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Charles Schwab Corp. v. Bank of America Corp.

United States Court of Appeals, Second Circuit

February 23, 2018

Charles Schwab Corporation, Charles Schwab Bank, N.A., Charles Schwab & Co., Inc., Schwab Short-Term Bond Market Fund, Schwab Total Bond Market Fund, Schwab U.S. Dollar Liquid Assets Fund, Schwab Money Market Fund, Schwab Value Advantage Money Fund, Schwab Retirement Advantage Money Fund, Schwab Investor Money Fund, Schwab Cash Reserves, Schwab Advisor Cash Reserves, Schwab YieldPlus Fund, Schwab YieldPlus Fund Liquidation Trust, Plaintiffs-Appellants,
Bank of America Corporation, Bank of America, N.A., Bank of Tokyo-Mitsubishi UFJ, Ltd., Barclays Bank PLC, Citigroup Inc., Citibank, N.A., Cooperatieve Centrale Raiffeisenboerenleenbank B.A., Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, HSBC Bank PLC, JPMorgan Chase & Co., JPMorgan Chase Bank, N.A., Lloyds Banking Group PLC, HBOS PLC, Royal Bank of Canada, The Norinchukin Bank, The Royal Bank of Scotland Group PLC, UBS AG, Portigon AG, FKA WestLB AG, WestDeutsche Immobilienbank AG, Defendants-Appellees, FTC Capital GMBH, FTC Futures Fund PCC LTD, FTC Futures Fund SICAV, Carpenters Pension Fund of West Virginia, City of Dania Beach Police & Firefighters' Retirement System, Ravan Investments, LLC, Mayor and City Council of Baltimore, Richard Hershey, Jeffrey Laydon, Metzler Investment GMBH, Roberto Calle Gracey, City of New Britain Firefighters' and Police Benefit Fund, AVP Properties, LLC, 303030 Trading LLC, Ellen Gelboim, Atlantic Trading USA, LLC, Community Bank & Trust, The Berkshire Bank, Elizabeth Lieberman, 33-35 Green Pond Road Associates, LLC, Todd Augenbaum, Gary Francis, Nathaniel Haynes, Courtyard at Amwell II, LLC, Greenwich Commons II, LLC, Jill Court Associates II, LLC, Maidencreek Ventures II LP, Raritan Commons, LLC, Lawrence W. Gardner, Annie Bell Adams, Dennis Paul Fobes, Leigh E. Fobes, Government Development Bank for Puerto Rico, Margaret Lambert, Directors Financial Group, Betty L. Gunter, Direct Action Plaintiffs, Carl A. Payne, Kenneth W. Coker, City of Riverside, The Riverside Public Financing Authority, East Bay Municipal Utility District, County of San Mateo, San Mateo County Joint Powers Financing Authority, City of Richmond, The Richmond Joint Powers Financing Authority, Successor Agency to the Richmond Community Redevelopment Agency, County of San Diego, Guaranty Bank & Trust Company, Heather M. Earle, Henry K. Malinowski, Linda Carr, Eric Friedman, County of Riverside, Jerry Weglarz, Nathan Weglarz, SEIU Pension Plans Master Trust, Highlander Realty, LLC, Jeffrey D. Buckley, The Federal Home Loan Mortgage Corporation, County of Sonoma, David E. Sundstrom, in his official capacity as Treasurer of the County of Sonoma for and on behalf of the Sonoma County Treasury Pool Investment, The Regents of the University of California, San Diego Association of Governments, CEMA Joint Venture, County of Sacramento, The City of Philadelphia, The Pennsylvania Intergovernmental Cooperation Authority, Principal Funds, Inc., PFI Bond & Mortgage Securities Fund, PFI Bond Market Index Fund, PFI Core Plus Bond I Fund, PFI Diversified Real Asset Fund, PFI Equity Income Fund, PFI Global Diversified Income Fund, PFI Government & High Quality Bond Fund, PFI High Yield Fund, PFI High Yield Fund I, PFI Income Fund, PFI Inflation Protection Fund, PFI Short-Term Income Fund, PFI Money Market Fund, PFI Preferred Securities Fund, Principal Variable Contracts Funds, Inc., PVC Asset Allocation Account, PVC Money Market Account, PVC Balanced Account, PVC Bond & Mortgage Securities Account, PVC Equity Income Account, PVC Government High Quality Bond Account, PVC Income Account, PVC Shortterm Income Account, Principal Financial Group, Inc., Principal