Case Information
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE RICHARD SIERRA, VERONICA )
GOOCH, ROLAND SIERRA, LUCIA )
LLERAS DE LABRADA, PRISCILLA )
LLERAS-BUSH, in her personal capacity )
and as Personal Representative of the )
ESTATE OF OLGA ROMAGOSA, and )
SUZETTE NICOLE NEYRA HENRICK )
in her capacity as Independent Executor of )
of the ESTATE OF ANGELA )
ROMAGOSA FERNANDEZ, )
)
Plaintiffs, )
) v. ) Civil Action No. 22-366-JLH-CJB ) CONSOLIDATED TRAFIGURA TRADING LLC and )
TRAFIGURA GROUP PTE LTD, )
)
Defendants. ) Michael L. Vild, CROSS & SIMON, LLC, Wilmington, DE; David A. Baron, Melvin White, Laina C. Lopez and Jared R. Butcher (argued), BERLINER CORCORAN & ROWE LLP, Washington, DC; Richard W. Fields, Martin F. Cunniff and Edward Han (argued), FIELDS HAN CUNNIFF PLLC, Washington, DC, Attorneys for Plaintiffs.
Jack B. Blumenfeld and Michael J. Flynn, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, DE; Alex J. Brackett (argued), Caroline Schmidt Burton, Andrew P. Thornton-Dibb and Juliet B. Clark, MCGUIRE WOODS LLP, Richmond, VA, Attorneys for Defendants. MEMORANDUM OPINION
August 14, 2024
Wilmington, Delaware
BURKE, United States Magistrate Judge
In this case, Plaintiffs Richard Sierra, Veronica Gooch, Roland Sierra, Lucia Lleras de Labrada, Priscilla Lleras-Bush (in her personal capacity and as Personal Representative of the Estate of Olga Romagosa) and Suzette Nicole Neyra Hendrick (as Temporary Administrator of the Estate of Angela Romagosa Fernandez) (collectively, “Plaintiffs”) bring claims under Title III of the Cuban Liberty and Democratic Solidarity Act of 1996, codified at 22 U.S.C. §§ 6081- 86 (the “Helms-Burton Act” or “HBA”) against Defendants Trafigura Group Pte. Ltd. (“TGPL”) and Trafigura Trading, LLC (“TTL” and collectively with TGPL, “Defendants”). ( See D.I. 42 at 1; D.I. 46 at 1) Plaintiffs seek to recover damages and interest under the Helms-Burton Act against Defendants for allegedly trafficking in Plaintiffs’ property that was wrongfully confiscated by the Cuban Government in 1960. (D.I. 37 at ¶¶ 1, 95) Presently pending before the Court are: (1) TGPL’s “Motion to Dismiss the Consolidated Amended Complaint” (“CAC”), filed pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2) and 12(b)(6) (“TGPL’s Motion”), (D.I. 41); and (2) Plaintiffs’ “Motion for Jurisdictional Discovery” (“Plaintiffs’ Motion”), (D.I. 43). For the reasons set forth below, the Court GRANTS TGPL’s Motion and DENIES Plaintiffs’ Motion.
I. BACKGROUND
A. Factual Background
Plaintiffs Richard Sierra, Veronica Gooch, Roland Sierra, Lucia Lleras de Labrada and TTL has also filed a motion to dismiss the CAC pursuant to Rules 12(b)(1) and 12(b)(6) (“TTL’s Motion”), (D.I. 39), and Defendants have filed a “Supplemental Motion to Dismiss Plaintiff Suzette Nicole Hendrick’s Consolidated Claims” pursuant to Rule 12(b)(6) (“Defendants’ Supplemental Motion”), (D.I. 54). These motions will be addressed in forthcoming opinion(s).
