Banco San Juan Internacional, Inc. v. The Federal Reserve Bank of New York et al

Filing 160

MEMORANDUM OPINION AND ORDER re: 154 LETTER MOTION for Leave to File Second Amended Complaint addressed to Judge John G. Koeltl from Abbe David Lowell dated January 27, 2025., 155 LETTER MOTION for Leave to File Second Amende d Complaint addressed to Judge John G. Koeltl from Abbe David Lowell dated January 27, 2025. filed by Banco San Juan Internacional, Inc.. The Court has considered all of the parties' arguments. To the extent not specifically addressed , those arguments are either moot or without merit. Therefore, for the reasons explained in BSJI II and this opinion, the Amended Complaint is dismissed with prejudice and the motion for leave to file the proposed Second Amended Complaint is denie d. The Clerk is directed to enter judgment dismissing this action with prejudice. The Clerk is also directed to close all pending motions and to close this case. SO ORDERED. (Signed by Judge John G. Koeltl on 3/9/2025) (tg) Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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BANCO SAN JUAN INTERNACIONAL, INC.,
Plaintiff,

23-cv-6414 (JGK)

- against -

MEMORANDUM OPINION AND
ORDER

THE FEDERAL RESERVE BANK OF NEW
YORK, ET AL.,
Defendants.
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JOHN G. KOELTL, District Judge:
The plaintiff, Banco San Juan Internacional, Inc. (“BSJI”),
a Puerto Rico International Banking Entity (“IBE”), brought this
action against the defendants, the Federal Reserve Bank of New
York (“FRBNY”) and the Board of Governors of the Federal Reserve
System (“Board”), alleging that the defendants wrongfully
terminated BSJI’s master account with the FRBNY (the “Master
Account”).
On January 8, 2025, this Court granted the defendants’
motions to dismiss and dismissed without prejudice the claims
alleged in BSJI’s First Amended Complaint. ECF No. 152. The
Court assumes familiarity with that Opinion & Order and the
procedural history leading up to the decision. Banco San Juan
Internacional, Inc. v. The Fed. Reserve Bank of New York, --- F.
Supp. 3d ----, 2025 WL 44259, at *15 (S.D.N.Y. Jan. 8, 2025)
(“BSJI II”).

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BSJI now moves for leave to amend, seeking to file the
proposed Second Amended Complaint (“PSAC”). For the following
reasons, BSJI’s motion for leave to amend is denied.
I.
Leave to amend should be freely granted “when justice so
requires.” See Fed. R. Civ. P. 15(a)(2).1 However, “[p]roposed
amendments are futile, and thus must be denied, if they would
fail to cure prior deficiencies or to state a claim under Rule
12(b)(6) of the Federal Rules of Civil Procedure.” Tannerite
Sports, LLC v. NBCUniversal News Grp., 864 F.3d 236, 252 (2d
Cir. 2017). In evaluating futility, a court must consider both
the proposed amendments and the original complaint, “accepting
as true all non-conclusory factual allegations therein, and
drawing all reasonable inferences in the plaintiff’s favor.”
Pyskaty v. Wide World of Cars, LLC, 856 F.3d 216, 225 (2d Cir.
2017).
II.
BSJI proposes the addition of two claims. First, in
proposed Count II, BSJI alleges that the Board issued the
Guidelines for Evaluating Account and Service Requests
(“Guidelines”) without statutory authority in violation of

Unless otherwise noted, this Memorandum Opinion and Order omits
all internal alterations, citations, footnotes, and quotation
marks in quoted text.
1

