United States Court of Appeals 

For the First Circuit 

No. 18-1884 

AER ADVISORS, INC.; WILLIAM J. DEUTSCH; PETER E. DEUTSCH, 

Plaintiffs, Appellants, 

v. 

FIDELITY BROKERAGE SERVICES, LLC, 

Defendant, Appellee. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF MASSACHUSETTS 

[Hon. Patti B. Saris, U.S. District Judge] 

Before 

Thompson, Circuit Judge, 

Souter,* Associate Justice, 

and Lipez, Circuit Judge. 

David Graff, with whom Graff Silverstein LLP, Howard Graff, 

Arent Fox LLP, Irwin B. Schwartz, Nicholas R. Cassie, and BLA 

Schwartz, PC were on brief, for appellants. 

Christopher R.J. Pace, with whom Christopher M. Morrison and 

Jones Day were on brief, for appellee. 

Ira D. Hammerman, Kevin M. Carroll, Securities Industry and 

Financial Markets Association, Colleen P. Mahoney, James R. 

Carroll, Alisha Q. Nanda, Immanuel R. Foster, Skadden, Arps, Slate, 

Meagher & Flom LLP, on brief for the Securities Industry and 

Financial Markets Association (SIFMA), amicus curiae in support of 

affirmance. 

 * Hon. David H. Souter, Associate Justice (Ret.) of the 

Supreme Court of the United States, sitting by designation. 
April 17, 2019 
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THOMPSON, Circuit Judge. William and Peter Deutsch, 

father and son, together with their financial advisor, AER Advisors 

("AER"), ask us to undo the district judge's decision dismissing 

their complaint against Fidelity Brokerage Services, LLC 

("Fidelity") under Fed. R. Civ. P. 12(b)(6).1 The judge had deemed 

Fidelity immune from suit here based on an immunity provision in 

the Bank Secrecy Act ("BSA"), 31 U.S.C. § 5318(g)(3)(A) — a 

provision that says, most pertinently, that a "financial 

institution that makes a voluntary disclosure of any possible 

violation of law or regulation to a government agency . . . shall 

not be liable to any person under any law or regulation of the 

United States, [or] any constitution, law, or regulation of any 

State . . ., for such disclosure." Seeing no reason to reverse 

the judge's thoughtful decision, we affirm. 

How the Case Got Here

We draw the facts from the complaint's allegations, 

which at this stage of the litigation we must accept as true and 

construe in the light most favorable to plaintiffs. See, e.g., 

Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st 

Cir. 2012).

 1 For convenience, we will sometimes refer to AER, William 

Deutsch, and Peter Deutsch, collectively, as "plaintiffs." 
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Parties' Dealings

At all times relevant to this suit, AER operated as a 

registered investment advisor, serving wealthy clients nationally. 

In 2009, AER joined Fidelity's Wealth Central platform, giving it 

access to Fidelity's investment technologies — technologies that 

AER relied on in advising its clients. William and Peter were two 

of AER's clients. And they were and are, respectively, chairman 

and chief executive officer of a billion-dollar company called 

Deutsch Family Wine & Spirits. 

Starting in 2011 and continuing through part of 2012, 

the Deutsches pursued a "China Gold" investment strategy 

introduced by AER and supported by Fidelity — a strategy that 

resulted in their acquiring millions of shares of China Medical 

Technologies, Inc. ("China Medical"), all in the hopes of making 

a profit from an eventual management buy-out or a third-party 

acquisition of that company. In March 2012, Fidelity offered the 

Deutsches the chance to participate in its "fully paid lending 

program," in which they would lend Fidelity their China Medical 

shares for an interest-based fee. If they accepted Fidelity's 

offer, they probably would have been able to engineer a "short 

squeeze."2 But they declined, saying they had no interest in 

lending stock. 

 2 A "short squeeze" involves a 
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Apparently unwilling to take no for an answer, Fidelity 

lent about 1.8 million of the Deutsches' China Medical shares to 

 

situation when prices of a stock . . . start to move up 

sharply and many traders with short positions are forced 

to buy stocks or commodities . . . to cover their 

positions and prevent losses. This sudden surge of 

buying leads to even higher prices, further aggravating 

the losses of short sellers who have not covered their 

positions. 

 

Tello v. Dean Witter Reynolds, Inc., 410 F.3d 1275, 1277 n.3 (11th 

Cir. 2005) (quoting John Downes & Jordan Elliot Goodman, Barron's 

Finance & Investment Handbook 807 (6th ed. 2003)), abrogated on 

other grounds by Merck & Co. v. Reynolds, 559 U.S. 633 (2010). To 

bring a little more clarity to the matter, we note that a "short 

position" — mentioned in the short-squeeze definition — is a 

technique used by some investors. As a leading treatise explains: 

A "short sale" is . . . any sale of a security which the 

seller does not own or any sale which is consummated by 

the delivery of a security borrowed by, or for the 

account of, the seller. Short selling can be a logical 

trading strategy for a trader who believes that the price 

of shares is likely to decline over the near-term. To 

sell short, the trader typically borrows the shares from 

a broker who obtains them either from its own reserves 

or from an external source. The trader then sells the 

borrowed shares in the open market. At this point, the 

trader has an "open short position" in the stock. At 

some point in the future, the trader "covers" the short 

position by purchasing an identical number of shares and 

returning them to the lender. [If,] as the trader hopes, 

the share price declines, the trader earns a profit equal 

to the difference between the price at which she sold 

short and the price at which she purchased the shares 

back to cover the short position (not taking into account 

fees or commissions). Short selling can be extremely 

risky because if the stock price rises, the trader must 

cover the short position at a loss. 

