Coffey V Ripple, Opposition To Remand, 7/11/2018

Case 4:18-cv-03286-PJH Document 17 Filed 07/11/18 Page 1 of 30
1 PETER B. MORRISON (SBN 230148)

peter.morrison@skadden.com
2 VIRGINIA F. MILSTEAD (SBN 234578)
virginia.milstead@skadden.com
3 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 South Grand Avenue, Suite 3400
4 Los Angeles, California 90071
Telephone: (213) 687-5000
5 Facsimile: (213) 687-5600
6 JOHN NEUKOM (SBN 275887)

john.neukom@skadden.com
525 University Avenue, Suite 1400
8 Palo Alto, California 94301
Telephone: (650) 470-4500
9 Facsimile: (650) 470-4570
10 MARY JO WHITE (pro hac vice)
mjwhite@debevoise.com
11 ANDREW J. CERESNEY (pro hac vice)
aceresney@debevoise.com
12 DEBEVOISE & PLIMPTON LLP
919 Third Avenue
13 New York, New York 10022
Telephone: (212) 909-6000
14 Facsimile: (212) 909-6836
15 Attorney for Defendants

Ripple Labs Inc., XRP II, LLC, and Bradley
16 Garlinghouse
17
UNITED STATES DISTRICT COURT
18
FOR THE NORTHERN DISTRICT OF CALIFORNIA
19 )
RYAN COFFEY, individually and on behalf of ) CASE NO.: 4:18-cv-03286-PJH
20 all others similarly situated, )
) 1) MEMORANDUM OF POINTS AND
21 Plaintiff, ) AUTHORITIES IN OPPOSITION TO
) PLAINTIFF’S MOTION TO REMAND;
22 v. )
) 2) DECLARATION OF VIRGINIA F.
23 RIPPLE LABS INC., et al., ) MILSTEAD (filed under separate cover);
) and
24 Defendants. )
) 3) [PROPOSED] ORDER (lodged under
25 ) separate cover).
)
26 ) Date: August 1, 2018
) Time: 9:00 a.m.
27 ) Courtroom: 3
) Judge: Hon. Phyllis J. Hamilton
28
OPPOSITION TO PLAINTIFF’S MOTION TO REMAND CASE NO. 4:18-CV-03286-PJH

1 TABLE OF CONTENTS
2 TABLE OF AUTHORITIES .............................................................................................................. ii
3 ISSUES TO BE DECIDED ................................................................................................................ 1
4 MEMORANDUM OF POINTS AND AUTHORITIES .................................................................... 1
5 I. PRELIMINARY STATEMENT ................................................................................ 1
6 II. FACTUAL BACKGROUND ..................................................................................... 4
7 III. REMOVAL IS PROPER UNDER THE CLASS ACTION FAIRNESS ACT .......... 6
8 A. Removal Is Proper Under CAFA .................................................................... 6
9 B. Section 22(a) And Luther Do Not Bar Removal Under CAFA ...................... 7
10 1. Background Regarding Removal Of Actions That Joined

Removable And Non-Removable Claims Prior To CAFA................. 9
11
2. Congress Enacted CAFA But Did Not Include The “Except
12 As Otherwise Expressly Provided By Act Of Congress”
Language, Distinguishing CAFA From The General Removal
13 Statute ............................................................................................... 12
14 C. Luther Requires Limitation Or Reconsideration........................................... 15
15 1. Luther Is Irreconcilable With Dart Cherokee ................................... 15
16 2. Luther’s Conclusion That Section 22(a) Is More Specific

Than CAFA Has Been Rejected By Subsequent Appeals And
17 District Court Authority .................................................................... 17
18 3. Luther Failed To Consider The Express Exceptions To CAFA

Removal ............................................................................................ 18
19
D. SLUSA Does Not Preclude Removal ........................................................... 19
20
E. Plaintiff’s Policy Arguments Ignore The Overriding Policy Of CAFA ....... 22
21
IV. THE COURT SHOULD DENY PLAINTIFF’S REQUEST FOR
22 ATTORNEY’S FEES AND COSTS ........................................................................ 23
23 V. CONCLUSION ......................................................................................................... 23
24
25
26
27
28
i
1 TABLE OF AUTHORITIES
2 CASES PAGE(S)
3 Allen v. Boeing,
784 F.3d 625 (9th Cir. 2015) ................................................................................................ 12
4
Appert v. Morgan Stanley Dean Witter, Inc.,
5 673 F.3d 609 (7th Cir. 2012) ................................................................................................ 20
6 Blausey v. United States Trust,

552 F.3d 1124 (9th Cir. 2009) .............................................................................................. 19
7
Broadway Grill, Inc. v. Visa Inc.,
8 856 F.3d 1274 (9th Cir. 2017) ................................................................................................ 7
9 Brown v. Mortgage Electronic Registration Systems, Inc.,

738 F.3d 926 (8th Cir. 2013) .................................................................................................. 9
10
California Public Employees’ Retirement System v. WorldCom, Inc.,
11 368 F.3d 86 (2d Cir. 2004)............................................................................................. passim
12 Cervantes v. Dickerson,
No. 15-cv-3825-PJH,
13 2015 WL 6163573 (N.D. Cal. Oct. 21, 2015)................................................................... 8, 21
14 City of Chicago v. International College of Surgeons,

522 U.S. 156 (1997) .............................................................................................................. 10
15
Cobalt Partners, LP v. Sunedison, Inc.,
16 No. C 16-02263 WHA,
2016 WL 4488181 (N.D. Cal. Aug. 26, 2016) ............................................................... 13, 21
17
Commodity Futures Trading Commission v. McDonnell,
18 287 F. Supp. 3d 213 (E.D.N.Y. 2018) ................................................................................ 4, 5
19 Cyan, Inc. v. Beaver County Employees Retirement Fund,

138 S. Ct. 1061 (2018) .......................................................................................... 3, 20, 21, 22
20
Dart Cherokee Basin Operating Co. v. Owens,
21 135 S. Ct. 547 (2014) ..................................................................................................... passim
22 Duncan v. Walker,
533 U.S. 167 (2001) .............................................................................................................. 14
23
Emrich v. Touche Ross & Co.,
24 846 F.2d 1190 (9th Cir. 1988) .............................................................................................. 11
25 Estate of Pew v. Cardarelli,

527 F.3d 25 (2d Cir. 2008).............................................................................................. 20, 22
26
Exxon Mobil Corp. v. Allapattah Services, Inc.,
27 545 U.S. 546 (2005) ............................................................................................................ 2, 9
28
ii
1 F5 Capital v. Pappas,
856 F.3d 61 (2d Cir. 2017)
2 cert. denied, 138 S. Ct. 473 (2017) ..................................................................................... 2, 9
3 Farmers & Merchants Bank v. Hamilton Hotel Partners of Jacksonville Ltd. P’Ship,
702 F. Supp. 1417 (W.D. Ark. 1988).............................................................................. 10, 11
4
FDIC v. Countrywide Financial Corp.,
5 No. 11-CV-10400-MRP-MANx,
2012 WL 12897152 (C.D. Cal. Mar. 20, 2012) .................................................................... 14
6
Gonsalves v. Amoco Shipping Co.,
7 733 F.2d 1020 (2d Cir. 1984)................................................................................................ 11
8 Holt v. Noble House Hotels & Resort, Ltd.,
No. 17cv2246-MMA (BLM),
9 2018 WL 539176 (S.D. Cal. Jan. 23, 2018)............................................................................ 7
10 Jordan v. Nationstar Mortgage LLC,
781 F.3d 1178 (9th Cir. 2015) ........................................................................................ 16, 23
11
Katz v. Gerardi,
12 552 F.3d 558 (7th Cir. 2009) ........................................................................ 17, 18, 19, 20, 21
13 Kircher v. Putnam Funds Trust,
547 U.S. 633 (2006) .............................................................................................................. 21
14
Luther v. Countrywide Home Loans Servicing LP,
15 533 F.3d 1031 (9th Cir. 2008) ....................................................................................... passim
16 Miller v. Gammie,
335 F.3d 889 (9th Cir. 2003) ................................................................................................ 16
17
Mississippi ex. rel. Hood v. AU Optronics Corp.,
18 571 U.S. 161 (2014) .............................................................................................................. 12
19 New Jersey Carpenters Vacation Fund v. Harborview Mortgage Loan Trust 2006-4,
581 F. Supp. 2d 581 (S.D.N.Y. 2008)........................................................... 12, 16, 18, 19, 20
20
Pacific Life Insurance Co. v. J.P. Morgan Chase & Co.,
21 No. SA CV 03-813 GLT (ANX),
2003 WL 22025158 (C.D. Cal. June 30, 2003) .................................................................... 13
22
Passarella v. Ginn Co.,
23 637 F. Supp. 2d 353 (D.S.C. 2009)........................................................................... 14, 18, 19
24 Public Employees Retirement System of Mississippi v. Morgan Stanley,
605 F. Supp. 2d 1073 (C.D. Cal. 2009) .......................................................................... 15, 23
25
Rajasekaran v. CytRx Corp.,
26 No. CV 14-3406-GHK (RJWx),
2014 WL 4330787 (C.D. Cal. Aug. 21, 2014) .................................................................. 8, 21
27
Rossetti v. Stearn’s Products, Inc.,
28 No. CV 16-1875-GW (SSx),
2016 WL 3277295 (C.D. Cal. June 6, 2016) .......................................................................... 7
iii
1 Russello v. United States,

