SUPPLEMENTAL BRIEF IN SUPPORT OF DEFENDANT NADRA BANK'S MOTION TO DISMISS THE AMENDED COMPLAINT

Transcription

1 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 1 of 12 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK YULIA TYMOSHENKO and JOHN DOES 1 through 50, on behalf of themselves and all of those similarly situated, Plaintiffs, 11 Civ (KMW) -against- DMYTRO FIRTASH a/k/a DMITRY FIRTASH, SEMYON MOGILEVICH, ROSUKRENERGO AG, GROUP DF, GROUP DF LIMITED, GROUP DF FINANCE LIMITED, GROUP DF REAL ESTATE, NADRA BANK, CENTRAGAS HOLDING AG, CMZ VENTURES, LLC, KALLISTA INVESTMENTS LLC a/k/a CALISTER INVESTMENTS LLC, THE DYNAMIC GROUP a/k/a THE DYNAMIC FUND, BARBARA ANN HOLDINGS LLC, VULCAN PROPERTIES, INC., BRAD S. ZACKSON, PAUL J. MANAFORT, YURIY BOYKO, VALERIY KHOROSHKOVSKY, VIKTOR PSHONKA, RENAT KUZMIN, OLEKSANDR NECHVOGLOD and LILIA FROLOVA and JOHN DOES 1 through 100., Defendants. SUPPLEMENTAL BRIEF IN SUPPORT OF DEFENDANT NADRA BANK'S MOTION TO DISMISS THE AMENDED COMPLAINT

2 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 2 of 12 TABLE OF CONTENTS Page I. PRELIMINARY STATEMENT...1 II. ARGUMENT...2 A. TYMOSHENKO S ATS CLAIM SHOULD BE DISMISSED WITH PREJUDICE BECAUSE THE PRESUMPTION AGAINST EXTRATERRITORIALITY BARS HER CLAIM Tymoshenko s ATS Claim Does Not Touch And Concern The Territory Of The United States The Allegations Against Nadra Bank Do Not Touch or Concern The Territory of The United States Whatever Connection To United States Territory Plaintiff May Have Alleged, If Any, It Is Not Of Sufficient Force To Displace The Presumption Against Extraterritorial Application Of The ATS...5 III. TYMOSHENKO S ATS CLAIM SHOULD BE DISMISSED WITH PREJUDICE AND NO LEAVE TO REPLEAD SHOULD BE GIVEN...7 IV. CONCLUSION...9 i

3 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 3 of 12 TABLE OF AUTHORITIES Page FEDERAL CASES Cedeño v. Castillo, 457 F. App x 35, 2012 WL (2d Cir. Jan. 25, 2012)... 7 Cuoco v. Moritsugu, 222 F.3d 99 (2d Cir. 2000)... 8 Haugh v. Schroder Inv. Mgmt. N. Am. Inc., No. 02 Civ. 7955(DLC), 2003 WL (S.D.N.Y. May 14, 2003)... 8 In re Rhodia S.A. Secs. Litig., 531 F. Supp. 2d 527 (S.D.N.Y. 2007)... 8 In re WorldCom, Inc. Secs. Litig., 303 F. Supp. 2d 385 (S.D.N.Y. 2004)... 7 Kiobel v. Royal Dutch Petroleum Co., 2013 WL (U.S. Apr. 17, 2013)... passim Morrison v. Nat l Australia Bank Ltd., 130 S.Ct (2010)... 2, 4, 5 Mortimer Off Shore Servs., Ltd. v. Fed. Republic of Germany, 615 F.3d 97 (2d Cir. 2010)... 8 Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29 (2d Cir. 2010)... 5 Republic of Iraq v. ABB AG, No. 08 Civ. 5951(SHS), 2013 WL (S.D.N.Y. Feb. 6, 2013)... 6 Sudler v. City of N.Y., 689 F.3d 159 (2d Cir. 2012)... 8 Tylicki v. Schwartz, 401 F. App x 603, 2010 WL (2d Cir. Nov. 24, 2010)... 7 Tymoshenko v. Firtash, No. 11 CV 2794 (KMW), 2013 WL (S.D.N.Y. Mar. 26, 2013)... passim Tymoshenko v. Firtash, No. 11 CV 2794 (KMW), 2013 WL (S.D.N.Y. Mar. 27, 2013)... 1, 3, 7 Xiang Li v. Morrisville State College, 434 F. App x 34, 2011 WL (2d Cir. Oct. 6, 2011)... 7 ii

