Jacobo v. Doe ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 GRACIELA JACOBO, No. 1:22-cv-00672-DAD-BAK (BAM) 12 Plaintiff, 13 v. ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION 14 JOHN DOE, FOR EXPEDITED DISCOVERY 15 Defendant. (Doc. No. 7) 16 17 18 This matter is before the court on plaintiff Graciela Jacobo’s motion for expedited 19 discovery. (Doc. No. 7.) Defendant John Doe has not yet been identified and has not appeared in 20 this action. Having considered plaintiff’s motion1, and for the reasons that follow, the court will 21 grant in part and deny in part plaintiff’s motion for expedited discovery. 22 23 1 In its June 7, 2022 order granting a temporary restraining order, this court directed plaintiff to file a motion for expedited discovery. (Doc. No. 6 at 13.) Because the pending motion is closely 24 connected to the temporary restraining order, the undersigned finds it appropriate to also consider and rule upon the pending motion. See, e.g., ZG TOP Tech. Co. v. Doe, No. 2:19-cv-00092-RAJ, 25 2019 WL 917418 (W.D. Wash. Feb. 25, 2019) (a district court ruling on a motion to expedited discovery related to a motion for temporary restraining order in a similar cryptocurrency suit); 26 Strivelli v. Doe, No. 3:22-cv-02060-MAS-RLS, 2022 WL 1082638 (D.N.J. Apr. 11, 2022) 27 (same); SingularDTV, GmbH v. Doe, No. 1:21-cv-06000-VEC, 2021 WL 3668161 (S.D.N.Y. Aug. 16, 2021) (same). However, pursuant to Local Rule 302(c)(1), all future discovery related 28 motions shall be set before the assigned magistrate judge in this matter. 1 BACKGROUND 2 The court previously summarized plaintiff’s allegations in its June 7, 2022 order granting 3 her motion for a temporary restraining order. (Doc. No. 6.) The court will refer to its prior order 4 and will not repeat that factual background here. Following the issuance of that order, plaintiff 5 filed the pending motion for expedited discovery, seeking an order authorizing her to conduct 6 expedited discovery upon cryptocurrency exchanges to facilitate the discovery of defendant’s 7 legal identity. (Doc. No. 7-1 at 11.) 8 LEGAL STANDARD 9 Federal Rule of Civil Procedure Rule 26(d) provides that no discovery can be sought 10 “from any source before the parties have conferred as required by Rule 26(f), except . . . when 11 authorized . . . by court order.” Fed. R. Civ. P. 26(d)(1). Generally, courts require a showing of 12 good cause to permit expedited discovery. In re Countrywide Fin. Corp. Derivative Litig., 542 F. 13 Supp. 2d 1160, 1179 (C.D. Cal. 2008); Criswell v. Boudreax, No. 1:20-cv-01048-DAD-SAB, 14 2020 WL 5235675, at *25 (E.D. Cal. Aug. 31, 2017). “Good cause may be found where the need 15 for expedited discovery, in consideration of the administration of justice, outweighs the prejudice 16 to the responding party.” Semitool, Inc. v. Tokyo Electron Am., Inc., 208 F.R.D. 273, 276 (N.D. 17 Cal. 2002). In determining whether good cause exists, courts consider: (1) whether a preliminary 18 injunction is pending; (2) the breadth of the discovery request; (3) the purpose for requesting the 19 expedited discovery; (4) the burden on the defendants to comply with the requests; and (5) how 20 far in advance of the typical discovery process the request was made.” Rovio Entm’t Ltd. v. Royal 21 Plush Toys, Inc., 907 F. Supp. 2d 1086, 1099 (N.D. Cal. 2012). 22 Moreover, district courts in California, applying the test set forth in Semitool, have found 23 good cause to authorize expedited discovery to ascertain the identity of a Doe defendant. See, 24 e.g., AF Holdings LLC v. Doe, No. 2:12-cv-02207-KJM-DAD, 2012 WL 6608993, at *1 (E.D. 25 Cal. Dec. 18, 2012) (granting leave to conduct expedited discovery to determine the identity of a 26 Doe defendant in a copyright infringement action); First Time Videos, LLC v. Doe, No. 2:12-cv- 27 00621-GEB-EFB, 2012 WL 1355725 (E.D. Cal. Apr.18, 2012) (same); UMG Recordings, Inc. v. 28 Doe, No. 5:08-cv-03999-RMW, 2008 WL 4104207 (N.D. Cal. Sept. 4, 2008) (same); Arista 1 Records LLC v. Does 1–43, No. 3:07-cv-02357-LAB-POR, 2007 WL 4538697 (S.D. Cal. Dec. 2 20, 2007) (same). The Ninth Circuit has held that “where the identity of the alleged defendant[ ] 3 [is] not [ ] known prior to the filing of a complaint[,] the plaintiff should be given an opportunity 4 through discovery to identify the unknown defendants, unless it is clear that discovery would not 5 uncover the identities, or that the complaint would be dismissed on other grounds.” Wakefield v. 6 Thompson, 177 F.3d 1160, 1163 (9th Cir. 1999) (alteration in original) (quoting Gillespie v. 7 Civiletti, 629 F.2d 637, 642 (9th Cir. 1980)). 