NFC Collections LLC v. Deutsche Bank Aktiengesellschaft et al, No. 2:2012cv10718 - Document 79 (C.D. Cal. 2013)
Court Description: AMENDED ORDER DENYING MOTIONS TO DISMISS 22 , 24 by Judge Dean D. Pregerson . (lc). Modified on 7/2/2013 (lc).
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NFC Collections LLC v. Deutsche Bank Aktiengesellschaft et al Doc. 79 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 NFC COLLECTIONS LLC, a Delaware limited liability company, 13 Plaintiff, 14 15 16 17 18 19 20 21 v. DEUTSCHE BANK AKTIENGESELLSCHAFT, a business entity organized under the laws of Germany; DEUTSCHE BANK PRIVAT-UND GESCHAFTSKUNDEN AG, a business entity organized under the laws of Germany; and BAYRAKKALE LTD STI, a business entity organized under the laws of Turkey, Defendants. ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 12-10718 DDP (JEMx) AMENDED ORDER DENYING MOTIONS TO DISMISS [Dkt. Nos. 22 & 24] 22 23 Presently before the court are Motions to Dismiss brought by 24 Defendants Deutsche Bank Aktiengesellschaft (“DB AG”) and Deutsche 25 Bank Privat-und Geschaeftskunden AG s/h/a Deutsche Bank Privat-und 26 Geschaftskunden AG (“DB Privat”). 27 /// 28 /// Dockets.Justia.com 1 I. Background 2 Plaintiff NFC Collections LLC (“NFC”) is the successor-in- 3 interest to Newbridge Film Capital, LLC (“Newbridge”). (Compl. ¶ 4 1.) 5 picture productions. 6 producer of animated motion pictures, Crest Animation Holdings, 7 Inc. (“Crest”), approached Newbridge to participate in the 8 financing of a motion picture entitled “Norm of the North” (the 9 “Film”). Newbridge was engaged in the business of financing motion (Id.) (Id. ¶ 8.) NFC asserts that in 2010, a Bayrakkale, LTD STI (“Bayrakkale”), a company 10 organized under the laws of Turkey and a named Defendant in this 11 action, agreed to fund the production of the Film in the amount of 12 $25,000,000, but required a $6,250,000 deposit “to enable it to 13 obtain financing for its funding commitment.” 14 agreed to make a loan to Crest in the amount of $5,930,000, and 15 Crest agreed to provide the remaining $320,000 to make the required 16 deposit. 17 deposit with an irrevocable letter of credit, naming Newbridge as 18 the beneficiary. 19 (Id.) (Id.) Newbridge Bayrakkale agreed to secure repayment of the (Id.) As of November 18, 2010, Newbridge, Crest, and Bayrakkale 20 entered into an escrow agreement (the “Escrow Agreement”) with a 21 law firm (the “Escrow Agent”). 22 provided: (Id. ¶ 11.) The escrow agreement 23 (a) the Escrow Agent would act as an escrow agent for 24 Newbridge, Crest, and Bayrakkale; (b) Newbridge would deposit 25 $5,930,000 (the ‘Newbridge Deposit’) and Crest would deposit 26 $320,000 (the ‘Crest Deposit’) into an escrow account set up 27 by the Escrow Agent; c) after receiving notice from the Escrow 28 Agent that Newbridge and Crest had made their respective 2 1 deposits into the escrow account, Bayrakkale would cause a 2 letter of credit in the amount of $6,562,500 to be issued by a 3 mutually agreed upon financial institution in favor of 4 Newbridge as the beneficiary and to be delivered by the Escrow 5 Agent...;and (d) upon satisfaction of certain conditions, the 6 Escrow Agent would disburse the Newbridge and Crest Deposits 7 to Bayrakkale and deliver the original Letter of Credit to 8 Newbridge. 9 10 (Id.) The parties agreed the Letter of Credit (“LOC”) would be 11 issued by Deutsche Bank,1 and on January 12, 2011, “Deutsche Bank 12 wrote a letter to Bayrakkale stating that its request to issue a 13 letter of credit in favor of Newbridge was being processed and that 14 it expected to issue the letter of credit the following week.” 15 (Id. ¶ 12.) 16 shareholder of the law firm, the Escrow Agent, “went to the offices 17 of Deutsche Bank in Dortmund, Germany,2 where he received an 18 original, executed letter confirming that the Letter of Credit was 19 ready to be issued and would be ready for collection on January 27, 20 2011.” 21 their deposits to the escrow account, and Nuccio notified 22 Bayrakkale that the deposits had been received. 23 January 27, 2011, Nuccio went back to the Deutsche Bank in 24 Dortmund, Germany, and received the original, executed LOC and On January 26, 2011, Vincent Nuccio, Jr. (“Nuccio”), a (Id. ¶ 13.) Later that day, Newbridge and Crest each wired (Id. ¶ 14.) On 25 26 27 1 Defendant states that this Bank was DB Privat. Plaintiff does not state this in the Complaint. Plaintiff refers to DB AG and DP Private as one entity, “Deutsche Bank.” 28 3 1 notified and provided copies to Newbridge, Crest, and Bayrakkale. 2 (Id., Exh. 1.) 3 The LOC “provides that it shall be paid upon presentation by 4 Newbridge, at any counter of Deutsche Bank worldwide....” 5 18; DB AG’s Motion to Dismiss (“DB AG Motion”), Exh. 1.) 6 about April 12, 2011, Newbridge presented the LOC and the required 7 certificate to Deutsche Bank in New York, New York. 8 On or about May 26, 2011, Deutsche Bank rejected the draw on the 9 LOC on the grounds “that the Letter of Credit was ‘neither validly (Id. ¶ On or (Compl. ¶ 18.) 10 issued by Deutsche Bank Privat-und Geschaftskunden AG nor 11 recognized in its books.’” 12 (Id. ¶ 19.) NFC brought this action against Defendants DB AG and DB Privat 13 for failure to honor the letter of credit, negligence, negligent 14 misrepresentation, and aiding and abetting fraud.3 15 wholly owned subsidiary of DB AG. 16 DB Privat is a (Id. ¶ 1.) Defendant DB AG moves to dismiss on the grounds of forum non 17 conveniens, NFC’s lack of standing, and NFC’s failure to assert any 18 plausible claims against DB AG. DB Privat moves to dismiss on the 19 grounds of forum non conveniens and lack of personal jurisdiction. 20 II. Legal Standard 21 Federal Rule of Civil Procedure 8(a)(2) requires a complaint 22 to contain “a short and plain statement of the claim showing that 23 the pleader is entitled to relief.” 24 give the defendant fair notice of what the claim is and the grounds 25 upon which it rests.” The purpose of the rule is “to Bell Atlantic Corp. v. Twombly, 550 U.S. 26 27 28 3 NFC also brought this action against Bayrakkale LTD STI (“Bayrakkale”) for fraud and unjust enrichment. It appears Bayrakkale has not been served yet. 4 1 544, 555 (2007) (alteration and internal quotation marks omitted). 2 Though a complaint “does not need detailed factual allegations, . . 3 . a plaintiff’s obligation to provide the grounds of his 4 entitlement to relief requires more than labels and conclusions, 5 and a formulaic recitation of the elements of a cause of action 6 will not do.” 7 marks omitted). 