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Aaron Data Systems, Inc. v. GLD International, Inc.

United States District Court, S.D. Florida

March 23, 2018

AARON DATA SYSTEMS, INC., a Florida corporation and OZCOIN, INC., a Texas corporation, Plaintiffs,
v.
GLD INTERNATIONAL, INC., a Delaware corporation d/b/a CRYPTOGLD; CITIGOLD CORPORATION LIMITED, an Australian public company organized under the laws of the Commonwealth of Australia; JOHANNES BREYTENBACH, individually; GREGORY BREYTENBACH, individually; JOHN FOLEY, individually; and MARK LYNCH, individually, Defendants.

          REPORT AND RECOMMENDATION

          BARRY S. SELTZER UNITED STATES MAGISTRATE JUDGE.

         THIS CAUSE is before the undersigned pursuant to the District Court's Order of Referral to Magistrate Judge Seltzer for all Pretrial Proceedings (DE 25) and Defendants' Motion to Dismiss for Forum Non Conveniens and Lack of Personal Jurisdiction (DE 12). After reviewing the parties' pleadings, memoranda of law, and supporting affidavits, and after hearing oral argument on the issue of forum non conveniens, the undersigned recommends that Defendants' Motion to Dismiss for Forum Non Conveniens (DE 12) be GRANTED; that the Complaint for Damages and Injunctive Relief (DE 1) be DISMISSED; and that Plaintiffs be instructed that any future complaint arising from the same subject matter be filed in Australia.

         I. BACKGROUND

         A. Allegations of the Complaint

         Aaron Data Systems, Inc. (“ADSI”) is a Florida corporation; it alleges that its principal place of business is in Florida. OZcoin, Inc. (“OZcoin”) is incorporated in Texas; it alleges that its principal place of business is in Florida. Both Plaintiffs are internet-based companies and neither maintains a physical location (other than for mail receipt and corporate records storage) in the United States, or anywhere else.

         Plaintiffs filed the instant Complaint (DE 1) in the Southern District of Florida. Plaintiffs assert claims for conversion, breach of fiduciary duty, and Deceptive and Unfair Trade Practices under Florida law, as well as for conspiracy and “aiding and abetting.” They seek damages and injunctive relief against six defendants: GLD International, Inc. (“GLD”), a Delaware corporation with its principal place of business in New York; Citigold Corp., Ltd. (“Citigold”), an Australian company with its principal place of business in Australia; Johannes Breytenbach (“J. Breytenbach”), a New Zealand citizen with his primary residence in Queensland, Australia; Gregory Breytenbach (“G. Breytenbach”), a New Zealand citizen with his primary residence in New York; John Foley (“Foley”), an Australian citizen with his primary residence in Queensland, Australia; and Mark Lynch (“Lynch”), an Australia citizen with residences in Australia and the United Arab Emirates. Defendant Foley sat on the board of directors of both Plaintiff OZcoin and Defendant Citigold. Defendant J. Breytenbach was named as an officer/director/Chief Technology Officer and a member of Plaintiff OZcoin's Executive Committee (DE 22-1). Defendant G. Breytenbach served as Plaintiff OZcoin's social media manager. Defendant Lynch was the CEO of Defendant Citigold.

         According to the Complaint (DE 1), ADSI's principal, Terry Aronson (who holds dual United States and Australian citizenship), was approached by Foley about ADSI creating and leading a fundraising initiative for Citigold. Aronson and Foley were long-time family friends from Australia. (DE 22-1). The Complaint alleges that ADSI conceived the concept of a 100% gold-backed cryptocurrency and created a licensed mobile app to build the cryptocurrency. ADSI's cryptocurrency and blockchain applications were developed and tested by programmers in Switzerland and the United Kingdom (DE 22-1, ¶ 5). At a meeting that took place in Australia, ADSI proposed utilizing gold assets owned by Citigold as collateral for the cryptocurrency (DE 34). ADSI and Citigold proceeded to execute an agreement (DE 1, ¶ 46), again in Australia, pursuant to which ADSI formed an affiliate, OZcoin, to market and promote the gold-backed cryptocurrency. (DE 1, ¶ 47).

