Opinion
CIVIL ACTION NO. 3:17-CV-01267
12-10-2019
GLORIA SUN JUNG YUN, Plaintiff, v. GLADIACOIN.COM, et al., Defendants.
(MARIANI, J.)
() REPORT AND RECOMMENDATION
Plaintiff Gloria Sun Jung Yun commenced this action by filing a pro se complaint, on July 18, 2017, asserting that Gladiacoin.com ("Gladiacoin") and several other defendants ran a Bitcoin-based Ponzi scheme through which they fraudulently obtained Yun's bitcoins. (Doc. 1) (Doc. 4). Yun brings claims, not only against the entities and individuals directly liable for defrauding her (collectively, "Defendants"), but also against companies and service providers, such as GoDaddy.com, LLC ("GoDaddy"), from which Yun seeks information to prove her claims (collectively, "Codefendants"). (Doc. 1, at 1-2, 15). However, if GoDaddy or any other Codefendants "conceal information and conspire[] together for bitcoin scam," Yun asserts that she will pursue damages against them as well. (Doc. 1, at 15, ¶ 71-72).
A "Bitcoin is "[a] type of digital currency [i.e., "cryptocurrency"] in which a record of transactions is maintained and new units of currency are generated by the computational solution of mathematical problems, and which operates independently of a central bank[.]" Bitcoin, Oxford Dictionaries, https://premium.oxforddictionaries.com/definition/english/bitcoin (last visited Nov. 19, 2019).
The Court adopts Yun's naming convention by which she uses "Defendants" to refer to those entities and individuals she believes are directly liable for her injuries—while using "Codefendants" to mean defendants such as GoDaddy, which Yun named for purposes of obtaining disclosure, not to recover damages.
Presently before the Court is GoDaddy's motion to dismiss the complaint, filed May 6, 2019, (Doc. 21), on three grounds: (1) Yun seeks relief only for hypothetical future conduct; (2) Yun has not pleaded the elements of civil conspiracy; and (3) none of Yun's allegations gives rise to a cause of action against GoDaddy.
"GoDaddy is the world's largest domain name registrar, with 18 million customers worldwide and 77 million domain names under management. As a domain name registrar, GoDaddy is responsible for managing the reservation of Internet domain names registered through it by members of the public. In addition to domain name registration services, GoDaddy offers numerous other online products and services to the public, including website hosting services." (Doc. 21-1, at 3 n.1).
For the reasons that follow, the Court recommends that GoDaddy's motion to dismiss be GRANTED and that GoDaddy be dismissed from the case.
I. BACKGROUND
In May 2017, acting on friends' recommendations, Yun began to invest bitcoins in Gladiacoin. (Doc. 1, at 5, ¶ 5). At the time, Gladiacoin advertised that investors would "double the bitcoin within 90 days" and promised daily returns of 2.2% on all deposited bitcoins. (Doc. 1, at 5, ¶ 5). Gladiacoin claimed to buy bitcoins in one market and sell them in another market in which bitcoins had a higher value, "exploiting the difference in price on difference exchanges." (Doc. 1, at 8, ¶ 28). Because Yun initially saw returns on her investment, she borrowed money and increased her investment from .1 to 4.8 bitcoins. (Doc. 1, at 6, ¶ 6-7).
Soon, however, Yun lost 1.3 bitcoins due to a technical error. It was then that she first contacted defendant William Portillo, who claimed to have access to Gladiacoin's administrative and technical support. (Doc. 1, at 6, ¶¶ 8-9). Portillo was not able to refund Yun's account, although it appears Yun did receive .2 bitcoins back into her account. (Doc. 1, at 6, ¶ 9). Another technical glitch resulted in Gladiacoin's system being down between May 18 and May 24, 2017. (Doc. 1, at 6, ¶ 13). It reopened until June 3, 2017, and then shut down its accounts for a second time. (Doc. 1, at 6, ¶ 14). With her account blocked, Yun was forced to pay an administrative fee equal to 15% of her deposited bitcoins for three months. (Doc. 1, at 6, ¶ 16). The end result: Yun's investments were halved rather than doubled (Doc. 1, at 6-7, ¶¶ 16-17).
The balance of Yun's complaint consists of allegations of Portillo's ties to Gladiacoin and the ways in which he knowingly defrauded Yun and others. Despite having disclaimed any ownership in Gladiacoin, (Doc. 1, at 7, ¶ 20), Portillo apparently put up promotional videos on Facebook and YouTube touting and flaunting the wealth he obtained by investing with Gladiacoin. (Doc. 1, at 7-8, ¶¶ 22-23, 27, 30-31, 33). Portillo used other companies, such as Defendants Gladiacoin.us, Twicecoin.com, and Jet-coin.com, to defraud investors. (Doc. 1, at 9, ¶¶ 32, 35-36). Yun's investigations revealed that Defendants are "all related or copying the same concept of [multi-level marketing] to scam." (Doc. 1, at 10, ¶ 37).