Priscilla Lleras-Bush are naturalized citizens of the United States. (D.I. 37 at ¶¶ 13-17) Olga Romagosa was a naturalized citizen of the United States prior to her death; her claims are being prosecuted by Plaintiff Pricilla Lleras-Bush in her capacity as Personal Representative of Olga Romagosa’s estate. ( Id. at ¶ 18) Angela Romagosa Fernandez was a naturalized citizen of the United States prior to her death; her claims are being prosecuted by Plaintiff Suzette Nicole Neyra Hendrick, in her capacity as Independent Executor of Angela Romagosa Fernandez’s estate. ( Id. at ¶¶ 20(a)-(b))
Plaintiffs’ claims arise from their ownership in stock (as well as inherited ownership interests) in: (1) a mining operation run by Minas de Matahambre, S.A. (the “Mining Company”) that owned, inter alia , ranches, mines, a power plant and an airport; (2) the Mining Company’s assets, which include Terminal Maritima de Santa Lucia (“Terminal”), the Port of Santa Lucia (“Port”) and related interests; and (3) an affiliated company called Compañia Operadora Rometales, S.A. (“Rometales”) that operated a sulfuric acid plant next to the Port (the Mining Company, its assets and Rometales are hereinafter referred to as the “Property”). ( Id. at ¶ 77, 81, 90) The CAC alleges that the Cuban government completed the forced confiscation of the Property in 1961. ( Id. at ¶ 95) At the time of the confiscation, there were 54 shareholders of the Property, almost all of whom were successors of Manuel Luciano Diaz. ( Id. at ¶ 97) Plaintiffs inherited their claims to the Property from Amparo Diaz y Martinez (one of Manuel Luciano Diaz’s daughters) and her husband Ernesto Romagosa y Sanchez, who both died prior to March 12, 1996. ( Id. )
The CAC alleges that TGPL is an employee-owned physical trading and logistics business specializing in energy, metals and minerals, and that it (or, at least, it along with its group of affiliated companies) has 88 offices in 48 countries around the world, including three offices in the United States. ( Id. at ¶ 21) TGPL was incorporated in August 2010 under the laws of Singapore, and its registered office is located in Singapore. ( Id. )
TTL is a wholly owned subsidiary of TGPL and a Delaware limited liability company. ( Id. at ¶¶ 22, 29) TTL’s principal place of business is located in Houston, Texas. ( Id. at ¶ 22) The CAC alleges that TTL has “primary responsibility” for TGPL’s United States operations, which include the Trafigura Mining Group (the “Mining Group”). ( Id. ; see also id. at ¶¶ 30-31) TTL has been registered in Texas and other states since 1995 to conduct the following activities on behalf of TGPL, including the Mining Group:
(i) management, administration, financing and support for industrial and technical services; (ii) trade especially in raw materials with companies which are [TGPL] members, including Mining Group members, and with third parties; (iii) investment in and administration of moneys, goods and claims; (iv) guarantee of securities for debt liabilities of [TGPL] members, including Mining Group members, and their companies; (v) acquisition and disposition of real property; and (vi) administration and exploitation of intangible rights and know how.
( Id. at ¶¶ 22, 29)
The CAC alleges that TGPL and its wholly owned subsidiaries in the Mining Group, which includes Trafigura Caribbean Mining B.V. (“Trafigura Caribbean Mining”), with the support of TTL, have trafficked in the Property through the investment in Empresa Minera del Caribe, S.A. (“EMINCAR”). ( Id. at ¶¶ 9, 101) EMINCAR is a joint venture between Trafigura Caribbean Mining and the Cuban government to develop mining operations (known as the Castellanos lead and zinc mine) in Cuba. ( Id. at ¶¶ 9, 101-03) The Cuban operations of TGPL and its Mining Group occupy and use a substantial portion of the Property, but the Cuban government and the Defendants have not obtained authorization from, nor paid compensation to, Plaintiffs or their predecessors for using the Property. ( Id. at ¶¶ 107, 109)
The HBA was enacted in 1996 to provide U.S. nationals who own claims to property that was confiscated by the Cuban government with a private cause of action against persons who have “trafficked” in such property, under certain conditions. See 22 U.S.C. § 6082(a); (D.I. 37 at ¶¶ 2, 54). In February 2022, Plaintiffs sent Defendants letters notifying them that they are trafficking in confiscated property as defined by the HBA. (D.I. 37 at ¶ 111) The CAC alleges that Defendants have not responded to Plaintiffs’ notice letters, and that they continue to traffic in the Property. ( Id. at ¶¶ 112-13)
Additional facts relevant to resolution of the instant Motion will be discussed in Section III.
B. Procedural History
Plaintiffs Richard Sierra, Veronica Gooch, Roland Sierra, Lucia Lleras de Labrada, Priscilla Lleras-Bush (in her personal capacity and as Personal Representative of the Estate of Olga Romagosa), Márian Maria de los Angeles Romagosa and Lisette Romagosa Smyrnios filed this action on March 22, 2022. [2] (D.I. 1) This action was then consolidated with an action that had been filed in November 2021 by Angela Romagosa Fernandez against TTL, Civil Action No. 21-1606. (D.I. 36) [3]
On February 24, 2023, Plaintiffs filed the operative CAC. (D.I. 37) The CAC asserts a single cause of action against Defendants under the HBA. ( Id. at ¶¶ 118-27) On March 1, 2023, TPGL filed its Motion. (D.I. 41) On March 3, 2023, Plaintiffs filed their Motion. (D.I. 43) These Motions were fully briefed by March 8, 2023. (D.I. 48; D.I. 52) The parties have subsequently filed numerous Notices of Supplemental Authority, (D.I. 51; D.I. 57; D.I. 59; D.I. 60; D.I. 76), some of which are related to the instant Motions. The Court heard argument on the Motions (as well as on TTL’s Motion) on April 11, 2024. (D.I. 84 (hereinafter, “Tr.”))
