Receiver in Ponzi Case Can't Sue Law Firm

     WASHINGTON (CN) - The court-appointed receiver for R. Allen Stanford's $7 billion Ponzi scheme cannot sue Proskauer Rose and Chadbourne & Parke in D.C. federal court because it lacks jurisdiction, the D.C. Circuit ruled.
     Janvey sued the law firms and attorney Thomas V. Sjoblom, of Virginia, in January 2012 for breach of fiduciary duty, accusing the lawyers of helping the Stanford Investment Bank evade government oversight and investigation.
     Sjoblom was a partner at Chadbourne from 2002 to 2006 and a partner at Proskauer from 2006 to 2009, Janvey alleged in a similar suit against the defendants filed in February 2013 in Dallas federal court.
     Janvey's D.C. suit was transferred to Dallas federal in March 2012. The trial court later denied the defendants' motion to dismiss in August 2013, resulting in the case being remanded back to D.C. federal court four months later by the U.S. Judicial Panel on Multidistrict Litigation. The panel agreed with the trial court's determination that the D.C. Court should decide if a transfer to Dallas federal court would be "in the interest of justice."
     On July 24, the D.C. Circuit concluded it is not in the interest of justice to transfer the suit back to Dallas federal court. Writing for the court, Judge Colleen Kollar-Kotelly said both parties concede some of the defendants are "stateless" for purposes of diversity jurisdiction, which creates a "special problem."
     "Two of the defendants are law firms with partners who are American citizens domiciled abroad," the 12-page opinion stated. "The Supreme Court has held that the citizenship of a partnership for the purposes of establishing diversity jurisdiction 'depends on the citizenship of all members.'"
     Kollar-Kotelly notes the plaintiffs are not pro se litigants. She is not convinced they "were simply confused as to the proper forum" to file their lawsuit.
     "Rather, plaintiffs are represented by two law firms, Strasburger & Price LLP and Neligan Foley LLP," the opinion stated. "Nor have plaintiffs alleged that there were complex or novel jurisdictional provisions at issue excusing their failure to file this action in the proper court. Instead, plaintiffs' failure to recognize the District of Columbia District Court lacked jurisdiction over their lawsuit suggests that plaintiffs filed their suit in this jurisdiction either in bad faith and/or as an attempt at forum shopping."
     Proskauer did not immediately respond to a request for comment Tuesday.