 

23A Jerry W. Markham and Thomas Lee Hazen, Broker-Dealer Operations 

Sec. & Comm. Law § 9.7 (citations and some internal quotation marks 

omitted) (quoting SEC v. Colonial Inv. Mgmt. LLC, 659 F. Supp. 2d 

467, 470 (S.D.N.Y. 2009), aff'd, 381 F. App'x 27 (2d Cir. 2010)).
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short sellers or their brokers between May and early June 2012. 

Fidelity made money from these loans. But the Deutsches got 

nothing — no notice of what Fidelity was up to, no collateral to 

protect their interests, and no compensation. 

On June 11, 2012, after "a routine monthly transfer of 

[China Medical] shares between the Deutsches' margin accounts," 

Fidelity's surreptitious lending triggered a recall obligation, 

basically because Fidelity had loaned more China Medical 

securities than legally permitted (fyi, all dates in the rest of 

this paragraph refer to 2012 as well). Over the next several days, 

Fidelity issued recall notices for about 1.8 million shares. The 

recalls for about 1.2 million shares failed, however, causing 

Fidelity to believe a short squeeze would occur. Ultimately, China 

Medical's stock price went from $4.00 per share on June 13 to 

$11.80 per share on June 29. Fidelity ended up buying roughly 1.2 

million shares on the open market between June 19 and June 27. 

And the Securities and Exchange Commission ("SEC") halted trading 

in China Medical securities on July 29. 

Investigations 

Sometime around July 5, 2012, Fidelity filed a 

suspicious activity report ("SAR") with the federal Treasury 

Department's Financial Crimes Enforcement Network, accusing the 

Deutsches of manipulating China Medical's stock price. Plaintiffs 

base this allegation on an internal memo written by David Whitlock, 
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an employee in Fidelity's Compliance Department, which they say 

"upon information and belief . . . reflects the contents" of the 

SAR.3 Whitlock's memo recommended that Fidelity's Investigations, 

Evaluation and Response Department investigate the Deutsches' 

China Medical-related activities because they had "the appearance 

of attempting to influence a short squeeze in the stock of China 

Medical." And "a scheme to manipulate the price or availability 

of stock in order to cause a short squeeze is illegal," his memo 

added. 

In August 2012, the SEC kicked off an investigation of 

both AER and Peter Deutsch for (in plaintiffs' words) "possible 

market manipulation in the equities of China Medical." AER, for 

example, received one SEC subpoena and participated in one SEC 

interview. Peter also participated in one SEC interview. State 

securities agencies investigated AER as well. William was not 

investigated at all, apparently (he makes no allegation that he 

was). Ultimately, neither the SEC nor the state agencies pursued 

enforcement actions against AER or Peter. Still, AER had to spend 

 3 Because a major goal of the BSA is to help law enforcement 

react quickly to evidence of financial chicanery, federal law 

mandates that SARs be kept confidential so that the SARs' subjects 

do not learn that they have come under suspicion. In fact, federal 

law forbids financial institutions, government authorities, and 

their respective employees from disclosing SARs or even "any 

information that would reveal the[ir] existence." 31 C.F.R. 

§ 1023.320(e)(1)(i); 31 U.S.C. § 5318(g)(2)(A). Indeed, federal 

law makes it a federal crime to willfully disclose the existence 

or contents of an SAR. See 31 U.S.C. § 5322(a). 
- 8 - 

hundreds of thousands of dollars in defending itself and did not 

"economically recover" from the ordeal. Peter had to spend 

hundreds of thousands of dollars too and suffered emotional 

distress as well. 

Proceedings in the Southern District of Florida 

Invoking diversity jurisdiction, the Deutsches and AER 

later sued Fidelity in Florida's federal district court. Their 

operative complaint contained an array of Florida-law claims, 

including claims predicated on the SAR — e.g., negligent reporting 

and misrepresentation, fraud, and tortious interference with 

existing and prospective business relations. 

Fidelity eventually moved to dismiss the complaint or to 

transfer the case to Massachusetts's federal district court. Most 

pertinently for our purposes, Fidelity's dismissal arguments 

pushed the idea that the BSA immunized it from any civil liability 

for filing the SAR. And its transfer arguments pushed the notion 

that all the events leading to the suit happened in or around 

Massachusetts. Plaintiffs opposed the motion, contending among 

other things that the BSA did not shield Fidelity from liability 

for its "bad faith" filing of the SAR and that Florida was a 

reasonably convenient forum for all concerned. 

