SHAH v. STATE BANK OF INDIA

Filing 25

OPINION FILED, Re: 21 MOTION to Dismiss filed by STATE BANK OF INDIA. Signed by Judge Edward S. Kiel on 11/25/2024. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

PETER SHAH,
Plaintiff,

Case No. 23–cv–23421–ESK–EAP

v.
STATE BANK OF INDIA,

OPINION

Defendant.
KIEL, U.S.D.J.
THIS MATTER is before the Court on defendant’s motion to dismiss
(Motion) (ECF No. 21–1 (Mov. Br.)) pro se plaintiff’s complaint (ECF No. 1
(Compl.)). Plaintiff filed an opposition to the Motion (ECF No. 23 (Opp’n)), to
which defendant filed a reply (ECF No. 24). For the following reasons, the
Motion is GRANTED.
I.

BACKGROUND

Defendant is India’s largest commercial bank with thousands of branches
worldwide.

(ECF No. 1–2 p. 12; ECF No. 21–2 ¶ 2.) Within the United States,

defendant operates branches in California, Illinois, and New York.

(ECF No.

1–2 p. 12; ECF No. 21–2 ¶ 7.)
Plaintiff, a New Jersey resident, alleges to have “invested $35,000 in
[India Development Bonds]” from defendant in 1992.

(Compl. p. 4; ECF No. 1–

2 pp. 2–8.) Each bond lists plaintiff and non-party Deepak Shashikant Mehta
as the holders.

(ECF No. 1–2 pp. 2–8.) While plaintiff claims that he

“subscribed to these … bonds via the State Bank of India, New York,” and that
they were “issued by the State Bank [o]f India, New York” (Compl. p. 4), the
bonds indicate that they were issued by the “State Bank of India, NRI Branch,

P.B. No. 9951, Tulsiani Chambers, 1st Floor, 212, Nariman Point, Bombay-400
021, INDIA” (ECF No. 1–2 pp. 2–8).

The bonds also provide that:

THIS CERTIFICATE CONSTITUTES AN OBLIGATION
OF, AND IS PAYABLE AT, THE BANK’S ISSUING
OFFICE IN INDIA AND DOES NOT CONSTITUTE OR
REPRESENT AN FDIC INSURED DEPOSIT AT ANY
U.S. OFFICE OR SUBSIDIARIES OF THE BANK.
(Id.)
Due to not having received his principal or interest on the bonds, plaintiff
sought relief against defendant in India in 2004.

(Compl. p. 4; ECF No. 1–2

p. 12.) His efforts were to no avail, and, to date, he has yet to receive a return
on the bonds.

(Compl. p. 4; ECF No. 1–2 p. 12.) Accordingly, on December 29,

2023, plaintiff commenced this action against defendant “for fiduciary duty
violations, breach of contract, and failure to pay the promissory notes.”

(Id.

p. 6.) Plaintiff is seeking $300,000 for his principal deposit/interest and
$900,000 in punitive damages.

(Id. pp. 4, 6.)

On March 22, 2024, defendant filed the Motion claiming that dismissal is
warranted because the Foreign Sovereign Immunities Act (FSIA) strips this
court of subject matter jurisdiction.
(2).

(Mov. Br. p. 9.) See Fed.R.Civ.P. 12(b)(1),

Defendant also argues in the Motion that the court lacks personal

jurisdiction, the statute of limitations has expired, Deepak Shashikant Mehta
is an indispensable party that plaintiff failed to name as a co-plaintiff, and
plaintiff fails to state a claim.
(7).

(Mov. Br. p. 10.) See Fed.R.Civ.P. 12(b)(2), (6),

In opposition to the Motion, plaintiff asserts that there is no jurisdictional

or time “bar to pursue [his] claims in the United States.”

(Opp’n pp. 9–14, 18.)

While plaintiff indicates that he would amend his complaint “if given the
opportunity” to do so, plaintiff argues that he sufficiently pleaded “when, where,
and how [he] was robbed” and was not required to name Deepak Shashikant
Mehta as his co-plaintiff.

(Id. pp. 14, 15.)

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II.

DISCUSSION
A.

Subject Matter Jurisdiction
1.

Legal Standard

Since federal courts are courts of limited jurisdiction, a party seeking to
invoke the court’s jurisdiction bears the burden of establishing subject matter
jurisdiction.

Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994).

