Citadel Securities Americas LLC v. Portofino Technologies AG

Background

Leonard Lancia and Alex Casimo left jobs with Citadel Securities (Europe) Limited in London and later founded Portofino Technologies AG, a Swiss corporation involved in high-frequency cryptocurrency trading. Citadel alleged that Portofino misappropriated Citadel’s proprietary trading strategies, research methods, simulations, and cryptocurrency-related business plans.

Citadel also alleged that Jean Canzoneri provided seed funding to Portofino’s founders in or around January 2021, while they were still Citadel employees. Citadel claimed that Canzoneri knew the founders had access to Citadel’s trade secrets and therefore aided and abetted Portofino’s alleged misappropriation.

Motion and jurisdictional standard

Canzoneri moved to dismiss the claim against him under Federal Rule of Civil Procedure 12(b)(2), arguing that the court lacked personal jurisdiction—that is, legal power over him. He also moved under Rule 12(b)(6), arguing that the plaintiffs failed to state a legally sufficient claim. Alternatively, he asked the court to stay the case while related matters proceeded in a London arbitration.

At the pleading stage, the plaintiffs needed to make a preliminary showing that personal jurisdiction existed. The court first examined whether New York’s long-arm statute authorized jurisdiction and stated that it would consider constitutional due-process requirements only if the statute provided jurisdiction.

Court’s analysis

The plaintiffs relied on New York Civil Practice Law and Rules § 302(a)(3), which can provide jurisdiction over a person who commits a tort outside New York that causes injury in New York, if additional statutory conditions are met. The relevant condition here required the defendant to expect, or reasonably should have expected, the conduct to have consequences in New York.

The court held that the plaintiffs had not alleged facts establishing that requirement. The alleged conduct connected to New York—including the recruitment of a Citadel employee, alleged misappropriation from Citadel’s New York office, and efforts to solicit New York investors—occurred after Canzoneri allegedly invested in Portofino. At the time of the investment, the allegations described Canzoneri as an investor in France who was living in Italy and funding a European business started by two Citadel Europe employees from London.

The court concluded that the plaintiffs offered no basis, beyond Citadel’s having a New York office, to infer that Canzoneri should have expected his investment to have consequences in New York. A later LinkedIn post stating that Portofino had a New York office did not change the result because the plaintiffs did not allege that the post existed when Canzoneri invested or that it showed Portofino intended to acquire Citadel trade secrets or reach New York customers.

Because the plaintiffs failed to establish jurisdiction under New York’s long-arm statute, the court found that it lacked personal jurisdiction over Canzoneri and did not conduct the federal due-process analysis. The court also did not address the merits of Canzoneri’s Rule 12(b)(6) argument. In a footnote, however, the court stated that the allegation that Canzoneri knew the founders worked for Citadel was insufficient by itself to show that he knew they would misappropriate Citadel’s trade secrets. The court also noted that the plaintiffs did not allege that Canzoneri saw a pitch deck describing an intention to replicate Citadel’s trading strategies.

Disposition

The court granted Canzoneri’s motion to dismiss because the plaintiffs had not pleaded facts sufficient to establish personal jurisdiction over him. The court granted the plaintiffs leave to file a second amended complaint solely to cure the deficiencies identified in the opinion, no later than 30 days after the order. The Clerk of Court was directed to terminate the motion at docket entry 39.