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Kyle Alexander v. FTC, 14-3286 (2015)

Court: Court of Appeals for the Eighth Circuit Number: 14-3286 Visitors: 12
Filed: Aug. 25, 2015
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 14-3286 _ Federal Trade Commission lllllllllllllllllllll Plaintiff - Appellee v. Eric L. Johnson lllllllllllllllllllllReceiver - Appellee BF Labs, Inc. a Wyoming corporation, doing business as Butterfly Labs; Darla Drake, an individual; Nasser Ghoseiri, an individual; Sonny Vleisides, an individual lllllllllllllllllllll Defendants - Appellees - Kyle Alexander; Dylan Symington lllllllllllllllllllllMovants - Appellants _ Appeal from Unite
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                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 14-3286
                        ___________________________

                            Federal Trade Commission

                        lllllllllllllllllllll Plaintiff - Appellee

                                           v.

                                   Eric L. Johnson

                        lllllllllllllllllllllReceiver - Appellee

 BF Labs, Inc. a Wyoming corporation, doing business as Butterfly Labs; Darla
Drake, an individual; Nasser Ghoseiri, an individual; Sonny Vleisides, an individual

                      lllllllllllllllllllll Defendants - Appellees

                             ------------------------------

                        Kyle Alexander; Dylan Symington

                       lllllllllllllllllllllMovants - Appellants
                                      ____________

                     Appeal from United States District Court
                for the Western District of Missouri - Kansas City
                                 ____________

                             Submitted: June 11, 2015
                              Filed: August 25, 2015
                                  ____________

Before GRUENDER, BEAM, and BENTON, Circuit Judges.
                                    ____________

BENTON, Circuit Judge.

      The Federal Trade Commission sued BF Labs, Inc. (BFL) for unfair and
deceptive acts. Two consumers, Kyle Alexander and Dylan Symington, moved to
intervene. The district court1 denied their motion. Having jurisdiction under 28
U.S.C. § 1291, this court affirms.

       In April 2014, the two consumers filed a class action against BFL. They
challenged its “deceptive and unconscionable business practices” in marketing and
selling Bitcoin mining machines.

       This case began five months later when the FTC sued BFL to enjoin it from
“deceptive acts or practices” in marketing and selling Bitcoin mining machines. See
15 U.S.C. § 45(a) (“Unfair methods of competition unlawful”). The FTC sought
preliminary injunctive relief “to avert the likelihood of consumer injury,” a permanent
injunction, and other relief “necessary to redress injury to consumers resulting from
Defendants’ violations of the FTC Act, including . . . rescission or reformation of
contracts, restitution [and] the refund of monies paid . . . .” The district court granted
a temporary restraining order, establishing a receivership and staying all suits against
BFL. The FTC suit is pending; the district court has wound down the receivership
and lifted the stay.

       On behalf of their class, the consumers moved to intervene permissively and
of right. The FTC opposed the motion and, in a footnote, said the consumers “failed
to establish that they have standing to intervene.” The district court denied the
consumers’ motion on the merits.

      1
       The Honorable Brian C. Wimes, United States District Judge for the Western
District of Missouri.

                                           -2-
      The parties brief the standing issue. The consumers appeal the denial of their
motion to intervene of right. “The denial of a motion to intervene of right is
immediately appealable as a final judgment . . . and our review is de novo.” United
States v. Metro. St. Louis Sewer Dist., 
569 F.3d 829
, 833 (8th Cir. 2009).

                                           I.

      An intervenor must establish Article III standing. Nat’l Parks Conservation
Ass’n v. EPA, 
759 F.3d 969
, 974 (8th Cir. 2014). The intervenor must show (1)
injury, (2) causation, and (3) redressability. 
Id. To satisfy
the first element, an
intervenor “must clearly allege facts showing an injury in fact, which is an injury to
a legally protected interest that is concrete, particularized, and either actual or
imminent.” Metro. St. Louis Sewer 
Dist., 569 F.3d at 834
. “Abstract injury is not
enough.” City of Los Angeles v. Lyons, 
461 U.S. 95
, 101 (1983). The intervenor
must show “the injury or threat of injury must be both real and immediate, not
conjectural or hypothetical.” See 
id. at 101-02
(quotations omitted).

