Knight v. Standard Chartered Bank

• Decision Date: 31 March 2021
• Docket Number: 19 Civ. 11739 (PAE)
• Citation: 531 F.Supp.3d 755
• Parties: Julian M. KNIGHT and Anshuman Chandra, Plaintiffs, v. STANDARD CHARTERED BANK, Standard Chartered Bank, Dubai, and Standard Chartered Bank, New York, Defendants.
• Court: U.S. District Court — Southern District of New York

531 F.Supp.3d 755

Julian M. KNIGHT and Anshuman Chandra, Plaintiffs,

v.STANDARD CHARTERED BANK, Standard Chartered Bank, Dubai, and Standard Chartered Bank, New York, Defendants.

19 Civ. 11739 (PAE)

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

Signed March 31, 2021

Robert J. Cynkar, McSweeney Cynkar & Kachouroff PLLC, Great Falls, VA, Patrick M. McSweeney, Patrick M. McSweeney, Attorney at Law, Powhatan, VA, for Plaintiffs.

Antonio Jorge Perez-Marques, Lindsay Brooke Schare, Davis Polk & Wardwell LLP, New York, NY, for Defendants.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

Plaintiffs Julian Knight ("Knight") and Anshuman Chandra ("Chandra") bring this claim for unlawful retaliation in violation of the Federal False Claims Act ("FCA"), 31 U.S.C. § 3730, and the New York False Claims Act, N.Y. State Fin. Law § 191 ("NYFCA"). Plaintiffs allege that after they sued defendant Standard Chartered Bank ("SCB") and two of its branches under the FCA and NYFCA for evading U.S. sanctions against Iran, SCB retaliated against them. Defendants now move to dismiss for lack of personal jurisdiction and failure to state a claim under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), respectively, as well as based on forum non conveniens. The Court holds that it lacks personal jurisdiction over the defendants on the federal FCA claim. The Court declines to exercise supplemental jurisdiction over the NYFCA claim, and therefore dismisses the complaint in its entirety, without prejudice.

I. Background

A. Factual Background¹

The Court incorporates by reference the factual background set out in its July 2, 2020 Opinion and Order. See United States ex rel. Brutus Trading, LLC v. Standard Chartered Bank , No. 18 Civ. 11117 (PAE), 2020 WL 3619050 (S.D.N.Y. July 2, 2020). The Court provides background here only as needed to resolve the pending motion to dismiss.

1. Parties

SCB is a public limited liability company incorporated in the United Kingdom and headquartered in London. FAC ¶ 28. SCB has a number of branches, including in Dubai ("SCB Dubai") and New York ("SCB NY"). Id. ¶¶ 29–30.

Knight is a citizen of and resides in the United Kingdom. Id. ¶ 20. SCB hired Knight in 2008. In 2009, he became SCB's Global Head of Transaction Banking Foreign Exchange Sales. Id. ¶ 26.

Chandra is a citizen of India. Id. ¶ 15. In August 2011, he was hired by SCB. He served as SCB Dubai's Head of eCommerce Client Services. Id. ¶¶ 17, 47.

2. Plaintiffs’ Reporting of Misconduct at SCB

The FAC alleges that in 2011, Knight first reported to SCB issues with its procedures to guard against money laundering, including as aimed at circumventing international sanctions against Iran. Id. ¶ 9. In 2012, Knight and a co-worker, Robert Marcellus, a relator in the related qui tam action, United States ex rel. Brutus Trading, LLC v. Standard Chartered Bank , became aware of a New York-based investigation into SCB for violating Iranian sanctions. Id. ¶ 10. Knight and Marcellus approached federal and state financial regulators with information about SCB's handling of money laundering. Id. They also filed a qui tam action under the FCA and the NYFCA. It alleged that SCB had misled the Government in negotiating a deferred prosecution agreement in 2012, and that SCB had continued to engage in conduct violating Iranian sanctions notwithstanding its pledge to the Government to cease to do so. United States ex rel. Brutus Trading, LLC , 2020 WL 3619050, at *1. In May 2013, Chandra contacted Knight and offered to provide him records of SCB deals with customers with links to Iran. FAC ¶ 12. Between May 2013 and December 2016, Chandra provided such information to federal and New York state investigators. Id.

In August 2013, the Government informed Knight and Marcellus that it would decline to intervene in the case. See United States ex rel. Brutus Trading, LLC , 2020 WL 3619050 at *1. In November 2018, Knight and Marcellus, acting through an entity they named "Brutus Trading, LLC," refiled the qui tam complaint. The Government again declined to intervene. Id. at *2. On November 21, 2019, after the initial complaint had been twice amended, the Government moved to dismiss. Id. In July 2, 2020, this Court granted the motion to dismiss, after finding that the Government had "proffered ‘a valid government purpose’ for seeking to dismiss the qui tam action—namely, the early termination of actions as to which the Government has determined that the factual allegations are meritless—and ha[d] articulated a more than ‘rational relation between dismissal and accomplishment of th[at] purpose." Id. at *3 (quoting United States ex rel., Sequoia Orange Co. v. Baird-Neece Packing Corp. , 151 F.3d 1139, 1145 (9th Cir. 1998) ). Brutus Trading has appealed. Its appeal is pending. See No. 18 Civ. 11117 (PAE), Dkt. 66.

