ATLANTICA HOLDINGS, INC., ALLAN KIBLISKY, JACQUES GLIKSBERG, BALTICA INVESTMENT HOLDING, INC., BLU FUNDS, INC., ANTHONY KIBLISKY, Plaintiffs-Appellees, -v.- SOVEREIGN WEALTH FUND SAMRUK-KAZYNA JSC, A/K/A NATIONAL WELFARE FUND SAMRUK-KAZYNA, Defendant-Appellant.
No. 14-917-cv
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term 2014 (Argued: April 24, 2015 Decided: February 3, 2016)
Before: WESLEY, LIVINGSTON, and CHIN, Circuit Judges.
AFFIRMED IN PART, DISMISSED IN PART.
JOSEPH D. PIZZURRO (Jonathan J. Walsh, Kevin A. Meehan, on the brief), Curtis, Mallet-Prevost, Colt & Mosle LLP, New York, NY, for Defendant-Appellant.
BRETT D. JAFFE (Jennifer S. Kozar, James S. D‘Ambra, Jr., on the brief), Alston & Bird
DEBRA ANN LIVINGSTON, Circuit Judge:
This interlocutory appeаl presents a question of first impression: whether the Foreign Sovereign Immunities Act of 1976 (“FSIA“), Pub. L. No. 94-583, 90 Stat. 2891, immunizes an instrumentality of a foreign sovereign against claims that it violated federal securities laws by making misrepresentations outside the United States concerning the value of securities purchased by investors within the United States. Plaintiffs-Appellees Atlantica Holdings, Inc. (“Atlantica“); Baltica Investment Holding, Inc. (“Baltica“); Blu Funds, Inc. (“Blu Funds“); Allan and Anthony Kiblisky (the “Kibliskys“); and Jacques Gliksberg (“Gliksberg“) (collectively, “Plaintiffs“) brought this action in the United States District Court for the Southern District of New York, alleging that Defendant-Appellant Sovereign Wealth Fund Samruk-Kazyna JSC (“SK Fund“), a sovereign wealth fund of the Republic of Kazakhstan, misrepresented the value of certain notes (the “Subordinated Notes“) issued by non-party BTA Bank JSC (“BTA Bank“), a Kazakhstani corporation majority-owned by SK Fund, in connection with a 2010 restructuring of BTA Bank‘s debt. Plaintiffs seek to hold SK Fund liable for these misrepresentations under Sections 10(b) and 20(a) of the
The district court (Jesse M. Furman, Judge) held that the FSIA furnished both subject-matter jurisdiction over Plaintiffs’ claims and personal jurisdiction over SK Fund, and therefore denied SK Fund‘s motion to dismiss. We agree with the district court that SK Fund is not immune from suit under the FSIA because Plaintiffs’ claims are “based upon . . . an act outside the territory of the United States” that “cause[d] a direct effect in the United States.”
BACKGROUND1
SK Fund, a joint-stock company wholly owned by the government of the Republic of Kazakhstan, is the majority owner of BTA Bank, a Kazakhstani corporation. In February 2009, SK Fund acquired 75.1% of BTA Bank‘s common stock by making a $1.5 billion investment in the bank. Shortly thereafter, in April 2009, BTA Bank announced that it had ceased principal payments on all of its outstanding financial obligations. Atlantica and Baltica, each a Panamanian investment fund, were creditors of BTA Bank, having purchased certain of its outstanding debt securities. These securities could only be held in accounts maintained in specific clearing systems, access to which is generally limited to large financial institutions (“Direct Participants“). However, Direct Participants could hold BTA Bank securities for either their own account or their customers’ benefit. Atlantica and Baltica were customers of UBS Financial Services (“UBS“), a large financial institution that was evidently a Direct Participant.
