U.S. v. Swiss American Bank, Ltd.

• Decision Date: 29 September 2000
• Docket Number: No. Civ.A. 97-12811-WGY.,Civ.A. 97-12811-WGY.
• Citation: 116 F.Supp.2d 217
• Parties: UNITED STATES of America, Plaintiff, v. SWISS AMERICAN BANK, LTD., Swiss American National Bank, Swiss American Holding Co. S.A. of Panama, and Inter-Maritime Bank, Geneva, Defendants.
• Court: U.S. District Court — District of Massachusetts

116 F.Supp.2d 217

UNITED STATES of America, Plaintiff, v. SWISS AMERICAN BANK, LTD., Swiss American National Bank, Swiss American Holding Co. S.A. of Panama, and Inter-Maritime Bank, Geneva, Defendants.

No. Civ.A. 97-12811-WGY.

United States District Court, D. Massachusetts.

September 29, 2000.

COPYRIGHT MATERIAL OMITTED

Irene C. Freidel, Kirkpatrick & Lockhart, Boston, MA, for defendant.

Wm. Shaw McDermott, Kirkpatrick & Lockhart, Boston, MA, for defendant.

Ellen Bober Moyangh, Kirkpatrick & Lockhart, Boston, MA, for defendant.

MEMORANDUM AND ORDER

YOUNG, Chief Judge.

I. BACKGROUND

This is an action by the government for breach of contract, unjust enrichment, and conversion against Swiss American Bank, Ltd., and Swiss American National Bank (collectively "the Swiss American banks"), as well as Swiss American Holding Co. S.A. of Panama ("Swiss American Holding Co.") and Inter-Maritime Bank, Geneva ("Inter-Maritime Bank"). The government seeks to recover $7,000,000 in forfeited drug proceeds that convicted money launderer John E. Fitzgerald deposited into accounts at the Swiss American banks from 1985 to 1987. The accounts were forfeited to the United States under the Racketeer Influenced and Corrupt Organizations forfeiture statute, 18 U.S.C. § 1963, in 1994. See United States v. Fitzgerald, No. 93-10149-RWZ (D.Mass. May 4, 1994). The government alleges that, subsequent to the forfeiture, the Swiss American banks in December, 1994, or January, 1995, illegally transferred $5 million to the government of Antigua, and confiscated the remaining $2,000,000.

In September, 1998, this Court dismissed the complaint, holding that neither the Massachusetts long-arm statute nor Federal Rule of Civil Procedure 4(k)(2) gave the Court personal jurisdiction over the defendants. See United States v. Swiss Am. Bank, Ltd., 23 F.Supp.2d 130, 136 (D.Mass.1998) (hereinafter "Swiss I"). On appeal, the First Circuit upheld this Court's finding that it did not have personal jurisdiction pursuant to the Massachusetts long-arm statute, but vacated the holding pertinent to Rule 4(k)(2) and remanded the case to this Court with a newly articulated methodology for applying the federal rule. See United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 44-45 (1st Cir.1999) (Selya, J.) (hereinafter "Swiss II").

At a hearing before this Court on Jan. 6, 2000, the parties¹ agreed that the defendants would submit new motions to dismiss. Accordingly, the Swiss American banks and Inter-Maritime Bank filed such motions. The government opposed the motions to dismiss and, in the alternative, moved to stay decision on the defendants' motions to dismiss and for leave to conduct discovery relating to personal jurisdiction, indispensable parties, and alter ego.

The Court heard oral arguments on the motions on March 30, 2000. At that hearing, the Court allowed the motion to dismiss of Inter-Maritime Bank for failure adequately to plead allegations of alter ego liability and for lack of personal jurisdiction. The Court took under advisement the Swiss American banks' motions to dismiss for lack of personal jurisdiction, for failure to join an indispensable party, on the grounds of forum non conveniens, and for defective service.

II. DISCUSSION

A. Applicable Standard of Law

Taking all facts and inferences drawn therefrom in the plaintiffs favor, this Court should only grant a motion to dismiss "if it clearly appears, according to the facts alleged, that the plaintiff cannot recover on any viable theory." Figueroa v. Rivera, 147 F.3d 77, 80 (1st Cir.1998). Despite this low threshold, the pleading requirement is "not entirely a toothless tiger." Doyle v. Hasbro, Inc., 103 F.3d 186, 190 (1st Cir.1996). In order to survive a motion to dismiss, the plaintiff must set forth "factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery...." Cooperman v. Individual Inc., 171 F.3d 43, 47 (1st Cir.1999) (quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 [1st Cir.1988]). As such, the Court need not accept "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like...." Rogan v. Menino, 175 F.3d 75, 77 (1st Cir.1999).