II. LEGAL STANDARDS
Rule 12(b)(2) requires the Court to dismiss any case in which it lacks personal
jurisdiction. Fed. R. Civ. P. 12(b)(2);
Nespresso USA, Inc. v. Ethical Coffee Co. SA
, 263 F.
Supp. 3d 498, 502 (D. Del. 2017). When a defendant moves to dismiss a lawsuit for lack of
personal jurisdiction, the plaintiff bears the burden of showing the basis for jurisdiction; in a
situation like this, where no evidentiary hearing has been held, the plaintiff must only make a
prima facie
showing that personal jurisdiction exists.
See Nespresso
,
The Supreme Court of the United States has recognized two classifications of personal
jurisdiction: “general jurisdiction” and “specific jurisdiction.”
Goodyear Dunlop Tires
Operations, S.A. v. Brown
,
In order to establish personal jurisdiction, a plaintiff must typically adduce facts
sufficient to satisfy two requirements—one statutory and one constitutional.
Hardwire
, 2014
WL 5144610, at *6. In the typical analysis of the statutory prong, courts consider whether the
defendant’s actions fall within the scope of a state’s long-arm statute.
Id
. at *6;
Power
Integrations
,
However, certain disputes over personal jurisdiction take a different form and instead
implicate Federal Rule of Civil Procedure 4(k)(2), which serves as a federal long-arm statute.
See Toys “R” Us, Inc. v. Step Two, S.A.
,
(1) a claim arising under federal law; (2) the defendant must be beyond the jurisdictional reach of any state court of general jurisdiction; and (3) the defendant must have sufficient contacts with the United States so that the court’s exercise of personal jurisdiction over the defendant comports with the due process requirements of the Constitution or other federal law.
Saudi v. Acomarit Maritimes Servs., S.A.
,
III. DISCUSSION
The HBA provides that “any person that . . . traffics in property which was confiscated by the Cuban Government on or after January 1, 1959, shall be liable to any United States national who owns the claim to such property for money damages[.]” 22 U.S.C. § 6082(a)(1)(A). With respect to property confiscated before March 12, 1996, a claim is only viable if the United States national acquired ownership of the claim before March 12, 1996. 22 U.S.C. § 6082(a)(4)(B). A person “traffics” in confiscated property if that person “knowingly and intentionally[,]” inter alia : (1) “engages in a commercial activity using or otherwise benefiting from confiscated property” or (2) “causes, directs, participates in, or profits from, trafficking . . . by another person, or otherwise engages in trafficking . . . through another person[.]” 22 U.S.C. § 6023(13)(A).
With its Motion, TGPL argues that Plaintiffs’ claims against it should be dismissed under
Rule 12(b)(2) for lack of personal jurisdiction, under Rule 12(b)(1) for lack of subject matter
jurisdiction and under Rule 12(b)(6) for failure to state a claim. (D.I. 42 at 1-2) For the reasons
set out below, the Court concludes that personal jurisdiction over TGPL is lacking; it therefore
need not and should not take up TGPL’s additional arguments.
See, e.g.
,
Mallinckrodt PLC
,
With regard to the personal jurisdiction question, TGPL contends that it has no direct contacts with the United States, as it is a non-operating holding company incorporated in Singapore that is without any employees, business operations or physical presence in this country. (D.I. 42 at 5-6) Plaintiffs, meanwhile, allege that TGPL is subject to both specific jurisdiction and general jurisdiction pursuant to Rule 4(k)(2). (D.I. 37 at ¶ 26; D.I. 46 at 2-9; Tr. at 7, 55-56) The Court will first assess Plaintiffs’ arguments as to specific jurisdiction, and will then turn to its assertions regarding general jurisdiction.
A. Specific Jurisdiction
There is no dispute that Plaintiffs could satisfy the first two prongs of the Rule 4(k)(2) analysis; the dispute here is only as to the Rule’s third prong—i.e., whether TGPL has sufficient contacts with the United States as a whole to support jurisdiction. (D.I. 42 at 5-6; D.I. 46 at 2; Tr. at 55)
As noted above, this third prong analyzes a foreign defendant’s contacts with the United
States at large, and whether the exercise of jurisdiction comports with due process.
Bos. Sci.
Corp. v. Micro-Tech Endoscopy USA Inc.
, Civil Action No. 18-1869-CFC-CJB, 2020 WL
229993, at *6 (D. Del. Jan. 15, 2020). In that regard, Plaintiffs first focus on a specific
jurisdiction-type analysis, which (in the Rule 4(k)(2) context), asks whether: (1) the defendant
purposefully directed its activities at residents of the United States, (2) the claim arises out of or
relates to the defendant’s activities with the United States, and (3) assertion of personal
jurisdiction is reasonable and fair.
Id
.;
TriDiNetworks Ltd.
,
In attempting to meet their burden as to the first two elements here, Plaintiffs put forward two theories. ( See D.I. 46 at 2-6; Plaintiffs’ Motion to Dismiss Slide Presentation at Slides 7, 31) The Court will address these in turn, and will explain why Plaintiffs have not met their burden as to either one.