464 U.S. 16 (1983) ................................................................................................................ 15
2
Spalo v. Union Pacific R. Co.,
3 No. 17 C 3357,
2017 WL 2908775 (N.D. Ill. July 7, 2017) ..................................................................... 11, 12
4
Standard Fire Insurance Co. v. Knowles,
5 568 U.S. 588 (2013) .......................................................................................................... 2, 22
6 Tuttle v. Sky Bell Asset Management, LLC,
No. C10-03588 WHA,
7 2011 WL 208060 (N.D. Cal. Jan. 21, 2011) ................................................................... 13, 20
8 U.S. Industries v. Gregg,
348 F. Supp. 1004 (D. Del. 1972),
9 rev’d on other grounds, 540 F.2d 142 (3d Cir. 1976) ............................................... 10, 11, 22
10 United States v. Providence Journal Co.,
485 U.S. 693 (1988) .............................................................................................................. 12
11
STATUTES
12
15 U.S.C. § 77p(b) ............................................................................................................................ 20
13
15 U.S.C. § 77p(c) ........................................................................................................................ 3, 20
14
15 U.S.C. § 77p(f)(3) .................................................................................................................... 7, 20
15
15 U.S.C. § 77v(a) ...................................................................................................................... 1, 7, 8
16
28 U.S.C. § 1332(d) .................................................................................................................. 1, 2, 14
17
28 U.S.c. § 1332(d)(2) ........................................................................................................................ 6
18
28 U.S.C. § 1332(d)(6) ....................................................................................................................... 7
19
28 U.S.C. § 1441(a) .................................................................................................................... 10, 18
20
28 U.S.C. § 1441(c)(2) ...................................................................................................................... 15
21
28 U.S.C. § 1445(a) .......................................................................................................................... 10
22
28 U.S.C. § 1445(b) .......................................................................................................................... 10
23
28 U.S.C. § 1452 ............................................................................................................................... 21
24
28 U.S.C. § 1453 ....................................................................................................................... 1, 2, 18
25
28 U.S.C. § 1453(b) .................................................................................................................. 2, 6, 13
26
28 U.S.C. § 1453(d) .......................................................................................................................... 13
27
28 U.S.C. § 1453(d)(1) ........................................................................................................... 7, 19, 20
28
28 U.S.C. § 1453(d)(2) ................................................................................................................. 7, 19
iv
1 28 U.S.C. § 1453(d)(3) ................................................................................................................. 7, 19
2 OTHER AUTHORITIES
3 16 Moore’s Federal Practice – Civil § 107.9[1][b] (2018) ............................................................... 16
4 2 McLaughlin on Class Actions § 12:6 (14th ed. 2017) ................................................................... 18
5 Order Granting Motion to Remand, Baker v. Dynamic Ledger Solutions, Inc., 17-cv-06850-
RS (N.D. Cal. Apr. 19, 2018) ............................................................................................... 21
6
Trevor M. Cutaiar, “Are Securities Act of 1933 Claims Filed In State Court Removable
7 Under The Class Action Fairness Act of 2005? A Proposed Resolution To A
Statutory Conflict,”
8 55 Loy. L. Rev. 559 (2009)................................................................................................... 22
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
v
1 Defendants Ripple Labs Inc. (“Ripple”), XRP II, LLC (“XRP II”), and Bradley
2 Garlinghouse (collectively, “Defendants”) respectfully submit this Opposition to Plaintiff’s Motion
3 to Remand (“Motion” or “Mot.”) (ECF No. 16).
4 ISSUES TO BE DECIDED
5 1. Whether Plaintiff’s Motion should be denied because this Action, asserting both
6 state and federal claims, was properly removed under the Class Action Fairness Act, 28 U.S.C.
7 §§ 1332(d), 1453?
8 2. Whether Section 22(a) of the Securities Act of 1933, 15 U.S.C. § 77v(a), bars
9 removal of nationwide class actions asserting violations, not only of the Securities Act of 1933, but
10 also of state law, which state law claims are indisputably removable under CAFA?
11 3. Whether Plaintiff’s Motion should be denied because the decision in Luther v.
12 Countrywide Home Loans Servicing LP, 533 F.3d 1031 (9th Cir. 2008), upon which Plaintiff
13 principally relies (i) is distinguishable, as the instant case asserts removable state law claims while
14 Luther only involved claims under the Securities Act of 1933; and/or (ii) should be limited or
15 reconsidered because it is clearly irreconcilable with the United States Supreme Court decision in
16 Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547 (2014), and/or subsequent court of
17 appeals and district court authority?
18 MEMORANDUM OF POINTS AND AUTHORITIES
19 I. PRELIMINARY STATEMENT
20 This putative class action (“Action”) concerns Defendants’ alleged sales of a virtual
21 currency—XRP—to “larger investors” and on alleged “cryptocurrency exchanges” throughout the
22 United States and the world. (Compl. ¶¶ 26, 122 (ECF No. 1-1).) Raising a misguided theory that
23 XRP is a “security” under federal and state securities laws—despite no federal or state court ever
24 applying such a designation to a virtual currency such as XRP—Plaintiff, who allegedly purchased
25 650 XRP on a “cryptocurrency exchange” in January 2018 and sold it at a $551.89 loss twelve days
26 later (Compl. ¶¶ 26, 119-121), filed this Action in the Superior Court of California, County of San
27 Francisco. Plaintiff alleges violations of the registration requirements of the federal Securities Act
28 of 1933 (“Securities Act”) and qualification requirements of the California Corporations Code on
1
1 behalf of all purchasers of XRP since January 1, 2013. (Compl. ¶ 122.) Because this far-reaching,
2 nationwide class action is exactly the type of litigation for which Congress sought to provide a
3 federal forum through the Class Action Fairness Act of 2005 (“CAFA”), Defendants removed this
4 Action to this Court pursuant to CAFA’s express provisions (ECF No. 1). See 28 U.S.C.
5 §§ 1332(d), 1453; Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 595 (2013) (observing that
6 CAFA’s “primary objective” was to ensure “‘Federal court consideration of interstate cases of
7 national importance’”) (citation omitted).
8 Plaintiff does not, and cannot, dispute that the requirements for CAFA removal are satisfied
9 in this Action with respect to each of his claims. CAFA confers federal jurisdiction and authorizes
10 removal, “if the class has more than 100 members, the parties are minimally diverse, and the
11 amount in controversy exceeds $5 million.” Dart Cherokee Basin Operating Co. v. Owens, 135 S.
12 Ct. 547, 552 (2014); see also 28 U.S.C. §§ 1332(d), 1453(b). This Action, purportedly brought on
13 behalf of “thousands” across both the nation and the world and placing at least $342.8 million in
14 controversy, easily satisfies CAFA’s requirements. See infra Part III.A.
15 Instead, Plaintiff asserts two flawed arguments to support his Motion. First, Plaintiff asserts
16 that Luther v. Countrywide Home Loans Servicing LP, 533 F.3d 1031 (9th Cir. 2008), concluded
17 that Section 22(a) of the Securities Act (“Section 22(a)”), which bars removal of cases arising
18 under the Securities Act, “trumps” CAFA’s express grant of removal authority and forecloses
19 removal of any case that includes alleged violations of the Securities Act, even if it also includes
20 other removable claims. Plaintiff is wrong. Luther involved only Securities Act claims and limited
21 its holding to actions including “only” claims under the Securities Act. Luther, 533 F.3d at 1034.
22 In this Action, in contrast, Plaintiff chose to assert state law claims under the California
23 Corporations Code in addition to Securities Act claims. This distinction is critical because
24 Plaintiff’s state law claims independently satisfy CAFA’s requirements for removal, a point
25 Plaintiff does not dispute. The presence of Plaintiff’s state law claims makes this whole action
26 removable regardless of Plaintiff’s Securities Act claims. See Exxon Mobil Corp. v. Allapattah
27 Servs., Inc., 545 U.S. 546, 559 (2005) (“If the court has original jurisdiction over a single claim in
28 the complaint, it has original jurisdiction over a ‘civil action.’”); F5 Capital v. Pappas, 856 F.3d 61,
2
1 82 (2d Cir. 2017) (concluding that class action was properly removed under CAFA and that the
2 federal court could exercise supplemental jurisdiction over state law derivative claims that were
3 otherwise not removable); see infra Part III.B. Luther did not address the circumstance in which
4 Securities Act claims are brought alongside independently removable state law claims; as such,
5 neither its reasoning nor its holding forecloses removal here.
6 In any event, as discussed in detail below, see infra Part III.C, even if this Court decides
7 that Luther governs here (which it does not), Defendants respectfully submit that the decision in
8 Luther is clearly irreconcilable with subsequent United States Supreme Court and other court of
9 appeal and district court decisions. Thus, it should be limited to the narrow question it addressed—
10 whether cases asserting only Securities Act claims can be removed under CAFA—or reconsidered.
11 Second, Plaintiff argues that Section 77p(c) of the Securities Act—which, enacted as part of
12 the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), permits the removal of state
13 law class actions asserting fraud in connection with securities traded on national stock exchanges,
14 15 U.S.C. § 77p(c) (hereinafter, “Section 77p(c)” or “SLUSA”)—forecloses removal. According
15 to Plaintiff, when Congress passed SLUSA, it intended SLUSA to serve as the only basis on which
16 a securities case may be removed to federal court, thereby foreclosing removal under CAFA even
17 though CAFA was not enacted until seven years later. Plaintiff’s argument fails.
18 While Plaintiff quotes a number of cases out of context to make it sound like these cases
19 bar removal on any grounds other than Section 77p(c) (Mot. 5:11-7:12), in fact, none of the cases
20 Plaintiff cites even considers removability under CAFA, much less rejects it. Rather, all of the
21 cases Plaintiff cites stand for the now-settled proposition that Section 77p(c) is not a source of
22 removal authority for Securities Act claims. See Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 138
23 S. Ct. 1061, 1075-76 (2018).1 Defendants did not remove under Section 77p(c)—they removed
24 under CAFA—so those cases, and the point Plaintiff seeks to make in his Motion, are irrelevant.
25 Even if Section 77p(c) does not provide for removal, removal is proper if a “separate removal
26
1
27 For example, in Cyan, the Court held that Section 77p(c) itself does not provide removal
jurisdiction to defendants seeking to remove class actions alleging Securities Act claims; Cyan
28 does not stand for the broad proposition that no Securities Act claims can be removed under any
removal statute. See Cyan, 138 S. Ct. at 1075-76.
3
1 provision” “‘grants additional removal jurisdiction.’” Cal. Pub. Emps. Ret. Sys. v. WorldCom,
2 Inc., 368 F.3d 86, 107 (2d Cir. 2004) (citation omitted). CAFA qualifies as a “separate removal
3 provision” that provides just such a grant. See infra Part III.D.
4 In short, because Plaintiff asserted state law claims that Plaintiff does not dispute are
5 removable under CAFA, based on the principle that where one claim in an action is removable on
6 diversity grounds, the entire action is removable, Defendants’ removal of this Action was proper.
7 Neither Luther nor SLUSA requires remand here. Therefore, the Court should deny Plaintiff’s
8 Motion in its entirety.
9 II. FACTUAL BACKGROUND

10 Defendant Ripple was incorporated in Delaware and is currently headquartered in San
11 Francisco, California. (Compl. ¶ 11.) “Ripple provides one frictionless experience to send money
12 globally using the power of blockchain. By joining Ripple’s growing, global network, financial
13 institutions can process their customers’ payments anywhere in the world instantly, reliably and
14 cost-effectively. Banks and payment providers can use the digital asset XRP to further reduce their
15 costs and access new markets.” (Ex. 1.)2 Defendant XRP II is a subsidiary of Ripple, also
16 headquartered in San Francisco, California, and is licensed to engage in Virtual Currency Business
17 Activity by the New York State Department of Financial Services. (Compl. ¶ 12; Ex. 2.)
18 Defendant Bradley Garlinghouse is the CEO of Ripple. (Compl. ¶ 13.)
19 Virtual currencies are generally defined as “‘digital assets used as a medium of exchange.’”
20 Commodity Futures Trading Comm’n v. McDonnell, 287 F. Supp. 3d 213, 218 (E.D.N.Y. 2018).
21 “They are stored electronically in ‘digital wallets’ and exchanged over the internet through a direct
22 peer-to-peer system” called a “blockchain.” Id. As one court, concluding that a virtual currency
23 was a “commodity” (not a security) within the regulatory purview of the Commodity Futures
24 Trading Commission, described it:
25 The “blockchain” serves as a digital signature to verify the exchange.

“The public nature of the decentralized ledger allows people to
26 recognize the transfer of virtual currency from one user to another
without requiring any central intermediary in which both users need
27
2
28 All references to “Ex.” refer to exhibits attached to the Declaration of Virginia F. Milstead, filed
concurrently herewith.
4
1 to trust.” Some experts believe blockchain technology underlying

virtual currencies will serve to “enhance [future] economic
2 efficiency” and have a “broad and lasting impact on global financial
markets in payments, banking, securities settlement, title recording,
3 cyber security and trade reporting and analysis.”
4 Id. (citations omitted). The digital asset XRP, which Ripple customers consisting of banks and
5 payment providers can use as a “reliable, on-demand option to source liquidity for cross-border
6 payments” (Ex. 3), is built on open-source blockchain technology and is a form of virtual currency.
7 In fact, both the U.S. Department of Justice and the Financial Crimes Enforcement Network, a
8 bureau of the U.S. Department of Treasury, have previously concluded that XRP is a virtual
9 currency subject to Bank Secrecy Act regulations. (Ex. 4 ¶ 17.)

10 Plaintiff alleges Ripple created 100 billion XRP in 2013. (Compl. ¶ 20.) Plaintiff alleges
11 that “Defendants sell XRP wholesale to larger investors and also sell significant quantities of XRP
12 directly to the general public on cryptocurrency exchanges.” (Compl. ¶ 26.) Such exchanges,
13 which are independent from Defendants, are accessible online and therefore accessible to people
14 throughout the United States and the world. (See Ex. 5.) According to Plaintiff, there were 32.49
15 billion XRP in public circulation, changing hands through digital wallets on “cryptocurrency
16 exchanges,” as of June 30, 2015. (Compl. ¶ 24.)
17 On January 5, 2018, Plaintiff allegedly purchased 650 XRP on a “cryptocurrency

18 exchange” and sold that XRP two weeks later at a loss of $551.89. (Compl. ¶¶ 26, 119-121.)
19 Plaintiff does not allege that he lacked information about the nature of these transactions.
20 Nevertheless, Plaintiff claims that he was somehow injured because Defendants were allegedly
21 required to register XRP as a “security” with the Securities & Exchange Commission (“SEC”) or
22 California authorities but failed to do so. (Compl. ¶¶ 135, 142.)
23 On May 3, 2018, Plaintiff filed this putative class action in the Superior Court of California,
24 San Francisco County, purportedly on behalf of “[a]ll persons or entities who purchased XRP from
25 January 1, 2013 through the present.” (Compl. ¶ 122.) Plaintiff alleges that Defendants violated
26 Sections 5, 12(a)(1), and 15 of the Securities Act and Sections 25503, 25504, and 25110 of the
27 California Corporations Code—federal and state statutes respectively governing the registration
28 and sale of securities and imposing “control person” liability on violators of securities laws.
5
1 (Compl. ¶¶ 131-159.) Plaintiff seeks, among other things, rescission of all XRP purchases,
2 damages, and a constructive trust over the proceeds of Defendants’ alleged sales of XRP. (Compl.
3 ¶ VIII.) On June 1, 2018, Defendants timely removed this Action to this Court pursuant to CAFA.
4 III. REMOVAL IS PROPER UNDER THE CLASS ACTION FAIRNESS ACT

