Firefighters' Retirement System et al v. Royal Bank of Scotland PLC

Filing 45

RULING: The 14 Motion to Dismiss filed by Defendant, Royal Bank of Scotland, on Rule 12(b)(2) grounds for lack of personal jurisdiction over Plaintiffs, Firefighters' Retirement System, Municipal Employees' Retirement System, and New Orleans Firefighters Pension & Relief Fund, is hereby GRANTED. The Defendant's Motion seeking dismissal on Rule 12(b)(6) grounds is hereby DENIED AS MOOT. The 22 Motion to Continue Submission Date to Allow Jurisdictional Discovery to the Royal Bank of Scotland filed by Plaintiffs is hereby DENIED. Signed by Judge Shelly D. Dick on 3/29/2016. (LLH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

FIREFIGHTERS’ RETIREMENT SYSTEM,
MUNICIPAL EMPLOYEES’ RETIRMENT SYSTEM,
AND FIREFIGHTERS’ PENSION & RELIEF FUND

CIVIL ACTION

VERSUS

15-482-SDD-EWD

ROYAL BANK OF SCOTLAND PLC
RULING
Before the Court is Defendant, Royal Bank of Scotland’s (“RBS”), Motion to
Dismiss the Petition.1 Plaintiffs, Firefighters’ Retirement System, Municipal Employees’
Retirement System, and Firefighters’ Pension & Relief Fund, have filed an Opposition2 to
which the Royal Bank of Scotland has filed a Reply.3 Plaintiffs have also filed a Motion
to Continue Submission Date to Allow Jurisdictional Discovery to Royal Bank of
Scotland,4 which RBS has opposed.5

For the following reasons, Royal Bank of

Scotland’s Motion shall be GRANTED, and Firefighters’ Retirement System’s, Municipal
Employees’ Retirement System’s, and Firefighters’ Pension & Relief Fund’s Motion shall
be DENIED.
I.

FACTUAL AND PROCEDURAL HISTORY
In this removal action, three pension funds, Firefighters Retirement System,

Municipal Employees’ Retirement System, and Firefighters’ Pension & Relief Fund

1

Rec. Doc. 14.
Rec. Doc. 21.
3
Rec. Doc. 31.
4
Rec. Doc. 22.
5
Rec. Doc. 37.
2

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(“Plaintiffs”), are seeking to recover damages from the Royal Bank of Scotland, a
corporation organized under the laws of the United Kingdom, with its principal place of
business in Edinburgh, Scotland, and with a U.S. branch located in Stamford,
Connecticut.6
Plaintiffs’ claims stem from their 2008 investment in Series N Shares issued by
Fletcher Income Arbitrage Leveraged Fund (“Leveraged”), a hedge fund organized under
the laws of the Cayman Islands.7 According to the Petition,8 “Corsair was the nominal
sponsor of an investment vehicle organized by Citco and RBS to invest in Leveraged.”9
As part of a simultaneous funding, RBS loaned $91.3 million in financing10 to a separate
entity, Global Hawk, which, in turn, invested $106.3 million into Corsair (Jersey) Limited.11
Corsair then allegedly purchased $34.7 million of Non-Series N Shares in Leveraged,12
which shares were pledged as collateral for RBS’s loan to Global Hawk.13 The remaining
funds were used to purchase Treasury Securities.14
Subsequently, Leveraged began experiencing adverse financial problems,
resulting in a decrease in the value of the Non-Series N Shares. Plaintiffs contend that
due to this financial predicament, Leveraged, RBS, and the holders of the Non-Series N
Shares structured an Offering to solicit a $100 million investment from the Plaintiffs with

6

Rec. Doc. 1-2, Rec. Doc. 14-8.
Rec. Doc. 1-2, p. 4, ¶4. Plaintiffs alleged that Leveraged was the “feeder fund in a ‘master/feeder’
structure. The master fund in the structure is Fletcher Income Arbitrage Fund, Ltd., a company incorporated
under the laws of the Cayman Islands.”
8
Rec. Doc. 1-2.
9
Rec. Doc. 1-2, p. 4, ¶5.
10
According to the Petition, RBS’ $91.3 million funding was guaranteed by JP Morgan Securities, Ltd. and
Credit Suisse Group AG. Rec. Doc. 1-2, pp. 3-4, ¶¶3h, 3i, and 3q.
11
Rec. Doc. 1-2, pp. 4-5, ¶¶5, 7.
12
Rec. Doc. 1-2, p.3, ¶3k defines “Non-Series N Shares” as “the Series 4, 5, and 6 shares of Leveraged
owned by Corsair or Global Hawk which were purchased with the RBS Funding.”
13
Rec. Doc. 1-2, p. 5, ¶7.
14
Rec. Doc. 1-2, p. 5, ¶7.
7

