The Court denies the dismissal of the Winklevii lawsuit

Quick Take

  • Winklevoss Capital Fund, LLC v. Shrem, 18-cv-8250, S.D.N.Y. January 7, 2019
  • The Court rejected the argument that there it lacked subject matter jurisdiction because “Shrem fails to show to a ‘legal certainty’ that the total of all four of WCF’s claims cannot exceed $75,000.”
  • The Court says that the other allegations also meet pleading standards

Want some bare-knuckled bitcoin litigation, agents (but not the James Bond kind), and news on why too much of a good thing sometimes isn't all that great? Read on, MacDuff! 

Disclaimer: These summaries are provided for educational purposes and provided by Nelson Rosario  and Stephen Palley These posts are not legal advice. These are our opinions only and aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes. 

If you have the unpleasant experience of getting sued, one of the opening gambits your lawyer might try is to move to dismiss the lawsuit. In federal court this usually arises under Rule 12(b) of the Federal Rules of Civil Procedure. Not to be a Negative Nate here, but these things are usually not granted because the standard to survive such a motion isn’t hard to satisfy. But sometimes they are and there are sometimes tactical reasons for moving even if you think you’ve got a slim chance.

We’ve written about the Winklevoss v. Shrem lawsuit in the past and if you want to catch up on the merits of that case, you can look at one of prior pieces here. In the latest chapter in this bare knuckled bitcoin litigation, the case survived a motion to dismiss late December. And the court last week issued an opinion explaining why it wouldn’t dismiss the lawsuit. It was maybe worth a try, but a competent lawyer usually doesn’t file a lawsuit that can’t beat a 12(b) motion.

First, the court rejected the argument that there it lacked subject matter jurisdiction because “Shrem fails to show to a ‘legal certainty’ that the total of all four of WCF’s claims cannot exceed $75,000.” The court says that even if WCF only gets $61,000 on the fraud claim — that’s the amount WCF says they gave Shrem to buy bitcoin for it — there are other potential damages claims, including punitive damages claims, the court noted. In short, more than enough allegations to get past $75,000, which is what you need to get Federal Court “Diversity Jurisdiction” in the United States.

Second, as the allegations themselves — this isn’t a hard standard. You have to lay out legal allegations and facts with requisite particularity to survive dismissal. The court doesn’t evaluate the merits of the claims, which are assumed true for purposes of the ruling.

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