8 9 Id. (alteration, citations, and internal quotation In considering a motion to dismiss, the court “begin[s] by identifying pleadings that, because they are no more than 10 conclusions, are not entitled to the assumption of truth. While 11 legal conclusions can provide the framework of a complaint, they 12 must be supported by factual allegations. When there are well- 13 pleaded factual allegations, a court should assume their veracity 14 and then determine whether they plausibly give rise to an 15 entitlement to relief.” 16 (2009). 17 Ashcroft v. Iqbal, 556 U.S. 662, 679 “[O]nly a complaint that states a plausible claim for relief 18 survives a motion to dismiss.” 19 complaint states a plausible claim for relief will . . . be a 20 context-specific task that requires the reviewing court to draw 21 upon its judicial experience and common sense.” 22 pleaded complaint may proceed even if it strikes a savvy judge that 23 actual proof of those facts is improbable, and that a recovery is 24 very remote and unlikely.” 25 quotation marks omitted). 26 /// 28 “Determining whether a Id. “[A] well- Twombly, 550 U.S. at 556 (internal /// 27 Id. /// 5 1 3 III. Discussion A. DB AG’s Motion to Dismiss 1. Forum Non Conveniens “[A] plaintiff's choice of forum should rarely be disturbed.” 4 Piper Aircraft Co. V. Reyno, 454 U.S. 235, 241 (1981). When 5 considering a motion to dismiss on the grounds of forum non 6 conveniens, the court must examine: “(1) whether an adequate 7 alternative forum exists, and (2) whether the balance of private 8 and public interest factors favors dismissal.” 9 Corp., 236 F.3d 1137, 1142 (9th Cir. 2001). Moreover, “a 2 Lueck v. Sundstrand 10 plaintiff's choice of forum is entitled to greater deference when 11 the plaintiff has chosen the home forum.” 12 at 255. Piper Aircraft, 454 U.S. 13 Generally, an adequate alternative forum exists when “the 14 Defendant is ‘amenable to process’ in the other jurisdiction.” 15 Piper Aircraft, 454 U.S. at 255 n.22 (quoting Gulf Oil Corp. v. 16 Gilbert, 330 U.S. 501, 506-07 (1947)). 17 is easily satisfied, “[i]n rare circumstances...where the remedy 18 offered by the other forum is clearly unsatisfactory,” the other 19 forum may not be an adequate alternative. 20 be appropriate if, for example, the other forum does not permit 21 litigation of the subject matter in dispute. 22 Although this requirement Id. Dismissal would not Id. Even when an adequate alternative forum exists, the court will 23 not “disturb the plaintiff’s original choice of forum unless the 24 private interest and the public interest factors strongly favor 25 dismissal.” 26 1181 (9th Cir. 2006) (internal quotation marks omitted). 27 Defendants must make “a clear showing of facts which establish such 28 oppression and vexation of a defendant as to be out of proportion Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 6 1 to plaintiff's convenience.” 2 588 F.3d 1201, 1206 (9th Cir. 2009). 3 i. Adequate Alternative Forum 4 5 Boston Telecomm. Group, Inc. v. Wood, a. Service of Process DB AG asserts Germany is an adequate alternative forum because 6 DB AG is “amenable to process” in Germany. 7 concedes DB AG is amenable to process in Germany but argues Germany 8 is not an adequate forum because DB AG did not prove Bayrakkale to 9 be amenable to process in Germany. (Opp. to DB AG’s Mot. to Dismiss (DB AG Mot. at 5.) NFC 10 (“Opp. to DB AG”) 10-11.) 11 to any of the claims against DB AG and has not been served in this 12 matter, making the argument irrelevant to DB AG’s motion to 13 dismiss. (DB AG’s Reply to NFC’s Opposition (“DB AG Reply”) 4.) 14 DB AG argues Bayrakkale is not a party The court has insufficient information to determine whether 15 Bayrakkale is amenable to process in Germany. 16 Bayrakkale has yet to be served in this action, the court finds it 17 is not dispositive. 18 19 However, because b. Statute of Limitations NFC asserts that Germany is not an adequate forum because its 20 claims may be time-barred in Germany. 21 year statute of limitations applies. NFC claims a German court may 22 not toll the statute of limitations thus barring the claims. 23 contends that NFC’s tort claims are governed by German law, under 24 which the statute of limitations is three years. 25 whether Germany is an adequate alternative forum in regards to the 26 statute of limitations, the court must first determine which law 27 applies. 28 Under California law, a one 1. Choice of Law 7 DB AG To determine 1 In determining which body of law or rule applies to a standby 2 letter of credit, three major sources may apply: (1) International 3 Chamber of Commerce, Uniform Customs and Practices for Documentary 4 Credits, Publication Numbers 500 and 600 (“U.C.P.”); (2) the 5 Uniform Commercial Code (“U.C.C.”); (3) and the International 6 Standby Practices (“ISP 98"). 7 Bus. & Com. Litig. Fed. Cts. §82:8 7 (3d. Ed). 8 construction, where they are not inconsistent with the U.C.P., 9 U.C.C., or I.S.P., may be used to examine the terms of a letter of In addition, “the common law rules of contract 10 credit, to determine whether any of the terms are ambiguous, and to 11 resolve any perceived ambiguity.” 12 Id. ISP98 does not have a default choice of law rule, as it 13 represents a commercial agreement on the “terms and conditions of a 14 contractual relationship rather than a body of law.” Jeffrey S. 15 Wood, Drafting Letters of Credit: Basic Issues Under Article 5 of 16 the Uniform Commercial Code, UCP 600, and ISP98, 125 Banking L.J. 17 103, 110 (February 2008). 18 economic harm if the credit is structured to be subject to, or is 19 determined by a court to be subject to, the laws of a jurisdiction 20 other than the jurisdiction in which the issuer is located. 21 Under ISP98 Rule 1.08(d), “[a]n issuer is not responsible 22 for...observance of law or practice other than that chosen in the 23 standby or applicable at the place of issuance.” 24 ISP98 “attempts to shield an issuer from Id. Id. “In diversity cases, federal courts must apply the conflict- 25 of-law principles of the forum state.” 26 Aerea Rio Grandense v. Boeing Co., 641 F.2d 746, 749 (9th Cir. 27 1981). 28 California; therefore, the court applies California’s principles. S.A. Empresa De Viacao This is a diversity case in the Central District of 8 1 When an agreement provides a choice of law provision, 2 California courts apply “the law of the state chosen by the parties 3 . . . unless . . . the chosen state has no substantial relationship 4 to the parties or the transaction and there is no other reasonable 5 basis for the parties’ choice.” Nedlloyd Lines B.V. v. Superior 6 Court, 3 Cal. 4th 459, 465 (1992); See also Hoffman v. Citibank 7 (South Dakota) N.A., 546 F.3d 1078, 1082 (9th Cir. 2008). 8 substantial relationship exists, for example, “when one of the 9 parties is domiciled in the chosen state.” A Nedlloyd, 3 Cal. 4th at 10 467 (internal quotations omitted). 11 relationship or reasonable basis for the parties’ choice, the court 12 must “determine whether the chosen state’s law is contrary to a 13 fundamental policy of California.” 