         After obtaining a license from ADSI to use its cryptocurrency technology, OZcoin and Citigold entered into a Gold Certificates and Security Agreement (DE 1-11) that granted OZcoin a collateral security lien over 100, 000 ounces of gold owned by Citigold; this gold formed the backing for OZcoin's cryptocurrency. The gold would be purchased by OZcoin, mined by Citigold, and stored at the Perth (Australia) Mint with OZcoin holding gold certificates issued by the Perth Mint (DE 1-11). Known as OzcoinGold (“OzGLD”), the gold-backed cryptocurrency was launched on March 10, 2017, with a promotion at the 2017 South by Southwest Conference and Festivals (“SXSW”) in Austin, Texas.

         In late April 2017, relations between OZcoin and Citigold began to deteriorate when Defendant Lynch, at a meeting in Australia, proposed an operating agreement that allegedly differed in substantial fashion from the parties' prior agreements. According to Plaintiffs, matters deteriorated further when, in May 2017, Defendants Foley and J. Breytenbach met in Australia and illegally removed Aronson as an officer of OZcoin and orchestrated an allegedly fraudulent release of OZcoin's security interest in Citigold's 100, 000 ounces of gold. Simultaneously, Foley, J. Breytenbach, and Lynch “surreptitiously plotted to incorporate a separate entity to launch a cryptocurrency clone of OZcoinGold called CryptoGLD.” (DE 1, ¶ 105). Defendant GLD International, Inc., was allegedly formed under Delaware law for the alleged purpose of operating CryptoGLD. (DE 1, ¶¶ 1-5, 110).

         CryptoGLD was launched in June 2017, “declaring itself ‘the World's First 100% Gold-Backed Cryptocurrency'” (DE 1, ¶ 112). CryptoGLD is allegedly based on the same technology as that developed by ADSI. Citigold allegedly announced that it had terminated its previous gold purchase agreement with ADSI and, instead, entered into a gold purchase agreement with GLD International. Plaintiffs contend that Foley and J. Breytenbach were still serving as officers and directors of OZcoin and/or ADSI while engaged in direct competition with OZcoin through GLD International.

         B. Defendants' Motion to Dismiss

         Defendants move to dismiss the Complaint on the grounds of forum non conveniens and lack of personal jurisdiction. “[A] district court has discretion to respond at once to a defendant's forum non conveniens plea, and need not take up first any other threshold objection” including “whether it has authority to adjudicate the cause (subject matter jurisdiction) or personal jurisdiction over the defendant if it determines that, in any event, a foreign tribunal is plainly the more suitable arbiter of the merits of the case.” Sinochem Int'l Co., Ltd. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 425 (2007). Accordingly, this Report and Recommendation addresses only Defendants' forum non conveniens argument.

         Defendants argue that Australia is the appropriate forum because access to witnesses and documentary proof is far superior in Australia than in Florida, because the plaintiff corporations have no presence (other than incorporation) in the United States, and because foreign law governs this action. Plaintiffs argue that Defendants do not satisfy the standard for dismissal for forum non conveniens because Plaintiffs' choice of forum is entitled to deference, because certain non-party witnesses reside in the United States or are willing to travel to the United States to testify, and because relevant documents in the custody of non-parties such as the Commonwealth Bank of Australia and the Perth Mint are actually under the “control” of at least one of the plaintiffs or defendants and, thus, are subject to production. Plaintiffs also dispute that the choice of law issue is determinative in identifying the appropriate forum for this case.

