Opinion
Case No. 2:22-cv-08659-MCS-PVC
2023-07-03
NEWPOINT FINANCIAL CORP., a Delaware corporation, Plaintiff, v. BERMUDA MONETARY AUTHORITY; Gerald Gakundi, an individual; Susan Davis-Crockwell, an individual; Does 1 Through 10, inclusive, Defendants.
Peter L. Steinman, Michelman and Robinson LLP, Los Angeles, CA, Allison C. Aguirre, Jane M. Kutepova, Michelman and Robinson LLP, Irvine, CA, for Plaintiff. Jordan D. Teti, Michael M. Maddigan, Hogan Lovells U.S. LLP, Los Angeles, CA, for Defendant Bermuda Monetary Authority. Michael M. Maddigan, Hogan Lovells U.S. LLP, Los Angeles, CA, for Defendants Gerald Gakundi, Susan Davis-Crockwell.
Peter L. Steinman, Michelman and Robinson LLP, Los Angeles, CA, Allison C. Aguirre, Jane M. Kutepova, Michelman and Robinson LLP, Irvine, CA, for Plaintiff. Jordan D. Teti, Michael M. Maddigan, Hogan Lovells U.S. LLP, Los Angeles, CA, for Defendant Bermuda Monetary Authority. Michael M. Maddigan, Hogan Lovells U.S. LLP, Los Angeles, CA, for Defendants Gerald Gakundi, Susan Davis-Crockwell.
ORDER RE: DEFENDANTS' MOTION TO DISMISS (ECF No. 24)
MARK C. SCARSI, UNITED STATES DISTRICT JUDGE
Defendant Bermuda Monetary Authority ("BMA") as well as individual defendants Gerald Gakundi and Susan Davis-Crockwell move to dismiss Plaintiff Newpoint Financial Corp.'s Complaint. (Mot., ECF No. 24.) Plaintiff filed an opposition, (Opp'n 33), and Defendants replied, (Reply, ECF No. 34). The Court heard oral argument on May 15, 2023.
I. BACKGROUND
Plaintiff is a corporation organized under the laws of Delaware with its principal place of business in Beverly Hills, California. (Compl. ¶ 2, ECF No. 1.) BMA is the regulatory authority responsible for reviewing and approving transactions related to Bermudian insurance companies, "including the purchase and sale of controlling shareholder interests in domestic insurance companies." (Id. ¶ 3.) Gerald Gakundi is the Director for the Insurance Supervision Department at the BMA and Susan Davis-Crockwell is the Deputy Director of Enforcement for the Legal Services and Enforcement Department at the BMA. (Id. ¶¶ 4-5.)
"On June 16, 2022, Newpoint applied to the BMA to become a controlling shareholder of a Bermudian insurance company, Citadel Reinsurance Company Limited ('Citadel')." (Id. ¶ 10 (emphasis removed).) Less than two weeks later, on July 26, 2022, the BMA sent a letter to Plaintiff's office in Beverly Hills stating that the BMA "was considering 'objecting' to the transaction, the objection being the functional equivalent of rejecting the transaction." (Id. ¶ 11.) Plaintiff alleges that "[t]he letter falsely and maliciously claimed that Newpoint was not a 'fit and proper person to be the controller of Citadel.' " (Id.) Specifically, Plaintiff alleges the letter falsely claimed the BMA "had received 'information' from regulators in multiple jurisdictions[ ] that 'Newpoint . . . provided information which is not accurate and is misleading as to the status of Newpoint's current ownership of other companies,' " " '[t]hat Newpoint [was] unlikely to comply with directions or other regulatory obligations imposed upon it,' " and "[t]hat Newpoint fail[ed] to meet the 'Eligible Capital Rules.' " (Id.)
"On September 30, 2022, the BMA[ ] transmitted to Newpoint at its Beverly Hills, California office its final 'objection[,]' thereby rejecting Newpoint's application." (Id. ¶ 14.) Plaintiff alleges that in the BMA's final objection, "Defendants doubled down on their malfeasance, again falsely conflating Newpoint with other entities, and vaguely accusing those companies' directors and controllers . . . of vague misconduct that allegedly supported the BMA's bad faith denial of Newpoint's controlling shareholder application." (Id.)
Plaintiff filed the instant case in this Court on November 29, 2022. Plaintiff brings four causes of action: 1) tortious interference with existing and prospective economic advantage, (id. ¶¶ 22-36); 2) negligent interference with existing and prospective economic advantage, (id. ¶¶ 37-46); 3) trade libel, (id. ¶¶ 47-55); and violation of California Business and Professions Code section 17200 et seq., (id. ¶¶ 56-59). Defendants move to dismiss Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) on the grounds that they are immune from suit under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602 et seq., and the common law. (Mot. 7-14.) Defendants also move to dismiss under Federal Rule of Civil Procedure 12(b)(2) on the grounds that this Court lacks personal jurisdiction over Defendants. (Id. at 14-17.)