Noting "the vast majority of the facts underpinning 

[p]laintiffs' cause[s] of action did not occur in . . . Florida," 

the federal district court in Florida held that "the locus of 
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operative facts in this case favors a transfer to the District of 

Massachusetts." So that court transferred the action to 

Massachusetts under 28 U.S.C. § 1404(a) and denied Fidelity's 

"other arguments and requests" as moot.4 To use some legalese, 

the Florida federal court here was the "transferor court" and the 

Massachusetts federal court was the "transferee court." See Atl. 

Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 

U.S. 49, 64-65 (2013). 

Proceedings in the District of Massachusetts 

Again asserting diversity jurisdiction, plaintiffs filed 

an amended complaint after the transfer, alleging Florida-law 

claims for negligent reporting, interference with existing and 

prospective business relations, breach of contract, breach of good 

faith and fair dealing, promissory estoppel, breach of fiduciary 

duty, unjust enrichment, negligence or gross negligence, deceptive 

and unfair trade practices, and prima facie tort. A common theme 

in each claim was that Fidelity filed an SAR falsely accusing 

 4 Section 1404(a) states that "[f]or the convenience of 

parties and witnesses, in the interest of justice, a district court 

may transfer any civil action to any other district or division 

where it might have been brought or to any district or division to 

which all parties have consented."
- 10 - 

plaintiffs of trying to manipulate the market for China Medical 

stock, which sparked the governmental investigations. 

Fidelity responded with a motion to dismiss the 

complaint. First Fidelity argued that First Circuit law applied 

to federal questions transferred here under § 1404(a). Then citing 

Stoutt v. Banco Popular de Puerto Rico, 320 F.3d 26 (1st Cir. 

2003), Fidelity wrote "that the BSA provides a financial 

institution with absolute immunity from civil liability for filing 

a[n] SAR." The provision Fidelity relied on says (as we said 

earlier) that a "financial institution that makes a voluntary 

disclosure of any possible violation of law or regulation to a 

government agency . . . shall not be liable to any person under 

any law or regulation of the United States, [or] any constitution, 

law, or regulation of any State . . ., for such disclosure." See 

31 U.S.C. § 5318(g)(3)(A) (emphasis added). Keep the italicized 

phrase "any possible violation of law" in mind. 

Plaintiffs opposed the motion, arguing that the 

§ 1404(a) transfer left the applicable law unaffected. Which meant 

Eleventh Circuit law, specifically Lopez v. First Union National 

Bank of Florida, 129 F.3d 1186 (11th Cir. 1997), controlled and 

(to quote their memo) holds "that immunity may be conferred in 

this case (transferred from Florida District Court) only with 

respect to a[n] SAR filing made in good faith." And, plaintiffs 

continued, because Fidelity used the SAR "as a smoke screen to 
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camouflage [its] own contraventions of law" and did not 

"objective[ly] identif[y] a possible violation" by plaintiffs, 

Fidelity's "bad faith" filing precluded a grant of immunity under 

the BSA. 

Taking up the motion, the district judge wrote that when 

federal-law questions arise, "the transferee court will apply the 

law of its own circuit" — a "general rule" that "applies with equal 

force where a transferee court is considering a federal statutory 

defense in a diversity case." AER Advisors Inc. v. Fidelity 

Brokerage Servs. LLC, 327 F. Supp. 3d 278, 284 (D. Mass. 2018). 

And with that, the judge applied this Circuit's interpretation of 

the BSA. Id. 

Relying on Stoutt, the judge then wrote that the BSA 

grants financial institutions "absolute immunity from suit, even 

when [their] disclosures are fabricated or made with malice" — in 

other words, there is no "good faith qualification to [civil] 

immunity," meaning this immunity applies even to fraudulent SARs 

filed by an institution to "falsely point blame at others to cover 

up its own wrongdoing." AER Advisors Inc., 327 F. Supp. 3d at 

284-85 (discussing Stoutt, 320 F.3d at 30-33). The judge also 

rejected plaintiffs' theory that Fidelity's SAR could not have 

stated a "possible violation of law." Id. at 285. Even if Fidelity 

"'knew that there was (in reality) no violation,'" the judge 

reasoned, "[b]ased on [p]laintiffs' own allegations, the SAR . . . 
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'was cast' as a disclosure of a possible violation of securities 

law." Id. (quoting Stoutt, 320 F.3d at 30). Criminal law, the 

judge added, is the mechanism to deter and remedy false reports to 

the government, whose agents are quite capable of "filter[ing] out 

SARs reporting 'false charges' and decid[ing] not to pursue those 

investigations." Id. (quoting Stoutt, 320 F.3d at 32). So the 

judge dismissed the case under Rule 12(b)(6). Id. at 280. 

The Parties' Principal Appellate Arguments 

Unhappy with the judge's ruling, plaintiffs appeal, 

making two basic arguments (echoing their positions in the district 

court). One is that Eleventh Circuit precedent applies because 

the case came to our Circuit via a transfer order from a court in 

the Eleventh Circuit. And, plaintiffs say, Eleventh Circuit 

precedent holds that BSA immunity requires a good-faith filing — 

a requirement not met here because Fidelity filed "an intentionally 

misleading SAR . . . to cover up [its] own wrongdoing." The second 

argument is that even if First Circuit precedent applies, we (in 

their words) must not read the BSA as "immuniz[ing] an institution 

that filed a report disclosing an objectively impossible violation 

that falsely implicated the victim of the financial institution's 

own wrongdoing — leading the government to investigate the victim 

rather than the perpetrator." To let Fidelity escape scot-free 

would frustrate the congressional purpose behind the BSA, which is 

to help "law enforcement by incentivizing reports of violations of 
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law" — "not to incentivize the issuance of reports that will be of 

no use to law enforcement; i.e., reported facts that could not 

possibly constitute a violation of law" (quotations taken from 

their brief). And they insist that a trio of state-court opinions 

support their view of how BSA immunity should work. 