As mentioned, supra, Yun does not allege that GoDaddy played a role in the Ponzi scheme or multi-level marketing scam. Rather, because the website Defendants such as Gladiocoin were hosted and registered with GoDaddy, (Doc. 1, at 4, 11-12, ¶¶ 47, 52), Yun named GoDaddy as a defendant for the purpose of obtaining information from GoDaddy to aid in litigating her claim against the primary "scam site[]" Defendants, (Doc. 1, at 15, ¶ 71). Asserting purely injunctive relief against GoDaddy, Yun concedes that she "does not have any claim or money judgment against [GoDaddy and the other] Co-Defendants unless co-defendants conceal information and conspires together for bitcoin scam," in which case Yun will "claim injury for helping [the primary defendants] by providing such service." (Doc. 1, at 15, ¶ 72).
Yun appears to assert three causes of action: (1) intentional misleading and misrepresentation; (2) money laundering; and (3) racketeering. She seeks millions of dollars in damages from Defendants and injunctive relief from Codefendants—unless, of course, Codefendants conceal information and conspire to further the Defendants' scam. (Doc. 1, at 10-15).
II. DISCUSSION
A. MOTION TO DISMISS STANDARD
Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a defendant to move to dismiss for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds the plaintiff's claims lack facial plausibility." Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). Although a court must accept the fact allegations in a complaint as true, it is not compelled to accept "unsupported conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation." Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (quoting Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007)). Additionally, a court need not assume that a plaintiff can prove facts that the plaintiff has not alleged. Associated Gen. Contractors of Cal. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983).
In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the United States Supreme Court held that, when considering a motion to dismiss, a court should "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Iqbal, 556 U.S. at 679. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. In evaluating a motion to dismiss, a court may consider the facts alleged on the face of the complaint, as well as "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).
With the aforementioned standards in mind, a document filed pro se is "to be liberally construed." Estelle v. Gamble, 429 U.S. 97, 106 (1976). A pro se complaint, "however inartfully pleaded," must be held to "less stringent standards than formal pleadings drafted by lawyers" and can only be dismissed for failure to state a claim if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Haines v. Kerner, 404 U.S. 519, 520-21 (1972).
B. ANALYSIS
While movant invites the Court to evaluate each of Yun's causes of action and, in doing so, find them wanting, the simple fact is that Yun has "not presented the court with a justiciable controversy" as between her and GoDaddy. See Williams v. BASF Catalysts LLC, 765 F.3d 306, 327 (3d Cir. 2014) (emphasis added). To invoke federal jurisdiction, "[a] plaintiff must establish a justiciable case or controversy with respect to each form of relief he or she seeks." Williams, 765 F.3d at 327 (emphasis added). "Only after [a court] is satisfied that it has both subject matter jurisdiction and that the case presents a justiciable case or controversy under Article III of the U.S. Constitution may it turn to adjudicating the merits." Rodriquez v. 32nd Legislature of Virgin Islands, 859 F.3d 199, 205 (3d Cir. 2017) (emphasis added). The "justiciability requirements . . . prohibit plaintiffs from presenting hypothetical or conjectural causes of action to the court and require that an actual injury has been suffered, or an injury is imminent and certain, before a federal court will hear a case." Harris v. Corbett, No. 1:11-CV-2228, 2012 WL 1565357, at *9 (M.D. Pa. May 2, 2012).
Here, Yun has pleaded facts establishing a controversy with respect to relief sought from Defendants, e.g., Gladiacoin, but she does not allege—even in conclusory terms—that GoDaddy played any part in the scam to defraud her. Lacking any such allegations, Yun's complaint does not set forth a case or controversy with respect to the injunctive relief she seeks against GoDaddy.
As a corollary to Yun's failure to establish a case or controversy against GoDaddy, she has also fallen short of satisfying the pleading requirements in the Federal Rules of Civil Procedure. That is, she has not pleaded facts establishing any cause of action for which relief can be granted against GoDaddy. She claims that GoDaddy might become liable, dependent upon future conduct, but "[t]his kind of hypothetical and conditional allegation fails to state a claim." See Tucker v. New York Police Dep't, No. CIV.A.08-2156 (DMC), 2008 WL 4935883, at *9 (D.N.J. Nov. 18, 2008); see also Harris, No. 2012 WL 1565357, at *9 ("The Third Circuit has . . . explain[ed] that an alleged injury is too speculative where it cannot be explained without the use of the word 'if.'" (quoting Reilly v. Ceridian Corp., 664 F.3d 38, 43 (3d Cir. 2011))).
As such, the Court recommends finding that Yun both lacks standing to sue GoDaddy—any claim for injunctive relief being non-justiciable—and has failed to state a claim upon which relief can be granted against GoDaddy.
III. RECOMMENDATION
For the foregoing reasons, the Court recommends that GoDaddy.com, LLC's motion to dismiss be GRANTED and that GoDaddy.com, LLC, be dismissed from this case.
BY THE COURT:
Dated: December 10, 2019
/s/ _________
KAROLINE MEHALCHICK
United States Magistrate Judge NOTICE
NOTICE IS HEREBY GIVEN that the undersigned has entered the foregoing Report and Recommendation dated December 10, 2019.
Any party may obtain a review of the Report and Recommendation pursuant to Rule 72.3, which provides:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636(b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions.
Dated: December 10, 2019
/s/ _________
KAROLINE MEHALCHICK
United States Magistrate Judge