IN THE SUPREME COURT OF OHIO. Case F f ^^ RELATOR'S MEMORANDUM IN SUPPORT OF PETITION AND COMPLAINT FOR WRIT OF MANDAMUS AND PROHIBITION

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_ /3^i0 9, r IN THE SUPREME COURT OF OHIO STATE ex rel. THE BANK OF NEW YORK MELLON, Case F f ^^ Relator, V. THE HONORABLE STEVEN E. MARTIN, Respondent. Original Action in Mandamus and Prohibition RELATOR'S
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_ /3^i0 9, r IN THE SUPREME COURT OF OHIO STATE ex rel. THE BANK OF NEW YORK MELLON, Case F f ^^ Relator, V. THE HONORABLE STEVEN E. MARTIN, Respondent. Original Action in Mandamus and Prohibition RELATOR'S MEMORANDUM IN SUPPORT OF PETITION AND COMPLAINT FOR WRIT OF MANDAMUS AND PROHIBITION John P. Gilligan Counsel of Record Daniel M. Anderson ICE MILLER LLP 250 West Street Columbus, Ohio Tel: (614) Fax: (614) John.Gilliganna,icemiller.com Daniel.Anderson(cr^,icemiller.com MAYER BROWN LLP Matthew D. Ingber (pro hac vice forthcoming) Michael Martinez (pro hac vice forthcoming) Christopher J. Houpt (pro hac vice forthcoming) 1675 Broadway New York, New York Tel: (212) Counsel for Relator The Bank of New York Mellon, ; r r;. f, ;,, ^., 3.-^.g. '..SS, S fi e %.. 33, TABLE OF CONTENTS TABLE OF AUTHORITIES... ii INTRODUCTION... I FACTS THE LAWSUIT... 5 II. RESPONDENT'S DECISION ARGUMENT AND AUTHORITIES A Writ Of Prohibition Should Issue, Barring Respondent From Exercising Jurisdiction. Over BNYM A. Respondent Has Exercised And Will, Unless Prohibited, Continue To Exercise Judicial Power B. Respondent's Exercise Of Personal Jurisdiction Is Unauthorized By Law Ohio Lacks General Personal Jurisdiction Over BNYM BNYM Is Not Subject To Specific Personal Jurisdiction Page 3. BNYM Was Permitted To Raise Its Jurisdictional Defense In A Subsequent Motion To Dismiss C. Relator Is Without An Adequate Remedy At Law II. A Writ Of Mandamus Should Issue, Compelling Respondent To Dismiss The Complaint Against BNYM A. Because BNYM Lacks Minimum Contacts With Ohio, Respondent Has A Clear Legal Duty To Dismiss The Complaint B. BNYM Has A Clear Right To Dismissal C. Relator Is Without An Adequate Remedy At Law CONCLUSION i TABLE OF AUTHORITIES CASES Page(s) Allstate Ins. Co. v. Electrolux Home Prods., Inc., N.D. Ohio No. 1:14-cv-329, 2014 WL (July 19, 2014)... E'x parte Burr & Forman, LLP, 5 So.3d 557 (Ala. 2008)...:... Centerpoint Energy, Inc. v. Miller Cnty. Cir. Ct., 372 Ark. 343, 276 S.W.3d 231 (2008)... Commerce Bank v. BNYM, No CV2844 (Mo. Cir. Ct. Jackson Cnty. June 25, 2014)... Curtis Publ 'g Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967) ,13, Daimler AG v. Bauman, -..-, US 34 S. 1Ct. 746 (2014)... ptzssam F'raley v. Estate of Oeding, 138 Ohio. St.3d 250, 2014-Ohio-452, 6 N.E.3d 9... Glater v. Eli Lilly & Co., 712 F.2d 735 (1st Cir. 1983)... Glidden Co. v. Lumbermens Miit. Cas. Co., 112 Ohio St.3d 470, 2006-Ohio-6553, 861 N.E.2d Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S., 131 S. Ct (2011) , 20 Gucci Am., Inc. v. Weixing Li, - F.3d -, 2014 WL (2d Cir. Sept. 17, 2014) passim Hawknet Ltd. v. Overseas Shipping Agencies, 590 F.3d 87 (2d Cir. 2009)...18 Holzsager v. Valley Ilosp., 646 F.2d 792 (2d Cir. 1981)... J. McIntyre Mach., Ltd. v. Nicastro, 131 S.Ct (2011)... Kauffman Racing Equip., L. L. C. v. Roberts, 126 Ohio St.3d. 81, 2010-Ohio-2551, 930 N.E.2d Knotts v. Anderson, 2d Dist. Clark No CA0068, 2001 WL , 2 (Dec. 28, 2001)... Mellino Consulting, Inc. v. Synchronous Mgmt. Sarasota, Inc., 8th Dist. Cuyahoga No , 2007-Ohio , , c01, ii TABLE OF CONTENTS (continued) Page Morrison v. Taurus Int'l Co., S.D. Ohio No. 3:11-cv-322, 2012 WL (Nov. 13, 2012)... Parshall v. PAID, Inc., 10th Dist. Franklin No. 07AP-1019, 2008-Ohio Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952) Posner v. Essex Ins. Co., Ltd., 178 F.3d 1209 (1 lth Cir. 1999)... Read v. Ulmer, 308 F.2d 915 (5th Cir. 1962)...:... Ricks v. Armstrong Int'l, Inc., E.D.N.C. No. 4:14-cv-37-BO, 2014 WL (June 24, 2014) In re Roman Catholic Diocese ofalbany, N. Y., Inc., 745 F.3d 30 (2d Cir. 2014) (per curiam)...15 