The Information Memorandum described the terms of the 2010 Restructuring. SK Fund would receive additional equity in BTA Bank, becoming an 80% owner. Preexisting holders of BTA Bank‘s debt would receive, in exchange for their old securities, new ones, including the Subordinated Notes. Like BTA Bank‘s old securities, the new ones issued in connection with the 2010 Restructuring could be held only by Direct Participants. Again, however, Direct Participants could hold the new securities either for their own accounts or for their customers’ benefit. The new securities were subject to transfer restrictions. In particular, because they would not be registered under United States securities laws, they could be transferred only to non-U.S. persons or QIBs in transactions exempt from this country‘s registration requirements. See 1 Louis Loss et al., Fundamentals of Securities Regulation 582-83 (6th ed. 2011). Interests in the new securities could be transferred on the books of a Direct Participant, but such transfers were subject to the same restrictions.
As required for the 2010 Restructuring to become effective, it was initially approved by BTA Bank‘s creditors in May 2010 and then by a court in Kazakhstan in July 2010. As creditors, Atlantica and Baltica committed to participate in the 2010 Restructuring—i.e., to accept Subordinated Notes in exchange for their existing securities—by communicating with their broker in the Miami office of UBS. Atlantica and Baltica later acquired additional Subordinаted Notes on the secondary market between September 2010 and October 2012, and the other Plaintiffs, who had not previously been creditors of BTA Bank, acquired Subordinated Notes on the secondary market as well: Blu Funds made its investment in April 2012, the Kibliskys made theirs in January 2011, and Gliksberg made several purchases between September 2010 and May 2011. Blu Funds, like Atlantica and Baltica, is a Panamanian investment fund; the Kibliskys live in Miami, and Gliksberg lives in Highland Park, Illinois.
Plaintiffs’ secondary-market purchases were all made through UBS‘s Miami office, which sent Plaintiffs’ orders to its broker-dealer in New York using funds from Plaintiffs’ UBS accounts. The orders were filled, and the transactions completed, in New York. Plaintiffs allege that BTA Bank and SK Fund marketed the Subordinated Notes “extensively in the United States, and directed that marketing to U.S. investors,”
Plaintiffs claim to have made their investments in the Subordinated Notes in reliance on a number of misrepresentations contained in the Information Memorandum and made subsequently by SK Fund and BTA Bank. Principally, the Information Memorandum—including the portion describing the obligations undertaken by SK Fund in the Deed of Undertaking—stated that BTA Bank would not pay SK Fund any dividends on its equity holdings until the bank‘s newly issued securities, including the Subordinated Notes, were paid in full. This representation, in addition to other financial disclosures in the Information Memorandum, was allegedly false in light of a complex, undisclosed series of transactions between BTA Bank and SK Fund (the “Negative Carry Swap“) pursuant to which BTA Bank paid interest on SK Fund deposits at a rate significantly higher than BTA Bank was earning on bonds it had purchased from SK Fund. According to Plaintiffs, the Negative Carry Swаp resulted in SK Fund‘s effectively “siphon[ing] hundreds of millions of dollars from BTA Bank at the expense of other creditors.” J.A. 20-21.
The Negative Carry Swap began to come to light in May 2011, when BTA Bank issued an investor presentation disclosing that it was paying more on its liabilities than it was taking in on its assets, and when the investment bank J.P. Morgan published a research report disclosing additional details of BTA Bank‘s asset-liability yield mismatch. As a result of these disclosures, the value of the Subordinated Notes decreased to less than 40% of face value by June 2011, and then to less than 10% of face value by January 2012.
Between July 2011 and December 2011, following the initial round of disclosures regarding the Negative Carry Swap, high-ranking SK Fund officers made a number of public statements to American press outlets, including Bloomberg, seeking to “prop up” the value of BTA Bank‘s securities by assuring investors that SK Fund would guarantee BTA Bank‘s ongoing viability. J.A. 53-54. Plaintiffs allege that these statements, too, were false or misleading: BTA Bank eventually defaulted on its debt in January 2012, less thаn eighteen months after the 2010 Restructuring. BTA Bank then went through a second restructuring (the “2012 Restructuring“), pursuant to which SK Fund gained a 97% ownership interest in the bank.
