Edmar Financial Company, LLC v. Currenex, Inc.

Background

This proposed class action concerns the Currenex foreign-exchange trading platform, which the opinion says was jointly operated by Currenex, Inc. and State Street Global Markets International Limited, also called SS Global or State Street Global. The plaintiffs alleged that SS Global, Currenex, and certain trading participants conspired to manipulate foreign-exchange auctions.

In an earlier ruling, the court granted SS Global’s motion to dismiss for lack of personal jurisdiction because the earlier complaint did not plausibly allege facts specifically connecting SS Global to the court’s jurisdiction and instead grouped Currenex, Inc. and SS Global together. The plaintiffs then filed a second amended complaint alleging additional facts about SS Global’s contacts with New York. SS Global again moved to dismiss for lack of personal jurisdiction.

Legal Standard

Because there had been no jurisdictional discovery, the plaintiffs needed only to make a prima facie showing of personal jurisdiction. This means they had to plead legally sufficient facts that, if accepted as true at this stage, would support the court’s authority over SS Global. The court considered whether New York’s long-arm statute applied and whether exercising jurisdiction would comply with federal due process.

Court’s Analysis

The court held that the plaintiffs made the required preliminary showing. The second amended complaint alleged that SS Global and Currenex, Inc. jointly operated and managed the Currenex platform, that SS Global claimed responsibility for offering the platform, and that the entities used the name “Currenex” to refer to both of them. Based on those allegations, the court held that the platform’s New York contacts could be attributed to SS Global.

The complaint also alleged that the platform was located in the district and matched and executed trades there; that SS Global representatives made business decisions there; and that SS Global’s agents drafted some of the allegedly fraudulent marketing materials and disclosures there. The court found that these allegations were sufficient to establish a prima facie case under New York’s long-arm statute.

SS Global argued that the platform’s matching-engine servers were outside New York. The court declined to resolve that factual dispute while deciding a jurisdiction challenge based on the pleadings and stated that an internet-based business could operate from one state while its data center was in another. SS Global also argued that the complaint did not allege that its employees operated the platform in New York, but the court found the allegations about the platform’s operations and SS Global’s agents sufficient at this stage.

Finally, the court held that exercising jurisdiction would satisfy due process. It stated that, because jurisdiction was appropriate under the relevant provision of New York’s long-arm statute, due process was presumed satisfied, and that SS Global purposefully benefited from operating its foreign-exchange platform in New York.

Disposition

The court denied SS Global’s motion to dismiss. It emphasized that the plaintiffs will eventually have to establish personal jurisdiction by a preponderance of the evidence at a pretrial hearing or trial, but that a prima facie showing was sufficient before such a hearing.