Greene v. Mizuho Bank, Ltd.

289 F.Supp.3d 870

Gregory GREENE, Joseph Lack, Anthony Motto, and Gregory Pearce, individually and on behalf of all others similarly situated, Plaintiffs,

v.MIZUHO BANK, LTD. and Mark Karpeles, Defendants.

14 C 1437

United States District Court, N.D. Illinois, Eastern Division.

Filed December 11, 2017

Alicia Elaine Hwang, Ari Jonathan Scharg, Christopher Lillard Dore, Jay Edelson, Benjamin Scott Thomassen, Eve–Lynn J. Rapp, John Aaron Lawson, Edelson P.C., Robert A. Clifford, Shannon Marie McNulty, Clifford Law Offices, P.C., Chicago, IL, Steven Lezell Woodrow, Woodrow & Peluso, LLC, Denver, CO, Nina Eisenberg, Edelson PC, San Francisco, CA, Scott Bennett Kitei, Honigman

Miller Schwartz and Cohn LLP, Detroit, MI, for Plaintiffs

Jason A. Frye, Jonathan Stuart Quinn, Neal, Gerber & Eisenberg, Chicago, IL, Jeffrey Resetarits, Jerome Steven Fortinsky, John A. Nathanson, Shearman & Sterling LLP, New York, NY, for Defendants

MEMORANDUM OPINION AND ORDER

Gary Feinerman, United States District Judge

In this putative class action, Gregory Greene, Joseph Lack, Anthony Motto, and Gregory Pearce allege that Mizuho Bank, Ltd. and Mark Karpeles are liable for financial losses arising from the demise of the Mt. Gox bitcoin exchange. Doc. 245. Plaintiffs bring only state law claims, and subject matter jurisdiction lies under the Class Action Fairness Act, 28 U.S.C. § 1332(d). Earlier in the litigation—when Greene, an Illinois citizen, and Lack, a California citizen, were the only named plaintiffs—the court issued an opinion, familiarity with which is assumed, denying Mizuho Bank's motion under Federal Rule of Civil Procedure 12(b)(2) to dismiss the claims against it for lack of personal jurisdiction. Docs. 199–200 (reported at 169 F.Supp.3d 855 (N.D. Ill. 2016) ). For complicated reasons explained in the opinion, the denial was conditioned on putative class counsel's adding as a named plaintiff an Illinois resident alleged to be a member of the Deposit Subclass. The third amended complaint met that condition by adding Anthony Motto, an Illinois citizen, as a named plaintiff and class representative of the putative Deposit Subclass. Docs. 205–206. In February 2017, putative class counsel moved for leave to file a fourth amended complaint adding Gregory Pearce, a Pennsylvania citizen, as a named plaintiff. Doc. 242. After Mizuho informed the court that it did not oppose the amendment, the motion was granted, Doc. 244, and the fourth amended complaint, now the operative complaint, was filed, Doc. 245.

The complaint names Motto, Greene, Lack, and Pearce as representatives of the putative Mt. Gox Class, defined as "[a]ll persons in the United States who had bitcoins or money stored with Mt. Gox on February 24, 2014." Id. at ¶ 89. The complaint names Motto and Lack as representatives of the putative Deposit Subclass, defined as those members of the putative Mt. Gox Class "who deposited money into their Mt. Gox account through Mizuho Bank after the date [when] Mizuho Bank stopped processing withdrawals." Ibid. The complaint names Pearce as the sole representative of the putative Withdrawal Subclass, defined as those members of the putative Mt. Gox Class "who initiated a request to withdraw[ ] Fiat Currency from their Mt. Gox account after the date [when] Mizuho Bank stopped processing withdrawals, and whose withdrawal request was not fulfilled." Ibid.

Three months after the operative complaint's filing, the Supreme Court issued Bristol–Myers Squibb Co. v. Superior Court of California , ––– U.S. ––––, 137 S.Ct. 1773, 198 L.Ed.2d 395 (2017). Bristol–Myers holds that specific personal jurisdiction does not lie over a nonresident plaintiff's claim against a defendant not subject to general personal jurisdiction solely because the nonresident plaintiff's claim is similar, or even identical, to a resident plaintiff's claim in the same suit. Id. at 1780–82. Citing Bristol–Myers , Mizuho moves under Rule 54(b) for partial reconsideration, as to Lack and Pearce, of the court's denial of its Rule 12(b)(2) motion. Doc. 282. At argument on the motion, Doc. 304, Plaintiffs agreed to the dismissal of Lack's claims as a named plaintiff against Mizuho; they did so because putative Deposit Subclass, of which Lack can be an absent member, may proceed with Motto as its representative. Plaintiffs oppose the dismissal of Pearce's claims as a named plaintiff against Mizuho; they do so because Pearce is the only representative of the putative Withdrawal Subclass. The motion is granted as to Pearce's claims against Mizuho.

