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10-04285-brl Doc 127 Filed 08/17/12 Entered 08/17/12 14:29:55 Main Document Pg 66 of 133 feel right about this client; I will accept this client on a trial basis for 6 months, and if I see a risk for our bank, [I will] liquidate the fund.” (Pergament Decl. Ex. 67.) UBS AG’s approval was necessary to establish Luxalpha. Without that approval, UBS SA, UBSFSL, and UBSTPM could not have profited from the roles they assumed with respect to the fund. With its powerful name behind the feeder funds, UBS AG maintained a close watch on Luxalpha after the account was opened. In March 2007, UBS AG risk controllers performed an audit on Luxalpha. UBS AG shut down new investments in Luxalpha for nearly a year while the audit was underway and “UBS nearly gave up” on Luxalpha. (Pergament Decl. Ex. 68.) But lured by the massive fees that the UBS entities were receiving from BLMIS, UBS found a workaround by having an Access entity, Defendant AML, take over the portfolio management role from UBSTPM, and Luxalpha was opened to new subscriptions in January 2008. (See Pergament Decl. Ex. 3.) (Pergament Decl. Ex. 69.) (Id.) Finally, a mere department relationship also exists because UBS AG and the Moving UBS Defendants were engaged in a common business endeavor to operate and service Luxalpha. Dorfman, 2002 WL 14363, at *8 (“Courts have frequently drawn an interference of substantial control from the fact that a subsidiary is engaged in a common business endeavor with its parent 46
10-04285-brl Doc 127 Filed 08/17/12 Entered 08/17/12 14:29:55 Main Document Pg 67 of 133 corporation.”). In addition to approving the establishment of Luxalpha and delegation of custodial authority to New York, UBS AG also served as Luxalpha’s co-sponsor, and provided the use of its correspondent bank account in the United States to UBS SA. The jurisdictional contacts between UBS AG and the forum should be ascribed to the Moving UBS Defendants as they are each mere departments of their parent. 22 7. The Court Has Jurisdiction over Each of the Moving Luxalpha Director Defendants Because Each Directed Investment Activity to New York Specific jurisdiction exists over each of the Moving Luxalpha Director Defendants because each of them has the minimum contacts with the forum required for the Court to exercise personal jurisdiction. Each of the Moving Luxalpha Director Defendants was involved in the major decisions and investment activities that were purposely directed to BLMIS in New York. Even if “none of them has ever met or communicated with Madoff . . . in connection with any Luxalpha business” (UBS Mot. at 22–23,) these defendants authorized and supervised Luxalpha’s targeted direction of funds to BLMIS in New York, actively concealed Madoff’s role as custodian and asset manager from investors, and generated millions in fees for UBS SA, where each was a high-ranking principal. The Moving Luxalpha Director Defendant also served on Luxalpha’s board with Littaye, who had close ties with Madoff, and used this relationship and 22 The Moving UBS Defendants rely heavily on Indem. Ins. Co. of N. Am. v. K-Line Am., Inc., No. 06 Civ. 0615 (BSJ), 2007 WL 1732435 (S.D.N.Y. June 14, 2007) to argue that UBS AG’s jurisdictional contacts cannot be imputed to them. (UBS Mot. at 36.) In K-Line, the court declined to find a mere department relationship where the plaintiff failed to establish common ownership among the entities, there was no interference in the selection or assignment of personnel, and where it was not clear that the parent company was even present in New York. 2007 WL 1732435, at *11. In contrast, each of these factors is satisfied here. The Moving UBS Defendants’ references to Greatship (India) Ltd. v. Marine Logistics Solutions (Marsol) LLC, No. 11 Civ. 420 (RJH), 2012 WL 204102 (S.D.N.Y. Jan. 24, 2012) and Fagan v. Austria, No. 08 Civ. 6715 (LTS) (JCF), 2011 WL 1197677, at *20 (S.D.N.Y. Mar. 25, 2011) are similarly unavailing. (UBS Mot. at 36.) Greatship concerned a foreign plaintiff’s efforts to enforce a foreign judgment against a foreign defendant whose parent entity was not even a registered company in New York, and the claims in Fagan revolved around foreign defendants’ allegedly tortious conduct that had exclusively occurred in Austria. Further, in both Fagan and Greatship, the domestic parent company at issue was in no way connected with the actions that gave rise to the plaintiffs’ claims, nor was there any assertion of control by the parent over the subsidiary or any common employees between them. 47
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