Financial Services, Inc., Principal Life Insurance Company, Principal Capital Interest Only I, LLC, Principal Commercial Funding, LLC, Principal Commercial Funding II, LLC, Principal Real Estate Investors, LLC, Texas Competitive Electric Holdings Company LLC, National Credit Union Administration Board, as Liquidating Agent of U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union, Southwest Corporate Federal Credit Union, and Constitution Corporate Federal Credit Union, Federal National Mortgage Association, Darby Financial Products, Capital Ventures International, Bay Area Toll Authority, Prudential Investment Portfolios 2, on behalf of Prudential Core Short-Term Bond Fund, Prudential Core Taxable Money Market Fund, Triaxx Prime CDO 2006-1, Ltd., Triaxx Prime CDO 2006-2, Ltd., Triaxx Prime CDO 2007-1, Ltd., The Federal Deposit Insurance Corporation, as Receiver, Direct Action Plaintiff, Direct Action Plaintiffs, Salix Capital U.S. Inc., Fran P. Goldsleger, Joseph Amabile, Louie Amabile, Norman Byster, Michael Cahill, Richard Deogracias, Marc Federighi, Scott Federighi, Robert Furlong, David Gough, Brian Haggerty, David Klusendorf, Ronald Krug, Christopher Lang, John Monckton, Philip Olson, Brett Pankau, David Vechhione, Randall Williams, Eduardo Restani, Nicholas Pesa, John Henderson, 303 Proprietary Trading LLC, Margery Teller, California Public Plaintiffs, National Asbestos Workers Pension Fund, Pension Trust for Operating Engineers, Hawaii Annuity Trust Fund for Operating Engineers, Cement Masons' International Association Employees' Trust Fund, Axiom Investment Advisors, LLC, Axiom HFT LLC, Axiom Investment Advisors Holdings L.P., Axiom Investment Company, LLC, Axiom Investment Company Holdings L.P., Axiom FX Investment Fund, L.P., Axiom FX Investment Fund II, L.P., Axiom FX Investment 2X Fund, L.P., Ephraim F. Gildor, Gildor Family Advisors L.P., Gildor Family Company L.P., Gildor Management, LLC, City of Phildaelphia, Pennsylvania Intergovernmental Cooperation Authority, City of New Britain, Linda Zacher, Plaintiffs, Rabobank Group, Credit Suisse Group, NA, Societe Generale, Deutsche Bank Financial LLC, Deutsche Bank Securities Incorporated, Barclays Capital Inc., Barclays U.S. Funding LLC, Credit Suisse Securities (USA) LLC, Bank of America Securities LLC, J.P. Morgan Clearing Corp., HSBC Securities (USA) Inc., UBS Securities LLC, Citigroup Global Markets Inc., National Association, Bank of Nova Scotia, BNP Paribas S.A., Credit Agricole, S.A., Sumitomo Mitsui Banking Corporation, Barclays PLC, WestLB AG, Chase Bank USA, N.A., Royal Bank of Scotland PLC, National Collegiate Student Loan Trust 2007-1, Citizens Bank of Massachusetts, agent of RBS Citizens Bank, NA, RBS Citizens, N.A., (f/k/a Citizens Bank of Massachusetts) incorrectly sued as Charter One Bank NA, Stephanie Nagel, British Bankers' Association, BBA Enterprises, Ltd., BBA Libor, Ltd., Credit Suisse International, HSBC Bank USA, N.A., Lloyds TSB Bank PLC, J.P. Morgan Bank Dublin PLC, formerly known as Bear Stearns Bank PLC, UBS Limited, Citigroup Financial Products Inc., ICAP plc, Credit Suisse AG, Credit Suisse (USA), Inc., The Hongkong and Shanghai Banking Corporation, Ltd., J.P. Morgan Markets Ltd., Lloyds Bank PLC, (formerly known as Lloyds TSB Bank PLC), RBC Capital Markets, LLC, Bank of America Home Loans, Citi Swapco Inc., J.P. Morgan Securities, LLC, Merrill Lynch Capital Services, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBS Securities Inc., Citigroup Global Markets Limited, Citigroup Funding, Inc., HSBC Finance Corporation, HSBC USA, Inc., Merrill Lynch & Co., Inc., Merrill Lynch International Bank, Ltd., Bear Stearns Capital Markets, Inc., Citizens Bank N.A., Credit Suisse Securities (USA) Inc., Barclays Capital (Cayman) Limited, Societe Generale, S.A. Defendants.

