Amidax Trading Group v. S.W.I.F.T. Scrl

• Decision Date: 13 February 2009
• Docket Number: No. 08 Civ. 5689(PKC).,08 Civ. 5689(PKC).
• Citation: 607 F.Supp.2d 500
• Parties: AMIDAX TRADING GROUP, on behalf of itself and all others similarly situated, Plaintiff, v. S.W.I.F.T. SCRL, S.W.I.F.T. Pan-Americas, Inc., S.W.I.F.T., Inc., John Snow, in his personal and professional capacities, Stuart Levey, in his personal and professional capacities, United States Department of the Treasury, George W. Bush, in his personal and professional capacities, Central Intelligence Agency, Richard Cheney, in his personal and professional capacities, George Tenet, in his personal and professional capacities, Michael Hayden, in his personal and professional capacities, and Henry M. Paulson, Jr., in his personal and professional capacities, Defendants.
• Court: U.S. District Court — Southern District of New York

607 F.Supp.2d 500

AMIDAX TRADING GROUP, on behalf of itself and all others similarly situated, Plaintiff, v. S.W.I.F.T. SCRL, S.W.I.F.T. Pan-Americas, Inc., S.W.I.F.T., Inc., John Snow, in his personal and professional capacities, Stuart Levey, in his personal and professional capacities, United States Department of the Treasury, George W. Bush, in his personal and professional capacities, Central Intelligence Agency, Richard Cheney, in his personal and professional capacities, George Tenet, in his personal and professional capacities, Michael Hayden, in his personal and professional capacities, and Henry M. Paulson, Jr., in his personal and professional capacities, Defendants.

No. 08 Civ. 5689(PKC).

United States District Court, S.D. New York.

February 13, 2009.

Bruce Ira Afran, Bruce Afran, Princeton, NJ, for Plaintiff.

Shawn Joseph Chen, Cleary Gottlieb Steen & Hamilton LLP, Washington, DC, Andrew S. Marovitz, Andrew H. Schapiro, Mayer Brown LLP, New York City, Catherine A. Bernard, Mayer Brown LLP, Chicago, IL, Matthew Lane Schwartz, U.S. Attorney's Office, SDNY, New York City, for Defendants.

MEMORANDUM AND ORDER

P. KEVIN CASTEL, District Judge.

Amidax Trading Group ("Amidax") brings this action on behalf of itself and purportedly on behalf of all others similarly situated against two sets of defendants: S.W.I.F.T. SCRL, S.W.I.F.T. Pan-Americas, Inc., and S.W.I.F.T., Inc. (collectively, "SWIFT"), a banking consortium; and the United States Department of the Treasury ("Treasury Department" or "Treasury"), the Central Intelligence Agency ("CIA"), and seven former high-ranking federal officials in their professional and individual capacities (collectively, the "Federal Defendants").¹ Plaintiff seeks money damages, a declaratory judgment, and injunctive relief, under the First and Fourth Amendments to the United States Constitution, the Right to Financial Privacy Act ("RFPA"), 12 U.S.C. §§ 3401, et seq., and various state laws and constitutions. These claims for relief stem from administrative subpoenas issued by the Treasury Department to SWIFT pursuant to the Terrorist Finance Tracking Program ("TFTP"), which allegedly resulted in Treasury unlawfully obtaining Amidax's financial information from SWIFT.

Plaintiff filed its complaint on June 23, 2008.² Defendants move to dismiss pursuant to Rule 12(b)(1), Fed.R.Civ.P., for lack of standing under Article III of the Constitution. For the reasons explained below, this motion is granted and the action is dismissed for lack of subject matter jurisdiction. The Court does not reach the other grounds for dismissal asserted by SWIFT and the Federal Defendants.

BACKGROUND

The following facts, taken from the complaint and the exhibits attached to it, are accepted as true for the purposes of this motion.³ See De Jesus v. Sears, Roebuck & Co., Inc., 87 F.3d 65, 69 (2d Cir. 1996) ("The complaint is deemed to include any document annexed to it as an exhibit."). Where a conclusory allegation in the complaint conflicts with a statement made in a document attached to the complaint, the document controls and the allegation is not accepted as true. See Williams v. Citibank, N.A., 565 F.Supp.2d 523, 527 (S.D.N.Y.2008); see also Feick v. Fleener, 653 F.2d 69, 75, 75 n. 4 (2d Cir.1981).

Amidax is a sole proprietorship based in New Jersey that sells household cleaning products to customers throughout the world. (Compl. ¶ 10.) SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is a Belgium-based cooperative of banks "that routes about $6 trillion daily between banks, brokerages, stock exchanges and other institutions." (Id. Ex. C; see also id. Ex. D.) It is the "nerve center of the global banking industry." (Id. Ex. C.) It is not a bank; rather, it "provid[es] electronic instructions on how to transfer money among 7,800 financial institutions worldwide." (Id.) It is "the premier messaging service used by banks around the world to issue international transfers." (Id. Ex. A.)

