Specific Jurisdiction Through the Lens of New York Activity of Foreign Banks
In their Southern District Civil Practice Roundup, Edward Spiro and Judith Mogul discuss Chief Judge Colleen McMahon's recent decision in 'Nike v. Wu', which applied certain general principles of specific jurisdiction to the New York activities of a group of foreign banks against whom discovery was sought in the Southern District of New York in connection with a judgment enforcement proceeding.
December 16, 2018 at 02:30 PM
10 minute read
In the past few years, the Supreme Court has issued a number of decisions emphasizing that the Constitution's limits on personal jurisdiction have real teeth. In its seminal decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), the court upended the long-standing assumption that a corporation's business presence in a state was sufficient to support the exercise of general jurisdiction, announcing that a corporation's contacts with the state must be so continuous and systematic that it is essentially at home there, and explaining that a corporation will generally be at home only in a state in which it is incorporated or has its principal place of business.
Last year, in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017), the court turned its attention to specific jurisdiction, rejecting a “sliding scale” test that took into account the strength of a defendant's non-suit related contacts in determining whether to exercise specific jurisdiction, and holding that the only relevant consideration was the defendant's suit-related contacts with the state. Southern District Chief Judge Colleen McMahon's recent decision in Nike, Inc. v. Wu, 2018 WL 6056259, at *10 (S.D.N.Y. Nov. 19, 2018) applies those general principles of specific jurisdiction to the New York activities of a group of foreign banks against whom discovery was sought in the Southern District of New York in connection with a judgment enforcement proceeding.
'Nike v. Wu'
Judge McMahon's decision in Nike focuses primarily on the jurisdictional implication of the use of correspondent bank accounts, widespread in the world of international banking. A correspondent account is an account at a domestic bank used to make payments or transfers on behalf of a foreign bank. These accounts allow foreign banks to facilitate transactions for clients that would normally require foreign currency exchange. According to the parties in Nike, there are more than 9,000 correspondent accounts maintained by foreign banks in New York alone.
In Nike, two footwear companies sued hundreds of online retailers for selling knock off versions of their popular shoes. The court entered a default judgment for $1.8 billion after the defendants failed to appear. Plaintiffs subsequently assigned that judgment to an investment firm, which then issued subpoenas to six Chinese banks in an effort to identify defendant assets against which to enforce the judgment.
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