ALAN LAMOTHE, Plaintiff, v. DECENTRAL LIFE, INC f/k/a SOCIAL LIFE NETWORK, INC.; MJLINK.COM, INC.; HUNTPOST, INC.; LIKERE.COM, INC.; KEN TAPP; and GREGORY TODD MARKEY, Defendants.
Civil Action No. 23-cv-03251-RMR-STV
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
filed 10/24/24
Magistrate Judge Scott T. Varholak
Magistrate Judge Scott T. Varholak
This matter is before the Court on Defendants’ Joint Motion to Dismiss Plaintiff‘s First Amended Complaint (the “Motion“) [#47], which has been referred to this Court [#49]. The Court has carefully considered the Motion and related briefing, the entire case file, and the applicable case law, and has determined that oral argument would not materially assist in the disposition of the Motion. For the following reasons, the Court respectfully RECOMMENDS that the Motion be GRANTED IN PART and DENIED IN PART.
The Complaint asserts that Defendants Ken Tapp and Todd Markey made fraudulent statements concerning the business operations and metrics of Defendants Decentral Life (“Decentral“) (a company that provides social networking and e-commerce platforms to startup founders) and its Licensees: MjLink.com, Inc. (“MjLink“) (a multinational cannabis technology and media sales organization); HuntPost.com, Inc. (“HuntPost“) (a social network and e-commerce platform for the hunting, fishing, and camping community); and LikeRe.com, Inc. (“LikeRe“) (a real-estate social networking platform for industry professionals). [#36 at ¶¶ 10-16, 19] In reliance on these fraudulent statements, Plaintiff invested a total of $1.7 million in Decentral and MjLink over two years. [Id. at ¶ 1]
On February 3, 2021, Defendants hosted a shareholder podcast to update shareholders on usership growth, specifically Monthly Active User (“MAU“) metrics. [Id. at ¶¶ 2, 36]. Defendants shared that HuntPost‘s usership grew to 1,042,755 MAUs in December of 2020 (111% increase from 2019); LikeRe‘s usership grew to 924,588 MAUs in December 2020 (105% increase from 2019); and MjLink‘s usership grew to 5,681,966 MAUs in December 2020 (31% increase from 2019). [Id. at ¶¶ 38, 40-41] In reliance on the growth discussed in the February 3 podcast, Plaintiff purchased shares of Decentral common stock. [Id. at ¶¶ 34, 44-45] The Complaint states that Plaintiff purchased 20 million shares of Decentral on February 5, 2021, and 10 million shares on February 8,
According to the Complaint, through their statements, Defendants falsely represented that Decentral‘s Licensees had millions of MAUs and were thriving social networking platforms, which indicated healthy long-term potential for monetization and influenced Plaintiff‘s decision to invest. [Id. at ¶ 3] However, Plaintiff asserts, contrary to these public statements, the Defendants’ MAU counts were significantly overstated, with actual user numbers reportedly being in the low tens to single thousands. [Id. at ¶ 5] Plaintiff estimates that at the time of the February 3, 2021 podcast, HuntPost had at most
Plaintiff initiated this action on December 8, 2023. [#1] The operative Complaint brings six claims: 1) fraudulent misrepresentation, 2) fraudulent concealment, 3) violations of the Colorado Securities Act (“CSA“), (4) negligent misrepresentation, 5) civil conspiracy, and 6) violations of the Colorado Consumer Protection Act (“CCPA“). [#36] Defendant filed thе instant Motion on April 5, 2024. [##47-48] Plaintiff has responded [#56] and Defendant filed a reply [#58].
II. LEGAL STANDARD
A. Federal Rule of Civil Procedure 12(b)(6)
Under
“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.‘” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). Plausibility refers “to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs ‘have not nudged their claims across the line from conceivable to plausible.‘” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Twombly, 550 U.S. at 570). “The burden is on the plaintiff to frame a ‘complaint with enough factual matter (taken as true) to suggest’ that he or she is entitled to relief.” Id. (quoting Twombly, 550 U.S. at 556). The ultimate duty of the court is to “determine whether the complaint sufficiently аlleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).