After the September 11, 2001 terrorist attacks, the executive branch initiated a program to gain access to financial records of people suspected of having ties to terrorism. (Id. Ex. A, C.) Run out of the CIA and overseen by the Treasury Department, the TFTP authorized Treasury to use administrative subpoenas to obtain records from SWIFT without requiring a court-approved warrant or subpoena. (Id. ¶ 30, Ex. C, D.) The subpoenas were issued by the Office of Foreign Asset Control ("OFAC"), within Treasury. (Id. Ex. C.) After obtaining the information requested by the subpoenas, government officials were able to conduct certain targeted searches through the data. (See id. Ex. A, C, D.)

OFAC initially issued a "narrowly targeted subpoena" to SWIFT, seeking only records of individuals "tied to terrorism." (Id. ¶ 1; see id. Ex. D.) SWIFT allegedly could not respond to such a narrow request, but offered to turn over its entire database if the government issued "a valid subpoena." (Id. Ex. C.) This appears to have led to a negotiation between SWIFT and the government regarding the appropriate scope of disclosure and the extent of the privacy safeguards that would be in place. (Id. Ex. A, C.) Among other things, Treasury hired "an outside auditing firm that verifies that the data searches are based on intelligence leads about suspected terrorists." (Id. Ex. C; see id. Ex. A.) Plaintiff alleges "[u]pon information and belief" that "SWIFT provided its entire database to the United States Government as part of the TFTP." (Id. ¶ 27.) Plaintiff alleges that its financial information was contained in the SWIFT database because plaintiff used SWIFT to receive payments from international customers. (See id. ¶ 11.) And thus, plaintiff further alleges "[u]pon information and belief" that "SWIFT disclosed Plaintiff's transactions when it provided its entire database to the United States Government." (Id. ¶ 28.)

As discussed in greater detail below, the overall complaint—including the exhibits attached to it—contradicts and undermines the conjectural allegation that the government obtained the entire SWIFT database, and thus fails to adequately allege that Amidax's data was disclosed to the government.

DISCUSSION

The Court turns to the issue of plaintiff's standing because if standing is lacking then the court is without subject matter jurisdiction to consider defendants' other arguments for dismissal. Article III standing "is the threshold question in every federal case, determining the power of the court to entertain the suit." Ross v. Bank of Am., N.A. (USA), 524 F.3d 217, 222 (2d Cir.2008) (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)) (quotation and citation omitted); see Filetech S.A. v. France Telecom S.A., 157 F.3d 922, 929 (2d Cir.1998) (federal district courts are "duty-bound ... to address the issue of subject matter jurisdiction at the outset"). "A court presented with a motion to dismiss under both Rule 12(b)(1) and 12(b)(6) must decide the jurisdictional question first," Adamu v. Pfizer, Inc., 399 F.Supp.2d 495, 500 (S.D.N.Y.2005) (quotation omitted), because "dismissal under Rule 12(b)(6), i.e., for failure to state a claim, is an adjudication on the merits with preclusive effect." Alliance for Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 88 n. 6 (2d Cir.2006); see also Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (stating that there is no "doctrine of hypothetical jurisdiction"); Merritt v. Shuttle, Inc., 187 F.3d 263, 269 (2d Cir.1999) ("The existence of subject matter jurisdiction goes to the very power of the district court to issue ... rulings.").

A. Governing Law

1. Rule 12(b)(1)

"A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). On a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), the court "must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff ... but jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir.2008) (quotations and citations omitted).

In deciding such a motion, the court is free to consider materials outside the pleadings. Id.; see State Employees Bargaining Agent Coal. v. Rowland, 494 F.3d 71, 77 n. 4 (2d Cir.2007) ("[t]he distinction [between a Rule 12(b)(6) motion and a Rule 12(b)(1) motion] is significant: while we must accept all factual allegations in a complaint as true when adjudicating a motion to dismiss under Fed.R.Civ.P. 12(b)(6), ... we have held that, in adjudicating a motion to dismiss for lack of subject-matter jurisdiction, a district court may resolve disputed factual issues by reference to evidence outside the pleadings, including affidavits") (citation omitted). Indeed, "once the Defendants' motion to dismiss for lack of jurisdiction under Fed. R.Civ.P. 12(b)(1) put[s] the Plaintiff[']s[] Article III standing in issue, the District Court has leeway as to the procedure it wishes to follow." Alliance for Envtl. Renewal, Inc., 436 F.3d at 87-88 (footnotes omitted) (citing Gibbs v. Buck, 307 U.S. 66, 71-72, 59 S.Ct. 725, 83 L.Ed. 1111 (1939) ("As there is no statutory direction for procedure upon an issue of jurisdiction, the mode of its determination is left to the trial court.")).

2. Standing Doctrine

"Article III, § 2, of the Constitution restricts the federal `judicial Power' to the resolution of `Cases' and `Controversies.' That case-or-controversy requirement is satisfied only where a plaintiff has standing." Sprint Commc'n Co., L.P. v. APCC Servs., Inc., ___ U.S. ___, 128 S.Ct. 2531, 2535, 171 L.Ed.2d 424 (2008). To have standing under Article...