Wilson v. Dantas, 746 F.3d 530 (2d Cir. Mar. 6, 2014) [click for opinion]

Robert E. Wilson, III appealed from the dismissal of his claims against Citibank, N.A. and all related Citibank entities (the “Citibank Defendants”) for engaging in tortious conduct and breach of contractual obligations owed to him, resulting in his failure to receive compensation purportedly owed to him in connection with private equity investments in Brazil. Although not raised by either party, the Second Circuit independently reviewed whether the district court had jurisdiction to hear the case under the Edge Act, 12 U.S.C. § 632.

To be removable under the Edge Act, an action must (1) be a civil suit; (2) have a federally chartered corporation as a party, and (3) arise “out of transactions involving international or foreign banking … or out ofinternational or foreign financial operations.” (emphasis added). As this was clearly a civil suit and Citibank is a federally chartered U.S. bank, the court only had to determine whether the third requirement was met, i.e., whether the claim arose out of a transaction involving international or foreign financial operations.

Because “international or foreign financial operations” are not defined under the Edge Act nor under relevant case law, the court looked to the plain meaning of the phrase: extending jurisdiction to those foreign operations that consist of the “act or process of raising or providing funds,” including the “raising of funds by issuing capital securities (share in the business.)” As Plaintiff alleged that this case involved an international investment program that made numerous transactions involving private-equity investments in Brazilian companies, and the Citibank Defendants allegedly contributed $750 million in return for stock in the portfolio companies pursuant to this program, the court decided that the action did indeed meet the third requirement for removal jurisdiction under the Edge Act.

Accordingly, the Second Circuit determined that the district court had jurisdiction to hear the case under the Edge Act and affirmed the district court’s dismissal of Wilson’s tort and contract claims pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.