5 A. Removal Is Proper Under CAFA
6 CAFA amended the diversity jurisdiction statute by adding 28 U.S.C. § 1332(d) and created
7 a separate statutory provision authorizing the removal of class actions meeting the requirements of
8 Section 1332(d). See 28 U.S.C. § 1453(b). Under CAFA, a putative class action may be removed
9 to the appropriate federal district court if (1) the action purports to be a “class” action brought on
10 behalf of 100 or more members; (2) any member of a class of plaintiffs is a citizen of a state
11 different from any defendant; and (3) the amount in controversy exceeds $5 million. See Dart
12 Cherokee, 135 S. Ct. at 552. This Action meets each of CAFA’s three requirements and, notably,
13 Plaintiff does not dispute in his Motion that every one of these three requirements is met.
14 Class exceeds 100 members. First, this is an alleged class action brought on behalf of over
15 100 members. Plaintiff purports to assert claims on behalf of a “class” consisting of “thousands of
16 Class members.” (Compl. ¶¶ 122, 124.) That well exceeds the requirements of CAFA.
17 Minimal Diversity. Second, under CAFA, minimal diversity of citizenship exists where
18 “any member of a class of plaintiffs is a citizen of a State different from any defendant” or “any
19 member of a class of plaintiffs is a . . . citizen or subject of a foreign state and any defendant is a
20 citizen of a State.” 28 U.S.C. § 1332(d)(2). On the one hand, each of the Defendants is allegedly a
21 citizen of California (Compl. ¶¶ 11-13), and on the other, there are members of the putative class—
22 defined as “[a]ll persons or entities who purchased XRP” since January 1, 2013 without any
23 geographic limitation, who are citizens of states other than California and citizens of foreign
24 countries (Compl. ¶ 122).3 Given these allegations, members of the putative class are citizens of
25
3
26 The Complaint further alleges that Defendants have sold XRP to putative class members on
“cryptocurrency exchanges,” which are accessible on the internet and therefore throughout the
27 United States and the world. (Compl. ¶¶ 26, 34.) Plaintiff also alleges that Defendants “made use
of means or instruments of transportation or communication in interstate commerce or of the
28 mails” in purportedly selling XRP. (Compl. ¶ 132.) Such allegations further support minimal
diversity here.
6
1 states and countries different from Defendants. See, e.g., Broadway Grill, Inc. v. Visa Inc., 856
2 F.3d 1274, 1276-77 (9th Cir. 2017) (concluding that minimal diversity was satisfied when class
3 definition, as pleaded, included a nationwide class and many non-citizens of California); Rossetti v.
4 Stearn’s Prods., Inc., 2016 WL 3277295, at *1-2 (C.D. Cal. June 6, 2016) (same).
5 Amount in Controversy. Third, this Action meets CAFA’s amount-in-controversy

6 requirement of $5 million. 28 U.S.C. § 1332(d)(6). Among other things, Plaintiff seeks the
7 rescission of Defendants’ alleged sales of XRP to putative class members. (Compl. ¶ VIII.4.)
8 Plaintiff alleges that in 2017 alone, Defendants received “over $342.8 million through XRP sales.”
9 (Compl. ¶ 26.) If all such sales were rescinded, the amount in controversy would exceed $5
10 million. While Defendants strongly deny that Plaintiff or any putative class members are entitled
11 to recover any amount (or any other relief), Plaintiff plainly seeks to recover an aggregate amount
12 over $5 million.4
13 Exceptions. None of the exceptions to removal set forth in CAFA applies to bar removal
14 here, and Plaintiff does not contend otherwise. This Action does not (i) involve a “covered
15 security,” as defined by 15 U.S.C. § 77p(f)(3); (ii) relate to the internal affairs or governance of a
16 corporation and arise under the laws of the state in which such corporation was formed; or (iii)
17 relate to the rights, duties, and obligations relating to or created by or pursuant to any security. See
18 28 U.S.C. § 1453(d)(1)-(3).
19 This Action clearly satisfies the requirements of CAFA. Plaintiff’s argument that the
20 removal bar in Section 22(a) of the Securities Act and the Ninth Circuit’s decision in Luther
21 nevertheless preclude removal fails. (Mot. 4:8-12.)
22 B. Section 22(a) And Luther Do Not Bar Removal Under CAFA

23 Section 22(a) provides for concurrent jurisdiction in state and federal courts over alleged
24 violations of the Securities Act. See 15 U.S.C. § 77v(a). It further provides, “Except as provided
25 in section 77p(c) of this title, no case arising under [the Securities Act] and brought in any State
26 4
Plaintiff also seeks a constructive trust over the proceeds of Defendants’ alleged sales of XRP,
27 which can be considered when determining whether the amount in controversy exceeds $5 million.
(Compl. ¶ VIII.6.); see Holt v. Noble House Hotels & Resort, Ltd., 2018 WL 539176, at *4 (S.D.
28 Cal. Jan. 23, 2018) (considering amount over which plaintiff was seeking a constructive trust and
disgorgement in assessing amount in controversy).
7
1 court of competent jurisdiction shall be removed to any court of the United States.” 15 U.S.C.
2 § 77v(a).
3 In Luther, the defendants removed pursuant to CAFA an action in which the plaintiff
4 asserted only Securities Act claims. Luther, 533 F.3d at 1033. In affirming the district court’s
5 order remanding the action, the court cited the removal limitation in Section 22(a) and held that a
6 class action brought in state court alleging only violations of the Securities Act was not removable
7 even if it otherwise met the requirements of CAFA. See id. at 1033, 1034. The court was not
8 asked to address, and did not address, a situation where, as here, independently removable state law
9 claims are joined with Securities Act claims. See id. All Luther considered was whether cases
10 alleging only Securities Act claims can be removed under CAFA.
11 Plaintiff responds to the key difference between this case and Luther by arguing that
12 Section 22(a) “explicitly bars removal of all cases arising under the Securities Act” and “not just
13 Securities Act claims.” (Mot. 5:6-10.) There is no authority to support Plaintiff’s overbroad
14 reading of Luther. The cases Plaintiff cites in support of his argument addressed only Securities
15 Act claims that the defendants sought to remove under SLUSA; they had nothing to do with
16 CAFA, and they did not involve independently removable state law claims. See Rajasekaran v.
17 CytRx Corp., 2014 WL 4330787, at *1 (C.D. Cal. Aug. 21, 2014) (Mot. 5:13-15); Cervantes v.
18 Dickerson, 2015 WL 6163573, at *1 (N.D. Cal. Oct. 21, 2015) (Mot. 5:19-22).5
19 In fact, Luther directly contradicts Plaintiff’s conclusion that the removal bar in Section
20 22(a) applies to state law claims. The basis for Luther’s holding that Section 22(a) bars removal
21 notwithstanding the later-enacted CAFA was the “principle of statutory construction that a statute
22 dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute
23 covering a more generalized spectrum.” Luther, 533 F.3d at 1034. The Luther court concluded
24 that Section 22(a) was “more specific” than CAFA because it “applies only to claims arising under
25 the Securities Act,” whereas CAFA “applies to a ‘generalized spectrum’” of class actions. Id.
26
5
27 Plaintiff cites no authority to support his contention that his California Corporations Code claims
arise under the Securities Act. (Mot. 5 n.1.) Plaintiff’s claims arise from the same alleged conduct,
28 but Plaintiff chose to assert separate claims under both state and federal law. (Compl. ¶¶ 131-159.)
As such, his claims arise under both state and federal law.
8
1 (emphasis added). Thus, Section 22(a) cannot be read to bar removal of the state law claims
2 without squarely contradicting the “narrow, precise, and specific” interpretation of Section 22(a) on
3 which Luther was premised. Id. Accordingly, Luther itself defeats any conclusion that Section
4 22(a) bars removal of state law claims or “trumps” CAFA even when removable state law claims
5 are asserted.
6 While Luther did not directly address the question of whether actions asserting both state
7 law claims and Securities Act claims were removable under CAFA, the presence of the state law
8 claims in this case is sufficient to justify removal. The general rule with respect to diversity
9 jurisdiction, of which CAFA is a species, is that the federal court’s jurisdiction over one claim
10 confers jurisdiction over the entire action. As the United States Supreme Court in Exxon Mobil,
11 545 U.S. at 559, explained:
12 When the well-pleaded complaint contains at least one claim that

satisfies the amount-in-controversy requirement, and there are no
13 other relevant jurisdictional defects, the district court, beyond all
question, has original jurisdiction over that claim. The presence of
14 other claims in the complaint, over which the district court may lack
original jurisdiction, is of no moment. If the court has original
15 jurisdiction over a single claim in the complaint, it has original
jurisdiction over a “civil action.”
16
Thus, absent an exception, if any claim in an action is removable, the entire action is removable.
17
This rule applies equally with respect to removals under CAFA involving both removable and non-
18
removable claims. See F5 Capital, 856 F.3d at 82 (concluding that class action was properly
19
removed under CAFA and that the federal court could exercise supplemental jurisdiction over state
20
law derivative claims that were otherwise not removable); Brown v. Mortg. Elec. Registration Sys.,
21
Inc., 738 F.3d 926, 933 (8th Cir. 2013) (affirming removal under CAFA and district court’s
22
exercise of supplemental jurisdiction over non-removable state law claims). As explained below,
23
the interplay between CAFA and other removal statutes, as well as the plain language of CAFA,
24
demonstrate that this general rule also applies to removal under CAFA of actions asserting both
25
removable state law and otherwise non-removable Securities Act claims.
26
1. Background Regarding Removal Of Actions That Joined Removable
27 And Non-Removable Claims Prior To CAFA
28 To fully understand CAFA’s scope, and the fundamental defect in Plaintiff’s reliance on
9
1 Luther, it is useful to review briefly the state of the law prior to CAFA. Prior to the enactment of
2 CAFA, whether an action asserting a non-removable federal claim, such as a Securities Act claim,
3 could nevertheless be removed because the federal court had diversity jurisdiction over a separate
4 state law claim depended on whether the general removal statute, 28 U.S.C. § 1441, allowed for
5 removal in such circumstance. There were two subsections of Section 1441 that could potentially
6 allow for removal: Section 1441(a) or Section 1441(c).
7 Section 1441(a) provides:

8 Except as otherwise expressly provided by Act of Congress, any civil
action brought in State court of which the district courts of the United
9 States have original jurisdiction, may be removed by the defendant or
the defendants, to the district court of the United States for the
10 district and divisions embracing the place where such action is
pending.
11
28 U.S.C. § 1441(a). Under Section 1441(a), if an action could have been filed in federal court
12
originally—such as an action over which the federal court has diversity jurisdiction—it can be
13
removed to federal court. See City of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 163 (1997)
14
(“The propriety of removal thus depends on whether the case originally could have been filed in
15
federal court.”).
16
However, prior to CAFA, courts concluded that Section 1441(a) did not authorize removal
17
of an action that included both state law claims and otherwise non-removable federal claims—such
18
as Securities Act claims or claims arising under the Federal Employers’ Liability Act or Jones Act,
19
28 U.S.C. § 1445(a), (b)—even if the federal court had original diversity jurisdiction. Courts
20
reasoned that the clause in Section 1441(a), “[e]xcept as otherwise expressly provided by Act of
21
Congress,” referred to anti-removal statutes such as Section 22(a) and created an exception to the
22
general rule that entire actions over which the federal court had original jurisdiction could be
23
removed. See U.S. Indus. v. Gregg, 348 F. Supp. 1004, 1015 (D. Del. 1972), rev’d on other
24
grounds, 540 F.2d 142 (3d Cir. 1976) (concluding that action over which court had diversity
25
jurisdiction asserting Securities Act claims was not removable under Section 1441(a)); Farmers &
26
Merchs. Bank v. Hamilton Hotel Partners of Jacksonville Ltd. P’ship, 702 F. Supp. 1417, 1419
27
(W.D. Ark. 1988) (same). Because Section 1441(a)’s right of removal was expressly made subject
28
to exceptions in other statutes, and Section 22(a) created such an exception to the right of removal
10
1 granted by Section 1441(a), Section 1441(a) did not permit removal of the action. See Gregg, 540
2 F. Supp. at 1015.
3 In contrast to how courts treated Section 1441(a), courts concluded that removal was
4 permissible under Section 1441(c). Section 1441(c) originally provided: “[w]henever a separate
5 and independent claim or cause of action, which would be removable if sued upon alone, is joined
6 with one or more otherwise nonremovable claims or causes of action, the entire case may be
7 removed.” Spalo v. Union Pac. R.R. Co., 2017 WL 2908775, at *1 (N.D. Ill. July 7, 2017)
8 (alteration in original) (citation omitted). Under Section 1441(c), so long as the state law claim
9 over which the federal court had diversity jurisdiction was “separate and independent” from the
10 non-removable Securities Act claim, the entire action, including the Securities Act claim, could be
11 removed. See Gregg, 348 F. Supp. at 1015-16; Farmers & Merchs. Bank, 702 F. Supp. at 1419-20.
12 Courts reasoned that, unlike Section 1441(a), Section 1441(c) did not contain the “[e]xcept
13 as otherwise expressly provided by Act of Congress” language. See Gregg, 348 F. Supp. at 1015-
14 16; see also Gonsalves v. Amoco Shipping Co., 733 F.2d 1020, 1022 (2d Cir. 1984) (noting lack of
15 exception language in Section 1441(c) and permitting removal when non-removable Jones Act
16 claim was joined with removable separate and independent claim). Thus, as one court explained:
17 Section 22(a) restricts the grant of general removal jurisdiction found

in Subsection (a). However, in a case where a separate and
18 independent claim, which would be removable if sued upon alone, is
joined with one or more otherwise nonremovable claims, whether
19 made non-removable by Section 22(a) or otherwise, Subsection (c) is
the governing provision and authorizes removal of the entire case.
20
Gregg, 348 F. Supp. at 1015-16; see also Emrich v. Touche Ross & Co., 846 F.2d 1190, 1197 (9th
21
Cir. 1988) (concluding that Securities Act claims were not removable under Section 1441(a) even
22
if joined with other federal claims, but that they could be removable under Section 1441(c)).
23
In 1990, Congress amended Section 1441(c) to eliminate “its application to cases within the
24
district court’s diversity jurisdiction” and instead permitted removal whenever “a separate and
25
independent claim or cause of action within [federal question jurisdiction] is joined with one or
26
more otherwise nonremovable causes of action.” Spalo, 2017 WL 2908775, at *1. The effect of
27
this amendment was that Section 1441(c) no longer authorized removal based on diversity
28
jurisdiction of an action that included both non-removable federal claims and state law claims. Id.
11
1 Section 1441(a) became the sole statutory authority for removal based on diversity jurisdiction.
2 Because, due to its “[e]xcept as otherwise expressly provided by Act of Congress” language,
3 Section 1441(a) did not permit removal of non-removable claims joined with removable claims,
4 diversity jurisdiction could no longer be invoked to remove actions with both removable and non-
5 removable claims. Id. at *2; see also WorldCom, Inc., 368 F.3d at 105 n.18 (explaining that
6 changes to Section 1441(c) meant that “the existence of a claim that meets the requirements for
7 diversity jurisdiction is no longer sufficient to implicate Section 1441(c)”).
8 2. Congress Enacted CAFA But Did Not Include The “Except As