II. LEGAL STANDARDS
A. Subject-Matter Jurisdiction
Federal Rule of Civil Procedure 12(b)(1) authorizes a party to seek dismissal of an action for lack of subject-matter jurisdiction. Rule 12(b)(1) jurisdictional challenges can be either facial or factual. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a facial attack, the complaint is challenged as failing to establish federal jurisdiction, even assuming all the allegations are true and construing the complaint in the light most favorable to the plaintiff. See id. In a factual challenge, the moving party "disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Id. "When the defendant raises a factual attack, the plaintiff must support her jurisdictional allegations with competent proof under the same evidentiary standard that governs in the summary judgment context." Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014) (citation and quotation marks omitted). In resolving a factual attack, the court need not accept the allegations in the complaint as true. Safe Air for Everyone, 373 F.3d at 1039. In either case, the plaintiff bears the burden of proving subject-matter jurisdiction by a preponderance of the evidence. Leite, 749 F.3d at 1121. "Although sovereign immunity is only quasi-jurisdictional in nature, Rule 12(b)(1) is still a proper vehicle for invoking sovereign immunity from suit." Pistor v. Garcia, 791 F.3d 1104, 1111 (9th Cir. 2015).
B. Personal Jurisdiction
1. BMA
"Under the FSIA, . . . personal jurisdiction over a foreign state exists where subject-matter jurisdiction exists and where proper service has been made." Altmann v. Republic of Austria, 317 F.3d 954, 969 (9th Cir. 2002) (citing 28 U.S.C. § 1330(b)). The assertion of jurisdiction over a foreign sovereign must also comply with the minimum contacts requirement of "the Due Process Clause of the Fifth Amendment," but "[w]here service is made under FSIA section 1608, the relevant area in delineating contacts is in the entire United States, not merely the forum state." Id. at 970 (internal quotation marks omitted).
2. Individual Defendants
The party asserting the existence of jurisdiction bears the burden of establishing it. Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d 857, 862 (9th Cir. 2003). Depending on the nature and extent of a defendant's contacts, if any, with a forum state, the appropriate exercise of personal jurisdiction may be either general—that is, the party is subject to any claims in that forum—or specific—that is, the party is subject only to claims arising out of its forum-related activities. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011).
To establish personal jurisdiction over a defendant, a plaintiff must show both that a long-arm statute confers personal jurisdiction over an out-of-state defendant, and that the exercise of jurisdiction is consistent with federal due process requirements. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154-55 (9th Cir. 2006). "Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004).
Constitutional due process requires that jurisdiction be exercised over a nonresident party only if that party has "minimum contacts" with the forum, such that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted); accord Burger King Corp. v. Rudzewicz, 471 U.S. 462, 464, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). The Ninth Circuit employs a three-prong test to analyze whether a defendant's "minimum contacts" satisfy the due process clause in the context of specific personal jurisdiction:
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; andSchwarzenegger, 374 F.3d at 802 (citation omitted).
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.
The plaintiff bears the burden of satisfying the first two prongs of the test. Id. The first prong may be satisfied with facts sufficient to show "either purposeful availment or purposeful direction, which, though often clustered together under a shared umbrella, 'are, in fact, two distinct concepts.' " Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010) (quoting Pebble Beach, 453 F.3d at 1155). Courts in the Ninth Circuit "generally apply the purposeful availment test when the underlying claims arise from a contract, and the purposeful direction test when they arise from alleged tortious conduct." Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1142 (9th Cir. 2017).
"Where allegedly tortious conduct takes place outside the forum and has effects inside the forum," AMA Multimedia, LLC v. Wanat, 970 F.3d 1201, 1208 (9th Cir. 2020), courts apply the "effects test," which requires proof that defendant "(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state," Axiom Foods, Inc. v. Acerchem Int'l, Inc., 874 F.3d 1064, 1069 (9th Cir. 2017) (internal quotation marks omitted). This test looks "to the defendant's contacts with the forum State itself, not the defendant's contacts with the persons who reside there." Picot v. Weston, 780 F.3d 1206, 1214-15 (9th Cir. 2015) (quoting Walden v. Fiore, 571 U.S. 277, 285, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014)). "[M]ere injury to a forum resident is not a sufficient connection to the forum," and "an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum State." Id. (quoting Walden, 571 U.S. at 290, 134 S.Ct. 1115). Consideration of the act is limited to whether an "external manifestation of the actor's will" is reflected, and "does not include any of [the act's] results, even the most direct, immediate, and intended." Schwarzenegger, 374 F.3d at 806 (internal quotation marks omitted). With respect to the "express aiming" prong of the effects test, "something more" is required than a "foreign act with foreseeable effects in the forum state." Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 675 (9th Cir. 2012) (internal quotation marks omitted).
III. ANALYSIS
A. Sovereign Immunity
1. BMA and the FSIA
"The FSIA is the exclusive source of subject matter jurisdiction over suits involving foreign states or their instrumentalities." Joseph v. Off. of Consulate Gen. of Nigeria, 830 F.2d 1018, 1021 (9th Cir. 1987). "Under the FSIA, [courts] presume that actions taken by foreign states or their instrumentalities are sovereign acts and thus are protected from the exercise of [federal courts'] jurisdiction, unless one of the FSIA's exceptions to immunity applies." Id. "Once the plaintiff offers evidence that an FSIA exception to immunity applies, the party claiming immunity bears the burden of proving by a preponderance of the evidence that the exception does not apply." Id.
