court found in its order dismissing the FAC, 25 such an injury is improperly conjectural and speculative. See Dkt. No. 74 at 5 n.5 (also stating 26 that “the physical or mental toll of trading, generally alleged, is not sufficiently concrete”) 27 28 10 1 (citations and internal quotation marks omitted).6 Plaintiff therefore cannot assert standing on either of these grounds. 2 3 b. 4 Plaintiff’s Standing Arguments Regarding His Alleged Actual Losses 5 The third standing theory posited by Plaintiff is the one the Court asked him to elaborate 6 upon in its order dismissing the FAC, and is based on certain operational expenses he allegedly 7 incurred in the course of trading. See SAC ¶¶ 4 (alleging that Plaintiff “lost money” due in part to 8 “operational expenses” and the “cost of trading equipment”), 7 (noting that Plaintiff “spent 9 between $299.95 and $315 per month of his own money for the Trading Software, [CVS], to Place the Electronic Trade Orders for Draper and Harry’s . . . Joint Venture Trading Account, under 11 United States District Court Northern District of California 10 Ronald Draper’s name . . . for about 15 to 17 months,” and that he “spent a few thousand dollars 12 of his own money for Software and Hardware (including a 3-Monitor Hardware System) to carry 13 out the electronic Trades”), 225 (alleging that Plaintiff paid the CVS Defendants $299.95 per 14 month to use their trading platform). In his prayer for relief, Plaintiff states that he is seeking 15 $4,527.25 for the CVS Defendants’ “dysfunctional” trading platform. SAC at 88(A). He provides 16 no indication as to how he arrived at that figure. Moreover, a paragraph from the FAC that 17 remained in the SAC contains an allegation that directly contradicts Plaintiff’s contention that he 18 paid the platform fees: “Furthermore, Draper’s Good Faith Deposit of $275,000 . . . is a negative 19 investment in that, every month at least $300 will be taken out of the Deposit for Trading Platform 20 and Exchange Fees, whether Draper traded or not.” See SAC ¶ 69 (emphasis added); see also 21 FAC ¶ 39 (same). As the Court found in dismissing the FAC, the only injury in fact which Plaintiff could 22 23 allege is the money he spent on the trading platform. Plaintiff has not sufficiently alleged standing 24 in this regard. His allegation that he “spent a few thousand dollars” on software and hardware is 25 not sufficiently concrete, nor does he allege any facts that demonstrate the required nexus—e.g., 26 that Defendants fraudulently induced him to buy this hardware and software in order to trade on 27 6 28 Plaintiff’s claim to $45 million in consequential damages (i.e., “lost profits”), see SAC at 88-89, is also facially speculative and thus insufficient for purposes of alleging an injury-in-fact. 11 their system. See SAC ¶ 7. As for the $4,527.25 he purports to seek in his prayer for relief, 2 Plaintiff alleges no facts in support of that figure, leaving it entirely up to the Court to guess how 3 he arrived at it. Most saliently, Plaintiff’s allegations that he paid a monthly fee for use of the 4 trading platform is undercut by his allegation that “at least $300” was withdrawn out of Draper’s 5 $275,000 deposit every month for platform fees. See SAC ¶ 69. These contradictory allegations 6 do not plausibly allege an injury in fact for purposes of establishing Plaintiff’s standing, especially 7 given the heightened pleading requirement under Federal Rule of Civil Procedure 9(b). See 8 Kakogui v. Am. Brokers Conduit, No. 09-CV-4841-LHK, 2010 WL 3629825, at *2 (N.D. Cal. 9 Sept. 14, 2010) (dismissing Truth in Lending Act claim with prejudice as futile where plaintiff set 10 forth “vague, conclusory, and internally contradictory allegations”); Coppes v. Wachovia Mortg. 11 United States District Court Northern District of California 1 Corp., No. 2:10-cv-01689-GEB-DAD, 2011 WL 1402878, at *7 (E.D. Cal. Apr. 13, 2011) 12 (finding that internally contradictory allegations failed to plausibly allege a duty of care); Gross v. 13 Symantec Corp., No. C 12-00154 CRB, 2012 WL 3116158, at *6 (N.D. Cal. July 21, 2012) 14 (suggesting that internally contradictory allegations would “defeat plausibility”). 