In an opinion yesterday, Judge Hellerstein emphatically rejected the arguments of a Spanish bank, Banco Bilbao Vizcaya Argentina (S.A.) (“BBVA”), that, under the recent Supreme Court decision in Daimler v. Bauman and the Second Circuit’s recent ruling in Gucci v. Li, the Court lacked jurisdiction to enforce a subpoena seeking information that related to judgment collection and that was located outside the New York branch:
The state of New York in general, and New York City in particular, is a leading world financial center. In order to benefit from the advantages of transacting business in this forum, a foreign bank must register with and obtain a license from the Superintendent of the Department of Financial Services (“DFS”), and file a written instrument “appointing the superintendent and his or her successors its true and lawful attorney, upon whom all process in any action or proceeding against it on a cause of action arising out of a transaction with its New York agency or agencies or branch or branches”. N. Y. Bnk. Law § 200( a). BBV A is registered with the DFS as a foreign branch. The Second Circuit recognized that the privileges and benefits associated with a foreign bank operating a branch in New York give rise to commensurate, reciprocal obligations. Foreign corporations which do business in New York are bound by the laws of both the state of New York and the United States, and are bound by the same judicial constraints as domestic corporations. Under New York Banking Law, foreign banks operating local branches in New York can both sue and be sued. See, e.g., Greenbaum v. Handlesbanken, 26 F.Supp.2d 649 (S.D.N.Y. 1998). This legal status also confers obligations to participate as third-parties in lawsuits which involve assets under their management. Contrary to BBVA’s suggestions, Daimler and Gucci should not be read so broadly as to eliminate the necessary regulatory oversight into foreign entities that operate within the boundaries of the United States. There is no reason to give advantage to a foreign bank with a branch in New York, over a domestic bank. I cannot espouse a notion of jurisdiction that allows banks to hide information concerning assets connected to terrorism in other countries. When corporations receive the benefits of operating in this forum, it is critical that regulators and courts continue to have the power to compel information concerning their activities. Foreign banks should not be permitted to promote the legitimacy of their business by registering to do business in New York, and then hide illicit activity by ‘keeping’ information concerning assets related to terrorism in other countries. Such action is akin to a legitimate business storefront which launders money from illegal operations in the back room, and does not comport with the legal system of the United States. The information requested by the Information Subpoena can be found via electronic searches performed in BBVA’s New York office, and are within this jurisdiction.
The opinion calls to mind Judge Scheindlin’s ruling (covered here) that corproate representative witnesses of banks can be required to gather information from outside the jurisdiction.