B. Personal Jurisdiction under Rule 4(k)(2)

To exercise personal jurisdiction under Fed.R.Civ.P. 4(k)(2), "(1) the plaintiff's claim must be one arising under federal law; (2) the putative defendant must be beyond the jurisdictional reach of any state court of general jurisdiction; and (3) the federal courts' exercise of personal jurisdiction over the defendant must not offend the Constitution or other federal law." Swiss II, 191 F.3d at 38. The Court of Appeals held that the first requirement has been met. See id. at 45. The second requirement, which the Court of Appeals called "the negation requirement," is subject to a modified burdenshifting regime, described as follows:

The plaintiff ... must certify that, based on the information that is readily available to the plaintiff and his counsel, the defendant is not subject to suit in the courts of general jurisdiction of any state. If the plaintiff makes out his prima facie case, the burden shifts to the defendant to produce evidence which, if credited, would show either that one or more specific states exist in which it would be subject to suit or that its contacts with the United States are constitutionally insufficient. Should the defendant default on its burden of production, the trier may infer that personal jurisdiction over the defendant is not available in any state court of general jurisdiction.

Swiss II, 191 F.3d at 41-42 (internal citations omitted). As required by this newly articulated methodology, the government has certified that the defendants are not subject to suit in the courts of general jurisdiction of any state. See Pl.'s Mem. in Opp'n to Swiss Am.'s Mot. to Dismiss at 12. In their reply memoranda, the defendants make no effort to refute the government's claim. Therefore, the defendants are "deemed to have conceded the negation issue, and the [government], to succeed in [its] Rule 4(k)(2) initiative, need only prove that [its] claim arises under federal law and that the defendant has contacts with the United States as a whole sufficient to permit a federal court constitutionally to exercise personal jurisdiction over it." Swiss II, 191 F.3d at 42.

Therefore, the only question for this Court to decide is whether to exercise personal jurisdiction over the Swiss American banks violates their constitutional rights under the Due Process Clause. More specifically, this Court must determine whether "the defendants have adequate contacts with the United States as a whole to support personal jurisdiction and [whether] an assertion of jurisdiction over them would be reasonable." Id. at 45.

Personal jurisdiction may take two forms—specific and general. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Phillips Exeter Acad. v. Howard Phillips Fund, 196 F.3d 284, 288 (1st Cir.1999). This well-established principle has been held to apply to the invocation of personal jurisdiction under Rule 4(k)(2).² See AT & T Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588-89 (9th Cir.1996); SEC v. Knowles, 87 F.3d 413, 418 (10th Cir.1996); Aerogroup Int'l, Inc. v. Marlboro Footworks, Ltd., 956 F.Supp. 427, 439 (S.D.N.Y.1996). The minimum contacts requirement is different for each form.

Specific personal jurisdiction may be asserted if "the claim that under-girds the litigation directly relates to or arises out of" the defendant's contacts with the forum. See Phillips, 196 F.3d at 288. Absent specific jurisdiction, general jurisdiction may be invoked over the defendant if her contacts are sufficiently "continuous and systematic" that the assertion of jurisdiction is "reasonable and just." See id.

C. Application of Rule 4(k)(2)

Because the constitutional questions presented are in essence "minimum contacts" analyses, it may be helpful at the outset to enumerate the contacts alleged by the government, and accepted as fact for the purposes of the motion to dismiss:

(1) The Swiss American banks placed at least twelve advertisements in American Way magazine, a publication of American Airlines, in 1992 and 1993, and entered into a contract for the publication of at least six of those ads.³ See de Kluiver Aff. ¶¶ 5-6, Exs. A-D.

(2) The Swiss American banks were subscribers to, and had a contractual agreement with, Visa International, a credit card company in Foster City, California. The dates of the subscriber agreement and contract are not part of the record. See id. ¶ 7.

(3) The Swiss American banks were a "principal member" of, and entered into a licensing agreement with, MasterCard International in Purchase, New York. The dates of the agreement and membership are not part of the record. See id. ¶ 8.

(4) The Swiss American banks in 1990 filed a lawsuit against a Florida resident, apparently over a contract dispute between the banks and a Florida corporation.⁴ See id. ¶¶ 9-10.

(5) Information about the Swiss American banks was listed on at least three World Wide Web sites in March, 1998. The record does not indicate when the information was placed on these web sites, which are now defunct, or whether the information was placed by Swiss American or a third-party. See id. ¶ 12, Exs. E-F.

(6) The Swiss American banks in 1996 entered into a contract with Arkansas Systems, Inc., of Little Rock, Arkansas, for the provision of ATM support services. See de Kluiver Aff. ¶ 13, Ex. G.

(7) The Swiss American banks entered into a joint venture with Home State Savings Bank of Ohio sometime before 1985, the year that the savings and loan collapsed. See id. ¶ 14, Ex. H.

(8) The Swiss American banks in 1996 loaned $350,000 to a Colorado company that runs an Internet information service in Oklahoma, "Sportspiks." See id. ¶¶ 15-16, Exs. I-K.

(9) The Swiss...