Segal et al v. Bitar et al

Filing 94

REPLY MEMORANDUM OF LAW in Support re: 52 MOTION to Dismiss the Complaint under FRCP 12(b)(2) and 12(b)(6).. Document filed by Johnson Juanda. (Schwartz, William)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
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:
STEVE SEGAL, NICK HAMMER, ROBIN
HOUGDAHL, and TODD TERRY, on
:
behalf of themselves and all others similarly
situated,
:
Plaintiffs,
v.

:

Case No. 11-CIV-4521 (LBS)

:

RAYMOND BITAR; NELSON BURTNICK;
:
FULL TILT POKER, LTD.; TILTWARE, LLC;
VANTAGE, LTD; FILCO, LTD; KOLYMA
:
CORP. A.V.V.; POCKET KINGS LTD.;
POCKET KINGS CONSULTING LTD.;
:
RANSTON LTD.; MAIL MEDIA LTD.;
HOWARD LEDERER; PHILLIP IVEY JR.;
:
CHRISTOPHER FERGUSON; JOHNSON
JUANDA; JENNIFER HARMAN-TRANIELLO; :
PHILLIP GORDON; ERICK LINDGREN; ERIK
SEIDEL; ANDREW BLOCH; MIKE MATUSOW; :
GUS HANSEN; ALLEN CUNNINGHAM;
PATRIK ANTONIUS and JOHN DOES 1-100,
:
Defendants.

:

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REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF
DEFENDANT JOHNSON JUANDA’S MOTION TO DISMISS THE COMPLAINT

COOLEY LLP
1114 Avenue of the Americas
New York, NY 10036
Tel [phone]
Fax [phone]

TABLE OF CONTENTS
PAGE
PRELIMINARY STATEMENT ................................................................................................... 1
ARGUMENT ................................................................................................................................. 1
I. PLAINTIFFS HAVE FAILED TO ESTABLISH JURISDICTION OVER
MR. JUANDA ................................................................................................................... 1
II. PLAINTIFFS HAVE FAILED TO PLEAD A VALID CLAIM AGAINST
MR. JUANDA ................................................................................................................... 4

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TABLE OF AUTHORITIES
PAGE
CASES
Appalachian Enters., Inc. v. ePayment Solutions, Ltd.,
2004 U.S. Dist. LEXIS 24657 (S.D.N.Y. Dec. 8, 2004) ...................................................2, 5, 6
Atuahene v. City of Hartford,
2001 U.S. App. LEXIS 11694 (2d Cir. May 31, 2001) .............................................................5
Hsin Ten Enter. USA v. Clark Enters.,
138 F. Supp. 2d 449 (S.D.N.Y. 2000)....................................................................................3, 4
Lehigh Valley Indus. v. Birenbaum,
527 F.2d 87 (2d Cir. 1975).........................................................................................................3
Ontel Prods., Inc. v. Project Strategies Corp.,
899 F. Supp. 1144 (S.D.N.Y. 1995)...........................................................................................3
Piven v. Wolf Haldenstein Adler Freeman & Herz LLP,
2010 U.S. Dist. LEXIS 27609 (S.D.N.Y. March 12, 2010) ......................................................6
Southerland v. New York City Hous. Auth.,
2010 U.S. Dist. LEXIS 124716 (E.D.N.Y. Nov. 23, 2010) .......................................................6
STATUTES
CPLR
§ 302(a)(1) .................................................................................................................................2
§ 302(a)(3)(ii).............................................................................................................................4
OTHER AUTHORITIES
Fed. R. Civ. Proc.
Rule 8 .....................................................................................................................................5, 6
Rule 12(b)(6)..............................................................................................................................6