While “[c]ourts have an independent obligation to determine whether subjectmatter jurisdiction exists, even when no party challenges it,” Federal Rule of
Civil Procedure (Rule) 12(b)(1) enables a party, as here, to move to dismiss a
complaint for lack of subject matter jurisdiction. Hertz Corp. v. Friend, 559
U.S. 77, 94 (2010).
A motion to dismiss pursuant to Rule 12(b)(1) may attack subject matter
jurisdiction facially or factually.
Cir. 2016).

Davis v. Wells Fargo, 824 F.3d 333, 346 (3d

A factual attack challenges the allegations supporting the

assertion of jurisdiction, which permits a court to weigh evidence outside of the
pleadings and places the burden of proof on the plaintiff to demonstrate that
jurisdiction exists.

Id.

A facial attack does not dispute the facts as alleged

and essentially applies the Rule 12(b)(6) standard.

In re Plum Baby Food

Litig., 637 F. Supp. 3d 210, 221 (D.N.J. 2022).
2.

The FSIA

The FSIA “provides the sole basis for obtaining jurisdiction over a foreign
state in federal court.”

Argentine Republic v. Amerada Hess Shipping Corp.,

488 U.S. 428, 439 (1989).

The FSIA defines the term “foreign state” to include

“a political subdivision … or an agency or instrumentality of a foreign state,”
and further specifies that an “agency or instrumentality of a foreign state”
includes, inter alia, “an organ of a foreign state or political subdivision thereof.”
28 U.S.C. §§ 1603(a), (b).

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Under the FSIA, a foreign state is “presumptively immune from the
jurisdiction of United States courts.”
355 (1993).

Saudi Arabia v. Nelson, 507 U.S. 349,

Subject matter jurisdiction under the FSIA exists only “[i]f one of

the specified exceptions to sovereign immunity applies … but if the claim does
not fall within one of the exceptions, federal courts lack subject matter
jurisdiction.”
(1983).

Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 489

A defendant seeking dismissal for lack of subject matter jurisdiction

under the FSIA must first present a prima facie case that it is a foreign
sovereign.
1993).

Fed. Ins. Co. v. Richard I. Rubin & Co., 12 F.3d 1270, 1285 (3d Cir.

Once the defendant meets this threshold, “the burden then shift[s] to

the plaintiff[ ] to establish that one of the exceptions to immunity applie[s].”
Id.
3.

Defendant’s Sovereign Immunity
Under the FSIA
a.

Foreign State

Plaintiff alleges that because the bonds he purchased from defendants
“were paid in U[nited] S[tates] currency” and “the majority of the money was
raised in the United States,” with the proceeds being “promised to be paid in
U[nited] S[tates] currency,” defendant is not a foreign state under the FSIA.
(Opp’n p. 10.) Defendant was, however, created by the Indian Parliament to
provide “a state-controlled and state-sponsored organ for a banking system.”
(ECF No. 21–2 ¶ 4.) Since defendant’s inception in 1955, its “majority stake …
has been owned and controlled directly by the Indian Government.”

(Id. ¶ 5.)

Given that federal courts throughout the country have recognized defendant as
a “foreign state,” and plaintiff failed to proffer any contrary evidence (see ECF
No. 24 pp. 6, 7), I find that defendant is presumptively immune from this action.
See, e.g., Bhattacharya v. State Bank of India, 70 F.4th 941, 945 (7th Cir. 2023)
(holding that the district court correctly “agreed with both parties … [when]

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f[inding] that the FSIA applies to the State Bank of India because the Indian
government is the Bank’s majority shareholder”); Gosain v. State Bank of India,
414 Fed. App’x 311, 313 (2d Cir. 2011) (stating “[t]here is no dispute that the
[State Bank of India] defendants are eligible for immunity under the FSIA as
instrumentalities of India”); In re Air Crash Disaster Near Roselawn, Ind. on
Oct. 31, 1994, 96 F.3d 932, 941 (7th Cir. 1996) (finding the State Bank of India
is a “foreign state” under the FSIA); Goel v. Am. Digital Univ., Inc., No. 14–
01042, 2017 WL 1082458, at *14 (S.D.N.Y. Mar. 21, 2017) (rejecting argument
that State Bank of India is not a foreign state under the FSIA).
b.

Commercial-Activity

Plaintiff invokes the commercial-activity exception.
§ 1605(a)(2).

