Commonwealth of Pennsylvania Public School Employees' Retirement System v. Morgan Stanley & Co.

814 F.3d 641

2d Cir.

2016

Check Treatment

Docket

COMMONWEALTH OF PENNSYLVANIA PUBLIC SCHOOL EMPLOYEES’ RETIREMENT SYSTEM, together and on behalf of all others similarly situated, Commerzbank AG, together and on behalf of all others similarly situated, Plaintiffs-Appellants-Cross-Appellees, Abu Dhabi Commercial Bank, individually and on behalf of all others similarly situated, King County, Washington, together and on behalf of all others similarly situated, Sei Investments Company, together and on behalf of all others similarly situated, The Bank of N.T. Butterfield & Son Limited, SFT Collective Investment Fund, Deutsche Postbank AG, Global Investment Services Limited, Gulf International Bank B.S.C., National Agricultural Cooperative Federation, together and on behalf of all others similarly situated, State Board of Administration of Florida, together and on behalf of all others similarly situated, Bank Sinopac, together and on behalf of all others similarly situated, Bank Hapoalim B.M., together and on behalf of all others similarly situated, KBL European Private Bankers S.A., Plaintiffs, v. MORGAN STANLEY & CO., Incorporated, Morgan Stanley & Co. International Limited, Moody‘s Investor Service, Inc., Moody‘s Investor Service, Ltd., The McGraw-Hill Companies, Inc., Standard & Poor‘s Rating Services, Defendants-Appellees-Cross-Appellants, Cheyne Capital Management Limited, Cheyne Capital Management (UK) LLP, Cheyne Capital International Limited, Defendants.

Docket Nos. 13-2095-cv(L), 13-2283-cv(XAP), 13-2286-cv(XAP), 13-2287-cv(XAP)

United States Court of Appeals, Second Circuit.

Argued: June 20, 2014. Decided: Feb. 23, 2016.

814 F.3d 641

that expressly stated that registration “enable[s] the tribunals of [that] Commonwealth to exercise general personal jurisdiction“); Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196, 1199-1200 (8th Cir. 1990) (reading Minnesota registration law, as interpreted by that state‘s Supreme Court, to confer general jurisdiction over common carrier). These two decisions reason that, because of its nature as a personal right, a defendant may consent to personal jurisdiction without regard to what a due process analysis of its contacts would yield. See Knowlton, 900 F.2d at 1199 (“Consent is the other traditional basis of jurisdiction, existing independently of long-arm statutes.“). Similarly, in an approach emphasizing the amenability to waiver of personal jurisdiction as an individual right, applicable to a defendant corporation without regard to the due process analysis, the Supreme Court has upheld the assertion of personal jurisdiction as a sanction for failure to comply with jurisdictional discovery, holding such failures “may amount to a legal submission to the jurisdiction of the court, whether voluntary or not.” Bauxites, 456 U.S. at 704-05, 102 S.Ct. 2099. From these sources, it could be concluded that a carefully drawn state statute that expressly required consent to general jurisdiction as a condition on a foreign corporation‘s doing business in the state, at least in cases brought by state residents, might well be constitutional.

But as the Supreme Court recognized in Goodyear, “A state court‘s assertion of jurisdiction exposes defendants to the State‘s coercive power, and is therefore subject to review for compatibility with the Fourteenth Amendment‘s Due Process Clause.” 131 S.Ct. at 2850 (citing Int‘l Shoe, 326 U.S. at 316, 66 S.Ct. 154). The reach of that coercive power, even when exercised pursuant to a corporation‘s purported “consent,” may be limited by the Due Process clause. We need not reach that question here, however, because we conclude that the Connecticut business registration statute did not require Lockheed to consent to general jurisdiction in exchange for the right to do business in the state.

CONCLUSION

To summarize, in the absence of a clear legislative statement and a definitive interpretation by the Connecticut Supreme Court and in light of constitutional concerns, we construe Connecticut‘s registration statute and appointment of agent provisions not to require registrant corporations that have appointed agents for service of process to submit to the general jurisdiction of Connecticut courts. The judgment of the District Court is AF-FIRMED.

Luke O. Brooks (Joseph D. Daley & Daniel S. Drosman, San Diego, CA) Rob-bins Geller Rudman & Dowd LLP, San Francisco, CA, for Plaintiffs-Appellants-Cross-Appellees.

James P. Rouhandeh (Antonio J. Perez-Marques, Paul S. Mishkin, Jessica L. Turner, on the joint brief) Davis Polk & Wardwell LLP, New York, NY, for Defendants-Appellees-Cross-Appellants Morgan Stanley & Co. Inc. and Morgan Stanley & Co. Int‘l Ltd.

Dean Ringel, Jason M. Hall, Roxana Labatt, Cahill Gordon & Reindel LLP, New York, NY, on the joint brief, for Defendants-Appellees-Cross-Appellants Standard & Poor‘s Ratings Services and The McGraw-Hill Companies, Inc.

Joshua M. Rubins, James J. Coster, Mario Aieta, James I. Doty, Satterlee Stephens Burke & Burke LLP, New York, NY; Mark A. Perry, Gibson, Dunn & Crutcher LLP, Washington, DC, on the joint brief, for Defendants-Appellees-Cross-Appellants Moody‘s Investors Service, Inc. and Moody‘s Investors Service, Ltd.

Before: WINTER, LEVAL, and LYNCH, Circuit Judges.

PER CURIAM:

Commerzbank AG (“Commerzbank“) appealed from Judge Scheindlin‘s denial of class certification and dismissal of the claims asserted by certain investors for lack of standing, including Commerzbank. In a previous decision, familiarity with which is assumed, we affirmed the district court in part and certified to the New York Court of Appeals the question of whether a reasonable trier of fact could, on the record of this case, conclude that Commerzbank was validly assigned the right to bring a common-law fraud claim, and therefore had standing to sue various defendants. See Pa. Pub. Sch. Emps.’ Ret. Sys. v. Morgan Stanley & Co., 772 F.3d 111, 116-25 (2d Cir.), as amended, (Nov. 12, 2014). The New York Court of Appeals has since resolved that, under New York law, Commerzbank does not have standing to pursue its fraud claim. Pa. Pub. Sch. Emps.’ Ret. Sys. v. Morgan Stanley & Co., 25 N.Y.3d 543, 553, 14 N.Y.S.3d 313, 35 N.E.3d 481 (2015).

Our prior opinion did not reach the question of whether the District Court properly denied Commerzbank‘s Fed. R. Civ. P. 17(a)(3) motion as untimely.¹ Rule 17(a)(3) permits ratification of a claim within a “reasonable time” after a standing objection is raised. That issue is now ripe for decision. We review a district court‘s decision whether to dismiss pursuant to Rule 17(a) for abuse of discretion. Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt Int‘l B.V. v. Schreiber, 407 F.3d 34, 43-44 (2d Cir. 2005). Commerzbank‘s Rule 17(a) motion was made on September 10, 2012, after summary judgment was entered against it and even after the filing of its motion to reconsider, whereas the issue was raised in defendants’ pleadings in March 2011 and again in the motion for summary judgment. Given Commerzbank‘s delay in filing the motion, the district court acted well within its discretion in denying Commerzbank‘s ratification motion as untimely.

In light of the New York Court of Appeals decision and our affirmance of the denial of the Fed.R.Civ.P. 17(a) motion, we affirm.

Notes

Given our disposition of this matter, we may assume, for purposes of this case, that Commerzbank‘s 17(a)(3) Notice of Ratification Pursuant to Fed.R.Civ.P. 17(a)(3) would have afforded the relief sought.