U.S. v. Swiss American Bank, Ltd., CIV. A. 97-12811-WGY.

Decision Date30 September 1998
Docket NumberNo. CIV. A. 97-12811-WGY.,CIV. A. 97-12811-WGY.
Citation23 F.Supp.2d 130
PartiesUNITED STATES of America, Plaintiff, v. SWISS AMERICAN BANK, LTD., Swiss American National Bank, Swiss American Holding Company S.A. of Panama, and Inter-Maritime Bank, Geneva, Defendants.
CourtU.S. District Court — District of Massachusetts

Michael B. Keating, Sarah E. Cooleybeck, Foley, Hoag & Eliot, Boston, MA, for Swiss American Bank, Ltd., Swiss American National Bank.

Irene C. Freidel, Wm. Shaw McDermott, Ellen Bober Moyangh, Kirkpatrick & Lockhart, Boston, MA, for Inter-Maritime Bank, Geneva.

MEMORANDUM AND ORDER

YOUNG, District Judge.

The government of the United States brings this action for breach of contract, unjust enrichment, and conversion against the defendant banks. The government seeks in excess of $7,000,000 in forfeited drug proceeds deposited at these banks into accounts controlled by convicted money launderer John E. Fitzgerald ("Fitzgerald"). The accounts were forfeited to the United States pursuant to the RICO forfeiture statute, 18 U.S.C. § 1963, in a Final Order of Forfeiture issued by this Court on May 4, 1994. See United States v. Fitzgerald, No. 93-CR-10149-Z (D.Mass. May 4, 1994).

The defendants Swiss American Bank, Ltd. ("Swiss American") and Swiss American National Bank ("Swiss National") (collectively "the Swiss American defendants") have moved to dismiss this action for lack of personal jurisdiction, improper venue, improper service of process, and failure to join an indispensable party. The defendant Inter-Maritime Bank, Geneva, now known as Bank of New York-Inter Maritime Bank, Geneva ("Geneva"), has moved separately to dismiss for lack of personal jurisdiction and improper venue, raising many of the same arguments as the Swiss American defendants. Geneva has also moved to dismiss, or in the alternative for summary judgment, for failure to state a claim upon which relief can be granted. The fourth defendant, Swiss American Holding Company S.A. of Panama ("Swiss Holding"), has not yet been served.

The government has requested an extension of time to take limited discovery on the issues of personal jurisdiction and the failure to join an indispensable party. The government advances three separate rationales for its discovery request.1 First, the government asserts an "effects theory" of personal jurisdiction under which the Court may assert jurisdiction over a defendant whose "intentional, and allegedly tortious, actions were expressly aimed at" a plaintiff within the jurisdiction. Pltf.'s Mem. Supp. Mot. Extend Time at 5, (quoting Calder v. Jones 465 U.S. 783, 104 S.Ct. 1482 [1984]). The government reasons that the jurisdictional inquiry will require it to adduce proof of intentional availment of the forum and avers that it requires limited discovery to support such proof.

The government's second theory is that if the defendants are not subject to the personal jurisdiction of a single state, they are subject to personal jurisdiction based upon the strength of their contacts with the United States as a whole under the provisions of Fed.R.Civ.P. 4(k)(2). This theory rests in turn upon the proposition that the claims for breach of contract, unjust enrichment, and conversion arise out of federal common law. The government argues that it should be permitted to engage in limited discovery in order to gather proof of the defendants' nationwide contacts. Finally the United States seeks discovery to address the joinder question.

In its opposition to Geneva's second motion for summary judgment, the government contends that Geneva is a part of an "Inter Maritime empire," with common ownership and control over all of the defendants in this action. United States' Mem. Opp. Summ. Judgment at 8. Liability, as well as personal jurisdiction, for Geneva is therefore premised on an "alter-ego" theory. The government once again requests an opportunity for discovery, in this instance under Fed.R.Civ.P. 56(f), to allow it an opportunity to oppose Geneva's summary judgment motion.

This memorandum discusses the personal jurisdiction arguments advanced by the government. Because the government has advanced no theory of jurisdiction that might be supported by limited discovery, the Court rejects these arguments, and concludes that it is without personal jurisdiction over either the Swiss American defendants or Geneva. It is therefore unnecessary to consider the remainder of the issues raised by the defendants' motions, as the Complaint will be dismissed.