Plaintiffs allege that BTA Bank made additional false or misleading statements in 2012, after its default. In PowerPoint presentations prepared in connection with the 2012 Restructuring, BTA Bank failed to disclose its liability on instruments called “recovery units,” which it had issued to some creditors during the 2010 Restructuring. These recovery units entitled holders to participate pari passu with BTA Bank‘s senior creditors in the event that the bank defaulted. When the market eventually learned of these previously undisclosed senior liabilities, the value of the Subordinated Notes held by Plaintiffs plunged even further.
Plaintiffs commenced this action in the United States District Court for the Southern
On March 10, 2014, the district court issued an opinion denying the bulk of SK Fund‘s motion. Atlantica Holdings, 2 F. Supp. 3d 550. With respect to the FSIA, the district court held that it had subject-matter jurisdiction under both the first and third clauses of the statute‘s “commercial-activity exception,” which provide, respectively, that a foreign state is not immune from suit in actions “based upon” the state‘s commercial activity in the United States or in actions “based upon” its commercial activity outside the United States that has a “direct effect” in the United States.
With respect to the merits of Plaintiffs’ claims, the district court concluded that Plaintiffs (1) had adequately alleged a domestic securities transaction under Morrison v. National Australia Bank, 561 U.S. 247 (2010), and Absolute Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60 (2d Cir. 2012), and (2) had adequately alleged reasonable reliance on SK Fund‘s alleged misstatements and omissions. See Atlantica Holdings, 2 F. Supp. 3d at 559-62. However, because only Blu Funds and Atlantica had purchased Subordinated Notes after July 2011, the other Plaintiffs could not have relied on any statements from July 2011 or later in deciding to invest; accordingly, the district court dismissed those Plaintiffs’ claims related to those statements. Id. at 562.2 The court also rejected SK Fund‘s arguments that Plaintiffs had not adequately alleged loss causation, had failed to plead scienter with particularity, and had not adequately alleged control-person liability under Section 20(a) of the Exchange Act. Id. at 563.
The denial of a motiоn to dismiss on sovereign immunity grounds is an immediately appealable collateral order, see Rogers v. Petroleo Brasileiro, S.A., 673 F.3d 131, 136 (2d Cir. 2012), and SK Fund filed a timely notice of appeal from the district court‘s order on March 25, 2014. SK Fund also sought a certificate of appealability pursuant to
DISCUSSION
I.
The FSIA “provides the ‘sole basis’ for obtaining jurisdiction over a foreign sovereign in the United States.” Republic of Argentina v. Weltover, 504 U.S. 607, 611 (1992) (quoting Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434-39 (1989)). Under the FSIA, a “foreign state” is “immune from the jurisdiction” of state and federal courts in the United States unless one of a number of statutory exceptions applies.
“The single most important exception to foreign state immunity under the FSIA,” Hanil Bank v. P.T. Bank Negara Indon. (Persero), 148 F.3d 127, 130 (2d Cir. 1998), and the only one at issue in this case, is the commercial-activity exception. This exception, which contains three independent clauses, provides that a foreign state is not immune from jurisdiction “in any case” in which:
the action is based [1] upon a commercial activity carried on in the United States by the foreign state; or [2] upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or [3] upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.
The third clause of the commercial-activity exception is known as the “direct-effect clause.” Under the direct-effect clause, a foreign state is not immune from jurisdiction if the plaintiff‘s “lawsuit is (1) ‘based upon . . . an act outside the territory of the United States‘; (2) that was taken ‘in connection with a commercial activity’ of [the foreign state] outside this country; and (3) that ‘cause[d] а direct effect in the United States.‘” Weltover, 504 U.S. at 611 (first and third alterations in original) (quoting
A.
