Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-02524/USCOURTS-cand-4_18-cv-02524-7/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 7:25 Fraud - Commodities Leverage Contracts

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

RONALD STEPHEN DRAPER,

Plaintiff,

v.

KCG AMERICAS LLC, et al.,

Defendants.

Case No. 18-cv-02524-HSG 

ORDER DENYING MOTION TO 

AMEND ORDER

Re: Dkt. No. 76

Pending before the Court is the Wedbush Defendants’ motion under Federal Rule of Civil 

Procedure 59(e) to amend the Court’s August 27, 2018 order, see Dkt. No. 66, which dismissed

Plaintiff Ronald S. Draper’s claims, without prejudice to re-filing the state-law claims in state 

court.

1

 See Dkt. No. 76 (“Mot.”). Plaintiff responded on October 9, in an opposition that also 

appears to ask the Court to vacate the August 27 order dismissing his complaint. See Dkt. No. 79 

(“Opp.”) at 2. The Wedbush Defendants replied on October 16. See Dkt. No. 81.2 For the 

following reasons, the Court DENIES the motion to amend.

In what can only be described as a bizarre case, Plaintiff’s 81-page Complaint named 14 

defendants and brought 11 causes of action, including fraudulent concealment, fraudulent 

misrepresentation, breach of fiduciary duty, breach of contract, “aiding and abetting” fraud, 

violation of several California consumer protection statutes, “employment of manipulative 

computer software programs, computer servers, electronic trading facility and manipulative

 

1 As in the Court’s August 27 order, the term “Wedbush Defendants” as used here refers to KCG 

Americas, LLC, Main Street Trading, Inc., Wedbush Securities, Inc., and those companies’ 

individually named officer defendants. See Dkt. No. 66 at 1.

2 The Court finds this matter appropriate for disposition without oral argument and the matter is 

deemed submitted. See Civil L.R. 7-1(b). 

Case 4:18-cv-02524-HSG Document 93 Filed 04/18/19 Page 1 of 3
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United States District Court

Northern District of California

scheme to defraud” him, and elder financial abuse. See Complaint, Dkt. No. 1; see also Dkt. No. 

66 at 2 (summarizing Plaintiff’s claims). The Court dismissed Plaintiff’s federal claims as timebarred under the Commodity Exchange Act’s (“CEA”) two-year statute of limitations. See Dkt. 

No. 66 at 7. But in dismissing the case, the Court expressly declined to reach the Wedbush 

Defendants’ argument that Plaintiff’s claims were barred by a contractual statute of limitations

contained in their account agreement. See id. at 7 n.7. Left only with causes of action arising 

under California law, the Court found that this was the “usual case” in which “judicial economy, 

convenience, fairness, and comity” pointed towards declining to exercise supplemental jurisdiction 

under the pendent jurisdiction doctrine, consequently dismissing those claims without prejudice. 

See id. at 10 (quoting Sanford v. MemberWorks, Inc., 625 F.3d 550, 561 (9th Cir. 2010) (internal 

quotations omitted)).

“There are four grounds upon which a Rule 59(e) motion may be granted: 1) the motion is 

necessary to correct manifest errors of law or fact upon which the judgment is based; 2) the 

moving party presents newly discovered or previously unavailable evidence; 3) the motion is 

necessary to prevent manifest injustice; or 4) there is an intervening change in controlling law.” 

Turner v. Burlington N. Santa Fe R. Co., 338 F.3d 1058, 1063 (9th Cir. 2003) (internal quotations 

and emphasis omitted). The Wedbush Defendants base their motion on the first and third grounds: 

they contend that the Court committed a manifest error of law by refusing to assume pendent 

jurisdiction over Plaintiff’s state-law claims, which they say should have dismissed with prejudice, 

thus “causing a manifest injustice against the Wedbush Defendants,” which necessitates Rule 

59(e) relief. See Mot. at 5. 

First, the Court did not commit a manifest error of law by declining to exercise 

supplemental jurisdiction and not reaching the question of whether Plaintiff’s state law claims 

were barred by a contractual statute of limitations. The Wedbush Defendants contend that 

“[i]nvoking pendent jurisdiction requires minimal resources by the Court because the contractual 

limitations clause applies to all of Draper’s claims against the Wedbush Defendants and its 

temporal limit is the same as the two-year limitations provision in the CEA.” Mot. at 3. But 

determining whether the purported contractual statute of limitations is applicable and enforceable 

Case 4:18-cv-02524-HSG Document 93 Filed 04/18/19 Page 2 of 3
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will require reviewing the contract and applying state law. The balance of pendent jurisdiction 

factors points towards this question of state law being determined by a state court, rather than by 

this Court on a Rule 59(e) motion after it has already declined to reach the question. Because this 

is the usual case in which judicial economy, convenience, fairness, and comity weigh towards

declining to exercise supplemental jurisdiction, the Court finds that it did not commit a manifest 

error of law.

Second, granting the Wedbush Defendants’ Rule 59(e) motion is not necessary to prevent 

manifest injustice. The Wedbush Defendants contend that they “will be unnecessarily subjected to 

the same claims and associated injustice in a state court proceeding,” especially “given Draper’s 

. . . prior disregard of Court orders and general contempt of the judicial process.” Mot. at 5. But if 

the enforceability of the contractual limitations clause is as airtight as the Wedbush Defendants 

assert it to be, they will surely be able to obtain a prompt dismissal if Plaintiff re-files his state law 

claims in a court well-versed with the applicable state law. Assuming pendent jurisdiction over 

the state law claims is not necessary to prevent manifest injustice.

Because the Court finds that it did not commit a manifest error of law and no manifest 

injustice will result from declining to exercise supplemental jurisdiction over Plaintiff’s state law 

claims, the Wedbush Defendants’ Rule 59(e) motion is DENIED.

IT IS SO ORDERED.

Dated:

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

4/18/2019

Case 4:18-cv-02524-HSG Document 93 Filed 04/18/19 Page 3 of 3