On March 29, 2007, the San Diego County Employees Retirement Association (SDCERA) filed a lawsuit against collapsed hedge fund manager Amaranth Advisors LLC (Amaranth) and several related individuals, including the fund manager’s one-time chief energy trader, Brian Hunter, in the U.S. District Court for the Southern District of New York, alleging securities fraud, common law fraud and several other causes of action.  In essence, the plaintiff alleged that the defendants fraudulently induced SDCERA into investing in funds managed by Amaranth, then dissuaded it from withdrawing that investment with a number of misrepresentations upon which SDCERA allegedly relied to its detriment.  The recurring theme in these allegations was that defendant Amaranth represented itself as managing a multi-strategy fund with sophisticated risk management controls when in reality it operated a single-strategy fund making essentially unhedged bets.  On March 15, 2010, District Court Judge Deborah A. Batts granted the defendants’ motions to dismiss each of the several counts of the complaint.  Judge Batts ruled that SDCERA’s claim under federal securities law – that it was fraudulently induced to purchase its interests in the Amaranth fund – was unreasonable as a matter of law; that choice-of-law principles dictated that the issue of common law fraud be decided according to the law of the state of Connecticut, where Amaranth was originally incorporated; that the claims of gross negligence and of breach of fiduciary duty are derivative, not subjects for a direct cause of action, and the plaintiffs failed to satisfy the requirements for a derivative action; and that Amaranth was not itself a party to the contract – which was between the plaintiff and the fund – so the management company was not liable on a breach of contract claim.  This article details the facts of the action and the issue of whether the court had personal jurisdiction over one of the defendants, Brian Hunter, who resides in Calgary, Canada, then analyzes the court’s rationale for its dismissal of each of the counts for failure to state a claim on which relief can be granted.