8 To determine whether a plaintiff has established good cause to seek the identity of a Doe 9 defendant through expedited discovery, courts consider the following: 10 whether the plaintiff (1) identifies the Doe defendant with sufficient specificity that the Court can determine that the defendant is a real 11 person who can be sued in federal court, (2) recounts the steps taken to locate and identify the defendant, (3) demonstrates that the action 12 can withstand a motion to dismiss, and (4) proves that the discovery is likely to lead to identifying information that will permit service of 13 process. 14 ZG TOP Tech. Co. v. Doe, No. 2:19-cv-00092-RAJ, 2019 WL 917418, at *2 (W.D. Wash. Feb. 15 25, 2019) (citing Bodyguard Prods., Inc. v. Doe 1, 2:17-cv-01647-RSM, 2018 WL 1470873, at *1 16 (W.D. Wash. Mar. 26, 2018); Columbia Ins. Co. v. seescandy.com, 185 F.R.D. 573, 578–80 (N.D. 17 Cal. 1999)). 18 ANALYSIS 19 In her pending motion, plaintiff argues that good cause exists to authorize expedited 20 discovery to determine the Doe defendant’s legal identity. (Doc. No. 7-1 at 15.) Plaintiff 21 contends that the discovery sought is “narrowly drawn and . . . relevant to identifying JOHN DOE 22 and resolving the issues of fact and law the Court must confront[.]” According to plaintiff, the 23 relevant information is in the readily accessible possession, custody, and control of the non-party 24 cryptocurrency exchanges Binance, FTX, OKX (OKEx), Poloniex, TokenIon, and gate.io 25 (collectively, “the Exchanges”), such that any burden on the Exchanges in responding to the 26 discovery is de minimis. (Id.) In particular, plaintiff seeks to obtain the following discovery from 27 the Exchanges: 28 ///// 1 (a) All documents regarding, reflecting, recording, or memorializing account opening and closing, including JOHN DOE’s actual legal 2 name, all proofs of identification (such as government-issued photo ID), date of birth, Social Security Number, telephone number, 3 electronic mail address, residential/mailing address, and Know Your Customer (“KYC”) and Anti-Money Laundering (“AML”) 4 information compiled by >. 5 (b) All documents regarding, reflecting, recording, or memorializing transactions, funding, registered funding sources (i.e., bank accounts 6 or other sources of funding tied to JOHN DOE’s account[s]), and account holdings, including but not limited to transactions into or out 7 of the following wallet address: _______ (the “Wallet Address”). 8 (c) All transactional logs for all activity in JOHN DOE’s > account(s), including but not limited to all 9 holding pages, trade confirmations, beginning balance, all trades (whether initiated by JOHN DOE or someone else) or trade orders 10 (whether executed or unexecuted), all date/time stamps for each trade, date/time stamps showing when each trade was filled (as 11 applicable), account balance following each executed trade, the ending balance, and the names and public addresses of all 12 counterparties to each trade. 13 (d) All documents regarding, reflecting, recording, or memorializing any suspicion or belief held by > that the 14 JOHN DOE account at > to which the Destination Address is linked was linked to or associated with any 15 other > account(s). 16 (e) Correspondence exchanged by and between > and JOHN DOE. 17 (f) Correspondence exchanged by and between > and any third-party concerning or relating to JOHN DOE. NOTE: The requested correspondence is not to include any 19 Suspicious Activity Reports (SARs) filed by > with any governmental regulator or other authority, 20 any drafts of such SARs, or any documents that expressly reference any SARs being filed. 21 22 (Id. at 11.) Additionally, plaintiff also seeks to conduct discovery upon “the accountholder to 23 whom [p]laintiff’s stolen funds flowed” to support any claim that the accountholder is “a bona 24 fide purchaser in good faith” and not defendant. (Id. at 12.) In doing so, plaintiff would request 25 such accountholders produce the following: 26 All documents and information, including but not limited to: (i) Transactional IDs related to the your [sic] acquisition of the 27 cryptocurrency in question; and (ii) information in your possession identifying the seller from whom you acquired the tainted 28 cryptocurrency in question -- showing how the cryptocurrency was 1 obtained, from whom the cryptocurrency was obtained, and the payment records for your acquisition of the tainted cryptocurrency. 