14 Fund Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1002 15 (9th Cir. 2010). 16 the parties’ choice of law.” 17 “the court must then determine whether California law has a 18 materially greater interest than the chosen state in the 19 determination of the particular issue.” 20 omitted); See also Hoffman, 546 F.3d at 1082. 21 If there is a substantial Id. at 466; See also Bridge If there is no conflict, “the court shall enforce Id. If, however, a conflict exists, Id. (internal quotations These “rules apply regardless of whether the dispute arises 22 out of contract or tort.” 23 of law provision “which provides that a specified body of law 24 ‘governs’ the ‘agreement’ between the parties, encompasses all 25 causes of action arising from or related to that agreement, 26 regardless of how they are characterized, including tortious 27 breaches of duties emanating from the agreement or the legal 28 relationships it creates.” S.A. Empresa, 641 F.2d at 749. Nedlloyd, 3 Cal. 4th at 470. 9 A choice 1 The court finds that California law governs both NFC’s 2 contract and tort claims alike. 3 have a substantial relationship to California. 4 beneficiary of the LOC, was a citizen of California at the time it 5 was issued. 6 plaintiff in this action, and Newbridge no longest exists, NFC is 7 the successor-in-interest to Newbridge. 8 NFC as it would Newbridge. 9 California, participated in negotiating the transaction and Newbridge and the LOC in dispute Newbridge, the Although neither Crest nor Newbridge is a named The court thus looks upon Additionally, Crest, another citizen of 10 ultimately wired the money to the Escrow Agent in exchange for the 11 LOC. 12 entities, most of which do business and exist under the laws of 13 California. It is clear the LOC was issued for and negotiated by several 14 Furthermore, the court finds that NFC’s tort claims arise out 15 of and are related to the LOC. If the LOC had not issued, the tort 16 claims would not exist. 17 claims. 18 entire action.4 19 20 21 The LOC is at the core of NFC’s tort Therefore, the court will apply California law to the 2. Whether Germany is an adequate forum regarding Statute of Limitations Under California law, a one year statute of limitations 22 applies. This statute of limitations may be imposed on NFC’s claims 23 if the case was brought in Germany, and a German court may or may 24 not toll the statute of limitations.5 NFC contends that “[u]nder 25 4 26 27 The court notes this does not answer the question of what law would be used under a German conflict of law analysis. The court declines to speculate on this issue. 5 28 DB AG did not contest NFC’s interpretation of Germany’s (continued...) 10 1 German law, a statute of limitations is tolled by a foreign action 2 only if the foreign action was brought in a court that has 3 international jurisdiction, which requires the foreign forum to 4 have a sufficient connection to the case.” 5 NFC argues it may be “foreclosed from any remedy. . .if a German 6 court found this court lacks a sufficient connection to the case.” 7 (Id.) 8 against Germany’s adequacy as a forum. 9 ii. Private Interest Factors 10 11 (Opp. to DB AG at 11.) The uncertainty regarding the statute of limitations weighs In evaluating private interest, the court considers seven factors: 12 (1) the residence of the parties and witnesses, (2) the 13 forum’s convenience to the litigants, (3) access to physical 14 evidence and other sources of proof, (4) whether unwilling 15 witnesses can be compelled to testify, (5) the cost of 16 bringing witnesses to trial, (6) the enforceability of the 17 judgment, (7) any practical problems or other factors that 18 contribute to an efficient resolution. 19 Boston Telecomm., 588 F.3d at 1206. 20 DB AG contends “the vast majority of evidence and witnesses 21 are in Germany where the [LOC] was allegedly negotiated and issued 22 and where the two individuals . . .who purportedly signed the [LOC] 23 on behalf of DB Privat were allegedly located.” 24 6.) 25 enforceable in Germany. (DB AG Motion at DB AG also argues any judgment obtained against DB AG is 26 27 28 5 (...continued) tolling rules. DB AG only argued that German law governed the statute of limitations. 11 1 NFC concedes “primary residences of the parties balance out” 2 but points out that Newbridge and Crest’s management’s staff, who 3 are primary witnesses, are located in California. (Opp. to DB AG at 4 11-12.) 5 for DB AG, DB AG has been a party to 50 lawsuits in California, and 6 that unlike NFC which has no ties to Germany, DB AG is well- 7 equipped to handle litigation in California. (Id.) 8 contends Germany does not allow pre-trial discovery, in particular 9 deposition testimony, forcing NFC’s witnesses to travel to Germany. NFC also argues that while Germany may be more convenient NFC also 10 (Id. at 13, n.3.) NFC argues DB AG’s cost of bringing witnesses to 11 California is not minimally relevant because they can be deposed at 12 minimal cost in Germany and are not required to be present in 13 California. (Id. at 14.) 14 The court finds private interest factors do not weigh in favor 15 of dismissal. While under United States’ rules any and all of DB 16 AG’s witnesses may be deposed in Germany, under Germany’s pre-trial 17 discovery, NFC’s witnesses would have to travel to Germany to be 18 heard. 19 substantially greater than the cost of deposing witnesses. 20 Moreover, DB AG has a significant presence in California, while NFC 21 has no presence at all in Germany. 22 convenient to the litigants. 23 24 The cost of traveling to Germany for a trial is On balance, this forum is more iii. Public Interest Factors In evaluating public interest, five factors are considered: 25 “(1) the local interest in the lawsuit, (2) the court's familiarity 26 with the governing law, (3) the burden on local courts and juries, 27 (4) congestion in the court, and (5) the costs of resolving a 28 dispute unrelated to a particular forum.” Boston Telecomm., 588 12 1 2 F.3d at 1206. DB AG argues public interest factors also weigh in favor of 3 dismissal, particularly because Germany has a local interest in 4 regulating its banks and regulating conduct that occurred in its 5 jurisdiction. 6 alleged a single transaction or action that took place in 7 California.” (DB AG Motion at 6.) 8 are subject to German law, since the transaction occurred in 9 Germany. 10 (DB AG Reply at 8.) DB AG argues that NFC “has not DB AG also argues NFC’s claims NFC responds that California has a local interest in this 11 lawsuit because the transaction involved a $25 million California 12 motion picture production in which a California resident was 13 essentially put out of business, and “California has a strong 14 interest in maintaining a stable and successful film business in 15 addition to providing an effective forum for its residents.” (Opp. 16 to DB AG at 15.) 