Court nixes Mizuho’s attempt to challenge US action by ex-MtGox customers

Maria Nikolova

Judge R. Gary Klausner did not find grounds to certify Mizuho’s question of personal jurisdiction for interlocutory appeal.

Japanese bank Mizuho has suffered another setback in its efforts to quash a legal action brought against it by former MtGox customers who accuse the bank of creating transactional difficulties for them during the period around the collapse of the ill-fated Bitcoin exchange. Earlier this week, Judge R. Gary Klausner nixed an attempt by the bank to appeal an earlier Court ruling.

As FinanceFeeds reported in July this year, the bank tried to challenge the action. It did so by making use of a formal procedure which sought to certify the question of personal jurisdiction for interlocutory appeal to the Ninth Circuit Court of Appeals.

Let’s translate this into more human terms. What Mizuho tried to do via its July motion for appeal is to prove that by passively accepting wires from Californian residents it did not technically commit anything, especially, anything targeted at the Californian plaintiffs in this case.

Joseph Lack, who brought this action, is a resident of California. He joined Mt. Gox in January 2014. Upon joining, he wired $40,000 to Mt.Gox’s Mizuho account. Mizuho accepted the transfer and collected the transaction fee. On February 24, 2014, the website of the exchange went unresponsive. Lack waited in vain for his deposit to appear in his Mt Gox account and he did not succeed in getting his money back.

Accordingly, Lack brought an action against Karpeles and Mizuho. Lack alleges that Mizuho had a duty to disclose material information to him and the other depositors. Also, the plaintiff accuses Mizuho of intentionally defrauding him by concealing that the bank was no longer accepting withdrawal requests. Furthermore, the plaintiff alleges that Mizuho caused him damage.

In its July motion, Mizuho said that:

“To accept a wire transfer is passive conduct, especially because, by its nature, a wire transfer is not a communication between people, but just a transmission of information electronically from a machine at one bank to a machine at another. Indeed, Lack is not alleged to have had any direct contact with Mizuho”.

Mizuho said it had simply remained silent – which is to say, it said (and did) nothing. In substance, according to the bank, the transaction was between Lack and Mt. Gox, whereas Mizuho played no substantive role.

Mizuho had requested the Court to certify the following question:

May a foreign bank defendant’s passive acceptance of wire transfers, coupled with an allegedly wrongful silence or inaction pursuant to the bank’s generally applicable worldwide policy, subject a bank to personal jurisdiction in each forum state in which a wire transfer originates, consistent with the requirements of the Due Process Clause of the United States Constitution?

This sort of argumentation, however, did not impress Judge R. Gary Klausner of the California Central District Court. On August 27, 2018, he denied the bank’s motion for interlocutory appeal.

The Judge agreed with an earlier ruling that the Court has personal jurisdiction over Mizuho in this action.

He said that “the “exceptional circumstances” necessary to justify certifying the order for interlocutory appeal are not present here”.

The case is captioned Joseph Lack v. Mizuho Bank, Ltd., et al (2:18-cv-00617).

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