Miller v. HFN, Inc.
- Vince Chhabria
- 3:23-cv-00533
- U.S. District Court · Northern District of California
- 2
In Miller v. HFN, Inc., Judge Chhabria granted HFN’s motion to dismiss, allowing amendment of Miller’s securities claim and declining jurisdiction over related state claims.
Allan Miller must decide whether to file an amended complaint within 21 days to continue pursuing the federal claim. HFN, Inc. obtained dismissal of the securities-fraud claim at this stage, and the court declined jurisdiction over the related state-law claims.
What happened
In Miller v. HFN, Inc., Miller sued HFN, Inc. and others, including claims under the Securities Exchange Act and state law. HFN argued that Miller had not alleged enough connection with California for the court to exercise personal jurisdiction over it.
The court said the California contacts alleged in the complaint were not enough for specific personal jurisdiction, but the federal securities law allowed jurisdiction if HFN had sufficient contacts with the United States. The court found that Miller had not adequately pleaded securities fraud because he did not allege that he bought or sold stock in reliance on materially false or misleading statements. The court dismissed that claim and declined to exercise jurisdiction over the related state-law claims.
Judge Chhabria granted the motion to dismiss and allowed Miller to amend. Any amended complaint was due within 21 days; if Miller did not file one, the dismissal of the federal claim would become with prejudice. HFN’s response would be due within 14 days after any amended complaint was filed.
The detailed version
- Miller v. HFN, Inc. · No. 3:23-cv-00533
- Vince Chhabria
- May 10, 2023
Background
Allan Miller sued HFN, Inc. and other defendants, asserting a claim under the Securities Exchange Act and state-law claims. HFN moved to dismiss. The opinion focuses on whether the court could exercise personal jurisdiction over HFN and whether Miller adequately pleaded securities fraud.
Personal jurisdiction
The court explained that Miller’s allegations about HFN officers traveling through San Francisco International Airport and HFN maintaining an office in San Jose did not establish sufficient California contacts for specific personal jurisdiction because the complaint did not connect those contacts to the claims.
The Securities Exchange Act, however, permits personal jurisdiction in any federal district court when the defendant has minimum contacts with the United States. The court found that Miller adequately alleged those contacts. The complaint alleged that HFN was incorporated under Delaware law and had its principal place of business in Utah.
The court also explained that the Ninth Circuit recognizes pendent personal jurisdiction, which allows a court with jurisdiction over one claim to exercise jurisdiction over related claims arising from substantially the same facts. The court said Miller’s state-law claims arose from substantially the same facts as the securities claim.
Securities-fraud claim
Despite finding a jurisdictional basis for the federal claim, the court held that Miller had not adequately pleaded securities fraud. The complaint contained no allegation that Miller bought or sold stock in reliance on materially false or misleading statements by HFN. The court therefore dismissed the securities-fraud claim.
State-law claims and disposition
Because the securities claim was dismissed, the court declined to exercise pendent personal jurisdiction over the state-law claims. The court granted HFN’s motion to dismiss and granted leave to amend. An amended complaint was due within 21 days of the order. If no amended complaint was filed by that deadline, dismissal of the federal claim would be with prejudice. HFN’s response would be due within 14 days after any amended complaint was filed.
Judge
Judge Vince Chhabria signed the order on May 10, 2023.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.