Fc Inv. Group Lc v. Ifx Markets, Ltd.

Decision Date20 June 2008
Docket NumberNo. 07-7037.,07-7037.
Citation529 F.3d 1087
PartiesFC INVESTMENT GROUP LC and Lawrence Jay Eisenberg, Appellants v. IFX MARKETS, LTD., Appellee.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (No. 04cv01939).

Alan B. Sternstein argued the cause for the appellant. Courtney R. Sydnor and Gregory D. Grant entered appearances.

Kevin J. Clancy argued the cause for the appellee. Joan M. Kubalanza was on brief. Kenneth S. Nankin entered an appearance.

Before: HENDERSON and TATEL, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LeCRAFT HENDERSON, Circuit Judge.

FC Investment Group LC (FCIG) and Lawrence Jay Eisenberg (Eisenberg) sued IFX Markets, Ltd. (IFX), a London-based currency broker, alleging that IFX conspired with Titan Global Strategies, Ltd. (Titan), a now-defunct investment company, to defraud them of millions of dollars through a currency investment scheme.1 The district court denied their motion for jurisdictional discovery and ultimately dismissed their four-count complaint for lack of personal jurisdiction. FC Inv. Group LC v. IFX Markets, Ltd., 479 F.Supp.2d 30, 44 (D.D.C.2007). For the reasons set forth below, we affirm the district court.

I.

FCIG, a Maryland limited liability company owned and managed by Eisenberg and with its principal place of business in the District of Columbia (District), and Eisenberg, a Maryland resident, allege that they lost several million dollars2 in a fraudulent investment scheme brokered by IFX and run by Titan. Am. Compl. ¶¶ 1-2 6. The plaintiffs' involvement with IFX and Titan began in September 1998 when "Titan and its officials," via unspecified means, "contacted Eisenberg at his offices in the District of Columbia about making an investment in a foreign currency trading account to be managed by Titan." Id. ¶ 7. Titan informed Eisenberg that its currency trades were made by IG Group, PLC (IG), a currency trader. Id. Eisenberg was also told that his investment was "completely liquid" and could be withdrawn at any time with notice to Titan. Id. ¶ 8. Eisenberg subsequently received by mail an informational brochure describing Titan's relationship with IG. Id. Eisenberg made an initial investment of $10,000. Id. Between October 1998 and October 2003, Eisenberg continued to invest with Titan, eventually investing approximately $1 million. Id. ¶ 9. Eisenberg's wife invested an additional $400,000. Id. In April 2001, Eisenberg formed FCIG to "introduc[e] certain friends and family-member investors to Titan." Id. ¶ 1. By October 2003, FCIG had invested approximately $5 million with Titan. Id. ¶ 12. Through at least 2003, Titan continued to send "account statements" to both Eisenberg and FCIG in the District indicating "large earnings on FCIG's investments." Id. ¶ 13.

Also in early 2001, Charles Knott, a Titan employee, became Titan's "investment advisor and point-of-contact" for FCIG. Id. ¶ 14. Knott met with Eisenberg "several times" in the District between 2001 and 2002 to update Eisenberg on Titan's operations. Id. Sometime in 2002 Knott advised the plaintiffs that IFX was replacing IG as Titan's currency broker. Id. ¶ 15. The plaintiffs allege that IFX knew, when it replaced IG, that "it was entering into [a] fraudulent foreign currency exchange scheme." Id. Thereafter, Christopher Cruden of IFX's Managed Investment Products Department telephoned Eisenberg regularly to provide updates on IFX's activities and to invite Eisenberg to visit IFX's London office. Id. ¶ 15. Eisenberg visited the London office in November 2002. See id. ¶ 18. During his trip, Eisenberg met with Knott (as noted, a Titan employee) as well as with Cruden and other IFX officers. Id. ¶ 21. While there, Eisenberg was shown an "elaborate" PowerPoint presentation, created jointly by IFX and Titan employees, which described Titan's and IFX's business relationship. Id. ¶¶ 19-21. Following Eisenberg's London trip, FCIG and "investors associated with FCIG" invested an additional $2 million with Titan. Id. ¶ 23.

In late 2003, Eisenberg asked Titan to close his account and refund the balance of his investment but Titan rebuffed him. Id. ¶ 25. When FCIG demanded return of its funds, Larry Lichtenstein and Milan Martinic, two members of Titan's board of directors, assured FCIG that "Titan had deposited $4.3 million in an account at U.S. Bank" and that those funds were available to repay FCIG. Id. ¶ 26. On January 4, 2004, Lichtenstein sent Eisenberg a copy of a $4.3 million deposit slip falsely showing that Titan had deposited the funds in the bank. Id. Neither Eisenberg's nor FCIG's investments have been returned.3 Id. ¶ 25.