State ex rel. City of Cleveland v. Astrab, 139 Ohio St,3d 445, 2014-Ohio-2380, 12 N.E.3d :...22 State ex. rel. Connor v. McGough, 46 Ohio St.3d 188, 546 N.E.2d 407 (1989)... State ex rel. DeWine v Grp., L.P., 2012-Ohio-3339, 977 N.E.2d 112 (9th Dist.) ,11, State ex rel. 1Tones v. Suster, 84 Ohio St.3d 70, N E 2d 1002 (1998).9 State ex rel. Mayer v. Henson, 97 Ohio St.3d 276, 2002-Ohio-6323, 779 N.E.2d , 24 State ex r el. Stone v. Court of Common Pleas of Cuyahoga Cnty., 14 Ohio St.3d 32, 470 N.F,.2d 899 (1984)...10, 11 State ex rel. Suburban Constr. Co. v. Skok, 85 Ohio St.3d 645, 710 N.E.2d 710 (1999)...10 State ex rel, Tempero v. Colopy, 173 Ohio St. 122, 180 N.E.2d 273 (1962)...9 State ex rez. Toma v. Corrigan, 92 Ohio St.3d 589, 752 N.E.2d 281 (2001)...10 U.S. Sprint Comm'ns Co. Ltd. P'ship v. Mr. K's Toods, Inc., 68 Ohio St.3d 181, 624 N.E.2d 1048 (1994)...19 In re Vivendi Universal, S.A. Sec. Litig., 765 F.Supp.2d 512 (S.D.N.Y. 2011)...18 iii 1 TABLE OF CONTENTS (continued) Page Walden v. Fiore, 134 S. Ct (2014) The Western and Southern Life Ins. Co. et al. v. The Bank of New York Mellon, No. A (Ct. Com. Pleas Hamilton Cnty.)... STATUTES, RULES AND REGULATIONS... passim U.S.C. 77aaa et seq...6 Ohio Rules of Civil Procedure Civ.R. 12(B)(6)... Civ.R. 12(G)... Federal Rules of Civil Procedure Fed. R. Civ. P. 12(g)(2)... Fed. R. Civ. P. 12(h)(2)... R.C OTHER AUTHORITIES Judy M. Cornett & Michael M. Hoftheimer, Good-Bye Signicant Contacts-General Personal Jurisdiction after Daimler AG v. Bauman, Ohio St. L. J. at 4-5 (forthcoming 2014), online at Bernadette Bollas Genetin, The Supreme Court's New Approach to Personal Jurisdiction, 2015 S.M.U. L. Rev. - (forthcoming), online at Charles Rhodes IV & Cassandra Burke Robertson, Toward a New Equilibrium in Personal Jurisdiction, 48 U.C. Davis L. Rev. - (forthcoming 2014), online at com/abstract= David D. Siegel, U.S. Supreme Court Severely Circumscribes Ps esence' As Basis for Personal Jurisdiction Of Foreign Corporations: Claim Itself Must Have Local Roots; If It Hasn't, Corpos ation's Overall Contacts With State Won't Support Jurisdiction, 265 Siegel's Practice Review 1(2014)...3 iv IN THE SUPREME COURT OF OHIO STATE ex rel. THE BANK OF NEW YORK MELLON, Relator, Case No. V. THE HONORABLE STEVEN E. MARTIN, Respondent. Original Action in Mandamus and Prohibition RELATOR'S MEMORANDUM IN SUPPORT OF PETITION AND COMPLAINT FOR WRIT OF MANDAMUS AND PROHIBITION INTRODUCTION In the first two months of 2014, the United States Supreme Court decided two cases that dramatically changed longstanding principles governing personal jurisdiction over civil claims against nonresident corporate defendants..s'ee Daimler A G v. Baunaan, - U.S. --, 134 S. Ct. 746 (2014); Walden v. Fiore, - U.S. -, 134 S. Ct (2014). This petition presents an opportunity for this Court to send clear direction to the courts of Ohio regarding the application of these new principles. When the underlying case (the Complaint ') giving rise to this writ action was filed in April 2013, Defendant/Relator The Bank of New York Mellon ( BNYM ) promptly argued that the case belonged in the courts of New York-where BNYM is unquestionably subject to jurisdiction, where virtually all of the activity giving rise to the claims took place, and where ` This memorandum uses the same terms as defined in Relator's Complaint for Writ of Mandamus and Prohibition. Unless indicated otherwise, the Complaint refers not to the Complaint for Writ of Mandamus and Prohibition, but rather the action pending in the Hamilton County Court of Common Pleas and assigned to Respondent that is captioned The Western and Soutlaern Life Ins. Co. et al. v. The Bank of New York Mellon, No. A related litigation was well underway. Under the law as it existed in April 2013, however, BNYM was limited to a motion under the discretionary doctrine of forum non conveniens; at that time, it was clearly established that BNYM could be sued in any state in which it had an active business presence. Since then, the governing constitutional law has completely changed. The