B. Federal Rule of Civil Procedure 9(b)
“In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.”
III. ANALYSIS
Defendants have moved to dismiss Plaintiff‘s Complaint on multiple grounds, including failure to meet the heightened pleading requirements for fraud under
Defendants contend that each of Plaintiff‘s claims lack the requisite specificity under
The Tenth Circuit explains that ”
1. Group Pleadings
Defendants argue that the Complaint improperly relies on group pleading in its claims against Defendants LikeRE and HuntPost. [#48 at 15-16] Defendants contend that the Complaint fails to differentiate between the actions of the individual defendants and the corporate entities and does not specify the particular roles that LikeRE and HuntPost played in the alleged fraudulent misrepresentations. [Id. at 16] They assert that Plaintiff‘s reliance on generalized allegations that “Defendants” made certain statements fails to meet the particularity standard required under
Under
Given these allegations, this Court finds that Plaintiff‘s claims against the defendants are sufficiently intertwined and that the joint leadership of Defendants Tapp and Markey across all Defendant-entities makes it plausible that the misrepresentations were made on behalf of all of the companies, not just Decentral. As such, this Court rejects Defendants’ argument that group pleading in this case is impermissible and thus does not believe that LikeRe or HuntPost should be dismissed on this basis.
Next, Defendants argue that Plaintiff has failed to provide sufficient specificity regarding the dates, amounts, and circumstances of stock purchases in Decentral, part of Plaintiff‘s rеliance on the alleged fraudulent misrepresentations. [#48 at 16-17] Defendants contend that Plaintiff has only vaguely referenced purchases over a broad period—spanning almost two years—without listing specific dates or amounts except in two instances in February 2021, which is not sufficient for the pleading standards of
Courts typically require plaintiffs in securities fraud cases to allege with specificity the dates and amounts of their securities purchases to demonstrate how they relied оn fraudulent statements. See, e.g., Gross v. Diversified Mortgage Investors, 431 F. Supp. 1080, 1088 (S.D.N.Y. 1977) (noting that claims involving stock purchases should provide clear details of the transactions). However, courts have also recognized that exact transactional details need not be exhaustively pled at the motion to dismiss stage as long as the overall allegations are plausible and give the defendant sufficient information to understand the claim. See, e.g., George, 833 F.3d at 1256 (allowing more general fraud allegations to survive a motion to dismiss when the overall claim was adequately detailed to apprise defendants of their role in the fraud); Imming v. De La Vega, No. 23-378 GJF/DLM, 2023 WL 8650372, at *10 (D.N.M. Dec. 14, 2023) (“Absent any statutory authority or case law suggesting otherwise, the Court concludes that the failure to allege the specific dates and manner of transfer of any assets, or even one asset, is not fatal to Plaintiff‘s claims at the motion to dismiss stage.” (citing Desmond v. Taxi Affiliation Servs., LLC, 344 F. Supp. 3d 915, 926 n.3 (N.D. Ill. 2018) (reasoning that, even under
3. Plaintiff‘s Allegations of Reliance
Next, Defendants argue that Plaintiff‘s allegations of reliance are insufficient because Plaintiff does not specifically allege that he listened to or viewed the podcasts in which the alleged misrepresentations were made, but rather states conclusory assertions such as Plaintiff relied on Defendants’ misrepresentations, which are inadequate under
Defendants are correct in pointing out that mere conclusory statements like “Plaintiff relied on the misrepresentations” are often insufficient to survive a motion to dismiss claim. See, e.g., In re NationsMart Corp. Sec. Litig., 130 F.3d 309, 321-22 (8th Cir. 1997) (dismissing a securities fraud claim despite allegation that plaintiffs acted “in reliance upon the defendants’ misrepresentations,” because plaintiffs “did not allege specific facts showing that they relied on the Prospectus“); Am. Fin. Int‘l Grp.-Asia, L.L.C. v. Bennett, No. 05 Civ. 8988(GEL), 2007 WL 1732427, at *10 (S.D.N.Y. June 14, 2007) (dismissing the complaint for failing to allege reliance with specificity, holding that generalized claims of reliance without particularized allegations connecting the plaintiff‘s decisions to the alleged misrepresentation were inadequate under
