Securities and Exchange Commission v. Wahi et al, No. 2:2022cv01009 - Document 106 (W.D. Wash. 2023)
Court Description: ORDER granting Plaintiff's 28 Motion for Alternative Service on Defendant Sameer Ramani. Within seven (7) days of this Order, the SEC is DIRECTED to serve process on Mr. Ramani with a copy of the complaint and summons as described. The SEC is DIRECTED to file proofs of service for each means of alternative service within fourteen (14) days of this Order. Signed by Judge Tana Lin. (MJV)
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Securities and Exchange Commission v. Wahi et al Doc. 106 Case 2:22-cv-01009-TL Document 106 Filed 05/22/23 Page 1 of 7 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 11 SECURITIES AND EXCHANGE COMMISSION, 12 13 14 15 Plaintiff(s), v. CASE NO. 2:22-cv-01009-TL ORDER ON PLAINTIFF’S MOTION FOR ALTERNATIVE SERVICE ISHAN WAHI et al, Defendant(s). 16 17 This is an action brought by the United States Securities and Exchange Commission 18 (“SEC”) against three individuals for allegations of insider trading of certain crypto assets in 19 violation of the Securities Exchange Act of 1934 (the “Exchange Act”). Dkt. No. 27 at 1–5 20 (amended complaint). This matter comes before the Court on Plaintiff’s motion for alternative 21 service on Defendant Sameer Ramani. Dkt. No. 28. Having considered the relevant record, the 22 Court GRANTS the motion and DIRECTS alternative service on Mr. Ramani as detailed below. 23 24 ORDER ON PLAINTIFF’S MOTION FOR ALTERNATIVE SERVICE - 1 Dockets.Justia.com Case 2:22-cv-01009-TL Document 106 Filed 05/22/23 Page 2 of 7 1 I. BACKGROUND 2 The SEC brings this action to enforce the Exchange Act against Defendants Ishan Wahi, 3 his brother Nikhil Wahi, and Ishan’s close friend Sameer Ramani. Dkt. No. 27 at 1, 5. The SEC 4 alleges that, from at least June 2021 through April 2022, Ishan worked at Coinbase Global, Inc., 5 as a manager and repeatedly tipped off his brother and Mr. Ramani to material, nonpublic 6 information about Coinbase’s upcoming listing announcements, allowing Nikhil and Mr. Ramani 7 to trade ahead of the listing announcements and earn at least $1.1 million in illicit profits. Id. at 8 1. The SEC seeks injunctive relief, disgorgement, prejudgment interest, and civil penalties 9 against Defendants for violations of Section 10(b) of the Exchange Act, see 15 U.S.C. § 78j(b), 10 and Rule 10b-5, see 17 C.F.R. § 240.10b-5. Id. at 5, 62–64. A parallel criminal proceeding 11 against the same Defendants in the Southern District of New York is ongoing. No. 28-1 at 4. 12 Defendants Ishan and Nikhil have been served with process and have appeared in this 13 matter. See Dkt. Nos. 7, 8, 13. While Mr. Ramani’s last known address was in Houston, Texas, 14 records from the U.S. Customs and Border Protection reflect that Mr. Ramani flew from Dallas, 15 Texas, to Dubai, United Arab Emirates (“UAE”), on April 25, 2022, without returning to the 16 United States. Dkt. No. 28-1 at 2. Therefore, his current address is unknown, but the SEC 17 represents that it “has reason to believe” that Mr. Ramani is currently in India. Id. On November 18 22, the SEC spoke with David Kornblau, Mr. Ramani’s counsel in the pending criminal case, to 19 ask if he would accept service on Mr. Ramani’s behalf. Id. at 4. Mr. Kornblau responded that he 20 was not authorized to do so but would speak with his client. Id. On December 2, Mr. Kornblau 21 informed the SEC that he was not authorized to accept service of the complaint in this action. Id. 22 On December 22, 2022, the SEC filed an amended complaint (Dkt. No. 27) and 23 separately moved for leave to serve Mr. Ramani by alternative means (Dkt. No. 28 at 1). 24 Mr. Ramani has not appeared in the action or responded to the motion. ORDER ON PLAINTIFF’S MOTION FOR ALTERNATIVE SERVICE - 2 Case 2:22-cv-01009-TL Document 106 Filed 05/22/23 Page 3 of 7 1 II. Federal Rule of Civil Procedure 4(f) provides that service of process on an individual 2 3 LEGAL STANDARD outside the United States may occur: (1) by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents; [or] 4 5 6 ... 7 (3) by other means not prohibited by international agreement, as the court orders. 8 Any method of service under U.S. law must comport with constitutional notions of due 9 10 process and must be “reasonably calculated, under all the circumstances, to apprise interested 11 parties of the pendency of the action and afford them an opportunity to present their 12 objections.” Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1016–17 (9th Cir. 2002) 13 (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). 