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a new class of stock or Series N Shares. As part of this Offering, RBS entered into an
agreement with Leveraged, and the holders of Non-Series N Shares, to subordinate their
redemption rights in the Non-Series N Shares to the newly issued Series N Shares.15
“Upon information and belief”, Plaintiffs claim that RBS’s consent was necessary “since
the Non-Series N Shares were held as collateral for the RBS Funding.”16 A Priority
Payment Agreement allegedly memorialized RBS’s, Leveraged’s, and the Non-Series N
Shareholders’ consent to subordinate their rights and was included in the Offering
Memorandum.17
On March 12, 2008, representatives of Leveraged and Consulting Services Group
(“CSG”) met with the Plaintiffs in Baton Rouge, Louisiana, and solicited them to invest in
Leveraged, offering them the Series N Shares.18 Plaintiffs were provided with an Offering
Memorandum that had been prepared by Leveraged’s attorneys that delineated the
investment’s terms, including two Priority Payment provisions that required mandatory
redemption of Series N Shares under certain circumstances.19 During the meeting,
Plaintiffs claim that representations were made to them that JP Morgan Ltd. and RBS had
consented to the Offering’s structure.20 Based in part upon these representations and
the Priority Payment Agreement, on April 1, 2008, Plaintiffs purchased $100 million of

15

Rec. Doc. 1-2, p. 5, ¶10; p. 8, ¶¶19 and 21.
Rec. Doc. 1-2, p. 8, ¶19.
17
Rec. Doc. 1-2, p. 8, ¶21; p. 9, ¶26.
18
Rec. Doc. 1-2, p. 5, ¶12.
19
The two Priority Payment provisions required mandatory redemption of Series N Shares “(i) if Series 4,
5, or 6 investors redeemed, a mandatory redemption of Series N Shares was required one day before the
redemption of the Series 4, 5, or 6 shareholder; and (ii) an automatic redemption of Series N would occur
if the value of non-Series N capital accounts fell below 20% of the value of Series N shareholders’ capital
accounts.” Rec. Doc. 1-2, p. 6, ¶14.
20
Rec. Do. 1-2, p. 5, ¶12.
16

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Series N Shares in Leveraged.

Without the Priority Payment Agreement, Plaintiffs

maintain that they would not have invested in Leveraged.21
Plaintiffs allege that, approximately one year later, RBS breached the terms of the
Priority Payment Agreement by issuing a default notice and calling its loan to Global
Hawk, and demanding the redemption of the Non-Series N Shares.22 Plaintiffs claim they
were never notified of the redemptions of the Non-Series N Shares after RBS issued its
notice of default as required by the terms in the Offering Memorandum.23 As a result of
RBS’s actions, Global Hawk allegedly received $24.7 million in “cash and/or property from
Leveraged for the redemption of the Non-Series N shares” and repaid its debt to RBS.24
On June 19, 2015, Plaintiffs filed a Petition against RBS asserting state law claims
for breach of contract, unjust enrichment, and detrimental reliance. Shortly thereafter, a
Petition for Intervention was filed by the City of New Orleans and several officials of the
City of New Orleans.25 On July 21, 2015, RBS removed Plaintiffs’ lawsuit to federal court
on diversity jurisdiction grounds, 28 U.S.C. § 1332, and bankruptcy jurisdiction, 28 U.S.C.
§ 1452(a).26 RBS moves to dismiss Plaintiffs’ claims for lack of personal jurisdiction and
for failure to state a claim.27 The Plaintiffs contend that the RBS’s arguments lack merit28
but have moved for jurisdictional discovery if the Court finds that it lacks personal
jurisdiction over RBS.

21

Rec. Doc. 1-2, p. 8, ¶21; p. 9, ¶26.
Rec. Doc. 1-2, p. 9, ¶27.
23
Rec. Doc. 1-2, p. 10, ¶30.
24
Rec. Doc. 1-2, p. 10, ¶33.
25
Rec. Doc. 1-3.
26
Rec. Doc. 1. In re Fletcher International, Ltd., Case No. 12-12796 (Bankr. S.D.N.Y. 2012); In re FIA
Leveraged Fund, Case No. 14-10093 (Bankr. S.D.N.Y. 2014); In re Fletcher Income Arbitrage Fund, Inc.,
Case No. 14-10094 (Bankr. S.D.N.Y. 2014). See Recs. Doc. 1-4, 1-5, 1-6, 1-7.
27
Rec. Doc. 14.
28
Rec. Doc. 21.
22

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II.

