954 F. Supp. 2d 972
C.D. Cal.2013Background
- Barantsevich sued VTB Bank in California over a failed software venture funded through VTB Group; entities involved include VTB Capital AM and VTB Capital, Inc., with Beau Laboratories and Zao Labs on the structure.
- VTB Capital AM provided equity financing to Zao Labs and Beau Labs; Zao Labs and Beau Labs were used to route funds for software development.
- Investments totaled about $7 million, with $4 million wired initially to Beau Labs via Zao Labs and remaining funds contingent on progress.
- Wire transfers were allegedly misrepresented as R&D costs and directed to Vestax and Bigland as kickbacks; purportedly approved by Zao Labs boards.
- Plaintiff asserted fraud, unfair competition, and RICO claims; defendant moved to dismiss for lack of personal jurisdiction under Rules 12(b)(2) and (6); amended complaint added several VTB entities as defendants.
- Court’s procedural posture: 12(b)(2) directed to FAC; 12(b)(6) moot as to amended pleadings; jurisdictional issues analyzed below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court has general jurisdiction over VTB Bank | Plaintiff argues VTB Bank is present via US subsidiaries. | VTB Bank asserts no California offices or assets; subsidiaries alone cannot impose general jurisdiction. | No general jurisdiction over VTB Bank. |
| Whether VTB Bank is subject to jurisdiction via agency between bank and its US subsidiaries | VTB Capital AM/Inc act as agents for VTB Bank in the US. | Subsidiaries are separate legal entities; no proven agency relationship. | No agency basis to impute subsidiary contacts to VTB Bank. |
| Whether VTB Bank is alter ego of its US subsidiaries | Unity of interest justifies piercing corporate veil. | No evidence of undercapitalization, commingled funds, or day-to-day control; entities separate. | Alter ego theory not satisfied; no basis to pierce corporate veil. |
| Whether the court can exercise specific jurisdiction over VTB Bank | VTB Bank purposefully availed itself of California by funding and discussing venture in CA. | Contacts are through VTB Capital AM, not VTB Bank; no purposeful availment by bank. | No specific jurisdiction; acts attributed to subsidiary cannot be imputed to bank. |
| Whether jurisdiction exists under Rule 4(k)(2) (federal long-arm) | RICO claims allow nationwide service if no state court could exercise jurisdiction. | VTB Bank not subject to general jurisdiction anywhere; due process not satisfied. | Rule 4(k)(2) not satisfied; no federal long-arm jurisdiction. |
Key Cases Cited
- Pebble Beach Co. v. Caddy, 453 F.3d 1151 (9th Cir. 2006) (burden on plaintiff to show jurisdiction; prima facie standard)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (U.S. 1980) (minimum contacts and foreseeability for jurisdiction)
- International Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (foundation for due process and minimum contacts)
- Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408 (U.S. 1984) (limits on general jurisdiction; continuous and systematic contacts)
- Roth v. Garcia-Marquez, 942 F.2d 617 (9th Cir. 1991) (purposeful availment in tort-suits)