NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAY 28 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
OX LABS INC., a California corporation, No. 20-55336
Plaintiff-Appellant, D.C. No. 2:18-cv-05934-MWF-KS v.
BITPAY, INC., a Delaware corporation, MEMORANDUM*
Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted May 5, 2021 Pasadena, California
Before: KLEINFELD, WARDLAW, and GOULD, Circuit Judges.
Ox Labs Inc. appeals the district court’s order denying specific recovery of
200 Bitcoins from BitPay, Inc., and fixing Ox Labs’ damages award to the value of
the Bitcoins when BitPay sold them. Because the parties are familiar with the facts
and procedural history of the case, we recite only those facts necessary to decide
this appeal. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
“A motion for judgment as a matter of law is reviewed de novo.” Davis v.
Yageo Corp., 481 F.3d 661 , 673 (9th Cir. 2007). We review the district court’s
computation of damages for clear error. Maxey v. Butchers’ Union Loc. No. 126,
Amalgamated Meat Cutters & Butchers Workmen of N. Am., AFL-CIO, 627 F.2d
912 , 915 (9th Cir. 1980).
The district court correctly denied Ox Labs specific recovery of its 200
Bitcoins. The California Supreme Court has yet to decide whether Bitcoins can be
specifically recovered in a conversion action. Based on our review of California
authorities, however, we conclude that they cannot. Specific recovery is
unavailable when the converted property is intangible. See, e.g., Englert v. IVAC
Corp., 92 Cal. App. 3d 178 , 184 (1979) (“[O]ne must distinguish between shares
of stock, a person’s intangible ownership interest in a company which cannot be
replevied, and the tangible certificates of stock which represent those shares and
which can be replevied.”). Because the converted property here, cryptocurrency, is
intangible, Ox Labs cannot specifically recover its Bitcoins from BitPay.
We also conclude that the district court did not clearly err in finding that
BitPay must have sold Ox Labs’ Bitcoins in July 2015. The district court’s finding
was supported by two declarations from Anthony Gallippi, one of BitPay’s co-
founders. Gallippi declared that in 2015, BitPay traded Bitcoins on three
exchanges: SFOX, ItBit, and Kraken. He said that on July 10, 2015, BitPay
liquidated Ox Labs’ Bitcoins on SFOX for around $57,000. According to Gallippi,
“the only other possibility is that the 200 bitcoin were transferred to Kraken or
ItBit. Even if this happened, the bitcoin balances of these three accounts were
fully liquidated to zero on July 14, 2015[.]”
Nor did the district court err in limiting Ox Labs’ damages to the price of the
Bitcoins when BitPay sold them in July 2015. In California, the default remedy for
conversion is to award damages equal to the value of the property at the time of
conversion. Cal. Civ. Code § 3336; Lueter v. California, 94 Cal. App. 4th 1285 ,
1301–02 (2002) (“As a general rule, the value of the converted property is the
appropriate measure of damages[.]”). Alternatively, courts may award damages
sufficient to compensate a plaintiff for losses that are the “natural, reasonable and
proximate result” of the conversion, but “only where a determination of damages
on the basis of value would be manifestly unjust.” Id. at 1302 .
The district court correctly chose the default damages calculation. Ox Labs
did not show that it was “reasonably foreseeable that special injury or damage
would result from [BitPay’s] conversion.” Id. It submitted no evidence that would
have raised a triable issue of fact as to whether it would have kept the 200 Bitcoins
beyond 2015. Moreover, awarding Ox Labs the default remedy would not be
“manifestly unjust” under the circumstances. Id. It was Ox Labs, after all, that
mistakenly deposited the Bitcoins in BitPay’s account. And it was BitPay that
disclosed the error and offered to compensate Ox Labs for Ox Labs’ own mistake.
We decline to award Ox Labs a windfall at BitPay’s expense. The applicable
California law does not compel us to award a remedy that we have concluded
would be manifestly unjust, given the massive increase in Bitcoin price in the
period after conversion of the assets up to this time; to the contrary, under
California law the default remedy for such a conversion is to award damages equal
to the property’s value at the time of conversion.