          Argued: September 25, 2017

         Plaintiffs-Appellants appeal from a judgment entered by the United States District Court for the Southern District of New York (Naomi Reice Buchwald, J.) on April 11, 2016, dismissing their complaint. This case is one of dozens seeking to recover for harm allegedly resulting from a conspiracy among Defendants-Appellees, major banks, to manipulate the London Interbank Offered Rate, a set of benchmark interest rates that inform trillions of dollars of financial transactions. On appeal, Plaintiffs contend that the district court erred in dismissing its state-law claims on personal jurisdiction grounds, and in dismissing its claims for fraud, violation of the Securities Exchange Act, and unjust enrichment for failure to state a claim. Because we find that certain Defendants' actions in selling financial products to Plaintiffs give rise to personal jurisdiction, that other Defendants may be subject to personal jurisdiction as a result of the acts of their agents or co-conspirators, and that certain claims were prematurely dismissed at the pleading stage, we AFFIRM IN PART, VACATE IN PART, and REMAND for further proceedings.

          Thomas C. Goldstein (Eric F. Citron, on the brief), Goldstein & Russell, P.C., Bethesda, Maryland, for Plaintiffs-Appellants.

          Neal Kumar Katyal (Eugene A. Sokoloff, Marc J. Gottridge, Lisa J. Fried, Benjamin A. Fleming, on the brief), Hogan Lovells U.S. LLP, Washington, D.C., for Defendants-Appellees Lloyds Banking Group plc and HBOS plc (additional counsel for the many parties and amici are listed in Appendix A).

          Before: Livingston, Lynch, and Chin, Circuit Judges.

          Gerard E. Lynch, Circuit Judge

         This case is one of dozens seeking to recover for harm allegedly resulting from a conspiracy among major banks to manipulate the London Interbank Offered Rate ("LIBOR"), a set of benchmark interest rates that affect financial transactions worth trillions of dollars. Plaintiffs-Appellants Charles Schwab Corporation, Charles Schwab Bank, N.A., Charles Schwab & Co., Inc., Schwab Short-Term Bond Market Fund, Schwab Total Bond Market Fund, Schwab U.S. Dollar Liquid Assets Fund, Schwab Money Market Fund, Schwab Value Advantage Money Fund, Schwab Retirement Advantage Money Fund, Schwab Investor Money Fund, Schwab Cash Reserves, Schwab Advisor Cash Reserves, Schwab YieldPlus Fund, and Schwab YieldPlus Fund Liquidation Trust (collectively, "Schwab") claim to have suffered damages in connection with their purchase of hundreds of billions of dollars in debt securities.

         Defendants-Appellees are the banks allegedly responsible. They are Bank of America Corporation and Bank of America, N.A. (together, "Bank of America"), Bank of Tokyo-Mitsubishi UFJ, Ltd. ("Bank of Tokyo"), Barclays Bank PLC ("Barclays"), Citigroup Inc. and Citibank, N.A. (together, "Citibank"), Coöperatieve Centrale Raiffeisen Boerenleenbank B.A. ("Rabobank"), Credit Suisse Group AG ("Credit Suisse"), Deutsche Bank AG ("Deutsche Bank"), HSBC Holdings plc and HSBC Bank plc (together, "HSBC"), JPMorgan Chase & Co. and JPMorgan Chase Bank (together, "JPMorgan Chase"), Lloyds Banking Group plc ("Lloyds"), HBOS plc ("HBOS"), the Norinchukin Bank ("Norinchukin"), Portigon AG and Westdeutsche ImmobilienBank AG (together, "WestLB"), Royal Bank of Canada ("RBC"), Royal Bank of Scotland Group plc ("RBS"), and UBS AG ("UBS") (collectively, "Defendants").

