Freeman v. Stake.com
- Ronnie Abrams
- 1:22-cv-07002
- U.S. District Court · Southern District of New York
- 11
In Freeman v. Stake.com, Judge Abrams granted defendants’ dismissal motion for lack of subject-matter jurisdiction, allowing amendment.
Christopher Freeman may amend his pleadings within 30 days; the named defendants obtained dismissal of the motion as granted without prejudice, and the court did not reach the merits of Freeman’s claims.
What happened
Freeman v. Stake.com concerns Christopher Freeman’s claims that former business partners used his work and Primedice-related resources to launch Stake.com and reduced his interest in Primedice. He asserted claims including fraud, idea misappropriation, interference, and unjust enrichment.
The court ruled that Freeman had not shown the complete diversity of citizenship required for federal jurisdiction. The complaint did not adequately allege the citizenship of several defendants, Bijan Tehrani was a U.S. citizen living in Australia and therefore could not be sued on a diversity basis, and Freeman’s alleged partnership interest in Primedice placed his citizenship on both sides of the case. The court did not decide the claims’ merits or the other dismissal arguments.
Judge Ronnie Abrams granted the motion to dismiss without prejudice and gave Freeman 30 days to amend his pleadings in good faith. The court expressed doubt that the jurisdictional problems could be fixed but did not find amendment necessarily futile.
The detailed version
- Freeman v. Stake.com · No. 1:22-cv-07002
- Ronnie Abrams
- June 26, 2023
Background
Christopher Freeman sued former business partners Edward Craven and Bijan Tehrani, along with Stake.com, Primedice, Slicemedia B.V., Medium Rare N.V., Easygo Solutions Pty Ltd, Mebit.io, Mladen Vuckovic, and other named defendants. Freeman alleged that he helped create Primedice, an online cryptocurrency gambling site, and later developed and promoted the idea of expanding it into a full-service cryptocurrency casino. According to the Amended Complaint, Craven and Tehrani said they would instead develop a fiat-money casino, induced Freeman to withdraw from that project, and then launched Stake.com using Freeman’s work and funds.
Freeman also alleged that ownership of Primedice was transferred through entities associated with Vuckovic, converting his partnership interest into an interest held by Slicemedia. The Amended Complaint asserted claims including fraud, breach of fiduciary duty, unfair competition, idea misappropriation, tortious interference, unjust enrichment, conversion, and an accounting of financial damage. The defendants moved to dismiss for lack of subject-matter jurisdiction, lack of personal jurisdiction over several defendants, and failure to state a claim.
Subject-Matter Jurisdiction
The court addressed subject-matter jurisdiction first. Diversity jurisdiction requires complete diversity—meaning no plaintiff may be a citizen of the same state as any defendant—and an amount in controversy exceeding $75,000. The plaintiff bears the burden of establishing that jurisdiction exists.
The court found that the Amended Complaint did not adequately allege the citizenship of every defendant. It alleged residences for some individuals, but residence does not establish citizenship. It also failed to identify the citizenship of every member of the partnership and limited liability companies involved, instead alleging where certain entities were located.
The court independently found that Tehrani’s presence defeated diversity jurisdiction. The opinion held that Tehrani is a U.S. citizen domiciled in Australia and therefore is not a citizen of any U.S. state or a foreign state for diversity-jurisdiction purposes. The court also explained that Primedice, alleged to be a partnership including Tehrani, shared that jurisdictional problem because a partnership has the citizenship of all its partners.
The court further held that Freeman’s own allegations defeated diversity because they identified him as a partner of Primedice and alleged that he was a Florida citizen. A partnership takes the citizenship of each partner, so Freeman’s Florida citizenship appeared on both sides of the action through Primedice. The court rejected Freeman’s attempt to contradict or reinterpret those allegations through his briefing.
Disposition
The court granted the motion to dismiss for lack of subject-matter jurisdiction. Because jurisdiction was lacking, it did not reach the defendants’ arguments concerning personal jurisdiction or whether the Amended Complaint stated legally sufficient claims.
The dismissal was granted without prejudice. The court granted Freeman leave to amend his pleadings within 30 days, provided he had a good-faith basis to do so. Although the court was skeptical that Freeman could establish diversity jurisdiction or personal jurisdiction over several defendants, it did not conclude that amendment would necessarily be futile.
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.