Otherwise Expressly Provided By Act Of Congress” Language,
9 Distinguishing CAFA From The General Removal Statute
10 In 2005, Congress—aware of this history—enacted CAFA with the express intent to
11 expand diversity jurisdiction and removal based on diversity jurisdiction for certain types of class
12 actions. See Miss. ex rel. Hood v. AU Optronics Corp., 571 U.S. 161, 169 (2014) (“[W]e presume
13 that ‘Congress is aware of existing law when it passes legislation.’”) (citation omitted); see also
14 Allen v. Boeing, 784 F.3d 625, 633 (9th Cir. 2015) (remarking on “Congress’s overall intent to
15 strongly favor the exercise of federal diversity jurisdiction over class actions”). If Congress wished
16 to continue to ensure that diversity jurisdiction, even in its CAFA form, was not available to
17 remove actions joining removable and nonremovable claims, all it needed to provide in CAFA was,
18 “except as otherwise expressly provided by Act of Congress”—just like Section 1441(a). See New
19 Jersey Carpenters Vacation Fund v. HarborView Mortg. Loan Tr. 2006-4, 581 F. Supp. 2d 581,
20 587 (S.D.N.Y. 2008) (concluding that Securities Act claims are removable under CAFA and
21 noting, “[h]ad Congress wanted to treat CAFA like the general removal statute of § 1441(a) and
22 leave intact other statutory regimes, it could easily have done so”).
23 On the other hand, when enacting CAFA, Congress also knew how to provide for removal
24 of an entire action, even if the action included otherwise non-removable claims—by omitting the
25 “except as otherwise expressly provided by Act of Congress” language, which courts would view
26 as an indication that anti-removal statutes, such as Section 22(a), did not prevent removal. See
27 United States v. Providence J. Co., 485 U.S. 693, 704-05 (1988) (observing that when two statutes
28 included “[e]xcept as otherwise authorized by law,” but that “by way of vivid contrast,” the third
12
1 did not, the third statute provided for no exception) (citation omitted); see also WorldCom, 368
2 F.3d at 106 (holding that Securities Act claims were removable under 28 U.S.C. § 1452(a) as
3 “related to” bankruptcy proceedings because, unlike Section 1441(a), Section 1452(a) contained no
4 “[e]xcept as otherwise expressly provided by Act of Congress” language) (alteration in original)
5 (citation omitted); Cobalt Partners, LP v. Sunedison, Inc., 2016 WL 4488181, at *6 (N.D. Cal.
6 Aug. 26, 2016) (same).
7 Against this backdrop, Congress enacted CAFA without the “except as otherwise expressly
8 provided by Act of Congress” language. See 28 U.S.C. § 1453(b) (“A class action may be
9 removed to a district court of the United States in accordance with section 1446 . . . .”). Even with
10 respect to the three enumerated exceptions to CAFA removal expressly set forth in Section
11 1453(d), Congress applied the exceptions only if the class action involved “solely” the matters
12 within the enumerated exceptions, suggesting that even these expressly non-removable claims
13 would not prevent removal of an otherwise removable class action. See 28 U.S.C. § 1453(d); see
14 also Tuttle v. Sky Bell Asset Mgmt., LLC, 2011 WL 208060, at *5 (N.D. Cal. Jan. 21, 2011) (“‘If a
15 complaint contains a claim implicating one of CAFA’s exceptions, but also involves other non-
16 excepted claims, the case should remain in federal court.’”) (citation omitted). Thus, Congress
17 intended for entire class actions falling within the expanded grant of diversity jurisdiction,
18 including those with otherwise non-removable claims, to be removable.
19 This reasoning is confirmed by case law interpreting the interplay between Section 22(a)
20 and other removal statutes. For example, in WorldCom the court concluded that Securities Act
21 claims were removable, notwithstanding Section 22(a)’s removal bar, pursuant to “related to”
22 bankruptcy jurisdiction in 28 U.S.C. § 1452. WorldCom, 368 F.3d at 106. The court reasoned:
23 [W]hen an anti-removal provision such as Section 22(a) is invoked,

the threshold question is whether removal is being effectuated by
24 way of the general removal statute, 28 U.S.C. § 1441(a), or by way
of a separate removal provision that “grants additional removal
25 jurisdiction in a class of cases which would not otherwise be
removable under the prior grant of authority.” If removal is being
26 effectuated through a provision that confers additional removal
jurisdiction, and that provision contains no exception for
27 nonremovable federal claims, the provision should be given full
effect.
28
Id. at 107 (citation omitted); see also Pac. Life Ins. Co. v. J.P. Morgan Chase & Co., 2003 WL
13
1 22025158, at *2 (C.D. Cal. June 30, 2003) (“Section 22(a) proscribes removal based on federal
2 question jurisdiction under 28 U.S.C. section 1441(a), but does not prevent removal based on other
3 grounds.”). Likewise, in FDIC v. Countrywide Financial Corp., 2012 WL 12897152, at *1 (C.D.
4 Cal. Mar. 20, 2012) (Pfaelzer, J.), the same district judge who authored the decision affirmed by
5 Luther concluded that the grant of federal jurisdiction over actions to which the Federal Deposit
6 Insurance Corporation was a party made an action asserting Securities Act claims removable under
7 Section 1441(b), which at that time provided for removal based on claims arising under federal
8 law. The court reasoned that Section 1441(b) “trump[ed]” the removal bar in Section 22(a) because
9 Section 1441(b) did not then contain exception language like Section 1441(a). Id.
10 Indeed, if the limitations in Section 1441(a) or anti-removal statutes govern removal of
11 class actions under CAFA, Section 1453 would become superfluous. See Duncan v. Walker, 533
12 U.S. 167, 174 (2001) (noting rule of statutory interpretation against treating “statutory terms as
13 surplusage”) (citation omitted). Congress could have merely amended Section 1332 to expand the
14 definition of original diversity jurisdiction, see 28 U.S.C. § 1332(d), and allowed Section 1441(a)
15 to provide the sole authority for removal. That it did not do so demonstrates that Congress
16 intended the removal authority under Section 1453 to be broader than that under Section 1441(a).
17 See Passarella v. Ginn Co., 637 F. Supp. 2d 353, 355 (D.S.C. 2009) (concluding that CAFA
18 “trumped” removal bar in Interstate Land Sales Full Disclosure Act (“ILSA”); observing that, in
19 contrast to Section 1441(a), “[e]xcept as otherwise provided by Act of Congress” was not included
20 in Section 1453 and concluding that Section 1453 should not “be treated as dealing only with a
21 subset of removable actions spelled out in” Section 1441(a)).
22 Likewise, if, as Plaintiff contends, Section 22(a)’s removal bar trumps not only Section
23 1441(a) but also Section 1453, “the key words ‘[e]xcept as otherwise expressly provided by Act of
24 Congress’ in Section 1441(a) would be surplusage.” WorldCom, 368 F.3d at 106. In other words,
25 if the Court concludes that “a nonremoval provision such as Section 22(a) prevents removal under
26 both Section 1441(a) and Section [1453], notwithstanding the phrase “[e]xcept as otherwise
27 expressly provided by Act of Congress” in Section 1441(a), that phrase in the general removal
28 statute would serve no apparent purpose.” Id.
14
1 What is more, Section 1441(c) was amended again in 2012 to provide that, upon removal of
2 an action that includes both claims arising under federal law and nonremovable claims, the “district
3 court shall sever” all nonremovable claims and remand “the severed claims to the State court from
4 which the action was removed.” 28 U.S.C. § 1441(c)(2); see also Spalo, 2017 WL 2908775, at *1.
5 Because removal here is not premised on Section 1441(c), this severance procedure does not apply
6 here. However, it is noteworthy that Congress did not simultaneously amend Section 1453 to
7 include a similar procedure for non-removable claims joined with claims removable under CAFA.
8 That Congress chose to include a severance and remand procedure for non-removable claims
9 removed under Section 1441(c), but did not include the same language in Section 1453, signals that
10 Congress did not intend such a procedure to apply to Section 1453. See Russello v. United States,
11 464 U.S. 16, 23 (1983) (“[W]here Congress includes particular language in one section of a statute
12 but omits it in another section of the same Act, it is generally presumed that Congress acts
13 intentionally and purposely in the disparate inclusion or exclusion.”) (alteration in original)
14 (citation omitted).
15 C. Luther Requires Limitation Or Reconsideration

16 Luther is not binding on this Court because, in the instant case, Plaintiff asserts both
17 Securities Act and state law claims that are undeniably removable under CAFA, a fact pattern not
18 considered in Luther. However, even if the Court concludes that the holding in Luther applies,
19 Defendants respectfully submit that, in light of subsequent developments, Luther should be limited
20 to its facts and not expanded to bar the removal of actions asserting both Securities Act and state
21 law claims, or it should be reconsidered. Indeed, the author of the California district court opinion
22 affirmed by the Ninth Circuit in Luther, the Honorable Mariana Pfaelzer, observed in a later case,
23 “Defendants appear to have nonfrivolous arguments for a change in law due to post-Luther
24 developments.” Pub. Emps. Ret. Sys. of Miss. v. Morgan Stanley, 605 F. Supp. 2d 1073, 1075 n.1
25 (C.D. Cal. 2009). Such arguments are equally present with respect to this Action.
26 1. Luther Is Irreconcilable With Dart Cherokee

27 The Ninth Circuit has recognized that its own decisions are not binding on district courts if
28 their “reasoning or theory” is “clearly irreconcilable” with subsequently decided United States
15
1 Supreme Court authority. Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003). Such is the case
2 with Luther. In reaching its holding, Luther relied on the general rules that “removal statutes are
3 strictly construed against removal,” and “any doubt is resolved against removability.” Luther, 533
4 F.3d at 1034. However, in Dart Cherokee, 135 S. Ct. at 554, the Supreme Court concluded that
5 “no antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate
6 adjudication of certain class actions in federal court.” On the contrary, CAFA’s “provisions should
7 be read broadly, with a strong preference that interstate class actions should be heard in a federal
8 court if properly removed by any defendant.” Id. (citation omitted). Accordingly, Luther’s strict
9 construction against removal to resolve the perceived conflict between Section 22(a)’s removal bar
10 and CAFA cannot be squared with the Supreme Court’s express instructions in the more recently
11 decided Dart Cherokee “to interpret CAFA’s provisions under section 1332 broadly in favor of
12 removal.” Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178, 1184 (9th Cir. 2015) (reversing order
13 of district court, “[i]n light of the Supreme Court's clear statement in Dart Cherokee that Congress
14 intended for no antiremoval presumption to attend CAFA cases” and rejecting Luther’s strict
15 construction of CAFA against removal because it was inconsistent with Dart Cherokee).
16 Likewise, Luther’s interpretation of CAFA as a “general grant of the right of removal of

17 high-dollar class actions” that excludes nationwide class actions asserting claims under the
18 Securities Act, Luther, 533 F.3d at 1034, cannot be squared with Dart Cherokee’s characterization
19 of CAFA as a tool to ensure federal consideration of “interstate cases of national importance,” Dart
20 Cherokee, 135 S. Ct. at 554 (citation omitted). In fact, other courts have concluded that application
21 of CAFA to interstate securities class actions of national importance is essential to fulfill the
22 purposes of CAFA. See HarborView, 581 F. Supp. 2d at 587-88 (concluding that “CAFA
23 overrides the Securities Act’s anti-removal provision because this case involves exactly the type of
24 case CAFA was concerned about—a large, non-local securities class action dealing with a matter
25 of national importance, the mortgage-backed securities crisis that is currently wreaking havoc with
26 the national and international economy”). The ruling in Dart Cherokee thus “undercut[s] the
27 theory or reasoning underlying [Luther] in such a way that [Luther and Dart Cherokee] are clearly
28 irreconcilable.” Jordan, 781 F.3d at 1183 n.2 (citation omitted); see also 16 Moore’s Federal
16
1 Practice - Civil § 107.91[1][b] (2018) (observing that “[g]iven the Supreme Court’s assertion that
2 no antiremoval presumption applies to cases under CAFA,” the decision in Luther was likely
3 incorrect). On this basis alone, Luther should be limited and reconsidered.
4 2. Luther’s Conclusion That Section 22(a) Is More Specific Than CAFA

