In re Citibank August 11, 2020 Wire Transfers

Background

The court received a joint letter from the parties concerning subject-matter jurisdiction, meaning the court’s legal authority to hear the case. The opinion does not describe the underlying claims or the parties’ broader dispute.

Jurisdiction discussed

Based on preliminary research, the court was inclined to conclude that the Edge Act, 12 U.S.C. § 632, would provide subject-matter jurisdiction at least as to defendants whose clients received wire payments in foreign bank accounts. The joint letter identified those defendants as HPS and Brigade. The court also stated that it could exercise supplemental jurisdiction under 28 U.S.C. § 1367(a) over a defendant for which there was no independent basis of jurisdiction, if the related-jurisdiction requirements were met.

The court further noted that the case could proceed to trial as to seven defendants the parties had confirmed were completely diverse from Citibank under 28 U.S.C. § 1332. The opinion presents these jurisdiction conclusions as preliminary and does not state that the court entered a final ruling resolving jurisdiction as to every defendant.

Required filings and investigation

The court required Citibank to immediately file a single, consolidated amended complaint alleging jurisdiction under the Edge Act, Section 1367, and Section 1332, as applicable. The complaint also had to include correct allegations about each defendant’s state or states of citizenship, to the extent known.

The parties were required to promptly complete their investigation into the citizenship of the three remaining defendants whose citizenship status was still uncertain. After that investigation, they had to file a comprehensive list identifying every person or entity whose citizenship was attributable to the defendants, including each member of every limited liability company and each partner of every limited partnership and that person’s or entity’s state or states of citizenship. The court stated that conclusory statements that no member or partner was a South Dakota citizen would not be enough.

Ruling and effect

The order set requirements and understandings for proceeding toward trial and directed counsel to be ready to discuss the jurisdiction issues at the start of the next day’s proceedings. It did not dismiss the case, grant or deny a motion, or make a final merits decision. Judge Jesse M. Furman signed the order.