For the purposes of this motion, the Court accepts Defendants' unchallenged assertion that Bermuda, a territory controlled by the United Kingdom, qualifies as an agency or instrumentality of a foreign state to which the FSIA applies. 28 U.S.C. § 1603(a)-(b); (see Mot. 9 n.3 (collecting persuasive cases)).
"Plaintiff does not dispute that Defendant BMA qualifies as a foreign state agency under FSIA." (Opp'n 6 n.4.)
A foreign sovereign may waive the immunity protections of the FSIA "either explicitly or by implication." 28 U.S.C. § 1605(a)(1). An explicit waiver is one that "may be ascertained simply by reading the document in which an explicit waiver is purportedly made." Anderman v. Fed. Republic of Austria, 256 F. Supp. 2d 1098, 1106 (C.D. Cal. 2003). "[T]he waiver exception to sovereign immunity must be narrowly construed," Corzo v. Banco Cent. De Reserva Del Peru, 243 F.3d 519, 523 (9th Cir. 2001), and any waiver "must be clear and unambiguous," Sequeira v. Republic of Nicar., No. CV 13-4332-DMG (FFMx), 2018 WL 6267835, at *3 (C.D. Cal. Aug. 24, 2018) (internal quotation marks omitted), aff'd, 791 F. App'x 681 (9th Cir. 2020). Where sovereign immunity is explicitly waived in the domestic courts of the foreign sovereign, U.S. courts have "uniformly concluded" that such a waiver "does not by itself evidence an intent on the part of the sovereign entity to waive immunity from suit in the United States." Corzo, 243 F.3d at 523. Ultimately, irrespective of whether waiver is explicit or implied, "the touchstone of the waiver exception remains the same: that the foreign state have intended to waive its sovereign immunity." Ivanenko v. Yanukovich, 995 F.3d 232, 240 (D.C. Cir. 2021) (internal quotation marks omitted).
The parties do not dispute that Bermuda waived sovereign immunity for suits against the BMA brought in Bermuda courts, but they disagree as to whether the waiver extends to lawsuits brough in the United States. (See Mot. 11; Opp'n 2.) In relevant part, the Bermuda Monetary Authority Act 1969 (the "Act") states that the BMA "may sue and be sued in its corporate name and may for all purposes be described by that name." (Swan Decl. Ex. 1 ("Act") § 2(3), ECF No. 24-3.) Defendants argue that "Section 2(3) of the BMA Act applies only to potential legal action against the Authority in Bermuda courts." (Mot. 11.) In opposition, Plaintiff argues that "the plain language of the BMA Act does not limit potential actions against the BMA to those filed in Bermuda." (Opp'n 9.) As a result, the question the Court must answer is whether the Act's sue-and-be-sued provision—which is silent as to whether it authorizes suits only in the courts of Bermuda or in other jurisdictions as well—is a valid waiver of immunity under the FSIA.
Although Plaintiff offers several strong arguments, they are not enough to conclude the BMA has waived sovereign immunity under the FSIA. Plaintiff's argument rests upon the principle that when interpreting a statute, courts must "begin where all such inquiries must begin: with the language of the statute itself." Republic of Sudan v. Harrison, 587 U.S. 1, 139 S. Ct. 1048, 1056, 203 L.Ed.2d 433 (2019) (internal quotation marks omitted). Plaintiff correctly points out that there is nothing in the Act itself that explicitly states that BMA may only sue and be sued in Bermudian courts. Plaintiff also notes that "Defendants do not cite any 'clarifying' language in the BMA Act, case law, treatises, legislative history, or statutory interpretation to support their argument that despite the clear language of the Act, the BMA can only be sued in Bermuda." (Opp'n 8.) Because this case involves a waiver of sovereign immunity, however, the statutory interpretation is not as straightforward as it would first seem.
Circuit courts confronting related questions under the FSIA have concluded that a valid waiver of sovereign immunity requires something more than an unadorned sue-and-be-sued clause. Writing for the D.C. Circuit in Dayton v. Czechoslovak Socialist Republic, then-Judge Ruth Bader Ginsburg relied on the legislative history of the FSIA to conclude "that no intelligent waiver of a foreign sovereign's immunity is fairly extracted from endowment of" a state agency "with the capacity to sue and be sued." 834 F.2d 203, 205 (D.C. Cir. 1987). Judge Ginsburg noted that the House Report accompanying the FSIA identified a state agency that "can sue or be sued in its own name, contract in its own name or hold property in its own name" as being entitled to a presumption of immunity under the FSIA. Id. at 206 (quoting H.R. Rep. No. 94-1487, at 15 (1976)). Relatedly, the Ninth Circuit's dicta in Corzo v. Banco Central De Reserva Del Peru states that the same House Report "strongly suggests that while an entity may be amenable to suit in its home country under some circumstances, it does not necessarily follow that it lacks sovereign immunity from suit in the United States." 243 F.3d at 523. Applying Dayton and Corzo's analysis to the present case, the mere fact that the authorizes the BMA to "sue and be sued in its corporate name," (Act § 2(3)), is not alone sufficient to wave sovereign immunity under the FSIA.