The Supreme Court has explained that, within the meaning of
SK Fund disputes whether statements made by BTA Bank in investor presentations and in the Information Memorandum may properly be attributed to it for jurisdictional purposes. See First Nat‘l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 623-28 (1983) (establishing presumption that “government instrumentalities established as juridical entities distinct and independent from their sovereign should normally be treated as such“). To be sure, Plaintiffs seeking jurisdiction under the FSIA must allege facts sufficient to establish an exception to sovereign immunity under the FSIA. See Robinson, 269 F.3d at 140-41. In this case, however, insofar as BTA Bank‘s statements constitute part of the “gravamen” of the complaint, Plaintiffs have advanced a Section 20(a) “control person” theory which, if proven, “would entitle [them] tо relief” from SK Fund on the basis of BTA Bank‘s alleged misrepresentations. Sachs, 136 S. Ct. at 395; see
Thus, we need not reach the question whether Plaintiffs have shown that BTA Bank is SK Fund‘s “alter ego,” see U.S. Fid. & Guar. Co. v. Braspetro Oil Servs. Co., 199 F.3d 94, 98 (2d Cir. 1999)
For these reasons, we conclude that Plaintiffs’ claims against SK Fund are “based upon” (at least) the misrepresentations alleged in their complaint.4 SK Fund does not dispute that those misrepresentations were made outside the United States. See Appellant‘s Br. at 14 (“Plaintiffs cite certain statements made by BTA Bank and SK Fund in Kazakhstan . . . .“) (emphasis added). Nor does SK Fund dispute that they were made in connection with a commercial activity of SK Fund outside this country. Accordingly, this action is “based upon . . . an act outside the territory of thе United States in connection with a commercial activity of [SK Fund] elsewhere,” and the only question remaining is whether “that act cause[d] a direct effect in the United States.”
B.
Plaintiffs argue, and the district court held, that losses suffered by United States investors in the Subordinated Notes as a result of SK Fund‘s alleged misrepresentations about those securities’ value qualify as a “direct effect” in this country. See Atlantica Holdings, 2 F. Supp. 3d at 558. We agree.
1.
In order to be “direct,” an effect need not be “substantial” or “foreseeable,” but rather must simply “follow[] ‘as an immediate consequence of the defendant‘s . . . activity.‘” Weltover, 504 U.S. at 618 (second alteration in original) (quoting Weltover, Inc. v. Republic of Argentina, 941 F.2d 145, 152 (2d Cir. 1991)). In Weltover, the Supreme Court held that Argentina‘s nonpayment of funds into a New York bank account that had been designated as the place of payment on certain bonds issued by that country caused a direct effect in the United States because “[m]oney that was supposed to have been delivered to [the] New York bank for deposit was not forthcoming.” 504 U.S. at 619. Based on Weltover‘s holding, courts have consistently held that, in contract cаses, a breach of a contractual duty causes a direct effect in the United States sufficient to confer FSIA jurisdiction so long as the United
Here, of course, Plaintiffs are asserting tort claims, not contract claims. “In tort,” we have reasoned, “the analog to contract law’s place of performance is the locus of the tort.” Antares Aircraft, L.P. v. Federal Republic of Nigeria, 999 F.2d 33, 36 (2d Cir. 1993). A tort’s locus—also known as the locus delicti, or “place of wrong”5—is the place “where the last event necessary to make an actor liable for an alleged tort takes place.”
A. Whitlock, Myth of Mess? International Choice of Law in Action, 84 N.Y.U. L. Rev. 719, 724–25 (2009) (“The First Restatement defines the place of wrong as ‘the state where the last event necessary to make an actor liable for an alleged tort takes place.’ Usually this is the location where the plaintiff was injured, since liability does not arise without injury.” (footnotes omitted) (quoting
We have previously held that the locus of an alleged misrepresentation actionable under Section 10(b) is the forum “where the loss is sustained, not where fraudulent misrepresentations are made.” Sack, 478 F.2d at 365 (quoting
6. A, in state X, owns shares in the M company. B, in state Y, fraudulently persuades A not to sell the shares. The value of the shares falls. The рlace of wrong is X.
