Caplan v. Dollinger
1:24-cv-07996
| S.D.N.Y. | Jun 30, 2025Background
- Nine investors bought $650,000 of Veg House Holdings Inc. stock (a PlantX Life, Inc. subsidiary), under agreements requiring PlantX to repurchase shares if Veg House failed to IPO by May 2024.
- Plaintiffs allege they were defrauded: the money was not used for a genuine IPO, and instead was misappropriated by defendants.
- Defendants include PlantX, Veg House, their executives, and related companies; claims included RICO, securities fraud, breach of contract, conversion, and unjust enrichment.
- The case reached the court on defendants’ motion to dismiss for lack of personal jurisdiction and failure to state a claim, and plaintiffs’ motion for preliminary relief (seeking an injunction and asset attachment).
- Plaintiffs withdrew their RICO claims during briefing; the key surviving claims were breach of contract against PlantX and Dollinger.
- The court found personal jurisdiction over some defendants for federal claims but rejected personal jurisdiction over others for the state law claims.
Issues
| Issue | Plaintiffs' Argument | Defendants' Argument | Held |
|---|---|---|---|
| Personal jurisdiction over non-signatories | Non-signatory defendants are bound via forum selection/alter ego theory | Only signatories (with forum clause or consent) are subject to jurisdiction | Dismissed state claims for non-signatories (no jurisdiction) |
| Breach of contract against non-signatories | Veg House/Dollinger/Rapkin/Hoffman liable as PlantX alter egos | Only PlantX is party to repurchase obligation; no sufficient alter ego facts | Only Dollinger plausibly alleged as alter ego; others dismissed |
| Securities fraud claims | Defendants made false statements regarding IPO use of funds | No specific fraudulent statements alleged; insufficient pleading | All securities fraud claims dismissed (fail Rule 9(b)/PSLRA) |
| Conversion/unjust enrichment claims | Defendants wrongfully retained investor funds | Claims duplicate contract claim or lack specific benefit/allegation | Dismissed as duplicative/insufficiently pled |
| Preliminary relief (injunction/attachment) | Seek injunction/asset freeze to secure funds at issue | Relief not warranted; claim is legal, not equitable | Denied; only contract claims remain, asset freeze unavailable |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard under Rule 12(b)(6) for all claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (standard for pleading sufficient facts for plausible claims)
- Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27 (Section 10(b) securities fraud elements)
- D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (forum selection clause confers personal jurisdiction on signatories)
- Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30 (prima facie showing for personal jurisdiction motion)
- Waldman v. Palestine Liberation Org., 835 F.3d 317 (minimum contacts for personal jurisdiction analysis)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (PSLRA requires particularity for scienter)
- Morris v. New York State Dep’t of Taxation & Fin., 623 N.E.2d 1157 (veil-piercing standard)
- Citigroup Inc. v. VDN Sys., Inc., 08-CV-7527 (SHS) (breach of contract actions are legal, not equitable, barring injunctive asset freeze)