FACTS

For the purposes of these motions to dismiss, the Court accepts the well pleaded facts in the Complaint as true. The following facts are relevant to the personal jurisdiction issue.

A. Swiss American Defendants.

The Swiss American Defendants are both located on the Island of Antigua, a part of the Caribbean nation of Antigua and Barbuda; both are organized under and operate pursuant to the laws of that country. All of the offices and employees of the banks are located in Antigua. This Court's May 4, 1994 Order forfeited to the United States assets held or controlled by Fitzgerald, including funds deposited into the Swiss American Bank, Ltd. and the Swiss American National Bank in St. Johns, Antigua. The Complaint alleges on information and belief that in December 1994 or January 1995, after the entry of the Final Order of Forfeiture, the Swiss American defendants transferred slightly more than $5,000,000 to the Government of Antigua from the Fitzgerald accounts without the consent of the United States. The Complaint further alleges on information and belief that at about the same time the banks reduced the remaining balance in the Fitzgerald accounts to zero, and that the banks kept these funds, $2,000,000 or more, for their own use.

B. Geneva.

Geneva is a bank incorporated and operated under the laws of Switzerland with its principal place of business in Geneva, Switzerland. According to the bank, none of its assets or accounts is located in Massachusetts, no offices are located in Massachusetts or any place in the United States. Likewise, it does not advertise or solicit business from residents of Massachusetts or anywhere in the United States.

The Complaint alleges that Geneva, along with the as yet unserved defendant, Swiss Holding, controlled or was the alter-ego of the Swiss American defendants. Complaint ¶ 4. The complaint asserts each of the three Counts against the four defendants collectively, referred to as "SAB", under this alter-ego theory.

DISCUSSION
A. The Government's Burden.

The government bears the burden of proving the existence of personal jurisdiction over each defendant. See Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir.1995). The First Circuit has identified three separate levels of evidentiary showing necessary to meet that burden. In the ordinary case, in which facts concerning personal jurisdiction are undisputed and the matter is relatively simple, the court accepts all of the plaintiff's properly documented evidentiary proffers as true, considering only whether the evidence, if credited, would be sufficient to establish personal jurisdiction. See Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir.1992). The second option is a traditional evidentiary hearing, at which the court sits as a finder of fact. This procedure is appropriate when the evidence is conflicting or the plaintiff's proffers are "patently incredible." Id. at 676. Finally, there is a middle ground, enabling the court to weigh evidence, but limiting the findings to probable outcomes as opposed to definitive facts. See id. at 678. This last method recommends itself to cases in which the personal jurisdiction question is bound up with the merits of the case. See id.

The Court sees no reason in this case to deviate from the norm. Although at first blush, the government's request for pre-jurisdictional discovery might suggest the need for fact finding, the Court concludes, for reasons that will become clear, that no material facts are in issue. The Court therefore will regard the plaintiff's proffers of evidence as accurate, proceeding to examine the personal jurisdiction question as matter of law.

B. Massachusetts Long Arm Statute.

The government does not dispute the fact that all three defendants are foreign corporations. As such, in order for this Court to exercise personal jurisdiction over them, each ordinarily must satisfy the provisions of the Massachusetts long-arm statute, Mass Gen. Laws ch. 223A, § 3,2 as well as the due process requirements set forth in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny.

Under the long-arm statute, the claim for which personal jurisdiction is asserted must arise out of the defendant's contacts with the forum. The United States, relying on Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) and Noonan v. Winston Co., 135 F.3d 85, 90-91 (1st Cir. 1998), asserts that jurisdiction under subsection (d) might be proper, reasoning that the conversion of the funds in the Fitzgerald accounts caused harm within Massachusetts, and that if that act were intentionally directed at the United States in the District of Massachusetts, jurisdiction would attach.

The government's major premise is faulty in that purposeful availment is a necessary, see World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), but not sufficient, due process criterion for the exercise of personal jurisdiction. In Calder, the Supreme Court specifically noted that, in addition to purposeful availment, the injury to the plaintiff had to occur in the forum state in order for personal jurisdiction to be consistent with due process. See Calder, 465 U.S. at 789-90, 104 S.Ct. 1482. Here, this requirement is...

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