Pristavec v. Meno Holdings SPV, LP

Background

Daniel Pristavec and Justin Hauge alleged that they entered into a series of agreements with Meno Holdings SPV, LP, and that Adit Ventures, LLC, acted on Meno’s behalf in some of those transactions. The agreements concerned restricted shares derived from Airbnb stock. The plaintiffs alleged that Meno represented it was purchasing the securities for investment and not for resale or distribution, but later entered into arrangements with other people or entities concerning the securities.

The plaintiffs also alleged that Adit instructed Fidelity Investments to place a hold on their accounts, interfering with their contracts with Fidelity. They asserted eight causes of action, including claims under Sections 5 and 12 of the Securities Act, several requests for declarations concerning the agreements and Meno’s alleged contractual breaches, and a state-law claim for tortious interference with contract.

Motion and jurisdictional issue

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which permits dismissal when the federal court lacks subject-matter jurisdiction. They also challenged personal jurisdiction and argued that the tortious-interference claim failed to state a claim, but the court did not reach those arguments.

The plaintiffs relied on federal-question jurisdiction under 28 U.S.C. § 1331, based on their Securities Act claims. They also asserted supplemental jurisdiction over the state-law claim under 28 U.S.C. § 1367. The defendants argued that the federal claims were immaterial, frivolous, and added solely to obtain federal jurisdiction over what was otherwise a contract dispute.

Court’s reasoning

The court examined the agreements and concluded that the plaintiffs did not purchase put options. Instead, the agreements were titled “Forward Purchase and Sale of Securities Agreement[s],” identified the plaintiffs as sellers and Meno as purchaser, and repeatedly described Meno’s purchase of the shares. The agreements gave Meno the right to seek specific performance if a seller failed to sell and transfer the shares. The court found no contractual remedy corresponding to the put option alleged by the plaintiffs.

Because the plaintiffs were sellers rather than purchasers, the court concluded that they lacked the status required to sue under Section 12 of the Securities Act. The court likewise found their related Section 5-based declaratory claims defective. Considering the procedural history, the New York state-court contract litigation, and the language of the agreements, the court determined that the Securities Act claims were wholly frivolous and had been asserted solely to obtain federal jurisdiction.

Disposition

The court granted the defendants’ motion to dismiss for lack of subject-matter jurisdiction. Because all purported federal claims were dismissed, the court declined to exercise supplemental jurisdiction over the remaining state-law tortious-interference claim. The court stated that it did not need to address the defendants’ personal-jurisdiction and failure-to-state-a-claim arguments, directed the Clerk to enter judgment and close the case, and stated that the order disposed of Docket No. 41.