A Blank Rome team successfully secured the dismissal of a lawsuit brought in the U.S. District Court for the Central District of California against Caitlyn Jenner and the estate of Ms. Jenner’s business manager, Sophia Hutchins. Ms. Jenner and Ms. Hutchins were named as defendants in a putative class action alleging violations of the Securities Act of 1933 and California state common law claims related to the launch and promotion of a cryptocurrency-based “meme coin” called $JENNER trading on the Ethereum and Solana blockchains.
The lead plaintiff’s sole federal claim alleged that the $JENNER Ethereum token was an unregistered security under the Securities Act. The Court found that the token did not qualify as an “investment contract”—and therefore a regulated security—under the Howey test because the plaintiff failed to plausibly allege a “common enterprise”—a required element. On horizontal commonality, the Court held that investors separately bought and sold $JENNER hoping it would increase in value as Jenner promoted it, but there was no pooling of assets or agreement to share profits and losses, which distinguished this case from other crypto cases where developers pooled proceeds to fund technology development. On vertical commonality, the court found that Jenner's financial fortunes were not tied to those of investors because she earned a three-percent transaction fee. The Court dismissed the federal claims with prejudice, declining jurisdiction over the remaining state law claims.
The Blank Rome team included Jennifer Achilles, Cheryl Chang, and Mike Donohue.