2

section 248a of the Federal Reserve Act (“FRA”), 12 U.S.C. §
248a, and in doing so, acted arbitrarily, capriciously, and
abused its discretion in violation of section 706 of the
Administrative Procedure Act (“APA”), 5 U.S.C. § 706. PSAC ¶¶
186–93, ECF No. 154-1. Second, in proposed Count VIII, BSJI
alleges that the FRBNY discriminated against BSJI on the basis
of BSJI’s Venezuelan national origin, in violation of the Fifth
Amendment to the United States Constitution. PSAC ¶¶ 228–33.
Because the two proposed counts fail to assert a claim to
relief that is plausible on its face, see Bell Atl. Corp. v.
Twombly, 550 U.S. 554, 570 (2007), and for the additional
reasons provided below, the proposed amendments are futile, and
thus leave to amend must be denied. See Boyette v. Montefiore
Med. Ctr., No. 22-cv-5280, 2024 WL 1484115, at *4 (S.D.N.Y. Apr.
5, 2024).
III.
Proposed Count II alleges that the Board violated section
248a of the FRA and section 706 of the APA. Each alleged
violation is addressed in turn.
With respect to the FRA, BSJI II renders futile the
proposed amendment. “The law of the case doctrine forecloses
reconsideration of issues that were decided . . . during prior
proceedings.” Doe v. E. Lyme Bd. of Educ., 962 F.3d 649, 662 (2d
Cir. 2020). “[W]hen a court has ruled on an issue, that decision
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should generally be adhered to by that court in subsequent
stages in the same case unless cogent and compelling reasons
militate otherwise.” Johnson v. Holder, 564 F.3d 95, 99 (2d Cir.
2009). “Cogent and compelling reasons . . . may include an
intervening change in law, availability of new evidence, or the
need to correct a clear error or prevent manifest injustice.”
Choi v. Tower Rsch. Cap. LLC, 2 F.4th 10, 21 (2d Cir. 2021).
BSJI II ruled that under the FRA, “a Federal Reserve bank
‘may’ grant, deny, or close, in the Federal Reserve bank’s
discretion, any master account.” 2025 WL 44259, at *9 (quoting
12 U.S.C. § 342). BSJI II also held that “nothing in section
248a(c)(2) disturbs the discretion conferred on Federal Reserve
banks pursuant to section 342.” Id. at *13. And BSJI has failed
to identify cogent and compelling reasons justifying a departure
from the rulings in BSJI II; rather, BSJI acknowledges that the
amendment is “likely” futile. ECF No. 154 at 1.
With respect to the APA, proposed Count II alleges that the
Board acted arbitrarily and capriciously when the Board issued
the Guidelines. PSAC ¶¶ 186–93. BSJI contends that the issuance
of the Guidelines was arbitrary and capricious because the
Guidelines purportedly contravene FRA section 248a, a statutory
provision that BSJI alleges entitles it to a master account.
PSAC ¶¶ 189–90; see also id. ¶ 160 (“By issuing the Guidelines
without proper statutory authority, the Board improperly and
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unlawfully expanded the FRBNY’s power.”). But BSJI II rejected
that interpretation of the FRA. 2025 WL 44259, at *9, *13. And
BSJI has not alleged or argued that the Board’s issuance of the
Guidelines was arbitrary and capricious for any other reason.
Because this claim relies on BSJI’s flawed interpretation of the
FRA, the proposed amendment would not cure the deficiencies
noted in BSJI II.
Proposed Count II also alleges that the Board violated the
APA by validating and authorizing the FRBNY’s termination of
BSJI’s Master Account. PSAC ¶ 193. This proposed amendment is
likewise futile. BSJI II determined that “section 248(j)’s grant
of general supervisory authority provides no meaningful standard
against which to judge the agency’s exercise of discretion.”
2025 WL 44259, at *16. Accordingly, “to the extent the Board
possesses any discretion to control or override the FRBNY’s
account-closure decisions,” such discretion is “committed to
agency discretion by law” and thus “jurisdictionally precluded
from review” under the APA. Id.
Moreover, for the reasons provided in BSJI II, BSJI lacks
constitutional standing to assert the claims in proposed Count
II against the Board. See id. at *13–14. Like the First Amended
Complaint that was dismissed in BSJI II, the PSAC continues to
allege that “the Board at most played a general supervisory
role.” Id. at *14. Although BSJI now “challeng[es] the
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promulgation of the Guidelines,” ECF No. 159 at 3, BSJI fails to
explain how its challenge to a nonbinding “tiered review
framework,” see PSAC ¶ 65, cures its failure to plead causation
and redressability. BSJI II, 2025 WL 44259, at *13–14.
Accordingly, an amendment adding proposed Count II would be
futile.
IV.
Proposed Count VIII alleges that the FRBNY discriminated
against BSJI on the basis of BSJI’s Venezuelan national origin,
in violation of the equal protection component of the Due
Process Clause of the Fifth Amendment. PSAC ¶¶ 228–33. The FRBNY
argues that this amendment would be futile because BSJI lacks a
valid cause of action and because the proposed amendment fails
to state a plausible claim to relief. ECF No. 157 at 2–3. BSJI
disagrees. ECF No. 154 at 2–3; ECF No. 159 at 1–2.
Proposed Count VIII would be futile for at least two
reasons. First, BSJI has failed to invoke a valid cause of
action. With respect to Bivens, as explained in BSJI II, “the
purpose of Bivens is to deter the officer.” Fed. Deposit Ins.
Corp. v. Meyer, 510 U.S. 471, 485 (1994). And proposed Count
VIII purports to allege a claim only against the FRBNY and not
against any officer or agent. But “to allow a Bivens claim
against federal agencies or instrumentalities, rather than
individual federal officers, ‘would mean the evisceration of the
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Bivens remedy, rather than its extension.’” BSJI II, 2025 WL
44259, *22 (quoting Corr. Servs. Corp. v. Malesko, 534 U.S. 61,
69–70 (2001)). “Accordingly, an extension of Bivens is
unwarranted” as against the FRBNY. Id.2
In arguing to the contrary, BSJI relies on inapposite
cases. In Village of Arlington Heights v. Metropolitan Housing
Development Corp., the plaintiffs sued the Village and several
of its officers under sections 1981 and 1982 of the Civil Rights
Act of 1866, 42 U.S.C. §§ 1981 & 1982, and section 1983 of the
Civil Rights Act of 1871, 42 U.S.C. § 1983. Metro. Hous. Dev.
Corp. v. Vill. of Arlington Heights, 517 F.2d 409, 411 (7th Cir.
1975), rev’d sub nom. Vill. of Arlington Heights v. Metro. Hous.
Dev. Corp., 429 U.S. 252 (1977).3 Likewise, in Hayden v. Pataki,
the plaintiffs brought suit “pursuant to 42 U.S.C. § 1983.” No.
00-cv-8586, 2004 WL 1335921, at *1 (S.D.N.Y. June 14, 2004),
aff’d sub nom. Hayden v. Paterson, 594 F.3d 150 (2d Cir. 2010).
In this case, BSJI has not invoked section 1983 or any other
statute as a basis for its claim in proposed Count VIII.