Has Been Rejected By Subsequent Appeals And District Court
5 Authority
6 The rationale for Luther’s conclusion that Section 22(a)’s removal bar trumps CAFA
7 removal of Securities Act claims is that the Securities Act, including Section 22(a)’s removal bar,
8 is a “more specific statute” than the later-enacted CAFA statute. Luther, 533 F.3d at 1034 (“Here,
9 the Securities Act of 1933 is the more specific statute; it applies to the narrow subject of securities
10 cases and § 22(a) more precisely applies only to claims arising under the Securities Act of 1933.
11 CAFA, on the other hand, applies to a ‘generalized spectrum’ of class actions.”) (citation omitted).
12 Subsequent court of appeals and district court cases, however, have determined that such reasoning
13 is flawed.
14 Shortly after the Ninth Circuit decided Luther, the Court of Appeals for the Seventh Circuit
15 considered the central legal question in Luther—the removability of Securities Act claims pursuant
16 to CAFA—and it concluded that such actions are removable. See Katz v. Gerardi, 552 F.3d 558
17 (7th Cir. 2009). In an opinion authored by Judge Easterbrook, the court began by noting that
18 “[u]sually the older law”—Section 22(a)—“yields to the newer”—CAFA. Id. at 561. Discussing
19 the reasoning in Luther, the court noted that the “[t]he canon favoring preservation of specific
20 statutes arguably affected by newer, but more general, statutes works when one statute is a subset
21 of the other.” Id. However, “§ 22(a) of the [Securities] Act is not a subset” of CAFA. Id. The
22 court reasoned:
23 Section 22(a) covers only securities actions, but it includes all

securities actions—single-investor suits as well as class actions,
24 small class actions as well as large multi-state ones. [CAFA], by
contrast, covers only large, multi-state class actions. Is the
25 [Securities] Act more specific because it deals only with securities
law, or is [CAFA] more specific because it deals only with
26 nationwide class actions? There is no answer to such a question,
which means that the canon favoring the specific law over the
27 general one won’t solve our problem.
28 Id. at 561-62. Like the Seventh Circuit, other courts have rejected the view that Section 22(a) is a
17
1 more specific statute. See, e.g., WorldCom, 368 F.3d at 101-02 (rejecting argument that Section
2 22(a) is more specific than Section 1452, which permits removal of actions related to bankruptcy
3 proceedings, concluding, “Section 22(a) does not cover only a subset of the universe of claims that
4 are ‘related to’ a bankruptcy case; rather it applies to numerous claims that are in no way ‘related
5 to’ a bankruptcy, just as Section 1452(a) applies to numerous claims that are not brought under the
6 [Securities] Act”); Passarella, 637 F. Supp. 2d at 354 (citing Katz and concluding that the “cannon
7 of statutory construction” on which Luther relied “is not particularly useful” in determining
8 whether CAFA or removal bar in ILSA is more specific); HarborView, 581 F. Supp. 2d at 586
9 (rejecting Luther’s conclusion that Section 22(a) was more specific than CAFA because both
10 statutes were “specific and narrowly-tailored”). As Professor Joseph M. McLaughlin observed in
11 his treatise on class actions, Luther “offered no reasons to support its assertion that the [Securities]
12 Act was [] more specific” than CAFA. 2 McLaughlin on Class Actions § 12:6 (14th ed. 2017).
13 Because Luther failed to demonstrate that the Securities Act was more specific than CAFA,
14 Luther failed to establish the predicate of the “basic principle of statutory construction that a statute
15 dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute
16 covering a more generalized spectrum.” Luther, 533 F.3d at 1034 (citation omitted). As such, the
17 reasoning underpinning Luther is flawed.
18 3. Luther Failed To Consider The Express Exceptions To CAFA Removal

19 Subsequent authorities have also recognized that Luther’s conclusion that Section 22(a)
20 provides an “express exception to removal” contradicts the plain language of CAFA. Luther, 533
21 F.3d at 1034. To begin with, as noted above, unlike Section 1441(a), which permits removal
22 “[e]xcept as otherwise expressly provided by Act of Congress,” 28 U.S.C. § 1441(a), CAFA’s
23 removal statute contains no such general exception, 28 U.S.C. § 1453. This alone demonstrates
24 that Congress did not intend Section 22(a) to provide an exception to CAFA removal—a point
25 Luther did not address. See HarborView, 581 F. Supp. 2d at 587 (“Had Congress wanted to treat
26 CAFA like the general removal statute of § 1441(a) and leave intact other statutory regimes, it
27 could have easily done so.”); Passarella, 637 F. Supp. 2d at 355 (observing that Section 1453 does
28 not include a “qualification on the ability to remove an action”).
18
1 Additionally, the express language of CAFA instructs how CAFA “applies to corporate and
2 securities actions.” Katz, 552 F.3d at 562. CAFA contains specific, enumerated exceptions to
3 removal jurisdiction that address certain securities class actions—none of which applies here—
4 actions “concerning a covered security,” those relating to the internal affairs of a corporation, or
5 those relating to the rights, duties, and obligations relating to or created by or pursuant to any
6 security. Id.; see also 28 U.S.C. § 1453(d)(1)-(3). “This [list of exceptions] tells us all we need to
7 know.” Katz, 552 F.3d at 562. Claims falling within the exceptions are not removable; “[o]ther
8 securities class actions are removable if they meet the requirements of” CAFA. Id. In other words,
9 the presence of these narrow, enumerated exceptions belies any assertion that other, unstated
10 exceptions also exist. See Blausey v. United States Tr., 552 F.3d 1124, 1133 (9th Cir. 2009) (“The
11 general rule of statutory construction is that the enumeration of specific exclusions from the
12 operation of a statute is an indication that the statute should apply to all cases not specifically
13 excluded.”). To read CAFA’s categorical right of removal as subject to an unstated, overarching
14 exception for actions that include claims arising under the Securities Act “would be to make most
15 of § 1453(d) pointless.” Katz, 552 F.3d at 562.
16 Other courts considering the interplay between CAFA and antiremoval statutes have
17 reached the same conclusion. See Passarella, 637 F. Supp. 2d at 355 (“CAFA is the more recently
18 enacted statute; it provides a right to removal for qualifying class actions; and it spells out three
19 exceptions to its grant of a right of removal. . . . [T]here is little guesswork in surmising that
20 Congress intends some substantial revisions when it grants a categorical right to removal and
21 provides for only limited, specific exceptions”); HarborView, 581 F. Supp. 2d at 587 (“CAFA’s
22 sole limitations are those exclusively listed in the defined exceptions . . .”). Post-Luther
23 developments have called into question the validity of its holding. Therefore, that holding should
24 be limited or reconsidered, and this nationwide class action should be removable under CAFA.
25 D. SLUSA Does Not Preclude Removal

26 Plaintiff’s Motion addresses none of the arguments above. Instead, Plaintiff’s argument
27 hinges entirely on the contention that, regardless of the plain language or intent of the later-enacted
28 CAFA and despite the existence of state law claims indisputably removable under CAFA, this
19
1 Action is not removable under CAFA because Section 22(a) allows removal only under SLUSA—
2 “as provided in section 77p(c).” (Mot. 5:4.) Section 77p(c) provides that “[a]ny covered class
3 action brought in State court involving a covered security, as set forth in subsection (b), shall be
4 removable to the Federal district court for the district in which the action is pending, and shall be
5 subject to subsection (b).” 15 U.S.C. § 77p(c). Subsection (b), in turn, provides for preemption
6 and dismissal of “class action[s] based upon the statutory or common law of any State” that assert
7 claims for false statements or deceptive devices in sales of securities. 15 U.S.C. § 77p(b). Section
8 77p(c) thus authorizes removal of state law class actions alleging fraud in connection with
9 “covered securities” “so that a federal court can dismiss them.” Cyan, 138 S. Ct. at 1069. Plaintiff
10 argues that Section 77p(c) provides the only exception to Section 22(a)’s removal bar, and because
11 removal is not proper pursuant to Section 77p(c), the Court must remand the action. (Mot. 6:3-19.)
12 Plaintiff is wrong.
13 Far from Section 77p(c) foreclosing removal under CAFA, the express purpose of CAFA—
14 enacted several years after SLUSA—is to permit removal of those nationwide class actions Section
15 77p(c) does not address. An action is removable under Section 77p(c) only if it involves a
16 “covered security”—that is, a security traded on a national exchange, 15 U.S.C. § 77p(f)(3)—while
17 CAFA provides an express exception to removal for cases solely involving “covered securities.”
18 28 U.S.C. § 1453(d)(1). Thus, “‘any case to which SLUSA applies, CAFA expressly excepts from
19 its gambit.’” Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 617 (7th Cir. 2012)
20 (concluding that removal was improper under Section 77p(c) but was proper under CAFA)
21 (citation omitted). CAFA, in turn, permits removal of nationwide securities class actions meeting
22 its requirements that were not already removable under Section 77p(c), such as those, like this
23 Action, involving alleged non-covered securities—purported securities not traded on a national
24 exchange. See Estate of Pew v. Cardarelli, 527 F.3d 25, 32 (2d Cir. 2008) (a “[r]eview of SLUSA
25 and CAFA confirms an overall design to assure that the federal courts are available for all
26 securities cases that have national impact”); HarborView, 581 F. Supp. 2d at 587 (same); Katz, 552
27 F.3d at 562 (holding that any action not falling within CAFA’s exceptions may be removed);
28 Tuttle, 2011 WL 208060, at *3 (concluding that action not involving “covered security” was not
20
1 removable under SLUSA, but that it was removable under CAFA).6
2 Courts have expressly rejected Plaintiff’s contention that Section 77p(c) is the “lone
3 exception” to Section 22(a). (Mot. 5:15.) In WorldCom, for example, the court considered
4 whether Section 22(a) and SLUSA precluded removal of Securities Act claims pursuant to “related
5 to” bankruptcy jurisdiction, 28 U.S.C. § 1452. WorldCom, 368 F.3d at 104-05. In concluding that
6 Section 22(a) and SLUSA did not prevent removal, the court reasoned that SLUSA, in providing a
7 right to remove state law fraud class actions based on covered securities, was meant to expand
8 federal jurisdiction. As such, “[i]t would be ironic to read SLUSA as implicitly contracting federal
9 jurisdiction.” Id. at 104. Other courts have reached similar conclusions. See Katz, 552 F.3d at 561
10 (rejecting argument that action was not removable because it was not a “covered class action”
11 under Section 77p(c)); Cobalt Partners, 2016 WL 4488181, at *6 (applying reasoning from
12 WorldCom and concluding that Securities Act claims were removable as related to bankruptcy
13 proceedings). Indeed, not even Luther went so far as to hold that Section 77p(c) (as opposed to the
14 more “specific” nature of Section 22(a)) precluded removal under CAFA. See Luther, 533 F.3d at
15 1033 n.1.
16 Accordingly, each of the cases Plaintiff cites on this score is inapposite. They conclude
17 only that Section 77p(c) does not itself provide removal authority for Securities Act claims.
18 Plaintiff’s cases do not address whether removal is permissible under another statute, such as
19 CAFA, the statute on which Defendants removed here. See Cyan, 138 S. Ct. at 1078 (holding that
20 removal of Securities Act claims is not permitted under Section 77p(c)); Order Granting Motion to
21 Remand, Baker v. Dynamic Ledger Sols., Inc., 17-cv-06850-RS, ECF No. 34, at 3 (N.D. Cal. Apr.
22 19, 2018) (concluding that Section 77p(c) does not authorize removal of Securities Act claims or
23 non-precluded state law claims; not considering removal under CAFA); Cervantes, 2015 WL
24 6163573, at *1 (concluding that Section 77p(c) does not authorize removal of Securities Act
25 claims); Rajasekaran, 2014 WL 4330787, at *1 (same); see also Kircher v. Putnam Funds Tr., 547
26 U.S. 633, 638 (2006) (considering SLUSA’s preclusion provision over state law claims involving
27 covered securities).
28 6
Plaintiff acknowledges that this Action does not involve “covered securities.” (Mot. 6:21.)
21
1 Finally, Plaintiff’s contention that Section 22(a) and SLUSA are meant to preserve for state
2 courts class actions that are “‘primarily of state concern,’” or that raise “no particular national
3 interest” proves Defendants’ point. (Mot. 6:20-25 (quoting Cyan, 138. S. Ct. at 1071).) If Section
4 22(a), as amended by SLUSA, is meant only to preserve state court jurisdiction over actions
5 “‘primarily of state concern,’” Cyan, 138 S. Ct. at 1071 (citation omitted), then there is no reason
6 to construe Section 22(a) to preclude removal under CAFA, a statute uniquely concerned with
7 providing a federal forum for “‘interstate cases of national importance.’” Standard Fire, 568 U.S.
8 at 595 (citation omitted); Estate of Pew, 527 F.3d at 32 (concluding that CAFA reflects “an overall
9 design to assure that the federal courts are available for all securities cases that have national
10 impact (including those that involve securities traded on national exchanges), without impairing the
11 ability of state courts to decide cases of chiefly local import or that concern traditional state
12 regulation of the state’s corporate creatures”). This is not a case that is “primarily of state
13 concern,” but is one of first impression on behalf of a nationwide class raising issues of national
14 importance concerning the manner in which virtual currencies may be regulated.
15 E. Plaintiff’s Policy Arguments Ignore The Overriding Policy Of CAFA

