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Access USA, LLC v. State

United States District Court, W.D. Washington, Seattle

October 23, 2014

ACCESS THE USA, LLC et al., Plaintiff,
v.
STATE of WASHINGTON, et al., Defendant.

ORDER GRANTING UNDERWRITER DEFENDANTS' MOTION TO DISMISS IN PART

JOHN C. COUGHENOUR, District Judge.

This matter comes before the Court on Underwriter Defendants' motion to dismiss (Dkt. No. 19). After reviewing the pleadings, the Court finds the Plaintiffs can prove no set of facts warranting relief under 42 U.S.C. § 1981, and therefore dismisses this claim with prejudice. Fed. R. Civ. P 12(b)(6). Dismissing Plaintiffs' 42 U.S.C. § 1981 claim eliminates the only cause of action over which this Court had original jurisdiction. The Court declines to exercise supplemental jurisdiction over Plaintiffs' remaining state claims. 28 U.S.C. § 1367(c)(3).

Having thoroughly considered the parties' briefing, the Court hereby GRANTS the motion in part and REMANDS the remaining claims to state court.

I. BACKGROUND

Plaintiffs are three Washington business entities: Access the USA, LLC, 520 Bridge Replacement Fund II, LP, and Premier 520 Bridge Replacement Fund II, LP (collectively "AUSA"). The AUSA entities seek relief after being denied participation in a bond offering. Dkt. No. 1, Attachment 1. Plaintiffs allege that state government entities-the State of Washington, the Office of the Treasurer, and state employees John Doe 1-5 (collectively "State Defendants")-along with the bond underwriters (Citigroup Global Markets, J.P. Morgan Securities, and Merrill Lynch; collectively "Underwriter Defendants") blocked AUSA's participation in the bond because AUSA's investors are Chinese. Id. at 9-10. Plaintiffs' investors are foreign nationals by design: Access the USA, LLC is a program through which non-citizens invest in job-creating programs in the United States in exchange for the opportunity to immigrate and establish residency. Id. at 4-5.

In their complaint, Plaintiffs allege that they diligently prepared an application to invest $143 million in a bond called GARVEE 2012F. Dkt. No. 1, Attachment 1, p. 5-7. Plaintiffs argue that Defendants' misrepresentations and omissions, stemming from animus towards AUSA's Chinese investors, prevented Plaintiffs from purchasing the GARVEE 2012F bond. Id. at 8-10. Plaintiffs bring suit against both State and Underwriter Defendants under five (5) causes of action: (1) the Washington Law Against Discrimination ("WLAD"), RCW 49.60.010; (2) the Washington State Securities Act ("WSSA"), RCW 21.20 et seq.; (3) tortious interference with contract and/or business expectancy; (4) The Civil Rights Act of 1866, 42 U.S.C. § 1981; and (5) the Washington State Consumer Protection Act, RCW 19.86 et seq.

Underwriter Defendants move to dismiss arguing, inter alia, that Plaintiffs fail to state a legitimate claim under 42 U.S.C. § 1981-the only claim conferring original jurisdiction in this Court-because the statute does not apply to persons outside "the jurisdiction of the United States." Dkt. 19.pp. 10-12. The Court agrees.

Dismissal of the Section 1981 claim defeats the original jurisdiction of this Court. As significant judicial resources have not been devoted, the Court declines to exercise supplemental jurisdiction over Plaintiffs' remaining state law claims. 28 U.S.C. § 1367(c)(3). As such, the Court's analysis does not reach the remainder of Underwriter Defendants' motion to dismiss as to whether Plaintiffs failed to state a claim under the WLAD, the WSSA, or the Washington Consumer Protection Act. Dkt. No. 19.

II. DISCUSSION

A. Standard for Motion to Dismiss

A motion to dismiss under Fed.R.Civ.P. 12(b)(6) is appropriately granted where a plaintiff can prove no set of facts in support of his or her claim warranting relief. Lewis v. Tel. Employees Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996). For the complaint to survive a motion to dismiss, the plaintiff must allege facts sufficient to create a plausible claim for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In reviewing a motion to dismiss, the Court disregards allegations that amount only to legal conclusions. Aziz v. Knight Transp., 2012 WL 3596370, at *3 (W.D. Wash. Aug. 21, 2012). The Court treats the factual allegations of the Plaintiffs as true and views them in the light most favorable to Plaintiffs. NL Industries, Inc. v. Kaplan, 792 F.2d 896, 989 (9th Cir. 1986).

As the Underwriter Defendants did not file an answer to Plaintiffs' complaint, the opportunity to bring a motion to dismiss for failure to state a claim has not been waived. Fed.R.Civ.P. 12(b).

B. Plaintiffs' 42 U.S.C. § 1981 Claim

Plaintiffs bring suit under 42 U.S.C. § 1981, arguing that AUSA suffered discrimination because their entities are "composed largely of Chinese investors." Dkt. No. 1, Attachment 1, p. 12. Underwriter Defendants do not deny ...


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