Source: https://caselaw.findlaw.com/us-2nd-circuit/1452564.html
Timestamp: 2020-08-06 01:14:15
Document Index: 504779674

Matched Legal Cases: ['§\u20021292', '§\u20021292', '§\u20021292', '§\u20021292', '§\u20021292', '§\u20021292', '§\u20021292', '§\u20021292', '§\u20021292', '§\u20021292', '§\u20021292', '§\u2002102', '§\u20021292', '§\u20021292']

Lee N. KOEHLER, Petitioner-Appellee, v. The BANK OF BERMUDA LIMITED, Respondent-Appellant.
No. 111, Docket 96-7066.
Before: FEINBERG, CARDAMONE and McLAUGHLIN, Circuit Judges. Gregor F. Gregorich, New York City (Laurie R. Rockett, Hollyer Brady Smith Troxell Barrett Rockett Hines & Mone L.L.P., of counsel), for Respondent-Appellant. Paul F. Newhouse, Towson, MD, for Petitioner-Appellee. Kenneth A. Caruso, New York City (David R. Sahr, Shaw, Pittman, Potts & Trowbridge, Lawrence R. Uhlick, David T. Halvorson, Institute of International Bankers, of counsel), filed a brief on behalf of the Institute of International Bankers as Amicus Curiae.
This appeal from an interlocutory order is before us because a district court certified it under 28 U.S.C. § 1292(b) and a motions panel of this Court granted leave to appeal. What seemed at first like a good idea turns out, on further reflection, not to meet the criteria for certification because allowing the appeal will not materially advance the ultimate termination of the underlying litigation. In fact, quite the opposite.
A court of appeals has discretion to review an interlocutory order in a civil case if the trial court states in writing that its order involves a controlling question of law about which there is substantial ground for difference of opinion and an immediate appeal may materially advance the ultimate termination of the litigation. See 28 U.S.C. § 1292(b). With the benefit of briefs and a record we have had second thoughts about permitting this appeal to proceed. It does not serve § 1292(b)'s intended purpose to rule on an ephemeral question of law that may disappear in the light of a complete and final record. Accordingly, we remand the matter to the district court.
The circumstances that gave rise to this appeal occurred as follows: petitioner-appellee Lee Koehler won a default judgment against A. David Dodwell in the United States District Court for the District of Maryland. With the knowledge that Bank of Bermuda International Ltd. (Bank of Bermuda) had in its possession stock certificates owned by Dodwell-which Bank of Bermuda asserts were pledged to it as collateral for a loan-Koehler registered his judgment in the Southern District of New York and began a garnishment proceeding against Bank of Bermuda, a banking corporation licensed under Bermuda law.
Koehler contends that BBNY is the agent of Bank of Bermuda in New York under the personal jurisdiction test articulated in Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533, 281 N.Y.S.2d 41, 227 N.E.2d 851, cert. denied, 389 U.S. 923, 88 S.Ct. 241, 19 L.Ed.2d 266 (1967), and that because the two banking corporations are not separate and distinct entities, the New York Bank is simply a “department” of Bank of Bermuda. To support his contention, Koehler relied on Bank of Bermuda's annual reports to its stockholders and promotional materials which Bank of Bermuda publishes and distributes to its customers and customers of its six subsidiaries, including BBNY. These materials portray Bank of Bermuda and BBNY as part of a unified global banking network that offers customers a wide variety of banking services and a choice of locale in which to have those services performed for optimal financial benefit.
In response to Koehler's assertions regarding jurisdiction, Bank of Bermuda declared that it is a banking corporation organized under Bermuda law, and that it owns no real estate in New York; has no New York telephone number, no office for transaction of business in New York, and no employees in New York; and is not authorized to conduct any banking business in New York. Bank of Bermuda further states that it has a wholly-owned subsidiary, Bermuda (U.S.) Holdings, Inc., a Delaware corporation, which in turn has a wholly-owned subsidiary, BBNY, which does business in New York and is chartered by the State of New York. Bank of Bermuda insists that BBNY is a separate corporate entity-independent from Bank of Bermuda-and is only one of several correspondent banks in New York to which Bank of Bermuda refers its customers for service. Bank of Bermuda customers, it continues, cannot make deposits to their accounts through the New York Bank and that entity cannot make loan commitments or advances on behalf of Bank of Bermuda.
