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Firm Wins Argument For Lack of Personal Jurisdiction in US Over UK Entity

Stroock&Stroock&Lavan LLP client Grant Thornton International Ltd was recently dismissed from a federal lawsuit seeking $100 million in damages from numerous defendants for alleged securities law violations. On September 15, 2016, District Court Judge Shelley D. Dick of the Middle District of Louisiana dismissed all claims against Grant Thornton International Ltd, which have been pending since 2013, for lack of personal jurisdiction.

The victory follows Stroock’s earlier successful appeal to the United States Court of Appeals for the Fifth Circuit, which in a matter of first impression, vacated the District Court’s prior order remanding the case to state court and directed that the case proceed in federal court under the Court’s bankruptcy subject matter jurisdiction. Stroock then continued to advocate for dismissal of Grant Thornton International Ltd for lack of personal jurisdiction. This is an actively evolving area of the law where it has become increasingly difficult to bring claims again foreign entities in US courts when those claims do not arise from contacts between those entities and the relevant forum in the US. The Court agreed that was the case here.

Stroock attorneys representing Grant Thornton International Ltd were James L. Bernard and David M. Cheifetz, along with Craig Isenberg and Stephen L. Miles of Barrasso, Usdin, Kupperman, Freeman & Sarver in New Orleans.

Stroock’s Bernard and Cheifetz said, “We are extremely pleased with the Court’s decision, including that Grant Thornton International Ltd is a non-practicing UK-based umbrella entity that had nothing to do with the audit reports or transactions at issue in this case and had no relevant contacts with the US that would subject it to the jurisdiction of US courts.”

Additional Matter Details

Plaintiffs were several Louisiana municipal pension funds that brought various claims in Louisiana state court seeking to recover their alleged $100 million lost investment in a bankrupt Cayman Islands hedge fund. Plaintiffs alleged that Grant Thornton International Ltd was liable for plaintiffs’ losses in connection with audit reports prepared for the fund.

The Court found that Grant Thornton International Ltd is a non-practicing international umbrella entity, incorporated in England and Wales and headquartered in London, which performs no audit work. The Court then evaluated Grant Thornton International Ltd’s alleged contacts with the United States and found that it had insufficient contacts with the United States for either general or specific personal jurisdiction.

The Court agreed with Stroock’s argument that absent exceptional circumstances, which were not present in this case, controlling authority from the United States Supreme Court excluded the possibility for general jurisdiction in the United States over a United Kingdom entity such as Grant Thornton International Ltd. The Court further agreed that the plaintiffs did not meet their burden to establish specific jurisdiction over Grant Thornton International Ltd because the plaintiffs did not plead any direct or purposeful communication by Grant Thornton International Ltd directed at the United States from which the claims arose.

Earlier in the proceedings, after defendants removed the case to federal court, Judge Dick decided to abstain from exercising federal subject matter jurisdiction and ordered the case remanded to Louisiana state court without deciding Grant Thornton International Ltd’s pending motion to dismiss. Stroock successfully led the appeal of that decision on various bankruptcy-related grounds to the Fifth Circuit Court of Appeals, which, after considering several issues of first impression, unanimously vacated the District Court’s abstention and remand order and required the District Court to exercise its federal jurisdiction over the claims. Following the Supreme Court’s denial of plaintiffs’ petition for certiorari, to which Stroock filed an opposition, Judge Dick then granted Grant Thornton International Ltd’s motion to dismiss for lack of personal jurisdiction.

Stroock&Stroock&Lavan LLP is a law firm providing transactional, regulatory and litigation guidance to leading financial institutions, multinational corporations, investment funds and entrepreneurs in the U.S. and abroad.  With a rich history dating back 140 years, the firm has offices in New York, Washington, DC, Los Angeles and Miami. For more, visit

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