1. Specific Personal Jurisdiction Based on Financing Plaintiffs’ first theory is that TGPL is subject to specific personal jurisdiction because: (1) TGPL engages in financing activities that directly target United States investors and markets; and (2) it has done so in order to finance Defendants’ mining operations in Cuba that give rise to Plaintiffs’ trafficking claims. (D.I. 46 at 4 (“This litigation arises from and relates to TGPL’s financing activities because U.S. funds have been used to facilitate trafficking activities in Cuba through the EMINCAR joint venture.”); see also id . at 2-5; Tr. at 62, 69) As for the first element of the Rule 4(k)(2) specific-jurisdiction test (i.e., that “the defendant purposefully directed its activities at residents of the United States”), Plaintiffs cite to evidence that beginning in March 2013, a wholly owned subsidiary of TGPL known as Trafigura Funding SA (“Trafigura Funding”) conducted numerous United States private placements, raising hundreds of millions of U.S. dollars; these included a $145 private placement in March 2013. (D.I. 46 at 2-3 (citing D.I. 82, ex. 17 at 106; id. , ex. 27 at 9, 13; id. , ex. 29 at 2); see also D.I. 37 at ¶ 51) And with regard to the second element of the test (“the claim arises out of or relates to the defendant’s activities with the United States”), Plaintiffs then suggest that the March 2013 private placement was used to finance EMINCAR. They assert this is so because in the same year (i.e., 2013), Trafigura Caribbean Mining obtained a $140 million credit facility from an unidentified “Group Company,” which it then made available to EMINCAR. (D.I. 46 at 3 (citing D.I. 82, ex. 32 at 6- 7; id. , ex. 27 at 13); D.I. 37 at ¶ 52) Plaintiffs are suggesting that this $140 million credit facility must have been funded in some way via TGPL/Trafigura Funding’s $145 million U.S. private placement. The following allegations in the CAC relate to this theory: 52. Funding raised by Trafigura Group companies appears to have been used to finance its trafficking activity, namely, its investment in the Castellanos lead and zinc mine in Cuba. For example, in 2013, Trafigura Caribbean Mining obtained a $140 million credit facility from an unidentified “Group Company,” and then made a $140 million credit facility available to EMINCAR. This coincided with a $145 million capital raise through a U.S. private placement in March 2013. This raise was conducted by Trafigura Funding, the entity responsible for making loans to other Trafigura Group companies. Both Trafigura Group and Trafigura Trading routinely guarantee the financing raised by Trafigura Funding.; and 103. The mining operation—referred to as the Castellanos lead and zinc mine—is conducted through EMINCAR, a joint venture between Trafigura Caribbean Mining (which owns a 49 percent interest) and Cuban state agency Geominera (which owns a 51 percent interest). With a capital outlay equivalent to $230 million, construction was completed in 18 months from start to finish.
According to financial reports, the Trafigura Group and its Mining Group invested at least $230 million in the venture through a loan from Trafigura Caribbean Mining to EMINCAR.
(D.I. 37 at ¶¶ 52, 103; see also id . at ¶ 108)
Defendants, however, have submitted sworn declarations that clearly and specifically refute Plaintiffs’ theory. Those declarations flatly deny that the $145 million U.S. private placement was used in any way to finance EMINCAR. (D.I. 42 at 11-12; D.I. 48 at 9; Tr. at 8) For example, Dan Peters, the Regional Controller for TTL, avers the following: • “TTL has not funded or facilitated in any way the funding of EMINCAR, nor of any EMINCAR-related business activities.” (D.I. 83, ex. 1 at ¶ 4);
• “TTL has not financed, nor has it in any way facilitated the financing of, investments or business activities relating to Cuba or EMINCAR.” ( Id. at ¶ 6).