2 3 (Id.) 4 The court finds that good cause supports plaintiff’s request for leave to take expedited 5 discovery to ascertain identifying information with respect to defendant John Doe in order to 6 facilitate service of this action, the temporary restraining order, and plaintiff’s anticipated motion 7 for preliminary injunction. Here, plaintiff recounts the use of blockchain analytics to trace the 8 path of her stolen assets and identified a number of cryptocurrency wallet addresses (“Destination 9 Addresses”) at the Exchanges to which her assets have been transferred without her consent: 10 Asset 11 Exchange Destination Address Type Funds under claim2 12 Binance 43ecaea7f78fe65f83646a864b2c73349793ddfe USDT 45,730.26604 13 Binance 5cccacf95cd5df55d95e3864af4551de094784c2 USDT 222,583.588 Binance 8f44af4f841ffd7db201e81f8deb66e6eea99c06 USDT 45,543.36493 14 Binance bff9f1d0d9156feb7b3182102d4ac226b9c2c44c USDT 95,118.95336 15 Binance c7e185922f923c438fc29b92309153816ba17498 USDT 4,082.182561 16 TOTAL 413,058.3549 USDT 17 18 Asset Exchange Destination Address Funds under claim Type 19 FTX 456fc7ea0b17b51e08a861af94e13f1dceba1db9 USDT 83,856.95211 20 TOTAL 83,856.95211 USDT 21 Asset 22 Exchange Destination Address Type Funds under claim 23 OKX 64452a2f3af318d86d947ba33beadfe39456ed3a USDT 272,540.4773 (OKEx) 24 25 2 Plaintiff represents that the value of the funds located in each of the destination addresses listed 26 in this order were calculated using an “average confirmed with five tracing methodologies” and 27 are listed in units of Tether (“USDT”), a cryptocurrency hosted on the Ethereum and Bitcoin blockchains that was designed so that each coin would be worth one U.S. dollar. (Doc. No. 7-1 at 28 6 n.1, 6–7.) 1 Exchange Destination Address Asset Funds under claim Type 2 TOTAL 272,540.4773 USDT 3 4 Asset Exchange Destination Address Funds under claim 5 Type Poloniex ee861cfb2a34eb5e73ccd92fce9e4b3b6a37a2db USDT 72,386.28453 6 TOTAL 72,386.28453 USDT 7 8 Exchange Destination Address Asset Funds under claim Type 9 TokenIon 8d90113a1e286a5ab3e496fbd1853f265e5913c6 USDT 230,153.7314 10 TOTAL 230,153.7314 USDT 11 Asset Exchange Destination Address Funds under claim 12 Type gate.io 29084a44f69510471e41a91f37ee59c088e71804 USDT 46,782.12103 13 TOTAL 46,782.12103 USDT 14 15 (Doc. No. 7-1 at 6–7); see ZG TOP Tech. Co., 2019 WL 917418 at *2 (plaintiffs must recount 16 steps taken to identify defendant to demonstrate good cause for expedited recovery). The 17 conversations between defendant, plaintiff, and plaintiff’s son indicate that John Doe’s identity as 18 the account holder is likely already known or ascertainable. (Id. at 6–7); see ZG TOP Tech. Co., 19 2019 WL 917418 at *2 (courts consider whether plaintiff identifies the Doe defendant with 20 sufficient specificity). Furthermore, as this court concluded in its June 7, 2022 order issuing a 21 temporary restraining order, plaintiff has shown that she is likely to succeed on the merits of her 22 claims brought in this action and in so doing she has also “demonstrated that the action can 23 withstand a motion to dismiss.” See ZG TOP Tech. Co., 2019 WL 917418 at *2. The court also 24 finds that plaintiff’s request seeking identifying information related to the Doe defendant is 25 reasonably likely to lead to the production of information that will permit plaintiff to serve 26 process. See Semitool, 208 F.R.D. at 277 (granting expedited discovery where the narrowly 27 tailored requests would “substantially contribute to moving this case forward”). Accordingly, the 28 court will grant plaintiff’s request for expedited discovery directed to the above-listed 1 cryptocurrency exchanges to obtain identifying information about the Doe defendant. Upon 2 service of a Rule 45 subpoena to the Exchanges, defendant or the Exchanges will have an 3 opportunity to raise objections through a motion to quash in which they could attempt to 4 demonstrate to the court that prejudice to them outweighs plaintiff’s need for the information 5 sought. 