Schansman v. Sberbank of Russia PJSC

Background

VTB Bank (PJSC) asked the court to certify an earlier order for an interlocutory appeal, meaning an appeal before the district court entered a final judgment. The earlier order denied defendants’ motions to dismiss the plaintiffs’ Second Amended Complaint. In that order, the court concluded in part that it could exercise personal jurisdiction—the court’s authority over a defendant—over VTB and Sberbank of Russia.

VTB argued that the personal-jurisdiction ruling should be reviewed immediately. The court had already denied VTB’s request for reconsideration and had reaffirmed that the allegations showed a preliminary case for jurisdiction. The plaintiffs alleged that VTB and Sberbank operated correspondent accounts in New York, routed U.S.-dollar transactions through those accounts, and processed transfers for fundraisers supporting the DPR. They also alleged that VTB used its New York correspondent account for specific transactions that transferred money to the DPR and helped fund the activities connected to the aircraft crash at issue in the litigation.

Legal Standard

Under 28 U.S.C. § 1292(b), a district court may certify an order for an immediate appeal only if the order involves a controlling legal question, there is substantial reason to disagree about that question, and an immediate appeal may materially advance the end of the litigation. The court described interlocutory review as an exceptional remedy and placed the burden on VTB to justify departing from the usual practice of waiting for a final judgment.

Court’s Analysis

The court held that VTB had not shown a controlling question of law. Whether VTB’s conduct and its connections with New York established personal jurisdiction required examination of the particular facts and a full record, rather than resolution of a pure legal question that an appellate court could decide quickly without studying the record.

The court also held that VTB had not shown a substantial ground for disagreement. It determined that its jurisdiction ruling was consistent with the Second Circuit’s decision in Daou v. BLC Bank, S.A.L. The court distinguished cases involving banks that had refused to send funds through New York correspondent accounts. Here, the plaintiffs alleged actual, specific transactions through VTB’s New York account that allegedly helped fund the DPR. The court stated that those allegations were more like the transactions discussed in Licci and that recent precedent supported, rather than undermined, its jurisdiction ruling.

Finally, the court held that an immediate appeal would not materially advance the litigation. An appeal would cause additional delay, particularly because discovery had already been substantially delayed. The court noted that only 239 of more than 7,000 estimated documents had been produced and that Russian-law restrictions had already slowed discovery.

Disposition

Judge Carter denied VTB’s motion to certify the September 30, 2021 order for interlocutory appeal. The Clerk of Court was directed to close the motion, and the parties were ordered to file a joint status report by April 11, 2024.