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PRELIMINARY STATEMENT
Plaintiffs’ opposition brief presents no basis for the assertion of personal jurisdiction as
against Defendant Johnson Juanda. In fact, the Plaintiffs in their opposing papers mention Mr.
Juanda specifically only once: to single him out as an individual for which the plaintiffs lack any
factual basis to assert jurisdiction. This extraordinary admission merits immediate dismissal.
ARGUMENT
I. PLAINTIFFS HAVE FAILED TO ESTABLISH JURISDICTION OVER MR. JUANDA
In support of his motion to dismiss, Mr. Juanda submitted a jurisdictional declaration
attesting to his lack of any relevant contacts with the State of New York. Plaintiffs not only fail
to controvert any of facts set forth in Mr. Juanda’s declaration in their Memorandum of Law in
Opposition to Defendants’ Motions to Dismiss (“Opposition” or “Opp. Mem.”), but in the
accompanying Declaration of Thomas H. Burt, Esq. (“Burt Decl.”), they state outright that they
are aware of no contacts or connections between Mr. Juanda and the State of New York
sufficient to exercise jurisdiction over him.
The Opposition itself makes no mention of Mr. Juanda, either directly by name, or even
indirectly through a group reference. Although the Opposition makes various arguments
concerning jurisdiction about two groups it defines as the “Entity Defendants” and the
“Individual Defendants” (and together defined as the “Defendants”), Mr. Juanda is specifically
excluded from all of these groups. In particular, the Opposition defines “Individual Defendants”
as a series of named individuals, but pointedly excludes Mr. Juanda from the list. Opp. Mem. at
3. Because the Opposition asserts only arguments as against various combinations of the
“Entity” and “Individual Defendants,” the effect of the exclusion of Mr. Juanda from these
categories is that the Opposition fails to make any argument whatsoever with respect to him.

The reason behind this seemingly odd omission becomes crystal clear upon reading the
Burt Declaration. That declaration states the factual basis asserted by the plaintiffs for
jurisdiction as against the Individual Defendants: they are alleged to have established contacts
with New York by playing poker online in tournaments in which New York-based players also
participated. See Burt. Decl. & Opp. Mem. at 8. The Burt Declaration attempts to support this
allegation by citing the results of “Plaintiffs’ independent research” and naming instances in
which certain Individual Defendants played in online poker tournaments in which players based
from New York allegedly participated. See Burt Decl. ¶¶ 3-12. However, when it comes to Mr.
Juanda, Mr. Burt admits that they cannot even assert this legally insufficient1 factual basis for
jurisdiction. Instead, he concedes that “Plaintiffs have been unable to specifically match . . .
Defendant Johnson Juanda to specific Full Tilt online poker tournaments in which New York
residents also played.” Burt Decl. ¶ 13. In short, not only do Plaintiffs fail to contest Mr.
Juanda’s declaration concerning the lack of jurisdiction, they openly admit they are unaware of
any factual basis to controvert it.2
Plaintiffs also improperly attempt to conflate jurisdiction over the Individual Defendants
(a category which excludes Mr. Juanda in any event) with jurisdiction over the Entity
Defendants. The argument proceeds as follows: plaintiffs begin by asserting jurisdiction with
respect to the Entity Defendants on the ground that they allegedly operated a “highly interactive”
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The fact that an individual defendant outside of New York accesses a website also located outside of New York
and that website happens simultaneously and independently to be accessed by a plaintiff from New York does not
constitute “transacting business” by the defendant in New York. See Appalachian Enters., Inc. v. ePayment
Solutions, Ltd., 2004 U.S. Dist. LEXIS 24657 at *14 (S.D.N.Y. Dec. 8, 2004) (explaining that a defendant may be
found to be “transacting business” and thus potentially subject to personal jurisdiction under CPLR § 302(a)(1) only
“[w]here defendants purposely avail themselves of the privilege of conducting business in this state, and the causes
of action arose out of activities occurring within the state”) (emphasis added).
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Plaintiffs also refer vaguely to the defendants’ “promotion” of the “Full Tilt brand,” Opp. Mem. at 3, presumably
referencing the allegations in the complaint that certain individuals wore “Full Tilt” branded clothing and
accessories at poker tournaments held outside New York. Compl. ¶¶ 36-48. However, there is no allegation that
Mr. Juanda wore such items at events in New York, and his uncontroverted declaration demonstrates otherwise.
Such incidental activities would not be a sufficient basis to support jurisdiction, in any case.

