Snyder v. Stox Technologies LTD

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA SEAN SNYDER, CASE NO. 19-6132 RJB Plaintiff, ORDER ON PLAINTIFF’S 12 v. MOTIONS FOR LEAVE TO FILE AMENDED COMPLAINT AND 13 STOX TECHNOLOGIES, a corporation, DEFENDANTS’ MOTION TO MOSHE HOGEG, DOES 1-10, DISMISS Defendants.

16 THIS MATTER comes before the Court on the Plaintiff’s “Ex Parte Motion for Leave to File an Amended Complaint” (Dkt. 31), Plaintiff’s Motion for Extension of Time to File his Amended Complaint once as a Matter of Course (Dkt. 33), and the Defendants Stx Technologies (improperly named in the Complaint as Stox and referred to here as “Stx”) and Moshe Hogeg’s Motion to Dismiss for Lack of Personal Jurisdiction and Alternatively for Failure to State a Claim (Dkt. 23). The Court has considered the pleadings filed regarding the motions and the remaining file.

1 On November 25, 2019, the Plaintiff filed this case, pro se, asserted claims against the Defendants for (1) breach of contract, (2) breach of fiduciary duty, (3) fraud, (4) intentional infliction of emotional distress, (5) unjust enrichment, (6) declaratory relief, (7) accounting, and (8) violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et.

5 seq. (“RICO”) in connection with the Plaintiff’s alleged purchase of “Stox Tokens” (cryptocurrency tokens). Dkt. 1. Defendant Stx Technologies is alleged to be a corporation registered in Gibraltar and Defendant Moshe Hogeg is alleged to reside in Israel. Id. 8 The Plaintiff now moves to file an amended complaint as of right (Dkts. 31 and 33) and the Defendants Stx and Hogeg move to dismiss the case against them (Dkt. 23). The Plaintiff’s motions to amend his complaint (Dkts. 31 and 33) should be granted. Considering the allegations in both the Complaint and Amended Complaint, the Defendants Stx and Hogeg’s motion should be granted and they should be dismissed without prejudice because this Court does not have personal jurisdiction over them.

14 I. PROCEDURAL HISTORY AND BACKGROUND FACTS 15 After the Plaintiff’s motion for service of process on international Defendants Stx and Hogeg was granted (Dkt. 9), a notice of appearance for these Defendants was entered on March 11, 2020. Dkt. 10. On April 17, 2020, Defendants Stx and Hogeg filed their Motion to Dismiss for Lack of Personal Jurisdiction and Alternatively for Failure to State a Claim. Dkt. 23.

19 The Plaintiff filed a motion for an extension of time to file a motion for leave to amend the complaint, which was granted, in part, and he was given until June 2, 2020 to file such a motion. Dkt. 28. The Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction and Alternatively for Failure to State a Claim (Dkt. 23) was renoted for consideration for July 3, 2020. Id. The Plaintiff then filed the two motions for leave to file an amended complaint as of right. Dkts. 31 and 33. Plaintiff attached a redlined version of a proposed amended complaint and several pleadings which he asserts are attachments to the proposed amended complaint.

3 Dkts. 31-2 through 31-4. The Court renoted the first of Plaintiff’s motions to amend (Dkt. 31) to July 3, 2020 to be considered with the Defendants’ motion to dismiss. Dkt. 32. In that order, the Defendants were directed to address how the Plaintiff’s proposed amendments impacted their motion to dismiss in their response (if any) to the Plaintiff’s motion to amend. Id. (After that order was entered, the Plaintiff filed a second motion to amend his Complaint as of right (Dkt.

8 33) noted it for consideration on June 19, 2020, and referred to the proposed amended complaint filed with his first motion at Dkt. 31-2. Both motions to amend are considered here.)

10 The Plaintiff’s 159-page proposed amended complaint names several new defendants (in addition to STX and Hogeg) including: Floyd Mayweather Jr. (alleged to be a Nevada resident), Kenes (Kenges) Rakishev (alleged to be a citizen of Kazakhstan), Ophir Gertnew (alleged to be a citizen of Israel), Marek Lornic (alleged to be a citizen of Canada), Hanita Ezta (alleged to be a citizen of Israel), Joe Chen (alleged to be a United States citizen domiciled in China), Eyal Hertzog (alleged to be a citizen of Israel), Ros Astar (alleged to be a citizen of Israel), Yossy Haezrachy (alleged to be a citizen of Israel), Avishai Ziv (alleged to be a citizen of Israel), Ron Ashtar (alleged to be a citizen of Israel), Itai Aveneri (alleged to be a citizen of Israel), Uriel Peled (alleged to be a citizen of Israel), and Does 1-17. Dkt. 31-2.