Sack, 478 F.2d at 366 (quoting
If the locus of a Section 10(b) claim is the place where the plaintiff suffers economic loss from reliance on the defendant’s misrepresentations, then it follows that in a securities fraud case, an FSIA direct effect may be felt where the plaintiff suffers such loss. See Antares Aircraft, 999 F.2d at 36 (“In tort, the analog to contract law’s place of performance is the locus of the tort.”). To be sure, locating an economic injury within the United States, without more, will not suffice to bring a foreign sovereign within the “commercial activities” exception. See id. (“[T]he fact that an American individual or firm suffers some financial loss from a foreign tort cannot, standing alone, suffice to trigger the exception.”).6 But here, as the district court correctly determined, Plaintiffs have adequately shown that SK Fund “contemplated investment by United States persons” and that SK Fund’s alleged misrepresentations caused a direct effect in the United States when at least some investors in the Subordinated Notes—including Gliksberg and the Kibliskys—suffered an economic loss in this country as a result of those misrepresentations. See Atlantica Holdings, 2 F. Supp. 3d at 558 (“[A]ccording to the Amended Complaint, Defendant made a series of false or misleading statements about the financial health of BTA Bank that, when the dust settled, left holders of the Notes—including many United States investors—with assets worth less than ten percent of their face value.”). On such facts, we have no difficulty concluding that Plaintiffs’ loss “follow[ed] as an immediate consequence” of SK Fund’s alleged misrepresentations concerning securities that were marketed in the United States and
As noted, Plaintiffs’ amended complaint alleges that the Kibliskys reside in Miami and that Gliksberg resides in Illinois. Plaintiffs allege thаt Gliksberg and the Kibliskys purchased Subordinated Notes following the 2010 Restructuring in reliance on the Information Memorandum, which allegedly included a number of misrepresentations about the value of the Subordinated Notes. They made these purchases by placing orders through their broker in the Miami office of UBS. After the falsity of SK Fund’s alleged misstatements was revealed, “the Subordinated Notes lost substantially all of their value.” J.A. 61. Nothing in the amended complaint or the parties’ other submissions suggests that Gliksberg and the Kibliskys were injured by SK Fund’s alleged misstatements anywhere other than their place of residence. The locus of SK Fund’s alleged securities fraud, then, was the United States. See Sack, 478 F.2d at 366;
2.
SK Fund advanсes three primary arguments against our conclusion, none of which is persuasive.
First, SK Fund emphasizes that the Plaintiffs other than Gliksberg and the Kibliskys are not American, and therefore could not have been injured in the United States by SK Fund’s alleged misrepresentations. The import of this argument is not entirely clear; perhaps SK Fund means to suggest that FSIA immunity must be overcome on a plaintiff-by-plaintiff basis, so that even if SK Fund’s misrepresentations had a direct effect on Gliksberg and the Kibliskys in the United States, the other Plaintiffs’ claims would have to be dismissed. Regardless, the premise of SK Fund’s argument—that Plaintiffs must demonstrate a direct effect on themselves in the United States to overcome FSIA immunity—is incorrect; the FSIA requires only that SK Fund’s alleged misrepresentations had a direct effect in the United States. In other words, had all of the Plaintiffs been foreigners, they could have successfully premised FSIA jurisdiction on the effect that SK Fund’s alleged misrepresentations had on non-party United States investors, provided that Plaintiffs could adequately establish the existence of United States investors so affected. Cf. Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 489 (1983) (noting that the FSIA “allow[s] a foreign plaintiff to sue a foreign sovereign in the courts of the United States, provided the substantive requirements of the Act are satisfied”).
