Clayton v. Does

Opinion

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3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE

9 10 STEPHEN JOHN CLAYTON, et al., CASE NO. C23-1324JLR 11 Plaintiffs, ORDER v. 12 DOES, 13 Defendants. 14

15 On September 8, 2023, the court issued an order to show cause why the case 16 should not be dismissed for lack of subject matter jurisdiction. (OSC (Dkt. # 7).) The 17 court noted that the face of the complaint makes unclear whether complete diversity is 18 present between pro se Plaintiffs Stephen John Clayton and Christopher Stephen Clayton 19 (collectively, “Plaintiffs”) and Defendants “Does” because Plaintiffs’ complaint does not 20 include any allegations regarding the citizenship of the Does. (Id. at 2 (citing Compl. 21 (Dkt. # 5)).) “Absent allegations in the complaint that establish complete diversity, this 22 // 1 court cannot hear Plaintiffs’ claims.” (Id. at 2-3.) Thus, the court ordered Plaintiffs to 2 provide information establishing the citizenship of the Does. (Id. at 3.)

3 Plaintiffs timely responded to the court’s show cause order by filing an amended 4 complaint. (Am. Compl. (Dkt. # 10).) Plaintiffs assert that they can only identify the 5 Does by their cryptocurrency transaction IDs and need to conduct third party discovery in 6 order to obtain the Does’s actual identity and citizenship. (Id. at 5-7 (stating that 7 Plaintiffs intend to seek third party discovery from Binance Holdings Limited and 8 CEX.IO Corp.).) In light of the foregoing, the court concludes that Plaintiffs have failed

9 to establish the existence of complete diversity between the parties. (See OSC at 2-3.) 10 Therefore, the court does not have diversity jurisdiction over this action. See Morris v. 11 Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). 12 However, when Plaintiffs amended their complaint, they replaced their common 13 law claims with a claim under Section 4b of the Commodity Exchange Act (“CEA”), 7

14 U.S.C. § 6b. (See Am. Compl. at 5 (asserting that the court has federal question 15 jurisdiction).) 28 U.S.C. § 1331 provides that federal question jurisdiction exists when a 16 plaintiff’s claim arises under the Constitution, laws, or treaties of the United States. See 17 also Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (“[A] federal question [must 18 be] presented on the face of the plaintiff’s properly pleaded complaint.”). Thus, federal

19 question jurisdiction arises where “federal law creates a cause of action” or where “some 20 substantial, disputed question of federal law is a necessary element of one of the well- 21 pleaded state claims.” Wander v. Kaus, 304 F.3d 856, 858 (9th Cir. 2002) (internal 22 quotation marks omitted). Because the amended complaint alleges that the Does violated 1 federal law and brings a claim under Section 4b of the CEA, the court finds that it has 2 federal question jurisdiction over this action.1 See also, e.g., Jing v. Sun, No.

3 CV212350GRBAYS, 2022 WL 1505950, at *14 (E.D.N.Y. Jan. 4, 2022) (recognizing 4 that there is a private right of action under Section 4b of the CEA); Merrill Lynch, Pierce, 5 Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 390-91 (1982) (holding that Section 4b of 6 the CEA gives rise to an implied private right of action). 7 In sum, although the court does not have diversity jurisdiction over this action, it 8 does have federal question jurisdiction. Therefore, the court DISCHARGES its order to

9 show cause (Dkt. # 7). 10 Dated this 12th day of September, 2023. 11 A 12 United States District Judge 14 15 16 17 18 19 20 21

1 The court does not, at this stage, evaluate whether Plaintiffs have stated a plausible 22 claim for relief under Section 4b.