Supreme Court in Daimler held that a corporation is subject to general jurisdiction (and thus is subject to suit regardless of whether the claim is related to its presence in the forum state) only in the state where it maintains its principal place of business and the state of its incorporation. That decision expressly rejected prior formulations-including those adopted by Ohio courts-that had made corporations subject to general jurisdiction wherever they had meaningful business operations. Then, in Walden, the Court held that a court does not have specific jurisdiction (that is, jurisdiction arising from the location of the operative events in the case) based solely on a defendant's conduct allegedly causing injury in the forum state. Taken together, these two cases make clear for the first time that BNYM is not subject to personal jurisdiction in Ohio with respect to the claims assei-ted in the Complaint. It has been widely recognized that these decisions mark a seismic shift. Just last week, the Second Circuit held that a non-resident bank with a branch in the forum state was not subject to general jurisdiction and that that defense was not waived because it was not available until Daimler. Gucci Am., Inc. v. Weixing Li, - F.3d -, 2014 WL (2d Cir. Sept. 17, 2014). A professor at the University of Akron Law School described Daimler and Walden as usher[ing] in a new era in the law of general and specific personal jurisdiction. Bernadette Bollas Genetin, The Supreme Court's New Approach to Personal Jurisdiction, 2015 S.M.U. L. Rev. - (forthcoming) (attached as Exhibit 6 to the Affidavit of Christopher Houpt), online at 2 And a forthcoming article in The Ohio State Law Journal categorizes the Daimler decision as a game changer. Judy M. Cornett & Michael M. Hoffheimer, Cood-Bye Significant Contacts---General Personal Jurisdiction after Daimler AG v. Bauinan, Ohio St. L. J. at 4-5 (forthcoming 2014) (attached as Houpt Aff. Ex. 7) (emphasis added), online at Daimler has shrunk the places of general jurisdiction against many large corporations to one or two states, which departs from settled law under which corporations have been subject to jurisdiction for all claims in states where they maintained a sufficient permanent presence or engaged in a comparable substantial level of business. Id. at 2, 4. Likewise, the leading commentator on New York practice explained that [a] truckload of cases on personal jurisdiction goes careening into the abyss under the U.S. Supreme Court's recent decision in Daimler. David D. Siegel, U.S. Supreme Court Severely Circumsct ihes Presence' As Basis f'or Personal Jurisdiction Of Foreign Corporations: Claim Itself Must Have Local Roots; If It Hasn't, Corporation s Overall Contacts With State Won't Support Jurisdiction, 265 Siegel's Practice Review 1 (2014). The Daimler and Walden cases, other observers wrote, will have a deep and wide-ranging impact on civil litigation in the coming decades. Charles Rhodes IV & Cassandra Burke Robertson, Toward a New Equilibrium in Personal Jurisdiction, 48 U.C. Davis L. Rev. - (forthcoming 2014) (attached as Houpt Aff. Ex. 8), online at Shortly after Daimler and Walden were decided, BNYM brought them to the attention of Respondent, Hamilton County Court of Common Pleas Judge Steven E. Martin, to whom the Complaint is assigned, by means of a motion to dismiss for lack of personal jurisdiction. Respondent, however, largely ignored the Daimler and Walden decisions, denying the motion on 3 the basis that the defendant has quite extensive contacts in Ohio. It is these contacts in Ohio that make jurisdiction possible in this Court. Houpt Aff. Ex. 5 at 2. In doing so, he relied on precisely the substantial and continuous contacts test that had been the law, but that the Supreme Court rejected in Daimler. He also found that BNYM had waived the defense by not raising it earlier; in fact, however, it would have been futile for BNYM to assert the defense before Daimler. Because Respondent is exercising judicial authority despite a patent and unambiguous lack