Even if the Court were to discount the probative value of the FSIA's legislative history, it would still reach the same conclusion. Outside the FSIA context, similar provisions have been interpreted as limiting the waiver of immunity to the courts of a single sovereign. In College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 527 U.S. 666, 676, 119 S.Ct. 2219, 144 L.Ed.2d 605 (1999), the Supreme Court recognized that a "[s]tate does not consent to suit in federal court . . . merely by stating its intention to 'sue and be sued.' " Instead, such provisions should be interpreted as consent to suits only in the courts of the state itself, absent "a clear declaration that" the state "intends to submit itself" to the jurisdiction of federal courts. Id. (internal quotation marks omitted). Although College Savings Bank applied the Eleventh Amendment and not the FSIA, its logic is highly instructive given the Amendment constitutionally "enacts" states' "sovereign immunity from suit." Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261, 267, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997).
Additionally, although the Court must begin its analysis with the text of the Act, other canons of statutory construction are relevant in its analysis. Specifically, the "presumption against extraterritoriality" recognizes that the United States Congress "ordinarily legislates with respect to domestic, not foreign, matters." Morrison v. Nat'l Austl. Bank Ltd., 561 U.S. 247, 255, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010). Thus, unless Congress has "clearly expressed" its intention "to give a statute extraterritorial effect," a court "must presume [the statute] is primarily concerned with domestic conditions." Id. (internal quotation marks omitted). The presumption against extraterritoriality canon is particularly apt to apply in the FSIA context given "the waiver exception to sovereign immunity must be narrowly construed." Corzo, 243 F.3d at 523. Consequently, the party asserting an FSIA waiver should overcome this presumption with evidence that the foreign sovereign intended the putative waiver to apply in courts outside its own jurisdiction.
Finally, prudential considerations support the conclusion that a sue-and-be-sued clause alone does not satisfy the FSIA's waiver requirement. As the Second Circuit has recognized, the entire "purpose of an explicit waiver requirement is to preclude inadvertent, implied, or constructive waiver in cases where the intent of the foreign state is equivocal or ambiguous." Cap. Ventures Int'l v. Republic of Arg., 552 F.3d 289, 293 (2d Cir. 2009) (internal quotation marks omitted). Sovereign immunity is no mere trifle, and courts should tread lightly when interpreting the scope of a foreign sovereign's waiver of immunity. It goes without saying that haling a foreign government into court when that government never anticipated it would be subject to jurisdiction in the United States could result in repercussions that extend far beyond the halls of justice. Consequently, "[t]he limited institutional competence of the judiciary to assess the impact upon its rulings upon foreign relations," Doe v. Qi, 349 F. Supp. 2d 1258, 1296 (N.D. Cal. 2004), strongly militates in favor of adopting a presumption that a sue-and-be-sued clause, without more, does not constitute an explicit waiver under the FSIA.
Plaintiff argues that the Act demonstrates Bermuda's intent to waive the BMA's sovereign immunity in foreign jurisdictions. Plaintiff states that "Bermuda, via the BMA and other acts, seeks to be not only a tourist destination, but also a financial destination . . . . As such, the BMA should have contemplated that its actions could result in suit in the United States based on its conduct here." (Opp'n 8.) As an initial matter, the fact that Bermuda "should have contemplated that its actions could result in suit in the United States," (id. (emphasis added)), is at best weak evidence that this is what was it intended when Bermuda it passed the Act, Ivanenko, 995 F.3d at 240. Further, Plaintiff's claim is fatally undermined by the same arguments that Plaintiff proffers as faults in Defendants' motion: Plaintiff does "not cite any 'clarifying' language in the BMA Act, case law, treatises, legislative history, or statutory interpretation to support [its] argument." (Opp'n 8.) Instead, Plaintiff relies entirely on the declaration of Craig Swan, the Chief Executive Officer of the Bermuda Monetary Authority. (Id. (citing Swan Decl. ¶ 27, ECF No. 24-2).) Plaintiff offers no explanation as to why the opinions of Mr. Swan, who joined the BMA in 2006, (Swan Decl. ¶ 2), would shed light on the Parliament of Bermuda's intent when enacting the Bermuda Monetary Authority Act 1969.
Even if Plaintiff could reasonably rely on Mr. Swan's declaration, it is not clear why the waiver would be interpreted in the manner Plaintiff proposes. Specifically, Plaintiff fails to explain why a waiver of immunity limited to suits brought in Bermuda courts would be contrary to an effort to "enhance Bermuda's attractiveness as a world class financial jurisdiction." (Opp'n 8 (emphasis removed) (quoting Swan Decl. ¶ 27).) Plaintiff provides no reason to conclude that entities contemplating transacting business in Bermuda would be reticent to invest if they knew that disputes with the BMA could only be heard by Bermudian courts. Nor does Plaintiff address the possibility that limiting disputes to Bermudian courts could actually enhance investment by eliminating potential uncertainty as to where a dispute would be heard should one arise.