Additionally, in his own declaration (the “McLaughlin Declaration”), Chris McLaughlin, Global Head of Group Treasury for Trafigura Holding GmbH (and the employee responsible for all foreign exchange, operational treasury and corporate funding matters within the overall group of Trafigura companies), ( id. , ex. 4 at ¶¶ 1-3), avers that:
• “None of Trafigura’s funding of EMINCAR or EMINCAR- related business activities has: (i) been in U.S. dollars, (ii) been paid using U.S. banks or other U.S. financial institutions, (iii) involved U.S. persons or (iv) involved U.S. operations of Trafigura such as . . . TTL[.]” ( Id. at ¶ 5); • “Trafigura has made a limited number of Euro-denominated payments to EMINCAR from an investment account maintained outside the United States that is funded from general cash pools of one or more non-U.S. Trafigura entities. Trafigura has funded the overwhelming majority of its investment in EMINCAR through a segregated Euro account maintained outside the United States consisting of retained earnings from non-U.S. company operations and proceeds from sales of corporate assets outside the United States.” ( Id. at ¶ 6) • “Trafigura has not funded any EMINCAR-related payment via financing guaranteed by . . . TTL or in which TTL is otherwise involved, including the financing Plaintiffs refer to in [the CAC]. This includes no use of financing from any financing vehicle for which TTL has served as a guarantor, originator or in which TTL has in any way otherwise been involved. Specifically, the $145 million U.S. private placement referred to in [the CAC] at paragraph 52 was not used to fund anything relating to EMINCAR, and had no relation whatsoever to the $140 million credit facility referred to in that paragraph .” ( Id. at ¶ 7 (emphasis added));
• “None of Trafigura’s TTL-related financing transactions is specifically designed to facilitate financing for the Mining Group or EMINCAR. None has been designed, implemented or used to fund, finance or facilitate any operations in or relating to EMINCAR or Cuba, nor do they have any other connection to or role in any activities in or relating to EMINCAR or Cuba.” ( Id. at ¶ 8);
• Trafigura has not otherwise established any special purpose vehicles, issued any debt instruments or sought any financing or access to capital markets (in the United States or otherwise) in order to fund its investment in EMINCAR, including the $140 million credit facilities and the $145 million capital raise referred to in the [CAC] .” ( Id. at ¶ 9 (emphasis added)) In the briefing, Plaintiffs’ only rejoinder to this evidence was that TGPL “provides no supporting documents, fails to identify the Group Company responsible for the $140 million credit facility to EMINCAR, and fails to explain the use of the March 2013 private placement, if not for EMINCAR.” (D.I. 46 at 4) And that is true; TGPL did not include supporting documents along with the declarations, nor did the declarations explain what the $145 million capital raise was used for.
But Plaintiffs cite to no caselaw that stands for the proposition that a declaration setting
out such facts must include “supporting documents” in order to further bolster the assertions
made therein, or that it must include reference to every possible fact that could be relevant to the
matter. (
Id.
; Tr. at 34) Indeed, the law does not seem to require that. As even Plaintiffs
acknowledge, relevant precedent indicates that once a defendant has put forward a sworn
declaration controverting the plaintiff’s jurisdictional allegations, it is then up to
the plaintiff
to
respond with similar evidence in support of jurisdiction. (Tr. at 34-36, 74);
see also, e.g.
,
McClung v. 3M Co.
, Civil Action No. 2:16-CV-2301-ES-SCM,
Then during the hearing on TGPL’s Motion, Plaintiffs seemed to shift their argument a
bit regarding these declarations. There, Plaintiffs seemed to be saying that while the declarations
“come very close” to establishing that EMINCAR was not funded by a U.S. private placement,
they leave “enough room” on the question for Plaintiffs to want to see more details regarding
“the actual finances”—since it could be that money from the $145 million U.S. private
placement was taken from the United States and then “run[] through some intermediar[y]”
knowledge. (D.I. 83, ex. 4 at 3; Tr. at 35);
see also, e.g.
,
Buckley v. Universal Sewing Supply,
Inc.
, Civil Action No. 1:19-CV-794-SHR,
In the Court’s view, Mr. Peters and Mr. McLaughlin’s declarations unequivocally convey that the $145 million U.S. private placement had nothing to do (directly or indirectly) with funding EMINCAR, nor was EMINCAR otherwise funded by any United States operations. The Court has no basis to conclude that the declarants are being untruthful with respect to these facts. Given this record then, Plaintiffs have not met their burden of establishing a prima facie case that TGPL purposefully directed relevant activities at residents of the United States, or that their claims arise out of or relate to TGPL’s activities with the United States, with respect to this first theory.
2. Specific Personal Jurisdiction Based on the Benefit to TTL from EMINCAR Production
Plaintiffs’ second theory is that TGPL is subject to specific personal jurisdiction pursuant to Rule 4(k)(2) because: (1) Defendants’ global zinc trading business encompasses zinc produced in both the United States and in Cuba; (2) even if zinc-related commodities from EMINCAR are not actually sold or imported into the United States, zinc mining in Cuba still, in some way, could be said to broadly benefit the entire TGPL trading business (including TTL’s U.S. business); and (3) TGPL’s zinc trading, some of which occurs in the United States, thus gives rise to the claims at issue because it amounts to commercial activity “‘using or otherwise benefiting from’” the Property. (D.I. 46 at 6 (quoting 22 U.S.C. § 6023(13)(A)(ii)); Tr. at 80-81) In support of the notion that TGPL’s zinc mining in Cuba benefits TGPL’s business conducted in and from the United States, Plaintiffs cite only to one page of a 2020 Base Prospectus regarding TGPL and its subsidiaries. That page states that the Trafigura Group’s “mining assets . . . are closely related to and have strong synergies with the Group’s core metals and minerals trading business.” (D.I. 42, ex. A at 111 ( cited in D.I. 46 at 6))
Plaintiffs have not met their burden with respect to this theory of jurisdiction either.
