Nike, Inc. v. Wu
349 F. Supp. 3d 346
S.D. Ill.2018Background
- NIKE and Converse obtained a default judgment (Aug. 20, 2015) against hundreds of online retailers, many in China; they assigned the judgment to Next Investments (Assignee) to enforce it.
- The Assignee issued Rule 45 subpoenas to six Chinese banks (nonparties) seeking account/customer records linked to the judgment debtors; the banks moved to quash and the Assignee moved to compel.
- Magistrate Judge Freeman denied the banks’ motion to quash and granted the Assignee’s motion to compel, finding personal jurisdiction and declining to require use of the Hague Evidence Convention; the banks objected to the magistrate’s non-dispositive order.
- The district court reviewed the magistrate judge’s order under the deferential “clearly erroneous or contrary to law” standard and affirmed the order.
- The court ordered the banks to comply within 28 days and referred further discovery disputes back to the magistrate judge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over foreign banks for Rule 45 subpoenas | Banks maintained and repeatedly used NY correspondent/settlement accounts to process USD transfers for judgment debtors, creating an "articulable nexus" with the subpoenas | Banks argued mere maintenance of correspondent accounts or de minimis/branch activity is insufficient; some transactions were incidental or unrelated to judgment debtors | Held: NY long-arm and Due Process satisfied; repeated, deliberate use of NY correspondent/settlement accounts shows purposeful availment; magistrate’s findings not clearly erroneous |
| Treating settlement accounts like correspondent accounts | Assignee: settlement accounts function analogously to correspondent accounts and can establish jurisdiction | Banks: acquiring/settlement activities occur in China; no precedent to treat settlement accounts as jurisdictional hook | Held: Court accepts reasonable extension of correspondent-account jurisprudence to settlement accounts based on evidence of their use in USD clearing; not contrary to law |
| Comity / Hague Evidence Convention alternative | Assignee: Hague route historically yields delayed and partial results from China; direct U.S. discovery is necessary and appropriate under balancing test | Banks: comity and Chinese bank secrecy laws require using Hague Convention; compliance would put banks in impossible position | Held: Court applied Restatement §442/Linde balancing factors and found Hague route was not a viable, timely alternative; comity concerns and Chinese secrecy laws did not bar the subpoenas |
| Burden/Reasonableness ("fair play and substantial justice") | Assignee: factors (forum interest, plaintiff’s need, efficiency) favor permitting subpoenas; banks offered speculative policy harms | Banks: enforcement would burden banks, risk violating Chinese law, and have adverse policy consequences for NY banking | Held: Magistrate reasonably concluded burden and sovereign-interest concerns insufficient to defeat jurisdiction; concerns about sanctions speculative and thus not preclusive |
Key Cases Cited
- Gucci Am., Inc. v. Weixing Li, 768 F.3d 122 (2d Cir. 2014) (nonparty discovery and nexus between forum contacts and subpoenaed information)
- Licci by Licci v. Lebanese Canadian Bank, SAL, 834 F.3d 201 (2d Cir. 2016) (New York long-arm analysis for foreign banks and correspondent accounts)
- Rushaid v. Pictet & Cie, 28 N.Y.3d 316 (N.Y. 2016) (quantity/quality of correspondent-account use can show purposeful availment)
- Linde v. Arab Bank, PLC, 706 F.3d 92 (2d Cir. 2013) (balancing test for discovery that may implicate foreign sovereign interests and laws)
- Société Nationale Industrielle Aérospatiale v. U.S. Dist. Court for S.D. of Iowa, 482 U.S. 522 (1987) (no blanket rule requiring Hague procedures; case-by-case comity analysis)
- Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58 (2d Cir. 2009) (policy consequences of exercising certain forum-based remedies on international banking)
- Amigo Foods Corp. v. Marine Midland Bank-N.Y., 46 N.Y.2d 855 (N.Y. 1979) (single routing through NY correspondent account insufficient for jurisdiction)