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Loginovskaya v. Batratchenko

United States Court of Appeals for the Second Circuit

January 8, 2014, Argued; September 4, 2014, Decided

Docket No. 13-1624-cv

Opinion

 [*268]  DENNIS JACOBS, Circuit Judge:

Ludmila Loginovskaya appeals from a judgment of the United States District Court for the Southern District of New York (Oetken, J.), dismissing, pursuant to Fed. R. Civ. P. 12(b)(6), her claims under the Commodity Exchange Act ("CEA"), 7 U.S.C. § 1 et seq. (2008), and declining to exercise supplemental [**2]  jurisdiction over her state law claims. The district court held that the domestic transaction test announced in Morrison v. National Australia Bank Ltd., 561 U.S. 247, 130 S. Ct. 2869, 177 L. Ed. 2d 535 (2010), applies to Loginovskaya's CEA claim, and that her Amended Complaint failed to adequately allege a domestic transaction. Because the district court dismissed Loginovskaya's only federal claim, it declined to exercise supplemental jurisdiction over her remaining state law claims. On appeal, Loginovskaya argues the district court erred in its application of Morrison.

Applying the reasoning of Morrison, we agree with the district court that ] a private right of action brought under CEA § 22 is limited to claims alleging a commodities transaction within the United States. 2 Because Loginovskaya fails to allege a domestic commodities transaction, we affirm the district court's judgment. Because we affirm on the basis of § 22, we do not reach Loginovskaya's argument regarding the territorial reach of the antifraud provision in CEA § 4o.

BACKGROUND3

The Thor Group, an international financial services organization based in New York, manages investment programs, [**3]  chiefly in commodities futures and real estate. Among the Thor Group entities are: 1) Thor Guarant, which invests in real estate holdings and development; 2) Thor Optima, which invests in options, futures, securities, and financial instruments; and 3) Thor Opti-Max, which invests in the combined assets of Thor Guarant and Thor Optima. Also part of the Thor Group is Thor United, an entity that maintains "integrated accounts" through which it invests in Thor Guarant, Thor Optima, and Thor Opti-Max on behalf of investors. Several Thor entities are registered participants in the commodities markets as commodity pool operators or commodity trading advisors. Am. Compl., J.A. at 72-73.

Defendant Oleg Batratchenko, a U.S. citizen resident in Moscow, is the Group's chief executive officer; in this role, he is a director for the three Thor programs. Defendant Tatiana Smirnova is a director for the Thor Opti-Max and Thor Guarant programs, and has served in various managerial capacities in the Thor entities.

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764 F.3d 266 *; 2014 U.S. App. LEXIS 17257 **

LUDMILA LOGINOVSKAYA, Plaintiff-Appellant, v. OLEG BATRATCHENKO, THOR UNITED CORP., THOR UNITED CORP. (NEVIS), THOR ASSET MANAGEMENT INC., THOR REAL ESTATE MANAGEMENT LLC, THOR OPTI-MAX LLC, THOR CAPITAL LLC, THOR FUTURES LLC, THOR REALTY LLC, THOR GUARANT REAL ESTATE FUND, LTD. (BVI), THOR REAL ESTATE MASTER FUND, LTD., THOR OPTIMA LLC, THOR REALTY HOLDINGS LLC, JOHN DOES 1-20, TATIANA SMIRNOVA, THOR OPTI-MAX FUND, LTD., Defendants-Appellees.1

Subsequent History: As Corrected October 29, 2014.

Prior History: Loginovskaya v. Batratchenko, 936 F. Supp. 2d 357, 2013 U.S. Dist. LEXIS 45888 (S.D.N.Y., 2013)

Disposition: Ludmila Loginovskaya appeals from a judgment of the United States District Court for the Southern District of New York (Oetken, J.), dismissing her Amended Complaint for failure to state a claim under the Commodity Exchange Act, 7 U.S.C. § 1 et seq., and declining to exercise supplemental jurisdiction over her remaining state law claims. We conclude that the presumption against extraterritorial effect and the domestic transaction test of Morrison v. National Australia Bank Ltd., 561 U.S. 247, 130 S. Ct. 2869, 177 L. Ed. 2d 535 (2010), apply to a private right of action brought under Section 22 [**1]  of the Commodity Exchange Act.

Affirmed.

CORE TERMS

commodity, domestic, extraterritoriality, trading, transactions, programs, private right of action, funds, cause of action, district court, territorial, regulated, pool, advisors, invests, courts, extraterritorial effect, regulate conduct, contracts, investors, entities, markets, private party, defendants', provisions, substantive provisions, statutory provisions, majority opinion, allegations, registered

Securities Law, Commodities Futures Trading, General Overview, Civil Procedure, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Appeals, Standards of Review, Postoffering & Secondary Distributions, Scope of Provisions, Covered Transactions, Definitions, Purchase & Sale, Civil Penalties, Jurisdiction