LAW AND ANALYSIS
Of the two grounds for dismissal articulated by RBS, the first basis--lack of

personal jurisdiction—suffices. Plaintiffs have failed to establish a prima facie case that
RBS is subject to personal jurisdiction in Louisiana with respect to their claims.
A. Legal Standard for Personal Jurisdiction
Rule 12(b)(2) of the Federal Rules of Civil Procedure authorizes dismissal of a
complaint where the Court lacks personal jurisdiction.29 “Where a defendant challenges
personal jurisdiction, the party seeking to invoke the power of the court bears the burden
of proving that jurisdiction exists.”30 When, as in this case, a court rules on a motion to
dismiss for lack of personal jurisdiction without holding an evidentiary hearing, the plaintiff
need only make a prima facie showing of personal jurisdiction.31 “Moreover, on a motion
to dismiss for lack of jurisdiction, uncontroverted allegations in the plaintiff’s complaint
must be taken as true, and conflicts between the facts contained in the parties’ affidavits
must be resolved in the plaintiff’s favor for purposes of determining whether a prima facie
case for personal jurisdiction exists.”32 However, in assessing whether the plaintiff has
presented a prima facie case of personal jurisdiction, the court “will not ‘credit conclusory
allegations, even if uncontroverted.’”33

The Court may consider “affidavits,

29

Fed.R.Civ.P. 12(b)(2).
Luv N’care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006)(citing Wyatt v. Kaplan, 686 F.2d
276, 280 (5th Cir. 1982)).
31
Johnston v. Multidata Systems Intern. Corp., 523 F.3d 602, 609 (5th Cir. 2008). “Proof by a
preponderance of the evidence is not required.” Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 609
(citing Bullion v. Gillepsie, 895 F.2d 213, 217 (5th Cir. 1990)).
32
Id. (quoting Bullion v. Gillepsie, 895 F.2d 213, 217 (5th Cir. 1990)).
33
Sealed Appellant 1 v. Sealed Appellee 1, 625 Fed.Appx. 628, 631 (5th Cir. 2015).
30

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interrogatories, depositions, oral testimony, or any combination of the recognized
methods of discovery.”34
“A federal court sitting in diversity may exercise personal jurisdiction over a
nonresident defendant (1) as allowed under the state’s long-arm statute; and (2) to the
extent permitted by the Due Process Clause of the Fourteenth Amendment.”35 As for the
first element, it is well-established that Louisiana’s long arm statute is coextensive with
the limits of constitutional due process.36 Therefore, the inquiry is whether jurisdiction
comports with federal constitutional guarantees.37
“[T]he Fourteenth Amendment Due Process clause requires satisfaction of a two
prong test in order for a federal court to properly exercise jurisdiction: (1) the nonresident
must have minimum contacts with the forum state, and (2) subjecting the nonresident to
jurisdiction must be consistent with ‘traditional notions of fair play and substantial
justice.’”38 Sufficient minimum contacts will give rise to either general, “all-purpose”
jurisdiction or specific, “case-linked” jurisdiction.39
A court may assert general jurisdiction over foreign defendants “to hear any and
all claims against them.”40

The Supreme Court considered the requirements for

establishing general jurisdiction in Daimler AG v. Bauman.41 The Court instructs that the
proper consideration when determining general jurisdiction is “‘whether that corporation’s

34

Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002)(quoting Stuart v. Spademan, 772 F.2d 1185, 1192 (5th
Cir. 1985).
35
Mullins v. TestAmerica, Inc., 564 F.3d 386, 398 (5th Cir. 2009).
36
Jackson v. Tanfoglio Giuseppe, SRL, 615 F.3d 579, 584 (5th Cir. 2010)(citing Walk Haydel & Assocs. v.
Coastal Power Prod. Co., 517 F.3d 235, 242-43 (5th Cir. 2008)).
37
Id.
38
Freudensprung v. Offshore Tech. Serv., Inc., 379 F.3d 327, 343 (5th Cir. 2004)(citing Asarco, Inc. v.
Glenara, Ltd., 912 F.2d 784 (5th Cir. 1990) and Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945)).
39
Goodyear Dunlop Tires Operations, S.A. v Brown, 131 S.Ct. 2846, 2851 (2011).
40
Id.
41
Daimler AG v. Bauman, 134 S.Ct. 746 (2014).

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affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at
home in the forum State.’”42 The Daimler Court rejected the notion that a nonresident
defendant is subject to general jurisdiction “in every State in which the corporation
engages in a substantial, continuous, and systematic course of business,” finding such
an approach “unacceptably grasping.”43 Rather, the Court held that for a corporation,
“the place of incorporation and principal place of business” are where it is “at home” and
thus paradigm bases for jurisdiction.44 Importantly, the Daimler Court noted that it “[did]
not foreclose the possibility that in an exceptional case … a corporation’s operations in a
forum other than its formal place of incorporation or principal place of business may be
so substantial and of such a nature to render the corporation at home in that state.”45 In
determining whether a corporation’s affiliations with a state are sufficient to impose
general jurisdiction, the inquiry does not turn solely on “the magnitude of the defendant’s
in-state contacts.”46 Rather, a court must appraise the “corporation’s activities in their
entirety, nationwide and worldwide.”47 In light of Daimler, the Fifth Circuit has observed
that “[i]t is incredibly difficult to establish general jurisdiction in a forum other than the
place of incorporation or principal place of business.”48
Even when the defendant lacks “continuous and systematic contacts” to support
general jurisdiction, the court may still exercise specific jurisdiction “in a suit arising out of
or related to the defendant’s contacts with the forum.”49 Specific jurisdiction “focuses on

