On August 11, 2015, the First Department of the Supreme Court of the State of New York, Appellate Division affirmed a previous order granting petitioner’s motion to direct respondent – an international banking corporation with principal place of business in Taiwan – to respond to an information subpoena compelling its New York branch to produce “any requested information that can be found through electronic searches performed there”.
The respondent, Mega International Commercial Bank (Mega Bank) had appealed the Supreme Court’s decision that directed the New York branch of the bank to respond to an information subpoena in order to enforce a money judgment obtained against a group of judgment debtors. Mega Bank complied with demands for information pertaining to its New York branch, but refused to produce similar information regarding records at its branches outside New York State. It argued, among other things, that New York courts lack personal jurisdiction with respect to that information.
The Appellate Division rejected Mega Bank’s argument. According to the Court, Mega Bank “consented to the necessary regulatory oversight in return for permission to operate in New York, and therefore is subject to jurisdiction requiring it to comply with the appropriate Information Subpoenas”.
Also, the Court deemed that New York’s separate entity rule – according to which each branch of a bank is a separate entity – “does not bar the exercise of jurisdiction over Mega to compel a full response to the information subpoena”.
The Court concluded that necessary regulatory oversight into foreign entities that operate within the boundaries of the United States must not be eliminated. “There is no reason to give advantage to a foreign bank with a branch in New York, over a domestic bank…When corporations receive the benefits of operating in this forum, it is critical that regulators and courts continue to have the power to compel information concerning their activities”. Moreover, the information requested “can be found via electronic searches performed in BBVA’s New York office, and [is] within this jurisdiction”. As a consequence, the court compelled Mega Bank’s New York branch to produce the information “that can be found through electronic searches performed there”.
For more information, Francesca Giannoni-Crystal