4 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 4 of 12 I. PRELIMINARY STATEMENT On April 17, 2013, the United States Supreme Court decided Kiobel v. Royal Dutch Petroleum Co., 2013 WL (U.S. Apr. 17, 2013), and addressed the question whether and under what circumstances courts may recognize a cause of action under the Alien Tort Statute [ ATS ], for violations of the law of nations occurring within the territory of a sovereign other than the United States. Id. at *3. Or, in short, whether a claim may reach conduct occurring in the territory of a foreign sovereign. Id. at *4. The Court held that the presumption against extraterritoriality applies to claims under the ATS, and that nothing in the statute rebuts that presumption so that petitioners case seeking relief for violations of the law of nations occurring outside the United States is barred. Id. at *10. On April 22, 2013, this Court directed Nadra Bank and Plaintiffs ( Plaintiffs or Tymoshenko ) to address the effect, if any, of the Kiobel decision on the issues presented in the motion to dismiss. Order, Apr. 22, 2013 [Dkt. No. 81]. As further explained below, the Supreme Court s Kiobel decision means that Tymoshenko s ATS claim is barred because, as this Court has found, all of the conduct underlying Plaintiffs claims occurred abroad and the alleged human rights abuses took place entirely in the Ukraine. 1 Tymoshenko v. Firtash, No. 11 CV 2794 (KMW), 2013 WL , at *6 (S.D.N.Y. Mar. 27, 2013). 1 The Amended Complaint also names fifty Doe Plaintiffs who are alleged to be former Ukrainian administration officials that served during Tymoshenko s terms as Prime Minister. (AC 26).

5 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 5 of 12 II. ARGUMENT A. TYMOSHENKO S ATS CLAIM SHOULD BE DISMISSED WITH PREJUDICE BECAUSE THE PRESUMPTION AGAINST EXTRATERRITORIALITY BARS HER CLAIM The allegations in the Amended Complaint ( AC ) in support of the Plaintiffs ATS claim concern alleged perpetrators [who] committed no wrongdoing in the United States and injuries [Plaintiffs] sustained in Ukraine (politically-motivated trial and imprisonment). Tymoshenko v. Firtash, No. 11 CV 2794 (KMW), 2013 WL , at *13 (S.D.N.Y. Mar. 26, 2013). It is the precise sort of claim that the Supreme Court held in Kiobel is barred under the ATS. The presumption against extraterritorial application provides that [w]hen a statute gives no clear indication of an extraterritorial application, it has none. Kiobel, 2013 WL , at *4 (quoting Morrison v. Nat l Australia Bank Ltd., 130 S.Ct. 2869, 2878 (2010)). As the Court in Kiobel pointed out to rebut the presumption, the ATS would need to evince a clear indication of extraterritoriality. Id at *6 (quoting Morrison at 2883). The Supreme Court concluded [i]t does not because nothing in the text of the statute suggests that Congress intended causes of action recognized under it to have extraterritorial reach. Id. Moreover, the Court found that [n]or does the historical background against which the ATS was enacted overcome the presumption against application to conduct in the territory of another sovereign, Id. at *7, and therefore conclude[d] that the presumption against extraterritoriality applies to claims under the ATS, and that nothing in the statute rebuts that presumption. Id. at *10. Plaintiffs ATS claim seeks redress for injuries [they] sustained in Ukraine (politicallymotivated trial and imprisonment), Tymoshenko, 2013 WL , at *13, and concerns matters that are wholly located in Ukraine surrounding a political dispute that took place entirely in the Ukraine while all of the conduct underlying Plaintiffs claims occurred abroad. 2

6 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 6 of 12 Tymoshenko, 2013 WL , at *6-7. As a result, Plaintiffs ATS claim should be dismissed under Kiobel. 1. Tymoshenko s ATS Claim Does Not Touch And Concern The Territory Of The United States In its decision in Kiobel, the Supreme Court made clear that even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application. Kiobel, at *10. Plaintiffs, the former Ukrainian Prime Minister and other political opposition members named as Does (AC 1), claim that their arbitrary arrests and prolonged detentions perpetrated by Ukrainian government officials violate the ATS. (AC 262). It was thus the Ukrainian officials who perpetrated the offenses in Ukraine that are the focus of Plaintiffs claim. Tymoshenko, 2013 WL , at *10. Accordingly, Plaintiffs human rights were allegedly violated in Ukraine and not in the territory of the United States. Nor do Plaintiffs arrest or detentions touch and concern United States territory, for all of the conduct underlying Plaintiffs claims occurred abroad and was allegedly perpetrated upon other Ukrainians. (AC 1, 17-22). Tymoshenko, 2013 WL , at *6. 2. The Allegations Against Nadra Bank Do Not Touch or Concern The Territory of The United States Tymoshenko s sole allegation against Nadra Bank is that Defendants Firtash and Centragas have used Nadra Bank to transfer unlawfully obtained proceeds... to bank accounts in New York... to be used for political bribery. (AC 137). However, the Amended Complaint does not identify a single transfer by Nadra Bank to New York, or anywhere in the United States, in connection with 3