42

Id. at 761(quoting Goodyear, 131 S.Ct. 2846, 2851 (2011))(alteration original).
Id.
44
Id.
45
Id. at 762, n. 19.
46
Id., n. 20. The Court further noted that “[a] corporation that operates in many places can scarcely be
deemed at home in all of them.”
47
Id.
48
Monkton Ins. Servs., Ltd., v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014).
49
Luvn’ care, 438 F.2d at 469 (quoting Helicopteros Nacionales, 466 U.S. at 414, (1984)).
43

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the relationship among the defendant, the forum, and the litigation.”50 “For a State to
exercise jurisdiction consistent with due process, the defendant’s suit-related conduct
must create a substantial connection with the forum state.”51 Within the Fifth Circuit, a
three-step analysis is applied for the specific jurisdiction inquiry:
(1)
whether the defendant has minimum contacts with the forum state,
i.e., whether it purposely directed its activities toward the forum state or
purposely availed itself of the privileges of conducting activities there; (2)
whether the plaintiff’s cause of action arises out of or results from the
defendant’s forum-related contacts; and (3) whether the exercise of
personal jurisdiction is fair and reasonable.52
If the plaintiff can establish the first two prongs, the burden shifts to the defendant to show
that exercising jurisdiction would be unfair or unreasonable.53
B. Analysis
RBS contends that Plaintiffs fail to establish either general or specific jurisdiction.
The Court agrees.
1. General Jurisdiction
In light of the Supreme Court’s decision in Daimler, the question before the Court
for purposes of general jurisdiction is not whether RBS’s contacts with the forum are
“continuous and systematic” but whether its “affiliations with the state are so ‘continuous
and systematic’ as to render [it] essentially at home in the forum State.”54 Here, RBS is
neither incorporated nor does it have a principal place of business in Louisiana.55 In fact,

50

Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014).
Id.
52
Monkton, 768 F.3d at 431.
53
Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 276 (5th Cir. 2006)(citation omitted).
54
Daimler, 134 S.Ct. at 754.
55
Rec. Doc. 14-8. “RBS is a direct, wholly owned subsidiary of Royal Bank of Scotland Group plc. RBS is
incorporated under the laws of Scotland. The principal office of RBS is located at RBS Gogarburn, P.O.
Box 1000, Edinburgh, Scotland.”
51

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RBS does not maintain any branch, agency, or representative office in Louisiana.56
Under Daimler, however, the fact that these affiliations with the forum state do not exist,
is not necessarily the death knell to finding general jurisdiction exists in this case. As
previously discussed, Daimler left open the possibility that, in the exceptional case,
general jurisdiction might still be attainable without such contacts in the forum state. After
reviewing the Petition, however, the contacts alleged in this case do not trigger such an
exception.
Plaintiffs contend that a strong basis for exercising general jurisdiction exists based
upon RBS’s filings and registration with the Louisiana Secretary of State to do business
from 2007 through 2014,57 filing of Annual Reports in Louisiana, payment of taxes in
Louisiana, and Certificate of Authority to conduct business in Louisiana.58 Fifth Circuit
precedent has consistently held that being qualified to do business in a state59 and the
appointment of a registered agent for service alone cannot support the exercise of general
jurisdiction.60 Such precedent is further strengthened post-Daimler.

56

Rec. Doc. 14-8, p. 1, ¶2.
As of December 24, 2014, RBS was “no longer transacting business in the State of Louisiana” as reflected
in its Application for Withdrawal of a Foreign Corporation Limited Liability Company from the State of
Louisiana. Rec. Doc. 21-2.
58
Rec. Doc. 21-2.
59
Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179, 182 (5th Cir. 1992)( “Applying for the privilege
of doing business is one thing, but the actual exercise of that privilege is quite another.”).
60
See, Wenche Siemer, 966 F.2d at 181 (“While … being qualified to do business, may on its face appear
to be significant, it ‘is of no special weight’ in evaluating general personal jurisdiction.”). See also, DNH,
LLC v. In-N-Out Burgers, 381 F.Supp.2d 559, 565 (E.D.La. 2005)(“Qualifying to do business in a state and
appointing an agent for service of process there do not amount a ‘general business presence’ of a
corporation that could sustain an assertion of general jurisdiction.”) Plaintiffs rely upon the 1991 decision,
Levron v. Marriott, to support their position that general jurisdiction exists where a foreign corporation
registers to conduct business and does conduct business in Louisiana. Considering the Levron decision
preceded Daimler, the Court declines to rely upon this decision for the proper general jurisdiction analysis.
Plaintiffs also rely upon the Louisiana Supreme Court decision, Bridges v. Autozone Properties, Inc., 900
So.2d 784 (2005) and the Louisiana Court of Appeals for the First Circuit decision, Sec’t Dept. of Rev. v.
GAP (Apparel), Inc., 886 So.2d 459 (La. App. 1st Cir. 2004), to support their general jurisdiction argument.
However, both cases precede Daimler, and, moreover, they involve the issue of Louisiana’s taxing
jurisdiction—an issue that has no bearing on the instant matter.
57