16 Plaintiff’s argument that CAFA removal would “undermine the very purpose of [the
17 Section 22(a)] removal bar” provides no reason to reject removal here. (Mot. 7:20.) All removal
18 statutes “undermine” a plaintiff’s choice of a state forum or the concurrent jurisdiction of state and
19 federal courts. (Mot. 7:25-8:6.) And the whole point of removal statutes is that there are instances
20 in which competing policies outweigh the policies underlying a removal bar. As one court aptly
21 explained it, Congress draws a line where it “intended the right granted a Securities Act claimant to
22 cease and the protection granted defendants to commence.” Gregg, 348 F. Supp. at 1015.
23 Here, Congress has expressed “a strong preference that interstate class actions should be
24 heard in a federal court if properly removed by any defendant.” Dart Cherokee, 135 S. Ct. at 554
25 (citation omitted). In contrast, there is an “absence of any legislative history explaining the
26 jurisdictional approach taken in the [Securities] Act.” Trevor M. Cutaiar, Comment, “Are
27 Securities Act of 1933 Claims Filed In State Court Removable Under The Class Action Fairness
28 Act of 2005? A Proposed Resolution To A Statutory Conflict,” 55 Loy. L. Rev. 559, 582 (2009).
22
1 CAFA’s policy thus overrides the unstated general considerations of Section 22(a).
2 IV. THE COURT SHOULD DENY PLAINTIFF’S REQUEST FOR ATTORNEY’S

FEES AND COSTS
3
Plaintiff’s contention that he is entitled to attorney’s fees and costs because “removal here
4
lacked a reasonable basis in light of the Ninth Circuit’s controlling holding in Luther” is wrong.
5
(Mot. 8:11-12.) Courts award attorney’s fees under 28 U.S.C. § 1447(c) “only where the removing
6
party lacked an objectively reasonable basis for seeking removal.” Jordan, 781 F.3d at 1184
7
(citation omitted). That standard has not been met here.
8
As demonstrated above, Defendants believe strongly that the analysis herein is correct and
9
warrants denial of Plaintiff’s Motion. Certainly Defendants have a reasonable basis for (i)
10
distinguishing Luther based on the existence of removable state law claims in the instant case—
11
which did not exist in Luther and which directly undermine the very rationale of Luther—and
12
which Plaintiff does not even attempt to argue are not removable under CAFA, (ii) arguing that
13
Luther has been abrogated by the decision of the Supreme Court in Dart Cherokee, and (iii)
14
arguing for a limitation or reconsideration of the decision in Luther in light of subsequent
15
developments, including the development of an inter-circuit split. Courts reject requests for fees
16
under such circumstances. See, e.g., Jordan, 781 F.3d at 1184 (reversing award of fees following
17
CAFA removal, when reasoning of the district court had been abrogated by Dart Cherokee).
18
Indeed, the author of the California district court opinion affirmed by the Ninth Circuit in Luther,
19
the Honorably Mariana Pfaelzer, observed in a later case that post-Luther developments raised
20
“difficult questions of statutory interpretation,” and that “Defendants appear to have non-frivolous
21
arguments for a change in law due to post-Luther developments” suggesting that even she believes
22
that Luther should be reconsidered. Morgan Stanley, 605 F. Supp. 2d at 1074, 1075 n.1.
23
V. CONCLUSION
24
Defendants removed this Action, alleging both state and federal Securities Act violations,
25
under CAFA. Plaintiff does not even attempt to argue (nor can he) that removal of his state law
26
claims under CAFA was deficient. Where one claim in an action is removable on diversity
27
grounds, here, Plaintiff’s state law claims, the entire action is removable. Thus, Defendants’
28
removal was entirely proper, neither Luther nor SLUSA demand a different result, and the Court
23
1 should deny Plaintiff’s Motion to Remand.
2 DATED: July 11, 2018

4
5 By: /s/Peter B. Morrison

Peter B. Morrison
6 Attorney for Defendant
Ripple Labs, Inc., XRP II, LLC, and Bradley Garlinghouse
7
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10
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Case 4:18-cv-03286-PJH Document 17-1 Filed 07/11/18 Page 1 of 36
1 PETER B. MORRISON (SBN 230148)

peter.morrison@skadden.com
2 VIRGINIA F. MILSTEAD (SBN 234578)
virginia.milstead@skadden.com
300 South Grand Avenue, Suite 3400
4 Los Angeles, California 90071
Telephone: (213) 687-5000
5 Facsimile: (213) 687-5600
6 JOHN NEUKOM (SBN 275887)

john.neukom@skadden.com
525 University Avenue, Suite 1400
8 Palo Alto, California 94301
Telephone: (650) 470-4500
9 Facsimile: (650) 470-4570
10 MARY JO WHITE (pro hac vice)
mjwhite@debevoise.com
11 ANDREW J. CERESNEY (pro hac vice)
aceresney@debevoise.com
12 DEBEVOISE & PLIMPTON LLP
919 Third Avenue
13 New York, New York 10022
Telephone: (212) 909-6000
14 Facsimile: (212) 909-6836
15 Attorney for Defendants

Ripple Labs Inc., XRP II, LLC, and Bradley
16 Garlinghouse
17 UNITED STATES DISTRICT COURT

18 FOR THE NORTHERN DISTRICT OF CALIFORNIA
19 )
) DECLARATION OF VIRGINIA F.
21 Plaintiff, ) MILSTEAD IN SUPPORT OF
) DEFENDANTS’ OPPOSITION TO
22 v. ) PLAINTIFF’S MOTION TO REMAND
)
23 RIPPLE LABS INC., et al., ) Date: August 1, 2018
) Time: 9:00 a.m.
24 Defendants. ) Courtroom: 3
25 )
)
26
27
28
DECLARATION OF VIRGINIA F. MILSTEAD CASE NO. 4:18-CV-03286-PJH

1 DECLARATION OF VIRGINIA F. MILSTEAD

2 1. I am an attorney admitted to practice before the courts of the State of California and
3 have been admitted to this Court. I am counsel in the law firm of Skadden, Arps, Slate, Meagher &
4 Flom LLP, which is counsel of record for Defendants Ripple Labs Inc. (“Ripple”), XRP II, LLC
5 (“XRP II”) and Bradley Garlinghouse (collectively, “Defendants”) in the above-captioned matter. I
6 submit this declaration in support of Defendants’ Opposition to Plaintiff’s Motion to Remand. This
7 declaration is based on my own personal knowledge, and if called upon to do so, I could and would
8 testify competently thereto.
9 2. Attached as Exhibit 1 is a true and correct copy of the “Learn About Ripple” page
10 available on Ripple’s website at https://ripple.com/company/.
11 3. Attached as Exhibit 2 is a true and correct copy of XRP II’s license to engage in Virtual
12 Currency Business Activity issued by the New York State Department of Financial Services, effective
13 June 13, 2016.
14 4. Attached as Exhibit 3 is a true and correct copy of the “XRP” page available on
15 Ripple’s website at https://ripple.com/xrp/.
16 5. Attached as Exhibit 4 is a true and correct copy of Attachment A: Statement of Facts

17 and Violations to the 2015 Settlement Agreement between Financial Crimes Enforcement Network
18 (“FINCEN”) and Ripple, available on FINCEN’s website at

19 https://www.fincen.gov/sites/default/files/shared/Ripple_Facts.pdf.
20 6. Attached as Exhibit 5 is a true and correct copy of the “XRP Buying Guide” page
21 available on Ripple’s website at https://ripple.com/xrp/buy-xrp/.
22 I declare under penalty of perjury under the laws of the State of California and the United
23 States of America that the foregoing is true and correct.
24 Executed on July 11, 2018 in Los Angeles, California.

25
By: /s/ Virginia F. Milstead
26 Virginia F. Milstead
27
28
DECLARATION OF VIRGINIA F. MILSTEAD CASE NO. 4:18-CV-03286-PJH

Exhibit 1
Company - Learn About Ripple | Ripple
Our Company
Enabling the world to move value like it moves information today
Contact Us
Overview
Ripple provides one frictionless experience to send money globally using the power of blockchain.
By joining Ripple’s growing, global network, financial institutions can process their customers’
payments anywhere in the world instantly, reliably and cost-effectively. Banks and payment providers
can use the digital asset XRP to further reduce their costs and access new markets.
With offices in San Francisco, New York, London, Sydney, India, Singapore and Luxembourg, Ripple
has more than 100 customers around the world.
Leadership
Ripple’s leaders bring together decades of experience in technology, financial services and
compliance.
https://ripple.com/company/[7/7/2018 12:54:19 AM]

Brad Marcus Treacher Antoinette David Schwartz

Garlinghouse SVP of Customer O’Gorman Chief Cryptographer
CEO Success Chief Compliance
Officer
Stefan Thomas Cory Johnson Asheesh Birla Ron Will

CTO Chief Market SVP of Product CFO
Strategist
See full leadership team
Investors
Investors include globally recognized venture capital firms and strategic investors.

Board of Directors
Ripple’s Board of Directors lend their deep experience in finance, policy and regulation in advising
Ripple.
See Board of Directors
Giving Back
Ripple is committed to connecting global communities through programs that support innovation
and education.
See our causes
Ripple is Hiring
Build the future of payments with us.
Join Our Team
Resources Regulators Support About
XRP Overview Compliance FAQ Our Company

How to Buy XRP Policy Framework Contact Us Careers
Insights Developer Center RippleNet Committee
Collateral Ripple Forum SBI Ripple Asia
Press Center Xpring

© 2013 - 2018 Ripple, All Rights Reserved.

Terms
Privacy
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

English 中文日本語 한국어

Exhibit 2
Exhibit 3
XRP | Ripple
xrp
The Digital Asset

for Payments
https://ripple.com/xrp/[7/7/2018 12:57:17 AM]

XRP | Ripple
Built for enterprise use, XRP offers banks and payment

providers a reliable, on-demand option to source
liquidity for cross-border payments.
XRP vs. Others
Use Cases
BANKS
Using XRP, banks can source liquidity on demand in real time

without having to pre-fund nostro accounts.

XRP | Ripple
PAYMENT PROVIDERS
Payment Providers use XRP to expand reach into new markets, lower foreign exchange costs and
provide faster payment settlement.
Benefits
Fast
Payments settle in 4 seconds.

XRP | Ripple
Scalable
XRP consistently handles 1,500 transactions per second, 24x7, and can scale to handle the
same throughput as Visa.*
*Source: 50,000 transactions per second, as of July 15, 2017
Distributed

XRP | Ripple
Open-source technology, built on the principles of blockchain with a growing
set of validators.
Stable
XRP's five-year track record of stable technology and governance makes it ready for institutional
and enterprise use.
stableEstablishedin 2012Dedicated team of world-class engineersNegligible energy

consumptionAll ledgers closedwithout issuesince inception29+ Million

XRP | Ripple
XRP Price and Volume
For more metrics, see XRP Market Performance.
XRP PRICE TODAY
USD
30-DAY XRP VOLUME

XRP | Ripple

XRP | Ripple
XRP News
Get the latest on XRP and the market.

XRP | Ripple
FEATURES
Democratizing Global Payments: xRapid’s Cost Savings and Benefits
VIEWS
Why Open Protocols Are the First Step in the Distributed Ledger Movement
NEWS
Ripple CEO at Money20/20 Europe: Blockchain Hype Outpaces Reality

RIPPLE NEWSLETTER
Get the latest in blockchain and banking delivered to your inbox.
XRP News Ripple Insights

XRP | Ripple
Learn More About XRP
For institutional XRP purchases or questions.
Contact Us