Fidelity, for its part, thinks that plaintiffs are wrong 

across the board (repeating what they argued below). Courts of 

appeals, Fidelity writes, regularly hold "that a district court" 

must "appl[y] the law of its own Circuit to federal questions (such 

as whether BSA immunity applies to Fidelity), including in cases 

transferred from another Circuit." So, Fidelity continues, Stoutt 

applies and gives "a financial institution . . . BSA immunity 

even if it files a[n] SAR that is 'wholly unfounded'" (the interior 

quotation is from Stoutt, 320 F.3d at 31). On the public-policy 

front, Fidelity writes that "[u]nqualified BSA immunity" is key to 

the SAR regime — to create an atmosphere that encourages financial 

institutions to report dishonest-looking activities without the 

fear of reprisals in civil lawsuits. And finally, Fidelity 

protests that the state-court cases plaintiffs champion cannot 

trump our Stoutt opinion. 

The Standard of Review 

We review the judge's dismissal decision with fresh 

eyes, knowing that she could grant Fidelity's BSA-immunity-based 

dismissal motion only if, after taking the complaint's well-
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pleaded facts as true and drawing every reasonable inference in 

plaintiffs' favor, see Schatz, 669 F.3d at 55, the facts 

establishing Fidelity's immunity "are clear on the face of . . . 

plaintiff[s'] pleading[]," see Medina-Padilla v. U.S. Aviation 

Underwriters, Inc., 815 F.3d 83, 85 (1st Cir. 2016); see also 

DeGrandis v. Children's Hosp. Boston, 806 F.3d 13, 16 (1st. Cir. 

2015). 

Our Take 

First Circuit Law Governs this Case 

 First up is plaintiffs' claim that the judge should have 

applied the Eleventh Circuit's interpretation of BSA immunity in 

Lopez, not our interpretation in Stoutt. Unfortunately for 

plaintiffs, however, we — like Fidelity — side with the district 

judge on this issue. And we spill a bit of ink to explain why. 

While we have yet to consider the subject, every Circuit 

to do so has concluded that when one district court transfers a 

case to another, the norm is that the transferee court applies its 

own Circuit's cases on the meaning of federal law — and for a good 

reason: as Justice (then Judge) Ginsburg pithily put it, in "the 

adjudication of federal claims," federal courts ordinarily 

"comprise a single system in which each tribunal endeavors to apply 

a single body of law," and if different circuits view federal law 

differently, then the Supreme Court can restore "uniformity." In 

re Korean Air Lines Disaster of Sept. 1, 1983, 829 F.2d 1171, 1175, 
- 15 - 

1176 (D.C. Cir. 1987) (brackets and internal quotation marks 

omitted), aff'd on other grounds sub nom. Chan v. Korean Air Lines, 

Ltd., 490 U.S. 122 (1989).5 Notably, and as footnote 5 of our 

opinion shows, even the Eleventh Circuit — the very Circuit whose 

law plaintiffs say should apply — flatly rejects the notion that 

a transferee court must always use the transferor Circuit's 

interpretation of federal law. See Murphy, 208 F.3d at 966 

 5 Cases from the Second, Fourth, Fifth, Eighth, Ninth, and 

Eleventh Circuits come out the same way. See Menowitz v. Brown, 

991 F.2d 36, 40 (2d Cir. 1993) (noting that "a transferee federal 

court should apply its interpretations of federal law, not the 

construction of federal law of the transferor circuit"); Bradley 

v. United States, 161 F.3d 777, 782 n.4 (4th Cir. 1998) (explaining 

that "this court cannot and does not apply the law of another 

circuit simply because the case was transferred from the other 

circuit"); Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 

1134, 1138 (5th Cir. 1992) (emphasizing that "[w]hen a case is 

transferred from a district in another circuit, the precedent of 

the circuit court encompassing the transferee district court 

applies to the case on matters of federal law"); In re TMJ Implants 

Prods. Liab. Litig., 97 F.3d 1050, 1055 (8th Cir. 1996) (agreeing 

that "[w]hen analyzing questions of federal law, the transferee 

court should apply the law of the circuit in which it is located"); 