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website accessed by some New Yorkers, and then, without any further explanation, leap to the
baseless conclusion that the mere existence of this website somehow constitutes “doing
business” by the Individual Defendants in New York. See Opp. Mem. pp. 8-12. Even assuming
arguendo that operation of the Full Tilt website could be give rise to personal jurisdiction in New
York, that argument could apply only to the owners and operators of that website, namely the
Entity Defendants. It could not possibly to apply to Mr. Juanda, who is alleged merely to have
been an investor in one or more of the Entity Defendants. See Ontel Prods., Inc. v. Project
Strategies Corp., 899 F. Supp. 1144, 1148 (S.D.N.Y. 1995) (“In New York, the individual who
owns a corporation is generally not subject to personal jurisdiction as a result of the
corporation’s activities unless (1) the corporate veil can be “pierced” or (2) the corporation acted
as an agent for the owner.”); see also Lehigh Valley Indus. v. Birenbaum, 527 F.2d 87, 93-94 (2d
Cir. 1975) (“The New York law seems to be clear that the bland assertion of conspiracy or
agency is insufficient to establish [personal] jurisdiction.”). Plaintiffs, meanwhile, cite no case in
which a mere investor in an entity, with no alleged personal business interactions in New York,
has ever been found subject to jurisdiction in New York based on activity carried out by the
entity through its website.
Hsin Ten Enter. USA v. Clark Enters., 138 F. Supp. 2d 449, 456 (S.D.N.Y. 2000), cited
by the Plaintiffs (Opp. Mem. at 10-11), aptly demonstrates the fundamental flaws in their
argument. In Hsin Ten, the court found that activities conducted through the “interactive”
website of the entity defendant was sufficient to constitute “doing business” in New York. 138
F. Supp. 2d at 456. However, the court dismissed the claims asserted against the entity’s
corporate principal on jurisdictional grounds, holding that jurisdictional allegations sufficient to
establish jurisdiction over a company could not be used to hale the company’s principal into

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court absent specific allegations that the principal, “in his individual capacity, has transacted
business in New York.” Id. at 456-57.
Finally, the Plaintiffs’ repeat the complaint’s assertion of jurisdiction based on CPLR
302(a)(3)(ii), while simply ignoring the overwhelming authority, cited in Mr. Juanda’s moving
brief, that establishes that the situs of the alleged injury in this case (alleged conversion of
overseas accounts) is outside New York. Plaintiffs instead rely on a single citation to an
obviously inapplicable authority concerning determination of the situs of injury that is specific to
copyright actions. Opp. Mem. at 12. Moreover, once again, this argument is made solely with
respect to the Individual Defendants on the basis of their alleged personal gambling activities
with New Yorkers, and thus does not apply to Mr. Juanda.
II. PLAINTIFFS HAVE FAILED TO PLEAD A VALID CLAIM AGAINST MR. JUANDA
Even if Mr. Juanda were subject to personal jurisdiction here, the action would still be
subject to dismissal for failure to state a valid claim for relief against him. The Opposition
confirms that the complaint does not allege a RICO violation against Mr. Juanda. See Compl.,
Count I. But the only remaining claim—for common-law conversion—does not make any
allegations at all with respect Mr. Juanda.
The Opposition acknowledges the failure to make any substantive allegations with
respect to Mr. Juanda personally, but in bold defiance of the most fundamental rules of pleading,
simply asserts it need not do so. The Plaintiffs’ theory is that as long as the complaint alleges
some sufficient set of allegations as against some defendant, it can name as many additional
defendants as it wishes under the generic, conclusory allegation that “[a]ll Defendants, by virtue
of their control and ownership of the Full Tilt Companies . . . are liable for conversion of