6 However, the court does not find that plaintiff has narrowly tailored all of her proposed 7 discovery requests to the cryptocurrency exchanges or provided good cause for the authorizing of 8 expedited discovery beyond certain specific identifying information about the Doe defendant. In 9 particular, plaintiff’s proposed discovery requests for documents and information regarding 10 transactions involving the Destination Addresses and communication with defendant and any 11 non-party accountholder of the Destination addresses “seek affirmative relief from this [c]ourt 12 that is the subject of this lawsuit, and go well beyond the request for expedited discovery.” See 13 ZG TOP Tech. Co. 2019 WL 917418 at *3. Plaintiff cites no authority that supports authorization 14 by the court of such discovery at this early stage of this litigation, and the court declines to permit 15 such substantive discovery aimed beyond the scope of identifying the Doe defendant. Similarly, 16 the court sees no reason for the proposed scope of the expedited discovery plaintiff seeks to 17 include defendant’s social security number, since there has been no showing that this information 18 is necessary to “obtain defendant’s identity” or to ascertain “a physical and/or electronic address 19 at which defendant can be given notice of the claims asserted against him in this lawsuit.” (See 20 Doc. No. 6 at 13.) Accordingly, authorization of these discovery requests on an expedited basis 21 will be denied. 22 CONCLUSION 23 For the foregoing reasons, the court grants in part and denies in part plaintiff’s motion for 24 expedited discovery (Doc. No. 7) as follows: 25 1. Plaintiff’s motion for expedited discovery (Doc. No. 7) is granted to the extent that 26 it seeks expedited discovery from the cryptocurrency exchanges listed below. 27 Plaintiff may immediately serve a Rule 45 subpoena on the below cryptocurrency 28 exchanges seeking the following information about the owner of the listed 1 Destination Addresses (defendant John Doe): legal name, street address, 2 telephone number, and e-mail address. It may not include defendant’s social 3 security number. A copy of this order shall be attached to the subpoena. 4 Exchange Destination Address 5 Binance 43ecaea7f78fe65f83646a864b2c73349793ddfe 6 Binance 5cccacf95cd5df55d95e3864af4551de094784c2 7 Binance 8f44af4f841ffd7db201e81f8deb66e6eea99c06 8 Binance bff9f1d0d9156feb7b3182102d4ac226b9c2c44c 9 Binance c7e185922f923c438fc29b92309153816ba17498 Exchange Destination Address 10 FTX 456fc7ea0b17b51e08a861af94e13f1dceba1db9 11 Exchange Destination Address 12 OKX (OKEx) 64452a2f3af318d86d947ba33beadfe39456ed3a 13 Exchange Destination Address Poloniex ee861cfb2a34eb5e73ccd92fce9e4b3b6a37a2db 14 Exchange Destination Address 15 TokenIon 8d90113a1e286a5ab3e496fbd1853f265e5913c6 Exchange Destination Address 16 gate.io 29084a44f69510471e41a91f37ee59c088e71804 17 18 a. If a cryptocurrency exchange is served with a subpoena authorized by this 19 order, it shall serve a copy of the subpoena and a copy of this order to the 20 defendant and any other affected user as soon as possible after service of the 21 subpoena. The cryptocurrency exchange may serve the user using any 22 reasonable means, including written notice sent to the user’s last known 23 address, transmitted either by first-class mail or via overnight service. The 24 cryptocurrency exchange shall provide plaintiff with the date when such notice 25 was provided to any affected user. 26 b. The cryptocurrency exchanges and any affected user shall have fourteen (14) 27 days from the respective date of service of the subpoena upon them to object to 28 the subpoena pursuant to Federal Rule of Civil Procedure 45(d)(2)(B). 1 c. The cryptocurrency exchanges shall not disclose the defendant’s identifying 2 information, or such information for any other affected user, during the 14-day 3 period or if a timely objection is served unless and until the Court orders it to 4 do so. 5 d. Ifan objection is served, the cryptocurrency exchanges shall preserve any 6 material responsive to the subpoena for a period of no less than ninety (90) 7 days in order to allow plaintiff to move for an order compelling production 8 under Federal Rule of Civil Procedure 45(d)(2)(B)). 9 e. Ifno objection is served, the cryptocurrency exchanges shall comply with the 10 subpoena within ten (10) days unless an objection to the subpoena will be filed 11 within 14 days of its service. 12 2. Plaintiff's motion for expedited discovery (Doc. No. 7) is denied as to all her other 13 proposed discovery requests. 14 | IT IS SO ORDERED. a - Dated: _ June 9, 2022 J aL Al 5 7 a 16 UNITED STATES DISTRICT JUDGE 17 18 19 20 21 22 23 24 25 26 27 28