7 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 7 of 12 Plaintiffs alleged ATS claim. 2 Accordingly, Plaintiffs ATS claim, as far as Nadra Bank is concerned, does not touch or concern the territory of the United States other than by virtue of a conclusory statement. But even had Plaintiffs alleged a transfer by Nadra Bank, such a transfer by necessity would have been made abroad as Nadra Bank has no offices in New York or the United States. Kholevan Decl., 2-3 [Dkt. No. 68]. Moreover, transferring money and political bribery by themselves are not violations of international law actionable under the ATS even if they took place within the territory of the United States. The Court s statement that the claims themselves must touch and concern the territory of the United States, indicates that some element of the ATS claim itself must occur in the United States or that the defendant must be a U.S. entity or person (or perhaps a foreign defendant who seeks refuge in the U.S.). See Kiobel at *10. Moreover, it is a rare case of prohibited extraterritorial application that lacks all contact with the territory of the United States. But the presumption against extraterritorial application would be a craven watchdog indeed if it retreated to its kennel whenever some domestic activity is involved in the case. Morrison, 130 S.Ct. at 2884 (emphasis in original). To say that conduct by foreigners done abroad and alleged merely to aid and abet a purported ATS violation could touch or concern United States territory under Kiobel would reintroduce the conduct-and-effect -test rejected by Morrison. But even under that lenient standard of statutory interpretation replaced by the presumption against extraterritoriality in Kiobel and Morrison, virtually all foreign-cubed actions actions in which (1) foreign plaintiffs [are] suing (2) a foreign [defendant] in an American court for violations... based on [conduct] in (3) foreign 2 The only actual transfer to New York mentioned in the AC is $25 million... wired from Raiffeisen Bank AG. (AC 118). 4

8 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 8 of 12 countries would fail. Morrison at 2894, n.11 (internal quotation marks and citations omitted, emphasis in original). Accordingly, whatever touch and concern the territory of the United States may mean under Kiobel, it does not include Tymoshenko s foreign cubed ATS claim. 3. Whatever Connection To United States Territory Plaintiff May Have Alleged, If Any, It Is Not Of Sufficient Force To Displace The Presumption Against Extraterritorial Application Of The ATS It is, as of yet, unclear what the practical meaning is of the Supreme Court s statement in Kiobel that even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application. Kiobel, at *10 (emphasis added). There is no judicial precedent on-point interpreting the language in Kiobel. However, in the context of Plaintiffs RICO claims, this Court has already addressed the question whether the allegations in the Amended Complaint concerning United States activity such as the alleged activity by the U.S. Defendants is sufficient to domesticate what is essentially a foreign alleged scheme. In granting the U.S. Defendants motion to dismiss, this Court s held that [t]he focus of Plaintiffs allegations is on a foreign enterprise and a pattern of... activity that occurred abroad and dismissed Plaintiff s RICO claim because the statute does not provide a cause of action for extraterritorial offenses. Tymoshenko, 2013 WL , at *11. That reasoning applies equally to whether Tymoshenko s (albeit conclusory) allegations concerning transfers to New York bank accounts by Nadra Bank suffice to rescue her ATS claim. The Norex decision, which held that RICO does not have extraterritorial application, is particularly informative in this regard as it too, like the holding in Kiobel, was based on Morrison. Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29, (2d Cir. 2010) (per curiam). Accordingly, simply alleging that some domestic conduct occurred cannot support a claim of 5

9 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 9 of 12 domestic application. Id. at 33 (emphasis added). This is of particular relevance here because peripheral contacts with the United States up to and including the use of a domestic bank account do not bring an otherwise foreign scheme within the reach of the... statutes. Republic of Iraq v. ABB AG, No. 08 Civ. 5951(SHS), 2013 WL , at *21 (S.D.N.Y. Feb. 6, 2013) (internal citations omitted). As a result, there is no reason to believe that the allegation that other Defendants used Nadra Bank to transfer [funds] to bank accounts in New York (AC 137) would meet the sufficient force requirement set forth in Kiobel needed to displace the presumption against extraterritorial application. Kiobel at *10. Any argument that peripheral allegations of conduct with some connection to the United States not by themselves violations of international law would suffice to bring Plaintiffs ATS claim within the ambit of claims [that] touch and concern the territory of the United States... with sufficient force to displace the presumption against extraterritorial application ignores the central holding of Kiobel that relief for violations of the law of nations occurring outside the United States is barred. Id. This Court has said as much when it held, in dismissing Tymoshenko s RICO claim, that [t]he scheme alleged here where both the victims and victimizers are foreign and the alleged perpetrators committed no wrongdoing in the United States, but merely invested alleged funds in U.S.-based corporations is not sufficient to state a claim for a domestic... violation. Tymoshenko, 2013 WL , at *13. Key to the findings that [Plaintiffs] did not state a claim for a domestic RICO violation was the fact that the actors, victims and conduct were foreign, and the connection to the United States was essentially incidental. Id. at *12 (internal citations omitted). The Court s reasoning applies equally to Tymoshenko s ATS claim against Nadra Bank, and to Tymoshenko s conclusory allegation that it was used to make transfers to 6

