In re Fyre Festival Litigation

Background

The court’s July 10, 2019 order dismissed the plaintiffs’ Second Consolidated Amended Class Action Complaint against Jeffrey Atkins and Grant Margolin with prejudice, while allowing the plaintiffs limited permission to seek an amendment concerning particular allegations against Atkins.

The earlier order held that the plaintiffs had not adequately pleaded fraud claims. As to Margolin, the plaintiffs had not identified false statements attributable to him with the detail required by Federal Rule of Civil Procedure 9(b), which requires fraud to be pleaded with particularity. As to Atkins, the plaintiffs identified an allegedly false April 27, 2017 Twitter post stating, “The stage is set!!! In less than 24 hours, the first annual Fyre Festival begins. #festivallife,” but did not adequately allege that a plaintiff relied on it.

Motion for Reconsideration Regarding Margolin

The plaintiffs sought reconsideration of Margolin’s dismissal under Federal Rules of Civil Procedure 59(e) and 60(b); the court treated the motion as one under Local Rule 6.3. Reconsideration is available only on narrow grounds, including an intervening change in controlling law, genuinely new evidence, or the need to correct clear error or prevent manifest injustice.

The plaintiffs submitted declarations from named plaintiffs Ritu Jutla and Daniel Jung, a declaration from putative class member Abbas Ali, and a declaration from counsel. The court declined to consider the declarations because the court had not directed that affidavits be filed. It also concluded that, even if considered, they did not identify when a particular plaintiff relied on an individual statement by Margolin or provide the missing details previously identified by the court.

The plaintiffs also submitted emails involving Jacqueline Veit and argued that Margolin was represented by counsel rather than proceeding without a lawyer. The court rejected that argument. It stated that Margolin’s receipt of assistance in preparing papers did not mean he was represented in the action, and that his status as a self-represented litigant was not the basis for the July 10 dismissal. The dismissal instead rested on the plaintiffs’ failure to attribute specific statements to Margolin, plead his involvement in the alleged fraud with sufficient detail, and show good cause for further amendment.

The plaintiffs further relied on two documentaries released in January 2019. The court held that the documentaries were not new evidence because they were publicly available more than six months before the July 10 order. The court also held that the alleged documentary material did not identify particular statements made by Margolin, show that a plaintiff saw or heard such a statement, or establish when a plaintiff relied on it. The court denied reconsideration concerning Margolin.

Motion for Leave to Amend Regarding Atkins

The plaintiffs submitted a proposed Third Consolidated Amended Class Action Complaint. The court explained that leave to amend may be denied when the proposed amendment would be futile, meaning the amended pleading still could not survive a motion to dismiss.

The proposed complaint relied on allegations from three putative class members—“Class member 1,” “Class member 2,” and Abbas Ali—that they saw and relied on Atkins’s April 27 tweet when finalizing travel or other plans for the Festival. None sought to become a named plaintiff. The court held that allegations by absent class members could not substitute for allegations showing that at least one named plaintiff had a plausible claim. The proposed complaint did not identify which named plaintiff saw, read, or heard of Atkins’s tweet, when that plaintiff relied on it, or what particular injury resulted.

The court also held that the proposed amendments did not satisfy the requirements for claims under New York General Business Law § 349. The complaint did not allege that a New York plaintiff relied on Atkins’s tweet while in New York or made a transaction that would bring the claim within New York law. The court additionally noted that the proposed complaint did not cure the pleading deficiencies concerning possible claims under California, Colorado, or Illinois law.

Disposition

Judge P. Kevin Castel denied the plaintiffs’ motion for reconsideration and denied their motion for leave to file an amended complaint. The clerk was directed to terminate the two motions identified as Documents 100 and 102.