Court Opinion

ID: 9366656
Source: CourtListenerOpinion
Date Created: 2023-01-27 17:00:34.88999+00
Date Added: 2024-06-11T17:15:54.181941
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JAN 27 2023
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

U.S. COMMODITY FUTURES TRADING                  No.    21-15952
COMMISION,                                             22-15571

                Plaintiff-Appellee,             D.C. No.
                                                2:19-cv-01697-JAD-DJA
 v.

DAVID GILBERT SAFFRON, AKA David                MEMORANDUM*
Gilbert,

                Defendant-Appellant,

and

CIRCLE SOCIETY, CORP.,

                Defendant.

                   Appeal from the United States District Court
                             for the District of Nevada
                   Jennifer A. Dorsey, District Judge, Presiding

                           Submitted January 25, 2023**
                             San Francisco, California

Before: GOULD, RAWLINSON, and BRESS, Circuit Judges.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      Pro se litigant David Saffron seeks reversal of district court decisions striking

his answer and entering a default judgment against him in a civil enforcement action

brought by the Commodities Future Trading Commission (CFTC) relating to

Saffron’s fraudulent Ponzi scheme involving foreign currency and cryptocurrency.

Saffron further challenges the district court’s grant of a permanent injunction

prohibiting him from trading commodities, as well as the court’s award of restitution,

disgorgement, and civil monetary penalties.

      We review the district court’s ruling on a motion to strike under Federal Rule

of Civil Procedure 12(f) for abuse of discretion. Whittlestone, Inc. v. Handi-Craft

Co., 618 F.3d 970, 974 (9th Cir. 2010). We also review the court’s grant of

injunctive relief for abuse of discretion. La Quinta Worldwide LLC v. Q.R.T.M.,

S.A. de C.V., 762 F.3d 867, 879 (9th Cir. 2014). And we review its factual findings

for clear error. Nat’l Wildlife Fed’n v. Nat’l Marine Fisheries Serv., 886 F.3d 803,

820 (9th Cir. 2018). We have jurisdiction under 28 U.S.C. § 1291 and affirm.

      1.     The district court did not abuse its discretion in striking Saffron’s

answer. A defendant “must serve” an answer “within 21 days after being served

with [a] summons and complaint.” Fed. R. Civ. P. 12(a)(1)(A). Here, service by

publication was complete on November 29, 2019. Saffron’s answer to the CFTC’s

complaint was thus due 21 days later, on December 20, 2019. See Fed. R. Civ. P.

12(a)(1)(A)(i). Saffron failed to file his answer by this date.

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      Nevertheless, and though it granted the CFTC’s motion to strike Saffron’s

answer as untimely, the district court also instructed Saffron on the filing of a Federal

Rule of Civil Procedure 55(c) motion to set aside the default. When Saffron filed

that motion out of time, the district court considered it anyway. In assessing whether

the motion to set aside the default should be granted, the district court appropriately

considered “(1) whether the plaintiff will be prejudiced, (2) whether the defendant

has a meritorious defense, and (3) whether culpable conduct of the defendant led to

the default.” Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984) (per curiam).

      The district court found that the CFTC would be prejudiced because a delay

in judgment could allow Saffron to dissipate assets and hide or destroy evidence.

The court also determined that Saffron had not demonstrated a meritorious defense

to the CFTC’s allegations. And it concluded that Saffron’s culpable conduct had

contributed to his default based on Saffron’s “devious and deliberate conduct

seeking to skirt the judicial process.” Saffron has not demonstrated error in these

determinations. Under all these circumstances, the district court did not abuse its

discretion in denying Saffron’s Rule 55(c) motion and in striking his untimely

answer.

      2.     Saffron next challenges the district court’s award of restitution,

disgorgement, and civil monetary penalties on the ground that he lacked adequate

notice of the magnitude of relief that could be awarded. This argument fails. The

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CFTC set forth its requested relief in its complaint and in its motion for default

judgment. Nor can Saffron reasonably claim unfair surprise when the district court

found that Saffron had defrauded investors of many millions of dollars. Insofar as

Saffron’s claimed lack of notice arises from his failure to participate in the

proceedings below, that does not provide a basis for relief.

      3.     The district court’s permanent injunction banning Saffron from

commodities trading was not overbroad.          District courts have “considerable

discretion in fashioning suitable relief and defining the terms of an injunction.”

Lamb-Weston, Inc. v. McCain Foods, Ltd., 941 F.2d 970, 974 (9th Cir. 1991). The

district court found that Saffron had engaged in extensive violations of the

Commodities Exchange Act, that he intended to defraud his victims, and that there

was insufficient evidence that Saffron would avoid future wrongdoing. The district

court thus found that “[a] comprehensive permanent injunction—that includes a ban

on trading cryptocurrencies for Saffron’s own personal account—is necessary to

prevent future violations concerning virtual currencies.” The court reasonably

tailored its ban to the contemplated harm, and Saffron points to no law or facts

demonstrating otherwise.

      AFFIRMED.

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