BSJI II noted that “Federal Reserve banks, including the FRBNY,
are federal instrumentalities incorporated as private
corporations pursuant to the FRA.” 2025 WL 44259, at *1 (citing
12 U.S.C. §§ 221 & 341 & United States ex rel. Kraus v. Wells
Fargo & Co., 943 F.3d 588, 592 (2d Cir. 2019) (“Kraus”)).
3 In Washington v. Davis, a case brought “under the due process
clause of the Fifth Amendment to the United States
Constitution,” the plaintiffs sued only officers. 426 U.S. 229,
232–33 (1976).
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Second, proposed Count VIII fails to allege plausibly any
violation of BSJI’s purported equal protection rights. “Where
the claim is invidious discrimination in contravention of the .
. . Fifth Amendment, . . . the plaintiff must plead and prove
that the defendant acted with discriminatory purpose.” Ashcroft
v. Iqbal, 556 U.S. 662, 676 (2009). An official act is not
“unconstitutional [s]olely because it has a . . .
disproportionate impact.” See Davis, 426 U.S. at 239.
As the principal proof of discriminatory purpose, proposed
Count VIII alleges that the FRBNY closed the master account of
“nine of ten IBEs owned by Venezuelan nationals.” See PSAC ¶
231; ECF No. 159 at 1. But that closure percentage is “merely
consistent with” the FRBNY’s liability and thus “stops short of
the line between possibility and plausibility.” Twombly, 550
U.S. at 557.
“[G]iven more likely explanations,” BSJI’s alleged proof
“do[es] not plausibly establish” the FRBNY’s discriminatory
purpose. See Iqbal, 556 U.S. at 681. Namely, BSJI’s complaints
and the documents incorporated by the complaints show that the
FRBNY terminated BSJI’s Master Account only after an account
suspension, BSJI’s noncompliance with the Supplemental Terms,
and the FRBNY’s thorough review of BSJI’s compliance risks. BSJI
II, 2025 WL 44259, at *3–5. The PSAC thus fails to “plead
sufficient factual matter to show that” the FRBNY closed BSJI’s
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