This Court finds that Plaintiff has adequately pled that he acted in reliance on the podcasts’ contents, which is sufficient to meet the pleading standards. Herе, Plaintiff has alleged that the February 3, 2021 podcast and subsequent misrepresentations caused him to invest in Decentral, detailing the dates of his initial investments shortly after the podcast (February 5 and 8) and asserting that he relied on Defendants’ statements regarding user metrics. [#36 at ¶¶ 44-48] Plaintiff‘s failure to explicitly state that he “listened to” or “viewed” the podcasts may leave room for ambiguity, but at this stage, the court “must construe the complaint in the light most favorable to the plaintiff” and resolve any ambiguities “in favor of plaintiff, giving him the benefit of every reasonable inference drawn from the well-pleaded facts and allegations in his complaint.” Daktronics, Inc. v. Skyline Prods., No. 15-cv-02699-WJM-KLM, 2016 WL 9735758, at *1 (D. Colo. Nov. 28, 2016) (quotation omitted). The timing of the investments—just days after the podcast—plausibly suggests that Plaintiff had access to and relied on Defendants’ representations.
4. Plaintiff‘s Reliance on Post-Purchase Statements
Next, Defendants argue that Plaintiff cannot base his fraud claims on аny statements made after he purchased stock in Decentral and MjLink. [#48 at 17-19] Defendants assert that many of the allegedly fraudulent statements referenced in the Complaint were made after February 2021 and therefore cannot form the basis for Plaintiff‘s claims. [Id. at 17-18] Plaintiff argues that the allegedly false and misleading statements made after February 2021 are relevant and actionable because they influenced his decision to keep his stock and continue purchasing stock. [#56 at 10] The Court agrees with Plaintiff.
Under Colorado law, a plaintiff in a fraud action must establish that they relied on the defendant‘s fraudulent misrepresentations when claiming damages stemming from those statements. Alzado v. Blinder, Robinson & Co., 752 P.2d 544, 558 (Colo. 1988) (“To claim damages from allegedly fraudulent statements, the plaintiff must establish detrimental reliance on the statements.” (citation omitted)). In other words, for claims of fraudulent inducement, the statements that a plaintiff relies upon typically must precede the investment or transaction. In this case, Plaintiff alleges that Defendants’ repeated claims of MAU growth, including in podcasts and other communications made after February 2021, reinforced his belief that the Licensees were thriving and that his investments would generate a substantial return, which induced him to continue
Defendants also argue that any claim based on Plaintiff‘s decision to hold stock in reliance on post-purchase statements should be dismissed as an impermissible “holder claim.” [#48 at 18] Colorado courts have recognized holder claims—claims based on a plaintiff‘s decision to retain an investment rather than to buy or sell based on fraudulent misrepresentations—but subjected them to specific pleading requirements. See Robinson v. Oppenheimerfunds, Inc., No. 12-cv-1528-JLK, 2013 WL 754417, at *6 (D. Colo. Feb. 27, 2013). “Specifically, a plaintiff must demonstrate she had concrete plans to sell her securities but refrained from doing so in reliance on a misrepresentation made directly to her.” Id. The caselaw suggests this is applied to situations where the plaintiff alleges only that they refrained from selling their stock, without any allegation of additional purchases or transactions based on the fraudulent statements. Id. In contrast, Plaintiff here alleges that he not only held onto his initial stock but also made additional purchases in reliance on Defendants’ ongoing misrepresentations. [#36 at ¶¶ 48-50] Therefore, Plaintiff‘s claims involve additional stock purchases, not solely the decision to hold stock, which distinguishes this case from impermissible “holder claims.” And as explained earlier, the Plaintiff has adequately alleged reliance upon statements made by Defendants. Accordingly, Plaintiff has provided enough at this stage to meet the requirements of
Defendants argue that their statements regarding the future success of the companies, including claims about potential public listings and future profitability, constitute non-actionable puffery, opinion, or expressions about future events and cannot form the basis for a fraud claim under Colorado law.11 [#48 at 19] According to Plaintiff, Defendants provided concrete numerical data—such as MAU counts in the millions—and linked these figures directly to the companies’ potential success. [#36 at ¶¶ 36-41, 56] Plaintiff contends that Defendants’ misreрresentation of these metrics created a false impression of the companies’ value and growth prospects, which Plaintiff reasonably relied upon when making investment decisions. [Id. at ¶¶ 55, 78] The Court agrees with Plaintiff that, if these allegations are true, Defendants’ representations went beyond puffery, opinion, or expressions concerning the future.