In holding that a sue-and-be-sued clause alone does not constitute a FSIA waiver, the Court wishes to make clear that it does not interpret the FSIA as requiring the sovereign to enact a waiver specifically authorizing suit in foreign jurisdictions. That conclusion was persuasively rejected in Capital Ventures International v. Republic of Argentina, 552 F.3d 289 (2d Cir. 2009). There, the waiver provision read: "To the extent that the Republic has or hereafter may acquire any immunity (sovereign or otherwise) from jurisdiction of any court or from any legal process . . . , with respect to itself or its revenues, assets or properties, the Republic hereby irrevocably waives such immunity . . . ." Republic of Argentina, 552 F.3d at 291-92 (emphases added). Although the waiver did not expressly authorize suit outside of Argentina, the fact that it explicitly applied to "any court" or "any legal process" was a sufficient textual basis to conclude the foreign sovereign did not intend to limit the waiver domestically. Id. at 291 (emphases added).
The Court holds that the sue-and-be-sued provision at issue in this case is insufficient to constitute a waiver of sovereign immunity under the FSIA. Accordingly, Defendants' motion to dismiss claims against the BMA for lack of subject-matter jurisdiction is GRANTED.
2. Individual Defendants
In their reply brief, Defendants argue "[t]his case should not be allowed to proceed against the individual defendants if the BMA, the real party in interest, is found to be immune." (Reply 9 n.3.) Such an argument was not raised in Defendants' motion, (see Mot. 12-14), and "arguments raised for the first time in a reply brief are waived," Autotel v. Nev. Bell Tel. Co., 697 F.3d 846, 852 (9th Cir. 2012) (cleaned up). Accordingly, the Court does not pass on the merits of this contention at this time.
The Supreme Court has held "that the FSIA does not govern whether an individual foreign official enjoys immunity from suit," Samantar v. Yousuf, 560 U.S. 305, 310 n.3, 130 S.Ct. 2278, 176 L.Ed.2d 1047 (2010), but that the official may still be entitled to immunity as a matter of common law, id. at 325, 130 S.Ct. 2278. "Although Congress clearly intended to supersede the common-law regime for claims against foreign states," there is nothing in the FSIA's "origin or aims to indicate that Congress similarly wanted to codify the law of foreign official immunity." Id. As a result, courts apply a two-step process to determine whether a foreign official is entitled to common-law foreign sovereign immunity. See id. at 311, 130 S.Ct. 2278; Doğan v. Barak, 932 F.3d 888, 892-93 (9th Cir. 2019).
"At the first step, the diplomatic representative of the sovereign could request a 'suggestion of immunity' from the State Department." Doğan, 932 F.3d at 893 (internal quotation marks omitted). "Generally, if the request is granted, the district court surrenders its jurisdiction." Id. (cleaned up). If, however, the State Department declines to act or the defendant's government fails to make a request, the reviewing court "moves to the second step, where it has authority to decide for itself whether all the requisites for such immunity exist." Id. (cleaned up); see Rishikof v. Mortada, 70 F. Supp. 3d 8, 12 (D.D.C. 2014) (proceeding to second step where neither official defendant nor foreign sovereign "requested a suggestion of immunity from the State Department"). Because there is no indication that Defendants have sought a suggestion of immunity from the State Department, the Court proceeds directly to the second step.
"At the second step of foreign official immunity, courts distinguish between status-based immunity and conduct-based immunity." WhatsApp Inc. v. NSO Grp. Techs. Ltd., 472 F. Supp. 3d 649, 664 (N.D. Cal. 2020), aff'd on other grounds, 17 F.4th 930 (9th Cir. 2021). "Status-based immunity is reserved for diplomats and heads of state and attaches regardless of the substance of the claim." Id. (internal quotation marks omitted). Conduct-based immunity, on the other hand, is afforded to any "public minister, official, or agent of the state with respect to acts performed in his official capacity if the effect of exercising jurisdiction would be to enforce a rule of law against the state." Restatement (Second) of the Foreign Relations Law of the United States § 66(f) (Am. Law. Inst. 1965) ("Restatement"); accord Doğan, 932 F.3d at 893-94. Conduct-based immunity thus shields foreign officials from liability if three conditions are satisfied: 1) the defendant is a public minister, official, or agent of the foreign state; 2) the acts were performed in the defendant's official capacity; and 3) exercising jurisdiction would serve to enforce a rule of law against the foreign state. Rishikof, 70 F. Supp. 3d at 12 (adopting the requirements of the Restatement to determine whether employee of foreign government was entitled to common-law foreign sovereign immunity).
