Bass, Berry & Sims attorney Chris Lazarini provided comment on a case in which the Plaintiff sued his father's brokerage firm for alleged violations of the Securities Exchange Act of 1934 and the RICO Act. The court dismissed the claim for several reasons, including Plaintiff's lack of standing – since Plaintiff was a future beneficiary of the trust, Plaintiff did not suffer any injury as yet and therefore was ineligible to file suit – and Plaintiff's failure to meet either the federal question or diversity jurisdiction thresholds. Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.
Powell vs. First Allied Securities, Inc., No. 14-13589 (E.D. Mich., 9/28/15)
*To have standing, a plaintiff must have suffered an actual or imminent injury in fact.
**Merely citing to a federal statute, without factual support, cannot create federal question jurisdiction.
***The amount claimed by a plaintiff usually determines the amount in controversy for diversity jurisdiction, but where it appears to a legal certainty that the claim is really for less than the jurisdictional amount, a diversity claim should be dismissed.
Seeking to gain control over a portion of his father's trust, pro se Plaintiff sued First Allied, alleging violations of the '34 Act and RICO statute. The Court dismisses the complaint on multiple grounds. First, it finds, as a "future beneficiary" of the trust, Plaintiff has no present possessory interest in the trust assets, has not suffered an injury in fact, and, therefore, lacks standing to bring the claims.
Second, even if standing exists, the Court finds jurisdiction lacking. Federal question jurisdiction does not exist, because Plaintiff failed to allege facts suggesting that First Allied committed securities fraud or violated the RICO statute. The Court also concludes that diversity jurisdiction does not exist, finding the amount in controversy to be less than the $75,000 threshold, after excluding Plaintiff's punitive damage claim (as it deems this case to be a simple contract claim in which punitive damages are not available). Finally, the Court notes that Plaintiff's mother is an indispensable party, whose addition to the case would destroy diversity jurisdiction, even if the amount in controversy threshold were established.