United States District Court, D. Minnesota
Richard T. Ostlund, Randy G. Gullickson, and Steven C.
Kerbaugh, BAER & LOUWAGIE P.A., for plaintiff.
M. Rusert, Gregory A. Bromen, and Jennifer L. Cornell, NILAN
JOHNSON LEWIS P.A., for defendant.
MEMORANDUM OPINION AND ORDER DENYING MOTION TO
R. TUNHEIM CHIEF JUDGE
action arises from a third-party, fraudulent scheme whereby
Plaintiff Upsher-Smith Laboratories
(“Upsher-Smith”) sent nine foreign exchange
(“FX”) wire transfers totaling approximately $52,
509, 373.49 to an individual claiming to act at the direction
of Upsher-Smith's Chief Executive Officer
(“CEO”) in the acquisition of a company.
Upsher-Smith commenced this action in Minnesota state court
alleging Defendant Fifth Third Bank (“Fifth
Third”), the processor of the nine FX wire transfers,
breached its contract and other legal duties when it sent the
wire transfers based on the instructions of and confirmation
by a single Upsher-Smith employee. Fifth Third removed this
action to federal court and now seeks to transfer venue to
the Southern District of Ohio pursuant to 28 U.S.C. §
Upsher-Smith's choice of venue is entitled to
considerable deference, and Fifth Third has not met its
burden of showing the convenience of the parties and
witnesses and the interest of justice strongly favor transfer
to the Southern District of Ohio, the Court will deny Fifth
is a privately held Minnesota corporation that engages in
pharmaceutical manufacturing, distribution, and sales.
(Compl. ¶ 6, Mar. 3, 2016, Docket No. 1; Decl. of Sheila
Handy (“Handy Decl.”) ¶ 3, May 26, 2016,
Docket No. 28.) Upsher-Smith maintains its corporate
headquarters in Maple Grove, Minnesota and employs
approximately 76% of its 720 employees in Minnesota. (Handy
Decl. ¶¶ 4-6.) Upsher-Smith also maintains its
business records relating to FX trades, FX wire transfers,
financial procedures, and banking relationships, including
all documents and records relating to Upsher-Smith's
association with Fifth Third, in Minnesota. (Id.
Third is a nationally regulated bank incorporated in Ohio.
(Compl. ¶ 7.) Fifth Third maintains its corporate
headquarters in Cincinnati, Ohio and employs over 19, 000
people. (Id.; Decl. of Robert Tull (“Tull
Decl.”) ¶ 31, Apr. 7, 2016, Docket No. 20.) Of its
19, 000 employees, only six currently work in Minnesota.
(Tull Decl. ¶ 31.) Fifth Third allegedly maintains no FX
trading or healthcare group personnel in
Minnesota. (Decl. of Joshua Livingston
(“Livingston Decl.”) ¶¶ 2, 17, Apr. 17,
2016, Docket No. 19.) Fifth Third generates its agreements,
maintains its business records, and houses its Wallstreet FX
system - which confirms, validates, implements, and settles
FX trades - in Ohio. (Tull Decl. ¶¶ 9, 16.)
parties agree their relationship began when Upsher-Smith
entered into a credit agreement with a number of banks,
including JPMorgan Chase (“JPMorgan”). The
parties disagree, however, on the formation of their business
relationship. Fifth Third contends Upsher-Smith solicited its
services through JPMorgan and that Fifth Third did not accept
Upsher-Smith's offer until Fifth Third clarified it
provided services solely through Ohio. (Livingston Decl.
¶¶ 4, 7-11.) In contrast, Upsher-Smith contends the
banks in the credit agreement, including JPMorgan, separately
allocated the risk associated with the credit agreement to
other banks, including Fifth Third, and that Upsher-Smith did
not agree to allow Fifth Third to provide ancillary services
until a Fifth Third employee residing in Minnesota solicited
business from Upsher-Smith. (Compl. ¶¶ 12-14; Decl.
of Stephen Robinson (“Robinson Decl.”)
¶¶ 4, 6-7, 9-10, May 26, 2016, Docket No. 27.)
Third began processing Upsher-Smith's FX trades and wire
transfers around August 2013. (Compl. ¶ 18.) The parties
entered into a contractual relationship using forms prepared
by Fifth Third. (Id. ¶ 16; see also
Tull Decl., Ex. B.) Upsher-Smith employees discussed and
executed the contracts with Fifth Third while in Minnesota.
(Compl. ¶¶ 16-17; Livingston Decl. ¶¶ 5,
10; Robinson Decl. ¶ 9-10.) Upsher-Smith also
communicated with Fifth Third over the course of the business
relationship from Minnesota by either phone or email -
including requests for FX trades and wire transfers. (Tull
Decl. ¶ 9-10; Robinson Decl. ¶ 9; Decl. of
Christine Hopper (“Hopper Decl.”) ¶¶
5-6, May 26, 2016, Docket No. 26.)
relevant to this action, Upsher-Smith completed an “FX
Customer Information Form” which required, among other
things, designation of Upsher-Smith's “Primary
Confirmation Contact, ” “Secondary Confirmation
Contact, ” and “Optional Confirmation
Contact.” (Compl. ¶¶ 16-17 & Ex. A; Tull
Decl., Ex. B.) One major dispute underlying this action is
whether the designation of a “Secondary Confirmation
Contact” required Fifth Third to verify an FX trade or
wire transfer with more than one Upsher-Smith employee.
29, 2014, the Upsher-Smith employee designated as the
“Primary Confirmation Contact” - Christine Hopper
- received an email purporting to be from the CEO. (Compl.
¶ 21; see also Tull Decl., Ex. B.) The email
advised Hopper that an attorney would contact her regarding
the acquisition of a company. (Compl. ¶ 21) The email
also told Hopper to “execute everything” the
attorney needed and to keep the information about the
acquisition confidential. (Id.) The purported
attorney contacted Hopper who, over the course of several
days, initiated nine FX wire transfers through Fifth Third.
(Id. ¶ 65.) Fifth Third, at Hopper's
request, did not inform anyone at Upsher-Smith about the
transactions and did not halt the transactions based upon
their irregularity. (Id. ¶¶ 68-69.)
Ultimately, Upsher-Smith determined this email was not from
the CEO, but was part of a scam to defraud Upsher-Smith.
(Id. ¶ 21.) Fifth Third assisted Upsher-Smith
in recovering $12, 746, 589.97, but Upsher-Smith ultimately
lost approximately $39, 792, 783.53 (id.
¶¶ 66-67) and ended their business relationship
with Fifth Third in September 2015 (Livingston Decl. ¶
commenced this action in Minnesota state court, alleging
Fifth Third: (1) breached its contract; (2) breached the
implied covenant of good faith and fair dealing; and (3)
failed to comply with Article 4A of the Uniform Commercial
Code, pursuant to Minn. Stat. § 336.4A-202. (Compl.
¶¶ 73-94.) Fifth Third removed this case to federal