17 California law, which governs the LOC, and thus there would not be 18 an unfair burden on the court because California has a substantial 19 connection to the case. NFC also argues the court is more familiar with (Id.) 20 Although the court agrees that Germany has a significant local 21 interest in this action, California also has a significant interest 22 given that California law governs the LOC. 23 the entire transaction took place in Germany is not persuasive. 24 Although the LOC was issued in Germany, negotiations took place 25 from California to create the terms of the LOC and the effects of 26 the LOC were felt most in California. 27 28 DB AG’s argument that For these reasons the court declines to disturb plaintiff’s original choice of forum. Neither private nor public factors weigh 13 1 in favor of dismissal on the grounds of forum non conveniens. 2 3 2. Standing DB AG argues NFC, as a successor-in-interest, lacks standing 4 to assert its claims because under the International Standby 5 Practices (“ISP 98") and California Commercial Code 5114(c), an 6 assignment of a letter of credit confers no rights unless the 7 issuer consents to the assignment. 8 a successor-in-interest is not the same as an assignee. The court 9 agrees. 10 (DB AG Motion 8-9.) NFC argues In Export-Import Bank of the U.S. v. United Cal. Discount 11 Corp., 738 F.Supp.2d 1047 (C.D. Cal. 2010), the defendant argued 12 the plaintiff lacked standing because it was not a party to the 13 Letters of Credit at issue or any other agreement. 14 that the plaintiff had standing because it was assigned “the 15 complete bundle of rights,” including the rights to a cause of 16 action against defendant. Id. 17 The court held The court finds that as a successor-in-interest NFC is not 18 simply an assignee and was similarly assigned the right to a cause 19 of action against DB AG. 20 bring this action. 21 22 The court finds that NFC has standing to 3. Failure to State a Claim DB AG asserts that NFC has failed to plead its four causes of 23 action sufficiently. DB AG argues primarily that although the 24 complaint refers to DB AG and DB Privat collectively as “Deutsche 25 Bank,” the conduct underlying the causes of action is attributable 26 only to DB Privat. As a consequence, to find DB AG liable for the 27 conduct of DB Privat, the court must consider the relationship 28 between the two entities. 14 1 The Complaint asserts two theories for finding that the 2 relationship is such that DB AG may be liable for the acts of DB 3 Privat: DB Privat is “an alter ego” of DB AG, (Compl. ¶ 3), or DB 4 Privat is “the actual or ostensible agent” of DB AG, (id. ¶ 5). 5 Before considering the four causes of action, the court addresses 6 the allegations of these two relationships. 7 8 9 i. Liability of DB AG a. Alter ego The Complaint alleges that “DB Privat is a wholly owned 10 subsidiary and an alter ego of DB [AG]. In particular, DB [AG] 11 controls the management of DB Privat; appoints members to, and has 12 common members on, DB Privat’s supervisory board; takes the profits 13 and is obligated to absorb the losses of DB Privat; and shares 14 certain assets with DB Privat.” (Compl. ¶ 3.) In response, DB AG 15 asserts that NFC’s “conclusory statement that DB AG is DB Privat’s 16 alter ego does not satisfy the requirement that claims be 17 plausible.” (DB AG’s Motion 8:15-16.) The court disagrees. 18 “Like other shareholders, a parent company is presumed to have 19 an existence separate from its subsidiaries. Accordingly, the mere 20 fact that it owns the stock of the subsidiary will not suffice to 21 prove that the two entities are alter egos of one another; rather, 22 the evidence must show that the wholly-owned subsidiary is merely a 23 conduit for, or is financially dependent on, the parent 24 corporation.” Nielson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 25 1101, 1116 (C.D. Cal. 2003). 26 To “satisfy the alter ego exception to the general rule that a 27 subsidiary and the parent are separate entities, the plaintiff must 28 make out a prima facie case (1) that there is such unity of 15 1 interest and ownership that the separate personalities of the two 2 entities no longer exist and (2) that failure to disregard their 3 separate identities would result in fraud or injustice.” Doe v. 4 Unocal Corp., 248 F.3d 915, 926 (9th Cir. 2001) (alterations and 5 internal quotations marks omitted). 6 1. Unity of interest and ownership 7 The first alter ego component is met if the parent company is 8 shown to control the subsidiary “to such a degree as to render the 9 latter the mere instrumentality of the former.” Unocal Corp., 248 10 F.3d at 926 (quoting Calvert v. Huckins, 875 F. Supp. 674, 678 11 (E.D. Cal. 1995)). This relationship is established, for example, 12 where “the parent dictates every facet of the subsidiary’s 13 business-from broad policy decisions to routine matters of day-to- 14 day operation.” Id. (alterations and internal quotation marks 15 omitted). The Ninth Circuit has explained, however, that “a parent 16 corporation may be directly involved in the activities of its 17 subsidiaries without incurring liability so long as that 18 involvement is consistent with the parent’s investor status.” 19 Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 20 F.3d 1122, 1135 (9th Cir. 2003). 21 “Ownership is a prerequisite to alter ego liability.” S.E.C. 22 v. Hickey, 322 F.3d 1123, 1128 (9th Cir. 2003). “Among the factors 23 to be considered in applying the [alter ego] doctrine are 24 commingling of funds and other assets of the two entities, the 25 holding out by one entity that it is liable for the debts of the 26 other, identical equitable ownership in the two entities, use of 27 the same offices and employees, and use of one as a mere shell or 28 conduit for the affairs of the other.” Wady v. Provident Life and 16 1 Accident Ins. Co. of Am., 216 F. Supp. 2d 1060, 1066 (C.D. Cal. 2 2002); see also Associated Vendors, Inc. v. Oakland Meat Co., 26 3 Cal. Rptr. 806, 813-15 (Ct. App. 1962) (listing factors considered 4 in California). 5 Here, NFC points to a “Control and Profit-Transfer Agreement” 6 between DB AG and DB Privat. Section 1.1 of that agreement provides 7 as follows: 8 The Parent Company shall . . . be entitled to issue 9 instructions to the Directors of the Subsidiary Company 10 as regards management of the company. The Subsidiary 11 Company undertakes to follow instructions issued by the 12 Parent Company. Management and representation of the 13 Subsidiary Company shall continue to be the 14 responsibility of the Directors of this company. The 15 Parent Company shall take note of the existing sole 16 responsibility of the Directors of the Subsidiary Company 17 . . . when issuing instructions. 