SPV Osus Ltd. v. UBS AG
882 F.3d 333
| 2d Cir. | 2018Background
- SPV OSUS Ltd. (a Bahamian assignee of Optimal) invested directly with BLMIS and claims roughly $2.9 billion in losses after Madoff/BLMIS was revealed as a Ponzi scheme.
- SPV sued UBS (Swiss/Luxembourg entities) and Access entities in New York state court, alleging they aided and abetted Madoff by supporting two European feeder funds (Luxalpha and Groupement) that funneled billions to BLMIS.
- UBS removed the case to federal court under 28 U.S.C. §§ 1452 and 1334(b); the district court denied SPV’s remand motion (finding "related to" bankruptcy jurisdiction), dismissed for lack of personal jurisdiction over UBS, and dismissed Access defendants for failing to plead proximate cause.
- On appeal, SPV challenged remand denial, the personal-jurisdiction dismissal of UBS, and dismissal of Access for inadequate proximate-cause allegations.
- The Second Circuit affirmed in all respects: (1) the action is "related to" the Madoff/BLMIS bankruptcies; (2) no personal jurisdiction over UBS in New York; (3) Access’s aiding-and-abetting claims fail for lack of proximate cause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remand / "related to" bankruptcy jurisdiction | Litigation is not "related to" the Madoff/BLMIS estates; removal improper | UBS: contingent contribution/indemnity claims could affect the estate; removal proper | Affirmed: "related to" jurisdiction exists because defendants’ potential contribution claims and other consequences could conceivably affect the estates |
| Personal jurisdiction over UBS | UBS had sufficient forum contacts via servicing feeder funds to permit specific or general jurisdiction in NY | UBS: incorporated/headquartered abroad; contacts insufficient for general or specific jurisdiction | Affirmed dismissal for lack of personal jurisdiction: Daimler/Goodyear/Gulf jurisdiction standards not met; alleged contacts too limited and not tied to OSUS’s direct investment decision |
| Proximate cause re: Access aiding-and-abetting claims | Access’s support, marketing, and failure to warn proximately caused SPV’s losses | Access: alleged conduct at most shows but-for causation or lack of duty; no substantial assistance causing direct/foreseeable harm | Affirmed dismissal for failure to plead proximate cause: allegations show only but-for causation and lack the required direct/foreseeable link or fiduciary duty |
| Appellate jurisdiction to review remand denial | SPV initially omitted remand order from notice of appeal | UBS argues waiver; but court may consider subject-matter jurisdiction sua sponte | Court considered remand issue because jurisdictional questions may be raised at any time; reviewed and affirmed denial of remand |
Key Cases Cited
- Celotex Corp. v. Edwards, 514 U.S. 300 (1995) ("related to" jurisdiction may be broad and includes proceedings that affect the bankruptcy estate)
- Parmalat Capital Fin. Ltd. v. Bank of Am. Corp., 639 F.3d 572 (2d Cir. 2011) ("related to" test: conceivable effect on estate suffices)
- In re Cuyahoga Equip. Corp., 980 F.2d 110 (2d Cir. 1992) (same test for "related to" jurisdiction)
- Lerner v. Fleet Bank, N.A., 459 F.3d 273 (2d Cir. 2006) (elements of aiding-and-abetting a breach of fiduciary duty; substantial assistance and actual knowledge required)
- Daimler AG v. Bauman, 571 U.S. 117 (2014) (general jurisdiction limited to a corporation's place of incorporation or principal place of business)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (distinction between general and specific jurisdiction; forum affiliations must render defendant at home)
- Walden v. Fiore, 571 U.S. 277 (2014) (specific jurisdiction requires defendant’s suit-related conduct create substantial connection with forum)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (doctrine on limits of assuming jurisdiction; discussed in concurrence)
- Cromer Fin. Ltd. v. Berger, 137 F. Supp. 2d 452 (S.D.N.Y. 2001) (proximate cause requirement for substantial assistance in Ponzi/aid-and-abet contexts)