Gucci v. Bank of China, Nos. 11-3934-cv; 12-4557-cv (2d Cir. Sept. 17, 2014) [click for opinion]

Gucci sued multiple defendants for selling counterfeit versions of its products.  Gucci received a preliminary injunction freezing Defendants’ assets, including accounts held by Bank of China.  Gucci also served a document subpoena on the bank.  After the bank did not comply with either the injunction or the subpoena, the district court found it had general personal jurisdiction over the bank and demanded compliance through its orders.  The bank appealed, arguing the court did not have general personal jurisdiction over it.  The Second Circuit agreed and remanded for a determination of whether there was specific jurisdiction over the bank.

The Second Circuit first noted that the district court did have authority to issue the preliminary injunction, as it was undisputed that there was personal jurisdiction over Defendants.  However, to order the bank to comply with that injunction, or with the subpoena, the district court needed personal jurisdiction over the bank. 

Although there was long-standing Second Circuit precedent that a bank that operates a branch in New York is subject to general jurisdiction in New York, the Supreme Court’s recent decision in Daimler AG v. Bauman, overruled that precedent.  Daimler held that “[a]side from ‘an exceptional case,’. . . a corporation is at home (and thus subject to general jurisdiction, consistent with due process) only in a state that is the company’s formal place of incorporation or its principal place of business.”

The Second Circuit noted that the Bank of China is incorporated and headquartered outside of New York, conducts the vast majority of its business outside the forum, and has over 10,000 branches, only four of which are in the United States.  The court concluded that this “plainly do[es] not approach” the level of contact required to make the bank subject to general jurisdiction in New York. 

But the court remanded the case for a determination whether there was specific jurisdiction over the bank in relation to the injunction and the subpoena.  In so doing, the Second Circuit noted that other courts have found specific jurisdiction over domestic parties in order to enforce asset freeze injunctions.

Finally, the Second Circuit addressed the bank’s argument that the order to comply with the injunction should be vacated due to concerns of comity. The bank argued that compliance with the injunction would require freezing Defendants’ assets in accounts held in China, and that doing so would be a violation of Chinese banking laws that would subject the bank to civil and criminal penalties.  The court did not rule on whether comity would compel the district court to refuse to compel compliance, but held that before issuing another order compelling compliance with the injunction, the district court must engage in a comity analysis pursuant to the factors set forth in section 403 of the Restatement (Third) of Foreign Relations Law.

Derek Soller of the New York office contributed to this summary.