18 (Gans Decl. Exh. G.) Sections 2 and 3 of the agreement provide, 19 respectively, that “[t]he Subsidiary Company undertakes to pay all 20 of its profits to the Parent Company for the term of this 21 agreement” and that “the Parent Company shall be obliged to absorb 22 the Subsidiary Company’s losses . . . .” (Id.) NFC also points to 23 Hermann-Joseph Lamberti, a member of DB AG’s board who “also was 24 chairman of every committee of the supervisory board of DB Privat, 25 including (i) the executive committee, (ii) the auditing committee, 26 and (iii) the committee for credit and market risks.” (Opp. to DB 27 Privat 5:2-6.) In addition, NFC asserts that DB AG and DB Privat 28 share certain assets, including a website, an email network, and 17 1 litigation counsel. (Id. at 5:9-10.) NFC concludes that it “has 2 alleged that DB AG acts as far more than an investor, i.e. it 3 controls management, takes all profits, absorbs all losses, has 4 common directors and shares assets, all specific attributes of 5 alter egos.” (Opp. to DB AG 23:27-24:1.) 6 The court agrees. For the purposes of a 12(b)(6) motion, NFC 7 has sufficiently pleaded factual allegations that DB AG is more 8 than a mere investor in DB Privat. NFC has presented facts showing 9 that DB AG has discretion to control the operations of DB Privat, 10 takes the profits and is liable for the losses of DB Privat, shares 11 assets with DB Privat, and has common board members with DB Privat. 12 13 2. Fraud or injustice The second component is satisfied either by “evidence of any 14 fraudulent intent in forming the corporation” or if “substantial 15 injustice” will result from respecting the corporate separateness. 16 Seymour v. Hull & Moreland Eng’g, 605 F.2d 1105, 1112-13 (9th Cir. 17 1979). The inability to collect a judgment “does not, by itself, 18 constitute an inequitable result” amounting to substantial 19 injustice. Id. at 1113. 20 NFC asserts that a failure to disregard the separate 21 identities of DB AG and DB Privat would allow DB AG to shield 22 itself from the consequences of DB Privat’s conduct. (Opp. to DB AG 23 24:8-10.) NFC concludes that “failing to impose alter ego liability 24 on DB AG would inequitably enable it to limit its liability for 25 illegal acts by performing them through its controlled division, DB 26 Privat.” (Id. at 24:13-15.) The court finds that NFC has 27 sufficiently pleaded injustice. 28 In sum, the court finds that NFC has pleaded a prima facie 18 1 case that DB AG and DB Privat are alter egos. 2 3 b. Ostensible agency The Complaint also alleges that DB AG and DB Privat acted as 4 the ostensible agents of each other. (Compl. ¶ 5.) “In the case of 5 agency, ‘the question is not whether there exists justification to 6 disregard the subsidiary’s corporate identity, the point of the 7 alter ego analysis, but instead whether the degree of control 8 exerted over the subsidiary by the parent is enough to reasonably 9 deem the subsidiary an agent of the parent under traditional agency 10 principles.” Fru-Con Const. Corp. v. Sacramento Municipal Utility 11 Dist., No. CIV.S-050583 LKK/GGH, 2007 WL 238481, at *3 (E.D. Cal. 12 Aug. 17, 2007) (quoting Sonora Diamond Corp. v. Super. Ct., 83 Cal. 13 App. 4th 523, 541 (2000)). 14 In California, “[a]n agency is ostensible when the principal 15 intentionally, or by want of ordinary care, causes a third person 16 to believe another to be his agent who is not really employed by 17 him.” Cal. Civ. Code § 2300. “Ostensible authority is such as a 18 principal, intentionally or by want of ordinary care, causes or 19 allows a third person to believe the agent to possess.” Id. § 2317; 20 see also Restatement (Third) of Agency § 2.03 (2006) (“Apparent 21 authority is the power held by an agent or other actor to affect a 22 principal’s legal relations with third parties when a third party 23 reasonably believes the actor has authority to act on behalf of the 24 principal and that belief is traceable to the principal’s 25 manifestations.”). 26 An agent acting with ostensible or apparent authority may bind 27 a disclosed principal to contracts with third parties. Cal. Civ. 28 Code § 2330 (“An agent represents his principal for all purposes 19 1 within the scope of his actual or ostensible authority, and all the 2 rights and liabilities which would accrue to the agent from the 3 transaction within such limit, if they had been entered into on his 4 own account, accrue to the principal.”); see also Restatement 5 (Third) of Agency § 6.01 (“When an agent acting with actual or 6 apparent authority makes a contract on behalf of a disclosed 7 principal, (1) the principal and the third party are parties to the 8 contract; and (2) the agent is not a party to the contract unless 9 the agent and third party agree otherwise.”). 10 In other words, if DB Privat was the ostensible agent of DB 11 AG, as the Complaint alleges, then the obligations that accrued to 12 DB Privat under the LOC may have also accrued to DB AG. 13 The court finds that Newbridge had reason to believe DB Privat 14 was an ostensible agent of DB AG. First, the LOC expressly provided 15 that Newbridge could present its documents to “any counter[] of 16 Deutsche Bank AG worldwide.” (Nuccio Decl. Exh. J.) Second, the 17 words “Deutsche Bank” appear in the top right corner of each page 18 of the LOC accompanied by the logo that appears on DB AG’s website 19 and securities registration document. (Compare id., with Gans Decl. 20 Exhs. A (showing a copy of the webpage titled “Deutsche Bank - 21 Location Finder”), J (showing a copy of DB AG’s registration 22 document).) The name and logo appear directly above and in larger 23 font than DB Privat’s own name and address. Third, the business 24 cards of Ulas Erkan and Mehmet Girgin, the DB Privat employees who 25 met with Nuccio, bore the same logo. (Nuccio Decl. Exh. H.) Taken 26 as true, these facts state a claim that Newbridge’s belief was 27 reasonable and that DB Privat acted with ostensible authority. 28 ii. Failure to honor Letter of Credit 20 1 California Commercial Code § 5108(a) provides that “an issuer 2 [of a letter of credit] shall honor a presentation that . . . 3 appears on its face strictly to comply with the terms and 4 conditions of the letter of credit. . . . [A]n issuer shall 5 dishonor a presentation that does not appear so to comply.” See 6 also I.S.P. Rule 4.01(a) (“[d]emands for honour of a standby 7 [letter of credit] must comply with the terms and conditions of the 8 standby”). Under the strict compliance standard, followed by 9 California, the documents presented by the beneficiary to a letter 10 of credit must comply word for word with the specifications set 11 forth in the letter of credit. 