10 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 10 of 12 bank accounts in New York. See also Cedeño v. Castillo, 457 F. App x 35, 37-38, 2012 WL , at *1-2 (2d Cir. Jan. 25, 2012) (complaint alleging imprisonment and money laundering by Venezuelan government officials and their agents alleges inadequate conduct in the United States to state a domestic... claim ). III. TYMOSHENKO S ATS CLAIM SHOULD BE DISMISSED WITH PREJUDICE AND NO LEAVE TO REPLEAD SHOULD BE GIVEN Although Rule 15(a)(2) of the Federal Rules of Civil Procedure provides that leave to amend shall be freely give[n]... when justice so requires, justice does not so require if amendment would be futile. Xiang Li v. Morrisville State College, 434 F. App x 34, 35, 2011 WL , at *1 (2d Cir. Oct. 6, 2011). [A]mendment would likely be futile [when] it does not appear that [plaintiff] has any viable [ATS] claims that could be brought if permitted to amend the complaint. See Tylicki v. Schwartz, 401 F. App x 603, 604, 2010 WL , at *2 (2d Cir. Nov. 24, 2010). Moreover, [i]n the absence of any identification of how a further amendment would improve upon the Complaint, leave to amend must be denied as futile. In re WorldCom, Inc. Secs. Litig., 303 F. Supp. 2d 385, 391 (S.D.N.Y. 2004). Here all of the conduct underlying Plaintiffs claims occurred abroad and the alleged human rights abuses took place entirely in the Ukraine where Plaintiffs, citizens of Ukraine, were tried and imprisoned. Tymoshenko, 2013 WL , at *6. According to the Amended Complaint, this alleged misconduct has been perpetrated by Ukrainian officials in the Yanukovich administration, and masterminded by Defendant Dmytro Firtash... a Ukrainian billionaire and Yanukovich confidant. Tymoshenko, 2013 WL , at *1. Because under Kiobel relief for violations of the law of nations occurring outside the United States is barred, Kiobel at *10, [p]laintiffs could add no facts to their complaint that would change in their favor the state of the law. Thus, the proposed amendment would be futile. Sudler v. City of N.Y., 689 F.3d 159, 179 (2d 7

11 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 11 of 12 Cir. 2012); see also Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000) ( we do not find that the complaint liberally read... suggests that the plaintiff has a claim that she has inadequately or inartfully pleaded and that she should therefore be given a chance to reframe ) (internal citation and quotation marks omitted). The problem with [Tymoshenko] s cause[] of action is substantive; better pleading will not cure it. Repleading would thus be futile. Such a futile request to replead should be denied. Id. Moreover, [i]t is well-established that one good reason to deny leave to amend is... when... additional information does not cure the complaint. Mortimer Off Shore Servs., Ltd. v. Fed. Republic of Germany, 615 F.3d 97, 114 (2d Cir. 2010) (internal quotation marks and alternations omitted); see also In re Rhodia S.A. Secs. Litig., 531 F. Supp. 2d 527, 551 (S.D.N.Y. 2007) (dismissing complaint as it pertains to Foreign Plaintiffs that did not meet the territoriality requirements of the Exchange Act when [i]t is clear to the Court that Lead Plaintiffs allegations about the location of any relevant conduct are complete, and that therefore there are no further allegations which could remedy the Complaint s subject matter jurisdiction infirmities ); Haugh v. Schroder Inv. Mgmt. N. Am. Inc., No. 02 Civ. 7955(DLC), 2003 WL , at *2 (S.D.N.Y. May 14, 2003) ( [w]hile it would appear that principles of sovereignty and even international comity may permit Congress to draw the line differently, it did not do so [and] plaintiff[s] cannot overcome this bar on... [their] cause of action [because] any amendment would be futile, and the motion to amend must be denied ). 8

12 Case 1:11-cv KMW Document 83 Filed 04/29/13 Page 12 of 12 IV. CONCLUSION For the foregoing reasons, Nadra Bank respectfully requests the Court to enter an Order dismissing the Amended Complaint as to it in its entirety with prejudice. DATED: New York, New York April 29, 2013 CONNON WOOD SCHEIDEMANTLE LLP By: /s/ Robert A. de By Robert A. de By (RD-6197) Kathleen M. Wood (KW-8399) Constance Kim (CK-5678) 35 East Union Street, Suite C Pasadena, California Phone: (626) rdeby@connonwood.com kwood@connonwood.com ckim@connonwood.com Attorneys for Defendant NADRA BANK 9