        The consumers argue that a successful FTC suit “will eliminate class members’
contractual right to obtain possession of the Bitcoin mining equipment . . . and will
extinguish class members’ ability to recover damages . . . .” This alleged “injury” is
not actual or imminent. See Metro. St. Louis Sewer 
Dist., 569 F.3d at 834
. Rather,
it is conjectural and hypothetical. See 
Lyons, 461 U.S. at 101-02
. The FTC suit is
pending, and there has been no adjudication of the FTC’s claims.

        Citing National Parks, the consumers argue that their “alleged risk of financial
harm . . . satisfies the actual or imminent injury in fact requirement.” But this case
is like Metropolitan St. Louis Sewer 
District, 569 F.3d at 836
, “where the potential
intervenor’s financial injury [is] contingent on several conditions.” See Nat’l 
Parks, 759 F.3d at 975
. The FTC must first prevail, the district court must then award relief


                                          -3-
that precludes a consumer recovery, the consumers’ class must be certified, and the
class must prevail.

       The consumers also cite United States v. White Plume, 
447 F.3d 1067
(8th Cir.
2006). That case is inapposite. The question there was not the intervenors’ standing
to intervene—they had already intervened—but their standing to bring constitutional
claims. White 
Plume, 447 F.3d at 1074-75
.

      The consumers lack standing to intervene of right.

                                          II.

       Even if the consumers had standing to intervene, they must meet Rule 24(a)
requirements. “[A] putative intervenor must establish that it: (1) has a recognized
interest in the subject matter of the litigation that (2) might be impaired by the
disposition of the case and that (3) will not be adequately protected by the existing
parties.” N. Dakota ex rel. Stenehjem v. United States, 
787 F.3d 918
, 921 (8th Cir.
2015) (brackets omitted).

        “[I]f an existing party to the suit is charged with the responsibility of
representing the intervenor’s interests, a presumption of adequate representation
arises.” Chiglo v. City of Preston, 
104 F.3d 185
, 187 (8th Cir. 1997). “[T]he burden
is greater if the named party is a government entity that represents interests common
to the public.” Little Rock Sch. Dist. v. N. Little Rock Sch. Dist., 
378 F.3d 774
, 780
(8th Cir. 2004), citing Curry v. Regents of Univ. of Minn., 
167 F.3d 420
, 423 (8th
Cir. 1999) (describing parens patriae doctrine). “We presume that the government
entity adequately represents the public, and we require the party seeking to intervene
to make a strong showing of inadequate representation; for example, it may show that
its interests are distinct and cannot be subsumed within the public interest represented
by the government entity.” 
Id. “A difference
of opinion concerning litigation

                                          -4-
strategy or individual aspects of a remedy does not overcome the presumption of
adequate representation.” Jenkins ex rel. Jenkins v. State of Mo., 
78 F.3d 1270
,
1275 (8th Cir. 1996).

       Congress “empowered and directed” the FTC “to prevent . . . corporations . .
. from using . . . unfair or deceptive acts or practices in or affecting commerce.” 15
U.S.C. § 45(a)(2). In fact, “there is no private cause of action for violations of the
Federal Trade Commission Act.” See Morrison v. Back Yard Burgers, Inc., 
91 F.3d 1184
, 1187 (8th Cir. 1996). The interests of the consumers’ proposed class are
subsumed within the public interest because the FTC, on behalf of consumers, seeks
relief for the same “deceptive and unconscionable business practices” alleged by the
consumers. The consumers have not made the necessary “strong showing of
inadequate representation.” See Little Rock Sch. 
Dist., 378 F.3d at 780
.

      The district court properly denied the consumers’ motion to intervene of right.

                                   ********

      The judgment is affirmed.
                       ___________________________




                                         -5-

Source:  CourtListener

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