In November 2004, Eisenberg and FCIG filed suit against IFX in district court. Their amended complaint contained four counts: (1) fraud/fraud in the inducement, see id. ¶¶ 33-37; (2) civil conspiracy, see id. ¶¶ 38-41; (3) civil aiding and abetting, see id. ¶¶ 42-46; and (4) conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961 et seq., see id. ¶¶ 47-59.

In February 2005, IFX moved to dismiss the suit for lack of personal jurisdiction. See Appellee's Mot. to Dismiss 2 (Feb. 7, 2005). In response, Eisenberg and FCIG asserted four bases for personal jurisdiction: (1) the district court had general personal jurisdiction over IFX based on its maintenance of an interactive website accessible—and used—in the District, Appellants' Mem. in Opp'n to Mot. to Dismiss 7-10 (Aug. 8, 2006); (2) the court had specific personal jurisdiction over IFX based on Cruden's "regular" telephone calls to Eisenberg at Eisenberg's District office, id. at 10-11; (3) the court had personal jurisdiction over IFX based on the actions of IFX's coconspirator, Titan, in the District, id. at 11-14; and (4) the court had personal jurisdiction over IFX pursuant to RICO's nationwide service of process provisions. Id. at 16. In February 2006, the district court rejected all four bases and dismissed their amended complaint. FC Inv. Group, 479 F.Supp.2d at 44. It also denied the plaintiffs' request for jurisdictional discovery. Order Denying Mot. 1 (July 7, 2005). Eisenberg and FCIG filed a timely appeal.

II.

We review de novo the district court's dismissal of the amended complaint for lack of personal jurisdiction. See Gorman v. Ameritrade Holding Corp., 293 F.3d 506, 509 (D.C.Cir.2002) (citing Second Amendment Found. v. United States Conference of Mayors, 274 F.3d 521, 523 (D.C.Cir.2001)). We review its denial of jurisdictional discovery for abuse of discretion. See Tax Analysts v. IRS, 410 F.3d 715, 720 (D.C.Cir.2005) (citing Stewart v. Evans, 351 F.3d 1239, 1245 (D.C.Cir. 2003)). The plaintiffs have the burden of establishing the court's personal jurisdiction over IFX. See Reuber v. United States, 787 F.2d 599, 599 (D.C.Cir.1986).

A. General Jurisdiction
1. District's Long-Arm Statute

Eisenberg and FCIG claim that the district court has "general" personal jurisdiction over IFX because IFX maintains a website that allows District residents "to engage in frequent and large value currency, precious metal and other transactions." Appellants' Br. 14.4 D.C.Code § 13-334(a) "permits courts to exercise `general jurisdiction' over a foreign corporation as to claims not arising from the corporation's conduct in the District[ ] if the corporation is `doing business' in the District."5 Gorman, 293 F.3d at 509 (quoting D.C.Code § 13-334(a); citing AMAF Int'l Corp. v. Ralston Purina Co., 428 A.2d 849, 850 (D.C.1981)). "Under the Due Process Clause, such general jurisdiction over a foreign corporation is only permissible if the defendant's business contacts with the forum are `continuous and systematic.'" Id. at 510 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)). The D.C. Court of Appeals "has indicated that the reach of `doing business' jurisdiction under § 13-334(a) is co-extensive with the reach of constitutional due process." Id. (citing Hughes v. A.H. Robins Co., Inc., 490 A.2d 1140, 1148 (D.C. 1985)).

Under certain circumstances, a foreign corporation's maintenance of a website that is accessible in the District can satisfy general jurisdiction requirements. See, e.g., id. at 513. But "[t]he mere accessibility of [a] defendant['s] website[ ] . . . does not establish the necessary minimum contacts" required for general jurisdiction. Id. at 512 (quotations and alterations omitted). Two additional criteria must be met. First, the website must be "interactive." See id. at 511. An "`essentially passive' website through which customers merely access information" is insufficient. Id. at 512 (quoting GTE New Media Servs., Inc. v. BellSouth Corp., 199 F.3d 1343, 1348 (D.C.Cir.2000)). Moreover, District residents must use the website in a "`continuous and systematic'" way. Id. at 512 (quoting GTE, 199 F.3d at 1350); see id. at 513 ("[D]etermining whether Ameritrade is actually `doing business' in the District requires an examination of the frequency and volume of the firm's transactions with District residents."); see also Atlantigas Corp. v. Nisource, Inc., 290 F.Supp.2d 34, 52 (D.D.C. 2003) ("[T]he question is not whether District of Columbia residents `can' transact business in the District with the non-resident defendant through the defendant's website, but if they actually `do' engage in sustained business activities in a continuous and systematic way." (citing Gorman, 293 F.3d at 512-13)).

Although the district court found that IFX's website failed to meet both requirements, we focus only on the second requirement.6 The district court noted that the plaintiffs alleged "only one District of Columbia resident has ever opened an online account with [IFX], and it was open for just six months in 2003." FC Inv. Group, 479...

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