See 28 U.S.C

Under the commercial activity exception, a foreign state lacks

immunity under the FSIA when
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.
Id.

“‘Commercial activity’ can be either ‘a regular course of commercial

conduct’ or ‘a particular commercial transaction or act.’”

Aldossari ex rel.

Aldossari v. Ripp, 49 F.4th 236, 252 (3d Cir. 2022) (quoting 28 U.S.C. § 1603(d)).
“[C]ommercial activity is ‘carried on in the United States’ … if it has
‘substantial contact’ with this country.” Id. (quoting 28 U.S.C. § 1603(e)).
However, the fact that a foreign state engaged in a commercial activity within
the United States does not automatically compel the application of the
commercial-activity exception.

See Saudi Arabia, 507 U.S. at 357. Instead,

“[t]he commercial character of an activity shall be determined by reference to

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the nature of the course of conduct or particular transaction or act, rather than
by reference to its purpose.”

28 U.S.C. § 1603(d).

The commercial activity exception entails a two-step analysis.

“First, we

ask whether there is a ‘sufficient jurisdictional connection or nexus between the
commercial activity and the United States’—in other words, whether the
foreign state has engaged in conduct that satisfies one of the three clauses of
§ 1605(a)(2).”

Aldossari ex rel. Aldossari, 49 F.4th at 252 (quoting Fed. Ins. Co.,

12 F.3d at 1286.) “Second, we look to see if there is a ‘substantive connection
or nexus” between the relevant commercial activity or act and “the subject
matter of the cause of action’—that is, whether the cause of action is ‘based
upon’ the relevant commercial activity or ‘act ... in connection with a commercial
activity.’”

Id. (first quoting Fed. Ins. Co., 12 F.3d at 1286) (second quoting 28

U.S.C. § 1605(a)(2)).

“[A]n action is ‘based upon’ the ‘particular conduct’ that

constitutes the ‘gravamen’ of the suit.”

OBB Personenverkehr AG v. Sachs, 577

U.S. 27, 35 (2015).
The gravamen of this action concerns defendant’s alleged failure to pay
plaintiff his return on the bonds.

(See Compl. p. 4.) While plaintiff concedes

that the bonds “were issued in India by a[ ] … non-resident Indian[ ] branch”
and that the bond certificate states that “it is payable at[ ] the bank’s issuing
office in India,” plaintiff argues that “payable in India” is a “fictious term.”
(Opp’n p. 10 n. 4.) Plaintiff asserts that because defendant “carried out and
actively engaged in commercial activities by offering [bonds] in the United
States” that “upon maturity, the proceeds … were to be in American currency,”
a direct effect in the United States exists and “[s]overeign [i]mmunity is not in
play.”

(Id. pp. 10, 12, 19.) In support of this position, plaintiff points to a

letter he received from defendant’s New York branch “enclosing an application
form … to open Foreign Currency Non-Resident …, Non Resident External …

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or Non Resident Non Repatriable … accounts.”

(ECF No. 1–2 p. 10; Mov. Br.

p. 18.)
I find that these activities have far too unsubstantiated an impact on the
United States to satisfy the direct effect and substantiality requirements of the
exception.

See Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 618 (1992)

(finding that jurisdiction under the commercial activity exception “may not be
predicated on purely trivial effects in the United States”).

“[F]inancial injury

to a U[nited] S[tates] citizen alone will not be sufficient ‘unless the foreign state
has performed some legally significant act here.’”

Bhattacharya v. State Bank

of India, No. 20–03361, 2022 WL 4482764, at *5 (N.D. Ill. Sept. 27, 2022), aff'd,
70 F.4th 941 (7th Cir. 2023), cert. denied, 144 S. Ct. 682 (2024) (quoting RushPresbyterian-St. Luke's Med. Ctr. v. Hellenic Republic, 877 F.2d 574, 582 (7th
Cir. 1989)); see Rogers v. Petroleo Brasileiro, S.A., 673 F.3d 131, 139 (2d Cir.
2012) (holding that “[i]n cases involving the default by a foreign state or its
instrumentality on its commercial obligations, an act has a direct effect in the
United States if the defaulting party is contractually obligated to pay in this
country”).
All actions taken in connection with the underlying bonds occurred not in
the United States but in India. Defendant is owned and controlled directly by
the Indian government, and its principal place of business is Mumbai.