         The United States District Court for the Southern District of New York (Naomi Reice Buchwald, J.) dismissed Schwab's state-law claims for lack of personal jurisdiction, and dismissed both federal and certain state-law claims for failure to state a claim. Schwab challenges the dismissal of all of its state-law claims on personal jurisdiction grounds, and the dismissal of certain of its claims on the merits. For the reasons that follow, we AFFIRM IN PART, VACATE IN PART, and REMAND for proceedings consistent with this opinion.


         I. Factual Background

         LIBOR is a set of benchmark interest rates that approximate the average rate at which major banks can borrow money. LIBOR, which is published daily, is used as a reference point in determining interest rates for financial instruments across the world.

         The British Bankers' Association ("BBA"), a London-based trade association for the financial services industry, oversaw LIBOR during the relevant period. It calculated LIBOR in various currencies for different maturities (e.g., one month, three months, six months) based on the submissions of member banks sitting on panels designated for a particular currency. Every day, panel members would answer the question: "At what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11 am?" J.A. 767. The published rates for the U.S. Dollar LIBOR were pegged to the mean of 16 panel members' quotes, after excluding the four highest and four lowest submissions.

         Defendants are banks that sat on the U.S. Dollar LIBOR panel. According to Schwab, between August 2007 and May 2010, Defendants continuously misrepresented their borrowing costs to the BBA, and their false submissions caused LIBOR to be artificially suppressed. By understating their true borrowing costs, Defendants were able to project an image of financial stability to investors who were sensitive to risks associated with major banks following the financial crisis that began in 2007. Suppressing LIBOR also had the immediate effect of lowering Defendants' interest payment obligations on financial instruments tied to LIBOR. Defendants allegedly conspired together to manipulate LIBOR. See Gelboim v. Bank of Am. Corp., 823 F.3d 759, 765-67 (2d Cir. 2016).

         Schwab invested in billions of dollars' worth of debt securities during the alleged LIBOR suppression period. Defendants' LIBOR manipulation allegedly harmed Schwab in connection with two types of financial products - floating-rate instruments and fixed-rate instruments - which it purchased exclusively through its trading desk in California.

         A floating-rate instrument is a debt instrument that pays out interest tied to an external benchmark, such as LIBOR, that varies over time. Because Schwab held floating-rate instruments that were tied to LIBOR, Defendants' manipulation of LIBOR allegedly caused Schwab to receive lower returns than it would have had LIBOR reflected Defendants' true borrowing costs.

         A fixed-rate instrument, in contrast, pays out the same amount of interest based on a fixed interest rate such that changes in LIBOR or other external benchmark interest rates do not affect the amount of interest that the instrument pays out. Schwab alleges, however, that when "considering whether to purchase a fixed-rate instrument, [it] evaluated the difference (or 'spread') between the offered rate [on the fixed-rate instrument] and LIBOR." J.A. 867. Because "suppressing LIBOR would always, and obviously, tend to suppress the rates of return on fixed-rate instruments by making lower rates of return relatively more attractive, " Schwab allegedly received lower returns on fixed-rate instruments than it would have if LIBOR had been properly set. Id.

         Schwab did not purchase debt instruments from all Defendants. Defendants can be divided into three groups relative to Schwab's purchases.

         First, Defendants HSBC, Citibank, Deutsche Bank, JPMorgan Chase, and UBS (the "direct seller Defendants") allegedly solicited and sold debt instruments directly to Schwab in California. The volume of these direct-sales transactions was significant: Schwab alleges that it purchased more than $1.8 billion in floating-rate instruments, and more than $174.8 billion in fixed rate instruments from these direct seller Defendants.

         Second, Defendants Bank of America, Barclays, Credit Suisse, RBC, and RBS (the "indirect seller Defendants") allegedly sold debt instruments indirectly to Schwab, through "broker-dealer subsidiaries or affiliates."[1] J.A. 868. Schwab identifies a non-exhaustive list of seventeen broker-dealer subsidiaries or affiliates, and alleges that the indirect seller Defendants "controlled or otherwise directed or materially participated in the operations of those broker-dealers, [and] reaped proceeds or other financial benefits from the broker-dealers' sales of LIBOR-based financial instruments, including but not limited to instances where [the indirect seller] Defendants issued the LIBOR-based financial instruments that were then sold by their broker-dealer subsidiaries or affiliates." J.A. 868. Schwab claims to have purchased more than $5.7 billion in floating-rate instruments and $222.7 billion in fixed-rate instruments from Defendants' broker-dealers.