Background

Much of the relevant background is set forth in the court's opinion denying Mizuho's Rule 12(b)(2) motion and also the court's opinion resolving Mizuho's Rule 12(b)(6) motion. Docs. 229–230 (reported at 206 F.Supp.3d 1362 (N.D. Ill. 2016) ). As noted in the personal jurisdiction opinion, the relevant background on a Rule 12(b)(2) motion includes the complaint's well-pleaded allegations and the evidentiary materials submitted by both sides. No party has requested an evidentiary hearing, so the court must accept Plaintiffs' factual averments and resolve all genuine factual disputes in their favor. See Felland v. Clifton , 682 F.3d 665, 672 (7th Cir. 2012) ("[W]here, as here, the issue [of personal jurisdiction] is raised on a motion to dismiss, the plaintiff need only make a prima facie showing of jurisdictional facts. We therefore accept as true all well-pleaded facts alleged in the complaint and resolve any factual disputes ... in favor of the plaintiff.") (citation omitted); Purdue Research Found. v. Sanofi–Synthelabo, S.A. , 338 F.3d 773, 782–83 (7th Cir. 2003). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in Plaintiffs' brief, so long as those facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am. , 714 F.3d 1017, 1020 (7th Cir. 2013) (citation and internal quotation marks omitted); see also Defender Sec. Co. v. First Mercury Ins. Co. , 803 F.3d 327, 335 (7th Cir. 2015). The facts are set forth as favorably to Plaintiffs as those materials allow. See Meade v. Moraine Valley Cmty. Coll. , 770 F.3d 680, 682 (7th Cir. 2014). In so doing, the court does not vouch for their accuracy. See Jay E. Hayden Found. v. First Neighbor Bank, N.A. , 610 F.3d 382, 384 (7th Cir. 2010).

Mizuho is a Japanese financial institution headquartered in Tokyo, Japan. Doc. 245 at ¶ 9. Mizuho received and processed deposits and withdrawals of fiat currency for customers of the now-defunct Mt. Gox bitcoin exchange. Ibid.

Greene lives in Illinois. Id. at ¶ 4. Beginning in 2012, Greene sold and traded bitcoins on the Mt. Gox exchange. Id. at ¶ 50. In November 2013, Greene began experiencing delays with his bitcoin transactions. Id. at ¶ 52. On February 5, 2014, Greene discovered that he was unable to execute withdrawal and other previously available functions on the exchange, and on February 24, 2014, he lost all access to his Mt. Gox account. Id. at ¶¶ 53–56. At that point, his account contained approximately $25,000 in bitcoins. Id. at ¶ 57. Greene's claims are against Karpeles only; he has no claims against Mizuho. Id. at ¶¶ 95–150.

Motto lives in Illinois. Id. at ¶ 6. Motto joined Mt. Gox in early 2014, wiring $1,000 in fiat currency from his Illinois-registered JPMorgan Chase Bank account to Mt. Gox's account at Mizuho. Id. at ¶¶ 71–72. Motto listed his individual Mt. Gox account number on the wire transfer instructions. Ibid. On February 18, 2014, Chase confirmed that Mizuho had accepted and received Motto's deposit, but the $1,000 did not appear in his Mt. Gox account. Id. at ¶ 73. On February 24, 2014, Motto lost access to his Mt. Gox account. Id. at ¶ 75.

Pearce lives in Pennsylvania. Id. at ¶ 7. Pearce opened his Mt. Gox account in November 2013, and began selling and trading bitcoins. Id. at ¶¶ 79–80. In January 2014, he converted some of his bitcoins to fiat currency, intending to withdraw $5,900 in fiat currency from his Mt. Gox account. Id. at ¶ 82. On January 29, 2014, Pearce submitted a withdrawal request in the amount of $5,900 to Mt. Gox, with instructions to deposit those funds in his personal bank account. Id. at ¶ 83. Although Pearce received an email from Mt. Gox confirming the withdrawal, he never received the withdrawn funds. Id. at ¶¶ 83, 85–86.

The complaint states a tortious interference claim against Mizuho on behalf of Motto, Pearce, the Deposit Subclass, and the Withdrawal Subclass, id. at ¶¶ 122–130, and unjust enrichment and fraudulent concealment claims against Mizuho on behalf of Motto and the Deposit Subclass, id. at ¶¶ 131–150. The complaint's other claims, brought by Plaintiffs on behalf of themselves and the Mt. Gox Class, are against Karpeles only. Id. at ¶¶ 95–121.

Discussion

Rule 54(b) provides that "non-final orders ‘may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.’ " Galvan v. Norberg , 678 F.3d 581, 587 (7th Cir. 2012) (quoting Fed. R. Civ. P. 54(b) ); see also id. at 587 n.3 (" Rule 54(b) governs non-final orders and permits revision at any time prior to the entry of judgment."). "Unlike the case in which a judgment is sought to be vacated ... a motion to reconsider a ruling is constrained only by the doctrine of the law of the case. And that doctrine is highly flexible, especially when a judge is being asked to reconsider his own ruling." Pickett v. Prince , 207 F.3d 402, 407 (7th Cir. 2000) (emphases omitted). Specifically, "the law of the case doctrine permits ‘a court to revisit an issue if an intervening change in the law, or some other special circumstance, warrants reexamining the claim.’ " EEOC v. Sears, Roebuck & Co. , 417 F.3d 789, 796 (7th Cir. 2005) (quoting United States v. Thomas , 11 F.3d 732, 736 (7th Cir. 1993) )...