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Aside from RBS’s filings with the Secretary of State and Certificate of Authority to
conduct business in Louisiana, the undisputed filings reflect that, since its date of
registration to do business in Louisiana, RBS has never owned property (fixed assets or
tangible property), had an office, or any employees in Louisiana.61

The Court further

finds that the payment of taxes to the State of Louisiana does not support the exercise of
general jurisdiction over RBS. As the Supreme Court has explained in the past, the mere
purchase of goods from a state, even at regular intervals and in substantial amounts, was
insufficient to warrant the assertion of general jurisdiction over a non-resident.62 A finding
that general jurisdiction lies solely because the annual payment of taxes constitutes
“continuous and systematic” contacts with Louisiana would amount to an “unacceptable
grasp” as discussed in Daimler.
Relying on the Eastern District of Louisiana decision Hills v. Brinks, Inc.,63 Plaintiffs
contend that, under Louisiana law, La. R.S. § 13:201, RBS has subjected itself to the
Court’s jurisdiction by obtaining an authorization to conduct business in Louisiana.64 The
Court, however, finds otherwise.65 Initially, the Court observes that Hills was decided

61

Rec. Doc. 21-2, p. 6.
Helicopteros Nacionales de Colombia, S.A. v. Hall, 104 S.Ct. 1868 (1984).
63
Hills v. Brinks, Inc., No. 07-4207, 2008 WL 243944 (E.D.La. Jan. 25, 2008). Unlike the pending matter,
Hills involved a motion to dismiss for improper venue.
64
La. R.S. 12:306 provides: “A foreign corporation which before January 1, 1969 has received a certificate
of authority which is still valid, or which shall on or after January 1, 1969 receive a certificate of authority,
shall, under a certificate of revocation or of withdrawal shall have been issued as provided in this Chapter:
… (3) Except as in this Chapter otherwise provided, be subject to the same duties, restrictions, penalties
and liabilities imposed on or after January 1, 1969 upon a business or nonprofit corporation of like character
organized under the laws of this state.”
65
The Court further observes that the Hills court found that it had “personal jurisdiction over defendants
because they purposefully availed themselves of the privileges of conducting business in Louisiana,” and
further found “exercising personal jurisdiction in this case does not offend traditional notions of fair play and
substantial justice.” The Hills court did not expressly state which type of personal jurisdiction—general or
specific--existed over the defendant. Arguably, the Hills court’s finding suggests that it had specific
jurisdiction, considering minimum contacts for purposes of specific jurisdiction “exist where a defendant has
purposely directed its activities toward the forum state or purposefully availed itself of the privileges of
conducting activities there.” Hunt Capital Partners, L.L.C. v. Berk, No. 14-2726, 2015 WL 4397137, *4
62

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approximately six years pre-Daimler. There are also certain factual differences. Unlike
the defendant in Hills, since receiving its authorization to conduct business in Louisiana,
RBS has never maintained an office in Louisiana, and its principal place of business is
not in Baton Rouge, much less Louisiana.66 In its analysis, the Hills court took all of these
factors into consideration before exercising personal jurisdiction over the defendants. The
court’s ruling did not rest solely on La. R.S. § 13:201. Accordingly, the Court finds that
the Hills case carries little weight in the instant matter.
Thus, even accepting the Plaintiffs’ uncontroverted allegations as true and
resolving all factual conflicts in their favor, the Court finds that Plaintiffs’ contacts, in their
entirety, do not rise to the continuous and substantial level required to render RBS “at
home” in Louisiana. Without the requisite showing on this point, Plaintiffs have failed to
establish a prima facie case for general jurisdiction over RBS.
2. Specific Jurisdiction
Likewise, this Court does not have specific jurisdiction over RBS. Specific
jurisdiction may be established where the defendant “has purposely directed his activities
at residents of the forum,” and the plaintiff’s alleged injury “arises out of or relate[s]” to the
defendant’s contacts with the forum state.67 As previously discussed, the Court’s inquiry
“focuses on the relationship among the defendant, the forum, and the litigation.”68 “[T]he
relationship must arise out of contacts that the ‘defendant himself’ creates with the forum