7 Bus. & Com. Litig. Fed. Cts. § 12 82:29 (3d ed.). The strict compliance standard is justified by the 13 ministerial nature of the issuer’s role in the transaction; to 14 require the issuer “to determine the materiality of discrepancies 15 would be inconsistent with that [ministerial] function.” Id. Both 16 NFC and DB AG agree that Newbridge was subject to the strict 17 compliance standard when it presented its documents to the DB AG 18 counter in New York. (See Opp. to DB AG 18:2-3; DB AG Motion 12:2- 19 5.) 20 The LOC issued by DB Privat describes the types of documents 21 that may be presented and provides where the documents may be 22 presented: “All documents to be presented to us shall be sent to us 23 in person or by an internationally recognized courier service at 24 the following address or at any of our counters or any counters of 25 Deutsche Bank AG worldwide . . . .” (Nuccio Decl. Exh. J (emphasis 26 added).) The LOC’s language, written and issued by DB Privat, 27 indicates that presentation to either DB Privat (i.e., “us”) or DB 28 AG is acceptable. 21 1 DB AG, however, argues that it “possessed no obligation in 2 connection with the Letter of Credit. Simply put, even if the 3 Letter of Credit had been legitimate (which is disputed), DB AG was 4 not required to pay upon a presentation to it or to DB Privat. Only 5 DB Privat would possibly have the duties and liabilities of an 6 ‘issuer’ under the purported Letter of Credit” since the LOC 7 indicates that DB Privat was the issuer.6 (DB AG Motion 12:7-13.) 8 The court disagrees. The court has already found that the 9 Complaint sufficiently alleges that DB Privat acted as either the 10 alter ego or the ostensible agent of DB AG. Should NFC ultimately 11 prove either of these relationships, the obligations belonging to 12 DB Privat, as issuer of the LOC, would also belong to DB AG. 13 Accordingly, if the LOC was validly issued, then NFC has made a 14 plausible claim against DB AG for failure to honor the LOC. 15 16 iv. Negligence The Complaint asserts that “Deutsche Bank had duties to the 17 public, inter alia: (a) not to employ people suspected of criminal 18 activities in position in which they can cause harm to third 19 parties; and (b) to ensure that their agents and employees did not 20 use Deutsche Bank to commit, or aid and abet, fraud or other 21 wrongful acts.” (Compl. ¶ 46.) 22 23 It further asserts that “Deutsche Bank negligently breached its duties by, inter alia: (a) continuing to employ Girgin and 24 25 26 27 28 6 The face of the LOC indicates that DB Privat was the issuer. The name and address of DB Privat appear in the top right corner of each page of the LOC and at the bottom of the second page immediately after the text of the LOC ends and immediately before the signatures of Girgin and Erkan. In addition, the name and address are stamped onto the very bottom of the second page. (Nuccio Decl. Exh. J.) 22 1 Erkan in positions in which they dealt with the public and could 2 cause harm to third parties; (b) failing to monitor or supervise 3 Girgin’s and Erkan’s activities adequately; and (c) failing to 4 restrict or control Girgin’s or Erkan’s activities.” (Compl. ¶ 47.) 5 Finally, it asserts that “[a]s an actual and proximate result 6 of the negligence of Deutsche Bank, NFC is entitled to recover 7 damages in an amount to be proved at trial together with interest 8 thereon.” (Compl. ¶ 48.) 9 DB AG argues that NFC’s allegations fail to state a plausible 10 claim for negligence for three reasons: (1) NFC does not allege 11 that DB AG owed NFC “any specific duty,” (DB AG Motion 17:12-13); 12 (2) NFC does not allege that “Girgin and Erkan engaged in wrongful 13 activity or that they did so on DB AG’s watch,” (id. at 17:16-17); 14 and (3) NFC does not allege that “it suffered any damage as a 15 result of DB AG’s alleged negligence,” (id. at 17:19-20). 16 The court has already found that NFC has sufficiently pled 17 alter ego and ostensible agency. Thus, DB AG’s first two arguments 18 are unpersuasive. The third argument asserts that being “entitled 19 to recover damages” does not equate to an allegation that NFC was 20 damaged. The Complaint, however, alleges that DB Privat induced 21 Newbridge to complete the transaction with Bayrakkale, resulting in 22 a loss to Newbridge of $5.93 million.(Compl. ¶¶ 8, 12, 13, 15, 36.) 23 Accordingly, the court finds that NFC has sufficiently pled a cause 24 of action for negligence. 25 26 V. Negligent Misrepresentation Pointing to Federal Rule of Civil Procedure 9(b), DB AG argues 27 that NFC must state with particularity the circumstances 28 constituting fraud, a higher standard than plausibility. (DB AG 23 1 Motion at 13.) 2 subject to a heightened pleading standard, but that under any 3 standard, “it has satisfied its pleading burden.” 4 at 20.) 5 NFC argues negligent misrepresentation is not (Opp. to DB AG “The Ninth Circuit has not yet decided whether Rule 9(b)'s 6 heightened pleading standard applies to a claim for negligent 7 misrepresentation, but most district courts in California hold that 8 it does.” 9 (N.D. Cal September 12, 2012). Villegas v. Wells Fargo Bank N.A., 2012 WL 4097747 Here, the court need not take a 10 position because, regardless, NFC has satisfied the particularity 11 requirement. 12 DB AG argues that NFC fails to state a claim for negligent 13 misrepresentation on three grounds. First, DB AG claims that NFC 14 does not meet the particularity requirement because the 15 misrepresentations NFC alleges were not made by DB AG. 16 Motion at 14.) 17 was issued by only DP Privat. (Id.) NFC, however, claims the LOC 18 and other communications were made by both DB AG and DB Privat. 19 (Opp. to DB AG at 20.) 20 letterhead and DB AG is the agent of DB Privat. 21 (DB AG DB AG points to the LOC’s letterhead and claims it NFC contends the LOC is on DB AG’s (Id.) The court is not persuaded DB AG’s argument. As stated 22 above, the court finds NFC sufficiently pleaded that DB Privat is 23 DB AG’s ostensible agent. If this is later proved, DB AG is bound 24 by the actions of its agent. Therefore, if NFC has sufficiently 25 pleaded negligent misrepresentation against DB Privat, then NFC 26 has stated a claim against DB AG. 27 In pleading negligent misrepresentation NFC states 28 24 1 “Deutsche Bank made representations that: (1) the Letter of Credit 2 was ready to be issued; (2) a valid letter of credit was issued 3 and; (3) Girgin and Erkan had authority to act in connection with 4 the Letter of Credit, including the authority to execute the 5 Letter of Credit.” 6 points to and provides documents which it alleges to contain 7 misrepresentations by DB Privat and their employees, Girgin and 8 Erkan. 