Plaintiff does not dispute that the first two conditions of conduct-based immunity are met in this case. (See Opp'n 10.) Instead, Plaintiff argues "Defendants cannot satisfy the third factor because they cannot show that exercising jurisdiction here is tantamount to enforcing a rule of law against the foreign state itself." (Id.) Plaintiff claims this is because Plaintiff "(1) seeks only civil liability against the individual Defendants in their individual capacities; (2) does not seek compensation against treasury funds; and (3) does not seek to force Bermuda to take any specific action." (Id. at 11.) Defendants argue that because "Gakundi and Davis-Crockwell are named as Defendants by virtue of their alleged actions on behalf of the Authority, this Court should not exercise jurisdiction over them." (Mot. 13.)
Both the Restatement and the relevant case law make clear that the mere fact that a foreign official was acting in his or her official capacity, without more, does not entitle that official to conduct-based immunity. Granting immunity simply because an action was taken in an official capacity would render the third element of the analysis superfluous. "The second immunity element focuses on the nature of Defendant's acts and whether they were taken within an 'official capacity.' By contrast, the third element considers whether the remedies sought by Plaintiff serve to enforce a rule of law against the" foreign state. Lewis v. Mutond, 918 F.3d 142, 146 (D.C. Cir. 2019). As the D.C. Circuit noted, the third factor "as understood through the lens of the small number of decisions speaking to the existence and scope of common-law immunity, would allow for immunity when a judgment against the official would bind (or be enforceable against) the foreign state." Id. Thus, the third factor is a distinct consideration from whether the foreign official was acting in his or her official capacity.
To satisfy the third factor, Defendants must "show that Plaintiff seeks to draw on [Bermuda's] treasury or force the state to take specific action, as would be the case if the judgment were enforceable against the state." Lewis, 918 F.3d at 147. Neither condition is satisfied here. First, Plaintiff seeks liability against Gakundi and Davis-Crockwell "in their individual capacities." (Opp'n 11; see Compl. ¶¶ 4-5.) Consequently, a judgment of liability against them would not draw upon Bermuda's treasury. Second, although Plaintiff "request[s] injunctive relief against defendants . . . the court can craft injunctive relief that does not require a foreign sovereign to take an affirmative action." WhatsApp Inc., 472 F.Supp. 3d at 665. Plaintiff is therefore not seeking to force the state to take any specific action, and "exercising jurisdiction would [not] serve to enforce a rule of law against the foreign state" in this case. Lewis, 918 F.3d at 146.
The possibility that the individual defendants might be indemnified for damages by Bermuda does not change the analysis. Such a conclusion would transform conduct-based immunity into absolute immunity because there is always the possibility that foreign officials might be indemnified by their governments.
Based on the foregoing analysis, the individual defendants are not entitled to common-law foreign sovereign immunity. Defendants' motion to dismiss claims against the individual defendants for lack of subject-matter jurisdiction is therefore DENIED.
B. Personal Jurisdiction
The Court thus turns to Defendants' personal jurisdiction challenge as it relates to the individual defendants. At the first step of the personal jurisdiction inquiry, the Court applies the effects test because Plaintiff's claims sound in tort. There is little doubt that the first and third elements of the effects test are satisfied. The Complaint alleges that the individual defendants engaged in intentional conduct. (E.g., Compl. ¶¶ 27, 34-35, 52-53.) As a result, Plaintiff has adequately alleged that Defendants "committed an intentional act." Axiom Foods, Inc., 874 F.3d at 1069; see also Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002) ("Because Dole has sufficiently alleged that Watts and Boenneken acted intentionally, we skip to the 'express aiming' requirement.").
The third prong of the effects test is also satisfied. In Dole Food Co., the Ninth Circuit grappled with the "the somewhat metaphysical question of where a corporation suffers economic harm." 303 F.3d at 1113. The court recognized "that in appropriate circumstances a corporation can suffer economic harm both where the bad acts occurred and where the corporation has its principal place of business." Id. The court noted that when a corporation suffers an "economic injury," courts rely "in significant part on the [corporation's] principal place of business in determining the location of" the harm. Id. at 1113-14. Because Defendants sent multiple letters to Plaintiff's principal place of business in Beverly Hills, California, (see Compl. ¶¶ 9, 11, 14), it is reasonable to conclude that Defendants knew the harm from their allegedly tortious acts would be felt in California. It is important to note, however, that "[b]ecause of the separate 'express aiming' requirement," a finding that a plaintiff "suffered economic harm in California does not mean that the forum in which a corporation has its principal place of business will always have personal jurisdiction over foreign defendants." Id. at 1114.
The only remaining dispute then, is whether the Complaint adequately alleges that Defendants "expressly aimed" their conduct at this forum. In making this determination, the Court is guided by three cases. The first is Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), in which the Supreme Court first applied the "effects test" to uphold the exercise of personal jurisdiction. The plaintiff in Calder was a professional actress and California resident who brought a lawsuit in California Superior Court alleging she had been libeled in an article that was written and edited by defendants in Florida. Id. at 784, 104 S.Ct. 1482. Although the defendants had no physical contact with California and their actions only took place in Florida, the magazine in which the story was printed had large circulation in California, "[t]he allegedly libelous story concerned the California activities" of the plaintiff, and the story "impugned the professionalism of" the plaintiff "whose television career was centered in California." Id. at 788, 104 S.Ct. 1482. The Court recognized that "[t]he article was drawn from California sources, and the brunt of the harm, in terms both of [the plaintiff's] emotional distress and the injury to her professional reputation, was suffered in California." Id. at 788-89, 104 S.Ct. 1482. The Court concluded that because "California [was] the focal point both of the story and of the harm suffered," id. at 789, 104 S.Ct. 1482, there was reason to believe "intentional conduct in Florida [was] calculated to cause injury to respondent in California," id. at 791, 104 S.Ct. 1482, and jurisdiction was therefore proper.