The Tenth Circuit has distinguished “between statements that are material and those that are ‘mere [puffery] . . . [or] not capable of objective verification.‘” In re Level 3 Commc‘ns, Inc. Sec. Litig., 667 F.3d 1331, 1339 (10th Cir. 2012) (quoting Grossman v. Novell, Inc., 120 F.3d 1112, 1119 (10th Cir. 1997)). “Vague, optimistic statements are not actionable because reasonable investors do not rely on them in making investment decisions.” Id. (quoting Grossman, 120 F.3d at 1119); see also Myers v. Alliance for Affordable Servs., 371 F. App‘x 950, 957 (10th Cir. 2010) (“[A] mere expression of an
A representation of fact is a positive assertion [that something] is true. It implies that the maker has definite knowledge or information which justifies the positive assertion. A representation of opinion, on the other hand, is only one of the maker‘s belief... It implies that he does not have definite knowledge, that he is not sufficiently certain of what he says to make the positive statement.
MHC Mut. Conversion Fund, L.P. v. Sandler O‘Neill & Partners, L.P., 761 F.3d 1109, 1120 (10th Cir. 2014) (quoting Restatement (Second) of Torts § 538A cmt b).
In determining whether a statement is puffery, the context also matters. Alpine Bank v. Hubbell, 555 F.3d 1097, 1106 (10th Cir. 2009). The relative expertise of the speaker and the listener, as well as the size of the audience can be critical factors. Id. at 1106-07. For example, the slogan “You‘re in good hands with Allstate” was held to be puffery because it was considered mass advertising in vague terms. Rodio v. Smith, 587 A.2d 621, 624 (N.J. 1991). Similarly, in Alpine Bank, the 10th Circuit found that a generalized statement that the Bank will “take care of everything else” could not be reasonably relied upon as a specific assurance. Id. at 1107.
In this case, Defendants’ statements about the companies’ MAUs—presented as current, measurable data—and the future impact thereof, are not the kind of vague, subjective statements typically considered puffery.12 For example, Defendants allegedly stated that the purpose of the February 3, 2021 podcast was to “discuss[] 2020 user
6. Conclusion
In sum, the allegations in the Complaint clearly identify the time, place, and contents of the false representations, the identity of the parties making the false representations, and the consequences thereof. They thus are sufficient to satisfy the
B. Duplicative Claim
Defendants argue that Plaintiff‘s First and Second Claims of False Representation and Nondisclosure, respectfully, are different variations of the same fraud-based claim, making them duplicative.13 [#48 at 20-24] Specifically, Defendants assert that Plaintiff‘s claims rely on the same alleged misstatements regarding MAU counts for the Licensees, and as such, Plaintiff‘s attempt to plead both fraud by affirmative misrepresentation and fraud by omission is improper. [ As explained below, under Colorado law, a plaintiff may assert claims for both fraudulent misrepresentation and fraudulent concealment, provided that the claims are based on distinct actions or omissions by the defendant. To state a claim for fraudulent misrepresentation, a plaintiff must plausibly allege: “(1) a fraudulent misrepresentation of material fact was made by [the defendant]; (2) the [plaintiff] relied on the misrepresentation[ ]; (3) the [plaintiff] ha[d] the right to rely on, or w[as] justified in relying The key distinction between the two claims lies in the nature of the defendant‘s conduct. Fraudulent misrepresentation is based on an affirmative act (making a false statement), whereas fraudulent concealment arises from the failure to act (failing to disclose a material fact). See In re Bloom, 622 B.R. 366, 413 (Bankr. D. Colo. 2020) (“false representation involves an actual affirmative statement whereas fraudulent concealment is a tort of omission”) The Tenth Circuit has recognized that a single statement can give rise to both an actionable misrepresentation and an omission, noting that “[o]ne conveying a