(E.D.La. July 13, 2015)(citing Choice Healthcare, Inc. v. Kaiser Foundation Health, 615 F.3d 364, 368 (5th
Cir. 2010).
66
In fact, within the United States, RBS maintains one branch in Connecticut and representative offices in
Illinois, New York, and New Jersey (license only). Rec. Doc. 14-8, p. 2, ¶3.
67
Clemens v. McNamee, 615 F.3d 374, 378-79 (5th Cir. 2010)(quoting Burger King v. Rudzewicz, 105
S.Ct. 2174 (1985)).
68
Walden, 134 S.Ct. at 1121.

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State.”69 In other words, the Court must determine whether the non-resident defendant
directed specific acts toward the forum state. The minimum contacts inquiry cannot be
satisfied “by demonstrating contacts between the plaintiff (or third parties) and the forum
State.”70 “Due process requires that a defendant be haled into court in a forum State
based on his own affiliation with the State, not based on the ‘random, fortuitous, or
attenuated’ contacts he makes by interacting with other persons affiliated with the
State.”71
Plaintiffs identify several allegations in their Petition in an attempt to demonstrate
that a prima facie case for the exercise of specific personal jurisdiction.72 The Court
accepts uncontroverted facts as true.

However, the Court assigns no weight to

conclusory allegations, even if uncontroverted.73 Plaintiffs overlook this well-settled legal
principal. The specific facts identified by Plaintiffs in their opposition memorandum are
largely conclusory and to some degree speculative.74 Hence, the Court shall not credit
such allegations in assessing whether Plaintiffs have made their prima facie case.
Here, the Court finds that the allegations fail to establish that RBS “itself” directed
any contacts towards Louisiana regarding the investment transactions giving rise to
Plaintiffs’ claims. A review of the Petition reveals that all of the activities that were
specifically directed towards Louisiana involved other entities, such as Leveraged—not

69

Walden, 134 S.Ct. at 1122(emphasis original).
Id.
71
Id. at 1123 (quoting Burger King Corp. v. Rudzewicz, 471 U.S 462, 475, 105 S.Ct. 2174 (1985)(internal
quotation marks omitted).
72
Rec. Doc. 21, pp. 13-14.
73
Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5th Cir. 2001).
74
For instance, Plaintiffs’ speculation that RBS must have agreed to a subordination of Leveraged shares
is contradicted by the Offering Memorandum itself. The Offering Memorandum indicates that Leveraged
had the autonomy to “issue additional classes of shares which may differ in terms of, among other things,
denomination of currency, the fees charged, minimum subscription amounts, redemption rights and other
rights.” Rec. Doc. 14-7, p.22.
70

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RBS. For instance, Plaintiffs have alleged meeting with Leveraged and CSG in Baton
Rouge, Louisiana, regarding the purchase of Series N Shares.75

The Petition is

completely devoid of any allegations that RBS ever communicated with the Plaintiffs or
went to Louisiana to discuss the investment opportunity.

The Priority Payment

Agreement is not, in this Court’s view, a communication or contact with the Plaintiffs which
gives rise to specific personal jurisdiction.
Plaintiffs’ contractual claims are further based on the terms included in the Offering
Memorandum prepared by Leveraged’s attorneys—not RBS’s legal counsel. As for the
alleged Priority Payment Agreement, it is well established that “[c]ontracting with a
resident of the forum state does not alone support the exercise of jurisdiction over [a]
defendant.”76 In cases which involve disputes arising out of contract, such as this one,
the inquiry is more nuanced such that “the place of contract negotiation and execution,
the place of contract performance, and the state whose laws the parties have chosen to
govern the contract are all significant in evaluating whether specific jurisdiction exists.”77
In this instance, Plaintiffs allege they are third party beneficiaries to a Priority Payment
Agreement, but the Petition is devoid of any allegations that the agreement was executed
in Louisiana, governed by Louisiana law, or related in any other manner to the state.
Moreover, the agreement was purportedly entered into by RBS and other entities that are
not Louisiana residents. As alleged, the Plaintiffs are the only links between the Priority
Payment Agreement and Louisiana.

75

Rec. Doc. 1-2, p. 4, ¶4; p. 5, ¶11. In the Petition, the Plaintiffs actually define the “Offering Memorandum”
as the “Leveraged Confidential Memorandum dated April 1, 2008, used by Leveraged to market the Series
N Shares.” Rec. Doc. 1-2, p. 3. “m”.
76
ICEE Distributors, Inc. v. J&J Snack Foods Corp., 325 F.3d 586, 591 (5th Cir. 2003).
77
Salacia Logistics v. Four Winds Logistics, LLC, No. 15-01512, 2015 WL 4645695, *4 (E.D.La. Aug. 4,
2015)(citing Command-Aire Corp. v. Ontario Mechanical Sales and Service Inc., 963 F.2d 90, 94 (5th Cir.
1992).