Newton v. Thomason, 22 F.3d 1455, 1460 (9th Cir. 1994) (declaring 

that "when reviewing federal claims, a transferee court in this 

circuit is bound only by our circuit's precedent"); Murphy v. FDIC, 

208 F.3d 959, 964, 966 (11th Cir. 2000) (holding that a "transferee 

court should apply its own interpretation of federal law"). And 

cases from the Seventh and Tenth Circuits reached the same 

conclusion, albeit in dicta. See Eckstein v. Balcor Film Inv'rs, 

8 F.3d 1121, 1126 (7th Cir. 1993) (pointing out that although 

"Congress might require one federal court to apply another's 

interpretation of federal law, . . . § 1404(a) does not itself do 

so," and "agree[ing] with Korean Air Lines that a transferee court 

normally should use its own best judgment about the meaning of 

federal law when evaluating a federal claim"); Olcott v. Del. Flood 

Co., 76 F.3d 1538, 1546 (10th Cir. 1996) (same). We will have 

more to say about Eckstein and Olcott later. 
- 16 - 

(concluding that in dealing with a federal common-law defense, the 

transferee court correctly applied its own Circuit's law instead 

of the transferor Circuit's law — the rationale being that "[s]ince 

the federal courts are all interpreting the same federal law, 

uniformity does not require that transferee courts defer to the 

law of the transferor circuit"). Persuaded by their legal 

analyses, today we join those Circuits and thus conclude that First 

Circuit law governs this case. 

Hold on, plaintiffs insist: two Supreme Court opinions 

— Van Dusen v. Barrack, 376 U.S. 612, 636 (1964), and Ferens v. 

John Deere Co., 494 U.S. 516, 522-23 (1990) — say that a transfer 

under § 1404(a) accomplishes "a change in courtrooms" only, not "a 

change of law." Which means, according to plaintiffs, the law of 

the transferor Circuit — here, Eleventh Circuit law — always 

follows the case. Though artfully presented, this argument is not 

a difference-maker. 

Van Dusen and Ferens say that if a federal court 

transfers a diversity case under § 1404(a), the transferee court 

applies the state law that the transferor court would have applied 

to any questions of state law. See Van Dusen, 376 U.S. at 627; 

Ferens, 494 U.S. at 524-25. Van Dusen, for example, held that 

"where the defendants seek transfer, the transferee district court 

must be obligated to apply the state law that would have been 

applied if there had been no change of venue" — in other words, a 
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venue change "under § 1404(a) generally should be, with respect to 

state law, but a change of courtrooms." See 376 U.S. at 639 

(emphasis added). Van Dusen left open the question whether the 

same rule "would govern if a plaintiff," rather than a defendant, 

"sought transfer under § 1404(a)." Id. at 640. Ferens answered 

that question by holding "that the transferor law should apply 

regardless of who makes the § 1404(a) motion." 494 U.S. at 531. 

Van Dusen and Ferens are diversity cases. And with 

diversity cases, federalism commands that federal judges apply 

state substantive law exactly as a state court would, see Erie 

R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) — a rule that aims to 

accomplish two things: prevent forum-shopping, "which had been 

encouraged by a regime in which the choice of state or federal 

court might determine what substantive law would govern the 

litigation," S.A. Healy Co. v. Milwaukee Metro. Sewerage Dist., 60 

F.3d 305, 309 (7th Cir. 1995) (Posner, C.J.); and "avoid[]" the 

"inequitable administration of the laws," Hanna v. Plumer, 380 

U.S. 460, 468 (1965).6 Ultimately, and importantly here, the 

concern animating Erie — maintaining the dual dignity of our state 

and federal systems — animates Van Dusen and Ferens too. See Van 

Dusen, 376 U.S. at 638 (explaining that in "[a]pplying" Erie's 

 6 Actually, though Erie's rule comes into play most often in 

diversity cases, it also applies to state-law claims brought to 

federal court via supplemental jurisdiction. See Felder v. Casey, 

487 U.S. 131, 151 (1988). 
- 18 - 

"analysis to § 1404(a)," courts "should ensure that the 'accident' 

of federal diversity jurisdiction does not enable a party to 

utilize a transfer to achieve a result in federal court which could 

not have been achieved in the courts of the State where the action 

was filed"); Ferens, 494 U.S. at 524 (stressing that "[t]he policy 

that § 1404(a) should not deprive parties of state-law advantages, 

although perhaps discernible in the legislative history, has its 

real foundation in Erie"). 

As for our situation, yes, plaintiffs filed a diversity 

complaint alleging scads of state-law claims. But as the parties 

recognize, the present appeal (to borrow from plaintiffs' brief) 

"devolves from a dispute surrounding the scope and application" of 

a federal statutory defense —— which makes this case unlike Van 

Dusen and Ferens. And we cannot say it any clearer than nowJustice Ginsburg did many years ago: "[n]othing" in Van Dusen 

compels one federal court to apply another's interpretation of 

federal law after a case's transfer. See Korean Air Lines, 829 

F.2d at 1186. The same goes for Ferens, by the way. So plaintiffs' 

Van Dusen/Ferens-based arguments go nowhere. 

Now, true, Congress sometimes tells a federal court to 

apply another's interpretation of federal law — like when "Congress 

. . . instruct[s] federal courts to adopt state law or federal law 

of individual circuits as of a given date," which implies that 

"some aspects of federal law will be 'geographically non-
- 19 - 

uniform.'" See 15 Charles Alan Wright et al., Federal Practice 

and Procedure § 3846 (4th ed. 2018). And in that situation, "some 

courts conclude that the transferee court should apply the law 

that would have been applied by the transferor court's circuit." 