This conclusion—that an FSIA plaintiff need only show a direct effect on someone in the United States, plaintiff or not—follows directly from the text of the direct-effect clause, which provides that a foreign state is not immune from jurisdiction where the “action is based . . . upon an act outside the territory of the United States . . . and that act causes a direct effect in the United States.”
Next, SK Fund suggests that a financial loss to American investors cannot qualify as a direct effect for FSIA purposes. We reject this argument, which rests on a misreading of our direct-effect precedents. In contract cases, FSIA jurisdiction is often premised on a financial loss, see, e.g., Weltover, 504 U.S. at 619 (“Money that was supposed to have been delivered to a New York bank for deposit was not forthcoming.”), and tort cases are no different.
To be sure, we have said that “the fact that an American individual or firm suffers some financial loss from a foreign tort cannot, standing alone, suffice to trigger” the FSIA’s direct-effect clause. Antares Aircraft, 999 F.2d at 37 (emphasis added). Thus, where an American citizen suffered a personal injury abroad at the hands of a foreign state and returned to this country permanently disabled, we held that his ongoing disability was not a direct effect of the foreign state’s actions, given that his initial injury occurred abroad. See Martin v. Republic of South Africa, 836 F.2d 91, 95 (2d Cir. 1987); accord, e.g., Princz v. Federal Republic of Germany, 26 F.3d 1166, 1173 (D.C. Cir. 1994) (“The lingering effects of a personal injury suffered overseas cannot be sufficient to satisfy the direct effect requirement of the FSIA.”); see also
But in all of those cases, unlike in this one, the initial injury сaused by the defendant’s allegedly tortious conduct occurred in a foreign country, not in the United States—that is, those cases all involved “foreign tort[s].” Antares Aircraft, 999 F.2d at 36. This distinction is critical. Where an American plaintiff is injured abroad, it will often be easy for the plaintiff to cite some downstream financial harm suffered in the United States (where the plaintiff lives or is headquartered), and in those circumstances, courts must take care to distinguish the initial injury caused by the defendant’s allegedly tortious conduct from the less immediate downstream consequences of that injury.7 Otherwise, “the commercial activity exception would in large part eviscerate the FSIA’s provision of immunity for foreign states.” Id.; see United World Trade, Inc. v. Mangyshlakneft Oil Prod. Ass’n, 33 F.3d 1232, 1238 (10th Cir. 1994) (“Congress did not intend to provide jurisdiction whenever the ripples caused by an overseas transaction manage eventually to reach the shores of the United States.”). Here, by contrast, for Gliksberg and the Kibliskys (as well as for other United States investors who bought Subordinated Notes in reliance on SK Fund’s misreprеsentations), the financial loss suffered when their investments declined in value was their initial injury. In cases where the plaintiff’s initial injury occurs in the United States—that is, where this country is the locus of the tort—there is no reason why that initial injury should not count as a direct effect merely because it happens to take the form of a financial loss.