9 (Compl. ¶ 37.) The court finds that NFC Second, DB AG argues that the alleged communications prior to 10 the LOC could not have been “reasonably relied upon as they were 11 merely precatory.” (DB AG Mot. at 14.) 12 relied on the communications prior to the LOC because those 13 communications “induced Newbridge to wire $5,930,000 to the escrow 14 account.” 15 NFC contends it reasonably (Opp. to DB AG at 20.) The court finds NFC pleaded with particularity that Newbridge 16 relied on the communications prior to the LOC. 17 Newbridge had known of the falsity of the foregoing 18 representations, it would not have continued to conduct business 19 with Bayrakkale and would not have made the Newbridge Deposit.” 20 (Compl. ¶ 37.) NFC pleads that it relied on each communication as 21 it went forward in making the Newbridge deposit. 22 NFC states, “[i]f Third, DB AG argues that NFC may not twist a contractual 23 claim into a tort claim. 24 not twisting a contractual claim into a tort claim because its 25 tort claims are “premised on the absence of a contract.” 26 DB AG at 21.) Thus, if the court later finds there is no valid 27 contract, NFC will only have tort claims. The court agrees that 28 NFC pleaded its contract and tort claims in the alternative. (DB AG Mot. at 15.) 25 NFC contends it is (Opp. to 1 Accordingly, the court finds NFC has sufficiently pleaded, 2 with particularity, a claim for negligent misrepresentation. 3 vi. Aiding and abetting fraud 4 As with DB AG’s other arguments, this one depends on the 5 assertion that DB AG and DB Privat are separate entities. The 6 Ninth Circuit has observed that “[a]iding and abetting liability 7 under California law, as applied by the California state courts, 8 requires a finding of actual knowledge . . . .” In re First 9 Alliance Mortg. Co., 471 F.3d 977, 993 (9th Cir. 2006). The 10 Complaint alleges that “Deutsche Bank knew that Bayrakkale was 11 committing a fraud . . . .” (Compl. ¶ 41.) DB AG challenges the 12 sufficiency of the Complaint, asserting that it failed “to provide 13 an explanation of how DB AG actually knew of defendant 14 Bayrakkale’s alleged fraud.” (DB AG Motion 16:4-5.) 15 As discussed, the Complaint alleges that Girgin and Erkan, as 16 employees of DB Privat, issued the LOC and, in addition, that DB 17 Privat acted as the alter ego or ostensible agent of DB AG. The 18 court therefore finds that NFC has sufficiently pled a cause of 19 action for aiding and abetting Bayrakkale’s fraud. 20 Accordingly, the court DENIES DB AG’s Motion to Dismiss. 21 B. DB Privat’s Motion to Dismiss 22 1. Forum Non Conveniens 23 DB Privat, like DB AG, argues that this case should be 24 dismissed on the ground of forum non conveniens and invokes 25 arguments similar to those in DB AG’s Motion. To satisfy the first 26 prong, DB Privat notes that it, as a German corporation, “is 27 indisputably subject to service of process in Germany.” (DB Privat 28 Reply 17:15-16.) With regard to the private factors, DB Privat 26 1 asserts that “the vast majority of evidence and witnesses are in 2 Germany” and emphasizes that the meetings between Nuccio and 3 Girgin and Erkan occurred in Germany. (Id. at 18:1-7.) In 4 considering the public factors, DB Privat argues that “the 5 interests of Germany greatly outweigh those of a court sitting in 6 California,” (id. at 18:22-23), that German law should apply to 7 the majority of legal issues, (id. at 19:1-2), and that this case 8 would unnecessarily burden the court, (id. at 19:9-10). 9 For the reasons discussed above, the court finds that DB 10 Privat, like DB AG, has not met its burden. Accordingly, the court 11 DENIES DB Privat’s Motion to Dismiss on the ground of forum non 12 conveniens. 13 14 15 2. Personal Jurisdiction i. Specific jurisdiction A nonresident defendant has sufficient minimum contacts with 16 a forum to be subject to its specific jurisdiction when the 17 following criteria are met: 18 (1) The non-resident defendant must purposefully direct 19 his activities or consummate some transaction with the 20 forum or resident thereof; or perform some act by which 21 he purposefully avails himself of the privilege of 22 conducting activities in the forum, thereby invoking the 23 benefits and protections of its laws; 24 (2) the claim must be one which arises out of or relates 25 to the defendant’s forum-related activities; and 26 (3) the exercise of jurisdiction must comport with fair 27 play and substantial justice, i.e. it must be 28 reasonable. 27 1 Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th 2 Cir. 2012). 3 4 a. Purposeful direction Where intentional torts are alleged, the purposeful direction 5 component may be satisfied by the “effects” test established in 6 Calder v. Jones, 465 U.S. 783 (1984). Taking the Complaint’s 7 factual allegations as true, the court finds that DB Privat is 8 subject to the court’s specific jurisdiction under the test. 9 In Calder, the Court concluded that “[a]n individual injured 10 in California need not go to Florida to seek redress from persons 11 who, though remaining in Florida, knowingly cause the injury in 12 California.” Id. at 790. The Court found that the defendant could 13 “reasonably anticipate being haled into court” in California 14 because “their intentional, and allegedly tortious, actions were 15 expressly aimed at California,” where they knew that “the brunt of 16 the injury would be felt” and “would have a potentially 17 devastating impact.” Id. at 789-90. 18 The Ninth Circuit has refashioned Calder into a three-part 19 test: (1) whether the defendant committed an intentional act; (2) 20 whether the act was “expressly aimed” at the forum state; and (3) 21 whether the act caused harm that the defendant knew was likely to 22 be suffered in the forum state. Wash. Shoe Co., 704 F.3d at 673. 23 DB Privat argues that NFC “has not alleged any facts to 24 satisfy either of the first two prongs of the Calder ‘effects’ 25 test, i.e. that DB Privat committed an intentional act expressly 26 aimed at California.” (Id. at 8:17-19.) The court disagrees. 27 The intentional acts at issue here are DB Privat’s 28 representations that it was going to issue a letter of credit and 28 1 its issuance of the LOC. The Complaint alleges that on January 12, 2 2011, DB Privat “wrote a letter to Bayrakkale stating that its 3 request . . . was being processed and that it expected to issue 4 the letter of credit the following week.” (Compl. ¶ 12.) 5 Bayrakkale then forwarded the letter to Newbridge and the Escrow 6 Agent. (Id.) The Complaint next alleges that on January 26, Nuccio 7 “went to the offices of Deutsche Bank in Dortmund, Germany, where 8 he received an original, executed letter confirming that the 9 Letter of Credit was ready to be issued and would be ready for 10 collection” the next day. (Id. ¶ 13.) Nuccio then notified 11 Newbridge and Bayrakkale. (Id.) The next day, Nuccio allegedly 12 returned to the Dortmund office, received the LOC, and again 13 notified Newbridge and Bayrakkale. (Id. ¶ 15.) 