Id. 

Two cases plaintiffs cite to fall in that category: 

Eckstein, a Seventh Circuit opinion, and Olcott, a Tenth Circuit 

opinion. See Eckstein, 8 F.3d at 1126 ("agree[ing] with Korean 

Air Lines that a transferee court" should typically consider 

federal questions "independently and reach[] its own decision, 

without regard to the geographic location of the events giving 

rise to the litigation," but concluding that § 27A of the 

Securities Exchange Act of 1934, 15 U.S.C. § 78aa-1, "instructs us 

to act differently" on a statute-of-limitations issue); Olcott, 76 

F.3d at 1545-46 (same, quoting Eckstein).7 Our situation, however, 

does not involve any congressional command compelling a transferee 

court to apply another Circuit's understanding of federal law. So 

 7 See generally McMasters v. United States, 260 F.3d 814, 819 

(7th Cir. 2001) (emphasizing that "[o]nly where the law of the 

United States is specifically intended to be geographically nonuniform" — such as with § 27A — "should the transferee court apply 

the circuit precedent of the transferor court"). But see Menowitz, 

991 F.2d at 40 (holding that because "federal law (unlike state 

law) is supposed to be unitary," a transferee court should use the 

law of its Circuit and not the law of the transferor court when 

dealing with a § 27A limitations issue). 
- 20 - 

despite plaintiffs' best efforts, they get no help from Eckstein 

and Olcott. 

Plaintiffs' brief also hypes two district court 

opinions: In re Fresenius Granuflo/NaturaLyte Dialysate Prods. 

Liab. Litig., 76 F. Supp. 3d 294 (D. Mass. 2015), and In re Methyl 

Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 241 F.R.D. 435 

(S.D.N.Y. 2007). Fresenius did not involve a § 1404(a) transfer, 

however. The issue there was what state law should apply to 

plaintiffs' state-law consumer protection claim. See 76 F. Supp. 

3d at 300-05. And nothing in Fresenius suggests the district court 

believed it had to apply the federal law of any Circuit other than 

the First Circuit. In MTBE, the judicial panel on multi-district 

litigation transferred plaintiffs' state-tort lawsuit to a single 

district court (the "MDL court") for consolidated pre-trial 

proceedings with other similar suits, knowing that once these 

proceedings concluded, each case not terminated would return to 

the original district court for trial. See 241 F.R.D. at 437-40; 

28 U.S.C. § 1407. The MDL court held that "[i]n the context of 

pre-trial issues such as motions to dismiss . . . section 1407 

requires the application of the law of the transferee circuit where 

the motions are being considered." MTBE, 241 F.R.D. at 439. But 

for "issues inherently enmeshed with the trial," the MDL court 

said that the law of the transferor courts should apply because 

the cases would have to go back to them for any trial. Id. at 
- 21 - 

440-41. That situation is nothing like the one before us. Plainly 

then, neither of these non-binding district court opinions helps 

plaintiffs' cause.8

The long and the short of it is that First Circuit 

caselaw interpreting BSA immunity applies here, not Eleventh 

Circuit caselaw. And we trudge on. 

 8 As a parting shot on this issue, plaintiffs fume that 

Fidelity pulled a fast one, convincing the Florida federal court 

to transfer the case (as they put it) for "the conveniences of 

administering discovery and trial," but then moving to dismiss 

their claims after the transfer (they make this argument under the 

heading blasting the Massachusetts federal court's use of First 

Circuit law). To their way of thinking, principles of judicial 

estoppel precluded Fidelity from asking the transferee court to 

jettison their claims, thus eliminating the need for discovery and 

trial. But their argument does not hold together. 

Judicial estoppel applies "when a litigant is playing fast 

and loose with the courts, and when intentional self-contradiction 

is being used as a means of obtaining unfair advantage" — with 

"[u]nfair advantage generally" meaning the "party . . . succeeded 

previously with a position directly inconsistent with the one it 

currently espouses." Franco v. Selective Ins. Co., 184 F.3d 4, 9 

(1st Cir. 1999) (internal quotation marks omitted); see also Alt. 

Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 33 (1st Cir. 

2004) (emphasizing that "[t]he doctrine's primary utility is to 

safeguard the integrity of the courts by preventing parties from 

improperly manipulating the machinery of the justice system"). 

Nothing approaching that scenario happened here. Plaintiffs 

suggest that Fidelity kept the BSA-immunity theory under wraps for 

later use in the transferee court. Yet, on this record, that is 

pure speculation — really, it is worse than that, since the record 

(don't forget) shows Fidelity invoked BSA immunity in the very 

same motion in which it alternatively argued for a transfer. Plus 

plaintiffs cite no authority (nor can we think of any) embracing 

their view that a litigant in Fidelity's shoes cannot later move 

to dismiss a case after securing a § 1404(a) transfer.
- 22 - 

First Circuit Law Bars Plaintiffs' Claims 

 Again, plaintiffs' basic theory is that Fidelity cannot 

get BSA immunity. And that is because, according to plaintiffs, 

Fidelity acted in "bad faith" by "intentionally" filing an SAR 

that accused them of manipulating the market to create a short 

squeeze — all the while knowing it was "objectively impossible" 

for them to have done so, since Fidelity knew its own misconduct 

had triggered the short squeeze. And plaintiffs make several 

arguments for why they are right and thus should get to bring their 

case to trial. But our Stoutt opinion — which involved a criminal 

referral form ("CRF"), a predecessor form to the SAR — pulls the 

rug out from under them. 