         Finally, Defendants Bank of Toyko, Lloyds, HBOS plc, Norinchukin, Rabobank, and WestLB (the "non-seller Defendants") are not alleged to have sold financial instruments to Schwab at all. Their principal connection to this case, therefore, is that they allegedly conspired with the other Defendants to manipulate LIBOR to Schwab's detriment.

         In total, Schwab alleges that Defendants' LIBOR manipulation caused it economic harm in connection with $665 billion in transactions. More than $40 billion of the floating-rate and fixed-rate instruments Schwab purchased were issued by Bank of America, Citibank, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Norinchukin, RBC, RBS, Rabobank, or UBS.

         Based on Defendants' allegedly false submissions to the BBA as well as their fraudulent representations and omissions in connection with Schwab's purchase of the subject debt instruments, Schwab filed the present case. It asserts thirteen distinct causes of action: fraud; aiding and abetting fraud; unfair business practices under the California Business and Professions Code; interference with prospective economic advantage; breach of the implied covenant of good faith and fair dealing; violation of §§ 25400 and 25401 of the California Corporations Code; rescission of contract; unjust enrichment; violation of section 10(b) of the Securities Exchange Act; violation of section 20(a) of the Securities Exchange Act; violation of section 11 of the Securities Act of 1933; violation of section 12(a)(2) of the Securities Act of 1933; and violation of section 15 of the Securities Act of 1933.

         II. Procedural History

         The present case is not the first in which Schwab has pursued claims relating to LIBOR manipulation. In August 2011, the various Schwab entities filed three actions against the same defendants named here. Those actions were consolidated in a Southern District of New York multidistrict litigation (the "LIBOR MDL") established to manage pretrial proceedings in lawsuits against banks that allegedly manipulated LIBOR and defrauded purchasers of LIBOR-based financial instruments. See In re Libor-Based Fin. Instruments Antitrust Litig., 802 F.Supp.2d 1380 (J.P.M.L. 2011).

         Following transfer of Schwab's 2011 complaints to the LIBOR MDL, the defendants moved to dismiss them. The district court, in relevant part, dismissed Schwab's federal antitrust claims for failure to plead antitrust injury and, in the absence of any live federal claims, declined to exercise supplemental jurisdiction over Schwab's state common-law causes of action. In re LIBOR-Based Fin. Instruments Antitrust Litig., 935 F.Supp.2d 666, 686, 736 (S.D.N.Y. 2013) ("LIBOR I"). We later vacated that dismissal. Gelboim, 823 F.3d at 783, cert. denied, 137 S.Ct. 814 (2017). We held that Schwab had plausibly alleged antitrust injury and rejected the defendants' alternative argument that we should affirm the dismissal on the ground that Schwab had failed to plead the existence of a conspiracy among the defendant banks to manipulate LIBOR. Id. at 772, 781-82.

         In April 2013, while the antitrust appeal was pending, Schwab commenced the present case in state court in California. Schwab reasserted the common-law claims over which the district court had previously declined to exercise supplemental jurisdiction, and added new federal and state causes of action. The case was promptly removed to federal court, and it too was then transferred to the LIBOR MDL.

         In November 2014, Defendants, together with 28 other entities defending against claims of LIBOR manipulation, moved to dismiss the complaints in 27 cases, including Schwab's, for lack of personal jurisdiction and for failure to state a claim. Fed.R.Civ.P. 12(b)(2), (6). The moving defendants filed a 98-page appendix listing the claims for which they sought dismissal, and filed seven supporting memoranda of law. Only one of those - Defendants' Memorandum of Law in Support of Defendants' Motion to Dismiss the Schwab Plaintiffs' Securities Claims - was specifically directed toward Schwab's complaint. Schwab and the other plaintiffs requested permission to file individual oppositions to the motion, but were directed to, and ultimately did, file their responses jointly. Schwab was permitted to file a memorandum of law specifically responding to Defendants' memorandum addressing Schwab's federal securities claims.

