Superior Court of Massachusetts, Suffolk, Business Litigation Session
B. BULLEN et al.
MEMORANDUM AND ORDER ALLOWING DEFENDANTâS MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION
Kenneth W. Salinger, Justice
forty-eight plaintiffs were investors in, and allege they
were defrauded of tens of millions of dollars by, a defunct
hedge fund. The defendant in this case, CohnReznick, LLP, was
the outside auditor and accountant for the Fund. Plaintiffs
claim that CohnReznick aided and abetted fraud and other
misconduct by the Fund, was negligent and committed fraud on
its own, conspired with the Fund to defraud its investors,
and committed an unfair or deceptive act in violation of
has moved to dismiss this action for lack of personal
jurisdiction and on other grounds. The Court agrees that it
cannot exercise personal jurisdiction over CohnReznick in
this action. It will therefore ALLOW the motion and dismiss
this action without prejudice,  without reaching
CohnReznickâs other arguments.
Legal and Procedural Background
question of personal jurisdiction ... goes to the courtâs
power to exercise control over the parties." Leroy
v. Great W. United Corp., 443 U.S. 173, 180 (1979). If a
judgment were to enter against a defendant over which the
court had no personal jurisdiction, the judgment would be
void, thus a "nullity." See Lamarche v.
Lussier, 65 Mass.App.Ct. 887, 889 (2006)
("void"); Vazquez-Robles v. CommoLoCo,
Inc., 757 F.3d 1, 4 (1st Cir. 2014)
generally may not exercise personal jurisdiction over a
non-resident defendant unless it determines "that doing
so comports with both the forumâs long-arm statute and the
requirements of the United States Constitution."
SCVNGR, Inc. v. Punchh, Inc., 478 Mass. 324, 325
(2017). Thus, in most cases "[a]n assertion of personal
jurisdiction over a nonresident defendant poses a two-pronged
inquiry: â(1) is the assertion of jurisdiction authorized by
statute,  and (2) if authorized, is the exercise
of jurisdiction under State law consistent with basic due
process requirements mandated by the United States
Constitution?â" Lamarche, 65 Mass.App.Ct. at
892, quoting Good Hope Indus., Inc. v. Ryder Scott
Co., 378 Mass. 1, 5-6 (1979). Massachusetts courts must
first consider whether some statute authorizes the exercise
of personal jurisdiction, and only reach the constitutional
issue if there is a statutory basis for jurisdiction.
SCVNGR, 478 Mass. at 330.
defendant moves to dismiss an action for lack of personal
jurisdiction, the plaintiff bears the "burden of proving
facts sufficient to establish" that the court may
exercise jurisdiction over the defendant. Bulldog Invârs
Gen. Pâship v. Secretary of the Commonwealth, 457 Mass.
210, 219 (2010); accord, e.g., American Intâl Ins. Co. v.
Robert Seuffer GMBH & Co. KG, 468 Mass. 109, 120 n.12
(2014) ("burden of demonstrating the existence of
defendant does not dispute jurisdictional facts alleged in
the complaint, then the court may accept those facts and the
plaintiffâs burden is only one of production, not persuasion.
Cepeda v. Kass, 62 Mass.App.Ct. 732, 737-38 (2004);
see also Callahan v. First Congregational Church of
Haverhill, 441 Mass. 699, 709 (2004) (same as to
"facial attack" on subject matter jurisdiction
based on factual allegations in complaint).
where the defendant presents competent evidence to contradict
the jurisdictional facts alleged in the complaint, "the
prima facie evidence loses its artificial force" and the
plaintiff has the burden to prove the existence of personal
jurisdiction "by a preponderance of the evidence at an
evidentiary hearing or at trial." Id. at 738
(quoting Burns v. Commonwealth, 430 Mass. 444, 451
(1999) as to "artificial force"); accord Abate
v. Fremont Inv. & Loan, 470 Mass. 821, 830-31 (2015);
see also Callahan (same as to "factual
challenge" to subject matter jurisdiction). In deciding
a motion to dismiss for lack of personal jurisdiction, a
court has "discretion to determine personal jurisdiction
by [a] preponderance of evidence without waiting for trial on
merits." Miller v. Miller, 448 Mass. 320,
case, CohnReznick presented affidavits and documentary
evidence in an attempt to contradict Plaintiffsâ factual
allegations regarding personal jurisdiction. Plaintiffs
responded by submitting their own affidavits and exhibits to
describe the conduct by CohnReznick that gave rise to this
lawsuit, the alleged connections between that conduct and
Massachusetts, and CohnReznickâs presence and activities in
Massachusetts in general. The parties asked the Court to
decide whether it has personal jurisdiction based on this
side asked the Court to defer final resolution of personal
jurisdiction until trial. In the exercise of its discretion,
the Court declines to defer a final decision as to personal
jurisdiction until trial because it would be unfair to force
CohnReznick to defend itself in a Massachusetts court that
lacks the power to act.
either side request an opportunity to present live testimony
or other additional evidence beyond their affidavits and
exhibits, or to cross examine any witness. It was "not
necessary ... to conduct an evidentiary hearing simply
because facts proffered by the plaintiff are disputed by the
defendant." Cepeda, supra, at
CohnReznick has presented evidence challenging Plaintiffsâ
recitation of the jurisdictional facts, and Plaintiffs had a
full opportunity to present their own evidence on the issue,
the Court must now "consider all relevant evidence
proffered by the parties," "make all factual
findings necessary for the determination of jurisdictional
facts," and "determine whether the plaintiff has
met its burden of proof by a preponderance of the
evidence." Cepeda, supra, at 739-40.
Findings of Fact
court makes the following findings of fact based on the
affidavits submitted in support of or in opposition to
CohnReznickâs motion to dismiss this action for lack of
personal jurisdiction over the Defendant.
is a New Jersey limited liability partnership. Its
headquarters is in New York. It has had an office in Boston,
Massachusetts, since 2008. After a merger in 2014,
CohnReznick had 15 partners and almost 100 employees working
out of its Boston office. It appears to be undisputed that
after that merger CohnReznick also had (and has) another
office in or near Springfield, Massachusetts, and that it
employed 55 to 60 certified public accounts in Massachusetts.
At that time CohnReznick had 26 offices and 2, 500 employees
nationwide, so its Massachusetts business activities were and
apparently are a fairly small part of the companyâs overall
audited the annual financial statements for the Platinum
Partners Credit Opportunities Fund ("the
Fund") for each year from 2011 to 2014. It
was retained to do this work by the Platinum Partners
entities that ran the Fund ("Platinum"). Like
CohnReznick, Platinum was based in New York. The engagement
letters for this work provided that the audit reports
prepared by CohnReznick should not be "made available to
recipients of any document to be used in connection with the
sale of securities" without CohnReznickâs "written
consent." CohnReznick never provided written consent for
such use of these audit reports.
staff performed their audit work related to the Fundâs annual
financial statements at Platinumâs New York office.
CohnReznick issued these audit opinions from its New York
office and sent them to Platinum in New York.
September 2013, representatives of Shepherd Kaplan, LLC
("SK")- which is a Registered Investment Advisor
based in Boston, Massachusetts- met with Platinum
representatives at a conference in Boston. They discussed the
Fund. SK conducted due diligence into the Fund over the next
six or seven months.
of its initial due diligence, SK asked Platinum to provide
copies of the Fundâs audited financial statements. Platinum
did so. Platinum also sent SK other financial and business
records, as well as marketing and offering materials,
concerning the Fund. SK received, reviewed, and analyzed all
of the materials provided by Platinum at SKâs Boston office.