Defendant's Attorney: Not Available

Description: Dallas, Texas civil litigation lawyer represented the Plaintiff who sued on a fraud theory.

Copeland, a Louisiana citizen, sued Ostler in a California federal
district court alleging that Ostler had fraudulently obtained a judgment lien
against Copeland that his brokerage firm, E*Trade, satisfied more than a
decade ago. The California district court issued, and Copeland served, a
subpoena on the Dallas offices of E*Trade’s parent company, Morgan
Stanley, that sought records of the lien and payment. After Morgan Stanley
informed Copeland that “they ha[d] nothing to give,” he sued Defendants-
Appellees in a Texas federal district court asserting diversity jurisdiction
under 28 U.S.C. § 1332. Copeland’s complaint alleges, inter alia, that
Defendants-Appellees violated and conspired to violate § 17(a) of the
Securities Exchange Act of 1934 (the “Exchange Act”) by failing to maintain
the subpoenaed records. See 15 U.S.C § 78q(a)(1).

The case was referred to a magistrate judge who sua sponte issued a
recommendation to dismiss Copeland’s suit for lack of subject matter
jurisdiction for two reasons. First, Copeland had not properly established a
basis for diversity jurisdiction because he did not specifically allege the
citizenship of every member of the E*Trade defendants—both of which are
limited liability companies. Second, Copeland’s Exchange Act claims could
not establish federal question jurisdiction because § 17(a) does not provide a
private right of action. The magistrate judge informed Copeland of his right
to object to the report and recommendations, which “offer[ed] Copeland an
opportunity to establish (if possible) that the Court does have subject matter
jurisdiction.” Copeland did not object to the magistrate judge’s report and
recommendations, which the district court adopted. The district court
subsequently entered a final judgment dismissing without prejudice
Copeland’s suit. Copeland timely appealed.

Outcome: Affirmed

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