The Eleventh Circuit Court of Appeals has affirmed the dismissal of a lawsuit brought by Donnahue George against several financial institutions and individuals, including Ken Griffin, related to the January 2021 GameStop short selling incident. The court found that George’s claims were either untimely or failed to adequately state a legal basis for relief.
Background of the Case
George, representing himself in the case, initially filed his complaint in August 2021, alleging investment losses stemming from the GameStop short selling event and other market manipulation schemes. He named as defendants the Financial Industry Regulatory Authority (FINRA), the Depository Trust & Clearing Corporation (DTCC), Citadel Enterprise Americas LLC, Citadel Securities LLC, Ken Griffin (collectively, the Citadel defendants), and Robinhood, LLC.
The district court initially dismissed the case sua sponte (on its own initiative) due to George’s failure to file a joint scheduling order. This led to an appeal and a remand back to the district court. After the case was reopened, the defendants moved to dismiss George’s second amended complaint, arguing that it failed to state a valid claim. The district court agreed and granted the motions to dismiss. George then appealed that decision to the Eleventh Circuit.
The Court’s Decision
The Eleventh Circuit, after careful consideration, upheld the district court’s dismissal. The court addressed George’s arguments, finding that they lacked merit.
Timeliness of the Defendants’ Motions
George argued that the defendants’ motions to dismiss were filed too late. The court rejected this argument, explaining that the defendants’ response deadlines were extended due to waivers of service and extensions granted by the district court. The court determined that the motions to dismiss were filed within the applicable deadlines.
Failure to State a Claim
The court then examined the substance of George’s claims. George brought four claims in his second amended complaint: breach of contract, civil RICO violations, violations of Section Two of the Sherman Act, and a Fourteenth Amendment violation. The Eleventh Circuit found that George failed to provide enough factual information to support any of his claims.
Breach of Contract Claim: George alleged that FINRA and DTCC breached a contract with the American people to ensure an open and fair market. The court found that George failed to identify a valid contract or specify any contractual obligations that the defendants allegedly breached. Therefore, the breach of contract claim was dismissed.
Civil RICO Claim: George claimed that the defendants violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by manipulating the price of GameStop and AMC shares. The court noted that civil RICO claims must be pleaded with particularity, but George’s allegations did not meet this standard. Specifically, the court found that George failed to allege “precise statements, documents, or misrepresentations made” and did not specify the time and place of the alleged racketeering activities. Furthermore, the court found that George’s allegations improperly “lumped together” all the defendants without specifying the individual actions of each.
Sherman Act Claim: George alleged that the Citadel defendants and Robinhood violated Section Two of the Sherman Act by monopolizing the stock market. The court determined that George had not adequately presented this claim. The court also noted that George failed to allege any actual harm to competition in the market, which is a required element for a Section Two claim.
Fourteenth Amendment Claim: George claimed that FINRA and DTCC violated his Fourteenth Amendment rights by implementing rules that gave an unfair advantage to companies like Citadel. The court found that George had abandoned this claim on appeal because he did not adequately brief it.
Conclusion
Because the Eleventh Circuit found that George’s claims were either untimely or failed to state a claim upon which relief could be granted, the court affirmed the district court’s dismissal of the case.