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When the Court turns its attention to the claims related to RBS’s issuance of the
default notice, a similar problem arises. The underlying loan made by RBS to Global
Hawk has not been alleged to have any connection to Louisiana.

Likewise, the

redemption of the Non-Series N Shares by non-Louisiana entities has no connection to
Louisiana. Although Plaintiffs’ experienced financial harm in Louisiana, injury in the forum
state is not a sufficient means of connecting RBS to the forum.78 The Court’s focus must
be on the RBS’s conduct and whether that conduct connects RBS to Louisiana in a
meaningful way.
Plaintiffs urge the Court to find specific personal jurisdiction because the Offering
Memorandum—which included the Priority Agreement—was directed to the forum state
by RBS, and the breach of the Priority Agreement’s terms caused them damages. In the
Fifth Circuit, a single communication directed at the forum can establish personal
jurisdiction when the content of that communication gives rise to an international tort for
which jurisdiction is sought.79 For instance, in Wein Air Alaska v. Brandt, the Fifth Circuit
held that various phone calls, letters, and faxes made by the non-resident defendant to
the plaintiff were sufficient to establish specific jurisdiction because the single act
contained and gave rise to the intentional tort cause of action of fraudulent
misrepresentation.80 Plaintiffs’ reliance on Wein and other similar cases81 is unavailing.

78

Pitts v. Ford Motor Co., No. 14-396, 2015 WL 5256838, *6 (S.D.Miss. Aug. 26, 2015)(quoting Walden,
134 S.Ct. at 1125)(“…mere injury to a forum resident is not a sufficient connection to the forum…an injury
is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum
State. The proper question is not where the plaintiff experienced a particular injury or effect but whether
the defendant’s conduct connects him to the forum in a meaningful way.”).
79
Wein Air Alaska, Inc. v. Brandt, 195 F.3d 208, 213 (5th Cir. 1999)(“When the actual content of
communications with a forum gives rise to intentional tort causes of action, the alone constitutes purposeful
availment.”).
80
Id. at 208.
81
Rossi v. Wohl, 246 Fed.Appx. 856 (5th Cir. 2007)(defendant law firm’s communications with plaintiff
regarding the payment of expert fees sufficient for specific personal jurisdiction where plaintiff sued in tort

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Unlike Wien Air Alaska, Plaintiffs’ Petition is devoid of any allegations suggesting
that RBS sent, delivered, communicated, or negotiated directly with the Plaintiffs
regarding subordination, the Offering Memorandum, or the Priority Payment Agreement.
In fact, there are no allegations suggesting that RBS directed any communication, much
less activity, regarding the financial investment toward the forum state.

Moreover,

Plaintiffs’ claims of breach of contract, unjust enrichment, and detrimental reliance, sound
in contract not tort. In Wein, the Fifth Circuit “made clear that a finding on the basis of a
communication, that a nonresident defendant purposely availed [itself] of the benefits and
protections of the forum state, turns upon whether the communication gives rise to an
intentional tort cause of action.”82 To the extent Plaintiffs are attempting to argue that
RBS’s “breach” of the terms of the Priority Payment Agreement serves as a “substantial
act directed toward the forum,” the Court finds such an argument to be meritless as it
ultimately turns on the effect of injuries sustained by the Plaintiffs; as previously
discussed, this factor alone does not establish the minimum contacts necessary to hale
RBS into a Louisiana court.83 Hence, the Court finds no merit in Plaintiffs’ foregoing
arguments.84
In this case, the Court finds that the minimum contacts necessary to exercise
specific personal jurisdiction over RBS simply do not exist. Rather than identifying those

for false misrepresentation); Lewis v. Fresne, 252 F.3d 352, 358-59 (5th Cir. 2001)(allegations that
defendant made misrepresentations in phone call with plaintiff, and sent financial documents to plaintiff
including same misrepresentations were enough to confer personal jurisdiction).
82
Loiacano v. Disa Global Solutions, Inc., No. 14-17502014 WL 5317872, at *3 (E.D.La. Oct. 16, 2014).
83
While it is certainly true that “a single, substantial act directed toward the forum can support jurisdiction”
Plaintiffs have failed to plead any such activity. Dalton v. R & W Marine, Inc., 897 F.2d 1359, 1361 (5th Cir.
1990)(citing Burger King, 471 U.S. 462).
84
The Court also finds Plaintiffs’ reliance on Escoto v. U.S. Lending Corp., 95-2692 (La. App. 4 Cir. 9/23/98);
675 So.2d 741 is misplaced in the instant matter. The issues in Escoto involved whether to exercise
personal jurisdiction over an individual in his corporate capacity and the applicability of the fiduciary shield
doctrine. Neither of these issues are relevant to the case before the Court.

