Theodorakis v. DFINITY Stiftung

Background

Theodorakis’s first amended complaint asserted claims for conversion, trespass to chattels, negligence, civil penalties under California Penal Code section 496(c), unfair competition, intentional misrepresentation, and four federal racketeering claims against Gian Bochsler and Dominic Williams. The second amended complaint again asserted racketeering, section 496(c), and trespass claims against Bochsler and Williams, and added a securities-fraud claim under section 10(b) of the Securities Exchange Act against all defendants.

The court’s earlier order had granted the individual defendants’ motions to dismiss for lack of personal jurisdiction and had granted DFINITY’s motion because no federal claim or diversity jurisdiction remained to support supplemental jurisdiction over DFINITY. The court allowed amendment solely to add new allegations addressing jurisdiction. Theodorakis then filed the second amended complaint, and Bochsler, Williams, and DFINITY moved to dismiss it.

Individual Defendants’ Motion

The court held that it lacked general personal jurisdiction over Bochsler and Williams. Bochsler did not live or work in the United States, and Williams lived in Switzerland, had a Swiss residency permit, and owned residential property there. The court concluded that Williams’s earlier connections to California—including living there, owning a house, raising children, and involvement in California litigation—did not show that California remained his domicile.

The court also held that Theodorakis had not shown specific personal jurisdiction. Specific jurisdiction concerns the connection among the defendant, the forum, and the lawsuit. The court found that allegations about Williams’s fundraising efforts, a tour of DFINITY’s Palo Alto facility, and money raised from California-based investors did not show that the defendants caused harm they knew was likely to occur in California. Theodorakis also did not explain why his claims would not have arisen without those California-related activities.

The court rejected Theodorakis’s effort to attribute DFINITY’s or DFINITY USA’s California contacts to Bochsler and Williams under an alter-ego theory. That theory permits a court to disregard separate business entities only when the allegations plausibly show both a unity of ownership and interests and that respecting the separate entities would cause fraud or injustice. The court found that shared ownership, management, employees, information, and resources were not enough, and that the allegations were insufficiently specific and contradicted by defendants’ evidence.

Because the court concluded that it lacked personal jurisdiction over the individual defendants, it did not address their additional arguments under the federal rules governing subject-matter jurisdiction, the rule concerning claims that effectively seek review of state-court judgments, or failure to state a claim.

The court also declined to give Theodorakis another opportunity to amend. It found that he had already had multiple opportunities to establish jurisdiction, including through amended pleadings and supplemental briefing, and had not shown that another amendment would cure the defects.

DFINITY’s Motion

The court held that the securities-fraud claim against DFINITY exceeded the scope of the permission to amend. The earlier order allowed amendment only to add jurisdictional allegations and permitted the previously asserted claims against DFINITY to be included under supplemental jurisdiction if a basis for that jurisdiction existed. It did not permit Theodorakis to add a new cause of action against DFINITY for the first time in the second amended complaint.

The court therefore struck Count Five, the securities-fraud claim. Because no claims against DFINITY remained, the court did not consider DFINITY’s additional arguments.

Disposition

The court granted the individual defendants’ motion to dismiss with prejudice. It struck Count Five and granted DFINITY’s motion to dismiss with prejudice. The order was entered by Judge Araceli Martinez-Olguin on March 14, 2025.