         The district court issued a herculean 436-page decision that endeavored to sort through the innumerable issues that the motion raised - a task complicated by the fact that the various cases differed in the claims asserted, the allegations pled, the forum of origin, and the applicable state law. See In re LIBOR-Based Fin. Instruments Antitrust Litig., No. 11 MDL 2262 NRB, 2015 WL 6243526 (S.D.N.Y. Oct. 20, 2015) ("LIBOR IV"), on reargument in part, 2016 WL 1301175 (Mar. 31, 2016), and reconsideration denied, 2017 WL 946338 (Feb. 16, 2017). In several parts of its decision, the district court did not focus on the particulars of any one complaint and, instead, set out broad-stroke conclusions explaining why certain classes of claims would be dismissed. In regards to personal jurisdiction, the district court directed the parties to agree on which portions of which complaints fell within the categories of claims that, applying the district court's reasoning, should be dismissed. As will be seen, this approach, understandably adopted by the district court to manage the enormously complex litigation before it, somewhat complicates our task on appeal.

         Schwab's complaint was dismissed in its entirety. The district court dismissed all of Schwab's state-law claims for lack of personal jurisdiction, and dismissed Schwab's Securities Exchange Act claims for failure to state a claim.[2]The court alternatively held that many of Schwab's state-law claims should be dismissed on the merits.[3] The district court further found that the unjust enrichment claims were partially time-barred. This appeal followed.


         We review de novo a district court's decision to grant motions under Rule 12(b)(2) and 12(b)(6). Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 167 (2d Cir. 2013); City of Pontiac Gen. Employees' Ret. Sys. v. MBIA, Inc., 637 F.3d 169, 173 (2d Cir. 2011).

         On appeal, Schwab argues that the district court erred (1) in dismissing its state-law claims for lack of personal jurisdiction; (2) in dismissing its fraud claims relating to transactions in fixed-rate instruments for failure to state a claim; (3) in dismissing its Securities Exchange Act claims for failure to state a claim; and (4) in partially dismissing its unjust enrichment claims as untimely.

         I. Dismissal of State-Law Claims for Lack of Personal Jurisdiction

         Schwab first challenges the district court's dismissal of all of its state-law claims for lack of personal jurisdiction.

         To defeat a motion to dismiss for lack of personal jurisdiction, a plaintiff "must make a prima facie showing that jurisdiction exists. Such a showing entails making legally sufficient allegations of jurisdiction, including an averment of facts that, if credited[, ] would suffice to establish jurisdiction over the defendant." Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 34-35 (2d Cir. 2010) (internal quotation marks and citation omitted; alteration in original). A plaintiff must have a state-law statutory basis for jurisdiction and demonstrate that the exercise of personal jurisdiction comports with due process. Licci, 732 F.3d at 168. Defendants do not contest Schwab's statutory basis for personal jurisdiction under California state law.

         The due process analysis proceeds in two steps. First, courts "evaluate the quality and nature of the defendant's contacts with the forum state under a totality of the circumstances test. Where the claim arises out of, or relates to, the defendant's contacts with the forum - i.e., specific jurisdiction is asserted - minimum contacts necessary to support such jurisdiction exist where the defendant purposefully availed itself of the privilege of doing business in the forum and could foresee being haled into court there." Id. at 170 (internal quotations marks, citation, and brackets omitted). Second, once minimum contacts are established, a court considers those contacts "in light of other factors to determine whether the assertion of personal jurisdiction would comport with fair play and substantial justice." Id. at 170 (internal quotation marks omitted). The district court did not find that considerations of fair play and substantial justice provided an alternative basis for dismissal, and Defendants do not argue that they provide an alternative basis for affirmance. Accordingly, only the first step of the due process inquiry is at issue here.