Because United States investors in the Subordinated Notes were initially injured in this country (rather than abroad) by SK Fund’s alleged tortious conduct, this case resembles products-liability cases against foreign states more than it does the cases cited by SK Fund involving foreign torts. In products-liability cases, courts have consistently held that the direct-effect clause is satisfied by allegations that a plaintiff was injured in the United States by a faulty product manufactured by the defendant abroad. See Lyon v. Agusta S.P.A., 252 F.3d 1078, 1083 (9th Cir. 2001); Aldy ex rel. Aldy v. Valmet Paper Mach., 74 F.3d 72, 75 (5th Cir. 1996); Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1545 (11th Cir. 1993); Rote v. Zel Custom Mfg., LLC, No. 13-cv-1189, 2015 WL 570973, at *9 (S.D. Ohio Feb. 11, 2015); see also
Finally, SK Fund argues that the relationship between its alleged misrepresentations and Plaintiffs’ financial loss is too attenuated for that loss to qualify as a “direct effect.” In particular, SK Fund argues that United States investors in the Subordinated Notes—including Gliksberg and the Kibliskys—could only have obtained the Information Memorandum containing SK Fund’s alleged misrepresentations from “third-party intermediar[ies]” such as UBS, whose conduct in “forwarding the document to investors . . . was an intervening act between the commercial activity and any resulting effect in the
The intervening actions of a third party may sometimes break the causal chain between a defendant’s allegedly tortious actions and an effect felt in the United States—rendering the effect in this country not “direct”—where the defendant’s actions affect the third party, who in turn takes some independent action that causes a further effect in the United States. See Virtual Countries, 300 F.3d at 237–38. In Virtual Countries, the Republic of South Africa issued a press release suggesting that it might contest an American company’s ownership of a web domain name; the company claimed that this press release had a direct effect in the United States by discouraging third parties to do business with and invest in it. We held that this effect was not “direct” because it fell “at the end of a long chain of causation and [was] mediated by numerous actions by third parties”:
First, the Republic issued the press release. Then wire services and newspapers in South Africa and elsewhere obtained the release and wrote articles about it. Current or potential investors—perhaps in the United States, perhaps in other countries, and perhaps in both—and a potential strategic business partner in South Africa, allegedly then learned of the release’s contents. Drawing on news reports, they then formed their own independent assessments of the Republic’s intentions and the possible effect of those intentions on [the plaintiff company] and people who would do business with it. . . . Only then could investors and the prospective business partner have decided to give effect to their doubts as to the validity of the plaintiff’s current registration of [the domain name] and their fears of reprisal by the Republic, by declining to invest in or do business with [the plaintiff company].
Id. at 237. Thus, the press release (after being communicated through press outlets) had its initial effect on third party investors and business partners, who had to take further action as a result of the press release in order for the American plaintiff to be affected at all.9
Nor was it UBS’s distribution of the Information Memorandum (as distinguished from the misrepresentations themselves) that ultimately caused Plaintiffs’ injury. Unlike the press release in Virtual Countries, SK Fund’s misrepresentations acted directly on those whom they allegedly affected, namely, the investors induced to purchase Subordinated Notes that were worth less than advertised.
Again, products-liability cases furnish a helpful analogy. Although a defective product may reach the plaintiff only through a long sequence of sales and shipments, that sequence does not attenuate the causal chain between the manufacturing defect and the plaintiff’s injury because the sequence is in no way a function of the defect. See, e.g., Vermeulen, 985 F.2d at 1545 (“[T]he injuries [plaintiff] suffered in an automobile accident on the roads оf Georgia were the result of [defendant’s] negligent design and manufacture of the LeCar passenger restraint system. We can hardly imagine a more immediate consequence of the defendant’s activity.”); Lyon, 252 F.3d at 1083–84 (finding FSIA jurisdiction while recognizing that “much time passed between the manufacture and the injury and that the [defective] aircraft even changed hands”). Likewise, the fact that a misrepresentation reaches an investor in an offering document distributed by a third party does not attenuate the causal chain between the misrepresentation and the investor’s loss.