The defendant bank in Stoutt filed a CRF with the FBI, 

accusing Palmer Stoutt of passing a check he knew he did not have 

cash to cover. 320 F.3d at 28. He alleged that the bank encouraged 

him to do what he did (for reasons not relevant here). Id. at 27-

28, 32. The bank "cast" the CRF "as the disclosure of a possible 

case of bank fraud," unquestionably "a possible" federal offense. 

Id. at 30. And after the FBI investigated and arrested him, a 

federal grand jury indicted him for that crime. Id. at 28-29. 

But the government dismissed the charges (for reasons not revealed 

in the record). Id. at 29. Unwilling to let bygones be bygones, 

Stoutt (as relevant here) sued the bank in federal court, alleging 

only local-law torts. See id. As an affirmative defense, the 
- 23 - 

bank claimed immunity from all of Stoutt's local-law claims under 

the BSA's "safe harbor provision," which "protects disclosures of 

'any possible violation of law.'" Id. at 29, 30.9 And the district 

court later granted the bank's BSA-immunity-based motion for 

summary judgment. Id. at 29. 

Zeroing in on the "any possible violation of law" 

phrasing, Stoutt argued on appeal that the provision implicitly 

requires that "any suspicions conveyed to the authorities be held 

in good faith" — a prerequisite missing there "because the Bank 

knew that [he] was innocent of criminal conduct." Id. But we 

would have none of it. "Conceivably," we wrote, "Stoutt could 

argue that the report was not one of a possible violation, even 

though so termed and colorably disclosing a possible crime, if the 

Bank knew that there was (in reality) no violation." Id. at 30. 

"But," we added, "this is a non-literal reading of the statute, 

which speaks of 'any possible violation.'" Id. And, we noted, 

"whatever its internal beliefs" — Stoutt, again, claimed the bank 

was dead certain that he was guiltless — "the Bank did by any 

objective test identify a 'possible violation.'" Id. 

 As support for our position, we drove home these points: 

Congress could have easily added a good-faith requirement to the 

 9 The version of the BSA that applied in Stoutt is slightly 

different from the one that applies now. See id. at 29 n.3. But 

the difference does not matter, because both grant civil immunity 

for a "disclosure of any possible violation of law." 
- 24 - 

statute but did not. Id. at 31. Actually, such a "requirement 

. . . was at one time in the proposed immunity provision" but got 

pulled before passage. Id. Which makes sense, since the provision 

was (according to its congressional author) "intended to provide 

'the broadest possible exemption from civil liability for the 

reporting of suspicious transactions.'" Id. (quoting 139 Cong. 

Rec. E57-02 (1993)). And as far as Congress's policy concerns, 

"any qualification" on the immunity created by the BSA "poses 

practical problems," including that imposing an "objective 

reasonableness" or a "subjective good faith" requirement on a 

filing would "obviously create[] a risk of second guessing" and 

discourage disclosure. Id. (emphasis added). More, the risk that 

an "unfounded" or "malicious" filing will result in "false charges" 

is slight since "ordinarily the disclosures will as a practical 

matter be made to the [government] authorities, who provide their 

own filter as to what investigations are pursued and made public." 

Id. at 32. More still, "remedies other than private damage actions 

are available for wilfully false reports: private sanctions such 

as employment termination, and government penalties such as fines 

and imprisonment."10 Id. (citing 18 U.S.C. §§ 1001, 1517). 

 10 "Wilfully" is the British spelling of the American 

"willfully." See Bryan A. Garner, Garner's Modern American Usage

864 (3d ed. 2009). 
- 25 - 

Given this compendium of considerations, we concluded 

that the BSA immunizes financial institutions even if their 

"disclosures [are] unfounded, incomplete, careless and even 

malicious," just so long as they identify "a possible violation" 

of law — something the bank had done there. See id. at 32 (internal 

quotation marks omitted). And in doing so, we rejected the 

Eleventh Circuit's view in Lopez, 129 F.3d at 1192-93 — the very 

opinion our plaintiffs urge us to follow — that immunity applies 

only when "a financial institution ha[s] a good faith suspicion 

that a law or regulation may have been violated." Instead, we 

accepted the Second Circuit's position in Lee v. Bankers Trust 

Company, 166 F.3d 540, 544 (2d Cir. 1999), that the "plain language 

of the safe harbor provision describes an unqualified privilege, 

never mentioning good faith or any suggestive analogue thereof." 

See Stoutt, 320 F.3d at 30 (siding with the Second Circuit over 

the Eleventh Circuit). 

