United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANT SYNOVUS BANK'S
MOTION TO DISMISS (Docket No. 178)
TIMOTHY S. HILLMAN DISTRICT JUDGE
Bank (“Synovus”), one of numerous defendants in
the TelexFree multidistrict securities litigation, moves to
dismiss all counts in the Second Consolidated Amended
Complaint (“SCAC”) for want of personal
jurisdiction, lack of standing, and failure to state a claim.
TelexFree, Inc. (TelexFree) was a pyramid scheme that
operated from February 2012-April 2014, and involved
approximately two million participants worldwide, nearly a
million of whom suffered a net financial loss. Several
plaintiffs filed actions in District Courts across the United
States seeking to recover their losses against dozens of
defendants, ranging from banks, payment processing companies,
and the principals of the fraudulent scheme. As the actions
involved common questions of fact, the Judicial Panel on
Multi-district Litigation joined the actions into a
multi-district litigation, and ordered transfer of all
actions to the District of Massachusetts for coordinated or
consolidated pretrial proceedings.
is a Georgia Chartered Banking Institution, with offices in
Georgia, Alabama, Florida, South Carolina and Tennessee.
Synovus serves as a sponsor bank for companies providing
credit card processing services. Credit card processing
services include collection of credit card data from
merchants, encryption of the data, and routing of the data to
the customer's issuing bank. Synovus was the sponsor bank
for co-defendant Base Commerce, a third party payment
processor that provided credit card processing services to
TelexFree from June - August 2013.
is a party to the SCAC, but was not served in any of the
underlying or tag along cases transferred to this District as
part of the multidistrict litigation. The SCAC seeks recovery
against Synovus for aiding and abetting violations of Mass.
Gen. L. ch. 93 §§ 12 and 69 and ch. 93A
§§ 2(a) and 11 (Third Claim for Relief), Unjust
enrichment, (Fourth Claim for Relief), and tortious aiding
and abetting, (Tenth Claim for Relief).
asserts that jurisdiction is not proper under the
Massachusetts Long-Arm Statute, Mass. Gen. L. ch. 223A
§3, and that Synovus lacks sufficient contacts with
Massachusetts to satisfy the Constitutional requirements for
this Court to exercise personal jurisdiction over it.
Plaintiffs contend that this Court has nationwide
jurisdiction as transferee court, and that traditional
personal jurisdiction also exists.
courts have held that the MDL statute, 28 U.S.C. § 1407,
“authoriz[es] the federal courts to exercise nationwide
personal jurisdiction, ” it is also well established
that “[i]n an MDL case, personal jurisdiction
is derived from the transferor
court.” In re “Agent
Orange” Prod. Liab. Litig., 818 F.2d 145, 163 (2d
Cir.1987); In re WellNx Mktg. & Sales Practices
Litig., No. 07-MD-1861, 2010 WL 3652457, at *1 (D. Mass.
Sept. 15, 2010) (emphasis added); see also In re FMC
Corp. Patent Litig., 422 F.Supp. 1163, 1165
(J.P.M.L.1976) (“Transfers under Section 1407 are
simply not encumbered by considerations of in personam
jurisdiction and venue.... Following a transfer, the
transferee judge has all the jurisdiction and powers over
pretrial proceedings in the actions transferred to him that
the transferor judge would have had in the absence of
transfer). Synovus was named as a party to the First and
Second Consolidated Amended Complaints filed in this
District. Synovus was never named as a party nor served
process in any of the cases that were transferred to this
Court as part of the MDL. Accordingly, there is no basis in
28 U.S.C. § 1407 for this Court to exercise personal
jurisdiction over Synovus.
addition, the Complaint does not allege facts to support
either specific or general jurisdiction under the
Massachusetts long-arm statute. The statute, Mass. Gen. L.
ch. 223A §3 provides in relevant part:
A court may exercise personal jurisdiction over a person, who
acts directly or by an agent, as to a cause of action in law
or equity arising from the person's
(a) transacting any business in this commonwealth;
(b) contracting to supply services or things in this
(c) causing tortious injury by an act or omission in this
(d) causing tortious injury in this commonwealth by an act or
omission outside this commonwealth if he regularly does or
solicits business, or engages in any other persistent course
of conduct, or derives substantial revenue from goods used ...