19 The Plaintiff’s proposed amended complaint is overly long (including the text of several statutes, discussions of other cases and events of limited relevance, and several news articles) and is difficult to understand. It is not consistent with Fed. R. Civ. P 8(a)(2), which requires that a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” He generally asserts that Stx and Hogeg, “are part of an enterprise [that] consummated several transactions with the Plaintiff, directly, or indirectly, while the Plaintiff was residing in Washington.” Dkt. 31-2, at 37. The Plaintiff alleges that Stx “reached out to the Wings Community (A Decentralized Autonomous Organization, with Members from all regions of the world, including members from several States within the U.S.A., including Washington State) and offered the Community up to $250,000.00 worth of Rewards to entice the members of the community, of which the Plaintiff was a member, to read the Whitepaper” (an informational text to, in part, explain the “initial coin offering”) and learn about its project. Dkt. 31-2, at 73.

8 The Plaintiff stated that he “looked into” the project and was rewarded with “4409 STX Tokens.”

9 Id. He maintains that Stx and Hogeg “listed or tried to list” their cryptocurrency on “exchanges that allowed U.S. Citizens, and Washington State residents to utilize and trade on.” Dkt. 31-2, at 37. The Plaintiff acknowledges that he could not participate in Stx’s “initial coin offering” as a United States citizen. Id., at 101. But he alleges that he eventually purchased STX tokens from a third-party. Id., at 80. He claims that “Stx effectively devalued the Plaintiff[’]s STX tokens when they created the Market for STX on the Bancor Platform, Stx knew that their actions devalued the Plaintiffs STX tokens, and that their actions were in non-compliance to the promises made in the relevant Whitepaper.” Id., at 37. The Plaintiff asserts that Stx purchased the Plaintiff’s tokens back from him. Dkt. 31-2, at 38.

18 As against Stx and Hogeg, the Plaintiff asserts claims in the proposed amended complaint for: (1) breach of contract, (2) negligent misrepresentation, (3) wire fraud, (4) willful and wanton misconduct and outrage, (5) quasi contract and or unjust enrichment, (6) “declaratory relief against Stx,” (7) “accounting,” (8) RICO, (9) “violations of Sections 5 and 12 of the Securities Act,” 15 U.S.C. § 77e and 15 U.S.C. § 771(a), (10) “violation of Section 15 of the Securities Act,” 15 U.S.C. § 77o, (11) violations the Securities Act of Washington, RCW 21.20, (12) violations of the Exchange Act, 15 U.S.C. § 78i, (13) violations of Washington’s Business Opportunity Fraud Act, RCW 19.110, (14) violations of Washington’s CPA, RCW 19.86. Dkt.

3 31-2. The Plaintiff also raises “equitable estoppel.” Id. The Plaintiff seeks damages, costs, attorneys’ fees, and “further such relief as the Court may deem just and proper.” Id. 5 II. DISCUSSION 6 A. PLAINTIFF’S MOTIONS TO FILE AMENDED COMPLAINT 7 Fed. R. Civ. P. 15(a)(1) provides: 8 Amending as a Matter of Course. A party may amend its pleading once as a matter of course within: (A) 21 days after serving it, or (B) if the pleading is one to which a responsive pleading is required, 21 days after 11 service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.

The Plaintiff’s motion for leave to amend the complaint once as a matter of course (Dkt.

31 and 33) should be granted. As explained below, considering the allegations in the Complaint and in the Amended Complaint, Defendants Stx and Hogeg should be dismissed for lack of personal jurisdiction.

The Court makes no ruling as to the futility of the amendment as it relates to the newly named parties and makes no ruling on whether the Court has jurisdiction over these parties. As stated above, the proposed amended complaint is not consistent with Rule 8’s requirement that it be a “short plain statement” showing that he is entitled to relief. While the Plaintiff is entitled to file the proposed amended complaint “as a matter of course” under Rule 15, he should be aware that the proposed amended complaint fails to plainly state what happened and what claims he is making as a result. Plaintiff should refer to the federal rules and the Local Rules of the Western District of Washington for additional guidance. Even though he is acting pro se, he is expected to follow all the federal and local rules. Further, the Plaintiff should be aware that “an amended complaint supersedes the original, the latter being treated thereafter as non-existent.” Ramirez v. Cty. of San Bernardino, 806 F.3d 1002, 1008 (9th Cir. 2015)(internal citation and quotation marks omitted).

5 The Plaintiff should file a clean version (without the redlines) of the proposed amended complaint by July 17, 2020. Further, a deadline should be set for the Plaintiff to serve the newly named Defendants. (Some of the Defendants are alleged to be U.S. citizens, some are alleged to be citizens of Israel, and others are alleged to be citizens of other countries.) On or before July 24, 2020, the Plaintiff should be ordered to begin the process of serving process on the Defendants, or file proof of service for the Defendants, or show cause why this case should not be dismissed for failure to prosecute.

