Bruce Dwain Copeland v. E*Trade Capital Management, LLC, et al.

Dallas, Texas civil litigation lawyer represented the Plaintiff who sued on a fraud theory.



Copeland, a Louisiana citizen, sued Ostler in a California federal

district court alleging that Ostler had fraudulently obtained a judgment lien

against Copeland that his brokerage firm, E*Trade, satisfied more than a

decade ago. The California district court issued, and Copeland served, a

subpoena on the Dallas offices of E*Trade's parent company, Morgan

Stanley, that sought records of the lien and payment. After Morgan Stanley

informed Copeland that "they ha[d] nothing to give,” he sued Defendants-

Appellees in a Texas federal district court asserting diversity jurisdiction

under 28 U.S.C. § 1332. Copeland's complaint alleges, inter alia, that

Defendants-Appellees violated and conspired to violate § 17(a) of the

Securities Exchange Act of 1934 (the "Exchange Act”) by failing to maintain

the subpoenaed records. See 15 U.S.C § 78q(a)(1).



The case was referred to a magistrate judge who sua sponte issued a

recommendation to dismiss Copeland's suit for lack of subject matter

jurisdiction for two reasons. First, Copeland had not properly established a

basis for diversity jurisdiction because he did not specifically allege the

citizenship of every member of the E*Trade defendants—both of which are

limited liability companies. Second, Copeland's Exchange Act claims could

not establish federal question jurisdiction because § 17(a) does not provide a

private right of action. The magistrate judge informed Copeland of his right

to object to the report and recommendations, which "offer[ed] Copeland an

opportunity to establish (if possible) that the Court does have subject matter

jurisdiction.” Copeland did not object to the magistrate judge's report and

recommendations, which the district court adopted. The district court

subsequently entered a final judgment dismissing without prejudice

Copeland's suit. Copeland timely appealed.

Affirmed