of jurisdiction, this court should exercise its extraordinary writ power to prevent Respondent from proceeding further. In addition, because BNYM is entitled to entry of an order dismissing the case without prejudice for lack of personal jurisdiction, it seeks a writ of mandamus directing Respondent to enter such an order. In doing so, the Court can clarify for Ohio courts the sweeping restrictions on personal jurisdiction now imposed by Daimler and Walden.2 FACTS The following factual presentation is adopted from paragraphs 1 through 36 of the Complaint for Writ of Mandamus and Prohibition, which allegations are supported by the separately filed Affidavit of Christopher Houpt. Relator BNYM is a bank organized under the laws of the State of New York, having its principal place of business in New York, New York. BNYM is the defendant in the Complaint, which was filed by The Western and Southern Life Insurance Company, Western-Southern Life Assurance Company, Columbus Life Insurance Company, Integrity Life Insurance Company, National Integrity Life Insurance Company, and Fort Washington Investment Advisors, Inc. 2 Indeed, a Missouri Court recently dismissed for lack of personal jurisdiction a nearly identical suit filed against BNYM by other trust beneficiaries in Missouri. Drawing on Daimler and Walden, that court properly concluded that jurisdiction was lacking. See Commerce Bank v. BNYM, No CY2844 (Mo. Cir. Ct. Jackson Cnty. June 25, 2014) (Houpt Aff. Ex. 9). 4 (collectively Plaintiffs or Western & Southern ). Respondent The Honorable Steven E. Martin has been assigned to the Complaint. 1. THE LAWSUIT On April 4, 2013, Western & Southern filed the Complaint before the Hamilton County Court of Common Pleas, which was assigned to Respondent.3 Western & Southern allege that they are Certificateholders in 31 mortgage securitization trusts (the Trusts ) administered by BNYM as Trustee. Houpt Aff. Ex The Trusts hold pools of residential mortgage loans and are governed by contracts, the Pooling and Servicing Agreements ( PSAs ), which Western & Southern attached as Exhibit C to their Complaint.4 Id. 3, 6, A party identified in the PSAs as the Master Servicer (then Countrywide, now Bank of America) 5 collects loan payments from borrowers, making monthly payments to BNYM for distribution to investors. See PSA 3.01, BNYM then distributes proceeds to a New York securities depository, for distribution to its participant banks and then ultimately to certificateholders. See id. 5.02(e). Western & Southern allege that BNYM failed to hold and review the mortgage documents. Houpt Aff. Ex Western & Southern further allege that BNYM had a duty to inform investors of defaults through the notice system of New York-based Depository Ti-ust Company, that it failed to exercise due care in administering the trusts, that it failed to avoid conflicts of interest, and that its trust officers failed to provide accurate certifications and 3 The Complaint is attached as Exhibit 1 to the Houpt Affidavit. 4 The PSA, which is governed by New York law, is alleged to be representative of those governing the other trusts. Houpt Aff. Ex. 1^ 6. Cites in this brief to PSA are to Exhibit C to Exhibit I to the Houpt Affidavit. 5 Currently, the Master Servicer is Bank of America, N.A. It previously was BAC Home Loans Servicing LP, which was formerly called Couiitrywide Home Loans Servicing LP. These entities are together referred to as Countrywide Servicing. Together with the Seller, they are Countrywide. Co\47126$8.3 5 remittance reports. Id The Carnplaint asserts several causes of action: violations of the 1'rust Indenture Act of 1939, 15 U.S.C. 77aaa et seq. ( TIA ) (Counts 1 & 2)6; breach of contract (Count 4); breach of fiduciaiy duty (Count 5); negligence and gross negligence (Count 6); and negligent misrepresentation (Count 7). The Complaint had included a claim for violation of the securities laws of New York State (Count 3) (not Ohio, though Plaintiffs claim injury here), but the Plaintiffs dismissed that count with prejudice in response to