102 A.D.3d 427
N.Y. App. Div.2013Background
- Supreme Court, New York County denied in part Rigby’s dismissal motions and denied KPS/JST personal jurisdiction motions; orders entered Jan 25–26, 2012.
- Complaint alleges Rigby participated in a New York–based conspiracy to commit torts; MMS and related funds purportedly operated from a New York “virtual office.”
- Court considered whether Rigby’s alleged conduct created personal jurisdiction under CPLR 302(a)(2) and whether forum non conveniens or other grounds warranted dismissal.
- Fraud claims target statements about redemptions, Wall Street office, funds under management, and investment returns; co‑conspirators implicated through conspiracy.
- Court dismissed civil RICO claims under PSLRA; and dismissed KPS/JST for lack of personal jurisdiction; declined to dismiss on forum non conveniens grounds where multiple forums involved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction under CPLR 302(a)(2) over Rigby | Rigby conspired with NY‑based actors and acted with knowledge of NY torts | Rigby lacked control/authority over co‑conspirators; no nexus | Jurisdiction sustained under 302(a)(2) due to conspiracy and awareness of NY acts |
| RICO claims barred by PSLRA | RICO acts separately pleaded as fraud and money transfers | PSLRA bars RICO claims predicated on same fraudulent scheme | RICO claims properly dismissed under PSLRA |
| Fraud claims against Rigby and co‑conspirators | Statements about NY office and redemptions were false and impacted investors | Rigby not personally making all misrepresentations; conspiracy supports liability | Fraud claims against Rigby supported through conspiracy and co‑conspirator liability |
| Personal jurisdiction over KPS and JST | Firm letterheads/email used to communicate; asserting control | No control or knowledge by firms; limited transactions | Lack of personal jurisdiction over KPS and JST |
Key Cases Cited
- Best Cellars Inc. v Grape Finds at Dupont, Inc., 90 F. Supp. 2d 431 (SD.N.Y. 2000) (co-conspirator knowledge and NY effects establish minimum contacts)
- Dixon v Mack, 507 F. Supp. 345 (S.D.N.Y. 1980) (out-of-state conspirator’s knowledge of NY torts satisfies test)
- Cleft of the Rock Found. v Wilson, 992 F. Supp. 574 (E.D.N.Y. 1998) (participation/knowledge in NY creates jurisdictional connection)
- Eurycleia Partners v Seward & Kissel, LLP, 12 N.Y.3d 553 (N.Y. 2009) (fraud elements; company liability for misrepresentations through agents/conspiracy)
- Brackett v Griswold, 112 N.Y.454 (1889) (conspiracy liability in fraud context)
- International Shoe Co. v. Washington, 326 U.S. 310 (U.S. Supreme Court 1945) (due process; minimum contacts standard)
- Banco Nacional Ultramarino v Chan, 169 Misc. 2d 182 (N.Y. County 1996) (minimum contacts in New York commerce context)
- Islamic Republic of Iran v Pahlavi, 62 N.Y.2d 474 (1984) (multifactor forum non conveniens analysis)