Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others
The key to understanding this lawsuit lies in a technical point having nothing to do with the merits of the claims and which appears at pages 35 through 37 of the complaint.In that section, the plaintiff, Think Computer Corporation, "respectfully requests that Civil Local Rule 3-9(b) be retired, or that Plaintiff be exempted from the Rule given its particular ownership [i.e., owned 100% by one individual] and tax structure [i.e., status as a Sub S corporation]."The Civil Local Rules are the rules used by the federal court in the Northern District of California to regulate its proceedings procedurally, specifying who needs to do what in connection with the filing and prosecution of lawsuits in this court. These rules have the force of law and litigants who ignore them do so at their peril.Rule 3-9(b), which the plaintiff asks be "retired," states that a "corporation . . . or other such entity may appear only through a member of the bar of this Court."In other words, a corporation cannot represent itself in a lawsuit of this type and Think Computer Corporation has filed this action without an attorney representing it while purporting to represent itself in obvious violation of this rule.A few comments about what I think this signifies:1. The plaintiff's principal is a spirited individual who has very definite ideas about the money transmission laws and who feels highly aggrieved by the impact that California's 2010 law has had on his company.2. Those ideas about these laws are, in my view, quirky ones that take significant liberties in interpreting how laws work. In other words, without detailing particulars, I believe that Mr. Greenspan's views of these laws will likely not hold up when tested formally in a court of law.3. Point 2 above, coupled with the complaint's wild swinging out at multiple parties on dubious theories of liability, is the most probable explanation of why there is no lawyer representing the plaintiff in this action.4. To sue investors basically for having chosen to fund high-profile startups that the plaintiff deems "unlicensed money service businesses" is flaky and will never hold up. If the action is not bounced for violation of Rule 3-9(b), it will be out the gate as to these defendants on grounds that it does not state a cognizable claim for legal relief.5. To sue the startups themselves for allegedly providing unlicensed money services is also quite dubious. The money transmitter laws are basically laws that give state governments the authority to require that bonds be provided, that minimum capitalization requirements be met, and that other precautions taken, to ensure that whoever handles escrowed monies takes prudent steps to protect those whose funds are entrusted to them. If these laws are violated, the state authorities have the power to take legal actions to enforce them. Nowhere is there any express private right of action that gives any private citizen the right to file suit complaining about alleged violations of these laws. Therefore, it is a stretch for any private party such as Think Computer to seek damages, injunctive relief, or any other form of legal remedy owing to alleged violations of the money transmitter laws.6. There are conceivably some legal remedies that might work if the facts support them, one of them being for false advertising claims under the Lanham Act (which is one of the claims asserted here). One competitor can indeed sue another competitor for private damages and other relief if the other competitor is gaining an unfair competitive advantage by falsely advertising that its products or services do something that is material to the customer's decision to use that product or service. Here, the result would turn on the ability to show that the parties sued are in fact engaged in false or deceptive advertising. Even here, however, the case is likely sketchy, in my view, from a quick review of the allegations made.All in all, this is a most unusual case filed by an unrepresented party that cannot legally represent itself in the forum chosen and resting on legal theories that are a real stretch in most cases. I believe Mr. Greenspan is both sincere and passionate about what he believes but what he asserts is really a case to be made to the legislative policy-makers, not to the courts. There may indeed be incredible unfairness in the way in which these laws are framed and applied. But that does not mean a private party should be able to indiscriminately sue anyone around who happens to be offering services that involve some form of money handling, or their investors, for the results of the existing system. That in itself in not only a stretch but an abuse. Wrong parties, wrong framing. The action should therefore be dismissed forthwith by the plaintiff as having been ill-considered. If it is not, it will be dismissed by the court in fairly short order.