Establishing Personal Jurisdiction Through Domestic Derivative Transactions: The Second Circuit’s Refined Approach in Sullivan v. UBS AG (2025)

Introduction

In Sullivan v. UBS AG, the United States Court of Appeals for the Second Circuit delivered a nuanced opinion that reshapes the personal-jurisdiction landscape for global financial-benchmark litigation.

The dispute arose after a collection of investors—including individual trader Stephen Sullivan, several hedge funds, and the California State Teachers’ Retirement System (CalSTRS)—alleged that a consortium of European banks and inter-dealer brokers illegally manipulated the Euro Interbank Offered Rate (Euribor). Plaintiffs pled federal claims under the Sherman Act, the Commodity Exchange Act (CEA), and the Racketeer Influenced and Corrupt Organizations Act (RICO), alongside state common-law claims. The Southern District of New York dismissed the case in its entirety for lack of personal jurisdiction and, alternatively, for failure to state a claim. The Second Circuit’s mixed ruling—affirming in part, reversing in part, and vacating in part—creates an important precedent on:

• The limits of conspiracy-based jurisdiction over foreign actors;
• How direct over-the-counter (OTC) transactions with U.S. counterparties can ground specific personal jurisdiction, even where broader conspiracy jurisdiction fails;
• The domestic-conduct requirement and Rule 9(b) particularity for civil RICO claims predicated on wire fraud; and
• Efficient-enforcer and class-standing doctrines in the antitrust context.

Summary of the Judgment

• No conspiracy jurisdiction: The court agreed that plaintiffs did not plausibly allege overt U.S. acts by co-conspirators sufficient to impute contacts to all defendants.
• Specific jurisdiction survives for two plaintiffs and two banks: Because CalSTRS and FrontPoint Australian Opportunities Trust (FPA) executed Euribor-based FX forwards and interest-rate swaps in the United States directly with UBS and RBS, the court found “minimum contacts” and allowed Sherman Act and RICO counts to proceed against those two banks.
• RICO revived but dismissed on pleading defects: Domestic-wire usage satisfied Morrison/Alibaba-style territoriality, yet the complaint failed Rule 9(b)’s particularity; RICO claims were dismissed without prejudice but could, in principle, be re-pled.
• Sherman Act claim stands: Plaintiffs successfully alleged a per-se price-fixing conspiracy involving Euribor manipulation, antitrust injury on FX forwards, and efficient-enforcer status.
• CEA claims fall: All CEA claims concerned LIFFE and CME futures transacted outside defendants’ U.S. contacts; no personal jurisdiction.
• Pendent personal jurisdiction restored: Because Sherman Act claims remain, the panel vacated the district court’s refusal to hear related state-law claims against UBS and RBS.

Analysis

1. Precedents Cited and Their Influence

• Schwab I and II – National contacts & efficient enforcer
• Schwab I supplied the “billions of dollars in transactions” metric confirming that actual U.S. OTC trades equal prima-facie contacts.
• Schwab II provided the blueprint for conspiracy jurisdiction and efficient-enforcer analysis; its failure of pleading overt U.S. acts became the benchmark against which plaintiffs’ allegations were tested.
• Bascuñán – Domestic-wire requirement for civil RICO
• The panel imported Bascuñán’s two-step test: (i) domestic use of wires; (ii) wires as a “core component” of the fraud. Finding on-shore trade confirmations satisfied step (i) and (ii), the court parted company with the district court’s extraterritoriality dismissal.
• Anderson News – Inference of conspiracy from circumstantial evidence
• The court reaffirmed that chat logs, emails, and parallel pricing can collectively imply a “meeting of the minds,” meeting Anderson News’s threshold for plausibility.
• Int’l Shoe & its progeny – Minimum contacts and foreseeability
• Although Int’l Shoe serves as the constitutional bedrock, the panel emphasized that contacts must be purposefully created by defendants, not imputed through conjecture.

