Trenton Smith v. John Shahidi
8:25-cv-00161
C.D. Cal.Sep 16, 2025Background
- Kyle Forgeard and John Shahidi (the "Nelk Boys") and related entities sold 10,000 "Full Send Metacard" NFTs on Jan. 19, 2022, raising over $23 million; Metacards were marketed as granting holders specific real‑world and digital benefits and access to future Full Send business ventures.
- Plaintiff Trenton Smith purchased a Metacard for $2,300, alleging he relied on pre‑sale representations made on podcasts, livestreams, and social media.
- Plaintiff alleges Defendants failed to deliver many promised benefits, used proceeds for personal benefit, provided limited post‑sale perks (events, discounts), and later offered a time‑limited refund program tied to returning tokens.
- Claims pleaded: fraud, breach of fiduciary duty, violation of the California Legal Remedies Act (CLRA), and civil conspiracy; Defendants moved to dismiss under Rule 12(b)(6).
- Court: defendants did not show the refund offer conclusively bars the suit at this stage; however, court dismissed fraud, fiduciary duty, CLRA (to the extent seeking equitable relief), and civil conspiracy claims for pleading deficiencies, granting leave to amend.
- Dismissal rationale focused on failure to plead fraudulent intent/scienter, absence of a fiduciary relationship in an arm’s‑length sale, inadequate showing that equitable relief is necessary, and insufficient particularity for a conspiracy claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Refund offers moot claims | Smith says he never received a timely, adequate refund offer and seeks more relief than offered | Refund program offered full refund + interest, so claims are barred | Refund program did not conclusively bar claims at pleading stage; dismissal on other grounds only |
| Fraud (misrepresentation & scienter) | Smith relied on specific pre‑sale promises of concrete benefits and alleges post‑sale conduct and Bored Jerky rollout show fraudulent intent | Pre‑sale statements were either honored in part or were nonactionable puffery; scienter not pleaded | Reliance and misrepresentations sufficiently alleged, but scienter not adequately pleaded; fraud dismissed with leave to amend |
| Breach of fiduciary duty | Defendants treated relationship as confidential/agent‑like and represented Metacard as business/stock‑like | Relationship was a commercial buyer‑seller transaction; no principal‑agent or fiduciary duties alleged | No fiduciary duty plausibly alleged; claim dismissed with leave to amend |
| Civil conspiracy | Smith alleges defendants agreed to solicit purchases and acted in concert to commit fraud | Conspiracy requires particularized allegations and an underlying tort; fraud is inadequately pleaded | Conspiracy claim fails for lack of particularity and because underlying fraud claim is deficient; dismissed with leave to amend |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading requirements and plausibility inquiry)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007) (materials courts may consider on Rule 12(b)(6))
- Engalla v. Permanente Medical Group, Inc., 15 Cal. 4th 951 (1997) (elements of fraud under California law)
- UMG Recordings, Inc. v. Global Eagle Ent., 117 F. Supp. 3d 1092 (C.D. Cal. 2015) (promissory fraud requires showing promisor lacked intent to perform when promise was made)
- Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020) (equitable relief requires showing no adequate legal remedy)