913 F. Supp. 2d 1063
D. Colo.2012Background
- This is a class action securities case alleging a Ponzi scheme orchestrated by Mantria Corporation and wrongdoing by multiple insiders and affiliated entities.
- Plaintiff Touchstone asserts that Rink, Granoff, Flannery, and others acted directly or via agents to defraud investors and were unjustly enriched.
- Mantria was previously subjected to summary judgment against securities violations by Judge Arguello on August 5, 2011.
- Defendants include Rink, Flannery, Granoff, Krassenstein, Astor Weiss, Tatum, Estill & Long, SFN Group, and others, with varying agency relationships and roles at Mantria.
- The court must decide, among other things, whether it has personal jurisdiction over several defendants and whether the complaint states valid claims under federal and state securities laws.
- The court ultimately dismisses Granoff, Krassenstein, and Astor Weiss for lack of personal jurisdiction and dismisses unjust enrichment claims; it allows other claims to proceed against remaining defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has personal jurisdiction over Rink and Flannery | Touchstone contends Peay-based analysis shows sufficient nationwide contacts. | Rink/Flannery argue no constitutionally significant contacts with Colorado. | Court exercises jurisdiction over Rink and Flannery under nationwide service. |
| Whether the court lacks personal jurisdiction over Granoff, Krassenstein, and Astor Weiss | Plaintiff asserts agency/contacts establish jurisdiction. | Defendants contend insufficient minimum contacts under International Shoe. | Court lacks personal jurisdiction over Granoff, Krassenstein, and Astor Weiss. |
| Whether Touchstone states a claim under Section 10(b) against Rink and Flannery | Plaintiff links statements to Rink/Flannery with group publication doctrine and ultimate authority. | Defendants argue lack of ultimate authority and improper group pleading for Granoff; firm positions argued. | Plaintiff states a 10(b) claim against Rink and Flannery, not Granoff. |
| Whether Touchstone states a claim under Section 20(a) against Rink, Flannery, and Granoff | Plaintiff alleges control over Mantria by these defendants based on positions and duties. | Granoff lacks control; Rink/Flannery possess control. | A valid 20(a) claim exists against Rink and Flannery; not against Granoff. |
| Whether Touchstone states fraudulent transfer claims under CUFTA/PUFTA and unjust enrichment | Transfers were fraudulent and defendants were transferees; unjust enrichment pleadings support relief. | Transfers to defendants lack specificity; unjust enrichment duplicative of UFTA claims. | Fraudulent transfer claims sustained against remaining defendants; unjust enrichment claim dismissed as duplicative. |
Key Cases Cited
- Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063 (10th Cir.2008) (burden of showing jurisdiction; prima facie standard when no evidentiary hearing)
- AST Sports Sci, Inc. v. CLF Distrib., Ltd., 514 F.3d 1054 (10th Cir.2008) (prima facie jurisdiction standard; liberal inquiry for nationwide service cases)
- Peay v. Bell-South Med. Assistance Plan, 205 F.3d 1206 (10th Cir.2000) (nationwide service analysis; fair and reasonable forum; convenience factors)
- CGC Holding Co., LLC v. Hutchens, 824 F.Supp.2d 1193 (D.Colo.2011) (nationwide service analysis; contacts as one factor)
- Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296 (S. Ct. 2011) (group publication vs. single-maker liability; ultimate authority over content)
- Schwartz v. Celestial Seasonings, 124 F.3d 1246 (10th Cir.1997) (group publication doctrine permits group authors to be liable)
- Adams v. Kinder-Morgan, Inc., 340 F.3d 1083 (10th Cir.2003) (scienter; magnitude of falsity; control person inference from CFO role)