Spy Osus Ltd. v. UBS AG
114 F. Supp. 3d 161
S.D.N.Y.2015Background
- Plaintiffs (Hill plaintiffs and SPV) are investors harmed by Bernard L. Madoff Investment Securities (BLMIS) and sue UBS AG, UBS (Luxembourg) S.A. (UBS SA), UBS Fund Services (Luxembourg) S.A. (UBS FSL), and UBS Third Party Management Co. S.A. (UBS TPM) for roles in sponsoring/operating feeder funds (Luxalpha and Groupement Financier) that funneled money to Madoff.
- Complaints allege UBS entities promoted, administered, custodized, managed, and otherwise enabled the feeder funds while largely delegating functions to BLMIS and collecting fees, thereby aiding and abetting Madoff’s fraud.
- Claims asserted: aiding and abetting fraud, aiding and abetting breach of fiduciary duty, aiding and abetting conversion, knowing participation in breach of trust; Hill plaintiffs also allege unjust enrichment and aiding and abetting embezzlement.
- UBS moved to dismiss on grounds including lack of personal jurisdiction, SLUSA preemption, failure to state a claim, and statute of limitations; court addressed personal jurisdiction first.
- Court found UBS AG (Swiss-incorporated) not subject to general jurisdiction in New York under Daimler; UBS SA, UBS FSL, and UBS TPM (Luxembourg entities) had no U.S. presence and were not subject to general jurisdiction as "mere departments."
- Court concluded no specific jurisdiction: plaintiffs failed to show their injuries arose out of or were proximately caused by the UBS defendants’ contacts with New York (claims were injuries from BLMIS’s Ponzi scheme, not forum-directed UBS conduct). Action dismissed for lack of personal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| General personal jurisdiction over UBS AG and affiliates | UBS has extensive NY contacts (offices, business, cases) making it "at home" in NY | UBS AG is Swiss-incorporated with principal place of business in Switzerland; affiliates lack US presence | No general jurisdiction; Daimler standard controls — not an "exceptional case" |
| Attribution of parent’s contacts to subsidiaries ("mere department") | UBS SA, UBS FSL, UBS TPM are departments of UBS AG, so UBS AG’s NY contacts confer jurisdiction | "Mere department" applies only if parent is subject to general jurisdiction; here UBS AG is not | Rejected — parent not "at home," so subsidiaries not subject via aggregation |
| Specific jurisdiction based on forum-directed acts (account opening, documents, redemption processing) | UBS SA and others had New York contacts (contracts with BLMIS, account paperwork, redemptions routed via Stamford) that relate to plaintiffs’ injuries | Contacts were limited/indirect and plaintiffs’ injuries resulted from BLMIS’s fraud, not UBS’s forum activities | No specific jurisdiction — plaintiffs failed to show their injuries arose from or were proximately caused by UBS’s NY contacts |
| Proximate causation / relatedness between UBS conduct and plaintiffs’ injuries | If UBS had not sponsored/disguised feeder funds or had disclosed the fraud, plaintiffs would have avoided losses | Plaintiffs were BLMIS investors, not feeder-fund investors; assertions about speculative disclosures or early collapse are attenuated and unlikely to change outcome | Held plaintiffs’ allegations do not meet even "but for" causation; claims lack the required nexus to forum contacts |
Key Cases Cited
- Gucci Am., Inc. v. Weixing Li, 768 F.3d 122 (2d Cir. 2014) (distinguishes general vs. specific jurisdiction and treats Daimler limits)
- Daimler AG v. Bauman, 134 S. Ct. 746 (2014) (corporation subject to general jurisdiction only where incorporated or principal place of business except in exceptional cases)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011) (general jurisdiction requires affiliations so "continuous and systematic" as to render defendant at home)
- Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) (distinguishes general and specific jurisdiction)
- Walden v. Fiore, 134 S. Ct. 1115 (2014) (specific jurisdiction requires that claim arise out of defendant’s forum contacts)
- Kernan v. Kurz‑Hastings, Inc., 175 F.3d 236 (2d Cir. 1999) (purposeful availment and relatedness test for specific jurisdiction)
- Chew v. Dietrich, 143 F.3d 24 (2d Cir. 1998) (degree of forum contacts affects required causation showing for specific jurisdiction)
- In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 659 (2d Cir. 2013) (discussion of general vs. specific jurisdiction framework)