14 Nuccio’s declaration supports this account. He describes 15 going to the Dortmund office on January 26 with representatives 16 from Bayrakkale to meet Erkan and Girgin. (Nuccio Decl. ¶ 12.) He 17 describes forwarding a letter signed by Girgin later that day to 18 Newbridge and Bayrakkale. (Id. ¶¶ 13-14.) He then describes 19 returning the next day to collect the issued LOC. (Id. ¶ 15.) 20 Because DB Privat knew that Newbridge—the LOC’s sole 21 beneficiary—was a California resident, the court finds that the 22 Complaint sufficiently alleges that DB Privat aimed its 23 intentional acts at California for the purpose of causing harm it 24 knew would be felt in California. 25 26 b. Arising out of Where the causes of action arise out of the defendant’s 27 intentionally tortious conduct, the plaintiff has sufficiently 28 alleged minimum contacts with the forum. For example, “the 29 1 inducement of reliance in California is a sufficient act within 2 California to satisfy the requirement of minimum contacts where 3 the cause of action arises out of that inducement.” Paccar 4 International, Inc. V. Commercial Bank of Kuwait, S.A.K., 757 F.2d 5 1058, 1064 (9th Cir. 1985) (alteration omitted) (quoting Data 6 Disc, Inc. V. Systems Technology Associates, Inc., 557 F.2d 1280, 7 1288 (9th Cir. 1977)). 8 9 Here, NFC’s causes of action against DB Privat arise out of Newbridge’s reliance on the January 12 and January 26 letters and 10 the LOC. DB Privat allegedly induced that reliance. Accordingly, 11 NFC has sufficiently alleged that DB Privat has sufficient minimum 12 contacts with California. 13 14 c. Reasonableness “[W]here a defendant who purposefully has directed his 15 activities at forum residents seeks to defeat jurisdiction, he 16 must present a compelling case that the presence of some other 17 considerations would render jurisdiction unreasonable.” Burger 18 King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985). To determine 19 whether the exercise of jurisdiction is reasonable, the Ninth 20 Circuit considers seven factors: 21 (1) the extent of the defendants’ purposeful injection 22 into the forum state’s affairs; (2) the burden on the 23 defendant of defending in the forum; (3) the extent of 24 the conflict with the sovereignty of the defendant’s 25 state; (4) the forum state’s interest in adjudicating 26 the dispute; (5) the most efficient judicial resolution 27 of the controversy; (6) the importance of the forum to 28 30 1 the plaintiff’s interest in convenience and effective 2 relief; and (7) the existence of an alternative forum. 3 CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1079 (9th 4 Cir. 2011) (quoting Dole Food Co. v. Watts, 303 F.3d 1104, 1114 5 (9th Cir. 2002)); see also Burger King, 471 U.S. at 477. 6 The parties dispute the reasonableness of exercising 7 jurisdiction over DB Privat. (Compare DB Privat Motion 10:9-11, 8 with Opp. to DB Privat 21-24.) The court finds that DB Privat has 9 not made a sufficiently compelling case to render jurisdiction 10 11 unreasonable. The first factor favors exercising jurisdiction. DB Privat 12 argues that it “has not purposefully injected itself into the 13 forum state’s affairs. It is a German company doing business in 14 Germany for the German market.” (DB Privat Motion 10:10-11.) 15 However, “[a]ctions directed at a forum resident expected to cause 16 harm in the forum constitute purposeful injection.” CollegeSource, 17 653 F.3d at 1080. Though DB Privat resides and primarily conducts 18 business in Germany, the Complaint alleges that DB Privat 19 purposefully directed its tortious activities at a California 20 resident. 21 Though the second and sixth factors oppose each other in 22 theory, on balance here they favor exercising jurisdiction. The 23 court acknowledges the burden potentially imposed on DB Privat by 24 requiring it to defend in California, (see DB Privat Motion 10:12- 25 16), but also recognizes that DB Privat is the subsidiary of a 26 large international bank with offices worldwide. The court also 27 realizes that denying jurisdiction to NFC’s claims would not only 28 31 1 inconvenience NFC but would likely force NFC to file in Germany, 2 the limitations of which have been discussed above. 3 Similarly, the third and fourth factors, on balance, favor 4 jurisdiction. The court recognizes the interest that German courts 5 likely have in adjudicating a dispute involving a German financial 6 institution. (See DB Privat Reply 17:19-20.) However, California 7 has an interest in providing its residents a forum for relief. 8 (See Opp. to DB Privat 22:27-23:2.) The court notes that the 9 parties agreed to a California choice-of-law clause. Indeed, DB 10 Privat appears to have agreed to California law after initially 11 proposing German law. (Compare Nuccio Decl. Exh. A, with id. Exh. 12 J.) Though a choice-of-law clause differs from a choice-of-forum 13 provision, in conjunction with the other factors, it adds to the 14 reasonableness of exercising jurisdiction. 15 In considering the fifth factor, NFC argues that “the most 16 important witnesses . . . are Vincent Nuccio, the escrow agent; 17 Dan Mandel, former executive of Newbridge; Noah Fogelson, former 18 President of Crest; Loeb & Loeb, Newbridge’s counsel; [and] Scott 19 Frank, a producer . . . .” (Opp. to DB Privat 23:8-13.) DB Privat 20 responds that these witnesses “have no knowledge related to the 21 claims against DB Privat, with the possible exception of Nuccio 22 (who is not even in California).” (DB Privat Reply 16:12-13.) The 23 court recognizes that Girgin, Erkan, and Nuccio, along with other 24 employees of DB Privat, may be important witnesses. However, DB 25 Privat is unable to confirm that Girgin and Erkan remain in 26 Germany. (See Peschkes Decl. ¶ 18 (“To the best of my knowledge, 27 they both still reside in Germany.”).) International disputes such 28 as this one subject judicial efficiency to the geography of the 32 1 parties, witnesses, and evidence, and the court is not persuaded 2 that judicial efficiency would be better served in a German court. 3 In sum, the court finds that exercising its personal 4 jurisdiction over DB Privat is reasonable. The court therefore 5 DENIES DB Privat’s Motion to Dismiss on the ground of personal 6 jurisdiction. 7 IV. Conclusion 8 9 10 For the above reasons, the court DENIES DB AG’s and DB Privat’s Motions to Dismiss. IT IS SO ORDERED. 11 12 Dated: July 2, 2013 DEAN D. PREGERSON United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 33
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