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contacts that RBS has made with the forum state itself, Plaintiffs have attempted to make
their prima facie case by focusing on RBS’s interactions with Leveraged, which, based
on the allegations plead in this case, directed its actions and communications towards
Louisiana. The Supreme Court in Walden specifically warned against relying upon such
interactions to establish specific personal jurisdiction. “Due Process requires that a
defendant be haled into a court in a forum State based on his own affiliation with the
State, not based on the ‘random, fortuitous, or attenuated’ contacts he makes by
interacting with other persons affiliated with the State.”85 Considering the Supreme
Court’s directive in Walden, the Court finds that RBS’s contacts with Louisiana are far too
attenuated for RBS to have “reasonably anticipated being haled into court” here. The
Court finds that the Plaintiffs fail to make a prima facie showing of specific personal
jurisdiction.
III.

JURISDICTIONAL DISCOVERY
Plaintiffs move for additional jurisdictional discovery in this case.86 RBS opposes

the motion.87 The district court has broad discretion on whether to permit a party to
conduct jurisdictional discovery.88 When seeking discovery on personal jurisdiction, a
plaintiff must first make a “preliminary showing of jurisdiction” before being entitled to such
discovery.89 “[D]iscovery on matters of personal jurisdiction need not be permitted …
unless the motion to dismiss raises issues of fact.”90 “In other words, the plaintiff must
state what facts he believes discovery would uncover and how those facts would support

85

Walden, 134 S.Ct. at 1123.
Rec. Doc. 22.
87
Rec. Doc. 37.
88
Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982).
89
Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 429 (5th Cir. 2009).
90
Wyatt, 686 F.2d at 284.
86

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personal jurisdiction.”91 “When the lack of personal jurisdiction is clear, discovery would
serve no purpose and should not be permitted.”92 The Fifth Circuit has affirmed denials
of discovery on questions of personal jurisdiction where the discovery sought “could not
have added any significant facts.”93
The Court finds that additional discovery is not warranted in this case. Contrary to
Plaintiffs’ position, the Court does not find that RBS’s motion to dismiss raised any issues
of fact; nor have Plaintiffs identified disputed facts. Moreover, Plaintiffs have failed to
identify what they believe discovery would reveal, or how these newly discovered facts
would establish personal jurisdiction over RBS.

Plaintiffs have, therefore, failed to

adequately support their request for jurisdictional discovery.94 Instead, the discovery
sought by Plaintiffs goes directly to the merits of the case. Therefore, the Court finds that,
additional discovery will not add any significant facts and “[t]he court need not allow
[Plaintiffs] to conduct a jurisdictional fishing expedition seeking facts to support a claim of
general jurisdiction.”95 The Court further finds that, because the absence of personal
jurisdiction is clear, discovery would serve no meaningful purpose. Accordingly, Plaintiffs’
Motion shall be denied.

91

21st Century Financial Services, Inc. v. Mandelbaum, No. A-10-CA-803LY, 2011 WL 3844209, at *2
(W.D.Tex. Aug. 30, 2011)(citing Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 855 (5th Cir.), cert
denied, 531 U.S. 979 (2000)).
92
Wyatt, 686 F.2d at 284.
93
Id.
94
National Sur. Corp. v. Ferguson Enterprises, Inc., No. 3:13-CV-2045-M, 2014 WL 5472436, *3 (N.D. Tex.
Oct. 29, 2014)
95
Id. (quoting Bell Helicopter Textron, Inc. v. American Eurocopter, L.L.C., 729 F.Supp.2d 789, 797-98
(N.D.Tex. 2010)).

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IV.

CONCLUSION
Wherefore, the Motion to Dismiss96 filed by Defendant, Royal Bank of Scotland, on

Rule 12(b)(2) grounds for lack of personal jurisdiction over Plaintiffs, Firefighters’
Retirement System, Municipal Employees’ Retirement System, and New Orleans
Firefighters Pension & Relief Fund, is hereby GRANTED. The Defendant’s Motion97
seeking dismissal on Rule 12(b)(6) grounds is hereby DENIED AS MOOT.
Furthermore, the Motion to Continue Submission Date to Allow Jurisdictional
Discovery to the Royal Bank of Scotland98 filed by Plaintiffs is hereby DENIED.
IT IS SO ORDERED.
Signed in Baton Rouge, Louisiana on March 29, 2016. 

S

JUDGE SHELLY D. DICK
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

96

Rec. Doc. 14.
Rec. Doc. 14.
98
Rec. Doc. 22.
97

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