14 III. DISCUSSION 15 The SEC seeks the Court’s leave for alternative service by means of email on counsel (in 16 a related matter) and direct messages on electronic platforms (WhatsApp and email) under Rule 17 4(f)(3). Dkt. No. 28 at 1. 18 A. 19 Alternative Service Under Rule 4(f)(3) The Ninth Circuit has “commit[ted] to the sound discretion of the district court the task of 20 determining when the particularities and necessities of a given case require alternate service of 21 process under Rule 4(f)(3).” Rio Props., Inc., 284 F.3d at 1016. 22 As an initial matter, the Hague Convention does not apply here. The Hague Convention 23 on the Service Abroad of Judicial and Extrajudicial Documents, opened for signature Nov. 15, 24 1965, 20 U.S.T. 361, T.I.A.S. 6638, is an international treaty that governs service of process ORDER ON PLAINTIFF’S MOTION FOR ALTERNATIVE SERVICE - 3 Case 2:22-cv-01009-TL Document 106 Filed 05/22/23 Page 4 of 7 1 among nations that are party to the Convention, including India and the United States. 1 The 2 Hague Convention flatly does not apply “where the address of the person to be served with the 3 document is not known.” Hague Convention art. 1. The SEC represents that, despite its best 4 efforts, the physical address of Mr. Ramani is unknown, which the Court takes as credible and 5 true. 2 The Court also notes that it is possible that Mr. Ramani is located in the UAE, which is not 6 party to the Hague Convention. 3 Cf. Fed. Trade Comm’n v. Cottelli, 854 F. App’x 837, 839 (9th 7 Cir. 2021) (unpublished opinion) (“[Defendant’s] globetrotting and evasive behavior would have 8 made it difficult for the [plaintiff] to establish the lack of any [relevant international] agreement 9 given that it could not identify where [plaintiff] was.”). Therefore, the Hague Convention is not 10 implicated in this case. Nor is the Court aware of any other “international agreement” that might 11 prohibit the proposed alternative methods of service. See Fed. R. Civ. P. 4(f)(3). Proceeding to “the task of determining when the particularities and necessities of [this] 12 13 case require alternate service of process under Rule 4(f)(3),” Rio Props., Inc., 284 F.3d at 1016, 14 the Court finds that alternative service is appropriate here. The party requesting alternate service 15 must “demonstrate that the facts and circumstances of the present case necessitate[] the district 16 court’s intervention.” Id. “Courts consider a variety of factors when evaluating whether to grant 17 relief under Rule 4(f)(3)[,] including whether the plaintiff identified a physical address for the 18 defendant, whether the defendant was evading service of process, and whether the plaintiff had 19 1 20 21 22 23 24 See Status Table, HCCH, https://www.hcch.net/en/instruments/conventions/status-table/?cid=17 (last updated May 16, 2023) (listing parties to the Hague Convention). 2 The Court notes that litigants may not simply evade the Hague Convention by claiming to not know the physical address of the defendant; at least some effort at identifying the physical address of a defendant located abroad is generally necessary for Rule 4(f)(3) alternative service. See, e.g., Rubie’s Costume Co. v. Yiwu Hua Hao Toys Co., No. C18-1530, 2019 WL 6310564, at *3 (W.D. Wash. Nov. 25, 2019) (holding email was appropriate means of service in part because plaintiff was “unable to ascertain physical addresses for service after a reasonable effort”). 3 See U.S. Dep’t of State, Judicial Assistance Country Information: United Arab Emirates, https://travel.state.gov/content/travel/en/legal/Judicial-Assistance-Country-Information/UnitedArabEmirates.html (last updated Mar. 23, 2018). ORDER ON PLAINTIFF’S MOTION FOR ALTERNATIVE SERVICE - 4 Case 2:22-cv-01009-TL Document 106 Filed 05/22/23 Page 5 of 7 1 previously been in contact with the defendant.” Rubie’s Costume Co. v. Yiwu Hua Hao Toys Co., 2 No. C18-1530, 2019 WL 6310564, at *2 (W.D. Wash. Nov. 25, 2019) (permitting alternative 3 service by email on certain online sellers of allegedly counterfeit products). 4 The SEC appears to have engaged in substantial efforts to locate Mr. Ramani but has 5 been unsuccessful. See Dkt. No. 28-1 at 2. Notably, Mr. Ramani left the country on April 25, 6 2022, less than two weeks after reports surfaced of suspicious trading activity in certain 7 Coinbase tokens—trading activity alleged to have been caused by Mr. Ramani—and Coinbase 8 publicly confirmed that investigations into the suspicious activity were underway. Dkt. No. 28-3 9 at 62–63 (grand jury indictment in related criminal proceeding). His whereabouts has been 10 difficult to pin down. All of this suggests Mr. Ramani may be attempting to evade, at the very 11 least, service of process. Mr. Ramani also appears to have actual notice of this action, as the SEC 12 has been successful at contacting Mr. Ramani’s criminal defense counsel, who in turn has 13 intimated that he is in contact with his client and has spoken with Mr. Ramani about this case. 14 Dkt. No. 28-1 at 4. All these factors show that the Court’s intervention is necessary and 15 alternative service is appropriate. 