2. Court’s Legal Reasoning

1. Rejection of Conspiracy-Based Jurisdiction
   
   • Needed: overt U.S. acts by any co-conspirator that other defendants could “reasonably anticipate.”
   • Allegations of Deutsche Bank’s internal New-York phone calls & a consent order lacked specificity and foreseeability; thus, could not anchor jurisdiction for the entire group.
2. Specific Jurisdiction via Direct Domestic Transactions
   
   • CalSTRS and FPA traded OTC FX forwards/swaps with UBS/RBS on U.S. soil.
   • These transactions were the “suit-related conduct” giving rise to antitrust and RICO claims, satisfying Bristol-Myers’ causation nexus and Int’l Shoe’s fairness considerations.
3. RICO: Domestic Predicate but Rule 9(b) Hurdle
   
   • Domestic confirmations and payments = “use of wires.”
   • However, plaintiffs lumped hundreds of theoretical false submissions together; they failed to identify which misstatements tied to which trades—fatal under Rule 9(b).
4. Sherman Act: Conspiracy, Injury & Efficient-Enforcer
   
   • Chats showing trader Philippe Moryoussef’s coordination across Barclays, RBS, and UBS evidenced a “unity of purpose.”
   • FX-forward pricing formula expressly incorporated Euribor, creating a direct overcharge injury.
   • Because injuries arose from trades with defendants themselves (no intervening third parties), CalSTRS/FPA passed the Schwab II efficient-enforcer test.
5. Pendent Personal Jurisdiction
   
   • Once federal Sherman Act claims survive, adjudicating state unjust-enrichment/good-faith claims—grounded in the same trades—promotes judicial economy.

3. Potential Impact

• Narrowed but clarified pathway to U.S. courts: Foreign financial institutions cannot be dragged into U.S. litigation solely through “global conspiracy” allegations; plaintiffs must plead particular U.S. contacts—yet even a handful of OTC trades may suffice.
• RICO pleadings under microscope: The decision signals that courts will scrutinize the link between each alleged false benchmark submission and each domestic transaction; generalized statistical allegations will be rejected.
• Antitrust scope over benchmark manipulation expands: By recognizing FX-forward buyers as efficient enforcers, the ruling broadens the class of potential plaintiffs beyond futures traders to OTC counterparties.
• Pendent jurisdiction revitalized: Judges may exercise pendent personal jurisdiction over related state-law claims once minimal federal hooks survive, reducing duplicative litigation.
• Compliance ripple effect: Banks may face greater exposure when they trade U.S.-booked OTC instruments; expect strengthened compliance around benchmark submissions and U.S.-facing sales.

Complex Concepts Simplified

Euribor

The average interest rate European banks say they would pay to borrow Euros from one another, calculated daily across several maturities.

Over-the-Counter (OTC) Derivatives

Customized contracts (as opposed to exchange-traded) whose value derives from an underlying reference—here, Euribor. Examples: FX forwards, interest-rate swaps, forward-rate agreements (FRAs).

Specific vs. Conspiracy Jurisdiction

Specific jurisdiction looks at the defendant’s own forum-related acts giving rise to the lawsuit.
Conspiracy jurisdiction tries to impute one conspirator’s forum acts to all, but only where those acts were reasonably foreseeable to each defendant.

Rule 9(b) Particularity

Plead fraud “with particularity”: identify the who, what, when, where, and how of each misrepresentation. Blanket statements of “hundreds of frauds” will not do.

Efficient Enforcer

A plaintiff whose injury is direct, non-speculative, and whose claim will not create duplicative recoveries. Courts use this test to control the reach of treble-damage antitrust suits.

Conclusion

Sullivan v. UBS AG is most notable for its doctrinal clarification that direct U.S. transactions—even if few—can confer personal jurisdiction and revive antitrust claims despite the collapse of broader conspiracy theories. Simultaneously, the ruling tightens civil-RICO pleading by demanding transaction-specific fraud allegations, ensuring that only well-supported wire-fraud theories proceed. By affirming class standing for holders of related Euribor derivatives and reinstating pendent personal jurisdiction over state-law claims, the Second Circuit paves a pragmatic middle path: real injuries stemming from domestic dealings will find a forum, but global banks remain protected from speculative or insufficiently pleaded dragnet suits.

Practitioners litigating benchmark-manipulation and other cross-border financial cases must now carefully marshal granular trading data and communications to survive jurisdictional and Rule 9(b) scrutiny, while defendants should audit U.S.-booked OTC activities for latent exposure. The precedential message is clear: concrete domestic trades create concrete jurisdiction—and plaintiffs must match that concreteness in their pleadings.