Dorchester Financial Securities, Inc. v. Banco BRJ, S.A.
722 F.3d 81
| 2d Cir. | 2013Background
- Dorchester (Florida corp., offices in NY) sued Banco BRJ (Brazilian bank) alleging breach of contract and fraud based on a purported $250 million irrevocable letter of credit; an earlier default judgment (2003) was vacated in 2011 and Dorchester filed a new action in 2011.
- In opposition to BRJ’s Rule 12(b)(2) motion, Dorchester produced an October 3, 2001 letter agreement in which BRJ allegedly consented to New York law and New York personal jurisdiction, plus other documents (letter of credit naming a NY beneficiary address, a SWIFT message, and a demand letter).
- BRJ submitted sworn declarations and documents asserting the materials were forgeries, that BRJ never dealt with Dorchester, never issued instruments like the letter of credit, and had been victim of similar frauds; BRJ asserted it had no U.S. contacts.
- The district court credited BRJ’s “direct, highly specific testimonial evidence” and dismissed for lack of personal jurisdiction without holding an evidentiary hearing.
- On appeal, the Second Circuit held that when a district court decides a 12(b)(2) motion on pleadings and affidavits without an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdiction and courts must construe pleadings and affidavits in the plaintiff’s favor.
- The Second Circuit concluded Dorchester’s proffered October 3, 2001 consent-to-jurisdiction letter, if credited, sufficed to make a prima facie showing; vacated and remanded, instructing the district court either to treat the showing as sufficient (absent a hearing) or to hold an evidentiary hearing where Dorchester must prove jurisdiction by a preponderance of the evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court had personal jurisdiction over BRJ | Dorchester: BRJ consented to New York jurisdiction in the Oct. 3, 2001 letter and other contacts (NY beneficiary address, SWIFT message) suffice for jurisdiction | BRJ: The documents are forgeries; sworn evidence shows no US contacts or dealings with Dorchester; thus no personal jurisdiction | Vacated and remanded — on pleadings/affidavits without an evidentiary hearing Dorchester made a prima facie showing because the consent letter, if credited, establishes jurisdiction; district court erred in resolving authenticity dispute against Dorchester at that stage |
| Proper standard for resolving a jurisdictional dispute decided on affidavits (no evidentiary hearing) | Dorchester: Prima facie showing suffices; pleadings and affidavits construed in plaintiff’s favor | BRJ/district court cited SDNY authority allowing dismissal when defendant rebuts with direct, specific evidence and plaintiff fails to counter | Second Circuit: Adheres to Ball sliding-scale framework — in the absence of an evidentiary hearing plaintiff need only make prima facie showing; district court erred to resolve controverted facts against plaintiff absent a hearing |
| Whether district court must hold an evidentiary hearing | Dorchester: Not required; prima facie is enough to survive 12(b)(2) if no hearing requested | BRJ: Favored resolving the dispute on submitted affidavits showing forgery and lack of contacts | Court: Not required to hold a hearing; but if it does, plaintiff must prove jurisdiction by a preponderance; district court may also leave jurisdictional facts for trial if intertwined with merits |
| Whether the court may consider materials outside the complaint without converting the motion | Dorchester: Court can consider affidavits and extrinsic evidence but must construe in plaintiff's favor | BRJ: Relied on extrinsic evidence to show forgery and absence of contacts | Court: Permissible to consider materials outside the pleadings; but must still treat plaintiff’s submissions as making prima facie showing absent an evidentiary hearing |
Key Cases Cited
- DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81 (2d Cir. 2001) (standard that pleadings and affidavits are construed favorably to plaintiff on jurisdictional motion)
- Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194 (2d Cir. 1990) (sliding-scale framework for plaintiff’s burden before and after discovery)
- Marine Midland Bank, N.A. v. Miller, 664 F.2d 899 (2d Cir. 1981) (district court’s procedural leeway and rule that a prima facie showing suffices absent an evidentiary hearing)
- D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006) (forum-selection/consent can establish jurisdiction)
- Indosuez Int’l Fin. B.V. v. Nat’l Reserve Bank, 98 N.Y.2d 238 (N.Y. 2002) (New York law on forum-selection and consent)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (due process principles and enforceability of forum-selection clauses)
- S. New Eng. Tel. Co. v. Global NAPs Inc., 624 F.3d 123 (2d Cir. 2010) (de novo review and treating pleadings favorably when no evidentiary hearing)
- Alliance For Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82 (2d Cir. 2006) (leave jurisdictional issues for trial when intertwined with merits)