         Schwab asserts three principal theories of personal jurisdiction: (1) transactions in California give rise to personal jurisdiction over both the direct and indirect seller Defendants, and jurisdiction, therefore, also lies as to the non-seller co-conspirator Defendants[4]; (2) Defendants' LIBOR manipulation in London was expressly aimed at California, satisfying the so-called "effects test" for personal jurisdiction; and (3) personal jurisdiction with respect to Schwab's Securities Exchange Act claims allows for pendent personal jurisdiction with respect to Schwab's state-law claims. Schwab alternatively argues that Defendants forfeited their personal jurisdiction defense.

         As explained below, we agree with Schwab's arguments in part and further find that Schwab should be granted leave to amend to add certain jurisdictional allegations.

         A. Personal Jurisdiction Arising from Transactions in California

         1. Direct Seller Defendants

         Schwab argues that jurisdiction exists over the direct seller Defendants as a result of "their solicitation of Schwab in California and their actual sales of LIBOR-based instruments to Schwab in that forum." Appellants' Br. 23.

         Allegations of billions of dollars in transactions in California easily make out a prima facie showing of personal jurisdiction for claims relating to those transactions. In Chloe v. Queen Bee of Beverly Hills, LLC, for instance, we held that there was personal jurisdiction over a defendant in a trademark action based on allegations that the defendant offered bags for sale to New York consumers on a website and sold "at least one counterfeit Chloé bag" to a New Yorker in the process. 616 F.3d 158, 171 (2d Cir. 2010). We reached the same result in Eades v. Kennedy, PC Law Offices, where the out-of-state defendant "mail[ed] one debt collection notice to [one plaintiff in New York], engag[ed] in one debt collection phone call with [her], and mail[ed] a summons and complaint to [the plaintiffs' New York homes]." 799 F.3d 161, 168 (2d Cir. 2015). The solicitation of and sale of financial instruments to Schwab in California are equally sufficient.

         Indeed, Defendants effectively concede that direct sales in California could give rise to personal jurisdiction for claims relating to those sales. They nonetheless argue that there is no jurisdiction over the direct seller Defendants here for two independent reasons.

         First, Defendants argue that we are not faced with a direct sales case at all. They contend that the district court dismissed all "state-law claims arising out of [Defendants' alleged] sales of LIBOR-based instruments" and that the only claims not dismissed on the merits are "those based on allegedly false LIBOR submissions made to the BBA in London." Appellees' Br. 23 & n.7. As a result, allegations of "solicitation and sale of LIBOR-based instruments to Schwab in California" are irrelevant to the jurisdictional analysis, because they are not "sufficiently 'related to'" Defendants' actions to manipulate LIBOR in London. Id. at 23.

         Defendants are mistaken that the district court dismissed on the merits all state-law claims arising from transactions in California. Specifically, Schwab's claims for fraud relating to omissions by Defendants in the course of selling floating-rate instruments, interference with prospective economic advantage, breach of the implied covenant, and unjust enrichment apply to financial products sold to Schwab in California and appear to have survived such dismissal.[5] Therefore, to the extent Schwab's claims concern transactions in California (as most of its surviving ones do), there is jurisdiction over the Defendants who are clearly identified as having made direct sales.

         Defendants are right, however, that sales in California do not alone create personal jurisdiction for claims premised solely on Defendants' false LIBOR submissions in London. A plaintiff "must establish the court's jurisdiction with respect to each claim asserted, " Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 24 (2d Cir. 2004) (emphasis omitted), and we identify one claim surviving merits dismissal that does not track the analysis above: Schwab's claim that Defendants committed fraud through their daily LIBOR submissions to the BBA in London. Because activities in London do not constitute California contacts, the relevant jurisdictional question for such fraud claims is whether the California transactions constitute "suit-related conduct [that] create[s] a substantial connection with [California]." Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014).

         They do not. "Courts typically require that the plaintiff show some sort of causal relationship between a defendant's U.S. contacts and the episode in suit, " and the plaintiff's claim must in some way "arise from the defendants' purposeful contacts with the forum." Waldman v. Palestine Liberation Org., 835 F.3d 317, 341, 343 (2d Cir. 2016) (internal quotation marks omitted). Here, the California transactions did not cause Defendants' false LIBOR submissions to the BBA in London, nor did the transactions in some other way give rise to claims seeking to hold Defendants liable for those submissions. That Schwab asserts its false submission claims against all Defendants, including those that did not sell any products to Schwab, ...

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