Theodorakis v. DFINITY Stiftung
- Martinez-Olguin
- 3:23-cv-02280
- U.S. District Court · Northern District of California
- 8
In Theodorakis v. DFINITY, Judge Martinez-Olguin granted dismissal motions, finding no personal jurisdiction over two defendants and no supplemental jurisdiction over DFINITY.
Theodorakis’s claims against Williams and Bochsler were dismissed for lack of personal jurisdiction, and his claims against DFINITY were dismissed because supplemental jurisdiction was unavailable. The court allowed amendment solely to add jurisdictional allegations.
What happened
In Theodorakis v. DFINITY Stiftung, Eftychios Theodorakis alleged that DFINITY Stiftung, Dominic Williams, and Gian Bochsler made misleading statements about ICP Tokens and improperly sold or withheld tokens. He brought state-law claims and federal racketeering claims against Williams and Bochsler.
Williams and Bochsler argued that service was improper, that the court lacked power over them, and that the complaint failed to state a claim. The court found that service complied with the Hague Convention but that the alleged use of cryptocurrency exchanges and related transfers did not establish the required connection with California. DFINITY argued that the court also lacked authority over the state-law claims against it.
Judge Araceli Martinez-Olguin granted Williams and Bochsler’s motions to dismiss for lack of personal jurisdiction and granted DFINITY’s motion because no federal claims or diversity jurisdiction remained to support supplemental jurisdiction. The court allowed amendment only to add jurisdictional allegations, with an amended complaint due May 30, 2024.
The detailed version
- Theodorakis v. DFINITY Stiftung · No. 3:23-cv-02280
- Martinez-Olguin
- Apr. 30, 2024
Background
Eftychios Theodorakis sued DFINITY Stiftung, Dominic Williams, and Gian Bochsler over ICP Tokens, a cryptocurrency created and sold by DFINITY. The amended complaint alleged conversion, trespass to chattels, negligence, civil penalties under California Penal Code section 496(c), unfair competition, and intentional misrepresentation against all defendants. It also alleged four federal Racketeer Influenced and Corrupt Organizations Act violations against Williams and Bochsler.
Theodorakis alleged that the defendants made false statements about the safety and stability of ICP Tokens, transferred millions of tokens to cryptocurrency exchanges, sold tokens while preventing non-insiders from selling, and delayed delivery of some tokens. The complaint alleged that Theodorakis received 41,666 tokens from his former employer and had a right to 12,608 additional tokens that DFINITY refused to provide.
Williams and Bochsler
Williams and Bochsler moved to dismiss based on improper service, lack of personal jurisdiction, and failure to state a claim. The court found that service was proper. The certificate issued by the Swiss Authority was prima facie evidence that service complied with Swiss law and the Hague Convention, and the court declined to look beyond that certificate.
Personal jurisdiction means the court’s authority over a particular defendant. The court analyzed specific personal jurisdiction, which depends on the relationship among the defendant, California, and the claims. Because the claims sounded in tort, the court examined whether Williams and Bochsler intentionally acted, expressly aimed their conduct at California, and caused harm they knew was likely to occur there.
The court concluded that Theodorakis did not satisfy the first two parts of this test. The complaint alleged that Williams and Bochsler transferred and sold ICP Tokens through Coinbase and other exchanges, and that Williams transferred proceeds to accounts including one at First Republic Bank in California. But the court held that merely transferring cryptocurrency through a California bank or exchange did not show conduct expressly aimed at California. The court therefore found no personal jurisdiction over Williams or Bochsler and granted their motions to dismiss.
DFINITY
DFINITY moved to dismiss for lack of subject-matter jurisdiction, under the Rooker-Feldman doctrine, based on issue preclusion, and for failure to state a claim. Theodorakis acknowledged that diversity jurisdiction was unavailable because all parties were or had been foreign nationals when the lawsuit was filed. He also did not assert federal claims against DFINITY, arguing instead that the court could hear the state-law claims against DFINITY through supplemental jurisdiction based on the federal claims against Williams and Bochsler.
The court rejected that basis for jurisdiction because it had found no personal jurisdiction over Williams or Bochsler. As a result, no federal claims remained to support supplemental jurisdiction over DFINITY. The court therefore granted DFINITY’s motion to dismiss.
Disposition
The court granted Williams and Bochsler’s motion to dismiss for lack of personal jurisdiction and granted DFINITY’s motion to dismiss. The court granted leave to amend solely to add new jurisdictional allegations. Any amended complaint was due by May 30, 2024. If Theodorakis could allege personal jurisdiction over Williams or Bochsler, the court allowed him to include the claims against DFINITY brought under supplemental jurisdiction.
Read the full 8-page opinion on CourtListener, the free public archive maintained by the Free Law Project.