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In re Customs and Tax Administration of Kingdom of Denmark (Skat) Tax Refund Litigation

United States District Court, S.D. New York

January 7, 2020

In re CUSTOMS AND TAX ADMINISTRATION OF THE KINGDOM OF DENMARK (SKAT) TAX REFUND LITIGATION This paper applies to: No. 18-cv-5053 (LAK)

          Martin H. Kaplan Kari Parks Gusrae Kaplan Nusbaum PLLC Attorneys for Third-Party Plaintiffs

          Brian S. Fraser Kristen G. Niven Akerman LLP Attorneys for Third-Party Defendant

          MEMORANDUM OPINION

          Lewis A. Kaplan United States District Judge

         This is one of many actions brought by the Customs and Tax Administration of the Kingdom of Denmark ("SKAT") to recover funds allegedly obtained from it by fraud.[1] The matter is before the Court on a motion by third-party defendant ED&F Man to dismiss the third-party claims of defendants and third-party plaintiffs the Goldstein Plan and Sheldon Goldstein (collectively, "Goldstein") under Rule 12(b)(2) and on forum non conveniens grounds [18-md-2865, DI-239].

         Facts[2]

         At all relevant times, Goldstein was located in New York. From 2012 through 2019, it had a brokerage account in New York that was used by ED&F Man, its U.K.-based broker.[3]Goldstein alleges that ED&F Man would transfer money to and from that brokerage account in the course of making foreign investments on Goldstein's behalf.[4] Goldstein alleges also that ED&F Man collected "significant fees" for this work.[5]

         The general theory of Goldstein's complaint is that if, as plaintiff alleges, Goldstein is liable to SKAT for submitting fraudulent tax vouchers to the Danish government, then ED&F Man ultimately was responsible and should be liable to Goldstein. In its twelve causes of action, Goldstein alleges that in the course of investing its money, ED&F Man injured Goldstein by submitting the fraudulent tax vouchers and engaging in related conduct that was negligent, fraudulent, and constituted a breach of various agreements between the parties and associated contractual and fiduciary duties.

         Discussion

         "In order for a court to exercise specific jurisdiction over a claim, there must be an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State."[6] "[T]he selection and repeated use of New York's banking system, as an instrument for accomplishing the alleged wrongs for which the plaintiffs seek redress, constitutes purposeful availment of the privilege of doing business in New York so as to permit the subjecting of [the defendant] to specific jurisdiction."[7]

         By engaging in a long-term business relationship with a New York entity, ED&F Man purposefully availed itself of the benefits of doing business in New York. And by withdrawing Goldstein's money from a New York brokerage account, using it in ways allegedly injurious to a New York entity (Goldstein), returning the money and any earnings and proceeds to that account, and charging Goldstein fees for this work, ED&F Man repeatedly reached into New York in the course of doing business with Goldstein. As Goldstein's claims arise out of these purposeful contacts with New York, and asserting jurisdiction under these circumstances would comport with traditional notions of fair play and substantial justice, the Court has specific personal jurisdiction over ED&F Man. For similar reasons, this suit is authorized by at least two provisions of New York's long-arm statute.[8]

         District courts have the discretion to dismiss a case fox: forum non conveniens subject to a three-factor analysis.

"At step one, a court determines the degree of deference properly accorded the plaintiffs choice of forum. At step two, it considers whether the alternative forum proposed by the defendants is adequate to adjudicate the parties' dispute. Finally, at step three, a court balances the private and public interests implicated in the choice of forum."[9]

         The alternative forum ED&F Man proposes is the United Kingdom.

         Although Goldstein today is located in Florida, traveling to and retaining counsel in New York would be far more convenient for it than litigating in the United Kingdom, where Goldstein has no apparent presence. The parties agreed via contract that the United Kingdom would be an adequate forum for adjudicating their disputes, a fact that the Court accepts as true. But they did not select the United Kingdom (or any ...


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