As an initial matter, this theory does not appear to have been pleaded in the CAC. Unlike
in the section of Plaintiffs’ brief where they discuss their first theory of specific personal
jurisdiction, Plaintiffs fail to cite to any allegations in the CAC relating to this second theory.
(D.I. 46 at 5-6) The Court has scoured the CAC independently to glean where this theory may
be alleged, but just does not see it. For that reason alone, TGPL cannot be subject to personal
jurisdiction pursuant to the theory.
See, e.g.
,
Value Drug Co. v. Takeda Pharms., U.S.A., Inc.
,
CIVIL ACTION NO. 21-3500,
But even were this theory pleaded, Plaintiffs have not demonstrated that it is viable, in
light of the record evidence here. As precedent for the theory, Plaintiffs rely on the “stream of
commerce” theory of personal jurisdiction that is referenced in
Wise v. Williams
, No. 1-10-CV-
02094,
As an initial matter, Plaintiffs point to no caselaw embracing that type of (incredibly expansive) personal jurisdiction theory. ( Id. ; Tr. at 120-21 (Defendants’ counsel noting that if Plaintiffs’ “idea of . . . liability were endorsed, any multinational company producing a commodity inside the United States and producing a commodity outside the United States would be susceptible to being hailed into a U.S. court based on conduct occurring entirely outside the United States with no connection other than the fact that maybe [the non-U.S. activity is] generally beneficial” to the company’s U.S. operations)) And even if such a theory were legally cognizable, the evidence does not support it. (Tr. at 120-21; D.I. 83, ex. 4 at ¶ 11 (“TTL has not received any revenues, profits or benefits from EMINCAR-related activities. TTL derives revenue from its own business activities, which activities have no connection to Mining Group activities outside the United States, including no connection to EMINCAR or Cuba.”)) For these reasons, Plaintiffs have not met their burden of establishing that TGPL purposefully directed relevant activities at residents of the United States, or that their claims arise of or relate to TGPL’s activities with the United States, as relating to this second theory.
Thus, the Court turns next to Plaintiffs’ arguments regarding general jurisdiction. B. General Jurisdiction
Plaintiffs contend that TGPL’s continuous and systematic operations in the United States render it “at home” here for purposes of general jurisdiction. (D.I. 46 at 6-9) Plaintiffs have a few lines of argument with respect to their position on general jurisdiction. The Court will assess these in turn, after first providing more context about the relevant law.
As was previously noted above, the inquiry with respect to general jurisdiction (as
modified for a Rule 4(k)(2) inquiry) is whether the “corporation’s affiliations with the [United]
State[s] are so continuous and systematic as to render [it] essentially at home in” the United
States.
Daimler
,
Plaintiffs first seem to briefly argue that TGPL is subject to general jurisdiction because it directly solicits or conducts business in the United States in a substantial, continuous and systematic manner “through its financing activities and its presence as ‘one of the largest and most active commodity traders in the US.’” (D.I. 46 at 6 (quoting D.I. 82, ex. 24)) But in the “Jurisdiction” section of the CAC, the following is all that is alleged as to TGPL’s direct U.S.- based presence: (1) TGPL formed a “joint venture” with Phillips 66 for the construction of a deepwater port east of Texas; (2) TGPL guaranteed TTL’s obligations under a prepayment agreement for crude oil; (3) TGPL’s charity is “active” in the United States; (4) TGPL “routinely guarantee[s]” financing raised by one of its subsidiaries, Trafigura Funding; and (5) one U.S. Attorney’s Office appears to believe that TGPL is subject to criminal jurisdiction in the United States. (D.I. 37 at ¶¶ 43-45, 52-53)
These contacts with the United States, either individually or collectively, fail to meet the
very high threshold that
Daimler
requires. In the Court’s view, having a joint venture in Texas
with another company, guaranteeing financing raised by U.S. subsidiaries, having a charity
active in the country and being the subject of a U.S. criminal investigation fail to come anywhere
close to a
prima facie
showing that a holding company incorporated in Singapore is essentially
“at home” in the United States.
See, e.g.
,
In re Packaged Seafood Prods. Antitrust Litig.
, 338 F.
Supp. 3d 1118, 1141-42 (S.D. Cal. 2018) (finding at the pleading stage that a corporation’s
activities did not rise to an exceptional case in which general jurisdiction would be applicable
where even though the corporation had an office in the United States, drew two-thirds of its
capital from United States investors and had a portfolio of United States-based companies, its
operations in the United Kingdom were greater than those in the United States and it controlled
its investments from the United Kingdom). Plaintiffs’ arguments to the contrary also fail to
grapple with or even acknowledge TGPL’s “activities in their entirety, nationwide and
worldwide”—as is required by the general jurisdiction analysis.
