District Court Finds Specific Personal Jurisdiction over non-US Defendants Based on Statements in Securities Offering Documents

The World in U.S. Courts: Winter 2016 - Personal Jurisdiction
September.30.2016

Firefighters’ Retirement System v. Citco Group Limited, US District Court for the Middle District of Louisiana, September 30, 2016

Three Louisiana pension funds brought claims against 23 defendants in Louisiana State court asserting multiple claims arising out of a $100 million investment loss.  After removal to federal court, eight defendants associated with a financial company, Citco, moved to dismiss the claims against them, including on the ground that they were not subject to the Court’s personal jurisdiction.

Because the matter was related to a bankruptcy proceeding under which nationwide service of process was available, the Court determined that personal jurisdiction should be based on an examination of a defendant’s contacts with the US as a whole, as opposed to its contacts just with the forum State.  Further, the Court determined that, unlike the law in many other US jurisdictions, governing precedent in the fifth Circuit did not impose a distinct requirement that an assertion of jurisdiction be “fair” or “reasonable” to be constitutional.

One of the Citco defendants was a US company, which the Court concluded necessarily established the requisite US contacts.  The remaining Citco defendants were incorporated and had their principal places of business outside the US, and for this reason the Court concluded that they were not subject to the Court’s general personal jurisdiction.  Nor did most of the other defendants have contacts with the US that supported the assertion of specific personal jurisdiction:  None had ever provided administrative, management, or accounting services to the funds at issue.  Nor was the plaintiffs’ assertion that the defendants had a common parent sufficient to overcome the presumption that they were legally independent entities.

One Citco defendant, however, was subject to the Court’s specific jurisdiction despite being organized under the laws of the Netherlands with a principal place of business in Curacao.  That defendant was prominently identified in the relevant securities offering documents, and the Court concluded that this established a “purposeful direction” of activities toward the United States.  Because the plaintiffs’ cause of action arose out of those contacts, specific personal jurisdiction attached.  Likewise, the offering documents identified another Citco defendant as an affiliate of the Dutch defendant, and the Court found this identification (combined with certain assertions of common control and integration) adequate for the assertion of jurisdiction despite the absence of direct US contacts.

In a separate opinion, the Court addressed personal jurisdiction over another defendant that was organized under the laws of the Cayman Islands with a principal place of business in Grand Cayman, Cayman Island.  This defendant served as “Administrator” of the offering documents and the Court concluded that its service was a “purposeful direction” of activities toward the US.  Because the plaintiffs’ cause of action arose out of those forum-related contacts, the Court concluded that specific personal jurisdiction existed.

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