15 Accordingly, the Court finds that Plaintiff lacks standing to bring his federal CEA claims, 16 and grants Defendants’ motions as to those claims with prejudice. While the Court is mindful of 17 Plaintiff’s pro se status, this is the third iteration of his complaint, and he has now twice failed to 18 allege sufficient facts showing that he meets the threshold standing requirements. The Court reads 19 this failure to establish that he cannot truthfully do so, such that granting leave to amend would be 20 futile. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (“[W]here 21 the plaintiff has previously been granted leave to amend and has subsequently failed to add the 22 requisite particularity to its claims, [t]he district court’s discretion to deny leave to amend is 23 particularly broad.”) (citation, internal quotations, and original brackets omitted); Lopez, 203 F.3d 24 at 1130. 25 26 3. Remaining Jurisdictional Issues Without Plaintiff’s CEA claims, this Court lacks federal question jurisdiction, as Plaintiff’s 27 remaining causes of action arise under California law. Moreover, there is no basis for exercising 28 diversity jurisdiction, as there is not complete diversity between Plaintiff and Defendants. 12 1 Compare SAC ¶ 52 (alleging that Plaintiff is a resident of Fremont, California), with id. ¶ 88 2 (alleging that Defendant Main Street Trading, Inc. is a California corporation); see Lee v. Am. 3 Nat’l Ins. Co., 260 F.3d 997, 1004 (9th Cir. 2001) (holding that “to bring a diversity case in 4 federal court against multiple defendants, each plaintiff must be diverse from each defendant”). 7 5 And, while the Court may in its discretion exercise supplemental jurisdiction over Plaintiff’s 6 remaining state-law claims, see 28 U.S.C. § 1367(a), it may decline to do so if, as here, it has 7 dismissed all claims over which it has original jurisdiction, see Sanford v. MemberWorks, Inc., 8 625 F.3d 550, 561 (9th Cir. 2010) (citing 28 U.S.C. § 1367(c)(3)). “[I]n the usual case in which 9 all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction doctrine—judicial economy, convenience, fairness, and comity—will point 11 United States District Court Northern District of California 10 toward declining to exercise jurisdiction over the remaining state-law claims.” Id. (citation 12 omitted) (original brackets). The Court finds this to be “the usual case,” and accordingly declines 13 to exercise supplemental jurisdiction and dismisses Plaintiff’s state-law claims without prejudice, 14 for lack of jurisdiction. 15 // 16 // 17 // 18 // 19 // 20 // 21 // 22 // 23 // 24 // 25 7 26 27 28 As support for his claims, Plaintiff attached to the SAC copies of two checks he apparently made out to one of the Wedbush Defendants—one for $599.90, and the other for $627.90. See Dkt. No. 75-1. Plaintiff pleads insufficient facts regarding the circumstances surrounding those payments, however, and in any event, the sum of the checks does not approach the $75,000 amount-incontroversy threshold required for diversity jurisdiction, even had there been complete diversity here. See 28 U.S.C. § 1332(a). 13 1 2 III. CONCLUSION For the foregoing reasons, the Court STRIKES Docket Numbers 104 and 112; DENIES 3 Plaintiff’s motion to consolidate; DENIES Plaintiff’s motion to stay; and DENIES Plaintiff’s 4 motion for judicial review. Further, the Court GRANTS Defendants’ motions to dismiss as 5 follows: Plaintiff’s federal claims are DISMISSED WITH PREJUDICE and his state-law claims 6 are DISMISSED WITHOUT LEAVE TO AMEND, BUT WITHOUT PREJUDICE to 7 refiling in state court. The Clerk is directed to close the case. 8 9 IT IS SO ORDERED. Dated: 8/27/2018 10 United States District Court Northern District of California 11 HAYWOOD S. GILLIAM, JR. United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

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