Press Center Xpring

Terms
Privacy




Exhibit 4
ATTACHMENT A: STATEMENT OF FACTS AND VIOLATIONS
I. INTRODUCTION AND BACKGROUND
1. Ripple Labs Inc. (“Ripple Labs”) is a corporation registered in Delaware and

headquartered in San Francisco, California. NewCoin, Inc. and OpenCoin, Inc.
(“OpenCoin”) are the predecessors of Ripple Labs.
2. Ripple Labs facilitated transfers of virtual currency and provided virtual currency
exchange transaction services.
3. The currency of the Ripple network, known as “XRP,” was pre-mined. In other
words, unlike some other virtual currencies, XRP was fully generated prior to its
distribution. As of 2015, XRP is the second-largest cryptocurrency by market
capitalization, after Bitcoin.
4. XRP Fund II, LLC, a wholly-owned subsidiary of Ripple Labs, was incorporated in
South Carolina on July 1, 2013. On July 2, 2014, XRP Fund II changed its name to
XRP II, LLC. During a portion of the relevant timeframe, the entity was named XRP
Fund II, LLC, but it will be referred to as XRP II throughout this document.
II. LEGAL FRAMEWORK
5. The U.S. Attorney’s Office for the Northern District of California (“U.S. Attorney’s
Office”) is a component of the Justice Department. The Financial Crimes
Enforcement Network (“FinCEN”) is a bureau within the Department of Treasury.
The Bank Secrecy Act and its implementing regulations require Money Services
Businesses (“MSBs”) to register with FinCEN by filing a Registration of Money
Services Business (“RMSB”), and renewing the registration every two years. See 31
U.S.C. § 5330; 31 C.F.R. § 1022.380. Operation of an MSB without the appropriate
registration also violates federal criminal law. See 18 U.S.C. § 1960(b)(1)(B). This
is a requirement separate and apart from state licensing requirements, if any, that may
be required by law.
6. On March 18, 2013, FinCEN released guidance clarifying the applicability of

regulations implementing the Bank Secrecy Act, and the requirement for certain
participants in the virtual currency arena to register as MSBs under federal law. See
FIN-2013-G0001, Application of FinCEN’s Regulations to Persons Administering,
Exchanging, or Using Virtual Currencies (Mar. 18, 2013) (the “Guidance”). Among
other things, the Guidance defines two categories of participants in the virtual
1
currency ecosystem: “exchangers” and “administrators.” The Guidance states that

exchangers and administrators of virtual currencies are money transmitters (a type of
MSB) under FinCEN’s regulations, and therefore are required to register with
FinCEN as money service businesses.
7. Specifically, the Guidance defines an exchanger as a person or entity “engaged as a

business in the exchange of virtual currency for real currency, funds, or other virtual
currency.” The Guidance also defines an administrator of virtual currency as a person
or entity “engaged as a business in issuing (putting into circulation) a virtual
currency, and who has the authority to redeem (to withdraw from circulation) such
virtual currency.”
8. Both exchangers and administrators are MSBs that must register with FinCEN unless
they fall within an exemption. And regardless of whether they have registered as
required, MSBs are subject to certain additional requirements under the Bank Secrecy
Act and its implementing regulations.
9. The Bank Secrecy Act and its implementing regulations require MSBs to develop,
implement, and maintain an effective written anti-money laundering (“AML”)
program that is reasonably designed to prevent the MSB from being used to facilitate
money laundering and the financing of terrorist activities. See 31 U.S.C. §§
5318(a)(2) and 5318(h); 31 C.F.R. § 1022.210.
10. Under the Bank Secrecy Act, an MSB is required to implement an AML program
that, at a minimum: (a) incorporates policies, procedures and internal controls
reasonably designed to assure ongoing compliance; (b) designates an individual
responsible for assuring day to day compliance with the program and Bank Secrecy
Act requirements; (c) provides training for appropriate personnel including training in
the detection of suspicious transactions; and (d) provides for independent review to
monitor and maintain an adequate program. 31 C.F.R. §§ 1022.210(d).
11. Further, an MSB must report transactions that the MSB “knows, suspects, or has
reason to suspect” are suspicious, if the transaction is conducted or attempted by, at,
or through the MSB, and the transaction involves or aggregates to at least $2,000.00
in funds or other assets. 31 C.F.R. § 1022.320(a)(2). A transaction is “suspicious” if
the transaction: (a) involves funds derived from illegal activity; (b) is intended or
conducted in order to hide or disguise funds or assets derived from illegal activity, or
to disguise the ownership, nature, source, location, or control of funds or assets
derived from illegal activity; (c) is designed, whether through structuring or other
means, to evade any requirement in the Bank Secrecy Act or its implementing
regulations; (d) serves no business or apparent lawful purpose, and the MSB knows of
2
no reasonable explanation for the transaction after examining the available facts,
including the background and possible purpose of the transaction; or (e) involves use
of the MSB to facilitate criminal activity. Id.
12. As part of their risk assessment and risk mitigation plans, MSBs are required to
implement Know-Your-Customer/Know-Your-Counterparty procedures. Such
procedures allow the MSB to assess the risk involved in providing account-based or
transactional services to customers based on their identity and profile, and to comply
with their AML Program requirements regarding foreign agents or foreign
counterparties. See FinCEN Interpretive Release 2004-1, Anti-Money Laundering
Program Requirements for Money Service Businesses With Respect to Foreign
Agents or Foreign Counterparties, 69 Fed. Reg. 74,439 (Dec. 14, 2004).
13. Financial institutions, including MSBs, are also subject to the Funds Transfer Rule,
31 C.F.R. § 1010.410(e), which provides that (subject to certain exceptions) for
individual transactions of $3,000.00 or above, the transmitting financial institution
must obtain, verify, and keep key information (set forth in the regulation) from the
transmitting party (the transmittor). If acting as an intermediary financial institution,
it must obtain and keep key information (the transmittal order received) from the
transmittor’s financial institution. And, if acting as the financial institution for the
recipient of the funds, the financial institution must obtain, verify, and keep key
information (also set forth in the regulation) from the recipient. The same financial
institution may be acting as both transmittor’s and recipient’s financial institution.
14. Similarly, financial institutions, including MSBs, are subject to the Funds Travel
Rule, 31 C.F.R. § 1010.410(f), which provides that (subject to certain exceptions) for
individual transactions of $3,000.00 or more, the transmittor’s financial institution
must pass on key information from the transmittor and the transaction to any
intermediary financial institution; if acting as the intermediary financial institution, it
must pass on this information to the recipient’s financial institution. And, if acting as
the recipient’s financial institution, it must receive, evaluate, and store this
information received from the intermediary or the transmittor’s financial institution.
15. The FinCEN registration requirement and other requirements of the Bank Secrecy
Act are independent obligations. An MSB’s failure to register with FinCEN does not
relieve an MSB of its obligations under the Bank Secrecy Act and implementing
regulations. Nor does an MSB’s registration with FinCEN mean that the MSB has
fulfilled all of its requirements under the Bank Secrecy Act and regulations. In other
words, an MSB might have complied with the Bank Secrecy Act and implementing
regulations, but failed to register as an MSB with FinCEN. Likewise, an entity might
3
have registered as an MSB with FinCEN, but not have complied with the Bank
Secrecy Act and implementing regulations.
III. VIOLATIONS
A. Ripple Labs’s Operation as a Money Services Business in March-April 2013
16. Ripple Labs has previously described itself in federal court filings and in a sworn
affidavit as “a currency exchange service providing on-line, real-time currency
trading and cash management . . . . Ripple facilitates the transfers of electronic cash
equivalents and provides virtual currency exchange transaction services for
transferrable electronic cash equivalent units having a specified cash value.” See
Ripple Labs, Inc. v. Lacore Enterprises, LLC, Motion for Preliminary Injunction, 13-
cv-5974-RS/KAW (N.D. Cal. 2013) (emphasis added).
17. From at least March 6, 2013, through April 29, 2013, Ripple Labs sold convertible
virtual currency known as “XRP.”
18. Ripple Labs was not registered with FinCEN as an MSB while engaging in these
sales.
19. As described in Paragraphs 6 and 7 above, on March 18, 2013, FinCEN released
guidance that clarified the applicability of existing regulations to virtual currency
exchangers and administrators. Among other things, this Guidance expressly noted
that such exchangers and administrators constituted “money transmitters” under the
regulations, and therefore must register as MSBs.
20. Notwithstanding the Guidance, and after that Guidance was issued, Ripple Labs
continued to engage in transactions whereby it sold Ripple currency (XRP) for fiat
currency (i.e., currency declared by a government to be legal tender) even though it
was not registered with FinCEN as an MSB. Throughout the month of April 2013,
Ripple Labs effectuated multiple sales of XRP currency totaling over approximately
$1.3 million U.S. dollars.
21. During the time frame that it was engaged in these sales and operated as a money
transmitter, Ripple Labs failed to establish and maintain an appropriate anti-money
laundering program. Ripple failed to have adequate policies, procedures, and internal
controls to ensure compliance with the Bank Secrecy Act and its implementing
regulations. Moreover, Ripple Labs failed to designate a compliance officer to assure
compliance with the Bank Secrecy Act, had no anti-money laundering training in
place, and failed to have any independent review of its practices and procedures.
4
B. XRP II’s Program and Reporting Violations
22. On July 1, 2013, Ripple Labs incorporated a subsidiary, XRP Fund II, LLC (“XRP
Fund II”), now known as XRP II, LLC, in South Carolina. XRP II was created to
engage in the sale and transfer of the convertible virtual currency, XRP, to various
third parties on a wholesale basis. XRP II sold XRP currency in exchange for fiat
currency in much the same way that Ripple Labs had previously done from March
through April 2013. In other words, XRP II replaced Ripple Labs as a seller of XRP.
23. By on or about August 4, 2013, XRP II was engaged in the sale of XRP currency to
third-party entities.
24. On September 4, 2013, XRP II registered with FinCEN as an MSB.
25. As of the date XRP II engaged in sales of virtual currency to third parties in exchange
for value, XRP II became subject to certain requirements under the Bank Secrecy Act
and its implementing regulations, as described in Paragraphs 5 through 15 above.
XRP II was required to have an effective written AML program, to implement that
program, and to have an anti-money laundering compliance officer.
26. Notwithstanding these requirements, despite engaging in numerous sales of virtual

currency to third parties, XRP II failed to have an effective, written AML program.
For example:
a) It was not until September 26, 2013, that XRP II developed a written AML
program. Prior to that time, XRP II had no written AML program;
b) It was not until late January 2014 that XRP II hired an AML compliance officer,
some six months after it began to engage in sales of virtual currency to third
parties;
c) XRP II had inadequate internal controls reasonably designed to ensure

compliance with the Bank Secrecy Act;
d) XRP II failed to conduct an AML risk assessment until March 2014;
e) XRP II did not conduct training on its AML program until nearly a year after
beginning to engage in sales of virtual currency, by which time Ripple Labs was
aware of a federal criminal investigation; and
5
f) XRP II did not conduct an independent review of its AML program until nearly a
year after it began to engage in sales of virtual currency, by which time Ripple
Labs was aware of a federal criminal investigation.
27. Further, from the date XRP II began engaging in sales of virtual currency to third
parties, XRP II was required to report transactions that it knew, suspected, or had
reason to suspect were suspicious and where the transactions or attempted
transactions involved or aggregated to at least $2,000.00 in funds or other assets. See
31 C.F.R. § 1022.320(a)(2).
28. In addition to XRP II’s lack of an effective AML program, XRP II also engaged in a
series of transactions for which it either failed to file, or untimely filed, suspicious
activity reports. For example:
a) On September 30, 2013, XRP II negotiated an approximately $250,000.00

transaction by email for a sale of XRP virtual currency with a third-party
individual. XRP II provided that individual with a “know your customer”
(“KYC”) form and asked that it be returned along with appropriate identification
in order to move forward with the transaction. The individual replied that another
source would provide the XRP virtual currency and did not “require anywhere
near as much paperwork” and essentially threatened to go elsewhere. Within
hours, XRP II agreed by email to dispense with its KYC requirement and move
forward with the transaction. Open source information indicates that this
individual, an investor in Ripple Labs, has a prior three-count federal felony
conviction for dealing in, mailing, and storing explosive devices and had been
sentenced to prison, see United States v. Roger Ver, CR 1-20127-JF (N.D. Cal.
2002);
b) In November 2013, XRP II rejected an approximately $32,000.00 transaction

because it doubted the legitimacy of the overseas customer’s source of funds.
XRP II failed to file a suspicious activity report for this transaction; and
c) In January 2014, a Malaysian-based customer sought to purchase XRP from XRP

II, indicating that he wanted to use a personal bank account for a business
purpose. Because of these concerns, XRP II declined the transaction but again
failed to file a suspicious activity report for the transaction.
6
Exhibit 5
XRP Buying Guide | Ripple
XRP Buying Guide

Individual Purchases
XRP is available at the following exchanges:
XRP/USD, EUR, BTC XRP/BTC, EUR, USD
How to Buy XRP on Bitstamp How to Buy XRP on Kraken
https://ripple.com/xrp/buy-xrp/[7/7/2018 12:48:45 AM]

Visit Bitstamp Visit Kraken
XRP/KRW, BTC XRP/MXN, BTC

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XRP/JPY, BTC XRP/KRW

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Visit Qryptos Visit Bitbank
XRP/USD, EUR, BTC XRP/AUD, BTC

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XRP/EUR XRP/THB
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XRP/USD, JPY, CNY, EUR, BTC, ETH XRP/BTC

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8 UNITED STATES DISTRICT COURT

9 NORTHERN DISTRICT OF CALIFORNIA
10 )
) [PROPOSED] ORDER DENYING
12 Plaintiff, ) PLAINTIFF’S MOTION TO REMAND
)
13 v. ) Date: August 1, 2018
) Time: 9:00 a.m.
14 RIPPLE LABS INC., et al., ) Courtroom: 3
15 Defendants. )
)
16 )
)
17 )
)
18 )
)
19 )
)
20 )
)
21
22
23
24
25
26
27
28
[PROPOSED] ORDER DENYING PLAINTIFF’S MOTION TO REMAND