         II. DISCUSSION

         A. Forum Non Conveniens Standards

         The doctrine of forum non conveniens allows a federal court to dismiss an action if a foreign court is a more appropriate and convenient forum for adjudicating a case. See Sinochem, 549 U.S. at 425. To obtain dismissal based on forum non conveniens, the moving party must “establish that ‘(1) an adequate alternative forum is available, (2) the public and private factors weigh in favor of dismissal, and (3) the plaintiff can reinstate his suit in the alternative forum without undue inconvenience or prejudice.'” Tazoe v. Airbus S.A.S., 631 F.3d 1321, 1330 (11th Cir. 2011) (quoting Leon v. Million Air, Inc., 251 F.3d 1305, 1310-11 (11th Cir. 2001)).

         1. Adequate Alternative Forum

         In evaluating Defendants' request for dismissal based on forum non conveniens, this Court first must consider (1) whether the alternative forum of Australia is adequate and (2) whether that forum is available. See Tazoe, 631 F.3d at 1330. An alternative forum is inadequate “only in rare circumstances where the remedy offered by the other forum is clearly unsatisfactory.” Aldana v. Del Monte Fresh Produce N.A., 578 F.3d 1283, 1290 (11th Cir. 2009) (internal quotation marks omitted). Such a remedy is insufficient when it is “no remedy at all.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 (1981); see Aldana, 578 F.3d at 1290. An alternative forum is available if the foreign court can assert jurisdiction over the litigation. See Leon, 251 F.3d at 1311. Generally, this requirement is met “when the defendant is ‘amenable to process' in the other jurisdiction.” Piper Aircraft Co., 454 U.S. at 254 n.22 (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 506-07 (1947)).

         Here, the parties do not dispute that Australia is an adequate forum for Plaintiffs' claims. Nor does the Court have any reason to doubt that the courts of that nation would offer Plaintiffs an adequate remedy. Defendant Foley, a licensed barrister in Queensland, Australia, filed an affidavit in support of the Motion to Dismiss [DE 16]. Foley opined that the Supreme Court of Queensland is a common law court of unlimited jurisdiction, with proceedings conducted in English. He stated that he has “confidence that plaintiffs in the instant action can receive due process and a fair hearing in the Supreme Court of Queensland.” (DE 16, ¶ 7). Indeed, the Gold Certificates and Security Agreement (DE 1-11) between Citigold and OZcoin expressly provides that the “agreement is governed by the laws of New South Wales, Australia, and the parties submit to the non-exclusive jurisdiction of that state.” (DE 1-11 ¶2) (emphasis added). Having reviewed Foley's affidavit, the agreement of OZcoin to submit to the jurisdiction of the Australian courts, and the underlying law concerning forum non conveniens, the undersigned concludes that the requirement of an available, adequate alternative forum requirement is met. See Kolawole v. Sellers, 863 F.3d 1361, 1370 (11th Cir. 2017) (defendant satisfied the initial burden of establishing the availability of an adequate alternative forum through the affidavit of a Nigerian law professor who opined on the adequacy of relief available in a Nigerian forum).

         2. The Presumption of Deference

         “When a forum is both available and adequate, courts proceed to analyze the private and public factors relevant to forum non conveniens.” Kolawole, 863 F.3d at 1371. The first inquiry is “a determination as to the proper deference to afford the plaintiff's choice of forum: there is normally a ‘strong presumption' that a plaintiff has chosen a convenient forum.” Id. (citing Leon, 251 F.3d at 1314). The presumption is stronger when the plaintiff is a citizen of the United States, Wilson v. Island Seas Invs. Ltd., 590 F.3d 1264, 1269 (11th Cir. 2009), but weakens when the plaintiff is a foreign citizen. King v. Cessna Aircraft Co., 562 F.3d 1374, 1382 (11th Cir. 2009) (per curiam).

         In this case, Plaintiffs are two corporations that are incorporated in the State of Florida and the State of Texas, respectively. Plaintiffs argue that their status as United States corporations grants them a strong presumption of deference. They argue that their presence in the United States is not a mere formality and that, in fact, they are American ...


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