Summary
The United States District Court for the District of Colorado grants Defendants’ motion to dismiss claims arising from Colorado’s registration and public listing of an alleged cryptocurrency scam entity. The court concludes that Plaintiff lacks standing to seek prospective injunctive and declaratory relief, and dismisses his tort, Colorado Consumer Protection Act, and other claims on grounds including sovereign immunity and the Eleventh Amendment. The opinion addresses alleged negligent misrepresentation, negligence, consumer-protection violations, due process, administrative-law, declaratory, and Commodity Exchange Act claims.
Topics
Practice areas
Questions Presented
- Whether Butts had Article III standing to seek prospective injunctive and declaratory relief.
- Whether the Colorado Governmental Immunity Act barred the negligent misrepresentation, negligence, and Colorado Consumer Protection Act claims against the State of Colorado.
- Whether Eleventh Amendment immunity barred the official-capacity Fourteenth Amendment and Commodity Exchange Act claims against the Secretary of State.
- Whether the Colorado Administrative Procedure Act supplied a substantive right to challenge the Secretary of State's alleged internal non-verification policy.
- Whether the Declaratory Judgment Act supplied an independent cause of action after the other claims were dismissed.
Holdings
- Plaintiff lacked standing to seek prospective injunctive and declaratory relief because he did not allege a sufficient likelihood of future injury or that he personally intended to rely again on the Secretary of State's database and suffer a similar loss.
- The complaint adequately alleged traceability at the pleading stage for the past injury because it alleged that Colorado's database listing of PBGME implied legitimacy and created an opportunity for the fraud.
- The negligent misrepresentation, negligence, and Colorado Consumer Protection Act claims against the State of Colorado were barred by the Colorado Governmental Immunity Act and were dismissed without prejudice.
- The official-capacity claims seeking money damages under § 1983 and the Commodity Exchange Act were barred by Eleventh Amendment immunity.
- The Colorado Administrative Procedure Act did not provide Plaintiff a substantive right to challenge the Secretary of State's alleged internal non-verification policy, and Plaintiff therefore lacked standing to assert the claim.
- The Declaratory Judgment Act did not provide an independent federal cause of action, and the declaratory judgment claim failed because Plaintiff's other claims were dismissed and he lacked standing to seek prospective declaratory relief.
Key quotations
“standing is not dispensed in gross; rather, plaintiffs must demonstrate standing for each claim that they press and for each form of relief that they seek” (Analysis § I)
“To demonstrate standing, Plaintiff must allege facts establishing “a sufficient likelihood that he will again be wronged in a similar way.”” (Analysis § I)
“The State Administrative Procedure Act “does not create substantive legal rights on which a claim for relief can be based.”” (Analysis § V)
“the Declaratory Judgment Act does not provide an independent federal cause of action.” (Analysis § VII)
Factual background
Bernard Butts invested $20,963.96 in PBGME, a purported company later alleged to be part of a cryptocurrency “pig butchering” scam. When Butts attempted to withdraw his investment, PBGME demanded an additional $10,500, and Butts refused, losing his investment. Butts alleged that Colorado's public corporate database and registration of PBGME implied that the entity was legitimate, and that Colorado's alleged policy of accepting corporate filings without verifying their accuracy induced his investment.
Procedural history
Plaintiff filed the action on March 27, 2025, alleging claims for negligent misrepresentation, negligence, violation of the Colorado Consumer Protection Act, a Fourteenth Amendment claim under 42 U.S.C. § 1983, a Colorado Administrative Procedure Act claim, declaratory relief, and a Commodity Exchange Act claim. The court granted the motion to dismiss and dismissed every claim without prejudice, entered judgment for defendants, awarded defendants costs under D.C.COLO.LCivR 54.1, and terminated the case.