CASE NO.: 4:18-cv-03286-PJH
1 The Court, having considered the Plaintiff’s Motion to Remand (“Motion”), the
2 Defendants’ Memorandum of Points and Authorities in Opposition to Plaintiff’s Motion,
3 declarations and exhibits, as well as the files in the case and any oral argument presented, and for
4 good cause shown therein, it is hereby ORDERED as follows:
5 The Motion is DENIED on the grounds that the above-captioned matter was properly
6 removed under the Class Action Fairness Act, 28 U.S.C. §§ 1332(d), 1453 (“CAFA”). Plaintiff’s
7 request for attorney’s fees and costs is DENIED.
8 Under CAFA, a putative class action may be removed to the appropriate federal district
9 court if (1) the action purports to be a “class” action brought on behalf of 100 or more members;
10 (2) any member of a class of plaintiffs is a citizen of a state different from any defendant; and (3)
11 the amount in controversy exceeds $5 million. See 28 U.S.C. §§ 1332(d), 1453. Plaintiff concedes
12 that this action meets these requirements. First, Plaintiff purports to assert claims on behalf of a
13 nationwide class consisting of “thousands of class members.” (Compl. ¶ 124.) Second, there is
14 minimal diversity of citizenship as Defendants are citizens of California (Compl. ¶¶ 11-13), and the
15 proposed class, which includes no geographical limitation, consists of persons throughout the
16 United States and the world. (Compl. ¶ 122.) Third, as Plaintiff seeks rescission of sales of XRP,
17 which he alleges were “over $342.8 million” in 2017 (Compl. ¶ 26), the amount in controversy
18 requirement is met. Finally, none of the exceptions that preclude CAFA removal apply, nor has
19 Plaintiff alleged that they do. See 28 U.S.C. § 1453(d)(1)-(3).
20 The Ninth Circuit’s decision in Luther v. Countrywide Home Loans Servicing LP, 533 F.3d
21 1031 (9th Cir. 2008), does not bar removal here. In Luther, the defendants removed an action
22 asserting only claims under the Securities Act of 1933 (“Securities Act”) pursuant to CAFA.
23 Luther, 533 F.3d at 1033. In affirming the district court’s order remanding the action, the court
24 cited the removal limitation in Section 22(a) of the Securities Act, 15 U.S.C. § 77v(a), and held that
25 a class action brought in state court alleging only violations of the Securities Act was not
26 removable even if it otherwise met the requirements of CAFA. See id. 1033, 1034. The court was
27 not asked to address, and did not address, a situation where independently removable state law
28 claims are joined with Securities Act claims. See id. All Luther considered was whether cases
1
1 alleging only federal Securities Act claims can be removed under CAFA.
2 Here, in addition to claims under the Securities Act, Plaintiff asserts state law claims under
3 the California Corporations Code. These state law claims are plainly removable under CAFA, and
4 Plaintiff does not dispute that his state law claims independently satisfy the requirements of CAFA.
5 Thus, Luther did not address and does not control the circumstances presented here. Instead, the
6 general rule that if one claim in an action is removable on diversity grounds (of which CAFA is a
7 species), the entire action is removable, controls. See, e.g., Exxon Mobil Corp. v. Allapattah
8 Servs., Inc., 545 U.S. 546, 559 (2005).
9 There is no exception to this general rule for circumstances in which a non-removable

10 federal claim is asserted alongside removable state law claims. Under the general removal statute,
11 28 U.S.C. § 1441(a)—on which Defendants do not rely for removal here—removal is not permitted
12 if non-removable claims are joined with removable claims. This is because Section 1441(a)
13 authorizes removal when federal courts have “original jurisdiction” “[e]xcept as otherwise
14 expressly provided by Act of Congress.” 28 U.S.C. § 1441(a). Courts have concluded that this
15 exception language—“[e]xcept as otherwise expressly provided by Act of Congress”—refers to
16 anti-removal statutes such as Section 22(a) and prevents removal of an action when such claims are
17 asserted. See U.S. Indus., Inc. v. Gregg, 348 F. Supp. 1004, 1015 (D. Del. 1972), rev’d on other
18 grounds, 540 F.2d 142 (3d Cir. 1976).
19 However, Section 1453—the CAFA removal statute, the statute on which Defendants do
20 rely for removal—does not include the “[e]xcept as otherwise expressly provided by Act of
21 Congress” language. See 28 U.S.C. § 1453. The omission of this language means that, unlike with
22 Section 1441(a), Congress did not intend for non-removable claims to block the removal of
23 otherwise removable actions. See Cal. Pub. Emps.’ Ret. Sys. v. WorldCom, Inc., 368 F.3d 86, 106
24 (2d Cir. 2004) (allowing removal of Securities Act claim under 28 U.S.C. § 1452 because that
25 section does not include the exception language); FDIC v. Countrywide Fin. Corp., 2012 WL
26 12897152, at *1 (C.D. Cal. Mar. 20, 2012) (concluding that grant of federal jurisdiction over
27 claims involving FDIC made action removable under Section 1441(b), which at that time provided
28 for removal based on claims arising under federal law, and “trump[ed]” the removal bar in Section
2
1 22(a) because Section 1441(b) did not then contain exception language like Section 1441(a)).
2 Accordingly, the entire action here is removable.
3 Moreover, the decision in Luther should be limited to its facts or reconsidered. First, it has
4 been abrogated by the United States Supreme Court decision in Dart Cherokee Basin Operating
5 Co. v. Owens, 135 S. Ct. 547 (2014), a case decided six years after Luther. In reaching its
6 decision, the Ninth Circuit in Luther relied on the general rule that “removal statutes are strictly
7 construed against removal” and “any doubt is resolved against removability.” Luther, 533 F.3d at
8 1034. However, in Dart Cherokee, the Supreme Court concluded that “no antiremoval
9 presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of
10 certain class actions in federal court.” Dart Cherokee, 135 S. Ct. at 554. On the contrary, CAFA’s
11 “provisions should be read broadly, with a strong preference that interstate class actions should be
12 heard in a federal court if properly removed by any defendant.” Id. Luther is thus “clearly
13 irreconcilable” with Dart Cherokee and not binding. See Jordan v. Nationstar Mortg. LLC, 781
14 F.3d 1178, 1184 (9th Cir. 2015) (reversing order of district court, “[i]n light of the Supreme Court's
15 clear statement in Dart Cherokee that Congress intended for no antiremoval presumption to attend
16 CAFA cases” and rejecting Luther’s strict construction of CAFA against removal because it was
17 inconsistent with Dart Cherokee).
18 Second, other courts have expressly disagreed with the holding in Luther. See Katz v.
19 Gerardi, 552 F.3d 558 (7th Cir. 2009); New Jersey Carpenters Vacation Fund v. HarborView
20 Mortg. Loan Tr. 2006-4, 581 F. Supp. 2d 581, 587 (S.D.N.Y. 2008). The reasoning of these courts
21 is persuasive and counsels against expanding Luther to bar removal of actions that include
22 removable state law claims.
23 In addition, contrary to Plaintiff’s argument, Section 77p(c) of the Securities Act, enacted
24 as part of the Securities Litigation Uniform Standards Act (“SLUSA”), does not provide the sole
25 exception to the removal bar in Section 22(a), to the exclusion of removal under the later-enacted
26 CAFA. Instead, CAFA was enacted to provide for removal of nationwide class actions in situations
27 where Section 77p(c) did not. See Estate of Pew v. Cardarelli, 527 F.3d 25, 32 (2d Cir. 2008) (a
28 “[r]eview of SLUSA and CAFA confirms an overall design to assure that the federal courts are
3
1 available for all securities cases that have national impact”).
2 Courts have expressly rejected Plaintiff’s contention that Section 77p(c) is the “lone
3 exception” to Section 22(a). (Mot. 5:15.) In California Public Employees’ Retirement System v.
4 WorldCom, Inc., 368 F.3d 86, 104-05 (2d Cir. 2004), for example, the court considered whether
5 Section 22(a) and SLUSA precluded removal of Securities Act claims pursuant to “related to”
6 bankruptcy jurisdiction, 28 U.S.C. § 1452. In concluding that Section 22(a) and SLUSA did not
7 prevent removal, the court reasoned that SLUSA, in providing a right to remove state law fraud
8 class actions based on covered securities, was meant to expand federal jurisdiction. As such, “[i]t
9 would be ironic to read SLUSA as implicitly contracting federal jurisdiction.” Id. at 104. Other
10 courts have reached similar conclusions. See Katz, 552 F.3d at 561 (rejecting argument that action
11 was not removable because it was not a “covered class action” under Section 77p(c)). The cases
12 Plaintiff cites in support of his argument, including Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 138
13 S. Ct. 1061 (2018), all addressed whether Securities Act claims were removable under Section
14 77p(c); they did not address whether actions asserting Securities Act and state law claims were
15 removable under CAFA. Therefore, Plaintiff’s cases are inapposite.
16 IT IS SO ORDERED.
17 DATED: ________________, 2018
18
Hon. Phyllis J. Hamilton
19 United States District Judge
Northern District of California
20
21
22 Respectfully submitted by:
24
By: s/ Peter B. Morrison
25 Peter B. Morrison
Attorneys for Defendants
26 Ripple Labs Inc., XRP II, LLC, and Bradley Garlinghouse
27
28
4

Coffey V Ripple, Opposition To Remand, 7/11/2018

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Case 4:18-cv-03286-PJH Document 17 Filed 07/11/18 Page 1 of 30

1 PETER B. MORRISON (SBN 230148)

6 JOHN NEUKOM (SBN 275887)

15 Attorney for Defendants

OPPOSITION TO PLAINTIFF’S MOTION TO REMAND CASE NO. 4:18-CV-03286-PJH

3 ISSUES TO BE DECIDED ................................................................................................................ 1

4 MEMORANDUM OF POINTS AND AUTHORITIES .................................................................... 1

5 I. PRELIMINARY STATEMENT ................................................................................ 1

6 II. FACTUAL BACKGROUND ..................................................................................... 4

8 A. Removal Is Proper Under CAFA .................................................................... 6

10 1. Background Regarding Removal Of Actions That Joined

14 C. Luther Requires Limitation Or Reconsideration........................................... 15

15 1. Luther Is Irreconcilable With Dart Cherokee ................................... 15

16 2. Luther’s Conclusion That Section 22(a) Is More Specific

18 3. Luther Failed To Consider The Express Exceptions To CAFA

6 Blausey v. United States Trust,

9 Brown v. Mortgage Electronic Registration Systems, Inc.,

14 City of Chicago v. International College of Surgeons,

19 Cyan, Inc. v. Beaver County Employees Retirement Fund,

25 Estate of Pew v. Cardarelli,

1 Russello v. United States,

1 28 U.S.C. § 1453(d)(3) ................................................................................................................. 7, 19

3 16 Moore’s Federal Practice – Civil § 107.9[1][b] (2018) ............................................................... 16

4 2 McLaughlin on Class Actions § 12:6 (14th ed. 2017) ................................................................... 18

3 to Remand (“Motion” or “Mot.”) (ECF No. 16).

11 3. Whether Plaintiff’s Motion should be denied because the decision in Luther v.

17 appeals and district court authority?

18 MEMORANDUM OF POINTS AND AUTHORITIES

21 currency—XRP—to “larger investors” and on alleged “cryptocurrency exchanges” throughout the

7 national importance’”) (citation omitted).

14 controversy, easily satisfies CAFA’s requirements. See infra Part III.A.

5 neither its reasoning nor its holding forecloses removal here.

14 15 U.S.C. § 77p(c) (hereinafter, “Section 77p(c)” or “SLUSA”)—forecloses removal. According

8 Motion in its entirety.

9 II. FACTUAL BACKGROUND

24 Trading Commission, described it:

25 The “blockchain” serves as a digital signature to verify the exchange.

1 to trust.” Some experts believe blockchain technology underlying

9 currency subject to Bank Secrecy Act regulations. (Ex. 4 ¶ 17.)

16 exchanges,” as of June 30, 2015. (Compl. ¶ 24.)

17 On January 5, 2018, Plaintiff allegedly purchased 650 XRP on a “cryptocurrency

22 California authorities but failed to do so. (Compl. ¶¶ 135, 142.)

4 III. REMOVAL IS PROPER UNDER THE CLASS ACTION FAIRNESS ACT

5 Amount in Controversy. Third, this Action meets CAFA’s amount-in-controversy

21 nevertheless preclude removal fails. (Mot. 4:8-12.)

22 B. Section 22(a) And Luther Do Not Bar Removal Under CAFA

11 545 U.S. at 559, explained:

12 When the well-pleaded complaint contains at least one claim that

6 allow for removal: Section 1441(a) or Section 1441(c).

7 Section 1441(a) provides:

17 Section 22(a) restricts the grant of general removal jurisdiction found

7 diversity jurisdiction is no longer sufficient to implicate Section 1441(c)”).

8 2. Congress Enacted CAFA But Did Not Include The “Except As

4 “[e]xcept as otherwise expressly provided by Act of Congress” language) (alteration in original)

6 Aug. 26, 2016) (same).

18 including those with otherwise non-removable claims, to be removable.

23 [W]hen an anti-removal provision such as Section 22(a) is invoked,

3 grounds.”). Likewise, in FDIC v. Countrywide Financial Corp., 2012 WL 12897152, at *1 (C.D.

21 subset of removable actions spelled out in” Section 1441(a)).

28 statute would serve no apparent purpose.” Id.

13 intentionally and purposely in the disparate inclusion or exclusion.”) (alteration in original)

15 C. Luther Requires Limitation Or Reconsideration

26 1. Luther Is Irreconcilable With Dart Cherokee

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