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Mullane v. Zurich American Insurance Co.

United States District Court, D. Massachusetts

May 21, 2019



          Denise J. Casper, United States District Judge.

         I. Introduction

         Plaintiff Jonathan Mullane (“Mullane”) has filed this lawsuit against Defendants Zurich American Insurance Company (“Zurich American”) and A Medium Corporation (“Medium”) (collectively, “Defendants”) alleging violations of federal securities law (Counts I-IV), including 17 C.F.R. § 180.1, 15 U.S.C. §§ 77e, 77e(c) and 77q(a)-(b) (the “Securities Act of 1933”) and 15 U.S.C. §§ 78j(b), 78j(c)(1), 78o(a)(1), and 78t (the “Securities Exchange Act of 1934”), and bringing claims for promissory estoppel (Count V), fraud in the inducement (Count VI), violation of Mass. Gen. L. c. 93A (Count VII-VIII) and intentional infliction of emotional distress (Count IX). Defendants have moved to dismiss. D. 10; D. 27. For the reasons stated below, the Court ALLOWS Defendants' motions.

         II. Standard of Review

         A. Motion to Dismiss for Lack of Personal Jurisdiction

         To meet the burden of establishing the Court has personal jurisdiction under the prima facie standard, Mullane must “demonstrate the existence of every fact required to satisfy both the forum's long-arm statute and the Due Process Clause of the Constitution.” United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001) (citing United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 987 F.2d 39, 44 (1st Cir. 1993)). The Court considers the facts alleged in the pleadings as well as the parties' supplemental filings. See Sawtelle v. Farrell, 70 F.3d 1381, 1385 (1st Cir. 1995). The Court will “take specific facts affirmatively alleged by the plaintiff as true (whether or not disputed) and construe them in the light most congenial to the plaintiff's jurisdictional claim.” Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 34 (1st Cir. 1998). The Court will not “credit conclusory allegations or draw farfetched inferences, ” Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir. 1994), and recognizes that it is the plaintiff's burden to “verify the facts alleged through materials of evidentiary quality, ” Killion v. Commonwealth Yachts, 421 F.Supp.2d 246, 252 (D. Mass. 2006) (quoting Barrett v. Lombardi, 239 F.3d 23, 27 (1st Cir. 2001)). The Court is also required to “add to the mix facts put forward by the defendants, to the extent that they are uncontradicted.” Mass. Sch. of Law, 142 F.3d at 34.

         III. Factual Background

         Unless otherwise noted, the facts are as alleged in the complaint, D. 1-1. GoexPro International (“Goex”) operates a cryptocurrency exchange business that facilitates trades between various cryptocurrencies. D. 1-1 ¶ 41. As part of this business, Goex solicited loans from consumers, including Mullane, to increase its “capital reserves” to facilitate the rapid exchange of cryptocurrencies. Id. ¶ 42. Goex used Medium's online publishing platform to promote its cryptocurrency business. Id. ¶ 10; D. 1-1 at 19. Between May 21, 2018 and June 24, 2018, Mullane loaned DASH and ETH cryptocurrencies to Goex. D. 1-1 ¶¶ 8, 34-39. When the loans matured, Goex refused to return the principal amounts and interest owed to Mullane, causing him to incur an “actual out-of-pocket loss” of $68, 623.84. Id. ¶ 46. Goex also blocked Mullane's access to his online account on the Goex website. Id. ¶ 47. On October 5, 2018, Mullane sent Medium a demand letter asserting that Medium engaged in “unfair and deceptive trade practice” by allegedly failing to notify consumers that it enjoyed a “financial relationship” with Goex and by failing to disclose that it did not endorse Goex or guarantee the veracity of Goex's representations purportedly in violation of Mass. Gen. L. c. 93A. D. 10-1 at 1-2.[1]

         According to corporate documentation that Mullane purportedly reviewed on Goex's website, Goex asserts that it is a subsidiary of Zurich Investment Management AG (“Zurich Investment”), a corporation registered in Zurich, Switzerland. D. 1-1 ¶ 14. Mullane alleges that Zurich Investment, in turn, is wholly owned by Zurich Insurance Group (“Zurich Insurance”). Id. ¶ 23. Mullane also alleges that Goex “forged and digitally altered” corporate documents establishing a relationship between Goex and Zurich Investment. Id. ¶ 14.

         The complaint does not contain allegations regarding the corporate relationship (if any) between Zurich American and the other Zurich entities: Zurich Investment and Zurich Insurance. Mullane nonetheless appears to allege that he sent an email to Zurich American on or about September 29, 2018 with copies of corporate documentation in which Goex purportedly asserts being wholly owned by Zurich Investment. Id. ¶ 32. Mullane contends that Zurich American should have, but refused to, publicly acknowledge Goex's allegedly improper use of Zurich Investment's name. Id. ¶ 33.

         IV. Procedural History

         Mullane instituted this action in Suffolk Superior Court on November 9, 2018. D. 1-1. Medium removed it to this Court on November 19, 2018. D. 1. Medium and Zurich American then moved to dismiss, respectively. D. 10; D. 27. The Court heard the parties on the pending motions and took these matters under advisement. D. 32.

         V. Discussion

         A. Persona ...

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