BNYM's motion to dismiss onforurn non conveniens grounds. Although Western & Southern allege that BNYM violated various contractual and other duties related to mortgage securitizations, they do not contend that any of this conduct occurred in Ohio. Indeed, they admit-by attaching the PSA to their Complaint-that BNYM was expected to maintain mortgage documents in the State of California. PSA 2.02(a). Aside from document custody, BNYM acts as trustee at its Corporate Trust offices in New York, and the PSAs provide that they are to be governed by the law applicable to contracts to be performed in the State of New York. Id (capitalization omitted). BNYM moved to dismiss or stay the case on forum non conveniens grounds, and in the alternative to dismiss the Complaint on the merits under Civ. R. 12(B)(6). At oral argument on that motion, Respondent stated that, under the controlling law at that time, BNYM could not have disputed jurisdiction, because it does business in Ohio. See 10/22/2013 Tr. at 28 (attached as Exhibit 1 of Exhibit 3 to the Houpt Affidavit). On November 22, 2013, Respondent overruled BNYM's motions, and an entry was filed on the docket on December 18, 2013, denying those motions. BNYM filed its answer on January 20, Count III, for breach of New York's Streit Act, was withdrawn by stipulation. 6 In Daimler-issued on January 14, 2014-the U.S. Supreme Court significantly narrowed the circumstances in which a court may exercise general personal jurisdiction over an out-of-state corporation. Just three years before Daimler, the Supreme Court had stated that general jurisdiction existed wherever a corporate defendant had continuous and systematic general business contacts. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. -, 131 S. Ct. 2846, (2011). In contrast, after Daimler, general jurisdiction exists only when a defendant's contacts with the forum state are so continuous and systematic as to render [it] essentially at home there. Daimler, 134 S. Ct. at 761. The Court stressed that a corporation would only be subject to general jurisdiction in a limited number of places: With respect to a corporation, the place of incorporation and principal place of business are `paradig[m]... bases for general jurisdiction. ' Id. at 760. Only in an exceptional case could a defendant be subject to general jurisdiction in a forum that is neither its state of incorporation or the location of its principal place of business. Id at 761 n.19. A few weeks later, on February 25, 2014, the U.S. Supreme Court decided Walden v. Fiore, 134 S. Ct (2014), in which it foreclosed the argument that specific personal jurisdiction is available where a party acting entirely outside a state is alleged to have intentionally caused an injury that manifests itself in the state. As the Court explained in Walden, the relationship must arise out of contacts that the `defendant hitnselfcreates with the forum State ; it is improper to satisfy the defendant-focused `minimum contacts' inquiry by demonstrating contacts between the plaintiff (or third parties) and the forum State. 134 S.Ct. at 1122 (emphasis in original). Taken together, Daimler and Walden, at least in the context of this case, created a dramatic shift in the law of personal jurisdiction. As a result, on March 27, 2014, BNYM filed a Co\ motion to dismiss before Respondent, explaining that Daimler and Walden fundamentally alter the limits of personal jurisdiction under the U.S. Constitution. BNYM explained that, because of Daimler and Walden, BNYM is no longer subject to personal jurisdiction in Ohio for the claims at issue in the Complaint. The motion is attached as Exhibit 2 to the Houpt Affidavit. On April 23, 2014, Western & Southern filed its opposition to BNYM's motion. The opposition is attached as Exhibit 3 to the Houpt Affidavit. In its opposition, Western & Southern offered into evidence a number of references to the Ohio contacts of BNYM affiliates, such as The Bank of New York Mellon Trust Company, N.A., which is not a
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