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Plaintiffs’ and class members’ monies and assets (the “property”) held in Plaintiffs’ and class
members’ Full Tilt Player Accounts.” Compl. ¶ 116.
Not surprisingly, the law is quite to the contrary. Even under the liberal pleading
standards of Fed. R. Civ. Proc. 8 (“Rule 8”), the complaint must, at a minimum, adequately
notify each defendant of the actual claims of wrongdoing against them. See Atuahene v. City of
Hartford, 2001 U.S. App. LEXIS 11694 at *2-3 (2d Cir. May 31, 2001) (“Although Fed. R. Civ.
P. 8 does not demand that a complaint be a model of clarity or exhaustively present the facts
alleged, it requires, at a minimum, that a complaint give each defendant fair notice of what the
plaintiff’s claim is and the ground upon which it rests.”) (internal quotation omitted);
Appalachian Enters., Inc. v. ePayment Solutions, Ltd., 2004 U.S. Dist. LEXIS 24657 at *21
(S.D.N.Y. Dec. 8, 2004) (“A plaintiff fails to satisfy Rule 8, where the complaint lumps all the
defendants together and fails to distinguish their conduct because such allegations fail to give
adequate notice to the defendants as to what they did wrong.”) (internal quotations omitted).
The complaint’s deficiency is particularly glaring here, where the allegations of the
complaint do not suggest any logical inference that Mr. Juanda personally controls or has the
power to control the Plaintiffs’ funds at issue. On the contrary, the complaint clearly indicates
that the accounts in question are controlled by the Entity Defendants, over which Mr. Juanda,
who is not presently alleged to be an officer, director or controlling shareholder, cannot
reasonably be expected to exercise dominion.
Under these circumstances, Plaintiffs’ failure to specify the alleged conduct or
wrongdoing of Mr. Juanda renders the complaint fatally deficient. See Atuahene, 2001 U.S.
App. LEXIS 11694 at *3 (affirming dismissal of complaint for failure to meet the minimum
requirements of Rule 8, where complaint “lump[ed] all the defendants together in each claim and

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provid[ed] no factual basis to distinguish their conduct”); Appalachian Enters., Inc., 2004 U.S.
Dist. LEXIS 24657 at *21-25 (dismissing complaint for failure to satisfy Rules 8 and 12(b)(6)
where complaint “[did] not identify any particular defendant that committed any specific act of
wrongdoing against plaintiff,” but “simply attribute[d] the wrongful acts as being committed
collectively by the seventeen defendants,” and where “plaintiff ha[d] not identified any specific
defendant who is in possession and control of the subject funds to support its claims for replevin
and conversion”); Southerland v. New York City Hous. Auth., 2010 U.S. Dist. LEXIS 124716 at
*7-10 (E.D.N.Y. Nov. 23, 2010) (denying pro se plaintiff’s requests for relief and finding
complaint deficient in failing “to give the defendants fair notice of plaintiff’s claims” where its
“statement of facts lists allegations against ‘defendants’ generally, however, it fails to distinguish
defendants’ conduct or allege facts against any individual defendant.”). Similarly, in Piven v.
Wolf Haldenstein Adler Freeman & Herz LLP, 2010 U.S. Dist. LEXIS 27609 at *33-34
(S.D.N.Y. March 12, 2010), a complaint asserting conversion and other wrongs against a law
firm and individual partners was dismissed as against two of the partners where their names
“[did] not appear in any of the Complaint’s substantive allegations and appear[ed] only in the
descriptions of the parties.” Id. at *32. While the complaint described their wrongdoing
indirectly in allegations attributed to “each defendant,” those “generalized allegations were not
deemed sufficient to state a plausible claim against these defendants in their individual capacity,”
Id. at 32-33. A similar defect plagues the conversion claim against Mr. Juanda in this action,
where Mr. Juanda is not mentioned anywhere in the Complaint’s substantive facts, allegations, or
claims.

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CONCLUSION
For the foregoing reasons, Defendant Johnson Juanda’s motion to dismiss the Complaint
should be granted.

Dated: September 30, 2011
New York, New York
Respectfully submitted,
COOLEY LLP
By: ________/s/_William Schwartz_______
William J. Schwartz (WJS-8462)
Jason Koral (JK-1044)
Timothy L. Foster (TF-8896)
1114 Avenue of the Americas
New York, New York 10036
Tel: [phone]
Fax: [phone]
Attorneys for Johnson Juanda

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