Treanor v. Paypal, Inc.

Background

Michael R. Treanor, Jr. filed the case without a lawyer and alleged that he is a licensed attorney in New York. He invoked diversity jurisdiction, which allows a federal court to hear certain disputes between citizens of different states when more than $75,000 is at stake. He asserted state-law claims against PAYPAL, INC., including fraud, fraudulent inducement, unjust enrichment, breach of fiduciary duty, false advertising, and deceptive or unfair business practices. He also indicated that he was attempting to bring the case as a class action.

According to the complaint, Treanor deposited $4,000 into Venmo’s cryptocurrency payment system on December 14, 2024. After he tried to use or withdraw the funds, the transaction remained pending and customer service told him the funds were under review and would be available on December 19, 2024. Treanor alleged that PAYPAL, INC. had fraudulently induced him to deposit the money by advertising ease of use and sought more than $75,000 in actual and punitive damages.

Jurisdictional Analysis

The court assumed, for purposes of the order, that the diversity-of-citizenship requirement was satisfied because Treanor alleged that he was a New York citizen and that PAYPAL, INC. was incorporated in Delaware and headquartered in California. The court held, however, that the complaint did not provide facts showing that the amount in controversy exceeded $75,000.

The factual allegations showed, at most, that Treanor could not immediately use $4,000 and that the funds were returned to his account approximately one week later. The court explained that even a permanent loss of $4,000 would be far below the jurisdictional minimum. Treanor’s assertion that the incident caused more than $75,000 in damages because his livelihood depended on a transaction was conclusory and unsupported by additional facts.

The court also examined Treanor’s request for more than $75,000 in punitive damages. It explained that punitive damages are ordinarily unavailable for an ordinary fraud claim under New York law and require especially egregious, morally reprehensible conduct. The complaint alleged that the cryptocurrency transaction was not processed with the advertised ease of use, but the court found no facts suggesting conduct serious enough to support punitive damages for jurisdictional purposes.

The court’s footnote also stated that a self-represented plaintiff cannot serve as a class representative, even if he is an attorney. It further stated that the alleged damages of individual class members could not be combined to satisfy the amount-in-controversy requirement. The court did not reach the merits of Treanor’s state-law claims.

Disposition

The court dismissed the complaint for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(h)(3). It granted Treanor 30 days to file an amended complaint addressing the identified defects. If he did not file an amended complaint within that period, the court stated that the Clerk would be directed to enter judgment.

The court also certified under 28 U.S.C. § 1915(a)(3) that any appeal would not be taken in good faith and denied fee-free status for purposes of an appeal. The Clerk was directed to keep the matter open on the docket until a civil judgment was entered. The order was signed by Chief United States District Judge Laura Taylor Swain.