12 B. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION 13 Fed. R. Civ. P. 12 (b)(2) governs the dismissal of an action based on lack of personal jurisdiction. Where no applicable federal statute addresses the issue, a court’s personal jurisdiction analysis begins with the “long-arm” statute of the state in which the court sits.

16 Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002). Washington’s long-arm statute extends the court’s personal jurisdiction to the broadest reach that the United States Constitution permits. Byron Nelson Co. v. Orchard Management Corp., 95 Wn.App. 462, 465 (1999). Because Washington’s long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analysis under state law and federal due process are the same. Schwarzenegger, 374 F.3d 797, 800–01 (9th Cir. 2004).

22 To exercise personal jurisdiction over a nonresident defendant under federal law, that defendant must have at least “minimum contacts” with the relevant forum state such that exercising jurisdiction “does not offend traditional notions of fair play and substantial justice.”

2 Schwarzenegger, 374 F.3d at 801, (citing International Shoe v. Washington, 326 U.S. 310, 316 (1945). In determining whether a defendant had minimum contacts, courts focus on the relationship among the defendant, the forum, and the litigation. Shaffer v. Heitner, 433 U.S. 186 5 (1977). Personal jurisdiction exists in two forms, general and specific. Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002).

7 “A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Goodyear Dunlop Tire Operations, S.A. v. Brown, 564 U.S. 15, 919 (2011). In order for a court to exercise specific jurisdiction over a foreign defendant corporation, the following is required: (1) the defendant purposefully availed itself of the privilege of conducting activities in Washington, thereby invoking the benefits and protections of its laws; (2) the plaintiff's claims arise out of defendant's Washington-related activities; and (3) the exercise of jurisdiction would be reasonable. Easter v. American West Financial, 381 F.3d 948, 960–61 (9th Cir. 2004); Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). Plaintiff has the burden to make the prima facie showing of jurisdiction. Ziegler, 64 F.3d 470, 473 (9th Cir. 1995).

18 Defendants’ motion to dismiss for lack of personal jurisdiction (Dkt. 23) should be granted. The Plaintiff has failed to demonstrate that his allegations (in either the Complaint or proposed amended complaint), if taken as true, show that this Court has general jurisdiction over non-resident Defendants Stx and Hogeg. There is no showing that their affiliations with Washington are not so “continuous and systematic” so “as to render [them] essentially at home” in Washington.

1 Moreover, the Plaintiff has failed to demonstrate that the allegations in his Complaint or proposed amended complaint establish that this Court has specific jurisdiction over Stx or Hogeg. The Plaintiff summarily asserts that these Defendants purposely availed themselves of conducting business in Washington and that his claims arise out of Stx and Hogeg’s Washington related activities. He fails to point to any allegations to support his conclusory assertions and the undersigned can find none. There is no showing that exercise of jurisdiction over Stx and Hogeg would be reasonable. The Court does not have specific personal jurisdiction over Stx and Hogeg.

9 Defendants Stx and Hogeg’s motion to dismiss for lack of personal jurisdiction should be granted and the case against them should be dismissed without prejudice. The Court need not reach Defendants Stx and Hogeg’s remaining grounds for dismissal of the case.

12 III. ORDER 13 IT IS ORDERED THAT: 14 • The Plaintiff’s “Ex Parte Motion for Leave to File an Amended Complaint” (Dkt.

15 31), Plaintiff’s Motion for Extension of Time to File his Amended Complaint 16 once as a Matter of Course (Dkt. 33) ARE GRANTED; 17 • The Plaintiff SHALL FILE a clean version (without the redlines) of his 18 Amended Complaint by July 17, 2020; 19 • On or before July 24, 2020, the Plaintiff SHALL begin the process of serving 20 process on the newly named Defendants, or file proof of service for the 21 Defendants, or show cause why this case should not be dismissed for failure to 22 prosecute; and 1 • Defendants Stx Technologies (improperly named in the Complaint as Stox and 2 referred to here as “Stx”) and Moshe Hogeg’s Motion to Dismiss for Lack of 3 Personal Jurisdiction and Alternatively for Failure to State a Claim (Dkt. 23) IS 4 GRANTED; 5 • Stx Technologies (improperly named as Stox) and Moshe Hogeg ARE 6 DISMISSED WITHOUT PREJUDICE for lack of personal jurisdiction.

7 The Clerk is directed to send uncertified copies of this Order to all counsel of record and to any party appearing pro se at said party’s last known address.

9 Dated this 7th day of July, 2020.

A ROBERT J. BRYAN United States District Judge