false impression by the disclosure of some facts and the concealment of others is guilty of fraud, even though his statement is true as far as it In this case, Plaintiff‘s claim for fraudulent misrepresentation is based on Defendants’ affirmative statements in shareholder podcasts, where Defendants allegedly inflated the MAU counts for the Licensees to induce Plaintiff‘s investments. [#36 at ¶¶ 97-102] Plaintiff alleges that these statements were knowingly false and that he relied on them in purchasing securities in Decentral and MjLink. [ Given the separate conduct alleged in each claim—affirmative misrepresentation versus failure to disclose—Plaintiff‘s First and Second claims are not duplicative under Colorado law and therefore the Court rejects Defendants’ argument that the claims must be dismissed as duplicative. Plaintiff has adequately pleaded distinct factual bases for both claims, and Colorado law permits simultaneous pleading of fraudulent misrepresentation and fraudulent concealment when they arise from different actions by the defendant. Accordingly, this Court RECOMMENDS that the Motion be DENIED as to Claims ONE and TWO against Defendants. Next, Defendants argue that Plaintiff‘s claim under the CSA should be dismissed because Plaintiff has failed to plausibly allege that Defendants were aware of the materiality of their alleged misrepresentations, as required under the CSA. [#48 at 24] Defendants contend that Plaintiff‘s Complaint lacks sufficient allegations that show Defendants acted with the requisite scienter or knowledge of the misleading nature of their statements. [ The CSA regulates the offer, sale, and purchase of securities in the state, requiring registration or an exemption for such transactions, and is designed to protect investors and maintain public confidence in securities markets. Here, Plaintiff has alleged that the MAU counts for Decentral‘s Licensees were critical to the health and success of the companies, and therefore to the value of Decentral‘s stock. [#36 at ¶¶ 3, 23-32] This would make the MAU figures a material fact. Plaintiff further alleges that Defendants made false statements in multiple shareholder podcasts claiming that the Licensees had millions of users, when in fact they only had a few thousand. [ Next, Defendants argue that Plaintiff‘s claim for negligent misrepresentation should be dismissed because the Plaintiff has failed to adequately allege the necessary To establish a claim for negligent misrepresentation, it must be shown that the defendant supplied false information to others in a business transaction and failed to exercise reasоnable care or competence in obtaining or communicating information on which other parties justifiably relied. Mehaffy, Rider, Windholz & Wilson v. Cent. Bank Denver, N.A., 892 P.2d 230, 236 (Colo. 1995). Negligent misrepresentation provides a remedy in cases involving money losses due to misrepresentation in a business transaction. W. Cities Broad., Inc. v. Schueller, 849 P.2d 44, 49 (Colo. 1993). Damages recoverable for negligent misrepresentation include: (1) the difference between the value of what the plaintiff received and its purchase price or other value given for it (out-of-pocket expenses); and (2) other pecuniary loss suffered as a consequence of the plaintiff‘s reliance upon the misrepresentation. Id. (citations omitted). Here, Plaintiff claims his damages due to the alleged negligent misrepresentation are his $1.7 million collective investment in Defendants’ companies. [#56 at 18] According to Plaintiff, based upon Defendants’ fraudulent misrepresentations, Plaintiff invested $1.7 million in stock for “worthless companies that had little to no genuine usership and thus little to no value,” thereby satisfying the damages requirement of a negligent misrepresentation claim. [#56 at 18] And his Complaint supports these A civil conspiracy claim requires a plaintiff to show: “(1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) an unlawful overt act; and (5) damages as the proximate