I Jurisdictional Issue
In a diversity case a federal court may exercise personal jurisdiction over a party in accordance with the law of the forum state. Marine Midland Bank v. Miller, 664 F.2d 899, 901 (2d Cir.1981). Here the forum state is New York. Under New York's CPLR 301 a foreign corporation is subject to suit in New York state courts if it is “engaged in such a continuous and systematic course of ‘doing business' here as to warrant a finding of its ‘presence’ in this jurisdiction.” Frummer, 19 N.Y.2d at 536, 281 N.Y.S.2d 41, 227 N.E.2d 851. A parent corporation may be sued in New York when the relationship between the foreign parent and the local subsidiary validly suggests the existence of an agency relationship or the parent controls the subsidiary so completely that the subsidiary may be said to be simply a department of the parent. See Bulova Watch Co. v. K. Hattori & Co., 508 F.Supp. 1322, 1334 (E.D.N.Y.1981). These tests require a fact-specific inquiry into the realities of the actual relationship between the parent and subsidiary.
II Section 1292(b)
A. Legislative History and Purpose
We turn now to an analysis of § 1292(b). That statute allows for an appeal from an otherwise unappealable interlocutory order upon consent of both the district court and the court of appeals:
When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals ․ may thereupon, in its discretion, permit an appeal to be taken from such order․
28 U.S.C. § 1292(b).
It is a basic tenet of federal law to delay appellate review until a final judgment has been entered. Coopers & Lybrand v. Livesay, 437 U.S. 463, 475, 98 S.Ct. 2454, 2461, 57 L.Ed.2d 351 (1978). Section 1292(b)'s legislative history reveals that although that law was designed as a means to make an interlocutory appeal available, it is a rare exception to the final judgment rule that generally prohibits piecemeal appeals. The use of § 1292(b) is reserved for those cases where an intermediate appeal may avoid protracted litigation. See Milbert v. Bison Labs., 260 F.2d 431, 433-35 (3d Cir.1958) (discussing legislative history of § 1292(b)).
The House Committee on the Judiciary while considering the proposed § 1292(b) listed several types of cases it thought appropriate for interlocutory appeals: (1) where a lengthy accounting is required upon finding liability under a contract; (2) where a long trial is envisioned to determine liability over a defense disputing the right to maintain the action; (3) cases involving third party defendants where there is no reason for the suit to continue if the third parties are out of it; (4) litigation relating to the transfer of an action where it is claimed that the law does not authorize the transfer. Id. at 433.
Of the goals set forth in the statute, one scholarly writer believes Congress only aimed to vindicate the final one of saving trial court time by avoiding fruitless litigation. The writer so concluded based on the drafters' language that an interlocutory appeal “materially advance the termination of the litigation,” together with the special ability a trial court possesses to assess the efficiency of an immediate appeal. Note, Interlocutory Appeals in The Federal Courts Under 28 U.S.C. § 1292(b), 88 Harv.L.Rev. 607, 609-11 (1975).
Although the statute represents a slight retreat from the policy of finality and strict enforcement of the final judgment rule, § 1292(b) has not caused a large problem in the federal appellate courts. Professor Wright points out that only about 100 cases a year are certified under § 1292(b), and of these only half are allowed. Charles A. Wright, Law of Federal Courts, § 102, at 758 (5th ed. 1994). The public record of the Second Circuit for the years 1994 and 1995 reveals a total for the two years of 35 motions for leave to appeal under § 1292(b), of which only eight were granted.
B. Resolution of Certification Question
Section 1292(b) vests review of an interlocutory order within our discretion and we may decline at any time to decide the issue presented. We have permitted an appeal to be taken when the interlocutory order involves issues of in personam jurisdiction. See Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21, 24 (2d Cir.1990); Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1326, 1330 (2d Cir.1972). Yet, § 1292(b) was not meant to substitute an appellate court's judgment for that of the trial court. In Link v. Mercedes-Benz of N. America, Inc., 550 F.2d 860, 863 (3d Cir.), cert. denied, 431 U.S. 933, 97 S.Ct. 2641, 53 L.Ed.2d 250 (1977), the Third Circuit held that the district court's certification of the class in a class action suit is an inappropriate order for interlocutory appeal because the district court has such broad discretion under Rule 23(c) to revise its class action determination before a final decision on the merits.