Daimler
,
Next, Plaintiffs argue that even though TGPL is a Sinagporean non-operating holding
company, it is nevertheless subject to general jurisdiction based on the presence and activities of
its subsidiaries. That is, Plaintiffs assert that TGPL exercises “sufficient control over its
subsidiaries to render them
agents or alter egos
” of TGPL. (
Id.
(emphasis added))
“[M]ere ownership of a subsidiary does not subject the parent corporation to personal
jurisdiction in the state of the subsidiary.”
Adtile Techs. Inc. v. Perion Network Ltd.
, 192 F.
Supp. 3d 515, 522 (D. Del. 2016) (internal quotation marks and citations omitted). A parent
corporation may only be subject to jurisdiction based on the contacts of its subsidiary under an
agency theory or alter ego theory.
Id.
Under the agency theory, a court “may attribute the
actions of a subsidiary company to its parent where the subsidiary acts on the parent’s behalf or
at the parent’s direction.”
Tigo Energy Inc. v. SMA Solar Tech. Am. LLS
, Civil Action No. 22-
915-GBW,
One problem for Plaintiffs again here is that neither the agency or alter ego theory of
personal jurisdiction is facially or fairly pleaded in the CAC. (
See
D.I. 48 at 2-3; Tr. at 52-53,
84-86) The CAC never once mentions the term “agent” in the context of this theory of liability,
and it never mentions the term “alter ego” at all. (D.I. 37 at ¶¶ 8, 34, 86) A party may not
amend a pleading through arguments made in a brief in opposition to a motion to dismiss.
Arunachalam v. Int’l Bus. Machs. Corp.
, Civ. No. 20-1020-LPS,
In the end, courts are instructed to consider a combination of factors in determining whether an agency or alter ego relationship exists between a parent and its subsidiaries. See supra nn.10-11. And here, Plaintiffs’ pleading and associated evidence do not well address most or all of those factors. (D.I. 48 at 4) Plaintiffs simply have not come close to meeting their burden of demonstrating the possible existence of an agency or alter ego relationship between TGPL and any of its United States subsidiaries.
Plaintiffs’ final argument was that a finding that TGPL is the alter ego of one of its U.S.-
based subsidiaries is “not necessary” in order for the Court to exercise personal jurisdiction over
TGPL—because courts will disregard the corporate form “in the interest of justice, when such
matters of fraud, contravention of law or contract, [or] public wrong . . . are involved.” (D.I. 46
at 8) (citing
Fid. Nat’l Info. Servs., Inc. v. Plano Encryption Techs., LLC
, Civil Action No. 15-
777-LPS-CJB,
For these reasons, the Court concludes that Plaintiffs have not sufficiently established a basis for this Court to assert specific or general jurisdiction over TGPL.
D.
Plaintiffs’ Motion for Jurisdictional Discovery
With their Motion, Plaintiffs request that, if the Court finds the evidence cited in
connection with TGPL’s Motion is insufficient to support a finding of personal jurisdiction over
TGPL, the Court should nevertheless grant Plaintiffs leave to conduct limited jurisdictional
discovery. (D.I. 44 at 2) The Third Circuit has stated that “[i]f a plaintiff presents factual
allegations that suggest ‘with reasonable particularity’ the possible existence of the requisite
‘contacts between [the party] and the forum state,’ . . . the plaintiff’s right to conduct
jurisdictional discovery should be sustained.”
Toys “R” Us, Inc.
,
For the reasons explained above, the Court has determined that Plaintiffs have not made
out a
prima facie
showing—that is, they have not established with “reasonable particularity” the
existence of sufficient contacts between TGPL and the United States. And in a prior decision,
the Court has explained why—pursuant to the applicable law of the Third Circuit—if a party
Sugar Indus. Inc. v. Xinjiang Goldwind Sci. & Tech. Co.
,
fails to make out a
prima facie
showing of personal jurisdiction, then the party is not entitled to
take jurisdictional discovery.
See 3G Licensing, S.A. v. Lenovo Grp. Ltd.
, Civil Action No. 17-
84-LPS,
Therefore, the Court DENIES Plaintiffs’ Motion.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS TGPL’s Motion and DENIES Plaintiffs’ Motion.
As was noted above, Plaintiffs did not come close to demonstrating a
prima facie
case of
personal jurisdiction under any of the theories they presented here. And so the Court is very
skeptical that they could do so in the future if given another chance. But in part because this is
the first time that a judge has found Plaintiffs’ jurisdictional pleading wanting,
see Illumina, Inc.
v. Guardant Health, Inc
., Civil Action No. 22-334-GBW-CJB,
An appropriate Order will issue.