Although it bears reiterating that an effect need not be foreseeable to be direct, see Weltover, 504 U.S. at 618, we do not intend to—indeed, we have no occasion to—foreclose entirely the possibility that an alleged misstatement by a foreign state may be so far removed from the American investor who eventually relies on it that FSIA jurisdiction will not lie. See, e.g., Filler v. Hanvit Bank, 247 F. Supp. 2d 425, 429 (S.D.N.Y. 2003) (finding no FSIA jurisdiction over claims against Korean banks that made alleged misstatеments about their finances in Korea, which were then incorporated into audit reports prepared by a Belgian company doing business with the banks, and which were later sent to and relied upon by the plaintiffs in investing in the Belgian company), vacated on other grounds, Nos. 01-cv-9510, 01-cv-8251, 2003 WL 21729978, at *1 (S.D.N.Y. July 25, 2003). Here, however, Plaintiffs allege, and SK Fund does not dispute, that BTA Bank and SK Fund marketed the Subordinated Notes “extensively in the United States, and directed that marketing to U.S. investors.” J.A. 44. Gliksberg and the Kibliskys placed their orders with UBS, which was a Direct Participant in the 2010 Restructuring, and the parties to the 2010 Restructuring contemplated that Direct Participants would be able to hold the newly issued securities “for the benefit of their customers,” including accredited investors in the United States. J.A. 164, 485. Given that investors
On the facts presented here, the relationship between SK Fund’s alleged misrepresentations and the resulting financial loss suffered in this country by United States investors—including Gliksberg and the Kibliskys—is sufficiently direct to overcome FSIA immunity. We therefore affirm the district court’s order denying SK Fund’s motion to dismiss on FSIA grounds.
II.
In the alternative, SK Fund argues that regardless of whether it has immunity from suit under the FSIA, the district court could not exercise personal jurisdiction over it consistent with due process. The parties dispute (1) whether SK Fund, as a foreign corporation wholly owned by a foreign sovereign, may assert due process rights against the exercise of personal jurisdiction by American courts, and (2) if so, whether exercising jurisdiction over SK Fund in this case would violate those rights. We may exercise jurisdiction over this claim, if at all, under the discretionary doctrinе of pendent appellate jurisdiction. For the following reasons, we decline to do so.
We have appellate jurisdiction over the issue of SK Fund’s immunity under the FSIA pursuant to the collateral order doctrine. That doctrine permits interlocutory appeals from non-final orders involving “claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” Cohen v. Beneficial Life Ins. Corp., 337 U.S. 541, 546 (1949). Because sovereign immunity is conceptualized as immunity from suit, and not just immunity from liability, it is well-settled that the denial of a defendant’s motion to dismiss on sovereign immunity grounds is an immediately appealable collateral order. Rein v. Socialist People’s Libyan Arab Jamahiriya, 162 F.3d 748, 755–56 (2d Cir. 1998). By contrast, an order denying a motion to dismiss for lack of personal jurisdiction is not an immediately appealable collateral order.10 See id. at 756. So with respect to the constitutiоnal questions raised by SK Fund regarding the district court’s exercise of personal jurisdiction, we must have jurisdiction, if at all, under the doctrine of pendent appellate jurisdiction. See id.
The doctrine of pendent appellate jurisdiction “allows us, ‘[w]here we have jurisdiction over an interlocutory appeal of one ruling,’ to exercise jurisdiction over other, otherwise unappealable interlocutory decisions, where such rulings are ‘inextricably intertwined’ with the order
Even assuming arguendo that, upon analysis, the question of SK Fund’s immunity from suit under the FSIA would be so “inextricably intertwined” with its due process claim as to allow for pendent appellate jurisdiction, we choose not to reach SK Fund’s due process argument. See Myers, 624 F.3d at 552. The key, antecedent question to SK Fund’s constitutional claim—whether a foreign corporation wholly owned by a foreign sovereign is a “person” within the meaning of the Fifth Amendment Due Process Clause—is pending before another panel in Corporacion Mexicana de Mantenimiento Integral v. Pemex-Exploracion y Produccion, No. 13-4022-cv. This circumstance, far from the “exceptional” instance warranting pendent appellant jurisdiction, favors restraint. Myers, 624 F.3d at 553. Accordingly, we decline to exercise our discretion to exercise pendent appellate jurisdiction over SK Fund’s due process challenge.
CONCLUSION
We have considered SK Fund’s remaining contentions and find them to be without merit. For the foregoing reasons, we AFFIRM the portion of the district court’s order holding that SK Fund is not immune from suit under the FSIA and DISMISS the portion of SK Fund’s appeal challenging the district court’s exercise of personal jurisdiction.