result.” F.D.I.C. v. First Interstate Bank of Denver, N.A., 937 F. Supp. 1461, 1473 (D. Colo. 1996) (citing Jet Courier Service, Inc. v. Mulei, 771 P.2d 486, 502 (Colo. 1989)). Defendants argue that Plaintiff has failed to plausibly allege the first and third elements of his civil conspiracy claim. [#48 at 26-27] With respect to third element, Defendants argue the Complaint merely recites the legal standard for conspiracy without providing factual support to demonstrate that Defendants had a meeting of the minds to pursue a common unlawful goal. [ To succeed оn a civil conspiracy claim, Plaintiff must plausibly plead a meeting of the minds between Defendant and at least one other party. First Interstate Bank of Denver, 937 F. Supp. at 1473. “The court will not infer the agreement necessary to form a conspiracy; evidence of such an agreement must be presented by the plaintiff.” Nelson v. Elway, 908 P.2d 102, 106 (Colo. 1995); see also, e.g., Mecca v. United States, 389 F. App‘x 775, 780 (10th Cir. 2010) (affirming the dismissal of a conspiracy claim where the plaintiff failed to provide specific facts demonstrating an actual agreement between the parties). The Complaint does not present any facts to prove that Defendants entered into an agreement to defraud investors. Rather, Plaintiff asks the Court to infer an agreement “based [on] the nature of the podcasts.” [#56 at 18] But, once again, the Court will not infer an agreement to establish a conspiracy. Rather, Plaintiff “must allege specific facts showing agreement and concerted action among the defendants.” McDaniel v. Denver Lending Grp., Inc., No. 08-cv-02617-PAB-KLM, 2009 WL 1873581, at *12 (D. Colo. June 30, 2009) (emphasis in original) (quotation omitted). The allegations posed in the Complaint are conclusory, merely suggesting parallel conduct without any factual basis for inferring a conspiracy. [#36 at ¶¶ 128-134] As such, the Complaint has failed to plausibly allege the necessary agreement to state a civil conspiracy claim. Even if, arguendo, this Court found that a meeting of the minds did occur, the claim still fails. Under the intracorporate conspiracy doctrine, “an agreement between or among agents of the same legal entity, when the agents act in their official capacities, is not an unlawful conspiracy” because “[w]hen two agents of the same legal entity make an agreement in the course of their official duties, . . . as a practical and legal matter their acts are attributed to their principal” and thus “there has not been an agreement between two or more separate people.” Ziglar v. Abbasi, 582 U.S. 120, 153 (2017). Colorado courts have recognized the doctrine and held that “[a] corporation and its employees do not constitute the ‘two or more persons’ required for a civil conspiracy, at least if the employees are acting on behalf of the corporation and not as individuals for their individual advantage.” Pittman v. Larson Distrib. Co., 724 P.2d 1379, 1390 (Colo. App. 1986) (citations omitted); see also Kerstien v. McGraw-Hill Cos., 7 F. App‘x 868, 875 (10th Cir. 2001) (affirming summary judgment on Colorado civil conspiracy claim where plaintiff failed to establish that the individual employees acted for their individual advantage as opposed to acting on behalf of the company); Zelinger v. Uvalde Rock Asphalt Co., 316 F.2d 47, 51-52 (10th Cir. 1963) (applying Colorado law and holding that a corporation and its employees cannot conspire to tortiously interfere with and bring about the breach of a distributorship agreement); Titan Mfg. Sols., Inc. v. Nat‘l Cost, Inc., No. 19-cv-1749-WJM-SKC, 2020 WL 996880, at *3 (D. Colo. Mar. 2, 2020) (dismissing civil conspiracy claim where complaint failed to adequately allege that the employees were acting for individual advantage as opposed to acting on behalf of the company). Here, Plaintiff alleges that Defendants publicized information reflective of their fraudulent scheme through podcasts and other communications. According to the Complaint, Defendant Ken Tapp is an