DENISE COTE, District Judge.
Plaintiff United States Securities and Exchange Commission ("SEC") has moved to enjoin a suit brought in the United States District Court for the District of Utah (the "Utah Action") against it by defendant Alpine Securities Corporation ("Alpine") and by Alpine's affiliate Scottsdale Capital Advisors ("SCA"). The Utah Action is a transparent attempt to relitigate rulings in this action unfavorable to Alpine. The SEC's motion is granted.
The SEC filed this suit on June 5, 2017, alleging that Alpine violated Rule 17a-8, 17 C.F.R. § 240.17a-8, by filing suspicious activity reports ("SARs") that failed to contain required information and by failing on other occasions to file required SARs. On August 3, Alpine moved to dismiss under Rules 12(b)(2) and 12(b)(3) for lack of personal jurisdiction and improper venue, or to transfer venue to the District of Utah under 28 U.S.C. § 1404(a). The August 3 motion to dismiss or to transfer was denied at a conference on September 15 (the "September 15 Conference"). On the record at the September 15 Conference, the Court addressed the factors relevant to § 1404(a), and explained that this forum was "not chosen for an improper purpose."
Alpine answered the complaint on September 29, and filed an amended answer on October 27. On November 13, the SEC filed a motion to strike affirmative defenses of estoppel, waiver, and unclean hands asserted in Alpine's amended answer. The November 13 motion to strike was granted January 12, 2018.
A Scheduling Order of September 15, 2017 set the discovery schedule, which is ongoing. Fact discovery was scheduled to conclude on March 30, 2018. Expert discovery is scheduled to conclude on August 10. Any motion for summary judgment is due July 13, 2018.
As invited by the Court, the SEC moved for partial summary judgment on December 6, 2017. In connection with its motion, and pursuant to an Order of December 13, the SEC submitted 36 SARs under seal as examples of the four categories of Rule 17a-8 violations it asserts. Alpine moved for summary judgment and for judgment on the pleadings on January 19.
SCA, Alpine's co-plaintiff in the Utah Action, is not a party to this action. SCA was listed as a "relevant entity" in the SEC's complaint in this action; the SEC alleges that the two entities are owned by the same individual, although Alpine denies this allegation. Alpine, in its answer in this action, "admit[ted] that [SCA] has introduced customers to Alpine." And in a Rule 56.1 statement submitted by Alpine, it explains that it has an agreement with SCA whereby SCA introduces customers to Alpine, which then processes the customers' transactions.
Alpine moved for reconsideration of the Partial Summary Judgment Opinion on April 20, 2018, as well as for certification of portions of that Opinion for immediate appellate review. After briefing, Alpine's motions were denied on June 18.
On June 22, Alpine filed a petition for a writ of mandamus in the United States Court of Appeals for the Second Circuit.
Also on June 22, Alpine and SCA filed a complaint (the "Utah Complaint") in the United States District Court for the District of Utah against the SEC.
On the same day Alpine and SCA filed the Utah Complaint, they also filed a motion in the Utah Action for a preliminary injunction to enjoin the SEC from,
The SEC moved for an extension of time to respond to the Utah preliminary injunction motion on June 29, 2018, which was granted July 2. The SEC's opposition to the preliminary injunction motion is due July 13. The SEC also filed a motion in the Utah Action to stay that action on July 3, which Alpine and SCA opposed on July 10, and on which the Utah Court has not acted.
The SEC moved in this Court for an injunction restraining Alpine and SCA from litigating the Utah Action on July 3. Alpine opposed the motion on July 9, and the motion became fully submitted on July 11. SCA has not appeared or taken any other action in this case.
"The first filed rule states that where an action is brought in one federal district court and a later action embracing the same issue is brought in another federal court, the first court has jurisdiction to enjoin the prosecution of the second action."
The Second Circuit has "recognized only two exceptions to the first-filed rule: (1) where the balance of convenience favors the second-filed action, and (2) where special circumstances warrant giving priority to the second suit."
The SEC is entitled to an injunction restraining Alpine and SCA from pursuing the Utah Action. This SEC action was filed first. The SEC seeks to enforce Rule 17a-8 against Alpine. Alpine defended against the SEC's suit by arguing,
What Alpine was not permitted to do, however, was to force the SEC to defend against largely the same arguments in another federal district court. The Utah Complaint is premised on an expanded version of the same statutory and regulatory arguments the Court rejected in the Partial Summary Judgment Opinion. Moreover, the Utah Complaint and the Utah preliminary injunction motion show that Alpine is complaining of injury caused by the Partial Summary Judgment Opinion. The Utah preliminary injunction opinion expressly requests that the Utah Court enjoin this earlier-filed action.
The balance of convenience does not support prioritizing the Utah Action. This Court denied Alpine's motion to dismiss for improper venue or to transfer at the September 15 Conference, and in doing so addressed the 28 U.S.C. § 1404(a) factors. This analysis will not be repeated. Alpine has still failed to show that this action should be transferred to Utah.
Further, special circumstances are not present that warrant allowing the Utah Action to go forward. This action is not an improper, anticipatory, declaratory judgment action. And although Alpine argues that forum shopping improperly motivated the SEC to bring suit in the Southern District of New York, the Court rejected that argument at the September 15 Conference. Alpine has not shown that that ruling was incorrect.
Given the unique circumstances of this case, the SEC is also entitled to an injunction against SCA.
SCA has not appeared in this action. Alpine raises an argument on SCA's behalf that this Court may not enjoin SCA from litigating the Utah Action because it lacks personal jurisdiction over SCA.
Specific personal jurisdiction is assessed with a two-part inquiry: first, a party must have "purposefully directed [its] activities at the forum and the litigation [must] arise out of. . . those activities."
SCA has moved for a preliminary injunction against this proceeding. SCA has thus purposefully directed its activities at this forum, and specifically at this proceeding. Asserting personal jurisdiction over SCA to the extent of enjoining interference with this action does not violate traditional notions of fair play or substantial justice. Indeed, any burden on SCA is outweighed by the SEC's interest in not having to defend against the same arguments it has already faced in this proceeding, as well as by the systemic interest in efficiently resolving disputes in a single proceeding. Thus, regardless of whether a more expansive personal jurisdiction could be obtained over SCA in the Southern District of New York,
Because the Court may exercise limited personal jurisdiction over SCA, both the All Writs Act, 28 U.S.C. § 1651, and Rule 65(d)(2)(C), Fed. R. Civ. P., empower the Court to enjoin SCA from litigating the Utah Action. The All Writs Act permits "[i]njunctions [to] be issued against non-parties . . . [as long as] the persons enjoined have the minimum contacts that are constitutionally required under due process."
The SEC's July 3, 2018 motion to enjoin the Utah Action is granted. Alpine and SCA are enjoined from litigating in the United States District Court for the District of Utah case number 18cv409(CW). This injunction shall be dissolved after the conclusion of any appeal from the entry of final judgment in this action.