The second case is Brainerd v. Governors of the University of Alberta, 873 F.2d 1257 (9th Cir. 1989). In Brainerd, the Ninth Circuit concluded an Arizona district court could exercise specific jurisdiction over Canadian defendants who made allegedly defamatory statements during a telephone call, even though the defendants did not initiate the call. Id. at 1258. The plaintiff, Charles J. Brainerd, was a former a University of Alberta faculty member who had been accused of misusing grant funds. Id. After the plaintiff accepted a position at the University of Arizona, his new supervisors caught wind of the allegations against him and reached out to his former boss in Canada to ask about the nature of his departure. Id. "[A]s a result of the conversation," the University of Arizona official concluded that the University of Alberta official "had severe reservations about the academic and personal integrity of Brainerd." Id. Interpreting Calder, the Ninth Circuit held that the "effects test" authorized the application of specific jurisdiction over the Canadian defendants in Arizona because they "knew that their actions would have a potentially devastating effect on the plaintiff," who lived in Arizona, "and that the brunt of the injury caused by their actions would be felt" there. Id. at 1259; see id. at 1260 (concluding the activities alleged "parallel those that were held to confer jurisdiction in Calder"). The court also recognized that "[i]n Calder[,] the Supreme Court distinguished untargeted negligence, which will not amount to purposeful availment, from intentional and allegedly tortious acts expressly aimed at the forum." Id.
The final case is Walden v. Fiore, 571 U.S. 277, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014). In Walden, airline passengers brought a Bivens action in Nevada alleging that their money had been illegally seized by a deputized federal agent in a Georgia airport. Id. at 280-81, 134 S.Ct. 1115. The Court was called on "to decide whether a court in Nevada may exercise personal jurisdiction over a defendant on the basis that he knew his allegedly tortious conduct in Georgia would delay the return of funds to plaintiffs with connections to Nevada." Id. at 279, 134 S.Ct. 1115. The Supreme Court concluded that "Calder made clear that mere injury to a forum resident is not a sufficient connection to the forum." Id. at 290, 134 S.Ct. 1115. "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." Id. "[T]o exercise jurisdiction consistent with due process, the defendant's suit-related conduct must create a substantial connection with the forum State," id. at 284, 134 S.Ct. 1115 (emphasis added), and the "analysis looks to the defendant's contacts with the forum State itself, not the defendant's contacts with persons who reside there," id. at 285, 134 S.Ct. 1115. Ultimately, "an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum State." Id. at 290, 134 S.Ct. 1115.
The holdings of Calder, Brainerd, and Walden demonstrate that the "effects test" requires "something more than mere foreseeability" of harm "to justify the assertion of personal jurisdiction in California." Schwarzenegger, 374 F.3d at 805 (internal quotation marks omitted). In essence, the inference that a defendant expressly aimed his or her conduct at a specific forum only arises when the "brunt of the injury caused by [a defendant's] actions would be felt" in the forum for reasons beyond the fact that the plaintiff happens to resides there. Brainerd, 873 F.2d at 1259. In Calder, for example, the allegedly defamatory story concerned the California activities of the plaintiff and negatively affected her employment relationships in California. 465 U.S. at 788, 104 S.Ct. 1482. These facts would still have supported the inference that the defendants aimed their conduct at California even if the Plaintiff was domiciled in New York. Similarly, in Brainerd, the defendants allegedly harmed the plaintiff by making statements to his superiors at the University of Arizona. 873 F.2d at 1259. As a result, the harm to the plaintiff's relationship with his employer would still have been centralized in Arizona even if the he had resided in another state and commuted to Arizona for work. In both Calder and Brainerd, there was a factual basis to support the inference that the defendants had expressly aimed their conduct at the jurisdiction—and not generally at the plaintiff—because the harm felt in the jurisdiction was not just a coincidence of the plaintiffs' residence.