Now back to our case. Calling Fidelity's conduct 

"deceptive," "fraudulent," and "misleading" — words they use 

because Fidelity submitted the SAR to conceal its own crime — 

plaintiffs' brief argues at length that financial institutions 

cannot get BSA immunity if they acted in "bad faith." Which is 

simply another way of saying financial institutions can get BSA 

immunity only if they acted in "good faith." But that argument 

goes poof, given how it is just like the one we shot down in 
- 26 - 

Stoutt. See 320 F.3d at 30-32. 

Ditto for plaintiffs' contention that BSA immunity does 

not apply if the SAR accuses someone of an "objectively impossible" 

violation of law — "objectively impossible," the argument goes, 

because Fidelity caused the illegal short squeeze, not them. But, 

to repeat, Stoutt expressly refused to limit BSA immunity by 

splicing an "objective reasonableness" requirement into the 

statute. See id. at 31. Anyway, if an SAR discloses an 

"objectively impossible" violation of law — plaintiffs offer the 

hypothetical example of an SAR accusing the Deutsch family of 

"kill[ing] Abraham Lincoln in 2012" — we doubt the government would 

investigate or prosecute such an accusation. Stoutt also said 

with crystalline clarity that this immunity applies even if a 

financial institution files an SAR that is "wholly unfounded." 

Id. And we think that phrase is broad enough to encompass a 

situation where the SAR claims an "impossible" or "objectively 

impossible" violation of law. 

Stoutt similarly precludes plaintiffs' argument "that an 

intentionally misleading SAR" prevents Fidelity from getting BSA 

immunity. After all, Stoutt firmly ruled that a financial 

institution receives BSA immunity for SAR disclosures even for 

"malicious" or "wilfully false" disclosures. Id. at 31-33. 

And plaintiffs' argument about congressional policy is 

hardly a difference-maker either. That is so because Stoutt 
- 27 - 

factored Congress's policy concerns into its decisional mix and 

reached a result that cuts against the very one plaintiffs push 

for here. 

Having said all this, however, we think it equally 

important to reemphasize something Stoutt emphasized. Which is 

that even though private actions are off the table, financial 

institutions that file malicious or intentionally false SARs are 

hardly untouchable. Among other things, and as Stoutt was at pains 

to explain, the federal government can go after them, with fines 

and prison time where appropriate. Id. at 32. 

Undaunted by Stoutt, plaintiffs still believe they hold 

a winning hand, thanks to three state-court opinions that withheld 

BSA immunity from an SAR filer that twisted the truth in its 

report, just like Fidelity did by not disclosing that it — and not 

the Deutsches — had illegally manipulated the market. The three 

cases are Bank of Eureka Springs v. Evans, 109 S.W.3d 672 (Ark. 

2003), Digby v. Tex. Bank, 943 S.W.2d 914 (Tex. App. 1997), and 

Walls v. First State Bank of Miami, 900 S.W.2d 117 (Tex. App. 

1995). The difficulty for plaintiffs is that a prior panel opinion 

like Stoutt remains binding on us until (a) the Supreme Court or 

the First Circuit sitting en banc judicially overrules it; 

(b) Congress statutorily overrules it; or, in exceedingly 

infrequent situations, (c) non-binding but compelling caselaw 

convinces us to abandon it. See, e.g., United States v. Walker-
- 28 - 

Couvertier, 860 F.3d 1, 8 (1st Cir. 2017), cert. denied sub nom. 

Lugo-Diaz v. United States, 138 S. Ct. 1303 (2018), and cert. 

denied, 138 S. Ct. 1339 (2018). Exceptions (a) and (b) do not 

apply here. As for exception (c), Digby and Walls predate Stoutt 

and so lacked the benefit of Stoutt's reasoning. And Evans misread 

Stoutt as requiring an objective basis for an SAR filing, see 109 

S.W.3d at 680, when Stoutt rejected such a requirement, see 320 

F.3d at 31-32. Evans also provoked a spirited dissent, which 

scolded the majority for "substitut[ing]" its "interpretation of 

a federal statute for that announced by the great majority of 

federal courts interpreting that same statute." See 109 S.W.3d at 

686-87 (Thornton, J., dissenting) (emphasis added). All of which 

is to say that we must — and do — follow Stoutt.11

Final Words 

Having worked our way through the issues, we affirm the 

judgment entered below.12 Each party shall bear its own costs on 

 11 As a last gasp, plaintiffs suggest that because Stoutt 

decided the BSA-immunity issue on summary judgment after 

discovery, our judge acted "unprecedented[ly]" by kicking out 

their claims on a motion to dismiss. The easy answer to this 

contention is that the Second Circuit in Lee resolved a BSAimmunity issue in the context of a motion to dismiss. See 166 

F.3d at 543. And we embraced Lee in Stoutt. See 320 F.3d at 30. 

Which means plaintiffs' suggestion does not change the outcome of 

this case.

12 One last matter. Fidelity also argues that we can affirm 

on an alternative ground — namely, that federal law bars it "from 

disclosing even whether a[n] SAR was filed, let alone its 

contents"; so "[p]laintiffs can never prove that [it] filed an 

inaccurate SAR"; and thus it "cannot be forced to defend against 
- 29 - 

appeal.

 

[their] claims while, at the same time, being prohibited from using 

key exculpatory evidence." But given our holding, we do not 

address that argument.