HAHA Global, Inc. v. Barclays

Background

HAHA Global, Inc. and Ali Aghaei asserted claims against numerous banks, including Barclays, Bank of America, and Santander. The claims alleged breach of contract, breach of fiduciary duty, violations of the Sherman Act, and violations of the Racketeer Influenced and Corrupt Organizations Act. Defendants moved to dismiss the amended complaint in its entirety for failure to state a claim.

Magistrate Judge Aaron issued a report and recommendation recommending that the motions be granted and the case dismissed. Plaintiffs objected to that recommendation. The opinion states that Plaintiffs were represented by counsel.

Review of the Recommendation

When a party makes specific, proper objections to a magistrate judge’s recommendation, the district judge reviews the challenged parts independently. When objections are only general or repeat earlier arguments, the district judge reviews the recommendation for clear error, meaning an obvious mistake in the record.

Judge Caproni found that Plaintiffs’ objections repeated arguments they had already made, including material copied from an earlier filing. The court therefore reviewed the recommendation for clear error and found none.

The court agreed that Plaintiffs had abandoned their federal claims because they did not address those claims in their opposition filings or sur-reply. The opinion states that the magistrate judge had specifically warned that failing to address those claims would result in their being treated as abandoned. The court added that, even if Plaintiffs had not abandoned the federal claims, those claims would have been dismissed for failure to state a claim.

The remaining claims—breach of contract and breach of fiduciary duty—were state-law claims. The court declined to exercise supplemental jurisdiction over them after the federal claims were no longer viable. It also stated that diversity jurisdiction was unavailable because the opinion identifies Plaintiff as a California citizen and Defendant Wells Fargo as headquartered in California.

Requests to Remove the Judges

Plaintiffs asked that Magistrate Judge Aaron be removed because of his former employment at Arnold & Porter, where some attorneys had previously represented Barclays in unspecified matters. The court found that argument speculative and unsupported because Plaintiffs alleged no facts showing that Judge Aaron had involvement in, or prior knowledge of, this case or had worked with attorneys who did.

Plaintiffs also asked Judge Caproni to remove herself because of her former employment with the Federal Bureau of Investigation. The court found no discernible connection between the case and the FBI and noted that Plaintiffs offered no evidence supporting their contention that Avantulo used FBI agents or informants. The court rejected both requests and also found them untimely and procedurally improper because they were raised for the first time in objections rather than in separate motions.

Disposition

The court granted Defendants’ motions to dismiss and dismissed the case. Because Plaintiffs had abandoned their federal claims, the court denied leave to amend those claims. The Clerk of Court was directed to terminate all open motions and close the case.