Notes
[2] Márian Maria de los Angeles Romagosa and Lisette Romagosa Smyrnios subsequently filed notices of dismissal with respect to their claims and are thus no longer parties to this action. (D.I. 13; D.I. 14)
[3] As was referenced above, Angela Romagosa Fernandez died on February 16, 2022, and her claims are now being prosecuted by Plaintiff Suzette Nicole Neyra Hendrick, in her capacity as Independent Executor of Angela Romagosa Fernandez’s estate. (D.I. 37 at ¶¶ 20(a)-(b))
[4] On January 25, 2024, United States District Judge Jennifer L. Hall referred this case to the Court to hear and resolve all pre-trial matters up to the pre-trial conference. (D.I. 61) On February 5, 2024, the parties jointly consented to the Court’s jurisdiction to decide TTL’s Motion, TGPL’s Motion and Defendants’ Supplemental Motion. (D.I. 64)
[5] Courts have noted that it is a “rare occurrence[]” when jurisdiction is established
pursuant to Rule 4(k)(2).
Singh v. Royal Caribbean Cruises Ltd.
,
[6] When Mr. McLaughlin refers to “Trafigura” in the declaration, he is referring to the overall Trafigura “Group” of companies, including TGPL. (D.I. 83, ex. 4 at ¶ 3)
[7] It is not as if a declaration like the McLaughlin Declaration is without evidentiary force. After all, the declarant has stated under penalty of perjury, pursuant to the laws of the United States, that what is being asserted in the document is true and correct to the best of his
[8] ( See, e.g ., D.I. 83, ex. 4 at ¶ 7 (Mr. McLaughlin declaring that “the $145 million U.S. private placement . . . was not used to fund anything relating to EMINCAR”); id . at ¶ 9 (Mr. McLaughlin declaring that “Trafigura . . . [did not seek] any financing or access to capital markets (in the United States or otherwise) in order to fund its investment in EMINCAR, including the . . . $145 million capital raise referred to in the [CAC]”))
[9]
See also In re Packaged Seafood Prods.
,
[10] In assessing whether a subsidiary is an agent of its parent pursuant to this test, a court may consider several factors, such as the extent of overlap of officers and directors between the companies, methods of financing, the division of responsibility for day-to-day management, and the process by which each corporation obtains its business. Tigo Energy , 2023 WL 6990896, at *8.
[11] In order to determine whether a subsidiary is the alter ego of its parent, a court in
part assesses certain corporate separateness factors, such as gross undercapitalization, failure to
observe corporate formalities, nonpayment of dividends, insolvency of the subsidiary
corporation, siphoning of funds from the subsidiary corporation by the dominant stockholder,
nonfunctioning of officers and directors, absence of corporate records, and whether the
corporation is merely a façade for the operations of the dominant stockholder.
Trinity Indus.
,
[12] When asked about this issue during oral argument, Plaintiffs’ counsel pointed to paragraph 32 of the CAC, (Tr. at 85), which states generally that the Court “has personal jurisdiction over Trafigura Group because, directly or through its wholly owned subsidiaries, Trafigura Group has sufficient contacts with the United States as a whole to comport with constitutional notions of due process[,]” (D.I. 37 at ¶ 32). Plaintiffs’ counsel also pointed to allegations following this paragraph that largely describe certain subsidiaries’ connections to the United States. (Tr. at 85; see D.I. 37 at ¶¶ 33-53) These allegations fall short of sufficiently pleading the agency and alter ego tests, as they fail to speak to the elements required by these tests or give anything resembling proper notice to Defendants as to what theory of personal jurisdiction is actually being asserted (and on what basis it is being asserted). (Tr. at 93)
[13] In support of the notion that being “two arms of the same business group” means that one corporation’s contacts should be imputed to the other, Plaintiffs cite to a case that, unsurprisingly, does not stand for that broad proposition. (D.I. 46 at 7 (citing Pfizer Inc. v. Mylan Inc. , 201 F. Supp 3d 483, 489 (D. Del. 2016)) Instead, the case makes the simple point that the agency theory applies not just to parents and subsidiaries, but also to companies that are two arms of the same business group— provided that the plaintiff show that the defendant exercises sufficient control over the activities of the other company. Pfizer , 201 F. Supp. 3d at 489.
[14] In Plaintiffs’ Motion, they highlight the (unpleaded) fact that TTL’s Chief
Financial Officer is also listed as a member of TGPL’s Financial Leadership. (D.I. 44 at 10
(citing
id.
, exs. 39-40)) Even if this were pleaded in the CAC, this would not be sufficient to
demonstrate a
prima facie
showing of alter ego or agency status.
Cf. Bristol-Myers Squibb Co. v.
Aurobindo Pharma USA Inc.
, C.A. No. 17-374-LPS (CONSOLIDATED), C.A. No. 17-379-LPS,
[15] In their brief in support of their motion for jurisdictional discovery, Plaintiffs
posit that personal jurisdiction is also proper under the
Calder
effects test. This test permits a
court to exercise personal jurisdiction over a nonresident defendant who acts outside the forum
state to cause an effect upon the plaintiff within the forum state. (D.I. 44 at 19 (citing
Carteret
Sav. Bank, FA v. Shushan
,