16 B. Constitutional Due Process 17 Each of the requested methods for alternative service comports with constitutional due 18 process and is appropriate, because all three are reasonably calculated to provide Mr. Ramani 19 with notice of this action and opportunity to respond. See Rio Props., Inc., 284 F.3d at 1017 (“In 20 proper circumstances, this broad constitutional principle unshackles the federal courts from 21 anachronistic methods of service and permits them entry into the technological renaissance.”). 22 Mr. Kornblau has already indicated that he is in contact with his client, Mr. Ramani, and the SEC 23 has ably shown that Mr. Ramani personally used his WhatsApp and email accounts for 24 communications related to the substance of this matter, frequently, and as recently as five months ORDER ON PLAINTIFF’S MOTION FOR ALTERNATIVE SERVICE - 5 Case 2:22-cv-01009-TL Document 106 Filed 05/22/23 Page 6 of 7 1 before the SEC’s motion for alternative service. See Dkt. No. 28-1 at 3 (WhatsApp account 2 activity as late as July 2022); see also id. (email usage as late as July 2019). Indeed, 3 Mr. Ramani’s primary means of communication in connection with his alleged conduct at issue 4 appear to have been the very three modes of communications by which the SEC proposes to 5 serve him; therefore, these three methods of service are the ones most likely to reach 6 Mr. Ramani. See id. at 1018 (“[W]hen faced with an international . . . scofflaw, playing hide- 7 and-seek with the federal court, email may be the only means of effecting service of process.”). 8 Courts have found the same methods of alternative service reasonably calculated to provide 9 notice in similar circumstances. See, e.g., Basatne Int’l, LLC v. INQ Star Corp., No. C21-3142, 10 2022 WL 3904690, at *2–3 (N.D. Tex. May 12, 2022) (permitting service on UAE defendant by 11 email and through U.S. counsel); In re Cathode Ray Tube Antitrust Litig., 27 F. Supp. 3d 1002, 12 1010 (N.D. Cal. 2014) (service through U.S. counsel); Williams v. Doe, No. C21-3074, 2021 WL 13 5814279, at *2–3 (W.D. Mo. Dec. 7, 2021) (service by email and WhatsApp). 14 The Ninth Circuit has expressed concerns about ensuring delivery and confirmation of 15 receipt for service by electronic means. See Rio Props., Inc., 284 F.3d at 1018 (“In most 16 instances, there is no way to confirm receipt of an email message.”). The SEC does not represent 17 that it has tested, much less received responses (or at least a lack of error messages) from, 18 messages to Mr. Ramani’s WhatsApp and email accounts. See, e.g., Keck v. Alibaba.com, Inc., 19 C17-5672, 2018 WL 3632160, at *2–3 (N.D. Cal. July 31, 2018) (approving service by messages 20 and emails where no error messages were received after sending test messages and emails and 21 some even resulted in responses from some of the defendants). Accordingly, the Court DIRECTS 22 the SEC to file any evidence of receipt, such as the WhatsApp “read receipt,” responses from 23 Mr. Ramani or his counsel, or at the very least lack of error messages upon delivery of the emails 24 and messages, with proofs of service before proceeding with the claims against Mr. Ramani. ORDER ON PLAINTIFF’S MOTION FOR ALTERNATIVE SERVICE - 6 Case 2:22-cv-01009-TL Document 106 Filed 05/22/23 Page 7 of 7 1 IV. CONCLUSION 2 Accordingly, the Court hereby ORDERS: 3 (1) is GRANTED. 4 5 The SEC’s motion for alternative service on Defendant Mr. Ramani (Dkt. No. 28) (2) Within seven (7) days of this Order, the SEC is DIRECTED to serve process on 6 Mr. Ramani with a copy of the complaint and summons as follows: 7 (a) david.kornblau@dentons.com; 8 (b) 9 (c) 11 13 14 By WhatsApp, username “mrsamram” and associated with the phone number +91 9920625464; 10 12 By email on his criminal defense counsel, Mr. Kornblau, at (3) By email, at samyramani@gmail.com. The SEC is DIRECTED to file proofs of service for each means of alternative service within fourteen (14) days of this Order. Dated this 22nd day of May 2023. A 15 16 Tana Lin United States District Judge 17 18 19 20 21 22 23 24 ORDER ON PLAINTIFF’S MOTION FOR ALTERNATIVE SERVICE - 7
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