COMMODITY FUTURES TRADING COMMISSION v. WORLDWIDEMARKETS, LTD.
2:21-cv-20715
| D.N.J. | Sep 9, 2022Background
- The CFTC sued WorldWideMarkets, Ltd. (WWM), TAB Networks, Inc., and officers Thomas Plaut and Arthur Dembro for alleged violations of the Commodity Exchange Act (CEA).
- The Court previously denied in part and granted in part Dembro’s motion to dismiss, finding the CEA does not apply extraterritorially but that the Complaint plausibly alleges a domestic application.
- The Complaint alleges WWM’s forex customers sent electronic orders to a WWM server in New Jersey, and WWM received orders, executed trades, and sent confirmations from a New Jersey office.
- The Complaint further alleges Plaut and Dembro worked from a shared New Jersey office; Plaut controlled company operations and Dembro served as CFO and participated in accounting, finance, and marketing.
- Dembro moved under 28 U.S.C. § 1292(b) to certify an interlocutory appeal on whether the CEA claims are impermissibly extraterritorial because they are "predominantly foreign" under the Second Circuit’s Parkcentral formulation.
- The Court denied the § 1292(b) motion, concluding certification was unwarranted because there is not a substantial ground for difference of opinion within the Third Circuit and piecemeal appeals are disfavored.
Issues
| Issue | Plaintiff's Argument (CFTC) | Defendant's Argument (Dembro) | Held |
|---|---|---|---|
| Whether the extraterritoriality question is a controlling question of law suitable for §1292(b) certification | The question is dispositive of Counts I–II and thus controlling | The question is controlling and merits immediate appellate review | Court: Yes — the issue is a controlling question of law |
| Whether there is a "substantial ground for difference of opinion" about the applicable extraterritoriality/transactional test | Third Circuit law (irrevocable liability) governs; no intra‑Circuit conflict justifying certification | Second Circuit’s Parkcentral creates a conflict that raises substantial doubt about the correct test | Court: No — no substantial ground for difference within the Third Circuit; Parkcentral is not binding and other Circuits reject it |
| Whether immediate appeal would materially advance termination of the litigation | Immediate appeal would not be appropriate because the Third Circuit rule controls and piecemeal appeals are disfavored | Immediate appeal could resolve Counts I–II and potentially avoid further proceedings | Court: Denied — discretionary refusal based on lack of substantial disagreement and concerns about piecemeal review |
Key Cases Cited
- Parkcentral Global Hub Ltd. v. Porsche Auto. Holding SE, 763 F.3d 198 (2d Cir. 2014) (adopting a “predominantly foreign” test for extraterritorial application in securities context)
- Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247 (2010) (establishing transactional test for "domestic" securities transactions)
- RJR Nabisco, Inc. v. European Cmty., 579 U.S. 325 (2016) (two‑step framework for extraterritoriality analysis)
- United States v. Georgiou, 777 F.3d 125 (3d Cir. 2015) (Third Circuit: transaction is domestic when irrevocable liability is incurred in the U.S. or title passes in the U.S.)
- Absolute Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60 (2d Cir. 2012) (identifying facts relevant to "irrevocable liability")
- Stoyas v. Toshiba Corp., 896 F.3d 933 (9th Cir. 2018) (adopting irrevocable liability test for domestic transactions)
- SEC v. Morrone, 997 F.3d 52 (1st Cir. 2021) (rejecting Parkcentral and applying irrevocable liability approach)