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Yulia Tymoshenko, and John Does 1 Through 50, On Behalf of v. Dmytro Firtash

March 26, 2013

YULIA TYMOSHENKO, AND JOHN DOES 1 THROUGH 50, ON BEHALF OF THEMSELVES AND ALL OF THOSE SIMILARLY SITUATED, PLAINTIFFS,
v.
DMYTRO FIRTASH, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Wood, U.S.D.J.:

OPINION & ORDER

Former Ukrainian Prime Minister Yulia Tymoshenko and John Does 1 through 50 (collectively, "Plaintiffs") bring this action for alleged violations of Plaintiffs' human rights. Plaintiffs' Amended Complaint ("AC") alleges that Defendants-a group of American and foreign individuals and corporations-violated the Alien Torts Statute ("ATS"), 28 U.S.C. § 1350, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, and various state laws. Plaintiffs seek damages and a declaration that the Ukrainian practice of detaining Plaintiffs for prolonged periods violates international law.

Defendant RosUkrEnergo AG ("RUE") has moved to dismiss the AC, claiming that this Court lacks personal jurisdiction over RUE. [Dkt. No. 56]. For the following reasons, the Court GRANTS RUE's motion to dismiss.

I.RELEVANT BACKGROUND

The AC alleges the following. RUE is a company registered and headquartered in Switzerland. RUE is owned by one company and two individuals (a Russian gas company owns 50% of RUE; Defendant Dmytro Firtash owns 45% of RUE through his holding company, Defendant Centragas Holding AG ["Centragas]; and Firtash's associate, Ivan Fursin owns 5% of RUE through Centragas). (AC ¶ 83). According to the AC, Firtash, "although not a majority shareholder, effectively controls RUE's operations." (AC ¶ 31). Plaintiffs also allege that RUE has "possible connections with organized crime," (AC ¶ 83), and has used "corrupt business dealings and illegal kickbacks" to secure a position as an intermediary in the Ukrainian natural gas trade, (AC ¶ 86). As part of its intermediary role, RUE was paid from two New York bank accounts belonging to Naftogaz, a state-owned Ukrainian natural gas monopoly. (AC ¶ 32).

Plaintiffs' allegations against RUE arise from RUE's alleged role in a conspiracy, headed by Firtash, to punish Tymoshenko and her political allies for their actions during her tenure as Prime Minister of Ukraine. In 2009, Tymoshenko renegotiated Ukraine's natural gas contracts with Russia, eliminating RUE as an intermediary (which resulted in a significant financial loss for RUE). (AC ¶ 141). Firtash stated publicly that the renegotiated gas contracts were "criminal and the 'most stupid contract[s] in Ukraine's history.'" (AC ¶ 143).

Following a political campaign financed by Firtash, (AC ¶ 147),Viktor Yanukovich was elected President of the Ukraine in February 2010. (AC ¶ 153). With this change in leadership, many of Firtash's and RUE's allies returned to power. (AC ¶¶ 147-48). Firtash used his connections to void the gas contracts negotiated during Tymoshenko's administration; to restore RUE's role as an intermediary in the Ukrainian gas trade; and to obtain a $3.5 billion arbitration award in RUE's favor, payable by the Ukrainian government. (AC ¶¶ 154-55).

Plaintiffs allege that RUE, in order to put its funds "outside the jurisdiction of Ukrainian courts," invested a "sizable portion" of the aforementioned arbitral award, and its profits, in a group of shell companies within the United States. (AC ¶ 95). The shell companies were affiliated with Firtash and were allegedly used "to launder money in the United States and abroad under the guise of investing in legitimate business ventures." (AC ¶ 100). These companies allegedly engaged in several transactions in the United States, including real estate investments, to launder Defendants' money. (See AC ¶¶ 95-134) Although Plaintiffs' brief states that RUE engaged in these transactions, the AC does not state any fact that would suggest that RUE controlled, directed, or had knowledge of the U.S. shell companies' actions. (See Pls.' Mem. in Opp'n 10-12 [Dkt. No. 70]).

As retribution for eliminating RUE from the Ukrainian natural gas trade, the Yanukovich government-allegedly incentivized by illegal kickbacks from Firtash and RUE, (AC ¶ 93)-has filed criminal charges against Tymoshenko and other former government officials. (AC ¶¶ 159-60). Tymoshenko has been subjected to a politically-motivated "show trial," (AC ¶ 78), and has been incarcerated since August 2011. (AC ¶¶ 193-96).

Plaintiffs seek compensatory, punitive, and treble damages, as well as a declaration that "the state practice of arbitrarily detaining Plaintiffs for prolonged periods is a violation of international law." (AC ¶ 93). RUE now moves to dismiss the AC pursuant to Rule 12(b)(2) for lack of personal jurisdiction.*fn1 [Dkt. No. 57].

II.LEGAL STANDARD

On a Rule 12(b)(2) motion, the plaintiff bears the burden of establishing that the court has personal jurisdiction over the defendant. Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). "Prior to discovery, a plaintiff challenged by a jurisdiction testing motion may defeat the motion by pleading in good faith ... legally sufficient allegations of jurisdiction, i.e., by making a prima facie showing of jurisdiction." Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998) (internal quotation marks and citations omitted). A prima facie showing "must include an averment of facts that, if credited by the ultimate trier of fact, would suffice to establish jurisdiction over the defendant." Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010). District courts have "considerable procedural leeway" in deciding whether or not a plaintiff has made a prima facie showing of jurisdiction, Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981), but must construe all allegations "in the light most favorable to the plaintiff" and resolve all doubts in the plaintiff's favor, "notwithstanding a controverting presentation by the moving party." A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993).

III.PERSONAL JURISDICTION PURSUANT TO RULE 4(K)(2)*fn2

Federal Rule of Civil Procedure 4(k)(2) permits a federal court to exercise personal jurisdiction over a defendant for claims arising under federal law "if: (A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws." Fed. R. Civ. P. 4(k)(2). "Rule 4(k)(2) is designed to fill a gap in the enforcement of federal law for courts to exercise personal jurisdiction over defendants having sufficient contacts with the United States to justify the application of United States law, but having insufficient contact with any single state to support jurisdiction under state long-arm legislation." Daventree Ltd. v. Republic of Azer., 349 F. Supp. 2d 736, 760 (S.D.N.Y. 2004) (Stein, J.) (quoting Fed. R. Civ. P. 4(k)(2), advisory comm. note (1993)). Thus, to establish personal jurisdiction pursuant to Rule 4(k)(2), a plaintiff must show that (1) the plaintiff's cause of action arises under federal law; (2) ...


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