Plaintiff's Complaint fails to make such a showing. As pleaded, the only connection between the alleged harm and California is Plaintiff's principal place of business located in Beverly Hills. Plaintiff has not plausibly alleged that Defendants knew their conduct would result in lost business opportunities in California, cf. Calder, 465 U.S. at 788, 104 S.Ct. 1482, that Defendants knew their conduct would interfere with contracts centered in California, cf. Brainerd, 873 F.2d at 1258, or that Defendants made allegedly false statements to third parties located in California, cf. Burri L. PA v. Skurla, 35 F.4th 1207, 1209, 1214-15 (9th Cir. 2022). To put a finer point on the issue, if one were to imagine a counterfactual scenario in which Plaintiff's headquarters were located in Baton Rouge rather than Beverly Hills, this Court's lack of personal jurisdiction over Defendants would not be in debate. Because the only basis for the inference that Defendants expressly aimed their conduct at this jurisdiction is that they intended to cause a general injury to Plaintiff, there is nothing to suggest this lawsuit is "tethered to [California] in any meaningful way," Walden, 571 U.S. at 290, 134 S.Ct. 1115; see also Picot v. Weston, 780 F.3d 1206, 1215 (9th Cir. 2015) (declining to conclude defendant expressly aimed his conduct at California after noting that the plaintiff's "injury [was] entirely personal to him and would follow him wherever he might choose to live or travel"). Accordingly, the Court cannot exercise personal jurisdiction over Defendants.
Although the Complaint alleges that "[a] contractual agreement, in principle, existed between Citadel" for Plaintiff "to acquire a controlling shareholder interest in Citadel," (Compl. ¶ 23), the Complaint also states that Citadel is a "Bermudian insurance company," (id. ¶ 10). As a result, the Court cannot determine which aspects of the agreement, if any, relate to California for jurisdictional purposes.
Plaintiff's arguments to the contrary are unavailing. Plaintiff relies on California Software Inc. v. Reliability Research, Inc., 631 F. Supp. 1356 (C.D. Cal. 1986), (Opp'n 14), but this case only further supports the Court's conclusion. There, the district court concluded it could exercise specific jurisdiction after the nonresident defendant allegedly made false statements about the plaintiff to nonparties outside of California. Id. at 1361. Specifically, the plaintiff claimed that "defendants allegedly intentionally manipulated third persons to interrupt their plans to purchase plaintiffs' product." Id. Importantly, the court reasoned that "such intentional 'manipulation' of third persons who thereby refrain from consummating a contemplated transaction in California" was sufficient to constitute "a forum-related activity by the defendants." Id. at 1362 (emphasis added). Here, however, Plaintiff has not alleged that Defendants' conduct had an effect on any of their business transactions in California, and California Software Inc. does not call for the exercise of personal jurisdiction in this case.
Further, the fact that Defendants sent correspondence containing allegedly false and defamatory statements to Plaintiff's headquarters does not give rise to the inference that Defendants expressly aimed their conduct at this jurisdiction. The letters here are fundamentally different from the communications at issue in Skurla, where the defendant allegedly sent defamatory correspondence to convince a third party to terminate the plaintiff's employment contract and drop a lawsuit pending in the forum in which the plaintiff was serving as the third party's lawyer. 35 F.4th at 1215. From these facts, the circuit court was able conclude that jurisdiction was appropriate because the defendant's conduct was "intended to interfere with [a forum] lawsuit and [a forum] contract." Id.
Here, Plaintiff does not allege that the letters were sent to anyone in California other than itself. (See generally Compl.) Nor do the letters appear to concern an economic relationship centered in California. At most, they suggest an intent to interfere with Plaintiff's application to be the controlling shareholder of a company located in Bermuda. (Compl. ¶¶ 10-11, 14.) As a result, there is nothing about the letters that suggest they were "circulated" in California, or that they concerned Plaintiff's activities in this state and therefore had a California "focus." Skurla, 35 F.4th at 1214-15. At bottom, it appears that Defendant sent the letters to this jurisdiction for no other reason beyond the fact that California is where Plaintiff's mailbox is located. As a result, the letters are not sufficient to support the inference that Defendants expressly aimed their intentional conduct at this jurisdiction, and the second prong of the effects test is not satisfied.
For the reasons stated above, Defendants' motion to dismiss for lack of personal jurisdiction is GRANTED.
IV. CONCLUSION
Defendants' motion is GRANTED in part and DENIED in part.
Defendants' motion to dismiss claims against the individual defendants for lack of subject-matter jurisdiction is DENIED.
As a general rule, leave to amend a dismissed complaint should be freely granted unless it is clear the complaint could not be saved by any amendment. Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Because there is no set of facts which could be alleged to show that the BMA waived its sovereign immunity, Defendants' motion to dismiss claims against the BMA for lack of subject-matter jurisdiction is GRANTED without leave to amend. See Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995) (affirming denial of motion for leave to amend where "proffered amendments would be nothing more than an exercise in futility.").
On the other hand, the pleading deficiencies with respect to personal jurisdiction over the individual defendants might be cured with the inclusion of additional factual allegations. As a result, Defendants' motion to dismiss Plaintiff's claims for lack of personal jurisdiction over the individual defendants is GRANTED with leave to amend.
The Complaint is dismissed in its entirety. Plaintiff may file an amended complaint within 14 days—if it can do so consistent with this Order and Rule 11(b). Failure to file a timely amended complaint will waive the right to do so. Plaintiff must attach to the amended complaint a "redline" version showing all additions and deletions of material. (Initial Standing Order § 9(a), ECF No. 12.) Leave to add new parties or claims must be sought by a separate, properly noticed motion.