Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Kan.: Bitcoin Miner manufacturer partially denied motion to dismiss for alleged deceptive acts, (Jun 9, 2014)

By Greg Hammond, J.D.

A Bitcoin Miner manufacturer’s motion to dismiss claims that it engaged in deceptive acts under the Kansas Consumer Protection Act (KCPA) and the FTC Act were partially denied. The federal district court in Kansas City, Kansas determined that the consumer stated sufficient claims under the KCPA to survive a motion to dismiss, but there is no private right of action under the FTC Act (Meissner v BF Labs Inc., June 6, 2014, Rogers, R).

Background. Martin Meissner purchased two Bitcoin Miners from BF Labs Inc., by wiring the company over $62,000 through TradeMost. At the time of purchase, Meissner understood and agreed that the products would not be shipped for two or more months due to placement in the order queue and that it was impossible to know when the devices would be shipped. However, when he did not receive his devices a number of months later, he filed suit against BF Labs, alleging the company engaged in deceptive and unconscionable acts under the KCPA and the FTC Act, and brought other claims for breach of contract, fraud, and negligent misrepresentation. He is seeking over $60,000 in actual damages and $5 million in consequential damages. BF Labs filed a motion to dismiss.

Deceptive acts. In support of its motion to dismiss, BF Labs argued that Meissner’s KCPA claims failed because TradeMost was the entity that actually pre-ordered the Bitcoin Miner devices. BF Labs also alleged that (1) Meissner is not entitled to consequential damages as a matter of law; (2) Meissner failed to state a claim because he conceded that he agreed to a multi-month timeframe for shipment of the devices; (3) his fraud and negligent misrepresentation claims are barred by the doctrine of economic loss; and (4) he failed to state a negligent misrepresentation claim because it relates to a future action.

According to the district court there is an issue of fact with regard to who actually purchased the Bitcoin Miner devices. Because the complaint satisfactorily alleges that Meissner, not TradeMost, purchased the devices, the court determined that Meissner’s KCPA claims survived BF Labs’ motion to dismiss. The court also determined that the consequential damages, fraud, and negligent misrepresentation claims should be decided at the motion for summary judgment stage of litigation. Therefore, BF Labs’ motion to dismiss was denied with regard to those claims.

However, the court did partially grant BF Labs’ motion to dismiss as it related to the FTC Act, reasoning that Meissner failed to actually state a claim of action based upon it and, in any event, there is no private right of action under the Act.

The case number is 13-2617-RDR.

Attorneys: Christopher B. Nelson (The Flynn Law Firm, PA) for Martin Meissner. James M. Humphrey (Polsinelli PC) for BF Labs Inc.

Companies: BF Labs Inc.

Cases: StateUnfairTradePractices ConsumerProtection KansasNews