(ECF

No. 21–2 ¶¶ 3, 4.) While defendant operates a branch in New York, the bonds
plaintiff purchased expressly provide that they were issued in India and were
payable only at the issuing office in India.

(ECF No. 1–2 pp. 2–8.)

Furthermore, the letter plaintiff points to as evidence of a “direct effect,” is
undated and is merely addressed to “Customer” without any indication that
plaintiff was the directed recipient.

(Id. p.10.) Hence, beyond demonstrating

his own financial loss, plaintiff fails to demonstrate or introduce evidence
showing that defendant’s conduct had any direct effect in the United States.

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See Bhattacharya, 70 F.4th at 944–45 (determined that because the plaintiff’s
breach of contract claim was related to a “non-resident account … maintained
in India, and the relevant transactions were with the [State Bank of India’s]
India-based branches,” the plaintiff failed to “allege that his suit related to any
account held with a U[nited] S[tates] based branch of the [State Bank of India]
or was otherwise related to any actions the [State Bank of India] had taken
here”).
c.

Waiver

Plaintiff argues in passing that because “defendant agreed to have …
disputes [concerning the bonds] adjudicated in … U[nited] S[tates] Courts …
[defendant] is not immune.”

(Opp’n p. 12.) While not articulated as such, I

interpret this assertion as plaintiff invoking the waiver exception.

See 28

U.S.C. § 1605(a)(1).
“A foreign state is not immune if it has ‘waived its immunity either
explicitly or by implication.’”

Aldossari ex rel. Aldossari, 49 F.4th 236 at 250

(quoting U.S.C. § 1605(a)(1)).

“The text of the FSIA does not specify the

standard for identifying a waiver, but [the Third Circuit has] join[ed] “the
virtually unanimous precedent” from [its] sister circuits that construes the
waiver exception strictly and requires ‘strong evidence’—in the form of ‘clear
and unambiguous’ language or conduct—that the foreign state intended to
waive its sovereign immunity.”
1 F.4th 1, 8 (D.C. Cir. 2021).

Id. (quoting Khochinsky v. Republic of Poland,

In such cases, the waiver must be “unequivocally

expressed” and read “narrowly, in favor of the government” or foreign
sovereigns.

Id. (first quoting United States v. Craig, 694 F.3d 509, 511 (3d Cir.

2012)) (second quoting Doe v. United States, 37 F.4th 84, 86 (3d Cir. 2022)).
Plaintiff points to the terms of offer of the bonds to demonstrate that
defendant waived immunity.

(ECF No. 23 pp. 28, 29.) I, however, find no

language in the terms of offer that sufficiently establishes waiver.

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Cf. Poddar

v. State Bank of India, 79 F. Supp. 2d 391, 393 (S.D.N.Y. 2000) (finding that
because the terms of offer states that “[t]he Courts in India and the United
States of America only shall have jurisdiction in respect of all matters of
disputes about the [bonds],” the State Bank of India had drafted a mandatory
forum selection clause consenting to be sued in the United States).
B.

Defendant’s Remaining Arguments1

Since this Court does not have subject matter jurisdiction over this action,
the remaining aspects of the Motion need not be addressed.

See Hoffman v.

Nordic Naturals, Inc., 837 F. 3d 272, 277 (3d Cir. 2016) (“[A] federal court may
not rule on the merits of an action without first ascertaining whether it has
subject matter jurisdiction.”); Rothman v, New Jersey, Case No. 19-13011, 2020
WL 409757, at *2 (D.N.J. Jan. 24, 2024) (declining to reach the merits of the
plaintiff’s claims in considering a motion to dismiss for lack of subject matter
jurisdiction).
III. CONCLUSION
For the reasons set forth above, I find that the Court lacks subject matter
jurisdiction over this action.

Accordingly, the Motion is GRANTED.

/s/ Edward S. Kiel
EDWARD S. KIEL

UNITED STATES DISTRICT JUDGE

Dated: November 25, 2024

1 Without discussing the merits of defendant’s argument as the expiration of the

statute of limitations, I note that this issue may warrant a choice of law analysis and
discussion as to whether the relief plaintiff sought in India in 2004 bars him from
seeking relief in the United State. (See Compl. p.4; ECF No. 1–2 p.12). Of note,
plaintiff’s bonds matured in 1997, but he waited 20 years to file this action. (ECF No.
1–2 pp. 2–8; ECF No. 21–1 p. 41.)

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