executive and/or co-founder at Defendants Decentral, MjLink, LikeRe, and HuntPost. [#36 at ¶¶ 12, 14-15] Defendant Todd Markey is an executive at Defendants Decentral and MjLink. [ Thus, the Court finds that Plaintiff has not plausibly pled a civil conspiracy claim against Defendants. Accordingly, this Court RECOMMENDS that the Motion be GRANTED as to Claim FIVE against Defendants. The CCPA is designed to protect cоnsumers from unfair or deceptive trade practices in the marketplace. (1) the defendant engaged in an unfair or deceptive trade practice; (2) that the challenged practice occurred in the course of defendant‘s business, vocation or occupation; (3) that it significantly impacts the public as actual or potential consumers of the defendant‘s goods, services, or property; (4) that the plaintiff suffered the injury in fact to a legally protected interest; and (5) that the challenged practice caused the plaintiff‘s injury. Id. at 146-47 (quoting Hall v. Walter, 969 P.2d 224, 235 (Colo. 1998)). Defendants argue that Plaintiff‘s CCPA claim should be dismissed. [#48 at 28-31] First, Defendants contend that the CCPA does not apply to securities transactions, and Plaintiff‘s claims, which are rooted in allegations of fraud related to the purchase of stock in Decentral, MjLink, and other entities, are inherently securities-based. [#48 at 28] Relatedly, Defendants assert that Plaintiff‘s claims under the CCPA are preempted by the CSA, which provides a comprehensive statutory framework governing fraud in connection with securities transactions. [ Another court in this district has held that securities transactions do not fall under the CCPA‘s definition of “consumer goods and services,” and thus claims involving the purchase or sale of securities are generally excluded from the scope of the CCPA. Robinson, 2013 WL 754417, at *4 (“Where the ‘goods’ at issue are shares or other securities investments, however, misrepresentations as to the nature or risk of the investment are governed by the Colorado Securities Act.”). The Robinson Court noted that the CSA provides specific causes of action against persons who make materially misleading statements to investors or who cause misleading statements to be made in any prospectus or other document filed with the securities commissioner. Id. (citing Even if the CCPA did apply to secured transactions and the CSA did not preempt the CCPA, Plaintiff has still failed to plausibly allege a CCPA claim. The Colorado Supreme Court has held that the CCPA “can not be used to remedy a purely private Plaintiff calls this assertion “laughable” because Decentral is a publicly traded company. [#56 at] But the Complaint primarily focuses upon representations made by Defendants on shareholder podcasts. [#36 at ¶ 20 (“Defendants’ primary deception involved knowingly making false public statements on shareholder podcasts.”)] And the Complaint fails to give any indication as to the number of people who listened to these podcasts or even the number of people who held shares in Decentral. [See Thus, the Court finds that Plaintiff has not plausibly pled a CCPA claim against Defendants. Accordingly, this Court RECOMMENDS that the Motion be GRANTED as to Claim SIX against Defendants. For the foregoing reasons, the Court respectfully RECOMMENDS that Defendants’ Joint Motion to Dismiss Plaintiff‘s Amended Complaint [#47] bе GRANTED to the extent it seeks to dismiss the following claims: 1) Plaintiff‘s Fifth Claim of Civil Conspiracy against all Defendants and 2) Plaintiff‘s Sixth Claim of Violations of the Colorado Consumer Protection Act against all Defendants. The Court RECOMMENDS that the Motion is otherwise DENIED.15 DATED: October 24, 2024 BY THE COURT: s/Scott T. Varholak United States Magistrate JudgeD. Negligent Misrepresentation Claim
E. Civil Conspiracy Claim
1. Agreement
2. Civil Conspiracy Between a Corporation and Its Employees
3. Conclusion
1. The CCPA as Applied to Securities Transactions
2. Plausibility of Plaintiff‘s CCPA Claim
3. Conclusion
IV. CONCLUSION