3. SCB's Retaliation Against Plaintiffs

The FAC pleads that the three named defendants—SCB and its Dubai and New York branches—retaliated against Knight and Chandra by terminating them without reasonable cause, discrediting them with other employers, withholding benefits from Chandra, discriminating against them, and threatening them and their families. FAC ¶ 13. It pleads that SCB gave Knight a notice of termination on October 10, 2011, and terminated him on January 9, 2012. Id. ¶ 44. Since then, the FAC alleges, defendants have discredited Knight and prevented him from finding employment in the financial services field. Id. ¶ 78. The FAC also alleges that, on December 7, 2016, SCB told Chandra that his position had become redundant and his employment would be terminated, and that, on April 8, 2017, it terminated him. Id. ¶ 71.

B. Procedural History of This Action

On December 23, 2019, Knight and Chandra filed the initial complaint, with subject matter jurisdiction as to the plaintiffs’ claim under the FCA, 21 U.S.C. § 3730(h), based on the presence of a federal question, see 28 U.S.C. § 1331 ; FAC ¶ 32, and subject matter jurisdiction over Chandra's and Knight's claims under NYFCA based on the Court's diversity jurisdiction, 28 U.S.C. § 1332(a)(2), and the Court's supplemental jurisdiction, 28 U.S.C. § 1367(a). On May 1, 2020, defendants filed a motion to dismiss. Dkt. 13. On May 5, 2020, the Court issued an order, giving plaintiffs until May 22, 2020, to file any amended complaint. Dkt. 19. Plaintiff then filed the First Amended Complaint ("FAC"), Dkt. 21, asserting two counts. Count One alleges unlawful retaliation against plaintiffs in violation of the FCA, 21 U.S.C. § 3730. Count Two alleges unlawful retaliation against plaintiffs in violation of the NYFCA, N.Y. State Fin. Law § 191.

On June 19, 2020, defendants moved to dismiss. Dkt. 25. Their supporting memorandum of law, Dkt. 26 ("Def. Mem."), argued that personal jurisdiction was lacking under Rule 12(b)(2), that the FAC did not state a claim under Rule 12(b)(6), and that dismissal was merited based on forum non conveniens. On July 17, 2020, plaintiffs filed a memorandum in opposition. Dkt. 29 ("Pl. Opp'n"). On August 4, 2020, the defendants filed a reply. Dkt. 30 ("Reply").

II. Applicable Legal Standards: Personal Jurisdiction

A. Requirements

There are three requirements for a federal court to lawfully exercise personal jurisdiction. "First, the plaintiff's service of process upon the defendant must have been procedurally proper." Licci ex rel. Licci v. Lebanese Canadian Bank, SAL , 673 F.3d 50, 59 (2d Cir. 2012). Second, "there must be a statutory basis for personal jurisdiction that renders such service of process effective." Id. Third, "an exercise of jurisdiction under these laws [must be] consistent with federal due process requirements." Grand River Enters. Six Nations, Ltd. v. Pryor , 425 F.3d 158, 165 (2d Cir. 2005). See generally Burger King Corp. v. Rudzewicz , 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).

1. Service of Process

"Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied." Dynegy Midstream Servs. v. Trammochem , 451 F.3d 89, 94 (2d Cir. 2006) (quotation omitted). Federal Rule of Civil Procedure 4 governs the content, issuance, and service of a summons. Id. Under Rule 4(h), unless federal law provides otherwise or the defendant has filed a waiver of service, a corporation must be served in one of two ways. It may be served "in a judicial district of the United States ... in the manner prescribed by Rule 4(e)(1) for serving an individual; or ... by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process ...." Fed. R. Civ. P. 4(h)(1). Or, it may be served "at a place not within any judicial district of the United States, in any manner prescribed by Rule 4(f) for serving an individual, except personal delivery under (f)(2)(C)(i)." Fed. R. Civ. P. 4(h)(2).

2. Statutory Basis

A court must also have a statutory basis for asserting personal jurisdiction over each defendant based on the long-arm statute of the state in which it sits. See 31 U.S.C. § 3732(a) ("Any action under section 3730 [the FCA] may be brought in any judicial district in which the defendant or, in the case of multiple defendants, any one defendant can be found, resides, transacts business, or in which any act proscribed by section 3729 occurred."); Eades v. Kennedy, PC L. Offs. , 799 F.3d 161, 168 (2d Cir. 2015).

New York's long-arm statute provides for general jurisdiction, see New York Civil Practice Law and Rules ("C.P.L.R.") § 301, which may arise from a foreign defendant's overall course of business in the state. Such jurisdiction is proper when "a company has engaged in such a continuous and systematic course of doing business in New York that a finding of its presence in New York is warranted." Sonera Holding B.V. v. Cukurova Holding A.S. , 750 F.3d 221, 224 (2d Cir. 2014) (cleaned up); see also MTS Logistics, Inc. v....