The opinion of the court was delivered by: Denise Cote, District Judge
Defendant Nicolette Loisel ("Loisel") moves to quash service of process and to dismiss the complaint against her for lack of personal jurisdiction, improper service, improper venue, failing to plead fraud with specificity, and because the punitive relief sought by the SEC is time barred. For the reasons stated below, the motion is denied.
Loisel is a corporate attorney residing in Houston, Texas. On September 29, 2009, the Securities and Exchange Commission ("SEC") brought this enforcement action against Loisel and four co-defendants, as well as two relief defendants, for violations of § 10(b) of the Exchange Act and Rule 10(b)(5), and §§ 5(a), 5(c), and 17 of the Securities Act.
The SEC alleges that, starting in late 2003, Loisel took part in a securities fraud scheme whereby the defendants "hijacked," i.e., took over the identities of, defunct public corporations, in part by submitting false documentation to secretaries of state, the Standard & Poor's CUSIP Service Bureau, transfer agents, and Nasdaq Corporate Data Operations (commonly known as "Nasdaq Reorganization"). The SEC alleges that Loisel, along with co-defendants Roger Shoss and Irwin Boock, effected nearly two dozen hijackings between late 2003 and early 2006. Further detail regarding the allegations against Loisel is contained in an Opinion being issued today to address Loisel's separate motion to stay this litigation pending her criminal prosecution on related securities fraud charges.
A. Motion to Quash Service and to Dismiss for Improper Service
Loisel has moved to quash service and to dismiss for improper service. Since making that motion, however, Loisel executed a waiver of service. The waiver was filed by the SEC with the Clerk of Court on February 25. The waiver renders this portion of Loisel's motion moot, and Loisel does not contend otherwise.*fn1
Loisel has moved to dismiss the SEC's complaint on the ground that there is no personal jurisdiction over her on these claims. "When responding to a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant." DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001) (citation omitted). Where a court does not conduct "a full-blown evidentiary hearing, the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant." Id. (citation omitted). The pleadings are construed in the light most favorable to the plaintiff, and all doubts are resolved in its favor. Id.
The Exchange Act permits the exercise of personal jurisdiction "to the limit of the Due Process Clause of the Fifth Amendment." S.E.C. v. Unifund SAL, 910 F.2d 1028, 1033 (2d Cir. 1990). "[U]nder the Fifth Amendment the court can consider the defendant's contacts throughout the United States." Chew v. Dietrich, 143 F.3d 24, 28 n.4 (2d Cir. 1998).
"The due process test for personal jurisdiction has two related components: the 'minimum contacts inquiry' and the 'reasonableness' inquiry." Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996). Applying these tests to a statute that permits jurisdiction to be exercised over an individual based on her contacts throughout the United States, the court must first determine whether the defendant has "sufficient contacts" with the United States to justify the court's exercise of personal jurisdiction. Id. If such contacts are found, the court may assert personal jurisdiction so long as "it is reasonable [to do so] under the circumstances of the particular case." Id. at 568.
A defendant satisfies the minimum contacts requirement when his conduct and connection with the United States are such that "he should reasonably anticipate being haled into court there." S.E.C. v. Unifund SAL, 910 F.2d at 1033 (citation omitted). For a defendant to reasonably anticipate a court having jurisdiction over him, it is essential in each case that there be some act by which the defendant "purposefully avails itself of the privilege of conducting activities" within the United States, thus "invoking the benefits and protections of its laws." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).
As alleged, the entirety of the scheme was directed at the United States: it was directed against U.S. issuers and misrepresentations were made to U.S. entities, including state governments. Thus, Loisel had sufficient minimal contacts with the United States in the course of acting to implement this alleged scheme to exercise personal jurisdiction over her. Chew v. Dietrich, 143 F.3d at 28 n.4. Similarly, her actions within the United States made it reasonably foreseeable to her that she would be haled into court here for the conduct in which she is alleged to have participated.
Even if it were appropriate to look solely to the contacts between Loisel and this district and her reasonable anticipation of being subject to this lawsuit in this district, her motion would also be denied. As described below in connection with her transfer motion, Loisel drafted and ...